The Canadian Investor - Are Software Stocks Broken? Plus 3 Stocks on Our Radar

Episode Date: May 25, 2026

In this episode, Simon and Dan break down why software stocks continue to struggle despite many companies showing little evidence of major AI disruption so far. They discuss the ongoing valuation reset across SaaS, the shift away from seat-based pricing, and why companies like Salesforce, ServiceNow, Adobe, Constellation Software, and Topicus may need more than solid earnings to regain investor confidence. They then turn to Bitcoin, looking at why it remains well below its roughly US$125,000 peak. Simon covers the role of ETF outflows, leverage, post-election crypto optimism fading, quantum computing fears, profit-taking, and higher bond yields as potential headwinds. To wrap up, they highlight stocks on their radar, including Visa and Mastercard as high-quality payment networks facing stablecoin disruption risk, and Waste Connections as a real-economy compounder trading at a more attractive valuation while the market remains focused on AI-related names. Tickers of stocks discussed: CRM, NOW, ADBE, CSU.TO, TOI.V, V, MA, WCN, WM, RSG, GFL.TO, BTC.   Subscribe to our Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website Our New Youtube Channel! Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.  See omnystudio.com/listener for privacy information.

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Welcome back to the Canadian investor podcast. We have a fun episode coming up today, so we'll start off with software. companies and what they're doing and what they could still do to improve their returns performance and why it's still not working and the market is not rewarding them right now. Then we'll look at Bitcoin and why it's still significantly down from its roughly $125,000 a dollar peak in US dollars. And then we'll finish off if we have time, but we should be good with stocks on our radar presented by EQBank. So some pretty well-known companies, but companies that have been put a little bit on the back burner with the market, really focusing on AI-related companies, specifically the semiconductor right now.

So a fun episode to come up. Hopefully you'll enjoy it. Some fun topics. Yeah, I mean, I guess do we want to just get right into it on the software side? Yeah, let's do it. So, yeah, I made this segment originally. I kind of mentioned, like I wanted to do a segment on what exactly. software companies need to do to turn things around in terms of sentiment or, you know, even

obviously positive price action. That's why we're buying these companies. And I actually found this like one of the more difficult segments to write because every single thing that I kind of looked at, they were already doing. So this is one of the, this is one of the wildest trades, I guess you could call it in the market right now. I mean, it's just, it's such a unique situation, all these companies are just getting beat up pricing-wise. But I thought it would be a pretty good segment to go over because I would imagine the majority of listeners have taken some sort of flyer on a beat-up software company. I mean, I know you did on Constellation when they first had that dip and then you ended up moving on. But I mean, probably a ton of listeners

have at some point over the last year or so bought one of these software companies and they just keep going down. So if we go back a year or so, when, I mean, maybe even 12, 18 months, the idea was that these companies need to prove that AI level disruption would not occur at their business. If they did this for a period of time, the market would eventually react positively. So we're now, you know, four, five, six quarters later with a lot of these big players pretty much seeing zero levels of disruption. In some cases, they've actually increase growth, but valuations keep sliding, multiples cut in half. And that would be a best case scenario in some situations. I know companies like Adobe are down, I think it's like 65% or

something like that from, let's say, 24 highs. Companies, you know, companies that used to trade at anywhere from a 70 to 100% premium to the S&P 500 are actually now reverted to trading at discounted valuations relative to the S&P 500. And because most of these, companies have not seen an impact to operations. It's just a constant re-rating of valuation multiples to the downside pretty much seemingly every week. We've kind of moved on, we've kind of moved beyond these software companies needing to actually post results from AI. They're now doing that, not all of them, but some of them are doing that. So we waited for no disruption. We kind of got that and prices still declined.

Then we needed strong AI-related growth from some of these software companies. We got that, at least in a few places. Salesforce, I know, I believe it's Salesforce is working on like 800 million plus in annual recurring revenue. And then prices just keep declining. And then we kind of had the bare case, the other weight and see of net revenue retention. So most of these software companies, how are they able to keep clients? How are they able to increase prices in regards to clients?

Like you want to see this over 100%. If you're under 100%, that is not a good sign. You typically want to see it in the 110 to 120% range because that not only shows you they're keeping their clients, but they're also raising prices generating more. And the theory here was that AI tools and customer shifting to AI would cause these to dip. We haven't seen that, you know, it hasn't really dipped at all. If it has dipped at some companies, it's usually, you know, maybe a percent or two. they went from like 110% to let's say 108. And I mean,

we just constant declines in prices. I mean, the bear case is pretty simple. And I do think, I don't probably a year ago, it was the vibe coding bear phase. Like I think we're well beyond that. I don't really think that that is much of an issue.

