The Canadian Investor - Aritzia, US Banks, Domino’s and the first US listed Bitcoin ETF

Episode Date: October 21, 2021

We are back with our regular schedule! In this episode we discuss the following news and earnings: Toronto having the second biggest housing bubble in the world according to UBS SEC approving the proshares Bitcoin Futures ETF Earnings of Aritzia, Goldman Sachs, JP Morgan, Bank of America, Taiwan Semiconductor, Alcoa and Domino’s  Tickers of stocks discussed: BITO, ATZ.TO, GS, JPM, BAC, TSM, AA, DPZ https://thecanadianinvestorpodcast.com/ https://www.ubs.com/global/en/wealth-management/insights/2021/global-real-estate-bubble-index.html Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital See omnystudio.com/listener for privacy information.

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Simon, we have not recorded a show in weeks because I was out on the East Coast and Simon, congratulations, is now a married man. How are you feeling? Yeah, I feel pretty much the same, but excited to get back to things. It was nice to get a few weeks break from recording, that's for sure. Yeah, there you go. Well, congrats. And on behalf of all the listeners, congratulations. All right, let's get back into it and be easy on us. We're a bit rusty.

Before we get into an earnings episode today, we have a few shout outs on the website. You can support the show, purchase a coffee for Simon and I. There's a button there. Andrew says, thanks for the long-term perspective and discussion on how to think about businesses, which will thrive for years. Keep up the great work. Thanks, Andrew. Mark said, I've been keen on investing for years. And even though I have read books on finance, I never thought it was something I could do myself. I discovered your podcast and stratosphere, which has given me the confidence I needed. Thank you. Asher writes, I haven't missed the show since I found you guys and I've learned

a lot in the process. Thank you. We appreciate all three of you guys. So if you go on the website, which is in the show notes there, you can check out all of the content we've created and some other fun links as well. Simon, let's get right into the news. What do you got for us first this week? Yeah. So the first item of news, I mean, I'm sure people will know this probably already, but it came out from UBS, the Swiss bank that Toronto has second biggest housing bubble in the world after Frankfurt. They have their own way. Like Frankfurt, Germany? Frankfurt, Germany. You got it. Yeah. And Vancouver is up there as well. So, it's probably not a surprise to anyone

living in those cities that housing is extremely expensive. And we've talked about it before. I think it's probably across the board in Canada, but even more so in Toronto and Vancouver. And they have a way of measuring. Obviously, they looked at people, the disposable income. And one of the things that they're saying is cities like Toronto, Frankfurt, Vancouver, is that the increase in prices just keeps going because there seems to be a widespread expectation that the price of houses and condominiums will just keep going up in the future. So people are getting more and more levered to be able to buy those. And you couple that with low interest rates and you get these type of bubbles, whether the bubble bursts or not, I mean, they've had Toronto pretty high on their index for

several years now. We'll have to see, but it was kind of interesting. And what I'll do is I'll put the link in the show note if people want to go and have a look and see what other cities around the world, large cities are in that same category. Yeah. Who's really shocked? Vancouver, Toronto have some of the most ridiculous housing prices on the planet. So this coming out and saying that we're in the top five and Toronto being the second biggest housing bubble in the world doesn't really surprise me. I mean, it's gotten out of control. At the same time, you could have said that for so many years now. And it goes back to a lot of the concepts we talk about. Things might look

expensive across different asset classes or whether we're talking about housing or stocks, but saying, oh, it's a bubble. And so then therefore prices must pop in the future. It's just a loser's game because Simon, we know it's impossible to predict it. Whether you're getting great value, that's a discussion, that's a debate to be had. And I lean on this side of the value being pretty much horrendous. That being said, that doesn't always imply that it's just going to tomorrow just pop. It's the perfect storm of interest rates and what's happening outside of that. So I'm really not surprised. Yeah.

And the other thing they were saying, I think the biggest surprise for them is especially in cities, the prices kept going up even though a lot of the attractiveness of living in cities was affected during the pandemic. So that was one of their notes. So it's an interesting report. I encourage people to read it. Again, take it with a grain of salt, like Brayden said, and I've said, who knows what will happen. But to say that at the very least, it's expensive to live in those cities and own a home. I think that's the very least we can say. What do we got next here, Simon? I see you have another note here.

