Taiwan Semiconductor-SP ADR (NYSE:TSM) Emerges as a Strong CANSLIM Growth Investment Candidate

Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) has become a possible choice for investors using the CANSLIM strategy, a method focused on growth investments created by William O'Neil. This approach mixes fundamental and technical analysis to find companies with solid earnings growth, support from institutions, and positive market conditions. TSM's recent results and financial numbers match several important CANSLIM requirements, making it worth a closer look for investors seeking growth.

How TSM Fits CANSLIM Requirements

Current Quarterly Earnings Growth (C)

• TSM showed a 60.7% year-over-year rise in EPS for the latest quarter, well above the CANSLIM minimum of 20-25%. This faster profit growth points to strong operations.
• Revenue growth of 38.6% year-over-year also beats the strategy's 25% target, showing high demand for TSM's chip-making services.

Annual Earnings Growth (A)

• The company displays steady growth with a 3-year EPS CAGR of 25.3%, meeting CANSLIM's need for ongoing yearly earnings gains.
• Return on Equity is a notable 31.9%, much higher than the 10% minimum O'Neil suggests, showing good use of capital.

New Products/Highs (N)

• As the top dedicated semiconductor foundry globally, TSM keeps advancing with 3nm and 2nm process technologies.
• The stock is now close to its 52-week high, a technical feature CANSLIM investors like.

Supply and Demand (S)

• With a debt-to-equity ratio of only 0.19, TSM has a careful capital setup, far below CANSLIM's limit of 2.
• Average daily volume is over 11 million shares, offering good liquidity for institutional investors.

Market Leadership (L)

• TSM has a relative strength rating of 91.35, meaning it beats 91% of all stocks, a sign of market leadership.
• The company holds a leading position in semiconductor production, especially in advanced nodes.

Institutional Sponsorship (I)

• Institutional ownership is 34.5%, under the 85% cap CANSLIM suggests, indicating space for more institutional purchases.
• The stock's strong results and growth profile keep drawing professional investors.

Market Direction (M)

• Both short-term and long-term trends for TSM are positive, matching CANSLIM's idea of investing with the overall market direction.
• The S&P 500's upward trend offers a good setting for growth stocks like TSM.

Fundamental and Technical Summary

TSM's fundamental analysis shows strong profit metrics, including top-tier margins (48.7% operating margin) and good returns on capital. While valuation seems high, this is partly due to the company's growth outlook and tech leadership.

The technical analysis indicates TSM in a clear upward trend, with the stock holding near record highs. The technical score of 10/10 reflects solid price momentum across different timeframes. Support levels are clear, with the next possible resistance near $245.61.

Investment Points

While TSM looks good as a CANSLIM pick, investors should think about:

• The ups and downs of semiconductor demand
• Geopolitical risks tied to operations in Taiwan
• Valuation levels that assume high growth
• The importance of proper position size and stop-loss rules, as CANSLIM stresses

For investors wanting to find more CANSLIM-style options, the predefined CANSLIM screener lists other candidates meeting these growth standards.

Disclaimer: This review is for information only and should not be seen as investment advice. Always do your own research and consider your risk level before making investment choices.