The Best Businesses in the World A to Z (List) - TCI Rewind

[00:00:00] Hey everyone, I got hit by a bad case of stomach flu last week and unfortunately I wasn't able to

[00:00:06] record our regular Monday episode with Braden. Turns out that young children catch a lot of viruses

[00:00:13] from daycare. Who could have known, right? But to make sure you still have something to listen to,

[00:00:19] we decided to replay an episode we recorded last summer. Whether you're listening to this TCI rewind

[00:00:26] for the first time or you've listened to it before,

[00:00:30] we think you'll enjoy this one.

[00:00:32] We go over what we think are the best businesses

[00:00:35] in the world for each letter of the alphabet.

[00:00:39] I'll be back next Monday with a new episode

[00:00:42] where I interview a special guest.

[00:00:44] Of course, I don't want to

[00:00:46] mention who it is just now. I want to leave you guessing, but make sure you tune in to

[00:00:51] find out who it is on next Monday's release. I hope you enjoy this TCI Rewind.

[00:00:59] This is the Canadian investor where you take control of your own portfolio and gain the confidence

[00:01:05] you need to succeed in the markets.

[00:01:08] Hosted by Brayden Dennis and Simon Beilanger.

[00:01:12] The Canadian investor podcast.

[00:01:15] Welcome into the show.

[00:01:18] My name is Brayden Dennis.

[00:01:19] As always joined by the outstanding, astute, distinguished,

[00:01:27] Simon Baylor J.

[00:01:28] All right, you got, that's,

[00:01:30] you just got way more than normal.

[00:01:32] You're welcome.

[00:01:33] Awesome.

[00:01:34] We have, I think you love it.

[00:01:36] We have a very fun episode today.

[00:01:40] It is our best businesses in the world list,

[00:01:44] A through Z.

[00:01:45] So I was texting Mr. Baylon J and I said, hey, let's go through every letter of the alphabet

[00:01:51] each and give what we think is the best business in the world.

[00:01:55] Throw out valuation.

[00:01:57] You can pick specific businesses with inside of businesses.

[00:02:00] I did that quite a few times.

[00:02:03] But throw out valuation, throw out, you know,

[00:02:06] the management team. It's really kind of really around the business model and defensibility

[00:02:10] of it.

[00:02:11] Yeah, I did it a little differently, but I knew how you were going to do it. So I basically,

[00:02:17] I know I just made sure it was public companies. That's it.

[00:02:20] Okay, fair enough.

[00:02:21] So not very different. It was just that. I decided to do it just public companies

[00:02:26] But I know you had shown me a list you had on stratosphere. So I knew you were gonna pick specific kind of

[00:02:34] companies within larger companies, but

[00:02:37] Just a little twist and make sure we have different names too

[00:02:41] The rules for the list are very fluid as you know

[00:02:47] names too. The rules for the list are very fluid as you know. Yeah, exactly. I could be convinced of any kind of subset of rules here. Alright, so let's go through each letter

[00:02:53] one by one. We'll do you first, then me and for the most part we just have like one name

[00:03:00] each but sometimes there's just like I I really need an honor to mention here.

[00:03:06] And so that was that happened a couple of times. Do you want to kick us off here?

[00:03:11] Sure. So letter A, I chose ASML. I had a feeling you'd probably choose Apple. So I wanted to

[00:03:18] be a bit different. But mostly, as ML, just because it's, it's a sort of monopoly part of their business is a monopoly

[00:03:26] part of it is a duopoly but what's not to like and with the you know projection or direction

[00:03:33] we're going especially with AI but as a whole you know everything takes a semiconductor

[00:03:39] or chip right now so you're gonna see more and more capacity to build these semi conductors and as ml will pay a key part in that because they make the machines that

[00:03:50] Enables that essentially so deep ultraviolet the UV and EUV

[00:03:55] So it's it's a company that I think should have some tailwinds for years to come. So that's why I chose them and

[00:04:01] Mine is a customer of a customer of your business you just mentioned.

[00:04:08] None other than the largest business on the planet, Apple.

[00:04:11] And it just felt like I'd be kind of cheating myself by not saying them on this list.

[00:04:18] I mean, of course, they have built out just probably the most iconic brand, the most addictive, most successful

[00:04:30] consumer product ever in the history of the world and most in many product categories

[00:04:39] now.

[00:04:40] They've kind of created this glue of their ecosystem, which generates an absurd amount of cash.

[00:04:47] And so I felt like I had to go there,

[00:04:49] but I had some other kind of honorable mention here

[00:04:52] in A's, there's lots of good A's,

[00:04:54] especially with publicly traded companies.

[00:04:56] I wanted to call it AutoCAD,

[00:04:58] as just one of the most successful

[00:04:59] vertical market software products of all time.

[00:05:02] And of course, Amazon Web Services carving out

[00:05:06] an entire new era of computing out of nowhere with inside of a business. And I think that

[00:05:12] that's always very impressive. Let's move on to B for Braden.

[00:05:17] Yeah, go for it. You started this one.

[00:05:18] Oh, that's not even what I meant, but you're right. I should kick it off. For us, you'll have to go first. I went with Berkshire.

[00:05:26] And lots of different ways I could go with this,

[00:05:30] but Berkshire is just an exemplary type of business,

[00:05:36] a special kind of business with a special kind of story

[00:05:41] and management team.

[00:05:42] And so I just felt right here.

[00:05:44] Yeah, I went with Bed Bath and Beyond.

[00:05:46] I just scared.

[00:05:47] I went with the now defunct bankrupt.

[00:05:52] Hey, they're selling some of their intellectual

[00:05:54] or their online assets, but jokes aside, I took Brookfield.

[00:05:59] But again, I think I put an honorable mention

[00:06:03] to Berkshire just because of Buffett.

[00:06:06] And I think Berkshire will definitely rise to another level if in 15, 20 years, when

[00:06:12] I'm assuming both, you know, knock on wood, they still still be there.

[00:06:16] But I'm assuming that, you know, both Roy and Buffett and Charlie Munger will have passed

[00:06:19] away, let's say in 20, 25 years, there's going to be some time where the new leadership

[00:06:24] and Todd will be in place. So just to see how well they keep doing after, you know, Buffett

[00:06:31] and Munger are no longer there. It'll be really interesting. And if they do well, I mean, that's

[00:06:35] just another level to be able to get, you know, someone new that's not the face of the

[00:06:41] company running the show. I had a really funny realization about this

[00:06:49] while I was at the meeting,

[00:06:50] because you had Ajit and, oh gosh.

