"While consumer electronics languishes in a spending recession, there is one bright spot flashing in our research: Blu-ray," says Toby Smith, a leading expert on emerging investment trends.

In his ChangeWave Investing, he explains, "Toshiba recently threw in the towel on its HD-DVD technology, meaning Sony's Blu-ray format has won the battle." Here, he looks at one stock set to benefit: Sigma Designs (NASDAQ: SIGM).

"Are we about to see a huge increase in Blu-ray DVD player sales? Yes, according to the 1,525 consumers in ChangeWave's latest consumer electronics survey.

"We asked respondents how Toshiba's recent announcement will affect their purchasing plans, and 44% said they are now more likely to buy a Blu-ray player. Only 1% said they are less likely. In another highly positive sign, 93% of current Blu-ray owners said they're satisfied with their players -- a clear indication of customer contentment.

"So, the demand is unmistakably there. But our latest survey also shows a huge and sudden pullback occurring in consumer electronics spending -- the largest since we began measuring spending trends in 2002.

"So, is it realistic to expect consumers to fork over $399 to $1,000 -- the going rates for most Blu-ray players -- in the midst of a recession?

"Yes! An extraordinary 9% of respondents said they are planning to buy a Blu-ray high-def DVD player in the next 90 days -- a clear signal of pent-up demand. It doesn't hurt that Amazon is dropping some Blu-ray DVD titles to less than $15 and Best Buy is offering gift cards in return for purchasing Blu-ray movies.

"The biggest winners in the Blu-ray sweepstakes are the chipmakers who supply critical components for the DVD players. Unlike others, however, Sigma Designs bet solely on Blu-ray from the start.

"Today it's the No. 1 supplier of chips for standard and high-def DVD players. Sigma's customers include Sony, Samsung, Pioneer, Sharp and Matsushita (MC).

"Research firm iSuppli forecasts that 6.6 million Blu-ray players will ship this year, rising to 17.4 million in 2009, 28.7 million in 2010, and 45.4 million in 2011. Yet it's unlikely that high-def DVD player sales will ever approach sales of standard DVD players since an increasing number of people will be downloading movies and videos directly from the Internet.

"Still, Sigma will especially benefit from the initial surge in Blu-ray sales during the second quarter, and again in later 2008 as lower-cost players and holiday shopping momentum propel sales. Obviously, the competition is formidable, so now is Sigma's best opportunity to make tracks in Blu-ray."

Editor's note: For those in the Fort Worth area, Toby Smith will be among the featured speakers at the BizRadio Money Fair on Thursday, May 8. Also featured are Jon Najarian, Mike Norman, Pat Redell, Jim LaCamp and Daniel Frishberg. For more, visit their website.