The Canadian Investor - Loblaws’ Stock Split and Caution From CN Rail

Episode Date: July 31, 2025

In this episode, Simon and Dan cover a range of earnings updates, starting with Canadian National Railway's lowered guidance and what it could mean for CP Rail. We then dive into TFI International’s freight challenges, Loblaws' strong performance (and controversial stock split), and Alphabet’s booming YouTube ad growth despite search disruption risks. We wrap up with thoughts on Bitcoin, gold, and why Franco-Nevada might be set up for a strong earnings surprise. Tickers of stocks discussed: TFII.TO, CNR.TO, L.TO, GOOG Check out our portfolio by going to Jointci.com Our Website Our New Youtube Channel! Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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time. Welcome to the Canadian Investor Podcast. I'm Simon Bernage. I'm back with Dan Kent. We are actually back from the TSX closing event which was really cool. We had a lot of people show up. Definitely a big check mark on my bucket list for something to do. It was great talking to a bunch of listeners.

Some of the feedback we got, but everyone, you know, it was a great event hosted by the TMX. Only good things to say. Did you have a good time on your end, Dan? Yeah, it was really fun. I mean, talked to a lot of people. I apologize if I didn't get to talk to you but there was there was a lot of people there a lot of conversations yeah it was pretty fun bucket list item for sure first time in Toronto as well so got to see the city

yeah it was pretty cool. Yeah and it was business casual and that was a little bit of an issue because it felt I think like 43 and for someone from Alberto's used to dry heat you quickly realized that 28 29 when there's a whole lot of humidity in Eastern Canada does not feel like that. Yeah, that was the thing. I was telling you I saw 27 on the forecast So I'm like, okay, I'll just wear some jeans. But yeah feels like 42. It was absolutely cooking Yeah, so anyways enough of that, we'll get started here. So we've got some earnings, thankfully, earnings season is back in full force,

lots of stuff going on. So the first thing we'll start is Canadian National Rail. We have a lot of Canadian earnings. So Canadian National Rail, we'll talk about TFI, we'll also talk about Loblaws and then Google. And if we have time, potentially Waste Connection, but those are at least the fours we'll start to. So the first one, Canadian National Rail, and you'll see for a joint TCI listeners

here you'll see the revenues and net income. So revenues were down 1%, net income was up 5%, but then again if you're looking at Canadian National Rail what you're seeing is it's pretty stagnant. When you start looking at the quarters there's not that much growth. Same thing for net income it's been relatively stable of course with the buybacks it may look better on earnings per share but at the end of the day I like to look at net income specifically because you know you're not compensating with less shares. Outstanding. The operating ratio improved 230 basis point to 61.7%.

Just a quick reminder that this is just simply the inverse of operating margin. So you just divide the operating expenses by the sales instead of the operating income. What really hit the stock was the revised guidance, and I'll be really interested what CP has to say, because this is definitely a little bit of a warning sign, so they said due to economic uncertainty, Canadian National Rail lowered its adjusted EPS expectation for 2025 to the mid to high single digit range compared to the previous expectation of 10 to 15 percent. They also removed their 24 to 2026 guidance. So it's not all that great. They had more things to say on the call, but just I know you own CP. So what's what are you expecting for CP? I know

they haven't reported yet, but we'll do in the next couple of days here. Yeah, they have been like guiding for like double digit earnings growth. And I think a lot of that is due to the Kansas City Southern acquisition. Their guidance has always been a bit higher than CNRail. And the thing with CN is like that earnings per share growth. I think they're buying back quite a bit of shares still.

So I mean, yeah, they 600. Yeah, they bought back like year to 300. Well, for the quarter, 305 million worth of shares for that. Yeah. So, you know, they're guiding to mid single digit. And I mean, what is half of that probably comes from buybacks, whereas, you know, CP rail really isn't buying back shares. They just raised the dividend I think for like the first time in five years. They've kind of prioritized that debt reduction.

I don't know like I don't know if they're going to pull guidance. I mean, judging by last quarter, they were a bit more upbeat than CN rail. But I mean, these railways are so interconnected that I mean, if the outlook is bad for one of them, it's generally bad for all of them. Yeah. Just because I mean, it's just the nature of the business. So it'll be interesting to see if they maintain it or if they pull it. I don't know if they're going to go as far as pulling the long-term guidance like CN Rail did, which I think which was what really caused it to take a dip post earnings. Yeah and I mean I'm expecting

some softness obviously there has been more growth with CP and something on the call they said there was really a telling line during the call when I listened to it they said the current macroeconomic environment is becoming increasingly volatile with ever-changing tariff rates and policies. The uncertainty and the direct tariff impact on our customer is putting pressure on volume. So that is the thing where I think it will likely impact CP. Again, maybe not to the same extent, we'll have to see.

