There are times when the market is a volatile mess and the economy’s either on thin ice or in the toilet. Everyone knows that’s when the real scores are made. And then push comes to shove and almost everyone tends to either buy too soon or, worse, sell at the worst possible moment.

Fortunately, this isn’t one of those times. The global economy is accelerating, with manufacturing surveys signaling strong growth in Europe and the U.S. and moderate expansion across much of Asia. Stock markets around the world are up as well, led so far in 2017 by the technology sector and the Asia-Pacific region.

In times like these when the trend is so clear, it’s important not to overthink things. It will only cost you money.

What do I mean by overthinking? Like, you could find any number of plausible reasons not to invest in Taiwan Semiconductor Manufacturing (TSM).

Chips are a notoriously cyclical industry, and the current upswing won’t last forever. Plus, the world’s leading foundry – that is, a contract chip maker catering to “fabless” designers – already controls 56% of this $50 billion market, so how much more dominant can it get?

That would definitely be overthinking it, because the current macro trend is Taiwan Semi’s friend, just as it’s ours. The company is benefiting from booming demand for smartphones in China and elsewhere. Smartphones drive two-thirds of Taiwan Semi’s revenue; Qualcomm (QCOM) and Apple (AAPL) are its leading customers. Apple shares are at a record high, as are Taiwan Semi’s.

Source: Taiwan Semi

Apple made Taiwan Semi the exclusive supplier of the system-on-the-chip for its newest models. Next month TSM is expected to begin mass production of the chips that will power the upcoming iPhone 8. These use the cutting-edge 10-nanometer fabrication process to produce circuitry 100 times finer than spider silk. Denser logic lines enable smarter phones that are also less power-hungry.

Taiwan Semi’s lead in the 10-nanometer race is even wider than its overall advantage over the smaller foundry rivals. That’s translated into record and still growing margins. Gross margin hit 50.1% for 2016 and was forecast to grow to 51.5-53.5% in the current quarter. Sales grew 12% last year and are expected to rise 5-10% in 2017.

All this cyclical goodness is currently priced at about eight times EBITDA based on TSM’s enterprise value. Taiwan Semi also pays a dividend currently yielding 2.3% based on last summer’s annual payout.

The Apple contract wins have given Taiwan Semi a leg up on archrival Samsung, which has struggled financially and commercially of late as its tablets and washing machines developed a reputation for exploding. TSM has also just passed Intel (INTC) in market capitalization, a milestone for their diverging fortunes. Intel and the computer chips its supplies have been dethroned by the smart phone revolution filling Taiwan Semi’s coffers.

The semiconductor cycle isn’t going to end next month; it will run out of steam much later than that and with Taiwan Semi’s shares priced significantly higher, I expect. We’re adding TSM to the portfolio with a buy limit of $41.

— Igor Greenwald

Portfolio Update

We are narrowing down the scope of the Breakthrough Tech portfolio to reflect a very different set of circumstances than what prevailed three years ago when we launched this service. At that time the global economy was still struggling to regain its footing, while central bankers in the U.S. and abroad were working overtime to boost growth.

Things are different now. The Fed is raising rates to fend off inflation as the Trump administration pursues policies radically different from Obama’s. The stock market is responding to the signs of stronger global growth, and new winners are emerging.

To make room for them in our portfolio we are clearing out some older recommendations we still think are solid but not as likely to outperform the market as the ones we will continue to add in the weeks and months to come.

The following positions are being removed from the portfolio:

2U (TWOU)

Broadridge Financial (BR)

Organovo (ONVO)

Points International (PCOM)

Please use the Stock Talk feature below if you have a specific question about any of them.

— Jim Pearce