With Apple's (NASDAQ: AAPL ) 2014 Worldwide Developers Conference coming up next week, excitement surrounding the event has reached a fever pitch.
Last year, the folks in Cupertino used the event to give their first official nods to iOS 7, iTunes Radio, and OS X Mavericks, while also announcing new hardware in the MacBook Air and Mac Pro. Yesterday at Re/Code's Code Conference, Apple Senior Vice President Eddy Cue boasted that "later this year, we've got the best product pipeline that I've seen in my 25 years at Apple."
If recent supply-chain news proves accurate, one of the first new products to be unveiled next week could be Apple's long awaited iWatch. Specifically, after returning from a research trip to Asia yesterday, analyst Peter Misek asserted the iWatch is finally ready for mass production and could be announced at any time.
Buying shares of Apple isn't the only way investors can play the device. Here are three companies making products that are likely crucial to the iWatch's unique functionality.
On the iWatch's curved, flexible display
First up is OLED technologist Universal Display (NASDAQ: OLED ) .
Back in January, LG Display was rumored to have signed an exclusive agreement with Apple to provide millions of 1.52-inch, flexible OLED displays for the iWatch. However, none of this would be possible without Universal Display, which licenses its OLED patents and sells OLED material to LG.
There is one caveat: I also suggested in January that the small screen size involved in producing iWatch displays "won't do much to boost Universal Display's material sales volumes." But I also wrote, "Merely having Apple acknowledge the viability of Universal Display's flagship technology should go a long way toward convincing skeptics of its long-term viability."
Misek surprised investors when he said Apple had a large number of prototypes "floating around," including a 5.5-inch OLED phone and a 4-inch OLED iPhone that unfolds into an iPad mini -- the latter of which sounds nearly identical to a similar device fellow Universal Display customer Samsung was said to be quietly showcasing at this year's Consumer Electronics Show. It's unlikely those prototypes will enter mass production anytime soon, but over the long term they could mean big things for Universal Display.
On the iWatch's motion sensors
Next, what's an iWatch without cutting-edge motion sensors? And that's where motion chip specialist InvenSense (NYSE: INVN ) comes into play.
Luckilygtat for investors, shares of InvenSense are still reeling after it missed quarterly earnings expectations earlier this month. But InvenSense CEO Behrooz Abdi explained the company strategically chose to build inventory in its core products to "prepare for multiple significant customer ramps in the coming quarters." Abdi also noted that InvenSense increased research and development expenses in its last fiscal year, which opened up "exciting business opportunities in emerging applications, such as wearables." [emphasis mine]
Call me crazy, but doesn't it seem like he was hinting at something?
That's why I suggested at the time the pullback represented a "fantastic buying opportunity for patient, long-term investors." I even put my money where my mouth is and purchased shares of InvenSense for my personal portfolio last week.
On the iWatch's protective cover
Finally, scratch-resistant sapphire producer and recently minted Apple supplier GT Advanced Technologies (NASDAQ: GTAT ) is set to benefit by providing the iWatch cover of choice.
Don't get me wrong. Despite a brief pause following GT Advanced Technologies' own weaker than expected earnings results a few weeks ago, the company's shares have already nearly doubled so far in 2014. But the market is rightly looking ahead, as GTAT was up front in telling investors the bulk of anticipated 2014 revenue of $600 million to $800 million should arrive in the second half of the year. Of that, over 80% is expected to come from sapphire -- albeit at a much lower gross margin than GTAT previously enjoyed with its historical equipment sales. But that's a trade-off GTAT was more than willing to accept given the extended weakness in its formerly key photovoltaic solar business.
With this in mind, GT Advanced Technologies is looking forward to the solar sector's expected rebound, which should drive demand for its latest technologies over the next few years and help diversify the business. As a result, GTAT management is targeting over $1 billion in revenue in 2015, as well as adjusted earnings of at least $1.50 per share in 2016. If that happens, and with the stock currently trading around $17 per share, long-term investors in GTAT would clearly be more than happy they held on today.
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