0:00

At a time when investors

0:03

are confronted with market volatility

0:05

and a variety of challenges

0:07

fueled by the uncertainty of

0:10

inflation, unsettled geopolitical tensions, and

0:12

economic pressures, Justin

0:14

Klein stands ready to take your

0:17

finance and investment questions and share

0:19

his unbiased answers. Invest

0:22

Talk is made possible by

0:24

KPP Financial, a registered investment

0:26

advisor firm serving clients throughout

0:28

the United States. The

0:31

clarity for your path

0:33

forward starts now. Here

0:36

is KPP Financial Chief

0:38

Executive Officer, Financial Advisor,

0:40

Justin Klein. Good

0:44

afternoon fellow investors and welcome back

0:46

to Invest Talk. This is our

0:48

Tuesday, May 7, 2024 edition. I'm

0:52

Justin Klein and I am here to help

0:54

you navigate through

0:57

the maze of financial

0:59

information headlines that are

1:01

flying at you every day on traditional

1:04

media, social media, and beyond.

1:08

This show is about helping unpack

1:10

the issues

1:13

that should matter to you and

1:16

get you ready for this new

1:19

era that we continue to try

1:22

to navigate through of higher

1:24

interest rates, more

1:26

geopolitical volatility, more political

1:29

volatility, and ultimately

1:32

a fiscal situation on

1:34

the sovereign level that is nothing

1:36

like we've seen in our lifetimes. It's

1:39

important to have your eyes wide open,

1:42

understand the risks and rewards of everything

1:44

that you are looking at in

1:46

your portfolio and what you may

1:48

put in your portfolio. That's

1:51

weird to help you with. We do that

1:53

by answering your finance and investment questions. If you

1:55

have something in your portfolio you're not sure about,

1:57

maybe you're thinking about adding something to your portfolio.

2:00

that you're not sure about, give

2:02

us a call. We can answer your

2:05

question on today's show or on a future show,

2:07

you can leave your message on our Anytime Listen

2:09

Align 88899 chart. Is

2:11

the number either way live or

2:13

after hours, it does not matter.

2:17

So that's what we are here to do. And

2:20

we're gonna talk about the marked performance for today

2:22

as well as run down some show topics, but

2:24

right after we tackle our first caller question now.

2:27

Hey guys, I had a quick question for you. I

2:29

was watching 60 Minutes on Sunday night and they did

2:31

a special on KKR company. I liked everything they were

2:33

saying in the segment, but I wanted to make sure

2:36

I wasn't getting sold on the story like you guys

2:38

like to say. So if you would, I added it

2:40

to my watch list, but I just wanted to hear

2:42

your evaluation before I made a purchase. Appreciate

2:45

it, thanks. Well,

2:48

let's just say this. When a company or

2:51

sector as a whole hits the

2:53

mainstream media, there's no

2:56

bigger mainstream show than probably 60

2:58

Minutes. Is

3:01

everybody on board is I think the question you have

3:03

to ask yourself. Now that

3:06

doesn't mean it's the only thing you

3:08

think, only factor you consider,

3:11

but that would always make me

3:13

more weary than excited

3:15

about the name. Now KKR is

3:17

one of the world's largest alternative

3:19

asset management companies. Think

3:22

of private equity. That's what

3:24

they're big into. Their core segments

3:26

are asset management, which includes private

3:29

equity, private credit, infrastructure, energy, real

3:31

estate. These are all areas that

3:33

there's not a lot of transparency

3:36

to talk about that. Their

3:38

investment vehicles, you don't really know what's in them.

3:41

They're not really marked to market, et cetera. And

3:44

that's what I don't like. Now

3:46

their business, at least right now is pretty

3:48

good. They

3:50

have high asset values and they're earning

3:52

a fee on that, but they're highly

3:54

levered. You have

3:57

about 60, what's it

3:59

called? 65-ish billion

4:03

in debt on

4:05

a market cap of 88 billion.

4:07

That's kind of a lot. The return equity is only 7%. Return

4:10

invested capital 4%. That's

4:12

not that exciting. And it's

4:14

trading at a pretty high multiple. Forward-looking enterprise value,

4:16

you bet 29. Don't love that. Earnings

4:21

this year are supposed to be up

4:23

37%. And so near-term things are good,

4:25

but to me, it's a leverage play

4:27

on asset prices. And I don't love

4:29

that. I don't want a name that

4:31

is so tied to the higher

4:33

cost of capital. And so I

4:36

just don't think this is a great risk

4:38

versus reward. Now, technically, it's fine in the

4:41

near term. When I say technically, I'm talking about

4:43

the chart. It's certainly in an uptrend. And I

4:45

don't think it's going to fall apart anytime soon.

4:47

But I will say there are some indicators

4:51

like MACD that are starting to roll over. And

4:53

I worry a bit about that. So just

4:55

because it's on 60 minutes is not an

4:57

indicator that to buy it. And frankly, it

5:00

would be more an indicator to stay away. Thanks

5:03

for the call. Now,

5:06

we have a lot of ground to cover. The next 45 minutes, and our

5:08

main focus point is about the opportunities

5:11

in the stock market after a tough

5:13

month. So we're going to talk about broader sectors,

5:16

different style factors, and what

5:19

general valuations are for

5:21

those different subsegments of

5:23

the overall market. We're

5:25

also going to touch on a

5:28

few other topics. One is in

5:30

regards to the recent senior loan

5:32

officer survey out of the Fed.

