Financials are paramount for any airline -- and Southwest's balance sheet is respectable. While aircraft leases make up a huge piece of LUV's balance sheet, the firm's $3.2 billion cash position otherwise make its debt neutral. Southwest has historically been skilled at hedging for its biggest cost: fuel. While it's biggest fuel cost advantages have expired, the firm's hedging program is still appealing in an environment where oil isn't getting any more plentiful. Watch out for earnings later this month.
The last 12 months have been surprisingly strong for shares of chipmaker
-- the firm has seen its shares rally more than 14% over the time period, while the rest of the semiconductor industry has actually lost 8%. But Broadcom's communications focus accounts for a lot of that relative strength -- as a key mobile device supplier, BRCM is one of the few semiconductor firms that's continued to get breakneck demand for its wares in the last two years.
Broadcom's bread and butter is research and development. Unlike most of its peers, the company doesn't own its production facilities. Instead, it outsources those tasks to third parties. While that means that BRCM sacrifices some profitability to its manufacturing contractors, the fact that BRCM doesn't carry chip factories on its balance sheet (and their associated overhead on its income statement) means that the firm cuts a leaner profile.
As technologies led by BRCM -- like GPS, Bluetooth and Wi-Fi -- get adopted on more and more devices, BRCM should have some big tailwinds pushing it along. At the same time, as more households continue to acquire multiple devices with Broadcom chipsets (like a tablet, a smartphone, and a TV set top box), the market for the firm's chips should continue expanding in kind. That rising tide of sales is already apparent on BRCM's income statement -- so we're betting on shares of this Rocket Stock this week. Investors should be aware of this company's earnings call on January 31.
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