[00:06:57] Oh, I'm forgetting, the Canadian guy, Berkshire,

[00:07:00] he runs the rail business.

[00:07:07] Yeah, you were there. Oh my God.

[00:07:09] Greg, Greg Abel.

[00:07:10] Oh my God.

[00:07:11] It took me so long to come.

[00:07:12] So, Greg runs the one side of the business that G runs the insurance business.

[00:07:16] Did I confuse Greg with Todd or there is a Todd?

[00:07:19] So, Ted, the two T's, they run the investment portfolio.

[00:07:24] Okay. Okay.

[00:07:25] Yeah.

[00:07:26] Greg Abel runs the T.C. at Berkshire Energy and the railroading business, and then Ajit

[00:07:33] runs the insurance business.

[00:07:36] Anyways, where I'm going with this is all the, you know, this roster that they've built

[00:07:40] up to replace themselves has now been in that position for so long because they're

[00:07:46] still at work.

[00:07:48] And like, they go like, yeah, I know that's what I had that realization.

[00:07:53] I was like, these aren't young guns anymore.

[00:07:56] You know, like as soon as they kind of took the role of in their late 70s and early 80s, which is now 15, 20 years ago,

[00:08:08] to kind of like be the next up in line,

[00:08:11] they've, you know, do they want to retire soon?

[00:08:15] Like they're all rich as hell.

[00:08:16] So I had that realization.

[00:08:20] All right, did you do see yet?

[00:08:22] Yeah, I'll do see.

[00:08:23] So yeah, we'll probably need to speed things up because we'll be here an hour and a half.

[00:08:27] Can have Buffett tangents every time.

[00:08:29] Yeah.

[00:08:30] Yeah.

[00:08:31] So for me, I think I'll say two names here.

[00:08:32] So Canadian National Rail or CP.

[00:08:35] But really you can put a lot of rail companies here.

[00:08:39] It could be some of the US ones, whether it's Union Pacific or some of the other ones.

[00:08:44] But there's just the natural mode around them, the regulatory approvals that would be required

[00:08:49] as well. So it's just a wonderful business.

[00:08:53] I went with Costco for kind of obvious reasons. I considered, of course, my largest position

[00:09:00] in constellation software, but I can't consider a roll-up like the best business in the world Maybe just the best the best execution of it in the world, but I feel good about Costco

[00:09:11] Yeah, can't can't disagree with that. Yeah. All right, let's go with a

[00:09:18] No, no D D. Wow

[00:09:21] Just learning the alphabet for the first time here. I went a little bit off the board

[00:09:25] here with Deer. John Deer. I think that my Aggie folks will like this pick because this

[00:09:36] is some of the most impressive technology, one of the most impressive companies that's

[00:09:42] just had such a great position in that market for such a long time. No, it's not

[00:09:47] some big growth stock, but it is an impressively tremendous company with a pretty wide moat and

[00:09:54] just amazing tech. The tech in those machines now for the farming industry blows my mind and I

[00:10:02] thought John Deere was a good pick here. No, that's a good pick.

[00:10:06] My pick is Disney, not, I'm aware the business

[00:10:10] is probably not at its peak right now,

[00:10:14] but Bob Iger is back and the reason why I really love Disney

[00:10:17] is just for the intellectual property

[00:10:20] because at the end of the day,

[00:10:23] that's the foundation of Disney. Whether you're

[00:10:26] thinking about theme parks or cruises or Disney Plus or content, like everything

[00:10:32] is based on that intellectual property and there's just so many things they

[00:10:36] can do with that and that's what makes Disney such a great business in my

[00:10:41] opinion. Obviously they do need to you know know, right size this ship and make sure that they invest in the right places and

[00:10:48] definitely reduce some debt as well. But just the intellectual assets are,

[00:10:53] it's just amazing.

[00:10:55] There's no substitute for brand value. There really isn't.

[00:11:00] It's really hard to compete with. It's one of the powers of strong businesses.

[00:11:06] E, I went off the board here.

[00:11:09] So this is a private company.

[00:11:11] And I wanted to use it as an example

[00:11:13] to bundle together all the large consulting firms.

[00:11:18] So E for Ernst & Young, most commonly known as E and Y.

[00:11:23] You have these management consulting companies

[00:11:25] the big the big four accounting firms that E&Y's the Deloitte's the KPMG's and

[00:11:35] the PWC Price Waterhouse Coopers. These are

[00:11:39] some of the largest businesses in the world by revenue and

[00:11:44] they're super fragmented in their own organizational

[00:11:48] structure by like the partner and the management teams.

[00:11:51] They have really interesting ownerships

[00:11:53] and they do extremely well.

[00:11:55] They churn out tons of cash, tons of profit.

[00:11:58] No interest in going public or anything like that.

[00:12:01] And it just deserves some sort of mention

[00:12:04] as incredible businesses

[00:12:06] that don't really get talked about because they are privately held.

[00:12:10] Yeah, no, that's a good one for me. I chose Etsy funny enough because I sold my position in Etsy,

[00:12:16] but I still think the business is really good just because they've really shown how well they can do despite, you know, you know, Amazon trying to get into that market over the years.

[00:12:28] Etsy has still been resilient.

[00:12:30] There's been a lot of good things happening with the platform.

[00:12:33] The one thing where I didn't love and one of the main reasons I sold is one,

[00:12:37] the valuation was quite high.

[00:12:39] But the other one is I feared that they were not treating their sellers well

[00:12:44] enough.

[00:12:49] And that is still a concern for me in terms of Etsy's just to make sure you, they don't, you know, they don't piss off. I'll just say that.

[00:12:55] I was having issues with the word, but they don't piss off their,

[00:13:00] their consumer or sorry, their seller base. Yeah.

[00:13:03] The seller base. That's right. That's the, that the that's such a important part of their ecosystem is that seller base

[00:13:11] All right F I chose Facebook the actual Facebook blue product because

[00:13:18] Just as soon as someone says Facebook is dead

[00:13:28] Even as someone says Facebook is dead, you're forgetting about the billions of people that use it on a daily and monthly active user type scenario.

