[SPEAKER_02]: On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is Invest Talk.
[SPEAKER_02]: Independent Thinking, shared success.
[SPEAKER_02]: Invest talk is may possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.
[SPEAKER_02]: Here is KPP Financial Chief Executive Officer, Financial Advisor, Justin Clyde.
[SPEAKER_01]: Good afternoon, fellow investors.
[SPEAKER_01]: Welcome back to Investock.
[SPEAKER_01]: This is our Tuesday, July, fifteenth, twenty twenty five, edition of Investock.
[SPEAKER_01]: And we're halfway through the month of July and just beginning earnings season.
[SPEAKER_01]: We had some reactions today.
[SPEAKER_01]: Certainly the market had a a rougher day than it's had in a little while.
[SPEAKER_01]: Now that could that pretend to the moves over the next couple of months, potentially.
[SPEAKER_01]: But we'll look at that.
[SPEAKER_01]: Really answer your finance and investment questions.
[SPEAKER_01]: That's what this show is about.
[SPEAKER_01]: It's about what's on your mind.
[SPEAKER_01]: I want to help you take that next step in your own version of financial freedom.
[SPEAKER_01]: Everyone starts in a different place.
[SPEAKER_01]: Everyone's goal is a bit different.
[SPEAKER_01]: But the principles are the same.
[SPEAKER_01]: And we're here to give you that foundation that mindset so that you can
[SPEAKER_01]: see through the headlines so that you can avoid the emotions of investing and really focus on the task at hand, which is making smart decisions from a personal finance standpoint as well as when you're investing a risk rewards standpoint.
[SPEAKER_01]: Okay, so that's what this is all about here on a best talk.
[SPEAKER_01]: It's further educating you as our listener and helping you achieve your ultimate goal.
[SPEAKER_01]: Now, just a bit, we'll talk about today's Mark performance and run down some show topics, but as usual, tackle this call a question first.
[SPEAKER_04]: Hi, can I have your opinion on buying this stock or a long term investment?
[SPEAKER_04]: If PI, thank you so much.
[SPEAKER_01]: Are you looking at farmland partners?
[SPEAKER_01]: This is a re that owns high quality
[SPEAKER_01]: Cropland farmland with a hundred thirty two thousand acres and fifteen states here in the United States now two point one percent yield so not a high yield compared to a lot of other reads that are out there so that's one thing to consider but as you know having a low or high yield isn't there's not the end of the story
[SPEAKER_01]: It's just part of the story.
[SPEAKER_01]: Let's look at the rest of the story.
[SPEAKER_01]: A five hundred thirteen million dollar market cap with about three hundred million dollars in debt.
[SPEAKER_01]: So good amount of debt and free cash flow is pretty meager only about ten million dollars in free cash flow.
[SPEAKER_01]: I don't love that.
[SPEAKER_01]: And it's pay our ratio is one hundred and eleven percent.
[SPEAKER_01]: So what I'm seeing is
[SPEAKER_01]: is a dividend that's probably is not going to grow.
[SPEAKER_01]: And is probably at risk of eventually being cut.
[SPEAKER_01]: In fact, if you go back to twenty eighteen, they were paying twelve cents, twelve oms, thirteen cents a quarter.
[SPEAKER_01]: Now they're down to six cents and they've been there really ever since.
[SPEAKER_01]: Twenty twenty three.
[SPEAKER_01]: And that debt level, I don't love.
[SPEAKER_01]: And if you look at funds from operation and expectations for this year, this will be up three percent, and then another three percent next year, from twenty nine cents last year to thirty cents this year to thirty one cents next year.
[SPEAKER_01]: On an eleven dollar and seventeen cents thought.
[SPEAKER_01]: That's pretty expensive.
[SPEAKER_01]: This is more of a, it's a land grab.
[SPEAKER_01]: It's a farm land grab.
[SPEAKER_01]: And that's what you are buying for.
[SPEAKER_01]: Not because it's a great business.
[SPEAKER_01]: Not because it has a great balance sheet, because frankly, neither are true.
[SPEAKER_01]: It doesn't have great cash flow.
[SPEAKER_01]: It's not trading at a particularly cheap price compared to earnings, funds from operations, cash flow, et cetera.
[SPEAKER_01]: But it is, if you're looking at a book value basis, it's trading a little over one times book, which is on the cheap side.
[SPEAKER_01]: I get to dig into the details of that.
[SPEAKER_01]: portfolio and see, you know, what is the true value?
[SPEAKER_01]: And that's that's very difficult to do in this sense, especially for the average person.
[SPEAKER_01]: So, you know, I, I look at the, the business, not amazing.
[SPEAKER_01]: I look at the technicals.
[SPEAKER_01]: I zoom out to a weekly chart.
[SPEAKER_01]: I see nothing exciting here either.
[SPEAKER_01]: So unless you just want exposure to land values, farm land values, I don't really see a compelling reason to buy this rate over many others that better out there.
[SPEAKER_01]: I think this is very low on the list.
[SPEAKER_01]: Unless you really want that specific focus of I want to own farm land, a diversified amount of farm land.
[SPEAKER_01]: Beth the only logical reason to own this e-read.
[SPEAKER_01]: Now we have a lot of ground to cover over the next forty-five minutes or so and our main focus point is about good and bad debt.
[SPEAKER_01]: What is the difference between good debt and bad debt?
[SPEAKER_01]: Where are the gray areas?
