[SPEAKER_01]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.
[SPEAKER_01]: Independent Thinking, shared success.
[SPEAKER_01]: Invest Talk is made possible by KPP Financial, a registered investment advisor firm serving clients throughout the United States.
[SPEAKER_01]: Here is KPP Financial Portfolio Manager, Luke Guerrero,
[SPEAKER_00]: Good afternoon, fellow investors, and welcome to the Thursday April 2nd, 2026 edition of Invest Talk.
[SPEAKER_00]: I'm your host, Luke Guerrero, and I'll be with you over this next 50 minutes as we round out a holiday, shortened, trading week.
[SPEAKER_00]: That being said, we got plenty to do, so let's kick it off right now by tackling our first caller question.
[SPEAKER_06]: I'm confident to get your quick analysis on a kind of smaller energy oil and gas company W HD is a ticker symbol.
[SPEAKER_06]: Cactus Inc is wondering if you think this is a big company and what will be your good by point if you like it all.
[SPEAKER_06]: Thank you very much.
[SPEAKER_06]: Appreciate what you guys do.
[SPEAKER_00]: Bye.
[SPEAKER_00]: WHD is Cactus Inc?
[SPEAKER_00]: What they do is they design, manufacture, and rent, well-head, and pressure control equipment
[SPEAKER_00]: year to date, they're up 4.62% up 1.62% over the past three months and pretty much flat over the past 52 weeks.
[SPEAKER_00]: It is a $3.7 billion market cap company.
[SPEAKER_00]: Not much
[SPEAKER_00]: And in February, they reported Q4, 2025, revenue down 1% annually with adjusted EBITDA beating estimates.
[SPEAKER_00]: Now looking ahead, management did guide their revenue in both their pressure control segments and international segments higher than expected, really keying in on growth from that international segment.
[SPEAKER_00]: If you look at the stock, it's been a bit of a wild ride, currently sitting at $47.79 per share.
[SPEAKER_00]: But it's sad like the mid-30s, from us to 25, the nearly doubled to about 60 between October,
[SPEAKER_00]: of 2025 in February of this year.
[SPEAKER_00]: It was driven almost entirely, my in acquisition, closing, which roughly doubled their adjustable market cabin, gave it that serious international exposure that it's continuing to build on here.
[SPEAKER_00]: If everything were to go well, it would be because this company has, well, a pretty clean balance sheet, right?
[SPEAKER_00]: It is well-run, it is one of the best run oil services names they have zero debt.
[SPEAKER_00]: Discipline capital allocation and a track record of growing market share while enabling them now to reach international customers.
[SPEAKER_00]: But at the same time, it's not all about the international game.
[SPEAKER_00]: Their U.S. rig count it's declining.
[SPEAKER_00]: Their core domestic pressure control business faces a bit of the headwind.
[SPEAKER_00]: And so their margins, while their margins are said to contract, as well, return on equity slipping the 13.6%.
[SPEAKER_00]: And with all that, it's trading bit the lower average forward looking price to earnings of 15.5.
[SPEAKER_00]: Bottom line, I mean, it is a best-in-class, ob-best-in-class excuse me, operator.
[SPEAKER_00]: They did a transformational acquisition.
[SPEAKER_00]: But for me, they're growth falling as much as it has within their domestic segment, which is the core of their business.
[SPEAKER_00]: It's a bit too worrisome for me to want to enter here.
[SPEAKER_00]: It is WHD, CactiSync.
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: We got another great show planned for you today, including our main focus point, which concerns this question, the great bond sell-off.
[SPEAKER_00]: Why fixed income is having its worst time in years.
[SPEAKER_00]: Global bond prices are headed for their biggest monthly decline in years.
[SPEAKER_00]: In fact, they achieve that as geopolitical tensions at stroke fear of sustained inflation and economic disruption.
[SPEAKER_00]: The bond market route is forcing investors to reconsider their fixed income allocations as traditional safe havens lose their appeal.
[SPEAKER_00]: We'll start to challenge a reevaluation
[SPEAKER_00]: And what has happened now that we are one day out from Liberation Day and how that reshaped trade?
[SPEAKER_00]: We'll touch on the recent announcement of changing metals tariffs, instead we have time at the end of the show, good story on tokenizing stocks.
[SPEAKER_00]: We also have some voicement calls rated playing, putting on one on clean harbors, which is CLH and another on EQT, corporation to your EQT, as well as some questions that came in from the comment section of the Invest talking YouTube channel.
[SPEAKER_00]: We're going into Break, please remember, you can call any time and leave your questions on the Invest Talk Voice Bank.
[SPEAKER_00]: If you're listening via our live streamer on AM1220 in the Bay Area, give me a call now at 888-99 chart.
[SPEAKER_00]: Up next, we'll talk about today's market activity.
[SPEAKER_02]: Sirious investors are certain to have finance and investment questions.
[SPEAKER_07]: I'm looking at an EPS and Goldman Sachs Nasdaq.
[SPEAKER_02]: And the best person to ask your question in the right way is you.
[SPEAKER_02]: If that would be a good hold to having a Roth IRA for the long term horizon.
[SPEAKER_02]: And 24-7 rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased answers.
[SPEAKER_02]: This isn't really a copper plate.
[SPEAKER_00]: This is a iron ore plate with some aluminum copper.
[SPEAKER_00]: If you're looking at each of the whole so few names that are so top-heavy, I think it is probably ill-advised to pay an expense ratio like this in order to get exposure that you could really get yourself.
