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 Gainers📈 & Losers📉

Our Biggest Gainers & Losers of the Day in the $100,000 Build Portfolio

For the 25th October 2024:

• Proof the Bears Were Wrong 🐻

• This Stock Doubled… What’s Next?🤔 

Proof the Bears Were Wrong🐻

I’ve said it before. I’ll say it again - Don’t bet against Elon Musk.

If the biggest single day gain in a decade for Tesla wasn’t enough for you yesterday, they kept the rocket going with another 3.35% gain today. I added more to my position at market open which is already 4.5% in the green & I’m still bullish.

Let’s take a look at what’s put the fuel in this rocket & why I think there’s still plenty left in the tank.🚀 

Tesla’s Top Tier Quarter💰️ 

Tesla’s stock has just had a 26% boost in the last few days. That’s insane.🤯 So what’s happened to kick-start that?

Well, Wall Street was sweating over Tesla’s demand & profit margins (aka how much they make on each car), but Tesla came out swinging like a vintage Mike Tyson. Here’s the spicy stuff:

1/ Bears got put in time-out 🐻🔒: A bunch of people thought Tesla was struggling to sell cars without cutting into profits. But Q3? Total knockout. They expanded their margins (made more $ per car) AND showed strong demand, so the bears are gonna have to get creative with new excuses.

2/ EPS? You mean E-Z Money? 💸: Tesla beat EPS expectations (fancy term for profit per share) with $0.72 per share, smashing what analysts had them penciled in for.

So what did we learn? Tesla is making more, spending less, & still managing to drop new models without breaking the bank. Love to see it.

 The Elon Factor: 2025’s Big Goals🔮

So now you’re all up to speed on what caused the recent spike. Next we need to know what the future looks like for Tesla to figure out whether if it’s worth selling now or keep buying & holding.

Let’s take a look at Tesla’s 2025 master plan because cause Elon doesn’t do anything small. Sometimes it feels like he might be overcompensating for something….anyway..

He’s been talking dirty to us with 20-30% growth in vehicle sales from more affordable models to bring in that sweet new-buyer energy. And self-driving tech is going full throttle. Here’s the details:

1/ Budget Tesla Whips 💵: The plan is to drop some cheaper models in 2025. More people will get in on the Tesla game, and that means more cash flow for the empire. It’s like getting Tesla vibes at Ford prices. That’s a win for consumers & Tesla in my book.

2/ Self-Driving Flex 🚙🧠: They’re cranking out 35,000 autonomous cars per week right now. For those keeping score, that’s a big “watch out” to all the regular car companies still playing catch-up.

They’ve shown they can keep the margins healthy in the recent earnings & now they’re promising higher volume aka more revenue? From that, I think it’s pretty clear that Tesla is still worth keeping in the portfolio.

It’s a no brainer, right? Well, kind of.

⚠️ The Musk Curveball ⚠️

I’m as big a fan of Elon as the next guy, don’t get me wrong. But, before you bet the farm, remember – Musk is, well, Musk. The guy’s ambitious, but his timelines? He tends to go with the over-promise & under-deliver there.

It wouldn’t be his first rodeo with on the “delay train,” so if he misses those targets, I’d expect Tesla’s stock to get wobbly legs.

Also, theyt’ve done a great job so far but keeping up these juicy profit margins won’t be easy with all the shiny new projects Tesla’s got going.

 Bottom Line: What’s the verdict? 🤔 

Tesla just clocked one of its most promising quarters in ages. If you’re down to hang on for a little Elon-rollercoaster, Tesla could be a diamond in the (kind of expensive) rough. At it’s current price Tesla stock isn’t exactly cheap but this Q3 reminded the world that Tesla’s not just about flashy cars and Twitter drama – it’s building something big & I’m here for it.

If Elon can deliver on his promises I don’t think it’s unreasonable to expect Tesla to break the $1 trillion dollar market cap again which is a 20%+ gain from current price.

If he doesn’t, expect to get spanked on the price in the short term. If you’re in it for the long haul, I’d treat any unfulfilled timelines as buying opportunities as long as the rest of the fundamentals stay in tact. That’s what I’m doing anyway.

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This Stock Doubled… What’s Next?🤔 

Technically, they’ve more than doubled but the headline wouldn’t of sounded as good. They’re up over 132% in the past year.

I was a little last to the party on TSMC (aka Taiwan Semiconductor Manufacturing Co.) so what's behind this insane growth & can you still make money from this stock?

 Chip Cycles & The Comeback Kid 💾

Yes, AI is helping but it’s not the only reason TSMC’s done so well over the last 12 months. Here’s a few more reasons why they been booming:

1/ Smartphones & PCs Are Back 📱💻 – Everyone's back to upgrading their gadgets & TSMC’s making the chips for all those fancy new toys.

2/ The Chip Cycle Rebound 📈 – Semiconductors go through “up-and-down” seasons. Right now? We’re in an “up,” & TSMC’s perfectly positioned to cash in.

