[SPEAKER_02]: This is Invest Talk, from KPP Financial, helping investors make sense of the markets one day at a time.

[SPEAKER_02]: Here's your host, Justin Klein.

[SPEAKER_01]: Good afternoon fellow investors, and welcome back to Invest Talk.

[SPEAKER_01]: This is our August 12th, 2020, six edition.

[SPEAKER_01]: And a lot to talk about as we have the CPI data today that move markets just a bit.

[SPEAKER_01]: And over all just a lot to unpack, a lot to discuss with geopolitical volatility, we have earnings that are mostly behind this.

[SPEAKER_01]: We're still getting a smattering of them.

[SPEAKER_01]: We're getting mainly a market rotation.

[SPEAKER_01]: So we'll discuss that in much much more during this hour.

[SPEAKER_01]: Am I goal?

[SPEAKER_01]: This hour is to help you feel better investor.

[SPEAKER_01]: Give you perspective, give you data, and see your finance investment questions so that you can take that back to your own personal situation and make better decisions.

[SPEAKER_01]: Not just this week, not just this month, not just this year, but year after year after year.

[SPEAKER_01]: That's how you build wealth.

[SPEAKER_01]: Is avoiding major pitfalls.

[SPEAKER_01]: like chasing returns and using your emotions, investing in risky illiquid assets, for example, a lot of pitfalls out there, but those are just a few, but then there's a lot of opportunities.

[SPEAKER_01]: Could be AI, AI, JSON, every sector has opportunities at any given point.

[SPEAKER_01]: It's your job to identify it or if you want broad-based exposure to asset class, maybe

[SPEAKER_01]: guide you either way.

[SPEAKER_01]: But do you want to keep it simple or you want to build a more complex robust portfolio?

[SPEAKER_01]: So I encourage you to give me a call.

[SPEAKER_01]: Aided at 99 chart is our number.

[SPEAKER_01]: Whatever's on your mind, I'm ready for it.

[SPEAKER_01]: Now, just a bit.

[SPEAKER_01]: I'll talk about today's mark performance and run down the show topics.

[SPEAKER_01]: But as usual, we're going to tackle this first call like question now.

[SPEAKER_07]: Hey, just an allute.

[SPEAKER_07]: This is Eric from Utah.

[SPEAKER_07]: Give me a call about

[SPEAKER_07]: So it's supposed to be on a long-term uptrend and just want your valuation and if this is a good entry point, thank you.

[SPEAKER_01]: Looking at GSK, which is Glaxo Smith Klein, at least that was the name, I think they changed it.

[SPEAKER_01]: You might have shortened it, you know, there's big corporations, they like to keep everything simple.

[SPEAKER_01]: It used to be restoration hardware, and now it's just RH.

[SPEAKER_01]: It used to be Glaxo Smith Klein, now it's just GSK.

[SPEAKER_01]: Well, they do R&D, they manufacture pharmaceuticals, vaccines, consumer health products, overall, headquartered in London, so it's a UK company.

[SPEAKER_01]: earnings are expected to do hit an all-time high this year and then another all-time high next year to $5.14 for 77 this year up from 470 last year.

[SPEAKER_01]: So growth is definitely slowing a bit and I think that's probably one of the reasons why this is flagging is just the multiples are not that great.

[SPEAKER_01]: Sorry, the growth rates are not that great, therefore multiple is not going to be a great.

[SPEAKER_01]: Tell this works.

[SPEAKER_01]: They get the growth company, the bigger the multiple.

[SPEAKER_01]: But overall, they are in a restructuring program, so that's what is probably holding them back when you're trying to restructure the business as hard to tackle growth and go for growth.

[SPEAKER_01]: So they're kind of holding water while improving their bottom line and improving their margins.

[SPEAKER_01]: Now it has pulled back, but overall it's just kind of consolidated since the beginning of the year, let's see.

[SPEAKER_01]: close the year last year, right around $49.55, and now we're at $50 bucks.

[SPEAKER_01]: So it's up per cent or so on the year, not a big mover, but just like I said, consolidating still a good business, 32% return equity, operating margin, 25% and that has been headed higher.

[SPEAKER_01]: So they've been doing a good job, creating efficiencies, they have a good balance sheet, and their price value either looking forward

[SPEAKER_01]: which is kind of the midpoint of the last 10 years.

[SPEAKER_01]: So I would say it's not really expensive or cheap.

[SPEAKER_01]: It's kind of fairly valued.

[SPEAKER_01]: Now if you're looking for exposure to the pharmaceutical industry, you definitely could do a lot worse than this.

[SPEAKER_01]: Like I said, good balance sheet, good business, decent growth, fair price.

[SPEAKER_01]: You're not getting a bargain, but honestly, I don't see anything majorly wrong with the chart that would make me say,

[SPEAKER_01]: Stay away, it looks fine, looks like it's just consolidation period.

[SPEAKER_01]: And then you add in, it's a foreign name.

[SPEAKER_01]: I like foreign exposure.

[SPEAKER_01]: So I'll give this one a mild thumbs up, but I'm also none enthusiastic about it.

[SPEAKER_01]: Now with a great show yesterday, we looked into the story about the SaaS apocalypse that bait our AI stocks disrupting SaaS in 2026, talked about the structural risks to the software sector as a whole and the valuations, and we also answered listener questions about general motors.

