Thursday Apr. 24, 2025 - Big day for the software stocks!
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He's been seen on CNBC, the Fox News Channel, and the Fox Business Channel. His articles can be found on MarketWatch, Seeking Alpha, TheStreet.com, and many other places. He's the author of the weekly Best Stocks Now newsletter and the inventor of the Best Stocks Now app. He's president of Gundersen Capital Management. Here is professional money manager, Bill Gundersen.

Good morning and welcome to the April 24th edition of the Best Docs Now show. We should have Bill coming up here in just a moment. A little connectivity issues, but the good news is market-wise we've got some green on the screen here. We've got the Dow up just about 31 points. It's the laggard out there right now. We've got the S&P 500 up.

41 points, that's 0.77% at the moment. And we've got the NASDAQ leading the way again, up 1.4%. That's 233 points, just under that 17,000 range at 16,940. We've got oil up.

The $62.72, that's up 0.7%. Gold still in the red, down $8.25%. And Bitcoin showing a little bit of a risk-off move, I guess, in the crypto world, down just over 0.5% here.

As we begin the April 24th edition of the Best Stocks Now show. Again, I'm your host at the moment, Barry Kite, planner analyst here at Gunderson Capital. And we should have Bill joining us here in a moment on the show. But in terms of market, we continue to get a solid rally there. Yesterday, certainly the market was,

It was a pretty good one here. We had...

MoveWise in the NASDAQ yesterday and today. We're starting out strong. Hey, Bill, we got you there. Yeah, I don't know what's wrong with my microphone. You know what? The Internet, computer stuff, it's never the same. But anyway, hey, we're off to a pretty good start here today in the markets. We had a good day yesterday.

The Dow was up 420. The NASDAQ was up 407 yesterday. Really good day for the NASDAQ yesterday. Although, you know, we were up a lot higher earlier in the day. The Dow was up about 1,000.

And then it started to give up the ghost, still ended up 400. I'm not seeing any progress between us and China. I think that's the biggest issue right now. And I did listen to Trump's news conference last night.

And, of course, China themselves saying that there's not much, no progress being made or no talks underway at the current time. But you know what? The good news is earnings trumped Trump.

And earnings have been really, really good coming in here recently. And it's a very good earnings season. You know, I can't remember the last bad earnings season. You've got to go back to 2008 and 2009 to find a bad earnings season. Once again, I see about 70% of companies that are reporting they're beating their earnings estimates. That's crazy.

I've seen a few that are in the line of fire of the tariffs. I think today Procter & Gamble was one of those. And, of course, they can also use the tariffs as an excuse for a lousy report. I've seen some of them too badly. That is true. It gives them an out, right? Yeah.

Yeah. So, like, you know, when the salesmen check in and report to the boss and they don't meet their numbers, well, it's the tariff war, you know, that is hurting us right now. You just don't know. But anyways, most companies, 70% are beating their earnings estimates. Now, on Tuesday, at the end of the day, it was Scott Besant that said there was progress being made. That was behind closed doors. Yeah.

But as soon as the doors opened, somebody leaked that, especially in the semiconductor sector, things were going to get resolved because the situation was not sustainable. And the semiconductor stocks have had a pretty good rally here over the last couple of days.

And today you had earnings from Lam Research, which we'll get to in a bit. That's a big company in that industry. And they reported stellar results. You had a company out of South Korea, which makes those high-bandwidth memory chips, saying that business is off the charts right now with NVIDIA.

And you had a blockbuster report. I'm going to call it the earnings report of the day from ServiceNow, which is really blowing up the software stocks. And we continue to like that software sector.

So that's helping a lot. China is calling on the U.S. to lift all unilateral tariffs and stated that no trade deal negotiations were currently underway. Now, that seems to be a little bit contrary to what we're hearing on this side of the pond that we talk every day.

And I think that's who knows where the truth lies. I'm sure there's negotiations going on in the background. But Trump has definitely softened his rhetoric. We've come down from that 140 where it's at now. And they're saying, yes, it's definitely going to come down from there. Well, there's no question that it will do that.

But China says there are absolutely no negotiations on the economy and trade between China and the U.S. All right? And their trade representative said if the U.S. really wants to resolve the problem, it should cancel all the unilateral measures on China. Well, my question to China would be, are you willing to...

to lower all your tariffs on the U.S. to zero. What are you offering on your side of the equation? And, of course, the best, again, he signaled on Tuesday, potential easing of tensions with China,

But China is not really reaffirming that. Now, there is going to be a big G20 summit coming up. When is that? Let's see. I don't have the date, but it's in the very near future. Beijing will firmly support free trade rules.

