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While Apple (OTC:APPL) continues to announce blowout quarters based on iPhone and iPad sales the professional shorts keep shorting two stocks that could soon announce some very impressive numbers. I have no idea why they are so entrenched in these stocks, but the day of reckoning may be coming. Many of the stocks representing an alternative way to play Apple's success, have prospered along with APPL. The shorts are hell-bent on keeping the lid on these two.

The Winners

Baidu (NASDAQ:BIDU) is the owner of the most widely used search engine in China. Apple will only increase that market share, as more devices are capable of accessing the internet. Baidu shares have gone from a low in December 2011 of approximately $110 to a high of over $150 in April 2012.

Cirrus Logic (NASDAQ:CRUS) is a developer of integrated circuits for use in the audio and energy segments. It is a major supplier of Apple circuit boards. Cirrus Logic's shares have gone from a low of $13 in August to a high of $25 plus in March 2012.

Broadcom Corp (NASDAQ:BRCM) is a global leader in semiconductor solutions for wired and wireless communications. It is a Tier 1 supplier to Apple. Broadcom"s stock has gone from f$27.50 in December 2011 to a high of $39 in April 2012.

Qualcom Inc. (NASDAQ:QCOM) designs, develops, manufactures, digital telecommunications products and services. It is a Tier 1 supplier to Apple. Qualcom"s stock has gone from $45 in August 2011 to a high of $68 in March 2012.

The Eventual Winners

ZAGG, Inc. (NASDAQ:ZAGG)

Zagg designs and manufactures accessories for the smartphone and tablet market. Zagg is the leading smartphone accessory player in the U.S. It sells the InvisibleShield screen protector for Apple and Android products. Zagg holds the U.S. patent for protecting electronics with film. ZAGG's core product is the Invisible Shield screen protector.

ZAGG owns iFrogz, a major case and accessory seller. ZAGG also sells keyboard cases for the tablet market and has partnered with Logitech (NASDAQ:LOGI) selling co-branded iPad keyboard cases throughout the Apple Stores.

Most of these products are sold through Big Box retailers like Best Buy (NYSE:BBY), Wal-Mart (NYSE:WMT) and smartphone retailers such as AT&T (NYSE:T) and through the Apple Stores (NASDAQ:AAPL).

ZAGG also holds 47% interest in HZO, which is a venture-capital backed company that designs a nanotechnology coating that protects devices from damage by water and moisture. That's right - HZO is making it possible to waterproof your phone.

What follows here are the reasons why I believe ZAGG is a great investment:

  • There are 31 million Shares outstanding, of which there are, 9.4 million shares short. Institutions own 12.1 million shares, and insiders own 10.5 million shares. This adds up to 32.5 million shares, 1.5 million shares more than what is currently outstanding.
  • The last three years' revenue was $38.1 million, $76.1 million and $179.1 million and projected revenue in 2012 exceeding $250 million.
  • There are four analysts following the company all having buy recommendations with a consensus price per share estimate of $21.
  • Analysts are projecting 2012 earnings of $0.80 versus $0.63 in 2011.
  • ZAGG has met or beat the street estimate for six quarters in a row.
  • The current short position is 42.29% of the float according to ShortSqueeze.com.
  • ZAGG has a PEG ratio of .55.

Skullcandy, Inc. (NASDAQ:SKUL)

Skullcandy is a lifestyle products company selling distinct audio branded headphones and other smart phone accessories. Skullcandy brings color, character, and performance to what has been a monochromatic space. It co-brand products with the NBA and other sporting venues. It also recently announced a line that links with runway model Kate Upton.

While the shorts have made a point of dismissing the value of a brand, I suggest they check out Nike (NYSE:NKE) and Lululemon Athletica (NASDAQ:LULU). Neither company designs and manufactures a product that can't be copied and reproduced; however, each company is a master at marketing their product and placing it in the correct channels to maximize revenue. Skullcandy has the same type of branding appeal and with the massive short interest is poised for a classic short squeeze.

Here are the reasons why I believe Skullcandy is a great investment:

  • Skullcandy has 27 million shares outstanding, of which there are 9.18 million shares short. Institutions own 14.3 million shares, and major holders (Form 3 and Form 4 filers) own 10.2 million shares. This adds up to 34.6 million shares, 7.6 million shares more than what is currently outstanding. The short interest is approximately 87% of the float.
  • Skullcandy is followed by 8 analysts all having buy recommendations with a consensus price per share estimate of $22 and a high of $28.
  • The last three years' revenue was $118 million, $160.5 million, $232.4 million, and projected revenues for 2012 are $280 million.
  • There has been recent insider buying in the company's stock.
  • Skullcandy has beaten the consensus earnings estimate in the 3 quarters they have been public.
  • Earnings were $1.00 per share in 2011 and are projected between $1.15 and $1.20 a share in 2012. Earnings are projected at $1.43 in 2013.
  • The PEG ratio is .59
  • For more info on SKUL

Conclusion

While APPL keeps sailing away, the professional shorts have managed to keep a lid on SKUL and ZAGG. It begs to question: Do you know these companies sell accessories for smartphones ?

Source: Don't The Shorts Know These Companies Sell Accessories