The Canadian Investor - Loonie Takes a Dive and Writing on the Wall for Cannabis?

Episode Date: September 29, 2022

Most retail stocks have had a tough year because of inflation and supply chain issues but Costco keeps delivering in its latest quarter. We look at how world currencies and CAD have fallen compared to USD. During the episode, we also talk about some changes at some of Cathy Wood’s Ark Funds and look at recent results from one of the largest Canadian Marijuana Companies. Tickers of stocks discussed: BIL, PSU-U.TO, FDX, GS, ACN, ACB.TO, PRNT, IZRL, ARKK, COST 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 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  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. The Canadian Investor Podcast. Today is September 27th, 2022. My name is Brayden Dennis, as always joined by the exquisite Simon Belanger. I got a thesaurus going of adjectives. I don't know if you noticed that. Simon, I have a question for you before we start

recording. Yeah, go for it. You've seen all financial news, media, everything's talking about currencies, right? Yeah. It's all that people care about all of a sudden. Everyone is a macroeconomic expert, by the way. Yeah, it seems like everyone is since the start of 2022, to be honest. But yeah, it's interesting what's happening with pretty much all currencies except the US dollar. And I'm sure you're going to be talking about that, but it kind of goes back to what we were talking, I think, last week about diversifying your portfolio a bit away from the Canadian dollars. And that's, you know, we're seeing right now why. Yeah, we talk about that all the time, the importance of not having that home bias

and lacking exposure to US stocks. And just as a result, USD, the currency by association, as a result of holding those US securities. This is why we say that so much, right? Your income's in a currency, your house may be attached to that currency. in a currency, your house may be attached to that currency. You got to be associated with the US economy in some way or another is my hard opinion on that. Do you ever just think about this? When's the last time you've had a bunch of toonies and loonies? Because for me, cash is extinct. I'm like total card or paying on my phone type of thing now, like entirely,

I actually have probably $200 worth of toonies and loonies, because I can't when I was younger, and I like never took the time to deposit them at the bank, I would like withdraw a certain amount every week. And that was my spending money. And then whenever I got changed, I would not actually use it, I would just keep it. And then that money would go towards a trip. So that's, that was kind of my system. So yeah. That's literally what my dad does. He's a big fan of the podcast, by the way, he's gonna, he's gonna be smiling ear to ear right now and save it for a trip. Yeah. Yeah. Because remember, like I used to keep quarters, loonies, toonies, you know, that kind of thing.

And then all of a sudden, you're, like, holding, like, it's, like, kind of heavy, you know, like, your arms weighed down by the amount of toonies you're holding. And you're, like, whoa, this is $150? Like, that seems so absurd. I honestly don't know the last time I held an actual toonie. Is that bad? Like, that seems weird to me. Yeah. Yeah.

I mean, the only time I've used them recently is I went to a home poker game, and it was useful when we were cashing out to have toonies to break down some of the chips. But yeah, I'm actually old enough to remember the $2 bills. I don't think you... I think that was before your time. It was before my time in terms of actually using them. Yeah. Yeah.

Yeah. Yeah. Yeah. But I'm too young for the $1 bills. Those I'm, yeah. When did they phase out of Canadian? I think it must have been like 92, 93. If I vaguely remember, 94 maybe. Because I was in elementary school. The $2 bill was phased out in 1996.

Okay. I was around, but I wasn't throwing cash around. Just give me candy. Okay. So currencies on that same note, we'll just touch on it quickly and talk about it. And then we'll get into some company news. Because as y'all know, last year, everyone was an investing stock picking genius. And then this year on the way down, everyone's a macroeconomic expert. And so we'll touch on the news. But at the end of the day, we want to touch on real business results, real companies, real long-term thinking. And so we'll get into that as soon as we address the currency thing. So officially, Simone, everyone knows what it feels like to own a junk shit coin.

Simone, everyone knows what it feels like to own a junk shit coin. It's called any currency other than any other currency than the USD. I think every like, you know, the Japanese yen, the British pound was the one that had the huge drop, the euro, like they've all pegged to the USD just gotten annihilated. And so I've always said this, like, I don't pretend to be some macro expert. I think that most of it's a waste of time for long-term investors, but I've always said that there's almost no incentive for the US Fed to not act the way they do, kind of recklessly printing money. And it is because even in the face of intense inflation, like they have, their ability to keep the currency so strong and basically raise rates to combat that and then inflict stagflation upon the rest of the world

is unmatched. The basic level here is the very basic to it is traditionally during uncertain economic times, recessionary periods, you actually have really, really strong demand for the strongest currency, aka the US dollar. And especially when the US Fed raises rates, you have strong demand for the USD. The British pound dropped 20% this year, pegged to the USD. And so, I mean, there's a variety of factors at play here, but a strong USD, it's measured, this is a measure against the USD, right? Yeah. Yeah. I mean, they're all measured. It's a reserve currency for a reason. You measure everything compared in USD. Obviously, you can take Canadian dollars, measure it to other currencies. But at the end of the day, let's be honest, no one really cares except Canadians when it comes to that.

