Cirrus Logic, Inc. (NASDAQ:CRUS)

Cirrus logic has positioned itself very well to take advantage of the Apple world ecosystem. Cirrus is a successful supplier to Apple because it is one of the few companies able to keep pace with the Apple product explosion. They have an excellent management team and their profits are finally beginning to add up for investors.

Apple

Cirrus is riding the Apple wave, but other manufacturers will likely begin to incorporate its top quality audio chips, especially in smartphones. The tablet line of chips are both ARM and Intel compatible, which is a big bonus as intel may finally be muscling its way into ARM's corner. The smartphone and tablet markers are growing, though more premium alternatives to the iPad are needed for Cirrus to fully benefit. Of course, if Apple falters, so will Cirrus, which is a risk that must be considered. With its low p/e, I'm hoping that Cirrus doesn't suffer from Corning-like undervaluation. What finally led me to invest in Cirrus is the energy solutions, such as smart meters. I think that our grids are moving in this direction and when I added this to the other advantages of Cirrus, I felt this was a compelling opportunity. The pullback on Friday may continue to provide a great entry point.

Tied at the hip to Apple, Cirrus Logic seems to still be one of Cupertino's favorite suppliers. As long as that relationship holds up, and iPhones and iPads continue to sell like hotcakes, CRUS is going to get pulled along for the ride. However, like my rating on AAPL, I'm only giving it 3 years or so to Outperform. After that, we'll have to see if AAPL can continue to innovate without Steve Jobs. Hopefully, also, CRUS will continue to diversify its customer base, so it won't get hit too hard should AAPL fail to continue to innovate and amaze the world in a few years...

Develops high-precision, analog and mixed-signal integrated circuits for a range of audio and energy markets. Building on its diverse analog mixed-signal portfolio, Cirrus Logic delivers products for consumer and commercial audio, but approx 40% of revenues are from Apple I phones and tablets. The current market price is $21 with a one-year analyst price target of $26.5. This represents an upside potential of 30%. CRUS appears to be extremely undervalued and relatively safe given its PEG of 0.77 and beta of 0.5. CRUS's current quarter consensus estimate has increased over the past 90 days from 0.37 to 0.43, a gain of 14.7%. This improvement is significantly greater than its Industry average. The company's gross margin has been higher than its Industry average for each of the past five years, currently is 52.65%. The company's Trailing P/E, Forward P/E, and Forward PEG multiples are all currently at or near their 5-year lows. Based on forward PEG, CRUS currently trades at a 66% discount to its Semiconductors Industry peers and based on trailing P/E, CRUS currently trades at a 63% discount. Also compared to its direct competitors CRUS has an EPS of 2.49; while its direct competition STMicroelectronics NV (STM) has 0.98 and Texas Instruments Inc. (TXN) EPS is 2.40. Chart MACD shows bullish trend and up/down volume shows sig accumulation. Overall looks like a sustainable breakout in progress.

They are a major supplier of Apple's chipsets.

Low Cap Value

Conference call was good. Long term prospects are excellent and the current price and PE are inticing.

Apple

Modified Greenblatt Screen (based off of Hidden Gems Principles) - High ROE / ROA, growth estimates are high, sales and EPS are growing at a good clip.

Cheap

Production issues = buying opportunity of a wonderful business at discounted rates. (Temporary Sale, brought to you by "Mr. Market")

CRUS is very quite per speaking up or promoting their company.But they are diversified,global and on the cutting edge of tecchnology and the future. JEFF DAHL

management doing great job

This is a fast growing innovative company with thousands of patents, the best audio processors in the business, now working into potentially huge led lighting
controls and digital motor controls among others.

CRUS' high concentration of customers presents a risk, but its strong ties with AAPL should keep this stock alive and kicking over the next few years. AAPL is set for another couple of big releases with the iPhone 5 (rumored to appear in August 2011) and the iPad 3 (rumored to appear between September 2011 and March 2012.

This stock provides huge upside to those willing to take the risk that comes with it.

Mr. Market hopefully made a mistake with evaluation on this one...

Value

Cirrus is expected to earn around $1.20 in 2012 and $1.55 in 2013. I like that they have no debt and are slated to grow about 20% a year over the next five years. They got punished for missing earnings in the Mar '11 quarter by 8.3%. However, the balance sheet is very strong and my estimates are conservative enough to allow for the occasional miss. My target over the next 12-18 months applies a modest multiple of 15 x 2013 consensus earnings of $1.55 -10% or $1.39 a share = $20.85. Add in $2.73 a share in cash and we arrive at a price target of $23.58 or 31.25% above market prices of $16.21.