[SPEAKER_07]: On radio, on YouTube, streaming live on investtalk.com, and for our podcast subscribers, this is invest talk, independent thinking, shared success.

[SPEAKER_07]: Invest talk is made possible by KPP Financial, a registered investment advisor firm, serving clients throughout the United States.

[SPEAKER_07]: Here is KPP Financial Portfolio Manager, Luke Guerrero.

[SPEAKER_06]: Good afternoon, fellow investors, and welcome back to the Friday February 13th.

[SPEAKER_06]: That's right, Friday the 13th, 2026 edition of Invest Talk.

[SPEAKER_06]: I'm your host, Lou Greyer, and I'll be with you for the next 50, four minutes as we dissect what happened in the market today.

[SPEAKER_06]: Go through a relatively important, I would say, main focus point and a bunch of topics that I brought to discuss.

[SPEAKER_06]: One other thing we're going to be doing over this next hour is what we do each and every day and that is answer your finance and investment questions.

[SPEAKER_06]: So before we talk about today's market performance and run down those show topics, why don't we start by answering a color question now?

[SPEAKER_01]: Hey guys, Chuck and Clayton, question on you and M, you and him group, whatever you can tell me about, I appreciate it.

[SPEAKER_06]: Thanks.

[SPEAKER_06]: What do they do?

[SPEAKER_06]: Well, they are a workplace benefits provider so they offer group offer group long-term and short-term disability, group life, accidental death and dismemberment, as well as some supplemental voluntary products like dental, vision, and critical illnesses.

[SPEAKER_06]: Now, in terms of company size, this company is a 11.9 billion dollar market cap company.

[SPEAKER_06]: And here today, it's down about 7.56 percent, down about 5% over the past 52 weeks.

[SPEAKER_06]: And now one of the reasons why it's down is, well, Q4 2025 had a bit of an earnings miss reported one at 92 earnings per share versus the two 12 consensus, missed by about 20 cents with revenue slightly below estimates as well.

[SPEAKER_06]: But most importantly, we know this markets are forward looking.

[SPEAKER_06]: And so it really started to drive this thing a bit downward was, well,

[SPEAKER_06]: While the estimate was 891, so a slight miss on forward-looking guidance as well, but, you know, they do have aggressive, aggressive capital returns here.

[SPEAKER_06]: Return on equity, sitting at about 7% for this business, and over the past couple years, I mean,

[SPEAKER_06]: StarCriture has not been bad, 2022, up 67% up 10% in 2023, up 61% in 2024.

[SPEAKER_06]: It did have solid, full year fundamentals, but most importantly, I would say aside from, you know, decent dividend yield, 2.35% very low debt equity about 0.32.

[SPEAKER_06]: One of the reasons why we have this position in one of our strategies is because it's a bit of a defensive position that gives you a solid dividend yield.

[SPEAKER_06]: So in one of our income focus strategies, we actually do hold this name and has a beta of about 0.2 meaning it does not move as aggressively as volatile as the overall

[SPEAKER_06]: market.

[SPEAKER_06]: So it's a pretty uncorrelated market name that has grown year over year in terms of revenue and about 4% for an annualized basis, which for an insurance company is pretty solid, steady, predictable revenue growth.

[SPEAKER_06]: Now, little bit hesitant to hear.

[SPEAKER_06]: Of course, with the Q4 Miss, with the soft guidance moving forward.

[SPEAKER_06]: But overall, still a solid name fundamentally, which offers like I said,

[SPEAKER_06]: great diversification positioning.

[SPEAKER_06]: That is UNM, UNM group, thanks for the call.

[SPEAKER_06]: We got a lot of ground to cover in the next 45 minutes or so, and here's a little bit of what we have at plan for you all today.

[SPEAKER_06]: First things first, my main focus point concerns this topic.

[SPEAKER_06]: Housing the spring season starts now.

[SPEAKER_06]: So, luckily, the real estate spring buying season starts the weekend after the Super Bowl.

[SPEAKER_06]: So, we'll take a look at inventory data to see if sellers are finally coming off the sidelines.

[SPEAKER_06]: We'll also touch on a rally in corporate bonds and how that is starting to prompt a little bit of bubble fears.

[SPEAKER_06]: We also will touch on Donald Trump's plans to roll back tariffs on metals and aluminum goods and should we have time at the end of the show?

[SPEAKER_06]: We'll talk about how companies are starting to delay IPOs in 2026 because volatility is well, it's been testing some valuations in the market overall.

[SPEAKER_06]: We also have plenty of questions to answer, including a couple from our voice bank, one on Amazon, take your AMZ-end, and one on a fast-knull company, take your FAST.

[SPEAKER_06]: So also some comments and questions that came in from the comments section of the Invest Talk YouTube channel.

[SPEAKER_06]: Hopefully we hear from some of you live over the next 50 minutes.

[SPEAKER_06]: All right, you've had it into a break.

[SPEAKER_06]: Please remember you can call any time and leave your questions on the Invest Talk of Voice Bank.

[SPEAKER_06]: If you're listening to your live stream, or maybe a 1220 in the Bay Area, give me a call now at 888-99 chart.

[SPEAKER_06]: But we'll talk about today's market activity.

[SPEAKER_08]: Serious investors are certain to have finance and investment questions.

[SPEAKER_00]: I'm looking at an EPS, it's Goldman Sachs, Nasdaq.

[SPEAKER_08]: And the best person to ask your question in the right way is you.

