The Canadian Investor - TSMC Crushes Earnings, Netflix Falls, and a Risky TFSA Strategy Goes Viral

Episode Date: July 23, 2026

In this episode of The Canadian Investor Podcast, we start with the latest Canadian inflation data and why the headline number may not fully reflect what households are feeling. We then look at TSMC’s huge quarter and what it says about the AI chip boom, before turning to Intuitive Surgical and Netflix, two high-quality businesses that sold off after earnings for very different reasons. We also discuss Cogeco’s latest results, the challenges facing legacy telecom companies, and wrap up with a cautionary discussion about a viral TFSA strategy that may be riskier than it looks.   Tickers discussed: TSM, NVDA, AAPL, AMD, AVGO, INTC, ISRG, NFLX, CGO.TO, BCE.TO, RCI.B.TO, T.TO, QBR.B.TO   Subscribe to Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time. Welcome back to the Canadian investor podcast. I'm Simon Beranger. I'm back with Dan Kent. We have a fun episode up for you. Of course, news and earnings coming up on Thursday here. So we'll go over quickly on the June CPI that just came out on Monday. We'll go over TSMC. So Taiwan Semiconductor released their quarter, which was probably one of their best ever, just a solid quarter. Not surprising if you haven't been living under a rock and are aware that demand for chips and semiconductors are just very high right now. We'll also talk about the intuitive

surgical, so the maker of the Da Vinci Surgical Robots that was down 14% on the earnings release last week. We'll talk about Netflix, another one that was hit hard by its earnings. We'll talk about why it went down. I think it was what 7, 8% on the day when it was all setting down. I think it was more. More than that? It might have settled that 7 or 8% but I think it opened like 12 or 14 down. And then we'll go over Domino's and then finish up with Kojeco. And if we have time, we also have a word of caution when looking at financial media and even sometimes what is called expert advice. So I think it will be a fun discussion that we'll have at the end here for a Globe and Mail article that came out. Was it today that article came out?

Yeah. And there's a lot of talk about it because it's one of the wilder articles I've seen on there. So yeah, it should be a good discussion. Okay. So yeah, so we'll start off with the June. CPI like we mentioned. So consumer price index cold in June coming in at 2.8% that was down from 3.2% for May. And expectations from economists that were surveyed by Reuters was around 2.9% for the CPI print. So it actually came in lower than expectation. The biggest factor like people may have guess was that it was essentially deceleration with gasoline prices. While they still increase close to 21% you over a year. It was a deceleration from 33% in May. Now, on the, there's a couple of interesting areas and Dan Foch and I will talk about this a bit more in depth on our Friday

live so you can catch that on Saturday if you're listening to the audio. But essentially, food is still a really sticking point here. So food purchase from stores, so typically grocery stores increased 3.9%. That was lower than the 4.3% in May. However, food as a whole increased 3.5% while it did decrease slightly month over month. And that decreased month over month, I'm always a bit skeptical mainly because even if it's a decrease, first of all, it doesn't mean that your own personal basket actually decreased in price. And even if it did, minus 0.2% month over month is I think you won't notice it. I think that's fair enough to say.

So I think it's interesting to see the decrease, but at the same time, I think when people see this, I'll probably be like, well, I don't feel like my food got any cheaper, if anything, it got more expensive.

And staying on the food topic, it was the 17th consecutive month where food prices increase faster than the headline CPI number. So that is not a really good streak, unfortunately, and that's what we're seeing is that food inflation is just staying pretty elevated. And core inflation measures continue T's lower here with CPI median hitting 1.9% and CPI trim hitting 1.8%. These are the measures that are used most by the Bank of Canada. Of course, they were talking last fall about using this, I think, this gauge or series of other data because they were thinking, thinking they were one of the deputy governors was saying that the media was and the markets were

relying too much on the core measures. I haven't heard them talking about these gauges ever since core has been trending in the right direction for them. So that's kind of interesting is I guess when it's going the right way, you don't mind it. And when it's not, you start looking at other potential measures. But at the end of the day, I think the headline number is probably the most important. And again, the inflation that you're feeling for your own expenses, I think that's what matters the most. You know, core is all nice and dandy.

The CPI median just takes the medium number of inflation for all the items. And CPI trim removes the most volatile one, which is all nice and dandy. But at the end of the day, removes food and energy for the most part. And those are two of the biggest items for pretty much everyone, right? So overall, not too bad. But again, we're seeing now the conflict in the Middle East intensify prices of oil is going up. So we'll have to see what will happen in July and potentially August if this continues in the Middle East and if price of oil stays elevated. Yeah, it kind of seems like it's the same thing month over month in terms of CPI.

Gas is up, food is up. And everything else kind of seems all right. But unfortunately, gas and food are what hits pretty much everybody. Yeah. So, yeah, it's unavoidable. So I don't have too much else to say because it seems like, yeah, it's the same thing month over month now. Yeah, let's see. They can get food prices down.

No, exactly. So let's move on here to Taiwan Semiconductor. So it should be, it was a pretty good quarter and you're a happy shareholder, right? Yeah. Yes. It was, well, it's got to be the best quarter that they've ever reported. The stock did kind of dump, though. It just kind of shows you the state of the AI trade right now.

