00:03.997 --> 00:12.909
[SPEAKER_03]: On radio, on YouTube, streaming live on investtalk.com and for our podcast subscribers, this is Invest Talk.

00:13.550 --> 00:15.893
[SPEAKER_03]: Independent Thinking, shared success.

00:17.956 --> 00:26.687
[SPEAKER_03]: Invest Talk is made possible by KPP Financial, a registered investment advisor for serving clients throughout the United States.

00:27.468 --> 00:32.535
[SPEAKER_03]: Here is KPP Financial Portfolio Manager, Luke Guerrero.

00:34.355 --> 00:40.362
[SPEAKER_08]: Good afternoon, fellow investors, and welcome back to another episode of Invest Talk.

00:41.163 --> 00:42.144
[SPEAKER_08]: I'm your host, Lou Guerrero.

00:42.184 --> 00:46.189
[SPEAKER_08]: Today's Friday, December 26th, 2025.

00:47.351 --> 00:54.319
[SPEAKER_08]: Now I hope all of those who are listening, maybe on there, drives home from work if you are unfortunate to have to work today.

00:55.701 --> 01:02.809
[SPEAKER_08]: Or listening via our live, humor later on when we publish this as a podcast, enjoyed their Christmas day.

01:05.388 --> 01:20.922
[SPEAKER_08]: Now that the holiday season is, well, for the most part over, a time of reflection is upon us, because as we turn into a new year, it is a tradition amongst many groups, including myself, to set new year's resolutions.

01:22.304 --> 01:34.855
[SPEAKER_08]: But in order to figure out where you need to go, first you must think about where you've been, and so we hear an invest talk hope that each and every day through 2025, we made good.

01:34.970 --> 01:40.307
[SPEAKER_08]: on our mission to help make you a better and more informed investor.

01:41.651 --> 01:45.604
[SPEAKER_08]: And we shall too carry that on into the new year.

01:47.187 --> 02:00.850
[SPEAKER_08]: Speaking of reflection, I do want to remind you one more time that this year we did something a little bit different by producing our first ever in Vestock holiday special which dropped in hole on our YouTube channel.

02:01.591 --> 02:06.519
[SPEAKER_08]: It was a fun end-of-year episode where Justin and I looked back at the biggest market themes of 2025.

02:07.241 --> 02:12.790
[SPEAKER_08]: Highlighted a few lessons talked about what we got right, talked about what we got wrong,

02:13.411 --> 02:17.777
[SPEAKER_08]: I'd really just geared up for 2026 in order to hit the ground running.

02:18.718 --> 02:22.844
[SPEAKER_08]: The Invest Talk holiday special is free like all of our content over on YouTube.

02:23.305 --> 02:27.911
[SPEAKER_08]: So just head over there, search Invest Talk with two teas, or use the link in today's show notes.

02:28.291 --> 02:31.656
[SPEAKER_08]: And while you're there, don't forget to subscribe and turn your notifications on.

02:33.222 --> 02:37.990
[SPEAKER_08]: Now we don't have many days left into 20, 25, so let's keep things moving.

02:38.711 --> 02:44.821
[SPEAKER_08]: In just a bit, we'll talk about today's market performance and run down those show topics, but first, let's tackle this color question.

02:45.222 --> 02:46.344
[SPEAKER_05]: This is Ryan and Seattle.

02:46.624 --> 02:51.953
[SPEAKER_05]: I'm calling about a company RLI core, ticker symbol RLI.

02:52.273 --> 02:53.616
[SPEAKER_05]: This is an insurance company.

02:53.676 --> 02:59.365
[SPEAKER_05]: I've been looking at the Espriner, and I'm just curious if you guys have any thoughts on the company itself.

02:59.665 --> 03:03.827
[SPEAKER_05]: And whether or not this is likely to remain a low bay to stock over a long period of time.

03:04.168 --> 03:05.214
[SPEAKER_05]: All right, I'll listen on the show.

03:05.274 --> 03:05.676
[SPEAKER_05]: Thank you.

03:06.955 --> 03:08.456
[SPEAKER_08]: Ticker R.L.I.

03:09.157 --> 03:14.062
[SPEAKER_08]: is a US-based property and casualty insurance company.

03:14.802 --> 03:24.752
[SPEAKER_08]: So what they do is they generally make money, this company specifically, by trying to underwrite more niche insurance risks that are often underserved by larger carriers.

03:24.792 --> 03:36.743
[SPEAKER_08]: So they have several subsidiaries that offer products like commercial casualty insurance, property insurance, surety bonds, and other specialty coverage, coverage is tailored to businesses

03:38.005 --> 03:47.884
[SPEAKER_08]: You're today, it's been quite a struggle down 21.48% year to date down 22.65% over the past 52 weeks.

03:48.666 --> 03:54.597
[SPEAKER_08]: And as under-performed in industry, by 7.3% this year and 8.8% the previous year.

03:55.454 --> 03:59.283
[SPEAKER_08]: In terms of price to book value, it's trading near the low about 3.2 times.

03:59.925 --> 04:07.563
[SPEAKER_08]: The range was from 3 to 5.9 over the past five years, so from a relative valuation perspective, certainly not too expensive.

04:08.284 --> 04:14.138
[SPEAKER_08]: Now if you're looking for dividends, well, it does have a modest dividend, pays about one.

04:14.405 --> 04:19.193
[SPEAKER_08]: point, you know, 0.8% to 1% is where it's been over the past five years.

04:19.213 --> 04:31.235
[SPEAKER_08]: They do a have a long track record of dividend growth with 50 plus consecutive years, which tends to be a bit rare amongst any publicly traded company.

04:31.255 --> 04:39.349
[SPEAKER_08]: Now, what's really driving their performance is, well, you know, a bit of technical weakness, definitely.

04:39.532 --> 04:47.622
[SPEAKER_08]: A bit of headwinds from a secular, cyclical perspective, but what I'm seeing here is not much growth.

04:48.643 --> 04:48.844
[SPEAKER_08]: Right?

04:48.864 --> 04:58.916
[SPEAKER_08]: Net earned grew a bit, 5.8% is where it's projected to be this year, but overall growth has certainly slowed compared to where it was over the past four or five years.

04:59.437 --> 05:03.121
[SPEAKER_08]: And from a technical perspective, I mean it really bounced off of the low of about 58.96.

05:05.324 --> 05:07.767
[SPEAKER_08]: Headed up word, but it's had a rough

05:08.270 --> 05:09.271
[SPEAKER_08]: year, certainly 2025.

05:09.912 --> 05:16.059
[SPEAKER_08]: And so from a moment in perspective, I'm not really seeing much that shows it's going to turn around, right?

05:16.199 --> 05:21.506
[SPEAKER_08]: All insurers are affected by the frequency and severity of claims, the costs.

05:21.526 --> 05:26.852
[SPEAKER_08]: So his general costs rise in order to fix things that are insured.

05:27.453 --> 05:31.898
[SPEAKER_08]: Well, margins tend to fall as well in underwriting tends to have a bit of a cycle.

05:32.300 --> 05:34.245
[SPEAKER_08]: They're insurance companies that we hold for our clients.

05:34.265 --> 05:39.600
[SPEAKER_08]: We think that from the perspective of getting exposure to financials, it's a critical piece.

05:39.841 --> 05:43.190
[SPEAKER_08]: That industry, but I don't know if RLI fits the bill.

05:43.251 --> 05:47.001
[SPEAKER_08]: So I'm going to pass on RLI corp, ticker, RLI.

05:49.900 --> 05:55.345
[SPEAKER_08]: We've got a lot of ground to cover in the next 45 minutes or so, and here's just a little bit of what we have planned.