Although I still do see a lot of people talking about it. The vibe coding element is not, you know, the threat to these software. companies anymore. I mean, I guess to a certain degree because companies can, you know, I guess that would have piqued that fear like in January, no? When the vibe coding type. Yeah, the vibe coding. I would say it was last year, like the vibe coding element, like the real thing I would say in January was, or not even January, maybe even late 20, 25 was agents. Yeah, being able

to build out your own agents there. And that, that kind of shifted the bear case to seat count issues. So if an agent can do the job of a dozen employees, you need one seat, not 12. And I think for a lot of these companies, the bull case is where it becomes very difficult to gauge. And I'm not saying that because there is not a bull case. I mean, again, we just saw Salesforce agent force. I think they're projected to hit 800 million plus in annual recurring revenue. It's just, you know, the difficulty here is what is the next article from Anthropic Open AI Alphabet, like what other platform, what other plug-in to whatever it may be, Claude, are they going to release that kind of absolutely derails it in a single day? Like, I think most of these software companies,

if there isn't any news from one of these major LLMs or major, you know, AI companies, they generally tend to trend upwards, but then they just kind of get thrashed on. any sort of news. And this is just kind of something I've been wondering myself, being a shareholder of Consolation and Topkis, and also seeing companies like ServiceNow trading at pretty attractive valuations. And that is, you know, what would be the determining factor to start sending these software companies upwards again? And I think there is a multitude of situations that could possibly do this. However, I do not. not think that multiple expansion will be one of them. I mean, maybe to a certain degree,

but some of these companies are priced relatively cheap now, but I don't, I don't know your opinion on it, but I don't think we're ever going to see, you know, the 40, 50, 60x free cash flow multiples again. I think the moat around software is gone. And, you know, if that's the case, I just don't see the market ever paying these types of valuation multiples again. Yeah. And I, I mean, I think you might see a little bit of multiple expansion if a couple years down the line some of these established name like a service now, sales force, Adobe, you name your favorite software as a service play continue doing well and growth continues. I think we're still in the weight in C phases where the market is trying to figure out okay how badly are these going to

get disrupted. So I think you might see a little bit of multiple expenses. but it could also be that these are just, this is just a new reality or multiples actually contract even more because one of the big things is people can say whatever they want, the bulls can say whatever they want in terms of vibe coding. But the reality is it became a whole lot easier to develop competitors to these companies. So I'm not saying it can be done in a week or two, but I'm saying that a team of experience, you know, programmers, software engineers can probably do a, like, a very good competing product in less than six months or a year. I don't know like the exact time frame.

Sure, it won't be a week, but a pretty complete product can come to life in a much shorter amount of time. And sure, you can make a case that ServiceNow, Salesforce, all of them, have some established modes. Some of their users have been using it for a while. They're embedded in businesses. So would the businesses really want to switch to competitor because all their employees know how to use the software? You have to train the employees and so on. And that's a very fair point, but the reality is some companies may opt for some cheaper alternative, especially if they start looking at these cheaper alternative and they can really bring in some significant cost savings and it's worthwhile in terms of retraining your staff.

Yeah. Yeah, it's, if you look to some elements of it, like I know this is probably not a huge chunk of Adobe's business, but you used to have to go and pay Adobe for stock footage, like stock video footage or stock images, like that has to be dead. I mean, I can, I've shown you the last few times. Oh, yeah. I mean, it was their last call, remember it, um, they said it declined faster than they thought. Yeah. There's just no reasoning for it anymore. I mean, I showed you those two YouTube thumbnails that were pretty much just one shot from chat GPT. And I can't even imagine like pre-AI what I would have paid a developer to, or like a designer to actually build those thumbnails

out. It's, it's kind of amazing in that case. I don't know. In terms of, I don't know. In terms of, terms of, I think there will be, I mean, I guess I've, I'm kind of scrambled here. Like, I guess I want to say is what, say what you want about a lot of these SaaS companies driving strong growth. But the, the moat that they had, like you said, the, you know, kind of the ecosystem, I guess you could say. I think that is effectively gone because there's a lot of human element there, gauging, you know, like you're in the Microsoft ecosystem. Your employees are, you know, comfortable with that situation. But if you have age, agents doing this, they can understand the workflows relatively easy, I guess I could say, a lot more than a human element. So I just don't know if we'll ever get back to those high levels of valuation because there's always like if I look to stock trades like the company I run. I've trimmed like 10, 15% of my operating expenses using AI agents. And I mean, I do it through a quad subscription that costs me $144 a month. So. I think investors might have to get comfortable with the valuation multiples being permanently lower. And I mean, that's kind of tough to think of because if you did buy a lot of these companies at higher valuations, you're probably not going to get back to even by the market, re-rating those companies back to those valuations. Now, of course, I could be wrong, but I don't really see any event where these companies start to trade back at premiums that they,

