Choosing Between Dollar-Cost and Value Averaging
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Good afternoon fellow investors and welcome back to InvestTalk. My name is Lou Guerrero and it is Wednesday, February 26th, 2025. And now we're halfway through the week and almost all the way through the month of February. And what a month it has been. It certainly has not been one devoid of news, devoid of market changing activity, tense market reaction, ups and downs, a return of volatility, and more than anything,

And so here at InvestTalk, we hope, we hope our goal is to help you understand these changes, to put these changes in context, to try and sift through all of the noise and try and find those signals and help you become a better and more educated investor. And like we do each day, we will have some stories for you. We'll have a focus point that maybe brings a topic to the table that a lot of people don't think of. We'll have some actual items as well.

But more than anything, most importantly, we'll have your finance and investment questions because that is really the lifeblood of this show. Now, with that in mind, we will talk about today's market performance a little bit later on and run down those show topics that we are bringing to you today. But because this show is about your questions, let's tackle one right now.

Hi, this is Dan from Walnut Creek. I had a question on A.O. Smith Corporation, stock symbol AOS, and I'm looking to get in at a good point, but it seems like it keeps on dropping. So I don't know if this is a falling knife scenario or if it's a good time to get in. If you can give me your advice, I'd appreciate it. Thank you. So take a look at A.O. Smith Corp., that's ticker AOS, and it's a name that we get questions on pretty frequently, both via voicemail, live call, on our YouTube channel.

And it is a leading manufacturer of residential boilers and water heaters, water treatment products, and they service customers worldwide. Most of their business comes from water heating, about 88% between these two business segments. Now, geographically,

A lot of their business comes from North America, yes, about 77%, but a lot of their business comes from China as well. And so as the Chinese real estate market has been hit particularly hard over the past couple years, revenue growth in that segment has been, let's say, a little lackluster.

Now, they did report a slight increase in 2024 from 2023. And I mean very slight. You can see that right here in the revenue growth, but at least headed back in a solid direction. I'm sorry, a decrease, slight decrease from 3.85 billion to 3.81 billion. Now, that's projected to grow a little bit headed into 2025, but it's really the beginning of the year. And those estimates are about as inaccurate as they could be at this point in the year.

Now, in terms of margins, well, their margins fell to a local low of about 6.3% in December of 2022, but they've recovered to where they were in 2019, 2020, and 2021, back towards that 14% to 15% net margin, supposed to be stable as well heading into next year.

But the performance of the company has not been great, right? They're down 18.9% over the past year. They're down 10% over the past three months. They underperformed their industry by 23% last year. The S&P 500, they underperformed by 40%. And so the question is why? Well, they don't have a lot of debt on their balance sheet. They only have about $228 million on a $9.6 billion market cap company. So debt doesn't seem to be the problem.

Cash flow seems to be improving as well from a valley in the end of 2022 headed back up into 2024 and stabilizing. They play a pretty solid dividend, which is consistent just at about 2%. And so what's striking to me then is that it is a growth story. Growth has slowed.

Over the past six years, they were on average at about 5% annualized. Over the past five years, I'm sorry. And so to have revenue fall off last year and to have it really projected to not even make 2023 levels at the end of 2025, well, that's why the price has been falling, as the caller said, like a knife. It's on a consistent downtrend for about 12 months now. It lost all support over the past 12 months and now it's trying to find some again. And so because of this, you see,

its forward-looking priced earnings pretty well below where its five-year average has been its price of book value about five times still a little expensive price to cash for about 16.8 times all of these multiples far below where they've been on average over the past five years

And so when you see this, you see growth falling off. You see a chart that does not look pretty from a technical perspective. You see consistent downgrades on earnings. I think this is a scenario where you don't want to buy yet because certainly there is not a lot of support and this trend seems to be headed downward still. That is A.O. Smith Corporation, ticker A-O-S.