But these railways, at the end of the day, they're bellwether stocks for the economy. Of course, a Canadian economy, but North American economy, especially when you're talking about CNR and CP because they have such extensive systems. So it'll be really interesting in terms of buyback. Just coming back to that, they said they'll continue to execute on their current buyback plan and for the first six months of the year, they generated over $1.5 billion in free cash flow, which is a bit higher than last year due to lower capital expenditures. And most of the railway specific metrics are going in the wrong direction. And that's probably something I'll keep an eye on for CP. With the only exception here would be the efficiency metrics that have improved. So there's

there's definitely been a bit more focus on that. But at the end of the day, those other metrics are reflection, a lot of them are reflection of softness and demand. So a bit less pricing power. So it'll be interesting how they fare for the remainder of the year, but a little bit of a warning sign here from one of Canada's like two large, well, one of Canada's two railways operators. Yeah, the the interesting thing I guess if you are a bit more bullish, I guess would be the increased efficiency will ultimately help them when volumes do pick back up. Yeah. Because most of these most of these companies like CPCN, the trains are heavier. They're carrying more, yet they're more fuel efficient. So I mean, this only would go to

help them when volumes pick back up. And another, another element here is, and I'll talk to TFI about how this isn't necessarily the case is when volumes pick back up, like there's so few railways and they have that pricing power, prices should pick back up as well So I mean they've had a rough time I mean, I think the railways have to be flat in terms of share price probably only over the last five years or so But there's not many other places that people can go to move freight So I think it is, you know a matter of when not if but they're definitely in rough and I think CP reports tonight So we should see we'll probably talk about it next week. I would imagine and see it's been a rough go

Honestly for a Canadian national well, so the last thing I'll mention just before we move on to TFI like you mentioned I mean year to date down 10% The last year it's down 16.4% and I'm looking at total returns here so it does include those dividends. So it's been a rough go for Canadian National Rail. I've been pretty critical just by the way that they're actually doing their capital allocation. We won't get into that. You can go back to the episode that we did Canadian National Rail vs CP maybe a month, month and a half ago so we talk a bit more into detail but for those who still like Canadian National Rail or we're thinking of starting a position

may be worthwhile especially with the bearishness short term I would say there could be some opportunities long term here so we'll move on to TFI International I'll let you get started on that while I do some screen sharing for our joint TCI subscribers. Yeah so TFI is still struggling quite a bit. I mean but this quarter was not as big of a struggle as expected. I think it did pretty decent post earnings. I think it was up three or four percent on the day. They top earnings expectations by double digits actually and operating margins improved

after three straight quarters of declines. So free cash flow actually increased 20% year over year. So this is despite earnings falling by 22% and a double digit decline in revenue as well. And this is pretty much a result of the company just kind of rolling back capital expenditures. If we look to just overall capital expenditures they scale them back by around 33 percent. So it's definitely in full preservation mode at this time. So less than truckload revenue fell by 11 percent and operating income is down by 32 percent. So if we go if you go back there to that the truckload, yeah, so you can see like Shipments are falling

Let's say post 2022 especially in US less than truckload. You're talking about what would that be? 6.83 million shipments. Yeah compared to 5.35 now So you're seeing a big decline and it's been kind of a constant slide for for three years right now And I mean that does make sense. If you think about it, uh, in 2022, they also acquired, or it would have been in 2021. That's when they acquired, um, UPS free, which kind of boosted this up. But I mean, the pandemic was a crazy environment. I mean,

the amount of people that were sitting at home ordering things like that, the word definitely in a freight recession, No question. And the other one, the other child will get to show you, I'll get to that on the back half of TFI, which would just be related to kind of the competition in the space. But yeah, for TFI though, it really looks like the U S is struggling, right? I remember the call that they did late last year where the stock absolutely tanked and tried most of the industry along with them they were saying it was definitely the US that

there was some softness there and clearly Canada is not firing on all cylinders here but I would say Canada is a bit more flat slightly up where the US you're seeing some pretty big decline here. I think there's a lot more competition in the US as well, which is kind of weighing on that. Their truckload revenue fell by three and a half percent, operating income, high single digits fell by, and their logistics fell by double digits in both revenue and earnings. So there really was not a segment of this business that did good at all.