5:35

And this is always

5:37

important because so many people talk about dollars

5:40

in the system and money printing from the

5:42

Fed. And if you're focusing

5:44

on, quote unquote, money printing from

5:47

the Fed, which kind of comes in all

5:49

the different forms. And a lot

5:52

of times it shouldn't

5:55

really be defined as money printing because it's something

5:57

else. But a lot

5:59

of people focus on that. And it's certainly important, but

6:02

by far what's more important are

6:04

what the banks are doing in

6:06

a fractional reserve banking system The

6:09

banks are the ones that create the dollars far

6:12

more than the Fed yes,

6:14

the Fed and the Treasury can work together and they can

6:17

liquefy the system and and get

6:19

dollars out into the system using

6:21

various means but Banks

6:23

do that too by levering up their balance

6:25

sheet lending, etc So we're going to look

6:28

at that survey because it is so important

6:30

to the overall economy In

6:32

addition, we're gonna discuss Gen

6:35

Z Millennials What are

6:38

the what's the younger generation spending on

6:40

in? Gen

6:43

Z and Millennials spending hit two point

6:46

seven trillion here in the United States

6:48

and that was thirty percent of all Spending

6:51

and you know, that's been going up since then

6:53

so it's important to unpack

6:56

the Unpack the trends in that

6:58

cohort of the population because they're

7:00

the ones that it will Continue

7:02

to spend more and more as

7:04

they advance in their careers. They

7:06

get older they enter their mid

7:09

to late 30s into their 40s

7:11

start to buy homes and You

7:14

know, they're buying habits spending habits will be very very important.

7:16

So we're gonna look at that and then

7:18

lastly IPOs what you look

7:20

for for An

7:22

opportunity in the IPO space

7:24

we always talked about IPOs generally overvalued

7:27

Upon first trading day. They typically

7:29

are not great to invest in

7:32

but what patterns After

7:34

the IPO can indicate that yeah now it

7:36

is time to jump in maybe weeks or

7:38

months after the initial public

7:40

offering We also have voice bank questions

7:42

one is on homes and interest rates

7:44

and the other is on revolution Medicines

7:47

RV MD and of course comments

7:49

from our comment section or some

7:51

questions from our comment section on

7:54

our invest talk YouTube channel But

7:56

most importantly, it's about you and your

7:58

live calls. We've all Welcome your finance and

8:00

investment questions right now on 88899 chart. Now

8:03

we're going into a short break on the other

8:05

side. We'll talk about today's market activity, but please

8:07

remember once again, you can call anytime and leave

8:10

your question on the Investalk Voice Bank at 88899

8:12

chart. Investalk

8:20

callers make each podcast unique.

8:22

I was calling about

8:24

Intel, if it's worth holding onto

8:27

or should I sell it? Their

8:29

questions are curious. I have

8:31

saved up around $88,000. I was

8:33

wondering what I should do to make

8:35

it grow. Careful. I'm just wondering

8:37

is this a value trap because it looks like it's

8:40

gone down quite a bit. Concerned.

8:42

It's taken quite the tumble today. I've been

8:44

trying to get out of this position for a while. I

8:47

think I waited too long. And clever.

8:49

Look at that Dominion Energy Inc. This

8:52

seemed to be situated in

8:54

some areas of expanding population.

8:56

And Justin Klein and now

8:58

Luke Guerrero are always ready

9:00

with their unbiased answers. And

9:02

this is, let's take a classic example of

9:04

chasing yield. Don't chase the yield. Next 12

9:07

months price to earnings is around 30. I

9:10

just don't see it at this price. Don't

9:12

forget to call Investalk 88899

9:15

chart. Every

9:23

investor is working to build

9:25

a secure financial future. How

9:28

they get there and when they get there.

9:31

That depends on many factors. The

9:34

more you learn about how the

9:36

market works, the better your chances

9:38

for success. So don't

9:41

forget to call Investalk 88899 chart.

9:47

Now let's take a look at the market

9:49

today. And it was

9:51

another up day. Not a big up day.

9:53

S&P was up about seven points. So

9:56

a little over one

9:58

tenth of one percent. the broad large cap

10:01

market that was that's what it was up 0.1% on

10:03

the day small caps up 0.13 so they outperformed

10:08

this sector today was actually

10:10

mid-cap value up 45 basis points

10:12

the worst sector mid-cap growth down

10:15

33 basis points

10:17

that was on the back of pounds here after

10:19

earnings down 15% finally getting

10:21

a bit of correction from its pretty

10:24

high valuation solid company but those

10:27

results didn't meet the expectations you

10:29

also had big down day from

10:32

things like Lucid group down 14%

10:36

Teradata down 14% as well so

10:38

kind of a mixed bag definitely

10:40

into resistance in the short short

10:42

term we've had this nice

10:44

rebound from the lows of

10:47

May 19th and

10:49

we are in the high end of

10:51

we call the Bollinger Band on the

10:53

charts and that typically brings some at

10:55

least near term resistance and we're also

10:57

kind of at the high the area where

10:59

we consolidate before the breakdown in

11:02

mid-May so it would not shock me

11:04

to see a bit of a market

11:06

step back after this most recent move

11:09

not a lot of catalyst for that to

11:11

be to be frank earnings after hours

11:13

i think there were a couple stinkers

11:16

out there and

11:18

you know overall today was

11:21

flat up but not very much and like

11:23

i said into some major resistance

11:29

you probably noticed that we are excited

11:31

about our new youtube channel it's about

11:33

uh you know even going live here

11:36

with these uh videos

11:38

and data that we're sharing our

11:40

screens and everything that comes with

11:42

our youtube videos but

11:46

each night we get comments in

11:49

the comments section or questions in the

11:51

comment section and here's one that came

11:53

in a couple of days ago copy

11:55

321 says what are your thoughts on

11:57

hymns preferred entry price and this Is.