Now we've got a lot of ground to cover in the next 45 minutes or so, and here's a little bit of what we have planned for you, time permitting. My main focus point concerns this topic, choosing between dollar cost averaging and value averaging. Investors can choose between these two savvy strategies that help mitigate market volatility and potentially boost returns. We'll also be touching on the bond market, who has proven thus far to be the Trump administration's biggest opponent. Bonds moving

In a pretty volatile way over the past two months, down over the past several weeks, so we'll dive into that. We'll also touch on the US's plan to alleviate some of the egg pricing that we've been seeing by importing more eggs. So will that really do the trick? And at the end of the show, we'll touch on maybe a high-level look at the economy, right? Everything honestly still seems pretty okay, so why are people so gloomy?

We also have some voice bank questions ready to play, including one on AVGE, which is the Avantis All Equity Markets ETF, and one on Cows, the Pacer US Cash Cows 100 ETF. We also have some questions that came in from the comments section of the InvestTalk YouTube channel. And of course, we hope to hear from you live anytime throughout the show. Now we're going to do a short break. On the other side, we'll look at today's market activity and answer more of your questions here on InvestTalk.

Invest Talk is made better when listeners add their voices. My name is Robert and I'm from Florida. Great show. I learned so much from just listening to you. Hi, this is Susan from New Jersey. I'm calling about AXOA. How much of the information that came out today on the whole AI play with deep seek and all that, how much of that information can you really trust?

And Justin Klein and Luke Guerrero are always ready to provide unbiased answers. I am very much a person that does not trust Chinese data. Net income is growing and margins are staying pretty steady. Let's go take a live call. Paul from Palm Desert. Let's go to George from San Mateo who has a question about index funds. Tell your friends, live a little, live a little. Call InvestTalk weekdays from 4 to 5 p.m. Pacific time.

Is that a good strategy or should I be looking at other things? 888-99-CHART Let me touch on a topic that most listeners need to understand. I want to talk about creating a trust and a will.

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Your questions are free. The answers are unbiased. Luke Guerrero is here now, ready to take your calls live. InvestTalk 888-99-CHART. 888-99-CHART. We're looking to talk to you live at some point over the next 50 minutes. But before you call, let's dive into the market today.

US stocks were pretty mixed, the S&P 500 and NASDAQ actually edging out some gains after four straight sessions of declines. The Dow down 43 basis points, S&P 500 barely positive at one basis point, the NASDAQ up 26, and the Russell 2000 up 19.

Outperformers looks like Semi, Software, China Tech, Internets, Copper doing particularly well today on that tariff news. Relative underperformers, Staples, Healthcare, Casual Diners, Ag and Chemicals doing poorly. Dollar index was up 20 basis points. Gold finished up 40 basis points. Big down day for Bitcoin, down 4.1%, back around the 83,000 level, actually its lowest level since November 11th. Crude oil settling down as well at about half a percent.

Now, a fairly choppy day. There's a lot of moving pieces going on. But I would say the big news, the biggest news as it tends to be is with regards to fiscal policy, in this case, trade policy. The president announcing that he's likely to impose a 25% broad tariff on imports from the European Union and is also likely to move forward with his tariffs on Mexico and Canada. So the market trying to digest what does that mean? Do we believe him? What is going to happen?

Other areas of concern included growth worries, negative macro trends. We got some new home sales data today, which felt a much worse than expected 10.5% in January, though we did see a little bit of an upward revision in December.

Looking ahead to the end of this week, we're going to get some PCE data on Friday. Remember, PCE is the inflation metric that the Fed prefers to use. Not expecting a big surprise there, nor should the data release really move where we expect the Fed's path of rates to be headed into March.

now we already tackled a voicemail question and we like to be fair here at invest talk and one of the ways we can be fair is we can treat all of our viewers and all of our listeners equally and so when you leave a question over there on the invest talk youtube channel comment section we'd like to tackle that and so let's tackle one right now

And so this question is from Eric Speaker and it's on ticker CCB and it says, I'm wondering what your thoughts are on Coastal Financial Corp, ticker CCB. I took a position in this company about 13 months ago and I'm up over 100% on that position. And I'd love to hear what you think of the company and its prospects going forward.