 Foundry 2.0 – TSMC’s New Power Move ⚙️

They announced the foundry 2.0 in Q2 of 2023 & to say it’s been a success would be an understatement. But what do they mean when they say “Foundry 2.0”?

Traditionally, TSMC operated as a pure foundry. This means they’d manufacture chips designed by other companies (like Apple or Nvidia) & then hand them over. That’s it - no extra bells and whistles.

The foundry 2.0 is TSMC’s way of saying, “We’re more than just a chip-making factory now.” Think of Foundry 2.0 as the “deluxe combo meal” for their customers. They’re not just whipping up the chips anymore. They’re now adding extra services like packaging, testing, and mask-making (basically blueprints for chip designs).

TSMC used to be the go-to factory just for building other companies’ chips. Now, it’s bundling everything from design templates to testing to packaging all in one sweet package.

Why is this such a huge move? Well, a couple of reasons:

1/ Bigger Market = Bigger Bucks 💰: TSMC’s moving into areas where they can get more revenue & reach a broader customer base. It’s like they went from a burger spot to a full-scale restaurant with all the sides & desserts.

2/ Less Monopoly Vibes 📉: TSMC’s Foundry 2.0 also helps them look less like a monopoly (their old market share was 60%!). By spreading out to other chip-related services, TSMC’s overall share drops, lowering the monopoly drama.

The best news? This plan is less than a year in action! So there’s still plenty of room to grow. I want to be holding shares before the full potential of this move is realised. Which I am. 😏 

AI Demand = $ Cha-Ching $ 🤖💰

I almost get bored about talking about how every company is growing with AI. Almost. Because I still love to see how much green they add to my portfolio.😅 With everyone and their dog jumping on AI, TSMC’s cashing in. Here’s how:

1/ AI Chips for Everything 🧠 – TSMC’s advanced 3nm & 5nm chips power everything from AI data centers to the smart tech on your phone. Demand is sky-high, expected to triple over the next few years. Triple!

2/ Front Row Seat to AI – TSMC’s tech powers a bunch of AI use cases, from massive servers to on-device assistants. AI’s a goldmine & TSMC’s front row with an axe pick.

 The Fundamentals Are Rock-Solid 📊

TSMC isn’t just a hype train either; they’ve got the numbers to back it up:

1/ Margins & Revenue Up 🤑 – TSMC’s revenue hit $23.55 billion last quarter & margins are up too (nearly 58%). Big fat revenues with big fat margins is as close to a legal money printer as you can find.

2/ Cash-Packed Balance Sheet 💰 – With over $68 billion in cash & a pretty light debt load, TSMC’s sitting pretty for future growth. Investing in companies that have a bunch of cash also gives me peace of mind because it gives them more of a buffer to weather any unexpected downturns.

 Valuation Check 💵

Now let’s be real for a second. Any stock that’s up over 132% isn’t going to be as much of a steal as it was a year ago unless there’s been some huge shifts in the fundamentals. And to be fair the Foundry 2.0 has come pretty close to that.

The fact is TSMC isn’t as cheap as it used to be, but here’s why it’s still worth a look:

1/ PEG Ratio 📈 – TSMC’s PEG ratio is sitting at 0.95, which is super solid for a growth stock. If it goes up to 2.0 (standard for high-growth stocks), this stock could double again.

2/ Free Cash Flow (FCF) Yield 🤑 – At 2.15%, TSMC’s FCF yield gives it a nice safety net if tech stocks slow down. Cash flow = stability.

Risks?⚠️

Nothing’s risk-free. If you want to take the leap on TSMC, here’s some things to know to make sure you go in with eyes wide open:

1/ Energy Costs ⚡ – It’s not just us that feel the pinch of rising energy prices. Big companies feel it too. Making advanced chips chugs electricity & Taiwan’s power costs are on the rise. If it stays that way, it could impact TSMC’s profits. I will say that the margins are so healthy that this isn’t worth losing any sleep over. Not yet, anyway.

2/ Geopolitical Tensions 🌏 – This is a bit of a scarier one. Taiwan being neighbours with China sprinkles in some geopolitical risk. TSMC’s diversifying with plants in the U.S., Japan, and Germany, but those take time to scale.

3/ Supply Chain Delays 🛠️ – The U.S. CHIPS Act is pushing for more domestic chip production, but TSMC’s expansion outside Taiwan has hit construction delays. Not a huge worry. More of a speed bump than a road block.

All this to say, I think TSMC is perfect if you’re looking for a mix of stability & big upside.

Between their Foundry 2.0 strategy, AI leadership, & steady demand in smartphones & IoT, this stock has huge potential in the short & long term. It’s a bit pricier than last year, but with the growth coming from their new strategy & innovation plus the markets they’re serving getting bigger, why would you not want a piece?

That’s all! See you same time tomorrow 👋 

P.S Hit reply & let me know what you thought of today’s newsletter. All feedback is welcomed ❤️