12:00

A. User

12:02

name that has spent a lot of money

12:05

on advertising. At the

12:07

same Cisco there in the. The.

12:10

Wellness Space shall we say? Report?

12:12

Healthcare software solutions and health and

12:14

wellness products in the United States?

12:16

Are they so lot of. Raquel

12:18

dysfunction, drugs via mail

12:21

odds him stand for

12:23

him. A. Hims and hers.

12:25

Health ain't. And. Their revenue

12:27

growth is very strong. Last quarter revenue

12:30

growth was forty six percent. Now that

12:32

is down from nearly one hundred percent

12:34

revenue growth. In. A least twenty

12:36

twenty two, but still healthy earnings growth

12:38

as of two hundred percent of make

12:41

Twelve dollars twelve cents excuse me per

12:43

share this year, Twenty one cents per

12:45

share next year, So that growth is

12:47

pretty solid. but. Even if

12:49

you're going based on for looking

12:51

earnings of twenty one sense you're

12:54

talking about sixty times multiple. That's.

12:57

A bit rich for my blood if

12:59

you look at things like prices, sales,

13:02

That. About three times a little high

13:04

but for a tech named this growth

13:06

thought terrible but I don't like or

13:08

the operating margins Negative Three point three

13:10

percent. And I worry that this is

13:13

one of those names that. Are. Is

13:15

focused more on the top line

13:17

then the bottom line and. Historically.

13:20

That's been the case. And in

13:22

order to plug that cashflow gap

13:25

the been increasing the number of

13:27

shares outstanding consistently. Really? Since

13:29

Twenty twenty One when they had about

13:31

two hundred million shares outstanding, him in

13:33

July, an hour at two hundred fourteen

13:36

million shares outstanding. Not

13:38

a dramatic increase by a consistent increase. and

13:40

they don't like that. Attack move

13:42

are pretty solid as pull back the hundred

13:44

a moving average and that's good. But

13:47

it. I just don't like

13:49

these these many losers i in africa

13:51

as slow as positive. That's good but.

13:54

Not. Enough to get me excited

13:56

about hims and herself. Frankly,

13:58

Hims gonna pass I I. Love

14:00

that lack of profitability. Thanks.

14:02

For the Gop. Will.

14:05

Keeping move things moving and have back in the

14:07

that such voice pay for question A Came in

14:09

earlier. Hey.

14:12

This is Andrew from Atlanta and

14:14

as try to get touch just

14:17

as or luke and as reach

14:19

not you guys but ticker symbol

14:21

are why I at Ryerson hold

14:23

incorporation of held this for a

14:26

while his have noticed that has

14:28

been Draven little bit. I'm

14:30

curious. how does this company or that this

14:33

whole corporation? How does the slit going forward?

14:35

And if I wanted to pick up more

14:37

Other, if you think that's an ideal, say

14:39

what do I need to be looking for?

14:41

Where would you want to pick up some

14:43

more? As a grown now trading a twenty

14:46

two dollars and fifteen cents, we appreciate your

14:48

advice. Beloved show and I'll Alison freelancer. Thank

14:50

you. Are looking

14:52

at Ryerson Holdings and it is a

14:54

small cap, namely seven or sixty five

14:57

million dollar market cap. The process distributes

14:59

industrial medals in the United States, Canada,

15:01

Mexico, and China. Amaze you with his

15:03

name is that it's earnings all over

15:06

the place. They. Lost my during cove

15:08

without was expected, but even before then. They.

15:11

Their earnings were were up and down the

15:13

me ten dollars and fifty four cents and

15:15

twenty twenty two. So Toby Daphne benefits them.

15:17

but this your earnings are set to be

15:20

all the way down to only ninety nine

15:22

cents per share. That back up the year

15:24

after So. They'll. I don't

15:26

love that. Return equity right now is

15:28

twenty percent but a longer term. It's

15:30

just it's just too volatile It was

15:32

I didn't have returned at would Eat

15:34

before turning eighteen. So ah the technology.

15:36

Very poor. I don't like the consistency

15:38

of earnings are in the have a

15:40

decent my gender balance sheet so I

15:42

would you sell it out. Move on.

15:44

Not a name that I would want

15:46

in my portfolio. They're moving into

15:49

a short break of I. Phone lines

15:51

are open waiting for your calls At

15:53

Aged Ninety Nine Shirt. I

16:06

never. You need unbiased, invest

16:08

in guidance because you can

16:10

help you achieve financial freedom.

16:12

Well you've come to the

16:14

right place investors and Just

16:16

Incline is here now taking

16:18

your calls. Live! So step

16:21

up with your questions. Eight

16:23

Eight Eight Ninety Nine Chart.

