In this week's Stansberry Investor Hour, Dan welcomes Alex Morris back to the show. Alex is the founder of TSOH (The Science of Hitting) Investment Research and an author. TSOH, which boasts more than 24,000 subscribers, aims to generate attractive long-term returns while providing complete transparency on the research process, portfolio decision-making, and returns.

Alex kicks things off by reflecting on the potential changes in Berkshire Hathaway due to the passing of Charlie Munger and Warren Buffett's retirement. He believes the company is in a good position to continue the momentum that was built up when Buffett was at the helm and acknowledges that the issues the company currently faces were present during Buffett's final days. Alex then begins sharing the names of companies that have fallen but he believes will be able to improve their positions. Though he's wary about picking beaten stocks that might be going nowhere...

I'm really cautious about getting into the "turnaround trap," getting caught there. And when you see this a lot with names where the turn's coming... and then you find yourself three or four or five years down the road and it's like, "OK, we're still trying to fight our way through this turnaround to get to the right place." So you have to be really, really thoughtful about the timing, the upside, if you're actually right. Is it significant enough given [the] risks that you're incurring? And also [see if] the signals and changes... are really showing you that it's changing.

Next, Alex gives his outlook on the next set of stocks he's considering. The first was impacted by the COVID-19 pandemic. But Alex believes that it's taking the right steps to combat inflation without causing its customers to turn away. The second stock is in a niche field. It's currently facing headwinds from a stagnant housing market, but Alex is confident that once conditions improve, the company is set to boom. The third is building up its business by providing higher-quality, premium beverages compared with the competition, which can produce loyal customers who won't want to settle for anything else. And the fourth also provides premium products, only directed at the egg industry...

It's a premium egg brand, basically. And premium at this point means pasture-raised, organic... And I just think you have these interesting companies that have gone after... a place in the grocery store that's really stale, effectively hasn't seen much change. Not for lack of a better word, innovation and then show up and build a brand and compete with the incumbents... And they're just doing their own thing... to the extent that they stay really focused on what they're doing and really intelligently think about where [they] can land and expand elsewhere.

Finally, Alex discusses his final stock pick. This is a company that has faced controversy surrounding user safety, but Alex says the company has improved and continues to improve its safety protocols and is righting the ship. In the long run, he sees the company being comparable with YouTube due to the way its creators make experiences that can't be rivaled by any similar platform. And he concludes by stressing the importance of creating goals in your life...

As a business owner or someone who has control of their calendar, [there's the] importance of optionality and flexibility and really pursuing the things that you love and then balancing that with financial goals and really being really thoughtful about your goals as time goes on, too. I got married a handful of years ago and now have two young kids, and it's really changed how I think about [investing]. I love it, I want to be really successful at this... [But] it's worthwhile to take time to actually sit and think about these things periodically. So you're ensuring that you... make the decisions that make the most sense to you as opposed to anybody else.

Click on the image below to watch the video interview with Alex right now. For the audio version, click "Listen" above.

(Additional past episodes are located here.)

This Week's Guest

Alex Morris is the founder of TSOH Investment Research and author of Buffett and Munger Unscripted. He launched TSOH in early 2021 after a decade in the finance industry as a buy-side equities analyst. The objective of TSOH – which now boasts more than 24,000 subscribers – is to generate attractive long-term returns while providing complete transparency on the research process, portfolio decision-making, and returns.

Alex is a CFA charterholder and holds a Master of Business Administration and a finance degree from the University of Florida.

Dan Ferris:                 I called the 2008 banking collapse, and then I called the 2021 inflation panic, and now I'm seeing a new crisis developing right here in America right now. If you don't move your money, you're going to lose it. If you do move it, you're going to make plenty. OK? And if you want to find out more about this, just go to nextenergyshock2026.com and you'll find out all the details there. nextenergyshock2026.com.

                                    So, now let's talk to our guest, Alex Morris. He's a very smart guy. We're going to talk about nothing but stocks. It's all stocks all the time today. Peloton, Dollar Tree, Fevertree, Dollar General, Floor & Decor, and more. So, get out your pens and pencils. We're going to give you a lot of ideas to think about. Let's talk with our guest, Alex Morris. Let's do it right now.

                                    Alex, welcome back to the show. It's been a whole year. It's good to see you again.

Alex Morris:                Good to see you. News last time we were on and news this time as we're on, but I guess that's the way the world goes, huh?

Dan Ferris:                 Yeah, it is. So, I know last time it was April "tariff tantrum," crazy stuff but – and this time, of course, it's war in the Middle East. But certainly, if you have a view on that that investors need to hear about, I want to hear it. But the first thing I have to talk to you about – you wrote a book called Buffett and Munger Unscripted. And now there's something quite a bit different than was a year ago. Basically, [Warren] Buffett is no longer the CEO and [Charlie] Munger's just gone. Munger died. So, what does the guy who wrote Buffett and Munger Unscripted – that's what I really want to know from you right now. Does it mean an enormous sea change in Berkshire Hathaway for you or no?

Alex Morris:                Yeah, it's funny. One of the – and first of all, thanks for having me on again.

Dan Ferris:                 You bet.

Alex Morris:                Great discussion last time. I'm excited for this. One of the funny things from reviewing the meetings was starting in '94 all the way to the present, basically, every year included the question, "Hey, when you get hit by a bus one day or you die, what happens to Berkshire next?" And I think the messaging, especially in the last call it 10 or 15 years has really been honed on, "Hey, there's [nobody] who cares about this more than we do. We're doing this as thoughtfully as we possibly can. And we've seen a lot, too, of what works and what doesn't work as you go through this transition."

