1 00:00:00,080 --> 00:00:02,280 Welcome back everyone. Today on the Joseph Carlson Show 2 00:00:02,280 --> 00:00:05,680 we're going to be taking a look at 10 deep value stocks. 3 00:00:05,680 --> 00:00:08,600 These are ones that are a buy according to Baron's. 4 00:00:08,600 --> 00:00:11,160 Now Baron's is a publication that does valuation and they do 5 00:00:11,160 --> 00:00:12,960 analysis on all different stocks. 6 00:00:12,960 --> 00:00:16,160 And one of the ones that they've recently picked was Google and 7 00:00:16,160 --> 00:00:17,560 that turned out to be a very good pick. 8 00:00:17,560 --> 00:00:20,680 So we're going to be looking at their 10 new picks, 10 stocks 9 00:00:20,680 --> 00:00:21,920 that they believe are a great value. 10 00:00:21,920 --> 00:00:24,640 Now I'll be giving you my reaction and my thoughts to them 11 00:00:24,640 --> 00:00:27,200 seeing if they're right and we going over each one. 12 00:00:27,320 --> 00:00:29,080 Now, of course, we have a lot of big news to get to. 13 00:00:29,080 --> 00:00:33,040 For example, J Pal just lowered interest rates by 25 basis 14 00:00:33,040 --> 00:00:35,240 points. He signaled for more to come. 15 00:00:35,440 --> 00:00:37,240 How should investors react to this? 16 00:00:37,240 --> 00:00:40,600 While I have my thoughts, we have a Waymo releasing safety 17 00:00:40,600 --> 00:00:44,280 data that's incredible, showing that robotaxis are orders of 18 00:00:44,280 --> 00:00:47,360 magnitude safer than humans. What does this mean for the 19 00:00:47,360 --> 00:00:50,200 future of Waymo? And on the subject of Waymo, 20 00:00:50,200 --> 00:00:53,400 they also partnered with Lyft, which is a bit shocking to Uber 21 00:00:53,400 --> 00:00:55,360 investors. Now, Waymo's partnering with 22 00:00:55,360 --> 00:00:57,920 both Lyft and Uber. What do we make of this? 23 00:00:58,360 --> 00:01:00,360 And then we also have the comments section. 24 00:01:00,480 --> 00:01:03,440 I'll be responding to some of your questions in the previous 25 00:01:03,440 --> 00:01:05,840 episode. I'll be going over a number of 26 00:01:05,840 --> 00:01:07,880 them. So we have all of that to get to 27 00:01:08,040 --> 00:01:09,200 now. We kicked things off today by 28 00:01:09,200 --> 00:01:12,240 looking at these 10 stocks that Barons outlines as deep value. 29 00:01:12,800 --> 00:01:15,560 When we look back, one of the calls that they had last year, 30 00:01:15,920 --> 00:01:19,080 in fact this was November of 2024, was Google. 31 00:01:19,400 --> 00:01:22,720 They said the Alphabet stock could rise by 50%. 32 00:01:23,080 --> 00:01:25,600 I read through their thesis and I largely agreed with it. 33 00:01:25,880 --> 00:01:28,680 They said that it's a beautiful bargain compared to the rest of 34 00:01:28,680 --> 00:01:31,080 the S&P 500, especially the top companies. 35 00:01:31,400 --> 00:01:34,360 In fact, Alphabet at the time had a Ford earnings multiple of 36 00:01:34,360 --> 00:01:36,320 19. Looking back when you compared 37 00:01:36,320 --> 00:01:40,240 the multiple of Google right here at a 19 compared to Amazon 38 00:01:40,240 --> 00:01:45,280 at a 34 or Apple at a 31, even Meta out of 22, Microsoft at a 39 00:01:45,280 --> 00:01:48,840 31, NVIDIA out of 37, Tesla out of one O 6. 40 00:01:49,040 --> 00:01:52,960 One of these companies was at a very low valuation and it was 41 00:01:52,960 --> 00:01:55,680 Google the entire time. And they did like many of us. 42 00:01:55,680 --> 00:01:57,560 Again, a sum of the parts analysis. 43 00:01:57,840 --> 00:02:02,600 Alphabets pieces could be worth $260 per share, more than 50% 44 00:02:02,600 --> 00:02:06,440 higher than Thursday's close. So at the stock price it was 45 00:02:06,440 --> 00:02:10,000 trading at, they're saying Alphabet could be worth 260 per 46 00:02:10,000 --> 00:02:11,960 share. That's why we're bullish on it. 47 00:02:12,200 --> 00:02:13,800 It has a lot of downside protection. 48 00:02:13,800 --> 00:02:16,480 It's trading at a low valuation. It has a lot of bearish things 49 00:02:16,480 --> 00:02:18,440 already baked into the price, and it's a great company. 50 00:02:18,760 --> 00:02:21,440 Now, when we bring up Alphabet, Don Qualtrum here, it's not 51 00:02:21,440 --> 00:02:24,240 quite at 260 per share, but it's getting rather close. 52 00:02:24,240 --> 00:02:27,360 It's at 2:50. So I would argue that this call 53 00:02:27,360 --> 00:02:29,840 has largely been correct, I think in a short amount of time. 54 00:02:30,320 --> 00:02:31,720 And I have to give credit to Barons. 55 00:02:31,720 --> 00:02:33,920 They're one of the few media outlets, one of the few 56 00:02:33,920 --> 00:02:36,920 analysts, people that were calling this out, saying that 57 00:02:36,920 --> 00:02:39,760 Google was undervalued, while many professional analysts were 58 00:02:39,760 --> 00:02:42,840 saying that it's it's done for, that Google's seen its best 59 00:02:42,840 --> 00:02:44,800 days. Now, not every call that Barons 60 00:02:44,800 --> 00:02:47,120 has made has worked out, of course, but they do make some 61 00:02:47,120 --> 00:02:49,840 good calls from time to time. And I think that their thesis is 62 00:02:49,840 --> 00:02:51,640 are worth looking at. So let's go ahead and take a 63 00:02:51,640 --> 00:02:53,880 look at the number one here. That's a more recent one. 64 00:02:54,400 --> 00:02:58,120 They say this infusion therapy leader is undervalued by the 65 00:02:58,120 --> 00:03:00,640 stock option. Care Health is capitalizing on a 66 00:03:00,640 --> 00:03:03,480 growing demand for at home alternative site medical 67 00:03:03,480 --> 00:03:05,120 services. The companies the nations 68 00:03:05,120 --> 00:03:08,200 largest provider of infusion therapies administrating often 69 00:03:08,200 --> 00:03:11,800 complex medications at patients homes or at one of their more 70 00:03:11,800 --> 00:03:16,240 than 170 ambulatory ambulatory clinics across the US. 71 00:03:16,320 --> 00:03:19,480 This already seems like a complex company in healthcare 72 00:03:19,840 --> 00:03:22,160 already. I I see a few red flags of why I 73 00:03:22,160 --> 00:03:23,880 wouldn't buy this one, but we'll continue on. 74 00:03:23,920 --> 00:03:26,640 They've also had a rise in profitability and margins and 75 00:03:26,640 --> 00:03:29,320 they say the shares have been sitting flat since 2022. 76 00:03:29,320 --> 00:03:31,560 Now when we get into the thesis of why this company is a buy, 77 00:03:31,560 --> 00:03:33,920 it's a multi pronged thesis. They have a lot of different 78 00:03:33,920 --> 00:03:35,320 reasons they believe this is a buy. 79 00:03:35,680 --> 00:03:38,840 The first one is they say that right now what they're providing 80 00:03:38,840 --> 00:03:43,720 care for is a growing market. An aging population with rising 81 00:03:43,720 --> 00:03:47,320 incidence of chronic conditions is increasingly seeking the 82 00:03:47,320 --> 00:03:50,760 comfort of convenience of AT care or care at home. 83 00:03:51,160 --> 00:03:54,160 So this company specializes in care at home and more people are 84 00:03:54,160 --> 00:03:57,560 preferring that than in hospital or in clinic care. 85 00:03:57,960 --> 00:04:00,800 The infusion therapy market is projected to grow at an average 86 00:04:00,800 --> 00:04:04,680 annual rate of 8.6% through 2030, according to industry 87 00:04:04,680 --> 00:04:08,240 estimates. So this is a secular tailwind at 88 00:04:08,240 --> 00:04:10,560 Care at Home. That is the first part of this 89 00:04:10,560 --> 00:04:12,320 thesis. The second part of their thesis 90 00:04:12,320 --> 00:04:15,320 is not only is this growing, but they're positioned uniquely to 91 00:04:15,320 --> 00:04:17,760 capture a larger percentage of the market. 92 00:04:18,040 --> 00:04:20,440 So this market's growing and they're going to grow on market 93 00:04:20,440 --> 00:04:22,640 share. Option Care operates as both a 94 00:04:22,640 --> 00:04:25,560 managed care company and a specialty pharmacy. 95 00:04:25,840 --> 00:04:30,240 With its team of more than 5000 clinicians, it has vital parts 96 00:04:30,240 --> 00:04:32,880 of the home care market and well positioned to capture market 97 00:04:32,880 --> 00:04:35,040 share. While a set back the recent sell 98 00:04:35,040 --> 00:04:37,640 off may have created an exciting entry point in the stock for 99 00:04:37,640 --> 00:04:40,120 investors, the company has played down any long term 100 00:04:40,120 --> 00:04:43,280 consequences, noting that no other therapy represents more 101 00:04:43,280 --> 00:04:47,040 than 5% of its total revenue. Furthermore, only 12% of its 102 00:04:47,040 --> 00:04:49,880 revenue was reimbursable through direct governmental programs in 103 00:04:49,880 --> 00:04:53,160 2024, providing A cushion against further legislative 104 00:04:53,160 --> 00:04:56,560 changes through a diversified private payer profile. 105 00:04:57,040 --> 00:04:59,560 So they believe that these earnings are far more resilient 106 00:04:59,800 --> 00:05:01,400 than what's currently being priced in. 107 00:05:01,440 --> 00:05:03,840 And then Baron's final argument for this one is basically that 108 00:05:03,840 --> 00:05:06,520 it's at a low valuation. When we look at option care here 109 00:05:06,520 --> 00:05:10,400 and we look at the valuation, it trades at APE of 16 and a free 110 00:05:10,400 --> 00:05:13,120 cash flow yield of 5.4. So if you're looking at this 111 00:05:13,120 --> 00:05:15,720 one, overall, I think it's a solid thesis. 112 00:05:16,160 --> 00:05:19,040 The earnings are growing. It does generate free cash flow. 113 00:05:19,320 --> 00:05:22,000 The revenue's growing steadily. It does look like a market 114 00:05:22,000 --> 00:05:24,800 that's needed over time, so this is one that I don't think is 115 00:05:24,800 --> 00:05:27,280 such a bad pick. Now the things they don't 116 00:05:27,280 --> 00:05:29,760 highlight is it does have quite a bit of debt, probably from the 117 00:05:29,760 --> 00:05:33,560 acquisition, and the company is just a bit more volatile. 