12 stocks for the next 12 months

Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing. Whether you're an absolute beginner or approaching Warren Buffett status, our aim is to help break down your barriers from beginning to dividend. My name is Bryce and as always, I'm joined by my equity buddy, Ren. How's it going? 

Alec: [00:00:31] I'm very good. Bryce. It's a bit slow today. I was excited. Just a bit slow. Well, I think I'm still recovering from our week of celebration from the Australian podcast. 

Bryce: [00:00:40] Yes, amazing week. Last week, Monday we went to the Australian Podcast Awards and drum roll.

Alec: [00:00:46] They say they are the biggest awards. Nights are always on a monday as well. 

Bryce: [00:00:50] Well the Brownlow is on a monday.

Alec: [00:00:51] I don't know why you were laughing. I was being serious. 

Bryce: [00:00:54] And we were very excited and super proud to announce that we won Australia's Best Business Podcast. 

Alec: [00:01:01] Not this podcast.

Bryce: [00:01:02] Not this podcast. For our latest and newest podcast, The Dive. Business News. You, Sascha and Darcy have been tirelessly working to create an awesome news show that breaks down some really exciting news stories from around the world. 

Alec: [00:01:19] You've been involved as well. 

Bryce: [00:01:20] No, it's not as much as you guys, but yeah.

Alec: [00:01:23] Darcy is actually. Still celebrating. We haven't seen him since. 

Bryce: [00:01:28] But yeah, it's. Very, very excited to take home the gold medal for Australia's Best Business Podcast. And also we won bronze in best creative and commercial campaign. So a massive thanks to the Equity Mates community for their ongoing support and to all of the brands that work with us and support us over the last 12 months as well. Yeah. 

Alec: [00:01:49] If you're watching on YouTube, you can see the award over Bryce's shoulder. And I think we should just say, you know, we've been saying you should go and listen to the dive, but you no longer have to take our word for it. Take the word of a panel of esteemed independent podcast experts that analysed the candidates and chose the dive. Yes, but don't take it. Our word for it any more. 

Bryce: [00:02:12] That is it. All right. Let's check in with the show today. We've got a very brief summary of what we've learnt this week, but we had the Sohn Hearts and Minds conference last Friday and we were fortunate enough to be able to tune in and get access to some of the awesome speakers that pitch their stocks. And we're going to go through some of them today and actually do a bit of a draw. 

Alec: [00:02:35] And we're going to pick our portfolio. 

Bryce: [00:02:37] Pick our portfolio. There's 12 stocks from 12 experts, and we're going to try and create a portfolio. 

Alec: [00:02:42] And what we'll. Do it then we'll put our portfolios head to head up on socials and people can vote. Yeah, well. I've had so much fun with the World Cup of stocks this week that we'll just get more voting. 

Bryce: [00:02:56] Yes. And then we get to finish off with a book bonanza. 

Alec: [00:02:58] So it's going to be long. 

Bryce: [00:02:58] Epstein Walker Yes. Long. Let's keep it tight, which is see how we go. So we ran. What have you learnt this week? 

Alec: [00:03:04] So two quick things. First of all, I love my automated ETF investing. I know we've spoken about it on the show. I don't need to do it again. So I checked my brokerage yesterday. It's just ticking away. I don't have to log in time to do anything automatically transferred from my bank account. So pay hits automatically transferred to my brokerage by brokerage that automatically invests across five ETFs that I've set up. And I checked it for the first time in about a month and it's just doing its thing. I highly recommend automating your core portfolio because I am feeling on top of the world right now. 

Bryce: [00:03:38] Will after all of Yahoo! Hiring about it, I have done it. 

Alec: [00:03:41] Oh, really? Yeah. How are you feeling? 

Bryce: [00:03:44] Great. 

Alec: [00:03:45] You could feel like pricing. Oh.

Bryce: [00:03:47] Yeah. I haven't done as many ETFs as you, but I've automated the ones that I have and it is great. I do share the frustration with you, though, that it's not rational. 

Alec: [00:03:56] It really irritates me. 

Bryce: [00:03:57] Yeah, because I know that. Yeah, I know that that requires there's going to be a requirement like a monthly top up purchase or something to make sure that you are deploying all the cash that you want to deploy anyway. 

Alec: [00:04:10] Yeah, I'm kind of getting excited about it because my plan now is to top it up. So it's via either Asia except Japan, one that is like six. Yeah. Anyway, so that's the one that's, that's getting me. But you know, I'll top that one up if I want to, but I'm also going to use any of that leftover money that isn't automatically invested to invest in thematic ETFs. 

Bryce: [00:04:35] OKay. 

Alec: [00:04:34] So that's because I don't want to regularly, consistently put into them, but you know, if I want to top up, you know, like a Betashares hack or something, I'll just use that money. Yeah. So that's how I'm sort of thinking about it. That's how I'm thinking about thematic ETFs kind of getting in my core portfolio. Yeah. Yeah. Anyway, what else is there? Working for me? I'm loving it, so I recommend it. One other thing. This is not for stocks, but it might be the start of a beautiful thesis. I love PayPal. I love PayPal so much. And let me tell you why I love PayPal so much. I am at war with The Australian, the newspaper. I don't know. Learn all that I am in a war with them. Okay. Proof. In fact, there was an article about Austin about Film Fest in the US. 

Bryce: [00:05:21] Yeah. 

