In this week's Stansberry Investor Hour, Dan welcomes Bryan Beach back to the show. Bryan is the senior analyst for Whitney Tilson's Ultimate Upside and a senior analyst on Stansberry's Investment Advisory.

Bryan kicks things off by discussing what's new in the Whitney Tilson's Ultimate Upside newsletter (previously Venture Value). Both Bryan and Whitney have teamed up to develop a new system built upon the proprietary Stansberry Score that further helps subscribers find overlooked, high-value stocks that have room to grow. The three newest recommendations that their new system discovered are already performing well. And Bryan warns of the belief that a stock is cheaply valued when it returns so little...

Mr. Market's not stupid. Walmart, [a] really well-run company, has a price-to-sales ratio generally around 1.1 – [it] seems low. But Walmart's not all that profitable on a pure bottom-line basis. Every dollar of revenue that comes in the door, you hope to get between $0.02 or $0.03 of profit at Walmart... [But] the average valuation multiple of [a software company in the S&P 500] is 12 times sales, so 12 times as expensive as Walmart... A dollar of software revenue – generally about 20%, or $0.20 – rolls down to the bottom line, which is way more than Walmart.

Next, Bryan shares how peer groups aren't as easy to identify as many folks believe, especially in technology or consulting companies. While a business might offer a product that competes with another company, its other services might not be related at all. And with small caps, it's even harder to find a true peer due to differing business practices. So Bryan and Whitney look at historical valuations to compare them instead. Bryan then shares how his views on the utilization of technology, such as the Stansberry Score, in investing have changed after finding one company he wouldn't have considered without it...

This is one of the benefits... of a system that forces you to think about companies you wouldn't normally think about. And the Stansberry Score is part of that... Once Whitney and I got to refining it even further, a retailer popped out that... excited [me] about this company's growth. And I was just floored. I never would have looked at this twice. So I still have those old Venture Value or value-investing bones... but I do think that I've come around, as frankly, as technology has gotten better, it's been easier to refine and back test strategies.

Finally, Bryan mentions how Whitney's connections help provide an edge in learning more about a company and to gain wisdom that has been built up over decades of experience. One lesson that Bryan learned is that you don't need to be completely rigid in your philosophies. Near the beginning of the Russia-Ukraine conflict, he thought it might be best to recommend energy stocks in Venture Value to hedge against that, despite the fact that they weren't value stocks. And Bryan expanded upon Whitney's idea for the Ultimate Upside...

When [Russian President Vladimir] Putin first went in Ukraine in 2020... and I saw that there was going to be a lot of demand for North American energy, that was my hypothesis. I wasn't betting on trying to make 200% or 300%. I just saw it as a hedge... High energy costs are generally bad for the markets... When Whitney first looked at our portfolio... [he saw that] one of them is up 350% [and another is up] 158%... We're pivoting into this new methodology. Nothing about these is Ultimate Upside, but it's smart to have them as a hedge against the market in general.

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

(Additional past episodes are located here.)

The transcript is coming soon.

This Week's Guest

Bryan Beach is a former "Big Four" auditor and a certified public accountant who holds bachelor's and master's degrees in business and accounting, respectively. He spent six years in public accounting and then a number of years as a controller and director of publicly held software companies. He also ran his accounting consulting practice. Bryan's ability to sift through company filings – finding opportunities and red flags – is his specialty. His unique experience in creating and auditing financial reports allows him to see what most investors miss.

Bryan is the senior analyst for Whitney Tilson's Ultimate Upside, an advisory service focused on small-cap value investing. He's also a senior analyst and contributor to our flagship product, Stansberry's Investment Advisory.