The world looks at U.S. dollar and then as the Fed is increasing interest rates, makes the U.S. dollars and U.S. treasuries even more interesting for investors. So that's why. Because they can get a return there. Exactly. Plus you have the safety component where it's the reserve currency. So it puts even more pressure on other currencies like Canadian dollar, British pound, euros, Japanese yen, the Australian dollar, name it. It puts more pressure because then they have to raise rates, but they would technically have to raise rates even higher than the U.S. to make their currency more attractive. Because if you're on par,

the US will still win because of that safety perception of US treasuries. So the loonie, the Canadian dollar actually has gained on other major currencies on a trailing 12-month basis. Despite you go on Google and you do USD CAD conversion and you're like, oh boy, lowest I've seen in a long time. Yet against other major currencies, trailing 12 months, the Canadian dollar got stronger against the Japanese yen by 25%, gained 15% on the British pound, 13% on the Euro, which I enjoyed very much when I went to Europe recently. I was like, whoa, this is not that much different than the Canadian dollar anymore. It's a, whoa, this is like not that much different than the Canadian dollar anymore. Like it's a little bit, but it used to feel a lot more expensive to go to

Europe if traveling is Canadian. But it's weakened to 73 cents this morning, as of this morning on the USD, which is around down 9% during that time. Other very recent factors include a little bit of softer commodity prices in the very short term compared to maybe three to six months ago. There's no real actionable insight except for what we preface this with is limit the home bias. If you're listening to this in Canada, if you're listening to this in Australia, Greece, Portugal, I know we look at the analytics as people who listen to this podcast very regularly all across the globe, including the US, which we thank you very much for listening to two Canadian lads rifle off on the podcast here.

You can't not have exposure to the US economy. It seems so risky to me for a variety of reasons. And this is exactly why. Yeah. Yeah. And for me to the point that now for at least two, three months, I've actually been saving a little bit of money as my savings account in USD and what I've been using because I have a lot of room in my TFSA. So there's two options that I found that are pretty good. There is Bill, ticker Bill, which is a money market ETF. So they hold short term US treasury. So one to three months doesn't fluctuate. You get, I think, about 2.53% as of right now. And the other one is a Canadian listed one, but it's in USD. So it's psu.u.to, the Purpose US Cash Fund. And this one is yielding like 3.4% on USD. So there are some options if people are looking just to hold a little bit of

US dollars, even if it's for their emergency fund or something like that. There are some options where you can actually get a little bit of yield as well. Yeah. Thanks for bringing that up because you're looking at it as like actual cash reserves, which I think is wise. For me, I'm mostly thinking just by association of owning US securities. On the currency perspective and the selection of businesses available on the US exchange, if you have been investing in Canada or your international country, if you're a country internationally outside of Canada, and you have been hesitant to make the leap and buy stocks, buy securities, not listed in your country, make the leap, do it. Seriously, consider stepping out of your biases. And I think that you will be very happy about it in 10 to 15 years. As do-it-yourself investors, we want to keep

our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable

and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your

home and guests. It's a win-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. All right, Simo, let's kick it off. We got big old Costco here. Yeah. I knew you'd beat me to the punch on the results here, but so we'll both be happy to chime in here. One we always cover, one we'll continue to cover.

And what a business. Yeah, I mean, Costco had a great quarter. And I'll stick Q4 here. And I think you'll agree with me. The reason why I want to stick to Q4 results and not really look at their full year results all that much. And trust me, the full year are very good as well. Is because, you know, Q4 of this year really compares well to other retailers that recently reported. And it's in the last, you know, pretty much three months. I can't remember the

exact period. I think it was probably a month ago that it finished around there. I don't have it in front of me. But the reason I wanted to stick with that is we've really seen inflation picked up. Whereas if we looked at the full year, the fiscal year results, the full year for them, then the first two quarters, I would go as long, you know, I would actually say first two quarters, the other retailers were doing quite well. So you aren't able to, you know, differentiate Costco as much. So I think Q4 is actually a really good one to compare with other retailers. Would you agree with that? I agree.

It was good. Yes and no. Yes and no, because this is just a retailer firing on just a different level, it feels, than every other type of retail model. And that's what makes it so special. Yeah. And the full year, they beat all their big counterparts. But where you're really seeing the difference, I think, is recent quarters where we've seen Walmart struggle, Target struggle with inventory and prices and having higher costs. And you'll see here, Costco is not having those issues. So revenues were up 15% to $72 billion. Costco is not having those issues. So revenues were up 15% to $72 billion.

