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I'm a swing and position trader using stocks and options. I'm also a new market technician trying to get my name out there and help folks at the same time. CMT level 2 candidate. I use fundamentals to find the best companies I can. Then I put them in a list and wait for big time technical... More
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  • Skyworks Solutions: An Intriguing Investment Idea 0 comments
    May 21, 2013 11:33 PM | about stocks: SWKS

    SWKS is often thought of as a smartphone play. Their largest segment is mobile devices, but 40% of their revenues come from other connectivity segments like smart energy, autos and home security. The stock seems to have fallen off many investors map as the stock has done nothing for investors for the last 30 months or so.

    The stock burnt investors who bought at the 2011 lows, ripped and then had a false break above 29 last fall. While the majority of stocks have ripped hard since the Obama lows, this has merely consolidated in a range.

    (click to enlarge)

    That above average volume breakdown and reversal around earnings in April caught my eye. After that strong run it's traded in a tight range giving back no gains.

    A break out of the flag could offer an attractive long term entry point as we bet on a test of the upper boundary line. You can see we want to shoot for a break of the wedge.

    We have to note the 40 week moving average is still pointed lower for the time being and relative strength is showing no sign of improvement. This isn't the greatest chart out there, but the fundamental story does make this a much more attractive to investors.

    I took some notes from their JPMorgan Tech Conference presentation.

    -Their products are all about the connectivity of devices and networks
    -Their mission is to capitalize on the explosive growth in connectivity.
    -Global demand for connectivity is in it's early innings.
    -50 Billion connected devices by 2020 (didn't mention current #)
    -Their chips are highly complex
    -Their products are very broad based so they offer a more competitive price point to customers (a bundle of sorts??).
    -They are positioned for the connected living room and factory floor, smart meters and upgraded wireless infrastructures etc
    -Every major smartphone brand has Skyworks components.

    You can tell from a lack of news flow and tweets that the mass majority isn't really thinking about this trend. Check out this Google Trends chart on the term Smart Grid. It appears it's wandered off the minds of folks after they found out what it was.

    (click to enlarge)

    To summarize, we are getting closer to a more connected everything and these guys seem well positioned for the early stages of this cycle. I really think this is a name worth watching for an eventual investment. I'll have more connectivity plays coming up later this week.

    Don't forget to follow me on stocktwits @a_jackson or twitter @a_jackson8.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SWKS over the next 72 hours.

    Stocks: SWKS
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