New Trade for May 9th, 2023

For market participants looking to strengthen their portfolios through diversification or create new avenues to explosive growth, international stocks can be an excellent addition.  Today’s recommendation is getting a lot of attention because of its broad geographical diversification.  However, there’s plenty more to support the bullish case for this name including strong margins, and an insanely attractive valuation.    

Behind the Markets:

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Taiwan Semiconductor’s (TSM)

For market participants looking to strengthen their portfolios through diversification or create new avenues to explosive growth, stocks with global exposure can be an excellent addition.  Taiwan Semiconductor is attractive for multiple reasons aside from its geographical diversification of its production outside Taiwan, including its strong margins, the secular growth of the chip industry, and its attractive valuation. share price has been on the rise after hitting a two-year low in October due to a sharp slowdown in global chip demand.  Still down more than 35% from its January 2021 peak, anyone on the sidelines might consider now an appropriate time to strike.  “Only a small number of companies can amass the capital to deliver semiconductors, which are increasingly central to people’s lives,” said Tom Russo, a partner at Gardner, Russo & Quinn.

TSM is currently trading more than 15% below its 52-week high, and well below its all-time from early 2022, making this an attractive deep-discount play. P/E values have ranged between 9.3 and 40.5 over the last five years, so the stock is at an attractive entry point currently at just thirteen times price to earnings.  

Analysts see earnings growth of 25.3% next year, leveling off to around 21.5% a year over the next five years.  TSM has outperformed the S&P 500 by an average of 8.4% per year over the last five years.

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