Comparable sales were up 16% in the US and 13% in Canada. International was lower because you just talked about it of currency exchange. It was 2.9% higher. But if you factor in foreign exchange, it was actually 11% higher. Membership revenues, which is what makes Costco's model so great. They were up 7.5% for the quarter and 9% for the year. And that's really impressive and really shows that people are valuing the value proposition here. Because keep in mind, Costco has not raised a membership fees since 2017 and they typically do it every five years or so and despite not raising the fees the membership revenues was still up nine percent

for the year but during the conference call management said that they have no specific plans for membership fee increase I think you know they didn't elaborate too much I did not listen to the question period. So it's possible there was a question regarding that. But my sense here is that people, you know, are being stretched out in terms of their budget with inflation and everything. And I think they're probably taking the approach that, you know, maybe wait a little bit. If they're doing well, they don't need that increase right now. Maybe push it back a year or two. Yep. No, it totally makes sense.

I just think that every six, seven years they do that membership hike. It seems insensitive right now. I think that's probably why they're just going to hold off. But I think within the next 16 to 24 months, I would say with a very high level of certainty, they'll be hiking that membership price. Yeah, exactly. And I think Costco is always a bit like that, right? They tend to compensate their employees better than other retailers, offer better benefits and so on. And I think it's just a smart decision here by leadership to say, you know what, we're doing

really well. You know, we could increase them and probably would not lose many members, but we'll get some good, you know, I think it's just some good not lose many members, but we'll get some good, you know, I think it's just some good PR to be honest. And I think it's probably the right thing to do too. Now getting back to the results, operating expenses increased 15%, which is actually really good because the revenues increased 15%. So it's right in line with that. With other retailers, we've actually seen the opposite. Revenues increase, but operating expenses actually increase far more. And that's where the margin starts reducing. Earnings per share increased 12% for the quarter.

The full statements aren't out yet, but I'm assuming it still looks good on a free cash flow basis. There's no reason to have concerns there. And renewal rates were very impressive. There's no reason to have concerns there. And renewal rates were very impressive. At the end of Q4, they had 92.6% renewal rate for US and Canada and 90.4% for the rest of the world. And that's in line with past years. It's always around like the 90, 91%, even when they increase their membership fees. Now, member carholders increase 6% year over year, and they have plans to open 26 new stores in the upcoming fiscal year. Are we idiots? You don't own shares, do you?

No, I don't. Yes, I feel like an idiot for not owning them. Are we idiots? Are we seriously stupid for not owning this stock? I think about this way too often. I'm starting to think that the answer to that question is yes. Probably. I mean, it's always a high valuation, right? But again- Yeah. It's like, how do I buy a retailer at 37 times earnings? I get that. It's like, how does that make sense, right? But then again, you look at these results and you compare them with their large competitors and you understand why it comes at a premium. Yeah. The levers for growth are so easy to understand.

This company, you talked about this with the employees too, right? Is they were very vocal from their founding story and now with Craig Jelinek who runs the business. founding story and now with Craig Jelinek, who runs the business, they have been very vocal about how they run their public company and the three stakeholders of shareholders, investors, and I guess those are the same things, shareholders, employees, and what would be the other one? I'm blanking here. Most companies- Community maybe? I don't know. I'm blanking here. Most public companies are like shareholders, shareholders, shareholders, you know, like make Wall Street happy, right? They have been very clear about how important it is to reverse that order of importance for stakeholders and shareholders get rewarded. And you've seen that with how they

treat their employees, how they compensate them, the kind of low turnover that they get in a retail model. It's just different. And so all these reasons and these results are just different, a different kind of level of performance and execution compared to other retailers. different kind of level of performance and execution compared to other retailers. And then I look at the multiple and I go, of course, of course, you know, the multiples like twice what anything else is. And so I'm starting to think that I should probably correct my stupidity and buy shares at some point. I probably will. Yeah. And the last thing I'll add here for me is if you're a Costco member for the, you know, please, I beg you, put your cart on the side when you go and grab something. Don't leave it in the middle of the aisle. I mean, I go to Costco once a month, maybe. And every single

time there's like three or four people that like almost leave it like sideways in the middle of the aisle. And then I have to like push it aside and they look at me like, oh, oops. It's like, oh, the cards are so big. Yeah, that was my little rant at the end there. I just reminded myself, the third stakeholder being the customer. Okay. Stakeholder, customers, investors, and employees are people, you know, at the company. And so they've kind of versed those orders and really put customers first, of course, and employees or people, you know, at the company. And so they've kind of versed those orders and really put customers first, of course, and employees first, you know, 1A, 1B. And then as a result of that, the shareholders get heavily rewarded because the business is executing well.

