It looks like Mr. Market has picked up on my enthusiasm for camera-chip specialist OmniVision Technologies (Nasdaq: OVTI). In fact, I think he got a little too fired up about this stock lately.

OmniVision just reported fourth-quarter earnings, and it was a fine quarter indeed:

  • Sales jumped 64% year-over-year to $258 million. That's at the top end of management guidance and $4 million better than the analyst consensus.
  • $0.66 of non-GAAP earnings per share was an astronomical leap from $0.18 seen a year ago, and it was also a penny ahead of Street expectations.
  • The outlook for next quarter places a revenue midpoint slightly below analyst estimates, but as we saw this quarter, Omnivision tends to land at the high end of its guidance.
  • Management expected gross margins to stay steady at about 29.8% in GAAP terms. The final tally was 30.7%, which is a significant improvement on the back of a richer product mix.

In short, the company beat every target it had set up. The Backside Illumination, or BSI, sensor chip structure is every bit the cash-cow selling point I expected it to be.

While the rest of the industry shrugged BSI off as impossibly expensive, OmniVision forged ahead and created a competitive advantage by making the technology not only better than traditional chips but also cost-effective to manufacture. OmniVision is still many moons ahead of Sony (NYSE: SNE), STMicroelectronics (NYSE: STM), former Micron (Nasdaq: MU) division Aptina, and other camera chip makers who are no doubt playing catch-up as we speak.

Now, OmniVision shares swooned after this report hit the wires, like a Hollywood diva angling for her close-up shot. The only reasonable explanation for that move is that investors had expected even more. I guess you can't get a 44% earnings surprise every quarter.

Even so, an 11% three-month price jump is nothing to sneeze at and works out to a market-bashing 52% or so if sustained through four quarters. The stock has beaten fellow Apple (Nasdaq: AAPL) coattail-rider Cirrus Logic (Nasdaq: CRUS) in both the one-quarter and full-year perspectives, not to mention crushing Apple itself.

The only company I can think of that can match OmniVision's technological moat today is robotic surgery specialist Intuitive Surgical (Nasdaq: ISRG), which locked down its market with patents and FDA approvals to the point of being bulletproof. There's one other consumer-oriented technology that comes close, as detailed in this free report.

Can you come up with another unassailable lead like that? Feel free to share your insight in the comments box below. If not, you'll understand why OmniVision excites me. Buy on the dips, my friend.