What can history teach us about the market today? Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoyam, joined today by Lou Whiteman and Andy Cross. So we are kind of in this doldrum phase of the market. Second quarter earnings season has not started yet. We're in the middle of summer, so I thought this was a good opportunity. Take a little bit of a step back. guys, we've got this big technology change that's coming that is absolutely driving the market. That's artificial intelligence, if you have not been paying attention for the last three or four years. But what does this mean historically? And what can we learn from at least the technology changes that have happened in probably our lifetimes? I'm thinking about the PC, the internet, and mobile. So Andy, I want to start with you. And just a little bit, if we go all the way back to the PC, what can we sort of learn about those early days? Because that's the first time that I remember things really changing. And you have my grandpa who had no interest in understanding what was going on. And then you had my dad who was intrigued and he thought it was cool when we got a computer and we got Prodigy. And then I was living in the computer lab in second grade. So it's like, it kind of seems like we're in that same area today where there's something there, but it isn't quite fully formed yet. Yeah. When you say all the way back, Travis, I think you're dating me because I think most people may be listening to this, think 80s and 90s. They picture like, you know, big shoulder pads, maybe dial up modems, Alan Green spans eyebrows. You know, but if you look at what happened during the 80s and 90s, they were incredible time for investors. And for a host of different reasons, we came into the 80s with higher interest rates than we've had over the last couple of years, even Paul Volcker came in, slammed them down. Yeah, short-term rates were almost 20%, right? Exactly. So they were exceptionally high. And then the Fed came in, put the hammer to those, pushed them back down. That was painful in the short term, but exceptionally good for investors across almost all asset classes, really, in the 80s. But what was really, I think, as you kind of teed us up, Travis, was this technological evolution. I mean, the PCs were just really starting to get going. And if you think about some of the data in 1984, only about 8% of U.S. households owned a personal computer. But by 1990, that had doubled to more than 15%. And by 97, you know, kind of when you start to before you start to get into the really crazy days, that was up to nearly more than a third of households owned. But just think about that. 1997, only a third of households had a computer. I mean, if you're under 30 years old at this point, that seems crazy that this technology that is kind of everywhere, a PC, a mobile phone, still had relatively low penetration even at that point. Yeah, it goes to show you that some of this penetration, this is actually why I think what we've seen with so many of whether it's OpenAI or Anthropic or Gemini, the explosion, the use of these AI tools. but technological, they're more evolution than revolution. I mean, even when the iPhone, you know, kind of came out in 2007 or so, it took some time for it all to get kind of going. And it really wasn't until the app store kind of got going that it really started to take off in that ecosystem. So, you know, that technological progress takes some time to build out. And I think what we're seeing right now, the parallel with what I'm seeing is you're seeing the foundationals being laid. Some of it is going to be exceptionally capital well-spent, and some of it will be wasted. But you're seeing this capital being spent, being laid for the foundation of our transition. It was the PCs, it was the internet, it was cloud computing, mobile a little bit in there, and now we're seeing it with AI. Yeah, the real takeaway is that we need to build the virtuous cycle. We need more than just the infrastructure. Because my household was one of the households that had a PC prior to 97. You know what we did with it? It was basically a typewriter with a screen. It was a typewriter where it was easier to delete because there wasn't there just wasn't that many uses for it. You know, we had a Commodore 64 way back when I used to type in and play like program games and do that. But it was kind of a novelty. It wasn't a productivity tool the way it was. Once again, this virtual cycle, whether it's the Internet, where it's all of these, you know, the early days of Windows and Office, where we wait, we can do things with those. So it's not enough to just invent the technology. It's not enough to just invent the software. It has to be this point where everything's coming together, where this is affordable, it's useful. And that's when, to a lesser extent, I mean, enterprises will kind of force it through, but definitely on the consumer side. But even on an enterprise, you need just all of these things working together for something to take off. And until that point, it all looks to a cynic to be just wasteful spending. It is hard to imagine once everything comes together. So as you're living in that pre-area, it's just like, oh, this is a gimmick. And the downside is some of these things end up being a gimmick. So you're not always wrong. But when they get it right, it's just suddenly snap. It all comes together and it's really valuable at that point. Yeah, I wanted to get to that. You talked about enterprises adopting PCs first. And I think this is one of the things, if you look back to the 1980s or early 1990s, it was not people buying PCs