Taiwan Semiconductor Manufacturing makes the world's most advanced chips for a host of chip companies including AI leaders Nvidia and Advanced Micro Devices. The chip foundry recently completed a cup-with-handle pattern, setting it up for a fresh run higher. On Wednesday, the Relative Strength (RS) Rating for Taiwan Semiconductor stock got an upgrade from 77 to 81.
TSM stock has a 100.70 buy point. See if Taiwan Semiconductor stock can clear the breakout price in heavy trading. While forming the cup-with-handle base it dipped to an 84.02 low on Sept. 26. It then climbed the right side of the base to complete the cup and form a handle. The chip foundry's stock traded at 98.92 Wednesday afternoon, up just under 1% for the day.
Taiwan Semiconductor Stock Ratings OK, Not Yet Great
The upgraded 81 RS Rating means Taiwan Semiconductor stock bested 81% of all stocks for price performance, regardless of industry, over the past year. Over 100 years of market history shows that the best stocks typically have an 80 or better RS Rating in the early stages of their moves. However there is a caveat. Taiwan Semi's fundamentals need improving.
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Among its other ratings Taiwan Semi has a 74 Earnings Per Share Rating, and a C Accumulation/Distribution Rating, showing that about as many funds are buying its shares as selling. Taiwan Semiconductor stock has a 75 Composite Rating, meaning it's outperforming three-fourths of all stocks overall.
Those ratings are OK but not great. They reflect the company's lackluster fundamentals. The Taiwan-based company has seen profits and sales contract this year amid a sluggish chip market. In its most recent quarter Taiwan Semi reported a 26% drop in earnings to $1.26 per share on a 12% dip in revenue to $16.9 billion. However, that marked an improvement over the prior quarter's results.
Chip companies use design software to make their chips smaller and faster. Taiwan Semiconductor uses those "blueprints" to manufacture the chips and send them to the chipmakers, who then sell them to electronic device makers.
Institutional Investors Are Showing Interest
The number of funds holding TSM stock rose from 2,398 in December to 2,689 in September, the most recent quarter for which data is available.
Taiwan Semiconductor stock earns the No. 6 rank among its peers in the 32-stock Electronics-Semiconductor Manufacturing industry group. Microchip Technology and MACOM Tech Solutions are also among the group's highest-rated stocks.
When searching for the best stocks to buy and watch, a stock's relative price strength is a good indicator.
Investor's Business Daily's Relative Strength Rating identifies share price action with a 1 (worst) to 99 (best) score. The score shows how a stock's price performance over the last 52 weeks holds up against all the other stocks in our database.
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