Sometimes even a generational secular growth trend isn’t reason enough to own a stock. If the underlying company can’t execute, if it can’t manage investors’ expectations, Cramer said Thursday, “Then you should not own it.”
Consider the differences between former Cramer fave Qualcomm and Skyworks Solutions , both of which are tied to the rise of the mobile Internet. Cramer thinks this trend is on par with the mass adoption of the personal computer. It’s one so big that smartphones aren’t a luxury anymore, they’re a necessity. But still QCOM has failed to deliver, the Mad Money host said, while Skyworks, a one-time single-digit spec stock, is now a flat out buy.
You’d think Qualcomm would be the perfect play on the mobile Web, as its chips are the brains of your smartphone. And this year’s hottest products – Google’s Android, Microsoft Windows Mobile 7, tablets and netbooks – are all supported in some way by this company. But for the last three quarters, this company has offered disappointing guidance, Cramer said, “even as management has been aggressively promotional.” That’s why he first steered investors away from the stock on Feb. 2 and he reiterated his “sell” call today.
Skyworks Solutions, on the other hand, just reported a better-than-expected quarter. And that came on top of the company raising its guidance back on March 1. Skyworks also bested QCOM by issuing new guidance that was better than the Street’s prediction: 10% to 15% sequential revenue growth and earnings per share of 30 cents, or 5 cents a share more than analysts’ estimates.
Skyworks, which makes power amplifiers and front-end modules for smartphones, is up 20% since CEO David Aldrich’s Jan. 27 appearance on Mad Money. And the stock has soared 268% since Cramer’s first recommendation on Dec. 12, 2008. He invited the chief exec back to the show to find out what’s been strong and what’s ahead for this company. Watch the video for the full interview.
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