The Canadian Investor - Mock Drafting Portfolios from Scratch

Episode Date: December 29, 2022

Ever wonder what a hockey starting lineup would look like if it were made of 6 great companies? Simon and Braden each chose 6 stocks that to fill their hockey starting lineup and explain why they chose each company. Tickers of stocks discussed: MSFT, COST, INTU, DOO.TO, ATZ.TO, ISRG, ASML, CP.TO, BIPC.TO, NDAQ, CHD, BRK-B 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. Register for ShakepaySee 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. How are we doing? Welcome into the show. My name is Brayden Dennis. As always, joined by the epic Simon Belanger. Sir, we have a fun show. This is like a bonus show, something we've never done before. It was actually a listener recommendation. And as soon as I saw it, I was like, man, we got to do this.

This is, I was looking at your notes, by the way, and I laughed more than once. So, I think these are good. Yeah, no, it should be fun. Hopefully, More than once. So I think these are good. Yeah, no, it should be fun. Hopefully, even the non-hockey fans will be able to enjoy this. I think we'll do some analogy, but I think you can still get some value even if you don't know anything about hockey. So the concept of the show today is we are both going to, quote unquote, draft a starting lineup of a hockey team, starting five and goalie. So the positions in hockey. And I thought it was a fun idea because it makes you think about different types of businesses as well and different skill sets that you might need. And it's fun.

Just before we do start the draft, I just wanted to add some color that like, Before we do start the draft, I just wanted to add some color that this is not you and I building a ideal 10 company portfolio. Although we own a bunch of them and many of them are fantastic businesses, this is a draft for fun and a hockey analogy. And there's going to be lots of interesting takeaways as we go through these 10 different individual stocks. My dude, do you want to kick us off with your first starting line centerman? Yeah. So I chose Microsoft for this one. And just like you said, I mean, I think I own some of the names. I do own Microsoft, but I don't own all the names that I've chosen anyways. So just so people understand that too. So Microsoft, I mean, for me, it's a large company. Obviously, it's a mega cap. It's still growing at a really

good pace considering that. And obviously, Microsoft Azure, so their cloud business, still grew 24% last year, sorry, last quarter. So it's still, you know, growing at a very good clip. And clearly, it is the part of the business that is growing the fastest here. And I like Microsoft as my center here, because I think there is still some growth coming. But other parts of the business like the productivity and business processes will grow faster, but will provide, you know, Microsoft with an incredible amount of stability, I actually meant to say it won't grow as fast, but it will still provide Microsoft with an incredible amount of stability. I actually meant to say it won't grow as fast,

but it will still provide them with a lot of stability. And one thing I love about Microsoft is they're really good at adapting with changing times. I would say that's probably with their current CEO. It wasn't always the case with, let's just say, Steve Ballmer before that. But in recent years, I think they've done a really good job. For example, take Microsoft Office, who used to be something that you bought, and then you pretty much had that version as long as you wanted. Clearly, there was some updates that you wouldn't get. But I think I used Microsoft Office 2000 for about 10 years just to give an idea because it did what I needed to do,

especially when I was using Word in university. I would just get a new computer and I would use the exact same Microsoft Office copy. But now they changed that to a monthly subscription, which provides some recurring revenue, but it's also a good experience for the user because you keep getting those new features that are added to that another example how nimble they are is Microsoft Teams so for those not aware Teams was just launched in 2017 and Teams is kind of a mix of Slack and I would say Zoom together I think that's a good way if people haven't used it and Teams was launched eight years after Slack and it's really widely used right now. I think there's just basically two names in the game.

There's Slack or Teams that businesses will use. I've used Teams and I know a lot of people who have. And, you know, whether it's that or Slack, I can't I have a hard time remembering what work was before that. I have a hard time remembering what work was before that. But it just goes to show how they're able to either buy some competitors or create their own products and user platform and their client base to actually, you know, bring that forward and grow it very rapidly and make it a very successful product in the case of Teams. And the last thing here is Microsoft also also returns capital to shareholders so you get increased ability which is what you want in a top-end two-way center if we're keeping the hockey analogy here yeah we need more yeah we need lots because mine are so ridiculous well i do i do

better in my later ones but definitely i noticed that your later ones are more oriented to the topic. But my main thing here is I wanted something stable with some upside and something that will also give me some defense in terms of my portfolio. So that's why I went. You need a two-way center. Exactly. So I wanted a two-way center. It won't, you know, Microsoft probably won't light up, won't be a Conor McDavid, for example. But, you know, maybe it'll be my Patrice Bergeron, for example. I think that's a good analogy, actually.

