KeyStone’s Stock Talk Show, Episode 185


Great to be with you. We are back from our in person VIP Client events live in Vancouver & Calgary over the weekend. It was great to start seeing clients across Canada in person once again. We will start by touching briefly on the Feud between AOC and Elon Musk over Twitter. Aaron is going to kick of the show with a look at some recent inflation data in Canada. In our YSOT segment, Aaron answers a viewer question on Decisive Dividend Corporation (DE: TSX), an acquisition-oriented company, focused on opportunities in the manufacturing sector including sells wood and gas burning stoves and fireplace inserts, agricultural sprayers, waste water evaporators, and manufacturing solutions for the energy sector among other products. The client ask us our thoughts on this dividend paying small-cap stocks.  In our Stars & Dogs segment Brett starts with our Dog of the Week – Spotify (SPOT: NASDAQ) is one of the largest music and streaming service providers in the world, the company offers both premium and ad-supported services. The stock is down nearly 70% year-to-day and 24% since reporting its most recent quarter. Our Star of the Week is Modine Manufacturing Co. (MOD:NYSE), The stock has bucked the bear and is up 54% over the last month and 97% year to date. Modine designs, manufactures and tests heat transfer products for a wide variety of applications and markets. The company has two segments, Climate solutions and performance technologies. Strong quarterly numbers have been pushing the stock higher and we let you know if it can continue.

I welcome my cohosts – Aaron, and one half of the Killer B’s – Brett. Brennan is sick as a Dog and at home sucking his thumb and cuddling a teddy bear with his mom on speed dial.

AOC versus Elon Musk.

On Tuesday, AOC mocked this move and tweeted, “Lmao at a billionaire earnestly trying to sell people on the idea that “free speech” is actually an $8/mo subscription plan”. Commenting on this tweet, Musk replied, “Your feedback is appreciated, now pay $8”.

Linked with free speech is also the freedom to charge whatever the hell you want for something you own. I don’t have to agree with it, but the right is yours.

She or anyone else can just go to another platform to express their opinions on another platform – that may occur.

Of course, she chose to share this on Twitter which is sees as a valuable platform to express her opinion.

As I understand, one can still express their opinion on twitter without the blue verification check at any time. Twitter has been a very, very successful platform for someone like AOC to get out her opinions to the masses. Monetizing this, should not be a surprise.

Musk fired back with.

The feud went on.

She recorded a video – shared it – talking about all her information on Twitter being gone. And inferred that Elon or his team had removed her mentions, all information was gone. It turned out to be a glitch, but I do find it funny that she thought it had to do with the little feud.

Musk when on to tweet a screenshot of AOC’s campaign page and her store which she sells Campaign page, t-shirts etc.

She goes on to say, “we do things for society with the resources that are entrusted to us”….we are assuming she is talking about politicians or just her as a politician?? Not sure, but we can have a massive debate as to whether they do it well…I mean, Democrat or Republican..both parties have run up a massive public debt – they are not minding the store well.

As far as doing things for society with the resources entrusted to them – is that not their job description as politicians?

She goes on to complain about billionaires not doing this.

Where the hell does she think she gets the money, the resources that are entrusted to her from….hello… it is from the taxes directly from billionaire or the companies they created or the employees they pay…for the love of god…this type of thinking is so one sided it makes me want to lose it.

She went on to say, billionaire pocket the change and take that extra money to Wall Street… (the statement is so cliché and so simplistic…

There are merits to each side of these discussions, but why is every debate just black and white…there appears no room for a little grey.

It is just…billionaire bad. Me good. He he he, thank you. Now I am going to each more chicken nuggets and you need to all thank me for my brilliant and shallow insights that get millions of clicks.

Perhaps twitter is the problem as it limits debates to a few characters of speech.

On the video…the extend of the agreement was, “I think it is silly”….

She thinks she made him mad so he removed her.

I have all the time for arguments on how this may harm Twitter and its user base etc…..but make them.

Dog of the Week – Spotify (SPOT: NASDAQ)

Spotify symbol SPOT on the NASDAQ is currently down nearly 70% year-to-day, trading at a price of $73. The company has recently had a poor performance since it released its Q3 earnings on October 25th, falling 24% since. Spotify is one of the largest music and streaming service providers in the world, the company offers both premium and ad-supported services.

The company did have top-line growth year-over-year but has stagnated over the past four quarters.

For Q3 2021, the company had been teetering on the edge of profitability. However, that is no longer the case, as the company reported a net loss of EUR166 million or EUR0.86  on a per-share basis.  A significant reason for the increasing loss is heightened operating expenses, including marketing and R&D. The increased marketing has helped to add monthly active users, which had increased from 381 million to 456 million, due to the high growth in less developed markets, including India and Brazil.

Management has favoured raising expenses in the hopes of long-term gains from the expansion of the music segment and the increasing focus on podcasts and audiobooks. But, the long term can be at risk when short-term headwinds are high like they are now. Spotify is counting on being able to raise its subscription price in 2023, which may cause some users to drop off as they tighten their wallets in a recessionary scenario. Some are claiming that this will just cause users to shift to the ad-driven free version, but ads have also taken a hit lately and have pressured other companies who are reliant on them.

Overall, the market is pessimistic about the near-term growth prospects of the company, leading to the slouching price, making it our dog of the week!


Star of the Week – Modine Manufacturing Co. (MOD:NYSE)

Modine Manufacturing symbol M-O-D on the New York Stock Exchange is up 54% over the last month and 97% year to date. The company designs, manufactures and tests heat transfer products for a wide variety of applications and markets. The company has two segments, Climate solutions and performance technologies.

The stock price has been on a strong run over the past year and has recently pushed higher up after posting strong fiscal quarterly results. Net sales increased 21 percent from the prior year to 578.8 million, and earnings per share skyrocketed to $0.46 from only $0.01 in the prior year. The company is attributing these strong results to strong gross margin improvements of 280 basis points to 16.6% as well as increasing volumes across both its segments.

The company has seen choppy revenue and net income over the past 5 years. The revenue hasn’t significantly exceeded the recent trends, but income from operations has pushed higher, leading to a bullish case. The recent spike in earnings has additionally allowed the company to pay down $32.1 million of its net debt, lowering its net debt position to $301 million.

The company is betting on the ever-growing data center industry, which of course, needs significant cooling. The company recently repurposed a facility in Rockbridge, Virginia to manufacture cooling solutions under its Airedale brand.

We’ll see in the coming years and months whether or not Modine can finally have sustained growth, but for now, it is our Star of the Week!

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