Well, we'll see. And the multilateral trading system at the meeting of G20 finance ministers and central bank governors in Washington. OK, China will adhere to opening up and promoting inclusive economic globalization, including

uh their representative said so anyways we shall see with uh we can get anything at that we'll have to look up that up maybe you could look at that up at the break very when that uh yeah i got it looks like g20 is 30 20th uh yeah so it'll be it won't be until november that one's in japanisburg but they're you know i know they're they're i think there's a meeting of the world bank at the moment too i mean there's a lot of folks uh

In Washington at the moment, different finance ministers, I saw them. I think Ireland's, you know, the Irish finance minister was on, you know, one of the financial channels this morning. And so a lot of those people are in town, you know, making, you know, having those discussions around, you know, around D.C., I think.

Yeah.

And they don't like the destabilizing of the global economic order. Well, I guess as long as it's tilted big time towards China, they're okay with that. But any disruption to that, they're not happy. Trump has reached out to the auto makers. The auto industry will be in Bloomfield Hills, Detroit.

in a few months, and I will be announcing the dates here today. We've got it all lined up. Warrensville, Ohio, which is just outside of Cleveland, we'll be talking about that. That's about one month out from this week. But Trump is planning some tariff relief for the automakers, and they're kind of caught in the middle of

That supply chain is not 100% U.S.-made parts and products. A lot of those parts, products made in China and, of course, Canada is a big contributor. I did hear him say last night that he doesn't want Canada making cars. He says we can handle that ourselves.

Frankly, he says, I don't want Canada, you know, helping us make cars. So I don't know how well that goes over in Canada, but there's definitely a lot of the support, a lot of the... Just across the river, obviously, from Detroit, you've got a lot of building going on in Canada, parts and assembly work, too, on a lot of these cars. So that has to be worked out. Well...

Yeah, and some of the double tariff stuff, too, I think is you're trying to remove some where you might have, say, an imported steel, and then also you've got, say, an imported part, and then essentially you may pay a tariff on that same thing twice. And so there's certainly some how tariffs are calculated and is big for negotiation.

Yeah, there's got to be a result. Okay, when we come back, we'll talk about the earnings that will be coming in after the close today. And then we'll get to RoboTaxi and a lot of earnings reports that have come in since our show yesterday. We'll be right back. Oh, we're going on.

What are you feeling? And welcome back here to the second quarter of today's Best Docs Now show. We got that mic working, hopefully, here. Although I don't hear myself in my ears here. But that's okay. We can get by. Tuesday and Wednesday, May 20th and 21st.

We'll be our Cleveland trip, our initial foray into the Cleveland area. I'm really looking forward to that. We'll be at the Marriott, the big Marriott out there in Warrensville, which is just west of downtown, so you don't have to fight that downtown traffic.

And on Tuesday and Wednesday, we'll be meeting with the folks. We've got about 20 spots available. If you'd like to meet one-on-one with the crew, including myself, you can set up an appointment with Edie at 855-611-BEST, 855-611-BEST. The spots always go fast. They always fill up.

855-611-BEST. And on Wednesday night, I think it's Wednesday night. It's either Tuesday or Wednesday. I've got to verify that. I'm going to teach a workshop open to the public.

It will start at 6.30 p.m. in Warrensville, Ohio there and end at 8 p.m. And I'll teach all about the current conditions of the market, the charting, valuations, and take questions from you. So invite your friends and come one, come all.

And more likely it's going to be Tuesday, May the 20th. We'll just go with that right now. If it's different, I'll hear. But it's either Tuesday or Wednesday at 6.30 p.m. at the Warrensville Marriott, May 20th and May 21st. So I really look forward. We all do. Barry will be there. Jeff will be there. Edie will be there. Jennifer will be there.

It's going to be a Gunderhead's meat, right? Like the Deadheads. Yeah. The sugar magnolia buzz. Yeah.

The note I got is the workshop on Tuesday. Okay, good. All right. Maybe we'll have some cookies or something. I don't know. We'll figure it all out, but that's where it's going to be. We finally nailed down the date and the place. Google's going to report earnings after the close tonight. That could be interesting. Intel's going to report. We've already heard from Procter & Gamble. We've already heard from Pepsi and Merck and Freeport-McMoran and Dow Chemical and American Airlines.