were trading at before AI because you had mentioned the wait and see situation. But the only thing is the wait and see situation always changes to something else. Like I said, like a year ago, it was, you know, the vibe coding. Let's see how many of these software companies get disrupted by, you know, people developing their own platforms. That never happened. Then we kind of came to the situation where, well, let's see how much these companies develop AI systems themselves and kind of integrate it into the platforms.

They did that and the market really didn't care. So, I mean, depending on the price you paid for some of these companies, it could end up being a pretty painful proposition to break even if multiples don't come upwards. Because if you think about it, if you bought a company and the multiple has been slashed in half and it stays that way, you need the company to grow at a 15% pace annually. That just gets you back to break even in five years. So that is a really, like you've got to have a lot. of patience on this side of things for that to happen. And I do think there is some things that could happen to turn it around in terms of, you know, a little bit of valuation, multiple expansion as long as, as well as increased results. And, you know, it is already happening,

which is why I had such a difficult time writing this segment, because kind of everything that I thought could turn these companies around, it's already happening, but there's just no results. and what I would have thought made the shift for these software companies is proving that these companies can monetize AI. And we're kind of seeing that. Renewals are still coming in higher primarily because they're integrating those tools into the platform. They own the workflow. They own the data. The integration layer that makes the agents actually work.

And I think there is still the fear here that eventually these AI tools will cannibalize their existing business. But then again, we're also kind of shifting beyond that because most companies, Well, I don't want to say most, but there's a lot of companies that are going to per seat SaaS pricing. So, or sorry, they're going away from per seat SaaS pricing. Like if it isn't dead now, I do believe that will be dead eventually, but a lot are shifting to hybrid pricing. So you'll have a base price, then you'll have a consumption level price. So per task, whatever it may be. And there are some, you know, investment pundits out there that believe that upwards of 50% of SaaS companies will shift to hybrid usage or. outcome-based pricing by 2030. So in the early stages, what they're seeing is that hybrid-based pricing is actually more lucrative than seat-based pricing. So I guess I should explain that. What I mean is you have 12 employees, let's say one AI agent can do the work. These software companies are going to compensate. And let's just say you're doing customer service requests and 12 employees can fill a certain amount of customer service requests. What these companies

might start doing is saying that agent can do all these requests as one, but you're actually going to be charged now per fulfilled request, whatever it may be. And I mean, in terms of what, you know, needs to turn it around, I think like, you'd have to think something disastrous from one of these big companies, like the Anthropics or the Open AI or whatever it may be, or some sort of like stalling of the investment cycle. I mean, maybe KPEX slows down. But I mean, with all these new, you know, plugins, whatever it may be for Claude that come out, it's just hard to imagine the market ever turns it around. I mean, it's, it's like we're in the midst of a rapid AI build out every single, it seems like every single month, Anthropic is releasing something like

Thompson Reuters, for example, you know, they have all that legal information and then they come out with a with a plug-in that, you know, kind of tackles that. So I mean, I think the more money that's poured into these AI companies, the more disruptive platforms they will build and the more doomsday headlines will continue to come out. And I think it's going to take a monumental amount of good results to see any sort of positive segment or sentiment in software names. I mean, you could have a company post four or five good quarters consecutively. And then I date like one soft quarter would probably wipe out anything because I think at this point in time, like investors are looking for a reason to, you know, they're not looking for a reason to buy software

companies now. They're looking for any reason imaginable to sell them. And I mean, like, again, this is just kind of gone through my own head as well. I don't have a ton of software exposure, so I don't get too bent up about it. I think consolation and topicus are like 5% of the portfolio, but it's just kind of something that's went through my head. Like, what is the catalyst that sends these companies upwards? And it's like, it's almost impossible to tell because, the way they're just going to I think the goalposts are just going to be moved constantly they have been over the last 18 months like it's just been you know they tackle this issue but now there's this issue so in a year from now what is what's the next issue yeah and one thing to keep in mind so as you were talking I was actually thinking about those CRM companies so self force sales force for example or service now you you name there's quite a a few of them out there and the reality is a lot of those type of software when they are large customers, they're typically like multi or contracts. So I think that's definitely something to keep an eye on because you could have customers

now that are locked in for another two years, for example, with Salesforce. But when their two year comes up or is about to come up and they're renegotiating, and that was one of the things that paper, that fictitious paper that came out was talking about is, okay, self-force might be good. It may have some pretty good RPO's because they already signed those contracts. But when those are being fulfilled and they're nearing an end, maybe those customers actually say, you know what? We'll stay with you, but we have some other option, so you'll have to reduce your pricing. Yeah. Or even, not even reduce it. Just, I think, keep it the same in general is kind of bad. I mean, you want to see these companies increasing.

