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Piggyback on Apple's Vision Pro — Buy the Suppliers

Written By Christian DeHaemer

Posted August 22, 2023

There are plenty of strategies to make money in the stock market, including fundamentals, momentum trading, and technical analysis.

There are also a bunch of lesser-known strategies that make money between the cracks. For example, you could buy volume spikes of biotech stocks right before the announcement of Phase 3 trials with the idea that doctors always leak the news.

You could also look at the daily news and find a country that just suffered a natural disaster. That country's stock market will almost inevitably fall, and you can buy bargains that rebound once things get better. It is good to support financial markets in times of trouble.

Today, I’d like to talk about another simple strategy that I call piggybacking. In this instance, we are riding Apple Inc.'s (NASDAQ: AAPL) coattails. As you know, Apple's iPhone was a massive success.

According to Blacklinko.com:

  • More than 1 billion consumers currently use iPhones.
  • Since its initial launch, more than 1.9 billion iPhones have been sold.
  • Apple shipped 206.1 million iPhones in 2020.
  • IPhones have a 65% share of smartphone sales in the U.S.
  • Six of the top 10 most sold smartphone models in January 2021 were designed by Apple.

If you invested $10,000 in Apple on January 1, 2007, you would now have $674,843.63.

You can buy Apple stock itself; if you don't own the company directly, there are also index ETFs or funds.

Alternately, you can make more money faster by piggybacking. You see, the iPhone is made up of smaller component makers, and that's where this opportunity lies.

Casings

For example, Jabil (NYSE: JBL) makes the casings for iPhones and iPads. These are the core products of its manufacturing sector, which generates about 40% of its business. The rest of Jabil's revenue comes from its electronic manufacturing services department, which makes parts for automotive, cloud, defense, energy, and telecom markets, just to name a few.

The stock has sold off about 10% over the last month, which could be a nice entry point. It has a P/E of 10 and a solid balance sheet.

Over the past five years, Jabil’s share price went from $24.21 to $103.45.

Opticals

Another company that supplies optical components for Apple’s 3D sensing cameras is Lumentum (NASDAQ: LITE). Lumentum generates about 26% of its revenue from Apple.  

The company also sells optical components to telephone companies, data communications, consumer electronics, and others.

Lumentum had a great run after it went public in 2016, going from $18 to $104 at the end of 2022. Since then, the company's share price has been cut in half but now looks like a bargain with a forward P/E of 12.

Chips

My favorite piggyback stock is Broadcom (NASDAQ: AVGO). Broadcom has actually outperformed Apple since 2007.

The company sells chips to data centers, as well as broadband, wireless, and industrial markets. It also sells infrastructure software.

Broadcom is a $355 billion company in terms of market cap. The share price is up this year due to it being perceived as an AI stock. It gets about 20% of its income from Apple. Broadcom makes the chips that control touch screens, Wi-Fi, and Bluetooth.

If you had invested $10,000 in AVGO in 2007, you would now have $680,496.11 — not bad at all. I recommended that my Bull and Bust Report readers buy AVGO, and we are up 294%.

Vision Pro

As I'm sure you're aware, Apple's next big product is the Vision Pro. This is billed as the ultimate mixed-reality headset interface and will launch at more than $3,000 in early 2024. It is a good bet that, like all Apple products, it will be a big winner.

What you may not know is that the Apple Vision Pro has 23 sensors that enable you to control the computer with hand motions. I’ve discovered the maker of these sensors, which will likely benefit from this. In fact, we have a free report on this company, and you can access it here. You don’t want to be late on this one.

All the best,

Christian DeHaemer Signature

Christian DeHaemer

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Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.

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