A little before 1 p.m. EST on Monday the Nasdaq Composite rose above the 5,000 level for the first time in fifteen years, signifying the tech sector’s complete recovery from the so-called “dot.bomb” collapse that sent the index reeling below 1,200 less than three years after reaching its all-time high in March of 2000.

I still remember where I was during the second week of April that year when the Nasdaq began its perilous descent. At that time my kids were out on spring break from elementary school so we decided to take a road trip to Myrtle Beach in search of warmer climes. Unfortunately, an “Albert Clipper” cold air mass was pushing very cold air down the east coast that week, spoiling the opportunity to enjoy the beach.

In fact, it was so chilly outside so we spent a lot of time indoors watching television and reading books. After my kids (thankfully) tired of binge watching episodes of SpongeBob SquarePants, I would change the channel to CNBC to see what was happening in the stock market, and each day the news was worse than the day before.

It is difficult to imagine now, but during that time the Nasdaq Composite dropped from an intra-day high of 5,132 on March 10^th to a low of 3,265 on April 14^th; a decline of 36% over the course of only six weeks! Rather than wait until my prepaid hotel reservation expired that weekend, I rounded up the family and drove home that Thursday wondering how much worse it could get.

Of course, it turned out it could get a lot worse as the Nasdaq continued to drop over the next two years to less than one-fourth of its March 2000 peak. With the benefit of hindsight we now realize that many of those stocks were grossly overvalued, priced on the expectation of profits many years into the future that never materialized.

So here we are fifteen years later approaching that fateful day in March of 2000 when the index was last at the level it is today. For that reason some investors are asking, do we have reason to fear another historic collapse, or this time different?

Naturally, we at STI believe strongly that there is very little comparison between market conditions today versus those present fifteen years ago. While there are some tech stocks that enjoy high valuations despite delivering very little (if any) profitability, the vast majority of them have very solid revenue models in place that deliver real value.

However, we also feel that you need to avoid companies that can not grow revenue and deliver profits at the same time. There will be less investment capital to spread around the stock market in the years to come now that Quantitative Easing is over here in the U.S. and 10,000 baby boomers retiring every day, which is why we employ a disciplined approach to picking stocks.

We won’t always beat the market; last week as a case in point as seen in the table below, but over time our quality companies will gradually separate themselves from the pack, just as they did last year.

NASDAQ Composite Index:                                                                         

Friday, February 27 = 4,963.53                                                

Trailing 12 months = + 16.4%                                        

Trailing 7 Days = + 0.2%                                      

Trailing 4 Weeks = + 5.3%

Next Wave Portfolio Update—Nimble Storage

By Rob DeFrancesco

Despite reporting above-consensus results for the fiscal fourth quarter (ended January), shares of Nimble Storage (NMBL) last week sold off because of short-term concerns about guidance for the current quarter being only in line with expectations.

Sellers are overlooking the fact that Nimble’s underlying business momentum remains strong (revenue in fiscal 2015 expanded 81%) and that the company is on track to end cash burn after fiscal Q1 (April); breakeven on the operating income line is still expected by the end of the current fiscal year (next January).

Nimble’s long-term growth story remains intact, helped out by the recent addition of Fibre Channel technology to the platform. Available for just one full quarter, Fibre Channel already represents more than 10% of Nimble’s bookings.

Fibre Channel is helping to improve overall deal win rates. In fiscal Q4, Nimble added 660 new customers, ending with a total base of 4,979 accounts, up 88% from the year-ago level. There are now 83 customers deploying Fibre Channel across a wide range of workloads, with more than 70% of these accounts new to Nimble.

Fibre Channel is also pushing up average deal sizes and leading to more Global 5000 account wins. The number of bookings worth more than $100,000 in the latest quarter rose 131% year over year; bookings from Global 5000 accounts more than doubled. Nimble in FQ4 added 41 new Global 5000 accounts (a 15% sequential increase), bringing the total count to 302, up 65% year over year.

Nimble continues to gain traction with cloud service providers (the customer count over the past year jumped 103% to 503), a group increasingly switching over to next-generation storage platforms from legacy solutions. Nimble not only offers 3x to 5x better performance/capacity per unit dollar spent when compared to older solutions, it also gives cloud service providers the ability to scale from small initial levels, as opposed to other vendors requiring big up-front commitments. In addition, Nimble’s InfoSight storage management engine’s remote capabilities improve overall operating efficiencies.

In fiscal Q4, revenue advanced 64%, to $68.3 million, beating the consensus estimate of $66.5 million and the high end of the guidance range of $65 million to $67 million. Product revenue of $58.6 million rose 58%. Gross margin held steady at 67.2%. Deferred revenue totaled $74.4 million, up 122% from the year-ago level.

The partner channel continues to be a significant growth driver for Nimble. It helps that the number of accredited reseller engineers doubled year over year. With a larger number of resellers now trained on the platform, more vendors are able to expand their Nimble practices and take on even greater roles when it comes to getting deals closed.

In the latest quarter, 38% of all new customer acquisitions had channel partners driving at least 75% of the sales engagement, with minimal direct involvement from a Nimble sales team. This freed up Nimble direct sales reps to focus on winning larger enterprise accounts, which tend to have longer deal cycles.

For fiscal Q1, the midpoint of the revenue guidance range of $68 million to $70 million came in only slightly above the consensus estimate of $68.7 million, disappointing some traders.

But the more important takeaway from the latest report: Nimble remains one of the fastest growing storage vendors (revenue for fiscal 2016 is expected to be up at least 44%), now with a broader portfolio (thanks to Fibre Channel) and a lot more opportunity to aggressively add larger customers and take share in its $20-billion total addressable market.

Nimble Storage remains a ‘Buy’ in the Next Wave Portfolio up to $28.