Chip Shortage Come, & Taiwanna Go Home?
Work on Wall Street, and I drink bourbon!
Chip shortage come, and Taiwanna go home.
Stack stock picks ‘till the morning come!
Chip shortage come, and Taiwanna go home.
Great Ones, if you’ve seen the state of the tech sector on Wall Street, you’d think it was Armageddon. The tech-laden Nasdaq has plummeted big-time this year, and we’re barely into the second week of January.
Chip shortage come, and Taiwanna go home…
Really? Going home right now would probably be a very bad investing move.
Especially when you have companies like Taiwan Semiconductor Manufacturing Company (NYSE: TSM) absolutely killing it right now.
How could Taiwan Semiconductor not be killing it? It makes chips for Apple, Advanced Micro Devices, Nvidia, Intel, Qualcomm, Broadcom, ARM Holdings … practically every major semiconductor company in the world!
All right, I’m considering not going home now … got more?
Good on you, because today’s Taiwan Semiconductor news is gonna blow your mind. The company is slated to slip into the earnings confessional this Thursday to release its fourth-quarter results — more on that in a sec — but Taiwan Semiconductor offered an early taste this morning.
Specifically, December revenue jumped 32% year over year to $5.6 billion — a single-month record. What’s more, fourth-quarter revenue rose to $15.83 billion, marking Taiwan Semiconductor’s sixth straight quarter of record revenue.
Now, if you really wanna see how well Taiwan Semiconductor is doing, just look at its third-quarter margins: 51.3% gross margin, 41.2% operating margin and 37.7% net profit margin.
Those are ridiculous numbers … and they’re probably going to improve in 2022.
Why? Because Taiwan Semiconductor is raising prices in the midst of record-breaking demand and an ongoing global semiconductor shortage.
In short, I expect Taiwan Semiconductor’s margins to have improved in the fourth quarter and guidance to be well above Wall Street’s expectations this Thursday when the company releases all the juicy details.
While TSM stock is not an official Great Stuff Pick, two of its biggest customers are Nvidia and AMD. Depending on how Wall Street reacts after this Thursday’s report, I might have to seriously consider adding yet another chip stock to the portfolio.
What are your thoughts, Great Ones? Are three chip stocks too many? Four? Are you already holding TSM stock? Let me know at GreatStuffToday@BanyanHill.com what chips are on your investing plate. Mmm … chips.
See, chips go into cars. Cars go into salsa. Chips in the salsa … our chips. Salsa chips.
We’re gonna need a bigger chipmaker!
I mean, literally every technology you can think of runs off of these chips … salsa notwithstanding.
Take lidar, for instance. Almost every car company is betting on this new tech: Audi alone is investing $16 billion … GM, $27 billion through 2025. BMW? $35 billion. In fact, Google, Amazon, Apple and even the U.S. Army are investing in it.
Good: Toke One For Tilray
After waiting eons for pot stock profitability that never manages to materialize, Tilray (Nasdaq: TLRY) investors finally caught a much-deserved break.
Not only did the pot producer report a 20% jump in second-quarter revenue — from $129.46 million up to $155.15 million — earnings came in at $0.03 per share, blowing expectations for a loss of $0.09 up in smoke!
Tilray’s CEO Irwin Simon also played up the company’s prospects for a European expansion as Germany looks to legalize adult cannabis use:
Germany germinating aside, Tilray also reported that its SweetWater and Manitoba Harvest beverage brands “remain profitable and continue to invest in products and acquisitions” that will help the company grow in the higher-margin medical market.
Tilray touters have learned to take what they can get, and this quarter’s rather impressive revenue growth and surprise profit certainly aren’t anything to sneeze at. As such, TLRY stock is already up 14% following today’s announcement.
Better: Above & Beyond
Beyond Meat (Nasdaq: BYND) is back, baby! Or, at the very least, looking a little less bloody and bruised than it did during most of 2021…
After announcing a plant-based fried chicken cooperative with the company formerly known as Kentucky Fried Chicken last week, the meatless wonder gained a new Canadian cohort this morning — Pizza Hut, the purveyor of all things, well, pizza.
The meatless mashup shouldn’t come as too much of a surprise to longtime BYND investors.