and then companies being forced to use them the way it was with iPhones. But I mean, iPhones were not supported in most big corporations until relatively recently, to be honest. I mean, in the last decade, that was the consumer forcing that piece of technology on the enterprise. In the 80s and 90s, it was the other way around. I mean, the Mac arguably had a better user experience and it was more popular among actual users. But businesses who wanted to do productive things wanted to use Excel and Word and they pushed the PC driven by Microsoft, Intel and IBM, I think would be the big three players there. So how does that dynamic look similar and maybe different in other ways to what we're doing today? Because I think what we've seen over the past six months is that, at least on the economic side, enterprises are driving AI. Anthropics success is not you and I paying 20 bucks a month for their subscription. it is companies paying hundreds of millions of dollars for tokens that are being used for coding and things like that. Well, certainly driving the revenue in the top line and probably the profitability, too. If you just look at the explosion from Anthropic and OpenAI and their revenue run rates tripling, you know, year over year or so. But as I mentioned before, you know, it was the fastest adoption, both OpenAI and Gemini, when they got rolling, they were behind the curve, got rolling from Alphabet. that you did see this massive adoption from individuals. So you have an individual that is probably a loss leader, most of them free, maybe paying 20 bucks or 22 bucks a month for an open AI subscription. But as you mentioned, Travis, the bulk of it is really coming from the AI adoption that is getting pushed into the enterprise level. And that's been the big success with the likes of Anthropic. But you've got to be able to make those investments into that business, right? You got it's massive amounts of capital to be able to grow that business out, to be able to make the investments, not just in the model, but the sales force, be able to build it out, all those kinds of things. And so that takes huge capital. We saw the parallel a little bit, but much more on the infrastructure side in the 1990s with the Telecom Act and the massive amounts of fiber that got laid. And, you know, that that was short term, very good in the markets and it was very bad in the markets. But that laid the foundation for what eventually became the Internet and supported the the AI infrastructure and AI usage boom now. So certainly the power of the Wintel, the Windows and Intel combination with IBM in the 90s, driving that and the near monopoly they had. And you're not seeing that necessarily on the AI side, but it's really around the effectiveness side, the effectiveness that companies are starting to see more and more, not just to save money, but to drive revenue from using these AI tools like Anthropics, like Claude and Gemini and OpenAI. Yeah, I think Andy's right. I'll give you one, I think, similarity and one difference I see between now and back then. The similarity is, is that it is really hard. most of us as consumers don't measure ROI. So we have to really be snipped, mapped across the face and say, wow, this makes life better. Like with a business, you can say, all right, well, if we invest, invest a million dollars in this and we can save X amount, it's worth it. So I do think that, you know, with AI and with back then, just technology in the 80s, there was more of just a. Look by businesses and again, consumers to change consumer inertia, you really need to either wow them or save them a ton of money because inertia is much stronger in the consumer side than the business side. Where I think it is different is, quite frankly, I don't think Microsoft built Office for the consumer. I think we later learned, why did anyone need a spreadsheet? I mean later on we had the spreadsheet and we figured out oh you can do home budgeting with it or something like that But the tools were designed for the enterprise back there These days it does feel like that there is a real effort to engage both the consumer and the enterprise That feels different to me, and maybe it will drive things faster. But again, back to that first point, I know a million people who love using AI as just in their daily lives as consumers. Andy, we're talking about this beforehand. I don't know how many of those people would pay 20 bucks for it. So, you know, like that is, I think that's both sides of it. I think consumers are being courted more than they were in the early days of Wintel when it was basically enterprise tools for the enterprise. But I don't know if we're going to see the ROI until it really hits us in the face. But, you know, the parallel, though, with the 80s, the focus on companies and because most of us use personal computers for fun graphics, games, like you said, as a word processor, essentially. it wasn't until later that we started to see more and more of the benefits. So the benefit really, the ROI really was accruing to the corporation's loo. You're right there. I want to bring this into a little bit more modern times when we come back and talk about how the consumer drove things in the 2000s and 2010s. You're listening to Motley Fool, Hidden Gems Investing. For 14 months, I robbed 30 banks, sometimes several in one day. I lost all sense that my life was going to be long at all. I just wanted to grab the loot and get the hell out of Dodge as fast as possible and go spend it and have fun. That was my ethos. And so I did. I'm not made for society. They have all these moralities, but they're too timid for me. Now