The Canadian Investor - Inflation Hits 3.2%, Couche-Tard Rallies & Airline Troubles

Episode Date: June 25, 2026

In this episode, Simon and Dan break down Canada’s latest inflation print, with CPI hitting 3.2% in May as gasoline, airfare, and food prices continue to pressure consumers. They also cover earnings from Empire, Air Transat, Couche-Tard, and Stingray, including the competitive pressure in grocery, Air Transat’s fuel and Cuba-related headwinds, Couche-Tard’s rally after a stronger quarter, and Stingray’s surprising growth following its TuneIn acquisition. They finish with a quick look at OSFI lowering the domestic stability buffer for Canadian banks and what it could mean for lending, buybacks, dividends, and the broader economy. Tickers of Stocks Discussed: EMP.A.TO, TRZ.TO, ATD.TO, RAY.A.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.

If you're a DIY investor ready to take control of your portfolio, BMO all-in-one ETFs simplify the process. Whether you're new to investing or looking to streamline your existing holdings, these all-in-one solutions are designed to help you invest smarter. With management fees on popular portfolios now reduced to 0.15%, you get professional diversification at a lower cost. Check out the asset allocation ETFs at BMO-E-E-T-E-S. Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business. Just my reminder to people who own cyclicals, don't be surprised when there's a cycle.

If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time. Welcome to the Canadian investor podcast. I'm back with Dan Kent. We're back for a news and earnings episode. A bit quieter on the news front this week, which is a bit of a surprise because it feels like every single week we had some big news to cover on the podcast. A lot of the time unexpected to, especially as earnings were slowing down. But that's all right. There was still a decent amount of news. So we'll still have a good episode. It might be more like 30, 35 minutes. it's in length, but we have some fun stuff to talk about. So we'll talk about Canadian CPI for May 2026. What came out of that? Empire's earnings, so the grocer, we'll talk about Alimantacion Kustadt. We'll also talk about Air Transat that had some interesting results here. Stingray, a company that I don't think we've talked about on the podcast, so the media company, really surprising results in a good way that I didn't know they were doing that good. And we might touch a little bit on

that domestic stability buffer that Dan Fosha and I talked about during the Friday Live that would have been published on the podcast feed on Saturday. So if we have some time at the end, we'll talk a little bit of that about that at a bit more context. But that's the overview of what we'll be talking about today. Yeah, we're just missing Micron, which reports after the bell today, which will definitely be a very interesting, I would say like market carrying quarter if they report bad earnings. I would expect some some ugly results tomorrow. Obviously, we're recording this Wednesday, June 24th. So we'll see what those earnings look like. But yeah, it should be pretty good episode. Not a lot of popular companies reporting right now, but it's pretty slow

period. Yeah. And for my cron, I'll probably touch on it on the Friday live recording with Dan Foast. We won't be touching on it next week because we recorded some episodes in advance. I have a really good guess coming on. You may have heard of them. So if you're familiar with the Belty Barber. It'll be coming. So Dave Shilton is came in on the podcast, recorded that yesterday. So you'll have it next week. So we did some early recordings because Dan and I are taking a little bit of time off for the 1st of July week. But you'll have some fresh episodes. So make sure you stay tuned. So I'll probably, like I said, talk about Micron during the Friday Live. And speaking on the Friday Live, just be on the lookout. The podcast cover that I'll show you up on your podcast feed will be slightly different. So we're rebranding, doing some. more modern, I would say, podcast cover. Really a nice looking. So I'm pretty happy what we have so far. So you'll see that for our feed, a new one for the macro investor.

And then we'll have a different one for our podcast, but it will stay on the main feed. And then for those who also listen to the Canadian real estate investor, there's going to be a new podcast cover there as well. So enough about the, I guess, housekeeping. Maintenance housekeeping. Yeah, I was like trying to think about the term. because I'm a bit tired due to a 12-year-old puppy that keeps waking up during the night.

So if I'm looking for my words, that would be the reason. So Canadian CPI, May 2026 came out. Headline CPI came in at 3.2%. Higher gasoline prices help push prices higher. I'm sure I'm not. It's not breaking news for anyone who has, who drives, who has a car. Obviously, we talked about it quite a bit on the podcast, higher gas prices. so it's been putting some upward pressure on prices here.

