[SPEAKER_01]: On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is Invest Talk, 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 Chief Executive Officer, Financial Advisor, Justin Klein.
[SPEAKER_09]: Good afternoon fellow investors.
[SPEAKER_09]: Welcome back to invest talk in another week in markets, another week of major headlines.
[SPEAKER_09]: Lot going on and we are going to unpack it all for you, what this means for the broader market, the broader economy, different sectors, and ultimately your asset allocation.
[SPEAKER_09]: And we're here to answer your finance and investment questions.
[SPEAKER_09]: That's what this show is about.
[SPEAKER_09]: It's about what is on your mind.
[SPEAKER_09]: I can sit here and blow V8 all I want.
[SPEAKER_09]: But this is not about me.
[SPEAKER_09]: This is about you.
[SPEAKER_09]: So I encourage you to reach out with anything that you have to ask.
[SPEAKER_09]: Maybe it's just a comment about where you think the market is headed or the economy is headed.
[SPEAKER_09]: We are here for all of it.
[SPEAKER_09]: This show, once again, is all about whatever is on your mind.
[SPEAKER_09]: So we'll be bringing you actionable data and insights so that you can make better decisions with your money.
[SPEAKER_09]: And in just a bit, we'll talk about today's market performance and we'll run down the show topics for the hour, but as usual, we'll tackle this first-collar question now.
[SPEAKER_06]: I wanted to picture opinion on a company.
[SPEAKER_06]: I was looking at some infrastructure small-tap company and I came across Dirling Infrastructure,
[SPEAKER_06]: So I'm going to take a look at the financials for me and let me know if now is a good 5.0 or if not, what would be, thank you very much, have a good day.
[SPEAKER_09]: Are you looking STRL is the symbol?
[SPEAKER_09]: This is $12 billion mark cap.
[SPEAKER_09]: I probably wouldn't call it a small cap.
[SPEAKER_09]: I wouldn't call it a small cap.
[SPEAKER_09]: $12 billion is not really small.
[SPEAKER_09]: Let's see what is morning you start giving it.
[SPEAKER_09]: That's funny about Morningstar.
[SPEAKER_09]: They always change around their structure.
[SPEAKER_09]: There you go.
[SPEAKER_09]: Small growth.
[SPEAKER_09]: There we go.
[SPEAKER_09]: Small growth.
[SPEAKER_09]: I guess technically it is.
[SPEAKER_09]: Morning Morningstar.
[SPEAKER_09]: earnings this year, so let's say at 24% 16% next year, no dividend, what do they do?
[SPEAKER_09]: They provide E infrastructure, building construction, transportation solutions and related services.
[SPEAKER_09]: And this is doing well, number one, we need more infrastructure in this country.
[SPEAKER_09]: So that's certainly a tailwind.
[SPEAKER_09]: So I like that.
[SPEAKER_09]: In addition, when they're building out these data centers, a lot of times they're putting them in places where if they're going to have more traffic
[SPEAKER_09]: Need more people.
[SPEAKER_09]: Need to bring more equipment in.
[SPEAKER_09]: You have to build out the infrastructure more.
[SPEAKER_09]: You have to lay more pipes and lay more electricity and build more roads and all of this.
[SPEAKER_09]: And that kind of hits at the heart of why Sterling infrastructure can you tend to use to do very, very well.
[SPEAKER_09]: Now it is trading at a bit of a premium, even though earnings are expected to continue to rise to $15 and 63 cents next year.
[SPEAKER_09]: That's still trading in at a high 20s multiple.
[SPEAKER_09]: Okay, so once again, not cheap, not cheap, but profit return at least 36 versus 32% excuse me.
[SPEAKER_09]: But you're talking about price to free cash flow around 33.
[SPEAKER_09]: It's pretty expensive.
[SPEAKER_09]: Enterprise value, you even are going forwards around 20.
[SPEAKER_09]: So I like this.
[SPEAKER_09]: Good balance sheet, very little debt.
[SPEAKER_09]: Once again, I love the business.
[SPEAKER_09]: I love the where it's at.
[SPEAKER_09]: And I think there's long-term tailwinds here.
[SPEAKER_09]: And I would buy this on some dips.
[SPEAKER_09]: The problem is is it dipped enough.
[SPEAKER_09]: It has pulled back a little bit here.
[SPEAKER_09]: It's down 17% from its 52 week high.
[SPEAKER_09]: Which is a nice little pullback, but still trading at a bit of a premium.
[SPEAKER_09]: I think there's more downside here to more like a 350 range.
[SPEAKER_09]: That's where I pick up STRL.
[SPEAKER_09]: And I think we get there probably at 7.
[SPEAKER_09]: This year, that's STRL sterling infrastructure.
[SPEAKER_09]: I buy it between 340 and 350.
[SPEAKER_09]: Thanks for the call.
[SPEAKER_09]: The end of our market, market madness competition.
[SPEAKER_09]: I was so busy this afternoon.
[SPEAKER_09]: I did not see who won, but I know there was one winner because we looked in the top of the leaderboard, they each had different winners for the championship game.
