To be sure, Apple works with other vendors, such as Synaptics, Incorporated (NASDAQ:SYNA) and Atmel Corporation (NASDAQ:ATML), but Cypress Semiconductor Corporation (NASDAQ:CY) is especially well-positioned to deliver a greater amount of content to Apple.
“Cypress can leverage its manufacturing assets and processes to help optimize cost for performance and best serve the highest volume opportunities,” said analysts at Lazard, whose $16 price target is more than 40% above current levels. Lazard’s analysts speculate that Cypress may play a key role in Apple’s upcoming iWatch launch.
Shares of Cypress Semiconductor Corporation (NASDAQ:CY) have been in the doghouse for an extended period, dropping 25% over the past two years while the Nasdaq composite index rose more than 40%. Much of the blame goes to a bungled launch of its previous touchscreen technology, known as Gen 4.
In recent meetings with analysts, Cypress management noted that the current Gen 5 hardware and software are performing more smoothly. The company anticipates robust demand in the coming year as Gen 5 systems start to ship to customers.
At first blush, Cypress looks to be a great dividend growth story. The company’s dividend was given a 63% boost in 2012 to $0.44 a share, good for a nearly 4% yield. But management appears committed to keeping the divided at current levels for the near future, even as analysts see earnings per share rising from $0.54 this year to $0.85 next year.
Risks to Consider: A disappointing launch of Apple’s new products, or a broader slowdown in consumer electronics spending would keep these stocks from rising.
Action To Take–> Both of these companies generate considerable cash flow, sport strong balance sheets and generate solid margins. Short-term investors focus on quarter-to-quarter trends, but both Cirrus and Cypress are setting the stage for continued industry leadership through their heavy R&D spending.
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– David Sterman
The article Apple Is Back: That’s Great News For These 2 Stocks originally appeared on StreetAuthority and is written by David Sterman.
David Sterman does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC does not hold positions in any securities mentioned in this article.
