Asit Sharma (2:47)

U.S. dylan, the last few years have been very good to US investors or those who invest in the US stock markets. Cumulatively, you're looking at 53 percentage points of returns in just the last two years. That success is attracting a lot of capital. You throw in some of the macro picture, the promise of productivity from AI, an administration that looks like it'll be friendlier to businesses, which will hopefully in turn increase earnings power, which is one way an expensive market can get. Not as expensive. I think there's a general sense that things could go well here. But you know, on the other hand, I wonder, as you point out, the Shiller PE ratio seems to hand this weird kind of gift to every administration, which is you're probably going to see the markets go down on your watch, right? I wonder what will happen here. We've got two thirds of the total global capitalization just concentrated in U.S. markets. And the U.S. has about 26%, I say, only of world GDP. So it almost feels like we're due on a few fronts for a little bit of reckoning in valuations, especially as they've been pushed higher by big tech companies. So it's maybe six of one, half a dozen of the other.

Jason Moser (4:01)

Try to putting everything in context when we talk about valuations and where they stand. I mean, if you look at the S and P, right now the market is valued at somewhere around 30 times trailing earnings in around 23 times full year 2025 estimates. Now, obviously we just started 2025, but that I think this sort of shows you some of the enthusiasm there. And then some listeners may be familiar with that old rule of 20, right? When you sort of, you take the sum of the PE ratio and the inflation rate, ultimately 20 is kind of kind of the benchmark there. Anything above 20, you start looking at inflation, it stretched valuations. Anything below 20 looks like a little bit more of an attractive valuation. I mean, clearly right now, given those numbers I just gave you, that rule of 20 is being broken. Hey, listen, as investors, we're happy, but it is again, I think it gives you some context as to kind of why we have these conversations on potential.

Dylan Lewis (5:02)

Overvaluation in the market, valuations not getting in the way of where some big money is being committed, particularly in the AI space. This week, a new $500 billion joint venture, Stargate, announced by OpenAI in news headlines this week, ASIT. And this brings together this joint venture kind of an odd super friends of.

Jason Moser (5:23)

Us tech companies, the hall of justice, right?

Asit Sharma (5:27)

So we've got OpenAI CEO Sam Altman sort of shepherding this project or bring it together. He brings his friend Masayoshi, the very peculiar, sometimes extremely successful and sometimes not global venture capitalist. We have players like mgx, which is the United Arab Emirates sovereign investment arm. They're going to be investors in here. Then we've got companies that are maybe more familiar to us. Oracle is going to participate. Nvidia will participate. Microsoft is going to participate on some level. But really the equity funding is going to come from two sources, OpenAI and SoftBank. Together they'll from the details we're getting own a good portion of this project. We're looking at so many data centers, it could be 20 to 30 data centers to be built in the US over the next five years. Out of this $500 billion and a lot of money spent on GPUs now we should say this has attracted a lot of snark from one Elon Musk, who is not great friends with Sam Altman. Satya Nadella from Microsoft said, hey, we're good for $80 billion of capex this year. And Mark Zuckerberg got into the act today as we're taping to say, hey, look, we're going to up our spend over at meta to $60 billion of capex this year whether we're part of this project formally or not. So details are still to be nailed down. But it is interesting. I think it's also indicative of just the race to invest in AI, that part of the fervor and hype hasn't died down in 2025.

Dylan Lewis (6:59)

A lot of the names that you mentioned there, Microsoft, Nvidia, many of the leaders at those companies, very familiar to folks that have been following the AI space. I think Oracle came up and that is a name that we have not talked about nearly as much and probably to our detriment because over the last 1 3, 5 years the stock has performed incredibly well. AI has been a part of that story. What do you make of them coming into the mix here?

Asit Sharma (7:24)

Oracle has very quietly taken its licks. They very famously avoided the cloud and thought it wasn't going to be a great deal and then watched as Amazon Web Services and Microsoft Azure ate their lunch. Credit to Safra Katz, the CEO and Larry Ellison, the chairman, who decided to just build a new architecture from scratch. It turns out to be really conducive to running AI cheaply. So all these startups and other companies, enterprise Businesses, governments, academic, research institutions are finding that if they run their AI on Oracle servers, they actually get pretty good return for their money. So they've partnered up with a lot of companies and they are plowing money to build more data centers themselves. They're taking their learnings from missing the big cloud explosion and reinventing how they're going to service the cloud from scratch is paying off so nicely for them. And they've flown under the radar, as you point out. Pretty hard to do when you're a mega cap company like Oracle. But somehow they pulled it off. They've certainly caught investors attention now.

