Chris Forte’s “Thoughts to Start the Day” – RELL

Posted on June 16, 2022 by Scott Shuda

What if your dad started wearing skinny jeans, playing frisbee golf, and listening to Bruno Mars with his Beats by Dre? It would get your attention.

75 year old Richardson Electronics (RELL) has undergone a transformation that should get your attention. For decades they have custom engineered electronic tubes and modules. Today, as they say, they are hitting “home runs” with new products. The suddenly “hip” company has found itself in high demand in sexy and booming fields of green energy and ESG.

Says author Paul Franke on Seeking Alpha, RELL has “a potential category killer product for ESG wind turbine owners, while progress is being made to adapt the idea for wireless towers, railroad locomotives, and solar power plants, anything needing cheap and quick energy storage. The invention is called the ULTRA3000 capacitor, which can economically serve as a type of energy storage device, replacing expensive, short-life and heavy metals-based batteries.”

Wind turbines have batteries at their base. There are tens of thousands of wind turbines that could benefit from RELL’s patented ultracapacitor. The same with over 300,000 cell towers.

They have an exciting battery replacement project underway with a division of Caterpillar for their 39,000 locomotives at $1M a pop.

They now make “magnetrons” for customers that produce synthetic diamonds, recycle old rubber tires into floor tiles, and convert methane gas into acetylene and hydrogen, also called “the gas of the future.” As I said, RELL is now a green power play in a big way.

And just like your dad Richardson is cheap, dirt cheap for a growth stock, with no debt and trading not far from book value. While the scope of “Thoughts for the Day” can’t go into the details, here are some nuts and bolts (fiscal year ended May) . . .
2021 $170M
2022 $224M
2023 est. $255M+
Strong balance sheet, $40M cash
Backlog of $206M
1.66% yield
2022 around a buck and “Over the next few years climb to $2.55. These are exciting times for us,” said the CEO. ““We are a table with six legs and five of them are on fire.”

An analyst said on a recent call, “It’s hard to find something in this market that comes anywhere close to a 20% plus top line grower trading at a single-digit cash-adjusted multiple. It seems like the wind turbine business could generate a substantial portion of what the company generated in revenues all of last year in a year or two. And if you cash adjust your share price, you’re trading at 9x earnings, which is basically almost like you’re going broke.”
*Wharton professor and renowned economist Jeremy Siegel says the S&P 500 has already priced in a recession and bear market. The S&P 500 is now trading at roughly 17 times forward earnings, and if you exclude tech stocks, the figure is even more impressive at just 13 times earnings. “You rarely see it that low,” Siegel said. – Fortune Magazine

*Pandemic savings drove inflation, now inflation is draining savings. – NPR’s Marketplace.

*$200B has been erased from the market since Saturday in the cryptocurrency sell off

*CNBC’s Joe Kernen: Do Republicans take one kind of economics class and Democrats a different class? Because they are 180 degree apart on how economics work.

*Airliner Volaris (VLRS) made Evercore’s Best SMIDCAP Core Ideas list. “We believe Volaris is seeing continued strong demand and is having success increasing fares. They’ve developed structurally higher market position vs. pre-pandemic and is well positioned to profitably harvest air travel demand growth in Mexico over time.”

*What percent is the NASDAQ down this year? 31%. Ouch.

*On the Feed Alex Bailao posts news from Las Vegas that a diamond industry show had strong “positive vibes” with good sales amid supply constraints. Florian Buschek also has a new CEO update with diamond miner DMIFF.

“I would like to die on Mars. Just not on impact.” – ELON MUSK

Good luck to all – Chris

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