Like that net revenue retention, you want to see that over 110, 120%. percent, whatever it may be. And yeah, I don't know. I think like I see a lot of people kind of, they'll own these companies. They'll kind of post on X or whatever it may be after earnings because the earnings are not that, you know, they're not that bad operationally. The company is still doing pretty well. But I, that's not really why these companies are falling. Like, it's not really operations right now. It's just the market has said, we don't want to pay 40x for these companies. We want to pay 20x. And whether or not that ever increases, it's really different. difficult to tell. I can't see any situation over the short term, at least, where the market just

decides, you know, whatever next AI platform comes out next. Like, it's not going to disrupt these companies. I think that's, that's going to be the case for, for many years, which is, it's kind of why I've, you know, thought to myself, why even own these companies. And I still do because, I mean, prices, they are a lot cheaper now to the point. where, yeah, you know, if you bought it at peak multiples and they've been cut in half and you need a 15% return, let's say, to break even in half a decade, if you're buying them now and that comes out to be true, you have a, you know, a 15% return from those lows. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus. and growing who are using the app.

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And I don't know if they ever will get back to those old levels. Obviously, I hope I'm wrong because I own Constellation and Topicus. I would be elated if Constellation went back up to $5,000 in the next few years. But I just, I don't see it. Yeah, maybe to wrap this segment. up, I would say, for those who have a bullish view. And look, it could be an opportunity to buy these companies. And the bearish sentiment is completely overblown. Multiple start expanding six months, 12 months, two years from now. And the thesis become true. But I would just say there's a lot of risk

around that. So if you want to bet on these companies, make sure you allocate appropriately. I've seen people on X where they'll put most of their portion. into these type of companies and good on them. If they're right, they're going to crush it and they'll probably be set for life. If they're wrong, well, there will probably be set back for decades in terms of investment. So just keep that in mind. Allocation can really help you take shots that could be very meaningful to your portfolio, but also not get wrecked if it doesn't work.

Yeah, I mean, I guess the final thing I'll say is you imagine when a company like Anthropic goes public and is posting quarterly earnings. And they post huge results. You imagine what software is going to do after stuff like that? It's, yeah, it's going to be an interesting time over the next, well, I mean, kind of indefinitely right now for a lot of these companies. Yeah. And I mean, on that topic, I was just before you started recording, I saw Open AI is supposedly

going to file confidentially for IPO as soon as this week. Oh, really? So, yeah. Yeah. Or this week. If you hear this, uh, as soon as last. week because we're recording this on Wednesday to 20th. So it'll be interesting whether it happens or not and when the actual IPO date is. But keep that in mind, I guess it could come in the next

couple quarters. So that will definitely have an impact on software stocks, especially if OpenAI really does well, at least on the revenue front. We know they're going to be losing a lot of money, but just to keep an eye on. So let's move on now and look at why Bitcoin is still down significantly since its $125,000 US dollar peak that happened in October. The first thing here is ETF flows shifted from ATO-in to headwinds. Spot Bitcoin ETFs were a major source of demand after launch. They helped institutionalize Bitcoin ownership. But when ETF inflows slower training to outflows,

one of the biggest marginal buyers disappears. And ETF really allowed a lot of people that were maybe afraid to hold Bitcoin. an easy way to do it. It's the same as buying a stock, an ETF in their brokerage account. It also became a way for institutions to buy it because before that, the main way institutions could buy Bitcoin was to simply own either GBTC, which was a close-ended fund, or they could decide by some Bitcoin proxies, like a micro-strategy, for example. So if Bitcoin rallied partly because of the ETF demand, then definitely the outflows will have a big impact. And inflows, well, it was majority inflows since January 2024 when the SEC and the US actually approved the launch of Bitcoin ETFs.