05:56.066 --> 06:02.332
[SPEAKER_08]: By main focus point concerns this topic, the 2026 corporate maturity wall.

06:03.113 --> 06:17.967
[SPEAKER_08]: We'll talk about the risks facing corporate bond markets as a trillion dollar wave of low interest debt matures in 2026, which may force companies to refinance at much higher rates.

06:18.706 --> 06:29.363
[SPEAKER_08]: We'll touch on another story about debt, this one about tech companies that are shifting over a hundred billion of AI-related data-centered debt off of their ballot sheets.

06:29.764 --> 06:30.785
[SPEAKER_08]: What does that mean for risks?

06:31.366 --> 06:35.533
[SPEAKER_08]: What does that mean for unseen risks and for debt financing in general?

06:35.969 --> 06:54.134
[SPEAKER_08]: Well, such a story I saw regarding the Permian Basin, which is one of the hot areas for oil field production, and some of the risks associated with that area right now, and what you might want to think about before you invest in oil companies, particularly exposed there, should we have time at the end of the show?

06:54.154 --> 06:56.678
[SPEAKER_08]: We'll touch on gold and silver.

06:57.907 --> 07:04.494
[SPEAKER_08]: We also have some foistement calls ready to play, and as always, have some questions that came in from the comment section of the Invest hockey YouTube channel.

07:04.954 --> 07:07.537
[SPEAKER_08]: And hopefully, some live calls throughout the show.

07:09.379 --> 07:11.981
[SPEAKER_08]: We are going into our break, our first break.

07:12.021 --> 07:15.905
[SPEAKER_08]: Please remember, you can call anytime, leave your questions on the Invest hockey voice bank.

07:15.925 --> 07:22.632
[SPEAKER_08]: If you're listening to our live streamer on AM1220 Radio in the Silicon Valley area, give you a call now at 80 to 99 chart.

07:26.898 --> 07:31.964
[SPEAKER_04]: Sirious investors are certain to have finance and investment questions.

07:32.204 --> 07:36.049
[SPEAKER_04]: Wanted to get your take on WW Granger.

07:36.269 --> 07:40.634
[SPEAKER_04]: And the best person to ask your question in the right way is you.

07:40.935 --> 07:46.121
[SPEAKER_06]: I was wondering from your standpoint, it's very downside in buying fractional shares versus whole shares.

07:46.421 --> 07:55.572
[SPEAKER_04]: And 24-7 rain or shine, Justin Klein and Luke Guerrero stand ready to provide their unbiased answers.

07:55.552 --> 07:58.936
[SPEAKER_02]: The issue, though, is really over the last decade or so.

07:59.296 --> 08:02.760
[SPEAKER_02]: It's never maintained this level of profitability for a longer time.

08:02.960 --> 08:07.124
[SPEAKER_02]: The modities are incredibly volatile, so when the going is good, take some profit.

08:07.145 --> 08:10.028
[SPEAKER_04]: Your participation makes an invest talk better.

08:10.308 --> 08:12.791
[SPEAKER_04]: My name is Mike, I'm calling in from Orange County, California.

08:12.831 --> 08:15.073
[SPEAKER_04]: This is Lewis, calling from Bolivia.

08:15.213 --> 08:17.015
[SPEAKER_04]: Let's go talk to Chris and me.

08:17.275 --> 08:25.204
[SPEAKER_04]: So don't forget to call Invest Talk.

08:31.495 --> 08:39.562
[SPEAKER_04]: The weekend is here or almost here, but you've got financial investment questions, so step up and call in.

08:40.163 --> 08:41.324
[SPEAKER_04]: Invest talk.

08:41.344 --> 08:45.667
[SPEAKER_04]: 88899 chart.

08:45.687 --> 08:48.970
[SPEAKER_08]: Stock a little bit about US stocks today.

08:48.990 --> 08:53.554
[SPEAKER_08]: I really the market in general, US stocks finishing a bit lower overall.

08:54.115 --> 09:01.401
[SPEAKER_08]: Though, you know, it really oscillated in a pretty narrow band

09:02.782 --> 09:05.485
[SPEAKER_08]: The Dow was up four or was down four basis points.

09:05.825 --> 09:10.611
[SPEAKER_08]: That's some P was down three, Nasdaq was down nine, Russell 2000 down 54.

09:11.031 --> 09:16.557
[SPEAKER_08]: Despite of this, Dow hasn't been Nasdaq's still logged solid weekly gains.

09:17.538 --> 09:23.204
[SPEAKER_08]: Amongst the groups, AI infrastructure, retail investor favorites and small caps under performed on the day.

09:23.725 --> 09:30.392
[SPEAKER_08]: Other and other performers included energy, AMD banks ensures private equity, media, and apparel.

09:30.777 --> 09:36.410
[SPEAKER_08]: Big Tech was mostly a lower with Nvidia being the standout the Notable Mag 7 Gainer.

09:37.031 --> 09:44.027
[SPEAKER_08]: While other performers included managed care, hospitals, industrial metals, stable retailers, and dollar stores.

09:44.918 --> 09:52.595
[SPEAKER_08]: On the bond side treasuries were a bit mixed with the curve steepening, yields up about two basis points focused on the long end of the curve.

09:53.377 --> 10:04.902
[SPEAKER_08]: Dollar indexed little change while gold finished up 1.1% pushing farther into record territory, and silver was up 7.7% and copper was up 4.7%.

10:06.265 --> 10:08.971
[SPEAKER_08]: No real change to the broader market narrative, right?

10:08.991 --> 10:11.476
[SPEAKER_08]: It's a very quiet low volume session.

10:11.817 --> 10:15.785
[SPEAKER_08]: It always is like this to close out a shortened holiday week.

10:16.386 --> 10:20.274
[SPEAKER_08]: And really look forward to the last trading days of 2025.

10:20.856 --> 10:24.443
[SPEAKER_08]: But at the same time, the S&P still remain near all time highs.

10:24.811 --> 10:40.069
[SPEAKER_08]: you still have a solid economic backdrop robust corporate earnings is still spending consumer and expectations for at least one more rate cut in the months ahead as well as that positive seasonality that has really been driving markets higher.

10:40.049 --> 10:48.884
[SPEAKER_08]: But at the same time, right, there's recent strong economic data, such as 2 days, Q3GDP, and that could raise the bar for future Fed rate cuts.

10:49.405 --> 11:03.289
[SPEAKER_08]: The AI growth engine continues to come under scrutiny, and the geopolitical backdrop, although unsettled, has still not really affected markets yet, so these are all the dynamics that are going to be coalescing, heading into 2026.

11:04.602 --> 11:12.173
[SPEAKER_08]: Nothing to report really on the economic calendar today, no major earnings reporters, and no scheduled FedSpeak due to the Christmas holiday.

11:12.693 --> 11:19.303
[SPEAKER_08]: And frankly, headed into next week, not much to talk about as well as we have another holiday shortened week.

11:20.785 --> 11:31.420
[SPEAKER_07]: Skipping's moving and roll in another listener question now.

11:31.568 --> 11:41.978
[SPEAKER_07]: I know I got a huge boost during the pandemic, but the rise in bike prices has been pulled back since then, but it continues to be pulled back, and I don't really understand the nature of it.

11:42.178 --> 11:49.786
[SPEAKER_07]: And I have assumed to be the leader and head production helps you really in the reduction in consumption, or balance you to super plane.

11:49.806 --> 11:54.791
[SPEAKER_07]: So if you have any insights on why the fold back, what's your recommendation on taking on?

11:55.191 --> 11:59.095
[SPEAKER_07]: Maybe a larger position or holding a position as is, but they now thank you.