118 00:05:33,800 --> 00:05:36,320 It's more volatile because of the industry that it works in. 119 00:05:36,360 --> 00:05:38,240 I'm unlikely to buy an investment like this just 120 00:05:38,240 --> 00:05:40,120 because it works in the healthcare industry and it's not 121 00:05:40,120 --> 00:05:42,920 one that I typically venture into, but I do find this one 122 00:05:42,920 --> 00:05:44,560 interesting. Now the next Deep Valley stock 123 00:05:44,560 --> 00:05:47,880 the Barons picks is Twilio. They say that Twilio stock got 124 00:05:47,880 --> 00:05:50,640 hit after earnings. It's still a software winner. 125 00:05:50,640 --> 00:05:52,920 Now they highlight around 8 different bullish points on the 126 00:05:52,920 --> 00:05:53,960 stock. We're going to go through each 127 00:05:53,960 --> 00:05:55,560 one of them. First of all, they say that 128 00:05:55,560 --> 00:05:58,600 Twilio hasn't missed sales expectations and at least 20 129 00:05:58,600 --> 00:06:00,360 consecutive quarters, according to FactSet. 130 00:06:00,360 --> 00:06:02,480 So they're taking a look at the history of the company, the 131 00:06:02,480 --> 00:06:05,520 consistency of beating their revenue expectations, and they 132 00:06:05,520 --> 00:06:08,040 reference FactSet as the data to do that. 133 00:06:08,360 --> 00:06:11,440 Now, instead of having a FactSet membership, you don't need to 134 00:06:11,440 --> 00:06:13,920 have that. Qualtrim is $10 a month, a lot 135 00:06:13,920 --> 00:06:16,400 less than FactSet. And you can see the exact same 136 00:06:16,400 --> 00:06:18,560 thing. Blue means that they beat their 137 00:06:18,560 --> 00:06:21,040 quarterly expectations. In fact, we can show the 138 00:06:21,040 --> 00:06:23,960 estimates on each one of these. So every single quarter going 139 00:06:23,960 --> 00:06:26,360 back to Q4 of 2020, they've beat. 140 00:06:26,680 --> 00:06:29,400 You can see the history there. And even on earnings per share, 141 00:06:29,400 --> 00:06:32,880 which Barron's doesn't mention, they've only missed one time, Q2 142 00:06:32,880 --> 00:06:35,480 of 2022. So they're, they're making a 143 00:06:35,480 --> 00:06:37,440 good point here. This is a company that largely 144 00:06:37,440 --> 00:06:40,600 lives up to expectations. Twilio charges a fee of a few 145 00:06:40,600 --> 00:06:43,520 cents per communication. While this reduces cost 146 00:06:43,520 --> 00:06:46,880 certainty for the customers, it also allows Twilio to boost 147 00:06:46,880 --> 00:06:50,160 revenue as use expands. So it's a consumption based 148 00:06:50,160 --> 00:06:52,320 model. Many businesses worldwide are 149 00:06:52,320 --> 00:06:54,720 still in the early stages of adopting tools to more 150 00:06:54,720 --> 00:06:57,760 efficiently communicate, making for substantial growth potential 151 00:06:57,760 --> 00:07:00,760 for Twilio's products. Total spend on the service can 152 00:07:00,760 --> 00:07:04,760 reach 119 billion globally by 2028 and continue growing from 153 00:07:04,760 --> 00:07:07,320 there according to the management estimates provided. 154 00:07:07,520 --> 00:07:11,480 And it's investor day in January, so the opportunity is 155 00:07:11,480 --> 00:07:13,960 massive. Now, one thing that I don't like 156 00:07:13,960 --> 00:07:17,320 about this model, this consumption based model, is that 157 00:07:17,320 --> 00:07:21,000 while they only charge a few cents per communication, the 158 00:07:21,000 --> 00:07:25,120 customers that use them at some point can get so big that they 159 00:07:25,120 --> 00:07:28,360 stop using Twilio. They say, you know what, we can 160 00:07:28,360 --> 00:07:30,880 build out our own communication API and platform. 161 00:07:31,160 --> 00:07:33,960 We can do that internally and we save a lot of margin because we 162 00:07:33,960 --> 00:07:36,880 don't have to pay Twilio this few cents per communication. 163 00:07:36,880 --> 00:07:39,240 An example of a company that's done that is Uber. 164 00:07:39,480 --> 00:07:41,200 They're once a big customer of Twilio. 165 00:07:41,360 --> 00:07:44,360 They got too big and then they ditched Twilio entirely by 166 00:07:44,360 --> 00:07:46,400 building up their own internal communication. 167 00:07:46,800 --> 00:07:49,280 So I think that this one has a problem here where it's true 168 00:07:49,280 --> 00:07:53,120 that their customers can grow and the use case expands, but if 169 00:07:53,120 --> 00:07:55,720 they grow too big, they can simply build their own version 170 00:07:55,720 --> 00:07:57,680 of a Twilio instead of using them. 171 00:07:57,760 --> 00:08:00,320 And then finally, Barons ends again with the argument that 172 00:08:00,320 --> 00:08:03,680 it's simply at a low valuation. And again, I have to agree with 173 00:08:03,680 --> 00:08:06,240 him on the valuation. The company trades at a 21 PE 174 00:08:06,240 --> 00:08:08,200 ratio. It trades at a free cash flow 175 00:08:08,200 --> 00:08:12,560 yield of 4.5%, but stock based comp eats a lot into that cash 176 00:08:12,560 --> 00:08:14,080 flow. Overall, that's the case for 177 00:08:14,080 --> 00:08:16,120 Twilio. This is one that I'd feel very 178 00:08:16,120 --> 00:08:19,320 nervous going into only because I think the margins do have a 179 00:08:19,320 --> 00:08:22,200 limited upside. The company does have to do all 180 00:08:22,200 --> 00:08:25,040 of its business telecom providers and they take a lot of 181 00:08:25,040 --> 00:08:28,800 the margins as well as when you look at the company with a 2122 182 00:08:28,840 --> 00:08:32,159 E ratio, I'd rather just buy Google out of 25. 183 00:08:32,559 --> 00:08:34,799 To me, that's a safer bet than Twilio. 184 00:08:34,880 --> 00:08:39,120 Now in #3 we have U-Haul. They say buy U-Haul stock shares 185 00:08:39,120 --> 00:08:40,760 could make AU turn as earnings rise. 186 00:08:40,880 --> 00:08:43,960 U Haul's market share and moving is well over 50%. 187 00:08:44,240 --> 00:08:47,920 Its truck fleets total nearly 200,000 vehicles plus some 188 00:08:47,920 --> 00:08:51,640 137,000 trailers. They can be hooked up to private 189 00:08:51,640 --> 00:08:53,600 vehicles. Customers can rent U-Haul 190 00:08:53,600 --> 00:08:57,400 equipment from more than 23,000 U-Haul rental locations in all 191 00:08:57,400 --> 00:09:01,480 50 States and Canada, putting 90% of US population within 5 192 00:09:01,480 --> 00:09:04,160 miles of AU Haul facility. You're relying on network 193 00:09:04,160 --> 00:09:05,600 effects here. The fact that this company is 194 00:09:05,600 --> 00:09:09,360 already so big makes it already an easy logistical pick. 195 00:09:09,520 --> 00:09:12,440 They also argue that profits should rise as U-Haul works 196 00:09:12,440 --> 00:09:14,760 through the depreciation of trucks purchased several years 197 00:09:14,760 --> 00:09:16,160 ago. So they're going through a 198 00:09:16,160 --> 00:09:18,920 depreciation cycle right now. One of the hidden gems of this 199 00:09:18,920 --> 00:09:22,400 company is profits also should get a boost as newer self 200 00:09:22,400 --> 00:09:25,760 storage facilities fill up. So U-Haul has just looked at as 201 00:09:25,760 --> 00:09:29,120 transporting stuff, but U-Haul has added about 10% annually to 202 00:09:29,120 --> 00:09:31,240 its storage footprint. An interesting thesis from 203 00:09:31,240 --> 00:09:33,440 Barron's, but U Haul's a pass for me now. 204 00:09:33,440 --> 00:09:36,800 Next up, we have a company that is in the beauty category. 205 00:09:36,800 --> 00:09:39,640 We have Elf Beauty. They say it's defying the rest 206 00:09:39,640 --> 00:09:42,080 of the cosmetic business by the stock. 207 00:09:42,080 --> 00:09:43,920 Now they have multiple bullish points on this company. 208 00:09:43,920 --> 00:09:46,400 The first one is that this company is different than the 209 00:09:46,400 --> 00:09:49,080 competitors. ELF, however, stands out from 210 00:09:49,080 --> 00:09:51,160 its competitors. It's reaching its cohort of 211 00:09:51,160 --> 00:09:54,560 customers the right way by marketing on social media, 212 00:09:54,560 --> 00:09:57,520 selling online, and selling in select retail locations, 213 00:09:57,880 --> 00:10:00,280 enabling it to take market share and grow faster than the 214 00:10:00,280 --> 00:10:02,280 industry. The fact that it's still 215 00:10:02,440 --> 00:10:05,480 relatively small should help it grow faster than its larger 216 00:10:05,560 --> 00:10:08,200 pairs, particularly as it expands globally. 217 00:10:08,440 --> 00:10:10,720 It's position is a steep discounter in the beauty 218 00:10:10,720 --> 00:10:14,080 business, gives it wiggle room to increase prices to protect 219 00:10:14,080 --> 00:10:17,400 its profit margins from tariff costs and still be a discounter. 220 00:10:17,720 --> 00:10:20,360 So the big thing with elf Beauty, the positioning of this 221 00:10:20,360 --> 00:10:23,440 company is they're offering products that are almost every 222 00:10:23,440 --> 00:10:26,680 bit as good as the more expensive counterparts, but 223 00:10:26,680 --> 00:10:28,480 they're just orders of magnitude cheaper. 224 00:10:28,600 --> 00:10:31,320 Elf Beauty is the value discounted trusted brand. 225 00:10:31,400 --> 00:10:33,680 On the company's earnings call, they highlighted that they're 226 00:10:33,680 --> 00:10:36,440 partnering with Dollar General. Most of those are first time 227 00:10:36,440 --> 00:10:39,120 buyers of elf Beauty, so they're actually expanding their 228 00:10:39,120 --> 00:10:41,920 customer positioning. They're also aggressively 229 00:10:41,920 --> 00:10:45,040 advertising on Tiktok where it's reaching younger shoppers. 