[SPEAKER_02]: Your participation makes it in Vestock better.
[SPEAKER_06]: Hey guys, Brian from Rookerhanna here.
[SPEAKER_06]: I'm a big fan of the show.
[SPEAKER_06]: I have a missing episode in number five years.
[SPEAKER_02]: So don't forget to call in Vestark, 888-99 chart.
[SPEAKER_02]: There are a few things that make KPP financial special.
[SPEAKER_02]: One of them is parallel investing.
[SPEAKER_02]: This means they invest right alongside their clients.
[SPEAKER_02]: Here's how it works.
[SPEAKER_02]: When KPP financial makes a trade for their clients, just in client makes the same trade for himself and KPP.
[SPEAKER_02]: On the same day, at the same price and same percentage.
[SPEAKER_02]: No front running, no special treatment.
[SPEAKER_00]: Learn more about Parallel Investing at Investalk.com.
[SPEAKER_00]: Was the headline?
[SPEAKER_00]: The S&P 500 snapped a 5 week losing streak, the Dow.
[SPEAKER_00]: Today dipped a tenth of a percent, the S&P and Nasdaq leaked out fractional gains, and they're also 2000, led with a 7 tenths of a percent advance.
[SPEAKER_00]: It was overall pretty tough to fit anything into a clean narrative.
[SPEAKER_00]: I mean, oil surged over 11%, WTI touched nearly $114 in today.
[SPEAKER_00]: But equities held well off worse levels and yields actually had to lower.
[SPEAKER_00]: On the conflict, there was a lot of moving pieces, Trump's Wednesday speech really lacked any incremental detail, though US messaging continues to point towards largely achieved goals at the same time, expectations for near-term escalation.
[SPEAKER_00]: They've ramped, concerns about infrastructure damage and supply disruptions.
[SPEAKER_00]: They persist, and Iran is reportedly drafting a protocol with Oman, including tolls to monitor traffic through the
[SPEAKER_00]: This cross-currents are, understandably driving a complacency vs. FOMO debate with Bulls pointed to watch out, positioning and bears flagging the unresolved oil overhang.
[SPEAKER_00]: Energy up performed on the crude move, software, small caps, managed care, defense, reeds and acts, chemicals also held up, auto's airlines, building products, machinery, farm accrues lines, and China tech.
[SPEAKER_00]: Some of the worst performers on the day, speaking of poor performers, Tesla, the notable Mag7, laggered on delivery numbers.
[SPEAKER_00]: The data front, the Labor Day, it was a mixed bag, initial claims dropped to 200 and 2000, the lowest since early January and a bit below the consensus, though continuing claims did actually edge higher.
[SPEAKER_00]: Challenger reports shown March layoffs up roughly 25% month over month with tech cuts up 40% versus the same period last year.
[SPEAKER_00]: The hiring plans, they ramped pretty sharply.
[SPEAKER_00]: Trade deficit came in narrower than expected at 57.3 billion.
[SPEAKER_00]: Outside of geopolitics, outsized private equity redemption requests are back in the headlines as M&A activity continues to receive attention as positive, treasuries bit firmer with yields down to the three basis points, the dollar gained three tenths of a percent, gold fell nearly three percent and silver dropped over four.
[SPEAKER_00]: Market is closed tomorrow for good Friday.
[SPEAKER_00]: We will be doing a best of show as a reminder.
[SPEAKER_00]: But the Martian Planner report will still be released in the morning.
[SPEAKER_00]: Street is looking for 60,000 gain after February's negative 92,000 with risks due to the debt upside on a largely mechanical rebound from strike dynamics and better weather.
[SPEAKER_00]: Market's first chance to react to that news will be on Monday.
[SPEAKER_00]: And you have a question.
[SPEAKER_00]: You can certainly leave it in the comment section of any of our videos, and we will get to those as soon as we can.
[SPEAKER_00]: In fact, why don't we tackle one right now?
[SPEAKER_00]: This question is on M-D-T, which is Metatronic PLC.
[SPEAKER_00]: It says, hi, I wanted to get your thoughts on M-D-T since it's been on a bit of a downtrend recently.
[SPEAKER_00]: I'm gonna small portion of my portfolio and considering picking up.
[SPEAKER_00]: More.
[SPEAKER_00]: Metronic is the world's largest pure play medical devices company we own in one of our strategies for our clients.
[SPEAKER_00]: They have cardiac devices, they have surgical robots, they have diabetes,
[SPEAKER_00]: And their devices treat over 70 health conditions across 150 countries.
[SPEAKER_00]: Now, they're currently trading at 8663 per share, which makes them a $110 billion market cap company with a fair bit of debt, but not too much, only about $26 billion in debt.
[SPEAKER_00]: Backward looking, fiscal year Q3, or rather quarter three of fiscal year 2026, revenue is up 8.7% and a 6% organic growth, the highest enterprise growth in 10 quarters.
[SPEAKER_00]: They're diabetes signals up 8.3, but it wasn't all great.
[SPEAKER_00]: They did have a bit of a weak spot.
[SPEAKER_00]: Their structural heart was soft.
[SPEAKER_00]: It saw weaker growth tariffs created 93 million in gross margin headwinds and Q3 alone.
[SPEAKER_00]: So despite the beat the stock fell, 3.2% on earnings day because management reiterated rather than raising guidance.
