Stock Investing Live Stream August 29th - Stocks reviewed NVDA, AL, DG, AMD, HRUS, HRB

good morning all right it is 900 a.m. eastern it's time to have a cup of coffee it's time to take a look at the stock market and see what's going on we have had a pretty active week and we've had uh mostly down sessions we had a pretty good down session yesterday I think there was a lot of nervousness in the stock market and as a result we are faced with a pretty much a 1.7% drop on the NASDAQ which is going to be a hard to overcome for the week my portfolio is sitting slightly in the green for the month and we've got two days left in the month today and tomorrow so if the stock market can be even or even go up a little bit I'll be all right with that and it looks like the Dow Dow stocks there's 30 of them big companies that include Microsoft Chevron 3M companies like that it is picking itself off the mat we had economic reports this morning already and those economic reports I'm going to go over in a minute but the Dow is trying to get into the green it's up 63% in premarket trading so that looks good the S&P is up 03 I'll take that NASDAQ is up 31 I'll take that I'm gonna look at some stocks that live in the NASDAQ I'm gonna look at Nvidia again I'm gonna look at crowd strike I'm gon look at CRM and I'm G look at hpq viewer requests are welcome is there a stock that you want to look at is there a stock that you want to take a look at the financials crack them open and see what's inside unassembled the Lego pieces of these companies to see if they're a good company to invest in and make a lot of money over a long haul I'm a a longterm investor I'm okay with making profits in the near term but really my whole philosophy is buying great companies watching them rise making a lot of money over time I also buy small companies that have a bright future potentially a very bright future and really get wifall gains and appreciation over time I'm not a Trader I'm not a day trader uh that's just not the lane that I pick I pick long-term trading investing and that's really worked for me so it's worked for me year after year it is nice to have a long-term Vision because we have uh let's say I wanted to take a a weekl long vacation two weeks maybe three my portfolio is going to be fine without me touching it it's going to be just fine I made decisions five years ago I'm making money on today I made decisions four years ago that I'm making money on today and so forth and so on so that's one of the reasons why I like long-term investing is I could uh I could take a week off when I want I could take some time off I know day trading could be uh a little laborious but I'm not going to take any way anything away from day Traders they've got their Lane I've got mine we can coexist and both make lots of money all right so stock market's trying to go in the green we've seen what the NASDAQ has done for the week so there was some news from E economic perspective it's just I like to see the big picture of what's going on with the economy what's going on with the stock market which would affect stock prices so um GDP gross domestic product it is a broad measure it's an economic term if you went to college and were in a business program or economics major you understand what gross domestic product is it's a full measure of the country's output and it grew 3% which is a little higher than what uh investors thought and I would make this a little bigger because right now it's kind of a night chart so I apologize for that um but back to GDP so GDP came in at 3% we were expecting 2.8% 3% is a very good growth for the United States China grows faster because they're building their economy building their country and so forth but 3% is very good so that's kind of good news for the economy I don't see a recession you know getting from 3% to a recession in my opinion it's going to take two three quarters to get there so 2024 I think is in the clear from any threat of recession we may see something in 2025 but we're in the clear now the other important piece of information was jobless claims unemployment jobless claim claims came in at 231 which is slightly below what was expected this is not very high so that's good because jobless claims were on the rise and those could moris you know uh create recession and really they are a barometer for the economy if people don't have jobs or they fear that they're going to lose their job people stop spending money for a good reason so jobless claims came in a little lower and that's you know I think the economic news was quite good the Federal Reserve is expected to lower interest rates in September and they're probably going to lower them by like 0.25 or 25 basis points as you might here and that's just a signal that hey we're we're going to begin to uh lower interest rates over time just to make sure that we don't see a really bad recession um or if these job losses continue the Federal Reserve has two mandates keep inflation down keep people employed so they don't want unemployment to go up too fast looks like boss hos is in hello sir Al stock let's put that one on the list check it out and we will do so thank you for joining all viewers you want to check out of stock let me know let me know in the comments we'll check it out see what's what's going on with that company all right so that's the economic information the economic information drives interest rates and this is a Stock Investing Channel but these variables are important it's almost like hey I'm going to drive from LA to San Francisco got to check the weather man if it's pouring rain you might want to you might want to you know think about your route and so forth and interest rates really affect stock prices interest rates affect the discount rate that we used to Discount free cash flows to Discount earnings per share uh the overall frankly if in the 80s as an example if interest rates are incredibly High bonds can outperform stocks so everybody goes to bonds that hasn't happened since the 80s but interest rates rise it does have an effect on stocks it's just good to know now this rise in interest rates causes bonds to be more attractive to be a more attractive investment I buy bonds I like to cover my living expenses for five years and take them off the table so I have a bond ladder I'm not going to talk about my bond ladder much there's a YouTube channel uh there's a YouTube video on my channel you can check out Bond ladders if you like and I'm probably going to look at buying a little bit in my bond portfolio today because it's a good day to buy so interest rates are up oil prices are also up but I'm not going to go further on that okay so sectors yesterday was a red day technology did the worst and discretionary did second worst uh financials you know broke even Healthcare was close to even and Utilities close to even but utilities I don't invest in them I mean fiveyear change you would make 21% appreciation no thank you rather stay in cash Industrials did okay so this is what happened yesterday we'll see what happens today we'll see how things uh play out uh as we approach the market all right so boss H wants to talk little Al air lease okay air lease I think these guys are materials no aircraft Leasing Company engages in the purchase of leasing of commercial jet aircraft to Airlines worldwide you know this is probably a really good business right now travel is at record levels alltime records