Well, thanks for thinking of us, Eric. Really appreciate that. And congratulations on being up over 100% in the past 52 weeks, or I guess 13 months. So taking a look at this name, this is Coastal Financial Corporation. It's a holding company for Coastal Community Bank. They offer a wide range of banking products and services to individuals and businesses, particularly in the Puget Sound region of Washington State.

Now, as we know, Eric is up a lot and everybody who bought a year ago is up a lot as well, up 138.79% over the past 52 weeks, outperforming the industry by about 65% in 2024. Now, it's a regional bank and it is a small one, about $1.3 billion market cap with not a lot of debt on its balance sheet, only about $53 million worth of debt.

Now, it looks like they have been issuing a lot of shares in the past couple years.

And profitability has really dropped off from 2023 into 2024. You see that their return on equity was about 16.6, 18.3 the year before that. Last year it was about 12.3%, projected to be about 14.4% this year. Now even with this price appreciation, you're still trading near average in terms of forward-looking earnings, about 17.3 times versus 13 times forward-looking earnings. But when you're looking at these banks,

What we want to see is what is the growth in their net interest income, their interest income broadly, and their interest expenses. Now, over the past five years, this bank has grown its net interest income by 44.6% on an annualized basis. That is ridiculous growth. Its gross income up by 51.6%.

Its total net income in general, including its operating and its interest income, 27.9% on an annualized basis. Now, it doesn't have many assets on its balance sheet. This is a pure play regional bank year. Only about $5 billion is where it's projected to be at the end of this year. But that growth is pretty solid, 30% on an annualized basis.

And now we, for our clients, have been a little hesitant to get back into the regional banking space. Why? Because we see rates have been higher than they have over the past several years. And what that means is it is likely that banks on their balance sheets still are holding debt that hasn't been marked to market.

and have losses that they haven't had to realize yet. This is the same type of situation we saw in 2023, March of '23, with Silicon Valley Bank, Signature Bank, in that when there was a run on deposits, they had to start liquidating assets, took huge losses. Now, I'm not saying that's the case for this bank. This is broadly why we have tended to shift our clients more towards larger banks. If you have issues in the Puget Sound region, but nowhere else,

A company like this is going to be exposed to that risk, whereas JPMorgan Chase has such a diversified asset base that it doesn't really hit them as hard. And so what I see here is a company that has very little debt.

It's a company that has improved its profitability dramatically. The growth probably to me seems a little unsustainable. I mean, if you're looking at this, you see 1.1 billion in assets in 2019. Most of that growth going into 2023, growth has already started to slow down in terms of net assets on its balance sheet. Here's what I would do. I think it's okay to leave a little exposure to this name.

Because in terms of regional banks, it seems to be in a better position than a lot of the ones I've seen. But you're up over 100%. Please, please take some profit. Thanks for watching. That is Coastal Financial Corporation, CCB. Now, I don't know if it's been announced yet.

But on the horizon, we're going to have InvestTalk Market Madness once again. We're preparing that all for you guys and we should have an official announcement soon. So stay tuned for that one. We're moving into a break and still to come, my main focus point, more answers to your questions. And of course, you can call me now. I hope you call me now at 888-99-CHART.

The numbers are in. InvestTalk, now with more than 60 million downloads. Justin Klein and Luke Guerrero are ready to answer your finance and investment questions 24-7. InvestTalk, 888-99-CHART. Let's keep things moving and get to our main focus point today, which is about choosing between dollar cost averaging...

