[SPEAKER_04]: On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is Invest Talk.
[SPEAKER_04]: Independent Thinking, shared success.
[SPEAKER_04]: Invest Talk is may possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.
[SPEAKER_04]: Here is KPP Financial Portfolio Manager, Luke Guerrero.
[SPEAKER_00]: Good afternoon fellow investors and welcome back to invest talk.
[SPEAKER_00]: I'm your host Luke Guerrero and today is Friday, July, eighteenth, twenty twenty-five.
[SPEAKER_00]: And we made it through another week.
[SPEAKER_00]: We are more than halfway through another month.
[SPEAKER_00]: And yet we still come back here to this program, whether or not you listen via the radio via our live stream, watch it on YouTube or via podcast, from your favorite podcast service.
[SPEAKER_00]: We here at Invest Talk have one mission, one goal, and that is to help make you a better and more informed investor.
[SPEAKER_00]: But more than anything, it's a team effort, right?
[SPEAKER_00]: We are all part of one team, one investor, our family, and we cannot do it without your help, because as much as we bring educational and actionable items to the table, we rely on you, our listener, to provide us with your finance and investment questions.
[SPEAKER_00]: Now,
[SPEAKER_00]: As we like to start the show, because it is the most important aspect of this show, before we talk about market performance, before we run down those show topics, we'd like to get to our first caller question, so let's do that now.
[SPEAKER_07]: Justin, one of the asks you today about L.E.U.
[SPEAKER_07]: Center's energy.
[SPEAKER_07]: I'm wondering if you feel like to become being a hold on to, maybe sell out a bit, just wanted to know how you guys are playing, but you're in here, and if you haven't liked it, thank you very much.
[SPEAKER_07]: Have a good day.
[SPEAKER_00]: Ticker LEU Centress Energy Corporation engages in the supply of nuclear fuel and services for the nuclear power industry.
[SPEAKER_00]: And like most of the nuclear power industry, it's up.
[SPEAKER_00]: Excuse me, significantly this year, though far outpacing the rest.
[SPEAKER_00]: Up, two hundred and seventy four point three three percent year to date.
[SPEAKER_00]: up, four hundred and sixty six point five five percent over the past year.
[SPEAKER_00]: Now primarily that's been driven by rapidly escalating your annual prices renewed interest in domestic nuclear production high demand for existing fuel sources and projects.
[SPEAKER_00]: And the revenue isn't just from the United States, fifty seven point three percent of it comes from the United States.
[SPEAKER_00]: Big old chunk, twenty six point five comes from Japan, more from the Netherlands, and a lot from other European countries as well.
[SPEAKER_00]: It's had consistent upgrades.
[SPEAKER_00]: It's been awarded a long term Department of Energy and Richmond contracts.
[SPEAKER_00]: It is
[SPEAKER_00]: Improving its utilization of its domestic centrifuge capacity, it has done very, very well.
[SPEAKER_00]: And there's the potential for more multi-year deals that could boost revenue and margins.
[SPEAKER_00]: It gives you direct exposure to the nuclear industry.
[SPEAKER_00]: And for us, right, we've gotten a bunch of calls about
[SPEAKER_00]: How do you get exposure?
[SPEAKER_00]: One way to do it is ETFs, but within the ETFs, they're mostly held, but they mostly hold a few companies.
[SPEAKER_00]: Now, this is on the smaller end of nuclear energy companies, about four billion dollar market cap, not a lot of debt.
[SPEAKER_00]: Certainly issue a decent amount of shares, but cash flow of profit, all look solid, look at these profitability numbers.
[SPEAKER_00]: Slipping, but still solid, twenty six point four percent in twenty twenty three, project to be fifteen point seven percent.
[SPEAKER_00]: That being said, it's not all fantastic.
[SPEAKER_00]: This is the most expensive this name has been.
[SPEAKER_00]: Nearly in the entirety of the past five years, trading at seventy point three times forward-looking earnings, trading at eighteen point six times, book value.
[SPEAKER_00]: A lot of this rise, certainly in the past three months, that two hundred and seventy percent, is also related to structural issues.
[SPEAKER_00]: There's eighteen point seven three percent short interest out there, which works great on squeezes when there's high demand, high short covering.
[SPEAKER_00]: But it can work the opposite way too.
[SPEAKER_00]: It's up six point six one percent just today alone.
[SPEAKER_00]: If you submitted this question yesterday, it would have been a great time to buy it.
[SPEAKER_00]: That being said, it's still yesterday today the day before incredibly expensive.
[SPEAKER_00]: And so I would look for a more reasonably valued company within the nuclear energy space, but we do believe fundamentally as you've seen thematically over the past year or so that
[SPEAKER_00]: The United States, other countries have to become more and more serious about nuclear-given, the wide-ranging explosion of demand sources, probably a poor word to use when describing nuclear power, but regardless, the massive demand increases we're going to see for energy in the coming years.
[SPEAKER_00]: Great company, had a great run-up, very expensive given its price out of look elsewhere, that is, Central's Energy Corp, Tigre, L, E, U.
[SPEAKER_00]: All right, you've got a lot of ground cover in the next of forty five minutes or so.
[SPEAKER_00]: And an important focus point.
[SPEAKER_00]: The three biggest misconceptions about dividend stocks.
[SPEAKER_00]: Now, many investors believe dividend stocks are always safe and reliable.
[SPEAKER_00]: But there are chemist conceptions, right?
