7 Stocks That Profit from Apple’s Profits in 2019

7 Stocks That Profit from Apple’s ProfitsPosted on Tuesday, September 4th, 2018 by Chris Markoch

Few debates are more passionate than the one between iPhone and Android users. For iPhone loyalists, no other smartphone can compare, even if a feature-by-feature comparison reveals little difference. It’s about fit, feel, and finish. It’s about user experience … and user expectations. So it was a little bit surprising when the Apple’s launch of a new iPhone platform in late 2017 fell flat. Was it a reflection of a saturated market? Or were true believers being converted.

Recent reports see the tide turning for the iPhone, which is expected to see a resurgence. One of the reasons for that is the iPhone is finding a new audience overseas. Apple has accumulated up to $230 billion in cash overseas and is preparing for exceptional growth in two key markets. First, the company is anticipating a 170% increase in China. This is due to what Apple calls “significant pent-up demand” for the iPhone. Apple is also anticipating growth for the iPhone in India which is the world’s second largest smartphone market, but where the iPhone only has captured a mere 2%.

Add to that 300 million users with iPhones that are over two years old, and the company believes that their new products will offer the innovations that will get these users to upgrade.

But with Apple currently trading around $227, you may have to look at other areas to profit from Apple’s growth. And that means taking a look inside the iPhone. The companies that make some critical iPhone components are priced at levels that make attractive buying opportunities. These companies prove the adage that’s it’s what inside that counts.

In this report, we’ll tell you about 7 companies whose stocks can profit from Apple’s profit.

#1 - Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM)

Taiwan Semiconductor Mfg. logo

Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) - Back in May, Taiwan Semiconductor started mass producing next-generation processor chips for iPhones. The new 7-nanometer chips will be smaller, faster and more efficient than its 10-nanometer predecessor. This means users will experience apps that run faster and phones that will run longer between charges. In an industry where innovation is short-lived, the promise of a phone that runs faster and requires fewer charges will help the iPhone have a, perhaps brief, competitive advantage. This will benefit TSM, which has faced some pressure from a computer virus that delayed earlier shipments. The delay has led to the company projecting a decline in anticipated third-quarter revenue of about 3 percent ($8.45 billion vs. $8.55 billion) and gross margin slipping by a percentage point. However, the company still anticipates an increase in revenue for the year. Apple accounts for approximately 21 percent of TSM's revenue. TSMC’s stock has risen to over $43 a share, well off its 12-month low of $35.51 and is now approaching its 52-week high of $46.28 reached in January 2018.

About Taiwan Semiconductor Mfg.
Taiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, engages in manufacturing, selling, packaging, testing, and computer-aided design of integrated circuits and other semiconductor devices. The company manufactures masks and electronic spare parts; researches, develops, designs, manufactures, sells, packages, and tests color filters; and offers customer and engineering support services. It is also involved in investing activities. The company operates in North America, China, Japan, Asia Pacific, Europe, the Middle East, and Africa. Taiwan Semiconductor Manufacturing Company Limited was founded in 1987 and is headquartered in HsinChu, Taiwan.

Current Price: $38.66
Consensus Rating: Buy
Ratings Breakdown: 4 Buy Ratings, 1 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $50.00 (29.3% Upside)

#2 - Universal Display Corporation (NASDAQ:OLED)

Universal Display logo

Universal Display Corporation  (NASDAQ: OLED) - One of the most exciting technologies available in the new iPhones comes from this Illinois company. Universal Display Corporation develops the technology that makes it possible for the latest generation of the iPhone to have a much thinner display screen than previous models. For consumers this means they get a larger screen with a phone that takes up less space in their pocket. Add to that, their technology allows the screen to light individual pixels so the new phones won’t use as much power as a traditional LCD screen, this means users won’t have to charge their phone as often and consumers can also enjoy a higher picture quality. One of the best news for this stock is that OLED owns both the parts and the patents for its technology. Like other Apple suppliers, OLED’s stock took a hit in early 2018 largely because the initial launch of the new iPhone’s was softer than expected. The stock dropped over 50% from its 52-week high of $209. However, the stock is rebounding on the anticipated increase in sales. At just above $120 a share, it is well of its 52-week low of $78.75.

