Welcome back to the Joseph. Carlson show, we have a.
Very full episode. Ahead of us.
This is earnings week two. We're going to be doing a review
of every company reporting earnings.
At least the notable ones I'll be.
Giving my thoughts on them what I think is going to.
Happen and how I believe. These companies are positioned
now. Week one was last week.
And that one was exciting because we.
Start off earnings. But really, we only had a.
Couple. Really notable companies report
earnings. Most of the attention was on
Netflix and Tesla. Two very.
Volatile stocks reporting earnings, So we got.
Through that, but this week's. Different as you can see.
There's a whole wall of. Companies, but there's a.
Lot more that are notable. Big companies than last week.
These are much. Bigger, more notable.
Companies and as you can. See, I've gone through this.
List. I've highlighted the ones that.
I think are the most notable. Circle them in red.
And those are the ones. That we're going to be.
Reviewing in this video so. We have Domino's which just
reported their earnings. I'll be giving my.
Thoughts on that? Then tomorrow morning.
We have Verizon this company. I have some thoughts on Verizon.
I and AT&T for that matter. I don't have AT&T selected, but
I'll be grouping. Verizon and AT&T.
Together, but then we have. Spotify We have Microsoft.
We have Google. We have Snapchat and Visa all on
the same day. Tomorrow is going to be a.
Very, very busy day. Spotify is facing a new.
Competitor, I'll be talking about the new.
Competitor Microsoft is one that.
I have a huge. Holding in same with Google.
Some very. Bullish on those companies and
same with Visa. So I like.
Three out of those four. Companies Snapchat?
Not quite as much. But I'll be talking.
About that company as well then we get into Wednesday which we.
Also have highly anticipated earnings.
You have Cocacola. And that's usually the same.
Usually. Cocacola isn't too crazy.
Then we have Union Pacific. That's a stock that I.
Hold so I. Want to share some thoughts on
that? Then we have.
The most highly anticipated. Of the week in my.
Opinion which is meta I think a lot of.
Investors are looking forward. To how this one's doing.
After that, we get into Chipotle.
We'll get into McDonald's. We have some of those food
stocks that I have some. Opinions on?
I really. Like some of these companies.
And then we get into. MasterCard Crocs.
Two companies that I currently. Hold.
And then after that Thursday evening, we have Intel and Roku.
To close out the week. Those are the companies.
That I'm going to be. Reviewing in this video.
And we'll be going. Over all of it, the.
Market position of. These companies the financials.
And whether or not I. Believe they'll post strong
earnings or weak earnings. So we have a.
Ton to get. To in this episode.
Go ahead and get yourself. Situated Grab a drink, because
we're going to dive right in. Let's go ahead.
And start off with. Domino's now Domino's just
reported. Earnings a couple hours ago.
And the results were mixed. They they beat on their.
Earnings per share estimates. But they missed by 50 million on
their revenue. So I'd call this a mixed result,
but overall. When I'm looking at.
Earnings even though a company. Can miss on one.
Or beat on the other. I don't.
Think that's the most important? Thing.
Really when we're looking at earnings, what I'm.
Trying to determine is. Whether or not the.
Company overall is. Moving in the right direction.
Whether it's growing. Its earnings per share growing,
its free cash flow per share. Whether the Moat is widening.
Whether they're opening up more locations I want to see.
Overall the business. Growing.
So I try to. Really look at this as.
If I'm a business owner, not just someone.
Looking at a couple numbers. I want to actually see.
Overall how the business is doing.
When I try to. Assess with this earnings
report. How Domino's is doing?
I think this. Company's really great I think.
It's a great. Company and I do.
Think it's doing well. I think it's going through some
temporary. Struggles with overall growth
simply. Because of a huge pull.
Forward of demand, That it. Experienced a couple years ago.
With everybody being locked in their home.
Pizza was a. Little bit of a goto.
Item. Is a bit like Netflix.
Netflix had some pull. Forward during COVID Domino's
had. The same thing.
So they. Benefited a lot during that.
And now trying to. Resume growth has been a.
Struggle. It's a bit of a.
Grind for Domino's, but I. Believe this company will.
Do it. I think they're going to.
Eventually surpass all time highs.
I look. At Domino's here and they had.
Growth and revenue of 5.8%. That's good.
That's excluding FX, but that's that's.
