Join Bill Gundersen as he deciphers the volatility in the stock market with a focus on valuation metrics such as P.E. ratios. By discussing the financial performance of stocks like Amazon and Apple, Bill offers actionable insights for investors. The episode also delves into geopolitical issues impacting the market, including the rising tariffs on Canada due to drug trafficking concerns.
He’s been seen on CNBC, the Fox News Channel, and the Fox Business Channel. His articles can be found on MarketWatch, Seeking Alpha, TheStreet.com, and many other places. He’s the author of the weekly Best Stocks Now newsletter and the inventor of the Best Stocks Now app. He’s president of Gundersen Capital Management. Here is professional money manager, Bill Gundersen.
SPEAKER 02 :
Good morning and welcome to the Wednesday… August 1st edition of the Best Stocks Now show, the Friday edition today. And we have Bill should be on here in just a little bit. He was putting together a note right before we got to the show. But markets are having a pretty sizable pullback at the moment. We’ve got the Dow down 742 points. It’s 1.68%. The S&P 500 down 114 points. That’s 1.8% on the tape. NASDAQ is leading the pullback down 2.26% at the moment, down to 20,644. We’ve got oil down as well, down about half a dollar to 68.79%. Gold is the safe haven this morning, up $56. That’s 1.7%. It’s $3,345. And Bitcoin also down 1.27%. And again, welcome to the Friday, August 1st edition. It’s August 1st already.
SPEAKER 01 :
of the best stocks now show and i think we’ve got bill on with us yeah we got a little equipment problems here this morning on this friday but not as bad as the market man this is a bloody friday i’ll tell you i’m thinking barry that it’s mostly uh the trade this is the august 1st deadline And a couple of countries didn’t quite make the deadline, it looks like. Canada’s going to get hit with a 35% tariff. Or they have been hit. I mean, that’s now official. And that’s not good for the Canadian economy. I don’t know. Do you buy much from Canada? I guess we’ll find out in the coming days and weeks. But you’ll be paying a lot more for Canadian products, I’m guessing wood mostly. You know, I don’t think we’re too dependent upon their oil at this point.
SPEAKER 05 :
Some aluminum, yeah.
SPEAKER 01 :
Yeah, some aluminum. And, you know, it’s probably going to hit the auto industry, too. I’m going to look at Ford and GM. Ford’s down 2.6% today. GM is down 2.6%. But, you know, Barry, the real problem that I’ve been discussing about the market is the valuation. Valuation is definitely a very important factor to follow, not only in individual stocks, but in the market itself. And every week I print and I update that forward PE ratio of the S&P 500, which is pretty much the bellwether. I mean, we’re at 22.3 right now. And when you look at the other measures, price to cash flow, price to sales, price to book value, you’re hitting 20-year highs. You’re up against those 20-year highs as far as valuations go. So that’s an issue with the market right now. You have to be very, very careful. Markets have cycles, and you’ve had a big run-up in the market here since March of this year. And it’s pushed valuations, it’s stretched valuations to a very extreme level. And, you know, there’s a few signs of that. Look at yesterday. Yesterday is a perfect example. You couldn’t have had two better earnings reports from two of your leadership stocks in the market yesterday. And the market reacted, the NASDAQ was up 288 points. And by the end of the day, we had given up everything and then some. That very much is a symptom of an expensive market where people are starting to get nervous about those valuations. And then you had a little bit softer than expected report from a giant like Amazon, which is down 6.4% right now. There’s some buying coming into Amazon right now. And then also Apple, which reported last night, Apple is basically flat after a good report. But when you get really good reports like that and the market reacts in a negative way and kind of ho-hums it all and sells off instead, that’s a symptom of a very expensive market. So that’s why I stay on top of these valuations on a daily basis.
SPEAKER 02 :
Yeah, I mean, that’s part of the app that you invented in terms of valuing those things on a daily basis and, number one, mainly just paying attention, right?