16:27

Their main focus point is about

16:29

the opportunities in the stock market.

16:31

After a rough month of April

16:33

now, we bounced. In the

16:35

first week of May by

16:37

April saw a route a

16:39

broad base retreat in markets.

16:41

The. Broad. Mornings or Us

16:43

Market Index was down four point three percent.

16:46

And. May. Hear this

16:48

a lot that the markets is over

16:51

valued. I don't want to get in.

16:53

it's too expensive, the markets overvalued, but

16:55

if you actually run the numbers, The

16:58

Market. Is neither expensive

17:00

nor undervalue. It's about fairly valued,

17:02

especially after this recent that's. But.

17:05

There. Is a wide

17:08

difference between different segments of

17:10

the overall market. Now.

17:13

The growth category. Fell. The most

17:15

in April down nearly six percent. Values.

17:18

Down about four point four percent.

17:21

And large gaps fell three

17:23

point nine percent whereas markets

17:25

fell six point five percent.

17:30

And what's for pretty clear is that. Where.

17:32

There is volatility. The. Grocery,

17:34

The Market. Government of

17:36

for because that's where most of

17:38

the or valuation isn't markets in

17:40

fact devalue category in general. Trait.

17:43

That about and nine percent discount to

17:45

fair value. And

17:48

small caps have the deepest discount. Of

17:51

all the. Market.

17:53

Cap sectors subsectors the market.

17:57

On average, most small caps trade

17:59

about. Twenty percent discount to their

18:01

true value. Large gaps are the

18:03

ones are. Pretty. Much near their

18:05

fair value. So. If you're talking about.

18:08

Opportunity sets in the market

18:10

place. It's mainly in companies that

18:13

you probably don't know much about a

18:15

haven't heard of. Make.

18:17

Apps. Penetrated. About

18:19

percent discount. Gonna

18:24

sector basis. there were some our

18:26

performers in some underperformers. the worst

18:28

sectors. In April were

18:30

tech. Health. Care. And.

18:32

Real thick. And there's

18:34

one main reason for. All. Three

18:36

being in the the worst category were

18:38

higher interest rates. We. Know that.

18:41

Real. Say tend to be in St

18:43

Sensitive and he's only saw gotta pull back

18:46

in that, especially those names that are. Exposed

18:49

to office real state. But.

18:52

There. Were some babies done out

18:54

with the bathwater? Think of

18:56

more resilience, defensive sectors of

18:58

the real estate space. Like.

19:00

Health Care to put that least, providers,

19:03

etc. though it's worth. The. Undervaluation

19:05

tends to concentrate. Or

19:08

intact. Obviously there's. Many.

19:10

Large cap names that are

19:12

that are overvalued, but some

19:14

smaller midcap name's certainly. Became

19:17

more attractive, In. Healthcare space.

19:20

That. Is also. Subject.

19:22

To higher interest rates, lot of those

19:24

companies are highly leveraged or and they

19:26

paid good dividends and therefore they are

19:28

bond proxies Just like real, it tends

19:30

to be. Okay cell. Technology

19:34

Those tend to suffer during

19:36

high streets because of. The.

19:39

Farther. Away nature of

19:41

their cashless, right? Lot of them thought about

19:43

the growth in there are Making Money My

19:45

or much money right now, but he, ah,

19:47

five, ten, fifteen years now they're expected or

19:50

and lot more. And so that's why they

19:52

kind of had that setbacks. Health: Those are

19:54

the sectors that underperformed in April, and I

19:56

think most of those still remain relatively unattractive.

19:59

Other some subset. Like I said

20:01

of real estate that do look attractive now what

20:04

did well in April? Utilities they

20:06

actually fell only actually they were

20:08

up 1.7%

20:10

energy also did well that was down less

20:12

than 1% and

20:14

consumer defensive was down 1.3%

20:16

now Utilities they

20:19

were all very attractive back in

20:21

October when it rates are very

20:23

high Now

20:25

they're about fairly valued so not a

20:27

whole lot of opportunity there But you

20:30

know I think there's still some

20:32

parts of the utility market that

20:34

remain relatively attractive especially those utilities

20:37

that are Concentrated in areas where

20:39

there's a lot of rising demand

20:41

for electricity. I think of the

20:44

smile sectors

20:46

or smile states of the United States

20:48

where There are a lot

20:50

of data centers for AI being built Etc.

20:52

I think there's some some opportunity there in

20:55

the energy space That broadly

20:58

trades at a decent discount although because of

21:00

the our performance recently It's not as big

21:02

of a discount as you saw back in

21:04

the fall But still a lot of opportunity

21:07

within that space consumer defensive it's kind

21:09

of a mixed bag things are improving

21:11

a bit better in that sector

21:13

as a whole mainly because of Ebing

21:17

inflation we talked before how consumer

21:19

defensive generally an inflationary environment It

21:22

doesn't do very well because those

21:24

costs of doing business Are

21:27

difficult to pass on to the consumer higher

21:30

transportation costs for getting products

21:32

to market? You know

21:34

to the stores as well as

21:36

paying employees, etc All those inflationary

21:38

pressures tend to weigh on profit

21:40

margins in the consumer defensive sector

21:42

think of packaged food companies grocery

21:44

stores Etc. Still

21:46

some opportunity there, but generally not

21:49

a place you want to be

21:51

overweight Overall and

21:54

then What is the sector at

21:56

the biggest discount? That would be basic materials.

