The Canadian Investor - GameStop’s Wild eBay Bid, Shopify’s AI Question, and Google’s Monster Quarter

Episode Date: May 7, 2026

In this episode, we break down one of the strangest acquisition stories in recent memory: GameStop’s proposed bid for eBay and the unanswered questions around how the deal would actually be financed. We also look at Shopify’s earnings, where the headline numbers looked strong but the stock sold off sharply as investors focused on guidance, valuation, and whether AI will be a tailwind or a threat. From there, we discuss Alphabet’s monster quarter, including explosive growth in Google Cloud, soaring backlog, and why the company’s AI infrastructure spending is starting to show up in the numbers. We then turn to Canadian markets with updates on Suncor, Canadian Pacific Kansas City, and Toromont. Suncor is benefiting from higher oil prices and record production, CPKC is showing operating improvements despite a softer macro backdrop, and Toromont delivered a standout quarter helped by unexpected AI-related demand through its AVL acquisition. Tickers of stocks discussed: GME, EBAY, SHOP, GOOG, GOOGL, SU.TO, CP.TO, CNR.TO, TIH.TO   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 Simone Beranger. I'm back with Dan Kent. This earning season is a good reminder that the market does not simply reward good numbers. It rewards numbers that are better than expected. That's why Shopify can report GMV up a whopping 35%, revenue up 34%, and free cash flow up 31% yet. The stock still falls close to 15%. And at the same time, Alphabet puts up what looks like Monster Quarter with revenue up 22%, operating income up 30% cloud revenue up 63%

and suddenly the old narrative that Google was going to be disrupted by AI looks a lot less obvious and well into the rearview mirror. So today we're going to try something a little different. We'll start with a quick high-level framework tying these stories together from our news and earnings and then we'll go through each news items one by one in more detail with the usual back and four that you're used to. And the common thread today is expectations. Some companies are showing strong results, but valuation already demands a lot.

Some companies have softer headline numbers, but the underlying business may be improving. And in a few cases, AI, energy, and infrastructure spending are showing up in places investors may not have expected. Yeah, I think that's a good way to frame it because this is a pretty wide mix. So we have Alphabet showing that, you know, AI may be more of a tailwind than a threat. Shopify is kind of showing that strong growth can still disappoint when, you know, the valuations are just so high. CP Rail had softer headline quarter, but the metrics underneath of it looked a lot better. And a toramont is kind of showing how AI demand can can pop up in very unexpected, you know, industrial type businesses. Suncor, benefiting from higher oil prices.

record production and then we have an interesting segment on GameStop trying to buy eBay. It might be one of the strangest acquisition stories we've seen in quite a while. Exactly. And I think the main lesson for investors is that the headline tells you what happened. The stock reaction tells you what investors thought was supposed to happen. And that is where people often get tripped up. Shopify is the obvious example here. The quarter looked strong on the surface. GMV hit $100 billion, revenue was $3 billion, monthly recurring revenue increased 16%.

Freecastle was up 31%. But the stock was down sharply because Guidon pointed to revenue growth slowing in the high 20s. Investors are still trying to figure out whether AI is a headwin or tail win for the business and the stock was trading at more than 60-time forward earnings and free cash flow. That is a very demanding setup. Right. And I think it's very different from saying that Shopify is all of a sudden a bad business. It's more so that when expectations are high, strong growth might not be enough. Investors need strong growth, durable margins, confidence in the AI story, especially with a company like Shopify.

And, you know, there was a valuation there that kind of left little room for error. Alphabet is almost the opposite example. So this is the company's 11 straight quarter. of double-digit growth. Revenue was up 22%. Operating income grew 30%, margins expended, cloud revenue grew 63%, cloud operating income tripled, and management said cloud revenue would have been higher if they had enough compute capacity. And that last point really matters. For all the debate about AI spending, Alphabet is giving investors evidence that the demand is real. This does not look like a demand problem. It really looks like a supply problem. Yeah. And on the Canadian side, these themes are

showing up in in many different ways, I would say. So Toramont is a great example because most would probably not think of Toramont as an AI play, more so a equipment play, but AVL, which is a company they acquired, a very tiny company, which kind of builds steel housings for backup generators, a switch gear, steel housings for switch gear, things like that, which are very popular. with data centers saw revenue go from 22 million in the first quarter last year to 129 million in the first quarter this year. So that segment actually made up 17% of Toramont's earnings, whereas previously it made up pretty much nothing. So AI is not just software and chips. It's, you know, it's also power systems, electrical infrastructure, backup generation, cooling

equipment, you know, industrial capacity, all that stuff. Cp. REL is another example where the headline and the under underlying business tell slightly different stories. Revenue was down 2%. Earnings misestimates and the operating ratio got a bit worse, but average train weight was up, train length was up, dwelled time drop and fuel efficiency of improved. Those are not flashy numbers,

but they matter if volume recovers, those operating improvements can start showing up more clearly in earnings. Yeah, and then when Suncor, you get a much more direct macro story. So higher oil prices are definitely starting to show up in the numbers. Revenue was up 18% year over year and 20% sequentially from last quarter, even though Q1 only included one month of higher oil prices from the conflict in the Middle East. Net income was up 24% year over year and 42% quarter over quarter. So they had record first quarter upstream production of 875,000 barrels per day and record refining throughput.

