by Tom Taulli | December 16, 2013 10:30 am
Apple (AAPL) has gotten its mojo back lately. Since the start of July, AAPL stock is up about 40%. A few key drivers have been its China Mobile (CHL) deal and strong holiday demand for new Apple products.
The good news doesn’t end with shares of Apple stock, though. As Apple’s fortunes rise, there should be improvements in in the AAPL ecosystem of supplies as well — companies that I like to call Apple stocks.
Of course, choosing which Apple stocks are the best for indirectly betting on the tech company is far from easy. There are certainly many Apple stocks to choose from, to start. What’s more, there is always the problem that AAPL will get aggressive and switch to another vendor or even create its own technologies.
In other words, for Apple stocks, the risks can be substantial. Any hint that AAPL may make a change can drive down the value of a company’s shares.
Still, if you want to bet on the momentum without actually buying AAPL stock, there are a few solid names to consider. Here are three of the top Apple stocks out there:
What It Supplies APPL: Chips that provide Internet connectivity as well as a controller for the touch screen.
It’s been a rough year for Broadcom (BRCM), with BRCM stock off about 14%. The problem is that Broadcom has struggled to meet growth targets from Wall Street analysts. In fact, among the Apple stocks, BRCM has certainly been one of the worst.
Going into 2014, though, BRCM could post a comeback. According to a recent report, Broadcom updated its guidance for Q4:. Revenues are now expected to hit $2 billion to $2.05 billion, above the prior forecast of $1.92 billion to $2.03 billion. During the same period, BRCM also expects improved profitability, as expenses are expected to fall.
And all in all, Broadcom is seeing more traction in its infrastructure and networking products, has been successful in implementing new inefficiencies, and has been successful getting business from Samsung (SSNLF). In light of all this, BRCM may no longer be in the doghouse for Apple stocks.
There’s also some buzz that BRCM could be buyout bait for Intel (INTC), which is desperately looking to get a much bigger piece of the mobile market. While such things are far from guaranteed, a deal would likely come at a juicy premium and likely make BRCM one of the top-performing Apple stocks for 2014. Nomura analyst Romit Shah thinks the deal could be struck at 50% higher than the current Broadcom stock price.
What It Supplies APPL: Radio chips for the Apple iPhone and Applie iPad
When it comes to Apple stocks, Skyworks Solutions (SWKS) is one of the most dependent. According to its fiscal 2012 10-K, nearly 30% of revenues came from AAPL.
True, SWKS has been trying to diversify its base by snagging customers like General Electric (GE). But for the most part, SWKS will firmly remain one of the key Apple stocks.
That should be a good thing, too. Apple is likely to get a boost in iPhone sales from its new relationship with China Mobile (CHL). It also looks like the Apple iPad has become the must-have item for the Christmas season, at least based on early results from retailers like Walmart (WMT) and Target (TGT).
As a result, SWKS stock looks positioned for solid growth over the long haul. Skyworks Solultions’ chips will continue to be in high demand as more and more devices become connected, which is key for Apple stocks. And this is especially the case in markets like China.
What It Supplies APPL: Chips that provide sensors for functions like the gyroscope, compass and even the new fingerprint system on the Apple iPhone 5.
NXP Semiconductors (NXPI) is not a typical Silicon Valley chip operator. Instead, the company got its start back in 1953 in Nijmegen, Netherlands. But NXPI has since become one of the largest semiconductor companies, and has also recently made great strides in becoming a prominent member of the family Apple stocks.
Then again, this shouldn’t be surprising considering NXP Semiconductors plows huge amounts into R&D and has over 10,000 patents. Plus, NXPI also controls a big footprint in Europe. Oh, and there is also lots of business in China. That’s good news because, when it comes to being a part of the family of Apple stocks, having a global presence is important.
NXPI also has lots of experience with technologies for in-car networking, connected TVs and mobile payments — all of which should be secular growth drivers. In other words, it is good bet that NXPI will be one of the top Apple stocks and suppliers for some time.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
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