Decent growth. It's not bad.
The. Problem is, we don't have.
Much same store sales growth. You want to see.
Stay same. Restaurant or same store sales?
Growth. If you're buying something like.
Like Home Depot? You want to see same?
Store sales growth. If you're buying something like.
Texas Roadhouse. Domino's.
Chipotle. McDonald's.
You want to see same? Restaurant sales growth.
That means they're selling. More, at least in revenue.
Every single year. At the same location.
So with companies that are very. Consistent with this the same.
Store sales growth. They do really well those.
Are companies like Costco Domino's again is struggling?
With this metric ever since 2020.
They did so. Well, they had so much.
Demand temporarily pulled forward.
That now they're struggling against those comparators.
So right now it's been a. Struggle, but I really I.
Really think this company. Can pull through it.
They're. Opening up a lot more.
Locations every single quarter. The company had. 200 and. 53
growth store. Openings and 56 closures during
the second quarter. So they opened up 200 additional
net locations this. Quarter, that's great.
The company's growing now it doesn't look.
Like the market? Is too concerned about this
report either it's. Up 1.51.
Percent I think that's an appropriate reaction.
The one thing that. Really deters me from.
Owning Domino's. And the reason that I.
Really don't have a. Big stake in this company is
because of the amount of debt. I just.
Don't like how much? Debt.
A lot of these franchise companies have Domino's in.
Particular has around 5:00. Billion Dollars of debt 5.
Billion for company. That last year did around 800
million in EBITDA. So they're around.
Five to six times. Debt to EBITDA?
Which is a It's okay. They're not going to go.
Bankrupt, but it's just a lot of debt and I'd.
Rather, I'd rather. Focus on companies, in my
opinion, that don't have as much.
Debt. So that's one of the reasons
that I've ruled Domino's out. But that's not a big.
Concern for most investors? And I think Domino's is doing
great. Now let's move on to companies
that I'm not so bullish on here. We have one of them.
Right here, which is Verizon. Verizon reports tomorrow morning
and all group. In AT&T.
Because my comments are. Basically the exact same.
They apply equally to both. Companies, So let's go ahead.
And bring them up here. We have Verizon hair and by the
way, this. Software is called.
Qualtrim. You can try it out with the
Patreon, but we bring up. Verizon Hair and the company's.
Up a little bit ahead. Of earnings.
These companies Verizon. And AT&T?
I believe are value traps. And I.
Believe that they're value traps.
For a long. Period of time.
Now it's. Easy to.
Say that their value trap. Now because they're doing
really. Poorly, but I believe they.
Have been value traps. Long before they're even doing.
Poorly, as bad as they are. Now but both of.
These companies have a lot. Of shared.
Characteristics that I find incredibly.
Unattractive and investments and the.
Results show. Let's go ahead.
And take a look. At the.
Company's returns over the past. Decade.
Verizon is down 32. Percent in the past 10 years.
32%. It's in the red, even with
dividends. Reinvested over the past 10
years? That is incredible.
It would be. It's it's difficult.
In my opinion, to have. Zero returns for a. 10 year.
Period during a bull market running a company.
As big as this? It's like they had a.
Work. On not having good.
Returns, and the same thing with AT&T.
This is a company. That attracts a lot of dividend
investors. Because of the high yield.
It's a company. That really offers a huge
payout. But it's down nearly 44.
Percent over the past decade. It's suckering investors into.
Buying this company and then. Providing them with a.
Lot of volatility. Income that doesn't make up.
For the total return. Loss.
Even with dividends reinvested, you're still.
In the red over a. 10 year period and the.
Returns don't look good even further out.
If you go back. 15 years or 20? Years.
It doesn't look good either. So neither of these companies.
Are giving good results. And I don't believe that's.
Happened chance. My thoughts on why these?
Companies are not giving good. Returns is because they're bad
companies. Simply put.
They don't have attractive characteristics.
In an investment they have. An.
Incredible. Incredible amount of leverage.
We look at the amount of debt. That this company holds a. 128
billion. That's more than the market.
Cap of most companies that exist in the.
World, They're so. Indebted.
And when you go into an indebted company, you have to deal.
With interest rates going up. You have to deal with.
Debt schedules and payment dates.
You have to deal with. High interest payments.
It eats into the. Earnings of the stock.
AT&T has. A ton of debt, Verizon.
