Apple Inc. (AAPL): Buy a Supplier at a Great Price

Threats and Competition

The business of image sensor chips is a competitive one, so OmniVision is not without threats to its business. There are plenty of big players in their business, but the one they should be most concerned with is Sony Corporation (ADR) (NYSE:SNE), who manufactures the other, and more frequently used camera in the iPhone 5. Sony trades at a much higher valuation than OmniVision and actually looks worse as an investment prospect to me, having lost money four out of the past five years and having very inconsistent revenues over the past several years.

Sony is suffering from a depreciation of the Japanese yen, and it couldn’t come at a worse time for the company, whose shares over the past year have traded at levels not seen in the stock in three decades. Thanks to the improving economy, and planned introduction of significant new products (PlayStation 4, for example), Sony’s revenues are projected to rise by 11% over last year’s. However, due to their weakening currency, revenues in terms of American dollars are only expected to rise by 4%.

To Buy or Not to Buy?

This may be my adventurous side talking, but I firmly believe OmniVision is worthy of serious consideration at the current levels. Being able to buy an Apple supplier with growing revenues for just 6.8 times earnings sounds like an opportunity worth looking into. Pay attention to how things are going with the company during their upcoming earnings report, but if the news is good, you may not get another chance to buy at these levels.

The article An Apple Supplier at a Great Price originally appeared on Fool.com and is written by Matthew Frankel.

Matthew is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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