No, you know why I like this and why they're perfect being a center is the distribution analogy, right? You talked about teams. Microsoft's able to just spin up a new product, instantly give it out to all of their existing user base, that ridiculous distribution scale that they have built up over time. And you want that in a setter. You want to be able to hand off passes to people in the slot in good scoring positions. And that's what Microsoft's distribution advantage gives them. And that's what Microsoft's distribution advantage gives them. They spin up this product and then all of a sudden it's more used than the largest competitor who's been working at it for multiple decades.

That's just such a big advantage and they're doing it now with the cloud platform Azure as well. Yeah. And just the last thing I'll add is they make you know, if they didn't, people would change. They do. Let's talk about my first pick of the draft here. And when I'm talking about my first line center, I need them to play offense and defense like you, a true two-way center and perform well in any environment, whether it's in the corner, while it's on the face-off, I need them to perform well at all times. And that is Costco. It is able to be the category leader in both good and bad times. Absolutely rock solid. Now, of course, it is a defensive name because while it's Costco, it performs well in a recession. People want to be able to buy these goods at very good prices. But offensively, they also have two really main important levers that they can pull over time.

And they're simple to understand, and they continue to do it. And what these two levers are, are one, open more locations, more warehouses. And there's lots of room for them to do this internationally. And they call the stores warehouses. So they're the same thing. Warehouses, stores, locations, whatever. Number two, raise membership prices. They're due for a membership fee increase. They are smart and they're sensitive around doing it in harder economic times.

That's why it's probably not happened yet. But this is a business that they can definitely do that. And their customers will tolerate it historically. And they do it about every five years-ish. And we're now past that point. I think we're at about six-ish now. So we're due for a hike, whether it's soon, whether it's two years from now, it's going to happen.

And I know we have been saying like, oh, it's going to happen. It's going to happen. This doesn't happen. I still stand by my statement that it is going to happen soon. Yeah, I think in terms of Costco, probably the last thing I'd add for me is they're also a very good kind of corporate citizen. I don't know how to put it, but I think you know what I mean, right? So they treat their employee wells. And I think the rate hike for membership,

they spoke about it. And they just mentioned that it's not really the right time right now. And I think, you know, whether they delay that six months or a year, just the fact that they're not taking advantage of people right now, when a lot of people are struggling. I think you can buy a lot of good faith from your customers, but also pretty much all your stakeholders. Yeah, I think I've talked about this on the pod many times, but it's the three-legged stool of corporate responsibility, your customers, your shareholders, and your employees.

And they have always been very transparent about how they think the third leg of the stool of investors and shareholders will get rewarded really, really well if they focus on the two other legs of the stool, their employees and making sure their customers have an amazing experience and constantly get lower and lower prices. That's where you get the shareholder returns. And that thesis has worked out incredible. And if we're talking again about two-way center and impressive distribution channels for someone in the middle there, Costco seems like a good pick for me. Yeah, no, exactly.

seems like a good pick for me. Yeah, no, exactly. 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 to 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 app store and i'll see you there now my next one is one of my wingers i didn't define whether it was a right i was gonna say are we gonna go left wing right wing just they're interchangeable let's just say that so this one which actually is funny because the

name is into it and we got tagged into something because what was it? FTX was using QuickBooks. Yeah, yeah, yeah. So, today's the now CEO of FTX is getting grilled in front of Congress or whatever it is. Yeah. So, we are recording this episode quite a bit in advance. So, you'll hear this during the holidays. But no, it was kind of funny. Someone tagged us with the fact that they were using QuickBooks, which is something we use as well. So obviously... It's just funny because it's like SMB software and this like big fraudulent multi-billion dollar company was using QuickBooks.

Exactly. And for those who are not familiar with it or don't know QuickBooks because you don't have a small or you don't have the business, for example, they have other brands you might be familiar with. So TurboT is one Mint is one Mailchimp Credit Karma these are all brands that are within the Intuit umbrella. Intuit has shown some impressive growth over the past decade and it's really showing no signs of slowing down to be honest but it's been definitely growing because in large part of acquisitions, but they've done a really good job at integrating those acquisitions. So if you just look up some of the acquisitions they've made in the past decade or so, there's a pretty long list. There's probably, I think,