In the release, they said that excluding gasoline prices would have been up 2.2% in May and 2% in April. So that's interesting. Obviously, it's all nice and dandy when gasoline prices affect so much. Airfare saw a 7.4% increase driven by higher operating costs for airlines, notably jet fuel. Food rose again, and food seems to be the story that we, We can't get away when we go over the CPI print. It's staying elevated. I feel like I'm a broken recorder here.

It seems like it's like that every single month. So it rose 3.8% year over year, 0.7% versus April. Food purchases from store, so the grocery store, were up 4.3%. And it was even worse when you started looking at subcategories of food, like fresh vegetable prices rose more than 9%. percent year over year and 5.5% on a month-over-month basis stemming from poor weather in Mexico and reduction in planted crops following U.S. tariffs again in Mexico there. On the better side of things, shelter prices continue to decelerate by increasing 1.7% in May

following that was following a 1.8% increase in April. And if you're looking at core CPI, so the measures that the Bank of Canada look at, those remain mostly on. The common CPI was a bit higher, but the trim and the median remain unchanged. So or I think change very little, so the trend is still looking good here. But overall, I think it's hard to obviously overlook the gas area of things. And we're seeing gas prices that are coming down now with or oil prices that are coming down along with some good news coming out of the Strait of Ormoos. But that situation is very up in the air.

it feels like every other day we have some bad news and we have some good news. There's more ships transiting, but it's still very volatile. There's multiple stakeholders involved. It's not just the US and Iran. There's the other Gulf countries. There's Israel. So it's very hard to know exactly what will be happening when you have two nations, the US and Iran trying to make a deal together, but there's also different interests involved. So I feel like it's going to be volatile for some time. but at the very least, if we can see those gas prices or all prices coming down, maybe it'll ease a little bit on the CPI, at least headline number front.

Yeah, because it pretty much hits everything. Like, it's kind of the master input. Like, you can't really exclude gasoline and kind of say that, or I guess energy in general, because it hits everything. So, I mean, in a way, if you exclude two out of the three things, that impact pretty much everybody in the country,

that being food and energy prices, then inflation looks pretty good. But ultimately, it doesn't really work that way in the real world. So, yeah, need to get food and energy down. And I think the one way you get food down is probably, you know, get energy down because it just, it hits everything. They need some sort of resolution over there. And it seems like every time they come to one, it blows up quite quickly. Yeah, yeah, exactly. So I think that's the gist of it.

So 3.2% it kind of aligns with the Bank of Canada and their change of tone that they had in our last meeting saying that it will hover around 3.3%. So 3.2% is still a decent amount higher than that. We'll have to see how quickly it comes down. But something to keep an eye on here. So let's move on here. You had some earnings coming up for Empire. And after that, I'll do air trans. I will go back and forth. Yeah, so it looked like a pretty, I guess you could say average quarter from Empire. The company struggled quite a bit over the last few years. It'd fallen behind in regards to kind of the discount grocer race when you compare it to something like La Blah. But it was also going through a bit of a multi-year transformation here to get more discount-orientated and kind of shed some bad segments of the business off. Revenue increased 2.2% adjusted earnings by 27% on the full. year revenue increased on the full, yeah, full year, because this was their Q4, increased by 2% revenue did. And earnings fell by 71%. But this is primarily due to some large write downs. I think

nearly $750 million in write downs that had had on some facilities, I believe here in Calgary. They have their Wala, grocery business, which is from what I'm reading is like an automated online grocery delivery business. So they kind of... Yeah, I've, I've, seen the trucks, yeah, the food delivery. I think they had one here in Calgary and it was not working out all that well. So they, I'm pretty sure they just shut it down. It also just completely exited home delivery grocery here in Alberta. And they were expanding in BC and they have pretty much stopped the BC expansion.

The good part is most of the write down, which again was quite large was a non-cash right down when you adjust this out. earnings actually increased by around 12%, 11.9%. And the company mentions that closing these facilities and exiting the areas should have a positive impact to operating income because a lot of these were kind of money burning situations. Food same store sales came in at 1.5%. This is the third straight quarter of slower growth in this area, so not necessarily declines, but they're not growing as fast as they were. Fuel increase by 5%. And this is a very similar situation of what we'll go over later with Custard, where, like, food is kind of struggling and fuels kind of picking up the slack. It's driving a lot of the results right now while grocery is is kind of lagging.

