Shares of San Diego chipmaker QUALCOMM Incorporated (QCOM) has soared more than 15% Thursday after the company topped analysts ‘ fiscal third quarter expectations and announced that it had come to a settlement agreement with Chinese communications giant Huawei Technologies Co. Qualcomm reported adjusted earnings of 86 cents per share on sales of $4.89 billion, with the wireless chip producer benefiting from the nation’s 5G cell deployment. Analysts had expected a profit of 72 cents per share on revenue of $4.8 billion.
In addition, Qualcomm has said that the settlement – which includes the amounts due in previous quarters and a global patent-licensing agreement – will add about $ 1.8 billion to its top line and $1.38 in earnings per share during the current quarter. “With the signing of the Huawei agreement, we are now entering a period where we have multi-year license agreements with all major handset OEMS, Qualcomm chief executive Steve Mollenkopf told investors, by MarketWatch.
From a technical point of view, Qualcomm’s shares smashed through significant resistance at $95 to set a new all-time high after the better-than-expected results. The breakout gap occurred on the highest volume in more than a year, indicating conviction behind the move. Traders can either buy the stock at current levels or wait for a gap-filling retracement to the breakout point. In both cases, set a profit target that is at least two times the amount risked per share. For example, if risking $5 per share, – target a move to $10 or more.
Traders who follow the group should also add to these two chip stocks to their watch list. The two names hit a new 52 weeks in the wake of Qualcomm Huawei regulations and their own positive quarterly earnings reports.
Skyworks Solutions, Inc. (SWKS)
Skyworks Solutions, Inc. (SWKS) manufactures semi-conductors for wireless devices used to activate the wireless connectivity. In Irvine, California, the company reported fiscal third quarter earnings of $1.25 per share, comfortably ahead of analysts ‘ forecasts of $1.13 per share. During this time, revenues of $736.8 million trumped the Street’s expectation of 6.8%. However, the manufacturer of micro-components of the top and the bottom of the line is contracted by 3.9% and 7.4%, respectively, compared to a year earlier. Skyworks’ Sky5 platform of growth during the quarter, with companies including Samsung Electronics Co., Ltd. (005930.KS) and Motorola Solutions, Inc. (MSI) using the solution to facilitate their 5G launch. As at July 31, 2020, Skyworks stock offers a 1.47% dividend yield and has gained 18.36% on the year. Over the past three months, the stock has surged nearly 40%.
Since the trough in mid-March, Skyworks shares have remained in a constant upward trend. The bulls have pushed the stock above a two-month ascending triangle Thursday, in a move that could propel the price upward in the coming weeks. Breakout traders who play the move should consider using a 15-day simple moving average (SMA) to lock in profits. To implement this strategy, to stay in the position until the stock closes below the indicator.
Qorvo, Inc. (QRVO)
With a market capitalization of almost $ 15 billion, Qorvo, Inc. (QRVO) develops and commercializes technologies and products for wireless and wired connectivity on a global scale. The company recorded a second quarter earnings of $1.50 per share, to provide a 32.74% of the profit for the surprise. Income for the period of $787.45 million increased 15% on a year on year basis and exceeded Wall Street forecasts of 7.8%. The top line also came in above the high end of the company’s guidance range of $ 710 million to $750 million. Qorvo stock jumped 31.26% since the end of April, outperforming the semiconductors industry average of more than 7% as at July 31, 2020.
The share price has broken out above major overhead resistance at $120 in the session of Thursday, on strong volume of transactions. The movement also coincided with the moving average convergence divergence (MACD) indicator crossing above its trigger line to generate a buy signal. Those who enter here could use a leak bar output to exploit the short-term bullish momentum. For example, place an initial stop-loss order below yesterday’s low and the address under each lower until it stopped.