Yeah. So the next thing, I think anyone who's following Bitcoin, even very seldomly remotely, will be able to know these news that the SEC has approved ProShares Bitcoin Futures ETF. ProShares, they filed for its Bitcoin strategy ETF this past summer, and they'll be the first one to launch this week. The date of the launch is actually tomorrow. So we're recording on October 18th. So beyond the 19th, this will be a Bitcoin futures ETF. So it won't reflect the spot price of Bitcoin like the Canadian ETFs. SEC chairman Gary Gensler said that the futures ETF would offer better protections to an investor. I respectfully disagree with him here because we've seen what futures ETF can do and there is a lot of arbitrage involved, especially when these futures contracts are rolled over from one one to the next. And I think it will benefit mostly

traders. So if you're interested in owning a Bitcoin ETF, definitely stay on the Canadian ETF side. There is even the USD nominated ETF version for most of the Canadian ETFs. So if you're someone who's mostly works in US dollars or even some of the American listeners that we have, there are some USD options out there. This was a long time coming since the first request for an ETF came from the Winklevoss brothers back in 2013, it was denied until obviously this week. It probably played a big part in the jump in price of Bitcoin last week and this week as well, as there was more and more speculation that the SEC would approve that ETF. And like I said, it can be very tricky for that futures ETF. So if you're interested in getting into those US listed ETFs, make sure you do your due diligence because I would not recommend owning those for a long time.

Those are pretty much made for trading. This is one of those financial products that really confuse me and do not provide any value beyond, yeah, like you said, as a trading instrument. I mean, if you want to own Bitcoin, just own Bitcoin. And this goes with a lot of these other financial instruments that become what I like to call further from the sun. It gets colder as you move away from the sun. And now you're going now into a futures thing on an exchange traded fund when the underlying asset is a digital cryptocurrency. You know what I mean? Like this doesn't make any sense to my brain. Yeah.

I mean, and the Canadian ones track the spot price of Bitcoin. Of the actual asset. Exactly. Of the actual asset. time in between but those futures etf are pretty tricky i'm with you i would not touch that if you're an experienced trader okay by all means you probably have experience trading these before but that's not how we invest nonetheless it was still big news and it's most likely a sign that there will be a spot bitcoin spot price etf at some point in the near future. I think this was just the first step towards this for the SEC. And in their view, this was safer than a spot price ETF. Let's jump into earnings. It is the beginning of the week. Earnings season is about to heat up,

Simon. So we're going to have lots of things to talk about over the next two weeks as earnings season picks up. However, we got some other ones to talk about today. We got fashion, we got banking, we got a little bit of tech, and pizza. Who doesn't love pizza, Simon? I'll kick it right in with Aritzia. The Toronto Stock Exchange listed women's fashion company Aritzia reported Q2 of 2022. That is not a typo. They have an odd fiscal schedule, so they are doing Q2 of 2022. Now, this woman's clothing store, Simon, is on fire. Net revenue increased 75%. E-commerce revenue up 48.7%. The retail segment overall was an increase of 95.3%. Oh my gosh. And comparable to COVID numbers when they were shut down, it was up 13.8%.

Gross margins of 44.6% on clothing. That's really nice to see. Do you know what Lulu's is offhand? For the gross profit margin? I think it's higher than that. I think it's in the 50s or 60s. I was going to say, I think it's about 50 something. But for a clothing retailer, 44.6% is really impressive. 72 million in free cash flow. So they are producing some free cash flow numbers. Dude, this company is killing it and shareholders are getting rewarded. The stock is up a hundred percent year to date. So it came across my radar recently. The stock is performing well. It's about 5 billion in

