Chit Chat Stocks - BBB Foods + How To Invest For The Robotics Boom With Leandro From Best Anchor Stocks (Ticker: TBBB)

Episode Date: September 9, 2026

On this episode of Chit Chat Stocks, we speak with Leandro from Best Anchor Stocks. We discuss BBB Foods, and close with questions around his latest sector write-up on the robotics boom. Topics: (00:00) Introduction (02:12) History and origins of Tiendas 3B (06:18) What does a typical store look like? (11:41) Market environment in Mexico versus developed countries (16:27) Store opportunity and growth potential in Mexico (21:58) Margins, scale, and cash flow analysis (26:19) Competitive landscape and market share (31:26) Valuation and future growth assumptions (45:06) Robotics (48:39) Supply chain and investment opportunities in robotics (55:17) Key takeaways on robotics and AI advancements Robotics report: https://www.bestanchorstocks.com/p/the-durable-winners-of-the-robot BBB Foods: https://www.bestanchorstocks.com/p/30-revenue-cagr-emerging-market-a ***************************************************** Subscribe to our newsletter, Emerging Moats: emergingmoats.com  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* 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

For the past three years, interactive brokers individual clients average 24.3% annually beating the SMP 500. Lower costs and access to 170 plus global markets matter. Visit IBKR.com slash performance. Welcome to Chit Chat Stocks. On this show, host Ryan Henderson and Brett Schaefer analyze businesses and riff on the world of investing. As a quick reminder, Chichat 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 into Chit Chat Stocks, a podcast to help you find your next great investment. My name is Brett Schaefer and I'm joined by my co-host Ryan Henderson and today we are bringing back on recurring guest Leandro from Best Anchor Stocks. I think you're probably number one over the last five to six years as a recurring guest on the show as a number of appearances based on the listenership that we get on each episode. We want to bring you Leandro Bag as much as possible. Leandro writes Best Anchor Stocks, which is a substack newsletter covering a lot of high quality and niche companies. We're actually talking before we were recording some of the stocks that he's been

researching for the episode. I hadn't heard of two of them. So there's a lot of undiscovered stuff that Leandro is covering there. We have a link in the show notes that people want to check that out. But today we're going to be talking about another interesting business. When we've talked about a little bit on the podcast, some of the listeners in our substack chat have talked about. It is BBB Foods. The ticker is TBB.

It's an ultra-discount grocery store concept in Mexico. It's growing quickly. We're going to go through the whole thesis here. And as well, on the second half or maybe last third of the episode, we were going to cover a sector write-up that Leandro made on robotics, which I thought was interesting as well. let's get into it. How did you find BBB Foods or Tiendus 3B and take us maybe a little bit through the history of the company? So first of all, guys, thanks for having me back.

I don't know if it's maybe fourth or probably fifth time on the show and it's always great. I'd say the answer to the first question is pretty straightforward because I found about, I don't know how to call it, Tendastresby or BBB Foods through a friend because he owned the company and he told me that I should look at it because I would like it and I guess he was right.

So that's how I got to the business. He recommended reading a very interesting book which is called Retail Disruptors. Interestingly, it's not on Amazon. Well, at least not when I purchased it. So you have to buy it on the webpage. It's by Jan Benedict Steencamp. And basically in the book, you can read about how the hard discount model started eating into the market shares of, let's say, the incumbent grocery retailers.

There are plenty of examples in the book, but I'd say the most famous one, especially because it caught famous investors. I think Warren Buffett and Terry Smith in the middle. I think they invested in Tesco. And Tesco started to lose significant share against the hard discounters from Germany, Alde and Liddle. So it basically explains how the hard discount model works and why it has, let's say, durable advantages, right? Which in retail is not easy to find.

So I can go a bit about the history of the company, although the numbers, I'm terrible with the numbers of the history, so basically Anthony Hatum, who is the president and the CEO and the founder of the company, he used to work at Mary Lynch in the private

equity arm, and they used to have an investment in a company called BIM in Turkey. Beam is basically a grocery hard discounter in Turkey, and, well, he was very impressed with the numbers that BIM was putting up. So he said, well, maybe I should go to find a place where I can replicate this model. And then he looked into many countries and he ended up in Mexico when they opened

the first store. I think it was in 2004, although I don't want to be held accountable on that number. I think it was early 2000. So they opened the first store with the hard discount model and the concept started to grow and grow and grow. And today there are a company, I think there are around $4 billion US dollars in revenue, so pretty large, and they continue to grow at a very fast pace. So that's a bit of the history of the company,

just so people understand it very fast. It's basically a copy of a model, hard-discount model that was working in Turkey that Anthony Hattum decided to take to Mexico because he believed that the, let's say that the industry environment was very similar in Mexico to that of Turkey. And that's also important to take into account when thinking about TBBBB because you shouldn't compare it with a hard discount

that's competing in a developed market. We can go over the difference later over that. but that's also important to consider. Yeah, let's talk more about what they look like today. What is the typical BBB store? What is sort of the customer experience? And why has this been able to kind of win share in Mexico? Okay, so the Enda Stresby has pretty small stores that are in urban places, right?