Yeah, and for listeners, less familiar with energy upstream just means the oil and gas produced before refining basically what comes out of the ground before it gets turned into usable products. The other important part is capital returns to SunkCore increase its buyback guidance to $4 billion up from $2 billion just five weeks earlier at Investor Day. That's a big change in a short period of time and it shows how quickly higher oil prices can flow through to cash flow and returns to shareholder. Yeah, and then we have the GameStop and eBay situation, which is kind of its own category. So GameStop, roughly a $10 billion company is trying to buy eBay for around $56 billion. So it has cash. It reportedly has a financing letter for TD for around $20 billion. And I think they have around $9 billion in cash.

But there is a major funding gap here, which we're going to talk about eventually. Yeah, when Ryan Cohen was pressed on how the math. work, Ryan Cohen, the current CEO of GameStop. The answer was essentially 50% cash, 50% stock, and then we'll see what happens. And that's not the kind of clarity investor usually want when a smaller company is trying to buy a much larger one. So that is the framework for today. Do not just ask whether the quarter was good or bad. Ask what was already priced in. Ask whether the business is getting stronger. Ask whether AI, energy, infrastructure demand is actually showing up in the numbers and ask whether the valuation gives investors any margin for error.

Yeah, that's what we're going to do now. We'll go story by story starting with the GameStop situation, then moving into Alphabet, Shopify, CPRail, TorMount, and Suncor. Yeah, and the main takeaway for investors is pretty simple. Good investors do not need perfect predictions. They need a process that survives in perfect outcome. So let's start, like you said, with GameStop and eBay, because the interview was one of the strangest market moments that we've seen a while. And for those who like hockey, it almost, it was debatable between this interview and the Maple Leaf introduction of John Shaker, their new general manager, which one was the most

awkward? Because I think we should make a poll about that because it was pretty crazy. They are crazy. Yeah, they were two of the. most cringe worthy interviews I've watched in a very long time. But I'll get into it. So as we had mentioned, like, GameStop had a bid to buy eBay for $56 billion. And the only difficulty here is GameStop is a $10 billion company. So nobody really knows how the math is going to work. So naturally, CNBC one. It doesn't sound like even Ryan Cohen knows how it's going to work. I mean, yeah, it's,

he really doesn't. I mean, you know, just judging by this interview. But CNBC wanted to figure it out because obviously this is a, it's a massive deal. So they invited them on to talk about it. You know, nine billion in cash on hand. They have that financing letter from TD that says they could get access to another 20 billion. So,

you know, that kind of leaves the gap at around 16 billion. And I think there's a little bit of a difference here too because GameStop owns a little bit of eBay, which would would kind of, you know, play into that as well. But there is a large gap.

Yeah, I think they own about 5%. 5%. Yeah. So when he, was asked where it would come from, as he mentioned, like 50% cash, 50% stock. And, you know, whenever they, they said, like, well, what exactly does that mean? Like, where's the, where's the $16 billion gap coming from? He just, well, first off, he said, check the website.

He just kept saying, check the website, check the website. And then eventually he just said, we'll see what happens. So in order to come up with the additional, you know, money needed, they would need to, like, I think what he doesn't want to say is they would effectively need to like triple their share count. So I mean, the company only has around, you know, 550 million in shares outstanding. And, you know, they need, you know, if we have their cash and their financing offer from TD, I mean, there's $27 billion more that they need. It's, it's very difficult to describe this interview on a podcast. Like, you have to listen to it yourself. Yeah, we'll add a link to the show notes for the YouTube interview. And the most important thing I think is

watching the full interview because you can see some clips that are a couple minutes, but the full, I think 13, 14 minutes interview is definitely worthwhile. Yeah, I think it, like his body language and just overall tone was incredible and it, it kind of took, like, I kind of got the vibe that he does not like them at all because he kind of shrugged off all the questions and kind of instead focus on, you know, how they predicted the demise of GameStop numerous times in the past and it didn't happen. So they're going to be wrong about integrating eBay, but he still was. wouldn't really tell them how he was going to do it. I mean, there's kind of a few things that are unprecedented about this.

