Silicon Valley is its own world ("the Valley"), with its own language (geek speak), and its own commerce (ludicrous options grants). That's why many people I know would rather be forced to eat a gallon of soup with a fork than invest in tech stocks.

But forsaking all tech stocks can be a recipe for subpar returns. Consider Cisco Systems. This tech pioneer, which specializes in the once-esoteric business of networking equipment, delivered mind-blowing returns for early investors, despite the tech crash. You could have become one of them by doing a little extra homework.

Yes, you could have
What homework? Trade magazines such as Network World were a great source of information when tech investments were taking off. Had you been a reader in 1994, you would have learned that Cisco products were helping build the digital communications backbone of the Canadian government. In 1996, you would have learned that Ryder was depending on an advanced, Cisco-powered network to keep its fleet of trucks in top working condition. And in 1997, you would have learned that Cisco employees loved their jobs so much that they were happily putting in 60 hours or more per week building the latest routers.

At the same time, had you checked Cisco's annual reports, you would have seen outrageous sales growth:


Total sales














Source: Capital IQ

Investors who seized the momentum in 1994 have seen their original investments increase more than nine times in value. But those who waited till January 1997 are sitting on a better than 170% gain today, which is more than double the market's return over the same time frame.

What about today?
It's tempting to say that the dot-com bubble was a unique time of massive growth, and that those days are gone, never to return. But I think that's crazy. Plenty of great tech stocks are available today, and some even look like Cisco did in 1995.

How to find them? Try the same trade magazines that worked back in the day. You're looking for technologies on which corporate chief information officers (CIOs) are willing to spend big money. A quick search of "spending priorities" in the 2006 archives at brought forth this article, which suggests that while overall IT spending will be lower than originally expected this year, telecommunications equipment is still in demand.

Screening for opportunities in this industry isn't too difficult. Here's a list of candidates ranked by three-year sales growth:


3-Year CAGR

Orckit Communications (NASDAQ:ORCT)


CommScope (NYSE:CTV)




Comtech Telecommunications (NASDAQ:CMTL)












Data courtesy of Capital IQ.

A handful of these stocks strike me as potential Rule Breakers. Take Radyne, for example. Between the military and our increasing distaste for terrestrial radio, satellite communication has become a big business. That's led to impressive growth for equipment supplier Radyne, yet the shares have barely budged over the past 52 weeks. Color the rebel in me very intrigued.

Make millions in tech
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This article was originally published on July 15, 2006. It has been updated.

Fool contributor Tim Beyers only breaks the rules in his portfolio. Wimp. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. Get the skinny on all of Tim's stock holdings by checking his Fool profile. Radyne is a Motley Fool Hidden Gems selection. The Motley Fool's disclosure policy is a rebel on Wall Street.