[SPEAKER_01]: Where are the factors to consider when you're thinking about taking on debt and whether it's likely a good path forward or not?
[SPEAKER_01]: In addition, we have other topics on the docket.
[SPEAKER_01]: One is in regards to the banks, and not really the big banks, these smaller banks, because the smaller banks tell you a lot more about the broader economy than those larger banks, especially in this environment, and we'll talk a little bit about why.
[SPEAKER_01]: Also, does America have Dutch disease?
[SPEAKER_01]: We'll talk about what that is and whether or not we have it.
[SPEAKER_01]: Then lastly, if we have time, a lot of people are being forced into retirement, maybe slightly before they would like to.
[SPEAKER_01]: Maybe in their late fifties, early sixties, maybe into their mid the late sixties, but not wanting to retire.
[SPEAKER_01]: but being pushed into it.
[SPEAKER_01]: And we'll talk about that as well.
[SPEAKER_01]: If we have time, we also have voice bank questions.
[SPEAKER_01]: One is in regards to DoorDash and the other is Opera, OPRA.
[SPEAKER_01]: We also have some questions that came in via the comment section over on the Investor on YouTube channels.
[SPEAKER_01]: Well, and of course, I welcome your finance and investment questions right now.
[SPEAKER_01]: So we're heading into a break.
[SPEAKER_01]: I welcome your questions.
[SPEAKER_01]: No question is too simple for two complex.
[SPEAKER_01]: You set the agenda.
[SPEAKER_01]: So give a best talk with college eight, eight, nine, nine chart.
[SPEAKER_03]: Serious investors are certain to have finance and investment questions.
[SPEAKER_03]: Wanted to get your take on WW Granger and the best person to ask your question in the right way is you.
[SPEAKER_01]: I was wondering from your standpoint if they're at downside in buying fractional shares versus whole shares.
[SPEAKER_03]: and twenty-four seven rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased answers.
[SPEAKER_01]: The issue though is really over last decade or so.
[SPEAKER_01]: It's never maintained this level of profitability for a longer time.
[SPEAKER_01]: Modernies are incredibly volatile, so when the going is good, take some profit.
[SPEAKER_03]: Your participation makes an invest talk better.
[SPEAKER_03]: My name is Mike I'm calling in from Orange County, California.
[SPEAKER_03]: This is Lewis calling from Bolivia.
[SPEAKER_03]: Let's go talk to Chris and me.
[SPEAKER_03]: So don't forget to call Invest Talk.
[SPEAKER_03]: First of all, great show.
[SPEAKER_03]: I went a lot for you too.
[SPEAKER_03]: Hey, day eight, ninety nine chart.
[SPEAKER_03]: Invest Talk is here to help.
[SPEAKER_03]: And when you download the free Invest Talk podcasts, don't forget to rate and review.
[SPEAKER_03]: The phone lines are open.
[SPEAKER_03]: Eight, eight, eight, ninety nine chart.
[SPEAKER_01]: Now let's take a look at the market today for July, fifteen, twenty, five.
[SPEAKER_01]: It's overall it was a negative day.
[SPEAKER_01]: We closed near the lows on the day and you still have the NASDAQ.
[SPEAKER_01]: Eaking out a gain slightly of about thirty seven points by eighteen basis points.
[SPEAKER_01]: There's a point one eight percent but the S&P fell forty basis points.
[SPEAKER_01]: The Dow was down about one percent and really it was the values of the market that continued to struggle over the last couple of days and it was really around the bank.
[SPEAKER_01]: So if I look at a heat map here you had some pretty
[SPEAKER_01]: sizable moves.
[SPEAKER_01]: Wells Fargo down over five percent.
[SPEAKER_01]: Blackrock down almost six percent.
[SPEAKER_01]: American Express down three percent, but I think Blackrock and Wells Fargo, I believe they both had earnings there, but it wasn't just the banks.
[SPEAKER_01]: You also had names like Tesla down two percent.
[SPEAKER_01]: You had Eli Lilly and Abby, some of the bigger
[SPEAKER_01]: Farman aims, those were down pretty decisively.
[SPEAKER_01]: Mark was down decisively.
[SPEAKER_01]: You had Pfizer down decisively.
[SPEAKER_01]: So a lot of United Health continued to bleed.
[SPEAKER_01]: And the only thing I was holding up the market was in video, up four percent on the day.
[SPEAKER_01]: Broadcom up two percent on the day.
[SPEAKER_01]: AMD also stronger Oracle a bit stronger Microsoft up a little bit.
[SPEAKER_01]: And that was kind of it.
[SPEAKER_01]: That was kind of it.
[SPEAKER_01]: Everything else was red.
[SPEAKER_01]: We closed the lows of the day.
[SPEAKER_01]: And it felt like a certainly at least a potential for a near-term top.
[SPEAKER_01]: Now, that doesn't mean you have to.
[SPEAKER_01]: It doesn't mean that one day is not a trend.
[SPEAKER_01]: You need to follow through.
[SPEAKER_01]: Once again, we're getting into earning season and that's going to be an important dynamic to see how the market reacts and so far the market has not reacted positively.
[SPEAKER_01]: Now we did have June CPI, that rose point two percent month over month on the core side.
[SPEAKER_01]: but which was a bit lower than expected.
[SPEAKER_01]: Now the, oddly the year of a year was about in line on the core side of what was expected.
[SPEAKER_01]: But if you look at headline CPI, that was that point three percent month over month and a bit ahead of expectations.
