6 supertrends ... and 6 superstocks

This past holiday season, one out of every four gifts was a consumer electronics device, and spending in the category topped $21 billion. The industry has prospered over the past decade, in large part because you and I want to transform our living rooms into Cineplex Odeons, complete with six-foot-wide flat screens, surround sound, and the full integration of PCs, iPods, Wiis, TiVos, and DVD players. To my eye, there is no clear end in sight to this trend. Video-on-demand is just around the corner, and consumers will enjoy an embarrassment of programming riches via the Internet.

Poised to benefit from each of these innovations is Dolby Laboratories (DLB), primarily a licensing business of superior audio technologies. After dipping 40% from the IPO price in 2005, shares have more than doubled, to around $34. A recent stock sale by founder Ray Dolby has scared off some investors - but not me. The company's balance sheet sparkles, and demand for its innovations should drive growth rates in excess of 20% per year. I think the stock will more than double over the next five years.