High Flying Bay Area Stocks (AAPL, NFLX, OPEN, CRM, VMW)

Many successful investors preach the importance of familiarity when making investment decisions - invest in what you know. For many people, this means investing in stocks of companies that are within their geographic area. Some areas of the country are obviously more ripe than others when you are looking for great, local, companies in which to invest. One of the premier geographic areas is the San Francisco Bay. Just imagine if you had been a Bay Area investor who focused exclusively on local companies over the last 20 or 30 years! Your results would likely make other investors blush with envy. This area has produced some of the most dynamic, transformative, and fast growing companies in the history of the world.Can you imagine being an early investor in Intel

? Or how about Apple

or Hewlett-Packard

? So what are some of the hottest stocks in the Bay Area right now? Even in these tough markets, there is no shortage of them. These high growth stories could potentially become the next technology goliath. In fact, one of the hottest stocks in the world right now is already a King Kong sized juggernaut - but it just keeps growing. The company of course is Apple (

). Steve Jobs' outfit has grown from humble beginnings into a $286 billion giant. The scary part? Apple does not have a dominant market share position in most of its product segments. Furthermore, most of the markets for these products are still growing at a torrid pace. This means that Apple is rapidly growing its share of the market in markets that are growing rapidly. Let that sink in for a minute. Despite the $311 price tag on AAPL shares, this company is not terribly expensive on a valuation basis. It trades at a trailing P/E of 20.54, a forward P/E of 14.12, and a PEG ratio of 0.83. The latter of these ratios really catches the eye. The PEG ratio divides the stock's price/earnings ratio by its expected growth rate. A PEG ratio of 1 indicates that a stock is likely fairly priced, if not downright cheap. It is not often that investors have the opportunity to buy the world's most innovative company at a P/E ratio which is less than its growth rate. The next Bay Area stock that is on absolute fire is Netflix

. The chart for this name is jaw dropping. Since its IPO in 2002, the stock has gained around 2,300%. Over the last year NFLX is up 250%. Year-to-date, it has gained almost 275%. You read that right. This is probably the absolute hottest stock in the world. It is expensive at 54 times forward earnings, but this is the Ferrari of stocks right now. Ferrari's may be expensive, but you pay for the performance. If you are in the market for a high-octane performer, you buy NFLX. The hits just keep coming for Bay Area stocks. Next up is Open Table

. This company provides a solution that forms an online network connecting reservation-taking restaurants and diners. Open Table did its IPO in 2009 and if its early growth trajectory is a sign of things to come, watch out! It has surged over 155% since it began trading on the NASDAQ. Year-to-date the stock has gained 188%. The trajectory is unreal, and with a market cap of only $1.69 billion there is plenty of room for growth. Open Table (

) may become another Bay Area gem in the not-too-distant future. The next sizzling Bay Area stock that should be on investors' radar is VMWare

. This name is on fire! Over the last year, VMW share have risen 94%, including 92% in 2010. VMware is a provider of virtualization solutions from the desktop to the data center and is one of the leading cloud computing stocks. Get ready to pay around 45 times next year's earnings for VMW, but that may be a bargain considering the likely future growth of the cloud space. The final Bay Area company that is lighting up trading screens from Wall Street to the Silicon Valley is salesforce.com

. Another leading play on cloud computing, it looks like CRM could go to the moon. Since its 2004 IPO, the shares have gained 792%. Year-to-date, CRM is up another 91%. The company currently has a market cap of $18.52 billion. The shares trade at a nosebleed forward P/E of 92, which suggests that investors are clamoring to get into this high growth area of the technology industry. CRM is already in the "clouds," but it looks like it might continue to climb higher, higher, and higher. All investors in search of the elusive "alpha" in this tough market should be casting their eyes to the Bay area. The companies in this region have been generating market beating returns for decades, and every now and again, those gains turn into life changers. Whether your trading setup is just a stone's throw from the Golden Gate bridge, or you are trying to beat Wall Street from an Iowa dorm room, the key to untold stock market fortunes may be residing in Northern California.