So basically thought to go walking to the store for people that live nearby. So if you're doing that kind of store, you're going to have to put it in dense areas, right, in densely populated areas. So they're typically small. They don't have, they have few SKUs and few in, I mean, quotation marks because they have quite a bit of SKUs, but they have significantly less than you'd find in a typical supermarket, right? because the idea of a hard discount model is that you simplified as much as possible so that you drive a lot of volume per SKU,

so you can get a lot of cost savings per SKU, and you share those cost savings with the customers. So the idea is that you have few SKUs, and as time goes by and you gain volume, those SKUs start to be impregnated with private label, which is cheaper for customers and also more profitable for the... So the typical customer experience, or I would say customer workflow is basically that someone goes to Tendazresby to satisfy their daily or weekly grocery needs, right?

So maybe the typical customer is someone who goes two or three times per week to the store, and the average ticket is pretty low. I don't know exactly by heart how low it is, but I think it is, the average ticket is below $5 currently. So pretty small purchases, right, of grocery. If you want, I can go because if we think about grocery, and this applies to a lot of countries, but I could say that, especially in, I will, let's say, tailor it to Mexico. We have, let's say, three kind of players in the grocery industry, right? We have the luxury grocery, like where players have to offer. some sort of differentiation in terms of services and maybe choice of products.

So they have to run with a lot of SKUs, a lot of brands, so that people have a lot of choice. And they need to do these two things to be able to charge a higher price, right? That should be like the high end of the market. Then you have, at the other end of the spectrum, you have low-cost grocery, where you have players like the Industries Bair that follow a shared economies of scale model with very low costs and that they share every additional saving. It's a volume-based business where you are sharing the savings with customers.

And then you have everything in the middle, right, of those two ends of the spectrum. Historically, everything in the middle has ended up disrupted, which is interesting. So in grocery, and we're seeing this in Mexico, you're either at the high end

and you can do well. I think there's a supermarket in Mexico that's more on the high end that is called Lacomere that is doing pretty well despite the rise of hard discounters or you either go to the low cost part of the market where there's a very strong first mover advantage, right?

So the industry plays in this let's say, I don't want to say low end because I don't consider it low end, but let's say low cost part of the industry. Then, and this is why it's important to understand that we're in Mexico and not in an undeveloped country, you can further differentiate it in two buckets, right?

You have the industrialized market or the formal market and you have the informal market, right? We live in developed countries, we are used to the formal market, right? Groceries industrialized everywhere. We don't see informal market in developed countries. But in emerging countries, there's a big chunk of informal market, right?

In Mexico, these are called Tian Diedas. It's like self-employed people that open up a small shop that is basically in densely populated areas, right? And trade is pretty informal. That was the same case in Turkey when Beam opened up, right? 60% of the market was in what's called bacals that are like informal small shops, grocery shops. So what Beam did in Turkey was basically industrialized.

the informal market, right? So a lot of people think about Tiendasresbea, a company that's fiercely fighting against the incumbents, and while it competes very favorably against the incumbents, a lot of share is being taken from the informal market, right? The end of Tresby is basically industrializing the informal market in Mexico. That's why I don't think Anthony Hattom ended in Mexico by mistake. I mean, the two countries are very similar in the sense that the informal market made around half of the total grocery market, right?

And there was not really a hard discounter that was disrupting the industry, neither the informal market or the formal market. So that's why Mexico is like a different environment to some people that may be thinking about a hard discount in a developed economy. Are there any other differences in the type of economies? Because I know the majority of our listeners are either in the United States or Europe. And this type of model, for the most part, isn't outside of, you know, Aldi is even a little

bit different, although very, very similar to BB foods. Is there anything specific about, like, what a consumer is like in Mexico versus the United States? You know, is there less driving? Is there just less ability to stock up on groceries that makes BBB foods a much better option for something that can go, hey, I can walk through? two minutes from my house in Mexico City, and I'm going to have very, very cheap items that I can get here.

I'm not going to have to go on the bus to Walmart. It's going to be an hour-long trip. Is that kind of the value proposition we have here, and they're even cheaper than what you would get at Walmart? Yeah, I'd say part of the value proposition and also why the stores are pretty profitable is the fact that they cater to densely populated areas, so people go walking,

and therefore with a small store you can cater to a good amount of people. Also, I will say that management has not refused to add parking when they deemed necessary to the stores. But I don't think that's inside the value prop now because it's everyday shopping, right? So it's high frequency, small ticket. So basically that's not a setting where you would go by car if you can avoid it, because you are going to be able to take the food walking to your house. So I'd say it's very, very different to what you see in the US. I would say in Europe we have more of a mix.

We have a lot of, let's say, small supermarkets in densely populated areas, but we also have the large supermarkets where you can go driving. I'd say, and I don't want to speak for you guys, but I'd say that in the US you have more of the... like hypermarkets where you go driving and you typically make a strong, like a very large purchase. I mean, I go to Costco in Spain, so I can feel that's more the US model than when we typically get here. Yeah, for sure. And yeah, I guess for the United States listeners, especially, you know, we want every listener kind of understand what the concept is, this isn't like a dollar general or a dollar tree.

it's a lot different because I think when people think, oh, small concepts store, ultra cheap prices, they're like, well, is this just a dollar store in Mexico? That's not exactly what it is, correct? It's all groceries. And actually, we should manage this too. They don't even sell produce or meat at the moment. Yeah, they have like, the thing with these models

is that they're based on ultra simplification because you need to be as agile as possible and have the lowest cost base as possible. So when you include a new category, they typically take another one that's not performing well out, right? So, for example, now they're piloting fresh, right, to have more fresh products in the stores. Typically, they'll make a pilot with a given number of stores, and if it works well and it generates high return, they'll try to put it in more like in all of the store network. But typically when that goes in, something else has to go out.

