Chit Chat Stocks - 4 Stocks To Hide In During A Stock Market Bubble (OTCM, BTI, ALSEA, DG)

Episode Date: December 25, 2024

On this episode of Chit Chat Stocks, we go through 4 stocks we’d like to own if a stock market bubble were to pop. (3:01) Are we in a market bubble today? (10:10) [Stock 1]: A superb dividend yield with little correlation to the broad market. (21:40) [Stock 2]: An international compounder trading at a wonderful price. (37:25) [Stock 3]: The truly “countercyclical” business. (51:51) [Stock 4]: A beaten down long-term winner. ***************************************************** JOIN OUR CHAT COMMUNITY: ⁠https://chitchatstocks.substack.com/⁠  ********************************************************************* Sign-up for a bond account at ⁠Public.com/chitchatstocks⁠  A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC. Deposits into this account are used to purchase 10 investment-grade and high-yield bonds. The 6.9% yield is the average annualized yield to maturity (YTM) across all ten bonds in the Bond Account, before fees, as of 8/28/2024. A bond’s yield is a function of its market price, which can fluctuate; therefore a bond’s YTM is “locked in” when the bond is purchased. Your yield at time of purchase may be different from the yield shown here. The “locked in” YTM is not guaranteed; you may receive less than the YTM of the bonds in the Bond Account if you sell any of the bonds before maturity, or if the issuer calls or defaults on the bond. Public Investing charges a markup on each bond trade. See our⁠ Fee Schedule⁠.  Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. You should evaluate each bond before investing in a Bond Account.  The bonds in your Bond Account will not be rebalanced and allocations will not be updated, except for Corporate Actions. Fractional Bonds also carry additional risks including that they are only available on Public and cannot be transferred to other brokerages. Read more about the risks associated with⁠ fixed income⁠ and⁠ fractional bonds⁠. See⁠ Bond Account Disclosures⁠ to learn more. ********************************************************************* FinChat.io is The Complete Stock Research Platform for fundamental investors. With its beautiful design and institutional-quality data, FinChat is incredibly powerful and easy to use. Use our LINK and get 15% off any premium plan:⁠⁠https://finchat.io/chitchat⁠  ********************************************************************* Sign up for YellowBrick Investing to track the best investing pitches across the internet:⁠joinyellowbrick.com/chitchat⁠ ********************************************************************* Bluechippers Club is a tight-knit community of stock focused investors. Members share ideas, participate in weekly calls, and compete in portfolio competitions. To join, go to ⁠Blue Chippers and apply! Link:⁠https://bluechippersclub.com/ ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Stocks. Before we get into this episode, we want to talk about our friends at Public. Heads up, folks. Interest rates are falling, but you can still lock in a 6% or higher yield with a bond account at Public.com. That's a pretty big deal because when rates drop, so can the interest you earn on your investment. A bond account allows you to lock in a 6% or higher yield with a diversified portfolio of high-yield and investment-grade corporate bonds. So while other people are watching their returns shrink, you can sit back with regular interest payments, but you might want to act fast because your yield is not locked in until you invest. The good news, it only takes a couple of minutes to sign up at public.com, lock in a 6% or higher yield with a bond account only at public.com forward slash chitchat stocks.

welcome to chit chat stocks on this show host ryan henderson and brett shaffer analyze businesses and riff on the world of investing as a quick reminder chit chat stocks is a ccm media group podcast anything discussed on chit chat stocks by ryan brett or any other podcast guest is not formal advice or recommendation now please enjoy this episode welcome in this is a another edition of the chit chat stocks podcast my name is brett schaefer and as always joined by my friend ryan henderson i think we're releasing this on christmas day if not it's going to be right around christmas week week right around the start of the new year and we got an episode for you.

I think it'll be a fun one. It's called Four Stocks to Hide In During a Market Bubble. Ryan chose two stocks that came to mind that he researched for this episode that he's been following. I chose two stocks. We're gonna discuss each of them. Try to do a quarter for each episode,

or excuse me, for 25% of each episode, of the episode, probably about 15 minutes, 20 minutes, something like that. We'll try to keep it a little bit succinct, but provide some value for the listeners as well. Before we get started, and I'm going to let Ryan tease why he was inspired to have this idea, why he wanted to do this episode, I will say, please, if you are so inclined, give us a good review on Apple or Spotify.

A little five-star review goes a long way there, and it takes not very much time, unless clicking one button with your thumb is very very taxing for you and also if you want access to the show notes graphics charts and our burgeoning little free chat community you can sign up for our newsletter at substack chit chat stocks the link is in the show notes there so let's get right into it ryan why did you want to do a stock about or excuse me a podcast about stocks to hide in during a market bubble yeah i've drafted up a little preamble here because i know some people might not think we're in a bubble some people might think we're at peak euphoria yada yada it just i felt inspired to do this because to me it's beginning

to feel a lot like 2021 again in terms of market sentiment in terms of um my process where I try to research the business, try to get an understanding of what the company does, whether I think it's well positioned for the future. And then I look at the valuation and I'm kind of getting that same 2021 feeling where I get to the valuation. I kind of my shoulders come down. I'm bummed out. I'm going to have to wait. It's going to have to go on the watch list because it seems like valuations are soaring. if we flash back to 2021 valuations were extreme across the board especially in anything with high

revenue growth the ipo spac market was really hot and tons of money was pouring into very speculative assets now cough cough nfts um now i don't think we're quite there yet but ipo markets starting to keep back up a little bit. We're seeing a service-tightened IPO, which is kind of the first one. And I think it's going to be a bit of a beta test for all other, or sort of a sentiment gauge for all other private companies that have thought about coming public. Valuations are really soaring and they're starting to get to levels where it's not just like, a lot's priced in. It doesn't make any sense to me for certain companies um and then you have assets well assets might be a loose term here but um you have things people can buy uh like fart coin that are commanding market caps

of like 500 million dollars so um yeah to me it feels like there's a lot of speculation going on And it's just kind of reminiscent of that time. I think as we talk here now, Ryan, wait, let me get this right. The Fartcoin market cap is up to $700 million. So after he wrote these notes, the craziness may have accelerated a little bit. But I will say, if it's not the exact same as 2021, we're pretty close. Might be 10% away. I don't know if it's that stark of a difference.