And the company is pushing hard into discount grocery. The only difficulty here is it doesn't really generate as much cash flow and doesn't have the sheer size to keep up with a player like La Blah. This is a fairly tough market to crack, especially when you're, largest competitor can kind of spend way more than you and already has a much larger reach than you. I know I'm pretty sure Empire has stores in Quebec where I think, I don't think La Blah has very much exposure in Quebec. I know they kind of shut down a lot of stuff and converted a lot of them to Maxi stores, but no, La Blas. Yeah, well, yeah, they have exposure through Maxis. Yeah. Yeah. So it's, they have some segments of the country where they're a bit bigger exposure, but it's pretty

tough to compete with La Blah right now, and I think they're kind of feeling it in that regard. They're kind of behind the push when it comes to kind of the trade down theme we've had in Canada for like three plus years now. They raised a dividend by 10.2%. That's the 31st consecutive. I think there are over three consecutive decades of dividend growth. And they're also continuing to aggressively buyback shares, which is why you're seeing earnings for share outpaced net income by quite a bit and that is due to the buybacks. Guidance for 2027 is for high single digit to low double digit earnings growth and for 20 new stores this year, 70 over the next three and the interesting element here is 75% of them will be those discount brands. It'll kind of be interesting

to see what happened. The company got a new CEO last quarter and they did mention that their kind of multi-year transformation phase here of shedding other assets and kind of going more discount oriented is over. They mentioned now that they're kind of in the growth phase, what it means the growth phase of kind of a slower growing grocery store here, it's probably still going to be relatively slow, but they've, they've struggled over the last few years here, especially when you compare it to a to a chart of La Blah, like La Blah has done exceptionally well, whereas Metro really hasn't moved the needle all that much.

They're only up around 30% over the last five years. This wouldn't be including dividends, but they just really weren't. in a position to capture that trade down market like a Lobla or a Dollarama were. And it's definitely shown in the results. Yeah, I mean, one thing that's, I was kind of looking at the transcript while you were talking. And it seems like the farm boy brand is doing quite well for them.

So that's a more exclusive brand. I guess it's a bit of a higher end. I think they converted. I've seen quite a few of Sobe's being converted to farm boys. And they're only located in Ontario. there's around like 50-ish stores. So I know they're pretty popular in Ottawa and they tend to have like more prepared meals. They always had like a food bar and stuff like that.

And it's a bit more expensive, but I know they're quite popular. So it's interesting that it almost feels like they're doing, yeah, some more premium stuff, but more discount stuff as well. Yeah. And I think that's kind of the area that a lot of people are getting away from and going to more like no frills. because I know Sobies is a bit more on the expensive side of things, mostly because you have that, you know, you have the deli, you have the prepared meals, whatever it may be,

whereas a lot of these groceries are realizing, you know, not a lot of people care about that stuff right now. They're looking at, you know, trying to save the most they can. And that's going to stores with literally nothing in them except for the groceries. And, you know, you go to the till you save a bit more money because they don't have to pay for the deli they don't have to pay to prepare all that type of stuff so yeah i don't know what farm boy is because we we don't really have them here yeah it's yeah i mean yeah so they're they're all in ontario it's um but i've seen them being more there's some that are not but there's quite a few

that i've seen open where they'll be like next to a couple of large apartment buildings so they're trying to capitalize on the fact that you know maybe it's a good alternative to like trying for people to order food from, you know, like delivered food from the grocery store or using Instacart, whatever it is. Maybe they're trying to do that or, you know, these prepared meals or food bar, it may be more expensive but cheaper than like food delivery if you go and pick it up yourself, right, if you're nearby. So maybe that's kind of the angle they're playing to where it does offer value, but it depends

to who. Well, especially if you're in like a downtown location or something where a lot of these, you know, some people don't drive or even if they do. drive, it's a royal pain, so they're willing to kind of pay more to not have to go through that situation. But in terms of competing, like you have Loblaw dumping like four times the amount of Empire's total free cash flow generation back into Loblaas business to kind of tackle that discount element.

It seems to me like it'd be pretty tough for Empire to kind of keep pace. I don't know. Yeah. No, I think that's a good point. It's a decent quarter, but like most of the growth in terms of earnings is coming from buybacks because, you know, the top line is really not growing all that much. Margins aren't expanding all that much. So they're buying back a ton of shares.