Dylan Lewis (8:28)

It reminds me a little bit of the great Microsoft revival that has happened over the last 10 to 15 years where humongous tech company that I think had a legacy reputation for a lot of investors and then found that next wave, in their case the productivity, cloud, software and the cloud segment overall. Maybe there's some more juice here for Oracle going forward.

Asit Sharma (8:48)

Could be. And I think that we should look at how aggressively they've invested in their infrastructure and how aggressively they intend to invest going forward. It matches some of the scale we're seeing out of Meta and Microsoft and Amazon, the companies we associate with not holding back when they write checks. Oracle has joined that club. Let's see what they do in the next few years.

Dylan Lewis (9:09)

All right, coming up after the break, Netflix hits it out of the park with its earnings. Where's the next chapter of its big growth coming from? Stay right here. This is Mouthful Money. Welcome back to Motley Fool Money. I'm Dylan Lewis here on air with Asa Sharma and Jason Moser. Earning season is fully underway and Netflix stealing a lot of headlines this week. After their report, Jason, the streamer reminding everyone, hey, we are number one. We are king of the castle when it comes to streaming.

Jason Moser (9:42)

Yeah, stealing headlines for good reason. I mean, it was a. I mean, it was just another really impressive quarter. Not that I think we should be surprised, but I mean, adding somewhere in their neighborhood of 19 million additional subscribers, very, very impressive. And I thought, interestingly enough, they noted in the call too, that it's not like most of those subscribers came from folks looking to be able to watch the football games for the holiday season or necessarily to log in to watch wwe. I mean, to be sure they helped, but that wasn't what drove it. And I think that's really what's so impressive with this business. They've just done such a good job over the years building out a content library that just got something for everyone. And so now over 300 million seemingly very happy subscribers. To me, I thought the revenue growth 16% was impressive. I thought to me even more impressive though to see that operating margin was up 5.3 percentage points from the same quarter a year ago. I mean this is a company that now is really starting to extract some profitability from the model and there's no reason why that really shouldn't continue.

Dylan Lewis (10:53)

Shareholders certainly happy to see that the streamer is also planning on increasing prices. Maybe something that the subscribers aren't quite as happy about. Asit we have seen them continue to hike prices and also introduce ad supported streaming like a lot of other streamers have. What do you think of the interplay between these two business lines and what's going on with their overall pricing models?

Asit Sharma (11:16)

Yeah, I think when you have a product that people feel that they just can't do without, you can take pricing and that's what they're doing. Being able to shift some consumers downstream to ad supported tiers is good for Netflix and they're taking so much of their capex and building a really phenomenal monetization engine. So the ad tech that underlies their revenue is very strong and they're rolling it out country by country so it's fine tuned for Canada. Something we heard about this quarter. Now they have their own native tech stack there. They're going to do this country by country just to target local users. So you get this virtuous cycle where you maybe get priced out of the full tier. You're content to watch the supported tier and as they show they have sort of phenomenal uptake of the ad supported tier. We don't know the exact dollar figures from that and in doing that they're able to throw some snark at other companies. I love the way only Netflix can subtly take jabs at its competitors. They talked about in their press release being such a pure company only focused on streaming, not having to deal with the distractions of a a link linear network like Disney and some other competitors. So yeah, just very focused core business doing well. That ad business is also meaningful and I hope to see the breakout of that revenue at some point in the near future.

Dylan Lewis (12:40)

Yeah, I think as it stands right now, we have to do a little sleuthing to figure out what's going on with that ad business. What I saw Jason, was ad revenue doubled in 2024 and that the management team expects it to continue to be growing at a pretty fast clip. We're not getting that breakout that we'd love as investors, but in your mind how are you valuing what's going on there, the growth that you're going to be seeing there when it contributes to the business versus the core membership model that we all know and generally love?