and value averaging. Now we talk pretty frequently about the former and you may not know what the latter is. So when would you use it? What does it mean? And how might it help you? Now at a high level, this is an important thing because market timing can be risky. Investors who are waiting for dips or think they're pulling out at highs can often find themselves in a worse position than where they started. And so if you're waiting,

for what you perceive to be a bottom, perhaps you can get left behind. And so we've mentioned this concept, I would say pretty frequently on this show. The first one, dollar cost averaging. And so dollar cost averaging is a refresher for all of you who may not know, is when you have a dollar amount that you want to invest in the market or invest in a stock or invest in what have you, and you set up fixed amounts at regular intervals. So why is that beneficial? Well, you don't know

what the price of something is going to be tomorrow. And so if you are buying something, a little bit of it today, and tomorrow the price falls and you buy more of it, you are lowering your average acquisition costs. You are spreading those purchases out over regular intervals and giving you the likelihood of having a better investment experience. And this works very well with volatile assets, ones that are moving up and down pretty frequently. It helps you smooth out that acquisition cost. And so that one's pretty common.

So what's the other one? Value averaging. Well, value averaging is in a way a similar concept, but instead of having regular intervals and regular amounts that you're going to invest over a period of time, value averaging means when assets move down, you buy more. When assets move up, you still buy, but you buy a little bit less.

And so if you think of that, right, you're thinking about if a target portfolio should grow by $500 per quarter and the stock rises, then the investor would add less of it. If it falls, then the investor is going to start to add more of it. And over time, if you have the cash available to invest in downward movements of assets, it gives you a likelihood of higher returns should that stock price move upward.

And so what are the pros and cons here? Well, for dollar cost averaging, it's pretty simple, right? It reduces risk. It's ideal for passive investors. It lowers that average acquisition cost. But it could be the case that after your first purchase, things move up. If you had put all of that money in at the beginning, you would have more in gains. But this is a probability game of giving you the higher likelihood of having a better investment experience. Now for value averaging,

where you buy more at the lows, you have higher potential returns. The other side of that is, well, it requires a lot more active management. You need to watch these names, these funds, these stocks, these bonds, whatever you're investing in, and you need to be more active about it. It means that you need to hold more cash. You need to have that cash available for downturns, which may or may not ever come.

Now, if you think about dollar cost averaging, right, there's a way that a lot of us automatically do it with DRIPs, dividend reinvestment plans. And so what that does is that effectively continues to buy over time and lower that acquisition cost. So the question here is,

Is dollar cost averaging right for you? Is value averaging right for you? I think it comes down to this. Dollar cost averaging is more suitable for passive steady investors. Value averaging benefits those with cash that's sitting on the sidelines ready for dips, but both of them generally work for long-term growth.

Now the key takeaway, the key takeaway, stay invested, as always avoid emotional decisions because we say it all the time, time in the market beats timing the market. Let's keep things moving and get to another question from the comment section of the InvestDoc YouTube channel. This one from Olazio Coltrane.

And it says, "Comment by a YouTube viewer" is the title. So let's read this comment. "Thanks for the reality check. I know generally retail and institutional investors are bullish, but the algorithm keeps offering up negative forecasts." And so the reason why I wanted to address this, which isn't a traditional question, it's not about a stock, it's not an investment concept, it's because we all exist within the information space that we choose.

Be it because we read certain newspapers, watch certain shows, live in a certain part of the country, have certain friend groups, whatever experience you have informs your informational space. And when you're scrolling YouTube or scrolling Reddit or Twitter or any place where you get your information, there's something that I think a lot of people need to keep in mind. Now, I am always long-term bullish. Why? Because if you pull back and you look at a chart of the markets, it's always been upwards.

Now, it doesn't mean it's always upwards every day, but the trend is typically long, right? That's why shorts don't work over long periods of time. But when you look around in the world and you see the information that comes to you, what you're getting is generally negative. And so I want to stress taking that with a grain of salt because being against the trend, being counter whatever the prevailing condition is, being bearish, the reason why it's more in front of you is because it sells better.

So as always, sift through the noise, sift through all of the corrosive things, try and find the truth. It'll help you become a better, more informed investor. Now, on the next InvestTalk, we'll look into this question. Average retiree spending, will you have enough? With average monthly expenses in retirement reaching around $5,000, retirees must navigate a delicate balance between enjoying their golden years and ensuring their savings last a lifetime.