market cap on the TSX now. And I'm seeing it now. The early signs of, I really wish I listened to what people were saying about it and noticing that people are really in love with this brand. I can see myself on this podcast, in two years going, why didn't I pull the trigger? I did some digging this weekend, how the store model works, the brands they own with some very complex research of basically asking my girlfriend about 100 different questions about how it works, the store, the brand more. She works in fashion and she knows this brand and personally loves this brand a lot. So she's a good person to ask. My thesis beyond women are obsessed with Aritzia from what I can tell is they sell high quality, not luxury, but high quality women's fashion at about a six out of 10, maybe a seven out of 10

price-wise. It's not the cheapest, not the most expensive, but it's a good value proposition based on the clothes they're selling. That's what I gather. Now, they own a plethora of different brands that are sold exclusively at Aritzia. So they have these brands like Wilfred, Babaton, TNA, Denim Forum. There's a long list of them and they're sold exclusively at Aritzia. Now, growth in the US is looking very promising. They're executing on the growth and both from a same store sales perspective and new store openings, it is so hard to invest in fashion. But if you're familiar with this brand, you know it well, it trades on the TSX. It could be a long-term winner. So this is one of those right now for me, Simon, where I'm just saying to myself,

pay attention to this type of stuff you see in your own life. The old Peter Lynch thing, pay attention to what people in your life are paying and spending their money on. And this one is definitely on my radar. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award winning customer service team with real people

that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some

extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. Yeah, actually, I think someone mentioned it on Twitter and was talking to a Canadian investor podcast Twitter. And so I looked into it a little bit. I did the same thing. I asked my wife, which is still a weird term to say.

Oh, yeah. Yeah, your wife now. My wife, exactly. So, I asked her like, oh, I knew she liked the store like a few years ago. So, I didn't know if she still liked it. And she's like, oh, yeah. And like I got a gift card to one of her best girlfriends. She got her a gift card for the store just recently.

And she had the same type of, of you know said similar things to what your girlfriend is saying and i think they're probably around based on your age i feel like they're probably 10 year difference in terms of age so it just kind of so that's good that's good exactly multi-generation of of appreciating it yeah exactly without saying their age and trying to guess and getting into the dog house let's just keep it at that but i can assume they're probably a decade apart so that's actually good to know because you have these brands like H&M that tend to be focused a bit on the younger demographic. And obviously, the quality is not great for those. But same for me. I have it on my watch list now. And I'll keep poking my wife's brain when it comes

to that just to get her sense if she's still going, still liking it. Yeah, well done. And look at that, Simon. You're noticing right out of the gate. Already, this guy's been married for just, what, a few days now, and he's already knowing happy wife, happy life, trying not to get too into the doghouse. Simon, let's talk about U.S. banks. What do you got for us?

Yes, obviously, U.S. bank earnings are starting to actually come out quite a bit. I won't do all of them, but I'll highlight some big lines, what we're seeing in terms of trends for those. So I'll talk about Goldman Sachs, JP Morgan, Bank of America. So to start off, Goldman Sachs. So obviously, Goldman Sachs is the investment bank, investment banking revenue, which is the majority of their operation, doubled to $3.7 billion in Q3 of 2021 versus last year. That's a reflection of more financing from companies, more IPOs. So they're big into that as an investment bank. Overall revenues were up 27% over a year to $13.6 billion, but down sequentially versus Q2 of this year.

billion, but down sequentially versus Q2 of this year. Every segment was up except their asset management revenue, which I was a little surprised to see. Lowered the credit loss provisions year to year, and that's something we'll see with the other two as well. Net earnings of $5.38 billion or $14.93 a share. They have a $2 dividend per share declared for q3 they also remained ranked number one in the world for announced and completed mergers as well as acquisitions equity equity related offerings common stock offerings and initial public offerings so everything seems to be going well with goldman sach. And I had tweeted something on the Canadian Investor Podcast Twitter about which company actually surprised you the most in a good way this year. And for me, it was Goldman Sachs in terms of their returns without knowing the bank in and out. Like they've really crushed it.

