Santa’s Stock Wishlist: Companies We’d Love to Buy (If the Price Was Right)

0:00I've been thinking about it recently and I can still remember the exact moment before I launched my very first business. I was sitting there staring at the screen and the self-doubt is hitting me like a ton of bricks. Is this really the right decision? What if I completely fail? What if no one buys anything? Making that leap was terrifying, but pushing through that uncertainty was one of the best decisions I ever made. I just wish I had Shopify back then to ease my worries and handle the heavy lifting for me. Shopify lets you tackle all those important tasks in one place, from inventory to payments to analytics, you name it, making your life easier.

0:34They even accelerate your efficiency with built-in AI tools that help you write your product descriptions and enhance your photography. Plus, they feature that iconic purple ShopPay button. It's one of the best converting checkout buttons on the planet, meaning fewer abandoned carts and more sales for you. And if you ever get stuck, no worries. Shopify is always around with their award-winning 24-7 customer support. It's time you turn those what-ifs into... With Shopify today. Sign up for your$1 per month trial today at shopify.com slash beginners. Go to shopify.com slash beginners. That's shopify.com slash beginners.

1:13This show is sponsored by Liquid IV. Now that the weather is finally heating up, One of my favorite ways to step away from spreadsheets and the SEC filings is getting outside for an early morning run. But once the summer heat truly kicks in and I start breaking a serious sweat, I know I need to hydrate and actually replenish and it gets a lot more important. No matter what activities get you moving, you need to stay hydrated as well. Liquid IV delivers longer lasting hydration than water alone. And right now, you get 20 % off your first order with Code Investing at checkout. I always keep a packet of their hydration multiplier sugar-free in my gym bag.

1:46Their white peach is absolutely delicious. It's incredibly refreshing and it's made with zero artificial sweeteners. I'll say it again, zero artificial sweeteners. Just one stick and 16 ounces of water hydrates faster than water alone. It's powered by LIV HydroScience, an optimized ratio of electrolytes, essential vitamins, and clinically tested nutrients that turn ordinary water into extraordinary hydration. Plus, it actually retains that hydration for up to four hours. So you feel refreshed all morning long. Get moving with superior hydration from Liquid IV. Tear, pour, live more. Go to liquidiv.com and get 20 % off your first purchase with code investing at checkout.

2:23That's 20 % off your first purchase with code investing at liquidiv.com. This is a company that I have been interested in for a long time. I haven't done the work to learn about the business, but I think that it's intriguing. it feels like it's become, it's gone from, it's gone from it's nice to have to must have. Like you look at different polls and people talk about like, you know, if you had to cut back, what are things you would cut back on? And Netflix is never one of those things. Love this podcast because it crushes your dreams of getting rich quick. They actually got me into reading stats for anything.

3:03You're tuned in to the Investing for Beginners podcast. Led by Andrew Sather. and Dave Ahern. Step-by-step premium investing guidance for beginners. Your path to financial freedom starts now. Starts now. All right, folks. Welcome to Investing for Beginners podcast and Merry Christmas. Today's episode will go live on Christmas Day. So if you celebrate Christmas, we wish you a Merry Christmas. And with that, let's go ahead and dive in. Our topic for today is what kinds of companies do we wish Santa would weave under the tree for us? So i.e. what would we love to get from Santa as a Christmas present in the form of a stock investment?

3:49So with that, Andrew and I are going to take some turns and talk about companies we wish we could, that Santa would bring us. So with that, let's go ahead and dive in. What would be company number one for you, sir? Ben, I really got so many, but one that I think is kind of fun for me personally is On Holding. If On Holding just came down to a reasonable price-to-earnings ratio, that company has been growing like a weed. I don't know if you've tried the On Cloud shoes before. The cloud part of the name is very much earned. They're great shoes. Give me an extra couple inches, which I don't hate.

4:32And, hey, I mean, dad style all the way. Like, I'm not going all the way down to, you know, too much. It's tasteful dad style. I'll just say that. So great little company. I've held Dick's Sporting Goods for a while. And that's been one of those stocks where it's like, why is the company doing good? And I've never seen a good answer. I've in fact seen multiple people on Twitter ask, why is this company doing so well? It's just a retailer. And I do believe it's their relationships with brands like On Brands and the way that they showcase them in their stores. And if you listen to the On Brands earnings calls, they're doing a good job.