[SPEAKER_00]: They kept that full-year guidance.
[SPEAKER_00]: And about 5.5% growth, a non-gappy BS, about 5.62566, which includes that 185 million tariff.
[SPEAKER_00]: headwinds.
[SPEAKER_00]: So the turf impact is actually expected to grow the following year to 300 million.
[SPEAKER_00]: See a bit of a cost overrun here from these exogenous variables that the company can't really help.
[SPEAKER_00]: Now the stock's meant most of 2025 and the 80s and then broke out to 106 in late 2024 early 2025 on the PFA moment.
[SPEAKER_00]: I'm going to give back most of its gains.
[SPEAKER_00]: It's been consolidating in that range where it sits now leaving the market to keep asking whether this is a real inflection point.
[SPEAKER_00]: Or if it's just still covering a bit of a sluggish legacy portfolio.
[SPEAKER_00]: Now one of the reasons why we hold this is that PFA for HLFB is a genuine platform shift.
[SPEAKER_00]: Metronix says it's outperforming every analyst model on market share and renal denervation for hypertension.
[SPEAKER_00]: Hugo for robotics and Altaviva for urinary incontinence are all real billion dollar opportunities still in the early innings.
[SPEAKER_00]: of the ball game at roughly 17 times for looking earnings.
[SPEAKER_00]: It's actually sitting at 14 times now with a 3% dividend yield.
[SPEAKER_00]: 3.3 is where it is.
[SPEAKER_00]: I mean, it still seems to me to be cheap for what is a best in class device franchise.
[SPEAKER_00]: Now, there are potential issues.
[SPEAKER_00]: We talked about one of them and I'll highlight it again, tariffs.
[SPEAKER_00]: If tariffs escalate, structural heart faces persistent competition,
[SPEAKER_00]: as well, right?
[SPEAKER_00]: You have Abbott, you have Edwards, you have Boston Scientific, and they keep taking share from the EP market while growing twice as fast organically.
[SPEAKER_00]: So there are threats to entry.
[SPEAKER_00]: There are, there is competition.
[SPEAKER_00]: There are costs that they cannot control.
[SPEAKER_00]: So you do have a bit of regulatory risk there, a bit of geopolitical risk there.
[SPEAKER_00]: Bottom line to me is that they are genuinely accelerating after years of underperformance,
[SPEAKER_00]: That's something, that is real progress.
[SPEAKER_00]: So at $86 to share 14 times price to forward looking earnings, you're getting paid while waiting with a 3% dividend yield.
[SPEAKER_00]: If the re-rating happens after these great products, simultaneously in 2027, could be a great opportunity.
[SPEAKER_00]: It's one of the reasons why we hold it for our clients, that is, Metronic, ticker, M, D, D.
[SPEAKER_00]: Well, folks, in Vestock Market Manness is well underway.
[SPEAKER_00]: In fact, it is nearing its conclusion.
[SPEAKER_00]: And if you haven't checked yet, I encourage you to not only check your bracket to see how you're doing.
[SPEAKER_00]: I once in sixth place have fallen quite down, but also check out our in Vestock YouTube videos because this is not just about winning money, though that is a big part of it for whoever qualified winner is.
[SPEAKER_00]: It's also about education.
[SPEAKER_00]: So Justin and I run down the winners, talk about the reasons why and what we might expect going forward in each round.
[SPEAKER_00]: That interests you head over to our YouTube channel, search Invest Talk with two T's and check it out.
[SPEAKER_00]: We're going into break.
[SPEAKER_00]: Still to come, my main focus point on the great Bond sell-off and more answers to your finance and investment questions.
[SPEAKER_00]: Here on Invest Talk.
[SPEAKER_02]: Look, Guerrero is here, and he's ready with answers to your finance and investment questions.
[SPEAKER_02]: Call in Vestock, 888-99, chart.
[SPEAKER_00]: March just delivered the worst month for bonds in years.
[SPEAKER_00]: The Bloomberg Global Aggregate bond index which tracks total return from investment grade government bonds and corporate bonds worldwide has surrendered all of its year to day gains.
[SPEAKER_00]: It was up to .1% through February 27th the day before the strikes on Iran and is now flat for the year.
[SPEAKER_00]: In the U.S., the 10-year yield has pushed above 4.4% that 2 years is above 4%, recent treasury options for 2 and 5 and 7-year notes all due week demand for signals higher than expected, and that's a stark reversal.
[SPEAKER_00]: From just last month, when a 30-year auction saw the highest demand in history, the move index, which tracks treasury market volatility, well, it's spiked levels consistent
[SPEAKER_00]: a lot of listeners are probably asking why are bonds selling off when they're supposed to be safe havens.
[SPEAKER_00]: Let me walk you through this because understanding what's happening in bonds right now is pretty critical for you to understand your portfolio.
[SPEAKER_00]: Now the simple answer is that the inflation trade is overwhelming the safety trade.
[SPEAKER_00]: Normally, in a crisis such as this, money flows into government bonds.
[SPEAKER_00]: Pushing prices up and yields down.
[SPEAKER_00]: We saw that pattern briefly at the start of the conflict, but within days, but if a different force took over.
[SPEAKER_00]: The realization that this war would push energy prices, sharply higher, re-ignite inflation prevent central banks from cutting rates.
[SPEAKER_00]: When inflation expectations arise, bondholders they demand higher yields to compensate for the erosion of their purchasing power and when central banks signal they might raise rates rather than cut them which is exactly what the bank of England did and what the Fed is increasingly hinting at, bond prices fall.