15 to 20 since the early 2010s, and they tend to target acquisitions that will fit well in their ecosystem. So if you use an Intuit product, there's a pretty good chance you'll actually be using more than one or at least one that is, you know, there's an additional feature that's a byproduct of an acquisition that they did. Now, revenues have been growing at a double digit pace for almost a decade. And although it might slow in the future because obviously you know law big numbers here they're starting to be pretty large in terms of revenue I still think there's a pretty good runway for them and their free cash flow has doubled since

2018 it's approaching 4 billion on an annual basis and I really chose them as a winger because it's going to generate offense but it's also pretty responsible from a defensive perspective I think you're gonna be able to count on into it even if there's tougher economic time yes it'll probably grow slower obviously if there's businesses that go bankrupt for example but there's certain products like TurboTax. People need to do their taxes. If anything, if they're in a top economic spot, they may choose to do their own taxes, save money versus paying someone else. So like most swingers here, I think they will take some big swings from time to time for more offense like their recent acquisition of MailChimp. But they seem – I haven't seen the numbers, but it sounds like it's being integrated quite well from what I've read. Look, I mean, I am a huge Intuit customer. If you look at my spend on Intuit from my two businesses,

it is a large, very large sum of money that is growing every single year. And this is something that they've tapped into extremely well, which is net expansion of their current customer base. For instance, I think I pay an extra $4 every month for every employee I add into the payroll system inside of QuickBooks. Perfect lever for them to pull. And it used to be $2. And they just doubled it. I'm like, what am I going to do? It's one, not enough for me to care that much because I don't have some gigantic team of employees. And same with MailChimp. One, I use it because it integrates with our backend better. And two, as my list keeps growing, I just pay more and more money.

And it gets very expensive. But again, not something that you want to just pick up and leave. It's very sticky for these businesses. And one thing that I thought was interesting about talking about Intuit today because it was timely with the FTX thing, is I actually don't see why businesses would grow out of it. I don't really currently, maybe I don't know enough, but it doesn't have a lot of scale limitations over time. Maybe sure, if I have some gigantic team, they want to be looking on some other platform. But it's very powerful. It's not feature lacking. And so I do think that it can continue to scale with these businesses.

I mean, I've worked in HR and work closely with payroll teams. So definitely when you have larger organization, there's things like ADP, for example. There's some really good solutions for larger corporation where, you know, you may have an internal payroll team, but ADP takes care of the actual, like, you know, processing all the instructions with the bank when you're talking about, you know, tens of millions of dollars and things like that. So I think, I don't know, I probably Intuit doesn't have that capacity. Well, they've built out the APIs if you do want to make an internal tool as well to kind of handle all that backend stuff.

So I think that they've recognized that like, hey, we can keep retaining these customers and build the tools they want if they want to scale as large enterprises. But I like the pick, man. And this is like the ultimate growth at a somewhat reasonable price name. Yeah.

All right. Let's get into my second round of the draft here. I had to take a winger and I wanted to go a little off the board and I wanted to free up some cap space too. I wanted to get something that maybe is a little bit more of a value name, but I think I can get lots of upside still. And it's dual listed. It's on the TSX and it's on the NASDAQ, and that company is no other than BRP, Bombardier Recreational Products. On the TSX, it is DOO. On the NASDAQ, it is DOO. So do and do. It is on the wing because this is a goal scorer and ready to join the rush by stealing market share of the competition in recreational vehicles. If you look at this graphic, Simone,

from fiscal year 16, BRP's North American power sports market share was 20%. And it is now about to hit 35% in fiscal 23. And it passed 30% in 22. So they're actually not only seeing this market expand, they saw 23% year over year growth on this market from an already bid up market where people wanted more recreational vehicles for outdoor activities, like pulled forward COVID stuff. It's grown exceptionally even on top of that. And they're taking market share. So you have a growing pie and taking more of the pie. Now, PowerSports revenue has gone from 2.1 billion to 8.8 billion CAD over the past eight years. So clean forex over eight years and relatively smooth as well, not like just some huge game-changing year made up the

difference. But still, still, Simon, given those growth numbers, the market is not favoring their scale here on the wing. Trading at just six and a half times EV to EBITDA, it seems perennially dirt cheap. And here's why. The market knows it's a consumer discretionary product to buy. It's going to be marketed as such. But so given that, you know, it could be a tough off season for BRP, for my winger here. But the numbers keep showing otherwise that it wasn't just outdoor activity, COVID demand. The company keeps going through it and past it. So this is a player I could legitimately