Has a ton of debt. Verizon has 100, I believe 100.
And 30. $6 billion of. Longterm debt Astronomical
amounts of. Debt.
And these companies will never. Get this debt paid off.
It's just. Never going to happen.
So I look. At both of these companies.
They're completely riddled with debt.
And they also. Don't have high returns on.
Capital employed, they're not capital efficient.
They don't have ample growth opportunity they don't have.
Pricing power they don't have. Anything.
Except for maybe a significant. Mode.
But within that mode, they don't have great economics.
So both of these. Companies have very
unattractive. Characteristics all around and.
You can look at the earnings and they might.
Beat They might miss but. Again, that's not the.
Point we should be looking at. It doesn't mean the investments.
Great if they beat their. Earnings.
We should. Be looking at the direction
over. All the companies are going.
And. Neither of these companies
Verizon and AT&T. Neither of them are going
anywhere fast, so in my opinion. I think it's a mistake.
For investors to continually. Try to buy the.
Dip in these companies when there's so many.
Better options? Now another company that's
quite. Different that's.
Reporting Earnings Tuesday Morning.
Is Spotify this is? One that I really.
Like the company? I really.
Like I like a lot. Of things about Spotify.
I like the app. I like the user interface, I
like the algorithms. I like that it's a founder LED
CEO. I do believe that Spotify has
pricing. Power.
They're just raising prices. Again, they're competing with a
big tech and. Doing a really good job.
At it, having said that. Spotify is now.
Facing a brand new competitor. That, I believe, will be a very.
Big competitor. Now if I was sitting.
In Spotify's executive boardrooms and.
Doing discussions on competitive threats.
And trying. To to think of what?
Do I think is the? Worst thing that could happen.
What do? I think is the biggest.
Competitive threat we could face.
TikTok would probably. Be the top thing.
That's probably the biggest single threat.
That I could face in terms of competition.
Because what other? Company has more of a.
Plug. Into younger generation and
music. TikTok.
Really. Controls this industry.
They're the ones that make. Viral hits in music.
If a TikTok goes. Viral on TikTok.
The song. Associated with that TikTok.
Will be trending on, it'll be trending on Spotify.
So this is what I. Think is a really not.
A good. Evolution for Spotify?
I don't. View this as a positive.
Thing at all Tik Tok's launching this new music app.
They're styling it very similar to.
Spotify with a nice album art. The easy.
Interface, right? Very simplistic.
Something that I think a. Lot of younger, younger
generation will really enjoy. Using and combining that right.
In the Tik. T.O.K ecosystem combined with
their. Already huge.
Platform, I think it's just. Another thorn in the.
Side of Spotify. I think it's another problem.
For this company to face. Another big competitor that will
take market share. I believe TikTok.
Will grow to. Millions and millions of users.
In their TikTok music, so Spotify.
Is down over 5%. Today, that is because of.
This news of Tik Tok's Music app and that happens this.
Company's down 5% when the rest of the.
Market is in the green. You can see it refreshing.
There the markets in the green. Spotify is in the red, and I
agree. With this sell off I.
Think that this. Is not a threat.
It's not a threat to be taken lightly.
Now the other issue. I have with Spotify.
Is. Spotify is over a decade.
Old and still not fully. Profitable on a free cash.
Flow stock based comp adjusted basis and if.
A company is not. Profitable after over a.
Decade, in fact over 15. Years.
What are the odds of this? Year them becoming.
Profitable or next year? What is the evidence?
You have when it takes. That long to become profitable.
They have nearly half a billion. Users on their platform.
Why can't they generate a? Profit.
And if they can't generate? A real sizable profit with.
Over 400 million users, What point do they need?
Where do they need to? Get It's a very difficult.
Thing to say that they're going to become.
Profitable at a certain. Time because of how this
business is constructed, they have.
Lower margins. Because the the the people.
That own the. Rights to the music.
All the. Labels.
They're the ones that. Really.
Take the economics. So even though.
Spotify is creating all the. Value the.
Algorithms. The advertising, The promotion.
It's the labels that accrue all the value.
And that's a bad relationship. I think it's unfair.
To Spotify, but that's. Just the way it is.
So as long as that continues on as long as.
Spotify. Continues to just grow in.
Users, but never really has great.
Economics I'm going to remain. On the sidelines.