$700 million is a lot of money. We just had the Hawk to a coin, basically get rug pulled. We Palantir, not to, you know, kind of calling out one name here because it's a little more richly valued than any other software stock, it seems like. But 60 times sales. I mean, when's the last time we've seen real businesses? So it's not like, you know, not to put Fartcoin and Palantir in the same category because they are very different. You've got a business that's driving real value to customers.

But we're talking about real, they're already doing a ton of revenue. It's already a significant market cap and it trades at 60 times sales. So that's where the kind of, given the size, it seems like an extreme valuation. And the PE ratio of the S&P 500 just crossed 30 times, which is well above its historical average. In fact, the only period in the last 20 years where the S&P 500 has had a multiple higher than now was 2021. 2008 as well, but it doesn't really count because the earnings disappeared for a lot of those companies. So it wasn't the – stocks were down, but earnings were down even more. So why are we doing this episode? Well, the market felt frothy in 2021 and we were even quite vocal about that, but we still owned a lot of stocks

that got hammered. And actually in 2022, as the bubble popped, it felt like there were really no places to hide. The only two sectors that actually had positive returns were energy because oil stocks jumped following COVID and then supply crunch and utilities. And utilities were up like 2%. Communication services, information technology, consumer discretionary all had major declines across the sector with some stocks down as much well north of 50%. Even bonds got hammered as rates rose to combat inflation. So it was hard to make money during that period. So if history were to repeat itself, what can we do? What are some stocks that we can own that will be poised to kind of weather that storm? I'll be the first to admit that I am not an expert

in energy or utility industries. So I think we got to be a little more creative in finding the right stocks and after much digging and actually a lot of discarding of stocks that i wanted to do for this episode uh i have selected two stocks and brett has selected two stocks that i think would be good place good companies to own during a market bubble and when that bubble pops you want to kick things off or you want me oh yeah you've been talking so let me do my stock first it is a tobacco company british american tobacco i will make a note here that there are a couple of themes we look at ryan will talk about that a bit as well you know sin stock can be helpful in this looking at international can be helpful and i'd also add in and this is something we're not talking

about here because we usually don't like to talk about stuff that has really low volume on these type of episodes is this is a place to play that can be uh riskier it can be something that you don't want to go into without actually researching the companies fully and understanding accounting and all that good stuff or value microcaps or just microcaps in general they can have less correlation you would hope to the broader market but let's get right into it try to do stuff that's more common here and a little more actionable for all types of listeners. And as I mentioned, British American tobacco. So when looking at stocks to hide in a market bubble, I want to emphasize a margin of safety above all else. I don't want to lose money. I would hope to earn

a little bit of return during the market bubble, but I would expect to underperform, say the NASDAQ, the S&P 500 if this trend continues like in 2023 and 2024 I would hope to preserve my wealth through this period but I want to I essentially want to have the ammo there so I can strike if the multi-bagger opportunities pop again and pop up or you know around and you get some big drawdowns in stuff that looks very attractive, but doesn't look attractive today. I'm also looking for high and sustainable dividend yields, non-cyclical earnings, and a low starting earnings multiple. I think British American Tobacco or BTI fits all three of these categories. So what is this company? For those who don't know, it's a global seller of cigarettes, Newport, Camel, a couple

other brands. And then they also have reduced risk nicotine products, including Glow, which is heat not burned tobacco, Vuse, V-U-S-E is how you say, I don't know the exact pronunciation of that, which is vapor, e-vapor, electronic vaping, and Velo, which is nicotine pouches. So those are the reduced risk nicotine products, the new age ones. Then they also own, interestingly, 29% of the India Tobacco Company, worth around $20 billion. It's unclear how much they could monetize this stake if they wanted to, but it's performed phenomenally for them and it is there.

I don't think that's worth $0. I think we need to consider that a little bit when doing our valuation work. But what I talked about before is I want non-cyclical earnings and I want sustainable dividend yield, high dividend yield, and a low starting multiple. First, let's talk about the earnings. And investors have been nervous about British American tobacco's ability to grow earnings

because of sharp volume declines for cigarette usage in the United States. And I agree that these volume declines will continue and that more and more people in the United States will stop smoking. I mean, in 10 years, there will be fewer people in the United States per, as a percentage basis, you know, unless we get a huge flux of immigration and the population boomed or something like that. Yeah, as a percentage of the population, I am. pretty confident that cigarette usage will go down. I disagree that it should keep people away

from the stock. Since 2018, when BTI merged with Reynolds, I think that was the company, free cash flow per share has been stable to higher despite these volume declines. The company consistently raises prices on packs of cigarettes. I see no reason why this can't continue in the coming years. And then if we look beyond this, their non-cigarette portfolio that includes the vaping, the nicotine pouches, and heat nut burned tobacco, they hit around $2.2 billion in revenue in the first half of 2024. I'm just converting there. They do stuff in British pounds, but I converted it to US dollars using the current exchange rate. So that could flip a little bit on you. If you do the math yourself, just for any heads up there, people get stuck on that and why

I have that number. So that's $2.2 billion in revenue through one half of 2024. I think they're likely to surpass given their growth rate and giving the sector tailwinds of people switching from cigarettes to these less harmful products. I think this is likely to surpass $5 billion in revenue soon. And the segment just flipped to profitability. So it used to be a drag on overall earnings. Now it's going to be a benefit. It's going to be a tailwind to earnings. And I expect profit margins, given what we've seen across the industry, to eventually reach similar levels to the cigarette business. And even if it's just 20% profit margins, which is significantly lower than cigarettes, that is $1 billion in annual earnings with a lot of growth potential in the next five

years and beyond. So that can make up for, and more likely, the volume declines impacting the earnings of the cigarette business. If we look at BTI's free cash flow per share, it was $5.75 over the last 12 months. Now that the new age products are going from a headwind to earnings to a tailwind, I'd expect us to slightly grow because the free cash flow per share has been fairly stagnant since 2017, 2018, or actually after the mergers, 2018. But if anything, I think, and maybe I'll let Ryan talk with any follow-ups here, I think there's a lot of room for, let's just say that what's priced into the stock right now is probably a free cash flow decline over the next five years.