230 00:10:45,360 --> 00:10:48,400 And the company spent just over $78 million some marketing and 231 00:10:48,400 --> 00:10:51,680 digital investments in the second quarter, up about 5% year 232 00:10:51,680 --> 00:10:53,800 over year. So their marketing spend is 233 00:10:53,800 --> 00:10:57,080 super targeted, a really good marketing campaign from this 234 00:10:57,080 --> 00:10:58,920 company. This is another company that 235 00:10:58,920 --> 00:11:01,400 consistently beats its expectations. 236 00:11:01,680 --> 00:11:04,080 Management, which usually provides conservative revenue 237 00:11:04,080 --> 00:11:07,840 guidance and then beats analyst sales estimates, was confident 238 00:11:07,840 --> 00:11:12,120 enough to forecast a second quarter rate above 9% net sales 239 00:11:12,120 --> 00:11:14,600 growth that they they delivered on in Q1. 240 00:11:15,080 --> 00:11:18,400 So they're aggressively raising their sales assumptions and even 241 00:11:18,400 --> 00:11:20,600 on top of that, they have a history of being conservative. 242 00:11:20,680 --> 00:11:23,600 Now overall, I like this thesis. I don't see too much wrong with 243 00:11:23,600 --> 00:11:25,560 it. One of the the points about elf 244 00:11:25,560 --> 00:11:28,000 beauty is it's simply in the beauty category, which I've seen 245 00:11:28,000 --> 00:11:31,080 companies like Estee Lauder, which used to be, they used to 246 00:11:31,080 --> 00:11:33,600 be doing really well, all of a sudden they get decimated. 247 00:11:34,040 --> 00:11:36,160 So this is a very volatile industry. 248 00:11:36,320 --> 00:11:38,680 Things can change rapidly. If you look at the stock price 249 00:11:38,680 --> 00:11:41,240 over the past five years with elf beauty, you'll see how 250 00:11:41,240 --> 00:11:44,000 volatile it really is. So be careful before you jump 251 00:11:44,000 --> 00:11:46,160 into this one. Now next we have a company that 252 00:11:46,160 --> 00:11:49,480 I can't say I've ever heard of it's called Innodata. 253 00:11:49,840 --> 00:11:53,160 It's making AI models smarter by the stock. 254 00:11:53,280 --> 00:11:56,920 Now Barron's published this September 3rd, 2025. 255 00:11:57,320 --> 00:12:01,640 If we look at the stock price at September 3rd, 2025 right there 256 00:12:01,640 --> 00:12:06,000 9/03/2025, it was 36 dollars. Look at what happened after they 257 00:12:06,000 --> 00:12:08,640 published it, unless you bought it right then, now it's up to 258 00:12:08,640 --> 00:12:11,720 $66 now. Regardless, even though we may 259 00:12:11,720 --> 00:12:15,000 have missed out on just some really spectacular gains in a 260 00:12:15,000 --> 00:12:17,440 short amount of time, almost a doubling, I'll go ahead and just 261 00:12:17,440 --> 00:12:19,160 read through some of the more bullish points here and 262 00:12:19,160 --> 00:12:21,440 summarize them real quick. Now they say that they're 263 00:12:21,440 --> 00:12:25,200 playing coy to avoid naming its specific customers, but In O 264 00:12:25,200 --> 00:12:28,400 Data notes that five of the Magnificent 7 Tech leaders are 265 00:12:28,400 --> 00:12:31,440 using its services. Businesses from its biggest 266 00:12:31,440 --> 00:12:34,840 customers have increased from the initial 8 million contract 267 00:12:34,840 --> 00:12:38,680 in 2023 to 135 million annualized revenue run rate, 268 00:12:39,000 --> 00:12:41,320 validating in Odata's AI capabilities. 269 00:12:41,320 --> 00:12:43,560 Now they outline what this company actually does and why 270 00:12:43,560 --> 00:12:45,920 these bigger companies are finding its products so 271 00:12:45,920 --> 00:12:48,040 attractive. They say that the core business 272 00:12:48,040 --> 00:12:50,920 idea is simple. In Odata cleans up inaccurate, 273 00:12:50,920 --> 00:12:54,520 incomplete or relevant data. Combining proprietary technology 274 00:12:54,520 --> 00:12:58,120 platforms with over 6000 expert consultants to annotate and 275 00:12:58,120 --> 00:13:00,800 validate information for various AI applications. 276 00:13:01,280 --> 00:13:05,120 This Human in the Loop framework provides specialized services 277 00:13:05,440 --> 00:13:09,080 such as fine tuning and preference optimization to teach 278 00:13:09,080 --> 00:13:13,000 large language models to control their tone, avoid biases, and 279 00:13:13,000 --> 00:13:16,520 ultimately reduce errors. So they're basically combining 280 00:13:16,800 --> 00:13:21,920 their AI product with a ton of consultants to really validate 281 00:13:21,920 --> 00:13:24,600 this data in a in a human infused way. 282 00:13:25,200 --> 00:13:28,080 And that that type of mixture is making them rather unique in 283 00:13:28,080 --> 00:13:30,160 this category. And they highlight that the need 284 00:13:30,160 --> 00:13:33,080 for this type of validation of data is only going to grow 285 00:13:33,080 --> 00:13:35,960 dramatically, exponentially. They say the category of 286 00:13:35,960 --> 00:13:39,200 applications can autonomously initiate and carry out complex 287 00:13:39,200 --> 00:13:43,320 tasks with minimal human input. Ino Data sees this as a new 288 00:13:43,320 --> 00:13:46,400 generation of AI, unlocking the full value of large language 289 00:13:46,400 --> 00:13:50,120 models, creating new use cases, including robotics for a range 290 00:13:50,120 --> 00:13:53,160 of industries. So as all these applications and 291 00:13:53,160 --> 00:13:58,280 use cases grow, so will the need for NONO Data's capabilities of 292 00:13:58,280 --> 00:14:00,360 validating and cleaning up this data. 293 00:14:00,600 --> 00:14:03,040 So we may have missed out a little bit on that one, but we 294 00:14:03,040 --> 00:14:04,960 have another one here. Luckily for our attention. 295 00:14:05,000 --> 00:14:06,720 This one they say is a stock pick. 296 00:14:06,720 --> 00:14:10,760 They've already, they've already picked, it's up 67%, and they're 297 00:14:10,760 --> 00:14:13,360 now telling us to continue buying it, hold it for more 298 00:14:13,360 --> 00:14:15,040 games. Now, what does Verdiv do? 299 00:14:15,040 --> 00:14:16,400 Why is this company so attractive? 300 00:14:16,720 --> 00:14:18,040 Well, it's simply the products they make. 301 00:14:18,280 --> 00:14:20,920 They make power and cooling equipment for companies and 302 00:14:20,920 --> 00:14:22,680 communities. Communications manufacturing, 303 00:14:23,080 --> 00:14:24,960 which is basically all the big techs. 304 00:14:25,440 --> 00:14:27,200 They're all building out their data centers. 305 00:14:27,480 --> 00:14:30,120 This company specializes in cooling equipment. 306 00:14:30,520 --> 00:14:33,320 So as long as we're building out data centre capacity, as long as 307 00:14:33,320 --> 00:14:35,720 we need this cooling equipment, this company is going to be 308 00:14:35,720 --> 00:14:38,240 very, very relevant. Another thing they highlight 309 00:14:38,240 --> 00:14:41,120 that I also like looking at for companies is how consistently 310 00:14:41,120 --> 00:14:43,800 they beat or miss on earnings. They say that it would be no 311 00:14:43,800 --> 00:14:46,480 surprise if Verdiff to beat expectations in the coming 312 00:14:46,480 --> 00:14:48,200 quarters. The company has surpassed 313 00:14:48,200 --> 00:14:51,160 analyst estimates for the top and bottom line in all of the 314 00:14:51,160 --> 00:14:53,960 past six quarters. It has beaten earnings per share 315 00:14:53,960 --> 00:14:55,720 forecast for the past ten quarters. 316 00:14:55,880 --> 00:14:58,440 I've seen companies that have longer streaks in this, many of 317 00:14:58,440 --> 00:15:01,880 them like Adobe or Visa or MasterCard, but I'd say in this 318 00:15:01,880 --> 00:15:05,600 category having 6 to 10 quarters is a pretty good streak. 319 00:15:05,720 --> 00:15:08,640 Now finally, another bullish point for this company is margin 320 00:15:08,640 --> 00:15:10,760 expansion. Management has forecasted 321 00:15:10,760 --> 00:15:14,200 adjusted operating margins of 20% for the third quarter 322 00:15:14,400 --> 00:15:16,520 compared to 18.5 in the second quarter. 323 00:15:16,520 --> 00:15:19,280 As a company makes its supply chain more efficient. 324 00:15:19,400 --> 00:15:20,880 I do like the thesis on this one. 325 00:15:20,880 --> 00:15:23,600 I think you'd probably be better served just buying big tech. 326 00:15:23,680 --> 00:15:26,680 You can buy all these little fish that grow alongside big 327 00:15:26,680 --> 00:15:28,680 tech, or you can just buy big tech itself. 328 00:15:28,760 --> 00:15:30,720 In most cases, I believe investors have a better risk 329 00:15:30,720 --> 00:15:33,400 reward buying big tech. Now we get to stock 7. 330 00:15:33,400 --> 00:15:35,440 This is another one that they believe is a buy. 331 00:15:35,440 --> 00:15:38,800 It's called Aptive and their main thesis for this is actually 332 00:15:38,800 --> 00:15:41,160 that it's being broken up beneath this automotive 333 00:15:41,160 --> 00:15:43,200 business. They have a much better higher 334 00:15:43,200 --> 00:15:45,720 margin safety and software business. 335 00:15:45,960 --> 00:15:48,520 When you look at the numbers, the safety and software business 336 00:15:48,520 --> 00:15:51,960 had sales that were a lot better, EBITDA margins that are 337 00:15:51,960 --> 00:15:54,720 like double. It has potential to reach 338 00:15:54,800 --> 00:15:58,200 outside of the customer base in the auto business, and so this 339 00:15:58,200 --> 00:16:00,960 is really where they're detaching a much lower quality 340 00:16:00,960 --> 00:16:02,960 business from a much higher quality. 1. 341 00:16:03,000 --> 00:16:05,480 Shares are trading for around $83 right now and they believe 342 00:16:05,480 --> 00:16:10,200 the shares will hit around $100, about up 25% from recent levels. 