The Canadian Investor - Microsoft, Apple, Visa, CP and More Earnings!

Episode Date: February 3, 2022

In this release of the Canadian Investor Podcast, we cover the following earnings releases and news: Shoutout to Quartr app for partnering with the show and providing us with earnings calls. Canadian workers getting big salary increases Sony buys Bungie Microsoft earnings Apple earnings Visa earnings Canadian pacific earnings ServiceNow earnings Rogers earnings A look at how well oil and gas has performed year over year   Tickers of stocks discussed: SONY, MSFT, AAPL, V, CP.TO, NOW, RCI-B.TO   https://thecanadianinvestorpodcast.com/ Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Stratosphere 🚀 https://www.stratosphereinvesting.com/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

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Simon, we've already done a full month of this podcast here in the new year. So thanks everyone for listening. Simon, before we start today, we have some coffee shout outs to do. So Dominic says, my go-to investing podcast, love the accessible content and Canadian perspective. Dominic, we got you.

George and Alyssa both supported the show by buying us a coffee. Thank you. Jonathan, always enjoy listening to the podcast every week. Now twice, great content and can't wait to hear more. Thank you very much, Jonathan. Marlon said, fantastic podcast, gentlemen. Your efforts are very much appreciated.

Pat said, thank you for the time and effort you put into this show as a seasoned trader and investor. I'm always looking to find value and key takeaways from TCI. Keep up the great work. We appreciate you guys very much we have some more to get through that i'll get to uh next week simone you got some news off the press here from canada what do you got for us here on the slate yeah before i get started thanks to everyone for the kind words and the coffees and yes some news sobeys Ontario warehouse workers negotiated a big wage increase.

So Unifor, which is a union representing more than 300,000 workers, mostly in Ontario, said that an agreement was made which covers more than 500 workers at the distribution centre in Whitby, Ontario. Some of the highlights include time pay increases of 19.5% over four years and 11.3% increase immediately for employees with 8,000 hours of service or more. Part-time employees will also get significant increases during the duration of the agreement. The company RRSP contributions will also double from 2.5% to 5% during the lifetime of the agreement. The reason I wanted to talk about this because I thought it was interesting as a piece of news and obviously good for these employees because these are pretty good increases. But it's just a reminder

right now that if you're not self-employed, it's probably a really good time to ask your employer for a wage increase. Dude, totally agree. I am seeing this across the board of my friends getting paid right now. So don't be hesitant to test the market if you're a salary employee. I think that's pretty good advice. Yeah, exactly. Like Brayden said, there's a lot of competition right now to get labor. So it's really in the employee's hands. You have all the leverage right now. And if your employer hasn't given you a reasonable increase recently or doesn't want to give you one, start looking elsewhere. If you do find another job that pays more, you can always come back to your employer and say, look, I have this offer.

I'm ready to take it and see what they say and you know if they don't want to give you that increase then you have a good backup plan that you can go to a new job but from an investment standpoint of course it's hard not to think that this will affect margins negatively for a lot of employers and earlier this week I'm sure everyone listened to our episode of ranking based on pricing power. And this is really where it comes in as an investor. And obviously, if you haven't listened to Monday's release, make sure you don't miss it because we had fun doing it.

And it just puts things in perspective as well. Yeah, it does put things into perspective. And it obviously is a huge line item for expenses for every large company, large and small, actually. So, I just want to double click on that for a second because I am seeing people get paid recently. Like I have some friends who have literally almost doubled their salaries in the past like 16 months. And that's because skilled employees are in high demand. Yeah. Test the market, right? Test the market. You'd be surprised. You'd be very, very surprised. Off the press here, just moments ago, as of when we start recording this,

Sony just acquired Bungie, the game developer. The gaming market keeps giving us more and more to talk about on our earnings episode. So Sony is buying Bungie, the developer of Destiny and the original creator of Halo for 3.6 billion, which is kind of ironic. The acquisition arrives shortly after Microsoft's announcement that it's buying Activision Blizzard for 68.7 billion. Bungie will continue to independently publish and creatively develop games, said Bungie CEO Pete Parsons. This is fresh off the press, so if you don't have any hot takes yet, that is fair. But wow, there is consolidation left, right, and center. We had Take-Two by Zynga

like three weeks ago. We had last week, Activision Blizzard being bought by Microsoft. And now, Sony is buying Bungie. It is consolidation across the board. Yeah, yeah, definitely. And I mean, I just, yeah, this is a surprise because I saw it on your notes and I didn't even realize it happened. But the one thing that comes to mind personally is if there's really an arms race here and companies trying to consolidate and getting more brands under their umbrella, gaming brands, of course, and more talent,