It's my thoughts on Spotify. I think the company's still.
Growing it's growing daily active.
Users, it'll grow its podcast. It'll grow its revenue, but.
Revenue growth without great economics.
Doesn't really amount to much. And that's the big question mark
there. So what I'll be looking?
For with. Spotify is are the actual.
Economics improving. Now let's go.
Ahead and move. On to the big ones.
Here we have. Microsoft and Google reporting
earnings. Tuesday after market close.
Now I'm going. To make a prediction here.
And I can't. Guarantee if this is correct.
So I wouldn't. Bet on this, but this would be
my. Prediction.
If I was forced to. Try to guess the outcome here.
I believe that Microsoft. I believe it will beat.
On its earnings per share. And I believe it will beat on
its revenue top and bottom line beat.
And. I believe the company will.
Sell off ever so slightly. I think it that's going to be
the. Outcome.
If I had a guess. Now the reason I say that is
because Microsoft. Has a.
Strong history of rarely missing.
Their earnings per share and rarely missing their revenue
estimates. They typically beat them.
So they beat the analysts estimates.
But in this situation, Microsoft.
Has had such a. Good run if we look.
At how the stock is traded, it's up. 43%.
Year to date in the. Past one year, it's.
Up 33%. We've had a really.
Miraculous recovery with this company.
Huge Bull. Run with this company.
And now the. Stock is trading at valuations.
That are, they're quite. High the valuations and
expectations. Are higher than most companies.
In fact, Microsoft. Is one of the companies.
In the market. That, I believe has.
The highest. Expectations of investors A20.
74 P/E ratio. A 2% free cash.
Flow yield. These are very high.
Expectations even for Microsoft. So I could.
See this company. Beating on its earnings per
share, Beating on its revenue. But if any.
Little weakness happens if there's.
Any part. Of the report.
That's weak. If.
The cloud is growing slightly slower than expectations then
the stock. Could trade down?
3 or 4%? I could see that outcome.
Easily now in terms of what investors are going to be
focused on with Microsoft. I think the big one is going to
be. Cloud.
That is the new Microsoft. The thing generating, growing
free. Cash flows is the cloud.
Business that's integrated into the rest of the.
Company SO. That's going to be the.
Biggest focus is what did Azure do?
What did the cloud? Part of the business do.
There's going to be. Some questions about the
acquisition. There's going to be questions.
About the other. Businesses about the gaming
division. But I still believe the cloud
will be the. Biggest thing investors focus
on? So another thing that could.
Send Microsoft stock down. Is if cloud.
Underperforms. I don't believe that will
happen. I think cloud is going.
To come in strong. And I do think that if.
Cloud comes in. Very strong or above
expectations. The stock will go.
Further high so. Overall I am bullish on
Microsoft. Even with these high
expectations. I think.
The earnings will be. Fine.
I think they'll be. Passable, but I'm aware.
There's a really good chance that even with good earnings,
Microsoft could have a. Little bit of a Netflix.
Or Tesla situation because? It's recently done, so well now
of course after Microsoft. We have Google on other.
Highly anticipated big tech earnings.
Google's a major holding. In My Portfolio, a company that
I'm bullish on, I love the. Properties of this company.
Now it trades at a much. Lower valuation than.
Microsoft, we have a 17. .84 P/E.
Ratio and a 4%. Free cash flow yield but.
This company does face challenges it faces.
Challenges that Microsoft doesn't.
One of them is that it has a. Much higher percentage of its
cash flows. Going to stock based comp and
investors. Especially activist investors
like Chris. Hohn have wrote into Google and
said. That you're basically not
managing. Your costs well.
You're paying developers too much.
You have way too much stock based comp impact.
You need to cut cost. So one thing that investors.
Are going to be looking. At is if this company is
effectively. Cutting costs and growing their.
Revenue more than their expenses, that's going to be a
big. Thing is the margins of the
company and if they're cutting. Costs the other thing of.
Course is the free. Cash flow of the company.
It's been a little bit flat for the last.
Couple of years and that's. Again, a lot of the.
Pull for it from COVID. You can see the huge.
Spike up here. They need to resume.
Growth from that point. So we'll be looking at the core
businesses, we'll be looking at the.
Growth and free cash flow. The other storyline and.
Narratives of Google is going to.
