A combination of faster economic growth and minimal competition from paltry bond yields kept the stock market marching higher. The S&P 500’s twelve-month return through May 2013 was a whopping 27%. In hindsight, stocks had further to go as well, gaining another 15% through the end of the year. We said in last month’s Insights that the rebound in interest rates likely bodes poorly for overall economic growth. So far in 2014, recent trends have been mixed, with housing a definite weak spot. The full IAS includes our current commentary on the state of the economy.

Each month we feature three companies that we think are especially interesting and potentially timely as well. Let’s take a look back at one of our three June 2013 features, InvenSense (NDAQ: INVN) to see how the stock has fared in the twelve months since we first presented it to our subscribers.

InvenSense makes microchips with integrated sensors to add motion-tracking abilities to digital devices. Like many new technologies, this one literally started out as a toy — literally — the company’s first big customer was Nintendo. However, motion tracking is now finding its way into mobile phones, a much larger market. At first, only high-end phones had it, but mid-range phones are adding it too. Samsung is now the company’s biggest customer, accounting for about one-third of overall sales. Apple is not a customer, preferring to cobble together its own motion sensing solution within the iPhone. InvenSense thinks its integrated solutions will be standard someday. Apple’s homegrown alternative is bulkier and less power-efficient. For as long as we have followed InvenSense, there have been persistent rumors that Apple is always just about to become a customer. It hasn’t happened yet, but we think it probably will someday. The trick is not to overpay for INVN shares based on hope.

We showed InvenSense to our readers at a price of $12.66, and we gave it a buy-up-to price of $16. We judged the potential upside price to be as high as $44, and we put the downside price at $8, leading us to estimate an upside/downside ratio of 7 to 1. With a history of steady growth and a big tailwind from increased adoption in middle-market phones, InvenSense looked to us like a classic IAS stock. The company even boasted a cash-rich balance sheet—always a plus!

In its first fiscal quarter as an IAS stock, InvenSense produced 43% revenue growth with a 24% increase in net income. Nice start. Shares reacted in kind, and by mid-July had risen above our $16 buy price. By September, they were up more than 50% from the price at the time of selection.

The next quarter was more of a mixed bag. Sales increased 28% but with some really whopping expense growth. R&D increased 66%, and SG&A increased 59%. Despite the good sales growth, operating income was down 11%, and EPS decreased 6% year-over-year. More bad news: Apple’s annual product cycle had come and gone without InvenSense winning a spot. Shares lost about 20% from their October highs and spent the last three months of 2013 bouncing around our buy-up-to price, which had risen from $16 to $16.50.

Stocks that excite the market just march to their own beat. With the turn of the calendar, InveSense found its way back into investors’ good graces once again. They seemed to forgive the company’s enormous spending and refocus on its exciting growth prospects in 2014.

Revenue increased just 13% in the company’s Fiscal Q3, ended December 29^th. Gross profit was flat. Operating expenses doubled to $30 million. The bottom line showed a small loss. These weren’t exactly the kind of results we were hoping for when we showed the stock to our readers, but the market didn’t mind. Investor sentiment is a powerful thing—not all important, but very important. INVN shares retested their 2013 highs then pushed higher as 2014 progressed. Now well above our buy price, despite financial results we would characterize as somewhat disappointing, InvenSense was starting to look a little too hot to touch.

The company recently reported its Fiscal Q4 results. Although revenue growth continued to decelerate, rising just 7% year-over-year, we actually thought the quarter was reasonably good from a growth perspective because we see much stronger results to come. Profitability remains basically disconnected from sales growth, with the company posting another small loss. Shares lost about 15% following the quarter’s release. At a recent price of $18.48, shares remain comfortably above their price at the time of selection, up 46% in the past twelve months. That far outpaces the S&P 500’s approximately 20% return. What’s funny is that despite the stock’s cartwheels over past twelve months, the company’s underlying story has really changed very little. The technology continues to win more adoption across multiple mid-tier OEM’s. Apple still isn’t a customer—but could always become one, of course. If anything, we’ve been slightly disappointed with the results InvenSense has produced as a company. Still, you can’t argue with its 46% gain. Sometimes companies perform well, but the stock doesn’t keep up. Sometimes they disappoint and their stocks do fine.