just they're filling planes and they can't get enough planes Boeing has had manufacturing issues but this this could be a really nice play very good suggestion I hadn't thought of this now as we approach 2025 right I I tend to think again long term and and I want ideas that are going to work in 2025 I like making decisions today that are going to make me a lot of money next year 2026 2027 2028 and so forth and when you find a really good idea that does that for five years Bingo it's like great um so air lease it's a $5 billion market cap company Revenue is 5 excuse me 2.7 it's early folks it's uh 6:10 a.m. Pacific here I'm in California these guys are profitable okay man look at this PE ratio compared to Nvidia that looks really attractive that looks really attractive compared to anybody all right that's good so what's going on with their the growth I see green on the screen people green on the screen that looks good take a peek at the quarterly most recent quarter a slight decline in Revenue okay so that's interesting all right so I like the revenue growth I like the I like the industry so one thing that I I I cover this is my desirability quadrant right so we're looking at U A Le Corporation and this is important for me to communicate just so that you understand how my my logic works as I look at a stock and when I look at a stock I look at okay is this company incredibly desirable do they have a really strong barrier to keep competitors out they're almost a monopoly they're like hey here's an example they're like Nvidia with gpus they're the best nobody even comes close so they get to raise their prices they get to raise their revenue they get to make profits and so forth that's an example of very desirable company and the market really responds and values those companies at very high market caps okay you look at the top 10 market cap companies on the stock market they would all be in the green the worst companies are down here that have too much competition we're talking retailers discount retailers we're talking you know restaurants we're talking you know businesses that you know very little C very little profit very little cash flow they're just constantly needing Capital competition everywhere at every corner there's a competitor that's coming coming to take your customer and then there's industries that are you know more in the gray meaning you know they've been around for a while but good companies operate quite well in those Industries an example might be like a 3M 3M is a very well operated company they have good ideas they have good patents but most of their stuff is is I think there's competitive products out in the marketplace but it's a well-run company so that's investable if I get a good discount I see a company with momentum very well operated I'm good to go in the gray but my desire is to find companies in the green a Le I like where they're at I like financial services and I like that they're focused on aircraft okay that's a good idea and I would put them kind of like here like mostly in the gray but hey they got some differentiation they make themselves different they have focus and specialization in leasing aircraft they probably have long-term agreements the airlines are prob very comfortable doing business with them so that's where I would put air lease that's way my mind thinks now based on that I'm going to treat air lease like a company in the gray that has a little bit in the green as I look at their fundamentals all right so they're they're experiencing good Revenue growth balance sheet make sure we don't have too much debt they have 454 million of cash and total debt is almost 20 billion okay okay okay that's that's a little high so 20 billion let's start ibida now I may give him a pass if everything else is okay but iida is not available that's weird why is it not available there um so that's the income statement so EB should be down here so e this is ebit and then depreciation and amortization isn't there but I'm going to safely guesstimate that this is probably five five times debt to iida which is kind of a a violation of my three three times debt to iida now the reason I'm like might be okay with it is they're a leasing company they have to work with that okay so let's put that aside for a minute and look at their cash flow all right you're making some cash okay operating cash flow looks good but we want free cash flow so what's going on okay I think because they're probably so they're a leasing company they're putting a lot of capital into their aircraft but the thing about it is they've been putting a lot of money into their aircraft for the last five full years so this is this is one of the things that I don't like about utility companies is um they operate they have operating cash flow and then they have all this capex and to me capex is like you have to rebuild the business in the case of these guys right AAS they're a $5 billion doll company five billion doll market cap company and each year they have to put more than half of that back into C the the business in the form of capital so these guys don't even produce free cash flow so that is a deal breaker for me this would not be a business that I want to invest in that's just too much capex capex goes on your balance sheet and if we look at their balance sheet it's probably going to have some some long-term assets and so we have so why isn't their asset okay here it is other long-term assets that's those are all their aircraft so they're putting a lot of that capex back in here because if they recondition an aircraft okay great it's a it's a more valuable asset but my big uh concern is it's not like you had to do it once then it goes away okay I'm cool with that I'm cool with that you you know you had to recondition an airplane that's fine but it is really the theme for the last five years it's not going away so having said that this is a pass for me I would not look at this further it's just um not a it's not a company that's going to be worth a ton more uh over time so hopefully you found my comments interesting hopefully they're they're helpful to you Trader prad what's up man happy this is isn't this uh Nvidia day this is like uh the day after so so um yesterday was awesome today we're going to see if Nvidia Rises From the Ashes like the Phoenix in the great state of Arizona rising from the desert and showing itself what's up Trader prad hey I gotta start joining your live stream sir and I got to start learning some of your techniques just to know just to learn you might give me a little more of an advantage and I'm always looking for that so well I'm a day trader sweet man I'd love to see what you're going to do with Nvidia when's your next live stream I'll tune in I I want to hear that I want to hear what you're doing how you're doing it why you do it sweet yeah let me know let me know when I can join your stream uh I'd be very interested in that so all right so we talked about air lease let's talk about Nvidia the stock was down quite a bit more last night 2.99% 3% let's call it three now they are catching a break because the markets are trading higher which is good I think if if it was just bad news like hey the economy is bad all kinds of bad stuff um I think you would have seen the stock probably sell off a little worse but let's take a look so I've done quite a bit of analysis on Nvidia in the last 24 hours I actually uh updated my model and