[SPEAKER_01]: Expert expectations were for to come in year of a year at about two point five came in about two point seven percent year over year.
[SPEAKER_01]: Shelter inflation did rise point two percent month over month and that drove most of the overall increase okay you did see these acceleration and things like hotels use vehicles were down new vehicles were down air fairs were down a little bit so kind of the
[SPEAKER_01]: You know, a mixed bag shall we say.
[SPEAKER_01]: So on the inflation front, not a death meal or anything like that, but certainly a bit higher than expected.
[SPEAKER_01]: And the odds of a Fed rate cut in September,
[SPEAKER_01]: actually fell a little bit and so you saw the dollar rallying you also saw interest rates rise especially on the back end of the curve okay so you saw the thirty year up four basis points moving back above that all important five percent level
[SPEAKER_01]: And the two year yield was up five basis points.
[SPEAKER_01]: So once again, kind of pricing in a bit more hawkish of the Fed over the next couple of years, Bitcoin was down to point nine.
[SPEAKER_01]: So we had that breakout above twenty thousand, but we have fallen considerably below that level now.
[SPEAKER_01]: So it was it so far it's been kind of a false breakout.
[SPEAKER_01]: We'll see we'll see.
[SPEAKER_01]: Once again, do we get to fall through overnight and into tomorrow?
[SPEAKER_01]: The dollar was up point six percent.
[SPEAKER_01]: WTI crude was down point seven percent on the day and gold finished down point seven percent.
[SPEAKER_01]: So, you know, I said this as we get closer to opx, we are an opx week as we get into earning season.
[SPEAKER_01]: there and in closer to August and September, you know, the markets likely will at least at the bare minimum chop sideways and could bring you a decent correction due to seasonality, due to opx, gamma squeezing, squeeze unwinds, things like that.
[SPEAKER_01]: There's some market dynamics there that matter.
[SPEAKER_01]: But ultimately, that's what you saw today.
[SPEAKER_01]: Some weakness, especially into the clothes,
[SPEAKER_01]: and we'll see if we get more fall through tomorrow as we gain, or we see more earnings announcements.
[SPEAKER_01]: Now every day, we receive questions from the comment section of the Invest Talk YouTube channel.
[SPEAKER_01]: And let's answer one of those questions.
[SPEAKER_01]: Now Luke says, hello, Invest Talk, or would like to get thoughts on CL or Clares, that a terrible year-long losing fifty percent of its market value.
[SPEAKER_01]: I was thinking it might be an attractive time to buy, or at least keep an eye on
[SPEAKER_01]: You know, the company's book value is worth more than the stock price.
[SPEAKER_01]: And as a six PE, they also have paid a dividend for fifty five year straight.
[SPEAKER_01]: Is this a value stock?
[SPEAKER_01]: Or am I missing something interesting?
[SPEAKER_01]: Let's go dig into Colaris.
[SPEAKER_01]: C-A-L is the symbol here.
[SPEAKER_01]: And interesting, bringing up the book value of the company.
[SPEAKER_01]: Now, let's take a look at its leverage.
[SPEAKER_01]: Anytime a company falls, fifty percent like this, it did peek out around forty-four dollars per share.
[SPEAKER_01]: Now we're down to thirteen dollars per share.
[SPEAKER_01]: So forty-four was not that long ago, either.
[SPEAKER_01]: And yeah, that's the, that's the big question here.
[SPEAKER_01]: Is the div, is, is, is, excuse me, the, the debt.
[SPEAKER_01]: Turn to fifty eight million in a long term debt on a four hundred fifty two million dollar market cap and a free cash flow has now turned into basically zero free cash flow back in the third quarter of twenty twenty three peaked out at a hundred and eighty million dollars well now it's at just three hundred and twenty five thousand dollars so less than a million dollars trailing twelve months
[SPEAKER_01]: Okay, and last quarter you had a free cash flow at negative twenty six million.
[SPEAKER_01]: So we've dipped down into negative territory earnings are protected to fall thirty one percent this year dividend is two percent, but unless they were able to recapture their
[SPEAKER_01]: Cashflow that a dividend is likely to be eliminated at some point.
[SPEAKER_01]: They just don't have the cashflow for it right now.
[SPEAKER_01]: So, you know, I think while you are looking at coming from a book value perspective that is cheap, that debt is paying over it.
[SPEAKER_01]: And until I get clarity on that cashflow, I'm passing on it and certainly the chart remains challenged as well.
[SPEAKER_01]: So, I would continue to watch it, but I would not be buying it right now.
[SPEAKER_01]: There are moving no breaks till the company.
[SPEAKER_01]: I hope it's a point and more answers to your questions.
[SPEAKER_01]: Give me a call now and edit it.
[SPEAKER_01]: I need an answer.
[SPEAKER_03]: Have you heard about the new Invest Talk store?
[SPEAKER_03]: That's right, you'll find great merch for the savvy investor.
[SPEAKER_03]: It's all there for you now at investtalkstore.com.
[SPEAKER_03]: And now Justin Klein is here and taking your finance and investment questions live.
[SPEAKER_03]: Call Invest Talk.
[SPEAKER_01]: Our main focus point on the best talk today is about good debt and bad debt.
[SPEAKER_01]: Now there are some people like my grandfather who he would say that all debt, excuse me, was bad debt.
[SPEAKER_01]: But others take a more nuanced approach and I am one of those.
[SPEAKER_01]: Good or bad debt depends on what you're spending and on and the terms at which you borrow.