see burying a 40 plus goal season, but we're talking about like 2 million, 1.5 million cap hit. This is a value play that I'm seeing a lot of upside and I'm taking it here on my second round of the draft. Yeah. no, I'm not surprised because I know you like this one, but I think for me, the most impressive for get revenues for a second, it's really the market share because that's more indication of their dominance,

in my opinion, versus having a tide that lifts all boats type of deal. Obviously, everyone and their brother wanted to have a recreational vehicle during the pandemic right so i think if you made decent ones i'm pretty sure you saw your sales increase but it's kind of telling to see that their market share has increased so that's the most important for me this market brand matters a lot like a lot a lot when people are making, a lot. When people are making these kinds of decisions on like which product they're going to buy, the brand matters a

lot. And it's a bit of like a network effect. And you're seeing this now where when I see more see-do's or more skiddo's on that like segment of the power sports, then more people know about the brand and more people trust it. And then it's like this positive feedback loop. And you've seen it in the numbers over the past 10 years, how much their brand has grown in these different product categories. And yeah, it's crazy demand for this stuff. Even when they say recession, people who can afford this stuff are doing good. That's the kind of dichotomy of the consumer right now. Yeah. No, that's a good point. Now, so my second winger here is Aritzia. So pick your ATZ,

it's listed on the Toronto Stock Exchange. Now, Aritzia's growth has been nothing short of phenomenal in the past decade. As a side note, if you wanted a good breakdown or dive, it's Adrian and you. I think I did a great episode on that maybe like two, three months ago for people if they're interested in learning more. I see Aritzia as my winger, but a winger that has some defensive liabilities here. So what it does well well it does extremely well so revenues have more than doubled since 2018 contrary to a lot of companies growing this quickly aritzia is also profitable on an earnings and free cash flow basis so it's pretty rare to have kind of both that combination usually have growth and profits what is this that yeah that's some sort of unicorn yeah i know what are we like 1992 right

so aritzia could continue growing for years to come with its u.s expansion strategy which has been working really well for them u.s sales should surpass canadian sales in their upcoming quarter they were essentially neck and neck the latest quarter now the biggest risk here is i think aritzia is a bit of a one-trick pony. So, I'll explain that a little bit. So, I'll kind of give the analogy of, you know, you have a winger that can really score well, but, you know. It's like Ovi, you know, he gets in his spot, he's comfortable, he's in his office, he's going to bury all day from there, but I don't know.

Yeah, but the rest, you know, can be a bit, you know, not necessarily the best. So the reason for that is first, I've mentioned this before about them, but it only sells women's clothing. Prices are not the most expensive, but they're not on the cheap end either. And there's somewhat of a narrow age demographic for women as well. Like you, I would say usually it's about what 15 to like late thirties that you would see wearing that kind of clothes. Now 15 to 35, I think is their sweet spot. Yeah. Yeah. So with rising costs for a lot of fashion retailers that really could pose some significant risk here with its expansion strategy because if costs increase significantly and demand does slow down because you know people just don't have as much disposable

income it could put a lot of pressure on Aritzia's growth and profitability however if they do continue to execute well and its products continue to be in high demand without too much margin compression this could end up being a top point producer in the league. So really have some phenomenal returns, but I think it's not without its risk. And obviously the fashion risk is always one to be careful of. It's been going well so far,

but if we're entering kind of some economic uncertainty and that's something that people can easily cut, right? They'll still need to buy clothes probably, but they can go to a cheaper brand. So that's where Aritzia has a bit of risk. Wow. Look at these back-to-back sleeper picks, Canadian listings, sleeper picks, absolute steals in the draft. I like the pick. All right, let's move on to a US name called Intuitive Surgical to round out my starting three forwards. Another name I want to be, I just want them ready in the slot for when the pass comes across, they're given the opportunity to bury. And Intuitive Surgical feels like that name. It is the category leader in robotic-assisted surgery, a growing and important market. And this is not some buzzword,

robotic-assisted surgery name, small cap. We're talking about a gigantic company today. Anyone who matches up beside them looks like they're stuck in peewee house league hockey, while Intuitive Surgical is the behemoth in robotic assisted surgery. What's the market cap? It's probably 80 billion. Let's see what it is. 95 billion today because it's rallied quite a little bit from September lows. So you get a sense and scale for the business. It is a big one. They're a sexy name. They have the huge upside. They have the secular trend behind them. They have the somewhat monopolistic position, but that comes with a frothy valuation premium.

