10 Stocks Poised to Rise in Apple's Wake

BOSTON (TheStreet) -- Apple's (AAPL) blow-out fiscal second quarter, led by huge gains in sales of iPhones, will raise the prospects for a range of companies, including suppliers and even competitors, along with polishing its own reputation.

Apple, the maker of the iPad tablet, MacBook laptops and iPhone smartphone, late Tuesday reported a 94% jump in earnings to $11.6 billion and a 59% increase in revenue to $39 billion for the first three months of the year, well above analysts' estimates.

Leading Apple's bandwagon in the period was the sale of 35 million iPhones, accounting for about half of its revenue in the quarter.

Apple's share price closed at $610 Wednesday, up 9% on the day, which has to have investors thinking about what else will ride along on its coattails.

Obviously, its suppliers, various chip and interface components makers, such as Broadcom ( BRCM) and Qualcomm ( QCOM), will benefit, along with a handful of others on the prospect that they will see a flood of new orders.

Since Apple saw most of its iPhone growth in China in the quarter, that nation's service providers should eventually get a boost as more people will log on with their new iPhones and ring up big charges for sending email, surfing the Internet and making voice calls.

And Apple's big gains give hopes to its competitors as well, as its success shows that there is still a huge international market for smartphones. So lower-priced providers using the Android communications platform should be able to find market share by following in Apple's footsteps.

Motorola Mobility ( MMI), which is about to be acquired by Google ( GOOG), and Korea's Samsung Electronics ( SSNLF) are the leading Android phone makers.

Google, better known for its Internet search engine, has cited Motorola Mobility's library of 17,000 patents for smartphones as the impetus for its acquisition and that shows its intent on being a mobile-communications player.

Here are 10 stocks that should benefit from Apple's success in selling iPhones, arranged in descending order of analysts' "buy" ratings:

10. China Mobile ( CHL)

Company profile: China Mobile, with a market value of $220 billion, is one of three national telecommunications firms in China and controls almost 70% of the country's wireless market, boasting the world's largest subscriber base, at more than 630 million.

Dividend Yield: 3.71%

Investor takeaway: Its shares are up 12.6% this year and have a three-year, average annual return of 9.6%. Analysts give its shares one "buy hold" rating, three "holds," one "weak hold," and one "sell," according to a survey of analysts by S&P.

Morningstar analyst Dan Su says China Mobile is "handicapped by the mandate to use the less-mature TD technology in 3G," which leaves out most Apple products for now.

China Mobile's 3G wireless services operate on a Chinese-developed standard not supported by the iPhone. The handicap means China Mobile, unlike its two main competitors in China, is unable to bundle the iPhone as part of its data-service packages.

But the company recently announced plans to speed up the build-out of 4G TD-LTE network over the next few years. And last week the company said it began 4G wireless services in Hong Kong, adding the city to test markets ahead of a nationwide rollout in mainland China slated for 2014, on expectations that its 4G, which is being developed on a standard known as TD-LTE, will support the next-generation of Apple's iPhone.

9. TriQuint Semiconductor ( TQNT)

Company profile: TriQuint, with a market value of $916 million, makes high-performance radio frequency components and modules, used by its customers in 3G and 4G cellular base stations.

Investor takeaway: Its shares are up 5.3% this year and have a three-year, average annual return of 9%. Analysts give its shares three "buy" ratings, one "buy/holds," six "holds," and one "weak hold," according to a survey of analysts by S&P.

S&P says "we see mobile devices, (the company's) largest business segment, benefiting from the increasing adoption of smartphones and the expansion of RF (radio frequency) content required for 3G/4G technology" used in mobile handsets.

8. China Telecom ( CHA)

Company profile: China Telecom, with a market value of $35 billion and one of three national telecommunications firms in China, is a provider of wireline telephone, Internet and managed data services in 20 of the 31 provinces in China.

Dividend Yield: 1.8%

Investor takeaway: Its shares are down 8% this year, but have a three-year, average annual return of 5.4%. Analysts give its shares three "buy" ratings, one "buy/hold," and three "holds," according to a survey of analysts by S&P.

S&P, which has it rated "hold," says "the introduction of the CDMA-based iPhone in China will enable the company to strengthen its position in the 3G market, translating into stronger revenue per user and data growth. However, we believe the company will face earnings pressure due to margin contraction in 2012."

But Morningstar analyst Dan Su writes that "on March 9, (the company) became the second mobile carrier in the country to offer the iPhone 4S under a contract with Apple, ending more than two years of exclusivity enjoyed by rival China Unicom ( CHU). The iPhone will help boost the appeal of China Telecom's CDMA network among higher-end smartphone users."

7. OmniVision Technologies ( OVTI)

Company profile: OmniVision, with a market value of $958 million, is a provider of CMOS image sensor semiconductors used in a broad range of electronic devices. The chips are used to electronically capture images in gadgets such as phone cameras and digital-still cameras. Most of its revenue comes from handset manufacturers.

Investor takeaway: Its shares are up 44% this year and have a three-year, average annual return of 24%. Analysts give its shares three "buy" ratings, two "buy/holds," and seven "holds," according to a survey of analysts by S&P.