21:58

Think of gold miners. I'm.

22:00

A goal crop chemical producer's fertilizer

22:03

companies those tend to do are

22:05

are are are the most undervalued

22:07

in the market, right? Self.

22:10

That's a broad overview of where we're

22:12

at as we. Will. Embark through

22:14

through this month of May where the

22:16

tends to be some market volatility a

22:18

sound mango way that I think that's.

22:21

Bad. Things a little overblown or depends

22:23

on the year depends on the

22:25

the earnings trains and generally we

22:28

talked about earnings x earnings trend.

22:30

So far for first quarter or

22:32

pretty good are being executions about

22:34

eighty percent. So higher than average

22:36

or in self. Those

22:38

that say i don't have money in the

22:40

market is too expensive. You're really not paying

22:43

attention to the facts on the ground. Facts

22:45

are that things are t cheap or expensive,

22:47

but it's certainly more of a stock pickers

22:50

market. If you do the work, you can

22:52

find some great value in this market. There.

22:54

Were hanging to a break. I'm ready

22:57

to your calls. And eighty to ninety nine? Sure!

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25:01

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25:03

Eight Eight Eight Ninety Nine

25:06

Chart. On

25:10

next invest.will look into this question is

25:13

a I a bit overhyped in the

25:15

short term. One billionaire investor a/his big

25:17

bet. On. A chip maker that was

25:19

one of the best reformers last year. When.

25:22

It was up two hundred and thirty eight

25:24

percent. Will dig minutes story tomorrow, but for

25:26

now let's play. Another lesser question came in.

25:28

From. Atlanta, A cast

25:31

stress or Atlanta. Sports. It's

25:33

primarily electric towards just set

25:36

up the steps. Still

25:38

a d. You know

25:40

manifests I did have was.

25:44

Divorced. Pretzels,

25:47

It by right now with the

25:49

higher interest rates of the topics.

25:52

Ranging. And wait for interest rates

25:54

drop. I'm at a better

25:56

time I I. mortgage the

26:00

same grade as my rentals. Just

26:03

trying to figure out what's the best way to manage

26:05

the situation right now. You know, I'd want to look

26:07

at it from a independent point

26:09

of view, see what your take was

26:11

on how you would address a

26:13

situation like this right now with the given

26:15

mortgage rates. Look forward to hearing the

26:18

answers. Thank you. Well

26:20

to your point where you started

26:22

which was that your personal residence

26:25

shouldn't be thought of

26:27

at least primarily as an

26:29

investment. Secondarily maybe,

26:32

you know, there's some factors to consider there

26:34

but mostly it's the utility of the home. Comfort,

26:39

reliability of you know that home,

26:42

the amenities, location

26:44

and just how happy living in

26:47

that home makes you. And

26:49

that's what's most important because you

26:52

know you could live in a home for a decade but if

26:55

you hated it the entire time you

26:57

just gave up an entire decade of your

26:59

happiness just to you know maybe make a

27:01

few dollars. Not worth it, right?

