Jim Cramer talked to CEOs at Cisco Systems (NASDAQ: CSCO) and Skyworks Solutions (NASDAQ: SWKS) this week, covering the ongoing chip shortage and industry trends. So, do either of these 5G stocks look to be good investments in the coming months?
Is Cisco stock a buy?
The mean consensus from Wall Street analysts is an Overweight rating on Cisco stock with a target price of $62 and a potential 9.8% upside. The Cisco share price has risen 29% year-to-date but is only up 7% in the past six months.
In recent months, global supply chain issues have caused volatility in the CSCO share price, but its latest earnings report looks good.
Cisco Q3 earnings overview
Cisco CEO Charles "Chuck" Robbins began the Q1 earnings call with an upbeat overview. He said the company looks to maximize value creation through its focus on higher concentrations of software and subscription-based revenue streams to improve the predictability of its future growth.
Despite supply chain issues hampering progress this year, he is bullish on the outlook from pent-up demand. He also sees various industry trends continuing to bring positive returns to the company. These include 5G, Wifi6, 400G ethernet and the growing popularity of working from home.
In the earnings call, the CEO confirmed FY22 is off to a great start with robust order growth of 33% and continued strong demand across Cisco's portfolio.
The company has invested heavily in leading the way in innovation, including hybrid cloud, Webscale, cloud security, 5G, Wi-Fi 6, 400 gig, and full-stack observability.
This appears to be paying off as Q1 saw the strongest demand in over a decade as clients sought to raise their investments in digital transformation.
Cisco's total revenue for the quarter increased to $12.9bn, up 8% year-over-year, which was in line with company guidance.
Is Skyworks stock a buy?
According to the mean consensus from Wall Street analysts, semiconductor company Skyworks Solutions' share price target is $207. FactSet data shows an Overweight rating on SWKS stock with several November buy ratings. The Skyworks share price has risen 8% year-to-date during a period of extreme volatility.
CEO Liam Griffin discussed the company's strong revenue growth with Cramer, highlighting improvements in segments other than its main 5G business, including automotive and wireless infrastructure.
Addressing the chip shortage, he said that the pressures appear to be slowly easing but noted that Skyworks has been mostly unaffected by those challenges because the company's main manufacturing bases are in the US and Mexico.
Skyworks recent Q4 results beat expectations on revenues and EPS.
Total revenue grew to $5.1bn for the full year, which was 52% ahead of last year and an increase of over $1.7bn. The company also increased EPS to $10.50, up 71% year-over-year.
5G stocks worth watching
The rollout of 5G wireless networks and 5G-capable devices is a growth trend taking the tech and communications world by storm. The improved connectivity will reduce latency and allow for more interconnected software applications. Along with Cisco and Skyworks, here are some of Bank of America's top 5G stocks to buy:
Marvell Technology Inc. (NASDAQ: MRVL)
Analog Devices Inc. (NASDAQ: ADI)
Qualcomm Inc. (NASDAQ: QCOM)
Broadcom Inc. (NASDAQ: AVGO)
Teradyne Inc. (NASDAQ: TER)
Qorvo Inc. (NASDAQ: QRVO)
NXP Semiconductors NV (NASDAQ: NXPI)
MACOM Technology Solutions Holdings Inc. (NASDAQ: MTSI)