So it's always extreme simplification, right? And I would also say that, whereas dollar stores probably have more of, let's say, more of a value prop of convenience than cost or other than price, especially because they are not any more dollar stores, pretty much everything costs more than a dollar. I think that a concept like that of Tendas 3B has also evidently, value prop of let's say of convenience but the main value prop is cost

right they are significantly cheaper than competitors right so and that plus the fact that they are close to people it's the whole value prop where in the dollar stores you could get things cheaper at other places but you maybe go to the dollar store because it's closer to your house than

maybe where you could get those things cheaper okay let's talk about the numbers a bit. I'm looking at our friends at fiscal.a.I. As I should mention, use our link fiscal.com.com slash chit-chat, get 15% of any paid plan. At the end of Q2, total store count was around 3,600. Let's talk about just the Mexican opportunity first, because international might be a bit more speculative.

What have they said here? What are your assumptions on the growth opportunity? Just kind of take us through some of the numbers. Okay, so the Mexican opportunity is quite large. According to management, it's going to be, I think they began at 12,000 in store opportunity, and now they've taken that to above 14,000, if I'm not mistaken. So there's still plenty of opportunity. What I feel is very interesting about Tiendas-Bes, that when you think about a retail concept, you typically think about, hey, how much of the store opportunity is less?

because probably same store sales are relatively low, and if you want these things to grow fast, then probably you need to open a large number of stores. And that's also, to an extent, what makes a retail model interesting, right? Because if you're getting high returns on your stores and you're able to open a lot, then the flywheel can get incredibly profitable

for both the company and shareholders. The thing with what makes the industry be interesting is that despite the store opportunities still being so large. Same store sales are growing at an incredible pace. I mean, I think in the last quarter, same store sales grew 18 percent or something like that, or around 50 percent of the growth, of the total growth in, of the quarter, was being driven by same store sales, which is incredible. Right? So not only do they have a very interesting store opportunity, they are, they are also, they still have a very interesting organic opportunity because even though they already

have 3,600 stores, they are, let's say, a relatively unknown retailer, right? And when you start opening and densifying, you get a lot of these brand economics that a lot of people know you better. And a lot of people also start to expand the purchases that they make with Tiendas-B. So that's what I feel is interesting. But the store opportunities, opportunity is still pretty large in Mexico. And there's a way of actually understanding if this is believable, because you can go to Beam in Turkey to see what their store density ended up at. And when you do that, you do that exercise,

you end up in a relatively similar number that Tendastresbyab management is saying. So I think it's pretty believable because it has happened in Turkey, and I see no reason why similar store density, store density with similar economics cannot work in Mexico. Now, they may not mention this too much. I'm not sure if you focus on it too much, but people, you know, listeners want us to talk about this. Mexico's a large country,

but it's not the largest country in the world. What about expanding to new markets, such as like Central America, things of that nature? They mention that, do you factor that in the model? Because, hey, if it works Mexico, can maybe work in a lot of other places. I mean, it's not something that they mentioned because the opportunity is still very large in Mexico,

nor something that I'm taking into account, but it's something that can happen. If you take a look at a beam in Turkey, they've already expanded into Morocco and Egypt, but they are much more mature business, right? I think the model is exportable to other countries in Latin America, but I don't think it's

I mean I wouldn't say it's even in the top 10 priorities of the company right now right they're so early in the opportunity in Mexico and the opportunity is so large that I don't think that they should be thinking about that and I'm not factoring anything about that in some way you can think of it

as durability more than in growth right because the company is going to be able to growth pretty fast in Mexico and then maybe at the end of the ticket, you can think about it, hey, maybe they have more opportunities internationally that I was not factoring in, so maybe growth is more durable that I thought it would be.

But at this point in time, I wouldn't take the international opportunity seriously, to be honest. I mean, it's not something that they're even piloting. What do, so I was looking at gross margins here, and they're, I believe, hovering around 16%. What do you think that end, or I guess, steady state margins look like at, I mean, they're already kind of at scale, but at more scale. What would be the gross margin, operating margin, is it going to stay relatively in the same range?