12:00.492 --> 12:29.976
[SPEAKER_08]: Cal main foods is involved in pretty much every step of the process for distributing eggs is these the largest egg producer in the United States now it's a fairly small company in spite of that right only four billion dollar market cap company it has zero debt on his balance sheet which is certainly something that we like and a decent cash position as of the fiscal year end

12:29.956 --> 12:30.738
[SPEAKER_08]: pretty substantial.

12:31.260 --> 12:41.187
[SPEAKER_08]: They do pay a dividend and that dividend has floated upward given that the stock is down 20.35% year to date and about 20% over the past 52 weeks.

12:41.227 --> 12:45.298
[SPEAKER_08]: The dividend yield sits at about 6.7%.

12:46.527 --> 12:56.784
[SPEAKER_08]: Now, as I was mentioned, Cal main did benefit from higher egg prices when industry supply was constraint, and they did have some pretty strong profit growth at the same time.

12:56.804 --> 12:57.685
[SPEAKER_08]: I mean, look at net margins.

12:58.286 --> 13:06.780
[SPEAKER_08]: 22, pre pandemic, it was sitting around 1.4.27.5% net margin, look at that explosion.

13:06.760 --> 13:09.144
[SPEAKER_08]: 24.1, EBITDA margin was at 32.9.

13:09.244 --> 13:12.148
[SPEAKER_08]: Now it's since come back down to Earth a little bit, right?

13:12.569 --> 13:14.191
[SPEAKER_08]: 2025 was a banner year.

13:14.612 --> 13:16.475
[SPEAKER_08]: They had outstanding margins.

13:16.495 --> 13:18.197
[SPEAKER_08]: They returned on equity of 56%.

13:19.239 --> 13:24.207
[SPEAKER_08]: But, I mean, from guidance that's coming back down to Earth a bit.

13:25.008 --> 13:32.199
[SPEAKER_08]: Price to Ford looking, you're sitting at 11.2, where it is right now, that is the low end of its five-year range.

13:32.239 --> 13:35.704
[SPEAKER_08]: But this is really going to be,

13:37.338 --> 13:40.624
[SPEAKER_08]: an outlier of a range because of what happened during the pandemic.

13:42.348 --> 13:47.758
[SPEAKER_08]: Now there are certainly risks right, cyclicality, commodity prices, and dividend sustainability.

13:48.339 --> 13:55.513
[SPEAKER_08]: The other issue is that it is a highly concentrated niche agricultural company, yes, demand for eggs are still there.

13:56.996 --> 13:57.878
[SPEAKER_08]: But.

13:58.111 --> 13:59.533
[SPEAKER_08]: The cost of eggs have fallen off.

13:59.553 --> 14:02.097
[SPEAKER_08]: Some of the supply issues have subsided.

14:02.578 --> 14:07.826
[SPEAKER_08]: And so you're seeing more than anything that's returned back down to reality.

14:08.607 --> 14:16.239
[SPEAKER_08]: It is trading at a price to afford looking earnings that is far more reasonable and more akin to something like vinyl farms.

14:17.100 --> 14:19.524
[SPEAKER_08]: And so this pullback kind of makes sense.

14:20.285 --> 14:22.548
[SPEAKER_08]: It is in a price discovery phase.

14:22.989 --> 14:26.835
[SPEAKER_08]: And with earnings coming up on January 7th, I think I would wait.

14:27.170 --> 14:41.309
[SPEAKER_08]: Typically, investing in companies within two weeks of earnings, puts you in a position where it isn't necessarily trading on fundamentals, but trading more on a prediction of what the earnings will be, and you can find yourself on either side of that trade for better or for worse.

14:41.970 --> 14:49.760
[SPEAKER_08]: So for CalMain, which is the largest producer, I would for now keep it on my watch list.

14:50.782 --> 14:54.747
[SPEAKER_08]: That is CalMain Foods, Tigger C-A-L-N, thanks to the call.

14:56.684 --> 15:00.849
[SPEAKER_08]: I want to briefly mention the newest KPP premium newsletter, which will be distributed tomorrow.

15:01.770 --> 15:10.140
[SPEAKER_08]: In this week's KPP Insight section, we talked about silver having a recent explosion on the back of really trailing gold for quite some times.

15:10.180 --> 15:13.304
[SPEAKER_08]: We'll dive into the dynamics there and talk about whether or not it will continue.

15:14.365 --> 15:20.533
[SPEAKER_08]: The stock idea section, we mentioned a luxury retail brand as well as an online travel platform.

15:20.933 --> 15:26.640
[SPEAKER_08]: And at the portfolio management section, we touched on things to do before year end and

15:27.397 --> 15:31.142
[SPEAKER_08]: If you're interested in learning more, visit us at investhop.com and hit subscribe.

15:31.703 --> 15:36.830
[SPEAKER_08]: All of our subscribers will see the newsletter hit their inboxes every Saturday afternoon.

15:39.293 --> 15:42.217
[SPEAKER_08]: We're moving into another break, still to come by main focus point.

15:42.558 --> 15:50.248
[SPEAKER_08]: All those stories we tease at the front, but most importantly, more answers to your finance and investment questions here on Invest Talk.

15:56.050 --> 16:05.622
[SPEAKER_04]: Every investor is working to build a secure financial future.

16:06.243 --> 16:11.429
[SPEAKER_04]: How they get there and when they get there, that depends on many factors.

16:11.990 --> 16:17.517
[SPEAKER_04]: The more you learn about how the market works, the better your chances for success.

16:18.198 --> 16:23.745
[SPEAKER_04]: So don't forget to call, in Vestark, 888-99 chart.

16:25.936 --> 16:31.644
[SPEAKER_08]: What is the 2026 corporate maturity law?

16:32.826 --> 16:41.519
[SPEAKER_08]: Well, the major stress test is quietly approaching credit markets and it centers on what many are calling the high yield maturity law.

16:42.320 --> 16:45.265
[SPEAKER_08]: Now in order to understand this, we have to go all the way back to the pandemic.

16:45.285 --> 16:55.740
[SPEAKER_08]: We're high yield companies took advantage of near zero interest rates and issued roughly

16:55.720 --> 17:04.473
[SPEAKER_08]: That borrowing's free bought time, but it also set the stage for a wave of maturity that will roll through the market over the next five years.

17:04.533 --> 17:14.748
[SPEAKER_08]: And debt coming due is expected to jump sharply rising from under 100 billion recently to close to 800 billion by 2028.

17:16.510 --> 17:17.772
[SPEAKER_08]: And so the core risk is simple here.

17:18.033 --> 17:21.137
[SPEAKER_08]: Much of this debt was issued at far lower rates.

17:21.573 --> 17:24.616
[SPEAKER_08]: especially low considering to what is available today.

17:25.457 --> 17:34.646
[SPEAKER_08]: As bonds mature, companies must either repay them with cash or refinance at meaningfully higher interest rate costs.

17:34.666 --> 17:41.713
[SPEAKER_08]: So if profits weaken or the economy slows, the refinance of burden can quickly turn into a default problem.

17:41.973 --> 17:51.242
[SPEAKER_08]: That's why investors are asking whether this maturity wall will trigger a new credit crisis.

17:51.442 --> 17:58.551
[SPEAKER_08]: Many high yield issuers have been proactive refinancing well ahead of deadlines rather than waiting for maturedies to hit.

18:00.012 --> 18:06.260
[SPEAKER_08]: Over the past year, borrowers reduce debt coming due to, due in 2024 by more than half.

18:06.360 --> 18:09.664
[SPEAKER_08]: And made progress pushing out maturedies in subsequent years.

18:10.405 --> 18:16.853
[SPEAKER_08]: That early action has helped smooth what could have been, frankly, a sharp near-term shock.

