BOSTON (TheStreet) -- In an accelerating economic recovery, technology stocks tend to outperform. But the popularity of the sector is deterring many investors. Momentum technology stocks, such as F5 Networks (FFIV), which plunged 23% last week, are volatile. Still, technology is the highest-rated U.S. sector for 2011, based on analysts' mean ratings. Researcher Jefferies favors the following six stocks, which it expects to outperform the market over 12 months. Below, they are ordered by predicted upside, from plenty to most.
4. Concur Technologies ( CNQR) is a niche software company, focusing on the business travel market. Its programs track employee expense purchases, ensuring accuracy and validity, reviewing the charges and then reimbursing employees, all through a mobile application. Its different software offerings are sold to small-, medium- and large-businesses. In the past three years, Concur has grown its revenue 31%, annually, on average, and amplified net income 36% a year, on average. On Jan. 13, Concur announced plans to acquire TripIt, a provider of mobile trip management solutions, for $82 million. TripIt's revenue is modest and the deal will hamper the operating margin. Still, it offers a growth venue. Jefferies believes that Concur will "be able to achieve the growth acceleration that management implies for 2011, which will be a scarce asset." Its $58 target suggests a one-year gain of 22%. However, the stock is priced for growth, commanding a forward P/E of 46 and a cash flow multiple of 34, 96% and 77% premiums to software industry averages. Jefferies is among the few bulls on Concur. Just six, or 24%, of researchers in coverage rate the stock "buy." Goldman Sachs, ranking it "neutral", offers a lofty $65 target.
2. Google ( GOOG) owns the world's most popular search engine. Once a top-performing tech stock, Google gained 11% in 12 months and is flat over a three-year span, which seems strange, considering that it grew net income by 26% a year, on average, over that period. As the company grew, its stock multiples contracted, thus it is now at an historical discount, costing 23-times trailing earnings, compared to a five-year average of 32. Google reported quarterly results last week, beating the consensus adjusted earnings estimate by 8.3% and the sales target by 5.1%. It exceeded the historical beat rates of 5.9% and 3%. However, the recent announcement that Eric Schmidt will be stepping down as CEO and transitioning to executive chairman so that Larry Page can take the helm has upset some investors. Schmidt will supposedly focus on mergers and acquisitions, a worthwhile endeavor, considering the company carries nearly $32 billion of net liquidity (cash minus debt). Jefferies boosted its 12-month price target to $800 in response to Google's solid fourth-quarter numbers. It has the highest projection on the Street. UBS is next highest, with a $780 12-month mark. An impressive 84% of researchers rate Google's stock "buy."