The 10 Best Tech Stocks of 2010

At the end of each year, I like looking back to see what I can learn from the past year's best and worst performing stocks. I as well key in on the tech sector since I'm the Internet and innovation editor for The Motley Fool.

The spinoff

After the spinoff, IDT however operates in two primary markets: telecom and energy. The spinoff and restructuring turned around IDT's revenues, something investors were ecstatic to see. The company declared a dividend last month payable out of its newfound cash flow. Together, the company announced it would spin off its energy business, Genie Energy, furthermore unlocking shareholder value. The firm as well got a big boost Friday when it crushed its first-quarter revenues. Last year was a real bottom for the company, and investors who had been following along could have made a ton of money.

Isilon, a maker of network-attached storage, is the second top-performing stock of 2010. On Nov. 15, the company announced it is being acquired by EMC for $33.85 a share.

Leader in the online telephone industry

Acme Packet is a leader in the online telephone industry. It makes devices called "session border controllers," which greatly increase the quality of Internet phone calls. The devices allow VoIP (Voice over Internet Protocol) customers to talk to one another, bypass firewalls, and use some of the familiar features of regular phones. This past year, Acme Packet has added a few large new customers and more than doubled its profit from last year.

MIPS Technologies, a designer of microcontrollers for digital TV and other consumer devices, is the fourth top-performing stock of 2010. CEO Sandeep Vij believes MIPS is then-positioned for huge growth through the smartphone market. This past quarter, MIPS beat Wall Street's revenues expectations by 70%. The Street expects revenues to grow 19% a year for the then and there five years.

VirnetX, an Internet security specialist, rounds out the best five tech stocks of 2010. This summer, the firm won a $200 million settlement against Microsoft, which subsequently became a licensee of VirnetX. Following that, the firm sued four more companies, including Apple and Cisco. With this year's buyout of security specialist McAfee by Intel, many investors are hoping the firm is bought out.