You need, like, you need the best quarter. order you've ever reported in the AI space right now or you're going to dump. I mean, just starting off the earnings season, like in general, it seems like most companies are taking double digit hits after they reported. So it wasn't really, TSM didn't fall at double digits, but it did dip after earnings. So revenue was up 33.7% year over year, 12% compared to last quarter. Earnings were up 77% year over year and 23% compared to last quarter. Gross margins continued to expand 67.7%.

That's up 9% year over year. This is the fifth straight quarter of record profits for the company. And they still produce $9 billion in free cash flow on the quarter. Debt is reducing and the company is not issuing shares at this point in time. So this is a pretty important note because we're starting to see from the other hyperscalers, although they're not really, they're in the chip segment to a certain degree, but the alphabets,

the Amazon's, the metas, they kind of started, their debt is increasing. To be clear, not the Frito-Lays chip, but the semiconductor. Sorry, it was too easy.

Cheesy joke, keep going. But they've started to increase debt, and they also, pretty sure every one of them has tapped into the equity market. Maybe not like the NVIDIA, but Alphabet did, Amazon did.

I'm pretty sure meta did, as well. So it isn't spending nearly as much as those hypers, TSM, but it's still self-funded. I mean, they haven't gone the equity route. They haven't gone the debt route.

They just have kind of a rock solid balance sheet and they are utilizing it. High performance computing continues to soar. It's now over 66% of revenue and grew 20%. Those would kind of be the business segments related to AI, whereas smartphones now makes up 22% of revenue and it actually declassed. declined by 4%. And in 2021, smartphone revenue was actually larger than HPC, high performance computing, but in 2023, or since 20203, HBC has compounded at 53% a year. It's, it's pretty absurd. Concentration risk is getting pretty interesting. Nvidia eclipsed Apple as the company's largest client, now making up 22% of revenue. 78% of TSM's revenue comes from 10 companies. So, Nvidia, Apple, AMD, Broadcom, Intel, those types of companies.

And the one reason, as a shareholder, I'm not really overly concerned with this. Concentration is the fact they really have nowhere else to go. If this concentration comes into play, I would think it would be not from a customer going elsewhere. It would just kind of be from spending pullbacks. And in that instance, I think the entire market is going to get hit. They raise guidance across the board. So next quarter, 37% revenue growth expected. percent gross margins, 58% operating margins. That's just wild how profitable this company is. And it was

pretty much telegraph last quarter that revenue guidance would be raised for the full year. And it was. Like they said that they were probably going to do it, but not they wouldn't like guarantee that they were going to do it. So earlier they had expected above 30% I think it was like mid 30% growth. Now they're expecting 40% revenue growth. Capital expenditure spending also raised to 64 billion. And the company kind of mentioned there will be significantly more over the next three years. But again, they're not really tapping any debt or equity to do so. And the company does mention that the bottleneck right now in the space is TSM. So demand is there. It's just capacity is the issue. But by the sounds of it, they don't want to get into a situation where they over expand too fast.

Because obviously, if demand falls there, you get into a big issue of spending all this money. that's not going to be generating anything. And the other thing that they mentioned, they didn't say this, like not word for word, but in a nutshell, they kind of said it doesn't matter who wins this race, the AI race. They're all TSM customers. So it's a pretty good thing.

The company is pretty reasonably priced, but it's also very important to understand. It's priced on forward demand. Like a lot of people look at this one, and I think it's only at 25X expected earnings, but you need the spending to continue. If it slows, you're going to say, see volatility zero question, but it's pretty crazy how I don't even know what their market cap

would be right now, probably $2 trillion. Yeah, let's have a look here. Two trillion. Yeah, $2.96 right now. Just, you know, a couple trillion here and there. Yeah. Well, growing at a 40% revenue clip as well. So yeah, pretty good quarter. But again, like you see these numbers in the market. The market has been pricing this in for the better part of, well, a couple of years now. So they need to put these up or you know you're going to see volatility to the downside yeah no it's actually crazy and if i felt like my reaction was a bit off as you were talking is just because my phone we have a tornado alert for the ottawa region that came in and it just was messing up all my inputs for the computer so i was listening and trying to to stay focused but we're okay if you know

if i cut off abruptly you don't need to shelter no no well we have a basement so i think i you know i'll be okay, let's knock on wood, but just, you know, it throws you off a little bit when you have that warning and you're recording. But no, I think it's a phenomenal business. I still kick myself for not buying it, I think three, four years ago, but I was concerned by the whole Taiwan-China situation, 300-something percent later or whatnot. I don't know the exact percent, but I probably should have started a little position, but it is what it is, right? That's why Berkshire, like Buffett, they sold it too because of that risk. And that was well, well before 300% ago. I think he had to sell that company in 2021, maybe they sold it. I can't

remember. It was, it was right during the midst of the pandemic. And yeah, it's, it's gone up quite a bit. But they couldn't hold it for, I mean, obviously me as an individual investor, not managing hundreds of billions of dollars, I can take on that risk a little bit better than they could. But yeah. No, exactly. So I guess, yeah, really, a really good quarter. And it's hard to disagree that, you know, as long as the AI buildout continues, demand will. be strong. I don't think it's without its risk, right? If there is a pullback in spending,