That's tomorrow. But for now, I'm Luke Guerrero, ready to take your calls at 888-99-CHART. This is InvestTalk. Luke Guerrero is here taking your calls live. 888-99-CHART.

Hey, Luke. It's Craig from the mountains outside Seattle. I'm hoping you get a chance to address this since you're familiar with them, but Justin, I would love your input as well. I've got about 840 grand in a Roth IRA, and my largest holding is AVGE. Avantis is all world. But I'm a big fan of Dimensional, and I think they're managed

differently enough, though there's some overlap, that it wouldn't be necessarily unwise to hold both of them. But I wanted your take on that and if it just makes more sense to keep piling into AVGE or if there's some value or benefit to holding both.

It would likely be my second largest holding with AVGV, their large cap value of Ontis' large cap value holding as my third. So anyway, I would value your take on it. I appreciate it. Thanks. Bye-bye.

yeah thanks for the call it was a good one so the uh avge the avantis all equity markets etf is a fund fund right if we scroll down to our holdings here we see instead of a wide array of stocks you see 15 total holdings so they have a likely market cap weighted attack of all of their individual etfs and so rather than buying

Bunch of stocks because they already own them in other ETFs. They in they are going to get shares of those ETFs instead Why do you do that? Well, one of the reasons is because it's a 481 million dollar fund You may end up in a position where if you want to invest in the global market Which this does that you have to sample in a lot of places rather than holding every single name here and so this is an actively managed fund and

It is trying to invest in both US and foreign exposures from small to large cap firms. It holds real estate and its general idea, much like of Avantis' other funds, is to attack the asset class while emphasizing profitability and relative price metrics.

And so as I've mentioned over time, the people who started that company I used to work with at Dimensional, and they have a similar investment philosophy in terms of what tends to perform better or have higher expected returns over time.

And even though you're attacking things on the same philosophy, doesn't mean you always do it in the same way. And so there are periods of time which a similar Avantis fund is going to outperform a dimensional fund. A similar dimensional fund is going to outperform an Avantis fund. And so in your case, I think it would make sense

to rather than pile all into this all equity market fund, which is likely to weight profitability and relative price and all these other things differently from a dimensional fund, to additionally get that diversification there. There are periods of time where value and profit are going to perform differently. There are periods of time where the premium on one is going to be higher than the other. But I think having all of it in this one holding, yes, you get the diversification inherently.

of how many names are held in these underlying ETFs. But now we're talking about manager diversification, and I think that's a good idea too. Thanks for the call. Let's make it two in a row. This one on another ETF, COWZ.

Hi, this is Zach calling from Michigan. I had a question about cows, the Pacer Cash Cow 100 ETF. It's something that I had heard about on your show originally, but I never opened up a position and I'm considering it now. At the time you did say you had given it a thumbs up and I'm just curious if you were still feeling that way. Thanks for all that you do. Bye.

Great, so COWZ, the Pacer US Cash Cows 100 ETF, gives you broad-based US large cap exposure with the idea being, as you can see here, that the higher free cash flow is a mark of stability. And I tend to agree with that philosophy over time. So what they do is they start with the Russell 1000,

And using proprietary metrics over a given period of years, they will sort for the highest free cash flow yielding companies. And those top 100 names are included in the index. And so over time, what we've seen when you look at a cross section of return of U.S. market, international markets, what have you, is that over time,

More profitable firms tend to have higher expected returns than less profitable firms. And so this fund is essentially just saying, I'm going to invest in a way, invest in a way towards profitability of U.S. large cap names. Now, it doesn't necessarily mean that every period U.S. large cap high profit names are going to do well.

During the 2010s, there were periods where small growth low profit names did really well. There have been periods in the past couple years, back when interest rates were really low, when capital was cheap, that for whatever reason, most likely because again, debt financing, a lot of capital in the system, those companies that were those potential unicorns did very well. Over time, I would expect this to do better.