[SPEAKER_08]: If that would be a good hold to having a Roth IRA for the long term horizon.

[SPEAKER_08]: And 24, 7, rain or shine, Justin Klein and Luke Guerrero stand ready to provide their

[SPEAKER_08]: This isn't really a copper plate.

[SPEAKER_08]: This is a iron ore plate with some aluminum copper.

[SPEAKER_06]: If you're looking at each of the whole so few names that are so top-heavy, I think it is probably ill-advised to pay an expense ratio like this in order to get exposure that you could really get yourself.

[SPEAKER_08]: Your participation makes an invest talk better.

[SPEAKER_03]: Hey guys, Brian from Rooker on here.

[SPEAKER_03]: I'm a big fan of the show.

[SPEAKER_03]: I haven't missed an episode in over five years.

[SPEAKER_08]: So don't forget to call, Invest Talk.

[SPEAKER_08]: 888-99 chart.

[SPEAKER_08]: Invest Talk.

[SPEAKER_08]: Tell your friends they can listen live, download the free podcast, or watch Invest Talk on our YouTube channel, and they can leave their finance and investment questions any time on 888-99 chart.

[SPEAKER_06]: 8.899 chart is the number if you want to get through to me live before the weekend begins.

[SPEAKER_06]: But as always, let's talk a little bit about the market today, down up 10 basis points, S&B 500 up 5 basis points, NASDAQ down 22, Russell 2000 up 1.18%.

[SPEAKER_06]: So I mean, across the board for the most part, finished higher.

[SPEAKER_06]: though you did see major indices giving up some of that mid-day strength into the clothes.

[SPEAKER_06]: But at the same time, breath was positive.

[SPEAKER_06]: The equate S&P logged solid gain, so while major indices were down for the week.

[SPEAKER_06]: The RSP equally, S&P 500 actually eaked out a 30 basis point.

[SPEAKER_06]: Big Tech was mostly lower in video and Apple, the notable Mag 7 decliners, while other other performers included large cap banks, insurers, private equity, airlines, industrial metals.

[SPEAKER_06]: On the other side, though, areas of strength, software, clawing back some previous losses, semi-caps, networking and communication names, home builders, and managed care.

[SPEAKER_06]: On the bond side treasuries a bit firmer, you did see the curve flattening with yields down anywhere from five to six basis points focused on the short end of the curve.

[SPEAKER_06]: At the same time, the dollar, little changed on the day.

[SPEAKER_06]: Gold, however, up 2% silver, up 3% and crude oil just squeaking out a positive day up 10 basis points.

[SPEAKER_06]: What did we see today?

[SPEAKER_06]: What we saw cyclicals working?

[SPEAKER_06]: We saw defensive working, so broadening out of trade.

[SPEAKER_06]: We saw small cap rally.

[SPEAKER_06]: We saw it.

[SPEAKER_06]: We saw rather continued mag seven sluggishness, a software bounce, cooler headline CPI, but of rallying the rates, a crypto bounce.

[SPEAKER_06]: So a lot of big developments from a trading perspective and that comes at the end of a week in which AI was increasingly framed,

[SPEAKER_06]: As a broader market overhang via the underperformance of the top seven names, we talked about unrelenting disruption and a meaningful ramp up in worries about how white color unemployment might be affected by AI.

[SPEAKER_06]: On the data front headline January CPI up 20 basis points, a bit cooler than December's 30 basis points, which is also the consensus.

[SPEAKER_06]: And a lot of it was helped by lower energy prices.

[SPEAKER_06]: On the course side, you saw Core CPI at 30 basis points in line with consensus in the prior months pace.

[SPEAKER_06]: On the year of year basis 2.5% was the increase and that's actually the lowest increase we've seen in five years.

[SPEAKER_06]: The report largely in line with expectations though had been there had been some concerns about upside risks from residual seasonality.

[SPEAKER_06]: We did talk about that last week on the show.

[SPEAKER_06]: Nothing else on the economic calendar today and frankly looking ahead the next week fairly quiet overall because Monday of course is a trading holiday.

[SPEAKER_06]: President's Day.

[SPEAKER_06]: On Tuesday that will get Empire Manufacturing and the Housing Manufacturing and Housing Market Index, Housing starts building permits durable good orders and industrial production as well as the FOMC minutes will be out on Wednesday, trade balance claims, filly fed, and pending home sales out on Thursday, PC inflation flash PMIs and new home sales will round out next week on Friday.

[SPEAKER_06]: Keep things moving and answer a fresh question that came in earlier to our Invest talk at YouTube comment section question bank as I'm sure you're aware Because we mentioned it.

[SPEAKER_06]: I would say from time to time.

[SPEAKER_06]: We do have a YouTube channel Invest talk with two T's and I actually want to announce a new thing We're gonna be doing and that is every Friday.

[SPEAKER_06]: We will have a focus point

[SPEAKER_06]: As always, though we're going to expand on that focus point.

[SPEAKER_06]: We're going to deep dive, give you 20 to 25 minutes of just really deep insight into whatever our Friday focus point is moving forward.

[SPEAKER_06]: So the first deeper focus video.

[SPEAKER_06]: We'll be hitting sometime soon, if not this weekend on Monday.

[SPEAKER_06]: So look for that on the Vestalk YouTube channel.

[SPEAKER_06]: But back to the question at hand this question on Tigger SNDK.

[SPEAKER_06]: It says, what do you think of sand disc?

