“Semiconductors” has been a hated space this year as many believe a slowdown is nigh. Down nearly 30%, though, there certainly are names worth owning in here, according to the Portfolio Manager at Gradient Investments.
Montagne’s bull case for Skyworks Solutions Inc
A name that Mariann Montagne is constructive on is Skyworks Solutions Inc (NASDAQ: SWKS) that’s expected to report its fiscal Q2 results next week. Defending her stock pick on CNBC’s “Power Lunch”, she said:
We’ve heard strong things about their latest product in terms of acceptance and they’re gaining share in high-end and mid-tier android phones that reduces their dependence on Apple, which has always kept their multiple [relatively low]”
Skyworks relies heavily on the iPhone maker for the majority of its sales; about 60% of which, come from Apple Inc. It’s expected to earn $2.58 a share this quarter, up 7% year-over-year.
Wall Street seems to agree with her positive outlook
Shares of Skyworks Solutions are currently in the oversold territory. Other than valuation, Montagne also likes the Irvine-headquartered firm as it pays a 2.3% dividend yield. She added:
Management has pledged to buy back 2.0% of its shares. This is a company we think is going to surprise to the upside on both revenues and earnings. It is trading at about a 45% discount to the S&P 500 index. So, that’s a buy for us.
Montagne’s positive outlook on “SWKS” is in line with Wall Street that also rates the stock at “overweight” and sees upside to $134 on average that translates to a more than 25% upside from here.
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