[SPEAKER_09]: So there will be one winner, and we will announce that here later in the week.
[SPEAKER_09]: Now we've got a ground to cover over the next 45 minutes or so, and time permitting,
[SPEAKER_09]: My focus point concerns the story material sector stock surge as aluminum hits a multi year high.
[SPEAKER_09]: We're not just going to look at aluminum stocks.
[SPEAKER_09]: We're going to look at other areas that are benefiting at least in the short term.
[SPEAKER_09]: What it comes to prices of materials coming out of the Middle East.
[SPEAKER_09]: look at that.
[SPEAKER_09]: We also have other topics on the docket.
[SPEAKER_09]: One is in regards to value stocks, value has outperformed by the largest margins since 2022, and you have that huge drawdown and growth stocks.
[SPEAKER_09]: And so far, the Russell 1000 growth index down 9.1% on the year.
[SPEAKER_09]: So we'll look at
[SPEAKER_09]: We're also going to get to how you'll bonds.
[SPEAKER_09]: There's been a lot of worries around private credit, private equity.
[SPEAKER_09]: That's fed into the corporate credit markets.
[SPEAKER_09]: The public corporate credit markets.
[SPEAKER_09]: So we'll look at the damage that has been done and see is that an opportunity or is there more pain to come?
[SPEAKER_09]: We also have voice bank calls.
[SPEAKER_09]: One is on company stock allocation.
[SPEAKER_09]: I love this one, as well as CNX resources.
[SPEAKER_09]: We also have some questions that came in via the comment section over in the best talk of YouTube channel as well.
[SPEAKER_09]: And of course, I welcome your finance and investment questions right now.
[SPEAKER_09]: But we're going to head into a quick book break.
[SPEAKER_09]: Please remember you can call any time.
[SPEAKER_09]: Leave your question on the best stock voice bank.
[SPEAKER_09]: If you're looking to be our live stream or on 1220 in the Bay Area, you can call right now at 88899 chart.
[SPEAKER_09]: But next, I will comment on today's market activity.
[SPEAKER_02]: When you tell your friends about Investork and they ask you why you listen, let them know there are many reasons and one is Parallel Investing from KPP Financial and Investorkose Justin Klein.
[SPEAKER_02]: Parallel investing means Justin invests right alongside KPP financial clients.
[SPEAKER_02]: He makes the same trade for KPP financial on the same day at the same price and the same percentages as KPP clients.
[SPEAKER_02]: There's no front running and no special treatment.
[SPEAKER_02]: In this way, Justin and KPP financials share the same risks and the same potential for success.
[SPEAKER_02]: Parallel Investing aligns the interests of Justin and KPP Financial with those of his clients.
[SPEAKER_02]: Justin, Klein and Luke Guerrero are ready to answer your questions about Parallel Investing.
[SPEAKER_02]: And you can learn more anytime at InvestTalk.com.
[SPEAKER_02]: Justin Klein is here and he's ready with answers to your finance and investment questions call in vest talk 888 99 chart 899 chart 899 2 4 2 7 8 so you can ask your question on it today's show.
[SPEAKER_09]: Let's check in on the market today.
[SPEAKER_09]: What do we see?
[SPEAKER_09]: We saw the S&P up almost half a percent, NASDAQ up a little more than half a percent and the Dow up about a third of a one percent.
[SPEAKER_09]: So a solid green day after a nice bounce to close the holiday shortened week last week, we have more headlines coming out about what's going on in the middle east.
[SPEAKER_09]: Iran rejected a 45 day ceasefire proposal.
[SPEAKER_09]: and they propose their own 10 point plan, which Trump characterizes as not good enough.
[SPEAKER_09]: But Trump said negotiations will likely continue with representatives.
[SPEAKER_09]: He believes are acting in good faith.
[SPEAKER_09]: But then he also threatens to attack bridges and energy infrastructure.
[SPEAKER_09]: So there's a lot of chaos going on, both in Middle East as well as Washington, DC.
[SPEAKER_09]: And this certainly hangs over the head of the broader economy, not just from an energy perspective, but just supply chains more broadly.
[SPEAKER_09]: Now, the March ISM services index came at 54 versus consensus at 54.9 down from reading a 56.1.
[SPEAKER_09]: So there's some disappointment there.
[SPEAKER_09]: New orders were higher, that's good.
[SPEAKER_09]: But employment fell to 45.2 from 51.8, contracting for the first time in four months.
[SPEAKER_09]: And prices increased to 70.7 from 63.
[SPEAKER_09]: So you had kind of an a stag flationary print on the services PMI number.
[SPEAKER_09]: What else happened in markets?
[SPEAKER_09]: Treasuries were a bit stronger, yields down and won the two bases points in the long ends, and nothing too crazy, no big reaction there.
[SPEAKER_09]: dollar index was flat, gold finished up 0.1% on the day, silver down 0.1, so also precious metal market pretty much flat.
[SPEAKER_09]: Bitcoin, though, at 4.2% on the day, and WTI crude set settled up 4.8, sorry, 0.8% in a choppy tree session.
