It is another beautiful week as we start our options trading activities in full gear with a focal point on one of the biggest trends in technology. The connectivity of devices including, the automobile, electronic appliances, television sets, heating and cooling units among other things to the Internet is gathering up enough momentum to become one giant of a megatrend.
The “Internet of Everything” (IOE) is an emerging megatrend that provides lots of upside potential. One of the ideas behind the Internet of Everything posits that we can assign an IP address to all the devices in the world without running out of IP addresses. It is estimated that about 50 billion devices will sport Internet connectivity by the year 2020 and only about 9 billion devices are currently connected to the Internet. Hence, we will be examining how we can profit from the options of the first responders in the IoE landscape in the next couple of days.
Skyworks Solutions Inc. (NASDAQ:SWKS), an $8.89B company is a producer of analog semiconductors. The Company offers custom linear products automotive, broadband, cellular infrastructure, energy management, global positioning system (GPS), industrial, medical, military, wireless networking, smartphone and tablet applications.
Link to the Internet of Everything
Skyworks as a semiconductor company currently manufactures chips used high-end smartphones and tablets among others. Skyworks’ major connection to the Internet of Everything is its unique positioning as a provider of the technology behind how devices connect to wireless networks. Hence, I believe that this company is positioned to surge since the Internet of Everything will mostly require connectivity over wireless networks.
Surges in Recent Times
The stock chart above shows how shares of Skyworks Solutions have traded in the last one year. You can observe that the stock has gained more than 100% in the last one year from $22.40 to $47.36. More interesting is the fact that the stock has been making new highs in the last two weeks. In fact, the stock made a new 52-Week high in today’s trading session when it rose to $47.36.
Upside Potential Ahead
Another good reason I am optimistic about what the future holds for Skyworks is the company’s confidence when it increased its current quarter guidance. The company now expects the Q3 revenue to be $570M to mark a 31% year-over-year increase and a 19% sequential growth. Non-GAAP diluted earnings per share is also expected to be $0.80 to mark a 48% year over year increase and 29% sequential growth.
David J. Aldrich, Chairman and C.E.O of Skyworks aptly summarize the possibilities that the Internet of Everything holds of the company when he said:
“As our upwardly revised outlook reflects, Skyworks is capitalizing on the growing opportunity within the Internet of Things as well as increasing analog complexity associated with higher data rate connectivity standards, both of which are enabling us to substantially outpace the growth of the broader semiconductor market.”
How to Trade SKWS Options
Skyworks solution has much to offer the discerning trader by way of speedy increases in the share price. The bullishness that the company currently displays and increased bullishness on the horizon is a great enough reason to be bullish on this stock. I recommend the SWKS Jan 2015 49.000 call (SWKS150117C00049000) at its ask price of $3.80.
— Daily Option Alerts