[00:13:33] Yes, Instagram has surpassed it as maybe the most valuable asset in that base. Do not discount the category of 60 plusters, the 50 plus year old mid-western mom who just

[00:13:52] crushes it on Facebook and has an arpoo of like 80 to 90 dollars per year.

[00:13:59] Do not throw out that category.

[00:14:03] It is super, super profitable.

[00:14:06] And so good old Facebook blue is still kicking it

[00:14:10] and still making an absurd amount of cash.

[00:14:12] Yeah, and our poo for those not familiar

[00:14:14] is just the average revenue per user.

[00:14:16] So just the revenue per that, you know,

[00:14:19] the 60, 50 year old like you're mentioning.

[00:14:23] But also they- It is a great demographic. Yeah, they also did well too with the Facebook messenger

[00:14:29] So my wife uses it a lot for groups. She never uses like Facebook

[00:14:33] It's basically marketplace and messenger and I think they've done a good, you know, really good job of being able to monetize that as well

[00:14:41] I love Facebook marketplace. Yeah, no, it used to be Kijiji and now I never go on Kijiji.

[00:14:47] I use Facebook marketplace.

[00:14:50] The power of network effects.

[00:14:51] Yeah, exactly.

[00:14:52] So for me, I stole one of yours.

[00:14:55] So I kind of struggled with letter F,

[00:14:57] but I ended up taking a Ferrari just because of, you know,

[00:15:01] the luxury good and just the exclusivity that they create and the power of the brand

[00:15:07] It seems to stand a test of time and there's almost kind of this

[00:15:12] Cold-tish aspect to owning a Ferrari it seems like so and you know, they're really profitable

[00:15:19] So what's not to like?

[00:15:22] With G I went with Google search just good old Google search one of the best businesses ever

[00:15:28] It's been tested. It's had an interesting narrative over the last couple years

[00:15:34] Sorry last couple of months maybe

[00:15:36] Year now with the release of chat GPT. I was quite skeptical of

[00:15:43] I was skeptical I was concerned about,

[00:15:46] what does this do for search?

[00:15:48] And the data comes out that it hasn't budged search at all.

[00:15:52] And those tools are extremely useful

[00:15:53] and I still believe that AI is gonna completely change

[00:15:57] the way that people search and surface information

[00:15:59] and get things done.

[00:16:00] That opinion has not changed.

[00:16:03] However, they're able to layer it on pretty well with

[00:16:05] Google search and monetize the heck out of that asset. It's like $23 billion in operating income.

[00:16:13] I think that that's pretty good. I have an honorable mention of GitHub, which is a Microsoft asset.

[00:16:19] I think it is becoming one of the most valuable assets in the world, not in terms of monetary value,

[00:16:27] but if you think about the actual value of all of the code that sits on GitHub, it might

[00:16:35] house the most valuable asset in the entire world.

[00:16:40] And I think that that's pretty spectacular.

[00:16:43] Microsoft bought that.

[00:16:44] That was really smart.

[00:16:46] Just one of the brilliant Satya Nadella moves.

[00:16:49] And I think that they're going to read the benefits of that long term.

[00:16:53] Yeah.

[00:16:54] So for me, I chose genuine parts companies.

[00:16:58] So ticker GPC.

[00:17:00] They're a global distribution company for Automative and Industrial Replacement Park.

[00:17:05] And I mean, these kind of, they're not the only one in this space, but these kind of

[00:17:11] companies, they just do really well.

[00:17:13] They just, you know.

[00:17:14] Is it just distribution?

[00:17:15] I believe it's mostly distribution.

[00:17:17] Yeah, I'm not super familiar with the company, but I, you know, I looked at the financials

[00:17:22] quickly as I was, you know, creating that they own, I think Napa

[00:17:27] auto parts too. That's under their brand and they're not the only ones, so there are other

[00:17:33] competitors, but they all seem to be doing quite well. So it's a good business model,

[00:17:38] so I needed something for Letter G with trying to go as just a whole publicly listed company. So that's why I chose that.

[00:17:46] So Home Depot.

[00:17:48] I don't think I need to explain what Home Depot is.

[00:17:50] I mean, they really have a strong or I would say almost a duopoly between them

[00:17:57] and Lowe's and Home Depot has just executed quite well over the years.

[00:18:02] Uh, pays a nice dividend.

[00:18:03] It's a really stable business.

[00:18:06] I mean, I feel like they're not going to be dethroned anytime soon.

[00:18:10] Damn it, Lowe's.

[00:18:12] There is some fragmentation in smaller players, but really good business.

[00:18:18] Not much more to add.

[00:18:20] I also chose Home Depot, so nothing more to add there than it is.

[00:18:24] Then it smells incredibly good, of course.

[00:18:25] Yeah, of course.

[00:18:26] I went in there last weekend just to.

[00:18:28] Yeah, then she sent me a text.

[00:18:29] Smelled roses.

[00:18:30] Yeah.

[00:18:31] I said, I said, I'm pretty sure I send a photo of Home Depot

[00:18:34] every time I'm in Home Depot to you.

[00:18:36] Yeah.

[00:18:36] Just because you know, I'm just going in there to just go,

[00:18:42] you know, lumber and appliances. How do you smell so good? I will go here with

[00:18:49] I on Instagram. You know, I'm doubling up here on the Facebook assets. That's boring.

[00:18:54] I want to give a shout out to IKEA, a private company that has kind of redefined retail and

[00:19:03] it's just such a iconic household name

[00:19:06] No pun intended and it has so much brand value people love going there even you know

[00:19:11] To say what you want about the quality of the stuff. There is a perfect product market fit for what they sell

[00:19:18] And that is what makes IKEA so special

[00:19:21] Yeah, no, I mean if you don't like going to IKEA for the furniture,

[00:19:25] go for the meatballs. They have them vegetarian or vegan and just regular meatballs. For me,

[00:19:32] I'll go with into it. I'm surprised you didn't use that one. But yeah, whether it's TurboTax,

[00:19:39] QuigBooks, all the assets they own, obviously there could be with TurboTax,

[00:19:42] all the assets they own. Obviously there could be with TurboTax,

[00:19:44] headwinds going forward, but it's so sticky

[00:19:48] if you just think about QuickBooks

[00:19:50] with small businesses once you're in that ecosystem.

