Why HiMax Technologies, Inc. Spiked 18% in August

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What happened

Last month, shares of HiMax Technologies (NASDAQ: HIMX) popped 18% in August, according to data provided by S&P Global Market Intelligence. Investors were pleased with the company's second-quarter revenue increase of 18.8% year over year and future prospects for new technologies like augmented reality (AR).

So what

HiMax relies on its small and medium-sized driver ICs (integrated circuits) for smartphones and tablets to bring in most of its revenue (currently about 45%), and in the second quarter, the company delivered. Small and medium IC revenue grew by a modest but steady 9.4% year over year, to $90.6 million.

CEO Jordan Wu attributed most of the strong sequential growth in the driver segment to its customers in China:

But investors were likely also happy with the company's revenue growth in its other segments as well. Large-panel display driver revenue increased 24.4% and non-driver revenue grew 21.4% year over year.

Now what

The increase in revenue was clearly good news for the company, but investors are also optimistic about its future prospects in burgeoning technologies like augmented reality.

Wu mentioned on the earnings call that the Pokemon Go game has thrust AR into the limelight and that HiMax is poised to benefit. The company already has about 30 AR customers and has been working on AR-related technology for 15 years. Wu noted that HiMax is the "provider of choice" for AR microdisplays and optics, and that optimism likely helped pushed HiMax's stock price up last month.

Going forward, investors should keep in mind the company's had a number of stock run-ups and drop-offs over the past few years. HiMax currently trades at about 50 times its earnings -- much higher than the tech sector's average of 25 -- so long-term investors should weigh the stock's volatility and its current premium before jumping in.

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Chris Neiger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.