One Winning Stock Often Points To Another.(THE SMART INVESTOR)(IBD INVESTOR PROFILE)

Byline: DAVID SAITO-CHUNG

Having been in the stock-picking business for five years, Jeff James has found a key truth about the market: Where there's gold, you can probably find more of it close by.

In 1997, James joined Chicago-based Driehaus Capital Management as a computer hardware analyst.

One of the most exciting stocks his team found back then was QLogic. The stock shot out of a long base to new highs in mid-July 1998. Driehaus got in as it quickly scaled to new highs. By the Nasdaq's peak in March 2000, QLogic had grown more than 3,200%.

At the outset, Driehaus asked James to find out all he could about why business at QLogic was so good. James found plenty. Fibre channel was a fast-growing technology used in storage area networks, and QLogic led the way. In 1997 and 1998, earnings and sales took off.

During his research, James discovered that QLogic had been spun off by another company. In 1999, this one also began to sport strong growth. James' team hopped into this company too in August 1998 and rode it until April 2000 for another big profit. Its name? Emulex.

Finding another fast grower in a turbocharged industry group was one of the early lessons James got while reading IBD.