I think Taiwan semi-conductor will be fine, but they could see a pretty steep deceleration in revenue. And I think that's just a reminder for principle. Yep. Yeah, sorry, you glitched out there a bit. There is an old saying in

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open and fund your account with code TCI and receive $50. Conditions apply. We've booked a cottage for early July, and I'm already picturing the kind of trip where the days are pretty simple. Mornings outside with coffee, my daughter running around with our new puppy, afternoons by the lake, and those quiet evenings with my wife watching the sunset with a glass of wine after everyone else has gone to bed. And while we're away enjoying that time together, the timing also made me think about our own home back in Ottawa. Early July is such a busy time in this city, with Canada Day and Blues Fest bringing so many people in. That got me thinking about how our home could be put to good use while we're out of town as it's just sitting empty.

Listing our home on Airbnb could create some extra income to help cover part of the trip while also letting another family enjoy our neighborhood during one of the best time to visit Ottawa. They could walk over to a local coffee shop, spend the afternoon at a nearby beach, and use our place as a comfortable home base after taking in everything happening downtown. Your home might be worth more than you think. Find out how much at Airbnb.ca slash host. Smart investing doesn't have to be complicated or time consuming. With BMO all-in-one ETFs, you get a complete diversified portfolio wrapped up in a single ticker. It's easy. Whether you're conservative investor or more aggressive, BMO has an all-in-one solution,

for you. And now it's even more cost effective. BMO has cut management fees to just 0.15% on select asset allocation ETFs, helping you keep more of what you earn. Simplify your investing today at BMOETFs.com. You want to get into intuitive surgical? Yeah, let's do it. Yes, I'm guess maybe that tornado is making its way. I'm glitching out, but yeah, no, I'm just kidding. So, Yeah, intuitive surgical. So really interesting quarter for the makers of the Da Vinci surgical robot. It was down 14% down another, I guess 1% today. You're looking at a company that's trading and its cheapest it has in quite some time. And that's despite revenues being up 19%. So really, I think it was really solid quarter. I'll give my interpretation of why I think this happened. There's a couple of reason here. I'll just show. for our joint TCI subscribers here. They'll see the revenue increase. I mean, it's pretty phenomenal.

Just looking at intuitive surgical. Like, they've had some really strong growth. So you wonder, like, why is the market so down on the name here? Earnings were also up 23%. However, it was helped by a one-time tariff reimbursement of $36 million. So I have to keep that in mind. The quarter was solid, but investors seemed to be concerned about decelerating procedure growth with the for the Da Vinci procedure.

Combined that with a high valuation. So it was training prior to the earnings release around 30 times price to free cash flow and 35 times price to earning. And those are both forward price to free cash flow and forward price to earnings. And now with that, with the valuation coming down, I think it's actually about like pretty much the cheapest. It's in an eye. Yeah. I was like looking at, I think, past seven, eight years and it's the cheapest it's ever been pretty much at that point. So it's starting to be very attractive. I'm definitely looking at it as a possible investment because it's a company I've had on my radar for quite some time. But in terms of the procedure growth, it was 15% for this quarter down from 16% in the previous quarter. That's important because obviously the most more procedures they do, the more accessories and equipment that they sell. So it's really the razor. blade model that you see for the for intuitive surgical so the companies will either lease or buy the machines and then they have to essentially go back to them and buy that equipment to continue

doing procedures, continue to do operations. So that 15% growth was good, but on top of that management said that procedures for the full year would likely land within the midpoint of their range, which would be 14.5%. So if you have 15%, you have 15% this quarter, 16% in Q1, and now they're guiding for the full year for 14.5%. That implies that the next two quarters will probably be more around 13%, right, because you have to pull it down even further. So probably 12 and a half, 13% for the next couple of quarters, which I think is the main reason combined with the high valuation, even though it's not as nosebleed as some of the AI plays or the tech plays or some of the semiconductor plays that we're seeing, it's still a

pretty high valuation and it's not an obvious AI play. So I think the market is not as understanding for decelerating growth here. Yeah, you definitely don't want to see a company trading at these valuations kind of. I think the guidance was the reason, like the slower guidance. I think is why it took a hit. So I mean, for a company trading this expensive, who's for quite a while, I think, posted accelerated growth. You definitely don't want to see a slowdown. But if you hold the stock, you also don't really want to overreact to maybe one guidance print that wasn't, it wasn't necessarily bad, just wasn't perfect, I guess you could say. Yeah.

