The Canadian Investor - Constellation Software, a Hidden Canadian AI Stock, and a Nuclear Energy Play

Episode Date: May 21, 2026

In this episode, Simon and Dan cover a wide mix of macro updates, Canadian corporate earnings, and AI-related investment themes. They start by discussing the latest Canadian inflation data, where headline CPI surprisingly slowed despite a volatile energy environment. The hosts also weigh the broader macroeconomic impact of surging bond yields—highlighting the climb in both U.S. and Canadian yields—and explain how these moves directly pressure household disposable income via upcoming fixed-rate mortgage renewals. The conversation then shifts to corporate earnings, starting with Constellation Software's strong quarter, record M&A spending, and whether AI poses a structural threat to the software sector. They also touch on Atkins Réalis (formerly SNC-Lavalin), reviewing its massive nuclear opportunities, unique Candu technology moat, and a new partnership with Nvidia to develop nuclear-powered AI factories. They wrap up by analyzing Canadian Tire's sluggish retail top-line growth, exploring a large sequential decline in Sport Chek store locations and elevated credit card delinquencies that signal a stretched consumer. Finally, the hosts highlight key industrial earnings from Applied Materials and Finning International, which are both capitalizing on the massive infrastructure and data center build-outs fueling the global AI boom. Tickers of stocks discussed: CSU.TO, ATRL.TO, WSP.TO, CTC-A.TO, DOL, AMAT, ASML, FTT, TIH Subscribe to Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website 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. I'm back with Dan Kent. Today on the podcast, we're going to cover a pretty wide mix of macro. Canadian earnings and AI-related investment themes here. We'll start with the latest Canadian inflation print. Headlighted CPI came in at 2.8% year over year, which was surprisingly contained given that we're now past the carbon tax effects for energy. Energy and gasoline were still big drivers, but services inflation and core measures continued to trend lower.

We'll also touch on the move of higher in bond yields with the U.S. 10-year approaching 4.70% and the Canada 5-year around 3.35%. And that matters for inflation, expectation, rate cut expectation, and especially Canadian mortgage renewals. On the company side, we'll go through consolation software strong quarter, record acquisition spending, and the ongoing question of whether AI is a real threat or just a market overhang for software. We'll also cover Canadian tires slower growth, but potentially cheap.

setup and applied materials as another AI Pixen shovel company tied to semiconductor and AI spending. And if we have time, because we have a lot on the slate, we'll also touch on Atkins Realist and its nuclear opportunity as well as finning, which continues to benefit from mining, oil sands, and heavy equipment demands. So quite a bit on the slate today. Pretty fun mix of topics for this one. Yeah, I think earning season slowing down.

for the most part, there's still quite a few notable Canadian names, but it should be good to talk about because they're kind of companies from pretty much every corner of the market, I guess you could say, software, retail, construction, mining, I guess you could say with finning. So yeah, it should be a good one. Yeah, exactly. So let's start with CPI here. So the headline number was definitely lower than I had expected, especially seeing the print that we saw in the US. So headline number was 2.8% year over year.

and it was up 0.4% compared to March. I was definitely a bit surprised by the low headline numbers, even like I said in the introduction, considering that there are no longer carbon tax effects here, I really thought it would bring up the price because for context, like we had mentioned last month, the carbon tax or the consumer carbon tax was removed on April 1st, 2025. And April is the first month on a year-over-year basis

where the prices weren't pushed higher because of the carbon tax. So last year prices would have been artificially higher for March because of the carbon tax, and that's no longer the case for April. Gasoline prices were up 28.6% year over year and up 8.9% versus March. Probably not a surprise to anyone who has filled up their car. In the last little bit, I was driving today past the gas station, and it's approaching here in Ottawa close to $2 a liter. Yeah, I think we were, well, I mean, we're up there as well and we're typically like in

Alberta and we're usually much cheaper, but I think just yesterday it was like a buck 85. Like it's, uh, it's wild. I mean, I'm lucky, very lucky to work from home. I don't really need to fill my tank more than like once a month. But for people driving to work every day, like that has to be a massive expense right now. Hopefully a short term one. Yeah. I mean, unless you have an EV and cheap electricity, so that is a saving grace over there.