There's been little outflows here and there during that time frame until October of last year where outflows really started accelerating. And obviously that kind of lined up with the price of Bitcoin crashing from its high. And right now, I believe we're still around like down like 38, 40%. percent from the peaks. Yeah, and I think another element that the ETFs kind of brought on was maybe a lot of people who might not, you know, they shouldn't own something like Bitcoin, but the ETFs made it so much easier to own it. Like these are the, probably the people who wouldn't have gone through the process of opening up a crypto wallet buying Bitcoin now that they can just log into their brokerage and buy it in one click. And obviously, you know, the previous

returns would probably have been a high draw. for a lot of people. Then they kind of sit there and see the price, you know, falling. It was pretty much cut in half from October up until I think February was like the largest drawdown. And maybe people at that point kind of realize that they probably either don't want to own it because of the volatility. They probably never should have owned it in the first place.

The ETFs obviously open up a lot of avenues for people to buy assets that they probably can't handle the volatility. They just kind of seen the past returns. Yeah, yeah, exactly. And the options that opened up along with those ETFs in the U.S. The other thing, speaking of option, leverage, leverage always plays a big part for Bitcoin, especially. I mean, it can play both sides. So leverage or shorting Bitcoin and then you get a short squeeze or in the case that we saw over the last six months or so where leverage, it just really adds to the drawdown. So a lot of momentum traders and leverage players likely entered late. And I've talked about it before.

but there's always tons of leverage in Bitcoin, especially when prices go on a run. And the issue is that when there starts to be a downward movement after Bull Run, then you get to liquidations that actually start. It accelerates the move downwards. You get some force selling with pushes price lower, and then it triggers this vicious cycle of lower prices. So oftentimes the move itself shouldn't be that large,

but because of the force selling actually pushes the price much lower. Yeah, and I think the ETFs kind of play a part in that too because you can get water. I think you can only get a 3x long Bitcoin. I don't know if they have higher than that leverage like through ETFs, but that's, you can definitely get more leverage out of exchanges. But yeah, I'm not sure if you can get more out of ETFs. Obviously there was the proxies with micro strategy and stuff like that. But again, I think the leverage kind of comes into play too because people are not going out,

borrowing on margin, you know, holding that margin balance, buying Bitcoin and kind of seeing the leverage in reality, they're just buying a 3x long Bitcoin ETF with one click. And then, you know, obviously when it gets, when it gets murdered on the way down, they kind of have to get out of that as well. So yeah, the leverage kind of hits in terms of actually people utilizing the leverage, institutional investors utilizing the leverage, but also just all these 3x, 2x, 3x long ETFs that have gone through some massive drawdowns.

Yeah, no, exactly. And the next one here is the post-election optimism in the U.S. That was probably overdone. I'm definitely guilty of that myself with my own bullishness on Bitcoin. So after Trump's election win, the market priced in the friendlier

U.S. crypto backdrop, investor expected regulation, more institutional adoption, and maybe even strategic reserve type narratives, Gary Gansor, the head of the SEC that was notoriously against crypto, left as ahead of the SEC, and they put in someone in place that was more friendly towards crypto. And some of that may still be valid long term, but I also think what probably rubbed some people the wrong way is when we remember the pumps and dumb behind the Trump and Melania meme

coins, and we saw it right before Trump's inauguration in 2025. And it really, you really didn't help to build confidence, I think, in the whole crypto ecosystem. And for a lot of people that are not really into crypto and Bitcoin, I think they might just see this whole space as one big thing. They don't differentiate from a shit coin or something like Bitcoin or Ethereum. They just look at the whole space being corrupted. And it definitely didn't help with Trump and Melania coins and that pump and dump and Trump and his family pocketing, especially around Trump coin. Apparently, were making money on the actual trading fees that were happening around the coin. So something to keep in mind, don't get me wrong, Bitcoin wasn't down for that whole period since Trump and

Melania coin got launch, which was early in January of 2025. But I think it definitely does not help with to build confidence in the space and into Bitcoin as an asset. Yeah. And I think that a large amount of the space is, you know, you shouldn't have confidence in a large amount of the space. Obviously, Bitcoin is kind of the premier play there. But yeah, Trump coin went from $44, January 21st, 20, 25. And it looks like it's at $1, $2 now. So $2. Yeah. It's down 90 plus percent. Presidential. So it just it. Exactly. And when your people were hopeful when institutional investors were hopeful at better regulations and regulatory framework, But then you see that kind of stuff happening.

It kind of, it's cognitive dissonance, right? So it just, I think it would put some people off a little bit. So keep that in mind. The next one here is quantum computing fears as a narrative risk. Probably not the main driver here, but quantum computing concern occasionally surface around Bitcoin's long-term security. The worry is that sufficiently advanced quantum computers could eventually threaten current cryptographic system. not likely the main reason that Bitcoin is down from the peak, but definitely something that can be used as a narrative and could scare some investors off. I think the bigger drivers are still kind of ETF flows, leverage, sentiment, and even the macro space.

