Skyworks Solutions Inc (SWKS) is poised to benefit regardless of who wins the handset war, Apple Inc (AAPL) or Samsung Electronics Co., Ltd. (KRX:005930), because the company supplies to both, and will also see rewards as more devices move to Wi-Fi, says Harsh Kumar, Managing Director at Stephens, Inc.
“One that we like a lot is Skyworks, SWKS. It’s a great company. We generally like the RF space, but this particular one is very well-run, and they already have very little fat but they continually strive to take fat off their financial statements. The best way to describe this company is it doesn’t matter whether Apple wins the handset war or Samsung wins the handset war or some third competitor wins it. They supply to both. They are very well-represented in the industry itself, and they also are a play in the China upgrade market,” Kumar said.
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Additionally, as the biggest player in Wi-Fi from a radio frequency angle, SWKS should benefit as more devices move to Wi-Fi, Kumar says. He picks this stock as an inexpensive yet attractive investment.
“Next is the Wi-Fi catalyst. They are the biggest player in the Wi-Fi and the Wi-Fi A/C space from a radio frequency angle. So as you hear of more and more devices such as DVD players, set-top boxes, TV are going to Wi-Fi, we think of this company as a very good play. We’ve got $2.54 in earnings, EPS. For September 2014, the company has $2.00 in cash. It’s a very cheap stock trading at roughly 10 times, and I think it could easily trade at a mere 13 to 14 times to get to the low $30s price target. Relative to that, most of my other companies trade somewhere in the high teens. So this will still be a cheaper stock and potentially the multiple for the expand even from there, but it’s very attractive,” Kumar said.
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