                                    So, I think it's been really, thoughtfully done in terms of how they approached it. Obviously, it helped that both of them ended up living to be – and Warren is still alive, obviously, but both of them lived well into their 90s. And I think the transition has been underway to some extent for a long period of time. Berkshire's most significant challenges, as I kind of wrote about here recently, one is some of the operational results in a few of the biggest businesses – I'm thinking of BNSF and Geico – and them trying to figure out how to be best in class in those businesses, which, again, a lot of this happened during Warren's tenure. I mean, particularly Geico and telematics and losing out to Progressive is something that started 15 years ago at this point. So, it's not like it was an issue that was or wasn't related to Warren necessarily. It's an issue that Berkshire needed to figure out, and they need to get better at things like that, honestly. It's taken a long time to get to from where they were to where they are and they have to win in those businesses.

                                    And the second one is capital allocation and how much cash the company has. And again, that's something that – this issue has lingered for the last five-plus years now, 10 years now, and Warren's been there the whole time. So, the question is how much more difficult do things become without Warren being here? And I think my answer is partly those challenges are kind of difficult with them here. Good problems to have, to be clear. Having too much cash is a problem I'm sure a lot of businesses would like to have. But – so, those are kind of the challenges.

                                    And I think you're starting to see sea changes, most notably in terms of them recommencing the repurchases. And I think they're going to get to a place where that becomes a lot more of a consistent activity with periodic large increases in what they do as they get opportunities. But I don't think they're going to keep going down this path of just keep building and building and building the cash. So, I think that's a positive change and I think there will be other things like that over time.

Dan Ferris:                 I took the move from Greg Abel when he said – he said he was going to use basically his whole salary to buy Berkshire shares. I was like "Wow. OK. That's a that's a signal. That's a message." And it's really a clear one. "I'm buying the stock. We are buying the stock. We are recommencing buying the stock." And they – of course, they have a ton of money to do it with, as you point out. More than ever. More than ever before.

Alex Morris:                Yeah. That's – I mean, that's a very significant move by Greg, right? And I think, as he wrote in the letter, there's – I think there's a distinction between the culture of Berkshire and the culture of Berkshire under Warren. And I think he's very clearly saying, "Hey, this is something that can and will continue under my leadership." And I think it's a very important first step of this being a successful transitional time.

Dan Ferris:                 Right. We had a guest on, an old friend of mine who's been on the show several times, Rick Rule, commodity and mining investor. Pretty famous guy these days, actually. And he pointed out to me something that I thought was – he just kind of said it as an aside on social media. "It was a classy move for Warren to leave Abel with a giant pile of cash." You know what I'm saying? He exited Apple, for example, a huge position, and he left his successor with this enormous resource. And it's always like saying, "OK, you're up. You'd better knock it out of the ballpark" in one sense. But also, it's like saying – it's not just enough rope to hang yourself with. It's enough resource to do something meaningful with. So, I took that comment to heart. I thought, "Wow, yeah. OK." So, maybe there was some planning and so forth in Buffett's mind. He's like, "I'm 95. I'm exiting our biggest position. Maybe I'll just chill out and give it all to Abel and let him do what he's going to do with it." I didn't hear him say anything like that. I'm just kind of guessing based on that comment. So...

Alex Morris:                No, and again, I'm speaking as someone who is obviously quite a bit younger than Warren, but for all the things that he deserves credit for over the course of his career and for his business and investing acumen, his ability to handle this in a way that puts Greg in as good of a position as possible to be successful, I think it's just classic Warren in terms of how he thinks about and approaches things. And again, I think that permeates the organization to some extent. It's been built over decades. So, I think a lot of it is going to prove lasting even though there are challenges.

Dan Ferris:                 Yeah. All right. So, we're on to the second CEO of Berkshire. We'll see how it works out. So, I want our listeners to know Alex – a lot of the times we get maybe one or two stocks out of a guest or none sometimes, but Alex delivers, man. He's going to deliver today. He gave us a list of all these ticker symbols and they were like – Alex, I took that to mean there were about five current picks and then you gave us the watch list picks. So, I wonder if we could talk about the current ones because I know that's what I'm interested in. That's what the listeners are interested in. And the one that I have to start with, because I'm shaking my head. I'm going, "Peloton? Really?" You're long Peloton.

Alex Morris:                I am long Peloton after a very, a very extended period of time of not being long Peloton. And it's been a – it's been very interesting to watch it from the sidelines. You can start with the simple fact of a stock that at one point, I believe, was at $150 a share and today is that – as of recently was less than $4 a share. It's a very, very significant move, obviously. And amongst all the companies, which I think almost every company I follow or own feels like it's had some version of the COVID tailwind/headwind, headwind/tailwind, whatever order it came, whatever magnitude it came in, Peloton is the most extreme example of that playing out, some of which is just the end market demand for Peloton's products. The other part of it is decisions the company made when demand was going through the roof that in hindsight were not the right decisions and really put the company on the brink in terms of their financial position.

                                    So, it's been – I think I first wrote the company up in I want to say 2022 and I've been following on the sidelines for years now, very similar to a name I'm sure we'll discuss, as we did last time: Dollar Tree. Very similar in terms of "there's something I like here," but getting to the point where it goes from being something I like to something I truly want to own, especially in size, there's a lot of ground to cover there. And in Peloton's case, I think it eventually got to the point where the balance sheet, the clarity of the strategy, and the valuation reached a level where, for me, I thought it made sense to swing and to swing fairly hard. So, we're still fairly early into the story, but if you'd asked me three years ago, I don't know that I would have said one day I would be owning Peloton. So, it'll be interesting to see.