5:24They're being strategic and putting themselves in the right places to kind of keep that brand, keep the brand vision while also getting a lot of exposure and not going too crazy. So it's just one of those growthy growth names that it's like, man, I wish this would become a value stock so I could jump all over it. But that's one for me. And I like the shoes. So maybe I should have just said that and I could have shut up and we would be on to the next. But yeah, on likes on. All right. So you'd be okay with the shoes or the stock is what you're saying. Yeah. Good point. I would. Yeah. Okay. Yeah.

6:03All right. All right. Good to know. Good to know. All right. So for my first wish to Santa, I would love Mercado Libre to see that under my tree. If you're not familiar with Mercado Libre, this is the e-commerce brand from Argentina. So Latin America is their playground. uh this company so here here's an interesting tidbit for you i saw this on twitter the other day and i actually had to check it this company has grown at has grown revenue at 30 or more for 27 quarters in a row wow so that's over seven years that this company has grown at over a 30 revenue growth uh so that is mind-boggling uh it's expensive it's trading at a 50 p.e.

6:53right now So if Santa was willing to give that to me at a much cheaper price, I would be all over this like white on rice. So I would be a big, big fan of this. So the company has got a great culture. If you've ever been to Latin America and you know how hard it is to travel there, the fact that this company can deliver packages within a day a la uh amazon i used it once when i was there i had a i needed a cable for one of my uh podcasting gears and i ordered it from mercado libre and i got it the next day and my wife's town where she lives is out in the middle of nowhere and so the fact that they were able to get it to me in a day was pretty amazing so So the company has great...

7:47All the metrics are fantastic. It's owner-operated. They've been around for a long time. And they are the unquestioned leader in that part of the world. And it's done really well in the market as well. So I would love the Santa to give this to me on the cheap. So I know nothing about them. How big could they get? They could get... Well, right now they're at a market cap at about$105,$106 billion, somewhere in that range. They could probably double that, no problem. I think they've really, a little bit like Nubank in that they're primarily in Argentina, Brazil, and Mexico and Colombia. And Mexico and Colombia are newer to them.

8:37So this is, they've been very prudent. They've been slow to expand. So they try to, you know, they're very good at experimenting. Like, okay, let's throw this out there. And if it doesn't work, we'll fix it and keep fixing it, iterating on it until it works. And so they, I guess they guinea pigged Brazil and Argentina. And so now that they've got their, you know, their mechanisms in order, now they're starting to expand into other adjacencies. So I could easily see a doubling, if not tripling their market cap over the next 10 years as it continues to expand and hopefully as the Latin American economy continues to improve.

9:22That's awesome. Yeah, that's helpful also in getting the sense of their geographies and everything. So come on, Santa. Dave hasn't been too naughty this year, I don't think. Oh, I've been okay. Let the audience judge that. I'm going to throw one that's been on my wish list for a while. And this one is Wingstop. For whatever reason, I am just a sucker for restaurant concepts, franchise concepts that the growth, the number, the path to scale just is a no-brainer. um apparently i haven't learned my lesson because i bought dominoes and that wasn't the best investment but um they currently have over 2900 locations worldwide when i think of the scale of like a subway subway is what 10 11 000 locations so a company like wingstop could probably triple number of locations and that would be a lot of growth over a lot of years and and i like i just like the simplicity of that kind of an idea.

10:30But it's always been very, very expensive. Reading the description of the company and what they do makes my mouth water quite a bit. But classic wings, boneless wings, tenders, chicken sandwiches. I actually don't eat there, but I've always been a fan of Wing Wednesday at my local pizza shop back in my hometown. So So I don't know if Wingstop does Wing Wednesday, but man, if you did 25-cent wings, in my humble opinion, that would pop off. And who doesn't love wings, especially with the way everybody loves football? So I think Wingstop is solid. I have looked at it, but again, it's just been expensive, and they are pretty aggressive on some of their tech investments.

11:21So I'm not trying to say it's a slam dunk or anything, and it's definitely still in its growth-y-growth stage, but it seems like a pretty cool growth story. And then I guess the next extension to that is that you would hope to have a good capital allocator when they finally mature and hit that saturation point. Because if you do, now the compounding just continues to snowball for who knows how long. but until then you're kind of betting that that all plays out if this is a super long-term investment. Yeah, you know, chicken has been on a run lately, hasn't it? Between all the chicken places, you know, Chick-fil-A, Popeyes, Wingstop, Buffalo Wild Wings.

