Apple Inc. (AAPL), Cirrus Logic, Inc. (CRUS), And Who Might Go Higher Than The Clouds

While the smaller iPad might be cannibalizing its elder sibling, one thing is very much clear — it’s a hugely successful product and is enabling Apple to cover a wider market. If Apple launches a retina iPad mini later this year, it would address the only gripe that users had — lack of a retina display — and propel Apple’s iPad sales higher.

However, investors need to be alert with regards to a retina iPad mini, as the latest rumors suggest that the tablet might not see the light of the day this year. But Apple’s increased attention to China and a low-cost device for the emerging markets should do enough to push up Cirrus’ sales till that happens.

Cirrus’ management is confident that the company is well-positioned to grow revenue and profit in the coming years. It’s looking forward to supplying more content to its end-markets and ramping up its new custom products. The company is still growing, and it’s growing fast.

Still going strong

Despite all the negatives around it, it shouldn’t be forgotten that Cirrus grew its revenue 90% in fiscal 2013 while non-GAAP earnings jumped 138%. In light of such numbers, the stock is trading at very cheap levels. The analyst estimate for revenue for the current fiscal, which is a tad lower than actual revenue in the previous one, might be pushed up significantly going forward as the next Apple refresh cycle comes and new devices are introduced.

Keeping these points in mind, it would make sense to initiate a position in Cirrus. It’s massively beaten down, but it’s not out. And before the Apple trolls come out and comment that Apple is going down, I would like to say that Apple’s products are still selling in the millions, and that’s what should matter for Cirrus Logic as they are positively affecting its business.

The article This Incredibly Cheap Stock Might Rise Above the Clouds originally appeared on Fool.com is written by Harsh Chauhan.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.