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RF Micro Devices (NASDAQ:RFMD) reported earnings before the bell on Wednesday. The company came through with a stellar quarter and is up more than 10% in early trading. I profiled this supplier to Apple (NASDAQ:AAPL) in late September when it was trading at $4 a share. I still hold it and believe it still has momentum and is heading higher.

Key highlights from RFMD's earning report and other catalysts:

  • Excluding items, the company posted a 3 cent a share profit on just under $210mm. This easily beat consensus estimates that called for 1 cent a share profit on under $200mm in sales.
  • More importantly, the company upped fourth quarter guidance. RF Micro Devices is now projecting third-quarter revenue of $245 million and earnings after one-time items of 6 cents per share. Analysts were expecting 4 cents per share on revenue of $219 million.
  • The company's CEO was particularly bullish for the quarters ahead stating "We are increasing our content in the world's leading baseband reference designs and smart devices, and we expect to outpace the rate of growth of our underlying markets, beginning in the December quarter and continuing into calendar 2013."
  • Goldman Sachs came out yesterday saying Apple is showing robust demand for the iPhone 5 and should be able to substantially increase production of the latest version of its juggernaut franchise. RFMD supplies components for the phone so this is a significant positive.

RF Micro Devices, Inc. designs and manufactures radio frequency components and compound semiconductor technologies primarily in the United States and Asia.

4 reasons RFMD is still a buy at $4.50 a share:

  1. The company has a robust balance sheet with nearly $150mm in net cash on the books (over 12% of its market capitalization).
  2. Analysts were already expecting over 10% revenue growth for FY2013. Based on this latest quarterly report and company guidance, I would look for that number to be taken to at least 15%.
  3. The company is well positioned to the transition to mobile as its two biggest customers by year end will be Apple and Samsung (OTC:SSNLF).
  4. The stock was $7.50 a share late last year. RFMD looks like it has put in a solid bottom here (See Chart). I could easily see it retracing at least half its previous high ($5.75 - $6 a share) by the end of the year especially if mobile devices from its key customers continue to gain market share.

(click to enlarge)

Source: iPhone 5 Supplier Beats Estimates And Is Heading Higher