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By Eric Bleeker | More Articles
January 31, 2012 |

It's started out as a great 2012 for technology stocks. So far, the tech-heavy Nasdaq has stomped the Dow Jones Industrial Average, returning 7.7% versus the Dow's 3.6% return.

Taking a peek at the top performers in the Internet and services space, you'll find a few key themes.

It's a global list. The top four performers are all from China. In addition, Net 1 Ueps hails from South Africa. Many of these stocks were horribly beaten down in 2011. Renren (NYSE: RENN  ) is of particular note for being one of the biggest busted IPOs of 2011. Did I mention China? Seven of these companies on the list are from China. While the Shanghai Composite is up a reasonable 5% so far in 2011, we're talking some extreme outperformance in the list below.

Top 10 Internet and services stocks of January

Company

% Price Change

VanceInfo Technologies (NYSE: VIT  )  57.0 AsiaInfo-Linkage  50.2 Renren  47.9 Youku.com (NYSE: YOKU  )  47.5 Net 1 Ueps Technologies  44.1 Parametric Technology  41.3 SouFun Holdings  37.4 NetQin Mobile  36.6 Ancestry.com (Nasdaq: ACOM  )  35.1 SINA (Nasdaq: SINA  )  34.5

Source: S&P Capital IQ. Includes only companies with U.S. listings and market caps greater than $300 million. All prices through Jan. 27.

Will the rest of 2012 be as kind to these highflyers of the new year? Here's an amazing fact: While outperformer lists early in the year are normally riddled with companies that smoked earnings during the first few weeks of January, only one stock in the list above has reported earnings! That's Parametric, which unsurprisingly earned its spot by beating earnings. For example, top performer VanceInfo doesn't have any particularly exciting news this year aside from an analyst upgrade.

What's driving that level of outperformance? For one, many technology growth stocks were heavily sold across the summer of 2011. As investors begin nibbling on more risk again, those stocks have come back in vogue. China reported GDP far more robust than the market was expecting earlier in 2012, and that's led investors back into the country.

Also, there's some pretty key tailwinds at the backs of other companies. As players in the social media space, both Renren and SINA will get to ride momentum from Facebook's upcoming IPO. Likewise, both Ancestry.com and Youku are also seen as fringe social media players that could ride the momentum of a positive Facebook IPO.

That's it for our recap of the Internet space. However, if you're looking for a better stock idea to kick off 2012, we've uncovered one such stock with so much promise we've dubbed it "The Motley Fool's Top Stock for 2012" and created a special free report for investors to uncover this soon-to-be rock star. The report highlights a company that is revolutionizing commerce in Latin America, and you can get instant access to the name of this company. Thousands have already requested the report, which is free today, but it won't be forever, so access it now.

Read the rest here:
The Top 10 Internet and Services Stocks in January

The following commentary comes from an independent investor
or market observer as part of TheStreet's guest contributor
program, which is separate from the company's news
coverage.

BEIJING (TheStreet) --
One year ago, shares of Molycorp(MCP) and Rare Earth
Elements(REE) were each up by several
hundred percent in a few months due to an investor-buying frenzy
for all things related to rare earths. Many investors piled into
shares of tiny fluorite producer Shenzhou
Mining(SHZ), which was trading below $1.
Within weeks, SHZ ran to over $10 -- a quick return of more than
1,000%. More stunning was the fact that SHZ wasn't even in the
business of producing rare earths, it was just mistakenly lumped
in with the sector. For a while the "greater fool theory" held
and the stock continued to skyrocket, but once the party ended,
shares of SHZ plunged back to $1 to $2. For those who piled in at
the top, they are looking at potential losses of 80% to 90%. We
are seeing the exact same thing again with "social media" stocks.
The hot stock driving the space is now the impending IPO of
Facebook. Despite the fact that everyone knew the IPO of
Facebook was nearing its filing with the SEC, and even had an
idea of the proposed valuation (up to $100 billion), a Wall
Street Journal article on Friday discussing the impending IPO
led to frenzied buying of anything related to social media. This
included most of the Chinese internet space. Shares of
RenRen(RENN), mislabeled as the "Facebook
of China," surged as much as 30% (36% in after hours) and Sina
Corp(SINA), which runs China's most
popular mini-blog service, jumped as much as 15%. This buying of
internet stocks set off a quick chain reaction, spreading to most
of the Chinese internet space as a whole (even non-social
networking stocks). Shares of eCommerce China DangDang
were up by nearly 20%, Baidu(BIDU) was up 7% and
Youku(YOKU) was up 13% . In December,
investors had seemingly given up on RENN completely. The stock
traded as low as $3.21, roughly equal cash per share. The
conclusion, it seemed, was that RENN's business was worth
precisely zero and the company was only valued for its cash.
Since that time, very little has changed with RENN, except that
it has continued to lose money and burn more of its cash, yet the
shares are up 63% and the run up shows little sign of slowing
down.

Read more:
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