A Few Stocks That Will Benefit from Apple’s Growth
Cecil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Apple’s (NASDAQ: AAPL) stock has been soaring for quite some time. Apple is by far the most talked about tech stock on the planet, and thanks to the revolutionary products the company has released in the past ten years, the stock had hit a staggering high of $705.07 per share.
That being said, the stock hasn’t been doing well; it has moved below it 50-day moving average. But I feel the company will still do well in the near future, especially with the announcement of the iPad mini and its quarterly earnings. If the quarterly earnings beat analyst expectations, this stock will reach new heights. Amidst all of this, not many have ventured into the companies that directly benefit from Apple’s prosperity. Of course, there is a down side to investing in these companies; if Apple misses out on its quarterly earnings, these stocks will probably fall. So here are some of the so-called Apple dependent stocks you should take a look at.
Cirrus Logic (NASDAQ: CRUS) specializes in manufacturing integrated circuits related to analog signals and audio DSP for smart phones, tablets, and portable music players. This semi conductor company also happens to supply Apple with audio chips; but does that mean this company is dependent on Apple?
The dependence has been growing steadily; in the financial year 2010, Cirrus Logic received 32% of its revenue from Apple, while in the financial year 2012, the company got 62% of its revenue from Apple. Clearly this company will do well as long as Apple does well. Over the years, the Apple alliance has proven fruitful for the company; in 2008 Cirrus' stock was at a mere $8 per share; right now it is priced at $40.76 per share. There has been a clear revenue growth for the company, thanks to the increase in Apple’s iPhone sales.
This company manufactures chips that deal with wireless, bluetooth, and broadband communication. Over the last year, Broadcom's (NASDAQ: BRCM) stock has been up by a little more than 27%. Out of the list of companies mentioned in this article, Broadcom has an advantage; it supplies chips to both Apple and Samsung. This stock has very decent earnings per share; about $1.30. It also pays a modest dividend of $.40 per share, and the P/E ratio looks promising at 25.6. In about a year’s time, this stock should hit a price of $42-$43 if everything goes well for both Apple and Samsung.
This is a company that deals with computer hardware and software systems; specifically, they deal with Flash memory. It just so happens that Apple co-founder Steve Wozniak worked as a chief scientist for Fusion-io (NYSE: FIO). The company was also named one of the most prominent information technology companies in the year 2010. Fusion-io gets a little above 10% of its revenue from Apple.
Though these companies get a substantial amount of revenue from Apple, the value of these stocks may not fluctuate in accordance to variations in Apple's fortunes. The point is, if these companies produce a strong balance sheet then Apple’s growth will work as a catalyst in propelling these stocks up. I feel that these stocks have a lot of growth prospects.
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ceciljohn2002 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Cirrus Logic, and Fusion-io. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.