Their returns have been quite good this year. Investment banking is crushing it across the board. And they have been for a while now, I want to say the last two years, IPOs are killing it. Banking, like the core banking profits across the board are really solid. Lots of cash on the balance sheet, buying back lots of stock, raising the dividend. Canadian banks too. I mean, things look pretty good minus the fact that ours are being regulated a little too much, I think, in terms of being conservative about their balance sheet at this point. It's like open up the floodgates, people. They have lots of capital available. But yeah, I mean, what's not to like about these numbers?

Yeah, exactly. So now on to the next big one, JP Morgan, which is probably a US bank disguised as a Canadian bank. Probably the closest thing. They tend to be the most conservative and they have the highest asset ratio. So the CET1 ratio that I think they have the highest amongst big US banks and it's always really, really up there. They're also the largest by market cap by quite a bit now, I think. Are they?

Yeah, I haven't checked their market cap recently. Well, they have been for a while, but I was just looking at the other day, and there was a bigger gap than I was thinking there was. And I mean, Jamie Dimon's been just value creator on steroids, so I'm not really surprised by that. Yeah, yeah, exactly. So again, JP Morgan, same as Goldman Sachs. So they reduced their provisions for credit loss in the quarter by $2.1 billion. Their revenues increased. Well, they were actually pretty much flat year over year, increased 1% to $29.6 billion. Net income increased 24% year over year to $11.7 billion or $3.74 per share. That is in line, I think, with the release in terms of credit loss provision. So

not a big surprise there when you factor that in. Announced $5 billion of stock repurchased and announced $1 dividend per share for the quarter. Their investor relation presentation is pretty funny because it's kind of a mix almost of a Berkshire presentation and a more normal banking presentation. And there's actually a place inhire presentation and a more normal banking presentation. And there's actually a place in their presentation that they refer to the balance sheets as a fortress balance sheet. That's actually the term that they use. But having said that, the other thing that's been coming out with Jamie Dimon, like you mentioned, has been last week, he talked about Bitcoin being worthless, but that's nothing new for Jamie Dimon.

But he did recognize that the clients of JP Morgan want exposure to Bitcoin. So because of that, they want to make it easy as possible for them to access it. Dimon said that they may not agree with his philosophy on Bitcoin. And I'm just using my own words to say what he said, but essentially that they're adults and they can invest their money however they want. As a side note, it's not the first time that Jamie Dimon is bearish on Bitcoin. And let's just say that so far, as good as Jamie Dimon is at managing banks, he has not been very good at predicting what Bitcoin will be in the future. No, and many people have been very wrong. And I would say myself was in that conversation as well too. But that's the power, a superpower, if you will,

is to be able to change your mind. That is one of the most important things you can possibly do as an investor, as a business owner, as a human, the ability to change your mind when new facts or new research or new discoveries have been presented. That being said, Diamond is smart because he's looking at it going, okay, if this is a new way for JP Morgan to extract more profits, I'm all in to offer the ability for our clients to pay more fees. That's how I'm reading that. Yeah, yeah. It's just me. Yeah. And he has analysts that have been quite bullish on Bitcoin too, which is kind of funny when you think about it. But I think that what frustrates a lot of people who believe in Bitcoin with Jamie Dimon is he'll throw out arguments sometimes that show that either he doesn't fully understand it or hasn't done the research. And everyone knows that he's a very smart man. So I don't know if there's a bit of a disconnect there or whether he just

doesn't want to learn about it or he's set in his way. So we'll see. We'll see what the future brings. But I think we'll move on to Bank of America now. So now the other big U.S. bank, their net income rose 58% to $7.7 billion or $0.85 per share. Their revenue increased 12% to $22.8 billion. Again, provision for credit losses improved or reduced by $2 billion. The average deposit was up 15% to $1.9 trillion on average. So for me, that's a figure I wanted to add because that's really mind-boggling. It's nice to see that people are saving, but it also means that they are getting very little in return. I assume this is mostly in accounts that are not bearing much interest. So it's just very interesting to see that sheer number here. And the last thing for them, their dividend increased 17% and they did 10 billion in share buybacks.