343 00:16:10,480 --> 00:16:12,760 The biggest risk is that investors continue to view boat 344 00:16:12,760 --> 00:16:16,280 spin offs as a car as car companies, which would cause the 345 00:16:16,280 --> 00:16:20,240 stock to fall back to $70, about 15% below today's close. 346 00:16:20,800 --> 00:16:23,640 So when we look at this right now, if investors keep viewing 347 00:16:23,640 --> 00:16:26,160 both of these companies as car companies, it's not a good deal. 348 00:16:26,480 --> 00:16:28,600 But they shouldn't. If one of them has software 349 00:16:28,600 --> 00:16:31,600 margins and it's largely driven off of software, it should get 350 00:16:31,600 --> 00:16:33,920 re rated higher. I like this one from Barron's. 351 00:16:33,920 --> 00:16:36,640 I think that it's worth looking at to see the software that 352 00:16:36,640 --> 00:16:38,640 they're providing, the growth potential of it. 353 00:16:38,920 --> 00:16:42,160 I have no interest in the automotive part of it now #8 354 00:16:42,160 --> 00:16:47,040 deep value pick by Barron's is a paunch, a pawn store, pawn shop, 355 00:16:47,400 --> 00:16:50,920 jewelry, electronics, tools, cash, America pawn. 356 00:16:51,280 --> 00:16:54,360 So you have like lawn mowers here, riding lawn mower. 357 00:16:54,360 --> 00:16:57,560 These look, everything is used. Of course you have bicycles, you 358 00:16:57,560 --> 00:17:00,000 know, all this equipment, and of course they have electronics on 359 00:17:00,000 --> 00:17:02,480 the inside. This isn't typically the type of 360 00:17:02,480 --> 00:17:05,760 company that I buy. These usually aren't ultra wide 361 00:17:05,760 --> 00:17:07,960 mode, you know, incredible companies. 362 00:17:08,200 --> 00:17:09,960 But again, we're focused on deep value here. 363 00:17:09,960 --> 00:17:11,680 So let's go ahead and just take a look at the case. 364 00:17:11,680 --> 00:17:14,160 The first major point that they outline is that the company has 365 00:17:14,160 --> 00:17:18,359 massive scale with more than 3300 retail locations. 366 00:17:18,720 --> 00:17:21,920 The Fort Worth, TX based company is the largest pawn store 367 00:17:21,920 --> 00:17:24,480 operated in the in the US and Mexico. 368 00:17:24,839 --> 00:17:27,599 This market leading position was built over 3 decades through 369 00:17:27,599 --> 00:17:30,280 roll up strategies of acquiring smaller players. 370 00:17:30,920 --> 00:17:34,560 So in the pawn wars, this company's won there. 371 00:17:34,760 --> 00:17:36,920 While everything's been going on, we've been focusing on big 372 00:17:36,920 --> 00:17:39,080 tech. There's been a pawn store, a 373 00:17:39,120 --> 00:17:42,760 pawn store war, and this one is completely dominated. 374 00:17:42,760 --> 00:17:45,040 They're the biggest in the US and Mexico, and they've been 375 00:17:45,040 --> 00:17:48,680 doing this by acquiring smaller players over and over again. 376 00:17:48,680 --> 00:17:51,040 These tuck in acquisitions. Now, when looking at the 377 00:17:51,040 --> 00:17:53,480 business model of this, it's actually very intriguing. 378 00:17:53,480 --> 00:17:56,960 They do more than just just selling stuff at a pawn shop, 379 00:17:57,440 --> 00:17:58,840 they say. There's no doubt that what we 380 00:17:58,840 --> 00:18:01,440 are seeing with customers given our unique value proposition of 381 00:18:01,440 --> 00:18:05,240 offering small dollar loans and quick hassle free transactions 382 00:18:05,240 --> 00:18:09,040 that take 15 minutes or less. All loans are non recourse and 383 00:18:09,040 --> 00:18:11,720 don't involve credit checks or credit reporting. 384 00:18:12,120 --> 00:18:16,320 So this company is also a mini bank, a mini bank for people 385 00:18:16,520 --> 00:18:19,000 that don't want to go through the hassle providing 386 00:18:19,000 --> 00:18:22,160 documentation, providing bank statements and, you know, 387 00:18:22,160 --> 00:18:24,000 providing your income verification. 388 00:18:24,280 --> 00:18:27,000 If you want a small loan, you can get one at this pawn shop. 389 00:18:27,240 --> 00:18:28,640 They say that the idea is simple. 390 00:18:28,920 --> 00:18:31,880 The customer brings in a personal item of value, perhaps 391 00:18:31,880 --> 00:18:36,120 a watch on their wrist, an old necklace or a used laptop with a 392 00:18:36,280 --> 00:18:39,680 regulated framework. A pawnbroker appraises the item 393 00:18:39,680 --> 00:18:43,320 and offers a small collateral backed loan, providing cash 394 00:18:43,320 --> 00:18:45,920 instantly. So you go to a bank and you want 395 00:18:45,920 --> 00:18:48,040 to get a loan. They're going to have, you're 396 00:18:48,120 --> 00:18:49,640 going to provide all your financials. 397 00:18:49,920 --> 00:18:52,040 You're going to be legally obligated that they're all 398 00:18:52,040 --> 00:18:54,360 correct that you know you can't get any loan off of false 399 00:18:54,360 --> 00:18:56,560 pretenses. You're going to have to all this 400 00:18:56,560 --> 00:18:58,040 paperwork, they're going to look into it. 401 00:18:58,480 --> 00:19:00,880 That's a lot of hassle and typically there's a lot of fees 402 00:19:00,880 --> 00:19:03,280 associated with it. You go to this pawn store, you 403 00:19:03,280 --> 00:19:07,200 can literally use anything that can be sold for collateral and 404 00:19:07,200 --> 00:19:09,360 they immediately appraise it and just give you money. 405 00:19:10,000 --> 00:19:13,960 That's it, no hassle, no documentation, you're just 406 00:19:13,960 --> 00:19:15,720 putting something up. They give you cash. 407 00:19:15,720 --> 00:19:17,440 What a niche that they've carved out here. 408 00:19:17,800 --> 00:19:20,760 This form of micro lending generates 2 powerful revenue 409 00:19:20,760 --> 00:19:23,200 streams. Customers can either repay the 410 00:19:23,200 --> 00:19:26,520 loan with interest to reclaim their item at an annual 411 00:19:26,520 --> 00:19:28,840 percentage rate that can exceed 200%. 412 00:19:29,320 --> 00:19:31,480 That's crazy. But again, these are very small 413 00:19:31,480 --> 00:19:33,240 loans. Like if you're loaning $50, you 414 00:19:33,760 --> 00:19:36,280 know you're not going to be incentivized with a 7% interest 415 00:19:36,280 --> 00:19:39,080 rate. Or they can forfeit the item 416 00:19:39,080 --> 00:19:42,440 with no penalty, allowing first cash to offer the merchandise 417 00:19:42,440 --> 00:19:45,760 for resale. So you can just take the money 418 00:19:45,760 --> 00:19:47,920 and then they've done a trade and they're happy with that 419 00:19:47,920 --> 00:19:49,440 trade if you're happy with that trade. 420 00:19:49,960 --> 00:19:52,880 The model is especially lucrative for jewelry, with gold 421 00:19:52,880 --> 00:19:54,840 and silver prices at historic highs. 422 00:19:54,840 --> 00:19:57,840 The greater customer borrowing power drives more store traffic 423 00:19:57,840 --> 00:20:00,880 and yields higher value inventory, while the company's 424 00:20:00,880 --> 00:20:03,880 ability to monetize forfeited items becomes even more 425 00:20:03,880 --> 00:20:05,760 profitable. Now finally, like we see with 426 00:20:05,760 --> 00:20:08,560 many of these, they end this bull thesis by saying that the 427 00:20:08,560 --> 00:20:11,480 valuation is compelling and it's a important part of the 428 00:20:11,480 --> 00:20:13,920 investment thesis. Shares are trading at a forward 429 00:20:13,920 --> 00:20:18,240 price to earnings ratio of approximately 17 based on 2025 430 00:20:18,240 --> 00:20:21,320 earnings estimates. The multiples that drop back to 431 00:20:21,320 --> 00:20:24,760 14 based on 2026 forecast. This valuation looks like a 432 00:20:24,760 --> 00:20:27,480 still as a stock has historically traded at earnings 433 00:20:27,480 --> 00:20:30,440 multiples of 23 over the past decade. 434 00:20:30,840 --> 00:20:33,480 So right now it's at a uniquely low valuation. 435 00:20:33,560 --> 00:20:37,440 I really like this thesis. This is by far my favorite that 436 00:20:37,440 --> 00:20:40,560 I've seen out of any of these, which is unsuspecting. 437 00:20:40,960 --> 00:20:42,720 Every once in a while we're looking at all these high 438 00:20:42,720 --> 00:20:45,360 quality network effect, subscription based companies. 439 00:20:45,640 --> 00:20:47,920 But sometimes when you look at some of the more unexpecting 440 00:20:47,920 --> 00:20:51,080 ones, the the companies you know, a little more offbeat like 441 00:20:51,080 --> 00:20:53,520 Texas Roadhouse, I've made a lot of money on that one. 442 00:20:54,240 --> 00:20:57,080 You, you find companies that they just do a couple things 443 00:20:57,120 --> 00:20:59,200 right. They've carved out a beautiful 444 00:20:59,200 --> 00:21:02,600 niche for themselves. They've added on really unique 445 00:21:02,600 --> 00:21:05,440 services like this micro lending that only they can perform with 446 00:21:05,440 --> 00:21:07,760 their scale. And you have a wonderful 447 00:21:07,760 --> 00:21:09,360 business here. I wouldn't be surprised if this 448 00:21:09,360 --> 00:21:13,240 one compounds for a long period of time now #9 we have a thesis 449 00:21:13,240 --> 00:21:17,480 almost entirely reliant on one guy, his name is Brad Jacobs. 