Yeah. Okay, I guess follow-up question. You might have answered it already, so I apologize if I missed it, but what percentage of the current revenue pie is from new age products? oh i should have the exact number in front of me but i think it's about 20 something percent maybe 30 i think their goal is they have a long-term goal of making it perhaps half of the business by 20 35 it's hard to tell exactly what it's going to be but all i know is that it's not an inconsequential part of the business yet i mean we have that five billion dollar number so i can pull up maybe their total revenue over the last 12 months and we can get a rough estimate i should probably have that number for listeners i'm going to be loading up finchette here as we're talking okay but it's not inconsequential right so i'm like

an altria where it's it's a real that these new age products are a really really tiny part of the overall business uh it's it's actually sizable it's been pretty successful for british american tobacco. But it's not as large as Philip Morris International. So let's say over the last 12 months, we convert to USD $33 billion in total revenue. So I guess it's less than 20%. But the goal is to increase that over time. And if it goes from $5 billion to $10 billion in revenue over the next five to 10 years for that new wage segment, that is a lot of revenue contribution. and it's $5 billion in new revenue on a $33 billion consolidated base, I think that's not bad.

Okay. I think the discussion around financials and the business makes sense and people understand what it is, what they do. Why do you think this is a good place to hide or a good place to be given current market sentiment? Yeah, so the current dividend yield is 7.9%. I know some people get on their high horse when you just quote dividends and say, well, you know, high dividend yields are dangerous, blah, blah, blah. You know, it's just the market knows.

They just start yelling. Some people are very anti this. But what I talked about above and how even with the major headwind of cigarettes volumes that is expected to continue and the fact that these new age products were actually hurting earnings for a good while and now are flipping to helping them, I think they will be able to maintain but even grow the dividend per share over the next few years with a current starting yield of 7.9%. They've paid down a lot of the debt from their merger. Earnings are coming through now from the nicotine pouches and vapor. And the company will now be able to allocate more cash to dividends and probably start up their share buyback program. Free cash flow, and I'll maybe share this chart here for anyone listening. Free cash flow per share is around double the dividend per share.

So if we look at this chart here, it's kind of hard to see the numbers, but if we zoom in, free cash flow per share over the last 12 months has been $5.75, dividend per share $2.97. Even if free cash flow per share goes nowhere and is just stable for five years, they can keep growing the dividend. And we would be buying in at a valuation that, at least in my view, is pricing in all these risks and more. The price to free cash flow is currently 6.6. Now, that excludes the debt. But as I mentioned, the debt as a percentage, you know, it's coming down. They're paying that down.

It's not a huge deal, I don't think. And it's not going to affect their ability to pay dividends. If you subtract out the India tobacco stake, this figure drops to below 5. if we look at the price to free cash flow. So from 6.6 down to below 5. I think expectations are for these cigarette volumes to decline. Maybe like this current rate, I think the expectation of what's priced in here

might be for these to worsen while we're seeing some of the worst cigarette volume decline rates in a long while. And I think even if the bubble, what I mean here, the market bubble, lasts for a few more years, let's say we're in 1996, That's a scary thought.

I think you can do just fine owning shares of British American Tobacco. And if the bubble bursts, you've probably earned 25% of your cost basis in dividends that you can plow into growth stocks trading on the cheap. And I bet the share price will be a little bit higher too when it is all said and done. Now, lastly, I would add that many investors are out of these type of stocks due to ESG mandates. They're out on tobacco stocks. They're out on sin stocks.

mandates like these can provide opportunities for investors if management takes advantage now recently british american tobacco hasn't because they've had to they haven't done their buyback program because just various things with paying down the debt um all that good stuff investing in the new initiatives investing in the new initiatives which are now again as i mentioned flipping to profitability and as earnings start inflecting for this reduced risk portfolio and with the debt more manageable, I expect more share buybacks to commence and further increase free cash flow per share. All in all, I think it is unlikely investors lose money on a total return basis holding BTI stock over the next year, three, or five. And I think the combination of

factors that are laid out above will help the stock outperform. It will go through a market crash. And that's why I think it's one to hide in during a market bubble. all right i like it it makes sense it's it's one that a lot of people can't own or won't own uh it bores a lot of people it seems like a no growth business but it's not i mean we can look at the numbers it really isn't a growth business but they can grow their earnings and it's certainly on a per share basis and they can grow their dividend on a per share basis as well which Maybe this isn't the kind of thing you dream of owning over 20 or 30 years, but right now, given the opportunity costs, it does not seem like a bad place to be at all. Let's hop to my first stock of the day, unless you have anything else to add on British American.

No, introduce this one. A little bit different. For any listener, we didn't do all tobacco stocks. We tried to mix it up a bit. So hopefully this, we have at least something for all types of listeners, but what is your first stock to hide in during a market bubble run? Yeah. So for context on both my picks, after looking around a lot, I kind of narrowed down my search

to three areas that I think could perform well, even in a broad market collapse. First one is international stocks. It's pretty simple here. There's just less correlation of American equities. So less American money has flowed into these stocks, so less likely that money will flow out as the bubble kind of pops and people pull their money in or they sell stock, so on and so forth. There's just not a lot of correlation to the American indices. Also, the valuations for a lot of these businesses, especially in certain markets, are far more reasonable, and you aren't taking as much currency risk as you might think. to the other category is sin stocks. You just talked about it. British American tobacco is

an example of those tend to have a discount relative to the overall market. And then like you said, many funds are precluded from investing in them, which means there's less risk of multiple compression. And then the third one, and you got to be real choosy here is financials. I think certain financial companies are durable regardless of the overall market, especially if you can find Maybe I'd do a fourth category here, which is kind of small caps. You get, once again, less correlation, less flows that are correlated to the indices overall. And so I'd like those kind of buckets are the ones that I'm looking at. The first stock I'm going to talk about fits into that international stocks category. So the company is Alsea. Alsea is the largest franchise restaurant chain in Latin America with 4,741 locations today.

We've talked about Alsea on this show before, but they are a master franchisor for Domino's and Starbucks in Mexico primarily. But they also operate and franchise other brands like Burger King, Chili's, P.F. Chang's, Cheesecake Factory. Yeah, essentially a lot of US and Canada. Let's call them quick service restaurants because it's not all fast food, but a lot of those brands. And Mexico is their biggest market, but they also operate throughout five different countries in South America. and they have certain european markets as well like spain france netherlands belgium portugal and i think the last one might be hungary i might be getting that one wrong uh looking at the flag here on a little map um but uh it it's a big franchisor a lot of the brands that are based

in the u.s um or the quick service restaurant brands want to outsource this they want a company that knows the market, has the know-how there to run these, and Alsea has been that company. I'll touch on the growth and valuation in a bit, but there are a few reasons I think the stock is well-positioned to benefit, even if the equity market in America collapses. One, spending power for the Mexican consumers won't be too affected. Two, less correlation with the American indices, which means less indiscriminate selling. And then three, the stock has been hammered along with Mexican equities broadly. It's now down 40% year-to-date and more than 50% from its latest highs.