[SPEAKER_09]: So that was the market today.
[SPEAKER_09]: Still, I think we could see more rallies in the short term, especially as, well, looks to be just
[SPEAKER_09]: uh... that was going on the middle east it's clear that both wants some sort of an on ramp to degree but they're far apart and we know this white house loves to talk big and then bring it back and then talk big again and it's an erratic negotiation process to say that so that ultimately will likely mean an erratic market going for filled with
[SPEAKER_09]: panic dips, as well as crazy short-curving rallies.
[SPEAKER_09]: Ultimately, though, as this drags on and you have supply chains becoming more clogged and more expensive, that will feed into what happens in the broader economy and earnings expectations and will weigh on the market.
[SPEAKER_09]: Simple as that.
[SPEAKER_09]: The question is, who will blink first?
[SPEAKER_09]: It seems right now.
[SPEAKER_09]: Iran has the leg up.
[SPEAKER_09]: They control the streets of Ramos.
[SPEAKER_09]: And there's not a lot of incentive for them to give that up.
[SPEAKER_09]: So we'll continue to watch how this story unfolds.
[SPEAKER_09]: Let's go talk to our YouTube listeners and take a YouTube comment question.
[SPEAKER_09]: Routy says, hello and best talk.
[SPEAKER_09]: What do you guys think of FICO, F-I-C-O?
[SPEAKER_09]: This is a name years ago.
[SPEAKER_09]: I sold puts on at 400 and kept selling puts up to 500 and never got in.
[SPEAKER_09]: Then I had the unfortunate sideline view of it going from the low 400s to 2400.
[SPEAKER_09]: Now it's back down around the 1100.
[SPEAKER_09]: I was looking to see why it's been performing so poorly and I'm seeing the software pull back, trade as fears of AI being able to disrupt their business.
[SPEAKER_09]: Do you think this is a good name to invest in now?
[SPEAKER_09]: So you're correct.
[SPEAKER_09]: It's seeing totally multiple contraction.
[SPEAKER_09]: Now for everyone out there, develop the decision making software for financial services insurance, healthcare, retail, et cetera, fair Isaac.
[SPEAKER_09]: This is your FICO score.
[SPEAKER_09]: Thus, the ticker symbol, like I think it's noteworthy that it has fallen so dramatically down 50% from a two-week high.
[SPEAKER_09]: The part of that is higher inflation, higher interest rates, multiple contraction.
[SPEAKER_09]: But the majority of this is the worries that AI will disrupt their business.
[SPEAKER_09]: That banks and lending institutions of all kinds will be able to
[SPEAKER_09]: Utilize AI, Utilize different models that calculate risk.
[SPEAKER_09]: And then it's not just the standard FICO number, a US 700 credit score, 750, 800, 6 whatever, right?
[SPEAKER_09]: There's going to be proprietary ones.
[SPEAKER_09]: that are able to scrape the internet for more data.
[SPEAKER_09]: And frankly, give a better picture of your credit worthiness than FICO.
[SPEAKER_09]: I do think FICO is going to be outdated in the next five, probably almost guaranteed 10 years.
[SPEAKER_09]: Why?
[SPEAKER_09]: Because there's just more data that can be incorporated in these scores.
[SPEAKER_09]: I always think it's stupid when
[SPEAKER_09]: I don't know if you know this, but if you have a credit card that you have some sort of limit on, you don't use it, and it gets closed.
[SPEAKER_09]: So you're credit limit declines.
[SPEAKER_09]: It gets closed because you just didn't use it.
[SPEAKER_09]: I've had that before.
[SPEAKER_09]: I've credit cards.
[SPEAKER_09]: Don't really use it.
[SPEAKER_09]: I use other ones.
[SPEAKER_09]: And it was an active for three, four years.
[SPEAKER_09]: They closed it.
[SPEAKER_09]: They didn't really bother me because I wasn't really looking for credit.
[SPEAKER_09]: But for some people, that lowers the credit score.
[SPEAKER_09]: And I always thought that was kind of dumb and didn't make sense.
[SPEAKER_09]: And so AI can develop a scoring system that's going to be better reflect true creditworthiness.
[SPEAKER_09]: And I think FICO will be outdated.
[SPEAKER_09]: So I just would not be buying this.
[SPEAKER_09]: The technicals are very poor.
[SPEAKER_09]: And I do think this is in the heart of the type of names that will be disrupted with AI.
[SPEAKER_09]: It was the best thought going to work to use after this final break, that final break excuse me, our first major break, which you can call now, or any time, 24-7, at 8-8-9-9-9-shark.
[SPEAKER_02]: 24-7 Rainer Shine, there's always value in the Invest Talk podcast.
[SPEAKER_02]: 888-99, chart.
[SPEAKER_00]: Hey, Invest Talk, this is Steven from Orange, California.
[SPEAKER_00]: Hey, I wanted to call today to ask about allocation of company stock.
[SPEAKER_00]: In my 401k, I just happen to take a glance and look at the percentage.
