Weekend Update #465 - January 15th, 2022
stocks covered: $TSM, $ASML
Dear Friends of Purple Chips,
The market is in wait and see mode as we begin what's known as earnings season for Q4. In the next 3 weeks, there will be hundreds of companies reporting their Q4 numbers which should set the tone for the next few months. In this video, we look at the following:
The latest World Economic Forum report;
Semiconductor stocks: TSM and ASML;
A quote by yours truly.
Please click on the icon below to view the video:
Text for Update 465:
On Thursday, the Dow Jones was just slightly higher than last week at 36,400. The market is fairly quiet because investors are waiting to see the results for the Q4 earnings season – which started this week. The Q4 earnings numbers will give investors more insight as company performance normalizes at what we think is the tail end of the pandemic.
Slide 3 – Schwab
I saw this ad for Charles Schwab in the Wall Street Journal. This is a creative way to entice Millennials to own the big-ticket stocks that are out of reach for them.
Slide 4 – Valuations
On Thursday, the low valuations were:
Align, Veeva Systems, Adobe, Shopify and Block.
On the TSX there was Stella Jones, Saputo, Fiera Capital and Enghouse.
Slide 5 – Spotlight –
In the Spotlight this week, the Scotia analysts look at a report by the World Economic Forum. They are saying that COVID has created divergences in the global economies much like how it has benefited some companies and harmed others. It seems that the global economies are decoupling which could bring about some surprises.
Slide 6 – Part 2
Here’s the second part of this commentary. Pause your video to read this.
Slide 7 – Satellite Holdings
n/c
Slide 8 – TSM
TSM reported strong Q4 earnings, so the shares were up about 8% on Thursday. The outlook is positive and it seems that the chip shortage is going to last a few more years. Based on this premise, I don’t think we have seen the highs in these stocks yet. This positive wave for chips stocks could mean another 20% / year growth for a few more years. Full disclosure, I own shares in TSM.
Slide 9 – TSM - summary
Here’s the Scotia summary of the investment thesis for TSM.
Slide 10 – ASML
ASML had a bit of a correction in the last couple of weeks. They had a minor fire at their Berlin factory so the shares dropped from about $800 to $700. We expect this company to do very well as long as the chip shortage holds out since they are the primary global supplier of the machines that make Semiconductor chips.
Full disclosure, I own shares in ASML.
Slide 11 – Core US
n/c
Slide 12 – Core CAD
n/c
Slide 13 – Quote
I’m going to finish with this quote by yours truly. “Good value isn’t that hard to figure out, but timing is impossible.”
I thought of this because throughout my career, I am always being asked about the timing of certain events like when a stock will appreciate or depreciate, and the reality is that timing is something that’s impossible to control. It’s hit and miss. But it also helps to be lucky.
END –
That’s all for this week, I’m John Schwinghamer, the author of Purple Chips. Have a great weekend and thanks for listening.