Part of that is Mexican stocks are down and part of that is the threat of tariffs from the incoming president in the US. They're – I'll say it's not that affected by tariffs. they produce and consume in mexico there is some currency risk in that they earn in south america and europe and they convert it to pesos but the only currency risk you're really taking and i think unless i'm wrong there isn't really any tariff risk you're well if you're whatever country you live in that's the currency risk you're taking so just think about the u.s dollar versus the peso um honestly could be in a good time if you kind of look at that chart it's been

fairly stable and it was maybe an inflated level two years ago. So I don't know, maybe some of that headwind has passed here. But another nice positive here is that this isn't some speculative Latin American, Mexico turnaround story. You don't have to bet that it's going to have good returns out of nowhere and the stock that has never produced good returns for American investors is all of a sudden going to do it. This has been a major winner over the last two decades. The stock is a 26 bagger over the last 20 years. And that is talking now on a 40, I guess, 55% drawdown. It's still a 26 bagger over the last 20 years. So it's drastically outperformed the S&P 500. As for the actual operations, like I mentioned earlier, they franchise and operate

stores for several quick service restaurant brands, most notably Domino's and Starbucks. 77% of the units they operate themselves, and then 23% they sub-franchise out. Kind of the next layer down. It's like Inception. Yeah. Franchise Inception, I guess. The franchises in the franchise. Yeah.

And maybe those sub-franchisers have people that run the stores that – Yeah. Watch out. Hey, watch out. You're describing a Ponzi scheme there eventually. But no. Just kidding. Just kidding.

Won't use the P word. So they either generate the sales themselves through the company-operated stores. So they buy the goods, buy the raw ingredients, and they have all the expenses. They like operating any quick service restaurant. And then they pay up to the master franchise, so the brand, the quick service restaurant as well. Or they collect a 6% royalty on their sub-franchisers revenue, which is pretty straightforward, pretty simple. Thanks to the superior operations, Alsea has delivered remarkable growth over the last two decades. Revenue has grown at a 13.4% annual rate over the last 20 years with a roughly 50-50 split

of that revenue growth coming from unit growth, so new stores, and then same-store sales. They've had really, really strong same-store sales over the last 20 years. Here's a quick quote from what we call Latin American correspondent Ian Bazak. He says, in a highly fragmented market full of mom-and-pop operators, Alsea's investment in supply chain, logistics, and digital marketing have given it a considerable advantage. And you see that. This was kind of news to me when we talked to Ian, which was, we think in America, we think of Domino's as the value choice, right? You can get two pizzas. It's not going to be the best pizza you've ever had, but you know what you're getting. And it's going

to be, I think it's, what is it? $7.99 per pizza. It's affordable. You can feed a family, that kind of thing. In Mexico and some of the other Latin American markets, people don't necessarily think of them as the value choice, but they're getting the standardized ingredients. They know what they're getting. It's very consistent, which you don't get as much with the mom and pops, which in a world where the middle income consumer is growing, that's very good um i've got a revenue chart here maybe brett can share it but basically revenue since 2004 has gone from 332 million pesos to three point i believe this is in pesos i'm not sure how i did this but 332 to 3.97 billion um so yeah brett sharing it here it's been it's the revenue is

up 10X over the last 20 years. A little more actually, 12X. So pretty good performance there. You can see the proof is kind of in the pudding with their concept. So sales growth has been excellent. They have a blueprint for successful store expansion that they've executed now thousands of times. And there's plenty of white space in many of their markets. As for profitability, I'll say it generates about 11% operating margins, which is slightly ahead of their historical average, but there should be some economies of scale as they grow and fill up certain markets. So potential operating leverage there. Current market cap is 37 billion Mexican pesos. However, you can probably imagine COVID was tough for them. So they had to take on

some extra debt. As of the latest quarter, they have 49 billion pesos in net debt. So that puts them at an enterprise value. And I know I'm doing a lot of verbal math here, which is not always fun for the listeners, but 86 billion peso enterprise value. That equates to basically 4 billion U.S. dollars. Over the last 12 months, they've done 12.5 billion pesos in EBITDA. So we're looking at EV to EBITDA. I think that's probably like six times. The net debt to EBITDA is pretty manageable now. It's 2.4 times. That's come down pretty steeply over the last couple of years because they've been paying that down. I know some of the debt was due in 2027. They might have rolled it. So altogether, the metric, I think the track here is EV to EBIT. And I know

you're thinking EBIT, there's plenty of interest in taxes. And if you look at EBIT versus net income, the majority or the lion's share of that discrepancy is going to come from the interest expenses. They're aggressive on the leverage and that can add to the returns, but it adds a little bit of risk here. Yeah. And it's certainly come down as they've paid it down because they needed the debt to survive during COVID. But EBIT 10.4 times, that's down significantly relative to the last few years. And then right now they're using most of that cashflow to pay down debt, but they just reactivated their dividend as well. So in May they paid out 120 peso per share, which equates to 2.6% of the current share price.

So if they're able to potentially annualize that or they don't do it really on a quarterly basis, it's a little less frequent. But basically, they're paying down 10% of their market cap they generate in cash each year. And they have the ability to invest that in a variety of places. They can do it in new stores. They can do it in paying down debt, which they've primarily been doing. or they can do it in buybacks and dividends, most likely a combination of both, which I think they

will do over the coming years as the debt becomes less of a burden. So here's one more quote as we kind of wrap things up. This is from Ian Bezek again. He says, I'll say it is the perfect sort of business to profit from a country's burgeoning middle class. It offers the sort of popular consumer goods that are accessible to a new group of consumers that want to live a little as they enjoy their greater discretionary income. I think this is a compounder. They've shown that over the last 20 years. It trades at a very reasonable price, now down 50% off highs. And I would not be surprised if you got a good return and there's very little correlation to US equity markets. So nice place to hide. This episode is brought to you by our friends at Yellow Brick Investing.