I feel like we may see some companies overpay because that tends to happen, right? You get a few, then competitors get worried that they may not have enough intellectual properties when it comes to this pace and then start overpaying for maybe less than premium content., I think, is the talent pool that these companies get concerned about losing the talent pool, maybe more so than anything else. Because there's only so many people who can develop games and there's only so much IP that's really valuable. So it does become a bit of a race. But it is ironic that Bungie is being bought by Sony because of their ties with Microsoft through the years. It is very, very surprising to me anyways, but I'm sure we'll

see more and more consolidation. It seems to be the trend for the year. Speaking of Microsoft, they reported their second quarter, which I know is bizarre. They have a weird reporting schedule, but the Microsoft calls, like the earnings calls, are just so much to unpack these days. It's like, where do I even start? Satya Nadella, the CEO, and Amy Hood, the CFO, they go through their segments. They go through customer wins. They go through the scale of their business. And each individual segment could be an entire call on its own. And the footprint that Microsoft now has is now mind blowing.

So for this episode, guys, we partnered with Quarter. Quarter is an app you can download on your phone, on your iOS device, on your Android device. And it is like the easiest way to get earnings calls right on your phone. It's unbelievable. We're both big fans of the app. We've been using it. So we've partnered with them to do this. So we've pulled some excerpts from Microsoft here. Let's hear Satya Nadella talk a little bit about the business. It was a record quarter driven by continued strength of the Microsoft Cloud, which surpassed $22 billion in revenue, up 32% year over year. We are living through a generational shift in our economy and society.

Digital technology is the most malleable resource at the world's disposal to overcome constraints and reimagine everyday work and life. All right. Yeah. So that's an excerpt from Microsoft Q2 call. Seriously, if you haven't downloaded the quarter app, check it out. It's awesome. It's like Spotify for earnings calls and they just had a brand new UI update and it is crispy. All right. So let's pull a little thing here from the excerpt, which is digital technology is the most malleable resource at the world's disposal to overcome constraints and reimagine everyday work in life. Now, this is what Satya said, and it's so true of Microsoft. They're capitalizing on this transformation, and we have seen their market cap just explode

since the real start of this shift. So revenue is up 20% to $51.7 billion in the quarter. Operating income was $22.2 billion, which increased 24%. Commercial cloud business was up 32% on revenue. LinkedIn revenue up 37%. This goes back to what we're just talking about in the job market and Satya touched on it countless times in the call, which is there's a big shift and people are moving around a lot between jobs because people are realizing what we're just talking about, where it's like, you know what? There's so much demand for my services that I'm willing to test it out. I'm willing to take those coffee chats. Dynamics 365 revenue was up 45%. It would take me, Simone, a full hour just to go through everything. If I go through Azure, if I go through the cloud security, if I go through GitHub, developer services, Dynamics,

Office, Windows operating system, LinkedIn, Microsoft Teams, virtual work environments, the metaverse, Xbox, their acquisitions, search and advertising. We'd be here all day, but I think across the board, this business is doing exceptionally well. Yeah, yeah. For me, I think the most, the one I'm probably the most amazed with is probably the one that it doesn't get as much press, but is MS Teams and virtual work environments. I mean, they really, it was really built, I think, as a competitor to Slack, right?

So, and it's kind of crazy how Slack was the first comer. And then it seems like everyone I work with for another organization, everyone uses MS Teams now. We used to have WebEx, now it's discontinued. Everything is done through MS Teams. So that's the one that I'm really amazed but not surprised at the same time because they're really leveraging their dominant power with the Enterprise OS. That's right. Well, both are good products. I've used both a lot. I currently use Slack. I do like Slack, the instant messaging

better. Now Slack is part of Salesforce, but you're right. They're both good products. The advantage that Microsoft has and the reason they win so many customers on the commercial cloud as well is distribution is everything. What percentage of Fortune 500 companies are already Microsoft customers? Like 100%? Maybe? I would say the majority for sure, the vast majority.

