Taiwan Semiconductor Manufacturing (NYSE:TSM) Passes Key CANSLIM Screen for Growth Investors

For investors looking for a systematic way to find high-growth market leaders, the CANSLIM method provides a disciplined structure. Created by William O'Neil, this approach mixes strict fundamental study with important technical signs to find stocks with solid earnings momentum, leading traits, and institutional support. The aim is to locate companies starting major growth, just as the wider market sees their promise. A recent filter using this method has identified Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) as a notable candidate for more detailed review.

Checking TSM With CANSLIM Rules

The CANSLIM letters list seven key checks. Here is how Taiwan Semiconductor Manufacturing (TSM) stacks up against the main needs:

• C - Current Quarterly Earnings & Sales: The method requires large or speeding growth. TSM states a quarterly earnings-per-share (EPS) growth of 39.1% and revenue growth of 30.3% versus the same quarter last year, easily passing the usual minimum marks of 20-25%. This quickening in profit is a main reason for CANSLIM choice.
• A - Annual Earnings Increases: A history of continued growth is key. TSM displays a solid 3-year EPS compound annual growth rate (CAGR) of 25.3%, meeting the rule for "large growth." Also, its Return on Equity (ROE) of 31.7% is much higher than the 10% minimum, showing very efficient use of shareholder money.
• N - New Products, New Highs: While the "new" part connects to TSM's front position in advanced process technologies (like 3nm and 2nm), the "new highs" part is clearly technical. The stock is now trading near its 52-week high, a good sign that market movement matches its strong basics.
• S - Supply and Demand: A good balance sheet helps lasting growth. TSM shows a very careful Debt-to-Equity ratio of 0.18, much lower than the filter's limit of 2. This small debt lowers money risk and is seen positively.
• L - Leader or Laggard: CANSLIM looks for market leaders, not followers. TSM has a strong Relative Strength rating of 88.1, meaning it has done better than about 88% of all stocks in the market over the last year. This proves its place as a real sector leader.
• I - Institutional Sponsorship: Some institutional ownership is required, but not so much that all buying is finished. With institutional ownership at 36.3%, TSM sits in a possible good zone; there is notable institutional interest, but plenty of space for more institutional buying as the growth story keeps developing.
• M - Market Direction: The method stresses investing in line with the total market. Now, both the long-term and short-term paths for the S&P 500 are up, giving a supportive setting for CANSLIM-type investments like TSM.

Fundamental and Technical Summary

A look at TSM's detailed reports gives a broad check of its fit with growth investing ideas.

The fundamental analysis report gives TSM a score of 6 out of 10. It points out the company's outstanding profit, with industry-leading margins and returns on capital. Growth numbers are especially good, with notable past results in both EPS and revenue. The main warning in the report focuses on price, which is seen as high compared to some numbers—a usual trait of high-growth leaders. Money health is firm, helped by the low debt level mentioned before.

The technical analysis report is more positive, giving a top score of 9 out of 10. It says that both long-term and short-term trends are up, and the stock is trading in a helpful way. The setup quality score is fair, hinting the stock may be settling inside a larger upward path, which could offer a possible entry chance for investors following technical methods.

Conclusion

Taiwan Semiconductor Manufacturing (TSM) offers a solid example of a stock that meets a strict, multi-part filter like CANSLIM. It shows the effective mix of fast quarterly growth, an excellent annual earnings history, top market leadership (high relative strength), and a very firm money base. While its price needs thought, its basic strengths and good technical position make it a leading candidate for growth-focused investors to study more.

The CANSLIM filter that found TSM is made to sort the market for similar high-chance leaders. You can view the present results and change the rules to your own investment way using the O'Neill CANSLIM High Growth screen.

Disclaimer: This article is for information only and is not investment advice, a suggestion, or a deal to buy or sell any security. You should do your own full study and talk with a qualified money advisor before making any investment choices.