Comcast, Union Pacific and we'll hear from T-Mobile tonight and we'll hear from Agnico Eagle which is a very important gold stock. Tomorrow will be Google one will be interesting because of the data center side we continue to hear on Amazon in terms of reducing some of their leases for data centers you had Microsoft remember a couple weeks ago kind of mentioned some of the same stuff in terms of

you know not moving as much of a pace maybe as they were initially so google also in that space so it'll be interesting to hear what they say all right and uh you know and then tomorrow we're going to hear from slumber jay it has not been a very good environment for the oil and gas stocks here recently i would say a lot of them are value plays at this point in time however

because I see pretty rosy days ahead over the next three and a half years for the oil and gas industry. But tomorrow we'll hear from Phillips 66 and Schlumberger, which is a pretty big one in the oil service industry. Okay.

Elon sure knows how to chase the short sellers out. You know, that chart has really firmed up on Tesla. I'm still afraid of Tesla, however, trading at 85 times next year's earnings and falling sales. This report that they had on Wednesday was not very good. Their sales were down 9% year over year.

Some of that was fallout from him being involved with Doge. Earnings were down 40%, so they're having a hard time making money on their current lineup of cars. And that's just a tough business to be in. Talk to all of our Detroit clients. The auto business in general is not an easy business. It certainly is not an easy business at the moment for a lot of different reasons and

I guess we talk about robots and robo-taxi and all that for Tesla at some point down the road, but right now the actual business is not great. Rugged. Now, Tesla is up 20% since its low in early April.

But I have a hard time putting money in it right now. It is a very good chart. It's a sideways chart. It's perking up. It's building some momentum. But I just don't see the catalyst or the earnings. Even though Elon says eventually it will be...

Bigger than the next four companies combined as far as market cap. Okay, he knows how to chase the short sellers out. That's for sure. Tesla starts testing robo taxi service in Austin and the Bay Area. They're letting the employees test. I don't know about that. Here, you guys try it first. If we lose anybody, you can always be replaced, you know.

But anyways, RoboTaxi, we still haven't really broken the code there with the flawless RoboTaxi service. The race is on between Waymo and Uber and, of course, Aurora Innovations. And speaking of which... I'll tell you, Waymo's pretty far. I mean, they're pretty solid. Yes.

I had a family friend who had to go out to the Bay Area for a death in the family. And, you know, she was complaining about, you know, parking in front of the house a lot of times was a Waymo vehicle waiting to go pick somebody up. Like it would just park. It needs a place to stay and wait, right? And so these robot vehicles just basically parked in front of the unit.

for most of the time while she was there. Now, the guy didn't die in a Waymo, did he? I mean, I don't know. Or the body wasn't in the Waymo. No, it did not. It was natural causes. Yes, okay. Yeah, it's got to be weird to see a car parked out in front of your house with nobody in it, but the lights are on and it's ready to go. Oh, yeah, and it just pulls off.

Weird. Yeah. Okay. Alphabet, that they will report tonight. And, of course, they are a big player there in autonomous, which is basically being tested right now in the Bay Area and Austin, Texas. Of course, a couple of big tech centers these days. And don't count out Aurora. They're going to try out self-driving trucks. Now, imagine...

Think of all those trucks pulled over on the highway. They're grabbing some sleep. You know, when you go down to Florida, Barry, I know you've probably seen it. It says there's a no parking sign like every six feet.

For like a mile. Have you seen that? No parking overnight. Why do they have to put so many signs like that? So no one can park. Yeah, but do we need that many reminders? It's kind of silly. Anyways, load look truckers, no hands. Aurora set to make headlines in Texas. Will we see the day...

that we get passed by a big semi-truck on a dangerous curve and nobody at the wheel. I don't know about that. Well, the earnings report of the day when we come back. This is the Best Stocks Now show. This is Bill Gunderson. Thank you for tuning in to today's Best Stocks Now, Best Inverse Funds Now show. I put several hours of research in during the wee hours of the morning each day to bring you the very best cutting-edge stories that I can.

To get two free weeks of my newsletter, go to GundersenCapital.com. To talk to us about our fee-based only money management services, call us at 855-611-BEST. Now, back to the second half of the show. The Instigator Because that's something new

And welcome back here to the second half of today's Best Docs Now show, where we saw that big sell-off on Monday on the old Jerome Powell-Trump public spat, mostly coming from Trump towards Powell. And eventually he knocked it off and quit calling him a loser and a...