[SPEAKER_00]: And they can lead to poor investment choices.
[SPEAKER_00]: What we're really trying to avoid here.
[SPEAKER_00]: So if you don't carefully examine that, you could have pretty poor outcomes.
[SPEAKER_00]: We'll also touch on the risks that come with the escalating fight between the White House and the independent, critically independent Federal Reserve.
[SPEAKER_00]: We'll touch on how banks are a little bit worried but a little bit optimistic.
[SPEAKER_00]: about stablecoins, and should we have time at the end of the show?
[SPEAKER_00]: And frankly, we don't, because we get to as many of your questions as we can, but we'd like to have it third one, just in case.
[SPEAKER_00]: We'll touch on how, if AI is such a big deal, why are businesses so slow to introduce it to their companies?
[SPEAKER_00]: We also have some voice-mate questions ready to play, including one on a Talon Energy Corp-Tiger TLN,
[SPEAKER_00]: as well as questions that came in from the comment section of the investor, YouTube channel, and hopefully some live calls from you throughout the show.
[SPEAKER_00]: We're headed into Break, our first break.
[SPEAKER_00]: I welcome your finance and investment questions now.
[SPEAKER_00]: No question is too simple or too complex.
[SPEAKER_00]: You set the agenda, but if you want to, you have to call.
[SPEAKER_00]: A-day, ninety-nine chart.
[SPEAKER_05]: Serious investors are certain to have finance and investment questions.
[SPEAKER_05]: Wanted to get your take on WW Granger.
[SPEAKER_05]: And the best person to ask your question in the right way is you.
[SPEAKER_01]: I was wondering from your standpoint, they're a downside in buying fractional shares versus whole shares.
[SPEAKER_05]: 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 the last decade or so.
[SPEAKER_01]: It's never maintained this level of profitability for a longer time.
[SPEAKER_00]: Modernies are incredibly volatile, so when the going is good, take some profit.
[SPEAKER_05]: Your participation makes it in Vestock better.
[SPEAKER_05]: My name is Mike, I'm calling in from Orange County, California.
[SPEAKER_05]: This is Lewis, calling from Bolivia.
[SPEAKER_05]: It's because not to Chris and me.
[SPEAKER_05]: So don't forget to call in Vestock.
[SPEAKER_05]: First off, great show.
[SPEAKER_05]: I went a lot for you, too.
[SPEAKER_05]: Hey, day, day eight, ninety nine chart.
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[SPEAKER_05]: Luke Guerrero is here now, taking your finance and investment questions live.
[SPEAKER_05]: Call Invest Talk, eight, eight, nine, nine, chart.
[SPEAKER_00]: Alrighty, let's see how the market performed around the week on Friday, stocks mostly lower, the Dow down, thirty, two basis points, S&B, five hundred finishing pretty flat, down just one basis point, NASDAQ up, point, zero, five percent, Russell, two thousand down, sixty one basis points.
[SPEAKER_00]: SNP Nasdaq and Russell all still log weekly gains.
[SPEAKER_00]: Nasdaq, in fact, very narrowly, very narrowly setting a fresh record closing high today.
[SPEAKER_00]: Under performers included entertainment names, managed care, energy, pharma, biotech and credit cards, big tech though, mostly higher Tesla the standout on the day.
[SPEAKER_00]: Other than tech outperformers included banks, PNC insurers, tech hardware, cybersecurity and airlines.
[SPEAKER_00]: On the bond side, treasuries were firmer, the curve flattened a little bit, though the thirty year yield finished near five percent for the week.
[SPEAKER_00]: Dollar index down at twenty basis points, probably on the back of some increased tensions between President and his Fed chair that he appointed in his first term.
[SPEAKER_00]: Gold finished up forty basis points and crude oil settled down thirty reversing some of that earlier strength that we saw at the beginning of the trading session.
[SPEAKER_00]: Now in terms of moving pieces on this Friday, you did get some Fed comments from Waller, who continued to make the case for Agelaire.
[SPEAKER_00]: Right cut, though other Fed officials this week still maintain their weight and see approach.
[SPEAKER_00]: Not a lot of calming down, I would say, between the White House and President Trump's feudal drone pal.
[SPEAKER_00]: How overnight defended the Fed's headquarters renovation, which some speculate the administration is trying to use as a pretext for cause to fire the Fed chair, Trump again arguing the Fed should cut sharply.
[SPEAKER_00]: On the trade side, we got some updates leaning a bit hawkish to the financial times reported Trump escalated demands.
[SPEAKER_00]: Unsurprisingly, as EU trade docks pushing for fifteen to twenty percent minimum tariffs rejected twenty five percent sectoral duties on EU.
[SPEAKER_00]: Autos you also got some news out of Japan.
[SPEAKER_00]: Treasury Secretary Scott Bessent saying that talks could still possibly lead to a good deal.
[SPEAKER_00]: You also had some several high profile earnings disappointments today, but you know, peak earnings season still a little bit down the road.
[SPEAKER_00]: Economic side, economic did a bit of a tailwind.
[SPEAKER_00]: You had consumer sentiment improving month over month.
[SPEAKER_00]: You had inflation expectations again taking lower.
[SPEAKER_00]: June housing starts printed at one point three to one million.
[SPEAKER_00]: A little bit above consensus and also may's upwardly revised figure.
[SPEAKER_00]: That sentiment number, preliminary July, Michigan Consumer Sentiment, slightly above consensus, right?