[SPEAKER_06]: Big run up, AI memory related, I'm guessing, recent earnings beat and strong expected earnings.

[SPEAKER_06]: How do the technicals look to you?

[SPEAKER_06]: And what would be good entry slash fair?

[SPEAKER_06]: Value will sand disk corporation is one of the five largest suppliers of NAND Flash memory semiconductors globally.

[SPEAKER_06]: It's vertically integrated, and they produce substantially all of its flash chips.

[SPEAKER_06]: And it's manufacturing sites in Japan via its joint venture with Kyoksia.

[SPEAKER_06]: Then they repackage it into SSDs for consumer electronics, external storage and cloud storage.

[SPEAKER_06]: Currently trading at about $626 per share, started actually trading at the beginning of this year when it spun off from Western digital.

[SPEAKER_06]: Sitting at about 93 billion dollar market cap, the thing that really strikes me here is it's incredibly volatile.

[SPEAKER_06]: Beta sitting at 2.4.

[SPEAKER_06]: So right now, it's trading at roughly 15 times for look at guarantees despite this massive runup that we saw does not pay a dividend

[SPEAKER_06]: Pretty solid balance sheet debt to equity sitting about point one four current ratio 3.3 so in terms of its debts it's done it's balance sheet is clean it can handle the debt that it is taken on.

[SPEAKER_06]: No, it's been driving it well parabolic AI driven and super cycle is the big one sand disc is up over 160% in 2026 alone 163.95%

[SPEAKER_06]: It's up 1,717% from the beginning of 2025.

[SPEAKER_06]: You heard those numbers correctly.

[SPEAKER_06]: Over the past 52 weeks, it's up 1,640% and the rally is being driven by surging demand for flash storage from AI data centers.

[SPEAKER_06]: which require massive amounts of fast reliable energy.

[SPEAKER_06]: And so, fast forward, or I guess rewind in this case, to Q2 fiscal year 2026 earnings, which was in December, blue guidance out of the water, blue results out of the water, not just for December, but guidance for March, earnings doubled in December for the previous quarter, or from the previous year.

[SPEAKER_06]: March quarter guidance is more than triple.

[SPEAKER_06]: was more than chivalrous consensus estimate.

[SPEAKER_06]: This data center revenues exploding in 164 percent, year over year, accelerating the company shift towards the high margin enterprise storage solutions, gross margins, expanded.

[SPEAKER_06]: Gross margins expanded to over 50 percent.

[SPEAKER_06]: Net margin 38.6 percent is worth projected to be this upcoming year.

[SPEAKER_06]: Now, there is a bear case, right?

[SPEAKER_06]: It's a cyclical commodity, the business, you know, it's core sandus.

[SPEAKER_06]: They sell commodity like flash memory, and offers little differentiation or pricing power it exposes it to volatile cyclicality.

[SPEAKER_06]: Sock is up a lot.

[SPEAKER_06]: That is a big run of that kind of move, tends to invite sharp corrections.

[SPEAKER_06]: I knew have competing companies Samsung rushing new products into production, which did pressure the stock earlier in the week.

[SPEAKER_06]: and you saw a bit more pressure today.

[SPEAKER_06]: It is priced like I've said before to perfection at this point.

[SPEAKER_06]: If you have a big slowdown in capex, certainly this one will hit.

[SPEAKER_06]: And so I like the name because of where it is, because of how it fits into this theme, but given the run up and given the volatility here, again, a beta of over two, it looks to me to be ripe for a correction.

[SPEAKER_06]: Either way, I'd keep it on my watch list.

[SPEAKER_06]: that is a sand disc to your SD or SNDK.

[SPEAKER_06]: We're headed into break.

[SPEAKER_06]: Still to come my main focus point on housing and how these spring season starts now.

[SPEAKER_06]: As always, more answers to your findings and investment questions and hopefully some live calls before we head off for the weekend.

[SPEAKER_08]: There are a few things that make KPP financial special.

[SPEAKER_08]: One of them is parallel investing.

[SPEAKER_08]: This means they invest right alongside their clients.

[SPEAKER_08]: Here's how it works.

[SPEAKER_08]: When KPP financial makes a trade for their clients, just in client makes the same trade for himself and KPP.

[SPEAKER_08]: On the same day, at the same price, and same percentage.

[SPEAKER_08]: No front running, no special treatment.

[SPEAKER_08]: Learn more about parallel investing at investtalk.com.

[SPEAKER_06]: Let's talk a little bit about housing.

[SPEAKER_06]: Now, the US housing market is, it's sending a bit of a clear signal.

[SPEAKER_06]: And that signal is probably best described as the word patience.

[SPEAKER_06]: The typical home that actually sells is now taking upwards of 70 days to go under contract.

[SPEAKER_06]: That is the longest stretch we have seen in roughly 70 years.

[SPEAKER_06]: Now what that's showing to me is that buyers are no longer rushing.

[SPEAKER_06]: They're weighing options.

[SPEAKER_06]: They are negotiating harder.

[SPEAKER_06]: And because of this pending home sales, we'll fill 5.1% year over year and early February.

[SPEAKER_06]: That's the sharpest decline in more than a year.

[SPEAKER_06]: Now on a macro level, the weakness is widespread with pending home sales dropping in nearly every major market.

[SPEAKER_06]: In fact, get this.

[SPEAKER_06]: Only a handful of cities, manage gains.

[SPEAKER_06]: Most have seen meaningful pullbacks.

