Synaptics: A Display of Growth

09/30/2014 7:00 am EST


Gregory Dorsey

Editor and Portfolio Contributor, The Leeb Group

Last year, the world added more than half a billion mobile devices and connections. And it's still early days as businesses increasingly turn to mobile devices, suggests Gregory Dorsey in The Complete Investor.

A great way for investors to benefit from this explosive growth is through Synaptics (SYNA), the leading global developer of custom-designed user interface solutions for mobile computing, communications, and entertainment.

Its customers make up a veritable who's who of mobile electronic devices makers including Apple, Samsung, HP, LG, Nokia, and Sony.

If you use a laptop or smartphone, chances are you've come into contact with Synaptics, whose touchpads and clickpads are found on around 70% of all laptops in use today. It's also the Number One suppler of touch screen controllers to the mobile-display market.

Synaptics is also cashing in on the demand for improved device security with its fingerprint authentication sensors to protect a user's identity.

Such security features will be critical to making possible the exponential growth of retail and banking transactions over mobile devices that is expected to occur in coming years.

Even after nearly doubling in the past year, the shares remain attractively priced—they trade at 16 times year-ahead earnings—with profits likely to grow in excess of 20% annually for the next several years.

Management sees good things ahead and recently increased its buyback program to $200 million through mid 2016. With a hot market, that will continue to grow rapidly for year. We are adding SYNA to our Small-Cap model portfolio.

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