Eventually you got to move the, you got to move the top line or you kind of run out of levers to grow earnings. Yeah. Yeah. Eventually you have to grow the earnings, not just the EPS, right? So, yeah, totally understands. Having cash on hand is essential for any business. Traditional business accounts hit you with high fees while paying little to no interest on the cash you need for day-to-day operations.

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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. So let's move on here to Air Transat. So I don't know if we ever talked about them on the podcast aside from maybe, you know,

some quick mentions here and there. Yeah, it's very small compared to Air Canada. Canada has a market cap of around $100 million, but an EV of $900 million, which if you're, you know, just to explain how EV is, it essentially adds kind of the debt into the market. So, yeah, so if you would say $100 million market cap, but $50 million EV, it would be that it had like in that cash position. So that's why it would be, it's a bit counterintuitive. But it's almost like the price you'd have to pay to buy the company when factoring the debt. I think it's probably the best way to put it. Yeah, if you were to buy the company and say eliminate the debt, it would cost you, what do you say it was?

900 million? Yeah. Yeah, so 900 million. Yes. So it's not a good situation to be in. No. They probably have a decent amount of assets when you factor in all the planes. So, you know, kind of give or take a little bit.

So Air Canada on the other hand has $7 billion market cap and a lot less debt compared to its actual market cap here. And it was a rough quarter for Air Transat, but to be fair was largely due to things out of their control. Higher fuel costs added approximately 70 million in additional operating expenses. Not a surprise. Adjusted EBTA also got hit about 25 million due to the suspension of operations in Cuba. Not surprising because Air Transat, of course, a lot of its business is like those sunny destinations. Flights to Cuba have been suspended since February 9th. They're not alone.

They're suspended across the board here. And to mitigate the impact, they started diversifying their network. by reducing seasonality on key transatlantic routes. So that's mitigating that Cuban impact. It's still been suspended, by the way. We'll have to see if there's resolution on that front in the coming months. Revenues were flat year over year. They had a 95 million loss on an adjusted bidup basis,

largely due to the two factors I mentioned, so fuel and Cuba. They've implemented fuel surcharges and the additional cost was originally well absorbed. by consumers, but they're also facing more competition now, and they have weakening pricing power due to the kind of recent market volatility, especially regarding flights. And they will be applying for government liquidity facility for the airline sector. I think that was announced maybe a month ago or something like that, which is a sort of bridge financing that airlines can apply for them to help navigate higher fuel costs. And in terms of key metrics for airlines, it was in.

great. So the load factor or how full the planes were was down 0.7%. The overall capacity increased, but they had fewer seats up for sale than the previous quarter. So that means that they had just longer flights than they had in the previous quarter. So, and obviously they flew greater distances, but just a smaller amount of flights. And that makes sense when you factor in Cuba and to the equation and having more transatlantic destination. So really interesting quarter to look at, again, not a company we look at, definitely on the small slash microcap, which is pretty wild to think of an airline being like a microcap company. But they're just difficult businesses, not one that I would own. But again, it's still, it's kind of slow on the earnings front.

So I figured might as well put some companies that we don't cover all that often, just to mix things up here. Yeah, I haven't followed this company at all. I thought they went under or they were very close to going under. I thought they were bought out by someone like privately. Yeah. I didn't even know they were publicly traded anymore. I mean, they have struggled for a very, very long time. They have interest coverage ratios of only 1.7x.

So I mean, they're towing the line here in terms of, in terms of operations. But it's not surprising when you look at the stock price. It's been absolutely cratered since, well, pretty much since it's it IPOed. Yeah, exactly. It's just, I mean, airlines are tough business. But again, if you start looking at their assets, I mean, they have a decent amount of asset. Like, just kind of the tangible assets, they have like $1.2 billion in tangible assets. I'm assuming a lot of that is like aircraft.

Yeah, it would. Yeah. So, I mean, you know, if you're really dumpster diving, maybe, you know, maybe there's something there, you know, that good old, you know, a few puffs left in that cigar butt. Maybe that's the thing here. But let's move on here to alimentation custom. So definitely a company that we know is followed quite a bit by listeners of the podcast, Canadian investors in general. And I read a little bit on the corridor. I think I was surprised to see the stock go up all that much.

