We are now two days away from the much anticipated launch of the iPhone 5 from Apple (AAPL). The hyperbole is in hyper drive. Reuters was out this morning predicting the iPhone launch will add between 25 to 50 basis points to the domestic GDP in the fourth quarter. Bloomberg estimates Apple will sell over 10mm units within weeks of launch. So how can investors play the rollout of the iPhone 5? Here are three reasonably priced tech firms that are supplying key components for the next version of the iPhone.
Key Component (S) for the iPhone 5: Touch screen MCU, Connectivity, Multi-Touch Controller
Estimated revenue per iPhone 5: $6.50
3 reasons BRCM is offers good value at $35 a share:
- The company has beat earnings estimates for twelve straight quarters. The average beat over consensus during the last four quarters has averaged 9%.
- The stock is selling for just over 11.5 times forward earnings, a significant discount to its five year average (18.8).
- The company sports an A- rated balance sheet. It has grown earnings and revenues at an average annual clip of 29% and 16% respectfully over the past five years.
Key Component for the iPhone 5: Baseband processors
Estimated revenue per iPhone 5: $18
3 reasons QCOM is a great long term investment at $61 a share:
- Qualcomm boasts a fortress balance sheet with over $12B in net cash on the books (over 10% of market capitalization).
- The company has beat earnings estimates for 11 of the last 12 quarters and has a forward PE of 15, under its five year average (18.0)
- QCOM sports S&P's highest rating "Strong Buy" and has an $82 price target on the stock.
"Cirrus Logic (CRUS) is a fabless semiconductor company, develops and sells high-precision analog and mixed-signal integrated circuits for audio and energy markets worldwide." (Business description from Yahoo Finance)
Key Component for the iPhone 5: Audio Codec and DSP, Audio processor
Estimated revenue per iPhone 5: $2.80
3 reasons CRUS is a solid growth play at under $43 a share:
- Consensus earnings estimates for FY2012 and FY2013 have risen approximately 30% over the last two months.
- Barclays, Feltl & Co., and Canaccord Genuity have all initiated the stock as a "buy" or "overweight" in the last six weeks.
- The stock has a forward PE of around 14.5, a discount to its five year average (20.2).
Disclosure: I am long QCOM.