18:18.175 --> 18:19.356
[SPEAKER_08]: Importantly,

18:19.724 --> 18:27.820
[SPEAKER_08]: While the dollar amount of maturing debt is rising, the percentage of the overall high-yield market coming due in any two-year window has remained fairly stable.

18:28.502 --> 18:36.197
[SPEAKER_08]: For several years now, the figure has hovered in the 9% to 11% range, which is consistent with recent history.

18:36.548 --> 18:45.041
[SPEAKER_08]: In other words, the maturity wall looks large in absolute terms, but it's not wildly out-of-line relative to the size of the market.

18:45.762 --> 18:46.202
[SPEAKER_08]: Defaults?

18:46.743 --> 19:00.143
[SPEAKER_08]: Well, that's another key concern, and they did rise meaningfully in 2023, reaching about 5.6%, that was the highest level since the early pandemic period, reflecting tighter financial conditions, but also those higher rates.

19:01.793 --> 19:09.007
[SPEAKER_08]: Expectations are that defaults are closer to a cyclical peak than the start of a sustained search.

19:09.708 --> 19:15.760
[SPEAKER_08]: Forcass suggests defaults may top out below 6% before easing back towards long-term averages.

19:16.581 --> 19:21.952
[SPEAKER_08]: One reason is the capital markets are made open with investors still willing to fund viable borrowers.

19:23.194 --> 19:24.797
[SPEAKER_08]: Another is that companies that

19:26.026 --> 19:37.787
[SPEAKER_08]: more two companies have more tools than outright bankruptcy, including distress exchanges, restructuring debt, and doing so in such a way that doesn't completely wipe out investors.

19:38.568 --> 19:46.903
[SPEAKER_08]: Now for bond holders, these restructurings will, they still count as defaults, but recoveries are often better than in a full collapse.

19:47.677 --> 19:54.089
[SPEAKER_08]: from an investor's perspective, the key takeaway is that not all high yield risk is created equally.

19:54.930 --> 20:00.941
[SPEAKER_08]: Lower rated bonds tend to suffer the highest default rates when refinance and conditions tightened.

20:00.961 --> 20:10.579
[SPEAKER_08]: By contrast, double-b rated bonds, the highest tier of high yield historically default far less often than lower quality segments.

20:11.099 --> 20:15.225
[SPEAKER_08]: That makes credit selection, especially important in this phase of the cycle.

20:15.926 --> 20:22.175
[SPEAKER_08]: Brought exposure to the weakest parts of the high-yield market carries much more downside risk than in prior years.

20:22.455 --> 20:29.165
[SPEAKER_08]: For most investors, higher quality investment grade bonds still offer a better balance of yield and stability.

20:29.906 --> 20:40.060
[SPEAKER_08]: Those securities are generally better positioned to absorb higher interest rate costs, while most importantly not threatening

20:40.833 --> 20:50.863
[SPEAKER_08]: For those that are seeking extra income, limited exposure to higher quality, high yield, either directly or through diversified funds, may make sense.

20:52.504 --> 21:06.958
[SPEAKER_08]: So, when you hear about this maturity wall, what you have to know is the maturity wall is real, but it looks more like a prolonged test of desktop, prolonged test of discipline, sometimes it's difficult to talk, than an imminent collapse.

21:09.807 --> 21:14.600
[SPEAKER_08]: Let's keep things moving and start to answer a YouTube comment section question.

21:15.142 --> 21:18.872
[SPEAKER_08]: This one on ticker EZPW.

21:20.168 --> 21:22.230
[SPEAKER_08]: And this question says, hi, Justin.

21:22.871 --> 21:24.553
[SPEAKER_08]: Justin's out here, so I will take it for him.

21:24.573 --> 21:26.815
[SPEAKER_08]: It says, sorry, it says, thanks, Justin.

21:26.835 --> 21:28.377
[SPEAKER_08]: Love the weekly update videos.

21:28.898 --> 21:32.662
[SPEAKER_08]: Could you guys please take a look at EZPW for me?

21:33.262 --> 21:40.370
[SPEAKER_08]: I have a small position and have done fairly well, but according to the information I'm looking at, they have a lot of short interest.

21:45.095 --> 21:49.500
[SPEAKER_08]: All right, let's pull it up over here on Factshead Real quick,

21:51.235 --> 21:57.142
[SPEAKER_08]: Now, EasyPW is EasyCorp, and what does EasyCorp do?

21:58.323 --> 22:02.128
[SPEAKER_08]: Well, EasyCorp engages in the provision of pawn services.

22:02.188 --> 22:10.417
[SPEAKER_08]: So they sell merchandise, primarily collateral, forfitted from pawn lending operations, and use merchandise purchased from customers.

22:11.198 --> 22:14.302
[SPEAKER_08]: Now, it's a $1.7 billion market cap company.

22:14.322 --> 22:17.766
[SPEAKER_08]: Got a decent amount of debt, about $700 million in debt.

22:19.957 --> 22:26.086
[SPEAKER_08]: And in terms of revenue growth, well, pretty decent about 9% on an analyzed basis going back to 2019.

22:27.609 --> 22:31.254
[SPEAKER_08]: Here's the thing, there's a lot more to dive into here before I can give you some sort of an answer.

22:31.294 --> 22:39.907
[SPEAKER_08]: So when we come back from the break, we will dive into easy corp and figure out if not always the time to take some profit.

22:39.927 --> 22:42.952
[SPEAKER_08]: I'm Lucurero, waiting to take more of your questions.

22:42.992 --> 22:49.221
[SPEAKER_08]: We got plenty of voicemails, plenty of YouTube comment section questions, plenty more here on Investor.

23:01.503 --> 23:04.988
[SPEAKER_03]: Luke Guerrero is here and ready to tackle your questions.

23:05.268 --> 23:12.338
[SPEAKER_01]: Is it a good idea to sell your losses in a Roth IRA and just use whatever you have left to reinvest into better stocks?

23:12.358 --> 23:18.487
[SPEAKER_03]: I just wanted to ask you about one stock that I'm looking at in Turkey, E.K.A.

23:18.908 --> 23:20.390
[SPEAKER_03]: Call Investor.

23:20.410 --> 23:22.633
[SPEAKER_03]: 888-99 chart.

23:27.642 --> 23:34.476
[SPEAKER_08]: On the next investor talk, we'll dig into this story, The Dogs of the Dow, 2026 strategy.

23:35.037 --> 23:47.423
[SPEAKER_08]: We'll explain the history, the mechanics of the dogs of the dow strategy, analyzing how dividend yield is utilized as a valuation metric to screen for potential contrarian trends within the index.

23:47.707 --> 23:51.792
[SPEAKER_08]: That's Monday, but for now, I'm Luke Guerrero, and we have a question to continue answer it.

23:52.373 --> 23:56.618
[SPEAKER_08]: And that question is about EZPW, which is EZCorp.

23:56.638 --> 23:59.121
[SPEAKER_08]: Again, this is a pawn company, right?

23:59.141 --> 24:07.492
[SPEAKER_08]: This is a pawn company, fairly decent cash position here, sitting on about 400 million in cash, very little debt relatively speaking.

24:07.752 --> 24:12.398
[SPEAKER_08]: And here today, it's up 62 percent, 62 percent.

24:13.002 --> 24:27.096
[SPEAKER_08]: It's only about 5.76% over the past three months, and although Grofluk pretty solid over the past five years, that slowed as well.

24:27.918 --> 24:29.121
[SPEAKER_08]: And margins?

24:29.371 --> 24:34.063
[SPEAKER_08]: although improved, their expansion has started to slow.

