Need to Know: These stocks will get you ready for another Apple ‘supercycle’

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Who’s tired out there?

Fatigue seems to be setting into the stock market this morning, as we count down to the long Labor Day weekend.

It’s certainly been a pretty dazzling week for stocks, thanks to the string of records, driven in part by big names such as Apple. The iPhone maker has gotten some help from talk earlier this week of shiny new phones that could be unveiled as soon as mid-September.

That brings us to our call of the day from Michael Kramer, founder of Mott Capital Management, who is gearing up for another iPhone “supercycle” that he says will take a lot of the company’s suppliers along for the ride.

He notes reports that iPhone shipments could reach 70 million to 75 million units by the end of the year, which he said would be the best performance since the iPhone 6 debut in 2015. He says all this matters because everyone thought last year would be the so-called supercycle, yet it wasn’t that strong.

“But if we look at many of the suppliers like Skyworks, Qorvo, Cirrus Logic and Analog Devices, they are all trading at the lower ends of their range on the charts. One would think investors would be buying these stock in anticipation of a strong iPhone cycle. So it could create an upside opportunity in these stocks should the cycle be stronger than expected,” Kramer told MarketWatch in a follow-up email.

Cirrus CRUS, -1.43%  and Broadcom AVGO, +0.26% are both down around 15% on the year, while Skyworks SWKS, -0.60% is off 2%. Qorvo QRVO, +0.58% is the star of the group, up 20%. As a sector, semiconductors got a bump in August, but are still looking cheap by some metrics.

A few members of the Apple supply chain gang.

Mott isn’t the only one eyeing up Apple’s supply chain. Crunching the numbers in a note earlier this week, Eric Ross, chief investment strategist at Cascend Securities, painted a pretty bright picture for the iPhone supply chain as well.

“Our measurements of the iPhone supply chain show it continues to be healthy and growing (through 2Q/3Q18)—up 16% Y/Y for July and 10% for 2Q18,” he said, in an Aug. 27 note to clients. ”Major supply chain partners already see revenues and orders growing strongly, but smoothly into 4Q18.”

Ross has a buy rating and $230 price target on Apple, and predicts this batch of phone launches and holiday season will be “bigger than the Street expects.”

The market

Dow YMU8, -0.27% S&P 500 ESU8, -0.17%  and Nasdaq NQU8, -0.18%  futures are softening up after Wednesday’s record-busting session for the S&P SPX, +0.57%  and Nasdaq COMP, +0.99% The Dow DJIA, +0.23%  had its best close since February.

Gold GCU8, -0.17% is off, while crude US:CLU8 is up. The dollar DXY, +0.08% is flat, but the pound GBPUSD, -0.1382%  is off as some worry that Wednesday’s Brexit optimism could get “washed away.”

Check out Market Snapshot for more

Read: Which markets are closed for Labor Day

Overseas, Europe SXXP, -0.32%  is down and on track for a weak August, while Asia markets ADOW, -0.47%  couldn’t latch on to those U.S. gains, finishing mostly lower.

The chart

Bears beware. Recent bullish action for the S&P 500 has set the stage for more gains, writes Andrew Adams, senior research associate of Raymond James, in a fresh note to clients. He says a four-day-long streak of records for Wall Street has ended a long run of sideways trading, something that is pretty hard to ignore.

“A breakout from a multi-month base is about as bullish of a signal as we usually get with the stock market,” he says, providing the following chart:

Courtesy Raymond James

Read more on Adams’s advice here.

The buzz

Salesforce CRM, +1.18%  is under pressure after the software maker’s outlook fell short of forecasts.

Ciena CIEN, -0.26% and Signet SIG, -0.74%   are jumping after earnings. Lululemon LULU, +0.01%  is a name to watch after the close.

Apple bought a small Colorado maker of augmented-reality lenses.

SurveyMonkey SVMK, +0.00%  says it is ready to go public.

Opinion: Trump’s exasperating ignorance on trade

Weekly jobless claims, personal income, consumer spending and core inflation are all headed our way at 8:30 a.m. Eastern.

Read: Another inflation gauge is set to enter the red zone, but no worries at the Fed

The quote
Reuters

Sparring and the city: Gov. Andrew Cuomo and Cynthia Nixon

“Can you stop interrupting?” “Can you stop lying?”—Those were just some of the barbs exchanged by New York Gov. Andrew Cuomo and challenger and actress Cynthia Nixon, respectively, at a debate ahead of the state’s Sept. 13 Democratic primary.

That wasn’t even the end of it:

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