450 00:21:17,480 --> 00:21:20,480 Jacobs, who has a net worth of $16.9 billion according to 451 00:21:20,480 --> 00:21:22,040 Bloomberg, isn't a household name. 452 00:21:22,040 --> 00:21:25,240 But maybe he should be. The 69 year old founded United 453 00:21:25,240 --> 00:21:28,720 Waste Systems, now a part of Waste Management, United Rentals 454 00:21:28,800 --> 00:21:32,800 and the logistics firm XPO Now. United Rentals, which Jacobs ran 455 00:21:32,800 --> 00:21:38,040 from 1997 to 2007, and XPO, where he was the CEO from 2011 456 00:21:38,040 --> 00:21:41,720 to 2022 and remains executive chairman, have continued to 457 00:21:41,720 --> 00:21:44,000 thrive. Shares of United Rentals are up 458 00:21:44,000 --> 00:21:46,720 more than 400% over the past five years, more than 459 00:21:46,720 --> 00:21:50,600 quadrupling the S&P 500's gains over the same time frame, and 460 00:21:50,640 --> 00:21:54,640 XPO has surged nearly 340%. Investors are now banking on 461 00:21:54,640 --> 00:21:57,360 QXO. So this new company being the 462 00:21:57,360 --> 00:22:00,480 next big Jacob success story. Now these type of bets where 463 00:22:00,480 --> 00:22:04,160 you're relying on one key person to execute again, even though 464 00:22:04,160 --> 00:22:06,920 they have a robust history, I think that they can be good 465 00:22:06,920 --> 00:22:10,280 cases, but I just make it a smaller portion of a portfolio. 466 00:22:10,560 --> 00:22:12,760 I don't necessarily love the key man risk. 467 00:22:13,040 --> 00:22:15,920 I'd rather buy a company that has a much longer, more proven 468 00:22:15,920 --> 00:22:19,240 history, a much bigger Moat than one that's so dependent on a 469 00:22:19,240 --> 00:22:21,120 specific person like Brad Jacobs. 470 00:22:21,240 --> 00:22:24,040 Now finally we get to their 10th pick and this is deep value 471 00:22:24,040 --> 00:22:27,080 stocks, so we're not looking at the most high flying ones here. 472 00:22:27,440 --> 00:22:30,760 In this case, we have a meat Packer and the stock is a 473 00:22:30,760 --> 00:22:32,840 quality buy at a discounted price. 474 00:22:33,200 --> 00:22:34,400 So we have a quality meat Packer here. 475 00:22:34,400 --> 00:22:36,080 Let's go ahead and just take a look at the thesis. 476 00:22:36,160 --> 00:22:38,640 The first thing that they outline, which I like, is that 477 00:22:38,640 --> 00:22:41,720 this is the biggest scaled player in the category. 478 00:22:41,960 --> 00:22:44,240 Whenever I'm looking at a company to buy, I like to know 479 00:22:44,240 --> 00:22:47,360 where they sit in the the food chain, whether they're at the 480 00:22:47,360 --> 00:22:48,800 top of it. They're the biggest and the most 481 00:22:48,800 --> 00:22:50,880 dominant. In this case, they say JBS is 482 00:22:50,880 --> 00:22:54,960 the number one producer of beef and poultry globally and #2 of 483 00:22:54,960 --> 00:22:56,560 pork. Now despite being the largest, 484 00:22:56,560 --> 00:22:59,720 most scaled player, JBS is also cheap relative to its 485 00:22:59,720 --> 00:23:02,320 competitors. The stock fetch is just seven 486 00:23:02,320 --> 00:23:06,720 times projected 2025 earnings of 1.92 a share. 487 00:23:07,160 --> 00:23:10,640 So this company truly has deep value. 7 times earnings. 488 00:23:10,760 --> 00:23:14,080 Not only is this company valued at a sizable discount to its 489 00:23:14,080 --> 00:23:17,760 competitors like Tyson, and that's a a gap that will likely 490 00:23:17,760 --> 00:23:20,120 close over time. Another part of the story is the 491 00:23:20,120 --> 00:23:24,320 prospects of solid growth as JBS embarks upon a five year plan to 492 00:23:24,320 --> 00:23:27,880 spend 1 billion annually on expansion, including AUS sausage 493 00:23:27,880 --> 00:23:30,680 plant and expanded American pork facilities. 494 00:23:31,120 --> 00:23:33,840 So they're cheaper than their peers and they're growing over 495 00:23:33,840 --> 00:23:36,080 the next five years. I think it's a fair thesis for 496 00:23:36,080 --> 00:23:38,600 this company. I don't like this as much as the 497 00:23:38,600 --> 00:23:40,240 Pond store. If I was going to pick between 498 00:23:40,240 --> 00:23:43,200 those two, I would pick that Pond store over this one because 499 00:23:43,200 --> 00:23:46,040 of the diversification of the business and I believe it has 500 00:23:46,040 --> 00:23:49,480 less CapEx needs. This one seems fine, but this is 501 00:23:49,480 --> 00:23:51,760 typically not the type of category I'd go into. 502 00:23:52,240 --> 00:23:55,480 Overall, I like the thesis for these 10 companies and I think a 503 00:23:55,480 --> 00:23:57,440 lot of these companies will likely outperform the market. 504 00:23:57,440 --> 00:23:59,440 Now let's go to move on and get to some news here. 505 00:23:59,440 --> 00:24:01,000 Of course, we have the big news of the day. 506 00:24:01,000 --> 00:24:04,800 The Federal Reserve today finally officially approved the 507 00:24:04,800 --> 00:24:09,000 quarter point interest rate cut. Now this is not a shock because 508 00:24:09,000 --> 00:24:12,880 it was priced into the market already around 90%. 509 00:24:13,280 --> 00:24:16,720 So if you're asking, Joseph, why even when they lower interest 510 00:24:16,720 --> 00:24:20,600 rates, did the stock market not go up 5% because this was 511 00:24:20,600 --> 00:24:22,760 already baked in. Investors were ahead of this. 512 00:24:22,760 --> 00:24:24,360 They signaled that they're doing this. 513 00:24:24,560 --> 00:24:27,160 So it wasn't much of a surprise. Now, the thing that we're 514 00:24:27,160 --> 00:24:29,640 looking for is what they signal for the future. 515 00:24:29,840 --> 00:24:32,000 So what do they plan on doing over the next couple of 516 00:24:32,000 --> 00:24:34,360 quarters? The Federal Reserve on Wednesday 517 00:24:34,360 --> 00:24:38,160 approved a widely anticipated rate cut and signaled that two 518 00:24:38,160 --> 00:24:42,640 more are on the way before the end of the year as concerns 519 00:24:42,640 --> 00:24:44,640 intensified over the US labor market. 520 00:24:45,240 --> 00:24:48,000 This is the big news. Not only did they just lower 521 00:24:48,000 --> 00:24:51,440 interest rates today, but they have two more cuts happening 522 00:24:51,440 --> 00:24:54,800 before the end of the year. So we are on officially a track 523 00:24:54,800 --> 00:24:57,360 of lowering interest rates. Even though this is expected. 524 00:24:57,360 --> 00:24:59,960 It's good for the market. It's good that the market gets 525 00:24:59,960 --> 00:25:02,760 what it expects, and it's good that interest rates will 526 00:25:02,760 --> 00:25:05,320 continue going down. If you look at what interest 527 00:25:05,320 --> 00:25:09,200 rates do they affect the price of money, the price that you can 528 00:25:09,200 --> 00:25:12,080 get money at. For example, everything that 529 00:25:12,080 --> 00:25:15,480 requires a loan becomes cheaper when interest rates go down. 530 00:25:15,800 --> 00:25:19,120 And inversely, holding cash becomes more expensive in terms 531 00:25:19,120 --> 00:25:22,200 of opportunity cost because as interest rates go down, you 532 00:25:22,200 --> 00:25:25,160 can't earn as much interest on cash, which means a lot of 533 00:25:25,160 --> 00:25:28,200 investors, as interest rates go down, realize they're not 534 00:25:28,200 --> 00:25:31,680 earning their 5 or 6% on cash, They're only earning 2%. 535 00:25:31,920 --> 00:25:34,560 And now they have to put their money into cash flowing assets 536 00:25:34,840 --> 00:25:38,240 like stocks, bonds, and real estate to actually get a return, 537 00:25:38,560 --> 00:25:41,840 meaning that those type of investments, equities typically 538 00:25:41,840 --> 00:25:45,040 go up as a result. So this is good news overall for 539 00:25:45,040 --> 00:25:46,760 the market. It's also good news for the 540 00:25:46,760 --> 00:25:49,200 housing market. It's not good for people holding 541 00:25:49,200 --> 00:25:52,120 a lot of cash and it should be good for job growth in the 542 00:25:52,120 --> 00:25:54,160 future. Moving on, we get to the safety 543 00:25:54,160 --> 00:25:56,240 impact report that Waymo just released. 544 00:25:56,520 --> 00:25:59,600 Of course, Waymo is Google's robotaxi network, and they 545 00:25:59,600 --> 00:26:03,680 compare Waymo drivers to humans. When you look at the numbers 546 00:26:03,680 --> 00:26:09,000 here, the data is staggering. It is so overwhelming that it's 547 00:26:09,000 --> 00:26:12,040 not even close. Waymo's are dramatically, 548 00:26:12,080 --> 00:26:14,000 dramatically more safe than humans. 549 00:26:14,440 --> 00:26:19,000 The overall crash reduction for fewer serious injuries or worse 550 00:26:19,000 --> 00:26:23,720 crashes was 91%. Now in terms of fewer airbag 551 00:26:23,720 --> 00:26:27,720 deployment, those type of crashes, 79% reduction. 552 00:26:28,280 --> 00:26:30,200 We're talking reduction here. These are massive. 553 00:26:30,480 --> 00:26:34,200 Reducing airbag deployments by 79% is incredible. 554 00:26:34,200 --> 00:26:36,400 Now, these numbers are so significant that if you were to 555 00:26:36,400 --> 00:26:39,720 extrapolate them, that if everybody switched from human 556 00:26:39,720 --> 00:26:42,840 driven vehicles and they they switched to Waymos, which had 557 00:26:42,840 --> 00:26:46,240 around the same safety record, which is a process that's slowly 558 00:26:46,240 --> 00:26:48,600 happening right now. But if that hypothetically were 559 00:26:48,600 --> 00:26:52,800 to occur and we use this type of math, that means that out of all 560 00:26:52,800 --> 00:26:56,080 the ways that humans die, if you have a pie of 100% of all the 561 00:26:56,080 --> 00:26:59,960 various ways that humans die, this would eliminate around 9% 562 00:27:00,240 --> 00:27:03,120 of the ways that humans die. So you get you get rid of an 563 00:27:03,120 --> 00:27:05,960 entire chunk of the way that humans die, which means that our 564 00:27:05,960 --> 00:27:09,880 life expectancy as it as humans would go up dramatically as a 565 00:27:09,880 --> 00:27:11,600 result. So the numbers are incredible. 