"Most people think that analog is dead," notes wireless sector expert Nikhil Hutheesing, adding "But analog is still a rapidly growing part of the semiconductor business."

In his Forbes Wireless Stock Watch, he explains, "And there is really only one company that provides a soup to nuts analog system for wireless infrastructure products.: that company is Analog Devices (NYSE: ADI)." Here is his review.

"Digital chips, which store data in ones and zeroes, operate by differentiating between on and off signals.

"Analog chips, by contrast, process gradations and are able to process waveforms such as speech, music and video. So analog chips create a bridge to the digital world where data is stored and manipulated.

"Digital chips themselves are ill-suited for communicating.As digital circuits shrink to ever smaller sizes, the value in the analog portion, that doesn't scale well, continues to rise.

"A year ago, I would not have recommended Analog Devices. The company was struggling. From 2004 to 2007 ADI posted a 1% compounded annual growth rate in revenues and earnings per share.

"During that time, the company was a provider of handset basebands (modems inside a phone) which really became a commodity business. It was also in the PC power management businesses, which was also a drag on the overall growth of the company.

"The good news is that during the first quarter, ADI got out of these businesses and has taken steps to move from single digital earning growth to double digit growth. ADI looks set to deliver double-digit growth of 13% five-year CAGR. Much ofthat growth is coming from its communications business.

"Wireless carriers have been upgrading to third generation (3G) networks over the past year and many now are focusing their sites on building fourth generation (4G) networks as well as WiMax networks.

"With each move up, the idea is to provide higher data rates, allowing for more applications to run at once and for higher quality pictures and video. As a result,I think this stock looks very attractive.

"The biggest part of ADI's analog business is products for its industrial and communications business, which account for 72% of revenues. Within this business, ADI's wireless base station revenues grew significantly over the past year.

"Manufacturers of base stations, which are radio receiver/transmitters that serve as the hub of the local wireless network, have been TD-SCDMA (the Chinese version of 3G) equipment.

"I expect ADI to generate revenues of $2.6 billion in fiscal 2008 (up 7% year over year). Earnings per share should grow 14% in 2008-and maybe 17% if you include stock buybacks. In addition to the share repurchases, ADI paid a dividend of $0.20 per share in the most recent quarter ,translating into a yield of about 3%. And, the company has no debt.

"I believe the shares should soon be trading at the upper end of their historical trading range. I expect ADI to generate EPS of $2.06 in 2009. At 26 times earnings, that would give a price target of $53 per share."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.