What else did he call him? A late to the party or something like that? He definitely said he's always late. He said he's always late. Yes. The market certainly did not like any suggestion of a non-independent Fed, and the market threw a big, big tantrum on that day.

And then we've had some nice stabilization because it's returned to earnings, which it always does. The market returns to earnings. And that's what it is doing. And let's begin with the earnings report of the day here. I'm going to call it ServiceNow.

Wow, look at that. Up 14.6%. Very well-run company. Bill McDermott, CEO. Been around. I had him speak a little bit before the show. Big AI talk really was what he was talking about. Yes. Now, we currently do not own ServiceNow. It got hammered. I mean, ServiceNow went from $1,200...

To $678. Software stocks in general. Oh, my gosh. The whole space has been beat down since February 17th. Now, obviously, it's on my shopping list. But, I mean, to go from $1,200 per share...

That was as recent as late January, okay? And it landed at 678 about three weeks ago. That is a drop of 43.5%.

Luckily, I have a cell discipline. We sold it at $9.39. Okay, $9.39. After we sold it at $9.39, it went down to $6.78. And you could say, well, you should have just rode through it. Ah, you know, 43%, that's stretching it. You know, I have to draw the line somewhere.

And now it's back almost to where we sold it. It's at 932. So it is up about 45% in the last couple, two, three weeks.

The valuation still looks good on it here at this level, but the bottom line on ServiceNow was that, let's see what their numbers look like here. He highlighted strong Q1 performance, noting a 20% year-over-year growth in subscription revenue. I mean, that's one of the big pluses with a lot of the software stocks is it's recurring revenue.

Their subscription revenue reached just over $3 billion. A record Q1 net new annual contract value. Okay, so that's new people coming in. That's good. The company completed 72 deals exceeding $1 million in net new ACV. That's annual contract value. And nine surpassing $5 million.

McDermott emphasized ServiceNow AI advancements, particularly in ProPlus solutions, which saw a four-fold increase in deals year-over-year. The RaptorDB database gained traction with five deals, exceeding one million in net new ACV. So anyways, they're looking for 19% growth year-over-year going forward.

That's a very, very solid report from ServiceNow. Of course, the symbol there is NOW, N-O-W. In their position...

Yeah, they're positioned well. He was also talking about, you know, being able to help, you know, say, Doge or just, you know, the federal government improve their, you know, computing on the back end. I think that's one of the big things that Doge has ran into in terms of, you know, archaic payment systems, right? Yes. Old systems.

cobalt kind of coding kind of systems. And so he was talking a bit about that where they've got an opportunity to potentially do some work for the federal level also, which is another income stream for them. Yes, Palantir also is well positioned there. I'm thinking of that cave with millions of paper documents and folders there.

That's how far behind the government is with their technology. And I'm sure companies like Oracle and ServiceNow and Palantir could definitely come along and make them a lot more efficient than what they are right now. Okay, now going from high-tech, way high-tech, to a honey chicken and carne asada, Chipotle Mexican Grill beats by one cent...

Revenue of $2.9 billion for the quarter. That's a lot of guacamole. Misses by $40 million. But they are pointing to, I think they have an affordability problem myself. I don't know what one of those bowls is. You probably know, Barry. I haven't been in there lately. They've got to be around $12, $13. I haven't really been in there.

Yeah, I haven't been in in a while. It's like, you know, the one by us, they don't really... I mean, I always do the online ordering anyway, but there's no, like, line in there anymore because I think they make everybody order on the app. It seems like it. So it seems a little...

They push you in that direction pretty hard. But you haven't been there in a while. I need to check it out. Yeah, but I'm sure a loaded burrito has got to be up around $12, $13 in that foil wrapper. It's not cheap to eat at Chipotle. And with kids and whatnot. And they are opening a lot of these Chipotle lanes.

where it's a drive-thru. I think that's a big advance there. Most of their stores are not drive-thrus. I haven't seen one of those yet. Okay. No, not around here. And then they've got...