Alec: [00:05:21] And so I signed up, so. To read it. The odds have one of them. Make your own judgement about it. You can sign up online and you can pay with a credit card online to sign up. But to unsubscribe? You have to call them. Really? You can't cancel just online. 

Bryce: [00:05:38] That's annoying.

Alec: [00:05:39] And I think that's bull. Like, if you're going to allow people to sign up online, allow them to cancel online. Yeah. So I am refusing to call them, not giving them the satisfaction. Yeah. So I just went on to PayPal and I said, stop paying this or stop paying this. And it just stops the auto payments.

Bryce: [00:05:59] I see you signed up through PayPal. 

Alec: [00:06:01] Yeah. Yeah. Most online transactions that I can do through PayPal, I will do it through PayPal. 

Bryce: [00:06:06] Yeah, right. 

Alec: [00:06:06] Yeah. So now the US keeps sending me emails. We need you to update your payment details, not junk. That. I refuse. To call you. So anyway, that's my petty gripe of the day. But PayPal is great because I would have expected com bank allows you to do something similar but it doesn't. 

Bryce: [00:06:26] Yeah. Banks you have to go in and ask them to stop direct debits. 

Alec: [00:06:28] Yeah, yeah, yeah. 

Bryce: [00:06:30] You can do it. 

Alec: [00:06:31] But it's not an easy paper. It's PayPal's easiest day. Like, if people aren't buying things with PayPal online, seriously, think about it. It's really good. Love it. What have you learnt this week? 

Bryce: [00:06:41] So we had the added cavalry episode on Monday, which was great about the Qatar World Cup. If you haven't had a listen, go and have a listen. It's also on the dive in shorter form, but he's got a few conspiracy theories. And after listening and then watching some. Of what some of the World Cup unfolds, I've learnt that I can understand why people can get really stuck in conspiracies or really get on board with them because you anchor to things that support your conspiracy theory. Yeah. And listening to Ed's episode and then seeing how some things have unfolded in the World Cup. 

Alec: [00:07:17] You can decide to believe it. 

Bryce: [00:07:19] You know, I'm not saying to believe it, but you can understand how over time people can just believe the most crazy things. 

Alec: [00:07:26] First step you believe in Ed Calverley about football. You end up supporting them. 

Bryce: [00:07:32] Yeah, Exactly. Exactly. 

Alec: [00:07:32] No, But like. So the. What about the Japan-German game? Yeah, yeah, exactly. Germany did the covering the mouth protest. Yeah, I was about to cover my mouth, but that's not great for podcasting. And then Japan beat them. 

Bryce: [00:07:44] Yeah, exactly. 

Alec: [00:07:45] Yeah. 

Bryce: [00:07:45] But I'm not. I'm not going to throw any accusations out there, but like all those small things. But if I hadn't listened to Ed, I wouldn't be saying. 

Alec: [00:07:53] And what about. 

Bryce: [00:07:54] I wouldn't be saying, oh, this is crazy. Well, I just feel like, oh, wow, Japan, Germany. 

Alec: [00:07:57] And what about when Australia did the protest video and then they lost four one to France? 

Bryce: [00:08:03] That's to be expected. Not no surprises. There. Let's move on. We have a lot to get through. It's time for the Sohn Hearts and Minds draft. But before we get to this year's stocks, it's important that we caveat this around what has happened from last year. Yeah. 

Alec: [00:08:21] Now, for people who aren't familiar with hearts and minds, it's a charitable conference where 12 expert investors from Australia and around the world pitch their best ideas. Those 12 stocks get rolled up into a portfolio unlisted investment company. The ticker is one that it's essentially all rather than taking a management fee on that and also all ticket sales from the conference get donated to medical research. So it's like a really great cause and something that we're really proud to support. But it is important that people take every stock tip, be it from an expert at a $1,000 conference or from your mate at a pub with a grain of salt, because last year wasn't a great year for that one. 

Bryce: [00:09:05] Stock picks. Yeah. So keeping in mind that year to date the ASX is down 5%. Go Aussie and the S&P 500 is down 17%. Here's how some of the stocks from the last conference have performed. So I am one. The listed investment company is down 4030 9% year to date. No surprises because it is packed with a lot of these stock tips. 

Alec: [00:09:30] High flying. Growth. 

Bryce: [00:09:31] High flying growth. Now, keep in mind, these are stock pitches. They're pitching a stock that has to perform in 12 months. Yes. So it's a very tough thing to do. But anyway, let's rip through them. Tectonic industries were pitched. It's down 44%. And these are all numbers year to date. Ben goes for 51 Megaport down 68 deliveries here. I remember that one down 59%, Spotify down 69% over Lara. 

Alec: [00:09:56] Yeah, Avalon. 

Bryce: [00:09:56] Was acquired at 9350 a share. 

Alec: [00:09:59] I'm not sure. What was that? That was a relative year to date. But yeah. 

Bryce: [00:10:03] Flight centre was a short pitch. It's down 16% on the semi is up five. Nice one to Nick Griffin at Monroe Beauty Health down 59%. Coinbase down 83%. GitLab was generally a hold down 53%, and pinnacle investment was a pitch and it is down 43%. So look, in the grand scheme of things, it's not. 

Alec: [00:10:26] I mean, like, we're not going. 

Bryce: [00:10:27] Whoa. Yeah, a lot of folks in this industry.