[SPEAKER_00]: The problem is compounded.
[SPEAKER_00]: by supply dynamics.
[SPEAKER_00]: The U.S. government is selling massive amounts of new debt.
[SPEAKER_00]: The Pentagon is reportedly asking for 200 billion more from Congress to fund the war in a and replenish its munitions.
[SPEAKER_00]: Total gross corporate bond issuance in 2026.
[SPEAKER_00]: Projected it around two trillion.
[SPEAKER_00]: With high-divered scalar data center debt adding to supply.
[SPEAKER_00]: When you flood the market with new bonds at the same time investors are demanding higher yields
[SPEAKER_00]: The dynamic to be described bluntly, investors are pricing in an unsustainable fiscal position, rising inflation risk, and growing uncertainty about the war, the bond market, it remains undefeated in the long run.
[SPEAKER_00]: And then there's foreign selling.
[SPEAKER_00]: We discussed this the other day, central banks dumping 82 billion in treasuries in a single month to defend their currencies.
[SPEAKER_00]: That removes a major buyer from the market at exactly the wrong time.
[SPEAKER_00]: So should investors avoid bonds completely, no?
[SPEAKER_00]: But you need to be much more selective than you might have been six months ago.
[SPEAKER_00]: The case for holding some fixed income, it hasn't disappeared.
[SPEAKER_00]: The word deescalates, the voile pulls back, the inflation panic reverses, the fed signals easing,
[SPEAKER_00]: Bonds could rally hard, you don't want to be completely out of bonds and miss the snap-back, and occur in yields for to 4.4% on intermediate treasuries, the income component is genuinely attractive for the first time in years.
[SPEAKER_00]: You're being paid to wait.
[SPEAKER_00]: The question is how much duration risk you're willing to take.
[SPEAKER_00]: Now, how does rising inflation affect different types of bonds?
[SPEAKER_00]: Well, this is where the nuance matters.
[SPEAKER_00]: Regular nominal treasuries, you're playing vanilla government bonds.
[SPEAKER_00]: They get hurt the most because their coupons are fixed when prices rise, the purchasing power of those fixed payments, and declines investors sell.
[SPEAKER_00]: That's what happens.
[SPEAKER_00]: It is happening right now.
[SPEAKER_00]: Tips, treasurer inflation protected securities, they're designed to hedge exactly.
[SPEAKER_00]: This, they're principal adjusts with inflation, so rising prices actually increase the value of your investment, but even tips of loss money this quarter, because rising real yields, which reflect expectations for future higher Fed rates, they can offset the inflation protection.
[SPEAKER_00]: Still, tips are one of the better ways to be in the bond market right now, even if you believe the energy shock keeps inflation hell of elevated.
[SPEAKER_00]: Investment grade corporate bonds, they've held up relatively well, credit spreads the extra yield companies pay over treasuries they've widened only modestly for about 86 to 91 basis points.
[SPEAKER_00]: That's orderly, especially compared to the tariff driven blowout we saw last April, when spreads hit 1.2%.
[SPEAKER_00]: Credit markets telling you that corporate fundamentals are holding, even if macro conditions are getting a bit worse.
[SPEAKER_00]: Now, high yield bonds.
[SPEAKER_00]: Those are vulnerable.
[SPEAKER_00]: Spreads there, they widen from 312 to 346 over treasuries.
[SPEAKER_00]: The economy tips into recession, high yield is where you'll see the most damage, because weaker companies, they can't service their debt when revenue declines.
[SPEAKER_00]: Short duration bonds, maturitys of 1 to 3 years, that's where you want to be.
[SPEAKER_00]: That's the safest corner of the bond market that gives you yields close to 4 with minimal price sensitivity to rate changes.
[SPEAKER_00]: Now, what are your alternatives to traditional bond investing?
[SPEAKER_00]: Well, you have a few options, money market funds and short-term treasuries.
[SPEAKER_00]: You'll think about three and a half to four with essentially no duration risk.
[SPEAKER_00]: That's legitimate parking spot to capital while you're waiting for clarity, floating rate instruments like loans from banks, floating rate notes.
[SPEAKER_00]: They actually benefit in a rising rate environment because their coupons are just upwards.
[SPEAKER_00]: Municipal bonds, they offer tax advantages and their credit quality.
[SPEAKER_00]: It's been pretty solid.
[SPEAKER_00]: If you can tolerate some complexity,
[SPEAKER_00]: You have instruments like defined maturity bond ETFs.
[SPEAKER_00]: They let you lock in specific yields to a specific date, which gives you the income certainty of a bond ladder with having to buy individual bonds.
[SPEAKER_00]: But the bottom line, the bond market is in a bit of a tug of war between inflation fears or session fears.
[SPEAKER_00]: And right now, frankly, inflation is winning.
[SPEAKER_00]: That makes it a painful environment for traditional bond allocations.
[SPEAKER_00]: But the income available at current yields, it's the best it's been in years, and if the war ends, the reversal could be dramatic.
[SPEAKER_00]: Stay short on duration, focus on quality, consider tips for inflation protection, and use money markets as a holding pen until the picture clarifies.
[SPEAKER_00]: Don't abandon fixed income.
[SPEAKER_00]: The don't reach for yield, in the riskiest parts of the market either.
[SPEAKER_00]: This is a time for defense, not offense.