[SPEAKER_00]: And the best number that we've actually seen since probably February, I would say.
[SPEAKER_00]: Current conditions too, best sense of January.
[SPEAKER_00]: So things are from a sentiment side improving.
[SPEAKER_00]: Not a lot, in terms of economic releases next week, the biggest probably being Richmond Fed Manufacturing on Tuesday, home sales on Wednesday, PMI composite and new home sales on Thursday and durable goods on Friday, but it'll also be a much busier week on the corporate front as we move closer towards the peak of Q-two earnings season.
[SPEAKER_00]: That was the market today, so let's dive right back into another question, this one from our YouTube channel.
[SPEAKER_00]: And it's about ticker DFAR.
[SPEAKER_00]: It says, I'm looking to get some exposure to REITs.
[SPEAKER_00]: Now that it seems like there might be a buying opportunity.
[SPEAKER_00]: I've been looking at the dimensional US real estate ETF, DFAR.
[SPEAKER_00]: It has a gold rating on Morningstar is actively managed, fairly low cost, and seems well diversified.
[SPEAKER_00]: I'd love to hear your thoughts on this fund, and whether now could be a good time to start a long term position.
[SPEAKER_00]: DFAR is the dimensional US real estate ETF.
[SPEAKER_00]: It is technically active management.
[SPEAKER_00]: It's invested broadly in the US real estate asset class.
[SPEAKER_00]: Essentially, there are evaluating companies involved in the ownership management and development and construction or sale of residential commercial industrial real estate.
[SPEAKER_00]: They must generate at least fifty percent of their revenue, or have fifty percent of the value of their assets invested in one of those areas.
[SPEAKER_00]: Dimensional fund advisors, the company that I used to work for, though I was on the US small and midcap equity desk.
[SPEAKER_00]: We didn't really do the reads on that side.
[SPEAKER_00]: But what I do know about this fund and about this firm in general is their active approach isn't stockpicking.
[SPEAKER_00]: It is primarily doing market cap weighted as a start and then tilting towards in the case of non-real estate assets, value profitability and small caps, but not necessarily the same for their real estate funds.
[SPEAKER_00]: Now, management fee, cheap, just like most of Dimensional's fund's seventeen basis point, expense ratio, about a billion under management, very broadly diversified, because again, you're taking a market cap weighted approach here,
[SPEAKER_00]: really towards all aspects of the real estate asset class.
[SPEAKER_00]: So that's why you have a hundred and thirty three holdings here top ten percent making up forty eight point four six percent meaning pretty broadly diversified with more than fifty percent in the bottom one hundred and twenty three names
[SPEAKER_00]: I believe this fund was likely launched as a mutual fund and then maybe converted into an ETF.
[SPEAKER_00]: So that's why you're seeing the first nav on record as the twenty-fourth of February, twenty-twenty-two.
[SPEAKER_00]: Back when I was a dimensional, we did a lot of that with our tax-managed funds into ETFs.
[SPEAKER_00]: But either way, if you're looking for broad real estate exposure,
[SPEAKER_00]: DFAR is a good way to do it, but I just want to reiterate that when most people think about active management, they're thinking about stockpitting, picking, rather.
[SPEAKER_00]: Dimensional funds are systematic investment vehicles, very rules-based, not stockpicking, because of that, you get a lot more broadly diversified, a lot less manager-specific risk for an ETF.
[SPEAKER_00]: That is, DFAR, the dimensional US real estate ETF.
[SPEAKER_00]: Alrighty, we are headed into a quick break.
[SPEAKER_00]: Please remember, if you want to call you and give your question, you don't have to do it during the show, you can leave it anytime at the Invest Talk.
[SPEAKER_00]: Voice bank, but if you'd rather talk to me live via our stream or if you're listening on AM-twelf-twenty in the Bay Area, give me a call now because I would love to talk to you.
[SPEAKER_00]: You know the number, eight, eight, ninety, nine chart.
[SPEAKER_05]: The more you learn about how the market works, the better your chances for success.
[SPEAKER_05]: So don't forget to call, in Vestark, eight, eight, nine, chart.
[SPEAKER_00]: It's going to Matthew from Florida, who is a question about CHKP.
[SPEAKER_00]: Do you own it?
[SPEAKER_00]: You're looking to buy it.
[SPEAKER_02]: I'm looking to enter into the position with it.
[SPEAKER_00]: Okay.
[SPEAKER_00]: Well, CHKP is checkpoint software technologies.
[SPEAKER_00]: It's a global cybersecurity vendor from Israel.
[SPEAKER_00]: It specializes in network and point cloud mobile and threat intelligence solutions.
[SPEAKER_00]: Now it has done pretty well over the past year and year to date up to twenty five point two one percent in the past fifty two weeks up fifteen point four two percent year to date and the primary reason for that is it had a little bit of a shift right and shift in more towards what a lot of people are which is cloud and a i cyber security
[SPEAKER_00]: Now in this case, there was some pretty strong enterprise adoption of those AI tools, and that's really driven revenue growth up to six point five percent year over year as of Q-N-Twenty-Twenty-five.
[SPEAKER_00]: They did beat non-GAPPPS.
[SPEAKER_00]: And, you know, what the market is looking for with the earnings upgrades over the past couple months is a potential beat again when earnings come out on July, thirty.
[SPEAKER_00]: Technical momentum.
[SPEAKER_00]: pretty weak going into twenty twenty four, but improving pretty significantly, since really the beginning of the year.