All right. Another US large cap name. We just talked about Costco, talked about FedEx. Simo, over to the next, far we are, a couple of weeks out before we have lots of variety of earnings to talk about. It's starting to trickle in. Yeah. Yeah. And so we'll have tons of Canadian TSX names there as well. We do have one TSX name here on the list as well. FedEx. So a week out of earnings, you touched on this last week, FedEx drops a bomb. Like, hey, by the way, we updated. So a week out of earnings, you touched on this last week, FedEx drops a bomb, like, hey, by the way, we updated our guidance one week out and it sucks. And so then I was thinking, I was like, okay, is this an economy thing? Because it's thought of as a bellwether

business, or is it a FedEx thing? Because UPS has objectively had some wonderful and outright better execution than FedEx from my opinion. So the results came out and sequentially across each segment, express ground freight services down slightly, but year over year, still single digit growth across the board and guiding for, you know, flat to a few percentages up for next quarter as well. And so the one thing that I find very interesting, not so much because I care about FedEx, but just because it is a bellwether. So on stratosphere.io, you can see here on the doc, got a screenshot of some interesting KPIs that they disclose. Total average daily package volume has been decreasing very consistently since the peak of that being millions. So that's the daily package

volume really dropped down. You've seen daily freight pounds kind of track on the same level. So this really granular data, it's nice to track. You get the data visualization. So you go on stratosphere.io, type in FedEx, you'll see it. But this stock has been hammered. Absolutely hammered. I think it's now 30%. Trades like 10 times earnings. Maybe it feels a little too cheap. This feels like a stock that's going to end up on Buffett's 13F next quarter.

I don't know why. I just have this feeling, bold prediction. This is on Buffett's 13F next quarter. I don't know why. I just have this feeling, bold prediction. This is on Buffett's 13F next quarter that I think like that X is like super interesting, but it just feels so cheap for, you know, one of the kind of become core infrastructure assets in their country. Yeah. Yeah. I mean, obviously if you look at that, you can pretty much trace with peak lockdowns too, right? I think, you know, people, probably a combination of people getting used to order online and then lockdowns, you know, coming back on again, I think November, February 20, November 2020, February 2021, that was kind of the peak for that. But yeah, I agree with you. It could be a good

value stock. But you know, you can make a case it could still continue going down just on the base that most metrics show the economy slowing. What's the catalyst? Yeah, exactly. The global economy is going down. In Canada, I know we had, I think, some recent data saying that total retail sales were down a couple percentage point in the low single digits. So that's some indicator that, you know, those numbers may not be improving anytime soon. So if anyone's interested in it, I would probably suggest, you know, dollar cost averaging, because I wouldn't be surprised if this keeps going down

a bit. Okay, now moving on here, I wanted to talk like we're seeing a lot of banks adjusting their predictions for the price target for the S&P 500 or, you know, stocks in general. I think I just saw one saying that I think it's Morgan Stanley saying that overall earnings are going to be continue trending down. Now, for the Goldman Sachs price target here, they cut their outlook for the S&P 500 to 3,600 points, down from 4,300 points until the end of the year. For reference, the S&P 500 closed below 3,700 last Friday. So we're recording on Tuesday now. I think it's a bit lower now. They're arguing that high rates will weigh on valuations of U.S. equities. And it also said that there would be more downside if the U.S. enters a recession. Now, I wanted to talk about that because it's easy to hear this and panic.

And obviously, there's a headline on CNBC or any major financial media about this almost every day, it seems. And I think it's safe to assume that there will be some shorter term headwinds to the economy, whether it's globally, Canada or the US. But keep in mind that banks are notoriously wrong about price targets. And second, even if they are right or say they are wrong and there is even more downside that they're saying, it really doesn't matter as long as your investing timeline is long enough. Because they tend to look at you know this is until the end of the year if you're investing for the next 10 15 20 years like you don't really care until you know what happens now until the end of the year and keep in mind too that the S&P 500 did below 2400 points in March of 2020 Even if it goes down another 20% from here, you're still at just

around 2,900 points. Now that level would still be 20% higher than the lows of March of 2020. So you can pick and choose data however you want to make it look, of course. But I just wanted to give these examples because most mainstream financial media will focus on what is terrible because that's what sells. That's what gets highballs. Clicks, baby. It's all clicks. And, you know, will things get worse in the short or medium term? You can definitely make the case that it will.

