Impinj (PI) is put in the chip stock basket, but the real theme here surrounds the Internet of Things (IoT), explains Mike Cintolo, growth stock expert and editor of Cabot Top Ten Trader.

The firm’s offerings allow businesses of various shapes and sizes to connect basically everything (potentially trillions of items) to the cloud. The benefits here are potentially huge, ranging from inventory and fulfillment visibility, loss prevention for checkouts at retailers, far more efficient supply chain operations and much more.

The firm is best known for its radio identification endpoint ICs (it dubs them RAIN), which cost just pennies, are battery free, can work without a line of sight, and can be read at rapid speed (1,000 items per second at 10 meters). Impinj also offers readers, gateways and software, including a new Authenticity platform that can authenticate everyday items (counterfeiting is a huge issue globally).

All in all, the firm says it’s the leader across all its product lines, having sold well north of 60 billion endpoint ICs and plenty of its other offerings, too. Supply has been an issue here, but we’re not sure that’s a bad thing — according to management, demand for its endpoint ICs has run at least 50% higher than what Impinj can supply for six straight quarters, and the firm sees some easing of supply restraints coming up.

And even before that happens, business is picking up, with endpoint IC revenue (which makes up three quarters of the total) hitting its fourth straight quarterly record in Q3, rising 19% from the prior quarter, with another sequential increase expected in Q4.

The overall numbers are just as impressive: Sales growth is accelerating (17%, 27% and 51% the past three quarters), while earnings took off in Q3 (34 cents a share, up from a loss a year ago and double estimates), with analysts looking for another big bottom-line gain (up 40%) in 2023.

Now, there are some customer concentration issues here (it sells to OEMs, and a couple of them make up nearly half of revenue), which, combined with supply worries, does raise the risk of some major potholes. That said, the top brass is on record saying demand should remain strong into 2023, and Wall Street sees great things ahead.

PI made a huge comeback in the summer, pulled back reasonably into the fall and then exploded higher on earnings in late October — and, impressively, has held those gains and even nosed to new highs since then. Pullbacks will come, of course, but I’m thinking PI looks like a fresh leader should the market get its act together.

Subscribe to Cabot Top Ten Trader here…