Maybe I'm more critical of Kushtaw. I didn't think the quarter was like bloodbuster or anything, but you tell me if you agree or not with that. Yeah, it was a pretty big quarter, I would say, in regards to the fact that they have struggled for, what would it be three years now? They haven't really done all that well. So to see it finally post kind of,

I wouldn't call it a blowout, but it was definitely well ahead of what, people expected. So it closed. I think it increased about 12% yesterday. Yeah. That's why I'm like, I don't know, I feel like the market was more excited than I was. I think it's the struggling economy has kind of been hitting fuel volumes for quite a while. And inflation was kind of forcing them to increase prices on their merchandise, which was kind of killing sales. And there was a bit of an improvement on both those ends. So I think maybe kind of front running some sort of long term turnaround here, or even short term, depending if things pick up even more.

Revenue increased by just under 20% and beat estimates, as I had mentioned, by a pretty reasonable margin. Earnings also came in well ahead of estimates and grew 58% year over year. Gap earnings actually doubled, but it's pretty important to look at adjusted numbers here is there was a one-time windfall of $260 million. It was some money that they recovered from a legal settlement, so they got that back. So if you look at the headline, you know, non-adjusted earnings, they're going to look huge. When you look to the full year, because again, this was their Q4, earnings grew by 14% and revenue by 5%.

And this final quarter of the year definitely vaulted those numbers quite a bit higher. If they had reported kind of a so-so quarter, you would probably see this earnings growth in the single digits and revenue potentially even closer to flat. That's kind of how big this quarter was. And I think a lot of the one thing a lot of people who own this who are watching this need to pay attention to is a merchandise same store sales. So this quarter was primarily a blowout due to the fuel. Fuel margins were way ahead of estimates, which caused pretty solid results. However, this is probably going to be a segment that is very volatile over the last while.

You could see it post next quarter's earnings and kind of fuel margins regress. It's even more amplified now with how much energy prices are launching up and down in a single day, like even 5%. Yeah, I think it's very hard to bank on fuel margins. don't want to stay at a certain level, right? So it's very difficult to carry that from quarter to quarter. And I'm just showing here for Joint TCI, just their same sore merchandise sells.

So I'm breaking down between the U.S., Canada, Europe, and other regions. And it's not great. In the U.S., it is the silver lining. So it has been trending up. It's the highest it's been since April of 2023, so in three years. But Canada is negative.

and you have Europe and the other regions that's barely growing at 1.1%. And again, that one is kind of where it's been a bit all over the place over the last few years. Canada, it's amongst the lowest it's been over the last few years. Like, I just, that is the part where I kind of keep an eye on. And if these merchandise, same store sales are not growing, like, personally, like, you don't have much growth. Like, that's how I see it. Maybe I'm too critical, but that's how I see it. And they're like the bulk of the business is in the U.S.

So you need like the U.S. same store sales is definitely going to be what the market focuses on. And it is it's growing. The difficulty with a lot of the growth here is when, you know, you have inflation that's three, three and a half percent. And you have same store sales that are not really growing in that line. And in terms of the quarter overall and I'll get to the merchandise stuff, but you had gross profit in terms of fuel that was up 29% and fuel volumes pretty much fell across the board.

I think they increased in Canada a bit, but in the United States and Europe fuel volumes actually fell. So pretty much the entire quarter, the entire success of the quarter was just increased fuel margins, which is pretty much why, like I'm not necessarily convinced yet. because when we look to the the merchandise same store sales and actual fuel volumes, like they're all struggling. So US, as you mentioned, 3.4%. Fuel volumes declined 2.1%. In Canada, merchandise fell 0.9%. Fuel volumes increased 2%.

And in Europe, we have that 1.1% in merchandise and fuel volume declined 4.4%. So they're not really keeping up with, you know, the inflationary impacts on a lot of the goods they sell. they're improving zero question. Like just over a year ago, I'm pretty sure Kuchstarred was seeing declining same store sales in the U.S. And now you see it, this is the fifth consecutive quarter of increases in comparable sales. But you look at them back pre-pandemic, this is a company that usually grew same-store sales in the U.S. at four, four and a half percent.

And we did not have inflation anywhere, anywhere close to those levels. inflation was, I think, sub 2% pre-pandemic. It was a very low inflationary environment, so they do have to continue growing this. And I guess in Canada, it's even more concerning because the merchandise same store sales are declining while fuel volumes are accelerating. So what that tells me is it suggests that a lot of people are filling up on fuel and kind of skipping, you know, the stop into the gas station to buy whatever it may be, chocolate bar, chips, whatever it is.