Dan Ferris:                 Yeah. That's just the way it happened, didn't it? I noticed that they did have – they had some quarterly announcements and stuff and the Q2 2026 revenue fell 3%. Continued declines in members and subscriptions. And they trimmed some revenue guidance a little bit. Cut 11% of the workforce. They've done some stuff. They're making some moves in response to all this decline. But it seems like the base case here is just "can we stabilize the subscribers and milk their cash flow out of the current base" and not succumb to just endless, if well managed, decline? Right? That's –

Alex Morris:                Yeah. This is a company that went from – in a 36-month period went from 500,000 paid subscribers to 3 million. They 6X'd their subscriber base in a three-year window. I think it was either two or three years. It since has bled down to I believe it's 2.7 million. So, again, it's just one of those funny situations where let's teleport back to 2019 and you go "Hey, this business has 500,000 paid subs and in the middle of 2026 it's going to have 2.7 million paid subs. What do you think about that?" That's pretty good growth. Things must have gone really well. And it's like, well, the stock price is down 97% from the highs. That's the outcome you got as a shareholder.

Dan Ferris:                 That's – yeah, that's how it's gone. So...

Alex Morris:                So, thinking about how they got there and the adjustments they have to make and – a very notable one is on the cost structure and a culture that, again, I think for a long period of time they – particularly under the founder, they were focused on this audacious goal of a subscriber base that they thought could get to 100 million people. And the reality is, in my mind, the opportunity for what this is, given the price point and who they're going after, is significantly smaller than that. It could potentially be 5 million to the extent that they really achieve the opportunities that are ahead of them, but they needed to refocus what they were going after, and that required a very significant change in terms of the cost structure. And that's still underway today.

                                    But to frame the 2.7 million that we're at now, I'm looking at Planet Fitness currently, which is effectively – it's largely a U.S. business. They do have some international presence, but it's less than 5% of the business. They have 20 million paid customers. Granted, these people are paying call it $20 a month on average to be Planet Fitness subscribers, and Peloton is more like $50 a month. Just giving some framing for what the opportunity is in the U.S., let alone going after some of the English-speaking, wealthier countries around the world.

                                    So, I think Peloton has a reasonable opportunity, but they have to get their – or they had to get their financing balance sheet in the right place. They have to get their cost structure in the right place. And they have to really figure out what it means to play offense going forward. I think we're a lot closer to that turning point than we were two years ago, but it has taken a long time to get here.

Dan Ferris:                 Yeah, and it's been a crazy ride. It's an insanely competitive – fitness is insanely competitive, right? We're not fantasizing about that here, are we?

Alex Morris:                No, I mean, I think it depends – and bringing up Planet Fitness as an example or bringing up some of the cycling, which of these things are competitors? Which of these things are complementary to each other? I think there's a lot of gray area there in terms of where these separate things lie. But yeah, I don't think that – the thesis as I see it is certainly not built on any belief that this business is ever going to get to something like 10 million CF subscribers. It's based on stabilization and potentially some growth in the out years as they figure out the form factors, really get better in terms of the software and building a more complete offering. And you see that in some of the statistics that they provide. And if they do those things, the evaluation is such that I don't think $150 is in the cards anytime in the future, but if well executed, it's not unreasonable a few years down the road that the stock is multiples higher than where it is currently, in my view.

Dan Ferris:                 Right. I forget where it IPO'd. It was, I want to say, $19 or $20 or something like that.

Alex Morris:                I was going to say somewhere around $20 or mid-$20s is my memory. I could be misremembering.

Dan Ferris:                 So, getting back to there would be a major home run.

Alex Morris:                Yeah. Yeah.

Dan Ferris:                 That'd be cool.

Alex Morris:                So, we'll see.

Dan Ferris:                 Yeah, we will see. And overall, I've got to tell you – so, let's talk about Dollar General and Dollar Tree, two other names that you – it looks like you really like here. Of the five sort of current names you gave us, I'm going to call Peloton and the dollar stores – Dollar General and Dollar Tree – turnarounds. And your boy Warren says, "Turnarounds usually don't." This – you're – they're not easy. We had a newsletter one time called the Rebound Report and I was hunting down these turnarounds. And the first – they first tried to do it. It wasn't working out. And then I took it over. And I remember Porter Stansberry, one month he e-mailed me, he said, "Oh, you've really got the rhythm of this thing. This is the way to do this." And the next month he said, "We're calling this the Refund Report because it's the worst-selling newsletter we've ever published and we're shutting it down." So, I have a – turnarounds have affected my life, I'm just saying. It's a thing for me.

Alex Morris:                That's funny.

Dan Ferris:                 But generally, I want to get your view on the turnaround. You must be looking for certain things and not doing certain things. What does the general case look like for you, if there is one?

Alex Morris:                Sure. I'll quibble slightly but we'll get into specifics, too. I would definitely – I'd definitely call Peloton a turnaround, or it's a very significant change from what they were doing. I think Dollar General, to some extent, that's a fair description as well, just given the massive pandemic-related tailwind that got early on in the pandemic period and what they've dealt with subsequently Dollar Tree is slightly different because, as I see it, so much of the turnaround is just figuring out what they were doing with Family Dollar.

Dan Ferris:                 Yeah, admittedly. Yeah.

Alex Morris:                And the answer was – the answer ultimately was just basically selling it for pennies on the dollar, which didn't seem – it's the outcome they didn't want to get to, but I think they eventually realized correctly that focusing on the opportunity at the core banner was the much more important part of the story and much more important part of – increasing the price they sold Family Dollar for from $1 billion to $3 billion over a handful of years by starting to fix it pales in comparison to the opportunity at actually running the banner correctly.

                                    So, before we go maybe into detail – well, first, I like going back when we've had prior discussions and listening to what we had said to get a sense for our conversation. I think one of your comments was "We've had people on here talking about stocks and there has not been anybody talking about Dollar Tree." And I think those are, to your point, I'm really cautious on those about getting into the turnaround trap, getting caught there. And you see this a lot with names where, OK, the turn's coming, the turn's coming – Disney is a pretty prominent example – the turn's coming and then you find yourself three, four, five years down the road and it's like, OK, we're still like trying to fight our way through this turnaround and get to the right place.