566 00:27:11,600 --> 00:27:14,880 And it backs up this point that robotaxi is a future and Waymo 567 00:27:14,880 --> 00:27:17,160 is well on its way, partnering and offering different 568 00:27:17,160 --> 00:27:19,240 strategies. They also had another piece of 569 00:27:19,240 --> 00:27:22,040 news here, not related to safety, but related to their 570 00:27:22,040 --> 00:27:25,720 expansion plans, which I think was a bit of a shock for Uber 571 00:27:25,720 --> 00:27:29,280 investors. Lyft shares pop on Waymo deal to 572 00:27:29,280 --> 00:27:31,640 bring robotaxi to Nashville next year. 573 00:27:32,240 --> 00:27:34,880 So Waymo's doing the strategy, which I think is really good for 574 00:27:34,880 --> 00:27:38,120 Waymo, but not good for Uber. They're now partnering with 575 00:27:38,120 --> 00:27:40,120 multiple ridesharing competitors. 576 00:27:40,160 --> 00:27:43,000 This is a situation that also feels like Waymo is just the one 577 00:27:43,000 --> 00:27:45,000 in control here. For example, if we look at the 578 00:27:45,000 --> 00:27:47,520 stock today for each of these companies, with this 579 00:27:47,520 --> 00:27:50,480 announcement that Waymo's partnering with Lyft, of course, 580 00:27:50,480 --> 00:27:53,120 Uber stock is down 5%. We have a note here. 581 00:27:53,120 --> 00:27:56,280 The most meaningful development in the past 24 hours is Alphabet 582 00:27:56,280 --> 00:27:59,680 Waymo partnering with Lyft to launch Robotaxi in Nashville in 583 00:27:59,680 --> 00:28:03,760 2026, expanding Waymo's reach beyond its active deployments 584 00:28:03,760 --> 00:28:08,040 with Uber in Atlanta and Austin. Investors read this as rising 585 00:28:08,040 --> 00:28:11,040 competitive pressure on Uber's autonomy road map, which weighed 586 00:28:11,040 --> 00:28:13,880 on Uber shares intraday. Now, if we look at Lyft for the 587 00:28:13,880 --> 00:28:16,920 very same reason this partnership, it's up 13%. 588 00:28:17,560 --> 00:28:21,760 Now Waymo with Google can impact the stock price dramatically for 589 00:28:21,760 --> 00:28:24,520 each of these companies, but neither of these companies can 590 00:28:24,520 --> 00:28:26,280 impact the stock price of Google. 591 00:28:26,880 --> 00:28:29,400 Google is the one that's overall in control here. 592 00:28:29,560 --> 00:28:32,840 Who they partner with, which one they choose is the dominant 593 00:28:32,840 --> 00:28:35,160 question and that goes to show that they're the ones that own 594 00:28:35,160 --> 00:28:38,440 this technology that is going to be the future very soon. 595 00:28:38,480 --> 00:28:41,360 Now moving on, we get to the comments section of my previous 596 00:28:41,360 --> 00:28:43,040 episode. I went through and looked at 597 00:28:43,040 --> 00:28:45,120 some of your questions and I'll go ahead and answer them here. 598 00:28:45,560 --> 00:28:51,320 We have from Joseph Gruder I believe says with regards to 599 00:28:51,320 --> 00:28:55,760 quarterly versus semi annual, would you approve of going to 600 00:28:55,760 --> 00:28:58,600 monthly reports then it seems your position is that more 601 00:28:58,600 --> 00:29:02,440 frequent equals more better. Now if you missed it, my last 602 00:29:02,440 --> 00:29:06,040 episode I talked about President Trump's effort to get the the 603 00:29:06,040 --> 00:29:08,600 filings to be on instead of a quarterly basis. 604 00:29:08,600 --> 00:29:11,320 He wants to move them to a semi annual basis every six months. 605 00:29:11,800 --> 00:29:13,720 I said that I'm in disagreement of that. 606 00:29:13,720 --> 00:29:16,480 I think they should stay quarterly and I have a lot of 607 00:29:16,480 --> 00:29:19,280 reasons for that. But some investors think that by 608 00:29:19,280 --> 00:29:23,240 going to semi annual every six months, that means companies are 609 00:29:23,240 --> 00:29:27,040 less regulatory burden, they can focus on the long term and it 610 00:29:27,040 --> 00:29:29,120 will improve performance. Now I'll go ahead and finish 611 00:29:29,120 --> 00:29:31,240 your question here. You say I'm not trying to be 612 00:29:31,240 --> 00:29:33,320 ridiculous, I'm genuinely curious. 613 00:29:33,720 --> 00:29:36,560 Initially, I like the idea of going to semi annual because I 614 00:29:36,560 --> 00:29:39,680 do believe that quarterly thinking is detrimental to long 615 00:29:39,680 --> 00:29:42,280 term planning. But you have pulled me back from 616 00:29:42,280 --> 00:29:45,560 a bit with your statements. However, I think your closing 617 00:29:45,560 --> 00:29:48,240 statement comparing the US stock performance to euro stocks is 618 00:29:48,240 --> 00:29:51,120 evidence is a little silly as the primary driver of the 619 00:29:51,120 --> 00:29:53,480 difference is reporting frequency instead of culture 620 00:29:53,480 --> 00:29:56,480 regulation of financial markets. So let me go ahead and address 621 00:29:56,480 --> 00:29:59,640 this. First of all, Joseph here, I 622 00:29:59,640 --> 00:30:03,800 agree with your last statement. I do think that the reporting 623 00:30:03,800 --> 00:30:05,960 difference is a very minor thing. 624 00:30:05,960 --> 00:30:08,520 I don't even think it's probably, you know, on the radar 625 00:30:08,520 --> 00:30:10,920 of a big thing between the Two's performance. 626 00:30:11,200 --> 00:30:13,480 So I agree that probably wasn't the best point to bring up in 627 00:30:13,480 --> 00:30:15,800 the last episode. The only, the only point I was 628 00:30:15,800 --> 00:30:20,000 making is the only benchmark we have comparing quarterly 629 00:30:20,000 --> 00:30:23,800 reporting to semi annual is the US and Europe. 630 00:30:24,000 --> 00:30:27,040 That's all we have. And the US market has dominated 631 00:30:27,040 --> 00:30:28,920 the Europe market for a long period of time. 632 00:30:29,280 --> 00:30:31,800 So the point here is like the evidence doesn't really show 633 00:30:31,800 --> 00:30:34,240 anything else. In fact, the UK finally they, 634 00:30:34,280 --> 00:30:37,000 they did the same thing. They had quarterly reporting and 635 00:30:37,000 --> 00:30:38,520 then they moved it to semi annual. 636 00:30:38,520 --> 00:30:42,000 For a lot of companies, there's no evidence that shows it really 637 00:30:42,000 --> 00:30:44,120 improves anything. None. 638 00:30:44,560 --> 00:30:47,360 People can try to find it, They can try to nitpick and sift 639 00:30:47,360 --> 00:30:48,640 through it. There's just none. 640 00:30:49,080 --> 00:30:51,400 It's all just people's thoughts that it should improve it. 641 00:30:51,800 --> 00:30:54,960 And the, the whole thought here is, is like you said, you 642 00:30:54,960 --> 00:30:58,440 believe that quarterly thinking is detrimental to long term 643 00:30:58,440 --> 00:31:01,600 planning. So let me let me just point 644 00:31:01,600 --> 00:31:05,400 something out here. Quarterly reporting does not 645 00:31:05,400 --> 00:31:09,800 mean quarterly thinking. A company can give disclosures, 646 00:31:10,200 --> 00:31:13,560 disclosures of what they're doing and still have a very long 647 00:31:13,560 --> 00:31:16,000 term perspective. Those two things are possible. 648 00:31:16,000 --> 00:31:20,040 In fact they're very possible. I give weekly reporting on My 649 00:31:20,040 --> 00:31:21,920 Portfolio and my investment thoughts. 650 00:31:22,280 --> 00:31:24,160 Does that mean I'm operating on a weekly basis? 651 00:31:24,160 --> 00:31:26,280 I'm like buying and selling everything on a weekly basis. 652 00:31:26,680 --> 00:31:29,400 No, I'm being transparent. I'm, I'm disclosing what I'm 653 00:31:29,400 --> 00:31:32,760 doing on a weekly basis, even though my average holding period 654 00:31:32,760 --> 00:31:34,640 for my stocks is over five years. 655 00:31:35,160 --> 00:31:38,520 So I think very, very long term, I'm thinking in terms of five, 656 00:31:38,520 --> 00:31:42,160 1020 years and then I disclose things on a frequent basis. 657 00:31:42,480 --> 00:31:44,560 So this conflation that because a company has to give a 658 00:31:44,560 --> 00:31:47,680 quarterly report, therefore they have to think about things and 659 00:31:48,000 --> 00:31:51,560 you know, the objective of the quarter I think is, is totally 660 00:31:51,560 --> 00:31:53,840 false. There's many companies in the US 661 00:31:53,840 --> 00:31:55,760 that make huge long term commitments. 662 00:31:56,240 --> 00:31:59,920 Look at Costco, look at Amazon, look at Walmart, look at all 663 00:31:59,920 --> 00:32:02,200 these companies, they're doing massive CapEx investments, 664 00:32:02,400 --> 00:32:03,880 they're building out infrastructure, they're 665 00:32:03,880 --> 00:32:06,120 reinvesting at levels that we've never seen before. 666 00:32:06,320 --> 00:32:09,240 They're all long term focused with quarterly reporting. 667 00:32:09,760 --> 00:32:13,320 And in your your hypothetical here, if you even said would you 668 00:32:13,320 --> 00:32:15,960 approve going to monthly reports, then yes, I think 669 00:32:16,480 --> 00:32:19,440 that'd be fine. In fact, some companies you say 670 00:32:19,440 --> 00:32:22,200 this ironically like it sounds preposterous to go to monthly 671 00:32:22,200 --> 00:32:23,920 reporting. Costco does that. 672 00:32:24,400 --> 00:32:26,720 Costco already reports their sales every single month. 673 00:32:27,320 --> 00:32:28,400 Every single month. Go look at it. 674 00:32:28,400 --> 00:32:30,560 You can look at every single month sales report. 675 00:32:30,880 --> 00:32:32,680 That brings down the volatility of the stock. 676 00:32:32,680 --> 00:32:34,760 It makes it less reliant on the quarterly reports. 677 00:32:35,040 --> 00:32:36,960 It gives investors an idea of what the revenue is. 678 00:32:36,960 --> 00:32:39,480 Now, they don't report every financial every quarter because 679 00:32:39,480 --> 00:32:42,400 that's just a lot of paperwork. But they do show you what they 680 00:32:42,400 --> 00:32:43,880 made in revenue every single quarter. 