5-Star Stocks Poised to Pop: Taiwan Semiconductor

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Based on the aggregated intelligence of 115,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, foreign chip giant Taiwan Semiconductor Manufacturing (NYSE: TSM) has earned a coveted five-star ranking. Our data has shown that five-star stocks outperform the market by a significant margin; conversely, one-star stocks have woefully lagged the market average.

With that in mind, let's take a closer look at Taiwan Semiconductor's business, and see what CAPS investors are saying about the stock right now.

Taiwan Semiconductor facts

Headquarters (Founded)	Hsinchu, Taiwan (1987)
Market Cap	$44.50 billion
Industry	Semiconductors
TTM Revenue	$11.11 billion
Management	CEO Dr. Rick Tsai (since 2005) CFO Lora Ho (since 2003)
Return on Equity (average last two years)	24.7%
Competitors	United Microelectronics (NYSE: UMC) Micron Technology (NYSE: MU)
CAPS members bullish on TSM also bullish on	Intel (Nasdaq: INTC) Apple (Nasdaq: AAPL)
CAPS members bearish on TSM also bearish on	Ford Motor (NYSE: F) General Motors (NYSE: GM)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 223 of 227 of the All-Star members who have rated Taiwan Semiconductor -- some 98% -- believe the stock will outperform the S&P 500 going forward. These All-Star bulls include papasilas and mkyorai, both of whom are ranked in the top 20% of our community.

In July, papasilas noted that "With the semiconductor industry moving to 300mm and possibly 450mm wafer sizes and with the moves to smaller feature sizes, only a few companies can afford to 'go it alone' ... [Taiwan Semi] is the cream of the crop as far as foundries go and is relatively cheap at a P/E of 15 for [trailing 12 months]."

A more recent pitch from mkyorai in August follows that line of thinking, weighing the stock's pros and cons for our community:

Sitting on a mountain of cash, minimal debt, consistent earnings growth, high insider ownership, and semiconductor manufacturing is slowly working its way into the world of the boring. They are repurchasing shares (albeit only to reduce share dilution from the company profit sharing plan), and they are paying a decent dividend. I am watching their inventory numbers with concern, doubly so because unlike commodities, getting a good handle on the value of semiconductors that can depreciate rapidly isn't easy, but overall, I feel this is a solid performer at a decent price.

What do you think about Taiwan Semiconductor, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 115,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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