So you have some risk that you sign them to some huge contract and can't perform relative to the huge expectations. We're talking about a big cap hit, Simon, here in my draft. A 15 times EV to sales multiple and a bajillion times earnings. That being said, if you look at the installed base, DaVinci Robotic Assisted Surgery Systems is now at 7,364 installed, and those are doing almost 500,000 surgeries per quarter now. So it's like a 2 million plus surgeries run rate. And we have huge profit opportunities from their services, instruments, and accessories,

which are occurring in high margin in nature. So I'm taking Intuitive S surgical to round out my forwards. It was an expensive pick, had to pay up late in the draft here, but it is what it is. I like it. I know you love that name. So, I think you have the position that right now. Yeah, it is my latest new position. That's correct. Okay, cool. Now, let's move on to the defense. So my first one is more of an offensive defenseman that's still pretty, you know, pretty stable. So it's ASML. So I did a dive into ASML not too long ago. So I encourage anyone to go back probably seven or eight episodes, something like

that, maybe a month or two ago. And just listen to that if you want to know more. But in short, ASML is the only company in the world that produces extreme ultraviolet lithography machines euv which are used to make the world's most advanced semiconductor chips the technology is a result of decades of rnd and they also have some know-how of how to operate these machines which is really important because you can try and copy these machines which is almost impossible to do it's another thing to have the right people to actually be able to run this business because you need people with you know specific studies that have PhDs that specialize in these type of machines to be able to run them. And it's just very hard to come by. And a lot of

these people are actually located in Western countries. So that's the reason why China has actually not been very successful in being able to produce these kind of machines or this kind of technology. Now, ASML may be restricted by its coach here. And the coach is the regulators or US government and won't be allowed to take risks in certain situations. For example, you know, shipping EUV machines to China. And they also have some lesser deep ultraviolet lithography machines that are kind of a slightly older technology, not as advanced they have been shipping those to China but I know the U.S. government is putting a lot of pressure on the

Dutch to restrict those machines as well now ASML will be given the top power play opportunities and most of the offensive zone star which means that there will be plenty of opportunities to score or grow its revenues. Now, ASML won't come cheap. It's always going to be a fairly high valuation. And if you don't pay up, another team will step up and offer it a lucrative contract during free agency because you get a pretty steady business with quite a bit of upside. Of course, there are some, you you know they have to play with in certain rules that's important but they do get to enjoy a lot of growth as well and i'll just add that

you know we're seeing in the u.s the u.s putting a lot of emphasis in bringing a lot of the chip production semiconductors production back to the u.s so they're not as reliant on other countries like Taiwan. So I think ASML will be a big beneficiary of that as well. I love the pick and definitely defensive in its position in the marketplace as being the game in town for ultraviolet lithography, but also has still a lot of room to grow. And we're talking about a secular trend of semis that is clearly no longer the cyclical business that it was once thought to be, in my opinion. Of course, you're going to still see some macro cyclicality. But for the most part, name something you're buying or even interacting with

today that doesn't have semiconductors and chips. Very important part of what's happening. And especially with computing power just going to continue to grow up. I think that there's some offensive opportunities still lots to go. Yeah. And you may be able to get it on a better valuation, right? If sentiment with China, US and China tensions kind of go back up, I have a feeling that ASML valuation may come down a little bit. Yes. I think basically any semi name has been priced in the fact that recently got repriced to things could go really bad really quick, basically. And so I think that it's fair, but also maybe there's opportunity there. 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 or investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the

community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. All right, let's start with my first defenseman of the draft and that is CP Rail. And that is CP Rail. I'm starting my pairing here with CP Rail on the blue line here because let's be honest, CP Rail, I mean, rock solid defensively. And his twin brother, CN Rail, I was looking for a little bit more experience, a veteran. And fun fact, CP Rail has been in the league since 1881, quite a bit longer than twin brother CN Rail, which only came line here. So at the young age of 141 years old,

CP Rail still has room to grow and consolidate with some friends in the US and build an impressive network spanning across all of North America. A real defenseman with defensive nature, and it is nearly impossible to disrupt the rock solid position that these railroads have, nearly impossible to disrupt the rock solid position that these railroads have, generating tons of cash, but also giving you some upside by growing EPS and the dividend quite aggressively at over 10% a year. Yeah, yeah. And you're definitely betting on the – I'm assuming on the Kansas City Southern acquisition to go through, right? I think that's kind of built into this, but even not, I mean, you're still looking at one of the premier assets in North America. Yeah. No, I mean, I like both plays. I think

you can't go wrong with either. I think CNR, slower growth, more capital return to shareholders and CP, higher growth, but less capital return to shareholders. I think that's probably the easiest way to define it. Yeah. And I have no problem with people just being like, I'm going to own both equal weighted. I see complete logic to that. I see complete logic in the same way that I combo pair Moody's and S&P Global or Visa and MasterCard, CP and CN, you're just looking at rock solid and wonderful businesses. If you think about the landscape of no one's going to Stanford and trying to disrupt the rails, it's not happening. Yeah, no, exactly.

