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The race to smaller, sleeker gadgets is aided by Tessera's technology, which lets chipmakers reduce the size of their chips and, in turn, allows electronics manufacturers to shrink devices like cell phones.

Though its shares were hit hard last year as Tessera fought to protect its patents, the company scored a big win against wireless giants Motorola and Qualcomm in May. The stock now hovers near its 52-week high. But analysts say there's still room to grow: The recent legal victory bodes well for another upcoming patent dispute. And Tessera's optics business, which makes technology for autofocus and zoom in cellphone cameras and the like, is gaining traction. "The emerging optics business is something that's been undervalued, especially if they have the ability to execute on their ambition to get to $100 million in revenues in 2011," says Raj Seth at Cowen and Company.

--E.L.

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