Be a lot of a I. Questions ChatGPT barred all the
new. A I stuff that they're.
Creating. I think all that stuff is.
Exciting, but for me I. Still believe the core?
Drivers of this company overall. Is going to be controlling.
Expenses and having discipline to control the stock based comp
so it. Doesn't rise up and eat.
Half the free cash flows and then continuing to grow the core
businesses. Growing Google Search.
Growing YouTube. Growing Google Cloud.
The way that I believe. Google could outperform current
investors. Expectations is by cutting.
Expenses more than expected. And by having Google cloud.
Lose. Less money than expected if.
Google Cloud comes in with better economics than expected.
I think that this stock is going to go much higher.
Google's in a. Situation I really like.
I like the set up for earnings. I like the valuation.
I feel completely fine going into it.
I'll be shocked. If it has a major sell off,
something will. Have to go really wrong.
For this. Company to have a sell.
Off. So right now I'm very.
Positive on the direction of Google.
Next up we have Snapchat. This company I have.
Not liked for a long. Period of time.
I don't, generally speaking, like.
Social media companies as investments that much to begin
with. Snapchat's a company.
That over the history of. It it really hasn't given.
Any returns, we're. Looking since 2017.
And it's down 48%. And while this has happened.
While the stock. Is down nearly.
Half and the retail investor has been burned in the.
Stock all the. Executives all the C.
EO's have had. Major paydays with stock.
They've given themselves massive compensation packages as this
has happened. That's not a.
Relationship I like. I like the relationship where.
It's like Buffett. Where the executives and the.
Owners of the company get paid with the rest of the.
Investors in the company. So this isn't a company?
That I like how it's been managed.
I don't like. How it's been treating
investors. And I think it's deceiving.
The way that they've done this by having incredible amounts of
stock based comp. Eating into the free cash of the
company and they. Try to act like that's not an
expense. So we look at this company.
We look at the cash. Flows we compare.
It to the stock based comp and it continually.
Dilutes. Now, that's not to say things.
Can't turn around, I believe. Snapchat.
For once, is actually. Headed in the right direction, I
think that they're going to actually try to make free.
Cash flows that exceed. The amount of stock based comp.
You can see this happening. Over the past couple of.
Quarters, the management has indicated.
That they're trying to become truly profitable.
So maybe I'll get surprised. Maybe things will actually go.
Well, for Snapchat. I'm open to that surprise.
But as of right now, for me, this is a company that I'm not.
Bullish on I, I. Think it's in a void.
I think there's much better. Companies in the market.
Now after Snapchat. We have Visa a company.
I really, really. Love.
I don't own Visa, but I do own. MasterCard in my opinion.
It's a flip of. A coin of which one you want to
own. They're both great, and they're
both. Duopoly in the credit card
processing. So Visa and MasterCard I.
Believe are just amazing companies.
I think so many. Investors are.
Missing out on these companies because they view them as.
Boring, outdated companies that don't.
Offer a lot. Instead of.
Exciting tech companies in reality.
MasterCard and Visa are. Both digital tech.
Companies transferring huge amounts of.
Data with massive network effects.
MasterCard in particular has a lot of actual.
They have a lot of tech. Stuff they sell Security,
identification. Lots of different things.
They sell to companies. So these are both.
Exciting tech. Companies reporting earnings
this week. And I believe the earnings are
going to be great if. I had to give a guess for both.
Of these companies I. Think they're going to have
strong earnings results? Good revenue, good free cash
flow. I think everything will be on
point. I'll be shocked.
If these companies post horrible.
Earnings. When I look at the.
Consistency. Of Visa and MasterCard.
There's nothing else like it. There's companies that are
consistent and then there's Visa and.
MasterCard look at the free cash flow.
Growth of this company? Isn't that just phenomenal?
It's like a 40. Five degree angle for over a
decade. There's some ebbs and flows.
Year over year. That's how free cash flow.
Works. But overall we have incredible
growth and then. Adjusted for stock based.
Comp on a per share. Basis it's even faster.
Growing at 18. Percent over the past five
years. The growth rates of these
companies. Free cash flow is.
Incredible. MasterCard is the exact.
Same I look at Mastercards. Free cash flow growth.
And it makes me want to own more of this company.
So when I look at these stocks, I see companies that have.
Incredibly good fundamentals. Huge network effects, Wide
moats. They they have.