Now, so something in the same kind of vein here for my second defenseman. So it's BIP, Brookfield Infrastructure Partners. There's a reason I chose BIP here because I wanted to have just a really well-rounded defenseman. So that's why I chose BIP. BIP won't wow you with growth, but will always be making smart decisions with the Brookfield management. There's going to be offense here, but you can really bank on not having any brain cramps. So that will really, if ever, happen with BIP. And Brookfield has a history of making smart acquisition and is not afraid of pulling the trigger if they see great opportunities like you know they did last year with interpipeline and we see how the market now is valuating those

pipelines compared to last year and it's at a much higher valuation last year when they made the offer it was much lower they even had to up the offer a little bit but even at that price i think it was a really good acquisition. Now you get additional stability with Brookfield here with a 4% dividend yield. So even when things do get a bit rocky, you get that extra stability. And revenues have just grown steadily over the past decade and continue growing with those smart acquisitions. And their contracts, There are a lot of fee bearing assets that they have under the Brookfield infrastructure, whether it's data

centers, and you also have toll roads, you have, like I just said, the inter pipeline, a lot of ports, exactly. So a lot of these type of contracts that they have, they also have kind of some inflation protection embedded in these contracts too. So that's why they've been doing pretty well despite the higher inflation. I love it. Perfect, perfect pick and late here in the draft. I think it's nice. All right, I'm going to take my last defenseman, my last position player. And it was hard to pick this last D man because there's so many good options here late in the draft still. We're looking at potentially 40,000 securities I could have picked. So where do I start? And I opted to look at the stock exchanges. We have ICE,

which operates the New York Stock Exchange, the NASDAQ, London Stock Exchange, the TMX, which operates the TSX. And there's more, Shanghai, Japan. These are all publicly traded businesses you can own. Ultimately, I did have some cap space available. And I took NASDAQ, which is a $31 billion in market cap company, growing at a decent clip annually too. You're looking at over 10% on the top line and the dividend as well. If you look at the segments, the market technology revenues are growing extremely well still. It's like one of the most persistent growth lines I've ever seen. IPOs are certainly down, no doubt, but there's some seasonality to this. It was a bit of a flu,

maybe a flu game happening here with the IPOs. We're going to come back. Ultimately, a rock solid defenseman to round out my starting pair on the blue line of CP and NASDAQ. It's not a cheap name given the growth, but that's because you're paying for the wonderful competitive advantages that the exchanges happen. So you're noticing here on the picks that we've had for the back half year, critical infrastructure picks and talking about, with the infrastructure of CP, and then the technological infrastructure of making the supply chain work in semis with ASML, and then operating the stock exchanges between NASDAQ, ICE, and the rest. Picks and shovels, the API providers to the modern world. Yeah, no, I like the pick. I heard this one is the same time as everyone, so I did my notes before Brayden's. I do like the pick i heard this one is the same time as everyone so i did my notes before braden's i i do like that pick my next one so i've noticed that we're we're having some

unique names that we don't talk about too here which is good yeah exactly so i made a point to choose the following one but you can insert you know a bunch of different ones here that would be pretty similar so church and dwightight, so ticker CHD. This is a consumer non-discretionary. So consumer staple is what I was looking for. So I could have, you know, chosen a Procter & Gamble or another name like that. I just figured Church and Dwight, I think it's a name that not a lot of people are familiar with i'm not going to impress you with growth with this name but it will be a rock in your portfolio regardless of what's happening in the economy so i was really looking for a lower volatility name here so something that's steady

whatever happens with the rest of my team so if you know my team's not having a good night or the market is very volatile ch CHD may be having slightly of an off night too, but it's still going to be way better than the rest of the team when they're not playing well. So that's where I wanted to go with this consumer staple. You look at it this year, right? Consumer staples have performed actually quite well compared to the rest of the market, and that's a perfect example. For those of you not familiar with what they have. So for example, they have brands like Harmon Hammer, Trojan Condom, OxiClean. These are all brands. They have a bunch of other brands, but this is what a consumer staple is. It's something that, you know, you need whether, you know,