Energy as a whole was up 19.2% you over year. Food was up 3.5% year, but declined 0.1% versus March. I'm sure a lot of people will say, well, how did food decline over the month of March? I mean, it's such a small decline that, again, it's the whole basket here. So this is just a category in itself. So if you're vegan, vegetarian, or whether you eat meat, depending on the type of meat that you eat, you might see an increase where the basket decreases or is flat. So you have to keep that in mind.

But definitely feel like food is still getting more expensive, even on a month-over-month basis. Maybe it's just me. Maybe it's just a feeling thing. But it feels like I'm getting less and less when I do the groceries for the amount of money I'm spending. It's definitely not a feel thing. It's hitting hard right now. I mean, even a like a Costco trip now is like 500 plus dollars and you really don't get all that much. The one that like wasn't U.S. inflation like 3.8%?

It's quite a bit low. Yeah, I believe it was 3.8. Yeah. That's why I, and obviously there's different ways they measure it a bit differently in both countries. But I did expect it to to be pushed higher a little bit. But again, services were only up 1.7% while they declined 0.3% month over month. And services were definitely sticky, especially during that COVID aftermath period. Core CPI on the other end is actually continuing to trend down with the core.

Just pulling it up here with CPI median, the core CPI down at 2.1% and it was 2.3% back in March. And now we're looking at trim at 2%, which was 2.2% back in March. So definitely trending down again. Again, here median takes the middle price increase for all the CPI basket. And then the trim just removes the most volatile items, which will typically be things like energy and obviously food. So all in all, probably a good print or good thing in terms of inflation for the lack of better word here. but definitely surprising, and I wouldn't be surprised if we see these higher inflation numbers

in the months to come as well, especially with no resolution inside at least for the Middle East, even if it stays in this kind of stalemate where there's not too much happening, but the reality is there's still not really a flow of energy coming out of the Middle East right now. Yeah, I wonder if you get two or three of these, do they cut interest rates? I don't think so. I think they'll wait for a while. Dan Foch and I were talking about it and I think they're just, well, first of all, there's the spread between Canadian rates in the U.S. Of course, they've cut more aggressively than the U.S., and that was always a question before the cutting cycle, whether Canada would cut that quickly versus the U.S. they did. But I think right now they have to be concerned that if they cut further in the U.S. does not, then the spread increases and for goods that imported from the U.S. which is a decent amount of goods in Canada, while you're potentially putting some inflationary pressure on that because the Canadian dollar would likely be weakened by lower interest rates.

So my base case is that you're probably just going to see the Bank of Canada staying still for quite some time because I think they'll be scared of igniting inflation and they'll just say we want more data. That's essentially what they'll say. They probably have to wait a bit for the U.S. to catch up maybe. And I mean, with a 3.8% inflation print, I don't see them cutting at any time in the near future. Yeah, we'll see. I mean, with a new Fed governor, Kevin Warsh coming in, there might be a bit of a different philosophy.

But again, Kevin Warsh is just one vote. So even if there's a Fed governor and what we've seen is more and more dissent. So even if he wants to cut, who knows if you'll have the votes actually cut. So we'll have to see. 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. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built

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ETFs, helping you keep more of what you earn. Simplify your investing today at BMOetefs.com. Moving on here for rising bond yields. Have you been paying attention to that? Well, I paid attention to Japan. It hit like the highest, well, highest levels in history, I think. And it went like straight north. It was wild. Yeah, Japan has been increasing rapidly. And if you want to hear more about bond yields, including Japan, Dan Foch and I will be doing, I think a big part of our episode, the live that we do on Friday, I will be doing on higher bond yields. So this is just a quick overview here. And I'm having trouble with loading the, uh, loading the, uh,

the site for the U.S. bond yield, so I'll just go with my notes. I think it was a bit different this morning, but the U.S. 10 year now, so it's gone down a little bit. It was actually approaching 4.7 percent, which is significantly, yeah, it's more, it's gone down to 4.6, but still, in the last three, in the last month alone, it's gone from 4.25 to 4.6. And as high as I was very close, So 4.67 yesterday. So we're recording this on May 20th. So that's a significant increase. It would have been the highest rate in about two years.

