Cisco Systems, Inc. (CSCO), True Religion Apparel, Inc. (TRLG): Monday’s Top Upgrades & Downgrades

Priced at 19 times earnings, but with a growth rate of “only” 16% and no dividend yield to make up the difference, Skyworks shares look slightly pricey on the surface. However, the company has nearly $460 million in cash that doesn’t get counted in a basic “P/E” valuation, and Skyworks Solutions Inc (NASDAQ:SWKS)’s $255 million in positive free cash flow is actually a bit more than what the company reports as “net income” under GAAP.

Result: I calculate an enterprise value-to-free cash flow ratio of almost precisely 16 for Skyworks, which aligns perfectly with the stock’s predicted 16% earnings growth rate. While I’m not fully convinced that Standpoint is right about its price target for Skyworks — $32 a share being a 33% gain from where the stock sits today — I do believe the stock is at worst fairly priced, and at best, priced to move upwards.

Motley Fool contributor Rich Smith owns shares of Apple Inc. (NASDAQ:AAPL). The Motley Fool recommends Apple and Cisco Systems, Inc. (NASDAQ:CSCO). The Motley Fool owns shares of Apple.

The article Monday’s Top Upgrades (and Downgrades) originally appeared on Fool.com and is written by Rich Smith.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.