I mean, the first one being the acquisition overall, like, I don't know how an $11 billion company is trying to buy a $56 billion company. I mean, it's very hard to make the math work. 20% of this size, yeah. Yeah, I mean, the biggest unprecedented thing we've ever seen, I would argue, though, is like, the CEO goes on live television and can't even explain how the math of the acquisition will work or he just did not want to. There was a lot of like awkward silences during the during the thing.

Like sometimes they had to switch reporters because like. Yeah, exactly. There was three reporters that like switch. So I think it started with Andrew Ross Dorkin and then switch over to Becky Quick and then to another one. So they were all three on the couple. It was funny. They were all different locations.

So you kept seeing it switch from location when a different reporter was on. And I thought, I mean, I thought especially Becky Quick, she did a really good job. I really like her and she always does a good job with Berkshire Hathaway meetings, which by the way, we'll be talking on the Monday episode. Just too many takeaways to do in the news and earnings here. Yeah, so just wrapping this up, Michael Burry, who was a big shareholder of GameStop, like I'm pretty sure he dumped this position like the next day. And I mean, I think the worst outcome here is if, this deal actually goes through. I mean, you have huge debt, huge dilution, like ugly overall. Now that said, like, he went on a podcast. I can't remember what podcast it was. It's a pretty big

podcast. He was a lot more, like, open here, which kind of confirms my idea that he just does not like CNBC and he was probably purposely doing this. But he says he effectively wants to use GameStop as kind of a physical eBay location. So you'd bring something in, get it authenticated, listed on eBay and it ships from the store, like kind of a hybrid situation like that. And he did mention that he believes he can double eBay's earnings. So I don't know. It seems it seems weird to me. It seems like, you know, if he wants to do this, he just needs more money.

I really don't see how they can get around it without just diluting shareholders into the ground, which I think he just doesn't want to say right now because obviously if you're a GameStop shareholder, You don't want your, you know, you don't want to go from 500 million shares outstanding to 1.5 billion. Like that doesn't, you know, nobody's going to like that. Yeah, I mean, there's definitely, I think you could tell in the interview like he said, because in the past they said GameStop would go bankrupt and he made a few times say, look, we may not be thriving and growing, but we're doing all right or something like that. You use that term, which, you know, to be fair, yeah, I think it's profitable, not a whole lot.

and revenues are declining, but it is doing well. But to me, it was more, even if you don't like and you want to be adversarial, it felt like he just winged it a little bit. Oh, yeah. It just felt like he winged the interview and he had no idea in terms, had done almost no preparation in terms of the actual financial number. And that to me would be a big red flag if I was an eBay or GameStop shareholder. Apparently they didn't even contact eBay.

They didn't even call them. Like, they didn't even organize a meeting or nothing. They just put in the offer. So, yeah. He said, yeah, I'm pretty sure they're very expensive lawyers and advisors will have a look and we'll hear back from them. Yeah. But yeah, that's all I got on this. You have to watch the interview.

It is, it is worth a watch for sure. Well, watch and then watch the Maple Leafs one. Yeah. And then try to figure out which one was the most off. Yeah. 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 regular investing. With no commissions on stock and ETF trades, you don't have to wait until you have thousands of dollars saved up to make a move. You can contribute small amounts regularly and keep your portfolio growing consistently, remove,

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and you have no idea where it is. And then you see that purple button. That's shop pay from Shopify. It completely changes the experience. One tap, and you're done. No forms, no hassle. Honestly, it's happened to me plenty of times where I just abandoned the purchase because of that extra friction. From a business perspective, that really matters.

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Simplify your investing today at BMOetoffs.com. Next here on the Slay, Chompify earnings. On the surface, like we mentioned, the intro, earnings look really good. So you might wonder why the company was down close to 15%. I mean, GMV increased 35% to 100 billion. Revenues grew 34% to 3 billion. Monthly recurring revenue increased 16% to $212 million.

Free cash flow. up 31%. So everything looked really good. I saw some posts on Twitter X where people were just wondering like, why is the stock down? It's pretty simple. It was really, market was disappointed. They did not meet expectation when it came to guidance. And I had someone replied to my post and said, well, what do you mean? They blew off. They exceeded expectation. Sure, compared to what they were guiding for Q1. But the reality is the market is forward looking. you're looking at a company was trading in excess of 60 times price to earning. I think actually 65 times forward price to earning.