Now, its expense ratio is about 49 basis points, but there's some pretty active management and design included in here. Again, large cap fund, though a little bit of it, about 40% actually in the mid-cap space. So I would say if you're trying to get exposure to the large cap space, having a little bit of an allocation to cows is a good idea. Now, year to date, it's only up 251, but we're talking about longer term returns. Five-year, 17.58% annualized, beating the MSCI USA large cap index 5%.

by about a percent and a half. So that is COWZ, the Pacer US Cash Cows 100 ETF. It was a thumbs up before, still liking it now. So we've been talking about a lot of stocks, a lot of equities, a lot of ETFs, but there's another side to markets, and I would argue it is the more important side to markets. That's the bond side. And that's because President Trump's biggest opponent

hasn't really been an opposition party, but rather the bond market itself. And that's because his goal, his administration's goal, Scott Besson's goal, as stated, has been to reduce the cost of borrowing. And that makes sense. You have the influence of Elon Musk, who is a tech guy, right? Companies that are funded by a lot of debt, they want it cheap. Trump himself is a

Real estate guy, real estate guys finance everything with debt. They would like interest rates to be cheap. Besant, hedge fund guy, credit markets guy, doesn't necessarily like it when the 10-year yield climbs like it had up until the past couple of weeks. And so their focus has been on how do we bring the 10-year yield down? And there's a lot of ways to do that. But it begs the question, how can the White House control it?

Well, long-term yields are driven by growth. They're driven by inflation expectations, fiscal policy, market demand, the biggest force that drives it. And so the administration has been saying, okay, we're going to deregulate. We're going to lower energy costs. We're going to push yields down. But the reality is...

The bond market doesn't always agree with you. And the bond market doesn't always move in the way you would like it to. Now, after the election, bond yields jumped from 4.3% to 4.8%, reflecting some optimism, yes, but also concerns about a deficit-funded tax cut. Now, how do I know the White House pays attention to the bond market? Well, they scaled back their tax cut proposal from $11 trillion over a decade to $4.5 trillion over a decade.

And now in February, this is why this is important, there's been a recent decline in yields. But that decline in yields isn't because there appears to be a tackling of the deficit, but rather macroeconomic data that suggests consumers are anxious. They're anxious about tariffs. They're anxious about how tax cuts are going to play into the deficit. And so although it's the outcome the administration wanted, it's not necessarily the scenario they wanted to achieve it by. Concerns about growth, falling yields because of it,

and a slowdown. But the reason why I'm emphasizing this isn't because you can extrapolate what's going to happen in the market over the next four years based upon one month of policy. That would be lunacy. But there's always an emphasis on people saying that the White House cares a lot about equity markets, and I would counter that. I would say, if you want to know the likelihood of deficit-inducing policy, if you would want to know the likelihood of how aggressive tariffs are going to be, look at yields.

Look to see if yields keep falling, if they keep signaling the likelihood of a slowdown. Because as always, markets lead the way in a way, especially debt markets. And so whereas the first administration and even earlier in this administration, tariffs were slightly walked back a little bit because of what equity markets reactions were. I think going forward, the better market to watch is the bond market. If you want to see where things are going, look for that bond market backlash.

Looks like we have time for another InvestTalk YouTube channel question. This one on HII. It says, "Hi, InvestTalk. I currently hold a small position in Huntington & Gallus Industries." That is ticker HII. "Making up about 1% of my portfolio, given the current trends in the defense industry, do you think HII is still a strong company to hold, or would it be wiser to cut my losses and move on?" Pulling something up on my other screen here.

Maybe one day I'll pull the camera back and everybody can just see the ridiculous amount of screens I have. But anyway, so ticker HII that is Huntington & Gallus Industries is the largest military shipbuilding company in the United States. It specializes in designing, building, overhauling, and repairing military ships for the US Navy and Coast Guard.