Well, they're within the range that they provided for the full year. It's just when you have 16 and 15 and then you say I'll be at the mid range at 14 and a half, well, I think the market probably saw 15 and 16, expecting at least 15 and 16 for the rest of the year. So I think it's just more that. They're within their range, right? I think that's the most interesting thing of all that. It seems like right now you need to be coming in above,

especially if you're an expensive traded stock like intuitive is. Yeah, and again, I think it is expensive, but it's not crazy expensive. That's why it is kind of funny how the market is treating depending on like what sector you're in. So yeah, the Ford valuation is around 31 on a P ratio and 27. So this is essentially the cheapest it's been, yeah, in a very long time. So management also mentioned that the slowdown and growth was likely due to the postponement of procedures in the U.S.

due to changes in insurance coverage for some patients. Again, that's important because a lot of these procedures are done by Da Vinci robots actually treat benign conditions, which can be delayed for some time. They do have some procedures that they will do because I was kind of interested in seeing the type of procedures. and if some are more essential than others, a lot of them treat benign conditions, but some are, you know, required where they're procedures, where they're kind of cancer related, for example. They also mentioned during the call that they will have an extended use program to support broader adoption in most cost-contrained markets. That's overall a good thing because it'll probably, it'll probably increase adoption, but it will likely pressure instrument revenue per procedure

because, you know, they may allow or they may ensure that, you know, equipment can be used for more procedures than it is right now. Hospital, like I said, they buy or at least the Da Vinci system. So they need to buy that equipment and accessories to perform the surgeries. Instrument and accessories revenue grew by 18% during the quarter, which, again, it's really key when you have that razor and blade model. They said during the quarter, there was 460-system place, and that's bringing the total count to 11,710.

Their ion system, which is used for lung biopsies, saw robust growth of 36% in procedure during the quarter and the installed base group by 55 system. It's in line with the prior year here, and that's where they get that recurring revenue. Once the system is in, is really all these procedures. So I think all in all, I don't know if it's an overreaction from the market. I think it probably is a little bit, but pretty solid quarter, I think, for me.

It's a stock I've had on my radar for a little bit. And don't be surprised if I come out in the next couple of weeks and I say that I've purchased a company because I think it's really attractive there. And like we've talked about on the podcast before, I think they could be a beneficiary of AI because they have all of that data, which competitors probably have, but not to the same extent as intuitive surgical. So, yeah, really, I think it's a really compelling play. still not cheap, but you get a really solid company with solid growth still. Yeah, it's kind of one that I've thought was too expensive and then I just watch it go up and up and up and up. Kind of similar to like Quanta, like power, POW or whatever it is, or TWR, like same thing.

I thought it was too expensive and it just keeps going up. But it's definitely come down to more reasonable levels. I'm definitely paying a bit more attention to it now. Do we want to get into another stock that has been absolutely hammered here over the last while. Yeah, exactly. Let's do it. A little, little company that probably everyone knows. Yeah. Yeah, you might have a subscription to this company, Netflix. They're in a pretty weird spot right now, I would say, because the company is putting up some pretty strong quarters in my eyes, at least, but the market just absolutely hates the stock. I, like, if I were to guess, it would

just be, there's a bit of deceleration here in terms of growth. And I think it might have just been too expensive at the, I don't even know what it got to. It probably got to a hundred and, $20, $130 a share. And now it's all the way back down to, yeah, you're showing it here, $68. So it's, yeah, 50% plus off highs. Yeah. On the quarter, yeah, 49%. Pretty close.

Revenue increased 13%, 11% constant currency. So this was a slight miss on estimates, but we're talking like a few million dollars in terms of misses. So they effectively came in line. Operating margins declined, but not by very much, 0.7%. Earnings grew 11%. slightly beat expectations. And ad revenue growing pretty fast.

It is expected to double in 2026. But I do think it's a very small portion of the company's overall revenue. This is, I'm pretty sure this is the subscription where it's cheaper, but you have to watch the ads. It's kind of like watching television in a way. They take like commercial breaks every certain amount of time. I think it's less than 5% or around 5% of revenue right now. So it's good that that's, you know, double.

but it's it's kind of a small base and the other thing here and there was I can't remember what they removed last year total subscribers maybe they took away a metric and I think it was total subscribers that they had to the platform they're kind of removing another metric and that's our streamed right well it's like engagement it's like engagement so yeah I think it's like they're not necessarily removing it but they used to report it apparently semi annually and now that they're pushing it to annually. So, you know, a, a, a, a, a, a bull might say it's probably reasonable for them to do this because, you know, they're a more mature company now.

Earnings, margins, revenue are probably the more important number. But I mean, if you're a bear for this company, you never want them to take away any sort of KPIs that, you know, they used to report, but they're not reporting anymore. It's kind of not a good look right now as the company's growth is slowing and then they're cutting down these KPIs. I do kind of agree. that it's, you know, you should be looking at the underlying metrics in terms of earnings growth, revenue growth, all that type of stuff. So they did spend quite a bit of time on the call discussing it. They mentioned that all hours are not created equal in terms of engagement. And what they have done is when annual reporting of this, and instead they use a metric they developed internally to kind of

quantify a lot of the high quality engagement. And they mentioned that. but they cannot use this metric in their reporting because it's taken them years to develop and the details are a competitive advantage if they were to release it. I don't know if they were to release this. If they had to put in the footnotes or something, how it was calculated or something like that. But I don't know. It's not a great look when you're like you're starting to report a metric that is looked at by the markets quite a bit.

