Please ensure Javascript is enabled for purposes of website accessibility

Skyworks Doesn't Really Need Apple

By Anders Bylund – Updated Apr 6, 2017 at 10:36AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It doesn't hurt to ride the big boy's coattails, but Skyworks would actually do fine on its own.

Some would invest in Skyworks Solutions (Nasdaq: SWKS) as a proxy for Apple (Nasdaq: AAPL), because the communications chip designer is riding the coattails of every iPhone and 3G iPad. It's a sensible strategy for investors who want all the goodies of Apple's business without the risks of investing in the cult of Steve Jobs.

But Skyworks is actually better than just an alternative to Apple. The stock has jumped by 120% over the past 12 months, running neck-and-neck with my own favorite tech stock for 2010, Tibco Software, and far ahead of Apple itself, thanks to a broad portfolio of outperforming products.

The just-reported fourth quarter saw sales soaring by 37% year-over-year. Non-GAAP earnings jumped from $0.24 per share to $0.43 per share. Investors had expected a great report, so the market largely took the news in stride by boosting share prices by about 1% on a generally flat market day.

Management gave credit for the strong performance to its diversified strategy and backed it up by shining the spotlight on a number of market opportunities in the pipeline:

  • A close partnership with Broadcom (Nasdaq: BRCM) is putting Skyworks chips inside everything from Blu-ray players and gaming consoles to smartphones and notebooks.
  • Motorola (NYSE: MOT) is using the company's products in head-end distribution systems, meaning the master connection where the cable company receives and redistributes its TV signals.
  • Staying within the broadcasting market, Cisco Systems (Nasdaq: CSCO) likes Skyworks' solutions inside its fiber-based distribution systems and set-top boxes.

As you can see, Skyworks hardly lives and dies by Apple alone. That might be a weakness as long as the Cupertino gang is doing alright, but it never hurts to be prepared for a downturn.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Apple is a Motley Fool Stock Advisor recommendation. The Fool has written calls (bull call spread) on Cisco Systems. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$146.10 (2.56%) $3.65
Cisco Systems, Inc. Stock Quote
Cisco Systems, Inc.
$41.82 (2.22%) $0.91
Motorola Solutions, Inc. Stock Quote
Motorola Solutions, Inc.
$235.42 (2.82%) $6.45
Skyworks Solutions, Inc. Stock Quote
Skyworks Solutions, Inc.
$92.18 (4.89%) $4.30

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.