Yeah. It's over 90, whatever the number is. And so distribution matters. And they already have an inside track on winning so many of these deals. So when they come out with a new product like teams, they can find scale and distribution in a snap of a finger. And so the timing of that platform worked out really well for them. Yeah, yeah, exactly. I mean, there's not much I like about Microsoft's quarter. So now we'll move on to another pretty big company, Apple. Have you heard of them? You heard of Apple? Yeah, I heard of them. So Apple released their Q1 2022 earnings, of course, a bit of a weirder reporting schedule them as well. There's actually

a lot of companies that have these financial years that don't follow the calendar year. And this, just for context, is the three months ending on December 25th, 2021. I wanted to mention that because it does include the holiday season. So Apple just had an amazing quarter with revenues up 11% year over year. To understand how big those numbers are, let's listen to an excerpt of Tim Cook, who talks about some of the highlights of the quarter, including their installed base of devices. Through the busy holiday season, we set an all-time revenue record of nearly $124 billion, up 11% from last year, and better than we had expected at the beginning of the quarter. And we are pleased to see that our active install base of devices is now at a new record

with more than 1.8 billion devices. So it's really hard to not be amazed by those numbers. So biggest quarter ever, $124 billion. Their active install base that Tim just mentioned at 1.8 billion devices. That's just mind-blowing. Obviously, it doesn't mean 1.8 billion humans because I know you, for example, you'll have, what, two or three different devices that you have, Apple? I am currently at just two. Just two. But still, let's say on average people ask two or maybe a bit less. It's still probably over a billion people that have their ecosystem, I would venture to guess,

which is just insane. And they set all time revenue records for the iPhone, the Mac, wearables and services. Mac sales were led by their new Apple-powered M1 chips. We are actually talking about the M1 chips before we started the call, how they're much more efficient than the Intel chips. And the services, to me, is something that just keeps coming up every quarter with Apple. Every time I talk about it, I'm even more impressed. This time it was up 23.4% to 19.5 billion they had revenue growth for all their product categories except the ipad which were slower than expected due to some supply chain constraints but overall supply chain constraints were more pronounced than they

were in the previous quarter but they did say that it was getting better i also had to look at their free cash flow because sometimes I'm a bit wary at looking at free cash flow on a quarterly basis. But for Apple, I don't think it really matters all that much since their overall operations are so massive. They generated $44 billion in free cash flow for the quarter and repurchased $20 billion worth of stock. They had $63 billion on their balance sheet in terms of cash and cash equivalent at the end of the quarter. So as of December 25th, 2021, that was in line with the previous quarter. I always like to look at their cash because it's always pretty massive, even though the amount of

stock that they repurchased. But all in all, I mean, what's not to like? It was a really good quarter for Apple. It is mind-blowing the amount of free cash flow that they're generating on a quarterly basis. Like the scale is like... $44 billion in one quarter. It's crazy, huh? In one quarter. And it makes sense that they're able, you know, would they do buy back $70 billion last year? You know, they're going to do more this year. They're just able to delete the share count over the next 5 to 10 years. That's going to be the playbook for them because they can continue to grow. They can't really make acquisitions. So, they're going to continue to

grow, be more profitable, come out with new, sleek, innovative things. People are locked into this ecosystem and they're able to just delete the share account, pay a dividend, grow the dividend. The capital allocation strategy seems pretty... The playbook seems really easy for me to understand and it's really hard not to like it. Yeah. I guess the only criticism I've seen from Apple recently is there is no new like wow product. I think that's probably the main criticism I've seen is just like kind of small increments. There's nothing like a new iPhone or I know I think the processors, the M1 chips was something

pretty big, right, that they've been working on. But I think that was probably the main criticism. But I mean mean people still love their products so I get it from one perspective but I mean with these numbers you can't really complain either. Yeah, you bring up a good question though like what is next? Because they just keep bringing out the new gen of product X, Y, and Z over and over again and they don't really have any incentive to do otherwise. Look at these numbers. 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. 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, Bl social in the app store and I'll see you there. Visa. Now over the past year, I've looked silly. I have been talking about Visa and MasterCard constantly and their share price has done nothing and in fact, just gone down and down and down.