I'm a criminal. I'm a bad guy. Check out episodes 1264 and 1265 of the Jordan Harbinger show. Welcome back to Motley Fool, Hidden Gems, Investing. All right. We talked a little bit about the 80s and 90s. We didn't really talk about the bubble, but I think the The takeaway from those two decades was really that the enterprise drove a lot in the PC buildout. That's why Wintel won. It's why IBM was such a big company. The bubble and all of that was, it made a lot of sense to build out a lot of these telecom assets. You know, building some of the apps that they were building in those days maybe didn't make as much sense. But there was a ton of VC money involved. But let's take it to the 2000s and 2010s. Because I think in modern times, this is where the companies that really define the market today were either created or kind of grew up. So Alphabet would be an example of that. Meta was started. Facebook was started in 2004. You have Shopify, which basically just rode Facebook's coattails, allowed for a completely new way to do business, ultimately disrupted some of the retail companies. So Andy, I want to start with you. When you look back on that era, that was sort of the maturation of the bubble that happened in the late 1990s, early 2000s, and sort of shaking it out, figuring it out. We talked before the show about, hey, everybody's really valued now, highly valued now, because everybody's really profitable, everything's growing. But long term, that's not usually the way that it works out. You find certain areas that are extracting most of the value, and then everything else kind of gets commoditized or modularized. is that the way that what we should take away from this is eventually there will be something new completely new and disruptive built on top of what we're building today well there might yeah i think there will be absolutely that what we're what the ai foundation they're laying today will will set up whether it's robotics or other innovations the seeds they're planting will become the oaks of that eventually but like we saw in the 2000s travis you know we we between 2000 in 2010, we basically had these two massive crashes where the market lost well more than 50% of a drawdown and shook out a ton of investors. Meanwhile, as you mentioned, 2004, we had Alphabet go public. I think Alphabet's market cap that day went public was something around 20 billion compared to where it is today, right? So you saw these massive success stories of these companies, as you said, maturing and building up on the technologies that were laid the decades before. I think we will see that on the AI side. We undoubtedly will see some big winners over the next 10 years from companies that are not even created right now. They're just a dream in somebody's head. So we'll see those innovations. I do think because of the capital required to build out this infrastructure, make these investments in the large language models, yes, it is possible to do it more cheaply, but it is on the backs of these NVIDIA chips. We saw what happened with Grok announcements this week when their effectiveness that they are seeing now with their new model on top of the NVIDIA chips. So it just takes so much capital that I do think the big players will continue to be the winners. They may not be the massive growth companies that drive 20% annualized returns for an investor's portfolio. Some of those, some upstarts will come along and they will do very well because they are solving that price demand equation that we talked about earlier where they're fulfilling a need and the consumers of that need, whether they're people, companies, governments are willing to pay and pay higher prices for that need. They're going to solve that. And those will be the future winners. And they undoubtedly are, some of them at least, are not even created yet in the markets. Lou, one of the things that I think is fascinating looking back at those days was how it changed distribution. And I had a paper route in the 1990s. That was how I paid for my first stocks and mutual funds that I was buying back in those days. But what ultimately changed about the Internet, and this is not necessarily what the 80s and 90s was completely about, but it was the fact that you went from these local monopolies with newspapers, with retail, to being able to reach the entire world. And that's what fundamentally changed the value in the market. it. What can we learn from that or what sort of parallels do you see in this new technology paradigm that seems like it's going to shake things up, but we're not fully clear on exactly where it's going? Yeah, I'm a logistics guy at heart. So, of course, I see everything as distribution. But that is the story of the 2000s was just the Internet changed the cost of moving information. We didn't know who Sergei Brin was in 1990. We didn't know who Mark Zuckerberg was. We didn't know what would be created with this, but just the bet was the right bet was, is that with this lowering cost, amazing things were going to happen. The real interesting thing about that error was, is that it changed human behavior, too. When Andy and I were kids, if you wanted almost anything from information to food to consumer junk, you had to go to the library. You had to leave your house to do it. And one of the things I think the Internet ushered in was, is just this expectation of no, the world comes to me, which has played off in all sorts of ways. Look, there is a scary, scary scenario here because we all know what happened. Tons of money were spent to build those rails. The companies that did that kind of went bankrupt and then we still benefited