The world’s biggest contract chip manufacturer is riding out the current market malaise just like most other stocks. But it soared in the post-coronavirus crash recovery this past year. And, positioned as it is, that’s likely to continue as the economy strengthens. On Wednesday, the Relative Strength (RS) Rating for Taiwan Semiconductor (TSM) climbed to 73, up from 69 the day before.
The 73 RS Rating shows that Taiwan Semiconductor tops 73% of all stocks, regardless of industry group, over the past year. The contract chipmaker provides processors for many top computer, server and smartphone makers.
Taiwan Semiconductor Stock Hits Fresh High
TSM stock hit an all-time high 142.20 on Feb. 16, more than tripling the 42.70 low it hit in late March last year at the end of the coronavirus crash. It’s held up well, but consolidated recently amid the tech sector slump. It closed at 108.21 Wednesday, down 4% for the day.
Decades of market research shows that the best stocks tend to have an RS Rating of over 80 as they launch their biggest climbs. See if Taiwan Semiconductor can continue to show renewed price strength and clear that threshold.
Among other key ratings, Taiwan Semiconductor has an 83 EPS Rating. It’s grown profits by double digits for the past four quarters, a period in which many other tech companies saw their profits shrink.
Still, investors will need more convincing before they jump in. TSM carries a D- Accumulation/Distribution Rating, on an A+ to E scale, indicating institutions are selling more shares than buying.
Earnings per share grew 28% last quarter to 95 cents. The prior three quarters its EPS grew 93%, 46% and 31% Revenue grew 24% in its most recent quarter, to $12.7 billion. That accelerated from 21% growth the prior quarter.
Other Leading Chipmakers
Taiwan Semiconductor holds the No. 8 rank among its peers in the Electronics-Semiconductor Manufacturing industry group. Qorvo (QRVO) and Texas Instruments (TXN) are also among the group’s highest-rated stocks.
Taiwan Semiconductor is trying to complete a consolidation with a 142.30 buy point. See if it can break out in volume at least 40% higher than normal. It’s a later-stage pattern, and investors should be aware that those are less likely to work.
When looking for the best stocks to buy and watch, keep a close on eye on relative price strength.
This unique rating measures market leadership by using a 1 (worst) to 99 (best) score that identifies how a stock’s price action over the trailing 52 weeks matched up against all other stocks.
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