Jason Moser (13:07)

Yeah, I'm not sure that we should expect them to get too terribly granular with it. I mean, remember they are actually going to stop giving us even, even subscriber forecast numbers. So they'll give us numbers when they hit certain milestones, but we're going to even get a little bit less information there. But I think going back to just the success from the quarter, I mean they noted that the advertising strategy continues to take hold. It accounted for over 55% of signups in ad supported countries and then ads plan memberships grew nearly 30% from a quarter ago. So I think that what they're doing is they went into this with, with some, some thought and they understood that advertising supported video on demand is something out there that consumers want. Netflix felt like they could participate and so they built this out in I think a thoughtful way to make sure that they were doing something that they thought the subscribers would love. And so as they continue to raise these prices, sure, I mean some people are going to balk at it, but for the most part we're not. Right. And for the people that do balk at it, instead of necessarily quitting Netflix, maybe now they just have an option to downgrade to an ad supported membership until they decide to re upgrade again.

Dylan Lewis (14:19)

Also Soaring this week, GE Aerospace shares up almost 10% largely on earnings. But asit, this feels like a little bit of a mix of what the company put out and some excitement around that and, and the general excitement around the business of space right now in the market.

Asit Sharma (14:35)

I think you're right, Dylan. I mean we are always hearing about companies that are on the cutting edge of space innovation, but there's been more focus recently on companies that supply just mission critical stuff in the aerospace industry. GE Aerospace is a supplier of high performance jet engines. And so they're starting to get some love from investors they can't produce fast enough to meet their demand, which is the situation of a lot of aerospace businesses just now. Total orders this quarter were 15.5 billion. That's up 46% year over year. And what I love about GE Aerospace is it's got this amazing spare parts business, service business. I liken that to sort of the razor and blades model. If the jet engines are the razors, then all these spare parts and shop visits for repairs are the, the blades. This is a company that benefits from this backlog of airplanes that need to be manufactured. We have to keep some tens of thousands of jet engines flying in the air all the time. And GE only gets better by that service revenue. So a very interesting quarter on all fronts. And they've got a little defense business on the side that grew pretty well 22% year over year itself.

Dylan Lewis (15:52)

So for people watching that industry, asit, would you say that GE Aerospace is maybe one of the more kind of diversified, stable players as folks are looking out and seeing other companies like Rocket Labs, Intuitive Machines and some of the more, I don't want to say speculative, but more kind of future oriented businesses?

Asit Sharma (16:09)

Yes, totally, because GE is focused on the aerospace industry, whereas some of these other companies like Intuitive Machines, which is very interesting technology and is now getting into the communications business, satellite communications business, they're focused more on the space space part of the industry. So I like to just make buckets of the two. And when you have solid players like this, you can start to build a basket. If you follow the industry, there are some great spare parts suppliers like Transdigm and Heyko. You can work in a little bit then of the space space companies as well. So all across the range of this industry, as you point out, Dylan, there's much interest right now, but I like some of these core companies to build sort of a basket around.

Dylan Lewis (16:56)

All right, from the skies back down to ground control Cloud communications company Twilio out with some fresh earnings results on Friday. Jason shares up 20%. Rounding us out with another heavily followed full stock that seems to be having a pretty good week.

Jason Moser (17:09)

Yeah, I think this is a good example of leadership just doing what they say they're going to do. And this is a company we talked a lot about on the show. It was a radar stock back in July of last year. I said to me it felt like there would be a time where the market's a bit more tolerant of companies like these. And if Kozaima Chandler keeps doing what he's doing, I think patience could pay off. Stock was in the 5560 range at that point. So I think we kind of see how that has worked out for investors. But they said a lot of really good things on this analyst day presentation. Returning back to that double digit growth that we've all expected. Actually reporting their first GAAP profitable quarter quarter in Q4 and set the expectation that for every year here on out, you should expect that this is a gap profitable company and they continue to bring that stock based compensation number down as well. So just operating with a lot of rigor and pursuing a lot of growth opportunities, reigniting that growth. It's certainly understandable the enthusiasm in the stock today, Jason.

Dylan Lewis (18:07)

This was a growth stock and at one point, I think had to go through the doldrums like so many others did. Post 2022, where do you see kind of the expectations, the return profile for a business like this going forward?

