Seeking Alpha
Long/short equity, growth, medium-term horizon, registered investment advisor
Profile| Send Message|
( followers)  

One of the most anticipated events of Q1 was Apple's (NASDAQ:AAPL) new iPad launch. I covered the supply chain winners and losers here. But for investors wondering whether stock price moves were baked in ahead of the iPad's launch, it's interesting to consider how Apple-related plays have behaved in the past.

Of course, when considering these suppliers prior Q2 performance, we have to remember the influence of Apple's news flow was far less before deciding on a spring launch for its iPad in 2010. As such, 10-year returns are more indicative of the consumer electronics supply cycle itself than impacts from any one device maker.

Regardless, a quick look through the seasonality of Apple and its supply chain suggests investors have been more discerning when it comes to owning suppliers over the past five years than over the past 10.

None of the stocks considered offer dramatic seasonal tendencies over the last Q2s. Almost all finished the quarter higher in four, five or six of the past 10 years - boringly neutral. Fairchild (FCS) was the only notably poor seasonal play, rising in only three of the past 10 years.

In the past five years, seasonality has been more hit and miss.

Apple, Qualcomm (QCOM) and Skyworks (SWKS) have all posted gains in four of the past five second quarters. Meanwhile, Broadcom (BRCM), Corning (GLW), Fairchild and Texas Instruments (TXN) have gained ground in only two of the past five Q2s.

Given seasonality, investors should tighten stop losses on Broadcom, Corning, Fairchild and Texas Instruments and give Qualcomm and Skyworks a bit more leeway.

The following table, courtesy of The Seasonal Investor, provides history over the past five years.

Symbol

Years Up

Q2 07

Q2 08

Q2 09

Q2 10

Q2 11

Q2 Average

AAPL

4

31.35%

16.68%

35.49%

7.03%

-3.68%

17.38%

BRCM

2

-8.77%

41.61%

24.12%

-0.46%

-14.33%

8.43%

CRUS

3

8.36%

-17.26%

19.68%

88.44%

-24.39%

14.96%

FCS

2

15.55%

-1.59%

87.40%

-21.03%

-8.19%

14.43%

GLW

2

12.39%

-3.91%

21.41%

-19.84%

-11.78%

-0.35%

NUAN

3

9.27%

-9.99%

11.62%

-10.16%

9.82%

2.11%

QCOM

4

2.05%

8.58%

16.62%

-21.31%

3.97%

1.98%

SWKS

4

27.83%

35.58%

21.46%

7.63%

-29.07%

12.68%

TQNT

3

1.20%

19.76%

114.98%

-12.71%

-21.07%

20.43%

TXN

2

25.30%

-0.04%

29.83%

-4.41%

-4.66%

9.20%

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NUAN over the next 72 hours.

Source: Apple's Supply Chain: Q2 Winners And Losers