Yeah. And force price to free cash flow. So when the valuation is that high, you just have to execute to perfection. And the big ticker here that did not really resonate well with markets is instead of having revenues increase in the 30s, now they're in the high 20s. So the market is definitely worried that there's. going to be a bit of a deceleration in revenue increasing. And then obviously you still have those questions around AI is Shopify going to see some tailwinds. Obviously the company's management is

saying it is a big tail win for them. But I think the market is still skeptical as whether it's going to be a tail win or a head win for the company. So those are the two main reasons. My opinion is that look, the quarter looked pretty good. High 20s in terms of growth, really impressive. It really comes down to the valuation and whether you think the valuation justifies maybe a bit of a slowdown in the business and the potential risks of AI. Yeah, they came in lower on guidance on pretty much every metric possible. So, yeah, I mean, a lot of people will look at the fact that, you know, they topped revenue expectations or earnings expectations, whatever it is. But I mean, especially when stocks are this expensive, like the only thing people care about is what they're going to earn. you know, next year, not, you know, what they earn this quarter.

That said, like, I think investors can take advantage of like short-term situations like this because, I mean, if you're a long-term investor, who cares what they're guiding to next quarter? Like, in the grand scheme of things, I mean, that's, yeah, it's not. Well, the longer term investor is more concerned about the AI question. I think that's where you get the two impacts here. Yes, you have the guidance that short-term is not as good. And if you're long term from the guidance perspective, that's fine.

You don't really care. But then the longer term investor may have some doubts because two, three, four, five years down the line, AI is moving so quickly, what is Shopify going to look like? That is a reasonable question. I mean, I'm not saying that I'm not trying to be doom and gloom. Maybe it's going to be much larger and just get tailwinds. But I think that's where that uncertainty starts to creep in. And some investors might be a bit freaked out by that. Yeah, I think the main angle for Shopify now is the, you know, kind of payment rail behind agent shopping, you know, shopping within, you know, the Gemini, the chat, GBT, things like that.

But yeah, that's all I got for Shopify. You want to move into. Yeah, let's move on to the largest company in the world now. Oh, is it? I'm pretty sure. I didn't see that. Yeah. They passed Nvidia. So I don't think anybody ever expected this. I mean, especially this fast. I mean, cloud backlog growth is. is next level. And, you know, the company is quickly moving on from moving on to one of the more dominant companies in the AI space. So revenue and earnings both beat estimates. Earnings looked well ahead, but I think they made some big gains, unrealized gains on Anthropics. So it was still a pretty solid beat, but it doesn't, it's not as big as it looks if you

adjust that out. So, yeah, again, as you had mentioned, 11th straight quarter double digit growth. And I kind of find it funny because 11 quarters ago was probably the peak fear of, you of Google's disruption. Like what would 11, 11 quarters would put us back to like mid-2020, probably. So as we are recording today, they're still slightly behind Nvidia. Are they? So Nvidia, yeah, Nvidia had a bigger jump today.

So Nvidia is like at almost $5 trillion and Google at $4.8 trillion. So, you know, we're just talking a few hundred billion, give or take it. You know, it's just chunk change. That's an afternoon move in these markets. But yeah, I mean, if you were to look back. to 2023, there was not a lot of people betting that Alphabet will become the largest company, or at least close to the largest company in the world by 2026. Definitely not. So cloudside revenue 63% operating income. I mean, it's gone from like a cash burning segment of the business for

five, six years to like just up and to the right in terms of operating income. Operating margins almost doubled over the course of the years. So the company's backlog, though, I don't know can you show a chart of the backlog. Do you have that up? Yeah, you can pull that up. Yeah. It reminds me of the Oracle situation with the, with the RPO's, remember they just posted that one like absolute blowout quarter in terms of RPO's. But now, I don't have it 100% off memory,

but I'm pretty sure like oracles, sorry, RPOs were like realized over the next like five years or something like that. Whereas Google's, like this backlog, this $460 billion backlog, which has pretty much almost doubled since last quarter, not last year.

last quarter. So they say that they'll be able to turn over half of this backlog into revenue within the next 12 to 24 months. So I might be completely wrong on the on the Oracle situation, but I think they were much longer out in the future with those RPOs. So if I'm wrong, let me know. You know, if we assume they're correct, that's, you know, 230 plus billion in revenue that the company is going to be bringing in over the next few years. So the wildest part is they did mention their, yeah, their compute constraint. Like they said cloud revenue. would have been much higher if they were actually able to meet demand. So I mean, we're well beyond the the question of whether or not there there is demand.

Like this is a supply issue. So the other element I think we're getting a bit more clarity on is the profitability of KPEC. So operating margins at cloud are launching. So if they realize that 50% of that backlog over the next few years here, you're talking like 80 plus billion in operating income. So starting to show up in the number. for them, which I think is why, like, we've seen Amazon report increase capital expenditures and the market kind of thrashed them for it, whereas Google said, you know, we're going to be spending more and they rewarded them.

