Posted on July 21, 2022 by Scott Shuda
Need an upbeat view? Bill Nygren, Oakmork Portfolio Manager had this to say . . .
“Regarding concerns about a recession and inflation and being in a bear market, our research shows there’s no evidence at all that once you know these are the conditions that you can profit from it by getting out of the market. So many people act as if because there is a recession or high inflation that we should be conservative but…it’s too late. As prices get lower it’s more opportunity and we get more excited about forward returns.
“Any value investor enjoys this kind of volatility. There is a lot of opportunity out there. The sad thing is the curse of value investing is – no one wants to give you money when the opportunities are there.”
Oakmark likes Disney and Amazon – both he considers very undervalued. They are also buyers of Etsy and Oracle.
In a recent fund letter, Nygren said, “The sell-off in the enterprise software sector, combined with the complexity related to the acquisition of Cerner, provided an opportunity for us to re-establish a position in Oracle. Oracle is one of the world’s largest and most profitable software companies—generating more than $42 billion in revenue and 40% operating margins. We have always admired the stability of Oracle’s business and the strength of its customer relationships.
“Now, the company’s organic growth is beginning to accelerate. Specifically, total revenue grew 7% in fiscal year 2022 and 10% in the fourth fiscal quarter. In addition, management believes that Cerner’s growth and margins can be higher under Oracle’s ownership than it could on a standalone basis. Finally, we commend Oracle’s repurchase of roughly half its share base over the past decade, which has nearly doubled each remaining share’s interest in the business. Trading for only 12x calendar 2023 earnings ex-cash, we believe Oracle’s risk/reward is attractive.
China is building 172 coal power stations, Indonesia 56, India 47, Vietnam 11. We can do a lot of things ourselves here but without the cooperation of the rest of the world that is energy hungry, new sources of renewable energy are not going to give their citizens the life they’ve come to expect. It’s just not working. If we are unilaterally trying to do that it’s not going to work. Europe is over a barrel because of renewables which emboldened Putin and allowed the invasion. It encourages dictators. – Joe Kernen
*AEHR finished the day up 29%, ending at $11.84 with over 4M shares traded. Net sales were $20.3 million, up 166% from $7.6 million in the fourth quarter of fiscal 2021. Kudos again to Breakout Investor Ashleigh Day.
*Richardson Electronics (RELL) reported Q4. Net sales of $61.6 million were up 22.1%. Backlog increased to $206.2 million in the fourth quarter versus $175.6 million at the end of the third quarter and $110.0 million at the end of the fourth quarter of last fiscal year. EPS was .59 vs .14.
*Who needs Netflix? Aaron’s Monthly Elite Call Recording 7-20-22 is available to Elite Subscribers.
* Put a sock in it: A man in Missouri says in a class-action lawsuit against Bass Pro that the outdoor outfitter is refusing to honor the lifetime warranty on his four pairs of socks.
“It is so hot, people are ordering Chipotle just so the E. coli can give them the chills.” — JIMMY FALLON
Good luck to all – Chris
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