SPEAKER 01 :
Yeah, when you look at it every single day, I personally record the forward P.E. ratio of the S&P 500 every single day. And look at that and know where it’s at. And, you know, I know what’s extreme. I know what is palatable. I know what is cheap. And I would just say that, you know, I said it in my newsletter last week that we’ve run up against some very, very rich valuations in the market. And, you know, that is the way the market works. The market follows earnings, yes, and earnings are going higher, yes, but there’s another part of that equation, and it’s how much, how rich are those earnings at any given point in time. So, you know, you just still have to take a… Does that mean that you go out and you sell across the board and go 100? Well, I suppose if you’re that kind of a trader and not an investor in the market, then, yeah, I mean, I suppose you lower your risk at a time when markets are very rich, richly priced. But, you know, sometimes it’s best to just see how things work out. We have had a very good earnings season. This will be a very important newsletter this week because now you’ve got 80% of the companies that have reported earnings. And we’re going to have a very good indication for 2026 S&P 500 earnings and 2027, which is the market, believe it or not, is looking ahead to 2027 right now. uh, in earnings. And, we do have a good look into those earnings, but we’re going to have an even better look by the end of today. Uh, and that will come out, uh, in, my newsletter, uh, tomorrow sometime, probably late afternoon. Hopefully I’ll get that, uh, out. Uh, a lot of earnings, very busy week in the market, uh, a Fed decision by, I see Trump called him, uh, a, um, uh, a stubborn moron i call them a stubborn idiot so i guess great minds think alike right i think he was just really you know he’s stubborn he’s set in his ways he’s had his feathers ruffled and he’s certainly not going to give in to anybody and he You know, like you say, that was historic to have two dissenters going against Powell yesterday. And I see Trump is urging the board, you know, the governors to kind of have a mutiny against him a little bit. I would expect a quarter point cut at the next meeting. If he doesn’t do it the next meeting, then that just really proves that he’s a stubborn idiot slash moron. According to Trump, Trump says if he continues to refuse to cut rates, the board should assume control. I assume that’s a mutiny. Take over the wheel. I don’t know how. I guess if you get six dissenters or whatever the case may be and do what has to be done.
SPEAKER 02 :
I need to look up and see what’s the most dissenters that they’ve ever had. It is a vote.
SPEAKER 01 :
Do you have to have a unanimous decision? I don’t know the rules on the Fed, or is it a majority like the Supreme Court? I would imagine it’s a majority like the Supreme Court. I believe it is. Yeah, I believe it is. It’s not something we’ve seen. If he can get a couple more dissenters on his side, then they would overrule Powell, I suppose. But rates are too high. And, you know, he calls him too late, Powell. Well, you just have to wonder, are the high rates starting to show up here in the jobs report today, where we got July non-farm payrolls of just 73,000? A lot of that’s seasonal, I think. Here we are the 1st of August, late July. A lot of people do a lot of hiring for the summer, creating those jobs. And now you’re getting end of the tourist season. We’re already seeing back-to-school sales. I’m sure your boys are happy to see that. Kids just got their schedules yesterday. Yeah, I’m getting a lot of moans and groans from my grandchildren, you know. They hate to see it come to an end, putting away the boogie boards and the surfboards and whatnot. But today is also that August 1st, which this time was a hard deadline, and he hit a couple of countries very hard. He hit India. And he hit Canada. And he hasn’t been happy with Canada since he got in there. And, you know, it’s showing up in our tourism numbers. We get a lot of tourism from Canada. We get a lot of, you know, snowbirds, especially in the wintertime. And Canada not happy. Well, when we come back, we’ll give you a little update on the fentanyl situation, why he hit them with the tariff. We’ll be right back.
SPEAKER 06 :
I’ll be gone 500 miles when the day is done.
