Yahoo Finance 2 Leading Tech Stocks to Buy in March and Hold: TSMC and NFLX
Today’s episode of Full Court Finance at Zacks dives into why the bulls control the stock market to kick off March. The episode then explores why investors should consider buying Taiwan Semiconductor (TSM) and Netflix (NFLX) stock for long-term growth inside two key tech industries.
Wall Street bulls sent the Nasdaq to its first record close since late 2021 on Thursday after PCE data came in line with expectations. The jump to new highs for the tech-heavy industry is another sign the bulls are in complete control.
Investors must remain aware that stocks are likely headed for a healthy pullback at some point soon to shave off excess fat. But fears about a major bubble and comparisons to the Dot-Com era don’t seem valid.
The companies driving tech today churn out massive profits and sit on huge piles of cash while working deeper into every aspect of the economy. The tech sector trades far below its early 2000s levels of 33.9X forward earnings at 26.3X.
Keep your eyes out for the next dip down to the 21-day or 50-day moving averages for the S&P 500 and the Nasdaq—or the 21-week. The bulls might keep buying up all the sizeable downturns as Wall Street rides multiple bullish waves, including corporate earnings growth, projected Fed rate cuts, a stable economy, and AI-driven growth and productivity gains.
Taiwan Semiconductor Manufacturing Co. (TSM)
Taiwan Semiconductor Manufacturing Co, known as Taiwan Semi or TSMC, dominates global chip manufacturing. TSMC’s foundries physically build the most cutting-edge semiconductors that drive AI, smartphones, and nearly every other advanced technology, boasting clients from Apple (AAPL) to Nvidia.
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Taiwan Semi is reaping the rewards of its founding principal: manufacturing only. TSMC’s moat is massive considering the institutional know-how and enormous costs needed to lead the world in making the most complex and microscopic tech on the planet.
The company topped our Q4 EPS estimate in January and provided upbeat guidance, “supported by the continued strong ramp of our industry-leading 3-nanometer technology.” TSMC is projected to grow its sales by 23% in FY24 and 20% in FY25, following a cyclical down year in 2023. TSMC averaged 18% revenue growth between FY18 and FY22. Taiwan Semi’s adjusted earnings are projected to climb by 19% and 24%, respectively.
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TSM crushed tech over the last 10 years, climbing 615% vs. 280%. Yet it trades below its all-time highs. Taiwan Semi trades at a 25% discount to the tech sector at 20.7X forward 12-month earnings and 40% below its 10-year highs.
The company is expanding beyond Taiwan to diversify its manufacturing amid geopolitical tensions. Taiwan Semi pays a dividend and it is poised to grow for decades as it physically builds the bedrock of all technology, from data centers to AI and the still to come.
Netflix (NFLX)
Netflix forever transformed entertainment. NFLX’s vanguard status and growing content library helped it maintain its lead over Disney, Apple, Amazon, and countless other streamers. NFLX shares have roared back over the last year plus after it addressed fears about slowing expansion against growing competition, crushing membership estimates in 2023.
The firm posted blowout fourth quarter results, adding 13.1 million net new paid subscribers to beat Wall Street estimates by 50%. NFLX hit 260.28 million total paid subscribers to crush Disney (DIS) and everyone else in the streaming industry.
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Netflix’s lower-cost ad-based tier is gaining traction while it cuts down on people sharing too many accounts. NFLX is also expanding its video game segment and rolling out more live content. The firm in January announced a 10-year deal with WWE that will bring Raw and other popular live wrestling shows to Netflix in the U.S. and elsewhere.
NFLX’s improving earnings outlook helps it grab a Zacks Rank #1 (Strong Buy) right now. Netflix is projected to grow its sales by 15% in FY24 and another 12% next year to boost its adjusted earnings by 42% and 22%, respectively.
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Netflix shares have climbed by 850% in the last 10 years, including a 230% run off its 2022 lows. Still, NFLX trades around 10% below its all-time highs. The streaming giant trades at a 90% discount to its highs at 34X forward earnings and 50% below its median.
[Disclosure: Ben Rains owns TSM in his personal portfolio.]
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Apple Inc. (AAPL) : Free Stock Analysis Report
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Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
