Skyworks Solutions (NASDAQ:SWKS) reports fourth quarter earnings after the market close Tuesday to cap off the 2019 fiscal year, and I think it could be a bellwether for the stock's expected performance in 2020. After a significant run-up, likely due to optimism over the launch of 5G-enabled iPhones next year, shares have once again reached triple-digits as fears over the U.S.-China trade war and overall weakness in the smartphone market have eased. While I still see SWKS as an attractive long-term investment, I think investors should consider protecting positions going into fourth quarter earnings.
Skyworks stock has been plagued by trade war fears and smartphone weakness over the past couple of years, but shares have staged a significant recovery over the past few months on investor optimism that Apple's (AAPL) rollout of 5G-enabled smartphones in 2020 will give results a boost and revitalize the smartphone market in general.
Here's a chart showing total stock returns over a 3-year period and a 3-month period for SWKS:
As we can see, they're virtually the same. And one might be inclined to wonder why that is. In my opinion, the primary reason shares have struggled over the years is due to Skyworks' reliance on the smartphone market, which has been struggling, for an overwhelming majority of its revenues. There's a lot of enthusiasm about IoT opportunities for the company, and rightly so, but while that market is growing, it is still relatively small.
Now investors are hoping that 5G-enabled iPhones can revitalize the smartphone market and finally bring growth back to the space, hence SWKS recent run-up. This optimism appears to have been validated by Qorvo's (QRVO) earnings in early November, which led to a big jump in SWKS and QRVO stocks and a slew of sell-side analyst upgrades. We've
