Lynch Picks: Buy TSMC (TSM)
Taiwan Semiconductor Manufacturing Company Limited is a leading chip foundry.
In 2021, $TSM maintained its leading position in the foundry segment of the global semiconductor industry by accounting for 26% of the worldwide semiconductor market, excluding memory, an increase from 24% in 2020. TSMC's growth was mainly driven by the continued expansion of 5G and high-performance computing (HPC)-related applications. The company supplies its chips to major tech companies, including Nvidia, AMD, and Apple.
TSMC is currently trading at a PEG Ratio of 0.57, which is why we have picked the stock today in our Lynch Picks. The company's leading position in the industry can be attributed to TSMC's advanced process technology, which not enables high performance, better power, smaller area, and time to market, which gives the company leverage to charge higher prices for its products as compared to its peers.
The semiconductor manufacturing industry is capital-intensive and requires significant investments to establish infrastructure. TSMC's high intangible assets and cost advantages from economies of scale provide a wide economic moat to the company. Although the company's stock is down 38% YTD, amidst a cyclical correction in the industry, the company's business fundamentals remain solid, and TSMC remains well-positioned to deliver value to stakeholders in the future.
Source: Yahoo Finance