But quantum risk is worth mentioning because it can't wait on long-term confidence, especially if you're thinking about institutional investors who tend to think long-term. Anything to add to that before I finish the last two here? Profit taking after you, Dr. I think this one. is really important because Bitcoin rose dramatically since 2024. So since that ETF approval that we talked about of January 2024, Bitcoin since January 1st, 20204, it's up 160%. And yes, the approval came a few weeks after, but there was already kind of rumors that it was coming at that point.

So for many holders, especially, you know, larger holders, they probably looked at that late last year and said, you know what, I still believe in the asset, but I'm going to take some money off the table, just locking some gains. And maybe some people just said, you know what, I'll liquidate everything. It ran up too quickly. I just want to take some profits. So that's those kind of selling, especially if there are larger holders that are taking profit off the table,

can definitely cap some rallies and put some downward pressure because you have so much new Bitcoin being offloaded. But something to keep in mind. And the last one here, higher bond yields, something to keep an eye on. US long-term yields have moved higher again. That should tighten financial conditions. And Bitcoin is still treated by the market as a high beta liquidity asset. So basically as liquidity goes up, Bitcoin should go up as well.

There's a pretty strong correlation with that. I've seen plenty of studies and charts showing that, depending on what measure you use for liquidity. and when cash treasury bills treasury offer attractive yields the hurdle rate for owning volatile assets like bitcoin you know it definitely raises like a lot of people might say okay you know what i can get some safety in this yield why do i want to hold something that's higher volatility like bitcoin when i can get some good yield there but even if the long-term bitcoin thesis intact higher yields reduce i think the willingness to pay extreme prices for it, especially when you have those other alternatives. It could also be a tailwind for Bitcoin from the perspective that these higher yields, especially on the 10 year and 30 year in the

U.S. are partly due to concern about U.S. debt. And if that's the case, then you should see some tailwinds in the next years. It's hard to really, you know, figure out when that will happen. But it may be in the next five to 10 years where money that would have traditionally gone to U.S. bonds, especially longer-term bonds, might start looking at gold or even Bitcoin as alternative, not because they're looking for yield, but because they're looking for something that cannot be printed out of thin air by the U.S. Federal Reserve, for example. So, yeah, that's kind of my overview as to why Bitcoin is probably down. Well, I mean, I think it's just a slew of different factors, but just explains a little bit.

I still am holding my Bitcoin position. I've trimmed a little bit in the past few months. Not a whole lot, but I'm looking to trim it down a little bit. It is quite a large position for me. And as I'm opportunity, like as I see opportunity, I'm trimmed a little bit just to make my position a bit more, you know, balanced. A bit better from a risk management perspective, yeah.

Yeah, I've been on the profit taking, it makes complete sense. Like, you know, I'm a drop in the, bucket in terms of overall assets, but I did the exact same thing because I had owned, I think I started with like a 4% position in Bitcoin and it ran all the way up to 10%. And I kind of sat there and I said, I don't want this making up 10% of my portfolio because in the case of Bitcoin, you know, a lot of the stocks I own, I don't really borrow conviction. I have my own. But with Bitcoin, I am definitely borrowing convictions.

So 10% of the portfolio, I didn't want it. So I kind of cut back. and it looked bad at first, but now I am actually ahead of prices where it is right now. But yeah, I mean, there's a lot of people who are going to do that. They don't want to be sitting on large, unrealized gains in an asset that can move 50% lower in a couple of months. So, yeah, it was a good overview. I don't really pay attention too much to the Bitcoin market. I do own it.

It used to be my largest position for quite a while. It's not so much anymore. But hopefully we see another leg up here over the next few years. Yeah. Yeah, I mean, hopefully it gets to 10% again, so I can cut it again. Yeah, there you go. That's a good problem to have. Calling all DIY, do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app.

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Go to Shopify.ca. That's Shopify.ca. Cheching. Let's move on here to stocks are on our radar presented by our great sponsor EQ Bank. So the ones that I have two on my radar and this will be more rapid fire. go into too much detail. There are companies that everyone should know, but we'll go over why they're on our radar right now.

So for me, it's Visa and MasterCard. I think it's pretty obvious why I would group them together here. Both Visa and MasterCard had very strong quarters. Revenues were up for 17% for Visa, 12% for MasterCard, which was pretty impressive for Visa, given that MasterCard over the last five years, it's typically seen revenue increase faster than Visa. They're both investing in agentic commerce, which should be. a strong area of growth for both companies.