But looking at history, things should get much better in the long term. And keep that in mind when you read all the gloom and doom information on the news. You have to put things in perspective. And oftentimes, they'll pick and choose data to make it look really bad. So make sure that you keep that perspective and don't be afraid to zoom out as well. Let's just take in the fact that how many employees worked on this piece for Goldman Sachs? How many people worked on their price target for the S&P 500? You know, like JP Morgan had their predictions for the rate hikes that the Fed released,

what now? It's however many days ago. It's an absolute time warp. They're like, okay, so there's going to be, there's one of two scenarios that are going to happen. There is either going to be, you know, 75 basis points and the S&P 500 is set to have potentially its best day in a long time, or it's a full percentage point and it's going to be the worst day ever. And so I'm like, it's like your two outcomes that you guys came up with are the best ever or the worst ever. And both were wrong. Because what ended up happening is they went out with 75 basis points, but then they gave their long-term outlook on the interest rates that they think will happen. The Fed did that and it was worse than investors expected. So then the

S&P dropped. So it's kind of funny that both were wrong. It's, you know, like I'm going to be like classic, like dad joke here, but it's like the weather, man. These macro predictions is like the weather. Doesn't matter if you're right. It doesn't matter if you're wrong. No one cares. And no one knows what they're doing. No one knows what they're talking about. I don't understand why people put so much weight into this stuff. And the market puts so much weight into it too. And sometimes I feel like, am I stupid for not putting any weight into what these people have to say? And then these things happen. I'm like, oh yeah, that's why.

Like no one knows what they're talking about. That's great. Yeah. So it's just what another piece of, of noise among hopefully looking for signal. Would you agree with that? Yeah. Yeah. I think so.

And that's why, like, I feel like I'm beating a dead... I don't know what I'm trying to look at. What's that say? Oh man, I don't know. Beating the dead horse. Beating a dead horse. There you go. What does that even mean?

I don't know, but I feel like I'm beating a dead horse on saying that's why dollar cost averaging is so great. Even having a little bit of cash on the sidelines because, you know, you just keep buying, buying, buying. And then if you get like these really sharp drops in short time span, you can be even more strategic and just add to your positions. You won't be able to time it. So the dollar cost average just takes care of that. And when you do see opportunity, having just a little bit of cash will allow you to really pounce on opportunities. It says here, I just looked it up because I feel like I've said the term and not really known what it means. A waste of time without a positive outcome. That's perfect. Hopefully, I didn't waste people's time with that.

No, no. We're saying that that whole industry is that. Kind of by definition. One, to keep talking about a subject that has already been discussed or decided. Dude, this whole podcast, we're just beating the dead horse all the time. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees.

They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly.

Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. but there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb but can still focus on enjoying your time away. Find a co-host

at airbnb.ca forward slash host. That is airbnb.ca forward slash host. Accenture Q4. So Accenture is the large consulting company, the technology consulting company, and they are dominating. This company is gigantic now. They're touching. They're like intermingled and stuck out their octopus arms into every large company around the world now, like the Fortune 2000 type companies. like the Fortune 2000 type companies, they reported their full year results. Revenues are up 15% for the quarter, 22% for the full year. Earnings per share, 18%. So yeah, more of this high single, high double digits, low 20% type top line and earnings per share, new bookings, free cash flow, the metrics that matter for this company. And they just keep getting it done. New bookings was up 21%. So think of that as work that

they've booked that they're going to perform, whether it's outsourcing, consulting, these kinds of services. It's a service business. 15% increase on the dividend. They expect revenue to grow 8% for their next fiscal year. That's nothing crazy, but it's guidance, right? They're probably playing it conservative, set it there, hopefully deliver mid-double digits type numbers. I wouldn't be surprised if that's what they're thinking. It's more of the same greatness from this great company. And they have been low-key acquisitive. They've been buying up so many firms over the past few years. Moving forward, the reality is that even in tougher economic times, these large companies are still and increasingly spending on digital transformation and making sure that they are ready for the next 20, 50 years digitally, whether it be their infrastructure, their cybersecurity, just their workflows. Because consulting out these types of

large digital infrastructure projects and training, it just doesn't make sense when you don't have the expertise in-house. So it's just a bit of a no-brainer and Accenture is the name in town. New bookings, you see here on stridesphere.io, we track all the stuff I talked about, but consulting bookings, outsourcing bookings, and you add that up, you get new bookings. Look at how much they're incrementally faster growing every year. So 10 years ago, they had new bookings of $32 billion in work that they booked in 2012. In 2022, that is $72 billion in new bookings, 71.7. So they are accelerating the pace of winning new work. And that is a trend that I can see happening even further past here. It's like, what's the market cap on Accenture today?

I know it's high. Let me check it out here. Accenture is $162 billion in market cap. I think it was like $220 at one point. Yeah, the stock's down like almost 40% because it's bundled into that like tech play. Now this thing's trading at 23 times earnings. The PE is, yeah, 23 and a half. Getting very interesting for a very high quality company here.