24:34.764 --> 24:39.756
[SPEAKER_08]: Now it's trading at about 13.3 times price to 4 looking earnings, a bit above its average.

24:40.458 --> 24:43.245
[SPEAKER_08]: It sounded to me like you were probably up on this position.

24:44.018 --> 24:50.208
[SPEAKER_08]: Typically, Pond and Consumer Financial Demand within this sector will it tends to be a bit counter-secretable.

24:50.548 --> 24:56.979
[SPEAKER_08]: When people are in worst rates from a economic standpoint, that's when they start to sell things.

24:56.999 --> 24:58.181
[SPEAKER_08]: And the opposite is true.

24:58.561 --> 25:02.888
[SPEAKER_08]: They get a little bit less volume when the economy is doing well.

25:03.593 --> 25:29.297
[SPEAKER_08]: Now, price action is still like I said, solid, relative strength has been improving, but I don't know it's trading above its average you're taking a profit here, you're rather you're at a profit, so I have no problem starting to trim this position, especially because things like this can really turn on a dime, especially in a volatile industry, like the pawn business, that is easy corp to your easy PW, thanks to the call.

25:30.543 --> 25:33.928
[SPEAKER_08]: Let's swing back to the investment voice bank for a call that came in earlier.

25:34.509 --> 25:44.043
[SPEAKER_01]: Oh, I wanted to get your guys opinion on ticker symbol B, T, U. I just want to get your opinion on the space and what you thought it's where you think for the short term.

25:44.224 --> 25:44.584
[SPEAKER_01]: Thank you.

25:46.126 --> 25:51.815
[SPEAKER_08]: Take a look at ticker B, T, U, which is P body energy corporation.

25:52.416 --> 25:55.200
[SPEAKER_08]: It is a coal mining company.

25:56.969 --> 25:59.494
[SPEAKER_08]: relatively small coal mining company at that as well.

25:59.514 --> 26:02.741
[SPEAKER_08]: It's $3.7 billion market cap.

26:02.761 --> 26:06.669
[SPEAKER_08]: I'm very little debt only about $419 million in debt.

26:07.371 --> 26:13.223
[SPEAKER_08]: But one big problem is revenue growth from $4.5 billion in 2019.

26:14.300 --> 26:19.665
[SPEAKER_08]: clocked out at 4.2 billion in 2024, projected to end the year at 3.8 billion.

26:19.685 --> 26:23.509
[SPEAKER_08]: So revenue growth is certainly headed in the wrong direction.

26:23.569 --> 26:29.134
[SPEAKER_08]: In fact, it's negative, negative 1.4% on an annualized basis going back to 2019.

26:29.154 --> 26:32.197
[SPEAKER_08]: And it looks even worse if the comparative year is 2022.

26:32.297 --> 26:39.344
[SPEAKER_08]: Remember, revenue was 5.4 billion, net margin, negative, ebit margin, also negative.

26:39.384 --> 26:41.826
[SPEAKER_08]: Return on equity, negative 1.7.

26:42.751 --> 26:48.804
[SPEAKER_08]: And at that price to for looking earnings is still well above its average of 6.8, sitting at 12.6 right now.

26:49.907 --> 26:53.715
[SPEAKER_08]: Now, it has been priority in the administration to drill baby drill.

26:53.756 --> 27:02.515
[SPEAKER_08]: And certainly in a way that has helped this company from a chart perspective up 45.08% year to date.

27:03.676 --> 27:09.631
[SPEAKER_08]: Though I guess this would be helped out by the fact that the administration likes coal, because you don't really drill coal, you mind coal, so I'll fix that there.

27:10.153 --> 27:14.243
[SPEAKER_08]: Oh, it's about 52 weeks, it's up 53.36%.

27:17.007 --> 27:19.169
[SPEAKER_08]: But momentum is slowed here, right?

27:19.269 --> 27:20.490
[SPEAKER_08]: It's up 23.85% over the past three months.

27:20.530 --> 27:24.934
[SPEAKER_08]: It's still solid overall performance, and it's actually outperforming its industry by 32.3%.

27:25.855 --> 27:28.177
[SPEAKER_08]: Here's my problem here.

27:28.197 --> 27:47.014
[SPEAKER_08]: Although there has been a bit more permitting within the coal industry, although there is an administration who certainly wants the coal industry to succeed, and they also have both the thermal coal and the metallurgical coal source decent amount of diversity there

27:46.994 --> 27:55.804
[SPEAKER_08]: The valuations are still in a bit of a high over the past five years, which is a bit worrisome given that revenue growth is so negative.

27:56.344 --> 28:01.910
[SPEAKER_08]: So for now, I think I would pass on Peabody Energy Corporation, ticker B to you.

28:02.311 --> 28:02.851
[SPEAKER_08]: Thanks for the call.

28:05.675 --> 28:15.145
[SPEAKER_08]: And it's Friday and generally on Fridays, we try and make a little bit of time to fit in a quick rundown of key benchmark numbers, so let me hit you with that list right now.

28:16.272 --> 28:19.356
[SPEAKER_08]: The two-year treasure yield was sitting at 3.481% today.

28:20.057 --> 28:22.040
[SPEAKER_08]: Two weeks ago, that was 3.528.

28:22.160 --> 28:25.484
[SPEAKER_08]: And 208 weeks back, that was 0.64.

28:27.166 --> 28:34.816
[SPEAKER_08]: The 10-year, sitting at 4.13% today, two weeks ago, that number was 4.19, 206 weeks ago, that number was 1.762.

28:37.380 --> 28:45.250
[SPEAKER_08]: Gold, $45, 34 per ounce, $237 higher

28:45.685 --> 28:52.234
[SPEAKER_08]: And higher still than it was 21 weeks ago and it was 33-48 and 200 weeks back when it was 1806.

28:52.455 --> 29:00.867
[SPEAKER_08]: Silver having its moment as well at 79-25 per ounce, $17.35 higher than 2 weeks back.

29:02.209 --> 29:07.997
[SPEAKER_08]: Also higher than 98 weeks ago and it was 22-80 and a hundred and 92 weeks ago when it was 23-94.

29:09.479 --> 29:24.737
[SPEAKER_08]: Oil, 574 per barrel, 88 cents less than it was two weeks back, 66 weeks ago then I was 67.79, 108 weeks ago then I was 74.30 and 207 weeks ago then I was 66.62.

29:25.510 --> 29:45.055
[SPEAKER_08]: But National average for a gallon of regular gasoline is $2.84, 9 cents less than it was two weeks back, 134 weeks goes, 3.56, 182 weeks goes, 4.25, and looking all the way back to 102 weeks, close to four years, a gallon of regular gasoline cost 357.

29:45.541 --> 29:59.434
[SPEAKER_08]: In California, where it has not stopped raining for several days, it was averaging $4.29 per gallon, 10 cents less than it was two weeks back, 112 weeks ago, that number was 532 and 188 weeks ago, that number was 587.

30:00.615 --> 30:15.008
[SPEAKER_08]: For comparison, in Missouri, gas is averaging $2.47 per gallon today, that is $1.82 less than gas in California.

30:15.832 --> 30:19.358
[SPEAKER_08]: Alrighty, let's talk a little bit about big tech.

30:20.240 --> 30:37.890
[SPEAKER_08]: And most importantly, big techs are race to dominate artificial intelligence and how it's increasingly being financed out of sight, out of mind, as companies push more than 120 billion with a beat, of data centers spending off their balance sheet through special purpose vehicles.

30:38.123 --> 30:48.690
[SPEAKER_08]: You know the names, meta oracle, XAI, core weave, they're using these structures to avoid taking on visible debt while still funding this massive AI infrastructure buildout.

30:50.595 --> 30:53.162
[SPEAKER_08]: Wall Street has eagerly.

