Here is another article in IBD that gives some information on another stock that is reported on each week, TSM.
investors.com
Taiwan Semiconductor: Big Guys Can Run Fast
By DONALD H. GOLD, INVESTOR'S BUSINESS DAILY
Posted 02/11/2011 06:41 PM ET
Even in a country known for its chipmaking prowess, one company stands out. Taiwan Semiconductor Manufacturing (TSM), a $67 billion company, leads the island nation's chipmakers not just by its size and market share, but by its ratings.
Taiwan Semiconductor, a behemoth in its industry, engages in the entire process of chipmaking: design, manufacturing, packaging and testing. It also makes manufacturing masks.
But wafer fabrication, the heart of chipmaking, accounted for 88% of 2009 revenue.
Think of this process as high-tech cookies being cut from a tray of dough. An ingot of silicon is laid out, and the chips are etched into it. The wafer is then cut into chips.
Taiwan is home to 10 companies that trade as ADRs trading on the NYSE or Nasdaq. Seven are chipmakers or chip designers. Taiwan Semiconductor tops the entire Taiwan list with its 82 EPS Rating.
By Relative Strength Rating, the company's 72 score puts it in fifth place. Ahead of it by this gauge are four low-priced chipmakers: Silicon Motion Technology (SIMO) (97), thinly traded Chipmos Technologies (IMOSD) (95), Advanced Semiconductor Engineering (ASX) (87) and Siliconware Precision Industries (SPIL) (73).
Within the chipmaking group, including foreign and U.S. names, Taiwan Semiconductor comes in at 10th place by EPS Rating.
Admittedly, this big-cap stock is not keeping up with smaller hot shots, such as Skyworks Solutions (SWKS), Atmel (ATML) and Cypress Semiconductor (CY).
But consider that Taiwan Semiconductor is widely held among institutions and offers a 2.8%-yielding dividend. The combination of growth and income is rare in this high-tech group.
Taiwan Semiconductor ran through a rough stretch in the five periods through Q3 of 2009. Results since then have shown a solid comeback for the company. Now, Taiwan Semiconductor has to show this rebound has legs.
Earnings growth is solid, but is slowing. The past three reports showed growth of 71%, 61% and 35%. Sales growth came in at 43%, 28% and 31%.
Pretax margin rose to 40% in 2010 and hasn't fallen below 32% in the past seven years. After-tax margin, a quarterly gauge, has been moving between 37% and 42% in the past four periods.
The Electronics-Semiconductor Manufacturer group stands in the No. 15 slot out of the 197 industries tracked by IBD, as of Friday's edition. It's been in the top 20 for the past four weeks.
Taiwan Semiconductor is trying to find a foothold at its 10-week moving average. A square-box base now appears with a 13.79 buy point.
What can go wrong? As with most companies, the economy is key. Many signs show the rebound is taking hold. But job creation has been painfully sluggish, and many economists warn that will be the case for some time.
If the economy falters, companies and consumers will quickly slash their tech spending budgets. |
