SaaS 20 Stock Index Continues to Climb

The SaaS 20 Stock Index climbed 1.86 percent for the week ending April 17, pushing software as a service stocks to their highest levels since mid October. Here’s a look at the weekly SaaS winners and losers.

This week’s SaaS 20 Stock Index winners included:

Constant Contact (CTCT, +16.65%): Shares in the email marketing company have been rising steadily since mid-March, and apparently investors are feeling upbeat about Constant Contact’s forthcoming Q1 results, which will be announced May 1.

RightNow Technologies (RNOW, +8.71%): Though not the size of Salesforce.com, RightNow seems to be emerging as a break-out SaaS software provider. Nearly 2,000 businesses and government agencies leverage the company’s CRM-related software. And shares have been rallying ahead of RightNow’s Q1 results, which will be announced April 29.

Google (GOOG, +5.30%): This Barron’s article recaps Google’s most recent quarterly results, announced April 16. Yes, the company remains very dependent on Google Adwords revenue. But we also believe the Google Apps Reseller program is gaining momentum with solutions providers.

This week’s biggest SaaS 20 Stock Index decliners included:

SuccessFactors (SFSF, -6.51%): Although shares dropped on the week, the on-demand HR/talent management software provider has recruited a Yahoo search veteran to head up product management.

Intuit (INTU, -3.98%): No cause for panic here, but Intuit shares dropped a bit because analysts see a “challenging QuickBooks environment.” Translation: The recession is hurting or limiting demand for QuickBooks. Intuit is part of our index because of the company’s growing online software business.

The Bigger Picture

As a whole, SaaS stocks seem to be recovering faster than the overall stock market. Our SaaS 20 Stock Index fell roughly 50 percent in 2008, and another 10 percent in the first few weeks of 2009. But as broader markets bottomed out, investors seemed to move even more aggressively into oversold SaaS stocks.

I’m not suggesting that the rally will continue. But the recent SaaS stock momentum in undeniable.

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