27:04

So you want to think of

27:06

your home as its primary purpose which

27:08

is utility. Now when

27:11

you're thinking about buying versus renting,

27:16

if you're going to buy and you think there's this kind

27:18

of rental parity that's kind of what it sounded like that

27:20

the cost to buy and get a

27:23

mortgage and pay that mortgage and all

27:25

the other costs that go with owning

27:27

that home. Think of homeowners insurance,

27:31

property taxes, maintenance,

27:33

etc. You have to look at that

27:35

all in and not just the mortgage and

27:37

then compare it to a rental. And

27:40

if that's on par then it

27:42

comes down to okay do you want

27:44

to be in this area for an extended period of

27:46

time? You know if you go rent

27:48

somewhere after a year you don't like

27:50

that area you don't like you're not

27:52

happy there you go move very easily. If

27:55

you own a home you know you have to go sell

27:57

it and market it and it can be more of a

27:59

challenge. to sell

28:02

it and you may be up or down depending on

28:04

kind of the market environment since when you when you

28:06

bought that home. So

28:08

what I say is if you're going to buy the home

28:12

you have to be very sure that you like

28:14

that neighborhood that you like that area that

28:16

you like the amenities that you're going to be happy

28:18

in this home you have to that's to check all

28:20

the boxes otherwise it's better

28:22

to be a bit more patient and

28:25

wait for the one that does right

28:27

why commit to something you're half in

28:29

on when you can rent for another

28:31

year and maybe find the one that

28:33

you're fully in on you love living

28:35

here that's exactly what you need and

28:39

either way your cost of living is sounds

28:41

like the same and

28:44

then so that there's the upside of

28:46

yeah if it's do pull back you

28:48

could refinance and and lower that that

28:50

overall cost so that's

28:53

the way you want think about it don't

28:55

don't tie yourself to a piece of real estate

28:57

that you aren't really

28:59

head over heels for in

29:01

this market environment now generally I think because

29:04

of inflation housing

29:06

prices are in most markets going to

29:08

go up now there are certain pockets

29:10

think of Austin Texas the Bay Area

29:13

in California there's some broader trends that

29:15

are gonna weigh on prices I think

29:17

for an extended period of time so

29:20

those markets you want to be even

29:22

more cautious but in general

29:24

you just want all your boxes to

29:27

be checked in and there's

29:29

no reason compromise when you're committing you know

29:31

basically hundreds of thousands of dollars

29:34

and maybe more of your capital in

29:36

order to live in a certain thanks

29:39

to the call now

29:41

let's pivot over to the

29:43

latest bank survey

29:45

the Fed survey and

29:48

it's the senior loan

29:50

officers survey and I

29:53

talk to the top of the show how this

29:55

is a very important under covered

29:58

report It's

30:01

kind of crazy to me that mainstream,

30:03

you know, CNBCs of the world haven't

30:05

really caught on that this is

30:08

one of the most important reports that

30:12

come out every quarter because

30:15

it has such a large impact on

30:19

credit availability and just

30:22

the general credit channels. And

30:25

that's really what monetary policy is made to do. We

30:27

raise or lower interest rates in order to make

30:30

those credit channels tighter or

30:32

looser. And

30:35

the senior loan officer survey is answering

30:39

the question, does that work or is that

30:41

working? And the simple answer in

30:43

the first quarter was, yeah, it's

30:45

working pretty good. And

30:48

that ultimately, frankly, is going to be

30:50

a drag on the

30:52

economy. Now, was it major? No.

30:55

There was a minor

30:57

weakness in demand

30:59

for many things like

31:01

industrial loans and

31:04

consumer loans. And there

31:06

was a slight decline in household demand

31:08

for credit as well. Now

31:12

there was growth in places like commercial

31:15

real estate where some

31:17

banks loosened their

31:19

credit standards. And that's what this is

31:22

all about. Are banks tightening or loosening

31:24

their credit standards for various types of

31:26

loans? And then what is the demand for

31:28

those loans? So

31:30

in the commercial real estate market, both there was

31:33

higher demand. We talked about

31:35

refinancing commercial real estate, for example.

31:38

And after a couple of years of

31:40

just consistently tightening lending standards in that

31:42

space, banks are starting to

31:44

loosen those standards. So

31:48

that's a positive for that part of

31:50

the market. Now the net share of

31:52

large and medium-sized banks reporting tightening standards

31:54

for commercial and industrial loans. This

31:57

is basically the vast majority

31:59

of... business loans that are out there. And

32:03

that ticked out from 14.5

32:06

to 15.6, meaning slightly

32:08

more banks are tightening their

32:11

lending standards. And they

32:13

also showed a weaker

32:15

demand for CNI loans. So what they're

32:17

saying is banks are being

32:20

a little, are scrutinizing

32:22

applications for these type of loans a little bit more, and

32:26

that the demand due to higher rates

32:28

for businesses to go out there and

32:30

borrow to expand their

32:32

businesses, expand what

32:35

they're doing, dropped

32:37

a little bit because of those higher rates. So

32:41

that was something of note. On the household

32:43

level, a rising share of banks

32:45

reporting tightening standards for things like auto loans.

