When I’d first taken a look at Fairchild Semiconductor International (NYSE:FCS) almost six months ago, I was convinced that it would turn out to be a good investment. Since then, the stock has gained almost 20% and there are signs that it could do even better going forward.

Holding steady

Fairchild’s recently-reported fourth-quarter results weren’t spectacular, as it missed top line estimates and met on the bottom line. Revenue of $333.4 million was 2% lower than last year, while adjusted earnings of $12.3 million or, $0.10 per share, were significantly lower than $32.3 million, or $0.25 per share, posted last year.

Sales of auto and mobile solutions were lower in the quarter due to seasonality, but Fairchild witnessed an improvement in demand for industrial and appliance products. Also, the company focused on cutting costs and keeping inventories lean in order to minimize the impact of lower sales on its gross margin. As a result, gross margin declined by just 20 basis points from the year-ago period. Also, things look better from here onwards.

The road ahead looks promising

Fairchild’s revenue guidance for the current quarter is between $330 million and $350 million, almost at the mid-point of Street estimate. This signifies that the company is expecting a sequential improvement in revenue, reversing the trend of sequential declines seen in the past two quarters. Fairchild’s positivity is driven by improved bookings, which were at a higher level in the previous quarter.

According to management, order rates are improving, the book to bill ratio is solid, and demand for industrial and appliance products is also moving up. Also, its automotive business is sitting on a strong order backlog and is set to grow in the current quarter.

Mobile growth to drive revenue

Fairchild also expects its mobile business to get better this year. It should be noted that the company supplied a total of five chips to Apple Inc. (NASDAQ:AAPL)’s iPad mini and the fourth-gen iPad. The iPad’s growth outpaced that of the iPhone in Apple’s latest quarter, which bodes well for Fairchild given its placements inside the tablets. Also, Apple is ramping up production for the iPad mini after a supply constrained quarter and this could be one of the reasons driving Fairchild’s revenue sequentially higher.

It appears that Fairchild has recorded some more design wins as it expects sales of new products to improve “especially in the second half of the year.” Thus, it seems that even Fairchild is expecting solid revenue growth towards the end of the year in the manner of Apple supplier Cirrus Logic, Inc. (NASDAQ:CRUS).