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Here's Why You Should Invest in Taiwan Semiconductor


California-based GlobalFoundries is also a burgeoning competitor. The company was created by the divestiture of the manufacturing arm of Advanced Micro Devices (AMD) and expanded through the acquisition of Chartered Semiconductor in 2010. It has emerged as the top candidate to buy IBM's (IBM) semiconductor operations, edging out Intel. TSMC dropped out of the running for undisclosed reasons.

Finally, TSMC faces competition from other Taiwanese foundries such as United Microelectronics (UMC). According to Gartner, UMC has a 10% share of the market and is now behind GlobalFoundries' growing 12% share.

But despite other competition, TSMC continues to hold its impressive market share and maintain its position as an industry leader and innovator.

Gunderson Capital Best Stocks Now Analysis

Taiwan Semiconductor is currently ranked #21 out of our 3,800+ stock universe and receives an overall grade of A. It is a large-cap technology name with a market cap of $112.5 billion. Its risk profile is considered conservative. The company's annual revenue last year was $20.5 billion.

We started buying shares of the stock in late March. Another attractive aspect of the shares is that it pays a 1.9% dividend. We own it for our Income and Growth accounts.

Data from Best Stocks Now App

Lower-valuation names continue to be favored in the current market environment. Taiwan Semi has a Value Grade of A- and trades at a trailing P/E of 17 and a forward P/E ratio of only 14. With a five-year annual growth rate of 15%, this stock is relatively cheap with a PEG ratio below 1.

Data from Best Stocks Now App

Coupled with improving demand trends in the sector, cheap semis like Taiwan Semiconductor have worked well relative to the overall market. The stock earns a momentum grade of A- and a performance grade of B+.

Data from Best Stocks Now App

Taiwan Semiconductor is reasonably valued and has strong growth prospects in the coming year, and is in a good sector for growth with strong demand and inventories being replenished. The company also has diversified international and emerging markets exposure. It is a perfect example of a "Best Stock" working right now.

Data from Best Stocks Now App

At the time of publication the author was long TSM and AAPL.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


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