So a quick look at the other segment. Search grew 19 percent. YouTube grew 11 percent. The company mentioned search queries are at all-time highs. And I did mention this in a YouTube video. I did. And somebody actually commented a pretty good comment. And I don't know if they're factoring this in, but like, when we use these LLMs, like,

all the time they're performing, like if you're using Claude Code or something and you ask it something, it'll perform a Google search. You know, it'll go on there and search. So I don't know if that's factoring in because obviously those agents that are searching, they have zero value for Google search. Like, you know, you're not serving these ads to agents. So free cash flow. Maybe one day. Maybe one day they were. Maybe one day if they get smart enough. Yeah. Yeah, that won't be good if we get to that state of intelligence. But yeah, free cash flow fell 47% kind of expected the capital expenditures came in at 35 billion and if you if you factor in that they want to spend 180 plus billion you know 35 billion doesn't really cut it you need to get you know

that's only 140 billion over the course of the year so interestingly enough they mentioned that 2027 will be significantly higher than 2026 so I mean what is significantly higher they're going to be spending that's isn't that what these like hyper scale have been saying for better part of like a year now. It's like they, they essentially, that's their key word. Whenever they talk about CAPEX is just say like significantly higher in this period of time than the previous year. But I feel like to their defense, though, I will give them that. The prices for, especially like if you think about like high bandwidth memory. Yeah. A lot of prices for components for these data centers, they have been fluctuating on the upper side of things quite a bit. So it is kind of difficult

when your inputs to building these are going up pretty rapidly to, to really make some accurate projections. Yeah. But I think like the one point here is at one point they, like these companies were going to spend $100 billion and everybody was like, oh my God. And now they're at 180 and everybody's like, oh my God. Now like 2027, I don't know. What is it going to be $250, $300? I mean, if they say significantly higher, I mean, I think $250 would probably be the, the low point there, but the one crazy thing is the company is doing all of this without putting,

like they're putting virtually no strain on the balance sheet. So they, like debt has gone up seven X over the last few years, but the company could eliminate all this debt in just over a year's worth of free cash flow. And that is with all this spending. So if you include cash, net debt, they could eliminate all their debt in under six months. So I mean, the pace that alphabet is growing, like should not be possible for a company this size, but they're doing it. It's wild. Yeah, it's pretty crazy. So I don't have too much to add.

It's just every quarter I seems to, it seems to be getting crazier and crazier in terms of spending, but they're delivering. So what else can you say, right? Yeah. Yeah. I mean, it's starting to show up in the results, which is what a lot of people, you know, had questions about. Now that said, like I did get another comment.

that mentions, you know, like this backlog is obviously not guaranteed. Like, it could be scaled back. So you never really know. The fact that they expected to be realized over the next year or two years, though, it's kind of a bit more, you know, of a confirmation that it probably, you know, will be realized, but it's far from guaranteed. Okay. No, anything to add before we move on here?

Nope. 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 regular investing. With no commissions on stock and ETF trades,

you don't have to wait until you have thousands of dollars saved up to make a move. You can contribute small amounts regularly and keep your portfolio growing consistently, removing the stress of trying to time the market. And they keep making it easier to build a well-rounded portfolio. Soon, you'll be able to trade precious metals through Questrade, giving you even more ways to diversify. Questrade makes the whole process seamless,

allow you to focus on what really matters your investment strategy, not trying to avoid fees. Ready to invest? Head over to Questrade.com, open and fund your account with code TCI and receive $50. Conditions apply. You know that moment when you're on the couch,

shopping online, ready to checkout, and then you realize you don't have your credit card nearby, and you have no idea where it is. And then you see that purple button. That's shop pay from Shopify. It completely changes the experience. One tap, and you're done. No forms, no hassle.

Honestly, it's happened to me plenty of times where I just abandoned the purchase because of that extra friction. From a business perspective, that really matters. Less friction means fewer abandoned carts and higher conversion. But Shopify isn't just about checkout. You can build your store with customizable templates, manage inventory and payments all in one place, and even use built-in AI tools to speed up product uploads and content creation.

