Taiwan Semiconductor Manufacturing Co. Ltd (TAI:2330) shares edged slightly lower on Wednesday after announcing its July sales. The company said revenue grew by 17.5% from July last year but fell 16.1% from June.
TSMC posted revenue of New Taiwan $124.56 billion or about $4.48 billion, based on Wednesday’s exchange rate. On the other hand, sales for the seven months ending July 2021 came in at NT$859.11 billion, representing a roughly 18.1% increase year-over-year.
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The company’s top-line could benefit from growing semiconductor sales after global Q2 sales increased 29.2% year-over-year and 8.1% from Q1 to $133.6 billion.
Should you buy TSMC shares in Q3 2021?
From a valuation perspective, Taiwan Semiconductor Manufacturing shares trade at a fair valuation of about 30.23 in P/E ratio. In addition, analysts expect the company to post earnings per share growth of about 50% this year and 18.48 next year, valuing the stock a forward P/E ratio of 24.52.
Therefore, with semiconductor sales rising after recent supply chain constraints, TSMC shares seem reasonably priced for purchase ahead of the company’s exciting earnings growth this year and next year.
In addition, TSMC shares have pulled back more than 17% since peaking in February, making the stock an attractive option for cyclical investors.
Technical overview: why buy TSMC shares in August 2021?
Technically, TSMC shares seem to be trading within a gently descending channel formation in the intraday chart.
The stock price has recently pulled back to trade just below the 100-day moving average, in the process cutting short its journey to overbought conditions. Therefore, TSMC has more room to venture upwards, which could attract swing traders.
Investors can target potential rebound profits at approximately $120.53 or higher at $124.83, while the support levels are $111.70 and $107.89.
TSMC shares traded at $116.02 at the time of this writing.
Bottom line: the case for buying TSMC shares now
In summary, although TSMC shares seem to be trading under significant bearish pressure, the stock is relatively volatile, up and above the 100-day moving average. Therefore, after crossing below the critical indicator, investors can expect a rebound back above.
In addition, with analysts expecting the EPS to grow significantly this year, it could be the perfect catalyst for a rebound.
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