from it. That's not a prediction, but it is sort of the jumping point for a thought experiment. Are we at an inflection point? All right. Are we, is it possible that the hyperscalers, the ones spending all these money and have these models that they are almost going to transform into the utilities. And, you know, it's going to be the companies that make stuff with these models or deploy the models or figure out how to kind of use this technology, which I'm not sure the hyperscalers are really the best at that right now of actually turning it into productivity. A lot of this has to play out, but there's a world where, like Andy says, that these hyperscalers remain hugely valued, But their kind of growth story isn't what it used to be. And there is just going to be a ton of new companies taking advantage of these rails and just building amazing things that will be where value is created from here. All right. Very quickly, I want to both of your answer on what is sustainable about this current technology evolution. Andy, you're up. Convenience, Travis. I'm lazy. And this, right, I think many of us are lazy and we wanted things to be as convenient, as quick and fast and great as possible. and I think that's what we're seeing with the AI revolution. Yeah, and at worst, even if everything just goes terrible, we will figure out a way to use all this compute power we're building. That's the silver lining and I don't know how. I don't think AI goes to nothing. I do wonder about commoditization. I do wonder, like I say, my guess is the way we interact with AI even two years from now will look so much different than today and just like we didn't understand in 1999 how we would use the internet. We don't understand. And all this projections just kind of, but yeah, Andy's right. There's a there, there. It's convenience. It's just a ton of compute and smart people are going to create value with it over time. When we come back, we're going to talk about the unknowns about the future of the market. You're listening to The Motley Fool, Hidden Gems Invest. Every Sunday, we cover the week's tech news on This Week in Tech. Hi, this is Leo Laporte inviting you to join me, Lisa Schmeiser, Jason Heiner, And Owen J.J. Stone, we're going to talk about how all those prices are going through the roof. And who do we blame? We blame AI. Fable is back. It's expensive. And the Supreme Court does something good for a change. All of that this week on This Week in Tech. You'll find it at twit.tv and wherever you get your podcasts. Welcome back to Motley Fool, Hidden Gems, investing. Let's enter the world of the unknown. And investing, what's known is often priced into a stock or what at least the market thinks that we know at that given moment. What not priced in is the things that we don know or can know Those are the unknown unknowns or known unknowns as Donald Rumsfeld would say And that ultimately what drives a lot of the value in the market. If you look at NVIDIA five years ago, you weren't buying it because it was the big player in artificial intelligence. If you were, congratulations, you were ahead of the game. Same thing with Micron 12 to 18 months ago. I mean, even Apple, even Tim Cook apparently couldn't predict that memory prices were going to skyrocket. So what are those unknowns that you're thinking about? And this can be either positive or negative with some of the biggest companies in the market, some of the most talked about companies in the market. Lou, I want to start with you with NVIDIA. When you look at that stock and how valuable that company has become, what are either the positive or negative unknowns that you're thinking about? I mean, the known unknown is I think we're sleeping on robotics and what a role NVIDIA would have. I do think we're moving towards NVIDIA's best days with AI are over. There's more and more custom chips. There's just more competition, like you say. Not that it's going to fall off. Do you think robotics can replace hyperscale spending? Yes. Yes. I really do because I think robot, and it's not going to be the dancing robots that clean your house. It's going to be all of the everywhere and just making lives easier. This trend isn't new, but I think just the ability to apply tech to it with smart tech, that is the next big thing for NVIDIA. And I don't think I think we're starting to worry about the negativity around AI with competition, but I don't think we fully appreciate the upside with robotics. What comes to it? Yeah, I mean, robotics is the key. I mean, Jensen's talked about this. If you just think about what goes into driving a robot, whether it's a humanoid robot or anything, it's the brainpower that uses most of the energy. And NVIDIA, they're the lead dog in that. And so I'll take a little bit of the other side from what Lou said. I think the better days for NVIDIA are not necessarily over. NVIDIA has been able – they've done a masterful job. Jensen Wong's been done masterfully, being able to navigate the different parts of the market across AI or GPUs or gaming, whatever it might be. And so I think robotics is the next big push for NVIDIA. And I think it's exceptionally ill-defined. There's a big unknown about what that market looks like. But if robotics is going to take off, NVIDIA is going to be the lead dog in that. That does seem like an area too, where the customers are not going to have the same ability or incentive to create their own chips. I think that's always been something that's made me a little bit uncomfortable with this AI build out is you're concentrated among four or five customers, 60% of your revenue or so, even for a company the size