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When Westjet first took flight in 1996, the vibes were a bit different. People thought denim on denim was peak fashion, inline skates were everywhere, and two out of three women rocked, the Rachel. While those things stayed in the 90s, one thing that hasn't is that fuzzy feeling you get when Westjet welcomes you on board. Here's to Westjetting since 96. Travel back in time with us and actually travel with us at westjet.com slash 30 years. So in this kind of business, the model is basically you evidently could have much higher gross margins

because you could be taking the scale economies for yourself, but what they do is they share part of these economies of scale with their customers. So therefore, margins do expand over time, but most of the economics is shared with a customer to take market share, right? At the end, I'm not going to discover here anything new. This is scale economy shared, the Amazon model, the Costco model all over again. So I do think that they will expand. And in my model, I have higher gross margins that 16.5%

that I think that they could do this year in 2026. And then evidently that, together with some operating leverage, is going to feed into higher EBDA margins. I, like, we shouldn't try to think that Tendastres B and BIM are exactly the same thing. But if you look at BIM, you should be thinking maybe about somewhere between mid-single, high-single-digit-did margins in a mature state. I must say that that's where I was anchored

at the start and that's what my model is based on. But if you take a look at where margins are trending, they are trending significantly better than I previously thought, right? So I don't know if I'm conservative assuming, let's say, 8% EBDA margin at the end or between 7 and 8%, but that's somewhere of where you'd be. The best thing about this business is not

the margins, right? It's the cost conversion. So when you think about these companies, as they gain scale, they get better terms with their suppliers, right? They get to a point where private label suppliers are basically supplying exclusively

to them, right, because they are gaining so much volume and you're growing alongside them. I mean, it's not a terrible place to be serving a retailer that's growing a 40% clip, right? Because you're going to be pretty profitable. So you could, I wouldn't say squeeze, but you're going to get better terms with suppliers. And then you're always getting paid up front. So cash conversion is very nice. So what this ends up in is in a model that's self-funded, while generating a lot of excess cash. And while I was doing my research on Tendas 3B,

I tried to look at how this played out for BIM in Turkey, right? So in 2015, Beam had a starting market cap of 15 million Turkish lira, more or less. Through the next decade, the company generated while being self-funding all of the expansion, the store expansion, they generated 48 million Turkish lira of free cash flow. So they generated three times their initial market cap a decade ago while not needing to raise one single dollar to continue growing, which is, I mean, it's incredible, right? But that's the beauty about the model.

And you can see this also in Tendastresby. The industry right now is in the, let's say, heavy expansion phase. they are already self-funded and they are already generating excess cash, right? So that's the benefit of the model more than the margin. The ideal model here is to get a slightly higher EBDA margin that allows you to continue to take market share, so you've got gain scale,

and as you gain scale, you also gain efficiencies and better cash conversion. That would be the ideal model. model. So I wouldn't focus as much on margins, which evidently are important, but also on the fact that the business, because it's a hard discount business, generates a lot of cash. They also generate a lot of cash because they have low SKUs, and they're rotating their SKUs very fast. So they turn the inventory several times before paying suppliers. So that's also a difference compared to other grocery retailers that have lower inventory returns, right?

So just to paint a picture for anyone that's listening, I shared a chart there, but, and Leandro's alluded to it, comps, same store sales over the last five years had averaged around 16%, which is kind of, I can't think of any other businesses that I've seen that produce 16% same store sales. And then store count has grown at around 30% annually over the last five years. So, yeah, it really is kind of astounding growth. who would you consider their largest competitor? Is it Walmart Mexico? This is going to sound a bit

I don't know, a bit controversial, but I don't think they really have a direct competitor right now. The thing is that you can think about two types of competitor, right? One is the incumbents. And the problem that the incumbents have,

and you saw this with the episode in the year, UK is that when they are publicly traded as Walmart is, Walmart in Mexico, when they suffer this disruption by a hard discounter, they typically take a long time to react because to react, you have to cannibalize your margins and you're publicly traded. So probably the CEO that's in place is not willing to do that. That's what happened to companies like Tesco. Eventually it's too late and then you react.

But when you react, these hard discounters are already large enough. that you cannot destroy them. I remember reading a call with an former employee of Tendas 3B who said that if Walmart would have wanted to kill them in the first years of Tendas 3B, that would have been pretty easy, but they didn't. And now they are the 4 billion size, and now it's impossible for them to do that, right?

Because Tendas 3B is already the cheaper, and when you're the first mover, you just simply keep the gap with competitors constant because you're taking market share and your scale is growing. So basically you can continue to turn the flywheel. There are other concepts in the country that are also trying to be hard discounters, but a lot of them are more convenient stores than hard discount stores. So they are also small and probably competing for similar real estate.

But more than a pure hard discount model, they are designed as a convenience store model, right? So this is the OXOXOOXO? Yeah, yeah. Walmart also has a concept that's trying to compete with the industry. I think it's called Bodegas Aurreira. But again, the first mover advantage in this world

is very important. If I tell you when Leda is established in a country, why doesn't someone come in or an incumbent change the strategy and they just start competing with it well because it's not easy, right, to take out an incumbent once the flywheel has starting to

change. That's what it's interesting about the book Retail Disruptors, right? Because it explains that this model is actually one of the most durable models in the retail world because once you're in that flywheel is very tough to get you out of it. Especially here we're talking about grocery, right?

Which is not linked to fashion. So people need to eat, and as long as you are able to be the lowest cost producer, then you're probably going to be in a very good place. Because trends are unlikely to change. People are going to still need to eat in 10, 20 years' time. And you're basically just... The main risk is that you stop turning the flywheel, right? That you start doing things that are not what a hard discounter would do,

and then you give an opportunity for competitors to go in. And also, as I see, it earlier, the interesting part about Tiena Stes Bay is also that they're competing against the informal market, right? So what is at the endita that they are not even organized between them going to do against the industry?