Yeah. Profits for banks are good. Look at these numbers. Despite everyone calling them lethargic and the new neo-banks are going to take over, the big banks, the well-run ones in particular, JP Morgan, Bank of America, Goldman, they're doing great. And I was just curious based on our last conversation, JP Morgan is very close to 500 billion in market cap, which is over $100 billion more than Bank of America, $381 billion in market cap, with the next in line being Wells Fargo at $200 billion in market cap. I think that would- This is a beast, man. I think it would qualify as a systemically important bank.

I think that would be a very fair statement. I'm looking here on banks by market cap and it is twice the size of the largest bank in China, publicly listed bank in China to clarify. Yeah. And Royal Bank is what, like 150 or so in Canadian, maybe a bit less? It's like 150 billion in market cap. Yeah. So, just for context. So, there you go. There's some context. It's a big bank. I was just looking as well as we were talking, just because I was curious about Aritzia. It was founded by the founder in 1984 by Vancouver's Brian Hill. And it went public in 2016. He still runs it every day.

So, that's just a little fun fact that I just looked at. I didn't realize he had started it so long and just been doing this every day since. So, we like to see that, don't we, Simon? Yeah, yeah. Definitely always something nice to say. I can't believe he's been behind it for so long. That's before I was born. Kind of surprising. Simon, they're doing more math now.

As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission-free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com.

BestTrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at slash host. That is Airbnb dot C-A forward slash host. All right. TSMC. Let's switch gears to Taiwan Semiconductor. The ticker is TSM. I'm not going

to get too much into the actual report, but I just want to talk about a couple other things because it is so important in all the headlines, supply chains, chips, the whole thing. Revenue did increase 16.3%. Earnings per share was up 13.8%. So the very typical numbers you're seeing out of TSMC, which is high, mid, double-digit growth on the top and bottom line as a mature $500 billion in market cap type industrial company. Now, for those who are not familiar with Taiwan Semiconductor, aka TSMC, they manufacture over half of the world's semiconductors. So when people talk about NVIDIA, Apple, Arm Holdings, AMD, these big chip designers and chip makers, they say, they're actually not chip makers.

They're just chip designers because they contract TSMC to fab their chips. Now, this is an incredible company and the shortage in foundry or manufacturing capacity is very real. The growing demand for semis is here to stay. Everything we use is using more computing power and needs more semis. Look at a car, Simon, over the last 10, 15 years, it has gone from a mechanical first type of machine to a computer first machine. And that is only going to increase dramatically in the future. The problem is they cannot create capacity fast enough. If they could capture

all of the demand in chips, that number on the top line would be a lot more than 16.3%. But it is a wildly complicated supply chain to create foundry capacity of chips. Now, no question, there's lots of geopolitical macro concerns all over the place for TSM, which I am in no position to really speak on right now or have any real insight on the matter. That being said, it is a great business. I don't think that really can be disputed. The long runway, even at $500 billion in market cap, this company trades for, I still see a lot of opportunity. This stock has done virtually nothing year to date. This could represent some real opportunity as the fundamentals

demand continue to improve. The macro environment for chips continues to improve with a bunch of short and medium term concerns on top of it. That is when investors should be licking their chops to buy great businesses from my perspective. Yeah. And I was just, as you were talking, I was curious to look at Intel, how they're doing, because they manufacture for the most part, all their chips and they have, yeah, they've been threading water to this year, which is interesting. And I know they've fallen behind a little bit from AMD in terms of performance and they've had delays, but it's kind of a head scratch. I guess we'll have to dig into those a little more to understand why they haven't performed all that well. Well, Intel lost the big deal with Apple too, right?

I mean, they used to make the... Yeah, they used to have Apple's business and they don't anymore. And think of how much that affects your sales numbers and your profit numbers when you don't have the biggest company in the world is now your largest customer. So there was a lot of customer concentration risk that paid out like it played out for the worst for Intel. Intel's not dead. You know, they're still around. They still have lots of other customers and they do have their own foundry. And there is a lot of outside political,

I don't even know what to say, but tailwind for Intel as the US would like to have their own, on their own lands, foundry for chips. Because you look across the supply chain and have to rely on basically one company in Taiwan or else the entire supply chain on the planet crawls to a halt. That is a real concern, I think, for the US's perspective. And I tend to agree with that sentiment. Yeah. And I think in a future episode, something will be interesting to look at is just how all these supply chain issues came about and why we're still seeing them. So I've been reading on that a little bit.