I'm going to show that to you in a minute um so so without a doubt you know Nvidia is a great company and just their valuation is you know great times three that's the problem is their valuation has detached itself from fundamentals right um you know so my investing idea and opportunity is investors have gotten carried away with Nvidia they've really uh rung up the price to a high level and I've shorted the stock right now I'm still in the negative I think I'm negative at this price I'm probably negative by 5% 4% but the story is intact and I've been shorting the stock for three months I think the story um is intact which is investors are now worried okay and I'm going to show you where I think the forecast of their revenue is going to be and what's going to happen to the rest of the fundamentals the thing that's really fueling the Nvidia craze is the the established investing Community like these guys here right have referred trust and you have all these you know hedge fund man managers and people that could barely spell AI talk about AI like they got a PhD in AI oh man it's going to change this it's gonna do that and frankly I don't have a PhD in AI I've worked in technology but I'm not going to claim to be an expert but it just is almost like everybody's beating the same drum on Nvidia oh it's gonna change the world it's gonna do all these awesome things and I to I'm I'm here to say that it might it's really interesting AI is really interesting it's just is not going to change the world in 2024 or 2025 it's going to take a while the internet took a long time these big massive changes to the way we do things they take a long time the winners and losers are not identified yet and I'm not talking about Nvidia Nvidia builds the infrastructure okay they're almost like the the miners that came to California a long time ago 1849 um the companies that made a lot of money were the ones that sold pcks and shovels and that's an analogy that use that is used in the stock market the miners for the most part they all lost their money so all the AI companies that are trying to do AI services and products online they're struggling and I could cite many many examples so that's going to take a long time and if you don't have success where AI meets you know the user the consumer the Enterprise you don't have anything yet but when it does begin to create value you know I think it could create a lot of a lot of value so we're like 5 10 years away from it being real but the whole establishment of investing Community is really you know uh built up Nvidia that same establishment if a few of the big players start getting out of this position which a few have already it could really it's a house of cards it could really come down fast is my expectation now fundamentally they're a very sound company and I'm going to switch over to my spreadsheet because I've done some work on Nvidia and what I did is I wanted to show and I got make sure you guys could see it so here's the sales forecast and the numbers that Nvidia has put out have been incredible and I tip my hat to them it's like incredible that Nvidia is uh grown that fast because they're already a big company I think that's legible and when you're you're growing your business like in Q3 this is kind of backwards we're going oldest to new you know from right to left in Q3 of 2024 which is their fiscal 24 um it was 205% so that was three quarters ago and then it was 265 per. and they just they just closed this quarter which was their Q2 fiscal and so you see the growth rate and you're comparing to get to this number you're comparing the second quarter of 25 to the second quarter of 24 and you're comparing 30,000 compared to 13,000 now their numbers that they're going to compare to keep getting bigger and the law of big numbers makes it harder to show a really high growth rate so they already guided they told us we're probably going to come in at 32 Bill 32.5 billion of Revenue in the next quarter that's going to be announced in three months based on that guidance they're going to have 79% growth you notice how the growth rate is really coming down sequential growth is from this quarter to this quarter that is slowing down fast we went from 88 34 22 18 15 now we're down to eight my point being is the Nvidia business is beginning to flatten out and that's exactly what the market does not want if you're sitting on a $3 trillion market cap company this is what you're expecting you're going to stay there for the next couple of years you're not going to flatten out and based on what they're reporting they're going to start flattening out and you're going to clearly see it in two quarterly announcements next quarter and then the quarter after is going to be even more eye opening which is going to be their year-over-year growth is going to be 54% still very impressive but their sequential growth is really slowing down if we wake up in 2025 in Nvidia is on their annual Compares is only growing 15% is this stock really worth three trillion no it's not so having said that having created this sales forecast with their data that they reported not stuff that I'm you know p in the sky I updated my free cash flow forecast because there's another element to the semiconductor industry that doesn't get taken into account um I I read you know I'm on Reddit and there is a lot of like chatter around how Nvidia is building the AI economy and so forth and that's partially correct but mostly incorrect they provide infrastructure they provide gpus chat GPT created the code in the large language models that use that infrastructure and create the value which is you go to chat GPT and you ask it hey can you create a term paper on the war boom it cranks it out Google Gemini which is the competitor chat GPT same they use gpus along with other infrastructure but Google wrote the code so the value that's delivered to that consumer is Gemini Chachi BT meta AI infrastructure is cyclical you have a couple of really good Years everybody buys everything they need you have a flattening and usually a decline in demand stud semiconductor companies and you'll see that um so I've been investing in semiconductor companies for a while so I expect that so what I've done with my free cash flow forecast is I've given them a very generous growth rate on free cash flow 25% actually taking their first half of cash flows multiplying it times two and then I'm adding 25% so in the next 12 months I'm expecting they're going to do $71 billion of free cash flow which is a boatload of cash and then the year after that it's going to be even better 89 billion two boatloads of cash but after that hey the cyclical nature of this industry I'm expecting that that the economy companies are going to pump the breaks in 2026 2027 and Nvidia is gonna be like oh not not as much revenues coming in not as much revenue and we got competition you know the other the other semiconductor companies did not stand idle and say oh we'll just let Nvidia take all that money all that business so I'm actually seeing a decrease of 15% in years three and four and then long-term growth 4% which I'm very comfortable with so this is the cash forecast that I I continue to theorize analyze and really be comfortable around it's my cash forecast it's my money that I'm investing that's my cash forecast but I can stand behind it and reference you know their data how I got there so I'm going to discount it by 8% they