The Stocks Behind Everyday Life (Part 2)

0:00One of the things about Bitcoin that's really surprised me is how much easier it is to transact with these days. I was always under the impression that using Bitcoin as payment was inefficient, expensive, and risky. But Cash App has made it easy. It seems like Cash App is being accepted by more and more merchants everywhere I look. It's usually a lot of small business owners like myself, and now many of them are starting to accept Bitcoin as payment. Bitcoin is often talked about as an investment, but it was built to be used. With Cash App, you can actually do that. Send Bitcoin instantly, pay at local Square businesses that accept it, or move it to your own wallet whenever you want.

0:31It works more like real money and less like something locked in an account. For a limited time, new customers can get$10 added to their balance. Just use code CASHAPP10 when you sign up. And don't forget this part. Send at least$5 to a friend in the first two weeks. Terms apply. Cash App is a financial services platform, not a bank. Banking services provided by Cash App's bank partners. Bitcoin services provided by Block Inc. brand. For additional information, see the Bitcoin disclosures at cash.app.legal.podcast.

1:25just an idea. Shopify makes it a whole lot easier to take the leap. They've got thousands of templates so you don't need to know how to code or design. Just point, click, and your storefront looks professional from day one. Once customers start finding you, Shopify's checkout saves their info so they can buy with one click. And when you hit a wall, their built-in AI assistant sidekick has answers on the spot. No waiting, no digging. All you need is the idea. Shopify handles the rest. If you're serious about hearing your first, start your free trial at Shopify.com slash beginners today. You heard that right.

1:59Start your free trial today at Shopify.com slash beginners. That's Shopify.com slash beginners. Love this podcast because it crushes your dreams of getting rich quick. They actually got me into reading stats for anything. You'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.

2:35All right, folks. Welcome to the Investing for Beginners podcast. Today, we're going to do part two of stocks behind everyday life. Last session, part one, we talked about different places you could look for stock ideas in your everyday life. So instead of just returning to screeners, you could actually pay attention to the things you interact with and use on a daily basis. And those could be a good to find investment ideas. So the last session, we discussed, for example, your morning routine, maybe places you go, how you got to work every day and companies kind of associated with that. And today we thought we would take a look at companies you could find at work and places associated with your work workday life.

3:21So let's start with, I guess, at work. What are some companies that you think would be a good choice to think about looking at? Man, there's so many. Shout out to the people who commented though. Thank you, Daniel, Grant, Kyle. And nice comments about Adobe too, Kyle. I think that was really insightful. So appreciate you guys commenting and happy to be here for part two. I don't really have like a super favorite. I know you got like a list, right? But which one would you want to start on first? Let's start with the overlord. Let's start with Google. Ooh. Okay. First thing on my homepage, right?

4:02New tab, blank slate, going to be a good Monday, right? Yes. Well, Google over the last five years in the stock market has returned 27 % a year. So that would be a pretty nice return if you bought it during the depths of the pandemic. By the way, I just want to say this. 27 % a year, you're like, okay, that sounds good, right? But over a five-year period, that's 236%. So the stock more than tripled, by the way. I just want to throw that out there. So 27 % a year is a nice thing and will make you lots and lots of money. We're talking about a company with$370 billion in revenue. and continuing to grow revenue last three years, 10 % a year.

4:49It's average over the last 10 years, 18%. Obviously that's slowed down, but still you grow three years in a row at around 10 % a year. It's no surprise maybe that the stock has done so well. When you think of Google, what do you think of as far as maybe things about the stock that people don't necessarily understand? I think everybody's heard of YouTube at this point. But what I don't think people realize is it's the number two search platform in the world. So they have Google Search, which is a verb. And now you have YouTube. And they're the second largest. And I don't think people realize how strong of a position that puts the company in.

5:38So that, to me, is huge. I think the other thing that probably gets overshadowed is how well Google Cloud has done coming from behind, really being the third, very, very distant third player among the big hyperscalers, i.e. Amazon, AWS, and Microsoft Azure. They have kicked some serious booty, and they've done really, really, really well over the last three or four years. and it's turned from a negative profit business to a profitable business for the business unit itself, which is impressive. And so I think that really flies under the radar when you compare it to search and YouTube. And I also think that the AI part of it is now maybe starting to get some love, whereas before it was kind of mocked and ridiculed, rightly so, because they really were fumbling out of the gate the whole competition with ChatGBT and everything that was going on with OpenAI.