[SPEAKER_06]: Oakland, Minneapolis.

[SPEAKER_06]: They posted some of the steepest year over year declines in buyer activity.

[SPEAKER_06]: And so the broader takeaway is that demand is cool,

[SPEAKER_06]: Compared to last year, at the same time, well, supply conditions, they're starting to shift.

[SPEAKER_06]: They're now five and a half months of supply on the market.

[SPEAKER_06]: The highest level in seven years.

[SPEAKER_06]: Anything above four to five months?

[SPEAKER_06]: What that usually means is, you're moving towards buyer-friendly conditions.

[SPEAKER_06]: Now that shift in leverage, it's starting to show up in a lot of places, but it's really starting to show up in pricing behavior,

[SPEAKER_06]: That's down significantly from what we saw last year.

[SPEAKER_06]: The average sale to list ratio sits under 98% reinforcing.

[SPEAKER_06]: Sellers are having an negotiate.

[SPEAKER_06]: Price growth itself has slowed to a crawl.

[SPEAKER_06]: The median sale price is up just 1.2% year over year.

[SPEAKER_06]: Now, more degrades have eased a bit from last year's highs, but they still remain roughly double pandemic or a lows, meaning that the average 30 year fixed rate,

[SPEAKER_06]: And so it's providing some relief because we've seen it till downward slightly, but it's certainly not a full reset.

[SPEAKER_06]: The same time, monthly mortgage payments.

[SPEAKER_06]: Well, they've actually declined about 3.8% year over here, because of these rates coming down, because of price growth starting to cool.

[SPEAKER_06]: One of the things that's helped wage growth roughly 4%.

[SPEAKER_06]: That's helping with affordability.

[SPEAKER_06]: I'll be at any modest way, but at the same time, psychological headwinds.

[SPEAKER_06]: They're still there.

[SPEAKER_06]: Concerns about job security, economic uncertainty, they're causing many buyers to pause.

[SPEAKER_06]: Add in severe winter weather in parts of the country, and that's temporarily dampened activity as well.

[SPEAKER_06]: And so leading indicators are pointing to understandably because of all of these factors, softer momentum going forward.

[SPEAKER_06]: Mortgage purchase applications and online search activity down month over month.

[SPEAKER_06]: Toring activity has ticked up slightly this year, but nowhere near the pace we saw last year.

[SPEAKER_06]: Interestingly, new listings also decline, meaning that sellers are becoming cautious as well.

[SPEAKER_06]: And that dynamic is starting to keep inventory from ballooning even as demand slows.

[SPEAKER_06]: Despite softer demand, there are still significantly more sellers than active buyers in the market.

[SPEAKER_06]: That imbalance is giving motivated buyers, room to negotiate below asking price.

[SPEAKER_06]: Some agents report early signs of spring season momentum, starting to build beneath the

[SPEAKER_06]: So the big question for investors and for homeowners is whether this remains a buyer's market or if improving affordability and seasonal demand will tighten conditions again as 2026 unfolds.

[SPEAKER_06]: As I mentioned, this story about housing is our first deeper focus video in our new series.

[SPEAKER_06]: So if you're interested as everybody should be about the housing market in 26, the regional disparity and what you should think about if you're looking to buy your sell your home.

[SPEAKER_06]: Don't forget to check out the Invest Talk YouTube channel where we will have an extended video on this topic coming soon.

[SPEAKER_06]: As it is Friday, I want to briefly mention the newest KPP Premium newsletter, which will be distributed tomorrow on Friday.

[SPEAKER_06]: In the KBB Insight section, we discussed deferred sales, trusts, it is a service that we offer for our clients, and for those that are selling their business, selling their homes, what it can do is give you a very solid tax benefit by making you not recognize all those capital gains up front and at the same time.

[SPEAKER_06]: In the stock idea section, we mentioned a tech company as well as a consumer goods company.

[SPEAKER_06]: And in the portfolio management section, we touched

[SPEAKER_06]: A really important part of investing that I think people don't talk about enough and that is assessing the risks in your portfolio.

[SPEAKER_06]: Great topics on deck for this week.

[SPEAKER_06]: So if you're interested in learning more, visit investalk.com and hit subscribe.

[SPEAKER_06]: The newsletter will come to your inbox on Saturday mornings.

[SPEAKER_06]: As I mentioned at the top of the show Monday is a market holiday.

[SPEAKER_06]: So we'll be posting a new best of show.

[SPEAKER_06]: But then on Tuesday, we will dig into this story, the Custom Ship War.

[SPEAKER_06]: It's not just in video anymore.

[SPEAKER_06]: We will discuss the earnings from companies like Arm and Broadcom, analyzing the shift towards Custom Silicon, designed specifically for distinct AI models.

[SPEAKER_06]: That's coming up on Tuesday.

[SPEAKER_06]: For now, I'm Luke Guerrero ready to take your calls at 888-99-Churton.

[SPEAKER_08]: is here or almost here.

[SPEAKER_08]: But you've got finance and investment questions, so step up and call in.

[SPEAKER_08]: Invest talk.

[SPEAKER_08]: 888 99 chart.

[SPEAKER_03]: Hey guys, I had a two-part question.

[SPEAKER_03]: First part is with a lot of the tax stocks down significantly.

[SPEAKER_03]: Are you guys looking for like value within the tax space or are you just

[SPEAKER_03]: Or do you think there's opportunities now, and then the second part is, do you think Amazon looks attractive right now or would you still be patient or just look elsewhere?

