Why Are SaaS Stocks Climbing Higher?

As I mentioned August 8, software as a service (SaaS) stocks have been moving higher lately. In fact, MSPmentor’s SaaS 20 Stock Index has climbed four consecutive weeks.

What’s behind the upward trend — empty Wall Street hype? Actually, no. In recent weeks, surprisingly strong earnings results have given our index members a boost. Last week’s biggest winners included Athenahealth Inc. (ATHN, +19.47 for the week ended Aug. 8), SuccessFactors Inc. (SFSF, +18.18%), Kenexa Corp. (KNXA, +16.31%), Concur Tech Inc. (CNQR, +16.17%), Taleo Corp. (TLEO, +13.18%) and Omniture Inc. (OMTR, +10.55%).

Here’s a closer look at each SaaS company and its recent momentum.

Now, let’s look at the bigger picture. Since closing at 803.04 on July 11, our SaaS 20 Stock Index has risen 14.72% to 921.58. For its year-to-date, the index is still down 7.84% — but that’s far better than in July, when the index was down roughly 20% for the year.

I’m trying my best not to hype SaaS. I do believe more and more software will be delivered through SaaS business models. But it’s still early in the SaaS game, and market gyrations will surely continue.

Still, it’s good to see a number of SaaS-centric companies delivering strong results that reinforce the SaaS business model.