After posting a dismal performance in the first half of 2008, software as a service (SaaS) stocks are rallying. In fact, MSPmentor's SaaS 20 Stock Index is up 14.7 percent since July 11.
Best of all, Wall Street hype isn't driving the recent SaaS rally. Instead, rapid revenue growth and solid earnings from multiple SaaS companies have restored investor faith in this emerging technology sector.
For the week ended August 8, several SaaS-centric companies -- including Athenahealth Inc. (NASDAQ:ATHN), SuccessFactors Inc. (NYSE:SFSF), Kenexa Corp. (KNXA), Concur Technologies (NASDAQ:CNQR), Taleo Corp. (NASDAQ:TLEO) and Omniture Inc. saw their stocks rise sharply.
Still, it will be difficult for the SaaS 20 Stock Index to fully overcome some of its early year declines. For its year-to-date, the index is still down 7.84%, MSPmentor reports.
I'm trying my best not to hype SaaS. It's early in the SaaS game, and market gyrations will surely continue. But recent financial results show that the SaaS market is heading in the right direction.