Jason Moser (18:18)

Yeah, I, I think things are starting to look a lot more encouraging again. Maybe it required a leadership change. A lot of that kind of came from its old startup mentality with Jeff Lawson, the co founder of the business and now Kazama Ship Chandler taking over and he has a bit more of an operational focus. But, but I think generally speaking, what they're doing, obviously it's working and pursuing a very large market opportunity.

Tim Byers (18:38)

They don't count me.

Dylan Lewis (18:45)

All right, Jason Ossett, we're gonna see you guys a little bit later in the show. Up next, we've got a look at where the next wave of AI upstarts are focused. Stay right here. You're listening to Motley Fool Money.

Tim Byers (19:04)

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Dylan Lewis (19:38)

Welcome back to Motley Fool Money. I'm Dylan Lewis. We spend most of our time talking stocks and the public markets here on the show. But the reality is that some of tomorrow's most interesting tech stocks exist today as early stage venture companies. So to get the skinny on the cutting edge of tech and where new venture funding is going, especially in places like AI, my colleague Tim Byers caught up with Frances Schwepp. She's a partner at Two Sigma Ventures. It's an early stage venture fund there. She spends most of her time looking at companies that have a data focus and, and leverage AI and machine learning technologies. Tim and Francis talked about where the biggest early stage opportunities are right now in the AI ecosystem and what to look for in great founders.

Frances Schwepp (20:18)

I'm very curious, what kind of view have you developed around AI and ML right now? I assume it's changed and it's probably changing all the time. But when you look at that industry and the view that you have, what.

Tim Byers (20:36)

Do you see right Now I think the biggest opportunity is in the underlying tools that are going to be made available to application developers who are looking to build AI applications. So there's this kind of, and I think we're ending sort of in the next year will be the maybe close to the most exciting tools that are available. And I think we're going to see the start of a real like ROI heavy agency workflows where you really have AI agents completing specific tasks. And so and maybe I'll just also say, you know, the first part of this wave was obviously a lot of the foundational models, so the anthropics, The Coheres, the OpenAI's of the world that is at this point I think mostly baked out and it's also very capital intensive and late stage game. So it's not where we focus at the moment but on the like agencic workflows. I can go into that. I mean I think I have a view on what makes AI agent tooling very powerful and the areas in which it can really have a lasting impact and maybe are kind of like most ripe for it to disrupt. So my view is right now we are in the tooling and stack AI, stack, build out. Like I said, that involves a lot of things like AI safety tools, data quality monitoring, automated prompting. So things like auto GPT and LangChain, all of that I put in the tooling set. And now we're just starting to see exciting true AI applications that are not just being tested in the experimental budgets of the enterprise, but they're actually being used in the day to day workflows of those employees and individuals.

Frances Schwepp (22:28)

Let's talk a little bit about just 2024, obviously the year of the GPU. This has made some investors absolute fortunes. Do you think, and I think you touched on this briefly, is 2025 a bit more of the same or do you have. We sometimes like to make reckless predictions.

Asit Sharma (22:48)

Here at the Fool.

Frances Schwepp (22:48)

Do you have a reckless prediction about what will be the technology which like this is, you know, 2024, year of the GPU, 2025, the Francis Schwepp reckless prediction is the year of what?

Tim Byers (23:03)

Oh man, I don't know. I do think Agencic workplace is going to be big. I think that's what we'll see in 2025. Although you know, Nvidia made these big announcements recently. I'm sure you saw, I think the most exciting one was the Jensen ORI platform and computer which is just a significant leap forward in edge AI and I think maybe the Reckless prediction around that is. I think we will see the fast acceleration in AI enabled hardware than we've ever seen in the history of venture investing. And that is because that computer has made, you know, being able to compute AI at the edge not only possible from the like the size of the models that we're talking about these days, there's something almost like 300, 270 something trillions of operations per second is what that new computer can handle. So just like massive AI workloads and then it's incredibly energy efficient was something I used to work at a wearable computing company as you mentioned was working in product there, man, like being able to get the battery life or you know, just like being able to actually run those models on device sucked up a ton of energy. I think this is groundbreaking from that perspective. It's a small form factor. So you could talk about different sizes of hardware, whether from, from robotics to drones to whatever IoT future IoT hardwares you can dream up to autonomous vehicles. We invested in a company that is autonomous, basically like the autonomous Caterpillar. And so that's a big one. I think again, stuff like what Nvidia is releasing around edge AI is going to be huge for the break open of that market. I don't know if it'll be 2025. I think to be honest, the 2025 will be the companies building the hardware around this new computing technology. And I think in the next year is when you'll start to see those companies pop up and then I imagine a lot of 2025 will be focused on agentic workflows.