Not like crazy drawdowns, but it's been an underperformer very consistently for the last 16 months. Now, I'm a believer in the businesses. And Visa and MasterCard are a duopoly in one of the greatest business models ever in the history of the world, full stop. Now, they pop 10% on their earnings report. And it's like, the market's like, market's like oh yeah geez these businesses are more important than ever the numbers just kind of speak for themselves and they were trading cheap they were like the stocks on a historical basis were cheap revenue increased 24 percent earnings per share was up 29 percent payments volume was up 20%. So that total payment volume on Visa was up 20% year over year. Cross-border volume. This is a huge moneymaker for Visa. That volume was up 40% as we get travel

back. The operating margin on the business exceeds 65%. For those listening at home, that is really, really good. They bought back more than 19.4 million shares in the quarter and just authorized another 12 billion in capital to buy back more stock. Now, the opportunity ahead of them is still gigantic. And that's what I've been consistently saying. So let's hear from Al Kelly on looking ahead and their success internationally. When we look at the opportunity ahead, if you assume global cash grows at 1% annually, industry-wide digital penetration or personal consumption expenditure wouldn't reach 90% for several decades. For example, in Latin America, until a few quarters ago, there was more cash volume than payments volume on visa credentials. In fact, in the past year,

there has been a nearly 6.5 point shift, and payments volume is now 55% of the total volume, even with cash in Latin America growing 10% this past quarter. The reality is that he's pointing out here that we may be, we're still a while out from firm adoption across the world. We have a lot of adoption for digital payments here in North America, but the rest of the world is still a gigantic total addressable market. And I think that that's something that still continues to get discredited. And he talked a lot about Latin America. Latin America, when I was in Peru and Colombia in 2019, that was one of the first things I noticed was accepting the payments rails seemed like a relatively new process. The level of adoption

that it had taken in such a short period of time was gigantic because people, you know, it's the incumbent is cash and cash is not a good means of transacting anymore when there's just such a better way in digital payments. So the opportunity ahead of them is still gigantic. And that's one that I wanted to touch on because the market has been pessimistic on the payments rails over the past 16 months for a reason that I haven't been able to find out. You look at the performance of the company year over year and still getting it done, still has a huge addressable market in front of it and a huge opportunity. There's not much to dislike with operating margins of 65%.

We're talking about one of the best businesses of all time. Yeah, I think Latin America will be extremely fascinating to look at in the next decade because it has a lot of countries where people are definitely underbanked. And I think I will be fascinated to see the battle between payment processors like Visa and MasterCard, but also with potential cryptocurrencies, right? Some countries potentially adopting that. We saw it with El Salvador. Will it be a one-off or will it be something that will lead to other countries adopting that? People having seen a lot of

countries, I know Argentina, there's been several times periods of high inflation. So will people kind of choose something like Bitcoin instead because they've been bitten or snake bit in the past? I don't know which way it's going to go. I just find it very fascinating to look at. I think the thing that is interesting about Visa and MasterCard is what you're saying is completely true. And those interesting fintech adoptions, even decentralized systems like you're talking about, Visa and MasterCard are at the forefront of helping push it. And that's what I think is interesting is that they're not sitting back and being sleepy. They're actually getting ahead of that. And they are the underlying infrastructure for all of the innovation happening. And that's why I think it's a good place to be. Yeah, I honestly, I think I agree with you. I

think I don't think it will be one or the other. I think that it's probably going to be a mishmash of both. I think it's going to be, like you said, probably a version that we'll see that we're currently seeing with some new development in the future. I mean, I feel like we could go on probably for a whole episode talking about that. But we'll move on to a Canadian company, Canadian Pacific. They released their full year results. Total revenues were up 3.76% for the year to $7.99 billion. revenues were up 3.76% for the year to $7.99 billion. They did mention that they had some headwinds during the year, especially with the flooding that happened in BC that did impact some of the rail lines. The CEO commented during the call as well that he wanted to commend his workers

for putting the rail lines back up so quickly. Having said that, their operating ratio was up 280 basis point to 59.9%. For those who are newer, this is their margins after operating expenses, which includes things like compensation and benefits, fuel, materials, equipment, rent, and a few more other items. It's pretty commonly used for railroads. Net income was up 16.8 percent to 2.85 billion for the year this was 4.18 per share they had 2.15 billion in free cash flow which was an increase of 90 percent year over year i pulled out i know you guys can't see that but brayden can here so they have a little graphic basically the variance in terms of the different things that they'll ship, the most common things that they ship. And some of the, I just thought it was interesting.