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higher yield with a diversified portfolio of high yield and investment grade corporate bonds on public.com you might want to act fast because your yield isn't locked in until the time of purchase. Lock in a 6% or higher yield with a bond account only at public.com forward slash chitchat stocks. Yeah, every time we look at it, I'll say, I go, why don't I own this? I own a couple other Mexican stocks, but I feel like this needs to be added to the list. One note, a clarification, you talked about that one chart you were asking because I didn't have the note there on the screenshot whether it was usd or mexican pesos that one i shared was in u.s dollars but the good thing is is you can toggle directly between mexican pesos and u.s dollars

seamlessly at our friends at finchat.io which you should go check out using our link finchat.io slash chitchat and get 15 off any paid plan we're using them throughout the episode but yeah it was it was u.s dollars ryan mentioned that market cap in pesos that looks way bigger than that 3.9 billion that he mentioned but that wasn't uh u.s dollars so converting to pesos they're actually like one-time sales i think on a market cap basis either either way that earnings multiple is cheap and then the last thing i'll add you talked about growing because or benefiting due to a burgeoning middle class. Mexico's GDP per capita is, I think, just kind of going for some quick Google search data here. It's about $13,500 per capita. If we translate that to incomes and

say that maybe correlates one-to-one on average incomes, the threshold for where a person, at least depending on you know what country and it can be a little bit different but the threshold of and especially in an emerging market of going from someone that has no consumer discretionary spending to one that has excess income is around this level because before this you have to basically spend all your money on your basic goods and necessities shelter food you know healthcare services if you have to pay those, stuff like that. But this is almost like discretionary spending in Mexico. If their GDP per capita, their income per capita, their average incomes per household grow from whatever it is today to $20,000, $25,000 a year,

$30,000 a year over a decade-long period, or maybe a multi-decade period, the percentage of consumer spending and discretionary spending travel going out to restaurants you know stuff like that will grow quicker because they already have to pay for those necessities is what i'm saying so it's almost a leveraged bet and i'll say it should generate if or should benefit because well look they're that restaurant spending they're that discretionary spending versus cooking at home yeah and an american recession like if you're thinking consumer spending might at her does not mean a mexican recession in terms of consumer spending so even though there is more and more trade relations they the they simply are not tight at the hip the way some might think

let's talk your stock number two here i can't think of a more perfectly counter cyclical one if uh consumer spending uh comes down yeah mine is it's a little bit different than British American Tobacco. I think it might be a little bit riskier, but it's one that might be like, it's just so counter cyclical, but it's almost a bet that it'll do well during a market downturn and a recession or something like that, that causes a bubble to pop. And then you'll have a stock that does well and you can buy some of the compounders that get cheap is the idea. Or you can just hold this one and keep going. So I will be honest here. I had trouble finding a second stock that I, you know, loved for this framework. I don't want to add another sin stock

or the Mexican stock here where I would find some opportunities, but I do, you know, listeners do look at those more closely. We plan to cover those a bit more in 2025, at least the Mexican companies we think can be a nice theme next year. But to keep things interesting for this episode, I chose Dollar General. The confidence on this one is lower, but I think it should make for a discussion. And here's what I want to discuss. Will Dollar General stock hold up in a market crash? I think probably is my guess. The stock is trading at a dirt cheap multiple, if you believe in some profit margin mean reversion. Even without it, it's not that expensive. Its business is counter cyclical, and they will keep returning excess cash to shareholders if the business

holds up. So for those that don't know, Dollar General is the largest discount retailer in the United States. Well, discount, small format retailer. I don't know what specific way we should describe them because Walmart would be the biggest on a pure discount retailer, but those are the super stores. It has slightly over 20,000 store locations. Here's the company's customer value proposition according to their website. Quote, we want to provide a broad base of customers with their basic everyday and household needs, supplemented with a variety of general merchandise items at everyday low prices and conveniently located small box stores. There are a few important points here. First, Dollar General is usually located in

rural areas that are too small for a Walmart. Think very small towns. This niche is what has allowed Dollar General to achieve so much dominance. Sometimes they are the only option in the entire town. Second, Dollar General wants to offer basic consumables, which is about 75% of their business, and merchandise items at low prices. It is a bit of the dollar store knickknack model, but much more skewed towards consumer durables versus consumer discretionary knickknack items. Third, Dollar General targets a poor customer. Management talks about the quote $30,000 salary as their cohort. From the show notes here, I have a random shot of stores in Western Nebraska. Just did a Google search there and you have a bunch of tiny towns everywhere

and they are probably the only game in town in some of these small areas. Historically, what I'll mention and why I'm confident that they will do well in a recession or a market crash, is they've done well. They are counter cyclical. Even though rising unemployment will see some of its customers lose purchasing power, many customers will trade down to more dollar general purchases, which will more than X out that stuff. So they won't be able to afford, you know, bulk items, the big trip to Walmart or maybe

even a Costco if that one's nearby, ordering online. you know there's a lot of puts and takes here uh you don't want your entire customer base to go out of business but maybe that they're more stable earnings when you're uh in kind of the agriculture business or something like that i don't know honestly but on the whole dollar general does well in a weak economy if we look at some data here back from an old investor presentation from dollar general if we go from 2004 through say 2011 i'll just read out their same store sales growth. 2004, 3%, 2005, 2%, 3%, 2%, 2007. And then 2008 and 2009, they both jump to over 9% per year. So that's compounded on each other. And 2010, 4.9%, 2011, 6%. They do well

in a bad economy for at least consumer spending. And we saw during this period, you go from 2004 to 2007, they were on a kind of, you know, the same sort of linear growth. But then from 2007 to 2010, that revenue growth accelerated. And why I mentioned that right now is because Dollar General stock is in the gutter because of a combination of weak same store sales growth and margin compression, which are interrelated. You know, Dollar General has not been able to keep up with inflation with its same store sales growth, which is hurting margins. I mean, just think about that on a, it's just logical when you're a store like this is kind of a basic consumables is almost impacted by broad amount of inflation. You have transport

costs, labor costs, and stuff like that, that are growing quicker or maybe at the rate of inflation. And if you can't grow your same store sales at the inflation rate, well, then your costs are going to grow a little bit faster than your revenues. If same-store sales growth recovers, which I think will happen in a recession, revenue growth will accelerate and margins will begin to expand. Same-store sales growth was positive 1.3% last quarter. And I believe if we get to 3% to 4%, margins will start to expand again. Now, that's not a huge hurdle. i'll let ryan talk and maybe have any feedback here because there's one really interesting chart and that is their operating margin going back to 2004

well below the post great financial crisis or say during great financial crisis levels of about eight to ten percent or down to five percent over the last 12 months what do you think about this chart, Ryan, and should I be confident that this can recover back to maybe 7%, 8%? Yeah, that's kind of the big question. And it's why the stock is on a 70% drawdown. It's the largest drawdown ever is there's skepticism that they can never get back to the operating margins that they were generating throughout the last decade, which was around 8% to 10%. if they do this will be a phenomenal investment and the other idea here in why it's so counter cyclical is something we've talked about in the show a lot it's the wealth effect so we're talking

about stock prices collapsing where's a good place to hide when stock prices collapse it affects consumer spending especially in big huge major drawdowns you've got all of a sudden When people don't think they're as rich as they were a year ago, they start to tighten those budgets and it becomes more and more difficult to afford things. Maybe they actually were wealthier. Maybe they've lost their jobs. Maybe businesses had profit margins squeezed and so they had to reduce the workforce, something like that. The stock market and the economy do tend to be correlated. It's not always perfect, but the wealth effect, I think it is real, and you can see that with Dollar General, comp store sales throughout the great financial crisis.