And for a company like this right now, I mean, management commentary is probably gonna be the most important thing investors need to focus on. I mean, operations are bad, they're expected to be bad, but kind of how they navigate it is probably what you're gonna wanna keep a focus on. And they had mentioned they have no plans to acquire any companies in 2025. And this is kind of in stark contrast, I guess,

to 2020, 2021, 2022. They made a ton of acquisitions. They bought a ton of struggling companies, trucking companies for fractions of valuation-wise after the markets crash and they ended up doing quite a bit quite well based on that. But they mentioned that the less than truckload market is just too unstable to have any confidence to go out and acquire companies right now. And in addition to this, they also mentioned at this point in time, they believe TFI is the best buy, not an acquisition. So what I take from that is you're going to see a ton of buybacks from the company over the next while. And they repurchase around 475,000 shares on the quarter. It's probably going gonna get more moving forward as they had mentioned straight themselves are gonna be buying back shares.

They did mention that acquisitions could resume in 2026, but again, they said they won't do anything until they see some sort of stability in the less than truckload market before ever considering it. They plan to reduce their leverage ratio. So this would be, I would imagine it would be their EBITDA to their debt from 2.35x to 2x by the end of

the year. And then they say if the market is a bit more stable next year, it has no problems elevating that to 3x if it can find some deals. 2025 free cash flow guidance at this point is $700 million. However, they did say that if they do see some stability in the back half of the year, it could get as high as one billion dollars so I mean really it the company doesn't really know what is happening right now and it's really tough to to predict the the current environment and just overall it's

tough sledding you know but you know there's really nothing the company can do I'm pretty bullish on them but long term and but the one thing now if you can show that chart of the the revenue per shipment, I Had mentioned with the rails. I mean, there's not really a lot of competition You can go to with the railways when it comes to freight. Like if you're gonna ship by rail, there's a select few but when you look to trucking companies, there's a ton of trucking companies so the prices are being weighed like their revenue per shipment is actually declining it's been declining quite a bit over the last while and if the market does recover if shipments do recover there's really no

guarantee that TFI would grab a chunk of this because obviously prices can remain low because competition is higher. So I do believe they'll be able to navigate it just because I do believe they're probably one of the best logistics companies in North America. But it's not as simple as the railways just because there is so many trucking companies that exist. And I think right now that competition is actually what is driving results downward even more just because a lot of these companies are willing to ship freight for less, which ultimately impacts margins. It didn't this quarter, but as we can see, like previously, like we're talking like a almost a year long slide in operating margins, which just kind of shows that the environment is pretty tough right now. And they're having to lower prices a lot to actually get shipments. I mean, you can see, yeah, here's the chart there. I mean, it's been on a pretty persistent decline since, you know, 2024.

The revenue per shipment, yeah. Yeah, so they're making less per shipment, primarily because, you know, there's not as many shipments and also there's just added competition who's willing to take those shipments for cheaper. Yeah, no that's a fair point. I mean it'll be interesting. The macro backdrop is really confusing right now to say the least. There's a lot of different signals. You're still seeing earnings depending on the area that can be good. Some other areas it's not as good. The guidance is hit or miss depending again on the sector and type of businesses, the job numbers obviously they're never perfect, there is revisions after the fact but the

markets tend to look at the estimates that come out the month of and those are looking decent but then the revisions are not looking as good when you start looking at them looking backwards and they're more accurate numbers. So there's a lot of a lot of mixed signals happenings but I don't know personally I take notice when you have these bellwether companies that are saying you know what stuff is things are not going all that well right now and these are businesses that are on the ground it's not government data these are businesses that have a lot of information and disinformation in a lot of cases

is way more up to date than any of the big macro data that we get from official government sources, for example. Yep, exactly. And you see a company like a company like TFI who is, I mean, the economy, they are heavily, heavily cyclical to, you know, the overall economy and you see them scaling back expenditures, you see them paying down debt, getting those leverage ratios, you know, down to a more comfortable level. So I mean, you can just tell by the actions this company is taking that the environment is really tough. They're like, I wouldn't say they're upbeat about the future. They're more realistic really, which is probably, well, you remember back when they absolutely bombed post earnings kind of because they just ripped the bandaid off and said it was

going to get ugly. Which probably... Hey, the light at the end of the tunnel is closer than it was six months ago. That's the way I see it. Yeah, definitely. In this kind of market, I like having some cash on the sidelines. It gives me the flexibility to jump on opportunities when the right stock goes on sale. But just because the cash is waiting, it doesn't mean it shouldn't be working for me. That's why I use EQ Bank.