[SPEAKER_03]: And I'll listen on the show.

[SPEAKER_03]: Thanks guys.

[SPEAKER_03]: Bye.

[SPEAKER_06]: Regarding the tech stock piece, yeah, we're certainly looking for opportunities now.

[SPEAKER_06]: They're names on our watch list that we're starting to allocate slowly towards, but at the same time, you don't really know if things are gonna go deeper when rotation starts when rotations.

[SPEAKER_06]: And so one of the best things you can do is enter positions gradually over time.

[SPEAKER_06]: And so that's kind of what we're starting to do with some of those names on our watch list.

[SPEAKER_06]: Within the tech space, it would look pretty expensive for quite some time.

[SPEAKER_06]: Now regarding Amazon, I don't need to tell you what Amazon does, one of the leading, I actually be leading online retailer and marketplace for sellers.

[SPEAKER_06]: Of course, they have their streaming service as well.

[SPEAKER_06]: They're down, I mean, they're currently trading in about $198.79 down from their all-time high of $254 last November, but their market cap still $2.1 trillion.

[SPEAKER_06]: And in terms of relative valuation,

[SPEAKER_06]: Looks like they're trading at about 25 times priced to forward looking earnings, which is well below their average of the past five years, sitting near their low.

[SPEAKER_06]: And so what's going on here, right?

[SPEAKER_06]: Because this stock has declined for most of the past 10 trading sessions.

[SPEAKER_06]: It's down almost 14% year to date.

[SPEAKER_06]: It's down 13.71% over the past 52 weeks.

[SPEAKER_06]: Underperformed, it's industry and the S&P not just this year, but last year as well.

[SPEAKER_06]: I mean, one of the things is capex bomb, right?

[SPEAKER_06]: They, the headline story is Amazon's forecasted capex of 200 billion in 2026.

[SPEAKER_06]: I mean, that's a massive jump from 132 billion in 2025.

[SPEAKER_06]: And people were expecting 147 billion.

[SPEAKER_06]: So that's a $50 billion overshoot that understandably is exposing market participants, despite

[SPEAKER_06]: Management's confidence in the spend, but at the same time is management going to come up and say we're not confident in this extra fifty billion dollars that you guys didn't expect us Just spend and then at the same time on a backward-looking basis, they missed Q4 earnings a stock fell roughly six percent after their Q4 report because estimates were missed.

[SPEAKER_06]: Even though the top line results were solid sales grew 14% year over year.

[SPEAKER_06]: It's still a miss.

[SPEAKER_06]: Now, one of the bright spots is Amazon Web Services, the acceleration, right?

[SPEAKER_06]: The revenue column 24% year over year, it is the fastest pace of growth that there's been in the past three years.

[SPEAKER_06]: So that's certainly a profit engine and it is firing.

[SPEAKER_06]: But it's being driven down by the overall AI capex debate across the Mac 7, right?

[SPEAKER_06]: Amazon's not alone here.

[SPEAKER_06]: The market is broadly repricing how much is too much.

[SPEAKER_06]: From a fundamental perspective, I mean, the company still solid.

[SPEAKER_06]: It's still seeing great operating leverage and it's e-commerce business, still seeing solid and expanding margins.

[SPEAKER_06]: So, the goal case from here is, well, this is one of the most attractive valuations we've seen in history for Amazon, while AWS is accelerating, while margins are expanding.

[SPEAKER_06]: But do we need to be a bit too defensive here?

[SPEAKER_06]: Or rather, do we need to be a bit defensive here because of CapEx?

[SPEAKER_06]: And so Amazon looks attractive to me.

[SPEAKER_06]: This is one of the situations where I would probably start to allocate slowly here, because you don't know.

[SPEAKER_06]: You don't want to fully allocate a position here and catch a falling knife when technicals look so poor.

[SPEAKER_06]: At the same time, you don't know when this rotation is going to stop.

[SPEAKER_06]: Either way, I think over the next five years, Amazon is a solid, solid name.

[SPEAKER_06]: Tigger AMZN, thanks for the call.

[SPEAKER_06]: On Fridays, we generally try to fit in a quick rundown of key benchmark numbers.

[SPEAKER_06]: Let me hit you with that list right now.

[SPEAKER_06]: The two-year yield, 3.42% today last week, that number was 3.502, and 215 weeks back, the number was 0.64.

[SPEAKER_06]: At the same time, the 10-year yield is at 4.066% today, down from last week.

[SPEAKER_06]: It was 4.214.

[SPEAKER_06]: Up from 212 weeks ago when it was $1.762.

[SPEAKER_06]: Gold back above $5,000 per ounce, sending it 50-31 today.

[SPEAKER_06]: It is $93 higher than last week.

[SPEAKER_06]: 28 weeks ago, it was 33-48 and 207 weeks back.

[SPEAKER_06]: It was 1806.

[SPEAKER_06]: Silver, $7791 per ounce, $2.07 higher than last week.

[SPEAKER_06]: Way higher than 105 weeks ago when it was 2,280.

[SPEAKER_06]: And higher as well than 199 weeks back when it was $23.94.

[SPEAKER_06]: Oil was selling for $63.05 per barrel the day that is $1.10 less than last week.

[SPEAKER_06]: 73 weeks back then it was 67.79 and 115 weeks back that number was 74.30.

[SPEAKER_06]: National average for a gallon of regular gasoline is $2.94 a per gallon a four cent increase compared to the last week.