Frances Schwepp (25:01)

The beginning of AI everywhere in every device. So that's, that's.

Tim Byers (25:05)

Yeah, we've been waiting for it, but now we actually have.

Frances Schwepp (25:08)

Yeah, it does, it does seem like it's coming. I want to come back to the beginning of your career. You started your career as a data scientist. So you have a very rigorous background, seeing the world in, in very analytical ways because you're a venture capitalist. There is some art and you touched on this that comes into the process. How much of the investing process is art and how much of it is science do you think? And I'm talking about it specifically from your perspective, but you could take it as general as you want.

Tim Byers (25:39)

I'm going to say 8020 science art and I think the scientific part of it, I like to say take a scientific approach to investing, which is you have a thesis and then my job is to kind of like disprove the null and go through the steps of diligence to get myself over the line on this being a good risk adjusted return profile of an. For an investment. You know, we like to say we look though for the glimmer of greatness, which is more of the art part of this. I think it has more to do with like, intuition. And I think it's possible that the 20% is even more important. I think there is a lot that goes into, you know, if you suspend disbelief, like, there may be no market for the technology today. There might not be a single customer using it today. And maybe there's a lot of skepticism, but on the chance that it becomes great, you know, and there's like, it becomes the. It fits the power law dynamic. And you could say this about Airbnb. There was no market for the Airbnbs when they were starting the business and it sounded crazy, but on the off chance it worked, you know, there is a huge glimmer of greatness there. That's the creative piece of it. Is that intuition. It's that kind of like trying to peer around the curve and suspend disbelief and dream a little bit with a founder. And then I think there's also creative ways to get to an investment which might require, you know, spending time with the founders. Like, you know, we talked about the magic of human connection and what you see that sort of lights someone up there. This what sparks your imagination, that sparks the imagination of the founder to be dedicating their lives to building this new technology. That is something that I think is. Requires more human connection and less science.

Frances Schwepp (27:28)

Yeah, quick follow up on this one. And then a final question. Looking forward. Can you name a founder, doesn't matter the company, but a founder that you've either observed or interacted with directly, who has that glimmer of greatness? Can you just.

Asit Sharma (27:45)

Who.

Frances Schwepp (27:45)

Who stands out to you? You know, somebody that we know who's got it?

Tim Byers (27:51)

I think will. Who's the founder of whoop? It's one of our investments. He is relentless about how he tests and iterates on the product and how, how much like, focus he drives for the business. I think one of the biggest mistakes founders make is they start to lose focus. And a lot of people did not believe in him. He was like, I'm focusing on. I don't know if you use a WHOOP before, but it's. I'm wearing one. It tracks your athletic performance, your sleep performance. And he's obsessed with performance. It's like not a, it's not a, A step tracker.

Asit Sharma (28:26)

You.

Tim Byers (28:27)

It's not A just say, you know, it's not like a wellness app. It's for true athletes that like, you know, want to track their performance and people try to push them in a lot of different directions. Like you need to add steps, you need to focus more on like nutrition and add these other things. And he's like, no, we're going to get as fine tunedly good at performance as possible. I mean, I think you saw this with the founders of Google. They're like, you know, we're going to focus on the milliseconds of getting you the retrieved answer from the search query. And he's like that when it comes to tweaking the performance metrics. And so when you wear a whoop and you use the application, you get very highly tuned and precise data about your, your body and your, you know, your performance from your muscle activity to your hitting, your VO2 maxes, what zone you're in when you're training and pushing it on a treadmill or lifting weights. You know, where you are in your sleep in terms of REM and restorative sleep, things like that that he's, he drills in and double clicks into the that product. And then he has built a very loyal and motivated team behind him in Boston. And we actually had the new CTO come and speak at our, one of our meetings recently and she is just incredibly inspiring and actually recently led to the, the release of an AI bot where you can ask questions. I recently asked my whoop, how many minutes does it take for me to fall asleep? And it said, you know, something like 65, which is too long. We spend like 45 of those stressing about the next day or something. But, but it's amazing. Now you have this like AI chatbot about because they have such good data and they focus so much on metrics and so much on the data they were collecting. Now they're able to layer on this, you know, AI agent basically that can be your, you know, your health coach and you can ask questions of this very rich data source, that and data asset that they've built up over time. So I think I have a lot of respect for him as a leader, as a product builder and as someone who knows how to focus and make the right trade offs.