They offer some of the best interest rate among Canadian banks, so my money's still earning while I wait. You can even get a boosted rate by setting up direct deposit for your payroll and depositing $2,000 or more per month into your EQ bank account. Your cash stays liquid and ready to go when it's time to invest. And if you're not in a rush to access your funds, EQ Bank's Notas Savings Accounts and GICs are great ways to access your funds, EQBank's noticed savings accounts and GICs are great ways to grow your returns even more. It's a smarter way to park your cash.

Visit EQBank.ca to learn more and keep your money earning even while you wait. Want to buy a stock but don't want to shell out hundreds or even thousands for a single share? With Questrade's new fractional shares, you can invest any dollar amount and build a diversified portfolio instantly. No delays, no trade fees, no excuses. Want to put $10 into a stock trading at $100? No problem.

Questrade has you covered. They're the first broker in Canada to offer real-time commission-free trading for US fractional shares and ETFs. It's simple, powerful, and finally available in Canada. Head to questrade.com to open and fund an account. Use code TCI and you get $50 to get you started. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app.

Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built 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. Some 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. Okay, so let's move on here to Loblaws,

a company that will do well regardless of what's happening because people have to eat and people need drugs, prescription drugs and pharmacy pharmacy-related items, and those are the two core businesses of Loblaws, as most people are most like are aware. Revenues were up 5.2% to 14.6 billion. You get food retail, same store sales were up 3.5%. Drug retail, same store sales were up 4.1%.

On a side note I don't know if you notice or if they have that in Alberta But I'm seeing more and more that t symbol for like stuff that's being tariffs. Okay, you guys are seeing that too, huh? Yeah, and they had mentioned that it was actually helping like people were actually buying like that the tariff late Or sorry the non-tariff on their yeah yeah I mean I've seen it for some items at the end of the day for me like sure I want to support Canadian products as much as I can but I like at the end of the day I have a daughter I'm looking at more the value of the prices right like

but I tends to be more and more the Canadian products tend to be more and more competitive because there's not that added tariffs to them but I tend to be more and more the Canadian products tend to be more and more competitive because there's not that added Tariffs to them, but I've noticed that it's definitely more present now I'm seeing pop up even more pharmacy and healthcare services were up same source sales were up six point two percent Front of store same store sales were up one point seven percent That's part of the drug retail store again ecommerce sales were up 1.7%. That's part of the drug retail store. Again, e-commerce sales were up 17.5%. Every time I do Loblaws or look at Loblaws, I'm still surprised with the e-commerce sale.

I know. I'm like, how are they generating double-digit sales increase still? And the pandemic is well done and for most most people it's you know they're trying to erase it from their memories but I'm still really surprised yeah I figured this would have peaked and and started declining post-pandemic but yeah I mean I don't I know numerous people who still do the click and shop online yeah and then they go and pick it up. Yeah, like I personally would never do it, but me neither because I find like the produce

is just hit or miss and I like to especially the produce. I like to, you know, I like to pick exactly the strawberries that are not moldy. That's a little bit people's mind just squished at the bottom. So I do like to look at that and when you use that Oftentimes is just you're relying on the employee that picked those for you and whether they were paying attention or not I mean, it's not their food. They're not the ones eating it. So yeah, that's my personal things Gross profit margins were slightly down but operating margins were up So they're really

executing pretty well. Of course this may kind of piss off a large chunk of the population because of course Loblaws and the other grocers have been taking a lot of heat because their profits are definitely trending up while the food prices are also trending up. So a lot of people feel like they're price gouging. I'm not going to get into that. Regardless, when you're looking at this strictly from a business perspective, it's a very well-run business. Net income was a 56% to 714 million and earnings per share was up 60%. They repurchased 445 million worth of shares.

So far this year they've generated 1.8 billion in free cash flow and that's 17% higher than last year. They continue to expand in Canada, believe it or not, because I feel like there's Loblaws brands at every corner almost, but there's 10 new stores and 12 new pharmacy clinics during the quarter and they're continuing that pretty close to that pace for the rest of the year. The big news is that they announced a stock split

of one share for four, sorry, four shares for, no, no, one share for four, I got it. So if you have one share, you get four. They said that the purpose was to continue making their shares affordable for retail investors and their employees who participate in the corporate stock program. They also said that the internal rate

of internal food inflation rate is lower than Canada's food inflation rate. Again, I don't know, this is kind of, I'll take the word for it, but at the same time it's just a bit weird. They said that opening new discount stores is helping towards keeping food inflation low because I guess you get more value depending on which type of store. And that is true. Not far from my place, there's a super store as well as a La Blas. And the La Blas is usually, it's a bit smaller and it's, you can get in and out faster.