And the same thing for the Canadian five-year bond yield, which was around 3.35% when I did my notes yesterday. It could be a bit lower right now. And the fact that they're the highest level in roughly two years, it's a bit concerning and has some wide-ranging impacts. So some of the potential factors behind the move in the year. US market appears to be pricing in stickier inflation risk, fewer rate cuts, and potentially more risk tied to U.S. debt and deficits. Keep in mind, wars will tend to be inflationary. There is more spending. They add to the deficit. And one way to see that debt deficit concern is through the term premium. So the extra yield investor demand to hold longer term government

bonds instead of simply rolling short-term debt. And the higher term premium can reflect inflation uncertainty as well, fiscal deficit, heavy bond issuance, and uncertainty around the future of Pat, especially if the demand for those bonds doesn't increase with an increase insuance, then typically that will push yields higher. And in Canada, the five-year bond yield is influenced by what happens in the U.S. bond market, of course, but also by domestic inflation expectation, economic growth, and Bank of Canada policy expectation. And the five-year yield is really important because it does play a big role in fixed mortgage rates. And keep that in mind because as you get first time home buyers looking to buy first home, this is making the cost of those payments higher because

they'll have to get the, especially for people wanting to go fix rates, which I think that's still the majority of people that will go fixed rate. Or you have people that are coming to term, their three, four, five year term. They have to renew. And then they're looking to renew likely at higher rates than they had expected. So those higher rates, more money being spent on your mortgage payments means that you have less disposable income on other things, which could in the aggregate have an impact on the Canadian economy as consumers have to kind of rein in their expensive to make up for those higher mortgage payments, at least those homeowners. So something to keep in mind, it's been a rapid rise, like you said. It seems to be leveling out a little bit, but even with

4.6% and the drop we saw since yesterday, it's still a massive increase, especially, well, essentially since the start of the war in Iran. Yeah, and I think the 30 year, which would be the very long term, that hit the highest level since 2007. So you're going back to, you know, pre-financial crisis. So, yeah, I got a pretty good rate on my mortgage. I imagine they're much higher now than when I renewed. So it looks like I renewed at a pretty good time. At just the right time. Yeah. Yeah, what's your rate? I'm just saying, 3.75. Oh yeah, that's good. I got low fours, yeah, when I did mine.

So, yeah, I mean, I think it's probably around what it is right now. Yeah. Yeah. Yeah. So something to keep in mind, especially if you're listening to this and renewing your mortgage soon, don't be surprised if the rates are potentially higher than expected. But let's move on. We have Constellation software here.

So you're still a shareholder. I sold my shares. I think I said it on the podcast a month or two ago. Yeah. simply just because I didn't really know what the future held for consolation software. And if I don't have strong enough conviction, why am I holding a name and decided to sell because of that? Yeah. And it's a little preview for the Monday episode.

I kind of made, based on this quarter, I made a segment in terms of software companies. It's going to be a pretty interesting segment because I kind of looked at like what these companies need to do to turn things around. and yeah, they're kind of all doing it now, but the market is still kind of punishing them. It'll be a good segment on, you know, what really needs to happen and how it's just like, who knows. But for Constellation, this quarter, it was a pretty good quarter. Revenue increased 20%, free cash flow 43%, operating cash flow, 8.5%. And total organic growth came in at 6%, 2% after FX changes. and not including FX, the foreign exchange, the company has posted two consecutive quarters

of 9% organic growth from maintenance and recurring revenue, which is kind of the bread and butter of the business. It's the highest levels of organic growth for the company since 2021. And if you can pull that up, actually, it'd probably be a pretty good chart to look at. It'll say if you go down, you can see the organic growth for each segment on the KPIs on fiscal. But yeah, it's, This is the segment. It makes up around 78% of the business. So this is kind of what you want to keep your eyes on.

The company's free cash flow margins came in at the best levels in over a year. And the one thing, and if you were to like look at this quarter like pre AI, let's say like this, this would have been a huge quarter because the one thing is the company is spending a ton of money on acquisitions. We're seeing the most in history. It looks like they deployed around 800 million on the quarter and have spent 1.6 billion. in over the last four months. And they've already signed another, I believe it's 700, 780 million or so after this post-quarter. And Miller mentioned that they are not seeing any sort of pricing changes in the private market. So he mentioned there might be some sort of plateau on the high end of things, but as far as

prices coming down for acquisitions, they haven't really seen anything. And this is probably why you're seeing that company get into the public market. They have the PEMS strategy. I can't remember what it's called. But they effectively take non-controlling minority stakes in public companies. We've seen them with Sabre a while ago. And I think that's probably just because if you don't see anything on the private market and public companies have gotten obliterated, obviously you're going to find quite a bit of value here. And the other reason.