[SPEAKER_01]: And if you happen to miss it, go check it out the best way to get every episode of Invest Talk is to check them out, check us out wherever you get your podcasts.

[SPEAKER_01]: We've got a lot of ground to cover over the next 45 minutes today.

[SPEAKER_01]: And our main focus point is about the S&P 500 new record eyes.

[SPEAKER_01]: Is this the stock market rally sustainable?

[SPEAKER_01]: We're going to look at underneath the hood of the valuation of the breadth, momentum.

[SPEAKER_01]: What's really keeping this market afloat despite a lot of headlines that catch attention.

[SPEAKER_01]: Catch a lot of attention.

[SPEAKER_01]: Okay, so we're going to look at that.

[SPEAKER_01]: Remember the motto Drill Baby Drill?

[SPEAKER_01]: It's now refined, baby refined, and we're going to look at that industry and why those refining companies are doing so well and can't continue.

[SPEAKER_01]: Then we are in El Niño.

[SPEAKER_01]: El Niño, this is where the oceans are warming, especially here in the Atlantic, I know.

[SPEAKER_01]: I say Atlantic Pacific, I'm definitely on the Pacific here in California.

[SPEAKER_01]: And over the weekend I went in the water

[SPEAKER_01]: Pacific we're at mid 70s right now, which is pretty nice and I think you we could hit at the the high 70s So the water's warm right now, but what does that mean for the global climate?

[SPEAKER_01]: And what impacts the mic that might that have on the economy.

[SPEAKER_01]: So we'll look at that as well

[SPEAKER_01]: We also have voice bank calls, one is on stop orders, and the other is on Celcius Holdings, C-L-H, and of course questions that came in via the comment section on the Invest talk.

[SPEAKER_01]: YouTube channel.

[SPEAKER_01]: But we're going to head into a quick break, because you're having time to leave your question on the Invest talk voice bank, and if you're listening to via our live stream or possibly an aim to tell 20 in the Bay Area, you can call right now at 8.99.

[SPEAKER_01]: Chart.

[SPEAKER_01]: Hang on.

[SPEAKER_01]: It's all planned.

[SPEAKER_01]: I've let you talk about today's market.

[SPEAKER_02]: Your questions are free.

[SPEAKER_02]: The answers are unbiased.

[SPEAKER_02]: Justin Klein is here now.

[SPEAKER_02]: Ready to take your calls live.

[SPEAKER_02]: Invest talk.

[SPEAKER_02]: 88899 chart.

[SPEAKER_01]: Let's go take a look at the market today.

[SPEAKER_01]: It was kind of a, going up the data.

[SPEAKER_01]: It was a modestly positive day after, yesterday being a modestly, down day.

[SPEAKER_01]: Overall though, S&P, eaked out about a quarter percent gain, NAS, that got about a half a percent down slightly.

[SPEAKER_01]: But overall, markets were positive.

[SPEAKER_01]: You had SpaceX with some big upside, I didn't see any news on it, but maybe a short-covering rallying continuing.

[SPEAKER_01]: Excuse me, dollar index up point two percent of the day.

[SPEAKER_01]: gold finish up 0.6 silver ended up 1.2 so you can see the strength out of the crushed metal space despite the dollar being a bit stronger.

[SPEAKER_01]: But Bitcoin down 0.3% so you continue to see weakness there.

[SPEAKER_01]: WTI was flat over all sorts of oil prices kind of hanging out here at levels

[SPEAKER_01]: They're elevated over the past few weeks.

[SPEAKER_01]: You had CPI numbers.

[SPEAKER_01]: That was the big economic data that came out today.

[SPEAKER_01]: Core increased 0.2% year of year was down to two and a half percent.

[SPEAKER_01]: That's the lowest annual score CPI prints since 2021.

[SPEAKER_01]: So you're seeing some good news on that front that pushed, interest rates down a little bit.

[SPEAKER_01]: odds of a,

[SPEAKER_01]: Continue rate pause, rows, so not rate cuts really, but taking some odds of a rate hike before you're in and out, so that kind of helped the market overall, a potential less hawkish fed going forward.

[SPEAKER_01]: What else do we find?

[SPEAKER_01]: The talks in the Middle East continue not to not make progress.

[SPEAKER_01]: I don't expect them to, I've said this for a while.

[SPEAKER_01]: So anyway, I got comments that,

[SPEAKER_01]: as being somehow political saying that it's likely to assume to drag onto the midterms and it's drag onto the midterms, right?

[SPEAKER_01]: We're coming up on them here in just a few months.

[SPEAKER_01]: So this doesn't look like this is, there's gonna be a resolution anytime soon to what's going on in the middle east.

[SPEAKER_01]: The intelligent investors bull bear spread that did widen to plus 42.6 last week, which is the widest has been since early February before the market had a more projected pullback.

[SPEAKER_01]: So while, which I'll get to in a little bit later, this is starting to signal that we're a little long in the tooth and this rally, and that we need to probably a sentiment reset, which probably is likely at some point in the back half of the year.

[SPEAKER_01]: So that was the market today.

[SPEAKER_01]: Modus upside and we'll get into sustainability of this rally later in the show.

[SPEAKER_01]: Let's keep things moving and play in at play another listener question now.

[SPEAKER_08]: My question is about using stop orders to lock in profits and just protect my portfolio in general from market so off.

