Taiwan Semiconductor Manufacturing Co. Ltd. (ADR (NYSE:TSM)

CAPS Rating: 4 out of 5

The Company manufactures semiconductors using its advanced manufacturing processes for the customers based on its own or third parties' proprietary integrated circuit designs.


Player Avatar Bama99 (80.83) Submitted: 7/14/2011 3:14:22 PM : Outperform Start Price: $10.96 TSM Score: +39.81

Analysts are dog piling on the entire semiconductor industry right now, expecting low growth and maybe they are right, but it won't last long. Consumers like their electronic gadgets, and even recessions aren't stopping them from getting their iPods and IPad's.

And the bad news is already priced in the stock, so our downside risk is limited.

So the stock is cheap, but cheap stocks can always get cheaper.

Even through the worst recession in modern history, TSMC increased earnings. In 2007, diluted earnings per share came in at 2.71 Taiwanese Dollars. In 2008, they increased to 3.13, 2009 popped to 3.44, and almost doubling in 2010 to 6.31.

The company keeps very little debt on the books and pays a nice 3.3% dividend while you wait for the stock to rebound. When the recovery hits full steam, this stock should soar.

I always like to find a little something extra that might goose a stock beyond our expected returns and with TSMC, the rumor is that Apple will select it to supply the new A6 processor. If that is true, then we can expect more gains in the share price.

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