6 Stocks That Could Cash In on Apple’s iPhone 5 Release
So much for Apple Inc.’s (NASDAQ:AAPL) big earnings miss.
After coming under some brief pressure, Apple has since powered its way to new all-time highs.
Make no mistake about it — this is a key product launch for the firm, its stock and the whole mobile computing food chain.
Based on the number of people who want to buy the new device the moment it comes out, I think the iPhone 5 launch promises to be another huge success.
Clearly, the market agrees or Apple shares wouldn’t once again be on such a tear.
For investors, that means it’s time to take a serious look at how to ride this trend as the iPhone 5 product launch unfolds.
In fact, I’ve found six ways investors can play the iPhone 5′s release right now. They include:
iPhone Play Number 1: Apple Inc. (NASDAQ: AAPL)
No doubt, many investors wonder if Apple stock can go much higher. Yes, it sports a high sticker price. But take a look at the numbers.
AAPL trades at just 12 times forward earnings, in line with the overall market. It sports a PEG of just .65 and has an operating margin of 35%.
Talk about cash flow. It has $27 billion in cash on hand and an equal amount in free cash coming in. And earnings will likely continue to grow at 20% a year.
Not only that, but the iPad is still ripping the high-tech market to shreds. Shipments grew 44% to 17 million in the second quarter, giving Apple the lead in the fast-growing tablet market.
Now you know why Peter Misek, an analyst at Jefferies & Co., has raised his price target to $900 from $800 a share, for a potential upside of 38%.
iPhone Play Number 2: Cirrus Logic Inc. (NASDAQ:CRUS)
With its wide array of audio signal processors, Cirrus is a big part of the Apple ecosystem. Its chips are in nearly every Apple product and Apple brought in nearly 60% of Cirrus’ revenue in the second quarter.
For its part, Cirrus wants to cash in on a huge sales increase from the new iPhone. It recently forecast a 70% sales increase for the period ending Sept. 30.
“We expect FY13 to be an outstanding year for Cirrus Logic and our long-term shareholders,” said CEO Jason Rhode. He’s so bullish on new sales he had the firm post its sales forecast as a major news headline on the firm’s home page.
No wonder Cirrus stock has faced such intense buying pressure lately. With a market cap of about $5 billion, Cirrus recently traded at just short of $40. It’s up 55% in the past month.
iPhone Plays Numbers 3 and 4: Qualcomm Inc. (NASDAQ:QCOM) and Fairchild Semiconductor (NYSE:FCS)
Tech watchers predict big sales for a number of firms that make mobile chips. Analysts put Qualcomm and Fairchild at the top of that list.
Both stocks have done well in the past 30 days. Qualcomm is up more than 16% and trades at about $63 a share. Recently selling for about $15, shares of Fairchild have rallied by about 20% in the period.
Analysts at FBR said in a recent report the iPhone 5 could be “one of the most important catalysts” for chip makers in some time. It predicts that 50 million to 52 million iPhone 5 units could be built in the fourth quarter.
There’s no way around it. If the iPhone is that popular, Apple won’t be able to keep them in stock. The iPhone 5 will be a “home run” for key hardware suppliers, driving large volume orders, the FBR report says.
iPhone Play Numbers 5 and 6: Nuance Communications (NASDAQ:NUAN) and NXP Semiconductors NV (NASDAQ:NXPI)
No doubt, these are the most speculative plays of the group. Both represent tech features Apple has yet to say it will include in the iPhone 5.
However, Nuance is the power behind Siri, the popular voice assistant that found its way into the last version of the iPhone. Siri grabbed a ton of press for both Apple and Nuance.
While it’s a good bet that voice will remain a key part of the iPhone 5, there’s no proof yet Nuance will power that feature.
As for NXP, it’s getting buzz on the belief the iPhone will include a new type of wireless tech that will greatly enhance mobile commerce. It’s known as Near Field Communications and it will play a huge role in turning smart phones into de facto mobile wallets.
NXP is a leading maker of chips for this segment. Trading at roughly $26 a share, NXP has gained about 30 % in the past month.
Let me close by noting that overall, Apple and its suppliers have fared well in a tough market environment.
And in as little as 30 days, we’ll know one way or the other if Apple can once again turn the world on its ear with a glitzy new digital device.
But if you ask me, the iPhone 5 has home run written all over it.
– Michael A. RobinsonSource: Money Morning
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