6:36So to me, those are the things that really kind of fly under the radar about Google. What about you? Just because you mentioned it with the whole Google Cloud thing, which is mind-boggling, it actually makes more revenue now than YouTube ads. That's massive. I mean, it's crazy. Yeah. And they've grown that very fast since 2017. They've more than 10x revenue for Google Cloud. Last thing that stands out to me, just because I'm a boring balance sheet guy, is they have their net debt free. So they have more cash than debt and they have 95 billion in cash, which is a lot of money. It would be nice to see that in the checking account.

7:18Would it not? Yeah. It wouldn't be a bad day. All right. We're in Google. What are we, what are we typing into Google? What, where's your first place to go? You got to check something, right? You check in your Twitter, you check with you on email. What are you doing? I'm going to actually go to my CRM. Okay. Wow. I'm going to look up at Salesforce. Let's look up Salesforce. The ticker is CRM. Over the last five years, the stock has actually declined. It's down 0.7 % annually, but the company itself has grown a lot. Similar to Google, it's slowed down the last three years, but still an average of 10 % a year.

8:01over the last 10 years it's 20 % a year if you look at that average so uh has historically grown really fast still growing in a good clip and revenue of about 40 billion so that's that's maybe bigger than i would have thought that's a lot of revenue for a software company i don't i don't think we think of software companies as big revenue uh we were looking at what was it keurig and some of the other big consumer-facing names. I don't remember how many of them had$40 billion in revenue, but I don't think it was many of them. No. No, I don't think so either. The thing I think about when I think about Salesforce is I always associate them with Slack because that's what I have used from their business.

8:49But I know that they have a lot of office uses to make what people do in their office more seamless and more efficient and more effective. And I think that's really why they've been able to stay. The company, it's not young. It's been around for a while now. And Mark Benioff, who's the founder and CEO, he's been around forever. So they're more of the dinosaur in the race, but they still got some legitimacy to them for sure. Gross margins, almost 78%. Operating margins still down to 22 % or 21%, excuse me. so I'm no expert but a software company at 21 % operating margin can probably get those numbers higher and so you would think that that would lead to more EPS growth EPS growth has been nice for the company you take last five years and growing over 20 % a year in earnings per share so that's a nice nice growth rate and I think when I always thought of Salesforce because we've been doing this a while I never would have thought of them as a dividend paying company they now officially pay a dividend end, which is something you would want to see for a value guy like me.

9:58So that's very interesting. The PE is actually down to 19. I'm sorry. Next 12 months, PE of almost 24 PE, backwards PE 34. But there's a lot of stock-based compensation too. So we can't. If you're going to invest in this company, go research stock-based compensation. yes before you do please yeah by all means pe pe does not help you with stock-based compensation does not all right maybe we just we're a salesperson we had some rough sales calls if it was me i'd probably need like a caffeine jolt or something to kind of pick me up where do you want to go to get some caffeine well starbucks duh starbucks i'm shocked they got one down in the lobby right right yeah they should otherwise go go change your company right no just kidding right uh starbucks i'm surprised we didn't talk about them in part one but last five years the stock's actually flat almost perfectly flat obviously you get a little roller coaster up down and up down.

11:13But yeah, if you had bought five years ago to today, you would not have seen any share appreciation from that. Growth is slowing there almost 5 % annually over the last three years, 7 % over the last 10 years. Sales of$37 billion. So with just the fact that Starbucks is everywhere, I don't know. I guess I would have thought it would have been a higher number because we just set a number that's lower than Salesforce. So Starbucks is real. I can see it. Salesforce is a little thing on a website. This does not compute, but here we are. Well, I think that when I think about Starbucks, I also think about you getting a$6 coffee, me getting a$6 coffee.

11:59And if you take$6 coffee into$35 billion in revenue, that's a lot of coffee. That's true. Good point. Yeah. So there's a lot of, even though it's a big company and it's everywhere, where the per person average is much, much lower than fast food restaurants, for example. So even going to McDonald's, you're not going to get out of there without spending less than 10, 11 bucks. I found it interesting that out of the almost 37 billion in revenue, 22 is beverage. The remaining others is food and other product type, which is like licensing. You go get a K-Cup and it's a Starbucks brand. And then you also have international revenue plays a decent part of that 7.6 billion out of 36, 37.

