Tech giant Apple Inc. (AAPL) launched the much-awaited iPhone 13 line on September 14, and analysts predict a huge demand for upgrading older iPhones to drive sales significantly. Wedbush analysts expect 250 million iPhone users to go for an upgrade this cycle. More than 2 million pre-orders were placed in China for the iPhone 13 through AAPL’s official store on JD.com, Inc. (JD), and it surpassed last year’s pre-orders for iPhone 12.
Wedbush analysts believe that AAPL is still in the middle of its “supercycle” of iPhone sales. Moreover, the sales momentum is expected to remain high ahead of the holiday shopping season, with improved features like increased battery life, higher default storage space, and camera up-gradation.
Given this backdrop, it could be wise to bet on shares of iPhone’s component suppliers Broadcom Inc. (AVGO) and QUALCOMM Incorporated (QCOM). These stocks are expected to rally on solid iPhone 13 sales.
Broadcom Inc. (AVGO)
Incorporated in 2008, AVGO is a global technology company that focuses on semiconductor and infrastructure software solutions. The company combines global scale, engineering depth, broad product portfolio diversity, superior execution, and operational focus to deliver category-leading semiconductor and infrastructure software solutions.
AVGO offers several chips used in the iPhones, including chips for processing 5G and Wi-Fi 6e components.
This month, AVGO launched the world’s lowest power L1/L5 GNSS receiver chip with GNSS innovations, the BCM4778, optimized for mobile and wearable applications. This third-generation chip should enable the company to maintain its tradition of raising the bar for mobile GNSS and allow its customers to experience 35% smaller and 5% less power consumption features.
AVGO’s net revenue for the fiscal third quarter that ended August 1, 2021, increased 16.4% year-over-year to $6.78 billion. The company’s net income grew 28.3% from the year-ago value to $3.12 billion. Its EPS rose 28.9% from the prior-year quarter to $6.96. Also, the company’s cash flow increased 11.4% from the year-ago value to $3.54 billion.
Analysts expect AVGO’s revenue to increase 14.7% year-over-year to $27.4 billion in the fiscal year 2021. Also, the company has an impressive earnings surprising history; it surpassed the consensus EPS estimates in each of the trailing four quarters. In addition, its EPS is expected to increase 26% in the current year. Moreover, the stock has gained 14.1% over the past nine months and 34.4% over the past year.
AVGO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A, which equates to a Strong Buy rating in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has a B grade for Momentum, Growth, and Quality. We’ve also graded AVGO for Sentiment, Stability, and Value. Click here to access all of AVGO’s ratings. AVGO is ranked #2 out of 97 stocks in the B-rated Semiconductor & Wireless Chip industry.
QUALCOMM Incorporated (QCOM)
QCOM is a wireless technology innovator that includes processors, modems, platforms, RF systems, and connectivity products. The company also offers a wide range of purpose-built, pre-packaged software, hardware, and tools in addition to products based on the end-use application of designs.
The company provides modems and 5G components used in iPhones. In fact, the latest iPhone 13 line uses QCOM’s X60 modem.
Last month, QCOM announced the offer to acquire Veoneer for $37 per share in an all-cash transaction. This acquisition should enable the company to bring advanced technologies to the automotive industry and offer a natural extension of QCOM’s digital chassis solutions.
During the fiscal third quarter that ended June 27, 2021, QCOM’s total revenues increased 64.7% year-over-year to $8.06 billion. The company’s operating income grew 180.7% from the year-ago value to $2.2 billion. Its net income rose 139.8% from the prior-year quarter to $2.03 billion. Also, the company’s EPS increased 139.2% year-over-year to $1.77.
QCOM’s revenue for the fiscal year 2021 is expected to be $33.02 billion, representing a 52.5% year-over-year growth. The company has an impressive earnings surprise history; it beat the consensus EPS in each of the trailing four quarters. Also, its EPS is expected to grow 97.1% in the current year. QCOM’s stock price surged 10.1% over the past year.
QCOM’s POWR Ratings reflect this promising outlook. The stock has an overall grade of B, which equates to a Buy rating in our proprietary ratings system. Also, the stock has a B grade for Value, Momentum, and Quality.
In addition to the POWR Rating grades I’ve just highlighted, one can see QCOM’s grades for Growth, Stability, and Sentiment here. The stock is ranked #13 in the same industry.
Want More Great Investing Ideas?
AVGO shares were trading at $486.68 per share on Thursday morning, down $2.80 (-0.57%). Year-to-date, AVGO has gained 13.73%, versus a 16.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|AVGO||Get Rating||Get Rating||Get Rating|
|QCOM||Get Rating||Get Rating||Get Rating|
|AAPL||Get Rating||Get Rating||Get Rating|