                                    So, you have to be really, really thoughtful about the timing, the upside, if you're actually right. Is it significant enough given the risks that you're incurring? And also, the signals and changes that are really showing you that it's changing. And at Dollar Tree, what happened in my mind, the most prominent things are going from a $1 to $1.25 was a really meaningful change, then starting to layer in multi-price SKUs throughout the store was the more significant change in my opinion.

                                    And it started, as we discussed last time – people probably should relisten given how things have gone subsequently, but the Dollarama case study really became relevant there. And then, again, you had a management team that said, "OK, we need to get focused on what really matters here, and spending even 20% of our time on Family Dollar is not what we should be doing. Let somebody else turn this thing around and make a couple billion dollars if they can do it. We've tried for 10 years. It has not worked and it's not the same business as Dollar Tree. So, let's just get out of here."

                                    So, they've done that subsequently. And I think you're now seeing them become more and more focused on what matters for Dollar Tree, which is running the stores more efficiently, getting the merchandising right to serve a different group of consumers. As time goes by, as you improve the unit economics, getting back to a faster pace of unit growth, focusing on capital returns to shareholders, all these things that were just a little bit muddier when you had two banners as opposed to one. So, I'm happy to talk about it more, but I think it's a good example of where, again, I watched Dollar Tree for 10 years probably and I never owned it once. I wasn't waiting for this exact moment the whole time, but as we got down to the last handful of years, I had real clarity on what I was looking for, and when that moment came, to me it was the indication that it's time to bet.

                                    Another name that is really relevant right now to this example that I don't own is Crocs, which bought the HeyDude brand a handful of years ago now for $2.5 billion, and I think it's pretty fair to say the deal is knock-on as they hoped. And it's a situation where for me, even with an evaluation that is optically cheap, I just really question whether or not management has the right strategic focus and if they're going to be focused on the things that I think are really important to the brand long term. So, for me, it's almost like a line in the sand where I'm just probably not willing to own something like this until they make a move that is comparable to what Dollar Tree did with Family Dollar.

Dan Ferris:                 Right. And that Dollar Tree example actually is the opposite of what I was suggesting when I said the Buffett thing about turnarounds, because he always said, "Good business with a one-time huge but solvable problem," and getting rid of FDO was like – that was the huge solvable problem and getting rid of it was the solution. So, now it's still Dollar Tree, basically, is the argument, right?

Alex Morris:                Yeah. And it's a – I always think especially when you're talking on investing podcasts, I think you have a certain type of crowd. If people don't walk into Dollar Tree and see what it is and actually shop it, I just think it's hard to grasp how it fits in the retail landscape. And I think for people who do shop it, you appreciate the role that they play in, as I probably mentioned last time, seasonal or in party or the role that they play in consumables for a certain type of customer. And them getting better at merchandising the store, I just think they continue to have a really unique model that in a lot of ways stands alone in my mind in US retail, even though obviously there's tons of overlap in terms of the products they sell.

Dan Ferris:                 OK, so one concern. They did 5% comp sales, which is a great number. Really, 6% with 1% traffic decline. Just round numbers here.

Alex Morris:                Yeah.

Dan Ferris:                 Getting higher average ticket is great, right? The higher prices work. Great. For a store that says "Dollar" on the front and higher prices are working, you're like "Whoo! Bullet dodged!" But less traffic is less traffic. Right?

Alex Morris:                Yeah. This was the scary – and it goes back to what we spoke about last time and it's one thing I picked up from relistening a little bit, is we were in the heat of the moment when we were talking last year at this time, and what happened subsequently is Dollar Tree made the decision for a lot of merchandise to go through the store and effectively remark them to reprice the products because they were going to get killed on the economics of selling things at the pre-tariff prices that they had. And it was – what was symbolized it was they would go through with these little red stickers, these red dots, and put them on the products to cover up the pricing and to list the new price. And I think that was – it was disruptive. Even today, in my opinion, it's still a little bit too complex in terms of walking through the store and really knowing what the price point is for certain products.

                                    And we talked about Five Below last time as well. You have to – in my mind, you have to be really careful about this risk of getting spread too thin and making the value proposition a lot less clear to people than what it was, obviously, when everything was a dollar. So, it's a needle that they still need to try to thread. That said, obviously tariffs was a huge – it was a huge issue that they had to try to navigate as well. So, they were kind of put in a tough place.

                                    Going forward. I think they have to be really thoughtful about, especially as you get above, let's say, $2, why are you doing it? And what is the value prop there? I think of an example from when I went to the store this past week, which is funny because I was finishing up a Crocs write-up. They had a knockoff Crocs product for $6 a pair, which Crocs are typically more like call it $25 or $30. Obviously, I'm not sure about the quality of the product. I did not buy it. Whether or not it sells is obviously an important question, but – so, to have some things like that throughout the store where you add a little bit of a treasure hunt environment at above $5, call it, I think that can work.

                                    Basically, if you're really, really thoughtful about what's the value prop as we're in those kind of core categories of consumables and party and seasonal, in those categories how do we add value? Maybe a couple things at $3, $4, $5, but it's really still sticking the landing at $1.25, $1.50. If they can do that well, then I think, again, they'll take wallet share over time and you can sustain something like those 5% comps with – probably led – and this is similar to Dollarama, probably led by ticket more than traffic. but I certainly want to want to see a scenario where traffic is flat to declining over a period of years. So, yeah, it's definitely something to keep a closer eye on.

Dan Ferris:                 OK. And then, as we said, Dollar General is more like an actual turn around.

Alex Morris:                Yeah.

Dan Ferris:                 And the bear cases, of course, are similar because there's a low-income, kind of stressed consumer, and in the case of Dollar General the margins kind of – are still compressed versus longer-term history or whatever. New CEO cleaning things up. Tell me about this one because – if we're going to characterize this one as a more sort of obvious turnaround-type situation.