12:48That's an important thing for Starbucks too. It's a international business, not just us. Right. I know China has been, China has been big on their growth plans. For sure. Yes. Yep. All right. So we get done with our coffee and we have to go back to work and we have to get on a call. I'm going to have to dial up Zoom. Okay. Yeah, let's do it. To do the video call. The Pandemic Darling. Pandemic Darling. How have they done since? Ticker ZM. You don't want to hear this. Okay. Nobody wants to hear this. This is a sad, sad story. last five years zoom is down 83 percent went from over 500 a share to now 82 a share so that's losing 30 a year that's pretty bad but uh revenue 4.75 billion it's a pretty pretty good size i don't know why i would have thought of zoom as like a couple billion or something but they're driving a lot of revenue.

13:55I honestly can't really think, how does this company make money? Because I've never really looked at them deeply. I couldn't even tell you how they make money. Low PE though. PE 21. And over the last three years, growth has slowed quite a bit. I don't know if that's because of tougher comps, the whole Wall Street saying. I guess if you look at past five years, revenue has grown almost 29 % annually per year. So it's like, wow. Business has grown by a ton, revenue is up a ton, and the stock's down a bunch. What's the lesson there, if anything? The lesson is that, for me, you have to understand what the business does, and you have to understand how it fits in the ecosystem and what is realistic for the company.

14:46If you talk about what happened during the pandemic, it's obvious that everything got pulled forward for the business. And everybody thought that this was going to be the new dichotomy. This is how we were all going to do business. I think we all overestimated how much we really were going to do business that way and maybe how much human interaction still really matters. So I think for me, if I looked at the business, how do they make money? They make money from this, this, and this. Okay, do I think that's going to continue? And how likely is this the new paradigm? Is this a new way we're going to do things?

15:24And I guess I probably would have been more skeptical about it. It's easy for me to say in hindsight, of course, but I think even at the time I was like, hey, don't see this being a thing beyond the pandemic because everybody, everybody complained about it. So yeah, for me, I'm the strict teacher from the seventies. Who's like wrapping your desk with a long yardstick. The PE was 800. I got down to like 170. 70. That's the price to earnings ratio. And your price to sales in 2021 was 42. In 2020, it was 34. So price to sales, you generally don't want to see that much higher than 10. And it was 40.

16:08I remember the days when the 10 price to sales used to be considered high. And now I'm saying the 10 might be decent. But yeah, just huge price to sales, huge price to earnings. This is what happens when you play silly games, you get silly outcomes. But to your point, if it would have been a thing, if it would have been not pulled forward, if everybody would have been on Zoom and nothing else, then maybe this is a different story and maybe the stock would have been one of the great performers. That's the thing you just never know. No, you do not. What if you could get a 25 % match on every dividend you earn?

16:47Well, now you can. When you earn dividends on the Plink app, you'll receive a 25 % cash boost up to$250 bonus per year. That means if you earn$1 ,000 in dividends, that's$250 more in your pocket. Your bonus can be taken as cash or reinvested, giving you potential to grow your earnings. No opt-in, no extra steps. As long as you own eligible dividend-paying stocks, ETFs, or funds on the Plink app, your dividends are automatically boosted each month. And to make sure you never miss a bonus or a payout? That's where the Income Hub comes in. It gives you one clear, simple view to track your bonus earnings, upcoming dividend payouts, and easily discover dividend earning opportunities.

17:25Goodbye, spreadsheets. Hello, smarter and more rewarding investment income management. Head to the show description to download Plink and start earning your 25 % bonus. Max dividend bonus is$250 per year, payouts made monthly, no opt-in required. Other terms apply. Investing involves risk, including risk of loss. Opinions expressed on this podcast are not necessarily those of Digital Brokerage Services, LLC, member FINRA, SIPC. I've been paying a lot more attention to what's actually happening inside my body when I train lately, especially when I hit a wall with my performance and nothing I do seems to move the needle.

17:56What surprised me is how much of how you perform and recover actually comes down to what's happening in your blood, markers most people never think to check. Here's what most people overlook. Training gives your body the stimulus, but your internal environment determines what actually happens next. Things like your glucose, whether your body is burning clean or running on fumes. Your omega-6 to omega-3 ratio. Which one is winning the inflammation battle after pushing your body? Your DHEAS. One of the building blocks your body uses to make testosterone and one of the first things to quietly decline without you noticing.

