Investment bank picks 3 stocks to buy ahead of Apple's next iPhone launch

Published Thu, May 6 20219:58 PM EDT

Apple is widely expected to launch the next generation of iPhones in the second half of 2021. Japanese investment bank Daiwa predicted there will be four new iPhone 13 models this year, similar to the line-up of the iPhone 12 series. Production of the new devices will boost shares of Apple's suppliers in the Greater China region, and the current quarter may be a good time to buy those stocks, the bank said. Here are Daiwa's top picks for Apple suppliers in the region — one of them has an upside of 65%. Shenzhen-listed Luxshare Precision Industry , a major assembler for Apple Watch and AirPods that has also gone into casing and assembling iPhones. Hong Kong-listed Sunny Optical Technology Group , which supplies camera lenses to Apple. Taiwan-listed Hon Hai Precision Industry, also known as Foxconn, which is a top assembler of iPhones and iPads. Shares of Sunny Optical have risen 9.1% and Hon Hai shares have increased by 22.3% so far this year, while Luxshare's stock fell 35.3% during the same period. Here are Daiwa's target prices for the three stocks and their expected upside. The analysts warned that weaker-than-expected smartphone sales could be a threat to the bank's "buy" calls on the three Apple suppliers. "Overall, we suggest investors to remain selective and focus on market leaders on favourable industry trends," the bank's analysts wrote in the report. New Apple products Daiwa analysts predicted that the four new iPhones — the iPhone 13 Pro Max (iMax), iPhone 13 Pro (iPro), iPhone 13 (i13), and iPhone 13 mini (imini) — will likely be launched in September, and would come with better cameras and displays. Possible upgrades from the previous line-up include a main camera with larger sensor size and ultra-wide lens for all models, they said. The new phones would also feature a higher screen-to-body ratio, added the analysts. Overall, Daiwa's analysts forecast total iPhone production of 225 million units in 2021, a 13% increase from a year ago. In addition to iPhones, Apple could introduce a new iPad mini with a faster processor and larger display, as well as new models of AirPods and Apple Watch, the analysts said.

Apple's launch promotional material of the new iPhone12 Pro seen displayed on a mobile phone screen with an Apple logo in the background.

Pavlo Gonchar | LightRocket | Getty Images

Apple is widely expected to launch the next generation of iPhones in the second half of 2021.

Japanese investment bank Daiwa predicted there will be four new iPhone 13 models this year, similar to the line-up of the iPhone 12 series.

Production of the new devices will boost shares of Apple's suppliers in the Greater China region, and the current quarter may be a good time to buy those stocks, the bank said.

Here are Daiwa's top picks for Apple suppliers in the region — one of them has an upside of 65%.