Skyworks Solutions: iPhone Chip Supplier's Sell-Off Overdone

| About: Skyworks Solutions, (SWKS)

Skyworks Solutions (NASDAQ:SWKS) sold off some 17% yesterday in what in my opinion was an overreaction to its latest guidance. This Apple (NASDAQ:AAPL) iPhone chip supplier is now offering a nice entry point for growth investors.

"Skyworks Solutions offers analog and mixed signal semiconductors worldwide. The company provides power amplifiers and front-end solutions for cellular handsets from entry level to multimedia platforms, as well as smart phones." (Business description from Yahoo Finance)

6 reasons SWKS is still a good growth play at $25 a share:

  1. The company actually guided to the top end ($420mm in quarterly revenue) of its previous issued sales range. Analysts were expecting a bigger nudge up and the stock was hammered. However, I believe the company is "under promising to over deliver".
  2. The first teardowns of the iPhone5 have confirmed the company's chips are inside the new version of Apple's juggernaut product line.
  3. The 16 analysts that cover the stock have a median price target of $35 a share on SWKS, roughly 40% above its current stock price.
  4. The company has a cash rich balance sheet with over $300mm on the books (approximately 10% of market capitalization)
  5. SWKS sells for under 12 times forward earnings, a discount to its five year average (14.2). The stock sports a five year projected PEG of under 1 (.84).
  6. The company has beat earnings estimates each of the last six quarters and consensus estimates for FY2013 have ticked up in the last month. Look for estimates to increase further if the iPhone5 beats sales projections which seems highly probable.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SWKS over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.