Alec: [00:10:30] To me that's down like. 90%. 

Bryce: [00:10:33] But it just doesn't catch the next part of this episode that despite these amazing investors coming out and saying it is their best investment opportunity, blindly going into it, you know, always do your research and consider what might happen over the next 12 months. 

Alec: [00:10:49] And to be honest, like a lot of these companies will probably do quite well. Like some of them are definitely worth it, I own some of them. Some of them are on my watch list. We've heard experts speak about them a few times. It's the challenge of the 12 months. The tyranny of the world. 

Bryce: [00:11:03] Yeah, big time. 

Alec: [00:11:04] Maybe that's what phrase we can call it like. It's hard to be right in a short period of time in anything, but especially in the stock market that relies so much on psychology. But anyway, with that important disclaimer in mind, let's talk about the 12 from the conference and let's do it in draft style. So, Bryce, I have a virtual coin toss here. Yeah. You just kind of have to trust me because you can't say my screen heads or tails. [00:11:33][29.9]

Bryce: [00:11:35] Tails. 

Alec: [00:11:36] Tails never fails, as they say. It is tails. So you get the first draft pick. The name of the game here is to pick the six stocks that you think will do the best. Over the next 12 months. Yeah. Pick your portfolio and then we'll go head to head and maybe at heart around hearts and minds time next year, we'll do the same thing and we'll review how we went. And so when you pick your stock, tell us who pitched it. Tell us about the company and why you like it. Why? Why are you drafting it nice? 

Bryce: [00:12:10] All right, let's get going. So my first stock round, no surprises here is from Nick Griffin, ASML. 

Alec: [00:12:15] Okay. 

Bryce: [00:12:16] The stock ticker is ASML. No, the first time we met him, he said it's the best company you've never heard of. And now in his presetation. Said it is the world's most important factory. And what they do is that they build semiconductor manufacturing tools. And essentially these tools allow us to fit more transistors onto a semiconductor. They have an absolute monopoly in this in this space. And the technology that they sell is incredibly expensive. So you've got a monopoly selling incredibly expensive technology that is super, super important for many of the semiconductor producers. And then also the end users, Apple, Samsung, you name it, incredible company revenue, 15% came through to 2030 is his expectation. And he says that they expect earnings per share to return 105% in the next two years alone. In two years is what his expectations are. Double your money. 

Alec: [00:13:20] 105%. 

Bryce: [00:13:21] Double your money in two years, you should say his 2030 expectations, but he reckons that this is a no brainer. They sell this tech, these big boxes that create this lithography stuff, and the minimum purchase price is $190 million. Yeah, up to the up to the head million euro, I should say, up to €350 million. And more and more people are or what they call the foundries are buying these things. Yes. So incredible company. He said he wish he had pitched this for the last four years. He's that obsessed with this company, but feels that this was the year to pitch this because of the growth that he is expecting over the next two years.

Alec: [00:14:02] And what about the semiconductor slowdown that was. 

Bryce: [00:14:04] Saying no issues. He says it's such a competitive market and the demand for given that they're a monopoly. Yeah. 

Alec: [00:14:12] I also think like the immediate slowdown right now isn't really the challenge because like the amount of foundries being built over the next like two or three or four years, you know, in mainland Europe, in America, like Intel is putting stupid amounts of money and TSMC is building one of mine in the US there. That's when you need to get the photolithography machines. Yeah. Yeah. To set up your foundries. Yeah. I like it. I probably would have been my first pick as well, partly just because Nick Griffin seems to you know, Tom Brady might have won seven Super Bowls, but Nick Griffin's the goat of the Heisman. 

Alec: [00:14:45] Yeah, no, no, no. Not in general. Just awesome. All right. So I'm going to go to a company that I hadn't heard of before, the Hearts and Minds conference. And that's Nike. No, it is Eurofins scientific. Yeah. Peter Cooper picked it. Have you heard of it?

Bryce: [00:15:06] I hadn't until hot sun. 

Alec: [00:15:09] So you think that 105% over the next two years is impressive? Let me give you 37,000% all time share market growth. It's a quote, Peter Cooper, a hidden champion, a long term compound up for context. Over the past 25 years, Apple's returned 32% and CSL has returned 21%. 

Bryce: [00:15:31] Year per annum.

Alec: [00:15:32] Yeah, pretty good. Yeah.

Alec: [00:15:33] This company sits right in the middle. 26% compound annual growth rate over 25 is amazing. They provide laboratory testing for a number of different companies in industry, pharmaceutical, food, environmental, agro science, consumer products. They're kind of like a not like a laboratory. As a service, you need lab testing done. These guys will do it for you. €6.7 billion in revenue last year are headquartered in Luxembourg. But the thing that gets me excited, well, there's a couple of things that get me excited. It's down, it's meaningfully down. It's down almost 50%, 47% from September last year. It's rebounded a little bit recently, back up about 10%. It's trading at just under €70 a share. Cooper's investors think it could be worth 100. So without knowing too much about the company, but just like being really excited by a company I haven't heard of before, I'm putting in eurofins.

Bryce: [00:16:35] Nice. Yeah, I found this one really interesting. A couple of the big ones. Tailwinds that support this stock pitch is that when you're thinking about a thesis, if the company is backed or has a tailwind of government regulation, then you're kind of in a good position. And this is a company that benefits from the increase in government regulation that comes around. Food quality, air quality, chemical quality, all these industries that keep getting more and more regulation put in. The more regulation that comes, the more testing they need to do, the more that they need to use eurofins. 