[SPEAKER_08]: Are there any rules of thumb using stop orders when selling any drawbacks of the strategy?

[SPEAKER_01]: Thanks love the show.

[SPEAKER_01]: Thank you.

[SPEAKER_01]: Well, first time I would probably say I would only trail in stop, which means that as the market they stock makes new highs, you're going to move up that stop.

[SPEAKER_01]: Because a 5% pullback in Apple, sorry, let's say Proctor and Gamble, is more extreme than something like a 5% pullback in Nvidia, which can happen in any given day.

[SPEAKER_01]: So make sure your stops more law aligned with probably a moving average, usually when a stocks in an uptrend.

[SPEAKER_01]: It's holding a particular moving average.

[SPEAKER_01]: So maybe the 58 moving average might be the 100 moving average, whatever that moving average might be, that's where you probably want to keep the stop or a little bit below that, right?

[SPEAKER_01]: Maybe moving average minus 1%.

[SPEAKER_01]: Something like that.

[SPEAKER_01]: A lot of times it'll hit the moving average, go below for a short period of time and then rally.

[SPEAKER_01]: So that's to me the better type of stop.

[SPEAKER_01]: that you're going to set for a name is used technical levels.

[SPEAKER_01]: And once again, that's going to differ depending on what company you're talking about.

[SPEAKER_01]: Let's squeeze in another listener question now.

[SPEAKER_01]: Hello and best thoughts.

[SPEAKER_04]: I'm calling today to hear your opinion on S&P Global, Tegre Central SBGI, and it's current valuation.

[SPEAKER_04]: I'm considering starting a small position.

[SPEAKER_04]: Second question if you have time, we're gonna find a comprehensive guide on liquidity dynamics for a complete understanding.

[SPEAKER_04]: Thank you, and I'll be listening on the podcast.

[SPEAKER_01]: A comprehensive gut and liquidity dynamics.

[SPEAKER_01]: I'm not sure exactly what you mean by that.

[SPEAKER_01]: Usually when I'm trying to study how liquid an aim is, I'm looking at the 50-day average volume of the stock, and then how many shares am I trying to trade?

[SPEAKER_01]: You know, for the average person, the vast majority of names are not going to be so low in volume that you,

[SPEAKER_01]: You have to worry about, now, we have to worry about that.

[SPEAKER_01]: Sometimes it's the institution if we're buying some smaller cap names.

[SPEAKER_01]: If we go buy $23 million of a name that has just a couple hundred million dollars in market cap, well, that can be a big impact.

[SPEAKER_01]: But $23 million on a name that's worth hundreds of billions is nothing, right?

[SPEAKER_01]: So you want to look at that average day of volume,

[SPEAKER_01]: Now, when it comes to S&P Global, it's actually a name we own for clients.

[SPEAKER_01]: It has been down a bit, a lot of this is software related where there's worries that the industry's gonna move away from centralizing analysis of companies, of credit ratings, by getting,

[SPEAKER_01]: that intelligence and insights from companies like S&P Global.

[SPEAKER_01]: So it's definitely a little bit of risk.

[SPEAKER_01]: It's actually on a name that we're reconsidering it, but I still like it long-term.

[SPEAKER_01]: We're actually just looking at it, okay.

[SPEAKER_01]: These are a better name with an industry that we want to add to it.

[SPEAKER_01]: Because it's now of the strategy we hold it in.

[SPEAKER_01]: It's not on the lowest tier.

[SPEAKER_01]: of that particular one that happens, we want to say okay there and there's another name that we want to move up ahead of it.

[SPEAKER_01]: So, it's still like it, just not as quite as much as they used to, but it's still a good company.

[SPEAKER_01]: Now our 24-7 events talk voice making never closes, so give us a call now, 8-899 chart.

[SPEAKER_02]: In the early days, in Vestock was Jerry Klein and Steve Peasley.

[SPEAKER_02]: Now the torch has been passed and a new generation of hosts is on the job, Justin Klein and Luke Guerrero.

[SPEAKER_02]: So when you've got finance and investment questions, don't forget to call in Vestock, 888-99, chart.

[SPEAKER_01]: Remember the drill baby drill model that President Trump was, was spouting on the campaign trail?

[SPEAKER_01]: Well, the reality on the ground in America's energy industry is actually refined, baby refined, and also exported diesel exports hit a record 1.9 million barrels a day last week and jet fuel measurements were near record levels.

[SPEAKER_01]: and they're mainly exporting this fuel abroad.

[SPEAKER_01]: And most likely this is going to be a situation that lasts through next year.

[SPEAKER_01]: Why is that?

[SPEAKER_01]: Because Russia is one of the top exporters of refined products in the world.

[SPEAKER_01]: And about third of its refining capacity has been knocked offline by Ukrainian drones.

[SPEAKER_01]: So that's a giant factor there.

[SPEAKER_01]: Then you have our attacks on Iranian refineries

[SPEAKER_01]: Iran's attacks on refineries within the Middle East.

[SPEAKER_01]: So what's going on there is certainly hurting the situation.

[SPEAKER_01]: And then the third pillar is that China had put a ban on exporting refined fuel to the rest of the world.

[SPEAKER_01]: Why China doesn't actually produce a lot of oil?

[SPEAKER_01]: They do refine a lot of oil.

[SPEAKER_01]: And they usually export it to other Asian countries.

