Skyworks Solutions Stocks - Still Fairly Valued
- Ishfaaq Peerally
- May 14, 2021
- 2 min read
๐คSkyworks Solutions $SWKS is the largest position in my portfolio. ๐๐๐ ๐๐ค๐ข๐ฅ๐๐ฃ๐ฎ ๐๐จ ๐ข๐๐ ๐๐ฃ๐ ๐๐ฃ ๐๐ข๐ฅ๐ค๐ง๐ฉ๐๐ฃ๐ฉ ๐๐๐ฆ๐ช๐๐จ๐๐ฉ๐๐ค๐ฃ, ๐ฉ๐๐ ๐๐ฃ๐๐ง๐๐จ๐ฉ๐ง๐ช๐๐ฉ๐ช๐ง๐ ๐๐ฃ๐ ๐ผ๐ช๐ฉ๐ค๐ข๐ค๐ฉ๐๐ซ๐ ๐ฝ๐ช๐จ๐๐ฃ๐๐จ๐จ ๐ค๐ ๐๐๐ก๐๐๐ค๐ฃ ๐๐๐๐จ $SLAB . This will change the balance sheet of the company since they are taking debts after a long time.
๐ I started buying shares of Skyworks Solutions in June 2019, at the time the largest position in my portfolio was Apple $AAPL which I bought in 2016 and 2018. Apple is a great company but the stock was getting expensive and I wanted to own smaller companies with lower correlations with the S&P 500 $SPX500 . Therefore, I started buying shares of Skyworks Solutions, taking profits from Apple gradually.
๐ฑ Skyworks Solutions is one of the ๐จ๐ช๐ฅ๐ฅ๐ก๐๐๐ง๐จ ๐ค๐ ๐ผ๐ฅ๐ฅ๐ก๐, making RF semiconductors, necessary to connect to the network. Skyworks Solutions will play a very important role in 5G. Compared to 4G and 3G, the profits on 5G are going to be much higher.
โ ๏ธ Recently, Apple has been ditching its suppliers, mainly Intel $INTC and Qualcomm $QCOM . Can the same thing happen with Skyworks Solutions? Unlikely, since Skyworks Solutions is a ๐๐ฎ๐๐ง๐๐ ๐๐๐๐ก๐๐จ๐จ/๐๐ค๐ช๐ฃ๐๐ง๐ฎ ๐๐ค๐ข๐ฅ๐๐ฃ๐ฎ, and it will be hard to delegate these manufacturing of these semiconductors to third party manufacturers.
๐ It is, nevertheless, important for Skyworks Solutions to diversify away from Apple and 5G into Autonomous vehicles and Internet of Things. That's why they are acquiring Infrastructure and Automotive Business of Silicon Labs.
๐ฐ We have not seen the effects of 5G and IoT on the fundamentals of Skyworks Solutions. The best is yet to come for this company. I won't say that Skyworks Solutions is a value stock anymore like it was in 2019 but it is still fairly valued.
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