[SPEAKER_00]: And I'm currently at 33% of my 401k and company stock.
[SPEAKER_00]: And our companies stock actually went down.
[SPEAKER_00]: probably somewhere around 20% within the last quarter.
[SPEAKER_00]: It is a financial related company, so it's affected by the interest rates, not coming down, and I think that's what's affecting it.
[SPEAKER_00]: The dividend is quite good and pays every quarter, and actually just did a transfer from stable value fund into the company stock, which I think put me over that 30% mark.
[SPEAKER_00]: So I did some reading, and I think the general opinion is 10 to 20% but I wanted a real flight person's opinion on that.
[SPEAKER_00]: And then in addition to the 401k, I also participate in the employee stock purchase plan.
[SPEAKER_00]: And it looks like that percentage is just at 20% with the value being down.
[SPEAKER_00]: And my general goal is I like to sell it at a 50s week high.
[SPEAKER_00]: I like to trim back a sizeable amount somewhere around 25 to 30% of what I hold.
[SPEAKER_00]: And if I can select the locks, especially in the employee stock plan, that's a taxable brokerage account.
[SPEAKER_00]: I try to pick the highest cost shares that are long-term capital gain.
[SPEAKER_00]: that have the smallest margin of gain and keep the lowest cost share so I can keep that dividend coming in.
[SPEAKER_00]: So anyway, whatever your thoughts are on that, I appreciate to hear on the next show.
[SPEAKER_00]: Thanks so much.
[SPEAKER_00]: Bye.
[SPEAKER_09]: Well, thank you for the call from Orange California.
[SPEAKER_09]: It's actually where I went to college, Chapman University, live there for a few years.
[SPEAKER_09]: So thanks for the call.
[SPEAKER_09]: This is a great question and you are, you answered kind of a lot of it.
[SPEAKER_09]: That 10 to 20% mark is a good range.
[SPEAKER_09]: I like to be in the low end.
[SPEAKER_09]: I've just seen a business for 25 years.
[SPEAKER_09]: Everyone I first came in over 25 years now.
[SPEAKER_09]: When I first came into the business, there were a lot of our clients were from San Diego, because that's where Invest Talk aired in the 90s was in San Diego.
[SPEAKER_09]: And a lot of those,
[SPEAKER_09]: a lot of those workers were clients that worked for Qualcomm and Qualcomm had a giant rally during the dot com boom and there were secretaries that were millionaires and millionaires in the 2000 meant a lot more than it does now but back then Qualcomm peaked right around the hundred dollars per share and then fell by two thousand and
[SPEAKER_09]: So there are a million dollars turned into about $150 to $200,000.
[SPEAKER_09]: Very different.
[SPEAKER_09]: So you definitely, I've seen a lot of people make the mistake of getting too exposed to their company stock.
[SPEAKER_09]: Now you just talked a little bit about your 401k, your employee stock purchase plan, and that's great for profit sharing plan.
[SPEAKER_09]: But what about your other assets?
[SPEAKER_09]: So what I like to say is 10% is the limit of your total liquid assets.
[SPEAKER_09]: So you have IRAs, maybe you have another broker to count, maybe old 401k's, things like that.
[SPEAKER_09]: You wanna add those all up together.
[SPEAKER_09]: And I would include what you have in the, that profit-uring plan or ESPP, or whatever, plus your company stock in your 401k.
[SPEAKER_09]: And that's what I would get down to that 10%.
[SPEAKER_09]: level.
[SPEAKER_09]: I like your idea of selling some of those stock options at long-term capital gains, the highest tax basis, all of that.
[SPEAKER_09]: I think that's great.
[SPEAKER_09]: One of my biggest issues with what you said though is I like to sell it at a 52 week high, and that's great, but there's no assumption that it's going to get back to a 52 week high.
[SPEAKER_09]: Especially you said, I don't know what financial
[SPEAKER_09]: It could be the best one in the world, it could be the worst one in the world, the worst one in the world, I don't know.
[SPEAKER_09]: But look at history of financial companies.
[SPEAKER_09]: They can easily go bust.
[SPEAKER_09]: And so your type of company matters a lot here.
[SPEAKER_09]: And in fact, that you're in the financial world, the sounds like a FinTech company, I would absolutely be in a rush to get that down to 10% of your total liquid net worth.
[SPEAKER_09]: And don't assume that it's gonna get back to a 52 week high.
[SPEAKER_09]: So I'd be working on bounces, you know, you eat small rallies, it doesn't have to be a 52 week high.
[SPEAKER_09]: So once again, it's down 20% during this time.
[SPEAKER_09]: If the market continues lower, going down another 20 or 30% is not out of the realm of possibility.
[SPEAKER_09]: Once I don't know what company is, but I bet if you go back in history, you'll see that it probably is falling 30, 40, 50% at some point in its history.
[SPEAKER_09]: That's the nature of markets, nature of equities, it's the nature of financial companies in general.
[SPEAKER_09]: So yes, continue to trim.
[SPEAKER_09]: I would not be moving more from your cash balance plan, which is safe into company stock just because it's down 20%.