[SPEAKER_06]: 141 weeks ago, that number was 356 and 189 weeks back, that number was 425.

[SPEAKER_06]: In California, 456 per gallon is the number 14 cents higher than the last time we spoke last week.

[SPEAKER_06]: 118 weeks ago, that number was 532 and 194 weeks ago, that number was 587.

[SPEAKER_06]: In comparison, in Missouri, gas is averaging $2.52 per gallon today that is $2.4 less than gas in California.

[SPEAKER_06]: Like we got plenty of time, so let's drop another listener question now.

[SPEAKER_05]: My name is Richard Hernandez.

[SPEAKER_05]: I am a 22 year old new investor.

[SPEAKER_05]: I was just calling about a stock called Fast S-A-S-T. Fastimal.

[SPEAKER_05]: And I was just wondering if you get your opinion on it.

[SPEAKER_05]: If you think it's a good company, I know it's gone down a little bit as of lately, but I don't know just where you think a good buy would be.

[SPEAKER_05]: if you think there would be a buy point possibly.

[SPEAKER_05]: But yeah, if you said just let me know, I'll be listening to it on the podcast.

[SPEAKER_05]: Thank you.

[SPEAKER_06]: Well, it's always great to hear young investors so good job of being ahead of the curve.

[SPEAKER_06]: It's diving to fasten all company, fasten all company is a 52 billion dollar market cap industrial distributor that really began as a bit of a nuts and bolts retailer, but evolved into more of a one stop outsourcing partner for industrial customers.

[SPEAKER_06]: So they offer maintenance, repairing operations, supplies, they offer cutting tools,

[SPEAKER_06]: They offer safety equipment, as well as janitorial surprise, supplies rather.

[SPEAKER_06]: Now they're a key differentiator, it's more in their on-site model.

[SPEAKER_06]: So once a customer becomes large enough, they install vending machines and their own personal on-site rather than personnel on-site.

[SPEAKER_06]: Now, these on-site locations, pretty cool, and they actually exceed their branch count.

[SPEAKER_06]: So it's really one of the firms that

[SPEAKER_06]: Terms are real devaluation sitting at 36.8 times price to 4 looking earnings, certainly still expensive well over its average of 31, albeit slightly below its high over the past five years of 42.5.

[SPEAKER_06]: Margin's looks solid, operating margin sitting at about 20% return on equity at 33.3, that's exactly where it's projected to be next year.

[SPEAKER_06]: And I mean, it puts it well above its competitors.

[SPEAKER_06]: The next closest one being at 22 and a half.

[SPEAKER_06]: And so understandably it's trading at these higher valuations.

[SPEAKER_06]: Now, over the past year, over the past 52 weeks, it's up 24.11% up over 15, 65 of this year.

[SPEAKER_06]: And growth is really the story here.

[SPEAKER_06]: 7.7% revenue growth.

[SPEAKER_06]: on an analyzed basis going back five years.

[SPEAKER_06]: They had strong Q4 organic sales acceleration.

[SPEAKER_06]: You're over your organic sales group 11.1 percent.

[SPEAKER_06]: They grew top and bottom lines nearly nine percent over the full year.

[SPEAKER_06]: Q4 daily sales were up 11 percent.

[SPEAKER_06]: I mean, that's pretty notable.

[SPEAKER_06]: Especially given what has been a sluggish industrial

[SPEAKER_06]: Now, you know, there is something on the horizon.

[SPEAKER_06]: You have a bit of a CEO change, right?

[SPEAKER_06]: Scheduled for July, so that does create some leadership transition uncertainty.

[SPEAKER_06]: And you have CapEx stepping up as well.

[SPEAKER_06]: 2020, six investment plans, this is about 4% of sales.

[SPEAKER_06]: Now they're trying to expand hub capacity, trying to expand hardware, IT throughput, certainly is what they're trying to expand.

[SPEAKER_06]: And so, you know, they're trying to scale.

[SPEAKER_06]: They're trying to scale.

[SPEAKER_06]: Now gross margins did decline 100 basis points year over year.

[SPEAKER_06]: A lot of that though is higher import fees.

[SPEAKER_06]: changes in rebate structure.

[SPEAKER_06]: So you're seeing operating margins follow as well.

[SPEAKER_06]: And a lot of this is banked on hopefully some level of industrial cycle recovery.

[SPEAKER_06]: So, you know, best case is the industrial cycle recovers a bit.

[SPEAKER_06]: The $15 billion revenue vision works out.

[SPEAKER_06]: I

[SPEAKER_06]: But it's expensive.

[SPEAKER_06]: 36.28 times price before looking earnings.

[SPEAKER_06]: This is one of those names.

[SPEAKER_06]: Price to perfection.

[SPEAKER_06]: Meaning that any issues of the next six months to a year be at tariff import cost headwinds would slow this down.

[SPEAKER_06]: And so for me, it's a solid company on solid footing but a bit too expensive.

[SPEAKER_06]: That is a fast and all to your F.A.

[SPEAKER_06]: S.T.

[SPEAKER_06]: Let's do this and move on

[SPEAKER_06]: Talk a little bit about corporate bonds.

[SPEAKER_06]: Because corporate bonds, the corporate bond market, flashing signs of exuberance, spreads on risky debt, compressed levels not seen since before the 2008 financial crisis.

[SPEAKER_06]: The extra yield investors demand to hold corporate bonds over government debt.

