Touch the Future With Synaptics

My cell phone is old -- I mean really old. While I was working to release my new book An American Hedge Fund, I was too busy to upgrade. Plus, I thought waiting a few months for the new phones would be worthwhile.

But now that all these cool touch-screen cell phones have come out, I can't hold back any longer. I don't want to get left behind! And this, in a nutshell, is why I recommend buying Synaptics (SYNA - commentary - Cramer's Take), a maker of touch-based interfaces for electronic devices, currently trading at $45.89, on any weakness.

I'll get to the weakness part in a minute, but let me just say that I think touch-based interfaces are the future, and Synaptics is the clear winner here. Keypads and keyboards will be like the black-and-white televisions screens of decades past -- I mean this could really be revolutionary. And I'm not alone in this thinking.

On Aug. 12, Craig-Hallum Capital analyst Anthony Stoss said, "The possible success of Apple's (AAPL - commentary - Cramer's Take) iPhone will go a long way in determining the long-term opportunities for touch pads on cell phones." Well, the iPhone's popularity certainly seems to be a positive development for this technology's future.

Not to be outdone, on Sept. 12, Bear Sterns analyst Andrew J. Neff said that he sees Synaptics' "touch-based user interface solutions becoming essential for mobile devices." And he kept his $60 price target, roughly 40% upside at the time (now 30%). That's a bold statement, but c'mon, Andrew -- only 40% upside for a company whose revenues are growing at 45% a year, and whose analysts have been scrambling to consistently raise earnings estimates, and whose stock is trading at only 16 times next year's earnings? When you make a statement like that, don't you think you should be like Blodgett and come out with a nice fat, round $100 price target?

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At the time of publication, Sykes had no positions in the stocks mentioned, although positions may change at any time.

Timothy Sykes trades for his own account. He managed the Cilantro Fund, starred in the reality show Wall Street Warriors, and authored An American Hedge Fund. Currently he also writes the blog timothysykes.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Sykes appreciates your feedback; click here to send him an email.