In the search for promising investment opportunities, many traders and investors use a multi-faceted method, combining strong fundamental growth with favorable technical patterns. One such method involves screening for stocks that show solid high-growth momentum traits while also presenting a good technical setup for a possible entry. This strategy aims to find companies that are not only increasing their earnings and sales at a fast pace but are also in a healthy price trend and consolidating in a manner that may come before a further rise. TAIWAN SEMICONDUCTOR-SP ADR (NYSE:TSM) appears as a security that currently fits these combined standards, deserving a more detailed review from growth-focused investors.
High Growth Momentum Fundamentals
For a high growth momentum strategy, the focus is on companies showing strong and often speeding earnings and sales growth. The provided metrics for Taiwan Semiconductor reveal a notable fundamental picture that fits this goal. The company's performance over recent periods shows it is benefiting from solid industry demand.
- Earnings Power: The company has reported impressive year-over-year EPS growth, with the most recent trailing twelve-month (TTM) figure near 46.4%. While the very high growth rates from earlier quarters have slowed, the latest quarter still recorded a firm 34.9% increase compared to the same period last year.
- Sales Expansion: Revenue growth remains solid, with TTM sales up 31.6%. The most recent quarter saw sales grow by 20.5% year-over-year, keeping a strong top-line increase that supports bottom-line results.
- Profitability Trends: A key part of quality growth is rising profitability. Taiwan Semiconductor has shown steady gain in its profit margin over recent quarters, moving from 42.7% two quarters ago to 48.3% in the last reported quarter. This points to not just revenue growth, but a greater efficiency in turning sales into profits.
- Analyst Confidence: Forward-looking estimates show analysts are hopeful, with the average EPS estimate for the next year adjusted upward by 15% over the last three months. Such positive adjustments often come before continued strong performance.
- Earnings Reliability: The company has surpassed EPS estimates in each of the last four quarters, with an average surprise of 4.35%, showing a steady ability to beat market expectations.
This mix of strong past growth, gaining profitability, and positive analyst feeling adds to the stock's firm High Growth Momentum Rating, making it a candidate for strategies like CANSLIM that look for market leaders with strong earnings momentum.
Technical Strength and Setup Quality
While strong fundamentals give the "why" for an investment, technical analysis can help with the "when." According to the detailed technical report, Taiwan Semiconductor presents a very strong technical profile helped by a constructive setup.
- Outstanding Technical Health: The stock receives a perfect ChartMill Technical Rating of 10 out of 10. This top score shows a strong and maintained uptrend. Both the short-term and long-term trends are rated as positive, and the stock is trading near its 52-week high, doing better than 88% of all stocks in the market over the past year.
- Strong Support Structure: The technical analysis finds multiple levels of support below the current price, including areas around $321-$326 and $302-$310, made by a mix of key moving averages and trendlines. This multi-layered support gives a structure for handling risk.
- Consolidation and Setup: With a Setup Rating of 7, the analysis notes that the stock is showing a decent setup pattern. The report describes lower volatility as prices consolidate in a recent period, with the pattern looking like a bull flag—a pause or pullback within a larger uptrend that can give a possible entry point. The setup summary indicates there is very little resistance above the current price, which could allow for a clear path higher if the consolidation ends upward.
This technical background shows that the stock is not only in a confirmed uptrend but is also in a period of consolidation that may be preparing for its next move up, fitting well with breakout-focused trading methods.
A Combined Perspective for Investors
The case of Taiwan Semiconductor shows the combined effect looked for by this screening method. The company's fundamental engine—driven by its key role in the global semiconductor supply chain—is creating strong and profitable growth, meeting the central idea of momentum investing. At the same time, its price action shows broad market acknowledgment of this strength, placing it in a leading technical position with a pattern that hints at a possible continuation.
For investors using this strategy, the presence of both elements is key. Strong fundamentals without a good technical setup might mean the stock is overstretched and likely to pull back. On the other hand, a good technical pattern in a stock with poor growth metrics may not have the fundamental driver for a maintained move. Taiwan Semiconductor, based on the provided data, seems to offer a mix of both.
Finding Similar Opportunities
The screen that found Taiwan Semiconductor is made to filter the market for other stocks that share this mix of high-growth momentum and favorable technical setups. Investors interested in using this method to find more possible candidates can review the parameters and results directly through the provided High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data provided and reflects conditions at a specific point in time. Investing involves risk, including the potential loss of principal. Always conduct your own thorough research and consider your financial situation and risk tolerance before making any investment decisions. Past performance is not indicative of future results.