They're mold-making investment in stable coins, although they are using different approaches there without going into too much detail. They are both seeing strong growth in value-added services, for example, tools helping with fraud prevention. Both are continuing to see solid growth across domestic and cross-border payments, although there are some slight headwinds because of the Middle East conflict.

Since 2020, free cash flow per share has risen 23% per year for MasterCard and 16% for Visa. So they're just free cash flow machines. And I like this free cash flow per share metric because it does account for share dilution or share buybacks. It gives you a good idea there. And it's really your share of that free cash flow. And they're both trading at around 24 a Ford P.

MasterCard tends to trade a little bit more in the high 20s, low 30s, and Visa tends to be more in the high to, you know, high 20s to mid to high 20s. It's a similar story when it comes to price to free cash. So very similar in terms of where it tends to trade compared to P.E. And over the last year, Visa is down 10%. MasterCard is down 14% while the SNP 500 is up 24%. So I think it's a very compelling play here. Don't get me wrong.

I don't think it's like super cheap. It's not without its risk. There are some concerns, especially about the disruption from stable coins. I know they're both investing in that. but, you know, it's non-zero possibility that more merchant starts accepting payments in stablecoin and completely bypass Visa and MasterCard. So you have to keep that in mind. I don't think it's super likely, but it is still a possibility. Right now what they're doing, I think MasterCard is trying to embed kind of stablecoin as part of its network system where Visa is focusing a bit more on the settlement layer between the different financial institution.

but that risk still remains that commerce merchants tried to just bypass VISA and MasterCard altogether, especially to bypass those fees because it's much cheaper. It would be much better business for them if they could just do all the business in stablecoin. Yeah, and I think that this is kind of similar to the software situation where the market just, you know, for a very long time, these companies had big moats and now they're kind of put under question. I mean, I own Visa. This was the, this was the, I own both of them, to be clear. This is, this was Visa's biggest quarter from what I can remember in, in the last five years.

They absolutely crushed it. And the market didn't really care. Well, I know it was up quite a bit the day. It went up then, went back down. It went up like 10%. And then that was all wiped out in a matter of a few days. But if you want to own them now, they're the cheapest they've been in quite a few years. So I own both.

I add Visa pretty routinely. I add it probably every other month to my position. So continue to do that. Yeah. And I mean, at the end of the day, I think, you know, the stable coin risk is definitely, you know, something to keep in mind. And it's also the reason why it's underperform. I think it has to be a little bit of these are also boring companies compared to throwing money at the AI trade, whatever it is, semi-conductors. You name your favorite AI kind of pure play.

that's out there. And I think a lot of people, you know, they don't even look at the stable coin risk. They just would rather be on the AI hype like train, right? The hype train for AI. So I think it's probably a little bit of byproduct of that as well. But two companies I have on my radar, they're not big positions for me. So I might look to get them closer to one percent each. They're a bit smaller than that right now. And I think it's it's looking pretty attractive, but keeping in mind that there are some real risk in terms of stable coin, whether they materialize or not, I think we probably won't know that for probably five to ten years. Yeah, same situation as the software.

Like, it's a constantly evolving headwind, I guess, or supposed headwind in the future. But for mine, waste connection. So this one, it's on my radar. Like, I bought it a while ago. Yeah, it's like, is it ever off? It has not been off my radar for the last six months. months or so I have been adding it. And I just think real economy compounders, I guess you could put, well, you couldn't put MasterCarter Visa in this because they're kind of, they're just payment rails, but they still do drive a lot of the real economy growth, like payment processing, all that type of stuff. A lot of these companies are getting cheaper because right now the trade is AI. There is nothing else in the market that really looks all that attractive outside of AI. And with, with, with, with, waste connections, I do think it is trading, what is trading at a pretty big discount to what the market is

historically paid for it. And the issue with them right now, I think core pricing is increasing, but volume is falling. And volume has been falling for quite a while. And there is the element of a weaker economy, which is why volume is falling. But there's also, they're shedding a lot of low profitability contracts. So they're intentionally lowering volumes. But it doesn't look good when, you see, you know, waste volumes falling. It's not going to be a good look. But I think it is kind of silly to assume that volumes will fall indefinitely. And a lot of people look at these companies relative to their growth and think they're way too expensive.