Frances Schwepp (30:31)

Relentless focus and right trade offs.

Asit Sharma (30:33)

Yeah.

Frances Schwepp (30:34)

Okay, great. Let's end on this. Imagine that I am pitching you a business idea and I'm coming into the meeting and you're going to give me a piece of advice before I come into the meeting. What is your piece of advice for me so that I come into the meeting and have a hopefully successful meeting with you and your partners.

Tim Byers (30:56)

I think the biggest one is tell me, tell me why people need your product and why you have to build it. Like, you can't buy or hire your way into product market fit. And I think, you know, you just, you have to focus on building a product that users and customers ultimately like, really want to use. You just can't skip steps. And so I think I've seen folks, you know, maybe focus prematurely on scaling the company without the killer product first. And so I maybe that skews towards my background, which is I, you know, I have more of a product mindset. But I think one is telling me, yeah, it's really just connecting me and helping me understand why this product needs to be built and then obviously why you are the one building it, what makes you uniquely capable of building this product. And then of course, we can get into, you know, market and your business model and all that, but those are the big ones.

Dylan Lewis (32:08)

Listeners, if you're a Motley fool premium member, you can catch the full conversation between Tim and Francis on our website as part of our AI Summit for members earlier this month. We'll be sure to drop a link to that for members in the show notes for the podcast version of this week's radio show. If you're not a member and you want to join, head over to fool.com signup to join Stock Advisor. As a Stock Advisor member, you get two new stock picks each month, rankings on the whole scorecard of companies in the service and access to to all episodes of our premium podcast Stockvisor Roundtable. You can learn more@fool.com signup we've got ASA Sharma and Jason Moser coming back with me in just a second and they're bringing some stocks and stories on their radar. Stay right here. You're listening to Mountain Fool Money. As always, people on the program may have interest in the stocks they talk about, and the Motley fool may have formal recommendations for or against. So don't buy, sell anything based solely on what you hear. All personal finance content follows Motley fool editorial standards is not approved by advertisers. Motley fool only picks products it'd personally recommend to friends like you. I'm Dylan Lewis, back on air with Motley fool analysts Asit Sharma and Jason Moser. And Fools. We're here taping in the third full week of January, and by this point, experts at Baylor say that most people have failed their New Year's resolutions. Jason here at the fool. We are all about keeping score. So I have to ask, how are we checking in on the on the New Year's resolution so far?

Jason Moser (33:47)

Well, I love that and I will say so. You and I spoke before the New Year and I kind of a two, a one, two punch on the resolution front personally just trying to wake up every day with a bit more of a glass half full view on things. Just tackle the day with a smile. So far so good, Dylan. It's working. I'm not going to lie on the back end of that. I said I wanted to add three new companies to my portfolio and we're going to get into radar stocks here in just a minute. To be continued.

Tim Byers (34:15)

Ooh.

Dylan Lewis (34:15)

All right, teaser Asit, what about you? How's the resolution progress going?

Asit Sharma (34:20)

It's mid length. I mean I have more than one resolution so is it 33% rate any good?

Dylan Lewis (34:29)

You're diversified.

Asit Sharma (34:31)

I noticed in the article that you shared with Jason and I that the folks at Baylor say that 88% of people who set New Year's resolutions fail them within the first two weeks. So I want to meet the other 12% and start hanging with them this year.

Dylan Lewis (34:47)

You can be part of the 12%. I believe in you. The nice thing about resolutions, you can pick them right back up at any point during the year and keep making progress.