12:08I know I'm missing some of the - Dave's Hot. Yeah, Dave's Hot. Raising Canes. Yeah, Raising Canes. Yeah, Chicken has been on a roll over the last few years for sure. So Wingstop is definitely a part of that. And it's one of the few of these companies that's publicly traded. So it could be an interesting train to hop on. Yeah, great point. All right. So I'm going to switch it up and go with something super boring. I'm going to go with Intuit. So, you know, this is the, I guess, accounting, you know, powerhouse. So the company behind QuickBooks, among other things that they offer. And this is one of those companies that is, if you look at lists of people, oh, I'm a quality investor and I want quality companies.

13:13Intuit is always probably in a top three, four, five of companies that everybody considers one of the best in the world, but it's also perpetually expensive. So it's trading right now at a 45 PE. So if Santa would be kind enough to bring this to me, I would be eternally happy. The company has grown revenue at 16 % over the last 10 years. So a company that's almost$200 billion in market cap, that's nothing to sneeze at. The margins on this company are kind of redonkulous. You got gross margins of 80%. You got operating income of 26%. You got net income of 21%. like yeah so uh this this is a powerhouse business that has been on my air quote wash watch list slash wish list uh please santa bring into it to me love it love it yeah i i've had them on my watch list for a long time too and i always thought the acquisition of mailchimp was interesting and i was wondering if if they are going to have to write that off.

14:24And as I've been waiting to see if it happens, they haven't. So that makes me think that it was a price well paid. Agreed. Yeah, software is fascinating. So then I guess I'll throw a software name on there and that would be Cadence. Cadence is to semiconductor software what TSMC is to semiconductor manufacturing. there is a competitor synopsis, but Cadence has a lot of the advantages that you will hear about when it comes to an industry standard software. And it comes with the know-how, the expertise, all the advantages. And you hear a lot like Roper Technologies is another one that kind of gets thrown in the whole industry standard software idea.

15:18And Adobe, I guess, for a long time was considered that way too until AI came and changed everything. But just the hyper specialty and the very niche way that this software does what it needs to do, the best chips in the world would not be able to be created, designed, manufactured without Cadence today. So I think it makes it very, very strong. And it's just been always expensive. that was actually uh that was one of the ones that was on my uh honorable mention for oh really list yeah yeah okay wow you got an honorable mention list i don't know we had a word ceremony gone yeah well um but it was uh a company that as i've been diving deeper and deeper into the semiconductor space has certainly come across my radar many, many times.

16:20But to your point, it's not cheap by any stretch of the imagination. No, and I have been a part of experiments to try and move away from Cadence and I was like, nah, we need to get back to Cadence. Yeah, exactly. So you used Cadence when you were in the semi-world, correct? Yeah, pretty much exclusively, yeah. did you learn it in college was that how they taught you how to do that part no your engineering okay so it's something you learned once you got once you got in a job yes did they have the cadence have people come and help teach you how to do it or was it yeah or yeah they did workshops and everything and one-on-one help yeah all right so my next one is MSCI.

17:14So this is the company that runs, they basically operate online funds. So they're an ETF and index fund provider and obviously they specialize in MSCI, which is the fund that they run, which can feature a variety of different industries, sectors,

17:45and stocks and whatnot. So this is a company that kind of competes along with S &P Global and also Dow Jones to sell the indexes that people can either invest in, like us, or also for fund advisors to create a fund and they can sell it via one of those vehicles. So this is a company that's been around for a little while and it's one of the OGs of this space. It's a smaller company, which is a little surprising. It's only a 40 billion market cap and it's trading right now at a 34 PE, which is actually down. It has come down over the last little bit. The company over the last 10 years has generated revenue around 11%.

18:30Again, margins, very, very redonkulous. Gross margins of 82%, free cash flow margin of 48%. So this company prints money. Capital Light doesn't even begin to describe it. So this is something that I would be very happy if Santa would bring to me this year. If you love to diversify with ETFs but are overwhelmed with all the options, the Plink app can help. Whether you're looking for stronger growth potential, stability, or ways to help hedge against inflation, the Plink app makes it easy to browse nearly 2 ,000 ETFs with thematic categories built around your goals and comfort with risk. It has categories like commodities, bonds, international, large cap sectors, and more.

