Trade-Ideas: Taiwan Semiconductor Manufacturing (TSM) Is Today's Weak On High Relative Volume Stock
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.Trade-Ideas LLC identified Taiwan Semiconductor Manufacturing (TSM) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Taiwan Semiconductor Manufacturing as such a stock due to the following factors:
- TSM has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $212.2 million.
- TSM has traded 43.4 million shares today.
- TSM is trading at 9.30 times the normal volume for the stock at this time of day.
- TSM is trading at a new low 5.11% below yesterday's close.
'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.EXCLUSIVE OFFER: Get the inside scoop on opportunities in TSM with the Ticky from Trade-Ideas. See the FREE profile for TSM NOW at Trade-IdeasMore details on TSM: Taiwan Semiconductor Manufacturing Company Limited engages in the computer-aided design, manufacture, packaging, testing, sale, and marketing of integrated circuits and other semiconductor devices. The stock currently has a dividend yield of 2.2%. TSM has a PE ratio of 17.6. Currently there are 2 analysts that rate Taiwan Semiconductor Manufacturing a buy, no analysts rate it a sell, and 2 rate it a hold.The average volume for Taiwan Semiconductor Manufacturing has been 10.2 million shares per day over the past 30 days. Taiwan Semiconductor has a market cap of $95.6 billion and is part of the technology sector and electronics industry. Shares are up 7.5% year to date as of the close of trading on Wednesday.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.TheStreetRatings.com Analysis:TheStreet Quant Ratings rates Taiwan Semiconductor Manufacturing as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and impressive record of earnings per share growth. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.Highlights from the ratings report include:
- The revenue growth greatly exceeded the industry average of 15.8%. Since the same quarter one year prior, revenues rose by 24.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TSM's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TSM has a quick ratio of 1.61, which demonstrates the ability of the company to cover short-term liquidity needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, TAIWAN SEMICONDUCTOR MFG CO's return on equity exceeds that of both the industry average and the S&P 500.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 40.98% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TSM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- TAIWAN SEMICONDUCTOR MFG CO has improved earnings per share by 18.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TAIWAN SEMICONDUCTOR MFG CO increased its bottom line by earning $1.10 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($1.24 versus $1.10).
- You can view the full Taiwan Semiconductor Manufacturing Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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