Alec: [00:17:09] Or a competitor. 

Bryce: [00:17:10] Yeah, but apparently these guys have a huge cost advantage. They offer, like, one of the cheapest tests on the market. Well, and at such a scale. 

Alec: [00:17:19] Hey, it's my peer. Sorry. Get out of here. I'm excited. 

Bryce: [00:17:22] I thought it was an interesting, interesting pick. Just another one of those, like, boring. Yeah. Companies that just dominate. 

Alec: [00:17:29] Yeah, yeah. Love it. Love it. All right, Bryce, you have got. Well, we could do a snake draft and then I get to pick again, but I think for you guys. 

Bryce: [00:17:37] Yeah. 

Alec: [00:17:37] Um. 

Bryce: [00:17:39] So another stock that I hadn't thought about, I'm going to be putting keywords studios. Keyword studios. In. And this was pitched by Joyce Meng. The ticker is K U.S. It's listed over in London. We talk about the picks and shovels of industries. And this is the picks and shovels of video game development. Now, video games are a $235 billion market, a huge market, but it is becoming more and more expensive to build and develop video games. It's one of those industries where as technology improves, we're not getting we're not getting cheaper economies of scale here. It's getting more and more expensive to build games. The average triple-A rated game, i.e. those top tier call of duty's big games.

Alec: [00:18:26] Yeah, Grand Theft Auto. 

Bryce: [00:18:27] Grand Theft Auto costs on average over $100 million and takes five years to develop. Now, if you're a video game maker, you need resources to do that. Serious resources. And this is where keyword studios come in. Because of that, they are the largest video game development outsourcing provider. So all these massive companies go to keywords and say, we need production help, we need sales help, we need help in many different verticals. Can you do it rather than paying for it all themselves? They outsource and get economies of scale that way. You'll like this because you like IAC. I think it is the Interactive Corp acquirer. They have an incredible track record of mergers and acquisitions. They've made 56 acquisitions that on average improve their bottom line by 10% per year. And they have a pipeline of, I think, 100 acquisition targets over the next sort of 24 months. 

Alec: [00:19:26] Yeah, I like Interactive Corp because of the opposite though. It's the fantasy that they spin everything out. 

Alec: [00:19:32] Yeah, yeah, yeah. 

Bryce: [00:19:33] Look, another fascinating company. It's huge and it picks and shovels. So if you want to get access to the video game game market, this is potentially one way to look at it. But I'm adding it in. 

Alec: [00:19:43] No. 

Bryce: [00:19:44] Keyword studios. 

Alec: [00:19:45] All right. Well, let's keep rolling. I am going to draft my second heart and mind stock pick based on the rebound in travel. I am going to the China Tourism Group listed in China. The ticker is 601888. 

Alec: [00:20:03] Right there tickets. 

Alec: [00:20:04] Oh well it's not just China. 

Bryce: [00:20:06] I know Hong Kong bla bla bla. 

Alec: [00:20:08] Yeah, Japan. Yeah it's just triple that. Yeah. So I'm feeling good about that. Joined by Lu pitched it and she came out wearing so much like a Louis Vuitton hat like all this like luxury luxury luxury. Yeah, yeah, yeah. So China tourism groups operate duty free stores at airports around China and around the world. They have 90% market share in China, 200 retail, over 200 retail stores listing stocking over 1200 global brands. They're the biggest in the world in this duty free category. And they are just directly correlated to Chinese tourism and Chinese tourism spending around the world. Here's a fun fact for you. 40% of global jury duty free shopping is done by Chinese tourists. 

Bryce: [00:20:59] Yeah, it's not. [

Alec: [00:21:00] 40%. 

Bryce: [00:21:03] Yeah, They love it. Yeah, they're $4 billion apparently. 

Alec: [00:21:06] Is that that's what that 40% is worth and an important driver of that spend. It's not just that Chinese tourists love spending money at airports. It's that luxury goods are meaningfully cheaper at these duty free shops than in mainland China. So there is a real arbitrage opportunity for Chinese tourists to buy it duty free and send it home or carry it home. Yeah. Like there's a, there's an economically rational reason that you would expect this spend to just be powerful. Yeah. As Chinese consumers get well. As they are able to travel more than able to get this stuff cheaper than they can at home. Net profit growth, 33% in 2020, 23% in 2021. And they were. 

Bryce: [00:21:50] And that was in COVID. 

Alec: [00:21:51] Yeah, that was in interrupted years. Yeah, I really liked this pitch. I think there's some interesting stuff here. But yeah, I'm really for the next 12 months. You're just saying you expect tourism to normalise, especially out of China, because you think about the context in China right now, you know, Qantas might be forecasting big profit increases, but in China, COVID zero is still a thing. But it feels like, yeah, I am. 

Bryce: [00:22:19] Trying to let go of that. This thing's going again now. 

Alec: [00:22:21] Yeah. Or if Xi Jinping cracks down and reinforces COVID zero, then this one maybe not so much. 

Bryce: [00:22:28] Nice. Okay, so you've got two in the draft. I've got two in the draft. Sorry. The third stock that I'm adding to the draft is darling ingredients pitched by James Miller from a fire trial. Now the world is after renewable energy sources and one of the biggest emitters of CO2 carbon emissions is airline industry diesel. Yes. 