Basically nothing, right? And that's 50% of the market right there. So that's what makes it interesting as well. They are not competing head to head against the incumbents, which I think they are also gaining share from them, but it's not something that they need to be successful.

Which, that's what makes Mexico different to maybe a developed economy, right? Where a hard discount model might do well, but maybe you have a lot of incumbents fighting for the same piece of the pie. Whereas in Mexico, maybe the incumbents are not even trying to compete against the informal market, and then Teamastresbe comes in to industrialize that market. Right. And Aldi definitely has more of a competitive,

an intense competitive set in the United States where they're trying to expand to, I believe they have a decent amount of market share now versus... Tand it's 3B. One more thing of the numbers, I think a lot of listeners will look at this chart and just ask what exactly is going on. I have the gap operating margin, or whatever, maybe it's IFRS.

It's gone from 2% of the last 12 months back in 2024, 2025. Now it's down to negative 1%. Maybe what's happened there? And, you know, if EBITDA margin is going to be the mid-single digits to maybe slightly higher over the long term, you know, what's the capital intensity

do how that would translate to kind of the gap operating margin figure? So first of all, I say that one has to be careful with the reported figures because right now, because they just IPO, they have

quite, let's say, high stock-based compensation, but they do provide, management does provide a pretty detailed view of how that SBC should translate into the fully diluted share count. So basically what I do is I use the adjusted EBITDA figures

and ignore the SBC expense and then I run it through dilution, right? Because if you do both, you're evidently double counting. As in KPEX, I think the most interesting way to understand the KPEX intensity of the business is to unit several variables. The first one is how many stores pair per year you think they are capable of opening, right?

I believe they are now, let's say, around 400, 500, that sort of numbers in short openings per year. I think that can scale up to around 1,000 per year. The reason is because the organizational structure is the same as BIM, right? So they have regions, and within those regions, each region is responsible for opening more stores around distribution centers, right? So the real estate decisions are pretty decentralized. So that enables them to scale the store openings as they scale the regions. Beam in Turkey topped around 1,000 stores per year. So I imagine that that's also a pretty valid limit for Tendas 3B.

then you need to understand how many distribution centers they need per store. I think the average has been that they've, they currently have, one second, I have my numbers here, around, I think it's 160 or, they currently have around 170 stores per distribution center. So if you have your total store numbers, you more or less know how many distribution centers they need. And you can more or less triangulate how much it costs to, open a store and a distribution center, so more or less you can get the capital intensity from that figure. So evidently, on an income statement basis, the company is going to look, let's say, capital intensive, but on a cash flow basis, the business is not really that capital intensive because you're getting the benefits of the significantly negative working

capital, right? So the model is self-funded, and even though KPEC is, going to go up, you're going to get quite a bit of cash generation along the way, which is what makes the model interesting, right? You're basically getting free financing from the model. So that's how I would look at it. I mean, I'm not going to share all the numbers I have, but if you think about store count, distribution centers, you more or less know. You can evidently include inflation into the construction costs of both the stores and the data. and the distribution centers. And then with that, you get to a KPEX figure,

and you basically can work out the operating cash flow. And from there, you can see that the business is going to generate quite a bit of free cash flow, even though it's going to ramp up the KPEX. Okay, last question I have, unless Ryan has one more on Tendus 3B. You might know more about this than me, but they hinted at, or at least have talked about expanding into non-grocery service. I think this could be something like financial services, something like OXO does a lot in Mexico. Is this part of your model at all?

How serious they are about this? Just wanted to hit on that briefly. I'd say, I'd give you a similar answer to the international opportunity. I think they, for example, if we think about pure grocery, they still don't have fresh, right, as a category. And fresh can, like, is a pretty important category in grocery. So I don't think it's needed today, like non-grocery services, or they don't need them because they can take share and they can include other grocery categories like Fresh. So there's still ample runway within grocery. Also, it's important to understand that management is willing to stay very close to the hard discount model. So everything that they include, be it grocery or non-grocery or services, has to have similar characteristics.

to the categories that they have today. So it has to have high rotation, right? It evidently needs to be something their customers needs. And evidently, they have to find quite a big value, especially if it can be private labeled, then it's perfect for them. But I imagine that a lot of services can't. What it's interesting is that Anthony Hatum in the latest call,

he said something very interesting, which is that Tendas 3B is, a platform more than a grocery retailer, right? I mean, if you have a lot of traffic from customers, that gives you a lot of optionality to offer things customers want, right? They already have certain categories that are non-grocery or non-grocery related, that are called, for example, that are called Los Irrepetibles. So that's to bring sort of a treasury hunt to the store. So you'll go and you'll have the category Los Irrepetibles, and they'll be there for a couple of of weeks or days, maybe you can find TVs there, and then they'll disappear and they'll rotate that

category. So I'd say it's a possibility that we'll see non-grocery services. I'd say even that it's significantly higher probability that we'd see non-grocery over the next couple of years than that we would see an international expansion. So yes, it's a possibility and it's a source of optionality, but again, probably not required for the next couple of years because the runway is so large in grocery and the categories that they are like today. Okay, before we move on to some robotics discussions, let's talk valuation briefly. I don't think we've really mentioned it much. What does it look like today and what sort of growth rate do you think they can sustain in the coming years?