And that's, you know, the merchandise side of the business. not this quarter, but typically is the much higher margin segment of the business. So, yeah, I don't know. I'm not convinced it was, I think it went up 12% just because it was again the first good quarter this company has reported in probably a few years now. Yeah. It's struggled a lot. Or the least bad quarter.

Yeah, it's. I would say, I'd let me with you. I don't think it was that great of quarter. Yes, the U.S. is two thirds of the business. So that 3.3 is good, but that 3.3 is not keeping up with headline inflation. Yeah. Headline inflation is, I think it was above 4% now, the latest print in the U.S., so it's not even keeping up there.

And then you have one Canada, their second largest market, but combined Canada and Europe is about third of the business. So if you, you know, weigh Canada a bit heavier than Europe in that because it's large, it's about double the size, then, yeah, 3.3 in the U.S., two-thirds of the business. business, but Canada and Europe, it's probably combined flat or slightly below, slightly negative. So clearly you're not keeping up with inflation there. And that's my worry is just that the business is stagnant there. And, you know, I think Bulls will probably say, well, they can make acquisitions, but you also

don't want to be relying too much on acquisitions, especially since you're at a size of a business that where acquisitions will not really move the needle unless they do something. Yeah, unless you're swinging big. And then they get additional risk if you do something really. Yeah, you don't want to be relying solely on acquisitions. It is a much more cost intensive way to grow. You need same store sales. And I mean, if they come out next quarter and US same store sales on the merchandise

go above 4%, then it's probably going to go up a lot more because I think it's more about the trajectory, I guess, than probably the actual raw numbers of it. Yeah, as long as inflation is not, you know. five plus percent. I think it's all dependent. Like, you know, if inflation is 20 percent, they're growing cells 10 percent. Like, that's still bad. Yeah. I think it's still, it's all relative. Maybe I'm too critical. It's just, I think Kustar is still riding the high of its historical, like kind of two-decade, amazing growth, acquisitions that, you know, went over really well, which, by the way, on Monday, make sure you tune in because we have a fun episode coming up

on the best acquisitions in Canadian history and US history. So we did it kind of both sides of the border. And spoiler alert, Ademantai Saint-Custal may be one of the names. The top there, but you'll have to tune in as to why. But yeah, yeah, I don't know. It's like they don't have much room to raise prices anymore. I'm sure a lot of people have been inside a gas station and seen how expensive this stuff is. Pepsi got into a lot of trouble with that too, raising prices so much during that high inflation.

And then they just ended up getting killed in regards to volumes because they went too aggressive on the pricing front. And prices are already high in these stores. So they definitely need inflation to slow down, which if it does, and they continue to grow same store sales in the U.S. at a, you know, four to five percent range. And inflation is only, you know, 2 percent. If they get it down to that pace, it's pretty good. But I don't want to say I'm an outright bear on this company. I'm just not really convinced that, you know, one quarter like this is. the sign of it kind of turning around. The final note, they bump the dividend 10 and a half percent.

This is nothing abnormal for the company. But the interesting thing, which is pretty abnormal, and they've done it over the last while here, is they've pretty much halted most all of its share buybacks. This is a company that buys back a lot of shares, typically. So I don't know if they're doing that to try and de leverage. I don't really think their balance sheet is in a very bad position. I don't think their leverage ratios are very high. So to me, that may be. looks like stockpiling cash to potentially make some sort of acquisition because they are known to do that. But yeah, they, I think they bought back very minimal shares on this quarter. And I think they've been scaling it downwards for quite a few quarters. But it was a good quarter.

It just got to see the trend continue. Yeah. No, I think that's a good point. That's probably where I put it as I would need to see like probably almost a year worth of good quarters, like this kind of quarter but improving and then before i you know would ever consider starting a position for me right now there's just too many red flags for this kind of the business and i don't think it's trading really cheaply either again yeah it's usually around 20 x earners like yeah Ford p of like yeah for p of 18 like not cheap for this kind of business so i would probably just wait and see but that's me having cash on hand is essential for any business traditional business traditional business accounts hit you with high fees while paying little to no interest on the cash you need

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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 on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends.

