The Fastest-Growing Technology Companies in America

These companies prove technology is still a growth business.

Buried beneath the downer headlines about massive layoffs and struggling businesses, there is some good news. A select group of tech companies--the 25 Fastest-Growing Technology Stocks in America--is thriving despite the tough economy.

Thirteen companies are making their Fast Tech debuts this year, including Apple, which earned almost $5 billion on $33 billion in sales in its latest 12 months.

The fastest-growing company, based on five-year annualized sales growth, is top-ranked Illumina, which more than doubled its revenues each year for the past five years. Illumina was on our 2007 list, but missed the mark last year because it lost money in 2008. Second-ranked Google has finished first or second in its four years on the Fast Tech 25.

Last year's list of the 25 fastest-growing tech stocks weathered Wall Street's storm somewhat better than the overall market. The class of 2008 Fast Tech stocks fell 30% over the past 12 months, while the Nasdaq 100 Technology Sector Index and the S&P 500 each suffered losses of 39%. This marks the sixth consecutive year--since we first published the Fast Tech list in 2003--that each new group of Fast Tech companies outperformed the market in the subsequent 12 months.

Two of last year's entries, DRS Technologies and LifeCell, were taken over before the end of our one-year performance-measuring period. Both acquisitions came at premiums relative to their January 2008 prices.

Only one 2008 Fast Tech company, Genentech, finished the full 12-month stretch with its stock in positive territory, a 19% gain. The $11 billion (revenues) biotech returns to this year's list with eight other returnees, including Cognizant Technology Solutions, the only company to qualify every year since 2003. More than half of this year's Fast Tech companies are newcomers for 2009. Of the nine repeat performers from last year, five are software developers.

To make the list, companies must have latest 12-month revenues of $25 million or more, annualized sales gains of at least 10% over the past five years and be profitable over the past 12 months. In addition, we require a Thomson IBES long-term consensus profit forecast of at least 10%, annualized. We also exclude companies with significant legal problems or with possible accounting or corporate governance issues, based on scoring data from Audit Integrity of Los Angeles.

Last year, we introduced the Fast 15, a group of companies that may not have met all the stringent requirements of our main list, but appeared to be on track to break into the top ranks at some future date. This year, we tightened our screening criteria for this second group of stocks; these companies must now meet all the criteria of the Fast 25, except we screen them on the basis of three-year sales growth rather than five-year.

On top of our 2009 Fast 15 is OSI Pharmaceuticals, a biotech company specializing in drugs for cancer, diabetes and obesity. Over the last year, the company has registered earnings of $121 million on $365 million in net revenue. On average, OSI has more than doubled its revenues in each of the past three years.

The Fastest-Growing Tech Companies

© Courtesy of Illumina

No. 1 Illumina

Illumina provides equipment and software for genetic analysis, such as DNA sequencing and gene expression. Scientists at universities and government agencies as well as in pharmaceutical and biotechnology companies use Illumina's tools for disease research, drug development and the development of clinical tests.

© Paul Sakuma/AP

No. 2 Google

"Googol" is the mathematical term for the number 1 followed by 100 zeros. Google the company traces its roots back to 1995, when founders Larry Page and Sergey Brin developed an online search engine. The company generates revenue by delivering online advertising tied to keyword searches, and now offers a multitude of additional services such as maps, phone-book listings, stock quotes, financial data and news.

© Paul Sakuma/AP

No. 3 Salesforce.com

Former Oracle exec Marc Benioff founded Salesforce.com in 1999 to provide on-demand customer relationship management software. Delivered over the Internet, Salesforce.com's 51,000-plus customers can receive and exchange customized, real-time sales and customer information without the overhead associated with the purchase and maintenance of software and information technology (IT) infrastructure. Companies use this software to manage their sales, marketing and customer service and support operations.

© Jeff Chiu/AP

No. 4 iRobot Corporation

Automated devices sold by iRobot help consumers and security authorities with mundane as well as dangerous chores. Products offered by the Bedford, Mass., company include Roomba, a robotic household vacuum cleaner; Scooba, a floor washer; and Looj, a rain gutter cleaner. The company's PackBot Scout is a surveillance robot for the police and military.

© Courtesy of Techwell

No. 5 Techwell

Techwell, a fabless semiconductor firm headquartered in San Jose, Calif., designs integrated circuits for digital video applications used in security surveillance systems. The company's products are also used by the consumer, personal computer and automotive markets. Applications include in-car LCD displays, advanced TVs and DVD Recorders.

Click here for the full list of the 25 Fastest-Growing Tech Companies