Yeah, you know, if it keeps going down a bit, it'll reach 2% dividend soon. Yeah, which seems kind of crazy for a company growing this fast and hiking the dividend 15% year over year. Yeah. Yeah, I mean, it must be all those Twitter ads I've been getting from Accenture. Have you been getting those too? I get them on LinkedIn. Oh, I get them on Twitter. I'm like, man, they must have a lot of money to spend on ads because I am not their right target audience. That's for sure. Well, they generated $8.8 billion in free cash flow in their fiscal 22.

Okay. So they can now be long a bit with some ad revenue. Yeah. They can throw them some ad revenue their way. By the way, that's coming up soon on the court case. I think it's in October. Everyone's kind of forgotten about it. I don't even know what's happening anymore.

Yeah. It's going, but now they have like the whistleblower and stuff. I'll have to look it up on the next earnings that we can give a quick update to what's happening. No, that just the whole Twitter thing reminded me of that. No, it's a good call. I kind of forgot that that's even happening. So I think Elon hopes that everyone kind of forgets to including the regulators. So, yeah, next up here, actually a big Elon supporter, Kathy Wood without without the S, gives up a portfolio manager.

Kathy Woods. She gave up a portfolio manager role at two of her firm's ETFs. Now, Will Scherer, Will Scherer, I feel like I'm butchering his name, but he's been appointed as the fund manager for the company's two index funds, ARK 3D Print ETF, ticker PRNT, and ARK Israel Innovative ETF, ticker IZRL. You will be replacing Wood in that role. In case you were wondering, both indices, so they are index funds. They are from German index engineering firm Solactive. Never heard of them.

Have you ever heard of them? So these are, they have two ETFs. They're index funds. Yeah. Index have two etfs they're in there and yeah index etf well yeah well they're not indexes i mean that's what they're claiming and it's this you know niche index from this german well they're etf yeah they're etfs and calling them an index is kind of ridiculous but so kathy managed these before on yeah i didn't even know about these ones because i knew about the genomics one. Yeah.

Okay. So they're just small ones and she's punting them off too. Yeah, exactly. Okay. And earlier in the month, Ark also named Brett Winton Chief Futurist. This is different. What? What is that title?

I know. Chief Futurist? Oh, yeah. So like you just wake up every day. It's like, hey, Brett, what do you do? What do you do? I am the future. Yeah. And they're like, what does that mean? And they just walk away. Yeah. And it's actually the first ever role of that sort at ARK. And a lot of people were saying that he might be a potential successor. But now, you know,

there is some talk that it could be Will Scherer that's been appointed to manage those two ETFs. Now, ARK and Cathie Wood have been getting a lot of flag because the fact that Cathie Wood has so many responsibilities and not having a really good succession plan in place, this looks like they may slowly be giving more responsibilities to people that have been closely working with her. And I don't follow Art very closely. You know, I'm aware of them. We've talked about them a little bit.

But I didn't realize Kathy Wood was 66 years old. So it's probably. She's 66? Yeah, yeah. I Googled that. That's a compliment to her because I didn't know that. No, I thought she was in her 50s. Yeah, I did not think she was.

Doesn't look a day over 64. No, I'm just kidding no i thought i thought she was younger so that's why like when i was reading that i googled her age be you know someone in their 60s that you know she's the face of arc right so i think it's a smart thing to you know whatever you think about arc it's definitely because she doesn't want to retire out of the blue and then fun flows just evaporate exactly the name's not behind it. Yeah. So I think whatever you think about it, I think it's still a good thing to have a succession plan in place. Now, the two ETFs I mentioned are actually down quite a bit. It's not surprising. Tech has been hit really hard. And

obviously, Woods and her team were investing in companies that had- Woods, there it is again. Kathy and her team, they were investing in things that were really high growth. So the ARK Innovation ETF is down a whopping 60% this year. And then the two ETFs I mentioned, so the 3D Print ETF is down 41%, and the Israeli one is down 39%. So so it's just you know i wanted to talk about that because obviously she makes headlines a lot but all that to say i know we kind of laugh at the chief futurist but i'm not laughing i'm jealous i'm changing my title to chief futurist but it's still a good thing to have succession plan in place for sure no i think that makes sense especially like like i said you know out of nowhere something like your tires or like whatever moves on and then fun flows just evaporate because you know

they know her their shareholder base yeah people are in and out of that stuff all day long so they don't want fun flows to be so attached to to the namesake so i mean i think that makes sense. ARK 3D print ETF. Oh, my goodness. Yeah, I didn't even know that. What a speculative thing to purchase. Isn't 3D printing, wasn't that big like eight, nine years ago? Like everyone was like, I think those tech shows, there was one year where like everything was 3D printing. It's kind of funny that they have that.