[SPEAKER_00]: They buy back shares.
[SPEAKER_00]: They don't have a dividend.
[SPEAKER_00]: A little bit of short interest, but nothing to worry about, but they also really don't have any debt at all on their balance sheet.
[SPEAKER_00]: Their long term debt was twenty one million dollars at the end of twenty twenty four.
[SPEAKER_00]: For twenty four billion dollar company, I mean, that's essentially just pocket change there, right?
[SPEAKER_00]: They have
[SPEAKER_00]: a decent amount of cash on hand.
[SPEAKER_00]: They've one point three, seven two billion cash on hand.
[SPEAKER_00]: Marge, it's great, right?
[SPEAKER_00]: From thirty four point two percent and twenty twenty two projected to grow to forty percent this year.
[SPEAKER_00]: Now, I think one issue is, yes, they're executing well in this transformation, but there's also a lot of competition in there.
[SPEAKER_00]: They have the benefit of having a decent product that is already in market and already being adopted.
[SPEAKER_00]: But, right, cybersecurity security is also a particularly risky area, should mistakes be made.
[SPEAKER_00]: Now being said, it's trading at a pretty reasonable valuation.
[SPEAKER_00]: It's trading about nine point three times sales, twenty point nine times forward looking price to earnings.
[SPEAKER_00]: Slightly above the average of the past five years, though below the high, I really do like the company mainly because not a lot of debt, a lot of cash on hand.
[SPEAKER_00]: Big technical momentum over the past several months, and they consistently buy back shares.
[SPEAKER_00]: That being said, one thing that always makes me nervous is historically speaking when you look at historical stock returns.
[SPEAKER_00]: buying a company within two weeks before after earnings have negative expected returns.
[SPEAKER_00]: Now, again, that's in the aggregate.
[SPEAKER_00]: That doesn't mean that every time the earnings a company goes down, we know that's not the case.
[SPEAKER_00]: But because investing is also about putting the odds in my favor, putting the odds in your favor, I generally do not invest in companies for myself or for clients within two weeks of earnings because of what we know about empirical data.
[SPEAKER_00]: That being said, understand that risk, understand historically what that has done.
[SPEAKER_00]: Either way, I do like checkpoint software technologies.
[SPEAKER_00]: If it were me, I'd be inclined to wait until after you get a little bit of earnings settlement in early August.
[SPEAKER_00]: It doesn't mean the company's not going to go up at earnings.
[SPEAKER_00]: It just means that you understand there's heightened risk around those dates.
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: All right, let's point another fresh question now.
[SPEAKER_06]: Hi, guys.
[SPEAKER_06]: I'm interested in purchasing tail-on energy corp symbol TLN.
[SPEAKER_06]: I know it's had quite the run-off lately, and I was wondering what would be a good entry point.
[SPEAKER_06]: Thanks a lot.
[SPEAKER_06]: Bye-bye.
[SPEAKER_00]: All righty, tail, talent, energy, core, particular TLN is an alternative energy company, so they engage in the operation of power infrastructure, producing and selling electricity, capacity, andcillary services into wholesale power markets.
[SPEAKER_00]: One hundred percent of the revenue comes from the United States of America in terms of business segments.
[SPEAKER_00]: Most of it comes from their PJM segment, which is pushing the wholesale power into the market.
[SPEAKER_00]: About twelve point four billion dollar market cap company.
[SPEAKER_00]: It's got a little bit of debt though not too much two point nine nine two billion dollars in debt.
[SPEAKER_00]: These cinematic short interests, though, again, not a crazy amount, five point one, nine percent short interest out there does not pay a dividend.
[SPEAKER_00]: It started trading in mid, twenty, twenty, three.
[SPEAKER_00]: So we're beyond that one year period over which we see IPOs, again, on average historically underperform, not the case here, right, above that first trading price.
[SPEAKER_00]: It has been successful.
[SPEAKER_00]: It's IPO date.
[SPEAKER_00]: That's interesting.
[SPEAKER_00]: That number's not correct.
[SPEAKER_00]: That date's not correct.
[SPEAKER_00]: Either way, right?
[SPEAKER_00]: You see the performance from twenty twenty three.
[SPEAKER_00]: One thing that is not good, though, is cash flow is falling since an IPO.
[SPEAKER_00]: Net margins are falling as well.
[SPEAKER_00]: And perhaps one of the reasons why it has been doing so well is on the back of its strategic acquisition of two combined cycle gas plants for about three point five billion dollars.
[SPEAKER_00]: The deal projected to raise free cash flow, which is one of the problems this company has, about forty percent in twenty twenty six.
[SPEAKER_00]: And so when you have this type of performance boost right up, twenty four point forty percent today, let me see if I can find out why it's up so much today, especially considering earnings did not happen.
[SPEAKER_00]: It was the announcement of that exact deal.
[SPEAKER_00]: And so you have this big deal announcement here, but the risk here is the market is over pricing what is happening and the synergies don't necessarily appear.
[SPEAKER_00]: So given the price run up today, I would let the calm down.
[SPEAKER_00]: Let's see how the market digest this news.
[SPEAKER_00]: Figure out what synergies are possible before I think about investing in talent energy.
[SPEAKER_00]: Thanks to the call.
[SPEAKER_00]: All right, we're going into break.
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[SPEAKER_00]: Divide in the stocks.
[SPEAKER_00]: Everybody loves dividend stocks, but the problem is, often times when you're looking for dividend stocks, you may fall prey to the three biggest misconceptions.