Alec: [00:22:54] Yeah. I'm just curious as to how you're going to make this work. You're going to change the airline industry in a year. 

Bryce: [00:22:59] Changing the airline industry in a year. No. So well, this isn't the only thing they do. But this was the main part of the pitch, the main thesis. So, darling, ingredients are in a huge portion of the world's animal fat and deep fried cooking oil. 

Alec: [00:23:15] They collect the waste. 

Bryce: [00:23:16] Yet they collect. 

Alec: [00:23:17] When you're old. And when I was a Coles, like we didn't do anything. I am Coles. I didn't do it, darling. But there are Australian equivalents. Yes, I collect literally used cooking oil. Yeah. Animal offcuts. 

Bryce: [00:23:29] Half an animal. Yeah. Yeah. And they use this and sell it on to those that are going to create renewable 100% fossil fuel free diesel, which we know for airlines, utes, cars, whatever is, is the way of the future. It is the largest owner of this fuel source around the world. They have relationships with over 200,000 restaurants. They say that they own about 15% of the world's animal fats and by-products and then sell this. But what is the thesis and the growth behind this? Apparently a lot of the big oil companies are now recognising that they need to get into the renewable diesel game and are building huge refining capacity for renewable diesel, which is putting an increased demand for the fuel source being animal fats and all that sort of stuff. And this is where Darling really comes in because they have that source. And if you look at the Chicago animal fat price, I didn't of course, there's obviously an exchange for Chicago for animal fat. It's tripled over the last couple of years because there is just not enough supply at the moment to meet the demand that is coming from a lot of these big oils and a lot of the companies that are now building and refining this renewable diesel. And so, so is. 

Alec: [00:24:50] Really. 

Bryce: [00:24:50] Putting themselves in the middle of all of this. 

Alec: [00:24:53] Yeah, but then shouldn't Walmart and Kroger and I don't know what the big butcher chains over there are probably Walmart and Kroger still. Shouldn't they be negotiating higher prices from darling? 

Bryce: [00:25:04] You're going to have to ask, darling. But he thinks so. So the prices are going up anyway. Yeah, the prices are going up given that there's not enough. But if I guess what you're saying is they should be asking for more. 

Alec: [00:25:16] Yeah. Yeah. But you would assume if the commodity prices go up and they have to pay more, they can still take that. They can sell one margin. All right. So anyway, I'm not sure what. 

Bryce: [00:25:27] The catalyst over the next 12 months. 

Alec: [00:25:29] That's my question. It's a really interesting company. Yeah.

Bryce: [00:25:31] And that wasn't really sort of pitched by James. It wasn't like this is what's going to occur in the next 12 other than there is just continued demand and continued inflation in the price. 

Alec: [00:25:43] I mean. 

Alec: [00:25:43] If the commodity price has gone up three fold in how. 

Alec: [00:25:46] Long? 

Bryce: [00:25:46] Last couple of years, I think. 

Alec: [00:25:47] Well then like if that trend continues. Yeah. 

Bryce: [00:25:50] Yeah. Sorry. So it is interesting, particularly for aviation, apparently aviation can't turn away from diesel. They can't go electric, they can't do anything else, X, Y and Z. So diesel is for them. So big opportunity in diesel. But anyway, what are you going for? 

Alec: [00:26:04] So I am going to play the man and in this case it was a man pitching it, not the ball here. I don't know much about this company, but I'm going back in the form of a guest of Equity Mates. Ricky Sandler. New Relic. NEWR. Yes, that's the ticker. Yeah. And that's all I know now. So hey, it's a software company. Obviously software has just been whacked this year and I am feeling throughout this whole market down. Turn this year. I've been feeling pretty okay. And I'm going to continue that. So it's down 50% this year. It trades at a big discount to its software as a service peers. Ricky has a $125 price target. For context, it's currently trading at about $50. He reckons the downside is 46, the upside is 175. So that's pretty good. Yeah, it's basically so it's a software as a service business that allows companies to track the performance of their technology stock in one integrated platform. Yeah, obviously not something that we're super familiar with being the media business rather than the tech business that we are here. So we spoke to him about this and, you know, he was talking about the catalysts for growth in a year. And it's not about valuation. Like, you know, there are a few pitches in the stone, hearts and minds, which were great pitches, but they were arguing that the market has just got valuation wrong. Ricky in this instance thinks that there's just like a misunderstanding of the business. The perception of the business is wrong, and if that perception changes in the next year, it'll get rerated. And so, Ricky, I'm backing you in here, my man. I'm drafting New Relic. 

Bryce: [00:27:52] Nice New Relic. Now, it was an interesting pitch. And you're right, it was all about the mispricing and the idea that it's perceived as a loser where in actual fact, it's not a loser. 

Alec: [00:28:01] So we've got three H. Let's quickly recap what we've got, take a break and then close out the draft. 

Bryce: [00:28:07] All right. So I started with ASML, then I went to Keyword Studios and then I had darling ingredients. 

Alec: [00:28:13] And on my side of the board started with Eurofins. Then I've gone to the China Tourism Group and headed over to America for New Relic. All right. Feeling good about my three so far? Well, with. 

Bryce: [00:28:26] Three to go. Let's see how it pans out after the break. All right. Let's kick straight into it. We've got three stocks each still to draft. And I'm going to be heading over to France, where I'm going to be taking the group FDJ of France du jour. I'm pretty sure it's. 