regardless of what's happening with your finances you have to make sure that you have these kind of products so they're non-discretionary so it produces large amounts of free cash flow and for a company as well established as church and dwight actually grown revenue in the mid single digits range for the last decade and that'll be pretty typical for the better type of consumer staples. It pays a 1.29% dividend yield and has a history of dividend increases with having increased its dividend 26 consecutive years. It's in a dividend aristocrat. So its share counts has also gone down by 12% in the last decade. So it's another way it's returning capital to shareholders. So my main goal here was not to have crazy return. It was just to provide some stability to the portfolio. It's funny because it reminds me of like a Peter Lynch type chapter of a book

where he talks about if the name is incredibly boring, good. Like even better. Yeah. And like what's more boring than a consumer discretionary named Church and Dwight? And you look at the portfolio, Arm and Hammer. You know, it's like we're talking about the most unsexy. We're talking about the most unsexy, but this is a, I would consider a high performing conglomerate, like an HPC that a term that I've never heard coined from outside of Mark Leonard and the Roper tech guys who are doing roll-ups of software.

Talking about high performing conglomerates, Berkshire is another perfect example, Unilever, LVMH. There are some conglomerates that are just really good at getting it done. They understand brand, they understand marketing, and they know how to churn out tons of cash. I think it fits well here. Yeah. And I think one thing, I don't know Church and Dwight all that well, but I think one thing that's interesting is they do have a lot less brands than some other consumer staples. And I know, I think I remember reading something, I think it was Procter & Gamble, like three, four years ago, where they were looking to divest some of their brands because

they had so many brands that some weren't performing as well as others. So I think it might not be a bad thing where, you know, at Church and Dwight, again, they may have a smaller amount of brands, but they have brands that do perform well overall. Yeah. It's like, you ever see those graphics of just like what some of these consumer facing brands own? You look like a Unilever, like a PepsiCo, Nestle. Yeah. I mean, you have to run... The only way to run these high-performing conglomerates correctly is really a decentralized structure. And so, some of them have pulled off that decentralized structure extremely well. And I think that many of them are just really good stocks to own,

just as like a general thought. Yeah. No, I totally agree. Ox to own, just as like a general thought. Yeah, no, I totally agree. Speaking of high performing conglomerate, I wanted my goalie also one of those. And I got a great goalie situation right now, Simo. I got to tell you. I know, I know. It's a good one. I didn't even think about it. And then I saw it, I'm like, oh, shit, I should have. Well, here's the thing. I don't know if you see the second part of my notes here,

Well, here's the thing. I don't know if you see the second part of my notes here, but I have Berkshire locked up in a really favorable contract. Berkshire Hathaway, absolutely locked up, just so rock solid, this massive conglomerate of business. It's amazing. And the dudes at Berkshire Hathaway, they want to go to work every day, even in their 90s. Just longevity that you could only dream of. But given all of those, I wanted to add a backup goalie. I saw one available on the active roster and I signed a name that we have definitely never talked about. Aeroports de Paris, which you could probably say correctly, much better than me. Aeroport de Paris, yeah. De Paris, okay. There you go.

This is the airport in Paris, France, because we're talking about a critical flight hub, critical infrastructure in Europe. And this is just infrastructure that's going to persist for a really long time. We're talking about businesses with really, really high barriers to entry and basically no active competition. We're looking at ports, railroads, and airports, like some of these infrastructure names. And look, it got rocked, as you can imagine, with lockdowns and travel, as many of these names do.

So I just figured, you know, I'll grab them off waiver, sign them to some crappy entry level contract here. My goalie situation looks great. Starting goalie at Berkshire Hathaway, just one of the best in the league. I'm really happy to round out my team there. We need the listeners to vote on which starting five they would prefer to have on their fantasy team here. Well, I'll give a little bonus since I didn't see the airport. Another interesting airport play.

You need a backup goalie, man. Yeah, backup goalie. So I'm going to go in the same vein, but I'm going to go take her PAC. So Grupo Aeroportuario del Pacifico. I probably butchered that a little bit, but essentially they own airports in South America. It's a name i'm somewhat familiar i looked at it a while back but it's uh they run airports in yeah central america mostly so it's another very similar play clearly you're betting a bit more on you know travel over there from the u.s and canada but they do run those airports. They are able to get revenues from

the concessions and things like that. So it's another very interesting play for those looking at airports specifically. Dude, did you just steal my airport pick? My sleeper late in the draft off the waiver wire? Wow, dude. Well, you inspired me. I didn't see the the airport thing so another one if people are interested at looking that name up but obviously there's going to be a lot of kind of currency fluctuations there oh for sure i'm looking at it now here on stratosphere yeah every airport has had a bad 2020 i'll just yeah yeah they've all had this like really amazing kind of compounding over time, like really nice looking. And then this like, yeah, drop, absolute panic sell in March of 2020.