So if we just need a few items, like we forgot something last night for dinner, we forgot one key ingredient, so I went and picked it up at the La Blas. And I noticed, I was looking at other stuff, cashews and I noticed that they were like about 10, 15% more expensive at the Loblaws for the exact same thing that the super store had. Yeah. They said, they had mentioned on the call that their tinier stores are actually like outperforming their like major super centers, you know, like the super stores and things like that,

especially on like the discount side of things. And I think they're like going all in on like these tinier, easier stores to shop in. Probably that don't have a lot of frills in them either. But yeah, I mean, it depends on the level of convenience, I would guess. But obviously, it's a lot easier to put in tinier Loblaw stores in locations and building these massive outlets. So yeah, they're the stock split. I don't really get I mean, their stock is only $200 a share. I mean, it just seems like a lot of extra paperwork for,

for not a lot of result. But I mean, companies like doing this even even in the face of fractional shares that make it a moot point but yeah they're still not widely available I think for Canadian stocks I think it's hit or miss that's probably why and it's more common for US stocks but aside from that I mean they kept their guidance unchanged for the rest of the year and they also said that they continued to work with suppliers to mitigate price increases in the face of tariffs. So that is something that ever since the tariffs were announced by the US but let's keep in mind that it's not the US tariffing the food, it's the counter tariffs from Canada that are

tariffing the food which I've been pretty critical of that specific approach for food items because we get a lot of stuff from the US and I understand you want to reciprocate and you want to show that you won't roll over, but at whose expense? And I mean, I'll let the listeners decide whose expense it is because you know, I think it's pretty obvious, but I find sometimes mainstream media actually forgets to say, they just say tariff by the end of the day, it's I think it's pretty obvious but I find sometimes mainstream media actually forgets to say they just say tariff by the End of the day is the counter tariffs that are impacting the food prices and the higher food prices because of tariffs here Yeah, I mean ultimately the tariff is paid like whether it be a tariff or a counter tariff the consumer ends up paying

Ultimately, they're like we'll pay the price for it. But yeah, they I mean Loblaws just continued to do Exceptionally. Well, I think it is that that discount element. I mean, you know Canadians are are looking to save money They're not exactly growing revenue by all that much yet They grow earnings per share by like double digits every single year tons of buybacks Tons of investments into the stores obviously to make them more efficient. I think that operating margin, I think it's like the highest it's been in six or seven years, which again, like you said, will probably kind of take some people off. But I mean, ultimately it's a publicly traded company. It's got to earn money for its shareholders. So,

you know, improving the efficiency is, is definitely something they've done at a very strong pace. Yeah, the good news for them is most people and mainstream media included, they rarely look at operating margins. They only look at net income. They just keep it very simple. So yeah, we'll have to see. But I'm sure it'll be in the news, you know, soon enough if it's not already.

In this kind of market, I like having some cash on the sidelines. It gives me the flexibility to jump on opportunities when the right stock goes on sale. But just because the cash is waiting, it doesn't mean it shouldn't be working for me. That's why I use EQ Bank. They offer some of the best interest rate among Canadian banks, so my money's still earning while I wait. You can even get a boosted rate by setting up direct deposit for your payroll and depositing $2,000 or more per month into your EQ Bank account. Your cash stays liquid and ready to go when it's time to invest. And if you're not in a rush to access your funds, EQ Bank's Notas Savings Accounts and

GICs are great ways to grow your funds, EQBank's noticed savings accounts and GICs are great ways to grow your returns even more. It's a smarter way to park your cash. Visit EQBank.ca to learn more and keep your money earning even while you wait. Want to buy a stock but don't want to shell out hundreds or even thousands for a single share? With Questrade's new fractional shares you can invest any dollar amount and build a diversified portfolio instantly. No delays, no trade fees, no excuses. Want to put $10 into a stock trading at $100? No problem. Questrade has you covered. They're the first broker in Canada to offer real-time commission-free trading for US fractional shares and ETFs.

It's simple, powerful, and finally available in Canada. Head to questrade.com to open and fund an account. Use code TCI and you get $50 to get you started. C-I and you get $50 to get you started. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing.

This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built 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, some 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. Now let's move on to that small company called Alphabet or Google. Pretty interesting company to discuss because clearly there is a lot of potential disruption.