[SPEAKER_00]: Tomorrow's market holiday, but we will post a new best of show.
[SPEAKER_00]: Then on Monday, we will dig into this story.
[SPEAKER_00]: Material sector stocks search as aluminum hits multi year high.
[SPEAKER_00]: Loona prices have rocketed to four year peaks after Iranian strikes targeted Middle East Smelters.
[SPEAKER_00]: That's coming Monday, but for now I'm Luke Guerrero, we're ready to take your calls in 80 to 99 chart.
[SPEAKER_02]: Every investor is working to build a secure financial future.
[SPEAKER_02]: How they get there, and when they get there, that depends on many factors.
[SPEAKER_02]: The more you learn about how the market works, the better your chances for success.
[SPEAKER_02]: So don't forget to call, in Vestark, 888-99, chart.
[SPEAKER_05]: Yeah, I was just calling to get your take on IHI about 5% of my overall portfolio and a lot of stops have been down since the start of the war.
[SPEAKER_05]: So I'll just see in on what your thoughts were on maybe taking a little bit more up at this time.
[SPEAKER_00]: Yeah, great question.
[SPEAKER_00]: So IHI is a sector ETF.
[SPEAKER_00]: It's the US Medical Devices ETF.
[SPEAKER_00]: It is a fairly large fund about $3 billion in that expense ratio of about 38% and effectively what it does is it's just going to pick companies, domestic companies that engage in medical devices, both in the rather in the broader healthcare space.
[SPEAKER_00]: It's market capitalated, it's style neutral, doesn't do anything fancy there, just selects
[SPEAKER_00]: All right, it's had a bit of a downtrend.
[SPEAKER_00]: Actually, might have hit its 52 week low recently, a bit up since then.
[SPEAKER_00]: And it has drawn down a bit since the war.
[SPEAKER_00]: Now, the whole healthcare space is a whole,
[SPEAKER_00]: has been trading downward.
[SPEAKER_00]: One of the reasons why is just the differences in interest rate expectations, especially for MedTech companies, a lot of discount and feature cash flows as discount rates go up because inflation expectations and therefore rate expectations go up.
[SPEAKER_00]: Well, then values go down.
[SPEAKER_00]: You end up trading at lower multiples.
[SPEAKER_00]: Now, the goal case here's free trade for it.
[SPEAKER_00]: You're buying a basket of the best in class, MedTech names that have,
[SPEAKER_00]: pretty low valuation, you have surgical robotics, you have companies like Metronica, which we just talked about with their accelerating 6%, you're over your growth, but at the same time, there are some structural issues here, one of them is rates.
[SPEAKER_00]: Another is,
[SPEAKER_00]: Uncertainty about what role the GOP one craze will cause on sleep devices, on cardiac medicine, cardiac treatment, as it starts to, no pun intended, eat away at some of those revenues from those companies, but either way, I think five percent of your portfolio on a single thesis like this is probably enough.
[SPEAKER_00]: I think that now's a good time to buy in generally, but if you're
[SPEAKER_00]: Thanks for the call.
[SPEAKER_00]: Why don't we drop another quick question in now?
[SPEAKER_08]: I was interested in buying some green, briar company.
[SPEAKER_08]: Simple is GBX and I would like to get one of your opinions on it.
[SPEAKER_08]: Thank you very much.
[SPEAKER_00]: Let's take a look at GBX showing.
[SPEAKER_00]: GBX is green, briar companies.
[SPEAKER_00]: It is a $1.6 billion company that designs manufacturers and markets freight rail cars.
[SPEAKER_00]: It is the largest rail car manufacturer in North America.
[SPEAKER_00]: Also, it is rail car, leasing, and management services.
[SPEAKER_00]: It's up about 12.84% year to date, up 11.55% over the past three months, up a 1.44% over the past 52 weeks, and it's seen a bit of revenue growth.
[SPEAKER_00]: But actually since 2023, revenue is falling from 3.9 billion to 2.8 billion.
[SPEAKER_00]: Return on equity has fallen or rather projected to fall from 14% in 2025 to 8.
[SPEAKER_00]: Two percent.
[SPEAKER_00]: I mean, it's a bit of a volatile ride recently.
[SPEAKER_00]: If you take a look at this chart, hit about $71 per share at the beginning of 2025, drop dramatically down below 40 and kind of been all over the place sense.
[SPEAKER_00]: Now, the key dynamic that is driving this is, well, the cycle.
[SPEAKER_00]: It's the rail car cycle.
[SPEAKER_00]: North American freight car orders and deliveries.
[SPEAKER_00]: They move in multi-year
[SPEAKER_00]: And so they operate at the cyclical heart of that entire system.
[SPEAKER_00]: When orders are strong, margins expand, revenue surges when they soften, revenue declines and it happens pretty steep and happens pretty fast.
[SPEAKER_00]: Now the company is trying to smooth this through its leasing business and international diversification, but the manufacturing segment is still dominating.
[SPEAKER_00]: It's 92% of their revenue.
[SPEAKER_00]: Now the thing that could benefit this company is that the rail car fleet,
[SPEAKER_00]: In this country is legitimately aging, tariffs on imported steel and goods it could actually increase domestic freight demand over time and they have a bit of a backlog they say they didn't disclose that number but historically their backlog has been solid and now they're only trading at rule 12.2 times price to forward looking earnings which is near their average they've had a bit of a run up recently.