[SPEAKER_01]: Generally good debt allows someone to accomplish something, whether that is meaningful personal goals, or it is to add personal capital, mainly education, so that they can grow their value in the marketplace and grow their income.
[SPEAKER_01]: So let's talk about what is considered good debt and bad debt.
[SPEAKER_01]: And in a lot of times, it isn't black or white.
[SPEAKER_01]: In this world of right versus left, political polarization, I always like to say the world does not exist in extremes.
[SPEAKER_01]: The vast majority of things, political, non-political, financial, non-financial.
[SPEAKER_01]: There's usually an in-between.
[SPEAKER_01]: that is closer to reality than one side is right or one side is not.
[SPEAKER_01]: And that's same thing with good and bad.
[SPEAKER_01]: So most people think of good dust, start with good debt and I'll tell you when it can be good and when it can creep into bad.
[SPEAKER_01]: The first is mortgages.
[SPEAKER_01]: Most people will consider a mortgage on your home to be good debt because it's helping you accomplish the personal goals, lifestyle goals.
[SPEAKER_01]: Okay, for example,
[SPEAKER_01]: It allows you to be an owner and maybe change the home in ways that more fits your lifestyle and your needs.
[SPEAKER_01]: And it helps you build equity over time.
[SPEAKER_01]: But it can be bad if you are taking on too much mortgage debt at too high of the interest rate, paying things like PMI,
[SPEAKER_01]: or buying a quote unquote investment property, and your cash flow is deeply negative.
[SPEAKER_01]: So there's ways that mortgages can be bad for your financial health, but it does tend to be one if you're using it in the simple way, most do, which is, third year fix, try to keep that rate low, maybe pay a bit more on it, so over time, but it can be good debt for a lot of people.
[SPEAKER_01]: Number two, student loans for most people, younger, they're trying to further their education and they know what they want to do, it can be great debt to dig on.
[SPEAKER_01]: Because that's cost will be amortized over decades of work and the payback period is often very short.
[SPEAKER_01]: But that's only if you kind of know what you're doing.
[SPEAKER_01]: Or what you wanted it, what your career path is.
[SPEAKER_01]: I remember, back when I was in college, there were plenty of kids.
[SPEAKER_01]: I was lucky enough to know going into college what I wanted to do.
[SPEAKER_01]: But there were plenty of kids that were just there to be there, to enjoy college and fit, quote unquote, figure it out.
[SPEAKER_01]: Now I was lucky to go to college over a couple of decades ago and
[SPEAKER_01]: It felt expensive at the time, but it's way more expensive than this today.
[SPEAKER_01]: It's all right, way more expensive today than it was.
[SPEAKER_01]: So you have to really know what you're going to do if you're just kind of floating, trying to figure it out.
[SPEAKER_01]: Oftentimes, student debt can become very bad.
[SPEAKER_01]: There's a lot of those kids drop out, but they still have that debt, but they don't have the degree or our knowledge to really advance their careers.
[SPEAKER_01]: So it can turn into bad debt.
[SPEAKER_01]: Business loans.
[SPEAKER_01]: This can be good debt if you want to get.
[SPEAKER_01]: You have a business plan, you know, an ex-credit, you have some experience, but just taking out loans to start a business without really a clear direction and a clear understanding of how to make it in the marketplace, it can turn into bad debt very quickly.
[SPEAKER_01]: Then interest free loans.
[SPEAKER_01]: Interest free loans.
[SPEAKER_01]: Once again, can be good if you are making energy efficient improvements to your home, for example,
[SPEAKER_01]: getting zero percent loans for that and there are programs for that.
[SPEAKER_01]: You might be getting down payment assistant program.
[SPEAKER_01]: It's just in programs, for example.
[SPEAKER_01]: So there are ways to do this, but the bad that turns into bad debt when it's some sort of, like a buy now pay later.
[SPEAKER_01]: It's a, it's a, it's a, a gimmick, right?
[SPEAKER_01]: You get zero percent for X number of months or years and it's interest free.
[SPEAKER_01]: But if you don't pay it all off by the end of that period, you accrue interest throughout that time, and then you are charged at the end of that period.
[SPEAKER_01]: So you have to make sure that interest-free loans are truly interest-free, or if they are on some sort of payment plan that you make sure you pay that off by the end of the period.
[SPEAKER_01]: If you can't, then it can turn into very, very expensive and bad debt rather quickly.
[SPEAKER_01]: And that goes the same with refinancing debt.
[SPEAKER_01]: So a lot of times you'll get these offers in the mail to consolidate your credit card loans and refinance what you are existing currently paying on.
[SPEAKER_01]: That can be a good way to lower your overall interest rate.
[SPEAKER_01]: But if you instead use that out to go up your spending more, it can turn into debt.
[SPEAKER_01]: Okay, so it's really about how you use the debt and make sure you limit it, you limit the interest rate, and you use it for specific purposes as opposed to just discretionary fun.
[SPEAKER_01]: You definitely don't want to add debt for those reasons.
[SPEAKER_01]: Now we're heading into a break, but I'm ready to take your questions now, and I've best thought to edit it, and I need to make sure.
[SPEAKER_03]: The more you learn about how the market works, the better your chances for success.
[SPEAKER_03]: So don't forget to call, in Vestart.
[SPEAKER_03]: Hey, date eight, ninety nine chart.
[SPEAKER_00]: Hi, Justin, I'm actually a long time listener of your in Vestart podcast.
