Apple's stock has been range bound over the last few weeks. However, with the Cupertino giant set to launch the next installement of its iPhone, investors can expect better times ahead. I think Apple suppliers stand to benefit more from the launch of the iPhone, which is why I would recommend investors to buy five of my favorite Apple supliers. They are:
1) Skyworks Solutions (NASDAQ:SWKS)
2) RF Micro Devices (NASDAQ:RFMD)
3) TriQuint Semiconductor (NASDAQ:TQNT)
4) NXP Semiconductor (NASDAQ:NXPI)
5) Avago Technologies (NASDAQ:AVGO)
Why the iPhone 6 will be successful
In fiscal 2013, Apple derived roughly 53% of its revenue from the iPhone. Thus, it's obvious that the success of Apple largely depends on how the iPhone 6 is received in the market. Over reliance on one product can be risky for many companies, but Apple is an exception. It's a well-known fact that Apple has a very loyal fan base, and a lot of people will buy the new iPhone just to replace their older Apple phones. In fact, according to Statista, nearly 70% of Apple's iPhone sales may come from users looking to swap older iPhones with the iPhone 6. This figure can rise to about 80% in 2015.
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- SWKS 15-Year Financial Data
- The intrinsic value of SWKS
- Peter Lynch Chart of SWKS
The increasing magnitude of replacement sales should ensure that Apple's next iPhone should begin with a bang. If the company brings new technology and arms the iPhone with a bigger screen, then it can bring users from other platforms into its fold as well.
The Galaxy S5 does not look good enough
Every year, tech fans eagerly wait for flagship devices from Apple and Samsung to hit the market. However, the specifications of Samsung's Galaxy S5 aren't great, so it might not be a huge hit. This certainly bodes well for Apple, as the Galaxy S5's lack of new features will push more customers toward the iPhone 6.
Several factors indicate that the Galaxy S5 will not be a hit. First, the phone is unattractive. Samsung may have gone too far to give the S5 a unique look (or maybe to avoid another lawsuit). The stippled backside of the phone hasn't helped Samsung gain any fans, as people across Twitter and Facebook have compared the Galaxy S5 to a band-aid. This clearly proves that the phone's design hasn't impressed tech enthusiasts.
The phone's lack of features include exclusion of optical image stabilization from the camera and no significant improvement in the TouchWiz software. This has set up the iPhone 6 for a blockbuster launch, and it won't be surprising if its sales smash all estimates.
I am extremely confident that the iPhone 6 will be a bigger success than its predecessors and the five Apple suppliers stand to benefit from it. All the five aforementioned stocks have reportedly gained or sustained dollar-content in the upcoming iPhone, which is why I think they represent massive upside potential. Hence, I think it'd be wise to buy these five Apple suppliers.