IT Stocks: The Growth of Data Storage in the Digital Age

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(By Rebecca Lipman. List compiled by Eben Esterhuizen, CFA. Data sourced from Fidelity.)

Looking for an industry destined to grow no matter the odds? In this digital age it seems reasonable to look no further than data storage. After all, as the world develops and becomes increasingly computer-centric, more information is being added to databases at an exponential rate. It has to be kept somewhere.

Analysts have been paying close attention to the growth projections of companies that construct and operate data centers. According to New York Times, a survey of 5,400 industry officials responsible for over 100,000 data centers expect to increase 19% in the US next year, a level that was "last seen in the world economy's boom years." It also showed a projected increase of 46% in China over the same period.


High energy consumption has long been a concerning restraint on the industry's ability to grow. The study shows cost and availability of energy is a "top concern in planning future operations" and has led to the production and design of more efficient data centers. The potential result of which is a slowdown of power consumption - the leading indicator of the industry's growth. For that reason, some analysts are calling foul on the projections.

Furthermore, New York Times reports the skepticism of Jonathan G. Koomey, consulting professor in the civil and environmental engineering department at Stanford University, who says the "projected growth rates were “self-reported” — estimated by the companies themselves rather than by outside analysts, who would presumably be more objective."

Still, these industry analysts admit the demand for the industry is growing, even if not at such drastically high levels.

So we were wondering, given the expected growth rate of the data industry, which companies stand to benefit the most?

For clues, we collected data on institutional money flows, and identified a list of data companies that have seen a sharp increase in institutional buying during the current quarter.

Big money managers seem to be optimistic on the growth of the companies mentioned below…do you share their optimism?

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1. Quantum Corporation (QTM): Operates as a storage company that provides backup, recovery, and archive solutions to small businesses to multinational enterprises in the United States and internationally. Net institutional purchases in the current quarter at 21.5M shares, which represents about 10.01% of the company's float of 214.80M shares.

2. Ocz Technology Group Inc. (OCZ): Designs, develops, manufactures, and distributes computer components for computing devices and systems worldwide. Net institutional purchases in the current quarter at 17.8M shares, which represents about 37.32% of the company's float of 47.69M shares.

3. Dot Hill Systems Corp. (HILL): Designs, manufactures, and markets a range of software and hardware storage systems for the entry and midrange storage markets worldwide. Net institutional purchases in the current quarter at 4.3M shares, which represents about 7.64% of the company's float of 56.25M shares.

4. Overland Storage Inc. (OVRL): Provides data management and data protection solutions for backup and recovery systems worldwide. Net institutional purchases in the current quarter at 874.4K shares, which represents about 8.22% of the company's float of 10.64M shares.

5. Radware Ltd. (RDWR): Provides application delivery solutions and network security solutions to banks, insurance companies, manufacturing and retail, government agencies, media companies, and service providers worldwide. Net institutional purchases in the current quarter at 650.1K shares, which represents about 5.61% of the company's float of 11.59M shares.

6. Isoftstone Holdings Limited (ISS): Provides various information technology (IT) services and solutions in the Greater China and internationally. Net institutional purchases in the current quarter at 3.6M shares, which represents about 12.89% of the company's float of 27.92M shares.

7. VanceInfo Technologies Inc. (VIT): Engages in the provision of information technology (IT) services. Net institutional purchases in the current quarter at 5.7M shares, which represents about 40.37% of the company's float of 14.12M shares.

8. Ness Technologies Inc. (NSTC): Provides information technology and business planning services in North America, Latin America, Europe, the Middle East, and Asia. Net institutional purchases in the current quarter at 4.9M shares, which represents about 14.56% of the company's float of 33.65M shares.

9. NCI, Inc. (NCIT): Provides information technology (IT), engineering, logistics, and professional services and solutions to federal government agencies. Net institutional purchases in the current quarter at 1.1M shares, which represents about 15.8% of the company's float of 6.96M shares.

10. Camelot Information Systems Inc. (CIS): Provides enterprise application services and financial industry information technology (IT) services in the People's Republic of China. Net institutional purchases in the current quarter at 10.4M shares, which represents about 37.91% of the company's float of 27.43M shares.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , Technology


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