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Skyworks Is Well-Positioned In Both Smartphones And IoT

|Includes: Skyworks Solutions, Inc. (SWKS)

Apple (NASDAQ:AAPL) supplier Skyworks Solutions (NASDAQ: SWKS)looked set for a terrific 2014 back in January. The company has not disappointed as Skyworks shares have gained close to 45% so far this year. Also, there are no signs of Skyworks stopping any time soon as it reported terrific second-quarter results back in April, accompanied by superior guidance. In addition, Skyworks also initiated a quarterly dividend payment of $0.11 per share, yielding 1.1%

Internet of Things

The IoT is all about machine-to-machine, or rather object-to-object connectivity. According toCisco, the number of connected devices around the world will reach 50 billion by 2020 as IoT gains pace. This would give rise to need for more connectivity chips that Skyworks provides.

The company's 802.11ac chips are being shipped for Internet of Things apps . Going forward, it would be only a matter of time.

There is no surprise coming in this, in fact, this is expected for a company such as Skyworks, which makes connectivity chips, is huge considering the expected size of the IoT.

IoT expected to be a massive $19 trillion opportunity going forward, or a huge opportunity for Skyworks

Skyworks holds key clients such as Nest, the maker of smart home products that was acquired by Google earlier this year. According to management, the company has an "extremely strong relationship and high content" at Nest.


Samsung ( OTC:OTC:SSNLF ) and Apple have been the cornerstone of Skyworks' success so far as the two giants made for half of its total revenue in fiscal 2013. Looking ahead, there is no reason to look for a termination on this contracts

According to iQmetrix, the Galaxy S5 accounted for 25% of total phones sold in the U.S. and Canada during its launch weekend, even surpassing Apples performance ( the iPhone 5s' share was just 18%). Samsung launch has been somewhat impressive.

Apples iPhone 6 is for a solid comeback: Two variants -- a 4.7-inch version and a 5.6-inch version, as reported by Reuters. Also, because Apple is expected to produce a massive 80 million units of the device, Skyworks might see a bump in its addressable market going forward.

Skyworks is well-positioned in both smartphone camps and benefits from the two major device launches that the industry sees every year

Skyworks' valuation is quite attractive. The stock trades at 24.6x last year's earnings, but the multiple comes down to just 13x forward P/E basis. Skyworks' PEG ratio is also under 1 at 0.87, signifying a solid growth rate and undervaluation going forward.

Impressive? The company has no debt and a lot of cash ($800 million). going forward in innovating new products and even make acquisitions to expand its business is overdone.


A robust company from all angles, benefiting from smartphones and tablets at present. Poised to benefit itself from the Internet of Things going forward.

The company has strong fundamentals. So, all in all, Skyworks looks like a solid investment even after solid gains this year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: SWKS

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.