[00:19:53] I mean, accountants are super familiar with that tool.

[00:19:57] They can, you can create a profile for them.

[00:19:59] Obviously we use it, so I'm pretty familiar with it.

[00:20:02] Just a really good company.

[00:20:04] I mean, they did, what's the mail company again?

[00:20:08] MailChimp.

[00:20:09] MailChimp, yeah, so I was thinking like MailMonkey,

[00:20:12] but I'm like, no, that's not it.

[00:20:14] Yeah, you're not wrong.

[00:20:16] MailChimp, I think that one is a little bit of,

[00:20:19] we'll have to see, you know, how it goes in that part.

[00:20:22] But for, especially when you think about

[00:20:25] QuickBooks it's so sticky so really good business model there. They've been

[00:20:29] aggressively raising prices on every product. Oh I know yeah I intuit a little

[00:20:34] bit too. I mean QuickBooks yeah. QuickBooks a little bit. Well just wait a

[00:20:39] bit because that letter's coming up soon so I didn't completely avoid

[00:20:43] Intuit because you'll see in a couple letters here. Okay, I'll go next. So letter J. So I took JP Morgan because

[00:20:52] if you're going to own a global bank that's too big to fail, it might as well be JP Morgan. So

[00:20:59] that's that's where I went for it. Everyone knows I'm not the biggest fan of banks in general.

[00:21:05] But, you know, as a too big to fail bank, if I had to choose one, it would probably be JP Morgan.

[00:21:13] And you have the best banker running the best bank.

[00:21:17] Yeah, apparently, you know, there's been rumors that he might put his candidacy for the 2024 elections.

[00:21:26] I don't know, he's been like shutting those down,

[00:21:28] but it'll be interesting.

[00:21:29] I think he would run as a Democrat.

[00:21:31] Yeah, of course we're talking here for those unfamiliar.

[00:21:35] Yeah, Jamie Dimon.

[00:21:36] With Mr. Jamie Dimon,

[00:21:38] who I've been calling JP Dimon recently

[00:21:40] because I think it works.

[00:21:42] All right, Johnson and Johnson is my pick for Jay. Obviously,

[00:21:46] one of these household name conglomerates that just have their hand in everything, wonderful

[00:21:53] brand equity, been extremely acquisitive and really well run through the years, nothing to add. K, I went with another large private company of Koch Industries. Koch Industries

[00:22:10] is them and Cargill, if you know Cargill, the agricultural company. They are the number

[00:22:17] one and two largest private companies by revenue. And Koch Industries has a phenomenal story. I want to do an episode

[00:22:27] on the podcast about this founding story, this kind of family business, which is turned

[00:22:32] at this huge mega giant billion dollar conglomerate that kind of just has their hands in everything

[00:22:38] industrial really impressive founding story.

[00:22:42] So yeah, Kay, I chose Kroger. So for American listeners,

[00:22:46] you'll know exactly what I'm talking about. For Canadian listeners, if you're not familiar,

[00:22:51] they're one of the larger grosser chains in the US. So quite large company, I think around 35

[00:22:58] billion market cap when I checked. And I mean, you're looking at very low margins here, so low single digits for their net profit margins.

[00:23:06] But again, as any good grocer, they do it on volume.

[00:23:11] And there's a reason why there's not like, you know, hundreds or thousands of grocers,

[00:23:18] whether it's in Canada or the US, it's because it's a low margin business,

[00:23:22] but that also creates a bit of a barrier of

[00:23:25] entry. And I think it's, I think these are great businesses. Obviously, they've been

[00:23:30] getting a lot of flak, at least in Canada for, you know, their profits and at least

[00:23:36] law-blows has been getting, I know, a lot of flak. Maybe the CEO, what is it, Gailam?

[00:23:42] Or whatever it is.

[00:23:43] Yeah, Mr. Weston.

[00:23:44] Gailan Weston. Mr. Weston, I think they need to stop

[00:23:46] the president choice commercials with him.

[00:23:48] Like, every time, like I saw it like a month or two ago

[00:23:52] and I'm like, I don't know who their PR person is,

[00:23:55] but they really need to like remove him

[00:23:57] from the commercials,

[00:23:58] because this does not go well with the public

[00:24:00] when you have this CEO that's been grilled

[00:24:03] and media's putting pressure on it.

[00:24:07] So if you're listening to this, Lawblaws, maybe consider.

[00:24:10] I don't know why Galen wants to be in the limelight so much.

[00:24:14] I really don't know.

[00:24:16] I mean, I guess he's just kind of, he likes doing it

[00:24:19] and he likes making money and he likes doing it

[00:24:23] and he's done such a good job.

[00:24:26] Like, oh my God, it's unbelievable.

[00:24:29] I think Lawblogs is the best grocery buy, a country mile.

[00:24:33] And I really do stand by that.

[00:24:35] But yeah, I mean, come on, you don't need to,

[00:24:38] like I love Galen Mustard,

[00:24:40] because like, you know, I just respect the game.

[00:24:44] Yeah. But like, you just gotta I just respect, I just respect the game. Yeah.

[00:24:45] But like, you just gotta know when you have a punchable face.

[00:24:49] You know? Yeah.

[00:24:50] You just gotta know.

[00:24:51] When there's a lot of flak.

[00:24:52] I mean, maybe they have removed those commercials,

[00:24:54] but to me, it's just like, with all the bad press

[00:24:57] they've been getting, like, you know,

[00:24:59] do some commercials, just remove him.

[00:25:01] Like just, you know.

[00:25:02] Yeah.

[00:25:03] If you don't see Zuck doing the commercials for Instagram.

[00:25:06] Exactly.

[00:25:08] Anyways.

[00:25:09] Even though he loves you.

[00:25:10] Too much time on grocers.

[00:25:11] So, L Lululemon.

[00:25:14] So I don't think that's a surprise to anyone.

[00:25:16] I'm not big in investing in fashion companies,

[00:25:20] but I asked two that are on this list.

[00:25:22] I will not spoil the next one,

[00:25:24] but people can probably

[00:25:25] figure out which one it is. Lululemon is one of the few companies that's in fashion and has stood

[00:25:33] the test of time. So I don't think I need to say more wonderful margins, great company. And when

[00:25:40] you think they should be stopping and the growth should stop, it just keeps on going.

