Which stock will you choose? Harmony Gold Mining Company Limited (HMY) or Taiwan Semiconductor Manufacturing Company Ltd. (TSM)

The shares of Harmony Gold Mining Company Limited (NYSE:HMY) and Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) were among the active stocks of the last trading sessions. Harmony Gold Mining Company Limited (NYSE:HMY) soared to 15.91% closing at the price of $2.04 whereas the shares of Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) declined -1.04% with the decrease of -0.41 points closing at the price of $38.94. Harmony Gold Mining Company Limited has currently decrease -2.39% in its stock over the period of 6-months while its rival Taiwan Semiconductor Manufacturing Company Ltd. subtracted -8.7% in the previous 6-months.

Now we have to analyze the facts that if the stocks were worthy off investors’ money? The facts to analyze here are risks, profitability, returns and price trends.

Returns and Profitability

Profitability and returns are the main reason of investment, the investors are looking for profits that they get and return they should expect over the period of time.

The first and foremost return that is considered while making an investment is the ROI or Return on Investment. The ROI is the ratio between the profit against the cost of investment. Currently the ROI of Harmony Gold Mining Company Limited (NYSE:HMY) is 1% while the ROI of Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) is 19.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, HMY’s EBITDA Margin is 3.71 whereas TSM’s is 8.84.

Both the profitability ratios suggest that Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) is more suitable investment in terms of profitability and return.

EPS & Surprise Factor
Technical Analysis of Harmony Gold Mining Company Limited & Taiwan Semiconductor Manufacturing Company Ltd.

Moving average convergence divergence (MACD) shows that Harmony Gold Mining Company Limited (NYSE:HMY) is on a PRICE RELATIVITY trend While Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Harmony Gold Mining Company Limited was in BULLISH territory and Taiwan Semiconductor Manufacturing Company Ltd. was in BEARISH territory.

HMY’s current statistics gauge that the stock candle is BULLISH with HIGH volatility. While TSM’s candle is BULLISH with HIGH.

EPS Growth Rate: HMY’s 0% versus TSM’s 15%

Another shareholder value can be analyzed through the EPS growth rate; the next 5 years EPS growth rate is predicted by the analysts after the analyzing the previous trends. The next 5 year EPS growth rate of Harmony Gold Mining Company Limited (NYSE:HMY) is predicted at 0% while Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) stands at 15%. These numbers suggest that TSM is more suitable investment in terms of EPS growth rate.

Financial Risk and Liquidity Concerns

The current ratio and the debt ratio are the two ratios that show the investor how quickly the company is able to payout its debt and how quickly it can cover its obligations. The current ratio of HMY stands at 2.2 while TSM is at 2.1 whereas the debt ratio of the prior is 0.09 while the debt ratio of the later is 0.09.

The values of the both ratios suggest that one is more liquid and other investment is more risk free.

Analyst Recommendations

While making an investment, another main factor to consider before investing is the analyst recommendation on the scale of 1 to 5 where 1 is strong buy, 2 is buy, 3 is hold, 4 is Sell and 5 is strong sell. Analyst recommend 3 for HMY and 2.2 for TSM which means HMY has Hold rating whereas TSM has Hold rating.

Another recommendation of analyst that is to be considered worthy is the price target. The mare price or price trend does not suggest the suitability of a stock. The price target set by analyst is also to be considered while investing as it suggests to what extent the stock will rise or fall in the near future. The price target set for HMY is $2.43 which is 16.05% of its current price while TSM has price target of 48.36 which is 19.48% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

HMY currently has price to earning P/E ratio of 0 whereas TSM has 17.73 while the forward P/E ratio for the prior stands at 8.16 and for the later it depicts the value of 15.42.

The price to Book P/B for HMY is 0.45, Price to Sale is at 0.75 and for TSM these ratios stand at 4.18 and 6.12.