[SPEAKER_09]: That means nothing.
[SPEAKER_09]: You want to look at the broader asset location goal, which should be 10% of your total liquid net worth.
[SPEAKER_09]: Now, let's keep things going and play another question now.
[SPEAKER_05]: Well, in this talk, I hope when you guys could do an analysis of Colby Holmes, where you would take her as Phm, where you got to see this company in the next year or two, given the fact that you guys talk a lot about how there's still a splash with Holmes.
[SPEAKER_05]: There's one else you guys think, and if it's goodbye, it's too expensive.
[SPEAKER_05]: Thanks.
[SPEAKER_09]: Yep, Colty Holmes, Phm is the symbol.
[SPEAKER_09]: This is actually a name we own for clients as pulled back as of late, but
[SPEAKER_09]: I like it.
[SPEAKER_09]: I like, uh, like, pullty.
[SPEAKER_09]: It's one of the best operators within the space.
[SPEAKER_09]: So it's to earn $11.30 to send next year or an estimates for this year.
[SPEAKER_09]: And next year, continue higher.
[SPEAKER_09]: It's only $120 stock.
[SPEAKER_09]: So 10 times forward looking earnings, three purchasing about a billion and a half of stock, which nearly 10% of its flow.
[SPEAKER_09]: And yes,
[SPEAKER_09]: Prof. Mark Profit has kind of leveled out here, but operating margins have just returned to the historical average, which is still pretty healthy.
[SPEAKER_09]: So we're still fans of Pulti and I would be buying it on these steps.
[SPEAKER_09]: That's for the call.
[SPEAKER_09]: The next investment stock we'll look into the story, Aerospace Defense Contractors, the new military investment cycle.
[SPEAKER_09]: We'll dig into that story tomorrow, but for now I'm just inclined and ready to take your calls anytime on 8-899 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, learn more about parallel investing at investtalk.com.
[SPEAKER_09]: Let's go focus on material sector, and it's impact so the impact that the conflict in the Middle East is having across different markets.
[SPEAKER_09]: What's the ripple effect of all of this?
[SPEAKER_09]: No one of the most underappreciated ones is the fertilizer market.
[SPEAKER_09]: This conflict is choking off about 20% of the supply of LNG look financial gas, which fertilizers make your makers in Europe and the lot of places need to generate a tremendous amount of electricity to convert atmospheric nitrogen into fertilizer.
[SPEAKER_09]: And then there's your rea.
[SPEAKER_09]: It's a form of nitrogen fertilizer.
[SPEAKER_09]: It's jumped one then 50% since the war started.
[SPEAKER_09]: And ultimately this will feed into the price of food.
[SPEAKER_09]: A lot of you will work our warning about this.
[SPEAKER_09]: If you don't have plant food, you can't grow plants.
[SPEAKER_09]: you can't grow food.
[SPEAKER_09]: And you've seen domestic fertilizer producers like CF Industries, climb 37% this in the month of March, one of the best performing stocks in the month of March in the S&P.
[SPEAKER_09]: And as much as the food on your table that it could impact, corn, which is can be on your table, but also goes into other markets like animal feed.
[SPEAKER_09]: So it feeds into the protein side of things as well.
[SPEAKER_09]: And then there is byproducts of corn
[SPEAKER_09]: a certain percentage of the gasoline in California is derived from corn.
[SPEAKER_09]: So this is probably the most underappreciated of the impacts of the disruption in Middle East, is what's happening, or is likely to happen with our food supply over the coming weeks and months.
[SPEAKER_09]: And then there is aluminum.
[SPEAKER_09]: Prices of a lot of metals actually dipped because of potential slow down the economic activity, but aluminum is actually higher by about 5% since it started the work.
[SPEAKER_09]: So not a lot, but noticeable.
[SPEAKER_09]: And this adds on top of the tariffs, the percent tariffs that President Trump has already putting on imported aluminum.
[SPEAKER_09]: So this is going to drag out most likely and it's not going to resolve itself in a short period of time.
[SPEAKER_09]: This under production will be felt for many months to come.
[SPEAKER_09]: Aluminum Bahrain represents 19% of global capacity of the world's largest single site
[SPEAKER_09]: What else?
[SPEAKER_09]: Helium.
[SPEAKER_09]: This is also an air-pressure.
[SPEAKER_09]: Most people think Helium is going to blins now.
[SPEAKER_09]: It's essential as a coolant in MRI machines, as well as in the manufacturer, manufacturing of semiconductors.
[SPEAKER_09]: And Qatar accounts for 35% of the world's capacity, even if you at the US produces the most unit.
[SPEAKER_09]: And Qatar's output has a main offline, and will likely remain offline for another four to eight weeks at least.
[SPEAKER_09]: And if it does, this could cause problems for chip makers that will feed into the electronics that you want to buy,
[SPEAKER_09]: So much electronics go into the products that we buy every day.
[SPEAKER_09]: Then there's plastics.
[SPEAKER_09]: We all use plastics.