[SPEAKER_00]: And anytime that you aren't fully understanding what you're investing in, you're leaving yourself open to having the negative consequences of poor investment choices.
[SPEAKER_00]: Now, the first thing I want to talk about is highest isn't always best.
[SPEAKER_00]: What is dividend yield?
[SPEAKER_00]: Dividend yield is the dividend that has paid relative to the price of a company.
[SPEAKER_00]: And so prices are constantly moving.
[SPEAKER_00]: Dividend's move is well, but not as frequently, right?
[SPEAKER_00]: Prices are moving every second that the market is open.
[SPEAKER_00]: Sometimes when the market's closed during after hours and so dividend yields are always changing.
[SPEAKER_00]: And so the higher yields can point to weakness if a price falls off significantly in days, weeks, a month.
[SPEAKER_00]: And the company has not yet announced changes and dividends.
[SPEAKER_00]: Well, then the dividend yield is going to look high.
[SPEAKER_00]: And you're going to think yourself, I can get eight, nine, ten percent here.
[SPEAKER_00]: But that might not be the case.
[SPEAKER_00]: Now, the second one is about payout ratio, right?
[SPEAKER_00]: Payout ratios matter.
[SPEAKER_00]: What is a payout ratio?
[SPEAKER_00]: Well, it's the percentage of profits that a company makes that is paid out in dividends.
[SPEAKER_00]: And so by that mathematical calculation, you can see that a payout ratio that is higher means that a higher percentage of profits are being paid out in dividends.
[SPEAKER_00]: If you're paying out most of the money you make in dividends, then something happens, what's this logical conclusion there?
[SPEAKER_00]: You're going to cut dividends.
[SPEAKER_00]: And so that leads to that second part that dividends are not set in stone.
[SPEAKER_00]: Dividents can change.
[SPEAKER_00]: They do change based upon prevailing market conditions, performance of the company, business cycle.
[SPEAKER_00]: That number is not necessarily permanent.
[SPEAKER_00]: They go up.
[SPEAKER_00]: They go down sometimes.
[SPEAKER_00]: They go, oh, what?
[SPEAKER_00]: But the most critical thing is looking at that dividend return in isolation.
[SPEAKER_00]: What really matters is total return.
[SPEAKER_00]: You can be holding a stock that's given you a juicy five percent and it's a safe dividend and it's going to pay you every quarter.
[SPEAKER_00]: But if that stock never moves in price and the rest of the markets up fifty percent just because you got that four percent yield doesn't mean that you came out on top.
[SPEAKER_00]: And so what you need to do is you need to look at the total return of the company.
[SPEAKER_00]: So when you're finding these companies, what do you want to look for?
[SPEAKER_00]: Right?
[SPEAKER_00]: You want to look for strong free cash flow.
[SPEAKER_00]: You want to look for low-capacs.
[SPEAKER_00]: You want to look for low debt that's being serviced because those are the types of companies that are more better positioned to facilitate continuing to pay their dividend and also raising the dividend.
[SPEAKER_00]: Avoid the traps.
[SPEAKER_00]: If you see that falling stock price, if you see something that is and sounds and looks like it's too good to be true,
[SPEAKER_00]: chances are it is.
[SPEAKER_00]: And the problem with cutting a dividend is for a stock that is known as a dividend stock that a lot of people invest in it for dividends, it can be devastating to the price.
[SPEAKER_00]: And that can dramatically lower again that total return aspect of invested.
[SPEAKER_00]: Look beyond the yield is the message.
[SPEAKER_00]: Dividend yield should be evaluated alongside the more important aspects of choosing companies.
[SPEAKER_00]: Business quality, growth management incentives, and overall total return.
[SPEAKER_00]: All right, it looks like we got another live call from Robert and Pleasanton, listening on AM, twelve, twenty radio.
[SPEAKER_00]: It looks like you have a question on, take your FUT, you do own it, you're looking to buy it.
[SPEAKER_02]: I do not own a look.
[SPEAKER_02]: I am thinking about buying it, but I'm just wondering if I'm a little too late to the party because it certainly is how the big run.
[SPEAKER_00]: Yeah, let's take a look at it.
[SPEAKER_00]: So Futo is a tech-driven digital brokerage and wealth management platform.
[SPEAKER_00]: They operate under a couple brands like Futo Bowl and Moomu.
[SPEAKER_00]: Offer security and derivatives trading, margin financing, wealth planning, crypto trading in the United States.
[SPEAKER_00]: It is a Chinese company headquartered in Hong Kong.
[SPEAKER_00]: So this is an ADR that you would be buying.
[SPEAKER_00]: It is about twenty one point one about twenty one billion dollar market cap very little debt only about one point four four billion dollars in debt does not pay a dividend has been trading for a decent amount of time and revenue growth is explosive
[SPEAKER_00]: right revenue growth is sixty six point seven percent on an annualized basis going back to twenty nineteen now what we know that is primarily driving this huge explosive growth in brokerage volumes account assets and new services and this isn't just for this company right this is we did a story a couple days ago about how the retail frenzy retail investor frenzy right now
[SPEAKER_00]: is larger than it was when everybody was sitting at their homes, not spending money during the pandemic.
[SPEAKER_00]: And so companies like this have greatly benefited.
[SPEAKER_00]: They only did about a hundred and thirty five million in revenue in twenty nineteen.
[SPEAKER_00]: Then they went up to just under a billion during the pandemic.
