With the introduction of the iPhone 4 in late June, Apple (Nasdaq: AAPL) once again cemented itself as the cutting-edge technology stock to own. The company's growth has been absolutely phenomenal over the last three years, more than doubling revenue and easily surpassing price projections.

So why would anyone not go out today and buy shares of Apple? Because the sum of the parts is actually greater than the whole.

Scratching your head?
Despite Apple's numerous successes, you have a greater profit potential from buying the individual component suppliers for the iPhone 4 than Apple itself. Apple's success has ballooned the company to more than six times book value and 4.5 times sales figures. Simply put, it's not the value it once was.

Instead, out of the 12 known component suppliers to the iPhone 4, I've isolated three that could give you a good chance to outperform Apple. Not surprisingly, all three suppliers are growing revenues at double-digit paces, have plenty of cash on hand, and trade at significantly lower book and sales multiples than Apple.

Even better, each company here is significantly smaller than Apple on a market cap basis. The earnings boost they receive from being an iPhone 4 component supplier could have a greater positive impact on their stock price.


Current Year Revenue Growth Projections

Price to Book

Price to Sales

Cash Per Share

Cirrus Logic (Nasdaq: CRUS) 69% 4.64 4.36 $2.10
Broadcom (Nasdaq: BRCM) 46% 3.93 3.09 $4.07
Triquint Semiconductor (Nasdaq: TQNT) 29% 2.33 1.97 $1.13

Source: Capital IQ, a division of Standard & Poor's, and Yahoo! Finance.

In Cirrus we trust
No company has benefited more from the iPhone craze than Cirrus Logic, which has seen a meteoric 600% rise in its stock price since January 2009. Cirrus provides the audio codec -- the microchip which allows the phone to conserve energy by rerouting audio functions through its chip instead of the main processor.

Apple has accounted for 34% to 39% of Cirrus Logic's quarterly revenue over the last year. Thanks to Apple, Cirrus has managed to turn quarterly losses into healthy profits, and has actually grown its gross margins from 52% to 57% in the last year. If you back out the company's $2.10 of cash on hand, you get a company trading at less than 11 times forward earnings and expected to grow this year by 69%.

Apple has no chance to match the intensity of the fire currently lit under Cirrus Logic shares. Despite the huge rise we've already seen, Cirrus should have plenty of room to move higher.

A GPS to profitability
Broadcom may already be a large-cap company at $18 billion, but that doesn't mean it can't benefit from what I'm dubbing the "Apple Effect." Broadcom currently supplies Apple's iPhone 4 with both its GPS chip and its wireless Internet access/Bluetooth chip.

Even though Apple accounts for a fraction of Broadcom's total revenue when compared to Cirrus, the extra boost that Broadcom receives from those orders has been enough to easily propel the company past the profit projections of the 27 analysts who currently cover the stock.

Backing out the company's current $4 in cash per share, Broadcom trades at just 13 times forward earnings, while expecting at revenue growth of 46% this year. Tack on a 1% dividend, and you have a very stable, well-diversified growth story that could outperform Apple.

Amplify your growth
Triquint Semiconductor has been supplying Apple with power-amplifier microchips since a surprising win back during the introduction of the iPhone 3G in 2008. Like Cirrus Logic, Triquint owes a good portion of its revenue -- more than 20% -- to Apple manufacturer Foxconn. This has been the basis for its recent rapid growth.

Triquint practically ignored the economic downturn, and it's grown revenue by double digits every year since 2007. Even more impressively, Triquint has seen its gross margins improve from 32% to 41% in just one year, thanks to the impressive growth in iPhone 4 sales.

Triquint maintains a healthy $1.13 in cash per share; once that's backed out, it trades for just less than 11 times forward earnings, with an expected growth rate of 29% this year. Triquint relies heavily on Apple, but so far this has been a symbiotic relationship, which looks like it could greatly benefit Triquint.

Foolish takeaway: Be optimistic, but stay realistic
These component suppliers look like great values on paper, and they should outperform Apple going forward. But in the end, we have to remember that Apple is the great puppeteer controlling the strings.

At any time in the future, Apple could decide to redesign the next-generation iPhone, leaving one or more of the above companies out of the loop. In fact, a recent publication alluded to just this possibility. While these are simply rumors at the moment, it pays to stay vigilant, and keep up on what Apple has to say about the future of its iPhone.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community

Fool contributor Sean Williams does not own shares in any companies mentioned in this article. You can follow him on CAPS under the screen name UltraLong. Apple is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.