[SPEAKER_09]: We all wear plastics.
[SPEAKER_09]: You don't realize it.
[SPEAKER_09]: And I'll talk about that in a second.
[SPEAKER_09]: But plastics and the price of plastics are moving higher.
[SPEAKER_09]: And you see plastic producers like Lyandil Bezel.
[SPEAKER_09]: They're at 40% in March.
[SPEAKER_09]: Things like NAFTA, ethane, and pro-pain are building blocks or plastics.
[SPEAKER_09]: Dow chemical, total customers last week that it plans to double its previously announced 15% a pound price hike for polyethylene, which is mainly used for the production of bottles, bags, tubing, textiles, et cetera.
[SPEAKER_09]: And this is one of the reasons why package food companies, a lot of the consumer-stable companies are down.
[SPEAKER_09]: They're the biggest laggers in the market right now because of the impact
[SPEAKER_09]: of packaging, cost of packaging, and one of the biggest winters, biggest commodity winters of this is actually cotton.
[SPEAKER_09]: Do you think why cotton?
[SPEAKER_09]: Well, because if you don't realize it, polyester is made with plastic.
[SPEAKER_09]: There's synthetics that go into clothing, textiles, and so if that becomes more expensive, well, cotton looks a little bit more attractive, and cotton has been
[SPEAKER_09]: Near record lows for a while, but it was at 4.6% in March, and at the highest level since December of 2024.
[SPEAKER_09]: So it's going to feed into your clothing costs as well.
[SPEAKER_09]: So that's how this conflict is feeding into different commodity markets and end product markets as well.
[SPEAKER_09]: Now we've got time.
[SPEAKER_09]: So let's drop it another listener.
[SPEAKER_04]: Invest stock listener in question now.
[SPEAKER_04]: I've been rebalancing my portfolio for the last year, so going more into materials, more into energy, more into financials, just trying to follow some of the advice you guys have given and trying to study these companies on my own.
[SPEAKER_04]: The question I had for you this evening was just strictly, as far as energy goes, what do you all think about natural gas right now?
[SPEAKER_04]: What do you think about
[SPEAKER_04]: the whole space, specifically I'm looking at a stock, C in X, Charlie, November X, Ray, and just wondering if that might be a good purchase to make the next year to move in forward.
[SPEAKER_04]: Thank you very much.
[SPEAKER_09]: Looking at CNX resources, this is primarily a natural gas and natural gas liquids company, very little oil.
[SPEAKER_09]: Now, they haven't benefited as much from this spike in oil prices, because they don't produce much oil.
[SPEAKER_09]: And natural gas already was being exported at the highest rate, we possibly could, because of the difference in
[SPEAKER_09]: because of natural gas here domestically versus the rest of the world.
[SPEAKER_09]: So I don't think that this is going to benefit dramatically from the war.
[SPEAKER_09]: In fact, in some ways, it's actually going to be heard a little bit.
[SPEAKER_09]: Why is that?
[SPEAKER_09]: Because when all prices go up, domestic oil, drillers, drill more.
[SPEAKER_09]: And what is a byproduct of drilling for oil?
[SPEAKER_09]: It's typically natural gas.
[SPEAKER_09]: And so that puts more natural gas on the market, as well as oil.
[SPEAKER_09]: Without prices going up and natural gas prices, producers making more money, it doesn't matter.
[SPEAKER_09]: Because these drillers are drilling for oil, and once again, natural gas is a byproduct.
[SPEAKER_09]: So I don't think that near-term this is,
[SPEAKER_09]: a great reason to be in it because of the war.
[SPEAKER_09]: But I do like long term the fact that AI, infrastructure companies are going to need more energy, they're going to turn to natural gas and our turn even natural gas more and more because it's easy to bring on new energy capacity in that in that sense.
[SPEAKER_09]: And so I like the natural gas space domestically.
[SPEAKER_09]: Turn equity around 15% pretty good.
[SPEAKER_09]: I would like that to be a little bit lower on a $5.7 billion market cap, but they have been paying that down a little bit over the past a couple of quarters, which is good.
[SPEAKER_09]: The chart is fine, it's in a nice uptrend, and so a lot here would depend on how much natural or how much energy exposure do you have, how much natural gas exposure do you already have.
[SPEAKER_09]: If you don't have much, I think this is a solid name too, but see you next resources.
[SPEAKER_09]: They probably know that you can call all the best talk.
[SPEAKER_09]: Any timeline and leave your question on our 24-7 voice bank.
[SPEAKER_09]: Full-spel a question that came in earlier.
[SPEAKER_07]: Hey Justin, look, this is Nathan from Texas.
[SPEAKER_07]: I was told in the day about Judge Brothers.
[SPEAKER_07]: The stocks in this D-R-A-S as in brothers.
[SPEAKER_07]: I wonder if now it would be a good time to get in.
[SPEAKER_07]: It's, uh,
[SPEAKER_07]: start to see these Dutch Brothers stores pop up in different parts of Texas.
[SPEAKER_07]: I'm just curious about maybe this may be an opportunity.
