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>>> Skyworks Solutions' terrific momentum is here to stay


Motley Fool

https://www.fool.com/investing/2021/08/24/these-3-stocks-are-screaming-buys-right-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


With a trailing price-to-earnings ratio of 21.4 and a forward earnings multiple of less than 16, buying Skyworks Solutions stock right now is a no-brainer given the pace at which it has been growing. The company's revenue in the recently reported fiscal third quarter increased 52% year over year to $1.11 billion, while adjusted earnings increased 72% to $2.15 per share.

Skyworks' guidance was also impressive. The company expects revenue to jump 36% year over year in the fourth quarter at the midpoint of its guidance range, while adjusted earnings are expected to increase 37%. But Skyworks can trounce expectations, like it has done over the past few quarters, as both its businesses are firing on all cylinders.

The mobile business recorded year-over-year growth of 52%, while the non-mobile broad markets segment registered 50% growth last quarter. The good news for Skyworks investors is that both segments are sitting on secular catalysts.

The mobile business is benefiting from the global rollout of 5G smartphones. Skyworks is in a prime position to take advantage of the boom in 5G smartphone sales thanks to its broad customer base. The chipmaker supplies its components to Apple (NASDAQ:AAPL), its largest customer with 56% of sales last fiscal year, and a clutch of top Android smartphone original equipment manufacturers such as Oppo, Vivo, and Xiaomi, among others.

Apple is going to be one of Skyworks' biggest growth drivers given its influence on the chipmaker's top line and the solid demand for the 5G-enabled iPhones. The iPhone 12 has been a runaway hit for Apple with sales of the series crossing 100 million units within just seven months of launch according to Counterpoint Research.

The momentum looks all set to continue with this year's iPhone launch. A recently conducted third-party survey of 3,000 iPhone owners over 18 years old revealed that 44% of them are willing to buy the 2021 iPhone models. Not surprisingly, Apple has reportedly increased the initial production batch of the 2021 iPhones to 90 million units from 75 million units last year. So, Skyworks' largest mobile customer seems set for better times ahead, and the same can be said about the broad markets segment.

Skyworks said on its latest earnings conference call that the broad markets segment is "benefiting from strong demand for [Internet of Things] solutions, including WiFi 6 and 6E and smart audio, as well as emerging use cases in industrial and automotive markets."

Investors should note that these markets have a lot of room for growth. The market for WiFi 6 chips is set to grow at an annual pace of nearly 22% for the next five years, while the connected car market is on track to record 17% annual growth through 2027, according to third-party estimates.

Skyworks Solutions can keep firing on all cylinders, and investors would do well to buy the stock given its enticing valuation.

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