A good old private equity conendrum where the market is going down, but magically private equity is going up. Yeah. Yeah. It's definitely, I say that a bit facetiously, but it is something where, you know, it's harder to value something when it's private. But then again, when you're looking at similar public companies, you'd think that's probably a good indication what the private company is actually worth. But oftentimes they'll use models, previous funding round, whatever they use in terms of comps. And they'll try and justify the higher valuation because of that. You could kind of argue there's a case for both directions there because public companies might be discounted because they're public because so many people can enter and exit them. So the private, like what is right here, the public market or the private market? I mean, it's probably always go public market. Yes. That is what is the most liquid.

And maybe you think the public market is wrong right now. And that's why you would place a bet against the public market, whether it's going along when the, market is going short on a company or a specific type of companies, but I'm always going to trust the market. Yeah, maybe not short term, but long term for sure. You can only sell your shares for what they're worth, right? So ultimately, that's, yeah, that's kind of the way it goes. In terms of other reasons for this PEM strategy, at least in my opinion, I think they're probably

just a bit too large now to move the needle with those small VMS tuckins. So they're probably just finding, because they're spending more money and they're spending larger quantities of money right now. So this does kind of change the playbook a bit. I mean, they're used to acquiring 100% stakes in smaller companies, decentralized, let them operate themselves. And, you know, now they're trying to acquire these larger but non-controlling minority stakes in these companies. Miller had also mentioned that AI is a tool to do more for their customers and not really to do what Constellation does currently more efficiently. So customers, are coming to constellation for requests in regards to AI.

They're not going out and doing it themselves thus far. Like I think for a lot of these software companies, the answer like the, the counter argument to all of these statements are going to be for now. Like that's just for for now. And Braden actually attended the AGM. I think it was a couple days ago or last week. And he said one of the crows, he gave a summary on X. So people can go and look that up if there are any.

interested, but one of the things is that he took away is they essentially didn't say like customers are not coming to them asking for like AI tools and things like that. They're just looking for them to make the software better, whether it is with AI or not, they don't really care. So I just want improvements. Yeah. Yeah, exactly. They just want improvements. They want it, you know, they're not necessarily requesting AR. There's just one improvement to, to the product. So I may be butchering that a little bit, but that's the sense I got. No, it makes sense. just make the software better regardless if it's with AI agents inside of it or not. He mentioned that they are losing virtually nobody to pricing.

However, he did mention that they kind of need to be better on the organic growth front. And the one, like, I don't look too much at price targets. Like, obviously I've went over this numerous times why they're kind of silly. But the ones on Constellation are wild. Like, they are all over the place. So after the quarter, I looked at, I think it was like 12 or so. consensus targets, you have some banks raising targets to nearly $5,000 a share. You have some of them cutting back to like $2,800 a share.

It is really all over the map, which kind of gives you an indication that absolutely nobody knows what is going to go on in this space. Yeah. That's because usually, you know, these price targets, they're within a certain range. Like nobody is ever like 80% higher than another target. It's just, yeah, I think that just kind of spells to the uncertainty. So if we factor in what the company has spent thus far this year, they're tracking towards 4 to 5 billion in annual acquisition spend.

Like I don't know if they'll actually hit this, but if they did 5 billion, this would be a little more than a doubling off their highest year in history, which would have been back in in 2023. Again, kind of seems like they're going for larger, larger fish here. And I mean, despite pretty much zero impact to operations, record levels, capital deployment, constant comments from management saying they're they're seeing zero levels of disruption. The market just doesn't really care. And I think that's why, you know, if you're long software here, like, I think you've got to be very, very patient.

Like, I don't see any sort of turnaround. Like constellations up, I think, like 16 or 17 percent off high, off lows. But, I mean, they're still down almost 50 percent. Actually, maybe more than 50 percent. Look, I think this management team, does. the, deserves the benefit of the doubt, where I push back a little bit when I hear something like zero levels of disruption when you home. Well, they did.