We've seen that Google search, I don't know when they started the whole like summarize AI summary thing. Was it like three, four months ago or beginning of the year, I would say roughly? It's probably when they started rolling it out. Yeah, they do. Well, obviously everybody Google, you've probably seen it.

They do the little AI overviews and I mean, it's, it's very bad. Yeah. I would say at this point in time, it's, it's very bad. Obviously, you know, my company like stock trades relied a lot on Google search. And this is something that's really hit us hard, especially considering the quality of the information. I would imagine they'll improve on it a lot. And apparently it's very popular, but there's also a lot of commentary from, you know,

people that say they're kind of, they're kind of fudging this. Like it's, it's an interesting situation. So revenue is up. Do you find that before you get started, do you find your usage over the last six months, let's say of Google search as increase decrease stayed the same decrease like on desktop yeah it's like collapsed on mobile still quite a bit but on desktop I am pretty much exclusively like GPT but on mobile I

still use Google quite a bit just because I mean I just haven't gotten used to GPT on mobile I guess and obviously you pop open your mobile browser, it's the first thing you see is a Google search. But I imagine it's- Same for me, yeah. Yeah, it's, I don't use it. It depends on the query as well, I guess. Like if I'm looking for something quick,

I probably still go to Google, but it's, they're AI overviews, like they're definitely gonna get better. I would imagine they're gonna be one of the better ones but like monetization for me is is kind of a question I actually do own this company. I'm still pretty bullish on Google. But um, yeah I think if they start putting ads into AI overviews, I think they're gonna have this. Oh they have okay I've not noticed they've started like they've started testing I follow a lot of like SEO like search engine optimization people on on X and they've kind of showed some images of them rolling out ads.

But it's nothing like inside the content. It's just the content with display ads in there. So I don't know. I would imagine there is a lot of testing going on in the background because this is something they had to roll out very, very quickly. Yeah. It's not that popular right now, but that's not to say it won't be popular later, but revenue was up 12% year over year. Earnings were up 33% operating margin expanded to 30.7%. So it was 29.3 last year and Google search ad revenue is up 12%. A lot of people are struggling to understand how this is continuing to grow at a double digit pace, but it is. But the one, the main thing, and I don't know if you

can pull up the chart is YouTube. Like YouTube is definitely one of the main stories for this company that I've seen the last while, obviously the cloud, like their cloud is growing at a very fast pace, but it's also like expected to be, like it's expected to grow this much. Whereas YouTube is actually growing over and above, I think what a lot of people would have expected. So they increase their YouTube ads increased by 18% year over year.

This is one of the larger jumps I've seen in quite a while. And the company actually mentioned something interesting about this. So they stated that AI built YouTube ad tools are what is causing this surge. And if you think about it, it does make a lot of sense because traditional Google search, I mean, you could, you could go on and create a Google search ad in five minutes. Like you just go, you create your link, you create your description, you're done, you launch it. Whereas YouTube, I mean, you needed cameras, you needed scripts, you needed people to film the ads, you needed to edit the ads, all that type of stuff.

So now that they've come out with these AI driven tools that can effectively create you a YouTube ad in a fraction of the time, it's obviously causing, you know, big tailwinds for the platform. And I mean, I see it on YouTube all the time Now is these AI ads? I mean you can clearly tell they're not real people a lot of them are poorly done But it's clearly being tested. Yeah, I mean I still I still manage to get away with ad blocker, but I got Oh, do you? Yeah, so, I don't know they like they'll like once in a while they'll like threaten you and say you won't have access and then you just

You turn it off for like a day and then you can just turn it back on like they they still have not figured that out All that well, but because I was traveling a lot I did try YouTube premium, which is kind of nice if you're listening if you want to you know especially listen to a video that you could you know you're fine with just the audio so I did try it but and the fact that you can download episodes on the mobile app and when you're traveling especially on the airplane the Wi-Fi is either not always available or not always very good when it's available So I used it for that too. Okay, that's interesting. I didn't even know ad blocker worked with it. I've never really I've never used an ad blocker

so Make enough money out of me. That's the way I see it. Yeah Yeah, it's pretty crazy. Like they bought this What do they pay they paid a billion dollars for YouTube and now it generates like 10, 10 billion dollars in revenue. A quarter. It's uh, I don't know. It's gotta be one of the better acquisitions we've seen. And I mean, I can't see video content slowing down. Like it's, if anything it's going to pick back up because they said they're,

