What happened

Shares of Silicon Laboratories (NASDAQ:SLAB) gained 18.8% in October 2017, according to data from S&P Global Market Intelligence. The two-part surge launched from some bullish analyst reports and took another leap when the company reported solid third-quarter results.

So what

Two weeks before the earnings report, two different analyst firms raised their price targets for Silicon Labs from $85 to $95 per share. Both analysts cited positive long-term margin trends and good-looking growth opportunities in the chipmaker's Internet of Things segment. Share prices rose 5% that day.

The earnings report proved these bullish analysts correct, showing 12% sales growth and stable earnings thanks to a 23% groundswell in IoT sales. Silicon Labs' stock took another 6% leap over the next two days as analysts and investors digested the good news.

A red charting arrow bounces a couple of times before launching skyward off a trampoline.

Hop, skip, and jump! Image source: Getty Images.

Now what

More than 70% of Silicon Labs' total sales now come from markets the company has identified as long-term growth drivers, such as IoT and data communications. The company is a leader in oft-overlooked market segments such as timing controllers for high-speed networking products, power management chips for rechargeable battery packs, and mixed-signal sensor packages that help computers read what's going on in the physical world.

Armed with this portfolio of high-volume order magnets, the company looks poised to deliver significant growth for years to come. Shares do look expensive, trading at 56 times trailing earnings and 26 times free cash flows, but I'll keep an eye on Silicon Labs in case the stock takes a haircut for no good reason. These things do happen, especially to high-octane growth stocks like this one.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Silicon Laboratories. The Motley Fool has a disclosure policy.