But anyways, it was just I thought it was an interesting article I came across. And, you know, I'm sure there might be some people that listen to us that maybe have a little bit in that fun. Or I know we have some people that listen to us that at least have Tesla, which has been one of our best calls, right? Yeah, that call that she got roasted for and it became true. Fair enough. I mean, hey, make bold predictions every once in a while. right yeah that call that she got roasted for and it became true yeah fair enough i mean hey make bold predictions every once in a while they turn out two thoughts here one 3d printing was such a fad it's not that it doesn't have merit 3d printing is cool i've 3d printed a bunch of stuff

it's sweet it's you know you can get so granular with the amount of detail and applications but when it came out it was like this is the new wave you're not gonna make food you're just gonna print it or like anytime you want a new phone you're just gonna print the phone it got so outrageously far ahead of the actual product like roadmap of what 3D printing could become. And so that was a bit of a sham. Now, you were saying, we always joke about how you say Kathy Woods, like Tiger Woods. Did you follow about how Tiger Woods turned down $800 million? For the Live Tour?

Is that it? For the Live Tour. I heard about that. For the Live Golf Tour. For the live tour? Is that it? For the live tour. I heard about that. For the live golf tour. This man turned down $800 million to go play golf for the Saudi golf tournament.

Funny enough though, but he doesn't really need it. As weird as it sounds. No, no, he doesn't need it. And clearly the guy's not motivated by that money. But can we just talk about how ridiculous that amount of cash is? Like their acquisition cost to get people's eyeballs is like, I'll spend anything to try to disrupt the PGA Tour. They're either going to like fold in a couple of years because it's a complete capital incineration model or, you know, something's got to give here with the whole golf industry yeah yeah honestly i think if woods is it's switched over i think they had a better chance of succeeding maybe they still will i don't know golf enough you know i follow it a little bit but you know for me golf is more

interesting when tiger woods is there it's that simple i don't care if he has zero chance to win i'm probably gonna watch a little bit if he's playing if he's not playing i'd really i couldn't care less yeah when he came back and won the masters i was literally like i was crying dude if you ever feel down on yourself just go on google and just watch tiger woods swing a golf club and you'll be like okay this is just literally the easiest thing to watch ever so let's round it out with our last. We still have a one earnings company to talk about. And this one's not a good one. So it's Aurora Cannabis.

They released their full year 2022 results. A little bit of wonky schedule here. Now, revenues decreased 9% to $221 million. They had a positive gross margin compared to a negative gross margin last year. So ding, ding, ding, that's always a trend in the right direction. It's still not great. Gross margins are at 9.5%. Their net loss more than doubled versus last year. However, I will hand it to them. If you do remove goodwill impairment, it was actually lower than last year and they had massive goodwill impairment. It was actually lower than last year and they had massive goodwill

impairment. It was obviously related to some of the bad acquisitions they did in the past three, four years, five years, I think at this point. They were free cash flow negative to the tune of $142 million, but that's an improvement versus $263 million last year. Now, you know, we've been pretty consistent here that the cannabis space was just not a good investment for the past three years, even as stocks were going down in value. I mean, I know a lot of people were thinking

a year or two ago, you know, it may be some value plays, but, you know, I'll hand it to Aurora Cannabis. They are making tough decisions to try and get the company back on track, or on track, I don't back on track or on track. I don't think it was ever on track. Get it back on off on track. Yeah, exactly. And they laid it. Unfortunately, obviously, they had to make tough decisions. So they laid off 12% of their workforce

earlier this year in their efforts to cut costs. Things are improving, but they still have a whole lot of work to do. And I cannot say that loud enough. I don't think I need to tell anyone that burning $142 million in cash on $221 million in revenues is not good. Now, the last thing I will say here is to be careful looking at earning releases for companies that are struggling because they will put some wonky stuff on those earnings release and I'll just read the top two lines in bold of their earnings release. Number one is remains number one Canadian licensed producer in high margin global medical cannabis revenues. International medical cannabis net revenues increased 35.4% from Q4 2021 and 70.3% from fiscal 2021. Now, that might sound good, but then when you look at the-

I'm buying shares. That sounded great. What do I invest? When you look at the financial statement, you realize that medical cannabis as a whole of all their revenues is only 16%. And international revenues as a whole of all their revenues is only 28%. So this might look good. But these are just tiny portions of the business. And that the fact that they put that as the number one thing in bold at the top of their earnings release. It really shows you that they're trying to project any kind of good news that they can project. And then the second... That just reads, what are you hiding? Exactly. Because good companies will say, you know, revenues increase this amount from last year,