[SPEAKER_00]: Personally, I think your thoughts on tick the symbol DASH.
[SPEAKER_00]: Looking at DoorDash, which has been a high flyer at the plate,
[SPEAKER_00]: When you look at the earnings, you know, the various stats on the air, what who are you using to investigate other companies that come across your line?
[SPEAKER_00]: You know, I looked at Dash and I see the PE ratio is like three hundred and four, which seems astronomical to me.
[SPEAKER_00]: Why is there such hype about this stock?
[SPEAKER_00]: Why would anybody buy a stock with a PE ratio of three or four?
[SPEAKER_00]: I guess that's my question.
[SPEAKER_00]: Thanks a lot.
[SPEAKER_01]: Well, if you ever pop over to our YouTube channel, I do share my screens.
[SPEAKER_01]: You can see what I'm using in the data.
[SPEAKER_01]: And I use multiple sources.
[SPEAKER_01]: One is market surge.
[SPEAKER_01]: It's by investors business daily.
[SPEAKER_01]: That's just a good clean view of kind of the trends and earnings, both going forward within this year and next year as well as over the past.
[SPEAKER_01]: eight quarters and the future four quarters.
[SPEAKER_01]: I'll skip the chart profitability, P ratio, like you said, dividend all of that.
[SPEAKER_01]: So that's nice.
[SPEAKER_01]: I also use the thing called white charts.
[SPEAKER_01]: I also use something called facts set.
[SPEAKER_01]: So we have multiple tools to get data.
[SPEAKER_01]: A lot of that's overlapping, but for the show, you know, we quickly are able to I make quickly able to
[SPEAKER_01]: see what's happening with the business with some of these tools.
[SPEAKER_01]: So that's what I'm using, but obviously when we're doing deeper dives with for our clients, you know, moving into not just the data, but qualitative reports like Morningstar and other reports about leadership and the industry, et cetera.
[SPEAKER_01]: So there's there's deeper data that we're looking at, but when I'm on air, I'm kind of giving an overview of here.
[SPEAKER_01]: So, DoorDash, about ninety-five billion dollar market cap, and you're correct.
[SPEAKER_01]: It is at a pretty high period show.
[SPEAKER_01]: Now, forward looking, if you look at earnings for this year, next year, two, nineteen, this year, three, sixty, six, next year, it's not quite as agreed.
[SPEAKER_01]: It's still very high, you are correct.
[SPEAKER_01]: But you're talking about a forward looking P-Multiple of a seventy-five.
[SPEAKER_01]: That's still very, very high.
[SPEAKER_01]: So you're right.
[SPEAKER_01]: It is still expensive.
[SPEAKER_01]: Price is sales ratios, nine point three.
[SPEAKER_01]: That's very high.
[SPEAKER_01]: And frankly, I do think that what Dordash has a good business.
[SPEAKER_01]: At least right now, I think it's going to be highly cyclical.
[SPEAKER_01]: So I would not be buying at these levels.
[SPEAKER_01]: The market's pricing in a lot of great growth, a lot of
[SPEAKER_01]: cash flow creation over the the coming years which frankly has taken off.
[SPEAKER_01]: It was kind of neutral free cash flow for a while kind of hanging between zero and about three hundred million through twenty twenty twenty twenty one.
[SPEAKER_01]: And now it's at one point billion.
[SPEAKER_01]: So it's had a nice leg higher over the last couple of years.
[SPEAKER_01]: But once again, I'm not buying into that level of a multiple.
[SPEAKER_01]: after this move, I think it'll be a down cycle that you could buy into, but it has to come in dramatically, like you said.
[SPEAKER_01]: And for right now, I would pass on the door dash.
[SPEAKER_01]: Now let's play another fresh color question.
[SPEAKER_01]: Eighty.
[SPEAKER_06]: I'm just going to look and call in today about opera, ticker, faux p r a. I've heard it for about year and a half now, and I am up on it was wondering if you think it's time to take some profits or if I should hold on and
[SPEAKER_06]: continuing letting it grow.
[SPEAKER_06]: Thank you very much.
[SPEAKER_06]: It's just a small portion of our portfolio.
[SPEAKER_06]: Have a good day.
[SPEAKER_06]: Bye.
[SPEAKER_01]: All right, looking at Opera, OPRA, and this is a name that we actually own for our covered call strategy equity income.
[SPEAKER_01]: And it's actually one of our, from a size perspective, it's probably our smallest company in that strategy by one point six billion dollar market cap, four percent dividend yield, but good, consistent growth, great cash flow as well as
[SPEAKER_01]: market as a debt level so balance sheet.
[SPEAKER_01]: No long-term debt, seventy-eight million dollars in free cash flow on the enterprise value of one point five billion.
[SPEAKER_01]: So you're talking about a five percent free cash flow yield and it's growing its earnings significantly.
[SPEAKER_01]: Last year earnings grew twenty-seven percent.
[SPEAKER_01]: Now only so to be four percent growth this year, but thirty percent growth next year.
[SPEAKER_01]: And it is
[SPEAKER_01]: solidy profitable.
[SPEAKER_01]: Nine percent return equity not amazing but solid.
[SPEAKER_01]: And what's good is about that cash flow and good balance sheet and they're using that cash flow to buy back shares.
[SPEAKER_01]: Pay that dividend which they certainly can pay at this point with what's going with that balance sheet and that cash flow.
