Taiwan Semiconductor Poised for Growth

Jun. 7.11 | About: Taiwan Semiconductor (TSM)

This morning while screening on Barchart for stocks having high growth rates and experiencing upward price momentum I came across Taiwan Semiconductor (NYSE:TSM). Research showed this company is an early innovator of the dedicated semiconductor foundry and over 80% of its customers are "fabless." Not being a computer qeek I had to look this one up:

From Wikipedia - A fabless semiconductor company specializes in the design and sale of hardware devices and semiconductor chips while outsourcing the fabrication or "fab" of the devices to a specialized manufacturer called a semiconductor foundry. Foundries are typically located in countries with lower cost of labor, so fabless companies can benefit from lower capital costs while concentrating their research and development resources on the end market.

Since the price held up well during the recent market downturn I like this one on price momentum alone:

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Taiwan Semiconductor is the world's largest dedicated integrated circuit foundry. As a foundry, the company manufactures ICs for its customers based on their proprietary IC designs using its advanced production processes. TSMC's goal is to establish itself as one of the world's leading semiconductor companies by building upon the strengths that have made it the leading IC foundry in the world.

Factors to Consider

Barchart Technical Indicators:

  • 96% Barchart technical buy signal
  • Trend Spotter buy signal
  • Above its 20, 50 and 100 day moving averages
  • 4 new highs and up 1.16% in the last month
  • Relative Strength Index is 64.98% and climbing
  • Trades around 13.95 with a 50 day moving average of 13.01

Fundamental Factors:

  • Wall Street brokerage analysts recently published two buy and four hold recommendations on this issue.
  • Sales are expected to increase by 17.50% this year and 11.00% next year.
  • Earnings projections are flat for this year but are forecast to be up 13.10% next year and continue increasing annually by 15.00% for the next five years.

General Investor Sentiment:

  • The individual investor as measured on Motley Fool is 98% positive on this stock.
  • CAPS members voted 1,345 to 37 that the stock will beat the market.
  • The more experienced All Stars agree with a 437 to 4 vote for the same result.

Summary: As the worldwide economy recovers, businesses will be equipping their new employees with the latest electronic devices and Taiwan Semiconductor makes the parts that will be in those devices. As the economy grows so grows TSM. Double digit projections for increases in sales and earnings with recent price momentum - what else could you want?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.