Skyworks Solutions (SWKS 3.04%) is all set to end 2019 on a high note. The chipmaker has beaten the broader market by a fair margin this year, which would seem surprising at first given that its top and bottom lines have headed in the wrong direction.

SWKS Chart

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Skyworks' reliance on Huawei and the broader weakness in the smartphone industry have hurt the chipmaker big time this year. Still, investors have remained upbeat, and the stock has soared in anticipation of a major turnaround next year thanks to 5G (fifth-generation) wireless networks.

Wall Street carries a similar view. Bank of America recently upgraded Skyworks stock from underperform to buy and slapped a $122 price target on it. The investment bank believes that the chipmaker could step on the gas in 2020 as 5G gains critical mass. And don't be surprised if that's indeed the case -- Skyworks could be one of the biggest beneficiaries of 5G in 2020. Here's why.

Buy, sell, and hold written on three sides of a die.

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The smartphone business will witness a major turnaround

Smartphones are Skyworks' bread and butter. According to Bank of America, the company gets 51% of its total revenue by supplying chips to Apple (AAPL -0.37%). Not surprisingly, Skyworks' financial performance has taken a hit this year as sales of Apple's iPhone have declined.

But the good news for Skyworks is that Apple is reportedly going to launch three 5G smartphones in 2020. What's more, Apple is expected to dominate the 5G smartphone space next year and lead the rankings by leaving rivals such as Huawei and Samsung behind.

A report from the Nikkei Asian Review estimates that 80 million 5G iPhones could be shipped in 2020. IDC, on the other hand, anticipates total 5G smartphone shipments of 123 million units next year. This indicates that Apple could indeed corner a major share of the 5G smartphone market next year. This bodes well for Skyworks given the influence the iPhone maker has over the chipmaker's business.

Moreover, Skyworks' 5G smartphone opportunity is not limited to just Apple. The company also supplies its chips to OPPO, Vivo, and Xiaomi. These Chinese smartphone suppliers have managed to corner a nice chunk of the global market for themselves. For instance, Xiaomi and OPPO together controlled nearly 18% of the global smartphone market in the third quarter of 2019 as per IDC's estimates.

So even though Skyworks cannot ship its chips to Huawei, it is still capable of making a dent in the Chinese 5G smartphone market next year.

What's more, Skyworks will enjoy a bigger revenue opportunity in the 5G smartphone era, because the chips are going to be much more expensive. According to analysts from JPMorgan, the average price of a chip inside a 5G smartphone could be 1.85 times higher than those deployed in current-generation smartphones. This means that Skyworks' mobile business will benefit from a combination of higher volumes and stronger dollar content in each smartphone in 2020.

A good time to buy

The good thing about Skyworks stock is that it trades at attractive levels despite its impressive rally this year. A trailing price-to-earnings (P/E) ratio of nearly 23 is not very expensive considering that the stock's five-year average P/E multiple is 19.

A forward P/E multiple of 17 indicates earnings growth over the coming year, which is not surprising given the catalysts noted above.

Analyst estimates compiled by Yahoo! Finance also indicate that Skyworks is all set to step on the gas in the coming fiscal year. Its top-line growth is expected to accelerate from just 1.4% this year to more than 11% in the next fiscal year.

More importantly, 5G smartphones will be a multiyear catalyst for Skyworks. IDC estimates that their sales will account for 28.1% of global shipments in 2023, up from just 8.9% of worldwide shipments in 2020. This is why now is a great time to go long Skyworks Solutions, as it could sustain its rally in 2020, and it might even remain a top growth stock beyond next year.