While the launch of the iPhone 12 series was delayed last year due to COVID-19 pandemic-related restrictions, Apple Inc. (AAPL) is expected to launch iPhone 13 by the end of September. In addition to a super-fast 5G modem, the model is expected to have a better display and a significantly improved camera. And according to a Bloomberg report, AAPL is boosting its production by 20% to 90 million units, anticipating high demand.
Forty-four percent of iPhone owners are expected to buy the new iPhone, according to a survey by SellCell. iPhone sales accounted for 48.6% of AAPL’s net sales in the third quarter (ended June 26, 2021). Also, the sales from its iPhone segment increased 49.8% year-over-year to $39.57 billion in the third quarter. While AAPL is expected to benefit significantly from the forthcoming iPhone 13, some quality iPhone suppliers will also likely benefit. In addition, they could witness a secular demand uptick because the 5G cycle is just getting started.
Against this backdrop, we think it could be wise to scoop up the shares of fundamentally strong iPhone supplier stocks Broadcom Inc. (AVGO), Qorvo, Inc. (QRVO), and LG Display Co., Ltd. (LPL). They are expected to gain substantially from the sale of the iPhone 13 and other industry tailwinds.
Broadcom Inc. (AVGO)
Global technology leader AVGO in San Jose, Calif., designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions. The company provides several chips used in the iPhone, including chips for Wi-Fi and Bluetooth and an Avago-branded RF front-end chip that helps the phone connect to wireless networks.
AVGO announced new, industry-first capabilities for Value Stream Management (VSM) on June 15 in its ValueOps software portfolio, which combines Clarity’s proven investment planning features with advanced Agile management capabilities of Rally software.
The company also announced the availability of its expanded portfolio of 100Gb, 200Gb, 400Gb, and 800Gb electro-optics platform solutions on June 3 for data center and cloud networks. This expands AVGO’s product portfolio significantly.
For its fiscal second quarter, ended May 2, 2021, AVGO’s net revenue came in at $6.61 billion, representing a 15.1% year-over-year rise. The company’s revenue from semiconductor solutions increased 19.7% year-over-year to $4.82 billion. Its non-GAAP net income increased 28.3% year-over-year to $2.98 billion, while its non-GAAP EPS increased 28.8% year-over-year to $6.62. Furthermore, its adjusted EBITDA came in at $3.96 billion, up 23.4% year-over-year.
AVGO’s revenue is expected to increase 14.1% year-over-year to $27.24 billion in its fiscal year 2021. The company’s EPS is expected to grow 18% year-over-year to $7.49 for the quarter ending October 31, 2021. In addition, it has surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past three months, the stock has gained 12.9% to close Friday’s trading session at $486.16.
AVGO’s strong fundamentals are reflected in its POWR Ratings. So, the stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has a B grade for Growth, Stability, Sentiment, and Quality. We have also graded AVGO for Value and Momentum. Click here to access all AVGO’s ratings. AVGO is ranked #5 of 99 stocks in the B-rated Semiconductor & Wireless Chip industry.
Recently the Reitmeister Total Return Portfolio (RTR) closed a winning trade in AVGO for a 25% gain. Learn more about the RTR service here.
Qorvo, Inc. (QRVO)
QRVO is a leading provider of technologies and RF solutions for mobile, infrastructure, defense, and aerospace applications. The Greensboro, N.C.-based company operates through two segments: Mobile Products and Infrastructure and Defense Products. And on June 7, it announced the interoperability of its DW3000 family of products with the AAPL U1 chip used in iPhone and AAPL Watch models.
QRVO announced on June 21 that it is now shipping the world’s first commercially available family of electronically reconfigurable dual-band GaN power amplifiers (PA)— QPA0007 and QPA0004. This is expected to expand its portfolio in the reconfigurable GaN PAs space.
Furthermore, on May 6, 2021, QRVO acquired NextInput, a pioneer in the emerging field of force-sensing solutions for human-machine interfaces (HMI). Eric Creviston, president of Qorvo Mobile Products, said, “The NextInput team is a great addition to our mobile products business, providing MEMS-based sensors in innovative products for customers in existing and new markets.”
QRVO’s top line surged 41% year-over-year to $1.11 billion for its fiscal first quarter, ended July 3, 2021. The company’s non-GAAP operating income for the quarter came in at $367.03 million, up 80.1% year-over-year. While its non-GAAP net income increased 84.3% year-over-year to $322.63 million, its non-GAAP EPS increased 88.7% year-over-year to $2.83.
Analysts expect QRVO’s revenue to increase 18.3% year-over-year to $4.75 billion in the current year. The company’s EPS is expected to come in at $3.25 for the quarter ending September 30, 2021, representing a 33.7% year-over-year rise. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock’s price has soared 12.9% over the past three months to close Friday’s trading session at $188.36.
QRVO’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, it has an A grade for Quality and a B grade for Growth and Sentiment.
In addition to the POWR Rating grades I’ve just highlighted, one can see QRVO’s ratings for Momentum, Value, and Stability here. QRVO is ranked #17 in the Semiconductor & Wireless Chip industry.
LG Display Co., Ltd. (LPL)
Headquartered in Seoul, South Korea, LPL designs, manufactures, and sells thin-film transistor liquid crystal display (TFT-LCD) and organic light-emitting diode (OLED) technology-based display panels. According to a Korean tech site, LPL will supply its flexible OLEDs for the iPhone 13.
On May 12, 2021, LPL announced that its 65-inch Rollable OLED TV had won the Display of the Year award at the Society for Information Display’s (SID) 2021 Display Week. Soo-young Yoon, LPL’s CTO , said, “LG Display is fully committed to its invaluable research and development that brings life to the most innovative and differentiated OLED technologies on the market, creating value and expanding the sector so that the endless benefits of self-emitting displays can finally be made mainstream and experienced by all.”
Also, LPL announced in March 2021 that it had obtained ‘Discomfort Glare Free’ marketing claim verification for all OLED TV panels from UL. This could lead to increasing demand for the products.
LPL’s revenue increased 31% year-over-year to KRW 6.97 trillion ($5.99 billion) for the second quarter, ended June 30, 2021. This all-time high second-quarter revenue was driven by increased sales in TV displays, including OLED, solid performance in IT products, and an increase in LCD panel prices. Its net income came in at KRW 424 billion ($364.46 million) compared to a KRW 504 billion ($433.23 million) loss in the year-ago period.
For its fiscal year 2021, LPL’s revenue and EPS are expected to increase 29.9% and 900%, respectively, year-over-year to $26.71 billion and $1.68. Also, it surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 33.9% to close Friday’s trading session at $8.88.
It’s no surprise that LPL has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Value and a B grade for Growth and Stability.
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AVGO shares were trading at $486.75 per share on Monday morning, up $0.59 (+0.12%). Year-to-date, AVGO has gained 12.91%, versus a 19.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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