It affects employment and it affects consumer spending, and if that happens, people will probably trade down and you'll see a big boost in comp sales for companies like Dollar General most likely. Yeah, I think that's the big bet. But the question is, will the stock hold up if the market maybe corrects itself, but we don't go into a recession? So we don't get the trade-down effect, but will they be okay? Or maybe, we are maybe not spending enough time talking about competition here. I will, we can't talk about everything on like a 15-minute segment, but there is, there are a lot of worries about Walmart. There are a lot of worries about Temu. There are a lot of worries about Amazon.

And I think you need to come up with any thesis yourself on how much you believe in those threats. Because right now, they're definitely hurting them a bit, especially Walmart, I hear, and maybe Temu on that merchandise side. But I think, if I look at the stock here, I think a lot of it's priced in. It's famous last words, but let's look at the numbers. If we assume Dollar General's operating margin remains at 5%, which is, again, where we are at today, well below the long-term average of the business, and total revenue grows at a lower rate than inflation. So we can't recover that operating margin. They still are kind of running on the treadmill and not getting too much. That's really the status quo here.

and the traffic losses to places have remained. It's not that great of a business. Revenue could grow to around $45 billion in a few years because I think it's still going to grow just due to inflation. But on that $45 billion in earnings, 5% profit margin, that is $2.25 billion in annual earnings. Current market cap is $17 billion. EV is slightly higher, but the company doesn't carry an absurd amount of debt.

i feel like this is what like the expectation going forward is that this is going to occur these or maybe even the margin gets worse is where people are are very concerned but if we look at the upside here what if profit margins recover same store still growth recovers if operating margin returns to eight percent and revenue grows to 50 billion dollars dollar general will be generating four billion dollars in annual earnings that is five times its current market cap of $17 billion, I would think it deserves a higher market cap than that. I think it's clear right now that the market is heavily discounting Dollar General's ability to recover to the long-term average of its business. Investors believe the future will

look like the immediate past, and I think if a recession or bear market happens, financials will recover. If this is a permanent impairment to its earnings compared to the pre-pandemic period versus now, well, that is likely priced into the stock unless we see a total unraveling of this business. I also like their long-term track record of capital returns. The dividend yield is approaching 3%. Shares outstanding have declined at a 3% clip since 2015, even though they've been paused since February of 2023, at least around then, the last couple of years. and then buybacks will resume in 2025 or 2026. At least I think they will. And dividend per share has grown at 12%. And he will clip all these charts again from our friends at FinChat.

Is Dollar General bulletproof? No. And people maybe thought it was bulletproof, but after the 70% drawdown, maybe more of that, that more is getting priced in here. But the expectations are low, it pays a decent dividend, and I think it should do well in a recession. It is, in my opinion, a perfect counterweight to a high growth portfolio. How I look at it is if your portfolio has absolutely crushed this year, stuff like Rocket Lab, Palantir, stuff that's done really, really well for you in 2024. This is a perfect counterweight. And if and when the market crashes there will be better or the opportunities among the rocket labs and the palantirs of the world will improve and if you want to buy those stocks you need money to do it

you need either money coming in which hopefully we all have or a stock that holds up or and performs well during a recession which dollar general can do and that can give you the ammo to road into into high growth stocks when they fall out of favor if your entire i want to say this before i close my segment here if your entire portfolio is is inexpensive bubble stocks well those are going to be the ones that are down 80 in a crash and yeah you might say look they've done really well over the last two years and they probably have your portfolio has done well it doesn't mean like you're you're dumb for holding them please consider maybe some new buys or mixing up a little bit with the dollar generals of the world or something that fits

your criteria because again these are not recommendations these are just what we think that can help you in a time like this when as ryan mentioned we're at some of the most expensive times in market history yeah agreed and it's it's just there's nothing more frustrating than let's say the bubble does burst and you those stocks you own the palantirs the rocket labs the world that are trading expensively all of a sudden your portfolio in tandem is down 50 or 60 then you have to sell you got to decide which stock that's down 50 do you want to trim some of to finance another stock that's down 50 and you just don't have as much you can't benefit as much from the drawdown if that's your goal. So yeah, I agree. It's nice to have some counterweights

in your portfolio. I'm going to move to my second stock. And this one might be a little counterintuitive for people because it's directly related to markets. Yeah, we'll have some pushback on there, but I guess you're definitely going to talk about it. Yeah. So the company is OTC Markets Group. All right, listeners, we've got a new sponsor here on Chit Chat Stocks. The name is Blue Chippers Club. Blue Chippers Club was recently started by two friends of ours with the goal of building a tight-knit community of stock-focused investors. Inside this awesome community, everyone gets to share and break down their portfolios with each other, participate in weekly calls, and compete in fun portfolio performance competitions. I really

like this idea and it's why we're promoting it here on the show. In fact, Brett and I are in the community ourselves and enjoy just how much value we get collaborating with other investors. When I first got into investing, a role model of mine recommended that I build a network of, or community of friends to bounce investing ideas off of. And Blue Chippers does just that. If you're interested in joining, head on over to bluechippersclub.com and hit apply. Right now, it is completely free to join. The link will also be in the description. To give a quick elevator pitch, it's very durable. It's a network effect business and it generates exceptional returns on invested capital and it trades at a reasonable valuation. the uh the reason i wanted to do this is because i don't just want to buy i don't just want this

episode to be stocks where it's like it's a short-term solution it's like a band-aid over my portfolio for the next two or three years or something like that if we can find companies that i would potentially hold for 10 or 20 years and reasonable valuations and might succeed even during a bubble even better that's a good point because i maybe with my discussions have skewed a little bit more towards stuff that's gonna like do well if if the market crashes and that's almost market timing and if you're gonna do that one it's hard to time the market but two why don't you just own treasuries or something like that instead yeah sorry you go ahead Okay. So just to talk the actual business itself, OTC Markets is a business that has been around for a long time in some form or fashion. So the company's roots date back to 1913 when the National Quotation Bureau – man, I wish they still had that name. That'd be cool – was established to help provide price quotes for stocks and bonds for lesser-known companies.