19:14You can search stocks by categories too, including artificial intelligence, gaming, fitness, wind energy, or even companies that pay dividends. Once you find what's right for you, your AI-powered newsfeed serves as a research sidekick, helping you stay informed with concise recaps on the investments you're interested in and the ones in your portfolio. Build a portfolio that fits your needs and go after your money goals with Plink. Head to the link in the show description to download the Plink app today. Investing involves risk, including risk of loss. Diversification does not guarantee profit or protect against loss.

19:43ETFs are subject to market fluctuation and additional expenses. Opinions expressed on this podcast are not necessarily those of Digital Brokerage Services, LLC, member FINRA, SIPC. As business owners, I think we all understand that we're spending too much time managing the small stuff with our business's finances. because there's multiple bank accounts, multiple apps, a place to do your bookkeeping, a place to do invoices, transfers to keep track of debt payments. It goes on and on and on. But imagine you could have all of your biggest hassles with accounting and finances in one place. And that's what Found offers.

20:13It's a business checking account with built-in bookkeeping and tax software designed for small business owners like you and I. Found empowers us to keep things organized and unlock time to strengthen our company's competitive advantages, which as we all know on this show is the best way to build a thriving business. One of the things that is really critical in this day and age with the power of the internet to work with so many different types of people in so many different places is the ability to make contractor payments easy and trackable without all the ridiculous fees. Found has that too.

20:42Take back control of your business today. Open a Found account for free at found.com. That's F-O-U-N-D dot com. Found is a financial technology company, not a bank. Banking services are provided by Lead Bank, member FDIC. Join the hundreds of thousands who've already streamlined their finances with found. What's the best way to get started in the market? Download my ebook for free at stockmarketpdf.com. That's awesome. Yeah, that's a cool one. And bonus points for being a finance geek one. Right. Yeah, exactly. Yes. Thank you, Seda. I'm going to go back to the boring Fastenal. This is a company that's just slow and steady, just consistently.

21:30It's like a rock, and it just continues to just compound capital. But it's weird because it doesn't do it in a crazy high growthy way, and yet the valuation still stays super, super high. And I've never been able to figure out why that is. my only theory which is

21:56as half-baked as something that I might try to put in the oven myself. So take this with the biggest grain of salt. But I just wonder if it's one of those stocks where a bunch of people made money on it and they're just like, I'm never going to sell this. And so the valuation never comes down because a bunch of people made money on it and they have no reason to sell. and it continues to just steadily compound. So always has had a higher-ish PE. Right now, the four PE is at a 37. And it just kind of grows at that 5%, 6%, 7%, 8 % a year. Nice little dividend, 2%. And if you know industrial distributors, you know how they're just the best in their business.

22:43They're everywhere. quick fill inventory, all great things. They just fire on all cylinders. They just do what they do with excellence. And it just creates this, again, compounding machine. It's not going to knock your socks off. It's not going to feel like the next NVIDIA, but it just continues to compound. So over the last five years, investors have made 70%. Over the last 10, 318%. So still a small-ish company,$46 billion. But again, I could never get my growth estimates to match the valuation. It always just seemed pricey. And maybe that's a lack of imagination on my part. And that is often the case.

23:26So it wouldn't surprise me if that is the case. But just one of those things that I could never figure out. But great company. Yeah, it's a fantastic business. Again, And if you look at the list of high quality businesses that a lot of people would love to own, Fastenal ranks very highly. I think anybody that analyzes businesses and looks at the history of that company, the way it's run, their culture, top notch stuff. Yes. Yeah. All right. So my next one also could be considered boring and that's going to be FICO. So this is the Fair Isaac Corporation. So this is a data analytics business. If you're not familiar with FICO, you might have heard of the FICO credit score and that's really their bread and butter.

24:16So they basically focus on credit scoring and decisioning. So they basically help lenders determine who of us is eligible to receive their money. So when you go buy a house, when you buy a car, when you get a credit card, when they run your credit score, that's the FICO score. And they have data analytics that they've been using for a long time to help determine how credit worthy you are. And obviously the higher the number, the better. And the way that they make their money is they sell that to lenders, the score to lenders to generate revenue. So again, this is a super, super high profitable, crazy profitable business.

25:01Gross margins, 82%. Operating income, 47%. Free cash flow, 39%. The company is extremely profitable. It is growing revenues last three years, about 13%. It lasts 10 years, about 9%. The stock price has come down quite a bit over the last year or so. The director of, I want to say housing that President Trump elected has kind of been headed out for FICO. And they are, you could argue they're a monopoly. And so they've had a target on their back for quite some time. And this gentleman has been very negative about FICO and is trying to introduce force competition to start, which a lot of analysts have worried that that could hurt FICO in the long run.