they're YouTube shorts, which is effectively their tick tock, like Facebook, Instagram, real competitor. That's actually doing quite well as well. So YouTube is, is crushing it. I mean, it could be a, it could be a publicly traded entity all on its own, I imagine easily, but, um, on the cloud revenue side, it grew 25% year over year. And it looks like they put Gemini into pretty much all of their major platforms like search, Gmail, ads, documents, Google Sheets, all that type of stuff. So they're definitely

rolling that out at a pretty fast pace. They spent over $20 billion buying back stock. Obviously Google is like I would say it's one of the cheaper Magnificent 7 stocks primarily because a lot of people think that you know this search search their searches is being disrupted we haven't seen that yet like I said it's you know a lot of people are questioning how they can continue to grow that at a double-digit pace but they are and they mentioned I think the company took a bit of hit on earnings because of this but they're ramping up capital expenditures they say they're now expected to be over 85 billion dollars this year,

most of which will be put to use for AI infrastructure. And overall, it was pretty solid quarter for Alphabet. You know, I think there's a larger likelihood that Alphabet is probably at the forefront of AI rather than being disrupted by it. I mean, obviously, I haven't seen it in the search yet, but also it's relatively new. I mean, they're changing things on a, on a daily basis on that platform. Just being somebody who deals with Google so much in, in my business, it's definitely, it's one of the craziest times I've seen since I started stock trades. But yeah, I mean, YouTube is just killing it. Obviously video video content is probably going to continue to propel them, which more YouTube ads probably creates for more money from YouTube ads

just to get your ads in placement, things like that. And with all these capital expenditures, I think it's a risk, but it's also going to put pressure on short term cash flow. But ultimately, if all these investments pay off, you're going to see that turn into profits eventually. No, yeah, exactly. Alphabet is just such an interesting play, just because, yes, they are at the forefront of AI, but their legacy business has a real risk of getting disrupted. They could manage to avoid the disruption, we'll have

to see, but one that I think we should look at pretty much every quarter just to see where it's going and clearly there's the YouTube side of the business that's really thriving. But no, that's a good overview. I'll finish here. I'll actually do a little something we didn't prepare. Yesterday, I tweeted out something on eggs because I follow quite a bit of Bitcoiners and some people I think better than others and some are into Bitcoin, but they're very thoughtful and I enjoy the reasoning looking to that.

But I saw yesterday was trending that Ray Dalio was saying that people should own like 15% Bitcoin and I'm gonna go on a little rant because people know I've talked I've had Bitcoin and Bitcoin ETFs for quite some time and Probably longer than a lot of people trying to pump Bitcoin right now with lack of better word misinformation on what Ray Dalio actually said. So Ray Dalio did an interview on the weekend, it went live, and he was saying that, essentially I'm just using my own words here, that people, if they're kind of neutral, they don't have

any views on where the macro picture is going and the big debt cycles that, you know, 10, 15% of Bitcoin or gold would make sense in a portfolio but that his preference is still gold and he only owns a little bit of Bitcoin. Well on Twitter or X what was trending is Ray Dalio says you should own 15% Bitcoin. So I encourage people to actually listen to the interview because it's really, it's I find that frustrating because it just doesn't show well. And these are a lot of the same people that were crying wolf in 22, 21, 2020, when they were saying that mainstream media was just like not being truthful about Bitcoin and so on.

Well, they're really omitting a lot of information here and that is something unfortunately we're seeing more and more, not specifically with Bitcoin and just a lot of content and investments and just things that we see on social media. I encourage people to, when there is something like that, when they're referencing a podcast interview or something like that, when they're referencing a podcast interview or something like actually go and listen to the podcast interview. Don't take my word for it. Don't take the word of, you know, Joe ABC on Twitter.

Just go and listening to it. And the last thing I'll mention here for Ray Dalio, so I started listening to his new book on audio book, obviously, How Countries Go Broke, The Big Cycle. It's about a 10 hour listen. I'm about three hours in. Very good, very similar to what he's done in the past, but he's made it a little bit more condensed and got a few emails from people asking what I was currently reading. So one of the things that I'm not reading but listening on audiobooks is that book and really

encourage people if they haven't listened to Ray Dalio before and what it want a sense of what he's talking about and some of the risk with all the government debts and something that I've been hammering on more and more and it is also a reason why my portfolio is built in the way it is currently built. Right now I really encourage people to go and get the audiobook version or go buy the actual book. I think it's worthwhile. The audiobook is actually read by Ray Dalio. So I it's it's pretty much him. Yeah yeah he does it. Oh that's interesting. He does it for a lot of his audiobooks I've noticed. Not all of them. Some