[SPEAKER_00]: But it's a cyclical industrial name, near a cycle trough, right?
[SPEAKER_00]: And in order for this company to succeed, order activities going to need to pick up, which is might margins have held steadier than maybe I would have expected them to?
[SPEAKER_00]: Could it be one of those boring industrial businesses that do well?
[SPEAKER_00]: Maybe, but given it size, given it's level of debt, 1.7 billion in debt on a $1.6 billion company,
[SPEAKER_00]: And given some of the economic issues we have right now, as a result of what's going on in the Middle East, bit of a bit more downside risk than upside reward for me.
[SPEAKER_00]: That is, GBX, the Green Breyer companies.
[SPEAKER_00]: Looks like we got plenty of time, so why don't we make it a three-and-a-row from 888-99 chart?
[SPEAKER_04]: Hi, this is Dan from Walnut Creek, and thank you for taking my call.
[SPEAKER_04]: I've got a question about EQT Corporation,
[SPEAKER_04]: It's gone down over 11% in the last five days and it's trying to do some research and it looks like people are doing some profit taking and there might be an over supply in storage and that's why I found out it's wondering if you could share some more light on this and whether or not I should be selling some of this now or hanging on.
[SPEAKER_04]: if you can give me an answer on the air that'd be great.
[SPEAKER_00]: Thanks very much, bye.
[SPEAKER_00]: EQT is EQT corporation.
[SPEAKER_00]: It is a name that we hold and have held for a, man, a pretty long time for our clients.
[SPEAKER_00]: We're going back to 2023 in some shape or form and she was trading at 3191 per share.
[SPEAKER_00]: And the reason why is because it is the pre-eminent, natural gas production company.
[SPEAKER_00]: within the United States.
[SPEAKER_00]: They're the forefront of developing pipelines and terminals to get gas everywhere.
[SPEAKER_00]: It is the largest natural gas producer by volume, upstream production and midstream infrastructure focuses in the Appalachian basin.
[SPEAKER_00]: Q4 revenue was an absolute below out.
[SPEAKER_00]: 90 adjusted EPS beats 73 cents, which is the consensus.
[SPEAKER_00]: By 23% revenue beat by 14%.
[SPEAKER_00]: construction and production, top to the high end of guidance.
[SPEAKER_00]: Full year free castle hit like $2.5 billion, sorry, $2.8 billion.
[SPEAKER_00]: And the guidance called for even more stellar movements, free cash flow 3.5 billion at strip pricing this upcoming year, net debt, they had a target of falling.
[SPEAKER_00]: They're sitting at 7 billion in debt on a 38 billion dollar market cap company.
[SPEAKER_00]: They stocked you to run from the high 30s in 2025 to nearly 72 by early 2026 on
[SPEAKER_00]: Come down a bit as the AI data center, power-driven narrative has sunk a little bit on what we've been seeing in the Middle East, but those are the reason why we hold this in.
[SPEAKER_00]: EQT is the lowest cost large-scale gas producer in America.
[SPEAKER_00]: It owns the infrastructure to move and price.
[SPEAKER_00]: It's own gas.
[SPEAKER_00]: It is aggressively.
[SPEAKER_00]: DeLeveraging toward a clean balance sheet and it sits at the epicenter of two-secular demand drivers.
[SPEAKER_00]: LNG exports as that has become so expensive in Europe and AI data center power demand.
[SPEAKER_00]: 3.5 billion free cash flow in a 3.36 billion dollar market cap that's roughly a 10% free cash flow yield.
[SPEAKER_00]: At the same time, they do run with minimal hedges, so when these sharp movements could be issues or winters, a supply gut glut from associated gas production, it hits them hard.
[SPEAKER_00]: Net debt, it's still high, albeit it's not as high as it's been, and it'll be paid down.
[SPEAKER_00]: Eventually, the gas prices are notoriously volatile.
[SPEAKER_00]: I like this thing, that's why we hold it.
[SPEAKER_00]: It is high quality, it is low cost, it's a great way to play natural gas, and at a time when perhaps the world is trying to look away from oil.
[SPEAKER_00]: So today's a second.
[SPEAKER_00]: which means it was the one year anniversary of liberation day, when Trump stood in the rose garden and announced sweeping tariffs that he called one of the most important days in American history.
[SPEAKER_00]: Now the world recoiled a bit.
[SPEAKER_00]: Japan's trade minister promised a bold and speedy response Canada vowed retaliation France urged Europe to ready its trade
[SPEAKER_00]: in global commerce.
[SPEAKER_00]: One year later, picture is a bit more nuanced than either the doom-sares of the cheerleaders, predicted the economist published a comprehensive look at what actually happened in the data.
[SPEAKER_00]: Kind of fascinating.
[SPEAKER_00]: America's effective tariff rate briefly topped 20% before falling back to 10 and a half.
[SPEAKER_00]: Still the highest since 1940s.
[SPEAKER_00]: Tariffs against China at one point exceeded 100% direct imports from China collapsed between May and December.
[SPEAKER_00]: They were over 40% lower than the same months in 2024.
[SPEAKER_00]: The bilateral trade deficit would China shrink 32% to 200 billion in the narrowest since 2005.
[SPEAKER_00]: But here's the punchline.
[SPEAKER_00]: The overall U.S. goods trade deficit?
[SPEAKER_00]: It widened.
[SPEAKER_00]: to a record 1.24 trillion American importers they didn't buy less, they just bought from different places.