So, grain, coal, and automotive were actually in the negative compared year to year. Automotive was actually the worst at minus 18%. And that one I wanted to highlight because are you surprised on that one with all the chip shortages? Getting your hands on new inventory of cars across the board has been a bit of a joke. So, this is not surprising at all. I am surprised that grain and coal were down double digits though. That seems like a lot. Yeah, I'm not sure if it was. It might have been related at least for grain, maybe the weather. I think that may have had an impact on

it, especially it was really dry last summer. I think that would be my instinct. That could be completely wrong. But the other one that saw a big, big increase was metals, minerals, and consumers. So that saw a 28% increase year over year. So I'm not surprised either because we saw the economy really pick up and there was not any shouldn't be too many chip constraints for that category that's right yeah no i'm not surprised by much of this the automotive being close down to 20 is basically if you want really good statistics about how the economy is actually working is look at the results from CP and CN Rail and Union Pacific, and that'll tell you a more complete picture than probably any other metric you'll find on any news source

anywhere. And I truly believe that. Yeah. Oh, yeah. They know their business. And as a reminder here, obviously, if you listen to the call, Kansas City Southern was a big topic. Pretty much almost all the questions from the analysts were regarding the Kansas City Southern acquisition. But as a reminder, it still operates independently in a trust managed by Kansas City Southern's own officer and reports to the KCS board. KCS is just the short term here. This is in place until the Surface Transportation Board STB reviews the transaction and provides it for approval. In other words, their revenues were not impacted by the KCS acquisition as it still cannot be factored in. They even had KCS officers

present during the conference call to answer questions regarding the performance. Now, let's listen to CEO of CP, Keith Creel, talking about how their customers are excited about this acquisition and the opportunity that this new network, assuming obviously that the TSB approves it, could create for CP. assuming obviously that the TSB approves it, could create first CP. Our customers are enthusiastic about the opportunity for the seamless, efficient, reliable single-line rail service across the U.S., Mexico, and Canada. John will elaborate. I'm sure we can address it in Q&A. But we have all been intimately involved getting in front of our customers. We've made over 90 customer contacts talking about the art of the possible,

talking about what this new transnational railroad, assuming it's approved or when it's approved by the SDB. And we will be able to go to work creating and reaching new markets and service that, quite frankly, has never been possible. And you can really tell from Keith and that he's very excited for this potential acquisition. He's also, if you listen to the call they're not taking anything for granted either so they're still they still know that it needs to be reviewed but it sounds like they're pretty optimistic overall there might be some divestitures but it sounds like it shouldn't be in their view too major the last thing i wanted to add here like i mentioned there was a lot of question of KCS acquisition during the call. So I encourage anyone who owns CP or wants to start a position in CP, it's a really interesting conference call to look at. You can even skip to the question portion if you're more interested in that by using the quarter app is really great. You don't have to create any fake data on the investor relation website. I would

always do that, create some fake name, fake emails, because I didn't want them to have my data. So it's always a very easy way to get access to that if you're interested in. And the last thing I would say is for me, if it does go through, I think the two Canadian railways are probably some of the most attractive railways in North America. I know they would not be as expansive in terms of the coverage they have in the US specifically, but just the fact that they cover Canada and they cover a good portion of the States, both of them, I think they're really, really interesting businesses. Oh, they're some of the best businesses is the truth. Really, they are. And they have the broadest coverage.

And if CP gets this deal, oh baby, it's going to be a really big business. Both of them are obviously gigantic, but the ability of their total network coverage gives them, you know, they might be the two best jewels in all of North America for railways. I truly believe that. All right, let's look at ServiceNow. ServiceNow, ticker NOW. This is a $115 billion market cap software company that sells workflow software to large enterprises. It's like, well, what the heck does that even mean? That sounds like some fluff. Well, it's kind of because it is. With ServiceNow, they do so many different things. So I have to give you guys some exact examples for you to get some context here.

