Skyworks Solutions (NASDAQ:SWKS) and Chewy (NYSE:CHWY) haven’t been the best performers in 2021, as shares of both companies have dipped despite terrific growth in their businesses.
However, these tech stocks could step on the gas in the new year thanks to secular growth opportunities in the industries they operate in. Let’s look at the reasons why Skyworks Solutions and Chewy could go on a bull run and leave this year’s disappointing performance behind.
Skyworks Solutions
Skyworks Solutions stock has dipped of late thanks to speculation that the demand for Apple‘s (NASDAQ: AAPL) iPhone would take a hit in the holiday season. Reports suggest that long waiting times arising out of supply chain delays and production constraints have put off customers from upgrading to the latest iPhone models. That has weighed on Skyworks as it supplies wireless chips for the iPhone.
However, there are indications that Apple’s supply chain may be improving. Morgan Stanley analyst Katy Huberty recenlty increased her forecast for iPhone shipments in the December-ended quarter to 83 million units from the prior estimate of 80 million units, saying that Apple’s supply chain problems have eased. If that estimate is hit, it would translate into a year-over-year increase of 3 million iPhone units sold, and that would be good for Skyworks since it gets most of its revenue by selling chips to Apple.
Apple provided 59% of Skyworks’ revenue last fiscal year, so increased sales for Apple would spell good things for Skyworks. A report cited by Taiwanese publication DigiTimes points out that Apple could sell over 300 million iPhones in 2022, a huge increase over this year’s estimated iPhone shipments of 240 million units.
That may seem ambitious, but it won’t be surprising to see Apple come close to that target as it is reportedly working on a 5G-enabled iPhone SE that could be launched in 2022. Some expect the 5G iPhone SE to add 30 million units to Apple’s shipments next year.
All this indicates that Skyworks’ terrific momentum is here to stay. The company’s revenue in the recently concluded fiscal 2021 (ended on Oct. 1) increased 52% year over year, while adjusted earnings shot up 71% to $10.50 per share. Analysts estimate Skyworks’ revenue will increase 11.4% in fiscal 2022, while earnings are expected to increase 10% to $11.56 per share. The bright prospects of its largest client could help Skyworks easily exceed those expectations.
And Skyworks Solutions is trading at just 18 times trailing earnings right now as compared to the S&P 500‘s multiple of 28.
Chewy
Chewy stock has been hammered in 2021 even though the company is successfully taking advantage of the increase in online sales of pet food and products. The company’s revenue in the third quarter of fiscal 2021 increased…
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