Is Skyworks Solutions (SWKS) a Good Long-Term Investment?

Heartland Advisors, an investment management company, released its “Heartland Mid Cap Value Fund” third quarter 2022 investor letter. A copy of the same can be downloaded here. In the third quarter, Mid Cap Value Investor Class returned -5.06% and Mid Cap Value Institutional Class returned -5.03% compared to a -4.93% return for the Russell Midcap Value Index. Initially, in the third quarter, the fund lagged behind its benchmark, the Russell Mid Cap Value Index. But at the end of the third quarter, the fund was able to close the gap compared to the benchmark index and outperformed year-to-date. Security selection contributed to the fund’s performance in the quarter. Financials and Utility sectors outperformed, while Consumer Discretionary, Consumer Staples, and Energy sectors detracted from the performance. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

Heartland Advisors discussed stocks like Skyworks Solutions, Inc. (NASDAQ:SWKS) in the third quarter investor letter. Headquartered in Irvine, California, Skyworks Solutions, Inc. (NASDAQ:SWKS) engages in the business of semiconductor products. On October 12, 2022, Skyworks Solutions, Inc. (NASDAQ:SWKS) stock closed at $79.38 per share. One-month return of Skyworks Solutions, Inc. (NASDAQ:SWKS) was -20.78% and its shares lost 50.46% of their value over the last 52 weeks. Skyworks Solutions, Inc. (NASDAQ:SWKS) has a market capitalization of $12.736 billion.

Here is what Heartland Advisors specifically said about Skyworks Solutions, Inc. (NASDAQ:SWKS) in its Q3 2022 investor letter:

“Before the risk-on rebound early in the quarter, we were searching for opportunities to shift from our defensive stance, looking for beaten-down, high-quality “early cycle” leaders. Existing holding, Skyworks Solutions, Inc. (NASDAQ:SWKS), represents one such opportunity that was added to on weakness.

Skyworks is one of two leading providers of radio frequency system components to smartphone makers and electronics manufacturers. With every step-up in product complexity, over the past two decades, the competitive landscape has shrunk while gross margins have increased significantly. 5G represents another such step-up, which is likely to increase how much Skyworks can make per smartphone.

Apple is a big customer, accounting for more than half of Skyworks’ sales. That customer concentration has depressed Skyworks’ valuation over time. More recently, fears surrounding a global recession and risk to consumer demand have further pressured valuation. However, the handset business is expected to benefit from 5G content, which may help offset some macroeconomic pressures. Away from the handset business, Skyworks’ growth is expected to accelerate thanks to other secular drivers such as WIFI 6 and growth of the industrial internet (i.e., “Internet of Things”).

At a P/E of less than eight and a 2.3% dividend yield, SWKS rarely gets this cheap, making this high-quality stock compelling for longterm investors.”

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Skyworks Solutions, Inc. (NASDAQ:SWKS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held Skyworks Solutions, Inc. (NASDAQ:SWKS) at the end of the second quarter which was 39 in the previous quarter.

We discussed Skyworks Solutions, Inc. (NASDAQ:SWKS) in another article and shared the list of semiconductor stocks that analysts are slashing price targets of. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.