So if you have repetitive IT tasks, that's one of their main industries. Or if you want to automate the flow of work from one employee to another employee at large companies, ServiceNow helps streamline it and like stitch some of the processes that you do repeatedly, very effectively so that it makes work easier for the employees. Now, again, like what does that really mean? But if you've worked at a large corporation, you know that there's huge time wasters on not only repetitive tasks, but let's say you completed a task and it has to move to the next person and they got to add to it or they have to review it and then they have to then send it to a customer. ServiceNow has a fleet of offerings on a subscription to make that process less of a headache. Now, revenue for the

quarter year over year increased 29%. Earnings per share was up 63%. Free cash flow is up 32%. On a full year basis, the business is almost generating $2 billion in free cash flow, which is really impressive at $1.86 billion to be exact, which was up 29% year over year. A quote here, we expect constant currency subscription revenue growth to accelerate year over year in Q1, setting us up for another strong year and putting us well on our way to becoming a 15 billion plus revenue company. So you can see the scale here on the top line. It's pretty impressive. Now it's business as usual. ServiceNow keeps getting it done. This is one of the most consistent compounders in software around.

They have sustained, like weirdly good sustaining of an impressive growth rate above 30%. This is the revenue growth year over year for the following years, starting in 2016 through 2020. 38.3% on the top line, 37.9%, 36%, 32.6%, 30.6%. They have consistently had over 30% on the top line. And the reality is that long that long term, yeah, of course, revenue will start to decelerate. Of course, it will. It's not going to grow at 30% for the next 40 years. However, every company needs this. And I was looking on Gardner and looking at other reports and customers love ServiceNow because the employees love ServiceNow. As soon as they get hooked up on ServiceNow, they're like, I was wasting so much time in my

job and now it's a game changer for a lot of large corporations. So I think because of that, the product is so strong. The runway is still massive. And you know, it's not going to grow. It's not like a cloud company that's going to grow at like 60 to 80% year over year. But if it can sustain high double digits for a long time, which I think it can, it's probably an attractive company to own. Yeah, I've heard of them before. Obviously, I've looked into them a little bit, but a good also also just for people to help to wrap their heads around it. Like workflow management is actually like part of pretty much entire businesses, right? I have an HR background and something is simple. If you have a manager

and you're submitting vacation, well, that goes through a workflow process. So you'll submit it, your manager has to approve it, then it gets written in a system. And if you don't have that, then it's like extremely manual process. I've seen it. Just something as simple as that is actually a workflow system. But just wanted to add that. Yeah, like gone are the days or hopefully gone are the days of every single task need to go through an email, for instance. Like that is excruci for instance. That is excruciating. It truly is excruciating. It takes forever and really simple things can get dragged on and on. So ServiceNow and competitors, they have a good product offering. So I think that large corporations, it's quite enticing for these kinds of things.

offering. So I think that large corporations, it's quite enticing for these kinds of things. 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. 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, and I'll see you there. Now moving on to Rogers. No, Rogers.

Rogers had their full year results. Revenues were up 5% to $14.66 billion. Net income was down 2% to $1.56 billion. Free cash flow was down 29% to $1.56 billion. Free cash flow was down 29% to $1.67 billion. The releaser full year guidance for 2022 as well, which is pre-Shaw transaction. So they're not considering the potential impacts that the Shaw transaction could have. Total service revenue growth in the range of 4% to 6%. Adjusted EBITDA growth range from 6% to 8%. The CapEx, so capital expenditures, of $2.8 billion to $3 billion. And they're projecting free cash flow between $1.8 billion and $2 billion.

For me, the overall results and guidance was all right. Nothing great from Rogers or Telecom. I mean, pretty much what I'd expect from a Teleco here. It's clear that they're making huge CapEx investments in their network. And the business is growing, although very slowly. To me, this one is just one that I want to keep an eye on for a few reasons. The first one, I'm intrigued to see what's going on with the family drama, although there hasn't been much lately. And two, of course, what happens with the Shaw acquisition.

It still hasn't approved to my knowledge by the CRTC. So it'll be interesting to see where that develops this year. But that's just my general idea about Rogers. I know some people own it. It's not a business I'm particularly fond of, but still a pretty important business in Canada. The Canadian telcos grow at, you know, mid to high single digits year over year. And that's been good. I mean, like historically, that's been good. Now, Rogers, on the other hand, is something that you and I both have zero interest in owning shares for a variety of reasons that we've touched on time and time again. But yeah, you see these numbers, you see the CapEx requirements

to run the business. I just don't know how you can get excited about it other than the fact that the cash flows are extremely consistent given the nature of their business. But there's been a lot of regulatory pressure for decreased pricing. And I think that it's actually coming through. A lot of telcos have reduced their pricing over the past few months. And consumers can get even better pricing nowadays. so i think it's going to be hard a couple years for the telcos to be honest not only with the capital cycle coming through but also just with pricing and like where did they grow you know like where do they make up some of these gaps i'm not sure i don't know the answers to that. No, same for me. And now moving on, a segment for our Alberta friends or Alberta listeners here.

