Cirrus Logic (NASDAQ:CRUS) turned on the heat spectacularly in the second half of 2019, rising sharply despite enduring a difficult time earlier last year as its over-reliance on Apple (NASDAQ:AAPL) proved costly. But the audio-chip specialist staged a terrific comeback as it returned to revenue growth in the second quarter of fiscal 2020, beating the higher end of its own expectations by a wide margin.

More importantly, Cirrus' turnaround seems sustainable. The chipmaker forecasts $345 million in revenue at the mid-point of its guidance for the quarter that ended in December. That would be a mid-single-digit jump over the year-ago quarter's revenue. But don't be surprised if Cirrus goes past expectations once again when it releases its results at the end of January and cements its status as a top growth stock for 2020.

CRUS Chart

CRUS data by YCharts

Cirrus is about to step on the gas thanks to Apple

Cirrus continues to rely on Apple, which uses its audio chips in iPhones and other products, for a major chunk of its revenue. The company derived 81% of its total revenue from its largest customer in the fiscal second quarter, which wasn't surprising as the Cupertino, California-based company ramped up the production of its latest iPhone generation. The good news for Cirrus Logic investors is that demand for the latest iPhone seems to be strong.

In October last year, Apple had reportedly asked suppliers to boost iPhone 11 production to the tune of 10% to meet heavy customer demand. What's more, the iPhone 11 was ranked fifth by Counterpoint Research on the list of top-selling smartphones in the third quarter of 2019. As Cirrus' fortunes are tied closely to the success of Apple's products, the iPhone 11's success is rubbing off positively on the former's financial performance.

More importantly, Cirrus' success won't be limited to the iPhone 11, as Apple is reportedly planning to launch iPhone models at different price points this year to lure more customers. For instance, the bosses at Cupertino are reportedly bringing back the budget-friendly iPhone SE nameplate this year.

Noted Apple analyst Ming-Chi Kuo predicts that Apple will launch not one, but two iPhone SE 2 models with different screen sizes in 2020. The cheaper device is expected to cost $399, giving Apple an opportunity to tap more customers in price-sensitive markets such as India. Kuo believes that the iPhone SE 2 Plus could follow the base model. And don't be surprised if that device comes equipped with 5G (fifth-generation) capabilities as supply chain rumors indicate.

Hand drawing stock chart return.

Image source: Getty Images.

Apple is expected to dominate the 5G smartphone landscape this year and its shipments are expected to rise thanks to the company's new pricing strategy and a huge installed base of customers. Cirrus Logic is a great way to ride the potential growth at Apple thanks to its close ties with the company. Of course, betting on Cirrus is fraught with risk as it has just one major source of revenue.

But it is worth taking that risk right now given the valuation and the potential earnings growth on offer.

Risky, but rewarding

Cirrus stock has risen remarkably in recent months thanks to its turnaround. Not surprisingly, the stock is trading on the expensive side. Its trailing price-to-earnings (P/E) ratio of 43 is well above the five-year average multiple of 24. However, a forward P/E ratio of 28 points toward a stronger bottom-line performance this year.

Analyst estimates compiled by Yahoo! Finance anticipate a 29% jump in Cirrus' earnings per share in the current fiscal year, followed by another increase in fiscal 2021. The good part is that Cirrus' margin profile has improved in recent months thanks to a favorable product mix and supply chain efficiencies.

CRUS Gross Profit Margin Chart

CRUS Gross Profit Margin data by YCharts

A potential increase in shipment volumes to Apple this year could give Cirrus' margins a shot in the arm and boost the company's profitability. So, it would be a good idea to bet on more upside in Cirrus Logic stock even though it has shot up impressively in recent months, as more growth seems to be on the way.