[SPEAKER_00]: Now it stands to be at two point two billion just three years later.
[SPEAKER_00]: That's why it's up one hundred percent year to date and the margins like any fin tech company like any brokerage wealth management platform.
[SPEAKER_00]: Pretty solid, right?
[SPEAKER_00]: You're sitting in thirty eight to forty percent net margin going back to twenty twenty and you're not servicing your debt because you don't really have much debt and so that money can just be plowed right back into the business because again right they're not really paying that many dividends or really they're not paying a dividend at all.
[SPEAKER_00]: And they're also not buying back shirts.
[SPEAKER_00]: I would love to see some capital return here, but if you keep getting this consistent growth, well, you can't really complain there.
[SPEAKER_00]: Now that being said, let's look at its relative valuation, training at six point one times book value kind of expensive for a FinTech wealth management platform, ten point five times sales, nineteen point two times price to earnings, it's up seven percent today.
[SPEAKER_00]: I think this is an interesting case.
[SPEAKER_00]: The strength here is undeniable from a technical perspective.
[SPEAKER_00]: Momentum has been very solid going back all the way to the last September.
[SPEAKER_00]: One issue that I have is the potential for trade tensions to deteriorate.
[SPEAKER_00]: There has been a lot of talk about the listing Chinese companies in the United States.
[SPEAKER_00]: And this one is headquartered in Hong Kong, so it's not a China A share, right?
[SPEAKER_00]: It's headquartered in Hong Kong, but still a lot of possibilities there for asymmetric risk within this specific company.
[SPEAKER_00]: I don't know, this is a tough one for me because it has had a very big run up, but the reason why it's run up is because of that explosive growth.
[SPEAKER_00]: And frankly, I don't see any slowdown in the amount of money that retail investors are just jamming into equity markets.
[SPEAKER_00]: And so overall, I think the growth is justified.
[SPEAKER_00]: The valuations look decently justified and not too expensive to me.
[SPEAKER_00]: And when they do start using this capital to have dividend, buy back shares, can really benefit shareholders.
[SPEAKER_00]: So yeah, you missed some of the boat, but I don't think you missed all of it here.
[SPEAKER_00]: If I would enter this position, I would be very patient and cautious though.
[SPEAKER_00]: They don't have earnings for a while, which is certainly puts it on your side.
[SPEAKER_00]: But given its technical strength, should things start to turn around, a lot of risks to the downside here.
[SPEAKER_00]: That is, at Food Two Holdings, take your FU to you.
[SPEAKER_00]: Thanks for the call, Robert.
[SPEAKER_00]: Now tomorrow is Saturday because today is Friday and that's how the week works.
[SPEAKER_00]: So I want to briefly mention the newest KPP premium newsletter, which we will be distributed tomorrow.
[SPEAKER_00]: In the Insight section, which used to be called the current market environment, but we wanted to do a little switch up and say, okay,
[SPEAKER_00]: Not much changes week to week though, these days it seems like it does.
[SPEAKER_00]: Let's try and explain something that is key to understanding investment in general.
[SPEAKER_00]: And so this week in the KPP Insight section, we're going to be talking about the little tracked market from retailers, retail investors, because everybody follows that's B-five hundred.
[SPEAKER_00]: The Nasdaq, the Dow, the Russell, equity markets, but what up on markets?
[SPEAKER_00]: How do they move relative to stock markets?
[SPEAKER_00]: Why is it important to pay attention?
[SPEAKER_00]: And what does it all mean?
[SPEAKER_00]: In the stock idea section, we mentioned a heating air conditioning equipment manufacturer and a company that manufactures equipment used in dispensing adhesives and sealants.
[SPEAKER_00]: In the portfolio management section, we asked an important question.
[SPEAKER_00]: Does economic data really impact your portfolio?
[SPEAKER_00]: Now, if you're interested in learning more, visit us at invest.com.
[SPEAKER_00]: All of our subscribers will receive the newsletter to their inboxes Saturday afternoon.
[SPEAKER_00]: One other thing we generally like to do on Friday is make time to fit in a quick rundown of key benchmark numbers.
[SPEAKER_00]: So let me hit you with that list right now.
[SPEAKER_00]: The two year treasure yield was at three point eight six one percent today.
[SPEAKER_00]: Last week that number was three point nine zero two and one hundred and eighty five weeks ago, which is about three and a half years, that number was a point six four.
[SPEAKER_00]: The ten year was at four point four to one percent today last week that number was four point four zero three four hundred ninety eight weeks ago.
[SPEAKER_00]: Believe it's supposed to say ninety eight weeks ago that number was at three point nine to one and a hundred and eighty three weeks ago that number was one point seven six two.
[SPEAKER_00]: Gold was priced at three thousand three hundred and fifty one dollars a per ounce and eight dollar a decrease compared with last week.
[SPEAKER_00]: Eighty eight weeks back it was nineteen thirty five and a hundred and seventy seven weeks go number was eighteen oh six silver was at thirty eight dollars and twenty four cents per ounce that is a seven cent increased compared to last week seventy five weeks go it was twenty two eighty and looking back hundred sixty nine weeks very far back silver was twenty three ninety four
[SPEAKER_00]: Oil, sixty seven, forty one per barrel the day and eighty cent increase over last week.
[SPEAKER_00]: Forty three weeks ago that number was sixty seven seventy nine eighty five weeks back that number was seventy four thirty and a hundred and eighty five weeks ago that number was sixty six sixty two.
