Clouseau: Does your dog bite?

Hotel Clerk: No.

Clouseau: [bowing down to pet the dog] Nice doggie.

[Dog barks and bites Clouseau in the hand]

Clouseau: I thought you said your dog did not bite!

Hotel Clerk: That is not my dog. – Pink Panther Returns (1975)

The recent huge success of unit sell-thru for the iPhone 5s and 5c has some huge implications in their supply chain and we have the opportunity, once again, to get ahead of the curve in this part of the Revolution, as the analysts haven’t caught up with it yet.

There’s a lot of chips that go into the iPhones and other smartphones out there, obviously, as chips for WiFi, LTE, 3G, processors, graphics processors, and so on and so forth all work together to make that magic at your finger tips happen. While most all of the major suppliers into the smartphone business, like Broadcom and Qualcomm, have established their places and have shown steady secular growth in their models for the last five years as the Smartphone/Tablet/App Revolution blossomed. Others that have had a smaller footprint and fewer customers to diversify amongst, have seen their stocks fly when their customers like Blackberry and Nokia were still viable, but have since seen their fortunes and stock prices plummet.

Which leads me to today’s new name for the Revolution Investing model portfolio. That name is Triquint Semiconductor and the symbol is TQNT. See, Triquint has some design wins that Apple is using for those new iPhones which are selling tens of millions right now. Triquint has been in past iPhones too, but this is where you get the kicker — the average selling revenue that goes to Triquint in each iPhone sold looks to have doubled in the new 5S and 5C.

That means even with no meaningful unit growth in iPhone sell-thru for the next quarter or two that Triquint’s revenue at Apple will double. And with unit growth at iPhone sales, there’s some serious upside to the numbers for next year vs this year. Not only that, but few, if any analysts who cover the iPhone suppliers like Triquint seem to have noticed this huge bump up in the average selling price and the Street is still estimating little revenue topside and earnings leverage from this bump up in the average selling price.

Consensus estimates for TQNT for next year are for earnings of 50 cents on just over $1 billion in revenue. I think the company’s likely got at least 30% upside on the topline to those numbers and that the earnings could actually come in above 85 cents a share. Putting just a 12 P/E on 90 cents of eanings would give you a double digit stock up from $8 and change right now. But if the company actually does deliver that kind of growth and earnings next year, the next year’s numbers will likely be looking for over $1 per share and we could get a 15-20 multiple on that, which would give us a stock up near $25 share in two years.

I’m going to replace our Nvidia long with this new name, as our thesis in the Nvidia gaming consoles and platforms just aren’t catching this kind of traction.

So to summarize, I’m adding a TQNT common to the portfolio and removing my NVDA from the portfolio.

Does your dog bite?