30:53.648 --> 31:14.475
[SPEAKER_08]: Jumped at the chance, with investors such as BlackRock, Pimco, Apollo, Blue Owl, banks like JP Morgan all supplying this capital, the money flows through these SPVs, these special purpose vehicles that legally own the data centers, keeping billions of dollars and borrowing off-tech companies' balance sheets, and therefore preserving their credit ratings.

31:14.455 --> 31:25.651
[SPEAKER_08]: Now, this approach has become all too commonplace in the last two years, reflecting just how quickly the capital demands of AI have overwhelmed even the strongest of cash generating tech firms.

31:26.833 --> 31:36.126
[SPEAKER_08]: A striking example is meta.

31:36.781 --> 31:41.628
[SPEAKER_08]: raised debt and equity, so meta could effectively bar without showing the liability.

31:42.349 --> 31:43.871
[SPEAKER_08]: Oracle, they've gone even further.

31:43.931 --> 31:49.699
[SPEAKER_08]: They've earned tens of billions of dollars in special purpose vehicle financing, to support long-term commitments to open AI.

31:51.161 --> 31:55.667
[SPEAKER_08]: And then what they're doing is they're leasing the facility back rather than owning them outright.

31:56.348 --> 32:04.780
[SPEAKER_08]: In theory, lenders are having little recourse because they only have recourse to the data center assets if something goes wrong.

32:05.722 --> 32:11.127
[SPEAKER_08]: In practice, many investors assume the tech tenants would step in if demand is a point, but will they?

32:11.167 --> 32:20.055
[SPEAKER_08]: Some deals explicitly blur that line with guarantees that forced companies like Meta to make investors whole if asset values fall below certain levels.

32:20.916 --> 32:34.648
[SPEAKER_08]: The rapid spread of SPVs everywhere raises concerns that risks are being obscured and could cascade if you private credit markets if AI demand slows or if technology shifts

32:35.962 --> 32:38.142
[SPEAKER_08]: Some of these facilities obsolete.

32:40.602 --> 32:43.485
[SPEAKER_08]: Concentration risk also adds to this worry.

32:43.505 --> 32:51.434
[SPEAKER_08]: Since a small number of customers, especially open AI, underpin a high share of the sector's long-term computing commitments.

32:52.115 --> 33:07.251
[SPEAKER_08]: While giants like Google, Microsoft, and Amazon have so far avoided SPVs, the trend highlights how Wall Street, Silicon Valley, are intertwining their balance sheets in ways that could amplify stress if the AI boom fails to meet all of the expectations.

33:09.357 --> 33:13.481
[SPEAKER_08]: Alrighty, let's keep things going and answer another listener question now.

33:13.501 --> 33:18.546
[SPEAKER_00]: Hi, and best talk this is Steven from Orange County, really love the show and wanted to ask a new question here.

33:18.987 --> 33:23.151
[SPEAKER_00]: I've been on a long time stockholder of the symbol WY Warehouseer.

33:23.671 --> 33:26.955
[SPEAKER_00]: Just wondering if I could get your analysis, it's kind of been in a slump.

33:27.595 --> 33:33.001
[SPEAKER_00]: It had a significant decrease during COVID, and I think they eliminated the dividend for some period of time.

33:33.041 --> 33:37.525
[SPEAKER_00]: It did come back, but it's actually pretty low, and I understand it's a read.

33:37.792 --> 33:42.883
[SPEAKER_00]: and they were supposed to return 90% of profits if it's a reat to the investor.

33:43.384 --> 33:47.773
[SPEAKER_00]: Just wondering why the dividends probably still so low relative to what it used to be?

33:47.793 --> 33:50.940
[SPEAKER_00]: And if you have any insight on why it's still down.

33:54.127 --> 34:09.627
[SPEAKER_08]: Okay, let's take a look at where heiser corporation, ticker is WY, and where heiser is a pretty decent-sized company about 17.1 billion dollar market cap company.

34:11.269 --> 34:14.994
[SPEAKER_08]: What they do is they manufacture distribute and sell forest products.

34:15.034 --> 34:20.421
[SPEAKER_08]: It operates through Timberlands, Real Estate Energy, and at natural resources.

34:21.160 --> 34:32.188
[SPEAKER_08]: So revenue growth is really not that great right sales of fallen revenue has fallen especially if you go back to 2022 about 10 billion down to about 6.9 billion is where it's projected to be this year.

34:32.809 --> 34:38.764
[SPEAKER_08]: It is from what I can see a real estate investment trust or a REIT.

34:38.744 --> 34:40.708
[SPEAKER_08]: And it's priced to funds from Operation.

34:41.048 --> 34:42.190
[SPEAKER_08]: It's still sitting at 27.8.

34:42.671 --> 34:45.076
[SPEAKER_08]: Nearly high of its five-year range.

34:45.717 --> 34:48.422
[SPEAKER_08]: While it's relative strength has dropped off a cliff.

34:48.482 --> 34:52.830
[SPEAKER_08]: I mean, you're to date it's down 15.67% over the past 52 weeks, it's down 15%.

34:53.090 --> 34:59.622
[SPEAKER_08]: It's underperformed its industry in both years by double digits, nearly 20% in 2024.

34:59.602 --> 35:03.386
[SPEAKER_08]: And so what you're really seeing here is return on equity, bottoming down to 1.2%.

35:03.506 --> 35:07.350
[SPEAKER_08]: You're seeing net margins look frankly horrendous.

35:07.730 --> 35:11.514
[SPEAKER_08]: Momentum is telling you that you shouldn't touch this thing with a 10-foot pole either.

35:11.674 --> 35:14.797
[SPEAKER_08]: So for me, I mean, this is a pretty easy answer here.

35:15.478 --> 35:19.722
[SPEAKER_08]: I'm seeing all these factors coalesced in such a way that not much is looking enticing.

35:19.782 --> 35:26.008
[SPEAKER_08]: So for now, I can't give a thumbs up to wear hyzer company, ticker WI.

35:26.668 --> 35:27.229
[SPEAKER_08]: Thanks for the call.

35:29.453 --> 35:32.597
[SPEAKER_08]: All right, why don't we tackle another question because we got plenty of time.

35:33.117 --> 35:33.438
[SPEAKER_06]: Hello.

35:33.838 --> 35:36.922
[SPEAKER_06]: Today I had a question about live nation entertainment.

35:37.583 --> 35:39.045
[SPEAKER_06]: It goes L, Y, B.

35:39.645 --> 35:43.310
[SPEAKER_06]: So I was looking to see if you think this could maybe present a buying opportunity.

35:43.330 --> 35:48.496
[SPEAKER_06]: And then what you think the future for this company looks like I heard about it in a newsletter.

35:48.556 --> 35:49.798
[SPEAKER_06]: And I just thought it was interesting.

35:49.878 --> 35:51.299
[SPEAKER_06]: So I just wanted to see what you guys thought.

35:51.600 --> 35:52.341
[SPEAKER_06]: I'll listen on the show.

35:52.621 --> 35:53.102
[SPEAKER_06]: Thanks guys.

35:53.202 --> 35:53.402
[SPEAKER_06]: Thank you.

35:54.428 --> 36:20.470
[SPEAKER_08]: live nation entertainment they are one of the preeminent entertainment companies for ticket sales here to date there up twelve point five nine percent but nine percent over the past fifty two weeks but a rough three months down nine point eight eight percent over the past three months what they do is they promote live shows they promote festivals they sell these tickets they operate venues they handle sponsorship and advertising

36:21.698 --> 36:22.559
[SPEAKER_08]: And it's been a good business.

36:23.100 --> 36:24.702
[SPEAKER_08]: I mean, relative strength looks great.

