Sign InTSMC's Technical and Fundamental Analysis Points to Strong Buy Potential
Summary
As of June 3, 2024, TSMC's stock price surged to $154.95, reflecting robust bullish momentum and nearing its year-high, while solid fundamentals and strategic positioning in the AI-driven semiconductor market make it a compelling 'Buy' candidate despite valuation concerns.
Technical Analysis
TSMC closed on June 3, 2024, at $154.95, reflecting a 2.59% increase from the previous session. The stock's price fluctuated between a low of $152.46 and a high of $157.15, indicating intraday volatility. The Relative Strength Index (RSI14) is at 62, suggesting the stock is nearing overbought territory but not excessively so. The Moving Average Convergence Divergence (MACD) is positive at 7.72, indicating bullish momentum. TSMC's 50-day moving average of $143.50 and 200-day moving average of $114.10 exhibit a strong upward trend, reflective of a positive sentiment in the medium to long term. The Average True Range (ATR) of 2.76 indicates a moderate level of volatility. Immediate support is found at $149.20 with resistance at $155.58. The stock is approaching its year-high of $160.78, a critical resistance level.
Fundamental Analysis
TSMC has a market capitalization of $672.44 billion, underscoring its status as a semiconductor giant. The company's EPS stands at 5.18, yielding a PE ratio of 29.91. While this indicates a relatively high valuation, it is justifiable given TSMC’s leadership in the semiconductor space and significant growth prospects driven by increasing AI and computing power demands. The upcoming earnings announcement on July 18, 2024, will be closely monitored for performance indicators. The upcoming dividend date on June 11, 2024, reflects a low yield of 0.24%, indicating that the company reinvests earnings for growth rather than prioritizing high dividend payouts. The discounted cash flow (DCF) analysis values the stock at approximately $63.16, below the current trading price, suggesting the stock may be overvalued when considering cash flow projections alone.
Performance Prediction
Next Trading Day (June 04, 2024): With strong momentum highlighted by the positive MACD and a recent bullish sentiment after favorable news, TSMC is likely to experience continued minor gains. The upcoming dividend capture and recent upbeat announcements at the Computex trade show lend further support.
Upcoming Week: The stock may test the resistance at $160.78, potentially consolidating around this level if positive sentiment and broader market conditions persist. However, the RSI near overbought territory suggests caution as a pullback could occur especially if profit-taking activities arise post-dividend distribution on June 11, 2024.
Intrinsic Value and Long-Term Investment Potential
Despite the DCF figure pointing to a lower intrinsic value of about $63.16, the broader market recognizes TSMC's dominance and growth potential. With robust EPS, strategic positioning in the AI-driven semiconductor industry, and historical resilience, TSMC is well-poised for long-term gains. The consensus price targets ranging between $125 and $180, with a median of $168, asserts a positive outlook from analysts.
Overall Evaluation
Given TSMC’s strong technical indicators and solid fundamental position in an industry poised for exponential growth, the stock can be categorized as a 'Buy' candidate. This aligns with the prevailing analyst consensus and underscores the stock’s potential as a strong performer, both in the near term and the long term. The strong buy sentiment from industry reports and continuous demand for advanced semiconductors justifies this classification.
