The last time I wrote about semiconductor company Skyworks Solutions was 185% ago on 2/6/2009, right after it broke above resistance on positive earnings. It closed at $6.77 that day with call options running amok. SWKS then rallied 140% by August on strong smartphone growth. They just reported Q3 2010 results. I'm not going to analyze the financials or price valuation ratios in this post but revenues were up 44% YoY and Non-GAAP Operating Income was up 122% (press release). See $SWKS, $TQNT, $RFMD, $SMH technical analysis, chart comparables and updates/downgrades after the jump.
If you want financial analysis on the Q3 numbers visit this Zacks Investment Research article. BTW, if you have no idea what Skyworks does here's a description.
Skyworks Solutions, Inc. is an innovator of high reliability analog and mixed signal semiconductors. Leveraging core technologies, Skyworks offers diverse standard and custom linear products supporting automotive, broadband, cellular infrastructure, energy management, industrial, medical, military and mobile handset applications. The Company's portfolio includes amplifiers, attenuators, detectors, diodes, directional couplers, front-end modules, hybrids, infrastructure RF subsystems, mixers/demodulators, phase shifters, PLLs/synthesizers/VCOs, power dividers/combiners, receivers, switches and technical ceramics.
They essentially provide chips inside your Blackberry, iPhone and now even iPad 3G. So Skyworks is riding the structural 3G/4G Smartphone / Tablet growth wave. Once decently priced 4G phones and tablets hit the market with unlimited data plans I bet the whole industry goes parabolic. That's if margins are decent, end users are healthy enough financially and/or banks start chopping up credit card debt in size again. What do you think? Here's a picture of a Skyworks chip "SKY77340" in the iPad 3G (source: ifixit.com).
|Inside ipad 3g (source: ifixit.com)|
Now lets look at the Skyworks (SWKS) chart on a short term basis, long term basis and competitor basis. TriQuint Semiconductor (TQNT) and RF Micro Devices (RFMD) are direct competitors. Actually the ifixit.com site noted that three TriQuint (TQNT) power amplifiers were on the right side of the image above.
SWKS broke out AGAIN a few days ago and made higher highs, while RFMD (RF Micro Devices) and TQNT (TriQuint Semiconductor) did not. Since October of 2009, SWKS has been in a constant upward trajectory while TQNT and RFMD peaked out and traded sideways (Chart 1). SWKS decoupled from TQNT and RFMD in May. I also wanted to note that SWKS broke out of its 8 year sideways channel, between $4-12, while TQNT and RFMD did not (Chart 2).
SWKS decoupled from TQNT, RFMD in May 2010 - FreeStockCharts
SWKS, TQNT and RFMD since tech bubble - FreeStockCharts.com
Now check out SWKS versus Apple, Semiconductor ETF, QQQQ (Nasdaq ETF), TQNT and RFMD since 1/09/2009. Skyworks is winning. Just to note, RFMD was a penny stock when it double bottomed in 2009 (70 cents). Performance comparisons change dramatically if you move back and forth a few days. SMH is in a strong sideways channel.
SWKS, SMH, QQQQ, AAPL, RFMD, TQNT
SMH (HOLDRS Semiconductor ETF)
Last but not least the Skyworks chart. SWKS broke through that $18 ceiling and is above the 50 and 200 day moving average. It closed at $18.88. SWKS is trending higher but keep an eye on the short and long term rising wedges. In the second chart you can see that the point of the rising wedge hits $32 which is also around tech bubble resistance.
If SWKS breaks below that rising wedge and violates $18 support, $14.50 and $12 look like potential floors. $12 is a very strong and important support level since it was a ceiling resistance for 8 years straight and was just conquered a few months ago. If SWKS breaks through that wedge a $12 retest or 33% correction could occur. SWKS would have to stab through the 50 and 200DMAs first.
Skyworks could rise into the twenties from here if nothing gets violated, but it will correct eventually and probably see a spike in volatility (watch technicals and puts).
SWKS Short Term Chart
SWKS Long Term Chart
Word on the Street-James Rogers of Thestreet.com (talks SWKS) - NBR Transcripts
Tapping Apple With 3 Cheaper Stocks - TheStreet.com
Skyworks Reports In-Line Numbers - Zacks.com
Beyond Apple: Three Other Ways to Profit From the Smartphone Boom - Daily Finance
Skyworks Solutions, Inc. F3Q10 (Qtr End 07/02/2010 ) Earnings Call Transcript - Seeking Alpha
Skyworks added to S&P Midcap 400 (replasec Sybase) - PR NewsWire
Skyworks grows revenue 44% year-on-year to $275.4m - Semiconductor Today
7/23: UBS Reiterates 'Buy' Rating on Skyworks Solutions, ups price target to $22 from $19 - Briefing
7/23: Skyworks Downgraded by Charter Equity from Buy to Market Perform - New Ratings
7/23: Caris & Company Reiterates 'Buy' rating on Skyworks, target raised to $24 from $20 - Briefing
7/23: Skyworks upgraded to Outperform from Sector Perform at PacCrest - FlyOnWall
7/23: Northland Securities reiterate 'Outperform' on Skyworks, target $21 - Briefing
7/23: Needham & Company Reiterates a 'Buy' on Skyworks Solutions, $25 - StreetInsider