Tariff fears have gripped the economy in recent weeks. Slight increases in tariffs between several nations, coming off of decade-low levels, make for scary headlines. And higher tariff rates will mean a shift in economic fortunes.
Fortunately, it’s not the end of the world. With this selloff, many companies that may appear to be in the crossfire of changing tariff rates may be setting up for a strong buy now.
For instance, Taiwan Semiconductor (TSM) is a foreign firm that’s responsible for the physical manufacturing of most chips designed by American chipmaker firms.
Shares have sold off about 18% since the start of the year, but with the company building a facility in the United States, and being a key supplier, it’s likely to avoid any significant tariff impact.
That makes it a potential winner to target in for the months ahead. The recent selloff has taken shares down to 19 times earnings, and TSM has as strong balance sheet to weather any feared economic slowdown.
Action to take: Investors may want to accumulate shares here, and use any market weakness to add to that position. At current prices, TSM also pays a 1.6% dividend.
For traders, the June $175 calls are heavily traded. Last going for about $8.40, the options could see mid-to-high double-digit returns on an oversold rally in the weeks ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.