S&P says the company "has what we see as an impressive portfolio of quality and feature-rich products, and we think sales for new offerings will expand with the fast-growing smartphone and tablet markets over the long term."

6. Cirrus Logic ( CRUS)

Company profile: Cirrus, with a market value of $1.4 billion, develops integrated circuits for specialized applications that find applications in mobile phones. They include graphics-accelerator chips, CD-ROM circuits, chips for advanced disk drives, encoders, switches, controllers and analog-to-digital converters.

Investor takeaway: Its shares are up 31% this year and have a three-year, average annual return of 71%. Analysts give its shares four "buy" ratings, and one "buy/hold," according to a survey of analysts by S&P.

Apple is the company's largest customer at 70% of its revenue last quarter, up from 54% a year ago. Its scheduled to report earnings Wednesday after the market's close.

5. SanDisk ( SNDK)

Company profile: SanDisk, with a market value of $9 billion, is a global leader in NAND flash memory cards. Its products are used in a number of consumer-electronic devices such as digital cameras, mobile phones and USB flash drives.

Investor takeaway: Its shares are down 26% this year, but have a three-year, average annual return of 33%. Analysts give its shares nine "buy" ratings, nine "buy/holds," and six "holds," according to a survey of analysts by S&P.

S&P, which has it rated "buy," says "we expect the mobile market to be SNDK's highest growth business and comprise more than half of the company's total sales. Also, we expect it to remain the technology leader as it moves to more advanced technology nodes."

Analysts estimate it will earn $3.92 per share this year and that will grow by 25% to $4.89 per share in 2013.

4. Skyworks Solutions ( SWKS)

Company profile: Skyworks, with a market value of $4.8 billion, makes semiconductors for wireless handsets that are used to enable wireless connectivity. Its customers are mostly large handset makers and wireless communications infrastructure companies.

Investor takeaway: Its shares are up 46% this year and have a three-year, average annual return of 41%. Analysts give its shares 11 "buy" ratings, five "buy/holds," and three "holds," according to a survey of analysts by S&P. Analysts estimate that it will earn $1.88 per share this year and that will grow 12% to $2.10 per share next year.

3. Qualcomm ( QCOM)

Company profile: Qualcomm, with a market value of $113 billion, is a developer of products and services based on its advanced wireless broadband technology. It has a strong balance sheet and is expected to continue to generate sizable cash flow. JPMorgan says there is a "huge amount of growth still to go in smartphones, and (this company) is very well tied to that."

Dividend Yield: 1.62%

Investor takeaway: Its shares are up 14% this year and have a three-year, average annual return of 16%. Analysts give its shares 21 "buy" ratings, 17 "buy/holds," six "holds," one "weak hold," and one "sell," according to a survey of analysts by S&P.

S&P, which has it rated "buy," says "(it) will see solid chipset sales throughout the coming year as the economy begins to improve and with rapid growth in the smartphone market."

2. Google ( GOOG)

Company profile: Google, with a market value of $156 billion, is the world's largest Internet company, specializing in search and advertising. In August, it announced the proposed acquisition of Motorola Mobility for $12.5 billion. Motorola Mobility was spun off from Motorola (which was renamed Motorola Solutions) at the beginning of 2011. Its mobile-devices segment sells smartphones that use the Android operating system.

Investor takeaway: Its shares are down 7% this year, but have a three-year, average annual return of 16%. Analysts give its shares 22 "buy" ratings, 13 "buy/holds," and seven "holds," according to a survey of analysts by S&P.

Morningstar analyst Rick Summer writes that "Google's meteoric rise in smartphone market share through the Android platform should help to extend its competitive advantages into the mobile world."

But S&P is negative on it, saying the planned purchase of Motorola Mobile "will not necessarily protect Android from (Internet protocol)-related attacks, and will weaken Google's growth, margins and balance sheet" and adds that the deal "could hurt Android, as (original equipment manufacturer) partners could pursue alternatives, with its purveyor now positioned as a competitor."

1. Broadcom ( BRCM)

Company profile: Broadcom, with a market value of $20 billion, designs and sells digital semiconductors that integrate several communications standards, such as Bluetooth, GPS and Wi-Fi, into a single chip. In February, it completed its $3.7 billion acquisition of NetLogic Microsystems.

JPMorgan says Apple uses Broadcom silicon in every product it sells, "a reflection of the loyalty and long-standing relationship that Broadcom has fostered over the past decade with Apple." It added that the company "is now the No. 1 supplier of mobile-connectivity solutions to the smartphone and tablet markets (70%-plus market share)" and its integrated solution has a tremendous lead over its nearest competitors.

Investor takeaway: Its shares are up 18% this year and have a three-year, average annual return of 13%. Analysts give its shares 22 "buy" ratings, 11 "buy/holds," nine "holds," and three "weak holds," according to a survey of analysts by S&P.

Although S&P has it rated "hold" on valuation concerns, it says: "Broadcom's focus on making integrated and multifunctional chips, is taking market share in relatively fast-growing markets, which should lead to above industry growth over the next few years."

For fiscal 2012, analysts estimate it will earn $2.84 per share and that that will grow by 9% to $3.10 per share next year.

>>To see these stocks in action, visit the 10 Stocks Poised to Rise in Apple's Wake portfolio on Stockpickr.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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