Take Samsung (XKRX:005935, Financial), which has technology leadership in semiconductors, foundry, display, mobile phones, and appliances and strong growth potential from new markets like 5G, AI, and automotive businesses. Samsung's preliminary operating earnings for the quarter were more than $10 billion and the preferred shares, net of cash and excess investments, trade at about 7 times our expectation of next year's earnings. During the quarter, Samsung announced a huge $6.6 billion contract with Verizon to provide 5G equipment and build out. We wonder what valuation that business alone would get if publicly floated given the crazy enthusiasm for IPOs these days, but in the larger structure of the company, that unit is lost to many.
Samsung's shares rose with a solid rebound in profits and general strength in global technology shares. We think there could be a significant improvement in earnings across many of Samsung's businesses next year and the shares represent an unusually compelling bargain.
From Yacktman Focused Fund (Trades, Portfolio)'s third-quarter 2020 commentary.