Plus, you can run marketing, campaigns directly through the platform to reach customers where they already are. See fewer carts abandon and more sales go chiching with Shopify. Sign up for your $1 per month trial today at Shopify.ca. Go to shopify.ca. That's shopify.ca. Cha-ching. Smart investing doesn't have to be complicated or time-consuming. With BMO all-in-one ETFs, you get a complete, diversified portfolio wrapped up in a single ticker. It's easy. Whether you're a conservative investor or more aggressive, BMO has an all-in-one solution for you. And now, it's even more cost effective. BMO has cut management fees to just 0.15% on select asset

allocation ETFs helping you keep more of what you earn. Simplify your investing today at BMOETs.com. Okay, so the next one on the list here we have, well, let's start our industrial segment, I would say. So Suncor Energy is the next one. This one I was really interested to see what would come out of this earnings report because it was essentially the first earnings report since the Middle East conflict started with the Strait of Hormuz being closed. And you're starting to see the impact of higher oil prices on results with revenues up 18% over a year and 20% versus the last. quarter alone. Q1 ended March 31st, so it only included one month worth of higher oil prices due through the conflict in the Middle East. Really important context here. They stated specifically

on the call that they ended up the quarter with an average WTI price, so West Texas intermediate price, 50% higher than when the quarter started. So take a moment to, yeah, think about that. So just within one quarter, it shows the magnitude of the, of the price change that we've seen in just a short amount of time. Net income was up 24% year over a year, 42% quarter to quarter. They receive record upstream production

for the first quarter at 875,000 burrow per day and record refining throughput. Now upstream is just the how much oil and gas is produced before he gets refined, so basically taken out of the ground. They increase their buy bag guidance, like I mentioned in the introduction, to four billion upfinding

from $2 billion that was just provided five weeks ago during Investor Day. So clearly, they must have seen enough that they know within, they probably have some models, internal models, saying like, okay, we anticipate this price, these higher prices to continue for some time. Or maybe they come down, but we just anticipate a higher floor in prices. Maybe now their projection is, you know what, like the worst it's going to get in terms of WTI high will be $7580. Maybe that's their new base case for the remainder of the year.

I don't know exactly. I'm just speculating here, but that would make sense to see such a shift in five weeks. The pace of buybacks actually increased to $350 million a month, effective April 1st. That's pretty crazy, huh? Yeah, I mean, these oil producers know they're going to be printing money. Just printing money.

Even if WTI states, at, like, let's say it doesn't stay at that 110 level. It comes down to, like, even 80. They're making a ton of money at 80 bucks a barrel. If they think that's a new floor, like, they're going to be, they're going to be ramping up buybacks and dividends probably because that's what most of these companies do now. They're not really expanding all that much.

And shoring up the balance sheet, right? So definitely something else that do you do? And just to be clear, I do own Suncor here. So just full disclosure. During the same investor day, they said they are aiming to. have a break-even barrel points on the corporate side of $38 per barrel by 2028. They're still on track to do that. They also updated their refining capacity from 466 barrels per day to 511. And that's essentially an increase of about 11, 10, 11%. So they were able to increase that,

that capacity simply through upgrades and optimization. And the more I see results from Suncor, the more I'm impressed by Rich Kruger, their CEO. Like, he's really turned around the business. I mean, Suncor was what a laughing joke for years? Oh, yeah. You invested money in Suncor just to lose it or something. I saw so many memes where they did not picture Suncor in a very good light. Well, when I worked in the industry, yeah, they were, I mean, I guess he could say laugh.

They were not a very well-run company. There was a lot of issues that a lot of their plants constantly. Yeah, they've, I mean, kudos to them. They've turned it around significantly because it was a, like out of the three majors, this would have been the last one I would have touched. I would have bought CNQ or Imperial Long before Suncor, but I mean, yeah, props to them. Yeah, I mean, and the results speak from himself. And Rich Kruger, the CEO mentioned that over the last three years,

production has increased by 133 barrels per day. I didn't calculate that how much it would be, but just bait on the 875. That's probably roughly like 16, 17%, just kind of top of my head, Matt, which is all achieve through better performance. So not acquisitions, not any new really discoveries, just better performance, which is even more so impressive. Kruger on the call was, he had a couple really good insights, especially when asked about the current volatility in the energy markets.

The fundamental question for him is, does it become a geopolitical premium on security of supply? And is something we've talked on the podcast before is as the situation in Middle East doesn't get resolved, or maybe it stays a bit of a stalemate, who knows exactly what happens with the strait, do you start seeing countries willing and to pay just a bit more? more to have supply that is just more secure that they know we'll get to them. And Canada's in the U.S., to be honest, they're both very well placed for that. Clearly, you need the infrastructure to be able to do that. But it was just interesting hearing him say that on the call as well. Then he followed that the best companies overtime in the oil and gas sector don't overact on

variables they can control because it is a cyclical business. And the upside and downside can definitely they can't control the upside and downside in the price a short term given that these are very long investment cycles. They can't react, be too reactive because when they make an investment for projects, these are projects that could take, you know, multiple years before they come and they become online and creative to the business. And they have upside potential if the environment materially changes for the long term, but essentially they're really sticking with their plan so far.