Now, over the past 52 weeks, it's been a little rough. Been a little rough. Down about 39.93%. Now, it's a $6.8 billion market cap company. It has about 3.4 billion in debt. So quite a bit of debt on their balance sheet. Their interest coverage ratio, only about 3.22 times. Not an alarming territory. Remember, interest coverage ratio is how much earnings you make before interest and taxes relative to how much interest you have to pay.

They've been buying back shares. They pay a solid dividend, about 3%, which is generally higher than it's been over the past five years, but still not in worrisome territory. What is worrisome is their cash flow is falling. Their profit margins are slipping, right? Their net margin was reached a high in 2020, about 7.4%. About 4.8% last year projected to be about 4.6% this year. Another issue I think that you have on the horizon is...

You know, you do have this strategic importance, right, of the fact that when Biden left office, one of the notes that was left, one of the reports that was left for the next administration was the necessity to build and rebuild the U.S. Navy.

Some ships were outdated. There's a backlog of orders with this company, about $9.5 billion worth of naval orders. And so because of that, you could expect, well, maybe going forward, you see a pickup in revenue, a pickup in cash flow, a pickup in profitability, because the U.S. government needs to spend money. But what you've had since the new administration is not just a cutback in social programs, USAID, foreign programs, but now also seeing an emphasis on likely cutting back on military spending.

And so how does that affect companies like this, whose 100% of the revenue comes to the United States? They're not selling naval vessels to Europe who may want to rearm. And so my caution here in this name that is certainly not on a good trend drops steeply headed into November, drops steeply again at the beginning of January as well.

The prevailing trend of cutting spending is likely not to be good for the largest builder of ships to the U.S. military. So for now, I would stay out of ticker HII, that is Huntington and Gallus Industries. Thanks for watching. Let's pivot back to the InvestTalk Voice Bank and fit in one more question before the break.

Hi, this is Shelly from North Carolina. I have a question for Justin or Luke. I've been gradually buying Shell and OKE starting with my Shell purchase price at the low 60s. What are your thoughts on Shell? Do you think it has room to grow? If not, I'm thinking of selling it and reallocating my funds to OKE. I look forward to your answers. Great show, by the way. Thank you.

So let's take a look at Shell first. Full disclosure in a couple of our strategies, we do hold OKE for clients. And so because of that, we are obviously fans. We are fans of OKE. Now,

Now, Shell, on the other hand, is a very, very large company. It's about $200 billion market cap company. It's got quite a bit of debt, but not too much for its size, about $77 billion. Now, they've been buying back shares over the past three years, which we like. They pay a very solid dividend, about 4.16%. All the way back in 2020, that was 6%, but you know what? Four is very reasonable for this company. Now, over the past year, it's up 6.34%.

about 4.1% outperformance relative to the industry. And it also is trading at pretty cheap multiples, about 8.9% forward-looking earnings, about 1.1 times book value. Now most of its revenue does come from Asia, Africa, Europe, the United Kingdom, an overwhelming majority of their revenue.

And in terms of their business segments as well, a lot of it is pretty simple split. Now they do have good exposure to renewable energy, right, about 15%. There was a lot of movement towards renewable energy in the past four years and the investment certainly isn't going to be likely to subside in the private sector. But if you're looking at it versus OKE, well OKE's a little bit different story. Their entire revenue stream is really from their natural gas segment. And so because of that, because of the demand

especially from AI growth themes, because of the demand for energy and the ease of moving natural gas in that space. This name's up 31.34% over the past 52 weeks, even though it's down 15% over the past three months. Now it's a little bit more expensive, right? 16 times forward-looking earnings, price spoke about 3.3 versus 1.1 if you recall, but look at that growth. Look at that sales growth right there, 16.5% on an annualized basis.

And so you have two different names here. You have an established name, Shell. You have a smaller growing name, right? Only about $59 billion market cap. And so if you're looking for growth, I would probably start to move a little bit of that investment towards OneOak. I don't think there's anything wrong with holding Shell, but the growth potential isn't there as much as it is for OneOak. Thanks for watching and thanks for the call.

