Finding deals after a sell-off is a great way to make a profit as an investor. Many stocks are currently trading for an absurdly low valuation, even after the bump that stocks got on Wednesday.
Two that look like screaming buys right now are Taiwan Semiconductor Manufacturing (TSM +0.42%) and Alphabet (GOOG 0.56%) (GOOGL 0.42%). Each of these stocks is so cheap right now that investors cannot afford to miss out on the deals the market is offering.
Taiwan Semiconductor Manufacturing
At first glance, Taiwan Semiconductor appears to be an odd pick. President Donald Trump specifically targeted Taiwan with a 32% tariff rate, which could hurt Taiwan Semi since most of the chips it makes are produced in Taiwan. That rate has now dropped to 10% to all countries across the board. However, that ignores a huge piece of information in the tariffs: Semiconductors are exempt. This is a key point that many investors are missing, making Taiwan Semi an intriguing buy right now.
Another factor that could keep Taiwan Semiconductor off of Trump's list of targeted companies is that it's actively working to build new production facilities in the U.S. TSMC recently announced a $100 billion investment in U.S. chip manufacturing facilities, which will include three fabrication facilities, two packaging centers, and one research and development (R&D) facility. That's big news for TSMC, and it's exactly what Trump wants: to move more manufacturing capabilities inside the U.S.
NYSE: TSM
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Still, there's fear that a weaker consumer could hurt TSMC's business, as some of its chips are used in consumer-facing products like smartphones or vehicles. While this demand will likely dip, it's bound to be outweighed by massive growth in AI chip demand. Over the next five years, management projects that artificial intelligence (AI)-related revenue will increase at a 45% compound annual growth rate (CAGR). Overall, it expects its total revenue to grow at a 20% CAGR, indicating that the company will be fine.
Investors will hear more commentary on how tariffs will affect Taiwan Semi's demand during its Q1 conference call on April 17, but there's no reason to doubt the stock as much as the market does right now. Following the sell-off, Taiwan Semi's stock now trades for less than 18 times forward earnings.
TSM PE Ratio (Forward) data by YCharts
That's an incredibly cheap price for one of the world's most important companies, especially when you consider its growth and ability to sidestep tariffs. With how cheap the stock is right now, I think it's one that investors can't afford to miss out on, and they should be buying up shares left and right at today's prices.
Alphabet
Alphabet is a member of the "Magnificent Seven," a group of tech stocks that have led the market over the past five years. These stocks were often noted as being expensive, but Alphabet has never fetched a premium valuation.
Many investors are worried that its advertising-focused business model centered around the Google ecosystem may be in trouble as generative AI takes some of its market share. However, the habit of "Googling" something is engrained in the behavior of most users around the world. Plus, Alphabet has already integrated generative AI-powered summaries into Google search results, so it's getting ahead of the curve.
NASDAQ: GOOGL
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Still, should the economy plunge into a recession caused by tariffs, Alphabet's advertising business won't fare well. Advertising is one of the first places companies look to cut expenses during a downturn, which has historically negatively affected Alphabet.
I don't expect this time to be any different should the economy plunge into a recession, but this is far from the first time the market has been worried about a recession over the past 15 years. Despite that, Alphabet's stock is not far from a 15-year low from a trailing price-to-earnings (P/E) standpoint.
GOOGL PE Ratio data by YCharts
So, even with all the fears caused by tariffs or a recession, Alphabet's stock looks dirt cheap from a historical standpoint. This sell-off has occurred without any confirmation of a recession, only the fear of one.
As a result, I think today marks an excellent buying opportunity for Alphabet stock, as it has rarely been this cheap over the past 15 years. We'll hear more from Alphabet in early May about how it believes tariffs will affect the company, but I think it's an excellent time to scoop up Alphabet shares.