was interesting to listen to the call just to get his perspective on that. It kind of aligns to with what I've been saying a whole lot on the podcast here where I think these disruptions will likely last longer than a lot of the market is still anticipating because I haven't checked like just recently, but I know if you were looking at futures prices for WTI, they were coming down significantly like towards the middle and the end of this year. So I don't know if this is starting to shift a little bit, but just interesting to see in his comments on that. Yeah, I mean, if you're, it was a very good quarter from Suncor, but if you, if you look to the share price, like it's down a bunch, it's, that's just because oil, like what is it, it's down 6% today,

but that's just because oil is down 7, 8%? Yeah, there is still, um, you know, there's some development that there might be another trues while they work on a peas deal. So the 12th piece deal that they've been working on. since the war started. So I think the market you're also seeing, not to touch this too long, but you're also seeing the market, even though the price yes dropped, you're seeing less significant drops now. Yes. So I think the market is starting to say, okay, like we, you fooled us more than once. Some people shorted before the news came out again and made a killing, but that's besides the point. You've fooled us more than once. I think the market more and more shifting towards,

okay, like we'll believe it when we see it. Yeah. So we'll finish on that for now next up here, continuing on the industrial side. CP rail. Yeah, I'll go through these two quickly because we got, yeah, we still got some time. But CP rail, so both railways put up pretty soft quarters, but CPs in my opinion, I'm a little bit. Well, I mean, you guess I could say I'm biased, but I mean, there's like, it's in the numbers. You're a shareholder just to be clear.

And that's why. CP, so I am a little bit more biased, but I think, you know, it's kind of deep rooted in the numbers that, like, CP Rail has just been the better operated railway over the last while. And, you know, I've seen more commentary than ever suggesting like management kind of needs a bit of an overhaul at CNRail because their quarter was, I would say their quarter was bad. CPs was soft. So for CP revenue down 2% earnings misestimates, operating ratios actually increased 50%. basis points, which is the first time in a while that they've taken a, taken a step back. So keep in mind, it's a reverse of the operating margin. So you want to see lower operating ratios. I don't know why. It is weird. I don't know why they do that.

It must be like a traditional thing. Yeah. They've always kind of used it. Because every railway uses this. Trucking company too, like TFI will report this. But yeah, they do it this way for some reason. If, if you know why, let us know. You know, most of the miss on earnings was macro headwinds that,

pretty much the company has zero control over. So they took a four cent hit to earnings from Forex, three cent hit from gasoline, for example. So if you kind of strip that out, they actually came in above what was expected. But obviously, these are real costs to the business. So that's kind of cherry picking a bit. But this is a very different conversation than a company losing pricing power

or kind of fumbling execution, which I think is what a lot of people think is happening kind of at, you know, CN rail right now. So as we had mentioned at the start, train weight is up, train length is up, dwell time is, dropped, fuel efficiency has increased. So these are kind of metrics that are pretty much, well, they're largely ignored during poor macro times like this because the results aren't going to be that good.

But, you know, when the situation turns around, you know, these efficiencies that have been compounding for, you know, two or three years start to show up in the results. So grain was the big player in terms of shipments. And that's primarily because of Mexico. So revenue in that area increased 11% on 12% increases in volume. and a lot of this was due from a, you know, big jump in trains to Mexico. Forest and steel took a big hit because of tariffs. So forest revenue down 17%.

I think Trump effectively priced a lot of Canadian lumber from a lot of the U.S. markets along with steel. So that would be a, you know, a summer, you know, the trade deal. You know, they kind of need a resolution on that before they probably see any sort of results. And Mexico doing very well, kind of proving that the KCS acquisition is working. Automotive volumes are up intermodal posted its ninth straight quarter of double digit growth. And they are currently constructing a second bridge that should double its capacity at the busiest US-Mexical crossing. I don't know where that crossing is, but they're building another bridge because there's more demand for it. And they kind of like CP has flipped the switch in terms of shareholder return.

So when they bought KCS, the company stopped dividend growth, didn't buy back a single share. Now it boosts to the dividend by 17 and a half percent and bought back around 650 million in shares. And I mean, they're definitely doing this at a good price. You know, whether or not they prudently stopped buying back shares because they thought the price was expensive during the pandemic or they just did it because of the Kansas City Southern acquisition. But they're going to have a lot more money to buy back shares now at lower prices than they would when when prices were higher when the freight environment was just through the roof during COVID. Yeah, I can just see Canadian National Management taking notes like, oh, buying back shares should be done with the price is lower. Okay. Yeah.