SPEAKER 01 :
And welcome back here to the second quarter of today’s Best Docs Now show. Well, I think what Trump has under his craw more than anything with Canada is the White House fact sheet on the Canada tariff cites fentanyl and illicit drugs flowing across the northern border. into the U.S. and Canada’s trade retaliation against the U.S. Since the start of October, that’s last year, U.S. Customs and Border Protection has reportedly seized 74 pounds of fentanyl at the Canadian border and 8,800 pounds at the Mexican border. Canada has failed to cooperate in curbing the ongoing flood of fentanyl and other illicit drugs and has retaliated against the United States for the President’s actions to address this unusual and extraordinary threat to the United States. In response to Canada’s continued inaction and retaliation, President Trump has found it necessary to increase the tariff on Canada from 25% to 35% to effectively address the existing emergency. So Trump sees this as an emergency. Now, obviously, a lot more is coming across that Mexican border, but it shouldn’t be coming across the northern border. That should be more secure, and Canada should be doing more. But, okay, it is what it is, and there’s your tariff. And that means even more revenue for the U.S. Treasury. Besson is saying we’re going to take in $300 billion in tariffs this year. And I’ve got to believe, Barry, I mean, those tariffs didn’t go into effect until later in the year. I think a full year we’re probably running somewhere double that. And, of course, that does narrow the deficit. It doesn’t bring it into line. I mean, we’re still running a $1.2 trillion deficit, but you can subtract $300 billion from that. And maybe $600 billion next year on these tariffs that we are collecting. And of course in June we saw a rare $27 billion budget surplus. which is very, very unusual. Now, I think that’s also another factor in the Fed not acting. They’re afraid that those tariffs are going to start showing up as inflation. And, you know, that comes down to who bears the brunt of the tariff. And studies have shown over the years, I mean this may not be the same as before, but generally speaking it’s the importers, the producers, and the sellers of the goods that bear most of the brunt of the tariffs. But the consumer definitely also bears. And, of course, Canada is going to retaliate. I don’t think Carney and Trump get along too well. I know he didn’t get along with Trudeau. And that’s where things stand right there. Now, despite that, Barclays continues to prefer U.S. equities over the rest of the world. Well, I would say amen to that. Number one, I would say that Europe, which outperformed the markets, outperformed the U.S. markets in the first half of the year by a wide, wide margin, I would say those days are over. And I’m already seeing Europe, VGK is the vanguard index on Europe. It’s rolling over right now. And the inverse Europe, EPV, is starting to curve and curl up to the upside, all right? And I would also say the outperformance in China is over with the tariffs they’re now facing and the slowdown in the Chinese economy that they’re facing. Maybe it’s caused by the tariffs. Who knows? Demand has maybe gone down for Chinese products. Their factories aren’t humming like they were. And I think the days are over of emerging markets outpacing U.S. markets like they did in the first half of the year. So be mindful of that in your 401ks. And you’ve got an expensive U.S. market, which is also something to be mindful of. The Trump administration is talking about trialing Medicare and Medicaid coverage for the obesity drugs. Well, things were getting pretty bad for the obesity drugs, Barry. We saw Novo Nordisk sell off by over 20% earlier this week as stales are collapsing for Wegovy. And, you know, that has trickled over to Lilly. Lilly’s stock doesn’t look that great. Now, this would be a help for them. My take on this, and I’d like to hear your theory on this. I was talking about this with my wife. I said, why do you think, she asked me, why do you think the sales of Wagovi collapse so much? And I said, I think it’s the price of the drugs. I don’t think the average person can afford $500, $600 a month. Even though you probably save that in your food bill and your eating out bill and your liquor bill and whatever else you consume, I think it’s a very expensive drug until those prices start to come down. But I also believe it’s a very beneficial drug. So let’s see, those stocks are not really reacting to this news today that much. Lilly, which was under pressure yesterday, is only up 2.4% right now. Novo Nordisk is up 2.4% also. as maybe, maybe, I still say that that would be a good investment by Medicare and Medicaid because it implicates and improves so many other conditions and prevents so many other conditions. Palantir lands an enterprise deal worth up to $10 billion from the U.S. Army. Palantir continues to be well-placed. It is the number one software company in the world. Them and I would say Microsoft at this time. You saw Microsoft’s earnings on Wednesday. And Palantir, believe it or not, in a bloody market, is only down 1.6% today. Investors are buying that little bit of a dip in Palantir. Wedbush says this gives Palantir another tailwind. Like they needed another one. This continues to be just a well-positioned company in AI, in defense, in cybersecurity, U.S. government. They’re very much connected to the U.S. government. So it’s all good news out of Palantir. Now, what happened to Amazon and Apple here? So Amazon’s numbers, and we’re going to go through Amazon’s performance over the years and their current valuation. We’ve lowered our exposure to Amazon by a pretty wide margin because we used to own it in our premier growth portfolio. And Amazon, do they pay a dividend? No, they don’t pay a dividend yield. We don’t own it in our premier growth portfolio anymore. I’d pick some up in the relative value portfolio because it’s trading at a lower P.E. ratio. And I think they had a pretty good quarter. I mean, their sales were up 13%. Their earnings were up 33%. but it’s a sign of an expensive market when you produce earnings like that and the stock sells off by 6.4%. We’ll dig into Amazon a little bit more, and then, of course, Apple is the other elephant in the room today, and along with some others like Roku, Kimberly-Clark, etc. We’ll be right back. This is Bill Gunderson. Thank you for tuning in to today’s Best Stocks Now, Best Inverse Funds Now show. I put several hours of research in during the wee hours of the morning each day to bring you the very best cutting-edge stories that I can. To get two free weeks of my newsletter, go to GuntersonCapital.com. To talk to us about our fee-based only money management services, call us at 855-611-BEST. Now, back to the second half of the show. Thank you.
