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On April 3, Apple (AAPL - Analyst Report) released its much-anticipated iPad, a highly versatile tablet PC that allows users to surf the web, send and receive email, watch movies, or read books.

The iPad is not cheap. The currently available Wi-Fi version sells between $499 and $699. Apple plans on releasing its iPad with Wi-Fi + 3G on May 7. Those units will be priced between $629 and $829.

Thus far, the iPad is a hit with consumers. Apple has already sold over 500,000 iPads. Industry experts are estimating that in 2010 Apple will manufacture at least 5 million iPads and sell between 3 million and 7 million units.

With those rosy projections, it is easy to see that Apple will be able to generate substantial revenue from this product. However, the companies supplying the components used inside the iPad are also in a position to produce robust revenue and earnings from iPad sales.

Now to the hard part: identify which companies are iPad suppliers, and, more importantly, identify which of those stocks are good buys right now.

Luckily for us, some smart techies have done the heavy lifting. Firms like Chipworks, iSuppli and iFixit obtained iPads for the sole purpose of breaking them down to find out what’s on the inside. Of course, only the Wi-Fi iPads have been ripped open. There will be another round of tear downs when the 3G iPad gets released next month, and additional suppliers could be unveiled in the coming weeks.

We took that list of suppliers and let the Zacks Rank work its magic. Below are four iPad stocks that have the best chance to outperform the market. Each of the stocks has a Zacks #1 Rank (Strong Buy) or Zacks #2 Rank (Buy) with rising analyst estimates: 

Broadcom (BRCM - Analyst Report)

Broadcom designs, develops and supplies semiconductors for wired and wireless communications. It provides a portfolio of system-on-a-chip and software solutions, which enable the delivery of voice, video, data, and multimedia content to mobile devices; consumer electronics devices in the home; and business networking products for the workplace, data centers, service providers and carriers.

Two separate Broadcom chips are used in the iPad’s touch screen. The iPad also uses Broadcom chips for its wireless connectivity (802.11n Wi-Fi), Bluetooth 2.1+EDR, and FM radio.

Analysts remain bullish on BRCM shares. In the last month, there have been eight upward estimate revisions. Both the 2010 and 2011 Zacks Consensus Estimates are up 2 cents to $1.33 and $1.55, respectively.

The company is scheduled to report first-quarter results on April 27. If recent history can be used as a guide, Broadcom has a good chance of beating estimates, as it has beaten the Zacks Consensus by an average of 96.0% in the last five quarters.

The Zacks #1 Rank stock trades at 26x 2010 EPS estimates and 23x 2011 EPS estimates.

Cirrus Logic (CRUS - Snapshot Report)

Cirrus Logic develops high-precision analog and mixed-signal integrated circuits (ICs). The company offers analog and mixed-signal audio converter and audio digital signal processor products, which include analog-to-digital converters; digital-to-analog converters; and digital interface ICs.
Cirrus Logic is a longtime supplier to Apple’s products, and it supplies a chip that manages audio in the iPad.

Consensus estimates continue to move higher for Cirrus. In the last 30 days, fiscal 2010 estimates are up 3 cents, or 9.4%, while fiscal 2011 estimates higher by 9 cents, or 16.7%. There have been 10 upward estimate revisions in the last month.

Cirrus Logic is a Zacks #2 Rank stock. It is trading at 29x fiscal 2010 EPS estimates and 16x fiscal 2011 EPS estimates.

Intersil (ISIL - Snapshot Report)

Intersil Corporation engages in the design, manufacture, and marketing of analog integrated circuits (ICs). Its high-end consumer products include gaming, light sensors, optical storage, displays and handheld products.

Intersil won a socket with a function that is to be determined. Some of the techs believe it will be tied to power management. We note that Intersil’s USB interface has been used in previous Apple products.

In the last 30 days, there have been eight upwardly revised analyst estimates for ISIL. In that time, the Zacks Consensus Estimate for 2010 has increased 3 cents, or 3.4%, to $0.92, and the 2011 Zacks Consensus Estimate is up 2 cents, or 1.9%, to $1.08.

Intersil is scheduled to report fiscal fourth quarter results on April 21. Intersil’s recent track record, beating the Zacks Consensus by an average of 121.6% in the last five quarters, suggests that the company should beat Q1 EPS estimates.

This Zacks #1 Rank stock trades at 18x consensus estimates for2010 and 15x consensus estimates for 2011.

Linear Technology (LLTC - Analyst Report)

Linear Technology designs, manufactures and markets linear integrated circuits worldwide. Its products include amplifiers, DC-DC converters and battery chargers.

Linear Technologies has two charger ICs in the iPad, one of which is a DC to DC controller.
The company reported strong results for its fiscal third quarter on April 14. LLTC beat the Zacks Consensus Estimate by 7 cents, or 18.0%. For the last five quarters, Linear has beaten the Zacks Consensus by an average of 14.0%.

Linear’s strong Q3 report prompted analysts to boost their estimates for fiscal years 2010 and 2011. In the last seven days, there have been 41 estimates revised upward with no downward revisions. Consensus estimates for fiscal 2010 increased 11 cents, or 7.6%, and the fiscal 2011 EPS estimates are up 10 cents, or 5.7%.

Linear has a Zacks #2 Rank. It stocks trades at 20x fiscal 2010 consensus estimates and 17x fiscal 2011 consensus estimates.

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