[SPEAKER_06]: It's falling sharply and that's reflecting this intense appetite for credit risk.

[SPEAKER_06]: Now that rally has been fueled by expectations that the U.S. economy is going to run hot under Trump's policies and at a lift, global growth and support corporate earnings.

[SPEAKER_06]: Highly rated U.S. and European companies are now borrowing at historically tight spreads.

[SPEAKER_06]: While lower rated issuers are also enjoying cheaper financing, tech giants like Alphabet like Oracle, they've seen the moment they've issued massive bond deals into what many

[SPEAKER_06]: Alphabet even went out on a limb here and said, you know what?

[SPEAKER_06]: Let's do a hundred year bond.

[SPEAKER_06]: While Oracle raised 25 billion despite concerns about rising debt tie day, I spend it.

[SPEAKER_06]: Yet some large investors are mismoved.

[SPEAKER_06]: Warning, the credit markets are beginning to exhibit bubble-like behavior.

[SPEAKER_06]: Ensures and asset managers are trimming corporate exposure and rotating into safer government bonds or high quality credits.

[SPEAKER_06]: And that dynamic reflects strong demand for income, as higher base yields make bonds attractive even if the compensation for added risk has thinned and it certainly has two historic proportions.

[SPEAKER_06]: But the danger is that investors are chasing yield, which is something that Justin always says not to do, especially when you're chasing yield without being adequately paid for the underlying credit risk.

[SPEAKER_06]: Such type spreads, they create these asymmetric downside risks.

[SPEAKER_06]: If economic conditions start to deteriorate, or if some exogenous shock, it's the market.

[SPEAKER_06]: So in this environment, broad exposure, may no longer be enough.

[SPEAKER_06]: And I would argue that credit markets have shifted into a selective, Von Picker phase, meaning active, credit market participation, maybe more beneficial now than it has been in quite some time.

[SPEAKER_06]: Before we head into the next break, let's answer one more listener question now.

[SPEAKER_02]: Hi, this is Gino from San Jose, California.

[SPEAKER_02]: I just wanted to look at the stock here of DDS, the symbol is the DDS's dildered retailer.

[SPEAKER_02]: I wanted to see what do you think about that one at this moment in time.

[SPEAKER_02]: Trying to see if I could purchase down one, but let me know about what you think about that.

[SPEAKER_02]: Thank you very much and have a great day and I'll be soon.

[SPEAKER_06]: Dillard's Inc. DDS is a $10.1 billion market cap American apparel fashion brands so they have American.

[SPEAKER_06]: They have fashion apparel cosmetics, home furnishings and with the past 52 weeks it's up 29.33 percent.

[SPEAKER_06]: It had some solid outperformance of its industry last year, outperform by 16.1

[SPEAKER_06]: And I mean, it's on a solid financial footing.

[SPEAKER_06]: And all these about $500 million in debt.

[SPEAKER_06]: Now, what has been really floating this name over the past couple years?

[SPEAKER_06]: Is it something that we certainly do like to see in general?

[SPEAKER_06]: And that is a massive, massive buybacks.

[SPEAKER_06]: If the story, they've reduced shares outstanding by 3.7% year to date as of mid 2025.

[SPEAKER_06]: And so that directly boosts, EPS and floats the stock price.

[SPEAKER_06]: Why, over the past five years, the stock is up 1,800 percent.

[SPEAKER_06]: A huge portion of that is relentless share count reduction.

[SPEAKER_06]: They only have 15, roughly 15.6-ish million shares out standing.

[SPEAKER_06]: And so that creates every buyback, creates meaningful per share creation, only 165.2 million, though, remains under this authorized plan.

[SPEAKER_06]: So investors are waiting for new authorization that has not come yet, which is one of the reasons why analysts have a consensus outrating here.

[SPEAKER_06]: It's trading at $644 and 71 cents per share right now.

[SPEAKER_06]: Above its average price to four looking earnings, said about 20 of the averages about 14.

[SPEAKER_06]: Now they also did declare a special dividend of $30 per share, which was payable on January 5th.

[SPEAKER_06]: And so this is a company that is only really done well, because yes, it has a fortress of a balance.

[SPEAKER_06]: You have a billion in cash and long-term debt

[SPEAKER_06]: And so for a department store, that's attractive.

[SPEAKER_06]: And yes, they have operational discipline, but really the low float here, low float, family control, less liquid, lot of share buybacks.

[SPEAKER_06]: And so until you get a re-enouncement of a program, or revenue and earnings that's stopped declining, I probably stay away from this thing.

[SPEAKER_06]: And it's diligent to your DDS.

[SPEAKER_06]: This is in Vestock, I'm Lou Greer, and we have one goal here, whether it's me or whether it's Justin, and that is to help you achieve your financial freedom.

[SPEAKER_06]: Our work continues after this break, our final break before the long holiday weekend.

[SPEAKER_06]: So get your questions in now at 888-99 chart.

[SPEAKER_08]: Every investor is working to build a secure financial future.

[SPEAKER_08]: How they get there and when they get there, that depends on many variables.

[SPEAKER_08]: The more you learn about how the market works, the better your chances.

[SPEAKER_08]: So don't forget to call, in Vest Talk.

[SPEAKER_08]: 888-99, chart.

[SPEAKER_06]: It's good to Dalton from Minnesota.

[SPEAKER_06]: Got a question about SPSC.

[SPEAKER_04]: Yeah, hey Luke, yeah, I've been kind of watching this one and it's pretty beat up right now, but their financials look pretty good.

