SWKS: Jump on the Skyworks Solutions Bandwagon

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While the broader market sloshed back and forth this week, one chipmaker stood heads and shoulders above the rest. Shares of Skyworks Solutions (SWKS) have rebounded over 10% in the past few trading days!

Skyworks Solutions SWKSIs it time to jump on the SWKS bandwagon?

Company Profile

Based in Woburn, Massachusetts, Skyworks Solutions makes analog semiconductors for use in radio frequency and mobile communications systems, which includes everything from amplifiers to lighting displays to mixers.

Skyworks’ products are used in a wide range of industries, including automotive, wireless infrastructure, energy management and military clients. Skyworks is also a supplier to major tablet and smart phone makers — Samsung (SSNLF) and Apple (AAPL) both use its chip sets to expand the wireless connection capability of their devices.

Skyworks sells its products directly, as well as through independent manufacturer representatives and distribution partners.

Future Outlook

There’s good reason that SWKS has rebounded in the past week. On Tuesday, Skyworks issued a better-than-expected earnings pre-announcement for the fourth quarter. The firm anticipates earnings of $1.08 per share on $718 million in revenue, up from its previous forecast of $1.08 earnings-per-share on $680 million in revenue. Compared with Q4 2013, Q4 works out to 69% earnings growth and 51% sales growth.

The revised guidance caused analysts to hike up their own EPS estimates for Q3, Q4, fiscal 2014 and fiscal 2015. The fact is that Skyworks is a direct beneficiary of the iPhone’s continued success and the 3G boom in China. So, the holiday season will help Skyworks’ bottom line.

Skyworks is also in great shape for its third-quarter earnings announcement on Nov. 6. The consensus estimate calls for $1.06 EPS on $703.94 million in revenue, representing 65.6% earnings growth and 47.6% sales growth.

Current Ratings

Skyworks Solutions is one of the biggest comeback stories of the year. As recently as last Oct., SWKS earned a “D,” indicating a “sell” recommendation. Since then, SWKS has been successful in turning around its balance sheet and attracting more institutional buying pressure.

Currently, SWKS stock earns a “B” for its Fundamental Grade, owing to strong sales growth (A), earnings growth (A), operating margin growth (A), analyst earnings revisions (A), cash flow (B), and return on equity (B). For the moment, Skyworks could improve earnings momentum (C) and earnings surprises (C). Meanwhile, SWKS receives an “A” for its Quantitative Grade, placing SWKS stock firmly in “buy” territory

As of this posting, Oct. 17, I consider SWKS an “A-rated strong buy.” Even with SWKS stock’s impressive rebound in recent days, I see plenty of upside left for SWKS.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


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