The correct answer is      (A.)  Sigma Designs (SIGM)

Sigma Designs makes the integrated System-on-a-Chip (SoC) semiconductors that power portable media players and Blu-Ray systems. The firm's specialty is in the Internet Protocol Television (IPTV) market, which allows users to view television programming through an Internet connection. The firm's sales have skyrocketed, soaring from $33 million in 2006, to $91 million in 2007, to $258 million this year -- a surge of +680% in just two years. Over the same span, earnings have shot up more than 36-fold. Plus, Sigma has just been named #7 on Fortune's "100 Fastest-Growing Companies" list.

As you might expect, SIGM shares have rallied accordingly -- turning in a gain of +116% last year alone. Since the end of 2007, the company has posted five consecutive triple-digit quarterly sales increases -- with growth rates ranging from as low as +111% to as high as +198%. As you might expect, that growth has slackened lately amid the current downturn. In fact, management is forecasting a milder gain of +58% in the upcoming quarter -- still a pace that most companies would love to see. The numbers look even better when you adjust them for R&D spending. If we add back Sigma's $1.09 per share in R&D spending last year to the $2.46 per share in actual profits, then the adjusted total is $3.55 (what the company actually made before R&D expenditures). At the current price of $10.10, the shares can be had for less than 3 times R&D-adjusted earnings. SIGM is a great example of how strides in research and development are what propel companies into stars and keep even the most mature companies a step ahead of the competition.

With that in mind, StreetAuthority editor Nathan Slaughter recently compiled a list of innovative companies that are most likely to keep churning out successful new products, thanks to their heavy research and development spending. From wireless equipment to pharmaceuticals, communications to video games, Nathan's picks, which appear in the latest issue of his Half-Priced Stocks newsletter, all have price-appreciation potential from +28% to as much as +118%! To learn the names of these stocks, and to learn more about the Half-Priced Stocks newsletter, please visit this link.