And then you're changing it for a metric that you have in-house, but you don't want to give the details on how it's done. Like, it's not a great look. It's just not. It looks like you're concerned about your growth and you're trying to hide it. Like that's, that's the perception it gives. Maybe it's not, but from an outsider hearing that, they would say, okay, clearly the business is slowing down. They're trying to, you know, not provide as much transparency so that investors don't focus as much on that. Yeah, I think that's exactly it. And even if everything they're doing right here is reasonable and it and it makes sense to do so. The market's never going to like it when you take away reporting metrics and you pull your, apparently your secret sauce reporting metric and

you're keeping it internally now. It's just not going to look good. So the company made the largest amount of buybacks in its history on a quarterly basis. So they bought back $4.7 billion. They mentioned they're not interested in acquisitions, not necessarily all acquisitions, but like large acquisitions. They said the bar would need to be very high to do any M&A. So I would expect more. more buybacks. On the AI front, they mentioned that AI has now been used in 300 Netflix titles, mostly post-production. And it's being used for things that are typically very costly, but probably or, you know, possibly a little unnecessary now. So what I would guess this would be, like, if you were, if you had like a big fight scene, like let's say like a Game of Thrones style fight

scene and you know how they would have like hundreds of people in the background just kind of doing random things like i could easily see that you know you don't need the actors you don't need the costumes you don't need any of that you're primarily focused on you know a few characters whatever it may be that all that background i would say this is what they're going to use that for and it makes a lot of sense yeah pre-a i this would have been very costly and content spending expected to increase 10% in 2026 this is higher than what it typically has been over the last while i think content spend was increasing by like 8% and i think the difficulty here is you have revenue expanding 11% on a constant currency basis and you have content spend

rising 10%. And I do get it because content spend now will pay off down the line, but it's still, I guess, doesn't look good either. I don't think the market liked it all that much. You think AI would make spending more efficient, though? I don't think they're using it a ton. Yeah. Yeah, because weren't all the writers in Hollywood like striking because they were like concerned that AI would be taking their jobs like a year two or two or go yeah yeah yeah I don't know if they actually went on strike but they were they were bringing up a lot of issues of it they wanted it you know kind of banned um well not necessarily banned I don't want to say that but they they did have issues on it yeah um I would imagine down

the line they will be able to trim costs substantially because again as I had mentioned that whole seen. You might not need 100 people anymore. Horses, costumes. Yeah, it's just, it seems like that would be a pretty easy way to trim back that kind of spending, but it is, it is expected to go up by 10% this year. And I don't really know how I feel about this one. I have been watching it quite a bit, because I do think it is a high quality company, but I think it just went from kind of expensive to fairly valued. Like, it's still trading at, I think it's 25x free cash flow, which they do have a lot an IP, like intellectual property that will probably be, you know, valued a little bit there, but I don't know, it's only, it's only growing 13%. It's trading at 25x. It just kind of seems like

a company that went from expensive to probably a little bit more reasonable. So it seemed like a pretty decent quarter, but the market, I think, as I had mentioned, I think it was down 12 to 14 percent on the open. I don't know what it actually ended up closing at, but yeah, yeah, good quarter, but. So for the pricing, just the Canadian pricing, so you're looking standard, which, ads. So it gives you 1080P, so full HD, but you have ads. So that's eight bucks a month. And then standard no ads, which is essentially the same thing, but no ads. And then you have premium, which is no ads. And you also get 4K streaming and AGR. And you have like more supported devices. And then you can add some extra members for I think six or eight dollars a month,

depending on the plans. So there is also the question, like how much pricing power do they get, right? If it's starting to get pretty saturated, how do you grow revenue aside from potentially the ad revenue growing? The ads, I would say. Or converting ad users to premium plans. That could be the other one. And I really don't think people care very much about the ads. I mean, I have it on Prime. I don't even pay attention to it really. Like when it happens, I mean, I guess it's kind of annoying to a degree, but I would never pay more for Amazon Prime to remove that functionality. I'll just, yeah, 30 seconds worth of ads, a minute worth of ads. I just, yeah, go on my phone for 30 seconds and then it's back to the show. But yeah, I don't know how they do it. I don't know

if they can raise prices much more. I think their main avenue here is that ads and cutting spending, really. Developing high quality content for cheaper might be the path here because the market is, I mean, how much more are they going to grow their member base? They already have a gigantic member base. Okay. No, I think that's a good overview. I mean, it's looking pretty attractive here, Netflix. I think it's in, yeah, if you're looking at earnings to, you know, PG, so the price to the peg ratio, so the price to earnings growth, it's like 0.9.

So it's below one. So fair. Yeah, fair to kind of value territory. It's trading at a 20p and 22 price to free. free cash flow. So I don't know how it is historically, but I'm assuming it's definitely on the lower side, probably historically. So definitely an interesting name. I mean, I don't think Netflix is going away, but I do think there are some value questions about growth going forward. There is an old saying in investing. It's not about timing the market, but time in the market.