[SPEAKER_00]: The national average for a gallon of regular gasoline is three dollars and fifteen cents per gallon a one cent decrease compared to last week.
[SPEAKER_00]: one hundred and eleven weeks ago that number was three fifty six one hundred fifty nine weeks back the number was four twenty five and looking back one hundred seventy nine weeks again of regular gas cost three fifty seven California was averaging four forty nine per gallon or four seventy three for a gallon of diesel at Costco where I go get gas regardless that was four cents lower than last week eighty nine weeks ago that was five thirty two hundred sixty five weeks back that was five eighty seven
[SPEAKER_00]: for comparison in Indiana, gas is averaging a two dollars and eighty six cents per gallon today that is one point six one dollar sixty three cents less than gas in California.
[SPEAKER_00]: All right, let's put it back to the invest talk of voice bank answer this question now.
[SPEAKER_03]: Long time call here from the Midwest.
[SPEAKER_03]: Good question for you gentlemen.
[SPEAKER_03]: I am kind of a missed the gold and precious metals market my portfolio.
[SPEAKER_03]: I need some
[SPEAKER_03]: I found this company, I believe it's an ETF, JJC, and another one.
[SPEAKER_03]: I like come Vanguard funds, so I've found VAW.
[SPEAKER_03]: I think they're both diverse in their holdings.
[SPEAKER_03]: Would either one of them get a thumbs up from you, gentlemen, to place in a portfolio for a long-term holding.
[SPEAKER_03]: Thank you.
[SPEAKER_03]: Look forward to hearing your answers on the show.
[SPEAKER_00]: So, these are two very different fonts.
[SPEAKER_00]: JJC, these are the I-Path Bloomberg copper subindex.
[SPEAKER_00]: Let's make sure that's right.
[SPEAKER_00]: Yeah, so this is going to be interesting.
[SPEAKER_00]: It says the security was de-listed.
[SPEAKER_00]: in twenty twenty three.
[SPEAKER_00]: Not sure why that's coming up, but either way, when I look it up on my other screen, it's telling me that it is a pure play copper index, whereas VAW, which is the Vanguard materials ETF, is not a pure play, right?
[SPEAKER_00]: The Vanguard materials ETF is going to give you broad, broad exposure to the material sector in general.
[SPEAKER_00]: Now,
[SPEAKER_00]: Vanguard as we all know is very cheap about ninety basis point expense ratio so very very cheap but because they're cheap you're also not going to get much active management here it's just a passively manage index that if you see is invested in hundred and twelve names pretty well diversified
[SPEAKER_00]: All right, ten percent top ten makes up fifty six point six one percent, but if you look at the sector, waiting to get specially chemical performance, commodity chemicals, construction materials, metal or mining, metal products.
[SPEAKER_00]: Whereas with JJC, again, the iPad series B Bloomberg copper sub index, it's a pure play copper investment.
[SPEAKER_00]: Now you mentioned the top of the call that
[SPEAKER_00]: You missed precious metals.
[SPEAKER_00]: And I don't necessarily agree with that.
[SPEAKER_00]: Certainly there's been a big run-up in precious metals, but what drives gold higher?
[SPEAKER_00]: Gold is driven higher by uncertainty.
[SPEAKER_00]: After the duration day when you saw a huge market drop off, what happened the gold would have in Bitcoin?
[SPEAKER_00]: Gold surge Bitcoin fell.
[SPEAKER_00]: That's because Bitcoin is not a hedge against uncertainty.
[SPEAKER_00]: It's not a hedge against risk, right?
[SPEAKER_00]: Bitcoin is a risk on asset.
[SPEAKER_00]: Gold is a safe haven asset.
[SPEAKER_00]: It always has been.
[SPEAKER_00]: It likely always will be.
[SPEAKER_00]: And what's driven, it higher is continued uncertainty.
[SPEAKER_00]: So let me ask you this question.
[SPEAKER_00]: would the president continuing to feud with the Federal Reserve threatening the dollar status as Reserve currency hurt or help gold?
[SPEAKER_00]: The answer is helpful.
[SPEAKER_00]: Would continued uncertainty in the Middle East in Eastern Europe hurt or help gold?
[SPEAKER_00]: The answer is helpful.
[SPEAKER_00]: And so the dynamic that his driven precious metals higher still exists still exists whipsaw in policy on certainty.
[SPEAKER_00]: skepticism about the US economic system from international markets or national investors that is.
[SPEAKER_00]: So I wouldn't say you missed precious metals, but between these two, you said you wanted a more diversified approach.
[SPEAKER_00]: Vanguard materials ETF is going to give you the diversified approach to the market.
[SPEAKER_00]: If you're looking for a pure play, JJC is just copper.
[SPEAKER_00]: This is in Vestock, I'm Lou Greer, we have one goal here to help you achieve your financial freedom.
[SPEAKER_00]: Our work continues after this break, our final break, so get your questions in now at eight, eight, eight, eight, nine, and chart.
[SPEAKER_00]: And while you're doing that, while you're waiting for us to come back from this break, cruise on over to the new Investock store is open now at investockstore.com.
[SPEAKER_05]: Every investor is working to build a secure financial future.
[SPEAKER_05]: How they get there and when they get there, that depends on many variables.
[SPEAKER_05]: The more you learn about how the market works, the better your chances.
[SPEAKER_05]: So don't forget to call, in Vestalk.
[SPEAKER_05]: Eight, eight, nine, chart.
