For investors looking to join solid earnings momentum with positive chart patterns, a multi-layered screening method can be very useful. This tactic requires sorting for stocks that show solid fundamental growth traits, like speeding up earnings and sales, while also showing technical health and a favorable price arrangement ready for a possible breakout. By stacking these conditions, the aim is to find firms that are not only increasing at a better-than-normal rate but are also in a good spot from a price movement viewpoint, possibly providing a combination of fundamental and technical supporting factors.
Fundamental Growth Momentum
Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM), the world's top dedicated semiconductor foundry, offers a strong case for growth momentum investors. The company's financial numbers match several important parts of high-growth investing, which focus on speeding up earnings power and good business directions.
- Solid Year-Over-Year Growth: TSM's earnings per share (EPS) rose by about 46.4% over the last twelve months, while revenue went up by 31.6%. This shows a strong basic increase in its main business.
- Steady Quarterly Performance: The company has a flawless history of beating EPS forecasts over the previous four quarters, with an average beat of 4.35%. This steady skill to do better than forecasts is a sign of positive operational momentum.
- Growing Profitability: A key point for growth investors is not only revenue growth, but getting better bottom-line efficiency. TSM's profit margin has shown quarterly growth, changing from 42.65% two quarters ago to 48.35% in the latest quarter. This direction of growing margins indicates pricing strength and operational skill.
- Positive Analyst Outlook: Showing belief in the company's future, analysts have increased their EPS forecasts for the next fiscal year by more than 13.5% in the last three months. Such upward changes often come before continued good performance.
These parts together add to TSM's High Growth Momentum (HGM) Rating of 6. This rating combines growth, speed, surprises, and changes into one number, showing the stock fits for plans like CANSLIM that look for market leaders with strong earnings momentum.
Technical Health and Arrangement Quality
Apart from the fundamentals, TSM's price chart shows a technically solid profile with a clear arrangement. Based on its detailed technical report, the stock gets a top-level Technical Rating of 10 out of 10.
- Strong Uptrend: The report states that both the short-term and long-term trends are positive, a very good signal. The stock is trading above all main moving averages (20, 50, 100, and 200-day), which are all pointing up, confirming the trend's condition.
- Market Outperformance: TSM is doing better than 92% of all stocks in the market over the past year and is trading close to its 52-week high. This relative performance is a main quality of market leaders.
- Favorable Pause: Maybe most important for timing an entry, TSM shows a Setup Rating of 7. The study points out that "prices have been consolidating lately and the volatility has been reduced." This kind of pause inside a strong uptrend, often called a bull flag pattern, can give a possible entry point as the stock builds energy for its next move up.
- Clear Risk Points: The technical study finds specific support areas, the closest being in the $324.63 to $330.55 range. Having well-marked support allows for the planned placement of stop-loss orders, which is a key part of risk-controlled trading.
Conclusion
Taiwan Semiconductor Manufacturing (TSM) shows a meeting point of strong growth fundamentals and good technical condition. For the high-growth momentum investor, the company provides speeding up earnings, growing margins, and positive analyst changes. For the technically-focused trader, the stock is in a confirmed uptrend and is now forming a pause pattern that may come before a new breakout. This mix is exactly what layered screening plans try to find: fundamentally healthy companies in technically beneficial spots.
Find More Possible Arrangements
The screen that found TSM looks for stocks with a High Growth Momentum Rating above 4, a Technical Rating above 7, and a Setup Rating above 7. This sorts for companies with earnings momentum that are also making favorable chart patterns. You can run this screen yourself and see the newest results by going to the High Growth Momentum Breakout Setups page.
Disclaimer: This article is for information only and does not make up investment advice, a suggestion, or an offer to buy or sell any security. The study is based on given data and should not be the only base for any investment choice. Investing includes risk, including the possible loss of principal. Always do your own research and think about talking with a qualified financial advisor before making any investment choices.