Alex Morris:                Yeah. Got caught in a place – to summarize the last couple of years, margins and comps both went through the roof for a period. Then we got caught on the other side of that, comps coming in weak for a while, traffic being fairly weak. That that has since improved. But yeah, comps still at a level where it's fairly difficult to lever SG&A and to get help on that piece of the margin equation. They've done better on inventory management and on shrink, so they've gotten help on gross margins. But yeah, you're still at a place on margins that is call it 200 basis points below where the business was at on a trailing 10-year average pre-pandemic, which in a business when you're talking about missing low digit margins versus high single digit margins, obviously that's a massive change in terms of [earnings before interest and taxes] dollars.

                                    And then, there's also been – as part of that, there's been this overhang – a fair overhang, in my opinion – of the competitive questions around Amazon to some extent, but I really think more so Walmart, Walmart omnichannel, as Walmart has done a really good job of, one, just running their stores better over the past decade. They got back to the basics of running that part of their business well, and then over time supplementing that with pickup in store or in the parking lot, now doing more on delivery as well. They've really gotten sharper on those things.

                                    DG didn't really have any answer to that for an extended period of time. When they tried to – when they first tried to figure out their solution, they came up with "buy online, pick up in store," but they had their employees going through the store and picking the product. Which, it's a business model that does not support those labor hours being repurposed to the employee going shopping for the customer. It doesn't work – without adding more labor hours, it just didn't work. So, that was shuttered fairly quickly.

                                    They've now shifted to basically a third-party model where I think primarily DoorDash, the dashers, they'll – they come in and shop and they'll do the delivery to the customer. And the interesting thing is, given DG's footprint, they're able – I think I said this on the last call – 80% of those online orders were delivered in an hour or less, which is, again, depending on where you live, is something that Walmart is not going to be able to match and Amazon's not going to get anywhere close to matching, without – again, without you maybe paying $10, $20 for that delivery, which is a problem when the average basket's, like, $15 – $15, $20.

                                    So, they've started to find their answer there in a way that I just think for a long – they went from playing more defense to playing offense, basically. And they've got the stores in a little bit of a better place. And that's been a funny one in terms of the financials being – the trajectory from here to the targets that they've kind of laid out over the next call it three years and the volatility of those numbers in any given quarter being fairly tight. The stock has been so volatile around that, which is just kind of funny to see when you watch a name like this. Obviously to the extent that someone trades that well, it's opportunity. But it's an interesting one to watch that. I think I even said this when we were talking last year. It's a name that for me I'm – I remain bullish on and own, but it's not the same bet in my mind as Dollar Tree. And I have a certain level of confidence on Dollar Tree that does not apply to Dollar General.

Dan Ferris:                 The one that I really don't know – the one name you gave us that I'm least familiar with is Floor & Decor, ticker FND. This looks like – it's a housing cycle bet, right? When housing picks up, they're – they've expanded the store base and wow, operating leverage and earnings and yay, the stock will take off. Is that accurate? Is that right?

Alex Morris:                That's certainly the macro variable that it's exposed to. If that doesn't go well, it's going to be difficult for the name to do particularly well, especially in the near term. I think longer term and again, like those other names I've mentioned, it's a company I've followed for a couple years now and have been waiting for a moment – in this case, just waiting for the valuation to become reflective of what I consider to be fairly sticky challenges. Their primary metric that they track in terms of driving their business is existing home turnover, and existing home turnover in the U.S. has basically been stuck at a four million annualized rate for the last handful years now. And not to get too wonky on this, but if you look at what that number should be based on population and historic rates of housing turnover, it'd be more like five and a half or six million.

                                    So, it's really depressed relative to where it's been for reasons that I'm sure people understand in terms of rates and home prices and affordability, etcetera. When that is going to correct itself, I personally don't have a high degree of confidence that it's going to happen fairly soon. That said, this is a company that was consistently trading in the call it $80 to $125 range over the last couple of years. And in my mind, at that level it was pricing in the turnaround coming fairly soon. When it got to – when it got down to $50, for me, that was kind of the level where I could look at a model and say, "Even if this takes three, four, of five years to really start turning, I think I can buy at this price and be happy with the returns I'll get over a handful of years." So, that's kind of that variable.

                                    Broader than that, Floor & Decor is in my mind – they've called themselves in the past a category killer, and I think that is fairly accurate. They're just competing with – they're competing with the Home Depots and Lowe's of the world through a different approach basically. I mean, Home Depot, if you go in the store, they'll have one or two aisles of flooring. And your ability to get inventory quickly, the breadth of inventory that's available, it's just a different game at Floor & Decor, basically. And Floor & Decor is taking share – or has taken share over time from the big boxes and from the independents. And I think there's good reason to believe that that will continue to happen in the years and really decades ahead. So, it's something that I'd really like to own for a long period of time. As you kind of framed it, the question is then what do you do when you're staring at basically as bad of kind of end market dynamics as you could imagine. I guess they could always get worse, but –

Dan Ferris:                 Yeah, let's not put that out there. Yeah. Exactly.

Alex Morris:                Right. The timing certainly doesn't seem ideal, and I don't think a turn is coming this year, and their guidance certainly doesn't suggest that either. So, it's one where you try to be thoughtful about the valuation you're paying and the sizing, but it is a name that I kind of would like to own if the future goes as I think it may.

Dan Ferris:                 Yeah. But you – what you're doing is sound though, right? It's – you want to buy a cyclical name when it's at the bottom of the cycle. You don't want to buy at the top of the cycle. So, you're not – neither one of us are claiming we know where the bottom is. But –

Alex Morris:                Right. Again, bringing this back to the – the COVID discussion, you think, again, Peloton is selling bikes that have a useful life of five, six, seven years. And you go through a period like the pandemic and there's a lot of money spent on home renovations or there's a lot of moving, and the times that people typically do their floors is if they're moving or if it's an investor in a property or whatever it may be. Well, if you rip out the floors and replace them, you're not doing it again for years later. It's going to be some time before...