of NVIDIA. And all of those customers are trying to get out from underneath you by creating their own custom chips. So that's definitely not going to be the case, at least for now in robotics. All right. What about Apple? Andy, when you look at Apple as a company, as a stock, what are the things that either excite you or keep you up at night well they need to find something next from the iphone they they have watch their needs there needs another a new the next thing from the next form factor i mean if you just think about when the iphone came out in 2007 i mentioned that earlier you know it took some time for it to really kind of take off it was tied to you know at&t and all those kinds of challenges that we had but it really wasn't until the app store came along that they started to really build up build out that ecosystem and then allow them to tie into the services so that that's been the big growth driver. I mean, the iPhone has been revolutionary, probably the greatest invention of the last, you know, at least 50 years, I would say. Meaningful when you think about the impact wider. So what is next for them? And then how does AI play into that whatever next is? That's the big question I have for Apple and the new leadership team there. It's really dangerous to be the Luddite, but I'm going to be the Luddite here and take the other side. I think that the the known unknown is there just isn't a next big thing. I don't think, I mean, if you look at how most of us use our phones today, I don't think glasses or any of these other alternatives are really, really a good alternative. I don't see people playing games. I mean, you know, maybe, but, you know, I really think that the story here is, is that them using AI and using things to just continue to make the phone better. Look, the downside is maybe there isn't a next big thing, at least on the consumer side, or maybe it's a long way off. But the good news is, is that they are a very profitable company and it's a great franchise. And thanks to AI, there are ways to eventually drive upgrades and stuff. So I do think we have to stop. I mean, whether it's not the Apple TV anymore, it's not the Apple car, it's not this. Yeah, we've lost a lot of those narratives. Yeah, we've lost the narratives. And I think kind of the known unknown, but underappreciated is it's a daggone good business. If it just continues to iterate on its own. I just have been underwhelmed by the replacements. That doesn't mean there isn't some somewhere. There's a lab right now that's about to really knock my socks off. But it's been long enough with these phones that I'm going to believe it when I see it. And Trav, I do think John Turner is the new incoming CEO at Apple is in a pretty good sweet spot. The experience he's bringing in across the Apple system, I think, gives him, he's potential. I do think he's the right person for that job, and I'm glad to see him take over the CEO role. The other thing, just look back historically with technology, typically the company that dominates a certain era does not dominate the next era or the next paradigm. So, you know, Microsoft did not dominate mobile because they couldn't see mobile through the lens with which they were looking at it, whether it was because they were selling mostly into enterprises or that was their kind of key market or because they were running an operating system and they had to completely rethink the operating system. So historically, whatever that next form factor is, whether it's a pin or a watch or glasses or whatever, Apple may not be the company that sees it because they are so ingrained in the current paradigm. All right, let's go to a key supplier to both of these companies. That's TSMC, what is exciting or makes you nervous, Andy? Well, gosh, I guess it's the customers, right? That's the big question. If the customers start pulling back, that's just obviously going to be the big question for TSMC. So is that going to be a macro problem for them or is that going to be, let's say, Tesla and SpaceX building their own fabs or what's the concern there? Yeah, it's going to be replaced. It's going to be others trying to take over the great leadership position TSMC has. This is minus China really ruffling feathers and doing anything really dangerous, which is the biggest, I think, big macro concern there. But other than that, I think it's customers starting to look elsewhere, away from TSMC, to be able to do what they do in the same way, the same quality, and the same price. Now, that's a big ask for customers to do that. But if they can do that and they're willing to put the capital to work and they can finance that, I think that's the big question I have with TSMC. Yeah, I think that's right. I don't have a better one than that. The one thing I'd add to it, though, is that you have the United States and I think soon to be Europe and when you have governments actually leaning on the scales. TMC is doing their best or TSM is doing its best to be part of that answer with these. But, you know, we all love our national champions. everything Andy said is right. And then adding to it the fact that it's, that governments are actually putting their capital to work to compete against the Taiwan fabs. That is at least worth watching. All right. I want to go to a little bit smaller company to end things in this segment. That's Intuit. Intuit is one of these companies that I keep looking at. Is this going to be a disruption story? There's a lot of unknowns in the future for Intuit. So Andy, you had a reaction there. What are you thinking about with Intuit? Yeah, the stock is down. 60% or 50% or so over the