A 10/10 Buffett Gem

Including a healthy dividend [View in browser]( BROUGHT TO YOU BY: Proprietary Data Insights Financial Pros Top Semiconductor Stock Searches in the Last Month Rank Name Searches #1 Nvidia 4,528 #2 Advanced Micro Devices 2,678 #3 Taiwan Semiconductor Manufacturing Company 1,910 #4 Qualcomm 1,232 #5 Broadcom 939 #ad [Cryptos… NFTs… real estate… startups…]( Brought to you by [The Financial Star]( [World's leading lithium experts on a quest to discover super lithium]( It is a rare circumstance when the world leaders in the lithium sector all come together to launch a publicly listed lithium mining company. This is exactly what has occurred with this Canadian lithium miner. A representative for Pierre Fitzgibbon, Quebec's economy minister, confirmed that the official met with Tesla executives in California recently. "The minister met with Tesla executives during a mission in California last month. They discussed Quebec's place in Tesla's supply chain." Thus, Canada is quickly becoming the best region for energy metal mining. [Learn more about this opportunity to discover this highly anticipated lithium mining IPO](. Technology A 10/10 Buffett Gem In Q3 2022, Warren Buffett’s company, Berkshire Hathaway, bought over 60 million shares of Taiwan Semiconductor Manufacturing (TSM). TSM is one of financial pros’ most searched semiconductor stocks, according to our proprietary Trackstar database. And after the company’s Q4 earnings announcement on January 12, which included a fairly upbeat forecast from management, search volume spiked. It might have to do with Buffett being a shareholder, the company’s 44.9% profit margins, and/or its $52.4 billion in net operating cash flow. If TSM is a good enough stock for Buffett, is it good enough for you? Taiwan Semiconductor’s Business Taiwan Semiconductor has the world’s largest semiconductor foundry, the part of the semiconductor supply chain that manufactures chips. TSM enables roughly 85% of worldwide semiconductor startup product prototypes. The company produces 12,302 products and employs 291 process technologies to serve hundreds of big-name customers with the world’s largest logic capacity. Excluding memory, TSM has 26% of the semiconductor market share. Across nearly every measure, it’s the largest semiconductor company in the world. [Revenue] Source: Taiwan Semiconductor TSM’s clients include some of the world’s largest tech companies, such as Apple, Qualcomm (#4 in financial pros’ semiconductor stock searches), and Huawei. TSM accounts for about 90% of the world’s super-advanced computer chips. Management plans to bring its most advanced chip manufacturing to Arizona in efforts to reduce delivery time along its supply chain. The company made $19.9 billion in revenues during Q4 2022, a jump of 26.7% from Q4 2021. The firm offered the following guidance for Q1 2023: - It expects revenue to be between $16.7 and $17.5 billion - It expects gross profit margin to be between 53.5% and 55.5% - It expects operating profit margin to be between 41.5% and 43.5% Much of the company’s optimism stems from tech companies’ upgrade cycle to more advanced chipsets as these companies vie for the top spot in their industries. Financials [Financials] Financials are in millions of Taiwan dollars. Source: Stock Analysis TSM is financially stable, with a current ratio of 2.2x. In Q4, revenues increased by 42.8%, and its net profit margin improved by 27.9% as demand for semiconductors outpaced supply. Moreover, its diluted EPS soared 82.6%. Operating income eclipsed 2021 by 77.6%. TSM’s Q4 2022 gross profit margin of 62.2% turned out to be +170 basis points better than the midpoint of its earlier gross margin guidance of 60.5%. Impressive figures like that are what attracted Warren Buffett to TSM. In Q3 2022, Berkshire Hathaway bought 60.1 million shares of Taiwan Semiconductor - a stock that pays a steady income with an annual dividend of $1.78 per share. Valuation [Valuation] Source: Seeking Alpha TSM trades at a 13.0x P/E GAAP ratio, notably lower than peers Nvidia (NVDA) at 75.7x, Broadcom (AVGO) at 21.5x, and Advanced Micro Devices (AMD) at 45.4x. Qualcomm (QCOM) is cheaper, with a P/E GAAP ratio of 10.8x. It’s worth noting that TSM has 3x the market cap of QCOM and operates at a greater scale than QCOM… …so it’s larger and cheaper. Taiwan Semiconductor generates $52.4 billion in cash from its operations, significantly more than NVDA at $6.4 billion, AVGO at $16.7 billion, QCOM at $9.1 billion, and AMD at $3.8 billion. Additionally, TSM has a price-to-cash flow ratio of 8.2x, much lower than NVDA at 68.3x, AVGO at 14.2x, QCOM at 15.2x, and AMD at 29.6x. Profitability [Profitability] Source: Seeking Alpha Taiwan Semiconductor’s net income margin of 44.9% is head and shoulders above its peers. QCOM is the second-highest at 34.6%, followed by QCOM at 29.3%, NVDA at 20.9%, and AMD at 9.9%. Furthermore, TSM has a 49.5% EBIT margin, notably higher than NVDA at 25.5%, AVGO at 43.0%, QCOM at 35.9%, and AMD at 13.1%. TSM plans to raise prices in 2023. It holds a near monopoly on advanced nodes, an area of the semiconductor space with insane growth. Advanced nodes give smartphones more powerful hardware, storage, and software capabilities. This is the growth that spurred the upbeat forecast. Growth [Growth] Source: Seeking Alpha TSM grew revenues 42.6% YoY, which is impressive compared to NVDA at 17.7%, AVGO at 20.9%, and QCOM at 31.7%. AMD grew revenues more at 53.7%. But AMD is 3.8x smaller than TSM. When you account for size, TSM’s growth numbers are downright eye-popping. There’s a lot of uncertainty in the semiconductor sector, including a global economic slowdown, supply disruptions, and geopolitical tensions between the U.S. and China. But TSM should grow revenues in 2023 as it starts raising prices. [Prepare for the Future: Understanding the Key Investment Trends for 2023 and Beyond]( "Inflation is out of control. The Fed plans to hike rates until we’re all in the poorhouse. And there’s a recession right around the corner… But you don’t have to settle for doom and gloom. In this free exclusive report, we dive into three key investment trends – and our top recommendations to play them to grow your wealth. " [Go here to learn where to put your money for 2023 and beyond.]( Our Opinion 10/10 TSM accounts for an estimated 90% of the world’s super-advanced computer chips. The company commands solid financials and robust profitability, and it pays a healthy dividend funded by cash, not debt. It trades at a discount in terms of P/E compared to most of its peers. No wonder Warren Buffett added it to his Berkshire Hathaway portfolio. The semiconductor sector incurred a massive correction over the last year, but we see it as a buying opportunity. We like TSM at these levels and rate the stock a strong buy. News & Insights Just Spilled - [Real Estate Looks Ugly]( - [Markets Are About to Move. We Can Tell You Why]( - [Should Investors Avoid Goldman Sachs?]( - [Baby Got Snacks!]( Share on: [We want to hear from you! Let us know your thoughts by clicking here]( [Link]( # [submit to reddit]( [submit to reddit]( [submit to reddit]( [submit to reddit]( To ensure delivery of all emails, [allow us on your list]( Spill&email=TheSpill@news.investingchannel.com). Update your email preferences or unsubscribe [here](. Manage your subscriptions with our [preference center](. View our privacy policy [here](. Copyright ©2023 InvestingChannel. 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