In the beginning of the yr, I purchased a place in United Microelectronics Company ($UMC). I favored its development prospects with historic earnings development of 19%, an inexpensive PE of 15, accelerating gross sales development, and a yield of two.45%. With its robust steadiness sheet (Altman-Z = 4.26), it appeared like a no brainer. After calculating a gift worth of $7.27-$25.17, it appeared like an excellent alternative to earn cash. Then, 2022 occurred.
At the moment, the value of the inventory sits at $6.11, approach down from its preliminary worth of $11.70 initially of the yr. Even when one elements within the wholesome dividend, which was elevated by 80%, I’m down 44%. This, nevertheless, actually is mindless.
At the moment, the corporate is reporting sturdy income development. Based mostly on YoY, UMC’s income is 37% higher than the identical interval in 2021. Consequently, it needs to be doing higher, however it’s 2022, the place nothing is rational.
As I see it now, the corporate is price someplace between $8.88-$23.99 proper now, and has a present dividend yield of 4.69%.
I do know it is only one instance, however this serves as anecdote that the 2022 inventory market is totally irrational. At the least, how this inventory has carried out is irrational, and I consider there is a chance right here.
https://www.businesswire.com/information/residence/20221006005432/en/
https://www.umc.com/en/IR_Financial/monthly_sales_revenue