And for a long time, the company was basically known as the Pink Sheets, which has and had quite a stigma to it and deservedly so. You might hear the term Pink Sheets and if you've never done any investing in the OTC markets or stuff like that, you're maybe thinking of the Wolf of Wall Street when they start scamming people with Pink Sheets companies and they've got all these horrible businesses that can't list on a better exchange and they're on the Pink Sheets and they're just ripping off investors. For a long time, that was in a way the pink sheets. It has evolved though and I think it's

very much been professionalized into what we see today. So we'll talk through some of that. The business was – a little more history here. The business was privately held for a long time and for a good 30-year period, it was actually owned by the Commerce Clearinghouse. However, in 1997, a man named Cromwell Coulson, cool name, who was 30 years old at the time, led a group of investors to acquire the National Quotation Bureau. At the time, the market for penny stocks and pink sheet listed businesses was, and this is a quote from Cromwell Coulson himself, disjointed at best and commercial enterprises were not providing an electronic facility for publishing or disseminating quotes in those stocks. following the acquisition cromwell worked to digitize the process and i would say over the last 28 years has significantly professionalized and improved this market today the business generates revenue from three buckets and the other thing i'll just say here is right now

if i look at a company for one you have great uh financial transparency you're getting really good reporting um even for businesses that are listed on the otc and you think about it some companies you see that they're listed on the otc for example alsea is listed on the otc pink sheets i don't think of that as an instantly crummy business um and part of that that's the that's the adr and that's part of the business here yes and that is and it's part of that is it's been professionalized because of cromwell colson and the team that's that's been leading them for the last 30 years. But let me go through the revenue buckets real quick. So the first one is OTC Link. This is the smallest part of their revenue segment. It used to be a really big part,

but it's kind of been steady over the last decade or so. And it grown a little bit, but not as quick as the other segments. So this is the alternative trading system and electronic communication network that broker dealers pay subscription fees and transaction fees to access. In other words, this is where investors pay OTC to be the go-between for trading in OTC listed stocks. This is the most cyclical part of the business. It's very transaction fee driven. So when transactions jump, OTC links revenue is going to jump. However, like I said, 10, 20 years ago, that would have been a major issue. Today, it's only 18% of revenue. So it's not the biggest deal in the world if transactions kind of decline

a bit. Second business here is market data licensing. So as the automated quotation system, OTC has lots of valuable data that funds and investors are interested in. So OTC sells data on quotes and transaction to those investor groups and typically does so through middlemen data distributors like Bloomberg, Interactive Data, which is owned by Intercontinental Exchange, also the owner of the New York Stock Exchange, Thomson Reuters, Faxset. Basically, they're using those big data providers to sell their market data licensing or license their market data. This accounts for 39% of revenue and it's grown really quickly over the last decade. It's been a nice successful subsidiary for them. And then the third one here, and this is probably the

most intuitive one and the one that investors probably think of the most when they hear OTC. Ironically, this was a really small part of the business for a long time. You really didn't have to pay much to be on the pink sheets. There was transaction fee revenue that OTC would generate, but there wasn't a whole lot of cost issuing or listing. But the third one here is corporate services. You can think of this basically as listing revenue. So there are a few different markets that OTC operates. So if you ever look up a ticker and there's an OTC listing, sometimes you'll see like OTCPK, OTCQX, OTCQB, stuff like that. Those are different tiers of the OTC market. So OTCQX is their best market. That is companies that are legitimate, high quality businesses.

It costs money to list on there. And then there's recurring fees to stay listed. OTCQB is one step below i'm not sure i believe there's a listing fee it's probably lower not quite as high um i don't look too much into that business and then the last one is the pink sheets um and they're actually in the process of recategorizing the pink sheets to be like anyone that's otc pk like i'll say uh um can get like more of a professionalized category and then there's like true true pink sheets which is companies that basically it's otc market saying more or less you're investing in this at your own risk kind of thing but to list on the otc qx which is the highest level it costs five thousand dollars for the initial application then fifteen thousand

dollars a year to stay on i saw that from a 2013 write-up so it's probably much higher now um And so this business, the exchanges, the listing revenue, the corporate services is 43% of revenue and will likely be the primary revenue driver and the biggest part of the business pending any really big growth in the data side for the foreseeable future. My question though, and the question probably a lot of people have is why would a company list on the OTC? Like why not list to New York Stock Exchange or the NASDAQ? And I know people are probably thinking, crown me businesses list on the OTC. There are more than 12,000 companies listed across OTC's marketplaces. And while most of them are penny stocks and pink sheets, there are some very recognizable names as well. Air Canada, Adidas, you can go onto their website and just look at all the companies and which exchange they're on, or which marketplace I should say.

Air Canada, Adidas, Allianz, BNP, Paribas. I only got to the Bs. because there's so many companies, but lots of very legitimate US and international stocks. Why do they do that? Number one, it is significantly cheaper. It's way, way cheaper to list and stay on the OTC markets compared to the New York Stock Exchange or NASDAQ. Two, and this is probably one of the biggest ones, international companies don't have to change their accounting or have multiple books to comply with the listing requirements. This gives them access to American investors without nearly as much effort requiring to be listed on New York Stock Exchange or NASDAQ.

So you think about like Adidas, who surely could afford purely the listing fees to be on the NASDAQ or the New York Stock Exchange. They don't want to have to revamp their entire accounting department, redo their books. They can just list on the OTC and it'll be the second biggest exchange. They automatically get access to American investors, and it's a financing source for them or a funding source. All in all, this really OTCQX primarily has led to solid growth for OTC markets over the last, I guess, 20 years. If we look at 2006 to 2024, revenue has gone from $13 million a year to $101 million a year. And there was a huge jump in 2021, and I think most people can probably guess why, which is the SPAC craze. So many companies were listing, and a lot of them were going up on the OTC markets, which I'll talk about here in a second.