And there's other stuff like learning duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. 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. So let's move on here to the last name that we have on the list. So Stingray, this one again,

like I mentioned, it's not a company. I was all that, like I knew of it, but I hadn't looked at it in pretty much forever. So ticker Ray. Stingray is a digital means. media company, the easiest way to think about it is that they provide music, audio ads, digital signage, content you hear or see in retail or public places like store, restaurants, hotel, gyms, and cars, of course, they have some radio stations due to acquisitions there. They also own radio station and music channels. So they operate more than 100 radio stations in Canada and recently bought Tune-in with the acquisition closing in December of last year.

that allows them to increase their in-car audio presence and ad monetization. Believe it or not, Stingry has actually crushed it over the last few years. So over the last three years, it's up 200%. It's pretty impressive. And there's still a small cap around $1 billion market cap here. Organic growth was 11.6% year over year. Revenue increased 43%. But of course, that factors in the Tunein acquisition.

so they didn't have it last year. So that was 43% for the quarter and 22% for fiscal year. But keep in mind, they have a weird fiscal year that just ended. And a lot of the growth can be attributed to the acquisition, like I said, of Tune in that closed in December. And they had a net loss of $65 million during the quarter. They're achieving synergies from the acquisition at a faster pace than they had anticipated. And they have $400 million worth of unsold retail media inventory.

So I guess that's a good problem to have, or it could mean that there is not, the demand is not super strong there for advertisers, but they'll be rolling out programmatic advertising, which will allow companies to essentially be able to do it themselves and book some advertising on their platform. And they said that it should help sell some of more of that unsold inventory. The radio declined 7.5% during the quarter in terms of revenue, but it was flat for the year. they attributed the decline in part because of the Olympics. I guess a lot of people were just focused on the Olympics, so less airtime for radio, but also a bit less ad spent from online gambling sites in Ontario. They expect the radio side to normalize and also benefit from, I guess, legalized gambling in Alberta.

That's coming a bit more like online legalized gambling. They were talking a bit about it during their calls. So I didn't do much research on that part specifically, but you're in Alberta. might know about that. I mean, the only one I've heard like aggressively in terms of ads is like to play Alberta one, which I think is like a government ran gambling. Yeah. It sounds like private companies will be coming a bit like we have like in Ontario.

So I could be wrong, but that's what they were inferring on the call. Yeah, it's wild. The online gambling scene across all, you know, Canada in general, even on, you know, media, like hockey games, whatever it may be, it's wild. I've heard about like I've heard a few like when I listen to a podcast like I've heard a stingray ad like pop up the odd time because they do own yeah like podcast partnerships I believe because I can't remember the only time I ever listen to the radio is when I forget my phone and can't like hook up to listen to a podcast or whatever it may be I knew about this company I didn't really I don't know how they've done so well over the last while I mean maybe it is that podcast element that's driving it because I know podcasts have absolutely. exploded in popularity over the last while. But on the radio side of things, I can't see a ton of growth there. But again, that's all like anecdotal just because I just don't listen to it anymore.

I don't know who does. But yeah, it sounds like, yeah, you're right. Right now, it's still play Alberta. And it will be, like private companies like eye gaming will be allowed July 13. Oh, interesting. So, yeah. If you want to gamble on the Oilers, you go. going to have have more time so maybe they'll have some bets on how long my bathcock will

stay as I coach have. I guarantee you there's a bit there's probably an option to select. He won't even coach a game either. Yeah, that's right. So no, I can't worry. We're joking around there. Did you, I guess we can talk quickly, just your main quickly takeaways on the domestic stability buffer lower biosphy and essentially like kind of just high level what you think it's going, what kind of impact it's going to have on banks? Yeah, so I haven't listened to the Friday, the macro one, but you did discuss this. Just quick overview. Yeah.

They lower. It was fresh off the press to be honest. Yeah. So this happened. Yeah, I think it was Friday. It happened. It happened. Wasn't it June 19th or something like that?