Just a quick one. So oil has been really on a tear year to year. I was just browsing through the data on the Alberta economic dashboard. Some is Alberta specific, but some is about the broader energy sector. And I just thought it was interesting. but some is about the broader energy sector. And I just thought it was interesting. So there's like six tiles here and they're all in the green and pretty massively for most of them.

So the Western Canadian select oil price. So that's the oil, the Canadian price, not the Western Texas intermediate. That's a U.S. price. So that one is up 42% year over year. Natural gas prices are up 42% year over year. Natural gas prices are up 77% year over year. Natural gas production is up 5.6% year over year. Oil production is up 5.2% year over year, which again, these are not surprising because more wells or more, it makes even the tar sands, for example, something like that, it makes them more profitable as soon even the tar sands, for example, something like that, it makes them more profitable

as soon as the price is higher. And active drilling rigs is up 69.2% to 110 year over year. That's just crazy. And wells drilled up 433% year over year. So for those who, you know, will tell us like they don't understand why we don't invest in oil, I mean, congrats to you because I'm sure you've done pretty well on your oil-related investment or natural gas, anything in the energy sector in the past year or so. I mean, it still goes to show that it's very dependent on the commodity prices, but it's been a good year when it comes to the energy sector and probably overall for Albertans because obviously their economy is very dependent on that. Didn't I say natural gas was going to rip?

Like macro call Braden, like I got one out of 50 right. So, you know, broken clock. Yeah, macro Braden doesn't make his appearance very often. Yeah, macro Braden doesn't make very many appearances because he's wrong about almost all of them. Yeah. Macrobrade doesn't make very many appearances because he's wrong about almost all of them. But I did say include timestamp of natural gas is going to rip. No, but seriously, like you're seeing the wells drilled up way up, active drilling rigs way up. And that's because the unit economics of oil is way better when the price is higher.

of oil is way better when the price is higher. You don't have to be an expert to figure that one out. Now, this is the exact reason why we don't own any of it is because its success relies on that price of oil and macro Braden doesn't know where that price is going. And that's the problem. That's the problem for me personally. No, no, exactly. Well put. But I thought it was fun just to, you know, just show that it's been doing well because we're not going to hide it. It's been doing well.

But having said that. It's doing great. Yeah. It's doing so good. Let's do stocks on our watch list to round out today's show. Stocks on our watch list is presented by EQ Bank. EQ Bank is a flagship sponsor of this podcast and we appreciate them very much. Check out EQ Bank if you have not already. They have excellent products and it is a digital bank that I know is really solid. Having

used it, it's a really good platform. All right, Simon, do you want to kick off stocks on our watch list? Yeah, let's do it. So the stock on my watch list, the main one, I'll talk about two here, but the main one is one I already own. So because we've talked time and time again, oftentimes some of the best ideas you can have are the ones you already own. So the name is Equinix. It's a company that I own, like I said, and I love, and it's down 15% 1.5 over the past three months. The valuation is actually getting pretty close to when I made most of my position about a year or so ago. It had a downturn. The valuation became a bit more reasonable, so I started just dollar cost averaging. They just keep increasing their revenue year over year like

clockwork. If you look at their financial statement, it looks awesome. For the first nine months of 2021, they've increased their revenues 11.2%. They have a yield right now that's yielding about 1.6%. But keep in mind that they are pretty aggressive increasers when it comes to their dividend. For the last six years, I mean, when it comes to their dividend. For the last six years, I mean, it's like clockwork, they increase it every year. Last year, they increased it 7.9%. And I think that was one of the smallest increases too in the past six years. And I anticipate that they'll announce another increase when they release their full year earnings on February 16th. The other one that I have on my radar, very similar business. It's AMD American