                                    So, there's these businesses where I feel like if you get to the point where demand is really outpacing kind of a normalized level, what you then have to go through on the back end to get to normalized again could be a fairly extended amount of time. So, as an investor, I just think you've got to be really thoughtful about how you then size those positions and think about what "fair value" is for those names.

Dan Ferris:                 We'll have you on next year at this time. We'll check back in with Floor & Decor. So, the next one, I think we talked about Fevertree when you were here last, didn't we?

Alex Morris:                I think so. Have you been drinking the product lately or no? We need all you help we can get.

Dan Ferris:                 I think – yeah, I think I did try something and I thought, "Well, this is good, but I don't drink tonic. I don't use tonic." And I don't – and they have these other products now. I don't really drink those, either. I just drink beer every day. So, I'm not their customer.

Alex Morris:                Yeah, it's hard. That makes it tough for Fevertree if you're only drinking beer.

Dan Ferris:                 Yeah. But – although, they've got a deal with a beer company. Who knows? So, when – I think – you tell me how it's developed, because I haven't followed these guys at all. But to me, they're just like the tonic company, but now that's less than half of the revenue. Right.

Alex Morris:                Yeah, That's really – that's a that's a good summation of the story. You go back five years ago, this was a tonics company, and not just a tonics company, a UK tonics company. That was more than 50% of their business five years ago. And that's where the company – the company got started in the UK. The UK, like most places, my sense is UK alcohol consumption has been pressured, but even more so just alcohol broadly, UK gin consumption has been pressured. And it went through a period leading up to the pandemic where it did fairly well and it has since normalized from those levels. So, it's been a pretty stiff headwind to Fevertree. Over the past five years, UK tonics revenues has declined at a mid-single annualized rate, which, again, was more than half their business. So, that's a stiff headwind.

Dan Ferris:                 And just for our listener's sake, the United Kingdom runs on gin and tonic. It runs on gin and tonic the way the rest of the world runs on fossil fuels.

Alex Morris:                Exactly.

Dan Ferris:                 So, just – just so you know. Anyway.

Alex Morris:                Yes, exactly. So, that's been a pretty stiff headwind for Fevertree. On the other side of the equation, they've really focused, one, on the U.S. and they signed the deal with Molson Coors early last year, which we can discuss. They've also focused on expanding their range of products. They started with really gingers, ginger beer being a prominent example, which that's been my go-to lately. I was a big tonic drinker. Now I've really shifted to whiskey and their premium – their light ginger beer, which is a really good product. So, it started with gingers, but again, really –

Dan Ferris:                 Whiskey and ginger beer?

Alex Morris:                Whiskey and ginger beer.

Dan Ferris:                 That's your drink? OK.

Alex Morris:                It's very good.

Dan Ferris:                 I'll have to try it.

Alex Morris:                It's been my drink of lately. I've been trying to keep it under control.

Dan Ferris:                 Yeah. Of course. Of course.

Alex Morris:                But so – so, again, ginger is – but still really framed as a mixer, right? And subsequently over time they've released more like cocktail mixers. So, think of an espresso martini or margarita – again, like a premium offering there. But they've also started moving into the adult soft-drink soda business, premium soda business. So, think of a lemonade or different versions of the ginger beers. And they're trying to compete more broadly in the beverage business as a premium beverage business, which they're early on in this journey in the UK, but they've reached a point now where in the UK these other categories are approximately a third of their business. So, it's taken them a while to get to here, but they're starting to see success in moving into the space.

                                    And I think about it as a U.S. consumer. If you look at the – go to the grocery store and look at the soda aisle, you'll see a lot of obviously your traditional Coke, Pepsi, Dr. Pepper, a bunch of different diet varieties, et cetera, but you're increasingly seeing shelf space given to – it really started with the Poppis of the world and Olipop, the kind of "healthier" sodas, the prebiotic sodas. But I think you're also seeing a space opening up for kind of premium, slightly healthier positions slightly different than your legacy brands.

                                    And I think this is an area that over time – Fevertree has built his brand on premium: premium mixers, better ingredients. It's historically all been about mixers, but I think the opportunity now is can we find a way to intelligently translate that to a broader beverage opportunity? On their own, I just feel like they're at a size and a breadth of focus around the world that would have made it really, really difficult for them to actually win at that in the U.S. over time. It's just far too competitive and you have way too many challenges in terms of shelf space. With the Molson Coors deal, I feel like they've now put themselves in the best position possible to try and win that over time. Certainly far from a shoo-in, but – and again, you're talking about categories that are – the U.S. mixers market is at retail maybe a couple hundred million dollars a year. And as you'd imagine, soda and over time premium soda, those are much larger opportunities for Fevertree to try to start chipping at.

                                    So, I think I may have even said this example last time. I view the opportunity in mixers as if you're going to go to somebody's house and they say, "Hey, I bought a nice bottle of gin. Can you bring over some tonic?" I just think the idea that you're going to walk into a local grocery store and buy private label or even Schweppes, for a certain type of drinker that just has a certain feel to it that you're going to buy Fevertree, you're going to buy a premium brand. I think to some extent you get to a place where – when you're talking about sodas where people have a similar reaction to you bringing Coca-Cola versus something that has the perception or the reality of being higher quality ingredients, healthier, etc. So, it won't be easy, but I think there is an opportunity for them there.