So why would you pay 20, well, let's just say 30x free cash flow for waste connections when you get a company like meta for cheaper. But I do think an overlooked element here in valuations, they are elevated because of assets. not because the market has just decided they're going to pay an absurd valuation for a business that's only growing 10 to 12%. So the market is going to value irreplaceable asset infrastructure and with waste companies, it's a landfills, almost no question. They're going to value those at a premium price. And this is often why you see these companies trade at, they'll trade at 4x book. I think even waste management is over 5x book value. And new landfills are, why, I mean, they're virtually impossible.

to produce. The permitting process takes an insanely long time. It's met with a ton of pushback. Nobody wants a landfill anywhere near where they're at. They're not exactly the best, you know, things to look at or smell or, or, but it doesn't increase your resale value. Yeah. So for this reason, I mean, there, there has not been very many permits for new landfills, like new fresh out of the ground landfills for a very long time. I couldn't actually. find a lot of official data on each state, let's say in the United States, because, you know, those permits would be on a state level. But what I did find is that new ones are very, very rare. If you're getting permitting on landfills, it's only to add to the existing

landfills, like expansion of ones that already exist. I think when you have assets like this, that are not replaceable and generate significantly more economic value than the land they're on, the market is going to pay a premium. So I think this is why, to a certain degree, you see the premium in these companies' prices. Obviously, the defensive nature of the business is also what is going to command this higher valuation, because if you look to a waste company like GFL, which is more industrial-based, kind of Western Canada, oil and gas, all that type of stuff, they're typically cheaper than waste connections or waste management because they have those, you know, kind of defensive areas

of the business like say residential trash collection. But for waste connections, the results are coming in at the high end of guidance. I would not doubt if they raise guidance over the next few quarters here. Margins are expanding. The company is expected to see tailwinds in terms of commodity pricing. A lot of people thought they'd be impacted by fuel, but they really aren't. They typically hedge their fuel. They have around half of their 2026 fuel needs locked in at lower prices.

and they would have done this last year. So if fuel remains high for a long time, then you could see that start to be a headwind. But in terms of commodities, they get fixed costs to recycle a lot of these commodities. And when prices go high, they typically get paid more for them. Because a lot of people,

because I cover this company quite a bit, and a lot of people are confused as to how they said that higher commodity prices are going to be a tailwind. It's that recycling side of things. And the company, trading at double digit discounts to historical averages virtually across the board. Free cash flow growing at a double digit pace, company spending hundreds of million dollars on tuck-in acquisitions, and they have a massive runway. They, the three big players in the space, it would be waste management,

waste connections, and I can't remember the name of the third one, Republic something in the States. I don't know why the name's drawing a blank, but they own, they own a big chunk of the market, Republic services, yeah. Republic services. So they own a big chunk of the market, but they still, like there's tons of smaller haulers that are around that, you know, waste connections can acquire. And I just think while the market pours money into these AI names, a lot of these real economy companies are getting cheaper and cheaper. I would not call waste connections cheap, but it has, it's, it's cheaper now that it has been over the last three years, five years, and one could even argue 10 years. So I've been.

Yeah, I mean, if you're looking at the whole. sector. I mean, waste management's down 5% in the last year. You've got Republic that's down 15%. You have waste connection down 20 and you have GFL down 27%. So I think it's just the whole sector is kind of unlawed a little bit. Yeah. And I mean, it's just because this isn't this isn't really the trade right now in my opinion because the economy is not that good. And a lot of these like a waste Connections are waste management, they are going to rely a lot on commercial construction, residential construction, even like industrial construction that, you know, waste connections, construction based revenue, like waste has not been very good for a few years now.

But again, I think that's a point where it's not going to be like this indefinitely. So if you have a long term approach on these companies, you don't really care what happens over the next year or two. You're looking at a five, ten, whatever it may be timeline. And I think in that situation, a lot of these companies are looking pretty good. Yeah. I mean, I don't have too much to add. At least right now, what I've been looking at is a lot of real economy companies just because I find a lot of, I mean, not a lot, but there's pockets of the markets that are extremely expensive.

And obviously, they tend to just somehow be tied to AI. So if there is some second order demand from AI related to a company, it's probably going to be good. So when you get those real economy companies like Waste Connection, but also I think, you know, even a few months back, some of the oil and gas companies, some commodity plays were pretty attractive. I think those kind of companies for me are worth looking at right now. So Waste Connection is definitely one that I've been keeping an eye on. So I think we'll wrap it up here. Hopefully the audio is good. It should be okay.

We had a few technical difficulties during this episode, but I think we'll be able to. I did everything to sound good with the release. If you haven't done so already, if you can give us a review on your favorite podcast player, it does help people to find us. If you haven't done so as well, make sure you subscribe to our YouTube channel. We're posting some new content every single week, so some short clips, also some shorter videos, 7 to 10 minutes as well there. And obviously, the live Daniel Foch and I are doing. And for those who want more content, you can join us on Joint TCI. It's $15 per month.

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