[SPEAKER_01]: They were not getting nearly as much oil from Saudi rapids, in fact, once as Euro and July, so we're buying more oil from Canada and Israel and Venezuela to feed the refineries.

[SPEAKER_01]: So, Exxon's CEO said it said quote, I've never seen the available capacity relative to demand as low as it is today, in quote.

[SPEAKER_01]: So, he's saying that Exxon is the nation's third largest oil refiner they're just seeing not enough capacity to meet demand.

[SPEAKER_01]: Because about five million barrels, other roughly 65 million barrels a demand per day of gasoline, diesel, and jet fuel is offline.

[SPEAKER_01]: So, you're talking about nearly 10% of global demand every day.

[SPEAKER_01]: Now collectively, as a nation, our refining capacity is actually down about 3% from its peak in 2019.

[SPEAKER_01]: You are seeing a company from India reliance industries, there we go.

[SPEAKER_01]: They're building the first new refinery.

[SPEAKER_01]: Since 1977, but that's not gonna come online for a number of years.

[SPEAKER_01]: Currently, American fuel factories have used 97.2% of operable capacity as of late last month, and that's the highest level seen since 2018.

[SPEAKER_01]: So that's why you're seeing companies like Marathon, Valero, Philip 66, Exxon, all reporting giant increases.

[SPEAKER_01]: In operating profits, the crack spread, the, the, the, the, the, the amount they're making by selling this fuel versus what the cost of the input is, which is the oil is at near record highs, so why exons are finding operations profits quadrupled from last year, marathons earnings quadrupled they all pretty much quadrupled.

[SPEAKER_01]: So this is what, when you're looking at the current industry, this is the shift that's happening and this is why I continue to say, this is maybe not the time to buy it right now because it moved a lot and a lot of expectations of earnings going forward, but I do think that structurally, this is a much better place to invest in the energy space.

[SPEAKER_01]: We've got time, so let's play another listen to a question from eight to eight, 99 chart.

[SPEAKER_09]: Hey, this is Don from Durham North Carolina Love Show.

[SPEAKER_09]: I know you like gold, sort of medium and long-term.

[SPEAKER_09]: the technical setup of ring R, I, N, G, S, I, shares global monitors E, T, F, just wondering what you think about technical setup of the next month or so.

[SPEAKER_09]: Thanks, bye-bye.

[SPEAKER_01]: Well, this kind of reminds me of the call yesterday that was talking about Agnico Eagle and said, oh, they made it, they bought it well, and then it rallied, they took some profits, and

[SPEAKER_01]: And it was over bot.

[SPEAKER_01]: And I said, yes, oh, in the short term, it's over bot, but because it's pulled back and ring pulled back from about $100 per share in early March to a low recently about $60 per share, you're talking about a 40% drop from peak to trough, that's reset sentiment in a major way.

[SPEAKER_01]: Now, you've already rallied from 60 all the way till basically 80 right now at the close today.

[SPEAKER_01]: So that's a big move, right?

[SPEAKER_01]: The high of the day, I guess, we'll see.

[SPEAKER_01]: That right there is about a 33% rise.

[SPEAKER_01]: So it is overbound in the short term, but that's the short term.

[SPEAKER_01]: As you said, a medium to long term are made bullish, and I think the technical setup still remains constructively to the upside.

[SPEAKER_01]: The question is, do you want to buy ring?

[SPEAKER_01]: Or do you want to buy GDX is the most common?

[SPEAKER_01]: That's the van at gold miners.

[SPEAKER_01]: Ring has the expense ratio of 39 basis points.

[SPEAKER_01]: GDX has 51 basis points.

[SPEAKER_01]: Their portfolios are very similar.

[SPEAKER_01]: So it's a little more expensive.

[SPEAKER_01]: When it comes to GDX, has, let's see, 59 names.

[SPEAKER_01]: Ring has 40 names, so you're a little more concentrated ring with a little bit lower expense ratio.

[SPEAKER_01]: I think both are good.

[SPEAKER_01]: But I like the technical setup in general within the oil patch.

[SPEAKER_01]: I'll test the oil patch, the gold in my ear, the precious metal sub-tector.

[SPEAKER_01]: Now the next invest stock will look into the story.

[SPEAKER_01]: U.S. housing market cracks, homes are selling below asking price in 38 major cities.

[SPEAKER_01]: And a report shows homes are selling below asking price in 38 of the 50 biggest U.S. cities and signal that the long, dominant sellers market may finally be turning.

[SPEAKER_01]: We will examine what this shift means for real estate as an asset class, homebuilders talks, and mortgage sensitive portfolios.

[SPEAKER_01]: That story is for tomorrow, but for now I'm Justin Klein and ready to take your calls now at 8 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9 a.m. at 9

[SPEAKER_01]: at KPP Financial.

[SPEAKER_01]: Accountability means more than advice.

[SPEAKER_01]: It means we invest alongside you.

[SPEAKER_01]: Through our parallel investing approach, when we recommend an investment for clients, one or more KPP principles invest their own capital at the same time.

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[SPEAKER_02]: Justin Klein is here now, taking your calls live.

[SPEAKER_02]: Invest Talk, 888-99 chart.

[SPEAKER_01]: Let's talk about the market everyone wants to know, is the current rally sustainable, and we're a near-recorded highs in the S&P, or kind of at them, reconciled dating, Reddit, record highs, the NASDAQ still below, record highs from a few months back.