same store sales, whatever it is, they're actually things that matter and then the second line they said that they reiterate adjusted EBITDA profitability run rate by December 31st 2022 now seriously what are those adjustments like WTF is going on here? Like, first of all, yeah, obviously, like, I don't know what their adjusted EBITDA like measure is, first of all. And those adjusted measures for the most part, like you have to take those with a grain of salt. Sometimes it makes sense. But I do not know if this one makes sense or not. And then they're trying to project the run rate, you know, by the end of December 31st, 2022. So that's a stretch. And the fact that these are the top two lines in bold at the top of the earnings release, that should tell you all you need to know in terms of how they're doing it as a business. It's like, Aurora, can you tell me what is in your adjusted EBITDA profitability run rate? And they're like, yeah, it's like our sales and we just don't include any of the costs. And you're like, oh, okay. I'm a little confused. Where do I sign up? Where do I buy shares? Dude, this is crazy, man. This is crazy. And I'm not surprised that S&P TSX launched them out of the index. as like value plays and things like that. One thing you can quickly identify whether the company's in trouble or not

is things like I just mentioned. If you're noticing on their earnings release that they're highlighting stuff that is really marginal for their results, chances are that they're not telling you about the important stuff because it's really not good. Yeah, it's like, why are you hiding the dead bodies? Like, you know, like it's just the smoke, there's fire. This thing's quacking like a duck,

sounds like a duck. It's a duck. There's so many, the writing was just so on the wall for however long we've done this podcast. Yeah. And it's too bad because I know more kind of beginner investors will probably just rely on just that little paragraph and say, oh, look, things are improving. But if you kind of scroll down and go to the financial statements and you actually start looking at the numbers, yeah, it does not take long. It took me about like five minutes to just see like, you know, I think I was fair. They are improving compared to last year, but they're still in a whole lot of trouble.

That's the reality here. Yeah, that is the reality. And I feel bad for a lot of people who in 2019, 2018 jumped on, mostly 2018, right? Jumped on the cannabis thing because you were an idiot if you didn't own one of Aurora or Canopy. You were an idiot if you didn't own one of those names because they just keep doubling every other week. Aurora in October of 2018, and I get it, it's impossible to value a company with huge potential on any multiple, but it traded for

225 times their sales. What does the company have to do for me to make money there? Well, you can do the math. They have to become the global superpower in selling. They have to be the global drug dealer of weed. I was going to say they have to start supplying the US basically. Yeah, they have to start supplying and everywhere else too, right? And so it's just just it's a valuable lesson and it's a painful and expensive lesson for a lot of canadians who jumped on this and so like if

you're one of those people don't be down don't feel silly everyone makes mistakes hopefully you're just listening to the podcast and like us hearing us being like this is the dumbest thing ever but if not don't feel bad bad. It's a mistake that a lot of people have made and maybe they turn it around, but I wouldn't be betting on that. Yeah. Yeah. I mean, I've talked about it before. When I first started investing, when I was 18, I invested in a junior miner because of, you know, a friend of a friend, you know, thought it was a good investment. I ended up losing everything because they went bankrupt. But it was, I think to this day, I think it's the best thing that ever happened to me because I learned

a valuable lesson and I do not invest in junior miners anymore. I can tell you that. What about if you got some really sexy stock tips? You're at the bar and some guy, your buddy just comes up to you, knows you have an investing podcast. And he goes, so my uncle's buddy's friend's son works for this mining exploration company. And he just gave me word that Brado's mining exploration company just hit gold, but it's not public information and you got to get on the ground floor. What do you say to that? How enticing does that sound? Sounds pretty good. You will see the best fake smile I've ever had and I will definitely tune out and I'll be thinking about, yeah, probably topics for the next podcast, mountain bike,

the Blue Jays or something else, or my daughter. Yeah, I will definitely tune out and I'll have a fake smile on. Well, you're a nice guy for just being along for the motor melting store that you would have got at the bar for that junior mining company. Thanks for listening to the podcast today. If you're new here, well, if you're not new here, you know, number one podcast in Canada for investors. Duh. This is not just my opinion, although it is my opinion. These are in the numbers. So just know that. We release episodes Mondays and Thursdays. Mondays and Thursdays. We talk earnings on Thursday and Monday. We talk general strategy, what we're

doing with our portfolio, how we're thinking about stuff. Sometimes they go on long tangents about gravity and how you can put that into your investment portfolio. People like that, by the way. We got some comments about that one. They like that one. If you haven't checked out stratosphere.io, it's where we get a lot of the data for this podcast, including granular KPIs and segment data. And if you don't care about that stuff, well, I think you should because it'll make it easier for you to track the positions you own. But if you just want 10 years of historical financial data and much more, it's completely

free at stratosphere.io. If you do want to sign up, you do want to whip out their credit card, you want to pay, which is not required because a lot of it's free. But if you do, use code TCI for the listeners of the show. We'll give you 15% off. We'll see you in a few days. Take care. Bye-bye. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or

financial decisions.