SPEAKER 05 :
Instigator Because there’s something in me
SPEAKER 01 :
And welcome back here to the second quarter, second half of today’s Best Docs Now show. Boy, we’re geared up, ready to go. Monday, flying out to Detroit, Bloomfield Hills area. Totally booked Tuesday and Wednesday. Almost fully booked on Thursday. I had to change my flight plans, Barry, which I’m good with that. I’m okay. I love staying there and seeing the folks. I love meeting with the folks and talking to the folks. If you want to grab one of those last spots on Thursday before we head on out to the airport and back home, you can grab a one-hour appointment with the team, with Team Gunderson at 855-611-BEST. Edie does a fantastic job of organizing the whole thing. It runs like clockwork, really, Barry. I mean, it’s like… Every one hour, bang, you know, time’s up, Bill. Knock on the door. Here’s your next patient.
SPEAKER 02 :
She’s the queen of the schedule, right?
SPEAKER 01 :
Yeah, the patients lay out their portfolios in front of me, and we see what we can do and see if we can do a little surgery maybe, some major surgery, maybe just a little bit of cosmetic surgery. I don’t know. It just depends. Usually it’s pretty major, I’ve got to be honest with you. But if you want to grab one of those last spots, call Edie, 855-611-BEST. And the all-important newsletter, which keeps you on top of these valuations in the market and where the action in the market is and where it’s going and where it’s been and where it’s headed and all this and that. And a real learning experience. You know, this time of year I put in the track records of a lot of these stocks that are reporting earnings just so you can see for yourself and educate yourself on what a good stock looks like and what a soggy stock looks like. Usually there’s a huge gap, a huge gulf in between good stocks and your soggy stocks. We’re going to have a few more here today. Now, Apple has definitely, in my book, we’re going to do Apple next. I’ve been saying this for over a couple years maybe, that it’s definitely entering into that soggy territory where it doesn’t have the double-digit growth. It doesn’t have the innovation. It doesn’t have the new products anymore like it used to have. And it’s slowing down to be like more of just a large-cap company dividend payer like Johnson & Johnson. It’s not that bad yet, but it’s headed in that direction. And I have to say, Amazon may be entering into that phase. You know, like I say, we do not own it in our growth portfolios anymore, even though here’s the numbers on Amazon. Over the last 10 years, you’ve had pretty good performance, but it’s been choppy. 24.2% has been the average annual return over Amazon, which has beat the S&P 500, which is at 20%. But, you know, lately it’s slowing down. It’s still a superior rate. growth uh stock when you compare it with other stocks in the dow you know your procter and gambles and your at&ts and your really really single digit growers but amazon ain’t what it used to be uh i i think You know, I think their margins, they have a lot of overhead now, Barry, when I see, especially in the delivery. And I’ve noticed the delivery has slowed down considerably at Amazon, and I think maybe they overpromised. They had that big Amazon day, and It takes a while to get your stuff now from Amazon. I guess in the overall scheme of things, you can’t complain too much about it. But let’s look now at a valuation on Amazon. Amazon year-to-date. Ah, year to date it’s up 6.7% and it’s given all of that up today. So you’ve got a flat stock on the year here after a 44% return last year, which goes along with my analysis that it’s slowing down. Even their AWS is slowing down. So now we’ve got to look, is it a compelling valuation at this level? And that’s where beststocksnowapp.com comes in very useful. I use it. I built the app for myself. It’s professional grade data that you’re getting from that. It is a pretty good value, in fact. If it