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Ready to invest, head over to Questrade.com, open and fund your account with code TCI and receive $50. Conditions apply. We've booked a cottage for early July, and I'm already picturing the kind of of trip where the days are pretty simple. Mornings outside with coffee, my daughter running around with our new puppy, afternoons by the lake, and those quiet evenings with my wife watching the sunset with a glass of wine after everyone else has gone to bed. And while we're away enjoying that time together, the timing also made me think about our own home back in Ottawa. Early July is such a busy time in this city, with Canada Day and Blues Fest bringing so many people in. That got me thinking

about how our home could be put to good use while we're out of town as it's just sitting empty. Listing our home on Airbnb could create some extra income to help cover part of the trip while also letting another family enjoy our neighborhood during one of the best time to visit Ottawa. They could walk over to a local coffee shop, spend the afternoon at a nearby beach, and use our place as a comfortable home base after taking in everything happening downtown. Your home might be worth more than you think. Find out how much at Airbus. Airbnb.ca slash host. If you're a DIY investor ready to take control of your portfolio, BMO All In One ETFs simplify

the process. Whether you're new to investing or looking to streamline your existing holdings, these all-in-one solutions are designed to help you invest smarter. With management fees on popular portfolios now reduced to 0.15%, you get professional diversification at a lower cost. Check out the asset allocation ETFs at BMOETFs.com. Now let's move on to, I guess, another company in that same kind of space, Cogeco. So the probably, we're guilty of that, probably the least talked about Telco in Canada. Oh, for sure.

For sure. I guess them and Quebec Medea, so the owners of Videotron, they're probably, yeah, kind of the smaller players in the space. So Cozegro came out with their earnings release. just showing on Joint TCI here. So it is, yeah, the drawdown is pretty significant. So from its eyes, it's down about, yeah, pretty much 50% as well. So, yeah, same kind of sector as Netflix. Wow, I did not know this took that big of a hit.

Yeah, yeah. Interesting. It took a big hit. It's yielding 6.2%. So in line with the other telcos in terms of big yields, I guess Rogers is always a bit lower on the yield front. But this is just another example for me of just a legacy kind of company that is just kind of struggling. I don't think there's any other way to put it.

So I'm showing here the revenues. So revenues were down 4.7% year over year. It was even worse because they have a decent chunk of their business in the U.S. And looking at their U.S. segment, it was down 10%. You might have guessed it, but more consumers are ditching their phone, their landline phone subscription and TV subscription. and just opting for internet options only, which is hitting their revenue in Canada was a similar kind of trend,

but not as pronounced where revenues decline 0.5%. They also mentioned that their US segment is facing increasing competitive pressure, which is interesting because there's another telco that's expanding in the US. Getting into it. Yeah, in the US. So Dell with that acquisition that they did,

what was it like a year and a half ago now, a year ago? Kind of lose track of it. It would have been right before. they cut the dividend, probably like a quarter before they cut the dividend, which would have been last summer. So maybe like early last year. Yeah, exactly. I thought that was interesting because, yeah, we've talked about it on the podcast, right? So you have, you know, you have all kinds of competition when fiber, you have SpaceX that is also competition with, oh man, I always forget, what is it the name of the Starlink? Starlink, there you go. And you have Starlink in terms of

competition. It's just a really competitive space. So it is interesting. for BC to be kind of trying to expand in the US. But the good news is the dividend remain unchanged versus the previous quarter, although it does represent a 7% increase year over year, but I think it's now been a year where it has been at that level. And the good news as well is because Jekko compared to BC before they cut the dividend is the payout ratio is actually extremely low. So in recent years, it's been around like 30%.

So I don't think the dividend is in any. risk. They could very well be taking some of that money that they have in surplus that they're not paying as dividend to reduce leverage. And they did mention that they are looking at potentially reducing the leverage on the balance sheet. So not that's not a bad thing as a hold. But again, when you're holding this, you're probably just holding it for the dividend. The business is clearly not growing. And if they want to grow in that space, then you have to do stuff like BC is doing, which is it the best use of capital to lever up in a sector, in a type of business, in an environment where it's hyper-competitive, I'm not so sure.

So I think the best thing they can probably do is shore up the balance sheet and try to reduce costs. I just don't know how these companies grow like it's your guess is as good as mine here. Well, and I think for the big telecoms, there's, I mean, not a very good path, but there would be a better path because, I mean, I don't know this company very well, but I do know that they had very little mobile exposure. Like, I think they just started getting into mobile phone plans, maybe like a year or two ago.

I think before that they were just like internet and television. And obviously television has no path. I mean, that's, we cancel it our TV six or seven years ago, and I do not miss it at all. So obviously, you know, they have a ton of that exposure. I think the mobile they just started a few years ago, which that's a pretty tough nut to crack to get into that space, especially in the United States. Like there's so many plans in the United States, like rock bottom plans.

So yeah, I don't know. I guess for the dividend, if you really want the income, you could look to a company like this, but I've seen it in passing, I guess a few times looking into it. And it's never really moved the needle for me, despite showing up on like a lot of. screens because the company I'm pretty sure is absolutely dirt cheap compared to the big telcos. But I think it's the fact that they're just, they don't really have a lot of, they don't have as diverse of a business model. And the exposure that they do have is just kind of legacy type stuff.

So I did look it up while you were talking. So apparently it's been about a year since they've been offering cell phone plans. So again, I think I agree with you. There's now more and more competition in that space. So you have Freedom Mobile that was bought by Videotron that's being offered more and more. You have the big three players. You also have population growth that's stalling in Canada. So we talked about it before, whether it's Tellis Rogers and BCE.

You can see it in a number. Their average revenue per user is actually trending down because there's more competition. People are shopping around more. So it's not like it's a great market either. I just don't know where the telcos will be. in like 10 years from now. Yeah. I just don't know how they grow the business.

