Synopsys Excels in an Overlooked Corner of Tech

One of the most overlooked parts of the software business is something called electronic design automation, or EDA. EDA software helps engineers design the most complex semiconductors in the world, and it is a vital part of the electronics business. EDA tools not only help engineers design semiconductors, they can test and simulate real-world operating conditions. Semiconductor makers pay bucketloads of money to the EDA companies for the latest cutting-edge tools. 

In the early 1990s, there were a whole slew of small EDA companies, but after an endless wave of mergers, the industry has been boiled down to about three companies -- Synopsys (SNPS), Cadence Design Systems (CDNS) and Mentor Graphics (MENT). Because of the impossibly dense engineering jargon thrown around by the companies, many investors have given up on the group, because it can be very difficult to figure out what management is talking about. Since the industry is so hard to understand, the stocks have outperformed the S&P 500 for the last five years....405 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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