can maintain 15% growth, I have 83% upside potential over the next five years. You know, I think it’s going to keep growing. Where is it now in market cap? Amazon is now $2.3 trillion. I think it’s going to get up in that $4 trillion range at some point in time. uh so we’ll look at it we own it in the in the relative value portfolio because on a relative basis it is trading at lower multiples that it has in the past amazon is currently ranked number 253 out of 5114 and who knows maybe we’ll use this little sell-off in amazon to increase our position that’s part of that decision process that i go through on a daily basis okay Now, let’s put Apple under the microscope next here, Barry. Apple right now has really been a soggy stock here this year. Apple is down 1.7%. Their sales were up. They had a decent quarter. Their sales were up 10%. That’s the first double digit growth they’ve had in a long time in sales. And their earnings were also double-digit, 12%. That’s the best quarter they’ve had in a while. But I just have the opinion that’s about as good as it gets for Apple and the company they are in today’s world. Apple has beat the S&P 500 over the last 10 years, 22% per year versus 20%. But I’m telling you, it’s decelerating. I don’t know if you’ve ever listened, you know, these locomotives that I run on my little model railroad when I need a little break from all the action. A steam locomotive. Have you ever heard a steam locomotive putting the brakes on and all of that steam? That’s Apple, right? It is slowing down. The brakes have been applied. Over the last three years, it has severely underperformed the S&P 500. That’s not good at all, Tim Cook. It’s averaged 9% per year. That includes the dividend. The market has doubled that performance, and hence that’s why we don’t own it in our growth portfolio anymore. It’s no longer… It’s a superior growth stock when you put it up against Kimberly, Clark, or Procter & Gamble or one of those. But when you put it up against the tech sector, the Palantirs, the NVIDIAs, the Microsofts of the world, no, it’s put the brakes on big time. It’s squealing, and the steam’s coming up. And, you know, in fact, year-to-date now, Amazon or Apple – Apple is up. This is so important to look at this. Oh, yeah, yeah. It’s down 17% year-to-date, Barry. Is that what great stocks are made of?
SPEAKER 02 :
Yeah, I mean, it’s in the front lines of tariffs. That’s been the talk this year, and certainly the stock hasn’t liked any of that at all, which makes sense.
SPEAKER 01 :
And there hasn’t been much innovation. I mean, there’s no AI. They’re not in the robo-taxi race. They’re just very little. They’ve become a very stodgy, conservative, nothing exciting. We have no exposure whatsoever. to apple now let’s look at the valuation uh you could definitely say well bill you should maybe consider apple for your value relative value portfolio well okay let’s check it out my upside potential over the next five years which is critical here 56 percent barry that’s subpar i need 80 that’s not going to make the cut nope and so it’s an easy decision with the app it makes my decision making process easy but i will say this a lot of people still don’t want to let go of their apple it’s been good to them over the years they’ve established large positions in it it’s done well it’s made some people rich in the market etc etc etc But when people transfer it to me from another firm, unless it has a huge capital gain liability, I sell it. I get rid of it. I want to replace it with something that’s doing better in this market. That diesel locomotive that’s still humming there instead of that steam locomotive that’s putting on the brakes and the steam’s flying around. I’ve seen a lot of movies open up with that, right? A squealing sound and somebody gets off the train. That’s Apple right now. We’ll be right back.
SPEAKER 06 :
And welcome back here to the final segment on this Friday. Welcome to August, believe it or not.