Yeah. Yeah. Yeah. Yeah. They lowered the buffer from 3.5 to 3% first time since 2003. And that it makes up a particular portion of the CET 1 ratio, which is the buffer they have to have to survive financial shock. And again, I won't spend a time on, on what it is.

but more so why they do it. And they'll typically raise this buffer and require the banks to stockpile more capital during good times because, you know, the cash buffer built up during the good times allows the banks to lend more freely during the rough times. So the cut to me is is kind of an indication that they believe the banks need to be lending more and kind of trying to stimulate the economy rather than, you know, stockpiling for a more overheated economy. And by the, by some quick reading, it looks like it'll free up 74 billion. if the banks choose to spend it, which is kind of the element that's, that's a bit different here. Like during COVID, the key difference between this cut and the cut they did during the pandemic is

the buffer was slashed dramatically back then, but then they came in and said that they were not allowed to issue, well, they weren't allowed to raise dividends and that buybacks were suspended as well. So back then when they cut it, they added more regulations in. That was a clear signal for the banks to lend. They couldn't, you know, they couldn't really do anything else. Now it's more of like a lend if you want situation. I mean, they could lower this buffer realistically and the banks could just spend it all on share buybacks or they could not spend it at all.

It's not really, like the banks are only going to lend if they think there's money to be made there. Whereas during COVID, they, they kind of made it no different option. They had to lend because they couldn't do anything else. But I could realistically see if they don't see any opportunity in regards to lending. They could just buy back shares or raise dividends, which is good for shareholders, but doesn't really do anything to to improve the overall economy, which is, I think they mentioned that they think the economy is soft, but they don't necessarily think it's bad. And they want to spend, they want these banks investing in a bunch of infrastructure type plays and like national defense. Yeah, it really felt like there was maybe a writer too from the Carney government that was suggesting.

what to add in terms of the reasoning behind that decision. And of course, I think to simply put, it just, I mean, it does allow banks to land more because essentially they can take more losses without, you know, being under the ratio. That's required. Because it's gone. Like, that's an easy way to put it. It's gone from 11 and a half to 11, essentially, the CET one, which is like the minimum. And they were all, a lot of them, yeah, were hovering higher, like you mentioned.

Exactly. 13 and a half. So they're well above it. But it is interesting in the release where they, Osfi says, well, on the one hand, they're like really well positioned.

They have good buffer. They have high provisions. But on the other hand, the Canadian economy, there's a lot of elevated risks with consumers, businesses. Like,

it's kind of funny. They're like, oh, they're well prepared, but risks remain elevated. But we'll still let them lend more. Well, and that's kind of why I see in a situation like this, they might just choose to spend the money on buybacks or raise dividends. They don't need to lend more.

That's not, you know, there might be insider pressure to lend more. That's definitely a possibility, but they don't need to do it. I think I, yeah, I mean, I think it's, look, I don't know, like, I don't have insider knowledge on the inner workings of banks and how much government gets involved. but I have a hard time with an ex-central banker being at the head of as prime minister of Canada to not think that they're not like strongly encouraging them behind closed door to kind of invest more finance and projects and especially the way it was written. It's like very similar language that was used in the Canada strong funds. It's pretty much the exact language.

Yeah, because they lower the buffer and then pointed towards like, infrastructure and defense spending when in reality, like it could be consumer. They could lend to the consumer. They could lend to whoever they wanted, but they specifically mentioned it was infrastructure, which kind of means they want the banks to spend more money in this area. I think that's kind of, kind of what you can take from this. And the banks don't need to. Yeah, almost like the banks to help that kind of national strategic interest. So it is interesting. We'll have to see, maybe we'll see more stuff that will confirm that or maybe we're completely out for lunch. So maybe Osfi's just doing that. I mean, you might see, you might see if the capital buffers are kind of lighten up, you might see,

you know, if the banks come out over the next few quarters and they're buying back more shares than they used to, they're probably, you know, going to utilize a lot of that capital for buybacks or dividend growth, which if you own Canadian banks, like I do, small position, but I do own them. I mean, it's ultimately good for shareholders. But we'll see. Okay. No, I think that's a good point to end it. So it was a fun episode a bit lighter on the news front, but Canada Day is coming up. And like we said, we recorded in advance.

So happy Canada Day to everyone listening. And I know we have some listeners in the U.S., so happy Independence Day that will be coming on July 4th. And then, yes, make sure you tune in next week. We have some great content. So a couple of episodes recorded in advance. So you'll have continuous front. fresh content. Make sure you tune in for my interview with the wealthy barber himself was a great conversation. So make sure you tune in for that. But if not, we'll be back in your ears next

week and we'll be back from vacation the week after. But like I said, you won't be missing any content. Thanks a lot for listening. 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.