Technology has been one of the hottest sectors of the year so far. The tech-centric Nasdaq index has soared more than 12% since Dec. 31 thanks to a series of earnings beats from the likes of Facebook Inc. (FB), Apple Inc. (AAPL), and other industry titans. For comparison, that 12% gain beats out the S&P 500 and Dow Jones Industrial Average, which have returned 10.5% and 11%, respectively, over the same period.
Investors seemed to flock back into the tech sector not just because of the positive earnings sentiment but also because many companies traded at a significant discount at the tail end of December. Shares of Alphabet Inc. (GOOG), for example, closed at a more than 12-month low of $976.22 on Dec. 24, presenting a ripe opportunity for investors to jump into one of the world’s most powerful tech firms at an inexpensive price.
With the tech sector’s hot streak in mind, let’s take a closer look at which companies are leading the pack…
No. 5: Maxwell Technologies Inc. (MXWL)
Maxwell, which provides tech-based power solutions to the transportation and renewable energy industries, has seen its stock rocket 128% from $2.07 a share to $4.72 a share as of Feb. 21. The majority of those gains have occurred this month, as shares are up 54% from $3.07 to $4.72 since the Feb. 1 close.
The rally comes on the heels of news that electric carmaker Tesla Inc. (TSLA) offered to buy Maxwell for $218 million in an all-stock transaction. The offer valued Maxwell stock at $4.75 per share. Tesla CEO Elon Musk likely wanted the company for its ultracapacitors, which are energy storage devices similar to batteries, but, unlike batteries, they can charge and discharge much quicker and can operate in extreme temperatures. As with any buyout, investors embraced the deal, especially since it comes from a high-profile carmaker and even higher-profile CEO.
No. 4: SITO Mobile Ltd. (SITO)
Shares of SITO stock have climbed 132% from $0.90 to $2.09 this year, the highest level since Sept. 20. The mobile data company recorded its most notable winning streak between Jan. 22 and Feb. 6 when the stock surged 74.5% from $1.14 to $1.99.
One factor fueling the rally is the quick decrease in short bets against the stock by the end of January. According to data released by the Financial Industry Regulatory Authority (FINRA), SITO stock saw a 6.44% decrease in short interest by Jan. 31. The drop-off in short positions likely instigated a follow-the-herd mentality among the rest of the SITO bears since steadily declining short interest typically indicates a rally ahead that other short-sellers wanted to avoid getting burned by.
No. 3: Resonant Inc. (RESN)
Resonant stock is the third-best tech gainer of the year, with shares up 177% from $1.33 on Dec. 31 to $3.69 on Feb. 21. Shares of the radio-frequency software firm experienced their best run during the 15-day period from Jan. 14 to Jan. 29 when they more than doubled from $1.67 to $3.48.
While no company-specific news story is responsible for the rally, research suggests that the buying behavior stems from bullish analyst ratings. In late January, three analysts polled by FactSet Research Systems Inc. (FDS) gave RESN stock an “Overweight” rating, meaning they expect the share price to outperform its broader industry. Their faith in the company’s performance has likely encouraged investors to crowd into the stock this month.
No. 2: CBAK Energy Technology Inc. (CBAT)
CBAK Energy Technology, a Chinese battery manufacturer, remains not just one of the top tech stocks of the year but also one of the top penny stocks overall. Shares of the company have soared from $0.38 to $1.11 since Dec. 31, making for a 192% gain year-to-date. The stock primarily exploded from Jan. 10 to Jan. 23 when it climbed more than 173% from $0.41 to $1.12.
The primary news fueling the rally has been insider buying, particularly CEO Yunfei Li’s purchase of 1.67 million shares that occurred in early January. When investors see a high-level executive making bulk purchases of his own shares, it indicates that he has faith in the long-term growth of his company. That, in turn, entices investors to pile into the stock to ride the potential rally ahead. For CBAT shareholders, they’ve been rewarded handsomely this year.
No. 1: CLPS Inc. (CLPS)
The top-performing tech stock of 2019 so far is CLPS, a Chinese information technology (IT) company whose shares have more than quintupled this year from $2.42 to $13.35. That constitutes an enormous gain of 452%, with the most bullish run occurring between Jan. 28 and Feb. 12 when the stock vaulted 174% from $5.83 to a near all-time high of $15.99.
As with Resonant, the company hasn’t reported any particularly bullish news that would’ve boosted the stock to these record highs. The only explanation for the rally is that investors flocked to CLPS as they have with the rest of the Nasdaq index this year. When the bigger companies pull an index higher, overall sentiment in the sector increases and a “rising tide lifts all boats” mentality typically settles in.