Richardson Electronics (RELL, Financial) was added to the portfolio in Chip Rewey's Rewey Asset Management 1st-Quarter Letter 2024 Q1, driven by its strong balance sheet and multiple growth avenues. The company is positioned in both semiconductor manufacturing and green energy sectors, with significant inventory backed by long-term orders.
"We added shares of Richardson Electric Company (RELL, Financial) in 1Q24, as we see a strong balance sheet, compelling upside potential with multiple avenues to grow, a solid financial profile with net cash on the balance sheet and significant investor neglect. Richardson’s products include electron tubes and microwave generators, old technologies that are finding new life in the semiconductor manufacturing industry and in multiple green energy applications. RELL has a strong financial profile. RELL has over $22 million net cash on its balance sheet and no debt. RELL has $116 million in inventory – a level exceeding its March 31st enterprise value of $110 million – with roughly 90% in finished goods inventories. Importantly, these inventories are supported by long-term orders, such as supplying GE windmill battery replacement units. RELL forecasts returning to a positive free cash flow position in FY25 (May), as sales recover, and inventory is delivered." — Chip Rewey, Rewey Asset Management, Q1 2024 Fund Letter
Read full letter at gurufocus Chip Rewey's Rewey Asset Management 1st-Quarter Letter 2024 Q1 page.