And of course, so much more severe than the market if it was tied to travel and anything like this. So, it's a stock chart that you'll... You see these travel names and you know they're a travel name if you look at the share price performance because we're talking about like absolute decimation. I'd rather have that. If you want like a play on travel and specifically kind of airline travel related to that, I think, you know, betting on airport groups like that, I think that's a much better play than trying to get into the airlines. I wholeheartedly agree. I think this just goes back to the way that we invest our money is like, what are the picks and shovels? It's like, I don't want to own risky boom or bust biotech companies that can go bankrupt at any second, or like the whole investment thesis relies on an FDA approval that I have no insight on. When I can just own like Thermo Fisher, which supplies all of the hardware accessories and software for

biotechs to run their businesses in like a picks and shovels. You know, like if there's a gold rush, sell the shovels, right? That's how my brain goes. But that's also because you and I are trying to own like really durable plays, not like boom bust. I think there's lots of places to look too. And a lot of them are in infrastructure, I think, for the most part. And that's why you and I have been so keen on owning alternative managers like Brookfield, for instance. Thanks for listening to today's show. I hope

you guys liked it. When this comes out, Simone, we'll have to do a Twitter poll on which starting five, or I guess starting six, you would like on your fantasy team here. And you can do that by going over to our Twitter, which is at CDN underscore investing. Speaking of Twitter, I have... Dude, you know we've made it when we have all these imposters coming after us. You and I have got the imposters going after us. Dan and Nick have the imposters. You would think it's pretty obvious that we're not trying to sell you a crypto scam but you know to get that blue check mark i think then you know that's probably the best thing about that is

because now they have to verify you right they kind of you pay for it and apparently they verify it and then you get the blue check mark once they validate your identity and stuff. So when this happened, I got like in one day, I got 10 different people send me screenshots of like DMs they got on Twitter from like an impersonator and poor listeners of the podcast are like, oh, Braden's best me on Twitter. That's cool. Like let's chat with him. And then all of a sudden I'm like hey how's your crypto you know why are you investing long term when i can just triple your money like shit like that and so obviously that's not me so i was like okay i'm gonna you know what elon you got me i'll sell spend the eight bucks so i went in i did the twitter verification i paid and i have no idea where my blue check mark is like i

don't like does it show up in the mail later? When did you do it? Just like today or yesterday? It was yesterday or... Yesterday or the day before. The fact that I can't remember is a bit scary. Did you do it on iPhone or did you go on the web app to save? I did it on the web app.

Yeah. I don't have it available yet for me. Like you can't do it? No. Like you can't buy the check mark? It's a gradual rollout. Oh, your account just hasn't been selected yet? Yeah.

Oh, no, I'm able to do it. So, anyways. I think everyone has it. Yeah, that's right. No, it wasn't. It took a while. Apparently, they were doing a gradual rollout yesterday. Oh, okay.

Yeah, but now I checked, I can do it. So, I'll do it as well. So, hopefully, by the time people listen to this, if I get the dates right, it should be on December 29th. So by the time they listen to this, hopefully we'll have the blue checkmark, both of us. Yeah, Frank, man. What if these bots just start paying for it or do they have to actually get verified? Yeah, I think so.

I think you get the added benefits except the blue check mark if you pay and then you get the blue check mark if they verify i think your identity okay so maybe that's what i'm waiting for yeah yeah okay very interesting all right well i'm not trying to triple your money on a crypto scheme if you fall for that i I don't know what, I can't help you. You know, like it's 2022. If you fall for that kind of stuff, it should be pretty obvious, but I still feel bad regardless. So don't fall for that. All right, Simone, this is dope. We'll have to do the poll. I'm feeling good about my team, but I also like your team, man. I also like your team. Sorry, there's a baby crying. We'll have to wrap up. I like my team too. I like yours too.

Wrap it up. Baby's crying. Thanks so much for listening, guys. We appreciate you. If you're new to the show, episodes come out on Mondays and Thursdays. And somehow, we always finish the episode. The baby knows. The baby knows. It's time to wrap it up and time to close it out. 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. Braden 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.