32:50

But they expanded or they shrink

32:52

the number of standards

32:56

for things like credit cards and consumer

32:58

loans. So they're lending more in the

33:00

credit card and consumer loan space, but

33:02

less in the auto loan space because

33:05

clearly the price of used cars going

33:07

down. And that

33:10

ultimately means

33:13

that the collateral is not as

33:15

strong. And they probably have a lot of auto loans

33:17

on their balance sheet, and they don't want to get

33:20

more exposure to that because that

33:22

was an area of loan growth for many

33:24

years post the pandemic. Now, the

33:27

demand deteriorated across

33:29

almost all categories, the survey said. So

33:32

it just shows you the average household,

33:34

they're kind of scared off from these higher rates. So

33:37

once again, those higher rates are having an impact

33:39

on and demand. The weakest auto

33:43

loans, weakest in a year. So

33:46

it just shows you this is why the

33:48

Tesla's of the world and many of the

33:50

auto companies are not doing so hot right

33:52

now because the

33:55

consumer, they don't feel the need after

33:58

really reaching to buy a lot of money. of cars

34:00

over the last couple of years trying to get

34:02

their hands on you know one they liked they're

34:05

kind of pulling back and so that

34:08

was the last main

34:11

takeaway from this report and it's always important

34:13

to follow this and look at it's a

34:15

quarterly report so it is a bit backwards

34:17

looking we're looking at the first quarter but

34:19

ultimately that does tend to trickle

34:22

into the requisite quarters and

34:24

allow you to get a real

34:26

sense of what's happening in the

34:28

broader lending market. Now

34:31

let's pivot to a YouTube channel question but

34:33

or we will pivot to a YouTube channel

34:35

question but first let's tackle another caller question

34:37

from 88899chart. Hello

34:40

Investalk I would like to know your

34:42

opinion about revolution medicines

34:44

ticker symbol R as in

34:47

Romeo, V as in Victor,

34:49

M as in medicine and D

34:51

as in Delta. This company is

34:54

not really making money but is

34:56

growing like crazy on expectations of

35:00

a new drug for cancer. I wanted

35:02

to get in there but then I

35:04

look at the balance sheets and I

35:06

see only losses let

35:08

me know what you think if this

35:11

price above 40 makes sense or

35:14

do you see something else thank

35:16

you by the way leaving a voice

35:18

message and hearing the answer is it's

35:21

a great idea of yours it's a very

35:23

nice feature thank you. Well

35:26

thank you for that we've been doing that for nearly

35:30

two decades now crazy but

35:32

thank you for the call looking

35:34

at revolution medicines it's a clinical

35:37

stage precision oncology company focused

35:40

on developing novel targeted therapies

35:42

to inhibit elusive frontier targeted

35:44

targets within notorious growth and

35:46

survival pathways and

35:49

basically what that means is it's

35:51

your typical biotech name that

35:54

is promising that they have the

35:56

cure for many

35:58

types of cancers and historically,

36:01

have we cured cancer? We

36:04

have not. And so, is this

36:06

the one that does it? Hopefully, I pray

36:09

that it does, right? When nobody likes cancer,

36:11

we all want cancer to be eradicated.

36:15

It's a terrible thing. But

36:19

are you going to bet on that? Is this the name? I

36:22

don't know enough about these

36:24

particular drugs, but as

36:26

you said with their balance sheet, this

36:28

is a company that really

36:30

doesn't have any revenue. Earnings

36:33

for this year and next year continue

36:35

to be deeply negative. And

36:37

all they're going to do is continue

36:40

to issue more shares and dilute

36:42

you, the shareholder. And

36:44

then there'll be some sort of announcements about

36:47

the clinical trial. And it fails,

36:50

and the stock drops 50%. That's

36:53

what happens, typically. And then

36:56

it meanders for a while. You get another clinical

36:58

trial, and maybe things look a bit better, and

37:00

it might rally. But

37:04

in general, long term, it tends

37:06

to just eat shareholder

37:09

capital. And this went

37:11

public in 2020. Now,

37:13

it is up from its IPO price. That's

37:15

interesting. That's good. But

37:18

you have to have a lot of faith in

37:20

their particular drug or

37:23

drugs. Frankly, I

37:26

don't know that. I haven't done the deeper research. But

37:29

based on history of

37:31

biotechs and the massive

37:33

cash flow hemorrhaging that

37:35

this company does on a yearly

37:37

basis, negative 358 million trailing

37:39

12 months free cash flow on

37:42

a $6 billion market cap. Now, they have a good

37:45

amount of cash from all the shares they've issued throughout

37:48

the years. So that's good. They

37:51

have some runway here. But you really

37:53

have a lot of faith in these new drugs.

37:55

But that's something I would jump on. There's

37:58

another question from our. Best Talk

38:00

YouTube channel user M8 says

38:08

looks like an interesting play. PLAB

38:10

is the symbol. This

38:13

is a name that's in a

38:15

pretty nice uptrend. It's been consolidating

38:17

after I'm assuming

38:19

a good earnings report back in December

38:21

and it's been consolidating between 25 and called

38:25

$32 per share ever since.

38:28

And for everyone else out

38:30

there they manufacture photo masks using

38:32

the fabrication of semiconductors, microelectronics, and

38:35

flat panel displays. Phototronics is the

38:37

name. What I

38:39

like is that earnings generally

38:41

consistently rise. I love

38:44

that. I love that. Although

38:46

revenue growth is slowing of only 2% last

38:49

quarter a year ago that was in the

38:52

high teens. Earnings

38:54

growth last quarter up 20%, no dividend here

38:56

about a 1.8 billion dollar market

38:58

cap. But

39:01

once again I like that trend

39:03

of consolidation. Let's go look

39:05

at its balance sheet real quick to

39:08

see what type of debt it might

39:10

have. Net cash on its balance sheet. So I like

39:12

that. Free cash flow 172 million. I like that. Returned

39:16

equity 11%. Not amazing.

39:18

Let's see the history of return equity. Kind

39:20

of mid single digits. Not that

39:23

exciting. But

39:25

I like the fact that they have pretty good

39:27

free cash flow yield. About 10% free

39:29

cash flow yield. That's good. They've

39:32

been buying back shares basically since

39:34

2018. So that's a positive that

39:36

they're taking

39:38

that excess cash and generally buying back

39:41

shares over the last five years or

39:43

so. So that's good. I'm turning

39:45

it, sorry, enterprise value even around four and a

39:47

half so it's relatively cheap. I'm

39:49

gonna give this one a little

39:51

bit of thumbs up. Mainly I like the

39:54

consistent growth of that earnings and

39:56

its cash flow. Free cash flow like I said 172 million. And

40:01

that has been trending higher basically since 2020.

40:03

So I'm going to give

40:05

Helab a thumbs up. It's a neutral,

40:07

really neutral, slightly bullish on the chart.

40:09

And I like the fundamentals over

40:12

all. Thanks for the call. Now

40:15

after the break, I'm going to touch

40:17

on IPOs. What to look for when

40:20

a company goes public? Do you jump

40:22

in the first day? Or is

40:25

there a pattern to the

40:27

price that will, give

40:30

you a inclination that, hey, things are headed

40:32

in the right direction? Or could it be

40:34

one of those clunkers that they drop 70,

40:36

80, 90% from their IPO price? So

40:41

we're going to dig into that on

40:44

the other side of our final break. So if you

40:46

have a question, I encourage you to give us a

40:48

call live at 888-99-chart. Justin

41:02

Klein is here and ready to tackle

41:04

your questions. Curious if

41:06

you think it'd be better for me to let

41:08

it go and spend money elsewhere. Well,

41:10

first off, never take one man's

41:13

opinion as possible, including my own.

