Sometimes, solid companies with increasing profits see their stocks fall as the result of industry disruptions.

That is the case with both Integrated Device Technology(IDTI) - Get Report andOn Assignment(ASGN) - Get Report .

Integrated Device Technologyare a bargain. At less than $25 apiece, shares of the semiconductor company sell for more than a 20% discount to their one-year high.

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Founded nearly four decades ago, the company has a diverse product mix that positions it for outstanding growth in the global semiconductor market. Analysts see the bottom line compounding almost 19% annually over the next five years.

Management is especially optimistic about the company's high-performance memory chips.

Tech titan Intel needs the chips for its newest central processing units that came out this year. Demand for the chips should remain strong, because Intel regularly upgrades its CPUs and expects another release next year.

Integrated Device Technology is also well-known for expertise in wireless battery charging, a feature that Apple recently added to the iconic iPhone. Integrated Device Technology is already partnering with South Korean tech giant Samsung Electronics to provide wireless charging for the company's Galaxy smartphones, as well as for several other Samsung Electronics mobile devices.

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Management at Integrated Device Technology expects big things from ZMDI, a highly profitable German chip maker that it bought in December. The buyout immediately made Integrated Device Technology a force in the steadily expanding, multi-billion-dollar market for components of smart sensors that improve handling and safety in cars and the precision of industrial machinery.

Integrated Device Technology is financially healthy, even after shelling out $307 million for ZMDI.

The company has excellent free cash flow, which is the amount of cash from business operations remaining after subtracting maintenance costs. At $191 million a year, free cash flow far exceeds the 10-year average of $102 million.

Meanwhile, though the Great Recession ended more than seven years ago, many employers remain wary of hiring permanent workers. Their timidity is a boon to staffing company On Assignment.

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Huge demand for On Assignment's temporary and temporary-to-hire employees, the type of workers that gun-shy employers increasingly seek in order to keep a lid on costs yet still get the job done, is driving earnings.

And why not? For a fee, employers get willing workers without any up-front commitment, while the staffing company assumes all the administrative burden.

Employers that eventually plan to hire get a long look at job prospects before making a decision.

Specialization is On Assignment's path to profits, which more than doubled the past three years to $98 million.

Rather than supplying a broad range of workers, the firm looks to fill highly skilled professional roles in areas such as digital marketing, finance, government and information technology. Supplying highly skilled workers means that the company can charge a premium for temp help.

Often, demand for these temps is as much about a need for expertise as it is about employers' reluctance to hire permanently. IT, in particular, evolves so rapidly that using temp labor makes it easier for employers to bring in cutting-edge talent as needed.

On Assignment supplies the IT sector through the staffing company's Apex segment, which accounts for nearly three-quarters of revenue. The segment has three divisions: Apex Systems, Creative Circle and Lab Support, a small division specializing in skilled laboratory personnel.

Apex Systems was long the segment's main source of growth, providing temps with high-tech expertise in areas such as application development, health care IT and IT infrastructure.

Creative Circle, which On Assignment bought just over a year ago for $570 million, adds a second growth powerhouse. As one of North America's largest staffing agencies specializing in digital and interactive advertising and marketing, Creative Circle immediately made On Assignment a force in an industry that is expanding 20% annually.

With the skilled-temps business booming, On Assignment's revenue grew almost 19% annually since 2012 to $2.1 billion, while annual profits compounded at more than a 31% pace.

The company also has industry-leading profit margins, including a 7.4% operating margin, versus the 4.1% industry average. Annual free cash flow of $111 million is more than a fourfold gain in just a few years.


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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.