The proliferation of more and more electronic toys and gadgets around the world has kept demand for silicon rising, along with the stocks of many companies supplying them. But I've found investments from another sector that are beating the pants off semiconductor stocks ... and I know where you can find out more about them.

Would the real hot stocks please come forward?
The 5,400 stocks that our Motley Fool CAPS community members have rated include descriptive "tags" that group them with other companies sharing similar qualities -- a country of origin, a sector, or an end product, for example. Clicking the Semiconductor -- Specialized tag pulls up a list of 43 stocks that have collectively risen 3.6% in the past year.

But CAPS tags can also lead you to a group of stocks that have outpaced the returns of stocks in this semiconductor group: Synthetics. The 39 companies under this tag have averaged a more impressive 12.9% return in the past year.

Each group has its share of winners and losers, of course, but CAPS can be a great resource for zeroing in on potential opportunities in each area.

From macro to micro
You can sort tag groups by their CAPS ratings, from one to a maximum five stars, and then see which players -- from Wall Street to Main Street -- are bullish or bearish on the company, and why.

For instance, here are a few of the stocks in the Semiconductor -- Specialized group:

Company

CAPS Rating (out of 5) 

1-Year Performance

Nvidia (Nasdaq: NVDA)

*****

5.7%

Sigma Designs (Nasdaq: SIGM)

****

47.6%

Trident Microsystems (Nasdaq: TRID)

****

(76.6%)

LSI (NYSE: LSI)

***

(48.9%)

Sources: Google Finance and Motley Fool CAPS, as of Feb. 7.

Now, here's a sampling of Synthetics stocks that -- judging by interest in the CAPS community -- investors may want to consider.

Company

CAPS Rating

1-Year Performance

ICO (Nasdaq: ICOC)

*****

74.8%

Praxair (NYSE: PX)

*****

29.5%

LSB Industries (AMEX: LXU)  

*****

78.2%

KMG Chemicals

***

58.1%

Sources: Google Finance and Motley Fool CAPS, as of Feb. 7.

Fake stuff, real profits
Manufacturers of synthetics definitely don't conjure the same excitement that splashy chip stocks like Intel or Nvidia do, but the business of making synthetic materials is nonetheless very profitable. Some synthetic-materials manufacturers actually participate in the success of chip producers by delivering specialty plastics, gases, and other materials used in the manufacture of those chips.

With operations around the globe, polymer and additives manufacturer ICO is benefiting from strong foreign currencies, which helped the company recently report a 29% increase in quarterly revenue over last year. In fact, the bulk of ICO's revenue is now coming from Europe, Asia, and Brazil. Revenue has more than doubled in the past four years as demand grows for ICO products to help make toys, household products, and other plastic items.

A strong contingent of CAPS investors are on board with ICO's growth as well -- more than 98% of the 619 players rating the company believe it will beat the market going forward. Many investors cite the company's reasonable valuation and the continued demand for its products in diverse markets as reasons to be bullish.

What a gas
Synthetics also come in a less-than-solid form, and Praxair is one of the premier producers and distributors of industrial gases. Should you have the need for a tank full of oxygen, helium, or nitrogen at the next family gathering or office party, Praxair can deliver. The company can also design and build the equipment that produces industrial gases, and it can provide specialty coating materials, too.

The $25 billion company is 100 times larger than plastic-powder producer ICO, but has seen similar benefits from global diversity and strong foreign currencies. The diversity of industries Praxair serves also makes the company less vulnerable to downturns in any particular sector, though the company is not immune to general economic woes.

But even with fears of an economic slowdown in the U.S. that may reverberate around the world, CAPS investors are largely bullish on Praxair. All but one of the 107 All-Stars rating the company believe it will outpace the S&P in the future, and more than 95% of all investors rating the company give it a thumbs-up.

Before you buy ...
Of course, investors shouldn't look in the rearview mirror to see where they should be investing now. But the underlying reasons behind dramatic run-ups in stocks or groups of stocks can clarify macroeconomic trends that may significantly affect investments. Just make sure to do your own due diligence rather than following crowds or individual recommendations.

Nvidia has returned 245% since the Motley Fool Stock Advisor service recommended it in the May 2005 issue. To see what other stocks Tom and David Gardner say will beat the market, take a free 30-day trial.

When it comes to running long distances, Fool contributor Dave Mock says he lags more than he leads. He owns shares of Nvidia. Dave is the author of The Qualcomm Equation. Sigma Designs is a Rule Breakers recommendation, and Intel is an Inside Value pick. The Fool's disclosure policy beats all other disclosure policies, year in and year out.