36:25.583 --> 36:36.035
[SPEAKER_08]: Sales growth is 14.9% on an annualized basis, and with stories consistently about an economy that is fledgling, consumers have not stopped buying concert tickets.

36:36.455 --> 36:39.239
[SPEAKER_08]: And those prices have gotten higher and higher each year.

36:40.140 --> 36:44.685
[SPEAKER_08]: Now, what is alarming is they're training at 64 times price to book?

36:44.834 --> 36:48.399
[SPEAKER_08]: 13.7 times price to cash flow, but below it's average there.

36:49.240 --> 36:56.491
[SPEAKER_08]: Price to book, well below it's average is a little bit of data in consistency here, given the high of the past five years was 11,000 something.

36:56.511 --> 37:01.518
[SPEAKER_08]: So, you know, given that they were losing money during the pandemic, there's a bit of a skew there in terms of these metrics.

37:03.480 --> 37:05.183
[SPEAKER_08]: But you're seeing a bit of a breakdown in momentum.

37:05.223 --> 37:10.390
[SPEAKER_08]: You're saw in, you know, training at 173 in September of this year.

37:11.211 --> 37:13.795
[SPEAKER_08]: And it's been on a consistent downtrend.

37:14.450 --> 37:15.531
[SPEAKER_08]: over the past three months.

37:15.571 --> 37:16.673
[SPEAKER_08]: I mean, you see that.

37:16.693 --> 37:19.476
[SPEAKER_08]: But in spite of that, it's outperforming as industry by 10%.

37:20.998 --> 37:31.089
[SPEAKER_08]: I think that one of the things here that is critical to understand, and I love going to concerts, I love going to stuff like that, as the demand is huge.

37:32.611 --> 37:36.916
[SPEAKER_08]: Expansion is ginormous for lack of a better word.

37:36.936 --> 37:39.259
[SPEAKER_08]: I mean, global expansion is incredible.

37:39.779 --> 37:42.764
[SPEAKER_08]: Now recently, they did miss earnings and revenue.

37:42.804 --> 37:49.915
[SPEAKER_08]: That's what led a little bit in some way to this drop off over the past three months.

37:50.436 --> 37:53.040
[SPEAKER_08]: But my primary concern isn't a fundamental issue here.

37:53.481 --> 38:04.298
[SPEAKER_08]: My primary concern has nothing to do with revenue growth, which is stellar, has nothing to do with profitability, which is set to be negative this year, but I mean, Eva Demargin and Eva margin are still positive.

38:04.778 --> 38:05.820
[SPEAKER_08]: They're still,

38:05.800 --> 38:11.171
[SPEAKER_08]: better than they were a couple years ago and it's certainly not demand because demand is growing like no other.

38:12.193 --> 38:16.843
[SPEAKER_08]: And in a way, you know, I as somebody who buys concert tickets see the scalping market out there.

38:17.063 --> 38:18.125
[SPEAKER_08]: People just buy these tickets.

38:18.165 --> 38:19.789
[SPEAKER_08]: They sell them on something like stubhub.

38:20.009 --> 38:22.915
[SPEAKER_08]: The fact that there's that huge gap there means

38:23.435 --> 38:24.937
[SPEAKER_08]: It's a bit of an inefficient pricing.

38:25.358 --> 38:31.348
[SPEAKER_08]: Consumers are willing to pay more than they currently are, which means that if prices grow revenue can grow even more.

38:32.109 --> 38:35.555
[SPEAKER_08]: My problem is valuation, 67.7 times price to forward looking earnings.

38:36.296 --> 38:38.980
[SPEAKER_08]: For a company that, even though it hasn't been hit,

38:39.955 --> 38:42.100
[SPEAKER_08]: You know, from cyclical issues, certainly could.

38:42.781 --> 38:45.026
[SPEAKER_08]: So for now, I'd keep it on my watch list.

38:45.387 --> 38:50.638
[SPEAKER_08]: This turn in momentum could be some sort of rotation that could help you get it in a more reasonable price.

38:51.300 --> 38:52.703
[SPEAKER_08]: That's a live nation entertainment.

38:53.164 --> 38:53.765
[SPEAKER_08]: Love the business.

38:54.406 --> 38:56.631
[SPEAKER_08]: Don't love the valuation.

38:59.851 --> 39:03.335
[SPEAKER_08]: Well guys, we don't have much time left in 2025.

39:04.136 --> 39:09.403
[SPEAKER_08]: But the good news is, here at Investock, we just see a calendar as meaningless.

39:09.903 --> 39:18.894
[SPEAKER_08]: Our goal, each and every day, regardless of what year it is, regardless of what month it is, regardless of what day it is, remains the absolute same.

39:19.535 --> 39:28.626
[SPEAKER_08]: To help make you a better and more informed investor and to facilitate your ability to reach financial freedom.

39:29.062 --> 39:29.965
[SPEAKER_08]: This is our final break.

39:30.046 --> 39:33.760
[SPEAKER_08]: Before we head off into this weekend, our work continues after it.

39:33.800 --> 39:38.920
[SPEAKER_08]: We got still one great story for you and maybe one more question to answer.

39:52.248 --> 40:00.755
[SPEAKER_04]: The goal of achieving financial freedom requires unbiased information, strategic planning, and determination.

40:00.775 --> 40:01.876
[SPEAKER_04]: Congratulations!

40:02.336 --> 40:07.361
[SPEAKER_04]: You found the podcast that is dedicated to helping you succeed in Fest Talk.

40:09.182 --> 40:11.704
[SPEAKER_06]: Hello, I'm Beth Talk, and Merry Christmas.

40:11.784 --> 40:14.447
[SPEAKER_06]: I was hoping you guys could take a look at the ticker's BR.

40:14.967 --> 40:17.669
[SPEAKER_06]: It was broad ridge financial solutions.

40:18.150 --> 40:22.153
[SPEAKER_06]: If you guys could take a look at that and tell me what you think.

40:22.268 --> 40:26.055
[SPEAKER_06]: of growing dividend, reasonable debt, share accounts remain the same.

40:26.376 --> 40:28.379
[SPEAKER_06]: So I like it, and I wanted to buy this.

40:28.800 --> 40:32.948
[SPEAKER_06]: I also was curious if this is a tech company, or if you feel like this is more financials.

40:33.289 --> 40:35.753
[SPEAKER_06]: It looks like they just sell their services to financial companies.

40:35.953 --> 40:41.664
[SPEAKER_06]: I'm really trying to be mindful of my sector, allocations, and making sure I'm in all the different sectors.

40:41.704 --> 40:44.049
[SPEAKER_06]: So if you guys get touch on that too, and I'll listen on the show.

40:44.189 --> 40:44.850
[SPEAKER_06]: Thanks, bye.

40:46.045 --> 40:51.010
[SPEAKER_08]: Broadridge financial solutions is a financial tech company.

40:51.090 --> 40:54.033
[SPEAKER_08]: You can ask yourself, okay, it has its hand in both baskets.

40:54.073 --> 41:03.602
[SPEAKER_08]: But when you think about classifying companies, there are various providers that do it, but generally each of them is saying, okay, where is the revenue exposure to this company?

41:04.022 --> 41:06.365
[SPEAKER_08]: And therefore, how is it affected in different cycles?

41:06.505 --> 41:15.934
[SPEAKER_08]: Because this company primarily works with banks, with institutional managers, with broker dealers,

41:15.914 --> 41:19.418
[SPEAKER_08]: and proxy voting and such like that.

41:19.919 --> 41:22.722
[SPEAKER_08]: Well, its revenue stream is going to be tied to financials.

