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 try 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. You could have become one of the winners had you done some 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 of that particular publication 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 depended on a Cisco-powered network to keep its trucks in top working condition. And in 1997, you would have learned that Cisco employees loved their jobs so much that they were happily working 60 or more hours per week.

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


Total sales

% YoY Growth


$1.3 bil



$2.2 bil



$4.4 bil



$6.5 bil


Source: Capital IQ, a division of Standard & Poor's.

Investors who seized the momentum in 1994 have seen their original positions increase more than 13 times in value. Those who waited till January 1997 are sitting on a 280% 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. What you're looking for are technologies on which corporate chief information officers (CIOs) are willing to spend big money. A quick search of "spending priorities" at trade magazine CIO Insight brought forth this article, which says that data infrastructure -- that is, the software equivalent of a building's foundation -- will be a priority this year.

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


3-Year CAGR

Red Hat (NYSE:RHT)


Tibco Software (NASDAQ:TIBX)




Informatica (NASDAQ:INFA)




Source: Capital IQ, a division of Standard & Poor's. Data available for one year of growth.

Could any of these help you make millions from thousands? Oracle, in which I've held a personal stake for more than three years, has made CEO Larry Ellison a billionaire. Rival SAP is no slouch, either.

But, of these five, I like Tibco for two reasons. First, its technology for bringing together disparate software systems has proven sturdy enough for FedEx (NYSE:FDX), which uses it to track packages. Second, Tibco's software has become increasingly relevant to those who are turning to software as a service systems.

Make millions in tech
Learning about the technology industry isn't easy, but the rewards of study can be huge. That's why we devote significant time and energy searching for stocks like Tibco at Rule Breakers. We think hunting for the next big technological breakthroughs will lead to the highest possible returns.

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This article was originally published on July 15, 2006. It has been updated.

Fool contributor Tim Beyers owned shares of Oracle at the time of publication. FedEx is a Stock Advisor pick. The Motley Fool's disclosure policy is a rebel with a cause.