Sigma Designs (Nasdaq: SIGM) has not delighted investors lately. While the S&P benchmark gained 20.4% over the last year, Sigma's stock swooned to the tune of 38%. Crushing analyst expectations last quarter didn't help, and now the media processor specialist has gone and done it again. Will the market listen this time?

First-quarter sales came in at $65.2 million, up 27% year over year. GAAP earnings of $0.04 per share represented a marked improvement over last year's $0.09 loss per share. And Sigma's balance sheet is mighty strong: Nearly half the current share price is supported by $5.02 of cash equivalents per share. Back out the cash cache, and Sigma trades at an astounding five times forward earnings.

That would make sense for a dying business in an obsolete market, like Blockbuster in the old-school video rental market -- these companies must reinvent themselves or die trying, and the market is betting on the latter.

But it's a different story for Sigma Designs. Its media-crunching processors are shipping into the red-hot market for Internet-based set-top boxes, which deliver TV broadcast feeds from plain data streams. The largest customer is AT&T (NYSE: T) and its U-Verse IPTV service, using Sigma-based boxes from Motorola (NYSE: MOT) and Cisco Systems (Nasdaq: CSCO). Across Europe, 15 IPTV providers depend on Sigma chips, and the Chinese market hungers for more of them. A new line of processors should cut into main competitor Broadcom's (Nasdaq: BRCM) IPTV presence and keep aspiring sector player Intel (Nasdaq: INTC), which recently announced it will be powering Google's new TV hardware, at bay. In any case, Sigma's system-on-a-chip (SoC) designs are differentiated enough to carve out their own niche and keep growing.

There's a lot of growth and good, steady business going on here, and analysts expect Sigma's earnings to grow by 20% a year over the next five years. Sigma is a longtime Rule Breakers recommendation and a five-star CAPS stock. I thought it looked cheap six months ago, and Sigma has only gotten cheaper. If this isn't an entry point, I frankly don't know what is.

I'm heading over to CAPS right now to rate Sigma Designs "outperform" for the next few years. That should give our dear, "efficient" markets some time to adjust to the reality of Sigma's healthy business. Feel free to follow my lead -- it only takes a couple of clicks, and it won't cost you a dime.

Fool contributor and all-star CAPS player Anders Bylund holds no position in any of the companies discussed here. Intel is a Motley Fool Inside Value recommendation. Sigma Designs is a Motley Fool Rule Breakers pick. The Fool has written covered calls on Intel. Motley Fool Options has recommended a write puts position on Intel. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.