Top 10 Best Performing Software Stocks of 2005

It was good year to be providing search related software or to be the perceived category leader in a "hot" space such as Linux or SaaS.  Large Cap stocks need not apply to the winners circle either as almost all of these firms had valuations under $1BN to start the year.

Neoware, a company focused on thin client computing, took the top spot even though it is now arguably a hardware company as a result of all its recent acquisitions.  It doesn't speak much for the software sector when the big winner is really a hardware company but perhaps it's emblematic of the larger identity crisis that software finds itself stuck in these days.

To be eligible for this list companies simply needed to start the year with at least a $50M market cap and to be primarily focused on developing and selling software.  And your winners are:

1. Neoware
   Price Change: 150% Ticker:NWRE
   Comment: Neoware is consolidating the so-called "thin client" space by buying up every software and hardware player it can find.  It is really more of a hardware company now, but they started out the year more of a software play so they sneak into the top spot.
2. Autonomy
   Price Change: 133% Ticker:AUTN
   Comment: British unstructured search provider came to life in 2005 largely thanks to all of the investor enthusiasm in search related companies thanks to Google.   Merged with Verity at the end of the year to build market heft.
3. Convera
   Price Change: 113% Ticker: CNVR
   Comment:  Yet another enterprise search vendor that saw tremendous Google inspired investor enthusiasm in 2005.  Something tells me the party won't last.
4. Logility
   Price Change: 105% Ticker: LGTY
   Comment:  Supply chain software provider saw shares soar late in year after reporting strong earning and lifting forecast.  Perhaps the supply chain sector may not be dead after all.
5. Redhat
   Price Change: 104% Ticker: RHAT
   Comment: Linux poster child recovered from 2004 missteps to post strong 2005 growth.
6. SPSS
   Price Change: 98% Ticker: SPSS
   Comment: Business intelligence software vendor finally put restatements and accounting issues from 2003 behind it and saw its multiple recover.
7. Blackboard
   Price Change: 96% Ticker: BBBB
   Comment: Saw strong year after rocky first year on the market in 2004.  Increasingly dominates higher education software market.
8. Salesforce.com
   Price Change: 89% Ticker: CRM
   Comment: Poster child of SaaS movement saw continued gains at the expense of Siebel and others in 2005.
9. TriZetto Group
   Price Change: 79% Ticker: TZIX
   Comment: Provider of software to healthcare industry saw strong results thanks to strong industry demand.
10. Liveperson
    Price Change: 78% Ticker: LPSN
    Comment: Online CRM provider saw shares surge as it broke back into the black and as its customers (online retailers) started spending again on infrastructure.