[00:25:48] Yeah, category defining. Lots for L, no pun intended there. But I went with Lockheed Martin.

[00:25:59] Yes, you can have some opinions about the business and the industrial war complex and the business of war

[00:26:07] and the machines that they make and the will the US puts on the rest of the world with these

[00:26:13] fancy machines that Lockheed Martin makes. But it is undeniably an incredibly good business.

[00:26:20] The US government has never, ever once had a president that spent less on the military

[00:26:26] than the previous president.

[00:26:27] I don't suspect that changes.

[00:26:30] Globally, you gotta have the best machinery and Lockheed Martin makes the most advanced

[00:26:37] planes, the most advanced machinery.

[00:26:42] Despite what they do, you gotta think that an F-35 is a pretty cool machine.

[00:26:46] All right, next up, M for Mastercard.

[00:26:50] This kind of goes without saying, you know,

[00:26:52] Visa Mastercard's to the best Mrs. of all time,

[00:26:56] 57% free cash flow margins.

[00:26:59] Do I have to say anything else?

[00:27:01] No, no.

[00:27:03] I'm gonna go with McDonald's, the golden

[00:27:05] arch. I mean, say what you want about McDonald's. I know it's a very

[00:27:10] polarizing business for a lot of people. But reality is, it stood the test of time

[00:27:16] and they do well in any economic environment. Even when people have less

[00:27:22] money to spend, they actually will probably go to McDonald's

[00:27:26] because they offer good value.

[00:27:27] You know, the food's probably not the healthiest as a whole,

[00:27:31] but I mean, you can't argue with McDonald's.

[00:27:35] They've just grown, I think I have a graph here.

[00:27:38] Again, free cash will per share.

[00:27:39] It's not the only metric,

[00:27:41] but I think it's always a good indicator.

[00:27:43] They've grown at close to a bit more than 7% annually compounded annually over the last

[00:27:50] close to 10 years, which is really impressive over such a long period of time.

[00:27:55] Just one of those businesses, right?

[00:27:57] Like, Mickey D's, it's got that brand value, it's got that distribution, and the value

[00:28:04] proposition remains extremely strong.

[00:28:07] You get some good tasting greasy muck for less than the price of groceries. So that value

[00:28:15] proposition has remained strong for a long, long time. And you know what? I care a lot about my health. I work out quite a bit.

[00:28:26] I try to be, you know, relatively aware of what I eat.

[00:28:31] Not perfect.

[00:28:32] But oh boy, I can smash some Mickey D's.

[00:28:37] You bet.

[00:28:37] You bet.

[00:28:38] You bet I could smash some Mickey D's just about any time.

[00:28:42] Yeah.

[00:28:42] And one last thing about McDonald's is I've traveled quite a bit and if there's one thing that's consistent, at least

[00:28:49] pretty consistent, maybe not identical but really close where I can't tell the

[00:28:54] difference is McNuggets in Canada, the US or Europe, they all taste the same. And

[00:29:01] they all taste amazing. Yeah exactly. Now the next name, so I alluded to that earlier. So for me, it's Nike letter

[00:29:10] and like I said, not usually a fan of fashion investments, but I mean, it's hard to argue

[00:29:18] with Nike not being a wonderful business because they have stood the test of time. Yes, they've

[00:29:24] had some short term issues over the years, but. Yes, they've had some short-term issues

[00:29:26] over the years, but they're short-term issues over the long periods of time. Nike just,

[00:29:32] you know, they just crush it. Yeah. I agree. I mean, again, with the little lemon thing,

[00:29:38] it's like I run from fashion, but there's a couple of category defining businesses. I went with the NFL.

[00:29:47] And the reason I went with the NFL is it is in a league of its own.

[00:29:53] You know, and yes, it's a league, but it is in a league of its own in terms of value

[00:30:00] and the franchise value of each of the teams that exist within it.

[00:30:06] Every single team is in the top 50 most valuable sports franchises in the world.

[00:30:12] And that competes with, of course, gigantic franchises all across the world

[00:30:18] for every major sports league, and namely soccer.

[00:30:21] So the NFL has a extremely unique position

[00:30:26] It's actually a fascinating way that the business is run the dynamic between the league and

[00:30:33] That the broadcast rights and the teams it's really kind of fascinating

[00:30:38] That's how it all connects together and there's only one NFL

[00:30:42] They have come out with multiple new American football

[00:30:45] leagues and they have all failed. Time and time again there's no replacement for

[00:30:50] the great NFL. I was just gonna say the one that's most intriguing from the big

[00:30:54] sports I think it's it's probably the NBA because it has a broader appeal

[00:30:59] globally but I agree with you in the US, it's still the NFL's number one, but the NBA probably has more growth ahead in terms

[00:31:09] of globally, because let's be honest, like the, you know,

[00:31:12] American football, I'll include Canadian football into that,

[00:31:15] it's very, you know, it's concentrate in terms of fan

[00:31:20] based in North America. Yeah, they're fans around the world,

[00:31:22] but the vast majority is in North America. Yeah, there are fans around the world, but the vast majority is in North America.

[00:31:32] That's right. And the NBA has lost a significant amount of viewership since 2013. I believe the stat is about 40% of viewership lost in the NBA. And most sports league have suffered

[00:31:40] familiar fate, even though the broadcast deals keep getting more expensive.

[00:31:43] a familiar fate, even though the broadcast deals keep getting more expensive,

[00:31:45] the NFL has increased viewership by double digits every year

[00:31:49] during that time frame.

[00:31:50] So it is a bit of a true outlier from that perspective.

[00:31:54] O is really hard.

[00:31:56] Why are there not better O businesses?

[00:31:59] Yeah, I had a hard time too.

[00:32:00] So I-

[00:32:01] It doesn't seem like there is.

[00:32:02] And then I'm like, I'm really, after this, I'm going to

[00:32:05] think of an amazing one and really rack my brain after this because there's got to be

[00:32:10] some.

[00:32:11] And people are listening at home.

[00:32:12] Well, I have one while you're, did you pick one?

[00:32:14] Yeah, I did.

[00:32:15] I picked open AI just because they're carving out just such an important developer ecosystem

[00:32:22] with the GPT API.

