Has Cirrus Logic, Inc. (CRUS) Become the Perfect Stock?

The big danger to Cirrus is that it’s incredibly dependent on Apple Inc. (NASDAQ:AAPL) . Given that more than 90% of Cirrus Logic’s revenue came from Apple last quarter, the component-maker’s fortunes will rise and fall with the success and failure of Apple products. Apple shows no signs of giving up on Cirrus, and moves to introduce products at cheaper price points might actually help Cirrus by boosting overall volume even as it potentially squeezes Apple’s margins. Despite attempts to sell to other customers, it’ll take a long time before they can make a dent in the company’s Apple exposure.

Moreover, some of Cirrus Logic’s diversification potential is in sectors that have struggled. For instance, LED lighting has some promise, but Cree (NASDAQ:CREE) has had to work hard to recover from a prolonged slump, and organic-LED technology from Universal Display Corporation (NASDAQ:PANL) represents a potential game-changer in the industry that could lock Cirrus and other traditional LED-makers out in the long run.

For Cirrus to improve, all it needs is for Apple’s strength to return and to start rewarding investors with a sizable dividend. With a pristine balance sheet, reasonable valuations, and solid growth, Cirrus has nearly everything investors want to see in a stock prospect right now.

The article Has Cirrus Logic Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger owns shares of Apple. The Motley Fool recommends Apple and Universal Display. The Motley Fool owns shares of Apple, Cirrus Logic, and Universal Display.

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