About Universal Display
Universal Display Corporation engages in the research, development, and commercialization of organic light emitting diode (OLED) technologies and materials for use in flat panel displays and solid-state lighting applications. As of February 21, 2019, it owned or had exclusive and co-exclusive licenses, or had sole license rights with respect to approximately 5,000 issued and pending patents worldwide. The company licenses and supplies its proprietary UniversalPHOLED materials to display and lighting manufacturers, and others. It is also involved in the research, development, and commercialization of other OLED device and manufacturing technologies, including FOLED that are flexible OLEDs for the fabrication of OLEDs on flexible substrates; encapsulation technology for the packaging of flexible OLEDs and other thin-film devices, as well as for use as a barrier film for plastic substrates; UniversalP2OLED, which are printable phosphorescent OLEDs; OVJP, an organic vapor jet printing technology; OVPD, an organic vapor phase deposition process for manufacturing a small molecule OLED; and TOLED, which are transparent OLEDs for the fabrication of OLEDs that have transparent cathodes. In addition, the company provides technology development and support services, including government contract work and support provided to third parties for the commercialization of their OLED products. Universal Display Corporation has strategic relationships with Samsung Display Co., Ltd.; LG Display Co., Ltd.; BOE Technology Group Co., Ltd.; Tianma Micro-electronics Co., Ltd.; AU Optronics Corporation; EverDisplay Optronics (Shanghai) Limited; Konica Minolta Holdings Inc.; Sumitomo Chemical Company, Ltd.; OLEDWorks GmbH; and Kaneka Corporation. The company was founded in 1985 and is headquartered in Ewing, New Jersey.

Current Price: $158.09
Consensus Rating: Buy
Ratings Breakdown: 7 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $159.0890 (0.6% Upside)

#3 - Cirrus Logic (NASDAQ:CRUS)

Cirrus Logic logo

Cirrus Logic (NASDAQ: CRUS) - Despite rumblings that they might be supplanted by competitors, the audio-chip manufacturer retained its business with Apple. This is critical for a company that relies on Apple for 81 percent of its revenue. However, this left the company vulnerable to softness in sales from the new iPhones that launched at the end of 2017. So it’s no surprise, the stock has been battered lately, down nearly 50 percent year-over-year. Shares are currently trading at just over 11 times trailing twelve-month earnings. Its earnings-per-share (EPS) is forecast to drop to $2.96 from $4.27. But with analysts expecting healthier sales for a new generation of iPhones set to launch at the end of 2018, the forecast for Cirrus Logic is looking up. If CRUS can raise extremely low investor expectations, analysts see a 20 to 30 percent rise in their stock price with revenue growth of 5.4 percent and earnings per share rising to $3.25. The stock has been climbing recently and is currently trading at approximately $43.50, up from its 12-month low of $35.36 reached in late April.

About Cirrus Logic
Cirrus Logic, Inc., a fabless semiconductor company, develops, manufactures, and markets analog and mixed-signal integrated circuits (ICs) for a range of consumer and industrial markets. The company offers portable and non-portable audio, and other products. Its products include analog and mixed-signal audio converters, and digital signal processing products for mobile applications; codecs-chips that integrate analog-to-digital converters and digital-to-analog converters into a single IC; smart codecs, a codec with digital signal processer; boosted amplifiers; micro-electromechanical systems microphones; digital interface products; and standalone digital signal processors. The company also provides SoundClear technology, which consists of a portfolio of tools, software, and algorithms that offer enhanced voice quality, voice capture, and audio playback features. It provides its products for portable applications, including smartphones, tablets, digital headsets, and speakers, as well as for wearables, such as smart watches and smart bands, VR headsets, and action cameras. The company's products are also used in laptops, audio/video receivers, home theater systems, set-up boxes, musical instruments, and professional audio products applications; and serve the automotive market, which include satellite radio systems, telematics, and multi-speaker car-audio systems. In addition, the company's products are used in industrial and energy-related applications, including digital utility meter, power supply, energy control, energy measurement, and energy exploration applications. It markets and sells its products through direct sales force, external sales representatives, and distributors in the United States and internationally. Cirrus Logic, Inc. was founded in 1984 and is headquartered in Austin, Texas.