[SPEAKER_07]: Thanks.
[SPEAKER_09]: Looking at Dutch Brothers, BROS is the symbol.
[SPEAKER_09]: They operate 982 drive through coffee shops in 18 states in the U.S.
[SPEAKER_09]: Certainly a strong growth company last quarter revenues up 29% earnings were up 143%.
[SPEAKER_09]: For total, 2026 earnings are supposed to be up 16% to 88 cents.
[SPEAKER_09]: And then up another 33% next year to $17 of those estimates are coming down a bit.
[SPEAKER_09]: This is a name that is still down 32% from as 52 week high.
[SPEAKER_09]: So it's going through a pullback consolidation phase that I think at some point will be a buy.
[SPEAKER_09]: And it provides value to even a ride around 20.
[SPEAKER_09]: which is not super expensive, but not cheap either.
[SPEAKER_09]: Price the boats around 10, that's pretty high.
[SPEAKER_09]: Price the sales around four, that's also very high.
[SPEAKER_09]: The technicals though, and they look pretty solid.
[SPEAKER_09]: Starting to find some traction here, right around $45 to $50 per share, which I like.
[SPEAKER_09]: I just don't love the valuation, but this would be more of a longer-term bet at not crazy expensive prices to be frank.
[SPEAKER_09]: But certainly not cheap either.
[SPEAKER_09]: You really have to have confidence that this growth will continue.
[SPEAKER_09]: I wouldn't just buy it because, oh, you see some popping up in your area, that's not a recipe of guaranteed success.
[SPEAKER_09]: It can be, can create success, but I remember,
[SPEAKER_09]: I'll tell you a quick story.
[SPEAKER_09]: I remember the 90s when I was growing up.
[SPEAKER_09]: There was a restaurant chain called Boston Market.
[SPEAKER_09]: Still around.
[SPEAKER_09]: I see some here and there.
[SPEAKER_09]: But as soon as it came out, very popular, it was like Thanksgiving dinner every day if you wanted it.
[SPEAKER_09]: And it was pretty good.
[SPEAKER_09]: And they started growing more and more stores.
[SPEAKER_09]: But they grew too fast.
[SPEAKER_09]: They can't
[SPEAKER_09]: You know, that one's going to survive is a chain.
[SPEAKER_09]: There's still around, but far few, a few are of them than they were in the past.
[SPEAKER_09]: So it was a good example of just because there were more of them doesn't mean that was necessarily a smart way to grow.
[SPEAKER_09]: They were just growing for growth sick.
[SPEAKER_09]: I would imagine in today's world with better data, better information, they can grow more efficiently and effectively than they did back then in the 90s.
[SPEAKER_09]: I would hope.
[SPEAKER_09]: And I like that they have an issue more shares in the past six to nine months.
[SPEAKER_09]: That's good.
[SPEAKER_09]: So this is a reasonable place I think to pick up some more shares, but know that you're not getting a bargain and they're still pretty considerable risk if it shares continue to go up and multiples contract across the market, this will be felt as well.
[SPEAKER_09]: Let's pay the back to another boy's bank question now.
[SPEAKER_08]: Hey, my name is Bob from Cincinnati and I'm looking at selfie if I own it and have owned it.
[SPEAKER_08]: Probably from the high down to where it is now and just wondering if this is a time I should just cut my losses and get out or if there's anything here.
[SPEAKER_08]: I look at like monster, another great drink company and selfie for a little bit more catering towards health conscious individuals.
[SPEAKER_08]: But I just don't know, I don't know if I've held it too long and just put on the money away or if I should stick with it and wait for it to come back.
[SPEAKER_09]: Looking at Celsius, this was one of those serial growers peaked out around, let's see, $9500 per share, hit a low back in early, $20, $25 on $20 per share.
[SPEAKER_09]: Rallyed back up to the 60s, now we're back then the 36.
[SPEAKER_09]: So you can see how a volatile this name has been.
[SPEAKER_09]: They lost money in 2022, but then made $0.70 in 2024, then a dollar $0.33 in 2025, and a dollar $0.62 expected this year in a $36 stock, so they're in $2.05 next year.
[SPEAKER_09]: I actually like this dip.
[SPEAKER_09]: I think now after this dip, it's a pretty good risk of versus reward at this time.
[SPEAKER_09]: about an $9 billion valuation.
[SPEAKER_09]: It's starting to show some signs of life down here.
[SPEAKER_09]: Good balance sheet, very little debt.
[SPEAKER_09]: Free cash flow around $323 million, which is down from its all-time high, but still relatively solid.
[SPEAKER_09]: And so I'm gonna give Celsius a thumbs up at this time at these prices.
[SPEAKER_09]: Now, it gets back in the 60s, it's solid again.
[SPEAKER_09]: You know, I'm $35 below is a good value for Celsius.
[SPEAKER_09]: Those are the best stock I'm just inclined we have one goal here.
[SPEAKER_09]: Each and every week, things help you achieve your own version of nature.
[SPEAKER_09]: Freedom and I work it to use after this final break.