Dan Ferris:                 Yeah, I remember we had another guest talking about this stock. I'm probably getting the two of you confused, but when one of you told me about this, I went to the grocery store and I was just walking down the aisle and I went "Oh, wait a minute" and it was like Fevertree – there was a whole Fevertree section and the shelving was about chest high on me. And it was an entire from the floor to the top of Fevertree. So, I had to buy some. And it tasted great, but like I said, I'm not a – I'm not really a drinker. But I can understand the proposition, because when I drink those kind of drinks, it's always out somewhere. It's rarely at home. I always – I specify every part of it as much as I can, because it's a special thing. I'm like "Give me a sapphire and Fevertree martini" or whatever it is. Whatever it is, I want to be able to specify all the parts of it.

Alex Morris:                Right. Right.

Dan Ferris:                 So, I don't know. Again, it's an interesting proposition. I tend to lean on rules of thumb a lot, probably too much. But I prefer somebody to go into a smaller market with a really great product that just turns things over than to go into an enormous market with – it could be the greatest product in the world, but when you go into an enormous market, it's like you'd better have Molson Coors or somebody on your side. You'd better do that, otherwise it's just – you're up against – Coca-Cola has the biggest distribution system in the world. They can take any product and press a button and it's everywhere. So, you have to do something.

Alex Morris:                Right.

Dan Ferris:                 But I like the basic idea of it.

Alex Morris:                I think that's a really – another name that I follow and don't own and I honestly am still at a point where I'm fully gathering my thoughts on what I think about the business, but I feel like Vital Farms is a somewhat similar example. Are you familiar with them or no?

Dan Ferris:                 I'm not. I know who they are. I eat the eggs. I eat their eggs. But otherwise, no.

Alex Morris:                OK. So, it's a – so, for anybody who doesn't know, it's a premium egg brand, basically. And premium at this point means pasture-raised organic. And it's call it – let's say, rough numbers, conventional eggs will cost you, let's say, $4 a dozen, and Vital Farms eggs are going to cost you $10 a dozen. But they've etched out an interesting position in the market where they now have call it mid-single-digit value share in the egg business. And I just think you have these interesting companies that have gone after – in this case, the grocery store, gone after a place in the grocery store that's really stale, effectively, hasn't seen much change, not – for lack of a better word – innovation, and then show up and build a brand and compete with the incumbents in a way that is – they're basically – they only respond, to some extent, generally speaking, not too effectively, and they have this other huge piece of the business that they're probably OK with and they're just doing their own thing.

                                    And I feel like these premium brands that are going after a very small piece, to the extent that they stay really focused on what they're doing and really intelligently think about "Where can we land and expand elsewhere?" I feel like those are interesting places to at least follow and understand, if not invest. So, Vital Farms has been a stock that has gone – it was at $20. When I wrote it up for the first time maybe two years ago now it was at about $20, ran to $50 or so, and now it's I think – it's in the $13 range. So, it's a lot cheaper than it used to be, but those are kind of fascinating companies. I think, to follow and to try to understand.

Dan Ferris:                 OK, I want to ask you about one more name real quick before we do our final question, because when I saw this ticker symbol on the list I was like "Wow." We had a guy on here who was a short seller and talking about this name and telling me all the horrible things that are going on at the company. And it's Roblox: RBLX. You want to be long this? You're watching it as a potential long, just so we're clear.

Alex Morris:                I'm watching it as a potential long. Yes. What are your – what do you – let's start with what you think about the name, or what's your views on the name, and I'll go from there.

Dan Ferris:                 I'm going solely on a conversation. Gosh, I should – Edwin Dorsey was the guy? The Bear Cave guy? Yeah.

Alex Morris:                Yes. Yes. I know Edwin Dorsey. Good guy.

Dan Ferris:                 Yeah.

Alex Morris:                Yes.

Dan Ferris:                 And he was telling me this is a website that pedophiles go to basically to ensnare children. And I was like, "Whoa!" And the story he told was mind-blowing. It was terrible. And the company wasn't exactly – it didn't seem like they were going out of their way to fix it. I'll just put it that way. That was the basic story. Gosh, I hope that's changing. I hope you think that's changing. What do you see here?

Alex Morris:                Yeah, I think that's – that is certainly a very prominent and important part of the story. And I think there's no question that the company has done an insufficient job of basically explaining their position and what they've done to address this issue. And I think it – that's obviously more important than what I'm about to say, but I think it reflects a broader inability of the company really effectively tell their story to different stakeholders, including shareholders.

                                    They have a very – the CEO and founder, co-founder, Dave Baszucki, I think he's very focused on the technical capabilities of the platform and what it can become over long periods of time, which in his defense and in the company's defense has been an insane run, especially in the last six years. At this point, they're at 140 million daily active users ("DAU"), which just would have been completely unfathomable – again, go back to pre-pandemic, numbers like that would have never been anybody's estimates for where they'd be at today.

                                    But they've really been focused on aggressively reinvesting in the business and improving the quality of the platform. They've focused a lot on things like security and safety. And I think for the most part – and again, not a topic that I'm intimately, intimately familiar with, but a lot of what they changed in terms of messaging and other things that they've implemented to try to deal with this issue, I think, are – they make a lot of sense. That said, you're dealing with the huge cohort of customers that are 9-year-olds, 12-year-olds, that age group. Obviously, safety and security has to be top, top, top of your priorities. And you have to be really, really good at doing it and you have to be really, really good at communicating it. Otherwise, obviously, it's not good for users on the platform and it opens you up to a lot of business risk. So, it's an area they need to do better at.

                                    That said, I do think they've hit on something here that, to me, feels YouTube-esque in terms of the developers and creators on the platform who create these experiences. This is where they're going to go to release their product, and this is where consumers are going to show up to play these experiences or engage with these experiences. And you just eventually get to a point where the flywheel is such that who is YouTube's most prominent competitor? And I think you get to a point where Roblox is in the same place where there's just really nobody else who's doing the same thing, which then positions them for an interesting future. And you see it in some of the numbers that they've reported. Last year, I think total hours of engagement on the platform, if I'm not mistaken, increased by something like 55% last year. And in the last few weeks, you've had Epic Games come out and had a pretty significant cut to their workforce and discussing basically engagement declines in 2025. And if you look at traditional gaming companies, I think they're, generally speaking, seeing similar pressures on their business.