[00:32:24] Of course, chat GPT was a you know a worldwide success

[00:32:27] But that the underlying technology and the underlying models that they're they're building a developer ecosystem on top of

[00:32:34] My company included

[00:32:36] Is what's really really valuable here? Yeah. No, that's a good point

[00:32:41] It'll be interesting to see how good of a natural business is. It is though, like five years down the line.

[00:32:47] I think you can make a case for both, right?

[00:32:50] Probably, but that'll be interesting.

[00:32:52] For me, I went Buffett style.

[00:32:55] So I took Occidental Petroleum.

[00:32:58] So again, there wasn't that much available under O.

[00:33:01] So jokes aside though, they generate free free cash flow like there is no tomorrow. They

[00:33:08] return lots of capital to shareholder via buybacks and

[00:33:11] dividends. There are diversified oil and gas play with

[00:33:14] production pipelines and chemical revenues. So I looked a

[00:33:19] little bit at the metrics and I can see why Warren Buffett

[00:33:23] likes this company. So I ended up just adding it because like you,

[00:33:26] I had trouble finding an O name.

[00:33:31] Now the next one, Pepsi.

[00:33:34] I think Pepsi, I mean,

[00:33:35] they're literally in a duopoly with Coca-Cola.

[00:33:37] So there's not too much add there.

[00:33:40] I actually prefer Pepsi over Coca-Cola,

[00:33:43] mainly because they have the Frito-Lays segment,

[00:33:47] which has been quite resilient.

[00:33:51] You can't really go wrong with either of them, but Pepsi just felt like the perfect name

[00:33:56] for P.

[00:33:57] You took the words right out of my mouth.

[00:33:59] I will drink Coca-Cola over Pepsi probably, but as an investor, my capital,

[00:34:05] I think is better served with Pepsi.

[00:34:07] I mean, they trade basically at identical market caps,

[00:34:10] but the Frito-Lay business, man, you just called it out.

[00:34:14] My God, it is a good business,

[00:34:16] and Pepsi was my pick as well.

[00:34:18] I hinted at this before for Q, I am picking QuickBooks,

[00:34:21] which is that intuitive asset,

[00:34:23] or sort of, yeah, that intuitive asset.

[00:34:27] And it is an intuitive asset in the fact that, oh boy,

[00:34:32] it is extremely sticky, dominates a certain segment

[00:34:37] of the market.

[00:34:38] It has perfect product market fit for basically every small

[00:34:43] and medium-ish company and they've really

[00:34:48] built an important kind of professional ecosystem of accountants using it and

[00:34:54] knowing how to use it for their clients and that's really kind of hard to

[00:34:58] displace. No that's good. So I actually came up with one on the spot. So it's actually a Canadian company. So

[00:35:08] Quebec, or Quebec, Quebec Incorporated. So for those not familiar with this name, so they own,

[00:35:15] it's a tele, well, I guess media conglomerate, I guess telecom they own video tron which is predominantly in Quebec so they have you know cell phones

[00:35:29] Internet of I think you know other properties as well. I think they own some newspapers too

[00:35:36] So yeah, I couldn't find a name and then I'm like oh Quebec all medias is

[00:35:41] Is one that I'll probably I'll just in. So I did it on the spot. I didn't really

[00:35:46] look at the metrics because I left Q blank. And then I'm like, oh, there's actually one

[00:35:51] in my backyard.

[00:35:52] This is like correlated to Scrabble. Isn't Q worth 10 points on a Scrabble board? This

[00:36:01] is very correlated. All the ones that are easy to deal also have big businesses aside with them.

[00:36:07] Yeah, the next one I chose, the letter R, so Rio Tinto.

[00:36:11] So for those not familiar, they're a massive mining company that produces aluminum and massive

[00:36:16] is not an understatement.

[00:36:17] I believe they have a hundred billion in market cap.

[00:36:20] They're the largest non-China slashrussia-based aluminum producer in the world. I think that's

[00:36:27] important with the current geopolitical climate that we're seeing, especially with China and

[00:36:31] Russia. But they also mine iron ore, copper, and minerals. Clearly, this is a company that'll be

[00:36:36] impacted by the price of commodities. But nonetheless, I thought it was a really good name for R. Maybe they will mind the constituents required for LK99, the superconductors.

[00:36:49] Yeah, like you talked about in the previous episode.

[00:36:52] That's right.

[00:36:53] My pick was Rolex here.

[00:36:56] I think it is just such an iconic brand, wonderful margins.

[00:37:02] There's like no replacement for just like how valuable this

[00:37:07] brand is. And there's lots of luxury watches, but there's not a person on the planet who

[00:37:13] doesn't know what a Rolex is. And that's really kind of hard to replicate. For a public company

[00:37:20] one, I did talk about Roper here. Roper is a roughly $50 billion

[00:37:26] industrial and software conglomerates roll up grow by acquisition strategy. I

[00:37:32] have personally owned Roper stock for at least five plus years and very happy

[00:37:38] shareholder. Yeah, I was just gonna comment on Rolex. So I read and I haven't

[00:37:43] listened to the conference call or anything, but

[00:37:45] apparently LVMH, which is obviously in the same kind of luxury market, they've seen some pressure

[00:37:52] now in their sales because they have kind of two target customers. One is the Affluent, so they're

[00:37:59] very rich. They can't afford the products pretty much regardless of the economic climate. And

[00:38:06] then there's the aspirational consumers that can't really.

[00:38:10] I knew you were going with that.

[00:38:12] Oh yeah.

[00:38:13] But you know it's true, huh? You have these consumers that maybe got stimulus checks or

[00:38:18] in the era of easy money, they were wanting to buy these luxury goods and now that there's pressure on them,

[00:38:26] inflation is higher, less disposable income, they've actually said that they're seeing those consumers

[00:38:34] impacted and less able to buy some of their goods. I don't know whether, well, it's something to keep

[00:38:40] on because I think we're both similar on the same pages.

[00:38:45] Typically luxury goods tend to do well regardless of the economic environment because the richest

[00:38:49] people tend to still be rich.

[00:38:52] But it'll be interesting whether that has a meaningful impact in their business for

[00:38:57] not just a couple quarters but the next few years to come and maybe even beyond.

[00:39:02] Yes.

[00:39:03] And I love the way you put that because let's use Rolex for example or the LVMH asset.

[00:39:11] There is the consumer who can buy 20 Rolexes and not even blink.