[SPEAKER_04]: You know, all the things you like to see as far as recurring revenue goes, revenue retention, everything looks good.

[SPEAKER_04]: I just worry about, you know, maybe AI replacing their software over time and would like your opinion on the stock, you know, overall.

[SPEAKER_06]: Yeah, you know, this is one of the names that saying it was beaten down as a bit of an understatement here.

[SPEAKER_06]: So SPSC is SPS commerce.

[SPEAKER_06]: It is a $2.4 billion package software company.

[SPEAKER_06]: So they

[SPEAKER_06]: can operate this intelligent retail supply chain network.

[SPEAKER_06]: So think cloud-based electronic data interchange.

[SPEAKER_06]: So fulfillment, analytics, supply chain collaboration tools.

[SPEAKER_06]: This is really the core of its business.

[SPEAKER_06]: So really the plumbing, if you will, that connects retailers, like Walmart, like Target, with the suppliers for order processing.

[SPEAKER_06]: And it's been being now, this is, this is beaten and bloody down 58.3% over the past 52 weeks down 30.53% year to date down 437 today.

[SPEAKER_06]: And that's on the back of earnings that were yesterday, which didn't look so hot.

[SPEAKER_06]: And so what's really driving this is yes, the AI trade.

[SPEAKER_06]: But it's a core sell off because revenue guidance was bad.

[SPEAKER_06]: fiscal year 2025 revenue, it was 751 million.

[SPEAKER_06]: So it was up 18% year over year.

[SPEAKER_06]: But the company guided 2026 revenue, that only represented six to seven percent growth.

[SPEAKER_06]: So you're getting growth that was one third of what they had.

[SPEAKER_06]: That's a dramatic step downward.

[SPEAKER_06]: And so even though Q4 results were okay, revenue was up 13% year over year occurring revenue,

[SPEAKER_06]: Guidances King, because prices are forward looking.

[SPEAKER_06]: You know, revenue cover results, they also kind of landed at the lower end of expectations because of some of the changes in Amazon's policy and variability in demand.

[SPEAKER_06]: And so, this is more not just a story about what is affecting them from what can automate their business, but what is actually happening with their retail customers as well.

[SPEAKER_06]: And so, you know, there's one silver lining maybe.

[SPEAKER_06]: you're seeing a little bit of margin expansion, you know we're turning on equity projected to grow from 10.2 to 15.4 net margin, 12.4 to 21.5.

[SPEAKER_06]: But I'm just not seeing anything from a technical perspective certainly because they just got beaten down again after earnings, or really from an overall thematic perspective that tells me now would be a good time to go in here.

[SPEAKER_06]: This seems to me like catching a falling knife.

[SPEAKER_06]: Any time a company's growth just gets cut into third of what it was.

[SPEAKER_06]: And then at the same time, you know, it's still trading at 14 times price to cash flow.

[SPEAKER_06]: I would stay away from this one for now.

[SPEAKER_06]: that is SPSC thanks to the call.

[SPEAKER_04]: Thank you.

[SPEAKER_06]: Now, for we head off for the weekend, wanted to touch on one more thing that is President Trump weighing a rollback of certain steel and aluminum tariffs as economic affordability concerns intensify ahead of midterms.

[SPEAKER_06]: Now, the tariffs which reached as high as 50% and expanded to goods like washing machines, ovens, they've understood when we drunk criticism, because the number one concern for voters is affordability.

[SPEAKER_06]: And so trade officials are now reviewing the product lists considering exemptions, halting further expansion, and favor a more narrow national security probe.

[SPEAKER_06]: Now Trump has already carved out exemptions for certain food products and called a truce and trade tensions with China in response to voter backlash.

[SPEAKER_06]: So this falls on with previous activity.

[SPEAKER_06]: And the tear frame work is going complicated.

[SPEAKER_06]: It is a loud lobbying process that allowed domestic firms to nominate foreign products for penalties.

[SPEAKER_06]: That process is kind of resulted in a bit of a sprawling list of consumer goods facing these Steve duties, sometimes inconsistently applied.

[SPEAKER_06]: So looking ahead,

[SPEAKER_06]: Towards the end of 2026 is especially given that affordability is and remains the number one issue.

[SPEAKER_06]: It seems to me that likelihood of tariffs going down is a lot higher than the likelihood of them going up.

[SPEAKER_06]: I'm Lou Guerrero and this completes another week of Invest Talk.

[SPEAKER_06]: Justin and I thank you for listening and I encourage you to tell your friends and family members about our free podcast downloads, which you and they can get it iTunes and you can get it Spotify, while you're over there, please be sure to leave us a rate and review.

[SPEAKER_06]: I also wanted to highlight our idea that we implement a KPP which is parallel investing where we make a trade for our clients while we make the same trade for ourselves.

[SPEAKER_06]: Same day, same price, same percentage, no front running, no special treatment.

[SPEAKER_06]: It's how we build a little trust, putting some skin in the game.

[SPEAKER_06]: Now I want to remind you, Monday is a market holiday, so we have a best of show and keep your eyes out for the deeper, focused episode that we'll be hitting the Invest Talk YouTube channel in the coming days.

[SPEAKER_06]: Independent Thinking?

[SPEAKER_06]: Shared Success.

[SPEAKER_06]: This is Invest Talk.

[SPEAKER_06]: Enjoy.

[SPEAKER_06]: You're extended, Weekend.

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