                                    So, again, just the results that Roblox is reporting in terms of engagement and DAU growth is – there's no question that they're just taking a huge chunk of the broader gaming space. What that then translates to in terms of revenues and profitability and cash flow – this company spends a lot on stock-based comp, it's worth noting – that's where the story for me has always been a bit more difficult. And I think management would benefit from something like the Netflix example of – even 10 years ago, Netflix had fairly clear financial goals of where they were trying to get to on a multiyear time period. And Roblox just has not been willing to commit themselves in the same way. And they seem a bit indifferent to how they're perceived and how their stock trades. Which, again, I don't think companies should go crazy thinking about this stuff. It also is somewhat relevant for your investors have an idea of where the roadmap is. And especially in a situation where so much of your business is related to stock-based compensation, and your employees are obviously – the employees aren't indifferent to whether the stock's at $25 versus $125.

                                    So, I think there's a little bit of a maturation that needs to happen in that regard. And again, I also think they need to do a better job at very clearly telling stakeholders what the platform safety and security situation is and ensuring that parents in particular feel really safe about their kids using the product. There have been countries around the world where it is – it's basically banned for this reason. And they have a number of lawsuits in different states throughout the U.S. So, certainly a fair point by Edwin that this is a very significant issue that the company has to – they have to address this more effectively than they have so far, in my opinion.

Dan Ferris:                 Fair enough. Listen, man, thanks for being here. It's time for our final question. You've answered it once before. I hope you forgot it because I think it works better that way. But it's the same final question for every guest, no matter what the topic. Even if it's a nonfinancial topic, same exact identical question. And it's simply for our listener's benefit, our viewer's benefit. If you could just leave them with one thought today, one idea, what would you like it to be?

Alex Morris:                Yeah, I think – without making this too long, my journey has been a fairly interesting one, and I graduated from college 15 years ago now and I started writing online 15 or 16 years ago now. Had a very traditional job for that first decade after school, but I kept writing, and I've now built a business with TSOH Investment Research or even to some extent writing the book. where I have a bit of a more nontraditional role. And I guess you could say even just as a business owner or someone who is in control of their calendar, just the importance of optionality and flexibility and really pursuing the things that you love and then balancing that with financial goals and really – being really thoughtful about your goals as time goes on, too.

                                    I got married a handful years ago and now I have two young kids and it's really changed how I think about – I love investing and I want to be really successful at this, and obviously some level of financial success also is a nice, nice thing in addition to that. But how you prioritize your time and how you figure out what it is that you care about versus how Warren Buffett wanted to live his life or anybody else, answering those questions for you, you feel like you should just kind of stumble into it but I don't know if that's truly how it works. It's worthwhile to take time to actually sit and think about these things periodically so you're ensuring that you make the decisions that make the most sense to you as opposed to anybody else. And again, I think that's really been top of mind for me in the last two years as I've had kids. So, yeah, maybe that's my final thought for today.

Dan Ferris:                 That's a great story. Thank you for it. And thanks for being here, man. We'll – we will definitely be inviting you back. It's great to talk with you about all these stocks.

Alex Morris:                Yeah, I love it. Thank you.

Dan Ferris:                 You bet.

                                    Well, did he deliver or what? I told you we were going to talk about nothing but stocks, and it was one after another: Peloton, Dollar Tree, Dollar General, Fevertree, Floor and Decor. And we even threw Crocs and Vital Farms and Roblox in there. Those are on his watch list. And you heard the way his mind works. He can watch these things for a decade before he even buys them. It's pretty cool.

                                    Now, I know from personal experience that folks aren't crazy about watch lists. I published a watch list in one of my newsletter and people hated it. They were like "Cut it out. Just give me the stocks you want to buy today." So, I get that. But this is really important. Watching a business, there's no substitute for it. There's no substitute for watching a business for a decade and getting a real feel for it. And then you watch it and then something happens that triggers you and you say, "The timing is right. The price is right. The management's doing the right thing. This is it."

                                    I think a lot of people suffer from just pulling the trigger without enough information. And what happens? Well, if you pull the trigger without enough information, you don't have any conviction, so the first little dip that comes along, you sell in a panic. You don't want to do that. You want to be able to hold a long-term stock through all the ups and downs and let the story play out. And you can only do that if you really know the business. And I promise you, if you watch the stock for a decade, you'll know the business well when it's finally time to pull the trigger.

                                    So, there's a whole way of thinking here. When Alex comes on the show and talks with us, it's a whole way of thinking about how you should invest in stocks. Especially – you might not be a long-term investor. OK, that's fine. This is not for you. But most people, they want to hold a stock and just let it run. They find it too hard to do that. And I'm telling you, this is the way to fix that. Be more like Alex. Watch the thing for a decade. Learn to watch businesses and become interested in what the management is doing and how the business plays out over time, and then you will be, I think, a much better long-term investor.

                                    And let's face it, that's how you get the real multi-bagger results. You want to make five, 10, 20 times your money? It's actually not that hard. You just have to hold for a much longer time than most people are willing to hold. And you do that by watching businesses, getting the conviction, etc. So, I love when Alex is on the show because it's just stock after stock after stock. And I hope you took good notes.

                                    All right, that was another interview and another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as we truly did. And remember, like, subscribe, and sign up for our free daily e-mail.

Announcer:                 Opinions expressed on this program are solely those of the contributor and do not necessarily reflect the opinions of Stansberry Research, its parent company, or affiliates.

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