Stock Focus
Growth Stocks At Bargain Prices
Fei Mei Chan, 06.11.04, 8:30 AM ET
NEW YORK - Taiwan Semiconductor Manufacturing sells for only 13 times estimated earnings per share for 2005, versus an estimated price-to-earnings multiple of 16 for the S&P 500.
Over the last five years, Taiwan Semiconductor Manufacturing (nyse: TSM - news - people ) posted annualized earnings growth of 53% and annualized sales growth of 29%. This company isn't expect to grow quite as fast in the future, but analysts reporting to Thomson First Call anticipate that TSM can deliver 27% annualized earnings growth over the next three to five years. In contrast, the long-term earnings growth estimate for the S&P 500 is only 11%.
North American sales make up almost three-fourths of Taiwan Semiconductor's companywide revenue. For the first quarter of 2004, the firm reported a revenue increase of 46% over the same period last year, while net income jumped to 14 cents per American Depositary Receipt from 3 cents per ADR. Daniel Heyler, semiconductor analyst at Merrill Lynch, thinks that firmer pricing for TSM's chips and high-capacity utilization of its facilities will help boost the firm's net profit margin.
The table below lists nine growth companies that appear to be selling at bargain prices. Over the last five years, each of these firms showed an average annual earnings increase of at least 36%, as well as average annualized sales growth of 31%. And, over the next three to five years, these companies are expected to post annualized earnings growth of at least 16%. All of these stocks trade for no more than 13 times estimated 2005 profits. |
