A Technology Sector “Triple Bagger”

It’s been a good year for the technology sector. Today’s chart shows how the SPDR Technology Sector ETF (NYSE: XLK) has outperformed the S&P 500 since the start of the year.

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The technology sector has gained 60% more than the broad market, with XLK up about 18% year-to-date against the S&P’s 11%.

When we drill down into this trend we find one company in the technology sector that’s had one heck of a year. A trendy new startup? No. Facebook? Ha ha… no.

Try the 26-year-old “data analytics” firm, Datawatch (NASDAQ: DWCH). The company’s stock is a “triple bagger” this year, meaning it is now worth more than three times what it was worth in January. Check it out…

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You’ll understand the role that Datawatch’s products fill if you’ve ever heard your boss bark, “Get me that report by Monday.”

You know well that “getting that report” to your boss usually involves a lot of work – often a lot of manual number-crunching work. You have to gather the research, hunt for the figures you need and plug the numbers into spreadsheets. Sometimes you have to convert file formats, or “transform” data into a useable form.

And that’s all before you even get to writing up the report. Without technology, “getting that report” can be a laborious, time-consuming and money-draining process.

Datawatch eliminates much of the labor-intensive, human “grunt work” of data management and analytics. Its products are able to scan through PDF files and HTML pages, extract targeted data, and organize the data so it’s easily recalled and analyzed.

Does this type of technology completely eliminate the need for human employees? No… of course not. But it does mean the type of analysis that used to require a team of employees can now be done by one or two people.

Watch for companies like Datawatch to thrive in this cost-cutting environment. Businesses are increasingly choosing technology over employees, especially when it costs less.

If you haven’t done so already read the Survive & Prosper issue on “What Leno Layoffs Say About Deflation.”



Adam O’Dell

Using his perfect blend of technical and fundamental analysis, Adam uncovers investment opportunities that return the maximum profit with minimum risk.