681 00:32:44,000 --> 00:32:47,160 So Costco is showing you every month what the revenue is. 682 00:32:47,600 --> 00:32:51,160 Does that make the management of Costco super short term 683 00:32:51,160 --> 00:32:53,720 thinking? No, they're one of the long, the 684 00:32:53,720 --> 00:32:56,760 most long term thinking companies in the market and they 685 00:32:56,760 --> 00:33:00,360 show the revenue every month. And more to the point, in fact, 686 00:33:00,360 --> 00:33:03,640 one point that I didn't bring up in the last episode on this of I 687 00:33:03,640 --> 00:33:07,520 think it's a mistake to move from quarterly to semi annual is 688 00:33:07,520 --> 00:33:11,600 when you buy a company, when you buy equity in it, you are 689 00:33:11,600 --> 00:33:13,440 literally part owner of that company. 690 00:33:13,960 --> 00:33:16,960 Now, you may just think that that's not important, that you 691 00:33:16,960 --> 00:33:19,600 don't respect the right to shareholders, that you're just a 692 00:33:19,600 --> 00:33:21,320 shareholder, but you don't deserve any rights. 693 00:33:21,320 --> 00:33:23,480 You know, you don't really own the company like people that 694 00:33:23,480 --> 00:33:26,000 have more invested do. I don't feel that way. 695 00:33:26,400 --> 00:33:29,400 If you worked for money, if you've gone to work, you saved 696 00:33:29,400 --> 00:33:31,120 up money. That's your labor that you saved 697 00:33:31,120 --> 00:33:33,040 up. And if you buy equity in a 698 00:33:33,040 --> 00:33:34,880 business, you are part shareholder. 699 00:33:35,400 --> 00:33:37,680 You have the right to know what's going on with your 700 00:33:37,680 --> 00:33:40,680 company. They they should show you what's 701 00:33:40,680 --> 00:33:43,480 happening with your business, that you're part owner. 702 00:33:44,040 --> 00:33:46,840 I feel like the relationship there is very important. 703 00:33:47,400 --> 00:33:51,120 You have the right to have transparent and frequent updates 704 00:33:51,280 --> 00:33:54,360 from the business to know what's going on with your investment. 705 00:33:54,680 --> 00:33:57,920 Your money's in that business. Your money's at risk in that 706 00:33:57,920 --> 00:34:00,600 business. Why should they go six months of 707 00:34:00,600 --> 00:34:03,560 time without giving you any insight into what your business 708 00:34:03,560 --> 00:34:06,120 is doing? If you owned a pizza shop or you 709 00:34:06,120 --> 00:34:09,880 owned a little rental apartment, would you like not being able to 710 00:34:09,880 --> 00:34:12,639 know whether you're collecting rent for six months or if the 711 00:34:12,639 --> 00:34:15,120 pizza shop is having troubles for six months? 712 00:34:15,600 --> 00:34:18,800 It's a long time to did not know anything about your company and 713 00:34:18,800 --> 00:34:20,080 that's what they're suggesting here. 714 00:34:20,600 --> 00:34:23,719 So even though we're we're small time shareholders, we only own a 715 00:34:23,760 --> 00:34:25,040 little sliver of these companies. 716 00:34:25,199 --> 00:34:28,000 We're shareholders nonetheless and we deserve to know. 717 00:34:28,239 --> 00:34:30,480 It shouldn't just be the executives who in many cases 718 00:34:30,480 --> 00:34:32,040 don't own much of the company themselves. 719 00:34:32,440 --> 00:34:34,800 They shouldn't be the only ones that knows what's going on with 720 00:34:34,800 --> 00:34:37,320 the business. So if I had to pick between 2 721 00:34:37,320 --> 00:34:41,600 directions going more frequent or less frequent, I would pick 722 00:34:41,600 --> 00:34:44,040 more frequent. And I believe that the right of 723 00:34:44,040 --> 00:34:47,880 transparency of investors and owners of the business, it 724 00:34:47,880 --> 00:34:51,320 exceeds the the burden of regulatory burden. 725 00:34:51,679 --> 00:34:55,320 It exceeds the the questions that people have of the long 726 00:34:55,320 --> 00:34:57,400 term planning. And I don't believe those 727 00:34:57,400 --> 00:35:00,440 objections anyway. So when I look at this again, I 728 00:35:00,440 --> 00:35:04,520 think the solution here is if regulatory burden is a problem, 729 00:35:04,560 --> 00:35:07,000 we should come up with better technology to be able to make 730 00:35:07,000 --> 00:35:10,080 these quarterly reports more seamless, more frequent and 731 00:35:10,080 --> 00:35:13,280 easier. We shouldn't remove a huge, a 732 00:35:13,280 --> 00:35:16,040 huge right of the shareholder to actually know what's going on 733 00:35:16,040 --> 00:35:18,520 with their business. Let's go to move on to another 734 00:35:18,520 --> 00:35:19,760 one here. Let's take a look at this 735 00:35:19,760 --> 00:35:22,680 question. Joseph, you bought more Google, 736 00:35:22,680 --> 00:35:25,440 Equifax and Amazon. Did you consider buying the dip 737 00:35:25,440 --> 00:35:28,320 in Microsoft? I haven't seen much of A dip in 738 00:35:28,320 --> 00:35:30,560 Microsoft. When I look at this one, I see 739 00:35:30,560 --> 00:35:34,200 it at $500 per share. To me, that's not like a huge 740 00:35:34,200 --> 00:35:35,440 dip. It doesn't attract me. 741 00:35:35,880 --> 00:35:37,960 Microsoft trades at a much higher valuation. 742 00:35:38,840 --> 00:35:41,640 My evaluation that I do analysis on at each of these companies, 743 00:35:42,080 --> 00:35:43,880 Microsoft is wonderful. So I haven't sold it, but I 744 00:35:43,880 --> 00:35:45,400 think it trades at a much higher valuation. 745 00:35:45,400 --> 00:35:47,720 Let's go ahead and move on to the next one here. 746 00:35:48,120 --> 00:35:50,760 Intuit is trading at the same price it was a year ago. 747 00:35:50,760 --> 00:35:53,280 Will you be loading some shares coming ahead? 748 00:35:54,120 --> 00:35:57,480 When I look at Intuit, I'm very pleased with what's going on in 749 00:35:57,480 --> 00:35:59,040 terms of the fundamentals of the company. 750 00:35:59,200 --> 00:36:00,800 The only thing that gives me pause on this one, it's 751 00:36:00,800 --> 00:36:03,160 evaluation. Intuit, even though it's grown 752 00:36:03,200 --> 00:36:06,280 earnings, the valuation is a bit higher than most companies. 753 00:36:06,760 --> 00:36:09,360 And one of the things that I'm concerned about is if Intuit 754 00:36:09,360 --> 00:36:13,000 starts to get the treatment of the dreaded software company, 755 00:36:13,280 --> 00:36:16,080 investors start to view it as a software company like Adobe or 756 00:36:16,080 --> 00:36:18,200 Salesforce. That could be bad news for 757 00:36:18,200 --> 00:36:20,600 Intuit. Right now it is a software 758 00:36:20,600 --> 00:36:23,680 company, but they're doing so well that investors still can't 759 00:36:23,680 --> 00:36:26,640 deny how well it's doing. So right now with all of that, 760 00:36:26,840 --> 00:36:28,480 I'm at a hold. That's what I'm doing with 761 00:36:28,480 --> 00:36:30,040 Intuit. I'm holding the stock. 762 00:36:30,680 --> 00:36:32,200 Let's go ahead and zoom into this one. 763 00:36:33,240 --> 00:36:34,960 There is no thesis for Open Door. 764 00:36:35,640 --> 00:36:38,240 All I heard is that they have a large Tam. 765 00:36:38,520 --> 00:36:40,880 So what? They lost a ton of money because 766 00:36:40,880 --> 00:36:43,640 their algo isn't good enough and couldn't scale. 767 00:36:43,960 --> 00:36:49,160 Pure speculation. Well, in Walt in K Walter, I 768 00:36:49,160 --> 00:36:52,040 mostly agree with you Now I thought the previous episode on 769 00:36:52,040 --> 00:36:53,360 open Door was an interesting one. 770 00:36:53,360 --> 00:36:58,360 If you haven't seen it, it goes over an investor and open door 771 00:36:58,360 --> 00:37:01,280 and how the stock is talked about is the next 100 bagger. 772 00:37:01,600 --> 00:37:03,640 It's a really interesting story that I thought was worth 773 00:37:03,640 --> 00:37:07,120 sharing. But it is true that almost all 774 00:37:07,120 --> 00:37:11,840 of the the thesis of open Door is potential, just potential and 775 00:37:11,840 --> 00:37:13,240 just the total addressable market. 776 00:37:13,680 --> 00:37:15,880 And you can play this game with almost any type of business. 777 00:37:15,880 --> 00:37:19,560 For example, I can open up if we're talking about Tam or total 778 00:37:19,560 --> 00:37:22,640 addressable market. I could open up a pizza shop and 779 00:37:22,640 --> 00:37:24,680 say I have a trillion dollar Tam. 780 00:37:25,040 --> 00:37:26,760 Look at all the restaurants in the nation. 781 00:37:27,040 --> 00:37:30,680 If I only get 1% of that Tam, I'm $100 billion business. 782 00:37:31,240 --> 00:37:34,400 So that doesn't mean much. If you're just, if you just have 783 00:37:34,400 --> 00:37:37,600 one pizza shop and you say the Tam is huge, that doesn't mean 784 00:37:37,600 --> 00:37:40,120 much. You have to show evidence that 785 00:37:40,120 --> 00:37:44,040 over a long period of time you can scale, you can compete, you 786 00:37:44,040 --> 00:37:46,400 can take market share from that Tam. 787 00:37:46,880 --> 00:37:51,640 As good as Open Door might be in this category, homes are very, 788 00:37:51,640 --> 00:37:54,080 very unique. Every single one of them. 789 00:37:54,440 --> 00:37:58,800 Every home has a different yard, a different lot, different 790 00:37:58,800 --> 00:38:01,800 interior, a different view, different blemishes. 791 00:38:02,240 --> 00:38:04,440 Trying to scale that with software is going to be a 792 00:38:04,440 --> 00:38:07,240 significant challenge. I don't know if Open Door can do 793 00:38:07,240 --> 00:38:08,560 it. Maybe they can. 794 00:38:08,840 --> 00:38:11,640 That potential is going to. It's well priced into the stock 795 00:38:11,640 --> 00:38:14,320 today. Let's go to move on to another 796 00:38:14,320 --> 00:38:19,120 one here. I think that Cynthian Cynthia, I 797 00:38:19,120 --> 00:38:21,600 believe, says, are you selling Netflix? 798 00:38:22,200 --> 00:38:24,640 I'm not selling Netflix. I still hold every share. 