TAIWAN SEMICONDUCTOR-SP ADR (NYSE:TSM) – A Strong Contender for CANSLIM Investors

TAIWAN SEMICONDUCTOR-SP ADR (NYSE:TSM) stands out as a compelling candidate for investors following the CANSLIM strategy. The company’s strong earnings growth, high relative strength, and solid fundamentals align well with the criteria outlined by William O’Neil. Below, we examine why TSM fits the CANSLIM framework.

Key CANSLIM Criteria and How TSM Measures Up

• C – Current Earnings Growth: TSM reported a 60.2% year-over-year EPS growth in its most recent quarter, far exceeding the CANSLIM minimum of 20%. Revenue growth was also strong at 41.6%, well above the 25% threshold.
• A – Annual Earnings Growth: The company’s 3-year EPS CAGR of 25.3% meets the requirement for sustained growth. Additionally, its Return on Equity (ROE) of 28.7% reflects efficient capital usage.
• N – New Highs & Innovation: As a leader in semiconductor manufacturing, TSM is at the forefront of advanced chip technology, including 3nm and upcoming 2nm processes. The stock is trading near its 52-week high, a positive signal for momentum investors.
• S – Supply & Demand: With a Debt/Equity ratio of 0.21, TSM maintains a conservative capital structure. Institutional ownership stands at 34.5%, leaving room for further institutional accumulation.
• L – Market Leadership: TSM’s relative strength of 86.8 places it in the top 14% of stocks, confirming its leadership position.
• I – Institutional Sponsorship: While institutional ownership is moderate, the stock’s strong performance and growth prospects could attract more institutional interest.
• M – Market Direction: Both the short-term and long-term trends for the S&P 500 are positive, supporting a favorable environment for growth stocks like TSM.

Technical and Fundamental Highlights

• Technical Rating (9/10): TSM’s price action is strong, with both short-term and long-term trends positive. It outperforms 86% of all stocks and 88% of its semiconductor peers.
• Fundamental Rating (6/10): While valuation appears stretched, TSM excels in profitability (ROE, margins) and growth (EPS, revenue).

For a deeper dive, review the full technical analysis and fundamental report.

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Disclaimer

This is not investing advice. Always conduct your own research before making investment decisions.