This is InvestTalk, I'm Luke Guerrero and we have one goal here to help you achieve your financial freedom. Our work continues after our final break, so get your questions in now at 888-99-CHART.

Every investor is working to build a secure financial future. How they get there and when they get there, that depends on many factors. The more you learn about how the market works, the better your chances for success. So don't forget to call InvestTalk, 888-99-CHART. Hi, this is Mike from Wisconsin. I own B-I-G-G-R.

Q, big lock incorporated, dropped in value to almost nothing due to going bankrupt. And I've only been holding it because it looked like there might be a buyout. And I'm wondering, does that mean the shareholders who perhaps own the stock would be, the stock value would go up and I should hold on to it? Or at this point, because it's bankrupt, the stock should be sold better

current value and take the loss. I use Schwab, so we're looking for any suggestions and information on your podcast. Thank you. Thanks for calling in. This is B-I-G-G-Q, Big Lots. They did go bankrupt. And anytime a company does go bankrupt, as an equity holder, you are last in line. The way the

Line works is you have senior secured debt and then junior unsecured debt and then preferred shares and then equity, a common stock in this case. And so holding onto this seems to be probably pointless. This is a name that is down, like you said, to essentially nothing down 99.55% in the past year. It's been on a trajectory downward really since 2021. And so if it were me, could you get something out of it?

I mean, something just means higher than zero. You could get higher than zero out of it.

but is it worth holding on to it i think you should just move on i think there are other places put your money hopefully you get some money back but this is a situation where you generally should not continue to hold companies that are doing this poorly i mean this is this should have been sold probably back in early 2024 you know and started heading even more downwards so time to move on sorry for your loss but uh at least you get to offset some gains this year thanks for the call

Now one more thing I wanted to talk about today is something that is visible for all of us and that is egg prices. Now as you probably know if you've gone to a grocery store, I personally go to Costco and it's been really hard to get eggs. And the reason why it's been really hard is the impact of bird flu on herds all across the country. And so what the U.S. is thinking about doing is to temporarily increase imports from countries like Turkey

In order to stabilize egg prices, but also egg supplies, 160 million laying hens have been culled since 2022, leading to a record price of $4.95 per dozen today. And until today, through today, imports remain limited.

even with Turkey's exports to us rising from 70 million to 420 million eggs. But it's more than just about buying eggs for them, right? It's about logistically, how do you make this happen? And so for now, right, if you think about importing and who tends to be hurt,

U.S. suppliers, farmers, farmers are actually behind this. They're saying that in order to have a long-term investment in domestic production, first we have to deal with the supply issues and then we can improve domestic production. So what needs to happen here? Well, there likely needs to be changes at the FDA. There likely needs to be changes within the industry in terms of supply chains.

The egg companies themselves are pushing for a bird flu vaccine because the 160 million hens that have been culled is just too much for the industry to support going forward. And so hopefully in the next several years, we put ourselves in a position where we are less likely to have supply contractions like this due to things such as bird flu.

But in the immediate term, as tends to be the case when things like this happen, hopefully we can start to import more eggs, lower prices for consumers. Now, I'm Luke Guerrero, and this completes another InvestTalk program. We thank you for listening, and we encourage you to tell your friends and family members about our free podcast downloads. Get yours anytime at iTunes, Google Play, and Spotify, and please be sure to leave us a rate and review on iTunes. Remember, and this is, I think, the most important part,

Most important thing I have to say at the end of the show, because I truly believe it, we can help you better understand your portfolio dynamics and calculate your investor risk number. We can also look at your 401k options and help you optimize your 401k.

But more than anything, something everybody should have, a financial plan, we can help build one for you as well. If you're interested, head over to investdoc.com, hit the portfolio review button. It is a free and confidential service. Justin and I would love to talk to you. Independent thinking, shared success. This is InvestDoc. Good night.

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