[SPEAKER_00]: All right, our last topic, our second topic, because we had a lot of questions to get to, but an important topic nonetheless, is about Fed independence.
[SPEAKER_00]: And that's because Fed independence is critical.
[SPEAKER_00]: It enables a political rapid responses to crises helping anchor both the US and global markets during events like COVID, two thousand eight, and international debt shocks.
[SPEAKER_00]: It supports the financial system while balancing
[SPEAKER_00]: Employment growth on one side and inflation on the other.
[SPEAKER_00]: I think one way to think about this is if you had to go to the doctor and your doctor got paid based on how quickly you felt better.
[SPEAKER_00]: versus how that solution benefited you for the rest of your life.
[SPEAKER_00]: Which would you choose?
[SPEAKER_00]: The quick solution that gives you that instant satisfaction, or would you want someone anchored, an institution anchored that looks beyond that.
[SPEAKER_00]: And that's the difference between a White House, who gives the desires, the instant gratification, because every two years there is an election.
[SPEAKER_00]: And their goal is to stay in power no matter who it is versus the independent organization that is looking more for the long term.
[SPEAKER_00]: Same thing with managers and CEOs.
[SPEAKER_00]: The CEO has an incentive to have the stock price go up in the short term.
[SPEAKER_00]: They get paid in stock options.
[SPEAKER_00]: But a board of directors goal, their job, is to align the managers incentives for a long term growth.
[SPEAKER_00]: because that is what is best for investors.
[SPEAKER_00]: And it's the same thing here.
[SPEAKER_00]: And so the president's threats raised the system, systemic risk attempting to fire pal could politicize the Fed, ending investor trust and making future interventions far less credible.
[SPEAKER_00]: It's one of the reasons why the dollar is the backbone of the global financial system because of the independence of the monetary authority.
[SPEAKER_00]: It also may, a compromised Fed, struggle to attract and retain experts.
[SPEAKER_00]: If the experts understanding of markets are just going to be ignored, ignored, and those are things that are critical, crucial, and essential for crisis management.
[SPEAKER_00]: The reality is short-term cuts may backfire.
[SPEAKER_00]: You've seen a lot of talk from a Waller who, frankly, is likely just looking to be the next Fed share about, well, maybe we should start cutting now.
[SPEAKER_00]: But consumer sentiment is good.
[SPEAKER_00]: The market is resilient.
[SPEAKER_00]: PPI was flat, but looking through PPI showed you an inflationary impulse from tariffs in production.
[SPEAKER_00]: And so the short-term incentive is to try to drive down mortgage rates, right?
[SPEAKER_00]: The president is a debt guy.
[SPEAKER_00]: He's a real estate guy.
[SPEAKER_00]: He wants mortgage rates to be lower.
[SPEAKER_00]: It's in his blood.
[SPEAKER_00]: I get it.
[SPEAKER_00]: I understand it.
[SPEAKER_00]: People are seriously in pain because it is difficult to buy a house or they're trapped in the house they already own.
[SPEAKER_00]: But the problem is, is when the long end gets blown out, and no longer can be controlled because the legitimacy of the independent institution is questioned.
[SPEAKER_00]: If we were to drastically cut the rates today, which would the Fed cuts the short end, given the amount of debt we're going to incur in the next decade, because of this bill that just passed, because revenues are going to be lower, far lower than spending will be cut.
[SPEAKER_00]: The long end could totally blow out.
[SPEAKER_00]: Lower rates can fuel bubbles.
[SPEAKER_00]: If politically driven, prolonged low rates may inflate risky assets.
[SPEAKER_00]: And so that is why you're seeing the CEO of Goldman Sachs, the CEO of JP Morgan, business leaders all over economists, people who know what they're talking about, who are incentivized.
[SPEAKER_00]: Goldman Sachs' CEO David Solomon is incentivized by markets continuing to hum along in the economy growing, not shrink.
[SPEAKER_00]: all defending, as I am now, the necessity of having an independent Federal Reserve.
[SPEAKER_00]: A serious topic to end the week, but important, nonetheless.
[SPEAKER_00]: And so all of you have earned a very restful weekend.
[SPEAKER_00]: And so Justin and I thank you for listening for another day, another week, another month of Invest Talk,
[SPEAKER_00]: If today's show made you think about your financial picture, your investments, your taxes, your retirement, whether it's all working together, we can help you answer that question and we do it for free.
[SPEAKER_00]: We have no cost portfolio reviews to help bring clarity and confidence to your financial life.
[SPEAKER_00]: Just go to invest.com and click on the portfolio review button.
[SPEAKER_00]: And if you liked what you heard today and you want to grow this family with us, tell one family member, one friend, one person you see walking their dog in the morning about in Vest Talk, which they can get at iTunes, Google Play, and Spotify.
[SPEAKER_00]: Independent Thinking?
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[SPEAKER_00]: This is Invest Talk.
[SPEAKER_00]: Enjoy your weekend.
[SPEAKER_04]: Invest Talk is a trademark of KPP Financial because of the nature of the interactive dialogue inherent in the format of this program.
[SPEAKER_04]: It's important for the listener to understand that not all comments may will apply to them.
[SPEAKER_04]: Specifically, nothing said she'll be taken to be investment advice.
[SPEAKER_04]: or shell statements on this program be considered an offer to buy or sell security.
[SPEAKER_04]: Because such advice is rendered solely on an individual basis and at times will require that the investor review of perspectives before investing.
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