Skyworks Solutions Inc. (SWKS)

(Top Pick Dec 10/15, Down 5.62%) It is now a potential takeout in the hot semiconductor arena.

He sees a phenomenal company. They are earning a good rate of return while putting money back in the company. ROE is 27%. The valuation looks reasonable.

(A Top Pick Sept 22/15. Down 17.72%.) This is a very innovative company doing radiofrequency chips for smart phones. It suffered along with Apple (AAPL-Q). It has a lot of cash and he doesn’t think the smart phone cycle is over. He still really likes this.

Semiconductors is a very clear leader in this market, but we are in the kind of market where there are a lot of stocks that are doing well and a lot of stocks that are doing poorly. He likes that this company is selling into hand works and automotive, because both are growing. As a replacement, he would use Broadcom (AVGO-Q). (See Top Picks.)

It has not performed well over the last while. He prefers a company line NVDA-Q where they are in the middle of graphics on the internet. It is higher margin product that SWKS-Q.

It always traded at a high valuation. It allows one chip on one phone that works anywhere in the world. Their sales are growing despite declining smart phone sales. He targets 30% upside.

One of the largest suppliers to iPhone in terms of dollars of content per company. He would continue holding this, partly in the believe that Apple (AAPL-Q) is going to continue to grow. (See Top Picks.)

This stock got up to one of his critical break points and got there at the same time as it reached its FMV of about $104. The setback has offered a chance to Buy the stock, and if you are looking at it he would give it a target of $66 where we could have a pretty nice recovery.

A semiconductor company that provides cutting-edge equipment into every smart phone, every tablet, every smart watch, etc. It is riding a wave of creating more and more sophisticated technology as devices get more sophisticated. This is a little bit misunderstood because most people think the majority of its revenues comes from China. What people don’t realize is that a number of very large smart phone vendors manufacture in China, so their exposure is much less than what you read from the headlines. Dividend yield of 1.2%.

The stock has done phenomenally well. They provide chips, mainly on the mobile side. Not only cell phones but, also in the Internet of everything, they are into cities, machines, cars, being connected to 4G. Part of why they have done so well is that when you ask more of performance in speed, storage, cameras and you still want to limit the size, you are asking these chips to do a lot more with a lot less. The company has the ability to combine different functionalities in a smaller space, which is why they have done so well. The stock may have gotten a bit ahead of itself. This is in the semiconductor space, which is very cyclical, so watch for any commentary on pricing pressure or overcapacity in the market. That is when you want to get out.

This is best known for the radiofrequency devices inside the Apple (AAPL-Q) iPhone, as well as many other hand sets. The one year revenue on this company is up about 100%. There was a pullback about 3 weeks ago, but then it is kind of rolling over again. With names like this, those are your opportunities, and you need to be ready to Buy it in those cases. Valuation concerns him, but he loves having Stops that allow him to let these valuations soar.