That's how you do it. Like CNRail spent, I don't even know what it was, $10 or $11 billion on buybacks during, I think it was like 2022 to 2024 or whatever it may be. I'm kind of guessing those numbers. But now they don't have as much money to buy back when the stock price is kind of in the gutter. So, yeah, it just kind of shows you like buybacks are a good headline number, but you got to be doing them at the right time. No, exactly. All right. Okay, no, that was good.

And now to finish here with Toramont. Toramont. So, so, is this, can you remind me, do you own Toramont? Yes. I can't remember. Yeah, I bought Toramont at the start of 2025. I did not imagine, I kind of bought it with the idea that it would be sitting at this price, like, you know, in three, four, five years. It took a little bit over a year.

And there's some very interesting elements of this company that, I mean, even I didn't. It's been on a heater. Yeah. absolute heater and I'll kind of go over why. But it's like my main element of buying it was obviously the equipment build out and infrastructure. And then they have a Simco segment which kind of does cooling and refrigeration like ice hockey rinks. Let's say they put kind of the systems in there to keep the ice cold or or like grocery refrigeration. And funny enough like that's kind of been one of the poorer performers this quarter. And it's actually AI tailwinds that are coming from some very

under the radar acquisitions or acquisition that the company made. So just going over the quarter first, revenue came in 13% higher. Earnings grew by 24%. And operating income jumped 40%. Gross margins also increased 340 basis points. So every revenue line in the company grew by double digits minimum. New equipment was up 18%. Rentals 11%.

Used equipment, 22%. The company's total bookings jumped 44%. Equipment bookings are up 45 and apparently almost half of those, you know, bookings backlog is tied to the power systems group, which is where the company, I mean, by the looks of it now, just made an absolutely genius acquisition in late 2024. So it closed in early 2025 and they took a majority stake in a company called AVL. So at the time they acquired it, I kind of heard about it just through getting pinged about a press release. But after I read it, you know, the company pretty much said when they bought it, it's kind of a small tuck-in acquisition. It's going to have an immaterial impact on the company's revenue earnings. Like they pretty much said, it's so small, there's a rounding error effectively on Toramont's total results. So I didn't really look any further into it. And it kind of says two things. They were either sandbagging this or it just kind of goes to show you how truly widespread the impacts of artificial intelligence is. So AVL Bill,

steel housings. So those housings, like they'll store, there'll be the steel housings in backup generators or the steel housings for switch gear. And I mean, like data center like data center exposure galore. And it grew 500, well, 485 percent. So when they bought the company in the first quarter of 2021, it had $22 million in revenue. And this quarter, it had $129 million. So it's grown like 480 some percent. And when they first bought it, they said it will have a nil impact to earnings. Like they didn't expect it to have any sort of meaningful impact to earnings.

And it actually made up 17% of Toramont's total earnings this quarter. So I mean, it's a wild situation. I find it like the entire thing just fascinating. I mean, we're seeing so many companies that just kind of have stuff like this pop out of nowhere. On the Simco side of things, which would that refrigeration. aspect. It had a big run over the last while, but it's slowing down. Revenue grew only 3% operating income dropped 36%. I'm not really too concerned about that over the long term, but yeah, I mean, they're expanding their stake. So I'm pretty sure they wanted to buy the entire

company, AVL through to 2031, but they've already ramped up their stake. They bought more of it this quarter. And they're building a new plant in the U.S. I think it's in Charlotte. That's going to get them exposure to U.S. data centers in the east. So, I mean, I don't know if that segment's going to grow at a 500% pace year over year, but I mean, on that small of a revenue base, it's certainly possible. So it just brings an entire other element into, you know, an equipment rental company for the most part. It's just crazy, the AI situation and what companies are benefiting. No, no, that's pretty crazy. I would not have guessed that either. But I think that's a good point to end things at.

Hopefully you liked a slightly different format. So we still have our normal back and forward, but with a little bit of overview of the episode coming up, kind of the big points and then going into more detail. Let us know if you liked it. We're trying something new. We'll try it. Keep doing it a little bit. See if people like it. But it was fun to do. Just kind of go a bit more rapid fire, more direct to the point, and then just get our usual back and forth. So thanks for all this support. Thanks for listening to the podcast. And we will be back with our regular episode on Monday. And as a reminder, Dan Foch and I have a live show on Fridays at noon Eastern time. Sometimes it's a bit later than noon, depending if one of us gets caught into traffic or something like that.

But you can catch it on the podcast feed. Saturday morning it's released. So you'll see there's Dan's beautiful face in mind on the podcast cover. So you can catch that as well if you just want to listen to the audio version. We definitely focus a bit more on the macro side of things. Thanks for listening and we'll see you on Monday. The Canadian Investor Podcast should not be construed as investment or financial advice. The host and guests 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.