That might have been me over emphasizing. Yeah. Okay. They don't see any. They have not seen any. Yeah. Yeah. I just feel like, you know, with the amount of businesses they hold, I would suspect there

is a little bit of disruption. Maybe not a lot, but that would be my suspicion. But again, they do deserve a whole. a whole lot of credit and they have a long track record. So even with Mark Miller being the new CEO, he's been at the company for a very long time. So I'll look on the sidelines. Maybe I'll be proven wrong. But then again, I'm not in the habit of holding companies that I don't have a strong conviction in.

And I guess I would place myself in the same bucket as the analyst where I could see that being at 2000. Like I could see it being at 5,000. And like I understand both bull and bear cases for them. And for that reason, I don't really want to own it. Yeah. And I mean, I still own it knowing that, I mean, you just have no idea what's going to happen moving forward. And it seems like no matter what results these companies put up, it just doesn't matter, which is more of a topic on the Monday episode, as I had mentioned.

But yeah, that's all I got for constellation. Okay. Let's move to the next one on the slate here. So Atkins Realist, this was formally known as Essense la Valais. So maybe a company with, you may have heard before with the checkered past. Revenues increase 18% to $3 billion. Backlog was essentially flat year at $20 billion. Net income was up 40% to $100 million for the quarter.

Nuclear revenue increased 37% continues to be in high demand, especially because of AI energy demand. Atkins Realist is the sole license holder for Can Do nuclear technology, which makes those engineering services in high demand right now. So Can Do is a strategic Canadian nuclear platform and a key differentiator for Atkins Realist, which owns Can Do Energy. While it might not be the cheapest and I'm not a nuclear energy expert or simplest reactor to design globally, it is a proven technology that uses natural uranium instead. of enrich uranium. And enrich uranium, if you've been following the Iran war, it's been one of the areas of contention is the U.S. and Israel do not want essentially Iran to abandon that uranium enrichment part of their program. So they can also be refueled while operating,

although it is not an easy feed there, and could be attractive to countries looking to expand nuclear power while reducing dependence on enriched fuel supply change. Now, to be fair, Kandu does have some drawbacks versus other nuclear technologies out there without going into too much detail, but it is an option. And clearly, with what we've seen, the conflict in the Middle East, I would say that it's probably going to be a tailwind for nuclear energy as countries start to rethink their energy independent strategy, especially as countries are seeing, well, okay, do I want to be dependent as much on oil,

and natural gas. I know I can't cut it off completely, but if I'm able to have these nuclear reactors and have other sources of energy, well, you know, it can definitely be a big tailwind for them, and they are clearly seeing a whole lot of demand. So during the quarter, the company entered in the partnership with Nvidia to develop nuclear-powered AI factories. And again, they're really well positioned for this, and they are also well positioned to benefit from increased defense spending by the Canadian government in the Arctic. So that will be something to keep an eye on. One of the headwinds the company is facing is in the Middle East as they reprioritized

to projects with more longevity. They did say that the conflict in the Middle East did not seem to have a major impact yet on demand for their services in that region. They kept their guidance unchanged for the full year with organic revenue growth in the mid to high single digits. And the company has been aggressively paying down debt over the last year. years, which allows them now to be very opportunistic when it comes to either acquisitions or share buybacks. So, I mean, something like pretty impressive what they've turned around the company to be.

Of course, again, it has a checkered pass. We won't go into detail. I'm sure he can look up Essence de la Valen and some of the scandals that they've been apart over like the last couple decades before changing their name and obviously rebranding here. But definitely an interesting play for those interested in those engineering services. Yeah, and I think they do the construction as well, which I think separates them from something like WSP, which kind of does just the kind of engineering aspect of it. But yeah, these companies with nuclear exposure have gone through the roof recently. Like if you look to another one, ACON, like the construction company, I think around 30% of their revenue is tied to. nuclear projects and they're they're up like 170 170% over the last five years.

They're up 160% over the last one year. So yeah, I mean, there's a lot of tailwinds for that space. You can see it in both these companies' results. Atkins is down 6.5% over the last year. But it's seen about 150% over the last five years. I think it's probably more reflection of the engineering business. I know we had someone reach out and ask, if we could cover, do an update on WSP Global at some point, which has been down pretty significantly, down 29% over the last year.

Something I added to recently, I think you did not too long ago as well. So take that as you may. Again, this is not investment advice or anything like that. Do your own due diligence. But I think, you know, in a market that seems to be pretty frothy right now, not everywhere, but there are pockets of, I think, pretty attractive value to luck at. But enough of that, you want to move on to Canadian tire. It's actually, my daughter loves to go there. Oh, I hate Canadian tire.