Alec: [00:28:42] Something like the French lottery. 

Bryce: [00:28:44] The French lottery. Yes. Now, this is a fascinating story. It's a look into the future. We've got front row seats in how to look into how the French lottery is going to play out over the next five years. Okay. According to Anthony Bird from Perpetual. Why is this the case? Just for a little bit of a history lesson, Australian Lottery, the Lottery Corp or whatever it's called, was spun out of Tabcorp earlier this year. What Anthony is saying is that we have a similar situation with the French lottery as we did with the lottery corp here. Okay. Now the French lottery is the fourth largest lottery in the world, which I thought was surprising. 

Alec: [00:29:23] And if you thought that was surprising, you obviously haven't been listening to the dive because we did a full episode on lotteries. What happens when you win the lottery and the world's biggest lotteries? Do you know what the world's biggest lottery is?

Bryce: [00:29:34] It's got to be the states. 

Alec: [00:29:36] No. Oh, it's in Europe. 

Bryce: [00:29:37] Oh, who? 

Alec: [00:29:38] Spain's Christmas lottery. 

Bryce: [00:29:40] How big?

Alec: [00:29:41] Like, it's a stupid amount of the population that plays it. Like half the population plays it every Christmas. 

Bryce: [00:29:46] There you go. Anyway, so FDJ has a monopoly concession to run the monopoly of the monopoly the the lotto for the next stupid amount of years. I can't remember what it was, but it was like 30 years or something. 

Alec: [00:29:59] Just for context. The Spanish Christmas lottery, $3 billion. 

Bryce: [00:30:03] Whoa, whoa, whoa. And so what Anthony is saying is that what happened with Lottery Corp. and why it's going so well now is because they took the lottery from an offline bricks and mortar and now have taken it to an online store and made it more accessible for many more people. And the online penetration is now a lot higher than it was. And so, you know, that's one of the theses behind the Lottery Corp and Fiji has incredibly low online penetration at the moment and are aggressively pursuing taking their business online. And so he's saying that there are many reasons why the French lotto should mirror what is going on with the lottery corp. And as such, he's saying it's a buy recommendation. It's a French lotto. 

Alec: [00:30:49] But. I mean, there's a few assumptions in there. What's that? I mean, like lotteries are just incredibly regulated businesses. So perhaps there is something that would stop the French from moving it online in the same way. Like, maybe people don't want to encourage gambling. Oh, I don't know. Like, the governments love the tax revenue from gambling, so. 

Bryce: [00:31:09] Yeah, well, he didn't mention anything about anything About that. 

Alec: [00:31:11] Because. It's not exactly it's not like you needed to say Australia's lotto move online to know that you could increase lottery participation by having an online offering. Yeah, well, I could have told you that in 2001. 

Bryce: [00:31:27] It's margins, it's a whole bunch of other things that I guess. 

Alec: [00:31:30] Yeah, I guess my question is like why haven't they done it earlier? Well, I mean. 

Bryce: [00:31:35] That's I mean, that's just like it's digitisation. Like, why hasn't Lottery Corp done it early on?

Alec: [00:31:39] They did. They did. Five years ago.

Bryce: [00:31:42] Yeah, but why didn't they do it? Ten. 

Alec: [00:31:44] It's the same question.

Bryce: [00:31:47] Why haven't half the businesses around the world digitised? Like, it's just.

Alec: [00:31:50] Why haven't they done it earlier? And why is this year, the year that they're going to do it? Because like, you know, I believe the thesis in general without being time bound, I don't know if I believe the thesis over the next 12 months. 

Bryce: [00:32:03] Faecal. 

Alec: [00:32:05] But I like it. 

Bryce: [00:32:06] To say what I think. 

Alec: [00:32:07] Yeah. Anyway, 

Bryce: [00:32:07] All right. What have you got? Just trying. 

Alec: [00:32:08] To. I'm just trying to have a crack at your pics. We haven't had an Australian company yet, so for my fourth pick, I'm going to put an ASX stock on the board. Give me car sales. 

Bryce: [00:32:19] Okay.

Alec: [00:32:20] Tim Carlton, who we have had on the show before, pitched car sales. It is a dominant player in Australia. It has six times the market share of the number two player. And Bryce Laskey. I bet you can't name the number. 

Bryce: [00:32:34] I was just thinking that not. Well, I haven't even bought a car. So you feel. 

Alec: [00:32:38] Unsafe? 100. 

Bryce: [00:32:39] You can barely name carsales. 

Alec: [00:32:41] Tim likes it because of the valuation of it. It's getting back towards that sort of long term average. It's down about 13% this year, so it hasn't sold off as much as some of these other tech businesses have. Probably because it actually does make a profit. But to say that 11% compound annual growth rate since listing, you know, it's not in Europe, it's no Europeans but pretty bad. Yeah. But Tim believes as a few growth drivers lifting ad prices, dynamic pricing and some more products, he also sees potential growth in some of the overseas businesses. US, South Korea. South America. Tim said you don't get extra returns from increased levels of difficulty. Don't leave this one on the road. Yeah. And I think this is one where it's like it's a good business, it's a dominant player and it's profitable. So, you know, I'm not trying to reinvent the wheel here. Put car sales on the board for me.

Bryce: [00:33:38] Done car sales on the board. Now we're getting to slim pickings now. 

