Skyworks Solutions (NASDAQ:SWKS) is a semiconductor stock, manufacturing analog and mixed signal semis. Basically, the company’s products help enable mobile connectivity and today almost everything is connected from smartphones, tablets, streaming video, thermostats, autos, appliances to medical devices. Skyworks’ chips help connect people to vital information.
Skyworks is a key beneficiary of the mobile revolution. Global adoption of 4G-LTE is still in its early stages and requires an increasing amount of analog content. The rollout of LTE is driving band proliferation. The Internet of Things requires lots of bandwidth. And the opportunity set is expanding into more and more areas.
I last wrote about Skyworks Solutions stock in July when it traded in the mid-$40’s. At that time, many investors linked its growth prospects to the success of Apple’s (NASDAQ:AAPL) iPhone 6/6+ rollout. As it’s safe to say the iPhone 6 has been a huge hit for Apple and it has helped drive LTE subscriber growth. Skyworks’ stock went along for the ride.
But looking at the company’s earnings results from November, it is clear that Skyworks’ growth prospects extend far beyond a single product launch from one big customer. The company beat earnings estimates by $0.04 per share and guided up 2015 earnings. Mobile connectivity and integration is driving company margins higher.
*All data from Best Stocks Now app
Skyworks Solutions is a mid cap stock with a market capitalization of $13 billion. Its risk profile is Moderate. I own it in my Aggressive Growth accounts.
One of the biggest knocks on the stock is that after reporting earnings results, it is trading at new high levels. Critics complain the stock is at its peak. Indeed, it does receive a Value Grade of B. Its forward PE is 13.5X, but that is high for a semi stock. But this company also has amazing earnings growth of almost 19%. So on a PE to Growth (PEG ratio) basis, it does not look that expensive. And it is easy to argue that the case for future growth continues to remain positive.
On a performance basis, Skyworks has been an amazing performer this year, up 142% YTD, as compared to Apple’s 38% return and the market’s 7.6% gain. I am long Apple stock as well. It has been a nice one-two punch.
Skyworks’ stock is currently rated a Strong Buy with a stock grade of A. Its current rank is #16 out of the more than 3900 stocks in the Best Stocks Now universe. The stock is another play on the mobile technology revolution and Internet of Things. As Skyworks’ chips extend into more and more devices and mobile applications its growth prospects will continue to soar.
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