[SPEAKER_01]: And that's really a big crux of the story here.

[SPEAKER_01]: Is there's definitely market rotation going on underneath the surface?

[SPEAKER_01]: Small mid caps are outperforming,

[SPEAKER_01]: index for the year.

[SPEAKER_01]: And a big part of that is that mag seven has peaked and is has really been got it's gone nowhere.

[SPEAKER_01]: If you go look at the mag index, the mag's MHS.

[SPEAKER_01]: Since last fall, it's just chopped sideways.

[SPEAKER_01]: So you're going on three quarters here to be peaked in the end of October.

[SPEAKER_01]: Guess what?

[SPEAKER_01]: Only two and a half months away from the end of October.

[SPEAKER_01]: So that means

[SPEAKER_01]: Those stocks which are a much larger part of the index than they ever been are going nowhere.

[SPEAKER_01]: But you got the market still making highs.

[SPEAKER_01]: It shows you that those small mid caps are the ones driving returns.

[SPEAKER_01]: And it makes sense because if you look at the rest of the S&P, the earnings growth is at about 24% annually.

[SPEAKER_01]: First quarter earnings increased 18%.

[SPEAKER_01]: So you're definitely seeing earnings overall, drive this rally.

[SPEAKER_01]: It's not multiple expansion.

[SPEAKER_01]: That's the positive here.

[SPEAKER_01]: It's not like the market as a whole is getting more expensive.

[SPEAKER_01]: It's not.

[SPEAKER_01]: The question is more about the sustainability of that rally, all right, of that increase in earnings.

[SPEAKER_01]: Because the increase in earnings

[SPEAKER_01]: companies raising prices, energy prices going up, especially talking about the refined products.

[SPEAKER_01]: So margins are expanding, but productivity is not really increasing, which is interesting, considering we're in the air revolution, you would think the productivity would be booming.

[SPEAKER_01]: So if inflation cools, and these companies are not able to continue to expand their margins,

[SPEAKER_01]: and competition intensifies what happens, margins come down, earnings growth comes down.

[SPEAKER_01]: So that's a huge risk I think going into next year.

[SPEAKER_01]: Now, can it last for the rest of this year?

[SPEAKER_01]: Absolutely.

[SPEAKER_01]: The lot of structural factors and we have an administration that wants the market title.

[SPEAKER_01]: You think it's a coincidence they're floating a getting rid of the capital gains tax?

[SPEAKER_01]: No, they want to keep the markets floating up until the midter's.

[SPEAKER_01]: Because the consumer is definitely stressed.

[SPEAKER_01]: You're seeing rising credit card delinquencies.

[SPEAKER_01]: Overall purchasing power and real incomes are declining once again.

[SPEAKER_01]: Then you have the backdrop of what's going on in the Middle East.

[SPEAKER_01]: That's creating inflation.

[SPEAKER_01]: Here's the number.

[SPEAKER_01]: drove about 15% earnings growth in Q1.

[SPEAKER_01]: But the 493 stocks?

[SPEAKER_01]: one-y percent group.

[SPEAKER_01]: So that's why those stocks are performing.

[SPEAKER_01]: It's those max seven names that are spending money going into the small parts of the market.

[SPEAKER_01]: They're expanding their balance sheets.

[SPEAKER_01]: So in some ways, they're expanding the money base in the economy.

[SPEAKER_01]: So their spending is generally inflationary.

[SPEAKER_01]: Just as if a bank expands their balance sheet by lending out into the economy,

[SPEAKER_01]: Those are dollars that are being created.

[SPEAKER_01]: If a corporation goes and borrows money or utilizes cash that's sitting on their balance sheet and goes and spends that into the economy, well, now that's dollars that are going on to the system.

[SPEAKER_01]: So, these are, one of the big reasons why you continue to see kind of the market hanging in there, and I think it can continue to hang in there probably at least until the midterm.

[SPEAKER_01]: So, we'll see, it's a rough or fourth corner to be honest with you, but at least through this month, I think we're going to hang in there.

[SPEAKER_01]: Now, our 24-7 voice bank never closes, so you can leave your finance and investment questions anytime and you know, chart and here comes one of those questions now.

[SPEAKER_05]: Hey, you can just open those up here.

[SPEAKER_05]: All about Celsius, ticker symbol, C-E-L-H.

[SPEAKER_05]: It's an energy, it's like something.

[SPEAKER_05]: They just have memories of a couple days ago, and it didn't go too well.

[SPEAKER_05]: But then the rocks are C-O made a statement and it pops a little bit.

[SPEAKER_05]: And it's hovering around that 27 area.

[SPEAKER_05]: Just wanted to get your thoughts.

[SPEAKER_05]: If this would be a good,

[SPEAKER_05]: place to start opening a position or if you think I should wait a little bit or if you think I should just not invest it all in Celsius, so before the hearing your response, love what you guys do.

[SPEAKER_01]: And looking at Celsius, this is a name that have been grown like gangbusters, especially post-pandemic.

[SPEAKER_01]: 2019, they'll have made five cents a share than four cents, then two, then lost the

[SPEAKER_01]: Everything blew up in a positive way, earnings revenues up 102% in 2023 in earnings with a 77 cents.

[SPEAKER_01]: Then it took down to $45, then a dollar 34 last year, a dollar 46 this year, a dollar 76 expected next year.