have a quality balance sheet plenty of cash so when I discount all these cash FL I expect from the company all those cash flows are worth 1.4 trillion they have 34.8 billion of cash on the balance sheet and then 8.4 of debt so to me the company is worth 1.4 trillion um I did kind of a calculation of hey based on the stock price where it was at they're probably going to come down a little lower than three trillion at but let's call it three trillion in market cap so they're about 51% priced too high priced at a premium and free cash flows is is really the the standard that I I re rely on to make my investments especially on a company that's been around for a while like Nvidia you can make earnings per share look um quite close to their evaluation based on their earnings per share I use a p of 36 growth rate of 10% but this is the method that Charlie Munger the late great Charlie Munger he never used earnings for share because he thought it was BS and I see his point but I think um I use it because especially small growing companies could really put up good earnings per share and you can see their growth and I take that into account so I take this into account when I blend the two and I put more weight in the free free cash flow method it's the company's being overpriced by 36% that's my theory and I'm sticking to it I have a short position and I originally put like I was at $99,000 of uh of Capital At Risk in that short position I took some off the table yesterday and uh I'm currently I've got $7,250 at risk and if I wanted to close out the position um I would lose 1% so that's where I'm at and this short position has been around for what three months now at times most of the time I've been underwater I've been losing money at times I've been up I've been up about 10% but that really leads me to believe that hey you know what I was on to something three months ago that this thing's just overheated it's too too high and because I'm seeing that there's a lot of fear in the stock the Stock's not moving from where it's at I think there's more reasons for it to fall than for it to rise the concerns are really turning into reality and once you start seeing these numbers right when you were seeing these numbers yeah okay holy smokes we haven't seen this in another company in their space right and I'm not showing you the screen so I apologize let me do that again so when Nvidia was experiencing this sequential growth it's like whoa everybody pay attention pay attention pay attention but when they start showing this sequential growth you know you got lots of companies that are bigger that are more established to have non-cyclical businesses like Google alphabet they crush it whether you're in recession non- recession they crush it every year meta keeps growing every year they have upwards of four billion users of their platform monthly active users it's early I forgot the exact number those are businesses that are freaking powerful man Nvidia is not that type of business they design right now the best accelerated Computing gpus absolutely that's a cyclical business it's not like Microsoft it's not like uh Google alphabet it's not like Amazon Amazon we're going to buy stuff Amazon no matter what they're going to keep growing the aw best AWS business it provides infrastructure for really important companies that's going to continue uh our friends at Nvidia that's not the business they in so so that's my updated analysis on Nvidia I'll uh record a video on my channel and kind of put you know I think I was trying to cross my my teas and Dot my eyes on my whole valuation I think I've gotten it to a good place and you know uh I'll put it out there on my channel that's that's my position on Nvidia I'm going to hold my my short position on Nvidia um my intent was you know if it if it ends up being a 30% loser for me meaning the stock price rallies and I'm sitting on a 30% loss I will close it just out of discipline that you know what I was wrong I was wrong man stock market you know took me out behind the Woodshed and gave me a pretty good weopon and I'll just admit it and I'll cite it and I'll say this is this is what I saw and underestimated this and I probably got that wrong and the market charged me a good price for that lesson if it goes up 30% I'll probably close it out uh because I think most of the gain that I'm expecting would have been attained and I'm done um and I'll make a video for that too so we'll see where it goes all right Mike the dividend investor guy thank you for checking in sir I can see your message and this is one of my uh longtime viewers members of my community I really appreciate you joining Mike thank you so much thanks for uh being part of my live streams for a while appreciate it pyro good morning sir how are you so stock um ideas are welcome if you guys want to see a stock I think we we saw Al we've seen Nvidia I've got a list of like five more stocks that I'm going to keep rolling on but if you guys bring up a stock we will we take a look at it and see what's up oh you said DG am I not oh I'm sorry sorry Mike it's early in California and I haven't even finished my first cup of coffee in my defense I need coffee to get everything to full speed so I apologize I'm glad you reminded me I apologize for not seeing your message let's get to DG and then we're gonna look at AMD AMD man I have I have looked at AMD for the last 15 years so glad to do it again um all right so DG Dollar General these guys are in retail now i' I've been uh I've been doing business with Mike for a while he puts out very good comments we go back and forth on ideas so when I make these comments I'm hoping um I'm pretty sure that he's going to take him the right way because I'm just going to share how I see it and he may see it differently and frankly sometimes he's right so Dollar General is a retailer and they're in kind of a an area of the market where you're it's it's all about price you have to you have to leas out real estate you have to hire employees you have theft concerns you've got just a lot of challenges and the best I can do with Dollar General is put them in the gray and put them like a little bit toward the green 99 Cent Stores just went bankrupt and it's you know it's unfortunate I thought they were bringing a lot of value to the market but you just don't make a lot of money if you're selling a product for a very little price you just don't make a lot of money so I don't like businesses like this I just don't see myself investing in Dollar General just because you know well I wake up in five years and Dollar General is worth twice as much and heck now they're doing something that's so Innovative they really have moved themselves closer to the green no I actually would not be surprised if Dollar General starts moving and maybe I could put over here into the red like our friends at 99 Cent Stores and you know as we look at Amazon right Dollar General sells stuff that you can find on Amazon and now Baba alib Baba's you know offered here in the United States and then there's another website in the US I haven't used it they sell really cheap stuff it's I think it's called teu so they have to compete with them so that's where they're at in my mind on the level of desirability for for Dollar General and they are getting killed premarket Mar I didn't I didn't see that but let's take a look so did they announce okay they announced today shares crater financially