The resurgence of the semiconductor industry is happening right now. And this company is expected to grow earnings by 17.4% this year.
Taiwan Semiconductor Manufacturing Company Limited (TSM)
From FMA Trader Alert
The conditions in the “semi” space, i.e., the “semiconductor” space, are more than just semi-bullish. In fact, they are uber-bullish.
The benchmark exchange-traded fund (ETF) in the space is the iShares PHLX Semiconductor ETF. This fund is up roughly 44% over the past six months. One big reason why is that demand for semiconductor chips has soared with the pandemic work-from-home wave, as well as demand for chips to run everything from smart cars to smart appliances to cell phones.
In fact, the shortage of chips now has even garnered the attention of the White House, as President Biden is expected to sign an executive order in the coming weeks to address a shortage of semiconductor chips used by U.S. industries.
Such an order would basically be a reversal of the Trump-era trade policies on Chinese semiconductor companies. It also will be bullish for the chip sector, as new policies will mean more chip sales across the industry.
To take advantage of this situation, today we are recommending you buy Taiwan Semiconductor Manufacturing.
TSM is one of the world’s leading semiconductor chipmakers, and it is known as a “foundry” firm, meaning it is a contract manufacturer that produces chips for other branded chipmakers. By contrast, rival Intel designs and makes its semiconductor chips in-house.
The great thing about TSM’s market positioning is that it has managed to create the smallest, and fastest, chips on the market. The company is mass-producing chips at a scale of five nanometers, whereas Intel’s chips are double that size at 10 nanometers. And in the chip world, smaller is better, faster, and more efficient.
What we further love about TSM is that the company is an earnings growth powerhouse, with earnings per share (EPS) growth over the past several years that has outpaced about 90% of all stocks in the market. Moreover, the share price performance of TSM over the past 52 weeks has been most impressive, with a gain of 136%, which also has outpaced nearly 90% of all publicly traded stocks.
So, as soon as you receive this email, let’s buy Taiwan Semiconductor Manufacturing at market, with a protective stop at $105.00.
For those willing to make a bigger bet, we recommend the TSM July $140.00 call options (TSM210716C00140000), which last traded for $9.85 and that expire on July 16.
Mark Skousen & Jim Woods, FMA Trader Alert, markskousen.com, Eagle Financial, 300 New Jersey Ave. NW, Suite 500, Washington, D.C. 20001, February 24, 2021