[SPEAKER_01]: And revenue growth is solid last quarter revenue group forty percent quarter for that revenue group twenty nine percent this year sorry this quarter.
[SPEAKER_01]: revenue is supposed to grow twenty five percent so we like it we like the business for everyone else out there they they have a web browser for mobile phones and and your desktop and they are cater to the gaming industry so
[SPEAKER_01]: It's a browser that if you browse through, sorry, you game through a browser.
[SPEAKER_01]: It is very fast for those applications.
[SPEAKER_01]: It also has a built-in VPN.
[SPEAKER_01]: So if you want to use a VPN and you don't want to have kind of this third party thing, it's kind of built into the browser there.
[SPEAKER_01]: There are some cryptocurrency features, crypto wallets that are built in to the browser.
[SPEAKER_01]: So there's a lot of great features.
[SPEAKER_01]: It's kind of a niche player.
[SPEAKER_01]: to be frank.
[SPEAKER_01]: But that's why it's small.
[SPEAKER_01]: We think there's a lot of runway for the business.
[SPEAKER_01]: So I would continue to hold opera.
[SPEAKER_01]: We continue to hold it.
[SPEAKER_01]: Thanks for the call.
[SPEAKER_01]: Now let's look at the banks.
[SPEAKER_01]: And we are in the midst of earnings season now and we're going to get more and more bank earnings, especially throughout this week.
[SPEAKER_01]: But a lot of people might look at the big banks and they say, OK, what are they doing?
[SPEAKER_01]: Are things improving for them?
[SPEAKER_01]: What does that mean for the overall economy?
[SPEAKER_01]: And if you look at the performance of the banks, especially in the second quarter, they did very, very well.
[SPEAKER_01]: Fourteen percent of KBW bank index.
[SPEAKER_01]: But those mainly driven by the megabex, Goldman Sachs, for example, is up almost thirty percent on the quarter.
[SPEAKER_01]: But if you look at the regional banking index, that was only up three percent in the second quarter.
[SPEAKER_01]: And so what does that tell you?
[SPEAKER_01]: Well, it tells you that there's two different drivers of the performance, and it's not really the broader economy.
[SPEAKER_01]: Those larger banks are outperforming for a couple of main reasons.
[SPEAKER_01]: Number one is that M&A activity has started to re-accelerate and then many of those large banks have an investment banking arm.
[SPEAKER_01]: And so the market is seeing that and the fees that they're going to earn from helping with those M&As.
[SPEAKER_01]: And then you have an easing of capital requirements.
[SPEAKER_01]: And this especially helps those businesses, those large banks because think of SIFI, strategically important financial institutions.
[SPEAKER_01]: So they had post-financial crisis and additional charge in their capital to make sure that they were safe.
[SPEAKER_01]: Remember, because if you have a Silicon Valley bank go under some small regional bank, that's not a big problem to the financial system.
[SPEAKER_01]: But what OA taught the regulators was that if you have a GP Morgan or a Bank of America or a Wells Farco, one of the large banks going under that is strategically important.
[SPEAKER_01]: And therefore, they need a bigger capital buffer.
[SPEAKER_01]: Well, what's happening now, one of the Trump administration is that they're starting to ease those requirements, and that's going to help those larger banks, at least in the short term with lending activity and being able to squeeze more profits at other business.
[SPEAKER_01]: So those are the reasons why those larger banks did well.
[SPEAKER_01]: But underneath the surface, like I said, those small regional banks, they're not doing nearly as well.
[SPEAKER_01]: Their fortunes tracked the economy more directly.
[SPEAKER_01]: Mainly because they're domestically focused.
[SPEAKER_01]: Those larger banks also don't, they have foreign operations.
[SPEAKER_01]: And that can help them, more hurt them.
[SPEAKER_01]: But once again, those smaller banks, they're regional.
[SPEAKER_01]: They're regional in the US, and they have very little exposure to happens overseas.
[SPEAKER_01]: Now recently, commercial industrial loan activity, which is typically the center of what these small and mid-sized banks tend to do, that's actually increased.
[SPEAKER_01]: It's picked up.
[SPEAKER_01]: Not dramatically, about three percent year of a year growth decent, but not amazing.
[SPEAKER_01]: You know, better than it was earlier in the year, coming into the year, at the end of January, year of year growth is only one point one percent.
[SPEAKER_01]: So we're now up to three.
[SPEAKER_01]: So that's a positive.
[SPEAKER_01]: But the big question is why are companies taking out these loans, because these commercial and industrial loans?
[SPEAKER_01]: And the answer is simply, they're loading up on inventory.
[SPEAKER_01]: So it's not like they're taking out these loans to hire a bunch of people, to spend on catbacks, to expand their operations or anything like that.
[SPEAKER_01]: It's really just to front run terrorists.
[SPEAKER_01]: So companies are playing defense, not exactly offense.
[SPEAKER_01]: And that is probably the biggest takeaway here.
[SPEAKER_01]: And why the movement in banks is not really telling you
[SPEAKER_01]: to be rosy on the overall economy.
[SPEAKER_01]: So remember, the financial markets are not the economy and vice versa.
[SPEAKER_01]: You know, it's twenty-twenty-two is a good example.
[SPEAKER_01]: As some views down twenty percent.
[SPEAKER_01]: Man, it's that because down thirty three percent.
[SPEAKER_01]: But we didn't go in recession.
[SPEAKER_01]: It was a bear market.
[SPEAKER_01]: But we didn't really go into a recession.
