Skyworks: More Than iPhones

02/25/2016 8:00 am EST

Focus: STOCKS

Charles Carlson

Editor, DRIP Investor

Some of my favorite indicators are saying that stocks are hated right now and such times have represented excellent opportunities to be adding to your portfolio, asserts Chuck Carlson, editor of DRIP Investor.

The good news is that DRIP investors have a built-in mechanism for taking advantage of market declines…dividend reinvestment.

And if you have any additional cash on the sidelines, I’m not suggesting you should dump all of it into the market right now. But doing some buying in beaten-down favorites makes sense.

One stock that looks especially attractive for long-term gains is Skyworks Solutions (SWKS); this a leading provider of semiconductors is down 41% from its 52-week high.

The cause for much of the selling is concern that a slowdown in iPhone sales will have a big impact on the company. Apple (AAPL) accounts for at least 25% of Skyworks’ sales.

But Skyworks is more than just its Apple relationship. The firm has carved out a strong and growing position as a provider of chips for the “Internet of Things,” the increasing connectivity of virtually everything around us, such as cars, clothing, electronics, and appliances.

For 2016, the firm should still show double-digit growth in sales and profits. The stock trades at a modest 11 times its earnings estimate for fiscal 2016.

With more than $1 billion in cash (more than $5 per share) and virtually no debt, the company has plenty of financial firepower to weather the current storm.

The selling is way overdone in these shares, in my opinion, making them among the most attractive opportunities in the market.

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