last few months. And it looks cheap, but is that a value or a value trap? Well, I would be careful because in the marketplace, this is where I think my little bit more revised thinking around some of the efficient market. I think the market gets more of those right than wrong. So I'm a little bit cautious to double down on stocks that fall down like that. Obviously, the risk over something like a Claude model, being able to handle all my taxes and LinkedIn very easily gather all my information that I can do. I can download my taxes from TurboTax or if I run QuickBooks and just import it into Claw. That's the kind of existential risk. My bigger, that's a big concern. But the thing on Intuit that I worry about, as well as some of these other companies that are kind to this space, is when they start taking capital and they start making these big acquisitions, and Intuit has done this, whether it's MailChimp or whether it's Mint or whatever it might be, they make these acquisitions to kind of go after their growth market. and I just worry that they start to stretch outside their core market because their core market's under threat. They make these stretches, they add goodwill to the balance sheet, they can't get the returns on the capital of those investments and ultimately just continues to hammer the stock because the profitable earnings growth that would come from that revenue jump from adding those companies is not there and investors sniff that out. Yeah, it's funny. Maybe I'm underestimating it because I don't want to right now upload my taxes to. I know, that worries me too, especially this new policy where they can use your content as they please. Right, right. On the consumer side, my biggest known unknown is, is that I think if the government, Intuit to its credit, does a lot of good lobbying, but I think a lot of the consumer business should probably go away. The IRS gets all of our data. They process our data It would be so easy for them to just send us a slip and say is this right And move on there I think one day we going to get there I tell you the AI threat is the other side of the business to me If you look at how Intuit describes their business to business, what they provide, they provide financial marketing and management software that helps small to mid-sized businesses run their operations, automating accounting, managing payroll and payments, processing payments, driving automated email marketing. All of that sounds very, very replaceable with AI. A lot of that is automating. It's just a fancy way of saying we do automated tasks. And I think, you know, that core business to business business is what I think gets disrupted first. And I think it's a real threat for them. I'd be a little scared of having too much of the government influencing and doing my taxes for me if that's. I mean, we definitely have to fact check it, but they're doing it anyway. They audit you if they think you're wrong. I know. I know. But then I have at least I have Intuit or someone else to be able to go back to and say, hey, listen, this is what we said. And this is what the government said. Yeah. This is one of these things. one of the reasons that I wanted to talk about this is these big trends, getting the big trends, the strategies, the technology shifts right is really where you hit the huge gains for investors into its stock between their IPO in the early 90s. 1993 is what I have data back to. To its peak, this was actually last year, 28,000%. So there was a long time, there was decades where you could have ridden the gains that you have with a company like that. Andy and Lou might be right that the best days are past it, but there was a lot of gains to be had in the meantime for investors. And Travis, I think that's one of the secrets to Hidden Gems kind of investing is trying to identify those markets and the trends and the companies that are going to benefit from that early on and being able to look past some of the noise to be able to invest for the next few years. I think that's something that Tom and the Hidden Gems team has done pretty well over the years. When we come back, we're going to get to some of our Hidden Gems ideas You're listening to Motley Fool and Jim's Investing. slash IM or wherever you get your podcasts. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Andy, I wanted to ask you some questions about in today's market, where are you seeing hidden gems kind of opportunities as an investor? And what are the kind of factors that you're looking for? Yeah, well, the hidden gems style, I've been doing this with Tom for a long time and benefited from so much of his thinking. But that hidden part, Travis, and that can mean a lot of different things. It's basically underappreciated or undervalued assets from what the market sees. asset strength and brands, exceptional leadership, financial power, intangible assets and growth opportunities. And it's a mixture of both. But I think about that combination. What is the market really not seeing? And I think one interesting spot is something like a retailer that really doesn't quite get the attention that other retailers might in the US. And that's a company like Aritzia, which had earnings this week. They were outstanding. Think about the growth profile. It's a Canadian women's retailer that does this very accessible medium to high fashion retail. And it's just doing things in a different way with that leadership team. But it was Canadian based. And now they're moving more aggressively into the U.S., very profitably into the U.S. And so that kind of story, when you think about getting into an early growth story like