Canny investors can exploit a trend in many ways. Take the ongoing sea change in the filmed entertainment industry, for example: Easy ways to ride that wave include investing in forward-thinking movie delivery companies like Motley Fool Stock Advisor pick Netflix
Another method is to look at who makes the hardware that will power the next generation of entertainment devices. That's where Sigma Designs
Revenues grew sequentially by 36% and 153% year over year, to $20.1 million. Inventories on hand more than tripled to $10.9 million, in response to high demand from IPTV set-top box makers for Sigma Designs decoder chips. IPTV is a next-generation entertainment delivery strategy that involves sending data to a decoder box using industry-standard Internet traffic protocols. It's the foundation for the triple-threat hopes of phone companies like Verizon
And Sigma stands to benefit from all of these plans. There are other companies making decoding chips with similar capacities, but Sigma is arguably the most focused competitor in that field. It is also a rather small company with a lot of potential growth ahead of it. I believe that we're only at the start of a massive increase in demand for IPTV services and other new-media entertainment solutions, and Sigma seems to me the kind of company Tom Gardner and team looks for in Motley Fool Hidden Gems: stellar prospects, equally impressive performance, and near-invisibility on Wall Street. Only six analysts follow this company today. Expect that number to increase as the mainstream catches on.
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Fool contributor Anders Bylund is a Netflix and Disney shareholder, but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like. AT&T is a former Stock Advisor pick. Foolishdisclosureis always one step ahead.