RFMD, TQNT and SWKS are all in good shape with good future. It is more logical to invest in all three companies instead of one. Even better, to move money in three depending on their trends, momentum and technical.
If you have noticed that large investors circulate money among three companies and when one reaches its top then the other two will catch up while the one at the top may not move or even drops. Clear example is recent SWKS action.
To benefit from above facts, we have to know advantage and disadvantage of each.
For example, TQNT and SWKS give clear estimates for the next quarter while RFMD does not. This adds a factor of uncertainty and instability to RFMD income. When RFMD claimed that it was booked 100%, this does not have a meaning since it did not give any revenue estimate number to claim 100% of that. On the other hand, TQNT claimed 92% booked for revenue of $205 MM. This is very clear and confident.
Based on above, I give RFMD a PE of 12.5, TQNT 13 and SWKS 13.5.
Another factor is cash-debt that should calculated in PPS.
SWKS +$2 per share
TQNT +$1 per share
RFMD -$.40 per share
Next one is incom of next 12 months, avoiding odd reporting.
When analysts update new numbers then estimates for next 4 quarter or 12 month will be as follow(approx).
RFMD = $.55
TQNT = $.65
SWKS = $1.20
Now lets calculate PPS for next 12 months.
RFMD => $.55 * 12.5 - $.40 = $6.47
TQNT => $.65 * 13.0 + $1.0 = $9.45
SWKS => $1.20 * 13.5 +$2.0 = $18.20
Now lets calculate % of gain from current prices
RFMD => $6.47 - $5.64 = $.83 or 15%
TQNT => $9.45 - $7.55 = $1.90 or 25%
SWKS => $18.20 - $16.83 = $1.37 or 8%
Based on above, I balance my investment in 3 companies.
One more factor is that TQNT has the lowest number of shares and TQNT insiders are not willing to sell their shares like RFMD and SWKS.
Some brokerages have updated TQNT income. Yahoo is late for updating TQNT new estimates.
These are new TQNT estimates that Yahoo will update later.
Q1 = $.12 *** already reported
Q2 = $.15
Q3 = $.18
Q4 = $.22
Total for 2010 = $.67
However, the yearly estimates are indicated as follow:
2010 = $.66
2011 = $.76
So, forward PE = $7.6/$.76 = 10
Well, how clould a company with over $1/shr of cash and zero debt trade at PE of 10. If it was RFMD, then I don't question it because of the debt, no guidance and other reasons but it is very unfair for a fine company like TQNT.
Nice job. Thanks. Reinforces my decision to invest in TQNT. I think we held up quite well today. So, if Greece does crap all over the market again, then we should see some better results tomorrow.
<<1 kink, TQNT insiders hold very little stock and typically exercize their options and immediatley sell into the market.>>
Probably, you need to rethink about what you wrote. TQNT insiders exercise very little compare to RFMD and SWKS even they own over 4.5% of all shares.
The reason for this fact is that TQNT will be at much higher price in future.
Demand for chip in general is very high that some chip makers can not meet the demand. Just look at PWAV CC that reported yesterday. They missed their revenue because they could not get chips for base stations and other equipments. On the other hand, TQNT is the one that expanding its manufacturing by a large amount. That hints to a huge increase in the revenue for next half of the year and even Q2. If investors miss days like today, then they have to pay much higher prices in coming weeks and days.
Great post, thorough research and I believe that the numbers for TQNT are (should be) somewhat higher than that.
Congratulation on a great post.
Let us not forget that the market is an "illogical entity" and expectations are sometimes tempered.
Interesting analysis, thanks. I don't follow SWKS or RFMD as closely, so I can't comment there.
But I do question the $.65 forward earnings estimate you used for TQNT. Analysts STILL refuse to give this stock even the conservative earnings outlook that the company is putting out! They're still at 14 cents average for Q2. So even though it's not really a surprise, the earnings upside surprise is a given going forward.
<<But I do question the $.65 forward earnings estimate you used for TQNT>>
The current quartly estimates(you may get it from your brokerage account like TD Ameritrade) for 2010 are as follow:
Q1 = $.12
Q2 = $.14 (TQNT estimate is $.15)
Q3 = $.17
Q3 = $.20
The above estimates add up to $.63, with current Q2 TQNT update to $.64.
My estimate is for NEXTt 4 QUARTERS or 12 MONTHS. If Q1 2011 is $.13 or only 1 penny better than Q1 2010 then next 12 months estimate(very conservatively) will be $.65. Nevertheless, TQNT may exceed $.65 estimate for 2010.
Same consideration is done for SWKS and RFMD.