Apple supplier stocks

Apple Supplier Stocks We Like for 2015

Many investors seek out Apple supplier stocks as an alternative way to play the tech titan's success.

Apple supplier stocksThose millions and millions of iPhones, iPads, and other gadgets Apple Inc. (Nasdaq: AAPL) sells contain components made by dozens of suppliers. For the most part, when Apple is doing well, the AAPL supplier stocks do well.

And in recent quarters, Apple has done very well indeed.

In the most recent quarter, Apple posted a 40% increase in earnings year over year. And the quarter before that, Apple had a 48% year-over-year increase in earnings.

For a company the size of Apple that kind of growth represents huge gains in sales. That success trickles down to the Apple suppliers.

Take the case of Cirrus Logic Inc. (Nasdaq: CRUS)...

The Good - and Bad - of Being an Apple Supplier

Cirrus gets about 78% of its revenue from supplying iPhone components to Apple. Those blowout quarters for Apple have CRUS stock up 54% so far this year.

Of course, it's not all roses and sunshine. Apple supplier stocks can be very risky for those companies heavily reliant the Cupertino, Calif.-based tech titan's business.

The biggest risk is that Apple will - with little or no warning - drop your part out of its product.

That happened with Audience Inc. (Nasdaq: ADNC) in 2012. Apple once provided more than 80% of ADNC's revenue. Then Apple replaced its audio chip with one from a different supplier. ADNC stock fell from $18 to less than $7 in one day.

And then there's Apple legendary ability to use its clout in the marketplace to extract low prices from its suppliers. So while selling to Apple typically means large volume, it also means taking less profit.

But most semiconductor companies nevertheless covet Apple's business. The key is not becoming overly dependent on it.

With that in mind we've found five Apple supplier stocks that benefit from selling to Apple and would survive if the tech giant dropped them. Take a look...

Five Apple Supplier Stocks Poised to Gain

These AAPL supplier stocks are all worth considering:

Apple Supplier Stocks No 1: Broadcom Corp. (Nasdaq: BRCM) - Broadcom makes the Wi-Fi and broadband chips that allow mobile devices to connect to networks. A longtime Apple supplier, BRCM gets between 12% and 15% of its revenue from AAPL. As a steady supplier over several product cycles, BRCM has less risk of getting dropped by Apple. The company provides chips for both the iPhone and Apple Watch, as well as Samsung Electronics' (OTCMKTS: SSNLF) Galaxy S6. Broadcom's strong phone business led to an earnings beat last month. BRCM stock is up 9.74% over the past six months. It closed at $45.95 Monday. The one-year target for BRCM stock is $51.82.

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Apple Supplier Stocks No 2: Maxim Integrated Products Inc. (Nasdaq: MXIM) - Maxim won new Apple business last year, becoming a supplier of an audio amplifier for the iPhone 6 and a biometric sensor for the Apple Watch. Maxim also supplies chips to Apple rival Samsung and has a strong presence in the automotive market. MXIM also is exploring opportunities in industrial automation and building controls. MXIM stock is up 11.63% over the past six months. It closed Monday at $32.92. MXIM has a one-year target price of $35.69.

Apple Supplier Stocks No 3: Micron Technology Inc. (Nasdaq: MU) - Micron supplies memory for both the iPhone and Apple Watch, with Apple accounting for about 7% to 8% of its revenue, down from about 13% a year ago. Like Broadcom, MU has supplied memory for the iPhone consistently, a sign of a stable relationship with Apple. Still, Micron's diversified customer base provides additional insurance. Over the past six months, MU stock is down 17% as Wall Street frowned on lower global memory prices earlier this year. But Micron is focusing on more profitable chips now. MU stock closed at $27.75 Monday. The one-year price target is $39.03.

Apple Supplier Stocks No 4: NXP Semiconductors NV (Nasdaq: NXPI) - Apple is one of NXP Semi's biggest customers, but far from the only one. The company supplies the chips needed to make Apple Pay secure on the iPhone and Apple Watch. NXPI sells those same chips to makers of Android phones. NXP Semi stands to benefit from the Internet of Things, as its chips can provide the required security for all those connections. NXPI stock closed at $103.57 Monday, and is up 40.26% over the past six months. It has a one-year target price of $113.18.

Apple Supplier Stocks No 5: Texas Instruments, Inc. (Nasdaq: TXN) - Veteran chipmaker Texas Instruments has been migrating away from its unprofitable wireless business toward the sort of analog chips used in mobile devices. TI has chips in both the iPhone 6 and the Apple Watch. But Apple is a relatively small portion of Texas Instruments' business. The company supplies chips for products ranging from televisions to autos. TXN stock is up 6.37% over the past six months, but down 6% over the past three months on lowered forecasts. But the problem areas are the businesses TI is moving away from. TXN stock closed at $54.44 Monday. It has a one-year target of $57.54.

Editor's Note: For the complete 2015 Apple suppliers list, click here.

Follow me on Twitter @DavidGZeiler.

The boldest Apple stock price prediction yet: Apple stock will reach $200 within 24 months. That's from a seasoned market analyst with 33 years of experience - Money Morning's own Chief Investment Strategist, Keith Fitz-Gerald. And he meant it: He made the call on publicly the FOX Business program "Varney & Co." Here's why Fitz-Gerald is so bullish on AAPL stock right now...