Alec: [00:33:43] You know what? I because I'm picking last. I'm going to get it on, what? 

Bryce: [00:33:47] Depends what you classifieds done. I'm going to have to go with probably the one that excites me the most of the remaining four, and that would be Nike, New York Stock Ticker. And what. 

Alec: [00:33:57] Is going to change for Nike in the next. 

Bryce: [00:33:59] Year? I don't know. This was from Bob Desmond. His pitch is really twofold. And the main thesis for why Nike is that it's obviously down. It's the fact that they're taking more and more control of their distribution channels. Now, we've known this, we've spoken about it on the show, it's nothing new. In 2015, they only sold 23% of their stock or 23% of revenue was driven from direct to consumer. Now 43% of what they sell is direct to the consumer. As you can imagine with taking more control of distribution, you have more control over cost and you know, a bunch of other things. And secondly, increase in the amount of technology that they're using within the business classifies it as a technology powerhouse. Thirdly as well, he says that no one will ever outspend Nike when it comes to advertising with a $4 billion marketing budget per year. So when you do have the right question there, what is the catalyst over the next 12 months? Hard to say, but it's obviously just an absolute giant in the retail space. And I'm going to have to put it into my draft. So I'll take Nike. 

Alec: [00:35:10] Nice one. I am mindful of the times. So let's keep rolling. I am going to take a bet on an inflation play. I am going to put Transurban in my portfolio as pick number five. Catherine Allfrey picked it at the Southern Conference. It's lost over $1,000,000,000 in revenue over the last three years because of COVID. But prices are linked to inflation. It's got an incredible moat. The return to the office trend is here. If your reign as CEO has anything to go by, everyone will be back in the office at some point, you know, very flexible here at Equity Mates. So we actually do have a job listing so you can head over and apply. Prices are very nice. Say yes, but yeah. Transurban, everyone knows that toll roads infrastructure's dominant position in Australia are inflation hedged, inflation hedged. If you've heard that little beep as you are driving on a toll road, you've paid Transurban some money. That's it. Put them in my portfolio. 

Bryce: [00:36:14] Done or I rent to go and I am going to have to go with Tim Elliott to pick a champion iron listed on the ASX. They are an iron ore miner and they have a large mine called Bloom Lake over in Quebec, in Canada, incredibly high quality iron ore, great management. But his thesis is that the market has misread their recent report and so the stock has been sold off, off and made it very clear that now is the time to buy this stock in terms of valuation against peers. You think Rio, you think BHP, you think Fortescue. He says the stock has 43% up lift just to be in line with valuation based on a beta against their peers. So it's a valuation play, it's high quality iron ore which we know has. Premium pricing in the market and is incredibly well run. 

Alec: [00:37:07] I guess my whole question about iron ore, because I believe all of that, but isn't the whole thing just like where China goes and where China's property market goes, the market for iron ore. Goes. Anyway, who knows? 

Bryce: [00:37:19] 12 months. 

Alec: [00:37:20] Evergrande has been collapsing for like 18. Months now. All right, well, that leaves me with AMP. A pitch by Fred Willard and Fred. Don't get me wrong, it's not because I think your pitch is bad. I just don't know about the Catalyst amp. A lot of people probably know financial advice, investment products, superannuation. It obviously got decimated with the Financial Advice Royal Commission here in Australia, advisors are leaving the market. That whole business model is being challenged. The referral is trailing. Commission referral business model got challenged in the Royal Commission and they've sort of been out in the wilderness ever since. It is worth noting that they're up a third this year. They're up 33% this year. So if you've been holding an amp, you might be a bit happy. You're probably less happy about the fact that down 74% in the past five years. But Fred's pitch was a sum of their parts. So AMP is currently worth about $4 billion. That's its market value. Fred believes that if you just value each of the parts of AMP business separately, they're worth about $7 billion. So almost double what they're trading at. If you just add up AMP Bank, its New Zealand Wealth Management Division, it's AMP Super and its advice platform and then minority stakes in two Chinese businesses and then finally a US property platform. So. Look, I believe that. But as Ricky Sandler said, it's not about valuations, it's about mispricing. And what Fred and I hope and I guess what one hopes is that the market wakes up to this some of the parts analysis in the next 12 months, because it could take longer for that thesis to play out. 

Bryce: [00:39:06] Interesting pitch for some of the parts, but there's a reason that it's last on the list. Right. And unfortunately, you did have to put it in the portfolio. I think if we both had the opportunity, we would. We'd be leaving. It anyway. 

Alec: [00:39:17] I think, you know, we're not close to AMP, but we're close enough. We've been burned by this whole financial advice thing. We're now licenced.

Bryce: [00:39:25] Yeah. 

Alec: [00:39:25] So we probably just want to avoid AMP because, I don't know, it feels too close to home. 

Bryce: [00:39:30] That's it. All right, well, we will get our picks up online just to close out. I had a small one. I had. Keyword ingredient. Keyword credits. Keywords typically are darling ingredients. Then I went to the group stage. Then I went to Nike. 

Alec: [00:39:46] And then champion. 

Bryce: [00:39:46] And then. Champion. 

Alec: [00:39:47] I will edit that up by Equity Mates. You got to know that it took about 5. Minutes to get through. All right. I had Eurofins on my board. Then I had China Tourism Group, New Relic car sales, Transurban closing out with AMP. Love it. So go over to Instagram. Tell us which portfolio you'll be backing for the next 12 months. And I guess in 12 months from now, we'll do it all over again.