18:25When these markers are off, the right moves don't hit as hard and the wrong moves hit way harder. When they're dialed in, the work you put in actually pays off. That's why I use function. 160 plus lab tests a year so I can see exactly what's going on under the hood, not guess at it. If something is working against my performance, I want to know. That's what actually taking your training seriously looks like. I use this and you should too. Check your health the way I do. Function provides 160 plus lab tests for a dollar a day and member pricing on MRI and CT scans. Join at functionhealth.com slash beginners or use gift code beginners25 for a$25 credit toward your membership.

19:00What's the best way to get started in the market, download my ebook for free at stockmarketpdf.com. So let's say we work in marketing. We work in design. We need a computer. Contrary to what Stephen says, we're going to buy a Dell. So let's look at Dell computers because I think they're solid computers and they could be a good investment. I don't know. Over the last five years, the stock is up 17 % a year. It has done pretty nice. This interesting U-shape where it came down quite a bit after 2021 and then rocketed up higher and it's now at that nice gain level. We're talking about a revenue of $100 billion.

19:41There's a lot of computers being sold and that's way more than I would have thought. Yeah, yeah, for sure. Way, way, way more. I mean, to put that in perspective, the last show we were talking about Visa and they were doing annually 30 billion in revenue a year. And so this is almost, it's over three times that. Not growing much over the last three years. Revenue is actually down. Over the last 10 years, revenue is up 6.5 % annually. Not terrible from a 10-year perspective, but it looks like things could be slowing down now. It's a low margin business. If you know about kind of tech hardware or just some consumer products in general can be low margin.

20:27So if revenue is at$100 billion, but gross margin is a little over 20 % and your operating margin is 7.3%. So you look at that$100 billion in sales, it's a big number. It sounds really impressive, but with a low margin business, not a lot of that's going to shareholders. So you really have to watch the margins closely because when margins are so small, big swings will make huge impacts to their ending profits. Yeah, it's not just about the top line number. It's also about the bottom line number and what happens in between all those things. Yeah, yeah, totally. All this work talk's making me hungry.

21:08So can we order something? What do we got options-wise? We got choices here. So we could do something like a cool thing to do would be to get some Wendy's from DoorDash. Oh, okay. So we could do a two for one. Are you getting... You're just saying Wendy's because you like the Dave's... What do they call those sandwiches? Hot chickens or whatever? Uh-uh, no. No. You've never eaten at Wendy's? You know the Dave's burgers? Really? You've never... Oh, man. They're like these square patties. They have a burger named after you. You should go check it out. Okay. I'm actually disappointed. I don't know if you can hear my voice.

21:53I'm a little bit disappointed. Yeah, a little bit. Yeah. Okay. Well, I'm going to look at DoorDash first. Similar chart to Dell. It has that U-shape where it came down during this crash and then ramped itself up. But if you bought the stock five years ago, you would be up around 7.5%. And man, we should really be comparing this to the S &P because I'm so curious. So I'll throw that in real quick. Over the same time period, the S and P is up 16 and a half percent a year. So if you bought DoorDash five years ago, you'd actually be trailing the market. Even though the revenue has grown 50 % a year over the last five years.

22:37Wow. I don't even know. That's such a big number. I'm curious, like beginning number, ending number. And I have to pull it up. So using the power of fiscal. So that's revenue going from 800 million to 10 billion. So revenue more than 10Xing and the stock underperforming. Interesting. That's very interesting, isn't it? Yeah. But the market's efficient, right? Oh, yeah, totally. Like, how could it not be? Everybody knows what the price of a growth stock should be. Right. Obviously, it's so obvious. obviously. Revenue close to$12 billion. That's a big business. Yeah, right. It's become a big business.

23:24That's a big boy now. So what is the price to sales for DoorDash? Like thinking about what you just talked about with Zoom. I'm just kind of curious. Yeah, good question. Let's pull it up. So in 2019, price to sales was a 68. It's now come down to a more moderate nine. And the price earnings was negative. So they only got profitable very recently. Wow. So they've actually grown into that a little bit better. They didn't draw down 80 % like Zoom did. Right. Yeah. Yeah, for sure. Well, I mean, their revenues are going in the right direction. Quickly. True. Whereas, yeah. Where Zooms were not. Very good point.