Very limited competition, this. Isn't like Spotify the faces?
Apple Music and YouTube Music and TikTok Music and a million
Other. Competitors.
MasterCard and Visa are very. Insulated in the.
Business that they run. So they have a limited amount of
competition, great economics. I think they're going to post.
Very strong earnings now after. Visa.
We move on to Wednesday. Morning.
And we have Union Pacific. Reporting earnings.
This is one of the. Companies that I currently own.
It's not exciting, there's. Nothing exciting about Union
Pacific. It is a boring.
Company that does the same. Thing, day in and day.
Out as. Very little disruption and very.
Little news overall. And those are the type of
companies I love. Ones where they just start
business. As usual, making.
Money day in and day out that go to my.
Pockets, now the. Thing that I really.
Like in particular about the. Earnings set up for Union?
Pacific is that. There's not a lot priced into
the stock. It has.
Pretty subdued expectations, in fact.
When I look at the. Multiples of this company.
It's trading out of 17. Ford P.
E That's not crazy. It's trading out of free.
Cash flow yield of four. Percent that's not crazy either.
This is pretty. Low.
Expectations for this company Which?
Means that the company. Just needs to report OK earnings
and it should be fine and it. Has a lot of wiggle.
Room. There's a lot.
Of wiggle room for. Upside surprises in the
earnings. So I like the.
Setup of Union Pacific. I think it's less risky than
companies with higher. Expectations, if you consider
the. Expectations that Microsoft has.
Very high expectations. Or Visa or MasterCard or.
Meta. It's had a huge run up.
So it has higher expectations. Chipotle.
The same thing as well, a lot. Of these companies the market.
Has raised up this year. A lot of these companies have.
Very high expectations. But if you look at.
Union Pacific year to date. It's only up 5%.
So it's really trail. Behind the rest of the market.
And that typically? Means that there's just.
Not as much priced into it. So if I had to give a guess.
Here I think. That Union Pacific's earnings
will be right in line and I think there's a chance that will
trade up after. Earnings Now let's.
Move on from Union Pacific. And we're going to talk.
About meta for a minute. This company I believe.
Has the most anticipated. Earnings of the week.
Meta is a company that. So far.
Over the past couple of. Years it's been a heavily.
Narrative driven company meaning.
That what the CEO? Mark Zuckerberg talks about.
What the company's focus is and. How he creates the narrative has
really moved the. Stock when Mark Zuckerberg.
A couple years ago started. Yapping about the Metaverse and.
Saying that, he's going to focus a ton of.
Energy a ton of. Effort all this time.
And a ton of. Capital in the metaverse
investors. Did not like that.
Because the Roc. E The Return on Capital
Employed. Of the metaverse is unknowable.
And likely very low. Some investors.
Bailed out of the. Company when he said.
That that was his. Primary focus and the north.
Star, but then Mark Zuckerberg. Got wise, he decided to pivot.
He said that. We're going to shift over to
having the year of efficiency when we had.
The Year of Efficiency start right here.
All of a sudden. Investors were like Okay.
My opinion has changed, Mark. Zuckerberg is now.
Being sensible, he's focusing on costs and things that drive
actual growth in the company's economics.
So the stock zooms back up. So this is largely been.
Narrative driven meta is no. Longer talking about the
Metaverse. Now.
Mark Zuckerberg is focused on. A I.
Focused on their core. Businesses focused on building.
Properties like threads. That compete with Twitter.
They're focusing on the things that they're best at, not these
unknowable. Projects with unknowable
returns. So as long as Mark Zuckerberg
continues on. Talking about these things.
Focusing on that as well as driving incremental.
Growth and revenue and free. Cash flow, I think that meta is
going. To continue to have good.
Results this earnings. I believe Meta will do fine.
I don't have any. Reason to believe the earnings.
Results will be. Bad, but I will.
Say, I think it's a. Little bit more of a risky 1.
Just because of the massive. Run up it's.
Had anytime a company's up. 135% year to date and.
It's basically a straight line. I think there's a chance.
You get a. 5 to 10% sell. Off.
That's just the risk you. Take with a company.
That's run up that quickly. Now moving on, we have.
Chipotle reporting earnings Wednesday.
After market. Close.
This is a company I really. Really like I've been.
Talking about this company. For years I've been following it
for a long. Time period.