again so so if you look at if you look at the reported figures it's going to be super expensive especially on profitability metrics due to the SBC I mean the stock has moved up quite a bit but I think was trading around one one time sales not long ago I would also caution at looking at current and even next 12 months multiples because the business is growing so fast that even if they appear a bit high, which at a point in time they didn't. And they don't even do because we were discussing before the episode. I mean, this business, the stock has run up like 40% in no time, like in six months,

but at the same time the business has grown 40%, right? So the valuation multiple has not move much from that level. And it's outpacing even the most optimal. optimistic of expectations. I mean, I have to update my model to the upside a couple of times already, and I've not even held the company for one year. So it's pretty amazing. So I think that the way to look at valuation here is you need three things. First, evidently, the growth, and that's going to be a mix of the store openings

and the same store sales. that gets you to a revenue number in whatever time horizon you want to do then the model is going to be sensitive to the EBDA margin because it's so small than changing it 100 bibs up or down changes quite a bit the valuation but I'd say that beam

and not only because I say it Tendas 3B management has also claimed that BIM is probably a good proxy to understand where the financials might move to in the long run. You get the revenue, the EBIDDA, expected EBDA margin. And then a very important thing to do with TNASB is to understand the fully diluted share count, right? Management uses SBC as a way of aligning employees with shareholders. and if you get the fully diluted share count, I'd say that you need to include further dilution to that number, and the historic dilution has been around, say, 1.5%, 2%.

So with those numbers in mind, then you can get an EBDA per share and judge what you believe is a fair multiple for the company in 5 or 10 years. That's how we would go around valuation. The interesting thing about this business, and I think it shows the magic of compounding, when I added the business to my portfolio, I was getting, say, 17%, 18% IRAs in my model. The stock is up 50% and my IRAs are still above 15%.

And that's the reason behind that is basically that the business has grown considerably faster than I expected it would, right? and margins have come ahead of what I expected would be the case. So that evidently, it's very important to take into account. I thought that I was not being extremely conservative, but this business, when it works, it can produce numbers that seem a bit unrealistic, right? Beam in Turkey has been going above,

and this is when you take the Turkish-Leworth, depreciation away has been growing upwards of 20, 30% for many, many, many years, right? Because once you have the model, you're basically taking share from competitors that basically can't do anything. In the PIMS case, it was the baccals, and in Tienas 3B is the Tienditas, the informal market. So I'd say that that's how I would go about valuation. There was the 6th of August, I thought that the stock could suffer a bit because we had the lockup expiration. But contrary to what everyone expected, the stock after August 6th basically went to all-time highs. Everyone thought that after the lockup expiration, everyone would rush to sell the shares.

But Anthony Hatum said that he didn't expect people. would rush to sell their shares when they are growing 40% while expanding margins. And, you know, maybe he was right. And maybe the lockup expiration even creating an event where more investors wanted to get on board. Who knows? So, yeah, that's what I would say about valuation. I don't think it's, even though the stock price chart gives a bit of vertigo, I wouldn't say it's very expensive.

evidently it would have been better to buy 50% lower like it always is, but the business has continued to grow fast. I think it's a very interesting example of price anchoring, right? You buy and then you're up 100% in, say, two years or three years, and you say, whoa, I paid half for this, so now it's expensive, but then you check at the fundamentals and maybe the business has grown even above that 100% and it's even cheaper today. That's evidently super logical, but it impacts psychologically every investor, right?

I mean, I suffer it. Averaging up, especially in start a short period, I think it's psychologically pretty tough. But if you have a well-built model, then it should be easy because you're seeing the IRR that you expect. Your summer travels deserve an upgrade. With select Chevrolet, Buick, GMC, and Cadillac vehicles connected by OnStar, you can stream, game, and more on the go. Whether you're headed to a music festival or a cottage getaway, you can access hundreds of apps on Google Play right from your center display.

Explore OnStar Tech today at OnStar.ca and discover how to take your summer to the next level. OnStar. Better never stops. Yeah, it is a good problem to have, but it can be uncomfortable when you have a stock do too well. Yeah. I mean, I would say that I would love to have this problem with all of my stock. stocks. Yeah. Yeah, likewise. All right, let's shift gears here.

You recently wrote an article at Best Anchor Stocks called The Durable Winners of the Robotics Age. What inspires you to look into this industry? What inspires you to write this article? Yeah, so basically I am evidently not blind to AI and the computing request. it has. So I always thought of AI as in, let's say, three stages, right? First you have, we had LLMs or generative AI. Then we have agentic AI, which let's say we're in the middle of, maybe early innings of agentic AI, which is basically the LLMs, well, having context and

reasoning between them, like to conducts, a tax that are human would conducts. And then the agentic AI basically happens, let's say, in a digital environment. And the next step is taking agentic AI to the physical world, right? And that's where you have robotics.

