"I'm amazed that any of them are hitting new highs," said Philip Dow, a market strategist with Dain Rauscher Wessels. "In our portfolio, I'm overweighted in technology and know I won't be making any money in the near-term. But I don't want to be left out when the sector begins to turn."
Dow is not alone in his surprise. Investors, after all, are still feeling the effects of the Nasdaq falling more than 50 percent from its year-ago high, dozens of dot-com companies turning out their lights and a never-ending stream of companies instituting cuts, rather than conquering new markets.
But since the start of the year, more than 20 Nasdaq-listed tech companies have managed to reach new highs--a classic case of when investor perception and reality disconnect. For example, three stocks have managed to rise above the carnage. While they all operate in different sectors, they are being rewarded for the same thing: beating analyst expectations.
Communications company Comcast, gaming-software developer Activision and electronic-payment technology provider eFunds are just some of the tech companies to hit new highs as the Nasdaq has continued its downward spiral.
"The world isn't falling apart. Tech stocks are now out of favor, but you have to look hard and you'll still find a few that are in favor," said Ralph Acampora, chief technical analyst with Prudential Securities.
Investors will certainly need sharp eyes to find the smattering of tech companies posting new highs from the pool of more than 4,600 Nasdaq companies.
Activision has been steadily climbing since December and has been setting new historic highs since earlier this month. The company reached its latest high, of $24.50, on Tuesday, but has since given up some of its gains to close at $22.25 Thursday.
Since mid-1995 to the end of 1999, the stock has traded in the $10 to $20 range, Acampora said. Last year, it dipped as low as $5, he added.
The gaming business is a cyclical sector and Activision is on the cusp of riding its next wave, analysts said. This wave comes as hardware makers have either launched or will soon debut new platforms. Hardware maker Sony found its new PlayStation 2 was in short supply, and Nintendo, with its pending Game Boy Advance already has 2.7 million pre-orders. Microsoft has joined the fray with plans to launch its Xbox in the fall.
"Activision is a publisher and distributor of games and we're just in front of a new cycle that will heat up in the December quarter," said Tony Gikas, an analyst with U.S. Bancorp Piper Jaffray.
Last December the company far exceeded analysts' expectations. Gikas said he anticipated the company would post $215 million in revenue for the fiscal third quarter, but it actually brought in $265 million. Earnings reached 70 cents, beating Gikas' estimate of 60 cents.
Like Activision, eFunds is also riding a wave for its sector and beating Wall Street's estimates, analysts said. The company processes electronic payments from debit cards via ATM machines, gas stations, grocery stores or from orders placed over the Internet or via telephone.
"eFunds processes debit cards, which is an industry growing faster than credit cards," said Scott Smith, an analyst at Lehman Brothers. He added that the company also exceeded analysts' expectations in the second and third quarters.
Shares of eFunds have nearly doubled since early January, reaching a new 52-week high of $16.75 on Feb. 14. The stock, however, has retreated slightly to close at $15.25 Thursday.
Not a walk in the park
But the company has not always enjoyed such a great ride. eFunds went public at $13 a share last March and its shares fell underwater in the ensuing months to around $6. But the company climbed back earlier this month and surpassed its IPO price.
Jeffrey Baker, an analyst with WR Hambrecht, said concern arose when a large customer of eFunds was acquired by another company. The eFunds customer, however, has since signed a multiyear agreement with its new owner to continue the processing of payments, Baker said.
While eFunds and Activision recently posted new 52-week highs, Comcast has fought to maintain its position since reaching its 52-week high in mid-January. The company climbed to $45.81 on Jan. 17 and has managed to stay close to that range. Comcast closed at $42.59 Thursday.
Comcast's strong fourth-quarter earnings earlier this week likely helped it to maintain its share price. The cable company reported a 9.7 percent annual increase in cable revenues to $1.13 billion over last year. And its QVC home shopping-related revenue jumped 13.5 percent to $1.12 billion in the quarter, compared with a year ago. Comcast's content revenues also rose sharply in the quarter, to $2.41 billion.
Comcast expects to grow its cable business by 10 percent to 12 percent this year, based on pro forma results, Richard Bilotti, an analyst with Morgan Stanley Dean Witter, said in a research report. QVC revenue, meanwhile, is expected to increase by the low double digits, and content-related business is expected to yield about $40 million to $50 million in revenue, Bilotti said.
In sizing up investor atmosphere for tech stocks, Acampora said: "People were scorched with tech stocks. It doesn't mean that they hate them, they just need to be more prudent and careful in picking them."