[SPEAKER_00]: Imports from Thailand, Vietnam, rose over 40%.
[SPEAKER_00]: As Southeast Asian producers took over China's share and categories like laptops.
[SPEAKER_00]: Taiwan's exports to America surged over 80%.
[SPEAKER_00]: On the back of the semiconductor boom, India increased exports for the U.S. despite facing tariffs as high as 50%.
[SPEAKER_00]: The tariffs changed where America bought.
[SPEAKER_00]: Not how much.
[SPEAKER_00]: And roughly half of goods imports still enter the U.S. duty free because of the extensive exemptions and backtracking the administration's done.
[SPEAKER_00]: What's more interesting is actually what happened globally.
[SPEAKER_00]: Instead of retaliating with their own tariff walls, which is what happened with the smooth hally tariffs in 1930, which triggered a collapse in global trade America's trading partners
[SPEAKER_00]: The U finalized a deal with Mercuser after 25 years of talks.
[SPEAKER_00]: It concluded agreements with Australia, India, Indonesia, Britain signed its most important post-Brexit deal with India.
[SPEAKER_00]: Switzerland reached its first agreement with South America, India alone, struck more trade deals in the past year than in the past decade.
[SPEAKER_00]: Middle powers are trading more with each other.
[SPEAKER_00]: Between May and December, trade amongst Britain, Canada, the EU, Japan, South Korea, Switzerland rose 12%.
[SPEAKER_00]: Even as their exports to America fell six in total, countries lowering trade barriers now account for more than a quarter of global imports compared with less than an eighth for America.
[SPEAKER_00]: The Economist estimates more than 15 deals covering over 400 billion trade have been struck since that speech.
[SPEAKER_00]: So in a way, Trump's tariffs, they didn't really break the global trading system, they rearranged it.
[SPEAKER_00]: America is still the world's largest economy, but it's increasingly being worked around rather than through.
[SPEAKER_00]: For investors' matters, because companies best position this year and beyond.
[SPEAKER_00]: Are those with diversified non-US-centric supply chains?
[SPEAKER_00]: Or those, like the semiconductor and AI hardware makers, whose products were largely exempted from duties?
[SPEAKER_00]: The era of the US is the indispensable hub of global trade.
[SPEAKER_00]: It's not over, but it's being diluted.
[SPEAKER_00]: In every new deal struck between middle powers is another brick in a trading architecture that doesn't depend on Washington.
[SPEAKER_00]: Let's see if we can answer one more question before the break.
[SPEAKER_03]: Hey, this is Andrew from Atlanta.
[SPEAKER_03]: I was calling about clean harvours incorporated, C, L, H. I held it for a while, it's done very well for me.
[SPEAKER_03]: And I'm probably going to trim it just a little bit, but was curious, I was looking currently, and perhaps where it's going.
[SPEAKER_03]: I appreciate your advice, and I'll listen to the show.
[UNKNOWN]: Thanks.
[SPEAKER_00]: Clean harbors North America's leading provider of environmental and industrial services.
[SPEAKER_00]: I think hazard is waste disposal, emergency spill response and use motor oil refining.
[SPEAKER_00]: Now, in Q4, revenue beat estimates earnings per share was in line, full year revenue at six billion, a new company record, which just three years after crossing five billion that is phenomenal growth, full year EBITDA up 5% year over year.
[SPEAKER_00]: The company repurchased $250 million in shares that is great in 2025 and now it's an additional $350 buyback authorization, had a bit of an acquisition as well.
[SPEAKER_00]: And it's up 26.66% this year, 44.22% over the past 52 weeks.
[SPEAKER_00]: It's trading at a very expensive valuation of 34 times price to forward looking earnings.
[SPEAKER_00]: It has been a 25-year compounder up 230% over five years, and the last six months, specifically.
[SPEAKER_00]: I mean, they've been strong.
[SPEAKER_00]: It broke out of a long consolidation, ran from the low of 200 in year to 95.
[SPEAKER_00]: now currently trading at 297 on strong results and momentum within their product stories.
[SPEAKER_00]: PFAS, that's really their key catalyst here.
[SPEAKER_00]: It is one of the only companies with end-to-end PFAS destruction capabilities with inciteration, plus filtration, plus remediation.
[SPEAKER_00]: And as regulatory standards tighten, the volume of that of contaminated materials that needs destruction is a multi-billion dollar long-term opportunity.
[SPEAKER_00]: But the downside's clear here.
[SPEAKER_00]: It's very obvious to see just by looking at it.
[SPEAKER_00]: It is valuation valuation valuation.
[SPEAKER_00]: This thing is run up significantly this year.
[SPEAKER_00]: significantly.
[SPEAKER_00]: For good reason, revenue growth, margins, return on equity, all in great places, but it's hard for me to justify, in spite of it being one of the highest quality industrial compounders in the market, given its dependence on regulation,
[SPEAKER_00]: Even with its pricing power, it still is a little rich for me.
[SPEAKER_00]: So I would keep it on my watch list.
[SPEAKER_00]: If it dips back down closer to his average of 25 times, price to forward looking average earnings, maybe I'd start to add there.
[SPEAKER_00]: This is Invest Talk.
[SPEAKER_00]: I'm Luke Graer.
[SPEAKER_00]: We have one goal here to help you achieve your financial freedom.
[SPEAKER_00]: Our work continues after this break, so get your questions in now at 888-99 chart.