Current Price: $41.00
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 3 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $43.1667 (5.3% Upside)

#4 - Skyworks Solutions (NASADAQ:SWKS)


Skyworks Solutions (NASDAQ: SWKS) - The story of Skyworks Solutions comes down to China. Skyworks generates approximately 40% of its revenue from Apple. However, it generates 64% of its revenue by supplying radio frequency (RF) chips for mobile devices, largely because it has aggressively sought to diversify its client base to capture this market. Skyworks Solutions now has their chips in China’s three largest smartphone makers. The largest, Huawei currently surpasses Apple’s sales in China. So why is this an Apple story? Because Apple is forecasting a significant demand for the iPhone in China. How much demand? Apple is anticipating a 170% increase in sales inside China. This should put SWKS in a great position to benefit from their existing client base in China, but also from a boost from additional iPhone sales. SWKS also is seeing growing revenue from its non-smartphone applications. Its “broad markets” category generated 26% of their $256 million revenue in the category. Their technology is now finding a home in smart homes and home security systems. The stock’s current P/E ratio is 14.23 and the stock is trading around $90 which is just above its 52-week low of $87.08.


Current Price: $0.00
Consensus Rating: N/A
Ratings Breakdown: 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: N/A

#5 - Dolby Laboratories, Inc. (NYSE:DLB)

Dolby Laboratories logo

Dolby Laboratories, Inc. (NYSE: DLB) - Dolby partners with Apple in both their iPhones and their Apple TV product lines. Apple announced that they would be using Dolby’s Vision image technology in their iPhone 8, 8 Plus, iPhone X as well as the new 4K Apple TV. Although the technology is not new, Dolby’s commitment to finding partners to ensure that content would be available using Dolby Vision gave Apple the assurance it needed to commit to the technology. The opposite seems to be true with Apple’s decision to use Dolby’s Atmos surround sound technology with Apple TV. The technical advantages of the Dolby product will appeal to audio enthusiasts, but Atmos isn’t fully seeded in the marketplace as of yet. So, in this sense, Apple is hoping the combination of Dolby audio and video will contribute to their anticipated increase in iPhone sales to a consumer base that is ready to upgrade. Dolby’s stock is trading at just over $70 per share well of its 12-month low of $49.83 share. Second quarter revenue was up 3.85% at $317.45 million.

About Dolby Laboratories
Dolby Laboratories, Inc. creates audio and imaging technologies that transform entertainment and communications at the cinema, at home, at work, and on mobile devices. The company develops and licenses its audio technologies, such as AAC & HE-AAC, a digital audio codec solution used for TVs, set-top boxes (STBs), personal computers (PCs), gaming consoles, mobile devices, and digital radio; AVC, a digital video codec with high bandwidth efficiency used in media devices; Dolby AC-4, an audio coding technology that delivers new audio experiences to a range of playback devices; and Dolby Atmos technology for home theaters, cinemas, device speakers, mobile devices, and headphones. Its audio technologies also include Dolby Digital, a digital audio coding technology that provides multichannel sound to applications; Dolby Digital Plus, a digital audio coding technology that offers audio transmission for a range of media applications; Dolby TrueHD, a digital audio coding technology providing encoding for Blu-ray discs and home theaters; Dolby Vision, an imaging technology for cinema and media devices; Dolby Voice, an audio conferencing technology; and HEVC, a digital video codec with high bandwidth efficiency to support for media devices. In addition, the company designs and manufactures digital cinema servers, cinema processors, amplifiers, loudspeakers, hardware components, video conferencing solutions, and other products for the cinema, television, broadcast, and entertainment industries. Further, it offers various services to support theatrical and television production for cinema exhibition, broadcast, and home entertainment. The company serves film studios, content creators, post-production facilities, cinema operators, broadcasters, and video game designers. It sells its products directly to the end users, as well as through dealers and distributors worldwide. Dolby Laboratories, Inc. was founded in 1965 and is headquartered in San Francisco, California.

Current Price: $61.74
Consensus Rating: Buy
Ratings Breakdown: 3 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $77.3333 (25.3% Upside)

#6 - Jabil Inc. (NYSE:JBL)

Jabil logo

Jabil Inc. (NYSE: JBL) - While many of the stocks on this list focus on what's inside the iPhone, Jabil produces the component on the outside, particularly the casing of the iPhone. Like some other Apple suppliers, Jabil's stock took a hit, dropping nearly 10% when sales from the iPhone disappointed in late 2017. However, the stock has rebounded from a 12-month low of $24.38 reached in February 2018 and is now trading at nearly $30 a share that would put it within striking distance of its 12-month high of $31.44 reached in September of last year. Jabil generates 25% of its revenue from Apple but also has relationships with other companies like GoPro and Cisco that helps ensure that they are less dependent on Apple for its growth. In their last reporting period, they reported a 21% annual increase in revenue to $5.44 billion and a non-GAAP EPS of $0.46, beating analysts’ estimates of $4.9 billion and $0.45. The company is also forecasting an approximately 8% increase in the next quarter (between $5.2 - $5.6 billion).