25:55And we will see how that pans out. But valuation-wise right now, the trailing 12 months, it's trading at a juicy PE of 66. Their forward PE is 42. so it is far even though it's come down a lot is far far far from cheap but i would love for santa to give this to me this would be one of the one of the coup de grace for me to have this as part of our portfolio as a financial so you don't see anybody ever replacing it i i hesitate to see anybody replace it and i'll give you it is very anecdotal one of my closest friends works in the restaurant industry or i'm sorry in the housing market and he sells homes and i asked him about this like how do you as a as a seller of homes when you're talking to customers and you're trying to get them approved when you're working with banks i said do you use the advantage score which is the other score that they're trying to promote or do you use the fico he's like i use the fico every time because banks don't understand the advantage score.

27:06Customers don't understand it. The FICO is ingrained in our DNA as, okay, what is my FICO score? What is my credit score? And we associate that with the number that FICO assigns us. The other one is new enough and small enough that it just doesn't get a lot of play. I'm sure there are people that use it, but again, this is anecdotal to my friend, but he's been in the real estate business for 15, 20 years. so I feel like he's got a pretty good pulse on how that works so I guess that's my thought never say never but I guess color me a little more skeptical so it's kind of like a bet that the current financial system in the United States continues in its current state yes totally makes sense totally makes sense alright what should I throw out there I want to continue being cute, but I feel like that's going to get old and I can't be that cute.

28:06I run out of good ideas pretty quickly. So I'm just going to do one that everybody's sick of hearing about Tesla. And I've heard Vitaly Katzenelson talk about making comparisons between Apple and Tesla. And I'm not trying to say that that's exactly like, okay, Tesla's the next Apple. However, I do think you are seeing similar consumer behavior that you saw in Apple is happening with Tesla. So maybe in the world 20 years ago, people were like, why would anybody ever want the same phone? There's like 20 different phone brands to pick. Why would everybody want the exact same one? That's silly. Don't people want to customize and express themselves?

28:54And we still do, but in a different way. So the other big, obviously they have a lot of kind of small bets. And so you're kind of taking that alphabet approach where alphabets found success, duplicating successful businesses multiple times. You could argue they have three strong pillars that are three separate businesses that are just extraordinary. And Tesla has a lot of irons in the fire. So the imagination can run wild with that. And I understand that gets baked into the price. But then the other thing, which is such a dumb insight that I think calling it an insight is an insult to the word insight.

29:42But I'll just say that all the new homes these days are getting outfitted with electric vehicle chargers. And so it almost feels to me like inevitable. I've always been anti-electric vehicle and my first car I've talked about was sick, loud, all the cool things V8, I love it but it's just convenient to have a charging station and you pay enough times with high gas prices you're just like, what am I doing? and then you can pair that with a solar panel and longer-term-minded people can start to see a payoff. I'm not trying to say that solar is... There's a whirlwind of problems with solar, which is a whole other conversation.

30:32But I just think this is a long story. I wouldn't be surprised if it's another rough 5-10 years for Tesla. I do think the valuation is unsustainable, but it would be fun to just have and see what happens in 20 years. For sure it would. But I know that in my world, in my orbit, I know I see more and more of them on the road. And I think what I'm going to be curious to see is how this newer, this lower tiered model, I'm going to blank on the name of it, how that translates to more Teslas on the road. and if that continues to grow then I think that would be awesome I'm not going to lie if Santa said hey here's a Tesla for you I wouldn't complain yeah it takes some extra level of spoilage you know spoily brat to argue against that kind of a Christmas present under the tree right yeah for sure so i guess the the big question for the company i feel like uh tesla is definitely a like key man risk like how do you how do you think like you know he's mercurial to say the least yeah do you see him around in 10 years like you know still having his finger on on the pulse of the business or does you know 10 years he he wanders away not we but you know it doesn't have the same impact he does now yeah i mean i just i like the guy i like to root for him and that makes me probably the worst human being on the planet and i understand that but just like from a business entrepreneurial perspective like the dude is just smart and I think if he wanted to he could figure capital allocation out I don't think it for whatever reason he has this visceral negative reaction to the words capital allocation like he's even said on interviews capital allocation is useless that's not exactly what he said but something to the effect of what I do is so much more important than capital allocation but like either he will have to leave at some point or he will have to figure out capital allocation.