constrained okay yeah so there's a couple things I'm going to point out so Revenue growth revenue is green that's fine now we saw and I could probably show it against crowd strike so you have Revenue at 40 billion and you have your cost of Revenue at 28 billion so your gross profit is 12 billion that's not a lot okay when you look at desirable businesses and I'm G to use crowd strike just as an example but I don't view them as a desirable business I shorted crowd strike I made money on them but the point that I'm making is their revenue is 3.5 billion their gross profit because their cost of Revenue is less than a billion their gross profits 2.6 billion going to 2.7 billion so the margin there is just much larger so desirable business or desirable model undesirable model okay that's the biggest hang-up that I have with retail especially discount retail and so many things can go wrong you know you got you know theft I know theft is really hitting the premium retailers like Macy's and others you got like shoe retailers that are getting broken into and you know their shoes are being stolen because you know a pair of sneakers these days that's like $200 box right well these thieves go in and get you know 200 boxes and they got a pretty good pretty good take and then they sell them on Amazon it's brutal it you know we got to stop it I'm all for law enforcement in that area it's just one more challenge that these guys have so these guys are not very profitable they are growing the balance sheet they may be getting killed because their balance sheet might be weak um total debt is 18 billion bucks they have one billion of cash eah so IID is three 18 divide by three is six it takes them six years to operate their business to pay off their debt in a very low margin industry I'm smelling risk I'm smelling like man you couldn't give me this business operating it is so risky it's like holy smokes their market cap is half of their revenue okay so so not like of course these are dated but analysts are saying oh it's it's a buy and it's discounted but not in my book um cash flow free cash flow is impressive very impressive very good uh 1.7 billion in free cash flow and it looks like this is pretty let me look at the quarterly yeah it's pretty recent so so cash flow is pretty good 1.7 billion in the trailing 12 months is pretty good um again I I start with is this a desirable industry for me is this a desirable company and the answer is no but if it was a desirable business um I could see getting to this valuation you can get to this valuation and after today it's going to be probably in the neighborhood of 15 billion right um they have a they have a dividend okay that's that's one thing they do have cash flow they will pay that dividend I just think that this is going to be a decaying company year after year it's going to get harder and harder and they may end up where 99 Cent Stores ended up Kmart you remember that franchise when I was a little dude you know five years old 10 years old we used to go to Kmart they don't exist anymore they were a discount retailer um just discount retail is so tough so for me it's a pass it looks like their cash flow is good they can probably afford that dividend um payout ratio is 34% but remember that balance sheet okay that balance sheet that's a giant giant problem we saw that interest rates I showed earlier the interest rates Rose a little bit these guys are probably sitting on debt that they're paying five six% on maybe seven because they're they're probably paying 7% maybe 8% on their debt let's take a look at their debt cost that'll be interesting uh [Music] so interest expense in one year they pay $327 million in interest expense their gross profit is close to 12 billion they're paying a good percentage of it in interest okay if their operating income they're paying 13 14% of it okay so just uh you know giving you you know how I see it Mike um you know it is something like if you saw an opportunity where you know the the market misunderstands it and I think that in the next 12 months it might rise to 140 I'm just making this scenario up maybe maybe maybe you go in you make some money you get out you have exit strategy predefine when you bought it get in get out done but we have thousands of stocks to pick from thousands you want a dividend stock I'll show you quality dividend stocks you want a retail stock I don't want a retail stock but if you want a retail stock you know there's other stocks to pick from you know you don't have to pick one that's a troubled you know a sick puppy you know pick one of the puppies that's like really happy and energetic and is gonna live a long life you know that's what I would encourage you to think about let me catch up here sorry about missing your comment dividend investing guy uh okay no you weren't blind I'm so I have to operate with the new site myself Mike so it's it's my fault for not seeing your comment um sorry about that so they're getting killed in the pre-market and for good reason I mean it's just uh it's just a tough tough business so you want to look at uh so Acer 8 KR us I'm GNA look at that so we looked at DG but somebody asked for AMD um so I'm gonna put KR Us in the back burner it's GNA be next let's look at our friends at AMD so AMD does they they so what's interesting about AMD is AMD is the second fiddle to Intel for 15 years okay and Intel obviously is falling off the face of the Earth they they're in so many problems you know so uh we'll leave that off to the side and now amd's second fiddle to Nvidia and AMD does produce a GPU AMD did focus on performance for a long time um and I think that AMD might have a path to compete for the GPU market and one thing about technology that I forgot to mention when I was doing my little piece on Nvidia is so I've been in technology for a while I you know I I've worked in the software space I've worked in technology for 25 years and over time and you can cite me on this technology per compute like if if you look at performance storage all those infrastructure elements that cost goes down prices go down and that's that's inherent in every industry over time prices of goods go down some Commodities will will Buck the that Trend and and appreciate in value like food for good reason right you gotta H people have to be paid a certain amount of money to live on so those tend to go up but technology over time technology goes down so gpus it's my expectation that the same horsepower of GPU capacity in two years will be less expensive because AMD has an uh GPU and their GPU is not as good as Nvidia but it's useful and if you can create a GPU super cluster with AMD at half the cost of Nvidia and provide maybe 90% of the performance money always wins the battle money always wins because the the level of investment that you have to make in a large language model you're taking a big risk if you can lessen that capital outlay or that investment you will and if Nvidia can start winning some of these workloads they can um and that might be exciting so high level I think Nvidia is interesting let's see what their fundamentals tell us so over the last five years not too bad it's not Nvidia it's not like going off the the chart here over the past year it's up 40% but it's had a pretty good you know uh drop if we look at the last uh five months okay it's a $238 billion market cap company and they do 23 billion in Revenue 10 times Revenue PE 176 