She wants to try out the bikes. Yeah. The Canadian tire that is in my town is an absolute mess. I try to go there as little as possible, but I do end up being. Well, the one we have, we have like, I think the nicest in Canada. Oh, really? So, like, less than a 10 minute drive from my home. Yeah, it's a two-story Canadian dollar.

Absolutely massive was built a few years ago. Yeah, it's like bigger than probably a Costco. That's how big it is. Yeah, we don't have that. Oh, yeah, it's two levels. Yeah, it's nice and she loves to try out stuff. So it's probably a different experience. The new Toys R Us, now that Toys R Us is toast.

But yeah, pretty good revenue from Canadian Tire. It was a beat on top and bottom line in terms of estimates, but there's really not a lot of growth here. So revenue 3.3% year over year. and if you normalized earnings, they're just 1% growth. So they're pretty much, they're growing in line with inflation. And it's funny, they kind of did the same thing as Dollarama and blame the weaker numbers on the weather. So Dollarama did that. And I do tend to believe a company like Canadian Tire more than Dollarama, because Canadian Tire does have a lot of seasonal items.

Yeah, that's fair. Dollarama would have some of this. But yeah, I tend to believe something like Canadian Tire because, you know, a lot of people want to get in there and and buy stuff for spring or whatever it may be. But comparable sales declined 2.3% for Canadian Tire. They were up 3.3% for Sport Check, up 1.2% for Marks. And despite growth from the other two companies like Sport Check and Marks, the core business is Canadian Tire. It makes up around two thirds of the revenue. So this kind of dragged the company-wide comparable sales negative.

And it's kind of surprising to see Sport Check do as well as it has. So this is now just under two straight years of positive comparable sales growth. And the one thing that I did notice that the company had probably one of its largest sport check store declines in years, but like nobody asked about it and nobody mentioned it. So they went from 354 stores to 317, like on a sequential basis, like from the last quarter. Yeah. So previously the largest quarterly. drop would have been around 20 stores.

And again, I don't really follow the company that much. So maybe this was like pre talked about. So that's why nobody asked about it. And that's why the company didn't talk about it. But it is a pretty large drop. On the financial side, revenue increased 6%, but delinquencies continue to rise, not only year over year, but sequentially as well. So they mentioned that insolvencies are elevated, but it's kind of industry wide, not

just Canadian tire chargeoffs came in around 7.2%. So we're down from peak level. in 2024 of high 7% range, but we're still double pre-pandemic numbers. And I'm pretty sure, like, if you look to the big Canadian banks, this is right off the top of my head, but I'm pretty sure most of their credit card charge officer, like half of this. I think they're in the 3.5 to 4% range. I might be wrong on that by a few. No, I think you're about.

Yeah, you're about right. Yeah. Yeah. Yeah, it's, uh, the charge officer, they're definitely, they're definitely getting higher, but I don't think like, it's been high. for the last two or two years or so here. And what I do find interesting is they did mention that the people they're seeing the most sales growth from, and I don't really know how they calculate this, they're seeing

it from the lowest income highest debt consumers are the ones that are spending the most. So I don't know, maybe they do that through the credit cards because they can see. Yeah, I was going to say they must do a credit credit check, right? Yeah. When they issue these cards, yeah. Because I can't see like somebody going in, like if I go in and buy some, something a Canadian tire. They're not going to know how much I make or how much debt I have, but if you apply for a credit card, they have all that information. Maybe they can kind of track it.

But yeah, they mentioned, you know, the people in the worst financial shape, I guess you could say, are kind of driving most of the growth. And the company did deflect a lot of tariff-related questions. I don't think this is necessarily because they think it will be bad. I think it's probably just because they don't, they don't really know. And just in terms of overall like valuation, the company does seem pretty cheap here, to be honest. I think it's like 11x earnings maybe. But it's also kind of, it's hard to imagine it starts moving the needle in any material way.