It's quite interesting. Doesn't only, it affects way more than just a computer chip. So I think it's something that would be interesting to talk about. Oh, it's affecting so much across the board. And it's this weird like inflationary environment on top of it, right? Which is just, it's a cluster f which i will not say on this podcast okay anyways because we're a family show we're a family show so now we'll move on to the thrilling world of aluminum and alcoa just released their earnings i was interested in

them just because of what we've seen in commodities and just the overall demand for materials and i thought it was really interesting just to look at that so alcoa their revenue grew to 3.1 billion which is an increase of 30 year over year and 10 sequentially they set a record for a quarterly net income of 337 million and earnings per share of 1.76 for context this was compared to a loss last year in the same quarter they announced plan to restart a smelter in sao luis brazil it will be fully operational in the fourth quarter of 2022 they redeemed 500 million dollars in high interest rates no so So basically, they paid those off. They have no maturities until 2027.

They generated $435 million in cash from operation. They finished a quarter with cash balance of $1.45 billion. So they're really shoring up their balance sheet. In short, that's what it means. They've also announced the initiation of a quarterly cash dividend on its common stock and 500 million share repurchase program. The 500 million is actually an addition of 150 million that they had already in place. And for context on the dividend, it's the first time they pay a dividend since 2016.

And the new cash dividend will be 10 cents per share, which shows that they're probably pretty confident at this dividend going forward because they've been on the more conservative side. They had paid a dividend for years before 2016. I was looking at their history. And the last thing, it will probably come to no surprise to you, Brayden, or anyone listening, They mentioned that they greatly benefited from a rise in aluminum prices. That's the whole sentence that spells the theme of the entire rest of the report. We're seeing this with every single commodity business, which is we are in the early innings and from my perspective of a huge commodity super cycle, whether it's

oil and gas, aluminum, steel, grain, whatever, like whatever it is, there is a huge amount of pressure, upward pressure on the prices of these commodities. And the companies like Alcoa that are producing them are benefiting across the board. And the only thing that makes me cautious when you read these kinds of reports, like so much in share repurchases, they're now issuing a dividend. It's like when you go to the casino and you're up big, and then you just start getting really aggressive after you've been so conservative. That gives me a little cause for concern.

But they have been shoring up the balance sheet. So I'll give them props where it's due because they are using that money in kind of different ways as well. So yes, they're rewarding shareholders, but they're also soaring up the balance sheet. And I think that's a great discussion, again, probably for a future podcast. But historically, commodity prices have done quite well in inflationary periods. And for the most part, I've exceeded returns of stocks as well. So I don't know if we're entering that, but I think there's a good chance that we may, like you said, going into a commodity super cycle where they just keep increasing because

just demand is there and we're seeing high inflation. Oh, it's going to be terrible if that's true. just keep increasing because just demand is there and we're seeing high inflation. Oh, it's going to be terrible if that's true because I don't invest in commodities. I invest in companies with pricing power and I can't wait for all the ads on Twitter that are going to be all over me because their oil and gas companies are dominating my portfolio. So, that's going to be just great, Simon. Pizza. Who doesn't love pizza? By the way, if you're on the spot and you're like, I don't know, but what is your go-to fast chain for pizza for takeout? For takeout? Oh, that's a good question. I tend to, I order quite a bit of pizza, but I do make it quite often. I more often than not, I actually make it from scratch. So, I usually go for like local places that deliver like

wood-fired ovens. That's kind of what I go. So, I don't do, I mean, chains, I probably the one is like one for one would be the one that I go to. One for – what is that? Yeah. Oh, I guess you don't have it. I've never heard of that. They have like a New York style pepperoni pizza and it's really good. But yeah, that's probably my go-to if not late night pizza pizza because it's the only thing open. It's the only thing open.