After all, the pizza chain’s parent company, Yum! Brands (NYSE: YUM) had previously inked a deal with Beyond Meat for exclusive meat substitutes for three of its fast-food favorites — Pizza Hut, Taco Bell and, you guessed it, KFC.
Starting today, Canadian Pizza Huts will permanently add plant-based sausage crumbles to their menus, which customers can sprinkle over any of the Huts’ pleasing pies. The sausage substitute is made from a pea protein proxy that sounds deliciously unappetizing … though considering how real sausage is made, I can certainly see the draw.
Now, if Beyond’s partnership with McDonald’s (NYSE: MCD) is anything to go off of, Pizza Hut’s plant-based plans will eventually slink state-side, which should boost BYND’s food-service sales — not to mention its share price.
It seems that Beyond Meat investors are still digesting today’s news, however, as BYND stock slipped 4% lower and keeps heading south.
Best: What A Croc Of…
Earnings! And oh, what mighty fine earnings indeed … if Crocs’ (Nasdaq: CROX) predictions hold true, that is.
Just like Taiwan Semiconductor, Crocs dropped a bomb on the Street today ahead of its actual earnings date of January 20. The dignity-destroying clog designer expects 2021’s overall sales to come in a whole 67% higher than 2020.
Crocs also sees sales shooting up 42% in the fourth quarter alone — a hop and a jump higher than the 36.6% that analysts predicted. Crocs CEO Andrew Rees says that, even with Croc’s clogged-up supply chain, “2021 proved to be an exceptional year for the Crocs brand.”
But not for humanity’s sense of style…
I digress. In a world where none of your coworkers can see below your desk on Zoom — get your mind out of the gutter — Crocs offers up a new take on “remote life chic.”
Editor’s Note: Charles Mizrahi’s No. 1 Stock for 2022…
My colleague Charles has been working on an exciting new project … and it’s definitely worth checking out. It involves a bold prediction for 2022, which he reveals in this two-minute video.
The company he’s recommending belongs to a special class of stocks that has crushed the market 6-to-1 … for almost a century. In fact, if you’d invested $10,000 in each of the top five stocks in this class in January 2020, you’d have made more than $1 million … in a single year.
Guess what’s back, Great Ones? Back again?
Earnings season’s back — actually, it never quite ends. That’s the secret, cap’n … it’s always earnings season. Caught in the revolving door of time, it’s time we heard from the earnings confessional once again.
Here’s what companies are strutting their success (or shame) this week, courtesy of Earnings Whispers on Twitter:
As you know, ‘tis the season for Taiwan Semiconductor’s chipmaking brilliance, and we’ll see how the rest of TSM’s report shapes up come Thursday.
Tilray started this week on a surprisingly high note for cannabis stocks, and it’s up to Organigram (Nasdaq: OGI) to keep the profitable pot circle going tomorrow.
For all you prospective homebuyers looking at the housing market like a deadly game of double Dutch … keep an eye on KB Home (NYSE: KBH) to see how the overall homebuilding hustle is going.
Same as it ever was throughout the pandemic, KB’s earnings will boil down to how well it’s managing its costs … and its backlog of building projects. Anyone remember that whole “lumber price explosion” from last summer? No? Just me?
In a similar vein, Delta (NYSE: DAL) investors already know what they’re looking for in the airline’s next report: rising air traffic, reducing cash burn and guidance. Everyone will be watching Delta’s guidance, ever since the company teased that oh-so-elusive “meaningful profitability” a few weeks back.
Whether Delta’s version of “meaningful profitability” is the same as Wall Street’s, of course, remains to be seen.
And what better way to round out the week than with a smattering of bank earnings? All the big names — all the greatest hits — are on deck this Friday, from Citigroup (NYSE: C) and BlackRock (NYSE: BLK) to Wells Fargo (NYSE: WFC) and JPMorgan (NYSE: JPM).
On second thought, I can imagine precisely a thousand better ways to round out the week rather than the bank parade — and top of my list is Friday’s Reader Feedback!
If you didn’t get your email sent in time for last week’s inbox roundup, write to us now, so you don’t forget. (Monday amnesia happens to us all, just ask my charred-to-a-crisp frozen pizza from lunch.)
Are any of your personal picks reporting earnings this week? Got a trade setup in your sights? Come spin the yarn over at GreatStuffToday@BanyanHill.com. And we will catch you on the flip side!
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Until next time, stay Great!
Editor, Great Stuff