Skyworks (NasdaqGS: SWKS) is a semiconductor company that manufactures analog and mixed signal semiconductors. Among the products it makes are power amplifiers, front-end modules, and solutions for cell phones. This small cap stock has a market cap around $1.5 billion and averages over four million shares traded per day. The stock has traded in a range of $3.57 to $11.24 over the past 52 weeks.

I believe this stock has a terrific future with significant upside over the next year. The company's fiscal second-quarter results showed how well it is coping with the difficult economic environment. SWKS made a profit of 12 cents per share, which beat expectations by two cents.

Revenues fell year-over-year, but still exceeded analyst views. The company also generated positive cash flow from operations of $22 million, which was a great development. For its fiscal third-quarter, management guided higher by forecasting 14 cents per share versus the current estimate of 12 cents.

"Despite the challenging economic backdrop, Skyworks delivered solid financial results in the second fiscal quarter of 2009 driven by our diversification, scale advantages, fab-lite strategy and improved cost structure," said David J. Aldrich, president and chief executive officer of Skyworks.

"Offsetting general market weakness, our performance was highlighted by strength in energy management and smart grid technologies, China 3G base stations, smart phones and push-to-talk applications. At a higher level, we believe our results demonstrate that Skyworks is gaining share in the broader analog semiconductor market and is creating a highly differentiated business model."

The company's balance sheet is strong and getting stronger. It ended the quarter with $268 million in cash and cash equivalents, which is an increase of $40 million over the past year. At the same time, the company reduced its convertible debt by $103 million. The bottom line is that Skyworks is in much better financial shape than it was a year ago.

Analysts have been busy raising their estimates for the company. Over the past month, this year's estimates have increased eight cents to 46 cents per share. Seven out of the nine covering analysts have raised their numbers.

Despite a drop in earnings expected for this year, analysts are expecting earnings to grow over 21% to 55 cents per share next year. I think the stock is attractively valued at 16.5x next year's estimates, which is slightly higher than its long-term growth rate.

Given the business momentum that Skyworks is showing, I believe that the shares can hit the $12-$13 range over the next 12 months.