2009: Stellar Year for Data Center Stocks
January 4th, 2010 By: Rich Miller
As the stock market rebounded in 2009, few sectors bounced better and higher than the data center industry. Share prices of many key players in the sector finished with triple-digit gains for the year, while even the laggards easily outperformed the major indices.
At the close of 2008, the share prices of many providers were battered amid credit worries and concerns about the capital-intensive nature of the data center business. But companies continued to invest in mission-critical infrastructure, and established players were able to find expansion financing amid the credit crunch.
All of the companies we track in our Data Center Investor performance chart managed gains of 53 percent or better for the year. Meanwhile, the Dow Jones Industrials rose 18.8 percent, the S&P 500 added 23.5 percent, and the NASDAQ 100 improved by 43.9 percent. Here’s a look at the year’s top performers:
Leading the pack was DuPont Fabros Technology (DFT), one of the real estate investment trusts focused on the data center sector.
DuPont Fabros shares were hit hard in late 2009 when the company halted its data center construction program. But the company was soon able to put together the financing to complete construction on huge facilities in Virginia and New Jersey, and was boosted by strong leasing in its core market in northern Virginia.
Also seeing triple-digit gains were hosting providers NaviSite (NAVI), Rackspace Hosting (RAX), Switch and Data (SDXC), Savvis Inc. (SVVS) and Equinix (EQIX). Like DuPont Fabros, managed hosting specialist NaviSite bounced back from liquidity concerns early in 2009, while Switch and Data was boosted by its pending $700 million acquisition by Equinix.
Content delivery specialists Akamai Technologies (AKAM) and Limelight Networks (LLNW) has less spectacular gains for the year but easily outperformed broader market indices. The 53 percent improvement in shares of Digital Realty Trust (DLR) trailed other major players in the industry, but primarily because the data center REIT’s stronger bottom line, which made it the best performer of 2008 as it retained its value better than its cohorts in the late-year downturn.
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