Asit Sharma (34:55)

And really seriously, that was the point of this article, that you can succeed by failing, picking yourself back up, making that incremental progress, which I think is a great principle to hold.

Dylan Lewis (35:04)

All right, well let's help Jason make a little progress on his resolutions. Let's get over to stocks on our radar. As always, our man behind the glass, Rick Engahl is going to hit you with a question. Jason, let's hear what you got for adding stocks to your portfolio.

Jason Moser (35:15)

Well, yeah, it's 2025 and I indeed have added one of my targeted three. I bought shares the other week, Dylan, in Nike Ticker Nke. I think everybody knows about this business, right? Tremendous brand equity, obviously the global leader in sports. But but they, you know, recent blunders by former leadership have created some headwinds. They really worked on prioritizing the digital business over the last several years and sort of neglected their wholesale partners. And so new leadership there I think is going to focus on sort of balancing those scales a little bit with new CEO Elliot Hill. It's understandable why the stock has been taken to the shed and it has been taken to the shed. I mean when you see the headwinds that have created you See the impact that that's had on the bottom line, sales actually decelerating for a company like this. And then they noted in a recent call that over the near term the, the effect of the actions that they're taking in order to right the ship will result in lower revenue, additional gross margin pressure and higher demand creation expenses. That, that's just, that doesn't paint a very good picture, Dylan. Right. And the stock, the stock reflects that today. But I do believe that this is a business that will recover. They were, they were self inflicted wounds that I think they can recover from. A big focus on those wholesale partners going forward. There's a reason why shares are at 22 times earnings today. But I think it'll get back closer to its historical norm in the coming years as new leadership executes a good comeback.

Dylan Lewis (36:49)

All right, who doesn't love that? Rick, a question about Nike Ticker Nke.

Asit Sharma (36:54)

I would love that. I'm a longtime Nike shareholder, but not long enough, I'm afraid. So how many years do you say I have to wait to come back from my.

Jason Moser (37:02)

Well, my intention, Rick, is to hold this business until I'm long gone. So I think, you know, patience will pay off here. That 2.2% dividend yield gives us a lot of incentive to just, to just hang in there and watch them do their thing.

Asit Sharma (37:16)

All right, I'll hold on.

Dylan Lewis (37:17)

All right, Asit, what's on your radar this week?

Asit Sharma (37:19)

So I'm looking at a stock that was up 69% in the last 12 months. Why would I even do that as a radar stock? Well, it's trading around 28 times forward earnings. Not too expensive. And the company is Garmin. Now this is a business that reinvented itself years ago. It was known as a GPS company. It's become more of a consumer facing company with lots of fitness wearables. It also has an outdoor segment, an aviation segment, a marine segment, an auto original equipment manufacturer segment. So it's very well diversified as a business and it just has this way of chugging along very quietly. I mean this is a business that throws off a lot of free cash flow. Operating cash flows increase every year, almost approaching a billion bucks now for what's a relatively small company. And I just like the way that Garmin has established a brand for itself in the fitness market. I myself have looked over some of their products, including some very snazzy accessories for my bike. Haven't bought them yet, but keeping an.

Dylan Lewis (38:18)

Eye on them, not only a radar stock, but a watch list item for assit's personal fitness journey. Rick, a question about Garmin Ticker grmn.

Asit Sharma (38:28)

This seems like a company that should have died and didn't. Is that because of good leadership and is that leadership still in place? Yeah, the leadership is still in place. And you're absolutely right. Not just on the executive level, but the whole management team has been together for a while and they know the drill. They know how to run this diversified business and they keep the focus on churning out great new products that we see in stores and online.

Dylan Lewis (38:53)

Rick, you going to a company in your portfolio already? Nike or something new with Garmin?

Asit Sharma (38:58)

I got enough Nike. I'm gonna go with Garmin. These guys turned it around once. I guess. I guess I can trust them.

Dylan Lewis (39:03)

There you go. Jason Assit. Appreciate you guys bringing your stocks, Rick. Appreciate you weighing in. That's gonna do it for this week's month. Money Radio show show is mixed by Rick Engdahl. I'm Dylan Lewis. Thanks for listening. We'll see you next time.