So basically we, I mean, a lot has been reading about generative AI and LLMs and even about agentic AI. So I wanted to look into like the third stage, right? robotics like what's what's happening on there and i wanted to understand that stage and and that's why

basically decided to work on on the article so so the article is basically an explanation of how how i view the robotics stage explain so that it's understandable right because i i find that in this kinds of topics a lot of people write very complex articles just to feel that they like to make others feel that they know a lot. But I think that these concepts can also be distilled into, let's say, simpler terms that can be understandable. And then, according to your technical expertise, you might decide to play in some parts or not in others because you don't know what's going about in some parts. And you may be quite knowledgeable on others, right?

To understand robotics and that it's an interesting opportunity, you don't need to be an expert in all of the layers. But basically, I decided to write it because I wanted to learn more about it, and writing is a great way to force yourself to understand, especially when you're writing and sharing it publicly, because then you know that people are going to read it. And if there's someone who knows about the topic and you're writing things that don't make sense, you're probably going to get called, right? So that's basically the motivation behind the report. Okay, let's talk a little bit more on, look, I would recommend people read it. There's a good portion of it that is free.

So anyone that, when you have the direct link in the show notes, anyone can go read it. But from a, I think generally for robotics, you know, my take is you want to look across the supply chain because there could be some really, really, you know, it might be niche and might be a larger part of it. there could be some inputs in there, whether it's something like batteries, connectors, what have you. You've looked at this more close than I have. That could be where you could find companies with competitive edge, something along those nature.

I think betting on like the optimist robots or whatever other dozens of different startups for those humanoids, that might be a bit more difficult. But what were your big takeaways and any parts of the supply chain that look interesting from kind of individual generalist investors' perspective. So the main takeaway for me

was that we are still a bit far off from a full on robotics wave, right? But at the same time, I mean, right now we have the limitation of computing power, right? For, let's say, digital AI. That's a limitation, right?

You are constrained by the compute. And then compute is constrained by power and then you can find a lot of bottlenecks along the way. So in terms of robotics, you have two constraints, right? It's much more compute-intensive than the HLAI, so you have that constraint as well. And then you have a second constraint that is that you have to physically manufacture a lot of things, right?

So that's the second constraint. I mean, it's not – if we had a lot of computing power, you could basically apply it digitally pretty fast, right? But when you're trying to apply it to the physical world, it probably takes more time. So I think it's still a bit far away or maybe more far away than people expect. What I was surprised to see is that when you look at niche suppliers in a lot of, or companies that are, let's say, pure play robotics, they were already trading or like they had already gone up like 300, 400, 500 percent

in a very short period of time. So I was surprised to see that a lot of that is already being anticipated in the stocks. I mean, I know that the market is forward-looking. But one could also argue that the market can be too much forward-looking in some cases, right? And maybe anticipate it too soon. If I think I think we could separate into three types of robotics, right? We have industrial robotics. I think this is what everyone understands as the most mature market.

So industrial robotics thinks about robotic arms or automated lines in a lot of, across a lot of industrials, right, or industrial processes. That's the most mature business because there's been a lot of automation and robotics throughout a lot of time. I mean, Amazon has a lot of robots within its warehouses, right?

Then I think we can also think about autonomous driving, which is another huge market. I think we are sort of starting to solve that one now. And then we have the most famous because it's like the most similar to what everyone thinks when they think about robotics, which are humanoids, right? So I think humanoid size are still a bit far away, especially because, like, in every technology,

when you are early on probably is very expensive to manufacture at scale, and when you want adoption, you need to bring the cost down, right? So that's why we have S-curves in technology. And I think it'll eventually get there, but that we are a bit too soon. Another interesting takeaway, and I think this was my main takeaway, is that even though you can look at a lot of pure play robotics companies, a lot of the winners in robotics are probably going,

are already winners in digital AI, right? Because basically what underpins robotics is a huge wave in computing demand. I think Jensen Huang used to say that if you think about LLMs as 1X, in computing, then agentic AI is 10 times that requirements, and then you have 100 times in robotics, right? Because in Agentic, your agents are reasoning between them, but in physical AI, you have, let's say, robots reasoning between them, but they have to do it in the real world and with a very high cost of failure, right?

right? So computing is theoretically going to go up multiple more when we talk about robotics. So a lot of the supply chain that is already present in digital AI is also going to win from robotics, right? And you can think about it, let's say, the chip ecosystem. I mean, it's not surprised to anyone that robotics are probably going to require a lot of semiconductor content. The interesting thing about the cheap ecosystem is that in many places, you get differentiation, right? So you get potentially this huge wave of demand coming, of computing demand or cheap demand, in an industry that's somewhat differentiated, right?

I always think about it, like, if you get a huge influx of demand, but there's no differentiation, then the entire value is going to accrue to the customer or to the end consumer, right? Whereas if you have a huge influx on demand and you have differentiation, then probably a good chunk of that value is going to accrue to the supply chain and to the shareholders of that supply chain. So that's how I think about it. Then I would say that a very

interesting company in robotics is Nvidia, right? I mean, I know this is not going to surprise anyone, but the strategy that, and this is something that I talk about in the report, the strategy that Nvidia is following with robotics is pretty similar to what they followed in digital AI, right? The company is basically

providing the tools across the software stack and the software and model stack for the companies to build robotics and then what they are doing is what they aim to do is monetize the compute that comes with it, right?

