Why Skyworks Looks Like a Promising Buy

A number of small companies that have contributed toward the mobile revolution are now seeing some good returns. Skyworks Solutions (NAS: SWKS) is one of them. The company came out with its earnings last week, beating Street expectations, and saw its shares jump 11%.

Fellow Fool Seth Jayson has already given a snapshot of Skyworks' numbers. Now, we will see what went right for Skyworks, and why I believe it has good prospects in the long run.

Riding the coattails
Skyworks supplies radio frequency chips to major companies in the mobile computing space. So, considering the speed at which mobile devices were sold during the holiday period last season, it didn't surprise me to see Skyworks' revenue jump 17% in the quarter to $394 million.

But what was the primary reason behind Skyworks' revenue heading north? Simple! The chips manufactured by the company are being used by Apple (NAS: AAPL) in its iPhone. The latest iPhone is rumored to have sold around 30 million units in the previous quarter, and Skyworks made merry while the phones flew off the shelves.

Even in the highly anticipated iPhone 5, to be released later this year, Apple will use Skyworks' chips.

A few more positives
Apart from the Apple story, Skyworks is expected to add a few more smartphone bellwethers to its existing clientele as it acquired Advanced Analogic Technologies in the previous quarter. This deal may help Skyworks add Samsung and LG, among others players, to its portfolio. And I won't be shocked if the stock carries its momentum forward.

The upbeat possibilities don't end there. Skyworks has diversified its business into various areas. It supplies chips for LED TVs, e-readers, tablets, and so on. The company manufactures chips used in wireless networking, an area expected to see fast growth and to hold promise in the long run.

The Foolish bottom line
With so many developments around the corner, Skyworks certainly seems like a stock that you should keep an eye on. And we at The Motley Fool will help you do just that through our customized Watchlist feature. To add Skyworks Solutions to your Watchlist, click here.

At the time thisarticle was published Fool contributor Harsh Chauhan owns none of the stocks mentioned in the article. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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