[SPEAKER_01]: And if that's the case, it's pretty cheap because it's trading out $27.

[SPEAKER_01]: Talking about a 15 roughly forward-looking multiple.

[SPEAKER_01]: That's pretty cheap, but it's been a very choppy performer.

[SPEAKER_01]: Look, it's operating margins right now, it's up 20% but it's been kind of up and down, especially over the past five, six years in the positive and negative territory.

[SPEAKER_01]: The good news is they have a pretty solid balance sheet only about $2 billion in net debt on a $2 $7 billion market cap, free cash let $462 million.

[SPEAKER_01]: So you're getting a nice free cash flow yield.

[SPEAKER_01]: I like the cash flow situation.

[SPEAKER_01]: What are they doing with that cash flow?

[SPEAKER_02]: I think buying back shares.

[SPEAKER_01]: Starting to guess that's the good thing.

[SPEAKER_01]: They've stopped issuing shares.

[SPEAKER_01]: It is that support to me.

[SPEAKER_01]: This is an easy trade.

[SPEAKER_01]: It's Low of the last A couple years is right about twenty one dollars.

[SPEAKER_01]: Now our twenty seven.

[SPEAKER_01]: So there's some risk here, but if it breaks below that twenty one.

[SPEAKER_01]: I'm out.

[SPEAKER_01]: It's the market telling you something Much worse is happening, but the valuation is is good.

[SPEAKER_01]: And the price value you've been looking forward is about 12 and a half, which is on the low end of where it just typically trade over the last 10 years.

[SPEAKER_01]: So I would, I think it's a decent risk versus reward because if it does turn around from here, it'll probably head back into the 40s.

[SPEAKER_01]: Maybe even into the 50s.

[SPEAKER_01]: And then you have a double in your hand.

[SPEAKER_01]: So 20% downside, potential of 100% upside, it's kind of the five to one ratio there.

[SPEAKER_01]: I think it's a pretty good one.

[SPEAKER_01]: Let's answer another voicemail question now.

[SPEAKER_09]: Hello, I was hoping you guys could look at Green Breyer, the ticker is G, B, X.

[SPEAKER_09]: But some of them I watched was for a little bit.

[SPEAKER_09]: So I was wondering if you think it's too light to get in or if I should wait for a pullback, just curious if you guys think, and I'll listen on the show, thanks.

[SPEAKER_01]: This is the name that definitely have looked at throughout the years.

[SPEAKER_01]: It's been one of those up and down performers.

[SPEAKER_01]: Bring it pre-pandemic to me nearly $3 per share.

[SPEAKER_01]: That ticked down to $1.10 by 2021, understandably, during the pandemic.

[SPEAKER_01]: Let me start to build back up.

[SPEAKER_01]: And they eventually earned $6.50 in $59 last year.

[SPEAKER_01]: Sounds great, right going from $1.10 to $6.59 in just the matter of five years.

[SPEAKER_01]: Great turnaround.

[SPEAKER_01]: But now, this year earnings are only expected

[SPEAKER_01]: down 54 percent.

[SPEAKER_01]: Now, if you look at the weekly chart, it's not very inspiring.

[SPEAKER_01]: This did peek out in January up around $70 per share and has been chopping kind of an arranged run 50 dollars per share over the past few months.

[SPEAKER_01]: And it's out of about 45 and change now.

[SPEAKER_01]: To me, that is what we call bearish consolidation.

[SPEAKER_01]: It's try to rally back to new highs for

[SPEAKER_01]: Susan, Susan, that peak was then January of last year, not this year.

[SPEAKER_01]: I'm looking at a weekly chart.

[SPEAKER_01]: So it's had a couple of good rallies last year in June and had a good rally late last year into early part of this year.

[SPEAKER_01]: It rallied up to about sick village for share, but then failed.

[SPEAKER_01]: So what I don't like is when a name has pretty steep strong rally and then just fails.

[SPEAKER_01]: That entire rally pretty much has been given back over the past few months.

[SPEAKER_01]: So the technicals overall to me are just too poor.

[SPEAKER_01]: You're talking about $3 in earnings this year, $39, you next year earnings expectations, for this year, next year continue to come down.

[SPEAKER_01]: So what are you gonna pay for a multiple for a company who has negative earnings growth?

[SPEAKER_01]: I'm gonna pay a lot for that.

[SPEAKER_01]: Their balance sheet has a lot of debt on it.

[SPEAKER_01]: About one and a half, one point six billion on a 1.4 billion dollar market cap.

[SPEAKER_01]: too much in this environment, especially with rates going up, we're trying to equity, it's turned back over as only at six percent.

[SPEAKER_01]: And they can't really afford the dividend based on the cash flow because the cash flow's gone negative.

[SPEAKER_01]: Just remember folks, it'd be very prudent with your capital.

[SPEAKER_01]: You always have to remember the opportunity costs.

[SPEAKER_01]: When you go invest, take your capital, you go invest in a company, you go invest in anything.

[SPEAKER_01]: You could take that money and go invest in something else.

[SPEAKER_01]: So you have to really like it.

[SPEAKER_01]: You have to be really confident.

[SPEAKER_01]: You have to do your research, and you have to say, okay, could buy this, but is there something better?

[SPEAKER_01]: Not just based on what you heard on TV, or what a cousin said, or a friend said, or what article you read.

[SPEAKER_01]: Us professionals, we have search criteria.

