For Foolish investors who've quietly enjoyed their 57% year-to-date gains, sharing the Synaptics (NASDAQ:SYNA) story with the rest of the world may feel a bit like letting the cat out of the bag. Why? Because as impressive as Synaptics' stock performance has been this year, it pales in comparison to the touchscreen solutions provider's financial results the past year -- and it's about to get better.

With a recent acquisition opening up a whole new market and consistent year-over-year revenue growth approaching 70% a quarter, investors who take the time to learn more about the Synaptics opportunity will find it time well spent.

Who are these guys?
With a market cap of about $1.5 billion, it's understandable that Synaptics flies under a lot of investors' radars. Compared to many of its clients, Synaptics is little more than a blip on the screen. But as it's blown away earnings and revenue expectations recently, and generated revised quarterly guidance that can't help but impress, investors would be wise to explore Synaptics before the rest of the world finds out about these guys.

Synaptics' touchscreen solutions are used primarily in the non-Apple (NASDAQ:AAPL) smartphone and tablet markets. Last quarter, which was Synaptics' fiscal 2013 Q4, about 75% of its revenues came from mobile OEMs, while the remaining 25% came from the declining PC market; in other words, Synaptics has already established itself as a presence in mobile computing, something its clients, such as Microsoft (NASDAQ:MSFT), were slow to address.

Revenues in Synaptics' fiscal 2013 Q4, particularly revenues in the mobile sector, were off the charts. At $173 million, Q4's mobile revenues jumped 186% compared to last year, even as Synaptics' PC revenues declined 26% to $57 million. But with the bottom falling out of the PC market, that's hardly a result worth worrying about.

Also impressive was Synaptics jump in ready cash compared to last year. Even after completing the repurchase of 1.6 million shares of its own stock over the past 12 months, Synaptics was able to strengthen its balance sheet by $50 million compared to fiscal 2012, and now has $355 million in cash and equivalents. Generating more than $102 million in cash flow from operations will have that effect.

Gross margins for Synaptics' 2013 Q4 were up from an already impressive 46.1% to 50%, and ended the fiscal year at 49.1%, an improvement of 2.5 percentage points over 2012. Those are heady numbers to be sure -- and based on Synaptics CFO Kathy Bayless' expectations for the current quarter, investors can expect more of the same.

Lengthy client list
Conspicuously absent from Synaptics touchscreen OEMs' customer list is Apple and all its iStuff -- and Synaptics' shareholders paid for that omission last year as Apple's stock shot up into the $700 range. But with Apple's recent woes, being un-Apple has paid big dividends for Synaptics. With its new iPhone 5s and 5c flying off the shelves to the tune of 9 million units in the first three days, and its stock price approaching $500, things are looking up in Cupertino. But the days of Synaptics' fortunes being tied to Apple are long gone.

Investors will find Synaptics products in Nokia, soon-to-be-Microsoft devices, BlackBerry's new Z10 smartphones, and, let's not forget, Samsung's Galaxy smartphones. Naysayers will bring up that, outside of Samsung, Nokia/Microsoft and BlackBerry are hardly worth the time or trouble. That'd be wrong.

Outgoing Microsoft CEO Steve Ballmer has made Microsoft's plans to move to mobile clear, and even apologized (sort of) for delaying. But with new Surface Pro tablets coming, and the $7.2 billion acquisition of Nokia's devices and services biz nearing completion, Microsoft could prove to be a very valuable client as consumers look for non-Apple mobile alternatives. And Samsung? Well, it's Samsung.

From here
Synaptics' recent acquisition of Validity Sensors, a provider of fingerprint ID solutions, is a huge win for the company as the mobile market shifts its attention to this new-ish technology. With Synaptics' list of clients already onboard, upselling Validity Sensor solutions to current customers should give revenues an almost immediate shot-in-the-arm. The $92.5 million Synaptics is paying for Validity -- though it could reach as high as $255 million if sales targets are met -- could end up being a steal when all is said and done.

If long-term growth is part of your Foolish investment strategy, you'll find the time spent learning more about Synaptics was worth every second.


Fool contributor Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.