I mean, it's a slow growth, mature retailer likely to be more of a defensive income play, in my opinion. I think they're yielding close to 5% now. I think just the pure Canadian exposure, heavy product outsourcing are two pretty big headwinds that they just can't really comment on in terms of clarity because they just have no idea where the tariff situation is going. Yeah, and I guess maybe why I'd push back a little bit on, you know, the income part. It's the issue with Canadian Tire, I think, is they, it's not really a value play for

consumers. So if you're trying to cut, like, it's not like Canadian Tire has the cheapest prices. You can usually find better prices elsewhere if you shop around a little bit. So I do, I am concerning that consumer may. start switching a little bit, looking for cheaper options versus them, like a Costco, like a dollarama, if you're looking for smaller types of items. And the credit card portfolio can be a bit of a concern too, right? Their charge off rates are much higher than the big banks. So you do wonder if consumers are getting stretch and stretch even more. Those could keep going up and they'd

have to put more money aside for bad loans. So something to keep in mind where it's, it's an interesting name, but one that I, I'm, I would be reluctant personally to invest in for those reasons. Yeah. I mean, you can't buy, can't buy a lawnmower at Dolorama. You cannot. Maybe eventually. Who knows?

Yeah. Yeah. Yeah. Yeah. Can you? Or Walmart. Yeah. Yeah.

There are like always, I don't know. To me, there tends to be a lot of, you know, cheaper options oftentimes than Canadian tire. I, I tend to go just because it's for the convenience. Yeah. Yeah. Yeah. I was, I wouldn't necessarily, it wasn't a bad quarter or a good quarter, I guess, kind of somewhere in the middle.

But, I mean, what can you ever see the company getting back up to like mid single digit same store sales? Maybe if the, the environment improves here. But yeah, I think it's just going to, it's more of a slower grower at this point. I mean, it has been for a while, but it's kind of amplified even further right now. Yeah. Okay. and now that's a good overview here. Calling all DIY, do-it-yourself investors.

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People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store, and I'll see you there. There is an old saying in investing. It's not about timing the market, but time in the market. The most successful investors aren't usually the ones trying to catch every top and bottom. They're the ones who spend the most time in the market. I've been a quest trade user for over five years, and the reason I stick with them is that they remove the friction of,

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Yeah. Yeah. It's, anyways, it's absolutely crazy. So, yeah, definitely not a cheap name by any stretch of the imagination. So applying materials for those not familiar, it sells specialized equipment that chip makers used to build semiconductors, layer by layer, especially in areas like deposition, materials engineering, inspection, and advanced packaging.

The simple difference versus ASML company we've talked quite a bit about in the podcast. We both own ASML too. ASML dominates lithography, which is essentially the machines that print the chip patterns, while applied material provides many of the other tools needed to add, remove, modify, and measure materials on the wafer. And a wafer is a thin circular slice of ultra-pure silicon that acts as a base material on which hundreds of thousands of semiconductor chips are built. So its customers are major chip manufacturers like the SMC, Samsung, Intel, Micron, SKINex. And like ASML, they make money not just on the equipment they sell, but also on the maintenance of that

equipment or what they call the install base management. And again, like ASML, this is a play on more the AI Pixen shovels. So basically, it's a bed that AI span will continue and that demand will, for chips, for semiconductors will continue in the foreseeable future. And if that continues, then demand for the tools required to make those chips, obviously, will continue as well. So applying material is up, like I said, massively over the last year, are up 11% year over year.

Earnings are up 20% The company said that about 80% of its growth is related to AI spend and they expect their semiconductor business to grow by 30% this year alone. So an interesting name but one that I wanted to just

mentioned because I've reported recently but also not a company that's mentioned a whole lot in the semiconductor space even though it holds a pretty critical role. I mean, it has 337 billion of market cap, so not a small company by any stretch of the imagination. And although some people may have heard of the name, I just figure it would be a fun one to cover on the earnings

here. Yeah, this isn't one I really follow much at all. I mean, not surprising to see its stock price is up that much if 80% of its growth is related to AI spend because AI spend has been pretty high over the last while. Yeah, I don't, I don't have any comments on it because I I actually like do not follow it whatsoever. That's all right. So let's move on to one that you have comments on. So Finney, one that I don't really know too much about. So I'll be listening.

So I figured this would be good to go over because I think it was last week or maybe two weeks ago we went over Toramont. So these two are kind of neck and neck here over the last year in terms of performance, pretty much doubles in price. And both of these companies are like cat dealers like caterpillar. But a lot of them, a lot of people think of them as competition. but they don't really compete with each other because the way Caterpillar structures it, you'll kind of get exclusive rights to deal in a certain region. So Toramont is more eastern based while Finning is more Western base.

