Skyworks Solutions Stock Seeking Another Bullish Q1

SWKS tends to outperform in the first quarter

by Patrick Martin

Published on Jan 2, 2019 at 11:31 AM

It was a brutal 2018 for chip stocks, and Skyworks Solutions Inc (NASDAQ:SWKS) was no exception. The semiconductor name shed 32% last year, but there could be clearer skies ahead, if history is any indicator. 

For one, Skyworks stock tends to outperform during the first quarter, looking back 10 years. According to Schaeffer's Senior Quantitative Analyst Rocky White, SWKS sports an average return of 25.2% during the first quarter, and was positive all 10 times. This is the best return of the stocks we tracked on the S&P 500. 

Best SPX Stocks First Quarter

Narrowing the scope a bit, Skyworks stock also found itself on the list of best stocks to own in January, historically -- obviously not surprising given its first-quarter results from the past. According to White, going back 10 years, SWKS sports an average return of 6.5% in January, near the top for all S&P 500 stocks. What's more, the equity has ended the month higher seven times out of 10. 

At last check, Skyworks stock was up 1.4% to trade at $68.12. Moves of similar proportion would put the equity back above $72 by month's end, and near $85 by the end of the quarter. This $85 level coincides with the pre-bear gap levels from early November. The chip stock fell to a roughly two-and-a-half year low of $62.71 on Dec. 24, and has been ushered lower by its descending 30-day moving average since October.

Daily Stock Chart SWKS

In the options pits, the security's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.66, which ranks at an annual low. In other words, options traders seem relatively optimistic, with data showing a much higher-than-normal preference for near-term calls over puts.

For those going that route, premium on short-term SWKS options are pricing in extremely elevated volatility expectations, per its 30-day at-the-money (ATM) implied volatility (IV), which currently sits at 45.5% -- in the 98th annual percentile.


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