24:03Yes. Do you use DoorDash personally? Do you use any of the apps? No? No, never. Uber eats nothing? No. No. No. Oh, man. I'm a cheapskate. I prefer to go to the restaurant and pick it up myself. Yeah. I mean, you can't argue with that. These prices are pretty ridiculous. Gross margin, 50%. Operating margin is still low at 5%. So you would think with a software business, can they expand the margins? And you would think that that would be the story around the stock. If it can overcome, it's still a pretty high PE, 152. So you would think that getting the PE lower, you're going to need some of that margin expansion.

24:43I don't see the PE staying that high that long when operating margin's at 5%. So not to say it won't be done, but yeah, it'll be interesting. I think the business models for these are really interesting. Is it something that, particularly around the younger generation, have they made it into this habit where they're going to continue using it because they enjoy paying for the convenience? Or is it something that was kind of like fueled by low interest rates. We saw so many gross stocks that were fueling growth just by funneling all this money into subsidizing, basically. In the case of a lot of apps like this, they were subsidizing the growth.

25:24So you were getting prices that were way cheaper than they should have been because the companies didn't need to make profits. Now that that's the case, can they continue? From what I'm seeing, revenue up 28 % a year over the last three years. maybe this is this is one case where they're able to continue it so maybe it is a secular buying habit but that's way outside my circle confidence so I could not tell you whether that's yay or nay yeah ditto right there with you yeah so I've got a food coma now we're back at the office we're back at our computer I got a food coma thanks to DoorDash oh we didn't look at Wendy's I apologize no we didn't look at the food how'd you get how'd you get food coma without the food okay wendy's stock not done well down 60 total 16 a year that's pretty bad over the last five years revenue to 2 billion and revenue growth number is not terrible over the last three years it's four percent a year but over the last 10 years it's one and a half so maybe they're kind of rebounding their revenue growth.

26:33But you look at a longer time frame, it's not been a great business story, at least on the top line. No, no. It makes me wonder if they are either not organically growing stores or whether they're just struggling with same store fail. Right. Maybe they have an older fleet of stores, i.e. they've been open for 15, 20 years. And so the year-to-year sales for those stores are going to be a lot lower, and that would drag down the company, especially if they're not growing very quickly. And so that would cause them to be a lot slower in that realm. I mean, man, you sound like you've looked at this business, but I'm pretty sure you haven't.

27:18I haven't. Unit growth has been meandering at best. And then when we look at same store sales, I'll just look at a global. Their best year was 2022 where they had a 10 % same store sales, but everything else is under five. And then you've had 2021 and 2024, which is under 2%. So yeah, I mean, you got one nice year of 10 % same store sales, but when the rest are pretty low, they're not doing great at getting more traffic to those stores. no no it sounds like you're a fan of the food so maybe they maybe they need a new a new ceo or some new blood in there to kind of revitalize the company no man fast food's cooked i hate fast food it is so garbage lately good okay it really is it's too it's too expensive and the portions are getting smaller and that's why everybody's going to texas roadhouse because if i'm gonna spend that much might as well get a juicy steak yeah true very good point okay now we have a food coma now we have a food coma so instead of going up the stairs we're going to take an elevator oh okay interesting because yeah because we're too tired to take the stairs up so let's look at otis and see what how the elevator can help us yeah so ticker symbol otis stock has been decent over the last five years, almost 8 % a year for the stock.

28:47A$14 billion sales company and revenue is slow lately, but earnings per share continuing to grow at a nice rate, 9 % and 12 % a year over the last five. So earnings per share growing well, even though the top line's meandering. What are your thoughts on all this? I have seen and heard people discuss it as a potential stable cash generating cow that could be a great investment. But my gut tells me that you're going to have to expect GDP growth, dividend, buyback, and pray for the best. So if you are going to go all in, I don't think this would be the company to do so, but if you wanted to use it as a bond proxy per se, this could be something that would be a nice fit for that.

29:47Yeah, I like that mentality a lot. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+.

30:17Do you hear that? Sounds like breakfast is ready. Because Quaker's coming in hot with morning nutrition. 100 % whole grain oats. And a good source of fiber. To fuel the rhythm of your morning and kickstart your day. And that sounds absolutely delicious. Fuel to start whatever's next. Quaker, official sponsor of FIFA World Cup 26. So we've taken the elevator. I want to finally sit at my computer and then veg for my food coma. So what is going to be the vegging of choice? Nice. Well, it's got to be Netflix. Okay. Yeah. To all the bosses who are listening, just put earmuffs on because all of your workers are totally not doing this.