Apple's Surprise Q3 Earnings Could Be Huge for These 6 Stocks

Lee Jackson

This semiconductor leader is working hard to focus more on Internet of Things and data center cloud spending and away from PCs. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide.

The company’s platforms are used in various computing applications, comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.

The company’s share of total business with Apple is expected to be an estimated 5% of revenue for calendar 2018. That figure may be growing, and the analysts said this:

We estimate that Apple was <3% of sales for Intel ex-CPU revs in 2016, with an estimated ~40% allocation for baseband processors. We believe this allocation likely expanded to ~60% in the latest generation iPhones and note that recent press reports have this figure as high as 70% in 2018 and 100% in 2019.

Intel investors receive a solid 2.29% dividend. Deutsche Bank’s Buy rating comes with a with a price target of $64. The consensus price objective is just $54.22, and the stock was trading at $52.00 a share.

ON Semiconductor

Aggressive accounts may want to look at this smaller cap play. ON Semiconductor Corp. (NASDAQ: ON) is a vendor of analog power management, analog signal conditioning, standard logic ICs and discrete chips into the automotive, communications, computing, consumer, industrial and medical applications. The company is in the midst of a transformation from a seller of commodity discrete chips into higher value-added analog ICs, both through organic growth and acquisitions.

The analysts view ON as an underappreciated way for investors to benefit from the emergence of advanced driver assistance systems and eventually autonomous driving. While the company is inherently levered (operationally and financially) and therefore subject to investor fears of cyclical volatility, many continue to see structural upside for the shares.

The company has lower exposure to Apple, but the Deutsche Bank team noted this:

ON has not historically had a meaningful exposure to Apple; however, we believe that their content is likely rising in next-gen devices. Specifically, we see them gaining content in Applesfast charging solution (charger side vs. device side). We estimate that this could mean that AAPL is ~5% of ON sales in 2018 estimated.

The Deutsche Bank price target for the Buy-rated stock is $27 a share. The posted consensus target price is $26.21, and the shares were trading at $21.85.

These six top companies to varying degrees are exposed to the fortunes at Apple. While the numbers are always subject to change, it’s a good bet that Apple continues to strive for innovation and improved product performance.