Well, first, maybe trading down pretty quickly to the OTC markets first. They were on the New York Stock – what's the one that did it? Was the New York Stock Exchange the one that allowed it? Either way, New York Stock Exchange or NASDAQ. And then, oops, two years later, we don't qualify, but hey, we'll release it on the OTC markets for cheaper. Yeah. And so I guess that was – and it's actually kind of crazy to think that from 2020 to 2021, revenue went from $65 million to $91 million in the year. So a huge jump. They have never seen that level of growth. They still have higher revenue today.

So lapping the SPAC raise and the fallout of it, they still have higher revenue today. However, that is kind of my biggest risk. I'll just say it right now. There's going to be companies that delist, companies that no longer qualify, and it's going to lead to a reduction in listing revenue. Valuation. This is important to talk about. OTC does not require much investment to grow. Basically, all they have to do is maintain their tech infrastructure.

And to do that, they currently spend $1.5 million a year on CapEx, which is not a lot. They tend to average between 35% to 40% operating margins, so very good returns on invested capital north of 40%. However, the issue is that they've got 40% returns on invested capital. That's great. They don't really have anywhere to invest. What are they going to do? It's not like they can put money into a new storefront like Alsea or a new restaurant. They have to wait more or less.

They have to continue to improve their systems, improve their processes, improve their tech. Maybe they can find new ways to sell their data, but they got to wait. So they're kind of at the whim of the market to some degree. Instead, what they do with their cash is they tend to just return it primarily to investors through either dividends, but also buybacks. So they have a bit of a unique strategy here. It looks like basically every sixth quarter going through their dividend history, they pay a big dividend. So it's kind of like – Tax savings, yeah.

You know? Special dividends. they're very special but we just yeah we come up with them regularly yeah yeah it's like recurring special dividends i guess um but basically it amounts to roughly a 4.2 dividend yield and they have more than enough cash to cover that um and more than enough cash flow to cover that on a recurring basis operating margins though peaked at 42 in 2021 so they've since fallen to the low 30 range which is well below their 10-year average and part of that is because they've been integrating a couple acquisitions recently um blue sky data was one of the companies and

then the other one was edgar online so if you ever used edgar online that is uh that's otc owns that oh really they own edgar that's not the sec i know well edgar online might be a different thing um i don't look into it too much because it's a small piece of the pie but um huh it might be like the place that i'm really not sure i gotta double check but um yes they acquired edgar online which is what i saw um but colson ceo who by the way owns 35 of the shares and i think he's a really good operator um it's very intent on getting back to the long-term margins long-term margin profile Well, here's kind of how I think about all the puts and takes to summarize things here. CEO owns a ton of stock.

I think he's a really good operator, very incentivized. I think he's in his 50s, so still got some room to run in terms of operating. He seems very excited. You listen to the calls. You can tell how much he cares about the business. Second one here, there was a massive jump in listings revenue. We're seeing the fallout of that today, which is why revenue growth has stagnated and has gone to just basically 1% revenue growth as opposed to their, I think it's 12% average

over the last 20 years. But over the long run, I think this will work itself out. I expect revenue to grow within the historical average range if we look out over 10 years. There's lots of reasons to list on the OTC. They professionalize it so there really isn't as much stigma for international businesses listing on the OTC markets. and i i think they can get some margins at 35 percent at least if that happens they will have 163 million dollars in revenue in five years and net operating profits after taxes

of 50 million basically today they've got a market cap of 623 million dollars no debt i think like 35 million dollars in cash so ev is just under 600 million dollars you're paying 22 times Depressed net operating profit after tax margins – or sorry, net operating profits after taxes, and that's on depressed margins. So that's the last 12 months. You're probably paying 12 times 2028 NOPAT depending on, A, depending on where revenue shakes out, but also whether or not they get back to the margin profile they've had. I suspect they will. And this is an operator who has shown an ability to do it in the past as well. So I think you're getting potentially low teens annual return, and then you've got the margin of safety in the kind of consistent 4% dividend yield as well.

There is going to be some correlation to the market, but the majority of revenue is going to come from those listing and data licensing businesses, which is recurring, subscription-based. It's not based on transactions. So you might have SPACs delist, you might have broker-dealers reduce trading, but ultimately- Private equity. Yeah. That's probably a headwind. That's probably a headwind. No, yeah.

I mean, listings have gone on the OTC best market. Listings were at, there was 329 listings in 2013, and now there's 600, just over 600 listings. So over the long run, people tend to join that market. But it's going to be lumpy, especially because it's dependent on how markets feel. But I think they're in a good spot long-term. And Cromwell Coulson really has a good idea on what drives value for shareholders. It seems like some of these potential headwinds of a market crash are priced in a bit. They're feeling it already, like with the SPAC delistings.

that's true yeah hmm yeah the one thing I get that it might be depressed multiple but I don't know if the valuation is that attractive where it's not going to go down a little bit at least

but yeah I like it seems well run long term performer I guess it's not one that's like perfectly counter cyclical it's a little too pro cyclical for me but i mean i like the i like this as a as a long-term hold and it seems more attractive

than a lot of stuff out there yeah that's the i guess it's not a hide in a market bubble one it's more of like all right this is an opportunity kind of long term for but it's better than you know buying walmart at 40 times earnings yeah i mean it's definitely of all the four that we talked about today it would be the most affected by a market bubble most likely um as companies delist and transactions likely come down but i like it i like it in the long run and the other one i was going to do is philip morris and i didn't want to bore people with another tobacco stock so yeah we already talked philip morris yeah there's some other mexican ones that i liked you know the airports stuff like that yeah all right we're running a little long so anything

else before we head out ryan no i think that covers it merry christmas if we are if you're listening to this on christmas um we will have our 2025 predictions episode out here as well i believe and also look back at some of our 2024 predictions yeah this is always a fun episode Yeah, we're doing, I can't remember the exact schedule, but we are pre-recording a lot of these before we go on a little Christmas and New Year's vacation. So, the recording date is December 13th. So, if anything crazy happens to these companies, hey, well, that's unfortunate that this aged poorly. But who knows, maybe it'll age well within the two weeks before launching this. All right, let's hit the disclosure and get out of here.

We are not financial advisors, and we say on the show is not formal advice or recommendation. Ryan, I or any podcast guests may hold securities discussed in this podcast, may have held them in the past, and may buy, sell, or hold them in the future. Thank you, everyone, for tuning in to another episode of Chit Chat Stocks, and we'll see you next time. Thank you.