I've become convinced that Chipotle.
Is a true compounder A compounding machine?
It has an investment. Thesis.
That's very simple. They create a.
Box. The box has.
Food in it. They have a way of distributing
the food. Creating the food, processing
the food and marketing the food, that's very efficient.
And makes a lot of. Money and then the great thing
about the Chipotle business model.
Like these fast casual restaurants?
Is they can take that? Box they can replicate it, they
can replicate it again, they can replicate it again, and then
they can measure the returns that they're getting on.
Each new restaurant and. Once they get that down, they.
Can just repeat the strategy and grow it all across.
The globe This is exactly what Starbucks did.
Starbucks. Has 33,000 locations.
Chipotle only has 3000. Locations Chipotle.
Has had such good success. They have such good unit.
Economics, they have such good execution that I believe.
This company is going to. Replicate their strategy.
Over and over again. Growing to double.
And four times the size. So Chipotle is a.
Company I. Really love the business.
Model I. Really like the situation.
Of the stock. I like the future growth outlook
of it the big. Question is the valuation.
On the company. With earnings reports, it's not.
Just about whether or. Not they beat or miss.
It's whether. Or not.
They have. Incredibly high expectations in
this stock. And.
This company has high expectations.
We look at this. The P/E ratio.
Right now is 35 and the free cash.
Flow yields 1.7. So the company appears.
Expensive based on the multiples.
We have a high P/E. Ratio A low free cash.
Flow yield. And that's something that.
Investors. A lot.
Of times don't like we like to get.
Deals, so we don't want to buy. Companies like Chipotle that
are. Growing fast but have high.
Expectations. My guess is.
Chipotle will have good. Earnings.
That's my prediction. I think that Domino's had.
OK, earnings. I think there's a.
Chance that Chipotle could slightly.
Miss on the top or bottom? Line, but they're.
Opening up new locations. They're going to be growing
earnings very quickly, my. Guess is that.
They're going to be on the top and bottom line.
And have very good. Growth, very good margins.
I think this company's executing.
On all fronts. So I'm very bullish on.
Chipotle I really like. The company.
Next up we have McDonald's. Now, like Chipotle, I'm bullish
on McDonald's. As well, I still believe.
That all these companies. All the fast.
Food highly optimized companies have.
So many things going for it. I've said this.
For a while, I think. These companies are basically.
Advanced vending machines for convenient.
Access to hot meals. So you look at McDonald's and
it's the same thing. It's just a box.
You go to you. Get a hot meal.
It's very consistent and with. People.
Value and convenience more than. Ever, I continue to believe.
That there's a lot of. Growth runway with same.
Store sales from McDonald's. In the future.
So I think. McDonald's, like Chipotle, will
again have good. Earnings, I don't see any.
Reason it's going to have. Really terrible earnings.
It offers great. Value it's very.
Consistent. I think they have.
Great execution and. I believe that people right now
have enough money to. Afford these services.
Now Next up we have. Crocs, this is a great.
Company the shoe company really trendy shoes right now they.
Also own Hey Dude. And a lot of people.
Don't realize that the company's named after their name brand.
Crocs. But they do.
Own Hey Dude as well, which is a.
Very fast growing, really comfy shoes, so I think they own 2.
Great. Brands.
I think the company has a lot of brand value.
I do think that Crocs isn't as much of A.
Meme, as people believe. And I have.
Made money on this company. I invested $1000 into.
It it quickly went up. 80% I sold out most of my.
Holdings. So I made eight. $100 on $1000
investment. So Crocs has been a great
investment for me. I really like the company.
If I was to give. A hesitation on this company.
My big hesitation is simply. How it's traded the company.
Traded up like crazy. During the peak of.
Meaning and Tik. T.O.K and the COVID.
Boom, 2021. And then it had a huge.
Falloff way. Too much of A sell?
Off during this time period I became interested in the company
and I was looking at what the insiders of the.
Company were doing. All the insiders.
Literally almost all of them. Were buying up as many shares.
As they could. Spending millions of dollars.
On buying their own stock. Now, when insiders are doing
that, they're buying their own stock.
They're not. Cashing out.
That is a hugely. Positive sign.
That they are very. Bullish on the company?
And of. Course, they knew best they knew
that things were. Going well with the company,
they know it better. Than anybody the company raced.
