Is Skyworks Solutions a Millionaire-Maker Stock?
The smartphone boom during the late 2000s and 2010s meant money in the bank for many semiconductor companies. Lots of new users, frequent phone upgrades, and rising prices as each year packed more tech into the mobile devices meant big increases in sales and profitability. Primarily riding the coattails of Apple's (NASDAQ: AAPL) iPhone, Skyworks Solutions (NASDAQ: SWKS) stock is sporting a 485% return over the last trailing 10 years, compared with just 136% for the S&P 500.
However, the lion's share of those returns on Skyworks had been made by 2015, and the stock has been trading in volatile sideways action ever since. The first problem to crop up was the gentle decline in global smartphone shipments the last few years as consumers have begun to hold onto phones for longer (global units shipped were 1.37 billion in 2019 compared with the peak of 1.47 billion in 2016, according to Statista). With the initial growth phase now over, supplying components for phones is now a cyclical affair just like any other manufacturing business. A disruptive trade war between the U.S. and China that eliminated another key Skyworks customer, Huawei, from the mix also hasn't helped, not to mention the current coronavirus crisis.
And yet there is still great potential for Skyworks. With a market cap of $15.7 billion, this isn't a tiny company that is going to shoot an investment portfolio into seven figures all on its own. But it is far smaller than mega-chipmaker Qualcomm (NASDAQ: QCOM) -- $84.7 billion market cap as of this writing -- known the world over for providing the processors that actually operate mobile devices (versus Skyworks' radio frequency chips that enable a network connection). With the Internet of Things (IoT) movement still ongoing and 5G mobile networks still in the very early innings of rollout, this small-ish chipmaker is worth investigating.
Source Fool.com
