Booming iPod market is good news for Wolfson

Stockings full of iPods could make this a merry Christmas for Wolfson Microelectronics (WLF), says Steven Frazer in Shares. This Scottish micro-chip maker is a supplier to Apple, and Christmas should see demand for Apple products soar.

But Wolfson is about more than just Apple. If you have a TomTom satellite navigation system, or a Sony PlayStation Portable, you're probably using a Wolfson chip. All three of these products have been "flying off the shelves", says The Scotsman. Which is one reason why the shares rose 9% on the back of its last trading statement.

But the good news for investors isn't over. If Wolfson is right that the MP3-player market could double in the next couple of years and that portable devices will see "continued strong demand", then there could be plenty of upside left.

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The company's competitors are on an average prospective p/e of 23 for the next 12 months, which makes Wolfson's ratio of 19 for next year seem less chunky. And as forecasts suggest that its earnings per share will increase by 65% over the next year, its p/e to growth ratio (PEG) is a very reasonable 0.32 times.

Overall, "returning to their record 320p level of last year looks feasible over the next six months or so", says Frazer (tipping the shares at 235.5p), while The Independent is sticking with its view that the shares are a "long-term gem".