you'll do a little bit and then have a speaker. But this one, at least so far, a couple hours in, two, three hours, it's him reading the book. So it's quite good. And I think it's really, I would highly recommend it to anyone just to get a sense of the potential. Well, I mean, I think it's inevitable that there is going to be some big issues with the amount of government debt and fiscal deficit that we're seeing right now. But he goes over why and some potential outcomes and solutions, but he goes over why and it's basically based on just historical data. This is the type of cycle that we've seen over and over again, and we're just following in that same path. Yeah but if you look at our Bitcoin and gold

probably got to be the two best performing assets over the last year like they got to be close on it like an indexing level obviously relative to the indexes. Yeah they it's they're definitely out there so if you look if you want to what is it Bitto or what's the oh iBit there you go had a yeah okay so I'm just gonna compare here iBit to one of the yeah so gold's up 40% yeah the last years and then we can just take the S&P 500 here just for a good measure and then over the last year it will include total returns so yeah it's been bitcoin 74 percent again using iBit ETF

just as a measure here and then you have GLD which is the the most widely known gold ETF that one is up for 39% and then the S&P 500 up 18%. Yeah. So it is. So the physical and digital gold have been some of the best performing assets over the last year. Yeah. I don't own any gold. I own a fair amount of Bitcoin, but I wish I had followed you into the gold trade.

Yeah, I won't shut up about it. So maybe at some point you will. you you bought some Franco, Nevada, right? Yeah. Yeah. Yeah Yeah, which is this one is really interesting and I'm talking about it on my joint TCI update That's gonna come up in a couple days. We do an update at every beginning of the month and joint TCI like in the update just a little preview for people, is I actually talk about Franco Nevada. And the price of Franco Nevada is actually pretty much the same price that was at the end of the first quarter they reported.

So March 34th were the first quarter. It ends there and they actually reported that first quarter, I think it was May 8th if I remember correctly. And the price of the stock is actually flat from those two dates. So yes, it's been up and down a little bit, but if you look at the average price of gold for the first quarter, it was like, I think, $28.60 around there. And then if you look at the average price of gold for the second quarter, it's like $32 something.

Yet the stock is flat since clearly it's a company that does trade at a premium compared to gold miners but anyways that that is my little my little stock pitch right now that Franco Nevada could be an interesting play because I think the market are actually I think they may be quite surprised by the earnings that will be coming up for them just based on the average price of gold during that time period. Yeah, now you're at close to isn't it close to 3,400 bucks an ounce right now? Like it's it's been around like 333 to 34. I think it's on probably closer to 33 as we're recording but still I mean still you know

like on the higher side. Yeah, for sure yeah I mean you get a company like Franco who benefits from this with almost zero operating costs I mean obviously the market is pricing that in already it's not like an unknown factor but I actually I really like them I I've owned them in the past I believe I sold them in probably 2019 but then I repurchased it well it's probably like three months ago now but yeah I like them for sure yeah even compared to Wheaton precious metal Wheaton has been doing better over that time span than Franco Nevada which is essentially I mean if you want

it to own streamers you probably can't go wrong with with those two yeah I don't think Wheaton has any oil exposure I don't think which which might be one of the differences yeah yeah I think that that could be I haven't looked at them in quite some time but I think we've went on and off we also had a little recording disruption here so that's okay we always have a backup recording so our joint TCI listeners it may have ended a little early but that's okay we were wrapping up anyways well a big thank you again to everyone that came to our two meetups the one in Calgary for the stampede and of course the TSX the closing bell it was amazing was amazing to talk to everyone again joint TCI we

provide updates on our portfolio Dan myself and Braden every month There is quite a few updates on my end even though I know you and Braden's been a bit more quiet on your end for the last couple of months, but Yeah, sometimes people ask questions I mean we we don't buy or sell just to buy or sell right like if we don't there's not really a Need for us to do any moves. We won't do any moves like for the most part. We're long-term investors So I think that's um that's always something to remember We also provide the videos the full videos for each of the podcast probably and won't be the exactly full one because the

Recording stopped a little bit here but that's okay. And the ad free podcast feed which is now available for Spotify so Patreon actually added the Spotify option so you can actually add it to pretty much every player that you have that you listen podcasts to. You get like you just follow the instructions and then you get them ad free so there is a little we're adding slowly some more goodies for the subscribers we will be increasing the price at the beginning of September so make sure you subscribe in the next month if you want to lock in the price because the ones who go now and by the before we actually increase the price will be locked in at that price of $9 per month on that note thanks again The Canadian Investor podcast should not be construed as investment or financial advice.

The hosts 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.