Bryce: [00:40:14] It sounds good. All right. Well, to close out, we've got a quick book, Bonanza. Let's do it. 

Alec: [00:40:20] All right. So we are joined by Dane. Dane, thanks for coming on the pod today.

Dane: [00:40:24] No problem. It's a pleasure. 

Alec: [00:40:26] For those who are new to Wren's book Bonanza, the rules are simple. I couldn't be bothered moving all my books, so I just brought them to the office instead and we want to give them away on the show. Three questions I'm going to ask Dion and Bryce. If Dion beats price, he gets to choose the book. If price beats Dane, Price chooses the book that Dion gets three books that you're playing for today. The first one, if you're watching on YouTube, I'll hold them up to the camera. Share placidly to a Guide to Investing in the US Stock Market by Danielle Acharya. This second one is one that I've tried to give away a few times. I really rated it. I obviously haven't done a good job selling it on this podcast. The contrary, in the book about Peter Thiel by Max Chaffin. Peter Thiel, the co-founder of PayPal, the co-founder of Palantir, early investor in Facebook and big Republican funder at the moment. Very interesting guy, very controversial guy. Finally, a book that's not particularly about investing, but is one that I'm actually good friends with. And I went to school with the author Bozo Shout out to him. He's over at Harvard at the moment, two time World University debating champion. And the book is called Good Arguments: What the Art of Debating Can Teach US About Listening Better and Disagreeing. Well, and if that doesn't sell you, Kevin Rudd writes the endorsement on the front cover. So a little bit out of left field, but one that I thought was quite good and one that I want to give away. So down there, the three books, any that you've got your eye on in particular. 

Dane: [00:42:00] I think you sell on the contrarians the way to go. 

Alec: [00:42:03] Nice, nice. Third time's the charm. All right. Well, let's play and let's see if you can beat Price the fame today where the soccer World Cup kicked off in Qatar. So it's all soccer and World Cup themed with a share market twist. Question one Manchester United is probably the best known listed sports team, listed soccer team in the world. In FY 22, it brought in $710 million in revenue. The first question is closest to the PIN question: how much revenue to bring in five years ago. So $710 million this year. Have a guess what it did five years ago. Dane, do you wanna start? 

Dane: [00:42:48] 450,000

Alec: [00:42:48] 450. Mil and Bryce. What do you think?

Bryce: [00:42:53] Five years ago? I'm going to say they poured in. I'm going to say not not not a massive increase. 600,000,. 

Alec: [00:43:00] 600 mil Dane, unfortunately, Bryce is closest to the pin. The answer is 757 mil. One thing that I learnt while looking at these companies is that sports teams don't grow their revenue line a lot. The valuations increase, but their revenues are very strong. Yeah,.

Dane: [00:43:17] Very. Consistent.

Alec: [00:43:18] Very consistent. Yeah. Yeah. So second question, these four professional football teams are all listed on stock exchanges around the world. Which of them is the most valuable we've got? Scotlands, Celtic, Germany's, Borussia Dortmund, Italy's Roma and Italy's Juventus. Ten. Are you a football fan? Have you heard of any of those teams? 

Dane: [00:43:42] I've heard of the teams and I think. Football is huge in Italy, so I'd be either AC Roma or Juventus. So I think we'll go to Juventus. 

Alec: [00:43:52] A nice Brye, which one do you want to go to?

Bryce: [00:43:55] I would also go to Juventus. 

Alec: [00:43:57] Been taken but. 

Bryce: [00:43:58] I'll. Okay. Well I'll flip it around and go. The German one. 

Alec: [00:44:02] Borussia Dortmund. 

Bryce: [00:44:03] Yeah. 

Alec: [00:44:03] Dane, you've nailed it. It is Juventus. 713 million USD are the next most valuable, which was 400 million at Borussia Dortmund. But Dan you've got that one. It is one all which takes us to the final question. Australia isn't getting left behind enlisting their sports teams. There's one notable Australian sports team that is publicly listed on the ASX. Bryce is nodding, so I think he knows the answer. So Dion, I'll throw it to you. Do you know what team that is? 

Dane: [00:44:34] Brisbane Broncos. 

Alec: [00:44:36] Danes, nailed it. Yes, the Brisbane Broncos are listed as the ASX ticker baby. Well, if you look at their financials, you'll see something very similar to Manchester United. The revenue doesn't move much year on year. I think they do about $38 million a year every year and covered that in 1938 again. But then you have one you have beaten Bryce. You get to choose your book. Which one are you after? 

Dane: [00:45:03] The contrarian. You sold it. So. 

Alec: [00:45:05] All right. Well, I know you'll enjoy it. I don't have to say I hope you will, because it's a good read. So we'll get that sent off to you. But Dane, thanks for playing. 

Dane: [00:45:13] Thank you for the opportunity. I love your work. 

Alec: [00:45:16] Cheers, man. 

Bryce: [00:45:16] Thanks, Dane. We appreciate it. And when that does bring us to the end of an episode, if you'd like to join us and take a book home like Dane did at the For Book Bonanza, email us at contact@equitymates.com. We'd love to have you as part of the show, but Ren, we'll pick it up next week. 

Alec: [00:45:30] Sounds good.