Maybe there's a new AI related product that we don't see that they'll be able to leverage. I'm not quite sure. But I think you're just, how can you not see it, right? Like it's the same thing for all the telcos. I mean, I guess the only difference with Kojiko, I don't even know if I'm pronouncing that right, because we don't have them here, but I don't think they own any of the towers. I think for their cell phone plans, they lease the towers. So maybe a little more.

asset light, not as much capital expenditures like Rogers Bell tell us so they can maybe offer plans for cheaper and kind of grind out a bit more profits. But yeah, I don't know them well enough to ever say anything definitively on that. But you want to move into the, to people's favorite pizza joint? Yeah, if you do it quickly and then I think it'll be fun to talk just because we, I, my daughter will be coming back. Well, do you want to push dominoes to? Yeah, let's push dominoes. And let's just finish with the, the news articles from the Globe and Mail. I think this is some, it'll be fun to talk about. So I'll let you start, kind of explain what the article was.

I'm showing it for Joint TCI. So for people interested, so it's entitled, this investor built a 875,000 TFSC using some unique portfolio maneuvers. Few ever thought of, I guess. Yeah, that's a, it's an interesting title. So why don't you go over and we'll talk about it a bit afterwards? Yeah, so they have this, I think this is like their TFC. series. Like you always see these articles from the globe. They come out with like people with million dollar portfolios who kind of yoloed into oil and gas stocks at the bottom during

the pandemic and ran their TFSAs up to to massive numbers. This one is and I didn't really focus on the entire article, but this is this is somebody who has an $875,000 TFSA. And I'll just kind of focus on the maneuvers, I guess. He had mentioned that he did. And, I actually do not and I am not a hundred percent positive on this, but I'm like 95% positive. What he is doing, you are not allowed to do. So what he would end up doing is he would have a stock in his taxable account and then they would be reporting earnings that night. So he would have the stock in his taxable.

They would report earnings and then he would see the stock spike after market. And then what he would do is go to his brokerage and request a transfer of that stock into his TFSA. And what the article says is because he requested the stock to be transferred in his TFSA at $7,000 because the aftermarket price had not been reflected in the current value, the Canada Revenue Agency deems it as fair market value when the transfer occurs, which is not correct. by my reading of the rules anyway. So really then effectively wakes up in the morning. The stock, say, let's just say begins at trading, trading at $8,500. So it spiked after earnings. Since the transfer occurred at the fair market value, and this is actually word for word in the article, since the transfer occurred at the fair market value of $7,000, Albre does not exceed

the contribution limit of $7,000 and has a capital gain inside of his TFSA. Why I find this hard to believe, like, that this even happened is, if it's like three o'clock and you send a TFSA transfer to your brokerage, they're not doing it. I mean, maybe they would, but they, like, if you sent a brokerage, if I sent a transfer request through Questrade right now, they wouldn't just do it that day. I bet you would take a day or two for it to actually happen. So, and the thing about these transfers. Do they timestamp it when you make the request, even if it's, it's done a few, you know, days later. I don't know. Yeah. By the wording of the rules, for me, what it looks like is the money put in is when the brokerage actually puts it in. So if it takes two days or

whatever it may be and the price spikes, the price when it went in is when it goes in. And then there's the other addition to this that, and again, there's a chance that I'm reading these rules wrong, but I really don't think I am. And that's just the idea of the fact that You're just not allowed to do this period. So there's rules in the TFSA. They call them like TFSA Advantage rules. And I can't even remember what I found this one. I think it was called value shifting or something.

So the rule, and I'm reading this right from the CRA website, an advantage also includes any benefit that is an increase in total fair market value of the property of the TFSA that is reasonably attributable to any of the following. So this would be a TFSA advantage, meaning that you are kind of, going against the rule. So it says a transaction or event or series that would not have occurred in a normal commercial or investment context between arm length parties acting prudently, knowingly, and willingly, and one of the main purposes of which is to benefit from the tax exempt status of the TFSA. So I mean, that kind of to me is the absolute definition of what this

is doing. You're like looking at these aftermarket gains and trying to get it into your TFSA to take advantage of the tax exempt status. So I just think I'm surprised that the article actually went out there and I'm surprised this person also put in there that he's doing this stuff. Maybe it's not the actual name of the person though. They refer to this person as Albert. Albert, yeah, it might not be. The other thing that he mentioned they were doing is he would buy.

call options, which obviously you can buy call options for much cheaper than the underlying, and then he would stick them in his TFSA, and then obviously exercise them, which I think is another situation where you're kind of putting those into a tax sheltered account, knowing that the fair value is much higher. And if you do this knowingly, it's against the rule. So I don't know, to me, if I had that size of a TFSA and I was doing that type of stuff, I would be, I just wouldn't go public with it. I don't know. As soon as, like, even if they don't know exactly who it is, like they can probably start like looking at accounts that have similar value and try to pinpoint. Like, I feel like, especially now with AI, like, it's probably not that hard for the CRA to try and pinpoint that. No. And I got, I had a gift article, so I was able to read this once and then it paywalled me before. But what? I heard after was this person is actually a finance professional, like works in the space, which I think makes it even worse. Even worse because they kind of target that as well.

