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Regime change has quietly taken place on Wall Street in the first three months of the new year as an unexpectedly powerful battalion of small Internet, technology, biotech and retail stocks has shoved aside gold, regional bank and health insurance shares as ruling party.

There's no telling whether the invasion of these mostly speculative, low-priced stocks will persist, but their move to power suggests a return of interest in risk among investors. You won't find more than one or two well-known names in the list of the top 30 stocks priced at $3 or more that have gained the most this year. This can be good or bad, depending on your point of view, as high levels of speculation are more characteristic of blow-off tops than of significant bottoms, according to researchers.

To understand more about the year's best-performing stocks, I have divided them, as I have in the past, into two baseball-like leagues: the

New York Stock Exchange

and the


. This is different from the normal partitions that investment consultants have created for stocks, which are size, sector and growth vs. value. But it helps us see momentum stocks along the risk spectrum as the most-established, somewhat-established and least-established names. The NYSE stocks are cheaper and larger, for the most part, while the Nasdaq names are primarily "story" stocks with high hype-to-earnings ratios.

If you're bullish and think that the year is going to turn out great, then these are the stocks you should expect to see with 1,000% gains by around Christmastime. If you're bearish, then these are the ones you'll want to start laying plans to short to zero. I'll offer my handicapping along the way, and will check back each quarter to see how the season is progressing.

Nasdaq Key Players

Let's start with

Ask Jeeves

( ASKJ). The best-performing stock in our leagues so far in 2003, Ask Jeeves was up another 5% on Monday. And what does it do? A classic Internet play, it provides about 12 million people a month with answers to plain-English queries on the Web.

Revenue has steadily increased from much lower levels over the past year to $74 million over the past 12 months, but it still doesn't actually make money. Analysts expect that to change over the next year as they have been surprised to discover that rather than experiencing no growth at all in traffic over the past quarter, it squeaked out a 4% increase. Kaufman Bros., which rates the stock a hold, sees the potential for 33 cents a share in earnings in 2004, but its reasoning reads like a sound clip circa 1999: "To the extent that the company's recently initiated advertising campaign generates higher-than-expected traffic growth, our estimates and valuation could prove to be conservative."

Ask Jeeves is a crypto-play on privately held Google -- a way to participate in the rejuvenated move toward search-based online advertising. Maybe I'm just jealous, but it's hard to imagine how this stand-alone also-ran will compete effectively with



, the MSN unit of

TheStreet Recommends


(MSFT) - Get Microsoft Corporation Report

, and with Google itself. Insiders were dumping the stock like mad in February and April, getting rid of 530,000 shares at an average price of $6.70. At the price in the high $8s, rate this one "Asking for Trouble." (And, for the record, Microsoft is the parent of MSN Money.)

Next, we have

Align Technology

(ALGN) - Get Align Technology, Inc. Report

, the second-best performer, with a 119% jump in the first three months of 2003. The company developed and sells the Invisalign system for orthodontics. Instead of using metal mounts cemented on teeth that are joined by wires, it uses clear spacers to move teeth into alignment. Supermodels normally smiles on small companies that move up on patented advances in medical technology, but the price you pay is still important.

Revenue has steadily advanced since the company went public, to $75 million in the trailing 12 months, but net income continues to lag: The company lost $68 million in the past year. Deutsche Bank is bullish on the stock, announcing in a February report that cash is ample, that both manufacturing and expenses are under control and that progress toward break-even results in the last quarter of this year is on track. Bear Stearns reports that 5,000 orthodontists submitted cases last quarter, up from 4,200 in the prior period and 2,400 in the year-ago period. General-practice dentists have grown to 1,600 from 100 in the fourth quarter of 2002, compared with the year-ago quarter.

While the stock was undoubtedly interesting to early believers at the $1.30 level where it rested last November, or $3.50 where Bear Stearns and Deutsche made their bullish calls, it's now trading at levels that seem to ensure disappointment if a souring economy dampens patients' enthusiasm for cosmetic dentistry. Brace for a new opportunity to put your teeth into this one in the $3 area in the weeks or months to come, though short interest in the stock is high, potentially allowing it the chance to squeeze toward $8 before this move is over.

Leaders on NYSE's Roster

On the NYSE team, perhaps the most interesting name is

Zarlink Semiconductor

( ZL). Formerly known as Mitel, the Canadian company makes chips and laser components used in networking gear made by companies such as


( ALA) and

Cisco Systems

(CSCO) - Get Cisco Systems, Inc. Report

, as well as, in a medical division, chips for hearing aids and pacemakers. Revenue and income are flat to worsening, as you might expect, but the company has generated some excitement around a chipset oriented toward the digital satellite and cable set-top box market.

In late March, the company announced that Fuzhou ZhuoYi Electronics, reportedly China's leading satellite TV equipment manufacturer, had selected one of its demodulation chips for a new satellite receiver set-top box. The set-top-box market has been waning in the U.S., but analysts at Raymond James contend it is growing prodigiously in Europe and Asia and will help Zarlink meet goals of 9% sequential quarterly growth throughout 2003. The case seems a little far-fetched to me, as competitors the size of


(STM) - Get STMicroelectronics NV Report

are intent on dominating the space and will cut prices viciously to get there. In a frothy market environment, the heavily shorted shares Zarlink could double to the $8 area that it inhabited during the middle of last year, but there are likely to be many sellers standing in that line.

I'll keep an eye on all of the players in the league as the year presses on. If you would like to offer your thoughts about any, please send mail to

Jon D. Markman is senior investment strategist and portfolio manager at Pinnacle Investment Advisors. While he cannot provide personalized investment advice or recommendations, he welcomes column critiques and comments at At the time of publication, his fund was long BioMarin Pharmaceuticals and short Alcatel, but positions can change at any time.