About Jabil
Jabil Inc. provides electronic manufacturing services and solutions worldwide. The company operates through two segments, Electronics Manufacturing Services and Diversified Manufacturing Services. It offers electronics design, production, and product management services. The company provides electronic circuit design services, such as application-specific integrated circuit design, firmware development and rapid prototyping services; and designs plastic and metal enclosures that include the electro-mechanics, such as the printed circuit board assemblies (PCBA). It also specializes in three-dimensional mechanical design comprising the analysis of electronic, electro-mechanical, and optical assemblies, as well as offers various industrial design, advance mechanism development, and tooling management services. In addition, the company provides computer-assisted design services consisting of PCBA design, and PCBA design validation and verification services; and other consulting services, including the generation of a bill of materials, approved vendor list, and assembly equipment configuration for various PCBA designs. Further, it offers product and process validation services, such as product system, product safety, regulatory compliance, and reliability tests, as well as manufacturing test solution development services. Additionally, the company offers systems assembly, test, direct-order fulfillment, and configure-to-order services. It serves automotive and transportation, capital equipment, computing and storage, defense and aerospace, digital home, industrial and energy, networking and telecommunications, point of sale, printing, consumer wearables, healthcare, mobility, and packaging industries. The company was formerly known as Jabil Circuit, Inc. and changed its name to Jabil Inc. in June 2017. Jabil Inc. was founded in 1966 and is headquartered in Saint Petersburg, Florida.

Current Price: $27.03
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 3 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $29.40 (8.8% Upside)

#7 - Broadcom Inc. (NASDAQ:AVGO)

Broadcom logo

Broadcom Inc. (NASDAQ: AVGO) - Broadcom has a long-standing relationship with Apple. However, the semiconductor manufacturer increased the number of chips it provides to iPhones from eight to five including bringing wireless charging to the new iPhones. This led to expectations that AVGO would be a big winner when the new iPhones launched. However, that growth did not materialize right away, and Broadcom’s stock took a temporary hit as Apple accounts for approximately 20% of the company’s revenue. However, even if you’re not convinced that the iPhone is going to take off, there are many reasons to like this stock. That’s because the company is a market leader in 20 semiconductor franchise businesses. Growth through acquisition has been part of the company’s core strategy. The company also benefits from high costs of entry that allows them to enjoy little competition and therefore large profit margins. The stock is currently trading around $219 and some analysts anticipate it could reach a high of $300.

About Broadcom
Broadcom Inc. designs, develops, and supplies a range of semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor based devices and analog III-V based products worldwide. The company operates through four segments: Wired Infrastructure, Wireless Communications, Enterprise Storage, and Industrial & Other. The Wired Infrastructure segment provides set-top box system-on-chips (SoCs); cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs; Ethernet switching and routing application specific standard products; embedded processors and controllers; serializer/deserializer application specific integrated circuits; optical and copper, and physical layers; and fiber optic laser and receiver components. The Wireless Communications segment offers RF front end modules, filters, and power amplifiers; Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; and custom touch controllers. The Enterprise Storage segment provides serial attached small computer system interface, and redundant array of independent disks controllers and adapters; peripheral component interconnect express switches; fiber channel host bus adapters and switches; read channel based SoCs; custom flash controllers; and preamplifiers. The Industrial & Other segment offers optocouplers, industrial fiber optics, motion control encoders and subsystems, and light emitting diodes. The company's products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom Inc. is headquartered in San Jose, California.

Current Price: $272.59
Consensus Rating: Buy
Ratings Breakdown: 28 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $306.1250 (12.3% Upside)

Apple is a stock whose story is still being written. And one of the largest chapters in that story is the iPhone. But while the iPhone is the signature product of an iconic brand, it’s a product that relies on many premium suppliers to help it generate revenue. However, the payoff for the businesses that supply the casings, display screens, semiconductors and audio/visual technology that contribute to the iPhone’s best-in-class reputation, is the way the popular brand is a rising tide that lifts many other boats.

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