Take a look around your computer station. Whether you're at work or at home, chances are decent that you have a keyboard, a mouse, or maybe a pair of speakers made by Logitech (NASDAQ:LOGI). The Swiss company has a long history in computer peripherals, augmented in the last couple of years with a lineup of Apple (NASDAQ:AAPL) iPod accessories -- maybe you have some of those speakers, headphones, or sundry gadgets, too.
And if you haven't bought any Logitech wares lately, plenty of other folks have. In its first quarter trading direct shares rather than ADRs on the Nasdaq (NASDAQ:NDAQ) Global Select market, the company delivered stunning results any way you slice it. Sales increased nearly 15% year over year, net income rose even faster at 36%, and free cash flow went ahead and quadrupled.
The gradual expansion from a mostly pure-play computer-gadgetry business toward a broader consumer electronics market is working out very well for Logitech. It's the sort of transformation Micron (NYSE:MU) wanted so bad that it bought end-user brand Lexar last year, and a close approximation of the SanDisk (NASDAQ:SNDK) business model. But Logitech is executing better than either of its distant cousins.
The market opportunities facing this company are arguably just beginning, too. It's a great time to show proof of tight-as-a-drum operations, just as Microsoft (NASDAQ:MSFT) is expected to kickstart a fat upgrade cycle with the consumer version of Windows Vista. The iPod train is rolling along all on its own, and I can see Logitech's line of high-end universal remotes gaining on the increased popularity and complexity of home theater setups.
Logitech is a four-star Motley Fool CAPS stock, and the only thing our players are complaining about is the stock price, which has risen by 72% in the past six months. The company has assuaged even the worst fears of my Foolish colleague Rich Smith, who used to worry about shrinking margins and excessive receivables. I'm tempted to take a position myself, once our trading rules allow me to touch the stock again -- all this operational goodness and market promise is hard to pass up.
Microsoft is a Motley Fool Inside Value pick. You can find more great stocks on fire sale with a free 30-day trial to our bargain-hunting service.
Fool contributor Anders Bylund holds no position in any of the companies discussed here, tempted as he might be. You can check out Anders' holdings if you like, and Foolish disclosure is always exciting.