Up in stock price. The sales were great, it.
Wasn't just a passing trend, Crocs is around to stay.
So for me currently I think the company's trading at a more
reasonable. Valuation and I don't expect.
Quite as much. Outperformance from here on out.
So looking at Crocs. Today I do believe this.
Is one that has more. Unpredictable earnings.
I can't guess what. Direction it's going to go and
that's. Part of the reason I.
Really have a hard time putting a ton of money into this
company. It's just too unpredictable I
really feel. Confident in companies like
Microsoft. And Visa and MasterCard.
I don't have the same. Degree of confidence in Crocs.
So this earnings report. It's going to be a mystery.
It'll be a surprise. Hopefully it's good.
Next up we have Intel reporting earnings.
This is a company. That I've been bearish on for a
while. I haven't liked Intel.
I think it's an incredibly. Complex company, huge CapEx.
Expenses. Tons of intense competition.
Not a lot of pricing power. It's just in an unfavorable.
Situation as a company. Having said that, the stock.
Price has been hit. Over the past five years, it's
come down. Dramatically and the C.
EO right now is. Determined to make a comeback.
With this one. So even though it's.
Down right now. I wouldn't count Intel out.
I do. Think there's?
Room for a recovery? They could get their cash.
Flows moving in the right direction again, so this.
Is one that I'm still. To this day, telling investors
it's not one I would invest in, it's not one that I would buy.
It doesn't fit My Portfolio or my investment thesis.
I don't like recovery. Plays I don't like.
Companies with weak fundamentals.
That I'm hoping and crossing my fingers that they turn around.
If a company shows it has a weak.
Fundamentals. It's getting invaded by
competition. It doesn't have pricing power,
has a lot of debt. It has a lot of CapEx.
Those are companies that I. I sell out of.
I wish them well. And then I put my money in
companies. Where things are.
Moving in the right direction. So Intel for me is.
Still in that situation where I'm.
Not betting on it. But in terms of this week's
earnings. Report.
I think it could beat expectations.
It already has priced very low expectations.
Now the last one. We're looking.
At This week is Roku. Roku's an interesting company.
This is one of those Trojan. Horse companies, that's really
what. It is.
It's a Trojan horse. Roku's a company.
That they. Try to sell their TV.
'S the Roku TV's for As cheap as possible.
Just to get them. Into your house.
And then when they get. The TV in your house.
For basically break. Even they're not even making.
Money on selling you the TV. Or the Roku device.
That's why they're like $10 or $20.
When they get them. In your house, then they
monetize. You through advertising on the.
Roku home screen. Then they monetize you through.
Getting you into the. Ecosystem of using the apps on
the Roku system. And advertising.
You on the Roku system? So that's the Trojan.
Horse play of this company. Sell device hardware for
extremely cheap. Just try to break.
Even on it. Get it into as many.
Households as possible. And then make money on.
The software. I think they're executing their.
Strategy Well. But there is.
Competition. Even within the strategy they're
competing with Apple, they're. Competing with Amazon doing the
same thing with. The Fire TV.
So they do face. Fierce competition and I
overall. I think the company is.
Okay, I think Roku. Is an okay bet.
If someone owned this. Company.
I wouldn't think they're crazy. The company right now is at.
Too immature of a stage. For me to invest in.
When I look at the financials of it.
And I see the free cash flows negative.
For multiple quarters. I'd be having to guess when is
this. Company actually going to make
money and for me. That's a little bit.
Difficult to say, right? Now they're going for.
Scale. They're going for size.
They're still. Trying to grow but for. $10
billion for company, that's still.
Free cash flow negative. Is just.
Not a mature enough. State So.
Roku right now I think is, I think it's a fine strategy, I
think a fine. Investment now in terms of.
This week's earnings report. I do believe it will be a
strong. One from Roku.
That would be my guess. No guarantees.
I can't see the future. But Netflix reported their.
Earnings and they gained. Subscribers.
They had great engagement. They're a big streaming service.
That's often used on Roku. And if Netflix?
And all the streaming services are doing really.
Well, Roku should be doing, really.
Well, so. So Roku should do well.
So that wraps up my. Predictions for the week.
And if you want to see analysis after these companies report
earnings, make sure you subscribe to the.
Channel with the bill notification.
That's all for now. See you in the next one.
I don't know what's going on.