So if you use Nvidia tools to build robotics, then those tools are going to work better with Nvidia hardware, right? So you are going to end up buying Nvidia hardware. So that's a very

interesting company. I mean, Nvidia is an interesting company for everything, right? But in terms of robotics, a lot of people I think are currently thinking about LLMs or, hey, what happens if LLM demand goes down a bit? Well, maybe, you know, it won't be good for the current

an invidial or a current valuation or whatever. But at the same time, you have to think that the next waves of competing are, the next waves of AI are probably much more compute intensive than what we are seeing now. And we are already seeing unprecedented demand. So that I would say were the main takeaways of the report. What about Texas Instruments? I know you follow that company closely. From what I understand about the business, it is much more industrial-focused.

manufacturing focused in general, could they be a beneficiary of robotics? Because like with electric vehicles, there's more basic chip content per say, you know, if there's say 100 million, doesn't have to be humanoids, but different robotics manufactured every year. Yeah, analog is a very interesting one, analog chip companies, because let's say that for the first time, and I think it's really the first time, because we have already seen, need in in ADAS or in autonomous driving, we're going to have to blend very well the physical and digital worlds and analog semiconductors are critical for that. So I think Texas Instrument CEO sized the opportunity and my numbers may be off here by around $1,000 per humanoid

when they come, although he did say evidently that humanoids are not going to be suddenly scaled up in the next couple of years. But robots also have, let's say, a significant component of analog chips, right? Because you're trying to blend the digital and physical worlds, and that's exactly kind of the use case for analog chips. So that's another interesting segment that's also benefiting right now from the digital AI buildup through power mainly. So it's not...

Analog is not benefiting from digital AI in the same way that it's expected to benefit in physical AI, right? But it's a very interesting business because it has exposure to both, and I also think that there are competitive advantages in

analog chips. And, yeah, I mean, it's very interesting segment to follow as well. I must say that a lot of analog companies don't look precisely cheap today. after the run.

But who knows? I mean, the opportunity is quite large and these are going to be important players. All right. Last question on robotics. What do you think investors misunderstand about the sector today? Well, I mean,

I don't think I know everything about robotics, right? So I don't think I'm anyone to say what people misunderstand about the sector. But I do feel that a lot of people are maybe a tad too optimistic on the timeline when it comes to robotics. I mean, and that's normal, right? People tend to be optimistic by nature

and AI has scaled up pretty fast, but again, scaling up AI, we're already starting to see that there are physical constraints to scaling up digital AI. We have first building the infrastructure as fast as AI requires, and then also you have power constraints, right? Well, in robotics, you're going to have those constraints probably

plus more constraints related to the physical manufacturing of their robots per se. So that's one thing. And I also think that a lot of people maybe try to make it more complex than it really is. So when you look at people that are looking across robotics, they might be trying to look for, let's say that niche supplier

that is going to go parabolic if robotics plays out that's probably a high risk high reward scenario because technology is still so early that you never know who's going to win but then and a lot of people probably just don't look at what's

working already that also is going to benefit from robotics right I don't think that when you ask anyone to hey when you think about robotics do you think about Nvidia no probably they'll think about pure play robotics companies, right? But Nvidia is going to probably be a strong winner in robotics

and nobody is thinking about it. You mentioned Brett Texas Instruments. Do a lot of people think about Texas instruments when they think about robotics? Probably not. And it's also understandable, right? Because it takes much more to move the needle if robotics takes place to move the middle for Nvidia

or for Texas Instruments. Or maybe it will move the needle, but 10, 20 years down the road. Whereas for smaller niche players that are peer-play robotics, you basically are levered towards the topic, right? Because as soon as there's an incremental improvement, then those companies are going to enjoy a very significant uplift in their financials. All right, Landre, thank you for taking the time once again.

Before we get out of here, let me give a 30-second elevator pitch on what listeners can get over at Best Anchor Stocks, and we'll put the robotics, and we'll put the TNus 3B report links in the show notes. Yeah, so basically what I provide at Best Anchor Stokes is research on quality businesses, what I consider to be quality. Maybe it's not the same mold as everyone considers quality,

because I must say that my investment philosophy has been molded through the years. So my definition of quality today is not the same as it was three, four years ago. But yeah, I basically post in-depth reports on interesting businesses and also a lot of follow-up articles and also industry reports, right? I mean, the robotics report is not the first one I've done. I also done several on semis, on the alcohol industry. So what you can expect at Best Anchor Stocks is basically,

in-depth research on topics that I consider to be interesting and also a great community of like-minded investors, which I also think is very important because I also get a lot of insights from the subscribers to best anchor stocks. All right, yeah, if you're a listener to this show, you'll like reading and interacting with Leandro's chat community as well. All right, that's going to do it.

As a disclosure, we are not financial advisors. Anything we say on the show is not formal advice or recommendation. I and any podcast guest. Mail, security discussed in this podcast, may have held them in the past, and may buy, sell, or hold them in the future. Thank you for everyone once again. And we'll see you next time.