RedHat - Have we been asleep at the wheel?

Every now and then there I come across a stock where the story fits with our investment strategy as well as a familiar sector domain and the story is as clear as day.

Red Hat has been acing it for a while now. It has re-accelerated revenue growth hitting the 20%+ rate whilst adding subscription revenues at an even higher rate and with leverage blowing out the bottom line (certainly on a GAAP basis).

I have friends who work for them who remind me how fast things are growing at Red Hat over here in Asia whenever I see them.

Even Bert holds this stock and has covered it of late.

The stock has practically doubled in a year and the chart is work of art and the market cap is still only $27Bn.…

There weren’t really any excuses, however now the P/E is 80 and the PEG has gone from below 1 to well above 1 perhaps we have missed our chance. Nonetheless it is a reminder to not be blinded by obvious candidates staring at us in plain sight.



In listening to yesterday’s episode of Market Foolery, Tim Hanson mentioned that RedHat is one of the 2 new companies being added to the Fool 100 with the quarterly re-balancing that is occurring between this Thursday and next Monday.

That change is not yet reflected on the holding page for the ETF (TMFC).

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So Saul mentioned Bert over at Reeking Flafel and Bert mentioned RedHat in a blog about VMWare and I bought a little of each.