that, that's the kind of hidden gems that I really love to find and and love to invest in. I look about our history of the same thing with a company like Buffalo Wild Wings, which was very early on in trying to grow out chicken wings, buffalo wings in a way that really wasn't done at scale or a company like Chipotle and Starbucks many, many years ago. So those growth opportunities, and then you have a company that's taking advantage of those. So I think still a company like Aritia and Retailer, I see some in the biopharma space, whether it's a company like Vertex or Crystal Biotech, symbol K-R-Y-S, that is doing some really cool things when it comes to treating butterfly skin disease. And they have a very proprietary process and platform. And that's what I'm trying to find and that are not really quite appreciated by the market that is constantly talking about large cap tech stocks. Yeah, kind of echoing what Andy said, I am a big believer. The reason I do this, the reason this is fun to me is I think there's always something to buy out there, because we do, we focus on one thing and it's crazy, but there are just good companies that kind of just get not forgotten about, but just fall out of favor. For me right now, it's the financials. I had a radar stock in this financial last week. So I've been talking about this a lot, but there isn't a lot of growth right now, but you're getting dividend yields north of 4%, well north of that. And I think that this is a business that grows over time. So I don't like the dividend yields with REITs because I don't know how much growth you see in REITs, But with financials, I really like that. Also, physical goods. Transdime is a company I keep talking about, but it is just a huge market winner over time. It's near a 52-week low. I like looking at value there because there's so much of a track record. I love when Andy brings up a stock that is headquartered just a couple of miles from where I live in the Minneapolis area. We should do a show about how many companies are based in the Twin Cities. Just incredible how many huge companies you didn't realize are based. right here. Cargill, another one, not even public, but one of the biggest companies in the world. Mr. Chamber of Commerce. Yes, exactly. Got to get my local shout out here. All right, let's get to the stocks on our radar and bring in Dan Boyd for his thoughts. Andy, what do you got this week? Guys, I'm looking at Primo Brands. Dan, this is symbol PRMB, a market cap of $8.5 billion. Primo Brands provides bottled water, hydration solutions through a huge network, 200,000 plus retail outlets. Some of the brands, As Dan, you might know, Poland Spring, Deer Park, Saratoga, Pure Life, Mountain Valley. It has a combination of a, let's call it water as a service. So subscription business that delivers the house, the big jugs, the three, five gallon jugs. But then also you can buy these products in your grocer and in your retail outlets. It owns 80 natural spring sources, runs this direct delivery that reaches a network that reaches 90% of the U.S. population and 80% of the Canadian population. What's interesting about it, it was a combination recently of a big merger. So it's working through that. The valuation is attractive. It's not one of those high growth companies. But when I look at the hidden assets behind it, I think good things ahead for premium brands. And I probably think probably in the, you know, not super high growth, but maybe 10 to 12 percent kind of annualized returns kinds of business. Dan, what do you think about water as a service? I think water as a service is something that most municipalities already offer. But here's the thing. I want to denigrate this stock. I really do because I generally refuse to buy bottled water because it's a scam. But like water isn't going anywhere. People need water. And if these companies are allowed to own water sources and stuff, it's going to be profitable. I do like a good bit of Dan pushback on these stocks. But yeah, if you come out positive, maybe it's worth the watch list. All right, Lou, what do you got this week? Definitely lots of liquidity, right? So anyways, I'll see myself. Dan, we always talk about big banks kicking off earnings season. For me, it all starts with Delta Airlines, ticker DAL. They are out this morning with a solid earnings beat, 156 compared to 151 consensus. Part of this was that fuel was a little less bad than feared with everything going on in the Middle East. But most of it was strong, diverse revenue flows. Delta is just finding a lot of ways to win. Premium upgrades, corporate travel, cargo, even doing maintenance on everybody else's planes, premium up 17 percent, cargo up 40 percent, maintenance up 32 percent year over year. If there was a disappointment, it was that overall passenger revenue was somewhat below expectations. What's the takeaway here? I think good things for United, maybe not good things for other airlines. But overall, this is a good barometer to the economy. and the economy, at least those who can spend, are holding up. Delta is and continues to be the best airline operator in the U.S. and another strong report from them. Just a really well-run company. Dan, what do you think about Delta charging extra so that I can sit with my kids on an airplane? I hate it. As somebody who has kids and has to travel sometimes, it stinks. Let's go Primo Brands. I don't want to do it. I don't want to do it, but we're going to go Primo Brands this week. All right, congratulations to Andy Cross. That's all the time we have for today. Thanks to Andy and Lou and Dan Behind the Glass. We'll see you here next time.