Tower REIT. AMT. I heard AMD. AMT. Yeah, sorry. Not to be confused with the chip designer. No, no. AMT American Tower REIT. So this is another one here. It's actually yielding a bit higher, 2.29%. And again, they have a long history of dividend increase. You'll actually see that AMT does small dividend increase every quarter. Very small ones, but whereas Equinix will do just a big one after four quarters every year. Just a little thing I noticed here. And AMT has also expanded its business significantly into the data storage space with the acquisition of CoreSight Realty, which closed in December of 2021. I know we have a ton of people that love dividends. These companies don't have huge yields. I will totally admit that, but they are increasing their dividends at a very good pace

and they are in industries or spaces that are growing. And I think that's probably the most important part here. It is the most important part. And so on Stratosphere, on the dividend appreciation, Equinix and American Tower are two of the largest positions for that exact reason, which is they are data rates, essentially. And now, especially with AMT acquiring CoreSight, they have a lot of the data center exposure from that acquisition. That was like over $10 billion deal. So it's very sizable. And Equinix is the leader in this space. Wonderful businesses. They truly are highly defensible. They grow consistently. And they have very low beta. So down 15% is actually a fairly sizable drawdown for an extremely high quality company like Equinix.

Yeah. And AMT is down around the same thing. I think it's about 12% right now. But yeah, you can rest. I mean, I sleep pretty well with these businesses. Well, with Equinix, I don't own AMT, but I'll just lump them in together. I sleep pretty well at night with these businesses in my portfolio. I have a big report on Equinix that we wrote at Stratosphere. I can link that in the show notes. You read it. It's a pretty good primer on the company. It talks about its collocation, which is a big part of their business. All right. GFL, Green for Life Environmental is a stock on my watch list. Again, one that I also do own, as Simone mentioned with Equinix. GFL is currently in a 22% drawdown. Now, again, just like your example, there is stuff a lot more beat up than 22% off the highs.

We know that. However, these are low beta. GFL is a waste collection industrial. industrial. What's more secure than garbage? You get death, taxes, and garbage. This is seriously a very rock solid business. It's run by Patrick DeViggi, who's an absolute killer, man. He is going to keep rolling up the fragmented waste collection business while continuing to find interesting new revenue streams like he always has. He's got his eyes on the prize, man. Fun fact, he was drafted to the Edmonton Oilers as a goalie, like 33rd overall or something. This is the only true founder-led business in waste collection still around. I think GFL is probably the best in class of the group, in my opinion, given those characteristics. They have best in class organic growth. They have huge opportunity in the US still, and they have growing demand across almost every segment across the board. It's a medium-sized position for me.

I'd like to buy more here. And it's Canadian listed co, ticker GFL on the TSX and GFL in the US as well. So, it is a dual listed security. That does it for this episode, Simon. Anything else new? Anything exciting in your world? No, I mean, I was just kind of checking Waste Connections at the same time. I didn't realize GFL was like just a third or a quarter of the market cap around there. Way smaller, huh? Yeah, Waste Connections has been doing this roll up a lot longer. No, it just surprised me. I didn't know the discrepancy between both. But no, aside from that, I think it was a great episode.

Fun doing it and look forward to our next episode, which will be released Monday. Yes, sir. On that note, like Waste Connections is another good one. Another great Canadian biz, also dual listed. Garbage is a great business to roll up because it's so fragmented. And there's so many mom and pop waste collection businesses in small town, like small town Missouri. Their garbage collection is run by mom and pop shop and they're willing to part with the business for the right price. If Patrick shows up with the right size check, they're ready to part with the business. And then the integration post acquisition is unreal. fresh and you are giving them better software to manage your business and better software for managing route densities, more efficient routes for actual waste collection. Anyways, it's one of the best integration opportunities post-acquisition of a garbage company. It's unbelievable.

I never knew you were so passionate about garbage. Yeah, dude. I'm passionate about making money and I own GFL. All right. You never know, right? Like there's more to the things that you take for granted, like people coming to pick up the trash on the front street. All right. Thanks so much for listening, guys. We really appreciate it. Thanks to Quarter for sponsoring this episode. We're going to do it again with them next week. I know you guys like the earnings calls in there and best thing you can get it right on your phone. So go ahead and download that. If you haven't checked out my company Stratosphere, I would really appreciate you do. It helps support me in a major way. Stratosphereinvesting.com or you can type in

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