The companies behind the letters, a brief summar

The companies behind the letters, a brief summary

I’m going to ask for a small favor and I hope it doesn’t make me sound lazy, but could you post the company names of some of the stocks in the titles, rather than the tickers? When I see tickers I can’t relate so well to them, it’s just a bunch of letters, and so I kind of shy away from any of the ones I don’t know. - Karen

I’m going to give a brief lighthearted summary of the companies, what they do, and who they are. Here we go!

Let’s start with Skechers (SKX). This company has burst on the scene like a rocket. Two years ago it was a sleepy little shoe chain that sold comfort shoes, and then people started buying four and five pairs at a time, and sports shoes as well. And signing up big name sports figures, and moving into second place in sports shoes behind Nike (displacing Adidas, New Balance and the like). Second place is a long way back as they have about a twelfth the market cap of Nike. They were at $28 two years ago, and now they are at $154, up about five times. I bought shares for the first time a little over a year ago at $46 and then at $54. They grew revenues the last six months at 38%. Their current PE (as of Friday’s close) was 35, the rate they are growing twelve month earnings is 107%, their 1YPEG is 0.33.

So as not to confuse the letters, now let’s hit Skyworks (SWKS). The letters are similar but the companies are entirely different. They make complicated and complex devices that power all kinds of things. Here’s their summary from their Yahoo board: Skyworks Solutions, Inc., together with its subsidiaries, designs, develops, manufactures, and markets analog and mixed signal semiconductors worldwide. Its product portfolio includes amplifiers, attenuators, battery chargers, circulators, DC/DC converters, demodulators, detectors, diodes, directional couplers, filters, front-end modules, hybrids, infrastructure radio frequency subsystems, isolators, LED drivers, mixers, modulators, optocouplers, optoisolators, phase shifters, phase locked loops/synthesizers/VCOs, power dividers/combiners, power management devices, receivers, switches, technical ceramics, and voltage regulators. The company also offers MIS silicon chip capacitors and transceivers. It provides its products for supporting automotive, broadband, wireless infrastructure, energy management, GPS, industrial, medical, military, networking, smartphone, and tablet applications. The company sells its products directly, as well as through independent manufacturers representatives and distribution partners. Skyworks Solutions, Inc. was founded in 1962 and is headquartered in Woburn, Massachusetts.

If you understood that you are miles ahead of me. What I know is that their complex products are very much in demand. Their margins keep rising, their last six months revenues were up 47%, their PE is 18, their rate of growth of twelve month earnings is 76% and they have a 1YPEG of 24. I started buying at $52 at about the same time I bought Skechers. I’ve recently added at about $86. There a bear argument that the Chinese market for smart phones deteriorating.

Now BOFI, (Bank of the Internet) which does Internet banking, or branchless banking. They seem to be doing everything right. Their tangible book value is growing at over 30%, for the last five quarters, which is incredible in banking circles. Their efficiency ratio is in the low 30’s. That’s the inverse of operating margins and is incredibly low (good). Their earnings of $2.89 for the last two quarters, is close to double their earnings two years ago, when it was $1.52, and it’s accelerating. Fletch writes great stuff on BOFI. Their PE is 24.65, their rate of growth of earnings is 39%, and they have a 1YPEG of 0.63.

First Internet Bancorps (INBK) is a tiny branchless bank, a BOFI wannabe. While their efficiency ratio is way higher at .63 (but coming down, which is good), their PE is just 23 and their rate of growth of earnings is 123%. Their 1YPEG is incredibly low at about 0.19. Their earnings for the last six months was up by 174% (yes, that’s not 74%, it’s 174%). Investing in them is quite a bit more risky though because of their small size, and lack of liquidity in the market.

AMBA stands for Ambarella, which makes great chips for high speed cameras (think GoPro), security systems, television, etc,… and oh yes, for drones! THEIR six month earnings are up by 173%. Their six month revenues are up by 68%. Their PE is 47, their rate of growth of twelve month earnings is 114% and their 1YPEG is 0.47. Their is a bear case that they are overvalued, but who knows.

Arista Networks is ANET, and is an upstart threatening Cisco (and subsequently getting sued by Cisco, which is something you don’t want). Basically Arista provides software that provides a much better way of using the cloud for data centers (think everything from Microsoft to AT&T to Facebook). They’ve recently partnered with SuperMicro Computer, with HP, and with Infinera. Their last six month revenue is up by 47%, and their six month earnings are up by 75%. Their PE is 43, their rate of growth of twelve month earnings is 77% and their 1YPEG is 55.

That’s all I have the patience for now folks. More to follow, I hope. I’ll pin the additional stocks to Fridays close as well for consistency.

Saul

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