41:23.023 --> 41:24.885
[SPEAKER_08]: It's going to be affected by the financial cycle.

41:24.945 --> 41:26.927
[SPEAKER_08]: And therefore, financials exposure.

41:27.948 --> 41:29.570
[SPEAKER_08]: Now, we're going to talk about what it did.

41:29.610 --> 41:32.554
[SPEAKER_08]: It's a $26 billion market cap company.

41:33.375 --> 41:39.182
[SPEAKER_08]: And revenue growth has been pretty solid at a percent on an annualized basis for frankly boring business.

41:39.322 --> 41:40.583
[SPEAKER_08]: And boring businesses tend to be good.

41:40.624 --> 41:42.165
[SPEAKER_08]: We like boring businesses.

41:42.245 --> 41:44.368
[SPEAKER_08]: Net income has grown at 12%.

41:44.348 --> 41:56.326
[SPEAKER_08]: on an annual basis, EBITDA margin, 24.7 net margin, 12 return on equity, a staggering 34% you typically see this with Fintet companies, high margins, high return on equity.

41:56.346 --> 41:58.392
[SPEAKER_08]: We all like that stuff.

41:58.844 --> 42:02.512
[SPEAKER_08]: It has had, you know, a pretty stable recurring revenue model.

42:02.573 --> 42:05.319
[SPEAKER_08]: It does all of these compliance for these banks.

42:05.379 --> 42:07.083
[SPEAKER_08]: It does regular Tory work.

42:07.103 --> 42:08.606
[SPEAKER_08]: Its earning growth has been positive.

42:08.626 --> 42:11.072
[SPEAKER_08]: Its recent results have been pretty good.

42:11.112 --> 42:13.277
[SPEAKER_08]: Its dividend is pretty solid as well.

42:13.417 --> 42:18.068
[SPEAKER_08]: Anywhere between 1.211.9% consistently over the past five years.

42:18.048 --> 42:20.692
[SPEAKER_08]: But with this growing valuations aren't cheap, right?

42:20.713 --> 42:24.820
[SPEAKER_08]: It's trading at 23.2 times price to forelooking earnings a little bit below its average.

42:24.880 --> 42:28.025
[SPEAKER_08]: It's price to cash flows about 20 times, price to book about 10 times.

42:28.666 --> 42:31.471
[SPEAKER_08]: So I mean it's not cheap, it's not expensive either.

42:31.551 --> 42:38.082
[SPEAKER_08]: But it's a pretty competitive fintech landscape, especially in the wake of the ease of

42:38.602 --> 42:42.205
[SPEAKER_08]: getting things online with AI, with tools such as that.

42:42.525 --> 42:48.110
[SPEAKER_08]: There's a lot of tools that are coming to improve the financial landscape for financial companies with respect to compliance.

42:48.571 --> 42:52.854
[SPEAKER_08]: And so that certainly could be a barrier here to why you might not want to invest.

42:53.355 --> 42:57.298
[SPEAKER_08]: And it's also sensitive to the financial sector from a cyclical perspective.

42:57.679 --> 42:59.840
[SPEAKER_08]: Either way, frankly, I mean, I like the business.

43:00.041 --> 43:02.062
[SPEAKER_08]: I think it's boring, but boring can be good.

43:02.743 --> 43:08.608
[SPEAKER_08]: And it doesn't look too expensive to me.

43:10.225 --> 43:22.078
[SPEAKER_08]: One story I wanted to briefly touch on is that Shale Drillers have pushed the Permian base into an environmental bragging point, turning America's most prolific oil field into a pressurized system that is now literally leaking to the surface.

43:22.599 --> 43:32.510
[SPEAKER_08]: The region produces about half of U.S. crude, but for every barrel of oil it also generates huge volumes of toxic, salty wastewater that has pumped back into the ground.

43:33.030 --> 43:39.878
[SPEAKER_08]: Years of relentless injection have overfilled underground reservoirs, driving pressures high

43:39.858 --> 43:44.145
[SPEAKER_08]: these old decaying well-bores and create costly surface blowouts.

43:44.746 --> 43:53.339
[SPEAKER_08]: In parts of the basin, underground pressure has reached levels that regulators' worn can push fluids to the surface and threaten drinking water sources if a pathway opens.

43:54.040 --> 44:05.157
[SPEAKER_08]: The visible consequences include geysers of salt water, ground deformation, drilling hazards, and fears that wastewater is migrating into oil and gas reservoirs themselves.

44:06.537 --> 44:13.367
[SPEAKER_08]: In places like Texas, plugging one erupting well as often just redirected pressure elsewhere.

44:13.387 --> 44:18.855
[SPEAKER_08]: And cleanup costs could routinely run into the millions with taxpayers often footing the bill.

44:19.215 --> 44:30.672
[SPEAKER_08]: And so the crisis kind of raises broader questions about whether the Permian basin can sustain this high output triggering environmental damage that undermines local support and long-term economic plans.

44:30.652 --> 44:31.813
[SPEAKER_08]: The reason why I'm telling you this?

44:32.233 --> 44:43.123
[SPEAKER_08]: If you're looking to invest in energy companies and oil companies, understanding where they're exposed, and if they're exposed specifically to the Permian Basin, could affect your thoughts before you invest.

44:45.785 --> 44:48.888
[SPEAKER_08]: I'm Lou Guerrero, and this completes another episode of Invest Talk.

44:49.328 --> 44:54.933
[SPEAKER_08]: Justin and I thank you for listening, and encourage you to tell your friends and family members about our free podcast and downloads.

44:55.373 --> 45:00.658
[SPEAKER_08]: You can get those at iTunes and Spotify, and while you're at it,

45:01.297 --> 45:18.833
[SPEAKER_08]: As always, if today's show made you think about your financial picture, your investments, your taxes, your retirement, and whether it's all really working together, Justin and I would love to speak with you, in fact, Justin, I speak with investors just like yourself each and every day.

45:18.813 --> 45:35.337
[SPEAKER_08]: If that sounds interesting, if your new year's resolution is to sort out your financial life, we'll head over to KPP Financials website, invest.com, where we offer no cost portfolio reviews to help bring a little bit of clarity and confidence to your financial lives.

45:36.228 --> 45:37.049
[SPEAKER_08]: Independent Thinking?

45:37.570 --> 45:38.231
[SPEAKER_08]: Shared Success.

45:38.812 --> 45:40.254
[SPEAKER_08]: This is Invest Talk.

45:40.274 --> 45:40.976
[SPEAKER_08]: Enjoy your weekend.

45:41.576 --> 45:49.209
[SPEAKER_03]: Invest Talk is a trademark of KPP Financial because of the nature of the interactive dialogue and herant in the format of this program.

45:49.569 --> 45:53.756
[SPEAKER_03]: It's important for the listener to understand that not all comments made will apply to that.

45:54.156 --> 45:57.662
[SPEAKER_03]: Specifically, nothing said she'll be taken to be investment advice.

45:57.642 --> 46:02.227
[SPEAKER_03]: or shell statements on this program be considered an offer to buy or sell security.

46:02.568 --> 46:10.337
[SPEAKER_03]: Because such advice is rendered solely on an individual basis, and at times will require that the investor review a perspective before investing.

46:10.837 --> 46:18.686
[SPEAKER_03]: Invest talk is a copyrighted program of flying, Pavles, and Peasley Financial, a registered investment advisor firm, which retains all rights.

46:19.066 --> 46:26.535
[SPEAKER_03]: For more information regarding KPP's investment advisors,

46:26.515 --> 46:31.638
[SPEAKER_03]: Thank you for listening, and your comments and questions are welcome on our 24-hour listener line.

46:31.658 --> 46:33.808
[SPEAKER_03]: At 888-99 chart.