[00:39:18] It doesn't even move a single decimal point on their bank account.

[00:39:23] They don't even notice because they have hyper wealth.

[00:39:26] Then there's the person who's buying the Rolex who should not be buying the Rolex.

[00:39:33] Those people are hard to distinguish in a world where you have flashiness on Instagram.

[00:39:39] Everyone never doubt people's willingness to spend money they don't have to impress people

[00:39:45] they don't know. And that's exactly where these kinds of products sit. But it sits in

[00:39:51] an exclusive category of true luxury. There's aspirational luxury, and there's true luxury

[00:39:59] and Rolex is true luxury.

[00:40:01] All right, I'll go with S N P Global. I've talked about the stock many,

[00:40:06] many times here on the podcast. Of course, one of the premier credit rating agencies,

[00:40:11] analytics business software company, they have their hands in everything with the equity in

[00:40:17] financial markets. And I am a shareholder myself. Yeah, so I chose Simon Property Group. No, I'm just kidding. It just felt too

[00:40:26] easy. But for those interested in mall reads that are high quality malls in the US, I encourage you

[00:40:34] to look into this name. There is a lot of things to like about this company. But for real, I chose

[00:40:39] Starbucks just because, you know, I think they've gotten a really good job over the years to, you know,

[00:40:47] grow the revenues, grow the amount of stores that they have. Obviously, the China rollout has hit

[00:40:52] some bumps here and there, but for the most part, I think they have a good pulse on the consumer and

[00:40:58] how much they are able to push prices. I've seen some price increase. We do like to go to Starbucks once in a while,

[00:41:06] but they've been manageable, I would say. I think they know the limit where if they do it too much,

[00:41:15] they'll get rid of part of their consumer base. The brand name is there. I think it's a great

[00:41:23] business if you're looking at a coffee kind of coffee chain

[00:41:27] Starbucks is one of those brands, right? Or did they just?

[00:41:31] demand pricing power and

[00:41:34] That's why it deserves to be on this list any any company that just without a doubt demands pricing power

[00:41:41] Typically, it's a pretty good business. Yeah. So the next one is T. So I chose,

[00:41:47] I'll give an honorable mention. So TSMC, if you forget about the geopolitical concerns here,

[00:41:53] I think it's in a league of its own when it comes to making these semiconductors,

[00:42:00] whether it's from Nvidia or Apple or pick your consumer that deals with TSMC, they have such a strangle hole on their market.

[00:42:09] I mean, they produce 90% of the world's most advanced chip, so I don't think you need to know more there.

[00:42:15] And as an honorable mention, and the T in the semi-conductor space as well, is Texas Instruments that kind of, you know, doesn't focus on the high-tech stuff as much,

[00:42:27] but they really have that analog kind of semiconductor market really, you know, really

[00:42:35] covered. I know there are some competitors, but they've stood the test of time. So I would not

[00:42:42] doubt them to keep going and, you know, being in a market that seems to be

[00:42:47] forgotten by some of the other semiconductor players. Ditto, I have the exact same two names

[00:42:54] here as well. So nothing more to add. I will go here with United Health for you. UnitedHealth is one of the largest businesses on the entire planet.

[00:43:07] They have such a strong position in the healthcare business in the US and has just been one of

[00:43:15] the most premier compounders of Free Cash Flow Per Share and compound annual growth rate

[00:43:23] of the stock for the last 20 years that it deserves a mention here for you.

[00:43:28] Yeah, no, that's a good one.

[00:43:30] For me, it'll be Uber.

[00:43:31] I wouldn't have said that a few years ago,

[00:43:34] but they've really turned the profitability around.

[00:43:37] Lyft is kind of an afterthought, in my opinion now.

[00:43:42] So they're really becoming the player,

[00:43:44] clearly profitability and

[00:43:46] the economics around it could be a bit better. But with autonomous driving at some point arriving,

[00:43:53] who knows, I think your guess is as good as mine. But I'm assuming AI and the advancement there

[00:43:58] will probably help towards that. I think the business models should improve. But I mean, if you live in

[00:44:05] a major city, I don't know anyone who doesn't use Uber, at least in one way, one form, another

[00:44:13] in there, you know, in a month, for example.

[00:44:16] I like how you opened that up with, I don't know if I would have said this a few years

[00:44:22] ago, because neither would I have.

[00:44:25] And I'd be shocked that either of us would even consider it on this list back then because

[00:44:31] the unit economics seemed horrendous.

[00:44:34] It just seemed like a business that was alive because of venture capital and low interest

[00:44:40] rates.

[00:44:41] And now I can't say that that anymore. I do think that they have just carved out this global

[00:44:50] business with actual profitability, really no competition in the drivers anymore.

[00:44:58] And, you know, a decentish, highly competitive food business there as well.

[00:45:04] know, a decentish, highly competitive food business there as well.

[00:45:10] Yeah, well, I think one of the things that helped them is the fact that easy money was done with because a lot of their competitors, especially in the

[00:45:13] delivery space, got sold or simply went out of business and Uber was one of, you

[00:45:21] know, was able to sustain that.

[00:45:23] And I think it was good for them because when interest rates were so low and, you know, money was being thrown at all these different

[00:45:29] competitors, it was much harder for Uber to be profitable because they had so much competition.

[00:45:35] And if you're charging way more than a competitor at some point, people will switch. So I think

[00:45:40] it was actually good for them.

[00:45:41] Yeah, I agree. You're right. It's like it was a low interest rate VC fueled phenomenon

[00:45:48] that is not going to maybe come ever again or for a long time.

[00:45:52] And that really gives it a kind of unique competitive advantage

[00:45:55] to exist here for the long term.

[00:45:58] Because in what world would that business

[00:46:01] have been able to keep burning cash for so long as they got scale?

[00:46:07] Yeah, right? Like it's pretty it's pretty tough. Alright, I will go with Visa for V for for mentions

[00:46:16] that are exact same as as M for Mastercard. I'll leave it at that. Yeah, same for me. So I chose Visa. Um, so I'll go for my next one, W Walmart.

[00:46:27] Um, I think there was a couple of good names here.

[00:46:30] Uh, Walmart, I mean, I think what is there?

[00:46:34] You know, what is there to say in terms of Walmart?

[00:46:37] Um, I mean, it's just a global company and they're so massive.