[SPEAKER_01]: We're filtering based on quantitative analysis, and then we're using our own judgment, human brain to do qualitative analysis along with Anne, definitely helps.

[SPEAKER_01]: And trying to find the best of each industry, is green buyer, the best within the industrial space?

[SPEAKER_01]: Absolutely not.

[SPEAKER_01]: There are far better names than this, so I'm passing on GDX.

[SPEAKER_01]: Let's go answer another listener question now.

[SPEAKER_06]: Hey Justin, look, love the show, Paul from Michigan here.

[SPEAKER_06]: I'm looking for a midcap value ETF and I came across this entry U.S. value fund, WTV.

[SPEAKER_06]: I was going to see what you think of it.

[SPEAKER_06]: If you don't like this one, how can I find a better midcap value ETF?

[SPEAKER_06]: So I'm listening to the answer on a podcast.

[SPEAKER_06]: Thanks a lot guys.

[SPEAKER_06]: Bye.

[SPEAKER_01]: I think the wisdom tree U.S. value fund, 12 basis point expense ratio, pretty low.

[SPEAKER_01]: I like that.

[SPEAKER_01]: It is U.S. based.

[SPEAKER_01]: So this is exposure not getting any foreign exposure, understand that.

[SPEAKER_01]: It is a midcap value, as you said.

[SPEAKER_01]: Where does it lean?

[SPEAKER_01]: Right now, technology is about 16% of the portfolio.

[SPEAKER_01]: The category is about 15, so not like the S&P.

[SPEAKER_01]: It's very different.

[SPEAKER_01]: It's members using the category averages.

[SPEAKER_01]: It's heavy in financials.

[SPEAKER_01]: Now financials have been well as of late.

[SPEAKER_01]: That's a good thing.

[SPEAKER_01]: Nastyper yields curve.

[SPEAKER_01]: They probably will do fairly well.

[SPEAKER_01]: Inflationary environment.

[SPEAKER_01]: They tend to do very well as well.

[SPEAKER_01]: Now, the top holding here is in video and they really have midcap now.

[SPEAKER_01]: And I've seen some creep here.

[SPEAKER_01]: I think they probably need to be selling that name if you want to stay a midcap name, but it's more of a value name.

[SPEAKER_01]: It's a video value name.

[SPEAKER_01]: That's debatable.

[SPEAKER_01]: Zoom is their third largest holding.

[SPEAKER_01]: It's a name that we own for clients to go.

[SPEAKER_01]: Now, the name is Target.

[SPEAKER_01]: Look at their top 10.

[SPEAKER_09]: Pretty good.

[SPEAKER_09]: It's looking performance.

[SPEAKER_01]: Performance over the year so far, 16%.

[SPEAKER_01]: to the 72nd percentile, so it's underperforming a little bit this year.

[SPEAKER_01]: The space, but last year in the 25%ile, the year before that, the 3%ile, the 5%ile in 2023, so for the last three years, minus this year, it's done really well.

[SPEAKER_01]: It's in the 8%ile, over the last three years, five years, the 6%ile, the 10 year, 2%ile, which means that only 2% of funds within the MidCat value category have done better than this name.

[SPEAKER_01]: Now, how much of that style, creep, et cetera, regardless.

[SPEAKER_01]: It's a good fun.

[SPEAKER_01]: He's relatively low and fine with it.

[SPEAKER_01]: Now would it be all of my portfolio?

[SPEAKER_01]: No, but, you know, a good chunk of my made-captic exposure, sure, I like that.

[SPEAKER_01]: But also, make sure to round it out with some foreign exposures as well.

[SPEAKER_01]: Let's go answer a YouTube Comic Question in Tom says, hi, guys, would appreciate your thoughts on I and D.S.

[SPEAKER_01]: Pacer Industrial Real Estate.

[SPEAKER_01]: What do you think of this sector currently?

[UNKNOWN]: Here we go.

[SPEAKER_01]: So this is another ETF, 49 basis point, expense ratio.

[SPEAKER_01]: So about half a percent there.

[SPEAKER_01]: Also, it's actually a midcat value fund, but it's definitely not as strong as the previous caller.

[SPEAKER_01]: That's very obviously going to be real estate centric.

[SPEAKER_01]: So I kind of really can't really judge it based on that.

[SPEAKER_01]: But if you look at its holdings, public storage, it holds about 30 different names, public storage is 30% of the portfolio.

[SPEAKER_01]: Sorry, 16% of the portfolio.

[SPEAKER_01]: Kind of compare it to it.

[SPEAKER_01]: It's hard to compare it because it's, I think it's looking at this as a mid cap fund, judging this correctly.

[SPEAKER_01]: You know, I don't hate it.

[SPEAKER_01]: I'll say that.

[SPEAKER_01]: I like that it's industrial real estate.

[SPEAKER_01]: I like that focus.

[SPEAKER_01]: I tend to like the bat sub-sector better.

[SPEAKER_01]: So I'm gonna give this one a thumbs up cause I like industrial real estate.

[SPEAKER_01]: Now this is Bestock.

[SPEAKER_01]: I'm Justin Klein.

[SPEAKER_01]: We have one goal here each every week.

[SPEAKER_01]: It's helped you achieve your own version of Fange of Freedom.

[SPEAKER_01]: And I work continues after this final break.