very high forward p is 33 strong buy 32% okay so we talked about cyclicality in semiconductors here it is that's what I talk about that cyclical the cyclical nature of business is they have good years they have slow years and that's that's what you see in this business they had very good growth in 2020 everybody's updating their PCS and so forth very good growth in 21 very good growth they kind of hit a wall in 23 let's look at the quarterly 8% growth in the last quarter that's very good so Revenue the reason I use Revenue as a very important barometer is this tells me customers are buying AMD products customers are finding more ways to use AMD products AMD is finding its way into that data center it's finding its way into the marketplace and succeeding so that's good I like I like the growth I'm seeing balance sheet so cash is five billion and how much money do they owe 2.2 billion so really they can write a check and say all right everybody that owe money to stop calling me I just paid you leave me alone but they obviously don't do that um cash flow so we've got free cash flow this was always my hangup with AMD I I kind of rooted for them because 20 years ago they were like The Whipping Boy for Intel AMD kept trying they just never made market share like advancements that they wanted so I'd be like man these guys someday they're going to get it right and so forth but always what always prevented me from being all on AMD is their cash flow semiconductor companies Produce High free cash flow I show in Nvidia I'm projecting them to be be what what size cash flow company 71 billion in the next 12 months and then we go to AMD and go 1.3 billion whoa what what like are we talking about the same industry and that's always been my hangup with these guys so AMD a lot of like strategic things I'm like I like it I like I like and then I get the cash flow I'm like w all right I cannot get so if I go 1.3 billion and compare it to their market cap uh I have to multiply that number by like 180 to get to this number there's no way I'm going to get anywhere near this valuation the only way you get to that valuation is if I don't listen to Charlie Munger and I go all in on earnings per share Charlie Munger did not touch earnings per share he said it was BS because Gap accounting rules do give the leadership of a company the ability to move money and and make that number look prettier than it should be I get that Charlie rest in peace sir you are awesome um but you can probably get there if you use the earnings per share and you see their growth but you know where my head's at my head is squarely on free cash flow that's where the money's at um if you look at and um I'm going to open a new tab here so I don't lose my train of thought there but when we look at the most valuable companies I could pick any one of these and let's go with meta since I own meta let we go to their cash flow look at this cash flow and it's gone up over time they're at50 billion dollars of free cash flow and they keep gr it they have these strong modes and um this is why meta is worth over a trillion dollars is their cash flow is just incredible so AMD if you don't have cash flow I don't know how you're going to keep that market cap I love what you're trying to do I'm rooting for you but it's just you're just not Nvidia you're not even Intel in its Heyday when it was doing decently it would produce like 1520 million of free cash flow and AMD would be like a billion dollars and I'd be like why are they so far behind I think part of it is I I don't know to to be to to answer that question very quickly just when I would get here I'd be like okay this is not an investment for me I have to stick to a lane that works for me investing is I try to simplify it as much as I can it's already so hard that I need to simplify it and find a recipe that works for me I'm giving you the recipe that works for me and I've repeated it and repeated it yeah I buy a a stocks from time to time that do poorly and I sell them but most of the stocks that I buy really work so I have to stick to that recipe and that recipe one of its main ingredients is free cash flow it's like I aim to make you know a nice dinner and it's gonna have a nice uh nice piece of fish beautiful piece of fish it's a white fish and uh the free cash flow is the main entree it's it's that fish portion you know the the sides the the vegetables the rice peel off those are nice to have but the fish is is what cost the money on that plate free cash flow in my recipe for the best dinner that I could have that's going to make me the most amount of money free cash flow is it and AMD doesn't have it so that's my opinion on AMD I don't know that that that's ever going to change because I've been analyzing that company for 15 20 years it's never been different H crazy all right and then Brian Brian's back Brian usually brings like Brian has very good ideas he wants to look at hrb that's uh next on the list now we're going to turn our attention to krus k r u Kura Sushi USA Kur Sushi operates technology enable Japanese restaurants oh wow man so this is a restaurant company man I'm glad it's not around dinner time I'd be like getting hungry and hungry every second I watch this so it looks like very cool where the heck are their locations I don't know that I've been to one of these last awesome Asian meal I had was in New York there's a a Korean market I don't know if you guys have been to it in Manhattan um one of our cousins their son is working at Amazon and he he got moved to New York and we were hanging out with him and he took us to this Korean restaurant that was out of this world just so good these guys are Japanese of course but makes me think of that experience all right so this is a restaurant very interesting idea um let's take a look um I don't like restaurants because you have to hire people you have to uh rent expensive real estate there's just so many things that can go wrong and restaurants it's not like hey you know this restaurant was one of the most valuable companies on the stock market you'll never hear that you might hear that hey Chipotle is worth 70 billion hey great McDonald's is worth 200 and some odd billion and McDonald's has been around for God 50 60 years right so they've been around for a long time and uh they're they're dividend machine which is great what is McDonald's worth let's see I think the symbol is MCD right yeah so they are worth 200 million and they've been around forever right and okay I I'll I'll say McDonald's is kind of cool but if you look at their debt level that might surprise you that they have a lot of debt um and they did create a model where McDonald's is more of like a real estate company they own the real estate rent it out to the franchisee and that's how they make a lot of money but back to kuras Sushi so it's a 700 million $739 million Revenue company so it's a small company uh and I'm got it all backwards here it's not 739 million Revenue it's 7 739 million in market cap and revenue is 226 they are losing a lot of money man that's a lot of loss so what's going on so they are growing their business I mean it's new to me it might be new to a lot of people yeah they're growing really fast okay taking a lot of losses um what kind of balance sheet do they have let's see 60 million in cash debt 135 million that's not a lot of debt okay good 60 million they have about 65 million in net debt and um I don't know