Broadcom Ltd, Skyworks Solutions Inc Track Apple Higher

Apple Inc. (AAPL) suppliers Broadcom Ltd (AVGO) and Skyworks Solutions Inc (SWKS) are rallying on the blue chip's standout earnings report

by Alex Eppstein

Published on Jul 27, 2016 at 10:00 AM

The big stock market news this morning is Apple Inc.'s (NASDAQ:AAPL) earnings-induced breakout. The impact is being felt across Wall Street, with the major benchmarks trading higher. Not surprisingly, among the individual stocks doing particularly well are AAPL suppliers Broadcom Ltd (NASDAQ:AVGO) and Skyworks Solutions Inc (NASDAQ:SWKS), both of which have received bullish options attention lately.

After jumping out of the gate to an all-time high of $167.60, AVGO has cooled some, last seen slightly higher at $163.46. This is more of the same for a stock that's been stair-stepping its way higher for the past year, helped by several bounces off its 320-day moving average. In fact, over the last 12 months, the shares have advanced a brow-raising 27%.

As such, options traders in recent months have upped the bullish ante. Specifically, across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 1.54 calls for each put over the previous 50 sessions -- outstripping four-fifths of comparable readings from the prior year.

The brokerage community has been every bit as bullish toward Broadcom Ltd. In fact, an astounding 96% of analysts recommend buying the stock, with not a single "sell" opinion to be found. Plus, the consensus 12-month price target of $192.15 represents record-high territory for AVGO.

Shifting now to SWKS, the semiconductor stock has jumped 1.2% to trade at $66.69. This represents a break from the prevailing technical trend, given that the shares have surrendered 30% on a year-over-year basis.

Meanwhile, options traders are holding out hope for SWKS, buying to open 1.66 calls for every put over the last two weeks at the ISE, CBOE, and PHLX -- a ratio that ranks above two-thirds of all others from the previous 52 weeks. Echoing this call-focus, the stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.61, just 6 percentage points from an annual low.

The brokerage crowd hasn't been shaken, either. Thirteen of 19 analysts recommend buying shares of Skyworks Solutions Inc. That said, if the stock continues to struggle, a capitulation among the bullish holdouts could intensify selling pressure.

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