Yeah, they target that in frequency trading. So in high frequency trading, especially those who have like knowledge, like I think advanced knowledge. I can't remember the exact wording, but I remember reading that where they, if you have knowledge that allows you to, you know, make better trade. not necessarily like it doesn't have to be insider trading just like knowledge where you can profit more and use your TFSA for that. Those are the kind of things that they look for. And I think one of the big issues and people have to be careful, especially reading articles like this is they might

think it's okay. But the TFSA, there's a lot of rules that are kind of murky where they say certain things are against the rules, but they're not clear on it. And high frequency trading or, you know, trading, they don't even define that. So I know there's been countless example of people getting taxed because the Sierra just said, look, okay, you're trading too much in that account. It's deemed business income, so you're being taxed on that. So you just have to be careful. And I think if you stay within like the spirit of the TFSA, it's not a guarantee, but if you

just buy and hold and sure you can like, you know, sell, buy something, sell it a few weeks later, I don't think that will create too many concerns. Like, if you do it within reason, I think you should be fine. But once you start trying to push the envelope, you should be very careful. Yeah. And I think the reason this got brought up is it got brought up to me. And people were like, oh, I didn't know you could do this. And I was like, well, I'm pretty sure you're not allowed.

Yeah. Because they would have knowingly known. known the fair value that of that investment was not the original $7,000. They seen the aftermarket move and they were like, okay, I'm going to transfer this. So if you know the value is more and you try to get away with it, technically, again, unless I am completely misreading these rules, it seems like that would violate it. I think so. Because if we had like, and I think we're trending towards 24 hour trading, right? Like I think five to 10 years from now, I think we'll probably have 24 hour trading.

I'd be very surprised if we don't. And then once we have that, I mean, that would no longer be possible, right? Like the markets would automatically react. So I think, I mean, my, I would be very careful. And, you know, I won't say the word, but F around and find out, right? Like, I think you have to keep in mind that if you do this kind of stuff, don't be surprised if the taxman comes and comes in knocking on your door. Yeah, yeah, because, I don't know. It just, to me, I find it hard to believe that it's even true.

Because again, like, if you're, if you make an in-kind request to your brokerage to put securities into your TFSA after the market closes, they're going to be processed the next day probably. I can't unless this guy had away. Yeah. Yeah. Maybe this guy knew somebody in there that would, that would shuffle them in there right away. but I've never seen of a brokerage where you send them a message and say, I want these in your TFSA, and it happens at 6 p.m. Eastern.

It's going to happen the next day. But I just, it's kind of weird that this comes out on like one of the largest investment publications in the country. And it's probably it's going to cause people to do this. I would actually say that they will try this. So I did a quick Google search, overview and I said for an in-house in-kind transfer from a non-register cash account to a TFSC with the same brokerage processing typically takes one to three business days so that aligns with what you said however one of them did say that RBC direct investing can

often be done real time to next day processing for standard North American securities so CRE look at the RBC direct investment. casting accounts if you want to find who it is. If you can get it in there that fast, maybe you could get it. And again, this is just an AI overview. I'm not sure to which extent it's accurate, but yeah, yeah. Online, yeah, I'm on the website. So online transfers of North American securities are processed within 10 minutes.

Online, yeah. So. Oh, so yeah, that's got to be it. I mean, you would think. I don't know. It's, I mean, yeah, you can get a. away with it, but are you, and you would think that if these stocks were moving aftermarket, that they would move into the TFSA at the aftermarket price, but maybe not.

Yeah, but anyways, yeah, if you know the value of your shares are more than what you're transferring in and you are purposely hiding that from the CRA, I mean, I kind of read off the rule, as we had mentioned. Yeah. I don't think I'm misunderstanding the rule. I mean, it's pretty cut and dry, it pretty much says that if you are pretending that the fair value of that of your transfer is lower than you think, like, that is not allowed. Yeah, I would not try to do this. I mean, either. It just, I wouldn't do it. I mean, you could, if they never look into you, you might, you might get away with it, but you might not get away with it if you go talk about it on the Globe and Mail. Maybe nothing happens from it, but it just seemed, it seemed odd. And the options

contracts are even more, are more wild. But yeah, it's, it's weird. It's a, you're towing the line there a lot. If you're thinking of doing something like that, I would say consult a tax professional. Ask your account. Yeah. Ask someone who has a lot of experience with this kind of stuff and they'll let you know whether they think it's risky or not. But I think this is a good point to wrap it up before my little lady starts coming in or a tornado hits my house. So we'll, uh, one or the other. Yeah, one or the other. So I think it was a great episode. Thank you so much for listening to the podcast. As we said originally, so we'll be posting every Monday episode on YouTube, the full episode. The earnings and news for now is posted to our joint TCI on Patreon. So if you're interested,

you can look in the show notes. But again, we appreciate all the support. People listening to us religiously. Definitely appreciate that. And we'll be back with another episode on Monday. and we're with our live, our macro show, Dan Foch and I, our live micro show, we'll be back on Saturday, or you can catch it on X or YouTube live Friday around noon is usually when we do it. So thanks a lot. We will be back soon. The Canadian Investor Podcast should not be construed as investment or financial advice. The host and guest featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional.

professional before making any financial or investment decisions.