The cardboard pizza pizza. It used to be actually one of my first jobs was working at a call center for pizza, pizza. Yeah, yeah. I didn't know I was going to learn so much on this podcast about you, Simon. Domino's reported revenues up 3.1% while same store sales were actually down 1%. So we've seen some mixed results on this one. Earnings per share was somehow up a whopping 30% with net income or profits up 21.5%. Now, what is this description of earnings per share and net income?

This shows the beauty of share buybacks. The increase in net income was primarily by higher income from operations resulting from higher global franchise revenues. The exciting number was international sales up 8% during the third quarter. The company repurchased and retired 391,000 shares of its common stock. That is why you see such a discrepancy between the net income and the earnings per share is they're deleting the share count. And they have also said that they are going to accelerate their deleting of the share count. It is down about 12%. I don't follow the name extremely well, but I'm assuming it's because of that same store sales

number, which has been so consistent. That same store sales number for Domino's, it's one of those metrics where you're like, they can't keep doing this. They can't seriously keep growing same store sales growth by high single digits, low double digits. And now we're seeing it pretty much flat. So it's actually down by a couple hundred basis points. The stock is up 3,200% since IPO. Domino's. Who would have thought?

To answer the question that I posed in the beginning is I'm a pizza Nova guy. I like that. I like that greasy pizza I'm a pizza Nova guy. Okay. I like that greasy pizza Nova. It's very good. Yeah, I don't think we- Domino's is all right. I don't think we have them in Ottawa. I've heard of it.

Aren't they at the Jays game or something? The pizza Nova? Yeah. No, I don't know. Okay. Anyways, we're done. Maybe. Maybe.

We're getting hungry but as a side note for dominoes i remember seeing somewhere how they like almost see them more like themselves as a tech business that delivers that does pizza as a product because they were one of the first pizza chains to embrace like kind of an app where people can track what like are their pizza and stuff like that so i think think it kind of shows that it's done quite well. And like you said, it's up like just look at the chart. I think in the past 10 years, it's up close to 10x just in that time frame. Yeah, it is. And you're right. That's the reason that Domino's had such a rise in market share in the pizza business, which was adapting to the new way that people wanted to order before they knew they even wanted to order it that way. And they were the first mover,

early adopter of some of the technologies. Now we're seeing how people order takeout food. Now, since they were so ahead, it gave them this huge rise. But moving forward, now customers have so many options with takeout food. They can support local and still get it delivered with these new apps. Here in Canada, whether it's Uber Eats and Skip the Dishes or in the US, DoorDash is a big one. I know it's here in Canada as well, but there are brands that have more market share in the US. That is a definite issue or headwind for Domino's moving forward as customers are having more choices when it comes to take out food. Yeah, that's it. And I mean, I think they also change your recipes over the years to something that was

a bit better. I mean, I haven't tasted their pizza in so long, so can't really talk. Yeah, I think it. Yeah, that's what I've heard from people. But yeah. Hey, props to them. They've delivered. No.

All right, guys. Thanks so much for listening. We are back. We're fully back now. Simon and I are getting the two episodes per week. And earning season is rolling around. So, as per usual, we got the Monday release. We're talking about individual companies, deep dives, investing concepts. And then on the Thursday release, we're going to be talking about all the exciting earnings releases coming out because it is that

time of the year. Thanks so much for listening. If you have not checked out Stratosphere, by the time you listen to this, last night, we just dropped our new platform. So if you've been listening to this podcast, you're like, this guy's been talking about his company, stratosphereinvesting.com. We just launched a brand new web application. It is available. And here's the big kicker. Here's the big pivot. It's completely free. Stratosphere Investing is completely free to make an account. You do not have to join a paid subscription, which you have had to before. There are paid subscriptions to get access to our in-house research model portfolios and topics, but you can use all of the analytics like 10-year financial statements, metrics,

analyst reports completely for free at stratosphereinvesting.com. Or an easier URL to remember is getstockmarket.com. Go over there, check it out. You can actually engage with our community as well. Ask myself questions, ask Simon questions if he's around, and my team as well. Thank you so much, and we will see you in a few days. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.