Synaptics (NASDAQ:SYNA) stock has been crushing the broader market in 2021, gaining more than 50% year to date on the back of impressive growth in its Internet of Things (IoT) business. It is worth noting that the stock has managed to turn in such a solid performance despite experiencing volatility.

As the chart below shows, Synaptics got a nice shot in the arm in early May. The company's results for its fiscal third-quarter (which ended March 27) were reported, and they helped arrest its stock price slide and kick start the rally that has sent its shares higher since. A similar story could unfold when Synaptics releases its fiscal fourth-quarter results on Aug. 5.

SYNA Chart

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Synaptics has hit a purple patch

Synaptics anticipates $325 million in fiscal Q4 revenue at the midpoint of its guidance range, which would translate into a 17% increase over the year-ago period's revenue of $277.6 million. The non-GAAP gross margin is expected to jump to 56.5% in fiscal Q4 from 46.9% last year. Thanks to its improved top line and a stronger margin profile, the company expects adjusted earnings of $2.00 per share at the midpoint of its guidance, up substantially from $1.24 per share in the prior-year period.

However, it won't be surprising to see Synaptics exceed its expectations due to the terrific momentum of its IoT business, which is expected to produce 49% of its fiscal Q4 revenue. On its May earnings conference call, CEO Michael Hurlston pointed out that the company was sitting on a "strong backlog of new design wins across all our product areas." Coming to the IoT business, he added that Synaptics continues to "aggressively expand and diversify our customer base and end markets across all our product lines."

As a result of that design win momentum and the order backlog, management believes that the company's IoT segment could grow at a faster pace than the 10% to 15% industry average. That wouldn't be surprising, as Synaptics is into several fast-growing IoT niches such as home automation, smartwatches, streaming devices, video interface products, and automotive.

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Synaptics is witnessing tremendous traction in some of these areas. For instance, the new design wins scored by the chipmaker in the home automation, streaming devices, and smartwatches over the past nine months have moved into the production phase. As a result, Synaptics anticipates the quarterly revenue run rate of these products to double compared to July 2020. Meanwhile, the Touch and Display Driver Integration solutions it has sold to various auto industry players will move into the production phase soon as automakers in U.S., China, and Europe start manufacturing their new 2022 models in the fall.

The mobile and PC businesses are on the rise

Not only does Synaptics' IoT business appear to be in solid shape, the same can be said about its personal computer and mobile businesses.

The PC segment is expected to account for 27% of the company's fiscal Q4 top line, and it's on the upswing thanks to the growing demand for notebooks. Synaptics' PC business is performing ahead of expectations because of the broader PC market's strength, as well as the design wins scored by the company in Chromebooks.

It started supplying its fingerprint and touchpad chips to its first Chromebook-manufacturing customer earlier this year, and two more are expected to go into production later in 2021. The good news for Synaptics is that the Chromebook market is expected to grow by 33.5% in 2021, so the company is positioned to tap into a lucrative market. More importantly, the pandemic has given the PC market a long-term boost. Shipments are now expected to grow through 2025, according to IDC's estimates.

As such, Synaptics' PC business can keep getting better. Meanwhile, its mobile business seems all set to take off thanks to the growing adoption of OLED (organic light-emitting diode) screens. Synaptics has started to ramp up production of its new generation of OLED touchscreen controllers, which could drive meaningful growth in its mobile business. It will start shipping products for two new handset models from a Korean OEM (original equipment manufacturer), while another two design wins at Chinese OEMs will go into production later this year.

Finally, the production ramp of this year's iPhone models will provide another tailwind for Synaptics in the back half of the year and beyond. Synaptics management indicated at the end of 2020 that it is supplying touchscreen controllers for the iPhone 12, though without explicitly naming Apple (NASDAQ:AAPL). Sharp was one of Synaptics' notable customers in fiscal 2020, accounting for 12% of its total revenue. Sharp -- along with LG and Samsung -- supplies iPhone screens to Apple. All of them are Synaptics customers.

Apple is expected to boost production of this year's iPhone models by 20% to 90 million units, and that should give a corresponding lift to Synaptics' mobile business. And given the fact that iPhone sales look set up for multiyear growth, Synaptics' mobile business seems to be in a solid place.

All of this indicates that Synaptics' impressive stock market rally could continue. That's why investors looking to add a tech stock to their portfolios should take a closer look at it, especially considering that it is trading at just 16 times forward earnings as compared to the S&P 500's average earnings multiple of 36.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.