[SPEAKER_01]: So, it's questions in right now at 8.8.

[SPEAKER_01]: I'm gonna be nice, sure.

[SPEAKER_02]: investor.

[SPEAKER_02]: Tell your friends they can listen live, download the free podcast, or watch invest talk on our YouTube channel.

[SPEAKER_02]: And they can leave their finance and investment questions anytime on 888-99 chart.

[SPEAKER_01]: We're going to go talk to Sammy and San Francisco looking at VDADX, which is the Vanguard

[SPEAKER_03]: Yes, that is correct.

[SPEAKER_03]: Just in thanks for taking my call.

[SPEAKER_03]: Yes, so I wanted to get your opinion on this fund.

[SPEAKER_03]: I was going to buy it as the market weekends hopefully in the next few months.

[SPEAKER_03]: I wanted to get your opinion.

[SPEAKER_03]: So why this one?

[SPEAKER_03]: I guess this producer is a good amount of dividend income.

[SPEAKER_03]: That's the motivation.

[SPEAKER_01]: OK, are you looking for income?

[SPEAKER_01]: You're trying to produce income in your portfolio?

[SPEAKER_03]: Yeah.

[SPEAKER_03]: Yeah, as I approach my, you know, retirement and, you know, getting ready for that.

[SPEAKER_03]: So I wanted to move a big chunk into a dividend producing fund and this one looked like a good one to consider.

[SPEAKER_03]: Okay.

[SPEAKER_01]: So, yes, it's the Vanguard dividend appreciation fund, but I think it's looking for companies that pay our increasing their dividend over time, not necessarily that are paying high dividends today.

[SPEAKER_01]: So, if you're looking for income, I don't really think this is the fund for you.

[SPEAKER_01]: That makes sense, like 1.45%, that's higher than the S&P, which is at about 1%, but it's not exactly doing off a ton of income, correct?

[SPEAKER_03]: It's like, you know, if you go for a fund that is giving you high dividend today, there's no guarantees, right?

[SPEAKER_03]: I mean, you said that number of times that next year that not the case, so I thought this fund kind of keeps that into account, right?

[SPEAKER_03]: I mean, you know, it takes that into account and ensures that they only have companies that are increasing dividends.

[SPEAKER_01]: Yeah, I mean, the thought is that over time that companies are going to, yeah, you're only getting, you're getting a low income today, but over time you're going to appreciation of the stock as they do raise their dividend and therefore five years, ten years south down the line, your yield based on your original purchase price is much higher.

[SPEAKER_01]: So I think that's the general consensus.

[SPEAKER_01]: The issue here, though, is a couple things.

[SPEAKER_01]: and pretty bad since the interests have gone up.

[SPEAKER_01]: So this year, remember, this is a large cap value ETF.

[SPEAKER_01]: Anything that is dividend focused is kind of a closet value fund.

[SPEAKER_01]: If you go look at them, it's pretty much what it is.

[SPEAKER_01]: And that could be fine, that's what you're looking for.

[SPEAKER_01]: But year to date, it's in the 61% tile, which means that most 61% of funds in this category are doing better last year than the 69% tile.

[SPEAKER_01]: lower half, 2024 and the 79th percentile, the lower quarter and 2023 and the 87th percentile.

[SPEAKER_01]: So it was one of the worst funds in the category in 2023.

[SPEAKER_01]: And that means over the last.

[SPEAKER_01]: five years in the 69th percentile, three years, 80th percentile in 10 years, 71th percentile, which means that over a 10 year period, 71 percent of funds within this category have done better.

[SPEAKER_01]: So, is this really the fund that you want to own?

[SPEAKER_01]: Because I think people focus too much on, if you have good performance, that performance can come from income, from dividends,

[SPEAKER_01]: Or come from price appreciation at the end of the day, it shouldn't really matter to you.

[SPEAKER_01]: Okay, it should be about the longer term risk adjusted return.

[SPEAKER_01]: And you're not really getting great risk adjusted return in this particular name.

[SPEAKER_01]: Now the fees are low, that's a positive.

[SPEAKER_01]: But when I'm looking at the portfolio as a whole,

[SPEAKER_01]: One thing I'm flagging and maybe this is the reason why it's struggling to perform well is the debt to capital ratio in the category is that about 33 and the index is that about 33 but for this name it's 44 which means that the names within the fund are levered up by about a third more than the rest of the market or the rest of the category, similar type of companies.

[SPEAKER_01]: So is that

[SPEAKER_01]: higher debt level, weighing on total performance of the fund, I think that's very possible.

[SPEAKER_01]: So, I wouldn't buy this for income, I wouldn't buy it for a longer term performance because it's not doing very well in this higher-end straight environment.

[SPEAKER_01]: They don't like the leverage.

[SPEAKER_01]: I just, it's not terrible.

[SPEAKER_01]: I'm not saying it's bad, but it's certainly not worth committing your capital to.

[SPEAKER_01]: I would continue to search for a better alternative.

[SPEAKER_01]: Thank you for the call.

[SPEAKER_01]: I'm Justin Klein reminding you about KP Financial's parallel investing when we make a trade for our clients, make the same trade for ourselves, same day, same price, same percentage, no front running, no special treatments we invest right alongside our clients.

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[SPEAKER_01]: Well, independent thinking should success.

[SPEAKER_01]: Isn't that stock?

[SPEAKER_00]: Good name.

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