799 00:38:24,640 --> 00:38:26,480 I haven't sold. I can't even remember the last 800 00:38:26,480 --> 00:38:28,560 time I sold Netflix. I, I, I don't remember, I think 801 00:38:28,560 --> 00:38:31,880 I've ever sold Netflix before, but I certainly haven't sold it 802 00:38:31,880 --> 00:38:33,920 in years. And I still hold every share of 803 00:38:33,920 --> 00:38:35,880 the company. It's too good of a company to 804 00:38:35,880 --> 00:38:39,840 sell today, even though it's at a higher valuation, even though 805 00:38:39,840 --> 00:38:41,200 it could trade down in the short term. 806 00:38:42,240 --> 00:38:48,200 Let's go to comet #7 Kong says what makes Equifax superior to 807 00:38:48,200 --> 00:38:51,480 TransUnion and Experian. The big thing that I would look 808 00:38:51,480 --> 00:38:54,480 at if you're looking at these three companies is look at the 809 00:38:54,480 --> 00:38:58,880 workforce verification or workforce solutions within 810 00:38:58,880 --> 00:39:00,480 Equifax. They have a unique business 811 00:39:00,880 --> 00:39:03,920 which TransUnion and Experian have a bit of, but it's just not 812 00:39:03,920 --> 00:39:07,720 nearly as scaled, which is verifying your customer. 813 00:39:08,080 --> 00:39:11,240 So not all three of these are are credit bureaus. 814 00:39:11,280 --> 00:39:14,600 They give you a credit report, but Equifax is by far the most 815 00:39:14,600 --> 00:39:17,640 scaled with the work number. The work number is a product 816 00:39:17,640 --> 00:39:20,560 where if you want to know someone's background, you get 817 00:39:20,560 --> 00:39:23,520 their their income, you get where they've worked before, you 818 00:39:23,520 --> 00:39:25,960 get what roles they've had. You want to verify their 819 00:39:25,960 --> 00:39:28,720 identity. Verifying someone's identity, a 820 00:39:28,720 --> 00:39:31,120 big part of that is verifying their work history. 821 00:39:31,560 --> 00:39:34,400 So Equifax has this additional product which is growing 822 00:39:34,400 --> 00:39:37,680 substantially. In fact, I would not buy Equifax 823 00:39:37,880 --> 00:39:40,640 without the work number. They didn't have that product as 824 00:39:40,640 --> 00:39:43,040 part of the company. I would not find this company 825 00:39:43,040 --> 00:39:45,760 nearly as interesting. So that's why I don't find 826 00:39:45,800 --> 00:39:48,160 TransUnion and Experian is interesting. 827 00:39:48,440 --> 00:39:50,760 That's why I do find Equifax as superior. 828 00:39:51,840 --> 00:39:53,880 Let's go ahead and go to another one here. 829 00:39:53,880 --> 00:39:58,600 OK, We have a dual question. Captain Mongol says on dual, any 830 00:39:58,600 --> 00:40:01,160 concern with the high PE ratio? I agree with everyone that it 831 00:40:01,160 --> 00:40:04,320 seems to be beating beating it down and besides profit taking, 832 00:40:04,320 --> 00:40:06,720 what am I missing? It continues to grow sales, add 833 00:40:06,720 --> 00:40:09,960 more paid users, has had expanding product and growing 834 00:40:09,960 --> 00:40:11,520 free cash flow. What am I missing? 835 00:40:11,600 --> 00:40:13,160 Where is the bottom? Sure. 836 00:40:13,160 --> 00:40:16,480 First of all Duolingo is not like a beaten down value stock. 837 00:40:16,600 --> 00:40:19,640 It's a high flying like fast growing company. 838 00:40:20,080 --> 00:40:23,880 I believe that the reasons it's being beaten down is by this 839 00:40:23,880 --> 00:40:26,440 series of news of AI translation tools. 840 00:40:26,840 --> 00:40:29,680 Like the Airpods, the Metaglasses, there's going to be 841 00:40:29,680 --> 00:40:32,200 lots of ways to translate language in the future, lots of 842 00:40:32,200 --> 00:40:37,560 devices that do it seamlessly. So if you believe that having 843 00:40:37,560 --> 00:40:41,920 more abundant use of AI translation tools is going to 844 00:40:42,000 --> 00:40:46,120 eradicate the the will and the motivation for people to ever 845 00:40:46,120 --> 00:40:49,000 learn a different language, then Duolingo is in trouble. 846 00:40:49,200 --> 00:40:52,000 That's one of the concerns. Another concern is a social 847 00:40:52,000 --> 00:40:53,880 media backlash. We're still trying to figure out 848 00:40:53,880 --> 00:40:55,360 how much that's affecting the company. 849 00:40:55,600 --> 00:40:59,280 So you have that additional bearish concern and then you 850 00:40:59,280 --> 00:41:01,240 have the concern of the valuation. 851 00:41:01,560 --> 00:41:04,760 Now Duolingo trades at like a 70 PE ratio, but it needs to be 852 00:41:04,760 --> 00:41:07,960 said that they also grew earnings 70%. 853 00:41:08,440 --> 00:41:10,760 So they're nearly doubling earnings every single year. 854 00:41:10,760 --> 00:41:12,440 These are these are massive growth. 855 00:41:12,840 --> 00:41:15,960 It's highly profitable, great cost structure, huge amount of 856 00:41:15,960 --> 00:41:19,240 operating leverage and there's a lot of things they can do to 857 00:41:19,240 --> 00:41:20,640 increase their margins over time. 858 00:41:21,080 --> 00:41:23,360 So I'm not as concerned about the PE ratio. 859 00:41:23,600 --> 00:41:26,960 What I'm concerned about is over the next three years, Duolingo 860 00:41:26,960 --> 00:41:29,440 continues to grow their free cash flow, their user base. 861 00:41:29,960 --> 00:41:32,000 I think they have a great product with chess. 862 00:41:32,360 --> 00:41:36,360 I know that chess.com is well liked by chess users. 863 00:41:36,800 --> 00:41:40,080 So they'll, they'll recoil at the idea of another product 864 00:41:40,080 --> 00:41:42,800 coming into the market. But I think it's a good thing 865 00:41:42,840 --> 00:41:46,440 even for usersofchess.com cause Duolingo will bring in people 866 00:41:46,440 --> 00:41:48,800 that have never played chess, never played it. 867 00:41:49,200 --> 00:41:51,200 I wasn't big into chess. I played it a couple times 868 00:41:51,200 --> 00:41:53,080 growing up. But I've been doing the Duolingo 869 00:41:53,080 --> 00:41:55,840 chess course and it's really fun for beginners. 870 00:41:56,120 --> 00:41:59,920 They try to get you to a 15,500 ELO. 871 00:42:00,680 --> 00:42:02,600 It's just mostly for beginners right now. 872 00:42:02,600 --> 00:42:05,200 But you can play against one of the characters and they're going 873 00:42:05,200 --> 00:42:07,800 to have player versus player soon and competitions and 874 00:42:07,800 --> 00:42:09,920 Duolingo. So I think it's going to expand 875 00:42:09,920 --> 00:42:12,440 the category. They already surpassed a million 876 00:42:12,440 --> 00:42:15,400 daily users in chess. And chess is massive. 877 00:42:15,400 --> 00:42:18,640 There's approximately 600 million people that play chess. 878 00:42:19,000 --> 00:42:21,160 So Duolingo is going to expand this pie. 879 00:42:21,800 --> 00:42:24,000 This is outside of language translation. 880 00:42:24,240 --> 00:42:26,120 So I think there's a lot of upside to the stock. 881 00:42:26,120 --> 00:42:29,000 You know, it's it's extremely volatile, but I continue to hold 882 00:42:29,000 --> 00:42:31,480 it today. Let's go ahead and go to the 883 00:42:31,480 --> 00:42:33,640 next one here. Is it too late to get into 884 00:42:33,640 --> 00:42:36,160 Google at these prices? I do not believe so. 885 00:42:36,760 --> 00:42:43,640 I have over $140,000 in Google. I've bought over 80,000 of it 886 00:42:43,680 --> 00:42:46,520 recently. It's been a recent company that 887 00:42:46,520 --> 00:42:50,840 I've really aggressively overall increased my my waiting in 888 00:42:51,040 --> 00:42:53,720 because I continue to be incrementally more bullish on 889 00:42:53,720 --> 00:42:55,800 it. I was bullish on the stock four 890 00:42:55,800 --> 00:42:58,000 months ago. I'm more bullish on it today. 891 00:42:58,240 --> 00:43:00,760 The price has come up to reflect some of that, but I think over 892 00:43:00,760 --> 00:43:02,200 the long term there's more to go. 893 00:43:02,640 --> 00:43:06,440 Consider that Google owns Waymo. Consider that they own YouTube. 894 00:43:06,800 --> 00:43:09,720 I think YouTube is likely to double over the next five years 895 00:43:09,760 --> 00:43:12,520 in value. They own Google Cloud, which I 896 00:43:12,520 --> 00:43:15,160 believe is likely to double in value over the next five years. 897 00:43:15,640 --> 00:43:17,800 Then they own all their subscriptions. 898 00:43:17,800 --> 00:43:20,360 YouTube's building out a match, a massive subscription business 899 00:43:20,560 --> 00:43:22,880 with YouTube Premium. They have over 100 million 900 00:43:22,880 --> 00:43:25,040 subscribers. And then of course, you get into 901 00:43:25,040 --> 00:43:27,160 their other subscription businesses. 902 00:43:27,160 --> 00:43:31,000 You have the Google One, which has millions of users, and then 903 00:43:31,000 --> 00:43:33,880 you have the entire search business and Gemini, all of it 904 00:43:33,880 --> 00:43:36,040 puts together to an incredible company. 905 00:43:36,560 --> 00:43:38,920 So I think that things look really good for Google. 906 00:43:39,520 --> 00:43:41,840 All of this with a valuation of a 25 multiple. 907 00:43:42,280 --> 00:43:44,720 So I think that of course, you could have bought Google a 908 00:43:44,720 --> 00:43:46,440 couple months ago. That would have been the time. 909 00:43:47,000 --> 00:43:50,200 And if you buy it today, don't be shocked or saddened if we get 910 00:43:50,200 --> 00:43:53,000 some profit taking in a a short trade down. 911 00:43:53,440 --> 00:43:57,080 But in the long term, the next 5 to 10 years, I think Google's in 912 00:43:57,080 --> 00:43:59,800 a great position. Now that's going to be all the 913 00:43:59,800 --> 00:44:01,760 questions for today. I hope you enjoyed today's 914 00:44:01,760 --> 00:44:04,000 episode and have a good week.