At the beginning of the year, I bought a position in United Microelectronics Corporation ($UMC). I liked its growth prospects with historical earnings growth of 19%, a reasonable PE of 15, accelerating sales growth, and a yield of 2.45%. With its strong balance sheet (Altman-Z = 4.26), it seemed like a no brainer. After calculating a present value of $7.27-$25.17, it seemed like a good opportunity to make money. Then, 2022 happened.
Currently, the price of the stock sits at $6.11, way down from its initial price of $11.70 at the beginning of the year. Even if one factors in the healthy dividend, which was increased by 80%, I am down 44%. This, however, really makes no sense.
Currently, the company is reporting robust revenue growth. Based on YoY, UMC’s revenue is 37% better than the same period in 2021. Consequently, it should be doing better, but it is 2022, where nothing is rational.
As I see it now, the company is worth somewhere between $8.88-$23.99 right now, and has a current dividend yield of 4.69%.
I know it’s just one example, but this serves as anecdote that the 2022 stock market is completely irrational. At least, how this stock has performed is irrational, and I believe there is an opportunity here.
https://www.businesswire.com/news/home/20221006005432/en/
https://www.umc.com/en/IR_Financial/monthly_sales_revenue