41:15

Investalk is ready 24 seven. When

41:18

you give a recommendation on your show

41:20

for a buy-in, like an entry point

41:22

to buy a stock, if I

41:24

already own it, should I go

41:26

ahead and be looking to sell

41:28

it? Don't forget to call. Investalk

41:30

888-99-chart. No

41:44

two portfolios are alike and every

41:46

investor has a unique set of

41:49

circumstances. So don't forget

41:51

to call Investalk 888-99-chart. Hi,

41:56

this is Brett from New Jersey. I just wanna thank you guys

41:58

for all that you do also. my best

42:00

wish Steve, hope he's back soon. I

42:03

was hoping you could take a

42:05

look at enter plus corporation PRF.

42:07

I know they're being acquired by cord energy.

42:10

I looked at cord

42:12

energy chart looks good on the

42:14

constant trend upward. Could you take

42:16

a look at the deal and

42:18

also cord energy for me? Thank

42:20

you very much. Bye bye. Alright

42:24

looking at cord energy and enter plus, enter

42:26

plus is the name that we own for

42:28

clients and they got bought out and it's

42:30

a stock and cash deal

42:32

at a roughly 11 billion dollars.

42:34

So it's a close sometime in

42:37

Q2 or a month in a

42:39

week into Q2. So your

42:41

looks like, see I try to remember the terms

42:43

the under deal each common share of enter plus

42:45

will be exchanged for 0.1 shares of cord common

42:49

stock and $1.84 per share in cash. So it's

42:52

basically 90% stock, 10% cash

42:56

and that's why if you

42:58

own enter plus you see the chart of

43:00

enter plus it's been highly correlated with

43:03

cord energy. Now

43:05

the generally

43:08

like the consolidation so cord energy so it's earned $20 per share

43:10

this year and $21 next

43:15

year it's even after this acquisition on a $178

43:18

stock. Talking about a 9

43:22

times for looking earnings pretty

43:24

solid 2.8% dividend yield and

43:28

generally like it. You know

43:30

we like enter plus obviously cord

43:33

is really not that much larger 4 billion

43:36

market cap for enter plus 7.8 for

43:38

cord. So certainly this will

43:40

excuse making the right move so

43:43

I have no problem buying cord

43:45

but you know you can also own

43:47

enter plus get some cash as well as cord shares.

43:50

Thanks for the call. Now lastly

43:53

we talked about the IPO market

43:55

and everyone gets enamored with IPOs

43:57

but there are some price

44:00

movements that can

44:03

tip you off to where things are going well. Now

44:05

the first way

44:07

to avoid major losses

44:10

in IPO is to chase the initial

44:12

run and if

44:15

you look at history of IPOs it's

44:20

littered with broken

44:22

companies that you

44:25

know are up big initially there's a lot of

44:27

hype around them and then the lockup

44:29

period happened six months later and

44:31

the stock gets steadily sold and

44:33

you know two three

44:36

years post it's down 70-90% because

44:39

it went public at way too

44:41

high valuation the owners

44:44

of the company many times will kind

44:46

of juice the business and kind of pull

44:48

some levers to make everything look better than

44:50

it really is in the

44:52

near term to create an exciting uh

44:56

environments around those shares so that they can sell

44:59

it at a high price and that makes sense

45:05

but there are other names that you know

45:07

they might do okay the first couple of

45:10

days and then maybe the stock meanders for

45:12

a while few

45:16

weeks few months but

45:18

it doesn't go down a lot and

45:20

then it slowly starts to

45:22

rise back to

45:25

its all-time high and

45:27

those are actually the ones that you

45:29

want to be buying the ones that

45:31

have modest dips you know

45:34

20-30% let's call it 10 to 20%

45:36

from that initial high and

45:42

consolidates that and really

45:45

brings in consistent buyers proves their

45:47

worth and is Millie's

45:51

meeting and maybe beating expectations

45:53

a little bit so

45:58

for example stock went public at 20% 20,

46:00

first few days went up to 30, and

46:02

then it declined back into the low 20

46:05

range and sits

46:07

there for a while. Well, when it

46:09

starts to break out again above 30,

46:11

that's saying that it's proven itself. It's

46:15

worked through a lot of the maybe

46:18

overvaluation, it's worked through

46:22

the hype, and it's

46:25

creating some level of consistency

46:28

to the business. Investors are

46:30

truly buying it, not just

46:32

on the initial offering, but after

46:35

as well. When you're

46:37

looking at IPOs, you probably

46:39

should watch them for a little while to

46:41

see if they can find some level of

46:43

stability, and then you can

46:46

buy in. But buying right away is

46:48

typically a fool's error. Thanks

46:51

for the call. Thanks for

46:53

the show. I'm Justin Klein. This is another

46:55

Invest Talk program. We thank you for listening. We

46:57

encourage you to tell your friends and family about

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of course, you can catch our

47:07

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47:10

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47:12

Talk with two Ts. Independent

47:14

thinking, shared success. This is Invest Talk.

47:17

Good night. Invest Talk

47:19

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47:24

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it's important for the listener to understand

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48:04

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