Amid growing concerns about the long-term health of the U.S. consumer, many investors have been seeking out companies with international exposure.
International stocks can be an excellent addition for market participants looking to strengthen their portfolios through diversification or create new avenues to explosive growth. Today’s recommendation is getting much attention because of its broad geographical diversification. However, there’s plenty more to support the bullish case for this name, including solid margins and a remarkably attractive valuation.
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 besides the geographical diversification of its production outside Taiwan, including its strong margins, the secular growth of the chip industry, and its attractive valuation. The 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 30% from its January 2022 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 at around 10% below its 52-week high and 30% below its all-time from early 2022, making this an attractive 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 at just fourteen 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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