So Finning has, you know, with it being more Western base, will have significant energy and mining exposure. So if you go back to, you know, when oil was booming a few years ago, like Finning did outstanding, whereas Toramont didn't really do, I don't want to say it didn't. bad, but it didn't do as good. And Toramon does have mining, but they're more like construction, and then they also have that refrigeration exposure. And now with the acquisitions, they made AVL, they have, you know, generator housing exposure, things like that. So both are cyclical, but finning is is going to be much more cyclical. And the quarter was a record, revenue up 2.1%, earnings up 7.4%. Backlog sits at 3.8 billion, and that's almost double off 2023.

levels. So since 2023, the backlog, backlog has grown at a compound rate of 33% a year. And the company's mining backlog is actually more than doubled year over year. So they're looking to deliver 140 plus haul trucks in 2027. And anybody who knows those haul trucks knows they are not small and they are very, very expensive. It's, you know, those will mostly be in, you know, the mining. You're not, you're not using those trucks for construction. You're using them to, to haul oil, haul, whatever it may be. Are those the trucks that like basically a wheel is the height, it's our height essentially? Oh, way more.

Yeah. It like the wheels. Yeah, they're, they're way more. They're, they're huge. Yeah. Probably like twice as high, I want to say. Maybe not exactly twice as high, but yeah, yeah, I'm kind of, yeah, I haven't seen one in person, but that was my.

Yeah. When I, when I worked up in the oil field, like there was a lot of, of safety stuff that they used to, they used to run over pickup trucks. with those heavy haulers, and there'd be nothing left of the thing. It was, they're wild. They're very expensive. 140 might not seem like that big of a number, but that's huge for those types of trucks.

So Canada is booming revenue up 14.4%. New equipment up 23% rentals up 20% everywhere else. So they have some exposure to South America and the UK, Ireland, they're declining. And the company is getting a lot of work from data center buildouts in the UK and are now speaking on how the data center buildouts here in Alberta, if a lot of them don't get contested, that's an entire other issue to talk about. That could be a tailwind for them. The company's leverage ratios are increasing, but they also mention that it's kind of, it's just to keep up with the demand of backlog growth. So again, this equipment is not cheap. If rental income and just outright purchases

flow in, they'd probably be able to pay the leverage down quite quickly. And the company mentioned the backlog being fueled by two things, oil sands activity and coal. So they increased the dividend for the 25th consecutive year. And thinning when you compare it to Toramont at this point is much cheaper across pretty much every metric. But it's been like that for quite a while. I would imagine this is just that cyclical exposure, the mining, the oil and gas. But yeah, both of these companies have been on a pretty big run over the last year and finning over the last five years. It's been, it's been pretty impressive.

Yeah, another pick and shovel play. Yeah. potentially picks and shovel for AI as well. So we'll have to, we'll see in terms of the data centers. But no, one, I was pretty interested in listening. And a small company, well, I don't know. I don't know what small and medium cap is anymore with the ways the markets are going, but 13 billion market cap.

So I guess smallish medium cap, I would say. And obviously that's a, yeah, mid cap. That's kind of, it's very subjective. But yes. I think it was, yeah, anything else? to add before we wrap this one up. I think it was a fun episode wide ranging. And like I said earlier, if you're looking to hear more about bond yields, a bit more macro talk, make sure you join us for the live that we have on Friday, Dan Foch and I. So it's usually around noon. You can join our

YouTube channel. And we also have it. Usually we'll repost it on X and a few other platforms. So, and if you can't make it, then we also make it available as a podcast. I usually release at 8 a.m. on Saturdays. So aside from that, it was a fun episode. We'll be back Monday with another regular episode. We have some stocks on our radars that will be going over on Monday. And we'll also be talking about, like you said, some software as a service, what they could do going forward, and also be doing a segment on Bitcoin, which I wanted to have done a couple months ago. But there was some news that came out. So I've been pushing it back a bit. So it felt like a good time to bring him back up. So make sure you join us on Monday. And hopefully you, you,

like this episode. Thanks for listening. The Canadian Investor Podcast should not be construed as investment or financial advice. The host and guest featured may own securities or assets discussed on this podcast. Always do your own due diligence

or consult with a financial professional before making any financial or investment decisions.