SPEAKER 01 :
The dog days of August, they call them, and we’re certainly starting off with the dog day in the market here today. Well, I’ve talked many times about, you know, over the years, my biggest source of new clients is people that aren’t happy where they’re at because they’re in a lot of the soggy type stocks that I outline all the time. You know, the numbers, it’s just not my opinion. The numbers back up what I’m telling you. And I just have seen it time and time and time again of these big wire house firms. The bigger the firm is, the soggier the stocks are. And it’s because they have to buy big stocks that have a lot of liquidity. And for some reason, they’re enamored with stocks like AT&T. And Kimberly Clark and Procter & Gamble and Coca-Cola and on and on and on. And I look first at the track record of the company. How has the stock performed over the last 1, 3, 5, 10 years? You know, that’s actually pretty hard to find. And that’s why I had to come up with my own damn app. I was so mad that there was really… I even looked today on Schwab when I click on a stock. And it gives me research and all these factors on the stock. And it will show a graph how it’s done against the S&P 500. But I just want a nice, clean-look report card of these annual returns. So anyways, let’s put Kimberly Clark up on the chopping block here today. It’s always, almost always in a portfolio that comes to me from a big, large portfolio. money management firm the fishers of the world the merrill lynch’s of the world the raymond james of the world the uh the morgan stanley’s of the world an investment in kimberly clark over the last 10 years which is the ultimate consumer staple stock probably them and procter and gamble you’ve gotten four percent a year out of kimberly clark over the last 10 years the The market alone, S&P, is 20. Over the last five years, you’ve gotten negative half a percent. What makes you think that all of a sudden, you know, this is going to be a 10%, 12%, 15% performer? Over the last three years, you’ve gotten 1.8%. How can you sit in something like this and not say, you know what, it’s time? That’s like watching a guy in your… Your lineup bat 162 year after year with one home run and 27 RBIs. When is it before you replace that second baseman and get somebody in there a little better that can hit? Over the last 12 months, the stock is down 5.3%. It’s a horrible stock. Well, you say, well, it holds up better in a bear market. Yeah, okay, if that’s a good reason to buy a stock. I just try to apply logic to the markets. Kimberly Clark, during the last bear market of 07, 08, 09, was down 33%, lost a third of its value. So I just see no reason whatsoever to have that one in my lineup, on the field, in my roster, on my roster. You know, it just hasn’t produced its dead money. And you’re taking market risk and you’re getting that kind of performance. Okay, let’s go to the next one here. You’ve got two big oil stocks reporting today. A lot of people, I find a lot of older folks love those oil stocks. They’ve been good to me over the years. The oil’s never going away. But you know what? They have not been very good investments over the years, especially lately here. I’m just going to give you an example here. We’re going to put up ExxonMobil, which is… is a popular one. That’s in every portfolio that comes to me from big warehouse firms or Chevron, one of those two stocks. The performance of Exxon over the last 10 years, 7.6% per year, 7.6. The market’s 20.1. Over the last five years, it’s been a little better, but then lately it’s just been awful. awful performance. The stock over the last 12 months is down 2.2%. It pays a big dividend yield and there’s a lot of people that focus on dividends in my book. That’s also a poor strategy. because those dividend stocks have really not done all of that well, even when you factor in the dividend. Exxon pays 3.6% per year annual dividend yield. You’re getting your dividend check, what, twice a year, quarterly, whatever the case may be. But all in all, I mean, it’s a pretty boring stock, okay? If you want something to just take up space on your shelf, and kind of sit there and produce a little bit, then Exxon is for you. We don’t own Exxon. I mean, we lean more towards growth investing, and there’s not much growth in Exxon. Their growth in earnings over the last five years has averaged, Well, I mean, their latest quarter, their sales were down 12% and their earnings were down 23%. That’s four negative quarters in a row of sales growth and earnings growth. There is no growth. uh… okay chevron’s a little better but not much they’ve had four negative quarters in a row also chevron maybe has performed a little better but really these two companies mirror each other and their performance so oil has not been a very good investment over there’s the investment now if you want exposure to energy is nuclear And that’s, you know, Constellation and Vistra and what’s the other one there that I’m trying to think of next? The one that we own in our ultra growth portfolio. The name escapes me right now. What is it, Barry? It starts with a V. Anyways, I’ll think of it here in a minute. But there’s also a BEP which owns Talon’s Energy, Talon. There’s also BEP which owns the company that went out of business, bankrupt and got bought out by Cameco and BEP, Westinghouse. All right, so very poor results out of Kimberly-Clark, very poor results out of the two big oil stocks. We’re not going to get to the others. Reddit had a good report today. I was going to do Dominion Energy just to see how a big stodgy old utility has done, but I can tell you this, not very good. Are you in it for meager returns? I mean, you buy stocks that have been given meager returns over the last decade. What makes you think that the next decade is going to be much better? That’s just the way I look at things, and that really narrows down the market, right? Well, that’s the way it is. There’s not a lot of good growth stocks. You have to buy the best, in my opinion. Reserve a spot next week, 855-611-BEST, to talk to us, 855-611-BEST, to get the newsletter and the whole enchilada, GundersonCapital.com. Have a great day. Have a great weekend.
