This Could Be the Next Big Thing
Tech stock investors are always looking for the “the next big thing.” While there are many innovations that could lead to big returns, one of them could deliver a payday to investors quicker than others.
I’m talking about 5G wireless technology.
Compared to 4G, a technology that many people are already using, 5G could be 100 times faster when it comes to data transmission speed. Moreover, 5G networks also offer ultra-low latency. This would enable the possibility of many mission-critical applications that need real-time feedback.
No doubt, as we enter the 5G era, the 5G-related companies (and their investors) could make a lot of money. That’s why 5G stocks have been a hot topic lately. And if you are looking for the best 5G stocks, you should consider adding Skyworks Solutions Inc (NASDAQ:SWKS) to your watch list.
Skyworks Solutions is a semiconductor company headquartered in Irvine, California. The company’s products are found in a wide range of applications, including in the aerospace, automotive, broadband, cellular infrastructure, connected home, industrial, medical, military, smartphone, tablet, and wearable markets.
Admittedly, Skyworks Solutions is not as big as Qualcomm, Inc. (NASDAQ:QCOM), another semiconductor company that’s often associated with 5G.
Still, despite being a smaller player in the semiconductor industry, Skyworks Solutions has won many big-name clients, including Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOG), Cisco Systems, Inc. (NASDAQ:CSCO), Microsoft Corporation (NASDAQ:MSFT), and Tesla Inc (NASDAQ:TSLA). (Source: “Connecting Everyone and Everything, All the Time,” Skyworks Solutions Inc, last accessed June 24, 2020.)
Speaking of 5G, Skyworks managed to leverage its “Sky5” platform across multiple flagship 5G handset launches in the March quarter, including for smartphone makers Samsung, OPPO, Vivo Mobile Communication Co., Ltd., and Xiaomi. (Source: “Skyworks Reports Q2 FY20 Results,” Skyworks Solutions Inc, May 4, 2020.)
Skyworks Solutions also worked with mobile operators to support the expanding work-from-home trend, powering 5G hotspots with Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T).
Due to the outbreak of COVID-19, the U.S. stock market experienced a major sell-off in March, and SWKS stock tumbled alongside its peers.
However, as the market started to recover, Skyworks stock quickly bounced back. Since March 16, the semiconductor company’s stock price has soared 85.7%. In fact, it is trading higher than its pre-crash level.
Skyworks Solutions Inc (NASDAQ:SWKS) Stock Chart
Chart courtesy of StockCharts.com
Now, there are many hot tech stocks on the market, with some of them still recording losses. Skyworks Solutions, on the other hand, is well established and already profitable.
In the second quarter of the company’s fiscal-year 2020, which ended March 27, it earned adjusted net income of $1.34 per share. It also generated $766.1 million of revenue and $280.4 million of operating cash flow. (Source: Skyworks Solutions Inc, May 4, op. cit.)
With the coronavirus pandemic yet to come to an end, many companies have suspended their guidance. Skyworks, on the other hand, still provided an outlook for the June quarter, despite limited visibility.
“In the third fiscal quarter of 2020, we anticipate revenue to be between $670 and $710 million with non-GAAP diluted earnings per share of $1.13 at the midpoint of our revenue range,” said the company’s senior vice president and Chief Financial Officer Kris Sennesael. (Source: Ibid.)
In the fast-changing tech world, companies rise and fall all the time. However, even though Skyworks Solutions Inc is not the biggest player in the semiconductor industry, it has established an entrenched market position and has been churning out strong financials for years.
The adoption of 5G could become a major catalyst for Skyworks stock. The company’s shares have been travelling on a nice uptrend lately, and if the overall market sentiment stays bullish, I suspect that this trend could continue well into the future.