[00:46:42] Yes, it's low margins, but I think they've stood the test of time.

[00:46:45] They have a big online presence right now, so it's hard not to like them.

[00:46:50] The big W. I mean, the distribution, the scale is so hard to compete with, just an incredible

[00:46:58] business.

[00:46:59] I also said the big W there.

[00:47:04] I give some honorables to some of the waste management

[00:47:07] businesses, waste management, of course,

[00:47:09] the name, waste management in the US,

[00:47:12] and waste connections, which is now a North American business

[00:47:16] but a TSX listed stock as well,

[00:47:18] and even WSP Global, because WSP Global

[00:47:21] is a Canadian listed engineering firm

[00:47:24] that has been kind of under the radar,

[00:47:28] or one because it only trades on the TSX.

[00:47:30] It doesn't get talked about that much in the circles I'm part of,

[00:47:33] and they have been a phenomenal performer.

[00:47:39] I've owned it for many, many years, and so I think it deserves an honorable mention here.

[00:47:43] Yeah.

[00:47:43] So I don't know what to write here, but it seems it seems like I just wrote dot dot

[00:47:49] dot for maybe X for the ones X dot com. I don't know any other businesses that

[00:47:54] start with the next and this one is X.

[00:47:56] Yeah, that's what I wrote to it. I'm not sure it's a great business, but I just

[00:48:00] wrote X. So let's leave it at that.

[00:48:03] It's our business.

[00:48:07] I just wrote X. So let's leave it at that. It's a business. It's a business. Yeah. So for Y,

[00:48:15] I chose Yum Brands. For those not familiar, they own KFC, Pizza Hut and Taco Bell. There's also Yum Brands China, but this one I'm taking about the main one here. You know, they have some really

[00:48:21] solid brands and they've grown their free cash for a share at close to 10% and compounded annually over the last five years.

[00:48:31] So they've done something right.

[00:48:33] Yeah.

[00:48:34] No, it's, it's one of those, you know, food conglomerates that you're like,

[00:48:39] people eat there.

[00:48:42] And then you see the numbers.

[00:48:43] You're like, Oh, people are certainly eating there.

[00:48:47] I'm not, but I'm glad some people are good for you. For why I went with YouTube, I mean,

[00:48:55] for very obvious reasons, it's just such a dominant business. It owns the category.

[00:49:01] It is gigantic in itself now. And I think that it's gaining and gaining

[00:49:06] and gaining market share right now. In a world where there's so many streaming competitors,

[00:49:12] YouTube is dominating. They're taking market share on the music side with their YouTube

[00:49:18] music, their YouTube premium subscription to not have the ads. So they've monetized it

[00:49:24] that way.

[00:49:25] And then of course, the largest piece of the business,

[00:49:28] the actual ads is incredible.

[00:49:30] I also want to give a shout out to Y Combinator,

[00:49:33] which is a Silicon Valley based accelerator

[00:49:36] that's very well known in the startup ecosystem.

[00:49:40] They were the early backers of Airbnb, Stripe.

[00:49:46] What else? Y Combinator.

[00:49:49] You know, Paul Graham, he's the one that started this.

[00:49:51] What are the big winners? Y Combinator winners.

[00:49:54] Stripe, Instacart, OpenSea, Airbnb.

[00:50:00] Gosh, there's so many.

[00:50:01] You know these more than I do.

[00:50:03] Deal, Gusto flex port

[00:50:06] All of those zappier, which I actually is my Z you can see there at the time my list is he so they backed my

[00:50:14] Z pick here

[00:50:17] Retool dude

[00:50:19] All of these businesses are approaching if not already

[00:50:24] Billion dollar valuations.

[00:50:26] Many of them have gone public.

[00:50:28] Many of them are household names like Airbnb.

[00:50:31] They are the premier startup accelerator in Silicon Valley and they deserve an honorable

[00:50:38] mention because they take a piece of those businesses.

[00:50:41] I think they invest like 500K and they take a 5 or 10% position.

[00:50:46] I forget what it is and they own, they make some pretty good returns. That's for sure.

[00:50:52] So to round that out, my Z-Pick is Zapier, which is a business I just mentioned, funded

[00:50:57] by Y Combinator, but Zapier helps you connect all your different business apps together

[00:51:04] and they are huge.

[00:51:06] I don't know if you've ever used it.

[00:51:08] No, I haven't.

[00:51:08] And then I forgot to do Z or Zed, should I say Zed?

[00:51:12] Yeah, that's right.

[00:51:13] Yeah, Zed.

[00:51:14] I forgot to do it.

[00:51:15] Maybe I'll put honorable mention for Zillow ticker Zed.

[00:51:20] That's the, I think it's the most visited real estate site in the US for people looking to buy and sell homes

[00:51:27] It's not been it's I'm not super familiar. So I was just scrambling for a Z name, but

[00:51:33] That's one that I'll put I'm not sure if it's the best business. So I take this one with a grain of salt

[00:51:38] Yeah, were they doing the eye buying or was that just so?

[00:51:43] because door and red fin were doing that and

[00:51:47] they got caught with their pants down.

[00:51:50] Yeah, I think they were and I think they may have done some like buying and renovating and

[00:51:55] reselling as well but I think they got out of that business.

[00:51:59] But you know, looking for a Zed and that's what I came up with.

[00:52:05] Yeah.

[00:52:06] The stock's been getting crushed,

[00:52:07] but I know that their website is super, super popular.

[00:52:11] Thanks for listening to the A to Z list, folks.

[00:52:14] It's, that was a grind.

[00:52:15] We got to, you know, all of them done here.

[00:52:19] Yeah.

[00:52:20] Just a little bit of rambling, not too much.

[00:52:22] Just a little bit of rambling in between too much. Just a little bit of rambling in between.

[00:52:25] Of course, there's many, many businesses that could be picked, as honorable mentions.

[00:52:30] If you want to see the full list, this list, we will post it to our website at the CanadianInvestorPodcast.com.

[00:52:39] At the top, there's on the navigation, there's a button called Show Notes.

[00:52:43] The last post there on July 25th is

[00:52:45] Braden's cell framework. The newest one will be called best businesses in the world list

[00:52:50] a to z. So you can see the entire list that we have broken out there. I encourage you to go check

[00:52:56] that out at the Canadian investor podcast.com. Thank you for listening. We'll see you in a few