It’s not every day that we beat the greatest investor of all time to the punch.
But recently … we did.
Warren Buffett’s Berkshire Hathaway just bought $4 billion worth of shares in this stock.
When the filing was released, the stock jumped 11%!
It’s in an industry that Mr. Market got WRONG.
So we had the opportunity to add a quality business to our portfolio at a bargain price.
This trend is being pushed higher by a tailwind.
Long term? It’s inevitable. We should do very well as shareholders.
That industry is semiconductors.
Chip Stock Leader
The reason semiconductors are an inevitable winner is simple…
Almost everything we touch requires chips.
Your iPhone, car, oven and refrigerator … all require chips to process data.
Your iPhone, car, oven and refrigerator … all require semiconductors chips. Source: Sourcengine.
Digital information is growing exponentially — and it is reshaping the world.
In 2015, a smartphone required about $100 worth of chips. Today, it’s about $180.
In three more years, it’s projected to be about $300.
Industry executives expect annual chip sales globally to double to more than $1 trillion by 2030.
If that doesn’t get your ears perked up, I don’t know what will.
There are hurricane-force tailwinds propelling this industry forward.
And the hands-down leader in the industry is Taiwan Semiconductor Manufacturing Company (NYSE: TSM).
Warren Buffett’s Berkshire Hathaway bought $4 billion — 60 million shares of TSM.
While we’ve had it in our Alpha Investor portfolio since August.
Taiwan Semi is the 800-pound gorilla in the chip industry.
They produce half the world’s microchips and they are 5X the scale of its only competitor.
The company just shared its plan to bring its most advanced chip tech to Arizona and already committed $12 billion to build the facility.
The biggest overhang for Taiwan Semi is what would happen to the stock if China invaded Taiwan.
Here’s my take… Tech companies on both sides of the Pacific rely heavily on chips and TSM.
Anything that would disrupt global chip production would do damage to all sides.
If there was an invasion, we’d have bigger problems than this … like World War III.
And that’s something that China, the U.S. and the rest of the world do not want.
Taiwan hasn’t even made any defensive moves — another sign they aren’t expecting it either.
So the way I see it, an invasion is a very low-probability event.
Bottom line: Taiwan Semiconductor has…
- An industry projected to grow to $1 trillion.
- It makes up 50% of the world’s chips.
- AND Mr. Market is pricing it at an attractive price.
It doesn’t take too much thinking to buy shares in a quality company trading at an attractive price. Right?
Buy
Mr. Market pushed share prices lower because global economies were slowing, and rates were rising.
That might be so over the short term, but over the long term the sophistication and demand for chips will only be increasing.
We’ve packed the Alpha Investor portfolio with opportunities to take advantage of this.
And over the past 30 days, Mr. Market is starting to see what we were saying all along.
Our semi-stocks have been moving higher. We’ve got a stock up 50%, another up 40% and one up 30% … all in just the past month!
You see folks, prices can move very quickly before market sentiment changes.
So don’t sleep on these opportunities when Mr. Market hands them over.
Over the long term, I have a very good idea of what should happen.
And that’s why most investors don’t make money. They try to time their trades based on daily, or weekly, price movements.
Kind of silly because that’s basically noise. But so be it. That creates opportunities for us.
Many stocks in our portfolio are trading below our entry price — they’re even better bargains.
Now’s the time to be a buyer.
TSM is just one of my top semiconductor recommendations.
In my latest Alpha Investor newsletter, I shared five semiconductor stocks to own for the long haul:
If you want to see how to get this issue and more, click here now.
If you buy quality businesses at bargain prices, it’s pretty hard not to make money.
Regards,
Charles Mizrahi
Founder, Real Talk