[SPEAKER_02]: In Best Bar, tell your friends they can listen live, download the free podcast, or watch In Best Bar on our YouTube channel.
[SPEAKER_00]: With everything going on, this one flew under the radar a bit.
[SPEAKER_00]: But it has real implications for manufacturers, for builders and ultimately for consumers.
[SPEAKER_00]: The Trump administration today announced that its restructuring its tariffs on steel, on aluminum, and on copper products.
[SPEAKER_00]: So here's those change.
[SPEAKER_00]: Previously, finished products with the administration calls derivative products that contained imported steel aluminum or copper were hit with a 50% tariff.
[SPEAKER_00]: but only on the value of the metal content within the product.
[SPEAKER_00]: So if you imported a piece of furniture that was worth $100 and it contained $20 of steel, you only paid a $10 tariff, 50% on the $20 of steel.
[SPEAKER_00]: Under the new structure, the tariff drops to 25% but it's assessed on the full value of the finished product.
[SPEAKER_00]: So the same $100 piece of furniture with $20 of steel now gets taxed at $25 on the $100 which is $25.
[SPEAKER_00]: The tariff array is lower, but the dollar amount of the duty is higher for many products.
[SPEAKER_00]: Despite this, a senior administration official reporters that they don't expect the change to raise costs for consumers.
[SPEAKER_00]: I'll leave that assertion to you to evaluate.
[SPEAKER_00]: The 50% rate, it stays in place for commodity-grade steel for aluminum for copper, products that are primarily composed of those metals and products containing less than 50% metal by weight, that is 15% by weight.
[SPEAKER_00]: Won't face the metal tariffs at all, they'll just be subject to the separate 10% global minimum tariff.
[SPEAKER_00]: There's a compliance angle here that's worth understanding.
[SPEAKER_00]: The previous system it required in port is to calculate the value of
[SPEAKER_00]: just the metal content and complex products, screws, auto parts, furniture.
[SPEAKER_00]: That's hard, that is very hard to do.
[SPEAKER_00]: The new value full value approach it's simpler to calculate, which is why the administration is framing this as a compliance improvement.
[SPEAKER_00]: From a revenue perspective, the change could help offset the tariff revenue, the government lost when the Supreme Court struck down their IEEPA tariff duties in February, taxing the full value of derivative products will generate more customs revenue per import, even at a lower rate.
[SPEAKER_00]: For investors,
[SPEAKER_00]: The industries to watch are construction manufacturing autos, builders who are already dealing with elevated material cost from tariffs, labor shortages from immigration crackdowns and reduced demand from high mortgage rates, they now face another input cost increase on any imported products containing metals.
[SPEAKER_00]: auto parts are a significant category here.
[SPEAKER_00]: Many come from abroad with meaningful steel and aluminum content and the full value assessment will increase cost of the border.
[SPEAKER_00]: American steel and aluminum products.
[SPEAKER_00]: from producers.
[SPEAKER_00]: Those producers benefit, which is why protection is groups like the coalition of a prosperous America celebrating the move.
[SPEAKER_00]: Domestic Mills have been the consistent winners of the Metal's Tariff's regime since 2018, and this titans the protection further by making it harder for foreign manufacturers to undercut them by embedding metal and finished goods.
[SPEAKER_00]: But for downstream manufacturers, the companies that buy these metals to make things, this is another cost-head wind and an already difficult environment and with oil prices elevated, borrowing costs high, consumer confidence fragile, passing those costs to end customers, it's not as easy as it sounds.
[SPEAKER_00]: This is the kind of policy change that doesn't make front-page headlines, but certainly adds friction and cost at every stage of the supply chain.
[SPEAKER_00]: Well, as we were well into the month of April.
[SPEAKER_00]: we will be soon announcing the topic of our latest invest talk wealth webinar, which we are set to air at the end of April.
[SPEAKER_00]: For those of you who have not attended, it is a free wealth webinar, a free webinar that we try to do at least once a quarter, where we choose a topic, go in depth for 30 minutes on why it's relevant to you, on what it means for your portfolios, for your financial lives, and then everybody's favorite segment, open-ended questions
[SPEAKER_00]: That sounds interesting.
[SPEAKER_00]: Beyond the lookout, keep your ears to the ground as in the near future, we will be announcing our next wealth webinar.
[SPEAKER_00]: Well, that does it for another day and, in fact, another week of Invest Talk.
[SPEAKER_00]: Justin and I thank you for listening and encourage you to tell your friends and family members about our free podcast downloads, which you can get at iTunes and Spotify.
[SPEAKER_00]: While you're at it, while you're over there, please be sure to leave us a rate and review.
[SPEAKER_00]: If you'd like, head over to YouTube, search Invest Talk with two T's, and check out our YouTube channel where we have YouTube exclusive content.
[SPEAKER_00]: One thing I want to talk about as well, at KVP is our practice of parallel investing where we make the same trades for our clients that we make for ourselves.
[SPEAKER_00]: Same day, same price, same percentage.
[SPEAKER_00]: We invest right alongside our clients.
[SPEAKER_00]: We share the same risks.
[SPEAKER_00]: We share the same potential for success.
[SPEAKER_00]: If that sounds like the philosophy you want in your advisor, head over to investsock.com to learn more and schedule a free portfolio review.
[SPEAKER_00]: Independent Thinking, shared success.
[SPEAKER_00]: This is in Vestock, enjoy your weekend.
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