Hybrid employee organizational structures, cloud services and Internet of Things (IoT) devices used by various businesses reveal the growth potential of 5G. To expand the country’s 5G base, President Biden has proposed $50 billion funding for the U.S. semiconductor industry as part of his $2 trillion infrastructure spending proposal. This follows the President’s executive order, passed two months ago, to review the nation’s semiconductor shortage.
Various companies have begun to manufacture 5G-supported devices to capitalize on this industry tailwind, leading to a shortage of semiconductor chips worldwide. In addition, U.S.-China trade tensions are forcing Taiwan Semiconductor Manufacturing Company (TSM), a Taiwanese multinational semiconductor manufacturing and design company, to build factories in both countries. Consequently, the global 5G services market size is expected to grow at a CAGR of 46.2% over the next seven years to hit $664.75 billion by 2028.
In light of these developments, Skyworks Solutions, Inc. (SWKS – Get Rating), Qorvo, Inc. (QRVO – Get Rating), and Cirrus Logic, Inc. (CRUS – Get Rating) are expected to generate significant revenues in this quarter. Thus, we think it could be wise to invest in these stocks now.
Founded in 1962, SWKS designs, develops, manufactures and markets semiconductor products. The company provides products for use in the aerospace, automotive, broadband, cellular infrastructure, connected home, entertainment and gaming, industrial, medical, military, and wearable markets. It sells its products through a direct sales force, electronic component distributors, and independent sales representatives.
SWKS is scheduled to repurchase up to $2 billion of its common stock in increments prior to January 26, 2023. On January 14, the company collaborated with Xilinx, Inc. (XLNX) to showcase the spectral and power efficiency achievable using its SKY66318-21 power amplifier in 5G infrastructure applications. Also in January, SWKS announced that its high-performance Wi-Fi 6E front-end modules were featured on the world’s first ultra-fast Wi-Fi 6E gaming router from ASUS.
For its fiscal year 2021 first quarter (ended January 1, 2021), SWKS’ net revenue increased 68.5% year-over-year to $1.51 billion. Its non-GAAP gross profit has increased 71.8% year-over-year to $771 million. The company’s non-GAAP operating income came in at $622 million for the quarter, up 97.2% year-over-year. Its non-GAAP net income of $560.50 million represents a 94.2% rise year-over-year. Also, SWKS’ non-GAAP EPS has increased 100% year-over-year to $3.36.
Analysts expect SWKS’ EPS to improve 68% year-over-year for the current quarter, ending June 30, 2021, to $2.10. It impressively surpassed the Street’s EPS estimates in each of the trailing four quarters. Also, the consensus revenue estimate of $4.92 billion for its fiscal year 2021 represents a 46.5% rise on a year-over-year basis.
The stock has gained 96.3% over the past year and closed yesterday’s trading session at $187.84.
SWKS’ strong fundamentals are reflected in its POWR Ratings. The stock has a B overall rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
The stock also has a B grade for Momentum and Quality. We have also graded SWKS for Growth, Value, Stability, and Sentiment. Click here to access all of SWKS’ ratings.
SWKS is ranked #19 of 99 stocks in the B-rated Semiconductor & Wireless Chip industry.
QRVO develops and commercializes technologies and products and radio frequency (RF) solutions for mobile, infrastructure and aerospace/defense applications worldwide. Its Mobile Product segment supplies RF solutions that perform various functions in the cellular radio front-end section of smartphones. The IDP segment-supplied RF solutions supports ubiquitous high-speed network connectivity to the cloud, data center communications, and upgraded military capabilities around the globe.
Last month, QRVO increased shipments of its RF Fusion20 portfolio to all major 5G smartphone manufacturers. QRVO introduced its first QPG6100 smart home communications controller on March 22 to deliver simultaneous support for multiple ultra-low power wireless protocols. And on March 5, NASA’s Jet Propulsion Laboratory (JPL) confirmed that QRVO’s products were
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