if they have any e they probably do so eight million that's nothing that's such low iida it would take them eight years to pay off their debt but they're in growth mode okay so let's just keep keep going going along here I'd be surprised if they had free cash flow yep that's kind of met my expectation so this one here this is not an investment for me this is in an industry that I don't invest in um I owned One Restaurant it's Starbucks and I think people could argue that well that's not a restaurant they sell coffee and they're the number one player in the coffee Biz and I like I like players that have separated themselves clearly from the competition I feel Starbucks is in that situation where they have beat out everybody for premium coffee and they do serve food in the restaurants but it's kind of like pre pre-made somewhere and then warmed up at the location so it makes the serving of food quick and um I think profitable and the coffee is very profitable so that's the one restaurant I own that's the exception I'm glad I own Starbucks an investment like this is just too high risk um we look at there's I'm surprised there's stock prices where it's at and they are traded on the NASDAQ I mean there's probably a story behind this that some really famous person you know has this idea for all I know this this person is like really good at opening restaurants has a lot of credibility in the space maybe but it's just not the right investment for me I'm looking for the next meta and I I would if these guys are incredibly successful they'll get like they'll get to a certain market cap I mean you'll still make a lot of money if you invested at this level but I just see so much risk there's so many things that can go wrong they're not making any money they're burning cash I mean the the list of concerns is really high for me so I'd have to be a pass on KR us what what's your uh Curious Acer 8 what are you trying to do with uh with this stock are you just trying to trade it and make some quick money yeah they're opening a lot of stores yeah I I agree you know there's there's a what do you call it there's um a noodle um a noodle house it's that opened near my home and I'm near Irvine by the way and this restaurant opened and it's a Japanese noodle noodle house and the inside was just beautiful and this place was awesome a little pricey but I thought it was worth the experience not not every week maybe maybe every other month go there check it out have some of their noodles delicious and they didn't make it and I just think to myself man so you had to pour all that money to make that restaurant look super cool you had to hire staff train your staff get everything operational you get it up to speed and you don't make money and you go bankrupt and that location's now you know it's been converted to a different restaurant and that's that's what they're faced with and it's man it's got to be so damn tough Starbucks I think is is a little different because it's coffee it's like man it's a simple recipe you get premium beans you you you have a central facility that roasts the beans they come to the location they get ground you pour c a hot water into those grounds out the bottom comes out a dark liquid you serve it to a customer give me four bucks all right sounds good to me man they make money I'm happy and away we go yeah you know let's uh let's talk about something real quick and then I'm gonna get to hrb so um there's a lot of businesses that we can put our heads around that are quite easy to put our heads around and especially ones that market a lot but they don't have a lot of value and there's really popular businesses that you would think oh man they must be making a lot of money the car business being one of them right automobile you look at Ford's valuation it's like so damn low everybody knows Ford everybody understands what Ford does but they're just not a very valuable business so there's some businesses that are incredibly valuable that people don't really know about I don't think the average person knows Nvidia is an example so I get that they could be quite popular um but investing is about you know show me the money show me the cash flow show me the fundamentals uh there's a lot of businesses that are worth a lot of money that people just don't Mo the average person doesn't know about doesn't understand all right so hrb H&R Block this is a services company uh okay now these guys are both services and they would like to compete against Turbo Tax which is owned by in and I'm familiar with this Marketplace I was educated in accounting part of my accounting curriculum was tax I really enjoyed tax I've done my taxes ever since I used to do taxes for my family and some close friends but it became too much of a burden and they said no I'm not I'm just going to do my own taxes and I I do the taxes for my two sons and that's the extent of it and um these guys let's look at their growth they've been growing they've been growing looks pretty good they did have a down year here but they've bounced back okay and H&R Block was like purely services along time ago but now they're they're getting into the software Biz their Market Cap's really low .9 revenue is 3.6 they do pay a dividend and their PE is very manageable 15 so we saw that their growth was okay balance sheet 1 billion in cash and how much debt total debt two billion not bad one billion in debt net debt I'm gonna guess if their eBid is going to be reasonable yeah they can pay debt off in one year okay good Cash Flow Free Cash it's been steady and at around $657 million they had a good year in 23 down year in 24 but I'm G to call it they do about $700 million of free cash flow they're fairly priced because it's not an exciting business it's not a growing business if you multiply seven times 10 you get to seven billion you could probably substantiate the N billion the thing about the I mean you could pick these guys up for a really good discount way back when I made some good money look at that the one year 60% so it looks like we're late to the party on H&R Block the money's been made there's some forces that you know would be liabilities for H&R Block one is Turbo tax's the number one player they're not going to leave that spot unless you I don't know what you'd have to do but Turbo Tax is the number one player uh into it is far more value valuable so into $176 billion company and in does a couple things they do Turbo Tax they do QuickBooks which is kind of an accounting software they do a couple of other products but that's mainly you know Turbo Tax is one of their franchises that's been incredibly successful so it's a very big difference between you know into it which is pure software and now they're they're beginning to do some Services uh if you're a Turbo Tax customer you know what I'm talking about these guys were pure services and now are trying to compete with software their valuation is not even close to into it but um yeah I think the money's been made on on H&R Block it's a sound business can't say many bad things about it it's just not something that I I feel like I'm GNA wake up five years from now and it's going to be worth $120 a share I actually think the opposite I think you could wake up five years from now and it's worth $60 a share and that wouldn't be good so um if they were the number one player like into it and I was getting a fair price or a discount I'd be all ears and trying