A lot has been written about semiconductor stocks, and expectations are high among the investor community. However, this in and on itself is a major red flag. It suggests sentiment is too bullish, and that is a recipe for failure. One semiconductor stock that nodoby is paying attention to today is UMC. That’s why we are at again: the ‘real news’ comes from InvestingHaven. Do not expect financial media to bring you the real investing news and opportunities that matter for investors. InvestingHaven’s research team is on call forecasting that semiconductor stock UMC is a multi-bagger in the making.
Buy low and sell high is what every investors acknowledges, but it requires discipline. It requires a deep understanding of how markets work, and good analysis to identify the undervalued stocks / markets / commodities (assets in general). One such case is semiconductor stock UMC, and it requires courage to buy this stock that nodoby talks about. There is no re-assurance from others on social media nor financial media. How does this feel? Indeed, going against the tide is hard, but it is the recipe to success!
Semiconductor Stock UMC: A New Multi-Bagger In The Making
Founded in 1980 as Taiwan’s first semiconductor company, United Microelectronics Corporation (NASDAQ: UMC) led the development of the commercial semiconductor industry in Taiwan. It was the first local company to offer foundry services, as well as the first semiconductor company to list on the Taiwan Stock Exchange (1985). UMC is responsible for many local industry innovations, including the introduction of the employee share bonus system, often credited as a primary factor in the development of a prominent electronics industry in Taiwan. UMC also enables customers to access complete supply chain information online through the MyUMC online service portal, an industry first when it was introduced in 1998.
UMC is a leading global semiconductor foundry that provides advanced IC production for applications spanning every major sector of the electronics industry. UMC’s robust foundry solutions enable chip designers to leverage the company’s sophisticated technology and manufacturing, which include high volume production 28nm gate-last High-K/Metal Gate technology, 14nm mass production, ultra-low power platform processes specifically engineered for Internet of Things (IoT) applications and the automotive industry’s highest-rated AEC-Q100 Grade-0 manufacturing capabilities for production of ICs found in cars. UMC’s 11 wafer fabs are strategically located throughout Asia and are able to produce over 600,000 wafers per month. The company employs over 19,000 people worldwide, with offices in Taiwan, China, Europe, Japan, Korea, Singapore, and the United States.
Besides its main listing on the Taiwan Stock Exchange, UMC is also listed in Nasdaq.
The weekly historical line chart of UMC is simply too obvious. There is no love for this stock since the inception of trading in the second half of 2000. That coincided with the dotcom bubble collapse which saw the stock price experience plunging hard from its top at 12 USD.
Before even stabilizing at around 4-5 dollar, this stock was once again in the midst of global financial crisis in 2008 that caused the stock price to pummel into a penny stock at around 1.50 by Oct 2008. Price was once again testing the low of 1.50 in Aug 2015 but it was well supported and hence, the slow and lengthy recovery began. By end of April, price is setting up for a launch to challenge this downtrend line.
If this stock price is able to break above 2.80 and carry through, the entire fundamental outlook of this stock would change. And, for years to come, it will be able to rise until it might revisit 12 dollar at a certain point (we do not put our price target there but do not exclude this scenario neither).
However, we want to be more modest in our approach. For the bullish case, we anticipate price to challenge ~3.4 and ~4.2 in mid term. And then 5.1 is the biggest hurdle where it was hit hard. As long as the economy is growing steadily and demand of the service is high, any more potential upside is possible.
What happens if price fails to break above and get rejected very hard? We will consider it as more consolidation needed.
The next major support sits around ~2.1. Below this price, we will take the bearish stance and 1.5 will be the final make or break level if it fails to support.