[SPEAKER_01]: There wasn't a big
[SPEAKER_01]: changing unemployment, a blowout and credit spreads.
[SPEAKER_01]: It was just the market's re-rating, liquidity being drained from the system and margins contracting.
[SPEAKER_01]: Multiple contracting.
[SPEAKER_01]: Excuse me.
[SPEAKER_01]: And so that's a good example there.
[SPEAKER_01]: And this last few months is another good example the other way.
[SPEAKER_01]: The economy, especially in May and into June,
[SPEAKER_01]: started to show real weakness, even if the capital markets continued to show strength.
[SPEAKER_01]: And a big reason for that strength was this where companies are not using that money to hire, they're using that money to front run tariffs, and they are buying back their stock in absence of clarity around how they should spend that money.
[SPEAKER_01]: And so
[SPEAKER_01]: Never confuse the equity markets, the bond markets with the broader economy, and vice versa, and you want to focus a lot on those smaller banks.
[SPEAKER_01]: Let's go with another listener question.
[SPEAKER_01]: The YouTube comment section.
[SPEAKER_01]: Carlos Pooner says, I'm based in Europe, and I hold the Vanic Uranium and Nuclear Technologies ETF, and UCL.
[SPEAKER_01]: See if I can look this up.
[SPEAKER_01]: I might need, I might need my other system.
[SPEAKER_01]: Yes, okay.
[SPEAKER_01]: So, you know, when you're, so just a heads up, when you are overseas and investor, it can be a challenge to invest in US markets and there are these kind of special investment vehicles that
[SPEAKER_01]: you don't really get a whole lot of data here in America.
[SPEAKER_01]: They're not your typical ETFs.
[SPEAKER_01]: So this one may be a challenge.
[SPEAKER_01]: Let me look at the other one up.
[SPEAKER_01]: So he said he wants to increase his position in nuclear as a general principle.
[SPEAKER_01]: Should I diversify to try another fund as well?
[SPEAKER_01]: Or should I buy more?
[SPEAKER_01]: And you see, looking at the global X uranium URA is a symbol on that is something that
[SPEAKER_01]: does trade on our exchange.
[SPEAKER_01]: You are in that global ex uranium ETF.
[SPEAKER_01]: The issue with this is once again, it's just uranium miners.
[SPEAKER_01]: I think we talked about this recently.
[SPEAKER_01]: Actually, no, there are some industrials.
[SPEAKER_01]: Twenty-five percent are industrials.
[SPEAKER_01]: You have Aqualo, which is a small modular reactor company.
[SPEAKER_01]: So you are getting some exposure there.
[SPEAKER_01]: Next-gen energy.
[SPEAKER_01]: I really need to look at the holdings of NUCL, which I don't really have.
[SPEAKER_01]: Let me see.
[SPEAKER_01]: I'm not really getting any data on this.
[SPEAKER_01]: You search.
[SPEAKER_01]: Here we go, holding something.
[SPEAKER_01]: See if I can get some holdings here.
[SPEAKER_01]: No, my fact sits not giving me any holdings either, that's interesting.
[SPEAKER_01]: Yeah, see this is the challenge is just the getting more data on those other names.
[SPEAKER_01]: So I don't mind you are a I would want something that holds a more diversified set of companies.
[SPEAKER_01]: If the view and you see all the nuclear technologies ETF that you can access over there has a more
[SPEAKER_01]: more industrial focus, I would rather own that.
[SPEAKER_01]: Once again, the URA does have some, but I know there are other, other ones out there that give you better diversification across the sector, but still exposure to the nuclear space.
[SPEAKER_01]: So I like that you are going after that, but I would probably want something with more industrial exposure.
[SPEAKER_01]: Now let's squeeze in a quick question from eight to eight, ninety nine chart.
[SPEAKER_05]: Hi, I'm calling about.
[SPEAKER_05]: Casey's general stores.
[SPEAKER_05]: ticker C-A-S-Y.
[SPEAKER_05]: I'd like to know what you think about this company, and if it's a good buyer, so thanks.
[SPEAKER_01]: All right, looking at Casey's general store, and this operates about twenty-six hundred convenient stores and twenty states under the Casey's general store, brand name, nineteen billion dollar market cap, and this is one of those high quality businesses.
[SPEAKER_01]: Now the issue in today's market is that a lot of quote unquote quality businesses are trading at pretty high prices.
[SPEAKER_01]: And this is one that certainly is not cheap enterprise value to even around eighteen times, okay, which is the highest it's ever traded on that type of multiple earnings this year.
[SPEAKER_01]: So let's go up eight percent.
[SPEAKER_01]: Thirteen percent next year is seventeen dollars and eighty four cents and it's a five hundred and seventeen dollar stock.
[SPEAKER_01]: Nice little divot in there, and the technicals are fine.
[SPEAKER_01]: But I think you missed the boat here.
[SPEAKER_01]: It's trading at, to me, too high evaluation for the, for the growth that it has.
[SPEAKER_01]: I would absolutely keep it in my watch list.
[SPEAKER_01]: This will probably break at some point, and you'll have a significant pullback with a multiple's contract back in probably the lead to low twenties, and that's road by, but not right now.
[SPEAKER_01]: Now, we're heading into our final break.
[SPEAKER_01]: I'm ready for your calls now.
[SPEAKER_01]: Aidedate, ninety-nine jerk.
[SPEAKER_03]: Twenty-twenty-five rolls on, and you've got finance and investment questions for Justin Klein and Luke Guerrero.