to track it and wait for it to drop and then buy into the number one player like into it I'd be game on buying into it but it's usually priced at a pretty good premium every time I look at into it it's just priced too much out of premium and there's other software categories that I'm invested in so I'm good when it comes to software I own three four different software companies so it's not like I'm starred for a software business so that's my opinion on H&R Block see tax no we're not in tax season we got four months before the year's over and then tax season will really be about five six months from now time to pay Uncle Sam at that point all right I got through the symbols that's good I think it's a good point to kind of start Landing the plane let's take a look at the stock market we are not in future territory anymore wow the NASDAQ go NASDAQ the Russell is lagging S&P Dow okay it's Green Day not the rock band it's a day where positive stock prices all right what's going on with our boys over at Nvidia they're still down up Market these guys are still down wonder what's goingon to happen are people gonna Pony up some cash and buy some more shares is this you know I I said this you know before they announced that Nvidia is one of those things that yes it's going to be super interesting what happened last night what's going to happen today but really the next chapter is going to be somewhat written over the next two to three weeks if over the next two to three weeks there's a selloff it's going to be painful to Nvidia stockholders if it rallies it's going to be amazing it's GNA be like wow where are we gonna go from here three trillion four trillion five trillion uh because you're not you're not attached to EV valuation anymore you can go as high as you want as high as people are willing to pay so we'll see all right yeah I get that if money comes out of Nvidia and other stocks that have been overheated you know that money there's other places that look pretty damn good to me Healthcare looks really good other parts of Technology like software look really good I'll show you um Adobe so Adobe is a long established company a pretty good market cap you're paying about 12 times revenue and you look at this company growth you look at their cash flow really nice cash flow okay and right now I have Adobe at like a 10% discount but this is they are the number one leader in Creative software artist uh Adobe Acrobat you know they have certain products that are just franchises kind of like into it having said that when we talk about money rotating out of Nvidia there's other homes that that money can go towards Adobe being one of those homes as an example or it could go into a health care stock if if that investor wants big cap there's really good choices of pharmaceutical companies that are high-f free cash flow they have good appreciation potential for the next 12 to 24 months smaller caps have great potential I really like United Therapeutics and as always guys I'm citing my experience my opinions I don't recommend you buy hold or sell any stock I ever cover I don't recommend you short any stock either but United Therapeutics is a fantastic company they've been up recently they're up again um these guys are a smaller cap you know company they keep growing and adding value to their market cap they're not going to be small cap forever but they have awesome fundamentals they have awesome ideas um you study them and you're like I'm just so impressed with what they've done to this point and they're very ambitious they're they have an ambitious uh growth uh plan scientifically it would be they already they already did something scientifically that's super impressive but if they're successful in the next business they're trying to create which is uh growing organs in a laboratory which are transplantable to a human being I just think okay you just opened up a new Marketplace of people that need an organ especially in life and what would they pay for that 50 Grand 100 Grand yeah so and insurance recover it probably at some point because um you know there there'd have to be some coverage where hey this person's dying and if they got an organ they they're going to live okay they'll probably be coverage for that so it's really a fantastic you know um potential like if they pull that off I just think the company's gonna be worth a hundred billion but again if if they pull that off if they don't pull it off they still have businesses that or franchises that are really really valuable and that's what I'm basing my fundamentals on if if the other business works that's icing on the cake so that's where money I think could rotate out of Nvidia there's lots of places thousands of companies since we have choices of thousands of companies let's pick companies that are in industries that inherently produce the most valuable companies in you know on the stock market the most valuable companies on the stock market uh let's take a look at the mega caps again technology technology technology technology technology oh here we go Berkshire outway okay pharmaceutical um Financial Services big Diversified retailer pharmaceutical Health Care energy financial services so the recipe for success is kind of hidden in plain sight right you look at these companies Health Care Health Care Financial Services I call this technology because they're the advanced streamer pharmaceutical pharmaceutical you've heard the word pharmaceutical five times right in the top 30 you have a lot of pharmaceutical companies and these companies have been left behind by technology I believe that Health Care is going to rise and really do well the next year to two years because they've been left behind and their fundamentals look great you look at you know valuation of fiser United Therapeutics Catalyst Pharma um ABY I was an ABV stockholder for a long time but they're beginning to concern me on a couple areas but um they look good they look really good so um as they rotate if you rotate and investors rotate out of Nvidia there's plenty of places to put your Capital to good use all right everybody um looks like I answered all the questions I've got 38 viewers thank you so much good luck today good luck in uh making some money it looks like the stock market is clearly in in the green we are clearly in the green on all indexes the economic news was positive so there shouldn't be any like Cloud over this uh this this stock market today and we'll see if the Market's going to run I think it has the potential of running and uh I'm going to do this again tomorrow at the same time 9:00 am Eastern 6 6 AM Pacific we'll see where the market ends up today and we'll see what is going on tomorrow and I'll be doing this uh each morning at 6 am I think this some this the this this works for me this is pretty much kind of like in what I do I I usually don't trade in the first hour for sure the first half hour when the Market opens so I can kind of get my head in the game and kind of get my juices flowing drink a little coffee with you guys and then uh if the market is giving me good prices maybe do buy some stocks buy some shares maybe sell a few options maybe buy a few options maybe short a stock from time to time maybe buy some bonds um so it'd be nice to start my day with you guys if you guys want to tune in again tomorrow um same time on stons and for now everybody best of luck investing thank you so much for tuning in take care