The long anticipated iPhone has been introduced by Apple (AAPL) - Get Report. After all the hype has passed and the excitement has settled down, how can investors make money off of this exciting new product?
Apple's stock is obviously benefiting from the launch last week and has rallied over $10, but we learned from its iPod that Apple wasn't the only company that investors could make money on as the product's popularity grew. If the iPhone continues to sell as well as it did last week, we should take a look at the vendors supplying the parts for the iPhone. Apple is the big winner if the iPhone does well, but the success of this product may create a bullish "halo" effect around the suppliers. Here's how they look.
We can start with one to avoid.
makes the video drivers used in the iPhone. BRCM is not holding a healthy configuration in what is an increasingly positive semiconductor group.
The stock has been under pressure and unable to get any meaningful advance going over the past 18 months. We would avoid Broadcom for the time being. It will take a move above the $34-$35 level for this issue to show any improvement, and we would only revisit it at that point.
This contrasts with another big chip manufacturer,
, which makes analog chips used in the phone. This stock is showing real improvement in the price action over the last six months and is now on the offensive and in an intermediate-term uptrend.
The recent price action has formed a bull flag, which is providing a low-risk entry point into the stock. We believe this issue will have further strength to the mid $30s and would be buyers at current levels.
Perhaps the best technical configuration from a momentum standpoint, and one that has the best prospects for further price appreciation, is
. Infineon manufactures RD chips used in the phone.
The stock has been advancing in an orderly uptrend since last November and recently broke out of lateral consolidation, a base within the uptrend. This type of consolidating action is constructive and promotes the further advance of the stock. We would look for further strength into the low 20s.
At the time of publication, John Hughes and Scott Maragioglio were long Apple and National Semiconductor. Hughes and Maragioglio co-founded Epiphany Equity Research, which has developed and utilizes proprietary tools to identify and track liquidity changes in the market indices and sectors. Hughes advises numerous asset managers, hedge funds and institutions managing in excess of $30 billion. Maragioglio is a member of the market technicians association (MTA) as well as The American Association of Professional Technical Analysts (AAPTA) and holds a Chartered Market Technician (CMT) designation. Maragioglio has also served on the board of directors of the AAPTA.