[SPEAKER_09]: It's a good question.
[SPEAKER_09]: Isn't it right now at 8.99 chart?
[SPEAKER_02]: The calls are free, the unbiased answers are free.
[SPEAKER_02]: So what are you waiting for?
[SPEAKER_02]: Call in Vestock, 888-99, chart.
[SPEAKER_03]: Hi, Dr. from New York.
[SPEAKER_03]: Thank you for all that you do.
[SPEAKER_03]: I just have two questions, and hopefully you can answer both of them.
[SPEAKER_03]: One is on Scott Stockticker, SKWD, interested in Skyward specialty insurance group, because it is in financials.
[SPEAKER_03]: It's also an insurance company and seems like a microcap, which might have the ability to grow.
[SPEAKER_03]: Just looking to see what you think, I see the return on equity is positive and the return on assets is positive to well too, well it'd be a good entry point and that leads me to question number two.
[SPEAKER_03]: When you look at technical analysis, there's 50 day, 100 day, and 200 day.
[SPEAKER_03]: I notice there's something called a single moving average or an exponential moving average
[SPEAKER_03]: What does the difference between the two and what do you think I should like as a retail investor follow more likely?
[SPEAKER_03]: Thank you very much and have a great day.
[SPEAKER_03]: Bye.
[SPEAKER_09]: What you're talking about is a simple, that's not, yeah, I think it's a single, that's simple moving average for this exponential.
[SPEAKER_09]: I always use simple, that's what I would use.
[SPEAKER_09]: Now, when it comes to skyward, especially insurance group, this is a small cap name about one and a half.
[SPEAKER_09]: Minimal debt.
[SPEAKER_09]: I like that.
[SPEAKER_09]: Good cash flow, $400 million in free cash flow.
[SPEAKER_09]: I would worry a bit about there how much private equity and private credit risk would dig into that.
[SPEAKER_09]: I don't have that in front of me.
[SPEAKER_09]: So I would try to find some information on that.
[SPEAKER_09]: But I like the valuations here.
[SPEAKER_09]: Price to free cash flow about four times pretty cheap for an equity on 18 times shares outstanding.
[SPEAKER_09]: They
[SPEAKER_09]: Maybe this you shares recently, don't love that, I wonder why with such a strong balance sheet.
[SPEAKER_09]: Yeah, I would, I would look into that is because they have a lot of private equity and private credit that is preventing them from having enough real cash flow, right?
[SPEAKER_09]: that does worry me a little bit.
[SPEAKER_09]: So I dig into that exposure.
[SPEAKER_09]: Technically, it did get a bounce off the off good support right around 41, now we're trading at about 45 now.
[SPEAKER_09]: So I like it, if it clears the private equity and private credit exposure, it can have some, but it needs to be below 10% of their assets.
[SPEAKER_09]: If the below 10% of their assets, then I feel good about owning Skyward SKWD.
[SPEAKER_09]: Lastly, let's talk about value stocks and growth stocks, right now, value stocks are having a great year after are they're marching towards really a banner year?
[SPEAKER_09]: The Russell 1000 value is up 2.4% this year.
[SPEAKER_09]: The Russell 1000 growth is down 9.1%.
[SPEAKER_09]: This year, the largest margin since 2022, the broader S&P is down around 4% on the year.
[SPEAKER_09]: and notched the worst quarter in nearly four years.
[SPEAKER_09]: In key one.
[SPEAKER_09]: But that doesn't mean that growth stocks or values stocks are without their own level of volatility.
[SPEAKER_09]: At one point, this year, values stocks Russell 1000 values up about 7% of the year.
[SPEAKER_09]: That's had a nice, you know, 5% pullback.
[SPEAKER_09]: But that should be expected.
[SPEAKER_09]: At the end of the day, no tree goes to the sky.
[SPEAKER_09]: Nothing goes in a straight line.
[SPEAKER_09]: And equities are equities and you're still going to have a broader pullback.
[SPEAKER_09]: But a lot of the stocks that are in the, the, the, the value index can do well like energy stocks, the top performer of the S and P is you to imagine this year, up 33% on the year.
[SPEAKER_09]: So that's certainly part of it.
[SPEAKER_09]: And there's a material side.
[SPEAKER_09]: you're living them in copper names, those continue to do well, but mainly this is a story about the growth side of the market.
[SPEAKER_09]: Software names down considerably, big cap AI names, hyperscalers down considerably.
[SPEAKER_09]: And the value stocks are benefiting more from patch cuts, deregulation, all of that than the tech names.
[SPEAKER_09]: But most importantly, in an inflationary environment, multiples come down.
[SPEAKER_09]: Cross the board.
[SPEAKER_09]: But when you're trading at a higher multiple, there's more room to fall, and that's why the growth set of the mark is just struggling in the will as long as inflation remains the name of the game.
[SPEAKER_09]: I'm Justin Klein, and I would remind you that K-P financials parallel investing when we make a trade for our clients, we make the same trade for ourselves, same day, same price, same percentage, no front running, no special treatments we invest right alongside our clients.
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