How to Play ‘Small Ball’ With Market Hopes High? A Contrarian SaaS Trade

Avatar photo Bret Jensen on June 14, 2026

Friday saw the successful debut of Space Exploration Technologies Corp. ($SPCX) which became the largest IPO in U.S. history. 

Hope continues that an agreement with Iran will be reached soon to end the ongoing conflict and reopen the strategically important Strait of Hormuz. Details for this deal remain sparse and unclear.

I continue to remain conservatively positioned within my own portfolio and I am focused on playing “small ball” by making covered call trades. Today’s trade idea is around a SaaS concern, a sector that has become quite out of favor in recent quarters on growing concerns around AI disruption.

The company in question is called Klaviyo, Inc. ($KVYO). The company operates a customer relationship management platform that captures, stores and analyzes clients’ consumer data while providing AI-driven marketing and customer experience solutions. The stock currently trades around $14.00 a share and sports an approximate market capitalization of just north of $4 billion. The company came public in the summer of 2023 at $30 per. The equity hit its high-water mark of nearly $50 a share early in 2025 and consistently has moved consistently down from there.

This software-as-a-service (SaaS) technology concern has nearly 200,000 clients – primarily retail and e-commerce – in 100-plus countries across the globe. The platform’s capabilities fall across omnichannel marketing, customer service and data and analytics. Klaviyo’s offerings allow shoppers to track orders, search for products, redeem rewards, manage subscriptions and receive customer support. Klaviyo also provides its clients an AI-powered 24/7 automated support function featured across digital channels that answers customer questions, resolves issues and completes purchases. On the data side, the platform can amalgamate customer data and provides tools for clients to run advanced reporting and predictive analysis.

All of these capabilities are provided via a subscription-based service. One of the best traits of this company is its pristine, debt-free balance sheet that held net cash of nearly $1 billion at the end of Q1. In March, the company authorized a large $500 million stock buyback authorization and utilized $100 million for repurchases in March. Leaving $400 million left on the program which would retire nearly 10% of the outstanding float at current prices.

Despite worries around AI disruption, the company posted Q1 numbers that bested both top- and bottom-line expectations and management slightly boosted forward guidance. The current analyst firm consensus is that over the next few years Klaviyo will see annual profit growth in the low to mid-20s on a revenue CAGR of 20% from 2026 to 2028.  Given that, the stock trading at 16.5 times forward earnings is more than reasonable. It is cheaper still considering the large amount of net cash on the company’s balance sheet. I can also either generate a solid return or garner a significantly lower entry point with the following covered call trade around Klaviyo below.

Option Strategy:

Here is how one can establish a position in KVYO using a covered call strategy.

Selecting the January $12.50 call strikes, fashion a covered call order with a net debit in the $9.70 to $10.10 a share range (net stock price – option premium). This strategy delivers downside protection of 30% across the trade expiration. This strategy provides 21% upside potential over the option duration even if the stock trades down just over 10% over the option duration.

At the time of publication, Jensen was long KVYO.

New Oracle Price Target After Earnings Raise OpenAI Question

Avatar photo Stephen Guilfoyle on June 11, 2026

On Wednesday evening, tech giant/AI platform provider Oracle ($ORCL) released the firm’s fiscal fourth quarter financial results. For the three-month period ending May 31, Oracle posted an adjusted EPS of $2.11 (GAAP EPS: $1.45) on revenue of $19.184 billion. The top- and adjusted bottom-line results both beat the consensus view as that sales number was good for year-over-year 20.6% growth.

The GAAP bottom-line number, however, fell just short of what Wall Street had in mind. Adjustments were made for restructuring costs, which is legitimate and for the purpose of stock-based compensation. Oracle went public in 1986. The fact that the firm is still not recording an expense they make every quarter 40 years later as an ordinary operating expense is just absurd. Just be straight with us, dudes.

Before we begin, readers should be fully aware that I have been critical of Oracle’s balance sheet in the past and have also been critical of the fact that the firm’s huge remaining performance obligation (RPO) never seems to turn into deferred revenues, which would make no sense if those orders were reliable.

I have had a negative take on ORCL since mid- to late 2025 and that opinion has proven itself worthy over that timeframe. The shares are down 47.7% from their $345.72 September 2025 high and have struggled even when other AI-focused names have performed well.

The Quarter Reported…

  • Record Remaining Performance Obligations grew $85 billion from $553 billion to $638 billion
  • Record Total Cloud Revenues of $9.9 billion, up 47% year over year
  • Cloud Infra (IaaS) Revenue of $5.8 billion, up 93% year over year
  • Cloud Apps (SaaS) Revenue of $4.1 billion, up 10% USD year over year

Guidance

For the current quarter, Oracle is looking for revenue growth of 27% to 29%. Total cloud revenue is seen at growth of 58% to 64%. Finally, adjusted EPS for the quarter is projected at $1.72 to $1.76, taking the low end of the range above the $1.69 that Wall Street was looking for.

For the full fiscal year just started, the firm sees total revenue of $90 billion, which was well above the $88.5 billion consensus view. This would produce an adjusted EPS projected at $8.05, which landed precisely upon consensus.

Fundamentals

For the quarter reported, Oracle generated operating cash flow of $31.977 billion. Out of that number came capex spending of $55.663 billion, leaving “free” cash flow of $23.686 billion. This was, for Oracle, the firm’s fifth consecutive quarter of cash burn.

Turning to the balance sheet, Oracle ended the period with a cash position of $31.894 billion, leaving the firm with current assets of $46.567 billion. Current liabilities add up to $41.764 billion. This includes short-term debt of $7.199 billion and deferred revenues of $9.916 billion. At the headline, the firm’s current ratio runs at 1.12. Adjusted for those deferred revenues, this ratio rises to 1.31 which, while not robust, does pass muster.

Total assets amount to $261.759 billion. Of that number, goodwill or other intangibles account for less than 24% which is not outlandish in 2026. Total liabilities less equity comes to $218.703 billion. Of that total, long-term debt comes to a whopping $122.342 billion. While I would not necessarily consider this an especially weak balance sheet, I don’t think anyone would marvel at its strength. Cash is burning and the debt load just keeps growing. Oracle cannot do what it has been doing indefinitely.

Opinion

The firm is profitable. That’s not in question. Should ORCL trade at 25-times forward looking earnings? That is a good question. The debt load is out of control. Cash flows seem to be, thanks to the AI up-spend, perpetually negative. The balance sheet is not super strong. Oh, and I have a question: If the firm has a remaining performance obligation of $638 billion, then how in the world are there only deferred revenues of $9.9 billion on the liability side of the balance sheet?

It is said that OpenAI accounts for more than 50% of that order backlog. If OpenAI is not putting any cash down on those orders, are they reliable?

Readers will see that what had been a rising-wedge pattern morphed into a head-and-shoulders pattern of bearish reversal. Relative strength is below neutral while the stock’s daily MACD is postured quite negatively. If I were involved in ORCL, I would see the downside pivot at $176 and the target price at $160.

At the time of publication, Guilfoyle had no positions in any securities mentioned.