[SPEAKER_03]: Call in Vestock, eight, eight, eight, ninety-nine chart.
[SPEAKER_01]: What is Dutch Disease?
[SPEAKER_01]: talk a little bit about that.
[SPEAKER_01]: And this is a term that refers to what happened to the Dutch in starting in the mid sixties into the mid seventies.
[SPEAKER_01]: Now in the late nineteen sixties, the Dutch economy drastically changed.
[SPEAKER_01]: Why?
[SPEAKER_01]: Because in nineteen sixty four, the country found natural gas deposits in the North Sea.
[SPEAKER_01]: And by nineteen seventy four.
[SPEAKER_01]: The country was exporting about seventy four million tons of oil per year.
[SPEAKER_01]: Equivalent.
[SPEAKER_01]: Okay.
[SPEAKER_01]: From zero.
[SPEAKER_01]: That's boarding no gas before that.
[SPEAKER_01]: Now what did the country do?
[SPEAKER_01]: Well, it started to take the taxes.
[SPEAKER_01]: Do this one fall and increase social spending.
[SPEAKER_01]: And it increased the value of the Dutch currency and manufacturing outside of the oil sector.
[SPEAKER_01]: Felt.
[SPEAKER_01]: Costs one up.
[SPEAKER_01]: Domestically, exchange rates made those exports harder.
[SPEAKER_01]: And by the name of the company, the output of the clothing industry in the Netherlands had dropped fifteen percent.
[SPEAKER_01]: And footwear dropped more than fifty percent.
[SPEAKER_01]: And so, what it refers to is this, what what looks like an advantage, turning into a disadvantage due to a stronger currency.
[SPEAKER_01]: And many think that the entire world, including the United States, has Dutch disease.
[SPEAKER_01]: Now, the United States is the most obvious, because we export a lot of dollars.
[SPEAKER_01]: In order to export those dollars, we have to take on debt.
[SPEAKER_01]: It's kind of how the system has evolved.
[SPEAKER_01]: And the strong dollar due to money just pouring in, especially to our equity markets, to our debt markets has caused the dollar to rise and make our export less competitive.
[SPEAKER_01]: So if you want to
[SPEAKER_01]: Bring the manufacturing back to the U.S., you need the dollar default.
[SPEAKER_01]: You need to cleanse us of our Dutch disease.
[SPEAKER_01]: Now in the nineteen nineties, the UCLA economist began to document countries that fell victim to this.
[SPEAKER_01]: And they looked at what's
[SPEAKER_01]: how that windfall made the country even stronger or weaker.
[SPEAKER_01]: And it looked at a couple of things.
[SPEAKER_01]: One is whether the institutions were strong and whether it was social solidarity.
[SPEAKER_01]: If the institutions were strong, the windfall will go to the people.
[SPEAKER_01]: It will go to those that need it.
[SPEAKER_01]: And it would go to parts of the economy that were making the country better.
[SPEAKER_01]: Investing in schools and roads and infrastructure.
[SPEAKER_01]: But if institutions were weak, money would then flow to powerful groups on an into unproductive endeavors.
[SPEAKER_01]: So the big question you have to ask yourself,
[SPEAKER_01]: are the US institutions strong or they weak?
[SPEAKER_01]: Is there good social solidarity?
[SPEAKER_01]: Or are those that are closest to power purposely dividing the country so that they can take advantage of
[SPEAKER_01]: the windfall, that is the dollar being the global reserve currency.
[SPEAKER_01]: By allowing the budget to continue to rise, the deficit to continue to rise in order for them to continue to granular all the profits.
[SPEAKER_01]: I think the answer is pretty simple, and that's where we are.
[SPEAKER_01]: So in order to reverse that, not only will you need a weaker dollar, but you need stronger institutions.
[SPEAKER_01]: to counter the Dutch disease.
[SPEAKER_01]: Bro, that about doesn't.
[SPEAKER_01]: I'm Justin Klein, and it's another invest stock program.
[SPEAKER_01]: And if they show, maybe think about your own financial picture in any way, investments, investment strategy, taxes, asset allocation, retirement planning, whatever is on your mind.
[SPEAKER_01]: I encourage you to have her to invest talk.com with the portfolio view button and schedule call with myself.
[SPEAKER_01]: Or Luke, and we thank you.
[SPEAKER_01]: Thank you for listening.
[SPEAKER_01]: We encourage you to tell your friends and family about our free podcast downloads.
[SPEAKER_01]: Which you can find anytime that I tune Spotify or to play Be sure to great and review on iTunes as well.
[SPEAKER_01]: Independent thinking should success.
[SPEAKER_01]: It's the best thought.
[SPEAKER_02]: Good name.
[SPEAKER_02]: Invest talk is a trademark of KPP financial because of the nature of the interactive dialogue inherent in the format of this program.
[SPEAKER_02]: It's important for the listener to understand that not all comments may will apply to them.
[SPEAKER_02]: Specifically, nothing said she'll be taken to be investment advice.
[SPEAKER_02]: or shell statements on this program be considered an offer to buy or sell security.
[SPEAKER_02]: Because such advice is rendered solely on an individual basis and at times will require that the investor review a prospectus before investing.
[SPEAKER_02]: Invest talk is a copyrighted program of client, Pavles, and Peasley Financial, a registered investment advisor firm which retains all rights.
[SPEAKER_02]: For more information regarding KPP's investment advisors, call one eight hundred five five seven fifty four sixty one.