Four Growth Stories – SWKS, SWI, EQIX and SCSS

SWKS

Skyworks designs and manufactures several types of chips that enable wireless capabilities in cell phones and tablets. The company’s circuits are used in the devices of Apple, HTC and Samsung. Long known as a Power Amplifier (PAs) manufacturer, the company now offers the full range of analog, radio-frequency (i.e., RF), and power management circuits between the handset transceiver and antenna. It has recently added power management circuits to its portfolio.

SWKS reported solid fiscal third-quarter earnings and gave investors a bright fourth-quarter outlook.

Mar-11 75% 33%
jun-11 40% 25%
Sep-11 33% 30%
dec-11 -10% 20%
Mar-12 -33% 13%
Jun-12 60% 10%

SWI

SolarWinds has been on a tear for the last year and a half; the company’s second-quarter sales increased by 40% year over year to $64 million–the fifth straight quarter that SolarWinds’ year-over-year sales growth has accelerated–and beat management’s first-quarter guidance of $59.0 million-$60.2 million. SolarWinds’ performance is particularly impressive because the company is focused on growing its operations in a tough European market.

Break out buyers – $48 was break out point, but in this market just initiate a 50% position.

SWI eps Change Sales Change
Mar-11 31% 25%
Jun-11 28% 29%
Sep-11 49% 31%
Dec-11 21% 34%
Mar-12 40% 40%
Jun-12 50% 40%

EQIX

Equinix is the largest network-neutral provider of data centers in the world. Equinix’s customers have the ability to plug into a host of network providers to speed up connections to content partners, financial exchanges, ad servers, and the like. As Internet traffic grows as a result of cloud computing, video streaming, and continued enterprise outsourcing of data centers, managing bandwidth and network connections becomes more complex.

This company serves 4000 clients and routes almost 90% of world’s internet traffic.

Only concern I have is the slowing growth.

Mar-11 50% 85%
Jun-11 1400% 33%
Sep-11 -13% 30%
Dec-11 30% 28%
Mar-12 40% 27%
Jun-12 15% 18%

Market generally doesn’t like slowing growth specially for high multiples company.

SCSS

I have owned this company in the first quarter of the year and again started a position last week. No, I don’t have a crystal ball, I bought it after the earnings. The company makes sleep number mattress and has been on a roll for over last 6 quarters.

I have buy orders in place at $25.5.

  • Sales were up 27% YoY.
  • Same store sales were up 25% YoY, unchanged from the 25% for the same quarter last year.
  • The company was able to achieve an EPS of $0.3. This was 11% higher than the Street’s estimate of $0.27.
  • The number of stores is being increased from 381 last year ending December 2011, to the 408-412 range at present.
SCSS eps Change Sales Change
Mar-11 114% 22%
Jun-11 82% 16%
Sep-11 63% 25%
Dec-11 85% 27%
Mar-12 33% 40%
Jun-12 51% 27%
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Portfolio as of 5/2/2012

STX – 4% (Sold some today)

WDC – 7%

APA – 6% (Super Long Term)

QCOM – 6%  (Super Long Term)

ALLT – 5% ( Added some more after recent earnings)

GNC – 5%

FFIV – 7%  (Super Long Term)

URI – 7%

HAL – 6%  (Super Long Term)

VMW – 7%  ( Long Term)

TXRH – 3% (Initiated Yesterday)

UA – 3% ( Stop set at $93 and will add if it goes above $103)

TLT – 6%

F – 7%  (Super Long Term)

SWI – 3% ( Will add more around $43.9)

PCLN – 3% (Took significant profit off the table recently)  (Long Term)

CASH – 10%

Stocks which make up less than 5% of PORTFOLIO might be sold or added based on criteria, market condition, etc. I am very nimble and hence very low turn around time.

Portfolio As of 4/12/2012

Cash 40%.

Portfolio –

AAPL – 3%

PCLN- 4%

STX – 6%

WDC – 6%

HLF – 3%

SCSS – 4%

SXCI – 4%

QCOM – 6%

BLV – 3%

TLT – 3%

RWM – 3%

FFIV – 3%

F – 6%

APA – 6%

Sold last week –

CLR, WLL, ALLT, GNC, LNKD (I know!)

Reasons for the sale –

  1. Market broke 2 critical supports last week – 4 month old trendline and 50 DMA. Let’s wait till the market moves above 50 MA and makes new high, convincingly  (no double tops please:().
  2. The earnings season is underway. It’s better to reduce the high fliers by 50% to avoid losing profits.
  3. Quite a few breakouts in last couple of weeks have stalled, failed and occurred at below average volume – such as SWI, WDC, LVS, etc.
  4. Old adage – Sell in summer and go somewhere ( dont ask me where!.)

Lastly I added small positions of defensive stocks as mentioned earlier – BLV, TLT and RWM.

Week ahead –

  1. Stay defensive, preserve capital below the prior trading range. Above the range, expect a move back to and above the prior highs.
  2. Do not trade intraday, but rather focus on setups and keep an eye on earnings
  3. U.S. week ahead (Reuters)
  4. Next week’s trading radar (Minyanville)

Good Reads –