Taiwan Semiconductor (NYSE:TSM) Embodies CAN SLIM with Explosive Growth and Technical Strength

The CAN SLIM investment method, created by William O'Neil, joins fundamental and technical review to find high-growth market leaders. This structured process assesses companies using seven main factors represented by the letters CAN SLIM, concentrating on earnings speed, yearly growth patterns, new products or services, supply and demand forces, market leadership, institutional backing, and the general market trend. The method looks for companies with high quarterly and yearly earnings growth that also display technical health through relative price action and correct chart patterns.

Earnings and Sales Momentum

Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) shows very good quarterly results that fit well with the "C" part in CAN SLIM, which focuses on current quarterly earnings and sales speed. The company's latest quarterly report displays notable growth versus the same quarter last year:

• Quarterly EPS growth: 613.7%
• Quarterly revenue growth: 33.5%

These large gains are well above O'Neil's suggested minimum of 18-20% growth and point to solid operational speed. The very high EPS growth, specifically, hints at effective scaling of profits along with revenue increase.

Annual Earnings Growth and Profitability

The "A" part of CAN SLIM calls for steady yearly earnings gains, and Taiwan Semiconductor meets this with strong past performance. The company's three-year EPS compound annual growth rate is 25.3%, matching O'Neil's suggested minimum of 25% growth. Notably, the company shows very good profitability numbers:

• Return on Equity: 31.7%
• Three-year average ROIC: 20.3%

These numbers are well above the minimum 10% ROE level suggested in the CAN SLIM method and put Taiwan Semiconductor in the top group in its industry for profitability.

Technical Strength and Market Leadership

From a technical view, Taiwan Semiconductor displays the features CAN SLIM investors look for. The stock currently has:

• Relative strength rating of 87.8
• Trading near 52-week highs
• Bullish flag pattern formation
• Good volume support during upward moves

The high relative strength rating shows the stock is doing better than almost 88% of all stocks in the market, meeting the "L" part for leadership instead of laggard status. This technical health, joined with the company's fundamental results, forms the strong mix the CAN SLIM method looks for.

Institutional Sponsorship and Financial Health

Taiwan Semiconductor keeps suitable institutional ownership levels at 36.3%, well under the 85% level that could suggest limited buying potential from large investors. The company's financial health stays solid with:

• Debt-to-equity ratio: 0.18
• Current ratio: 2.69
• Good free cash flow generation

These numbers support the "S" part about supply and demand forces, indicating a healthy balance sheet without too much dilution or debt issues.

Complete Analysis View

According to ChartMill's fundamental analysis report, Taiwan Semiconductor gets a rating of 6 out of 10, with very high profitability scores (9/10) and good growth numbers (8/10). The technical analysis is even more positive, with a technical rating of 9 out of 10 supported by good short and long-term trends. The stock currently shows a decent setup pattern with clear support and resistance levels that may provide planned entry points for position traders.

Market Context and Opportunity

With the S&P500 showing good trends in both short and long-term periods, the general market direction backs the CAN SLIM method of looking for leadership stocks during rising periods. Taiwan Semiconductor's place as the world's top dedicated semiconductor foundry, along with its technology leadership in advanced process nodes, provides the "N" factor of new products and innovation that supports continued growth.

For investors wanting to find more companies that fit CAN SLIM factors, the predefined screener configuration gives a starting point for spotting other possible candidates that share these growth and technical features.

This article presents objective analysis of Taiwan Semiconductor Manufacturing Co., Ltd. based on publicly available data and the CAN SLIM investment framework. It does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with financial advisors before making investment decisions. Past performance does not guarantee future results, and all investments carry risk including potential loss of principal.