But the thing is, they are, in terms of, say, tariff, so we've talked about this before, they're subject to avocado prices, and that creates that affordability issue, too, that you talked about. Yes, and they did also mention a weaker consumer, all right? So they're one of the companies that...

that is using the weak consumer, well, I'm just going to say that's the higher end. I mean, Kava, Chipotle, that's not the value menu at McDonald's or Jack in the Box, which have a lot cheaper offerings.

They're competing for the big bucks, the college kid, the teenagers with well-to-do parents, etc. IBM maintains 2025 guidance. IBM, member of the Dow. IBM is actually down 5.3% right now. Hence, you've got the mixed market today. You've got the Dow down, the NASDAQ up.

I just have not seen much innovation come from IBM. And, you know, look, the bottom line is growth. So what is causing the absolute lack of growth at IBM? And I usually have to point to innovation, number one, and management. Management, number two, or management, number one, and innovation, number two. They kind of go hand in hand.

You've had sales over the last four quarters plus 2%, plus 1%, plus 1%, plus 1%. That's terrible growth, okay? And I understand it's a $215 billion company. How do you want us to keep growing, Gunderson?

Out of Armonk, New York, that's where their headquarters are. I spent some time back at the IBM, one of their old campuses one time for some training. It's kind of interesting in that area, neck of the woods. But that is terrible growth.

And, of course, with no growth in sales, you're not going to get much growth in earnings. Their last three quarters, plus 5% growth in earnings. This last quarter was plus 1%, and this quarter was minus 5%. And even though they do have new management there at IBM, a new guy at the top,

Not much happening there yet out of IBM. Dividend yield right now, 3%. Yeah, 3% we'll call it is the dividend. Still a value trap. Value trap from my point of view. Okay, and then Procter & Gamble, which, and of course, now listen, when we get accounts from these big firms...

They almost always have IBM, and they almost always have Procter & Gamble in them. And Johnson & Johnson. Yes, and many others. And very seldom do you see ServiceNow, Palantir, CrowdStrike. Very, very seldom. They own IBM. Pfizer is the other dog that you see a lot. Pfizer, Merck.

Abbott Labs. All right, so let's go to another one here. The Pride of Cincinnati. Procter & Gamble down 4.4% today. No growth. 2%. 2% growth. You see the difference between a soggy stock, stodgy old growth giant of yesteryear, and a best stock now? It's like night and day. We'll be right back.

And welcome back here to the final segment of today's Best Docs Now. The phone lines are now open.

855-611-BEST, 855-611-BEST. Or you can go online to GundersenCapital.com and reserve a spot on either Tuesday or Wednesday, May 20th and May 21st at the Warrensville Marriott.

And we'll all be there. The whole team, the Gunderson team will be there. You know, we have a lot of people. I've talked to many, many people here in Charleston. I think we're Ohio South or Cleveland South. There are so many people in Ohio that either have a beach home or they've moved here from Ohio.

Of course, there's a freeway that connects us, right? Yeah, we've got a lot of Buckeye folks struggling during college football season. Yes, when Ohio State is playing. Worked out well for them this year. Yeah, I mean, they're happy campers this year. And so I'm going to be going the other way. We're going to be heading up to Ohio, to Cleveland. I'm really, really looking forward to it.

And you know what? I don't always do the workshops, but I've never done one there. So Tuesday night at that Warrensville Marriott, we got a nice room, have some light refreshments. And if you'd like to reserve a spot for that and not an appointment, 855-611-BEST.

855-611-BEST or go to GundersenCapital.com. Now, when does the Dow say, let's kick IBM out? It's not really a representative of the software industry anymore. And let's put Palantir in. You know, Palantir is the same size as IBM. It's a quarter of a trillion dollars. Look at the chart on Palantir today. Isn't that amazing?

Even how big is ServiceNow? ServiceNow is a little smaller than IBM, but it's a much more current company in my book.

than IBM is. And obviously, when did they say, Merck, you haven't come up, or Pfizer, even worse. Pfizer, you haven't come up with anything in years. I know you were there with that COVID vaccine. We still don't really know if it was a vaccine or not. That's questionable. Drop that in your lap. Let's put...

Lily in there, which may have the biggest drug of all time, which could be in pill form pretty soon. That's just me. Okay, Procter & Gamble, member of the Dow.

The pride of Cincinnati not having a good time today, down 4.7%. And here again, soggy, soggy, soggy. What do I mean by soggy? Well, look at their earnings report. I mean, you can't hide behind an income statement that's lousy. You can't hide behind 2% growth.

But then again, you say, well, how do you grow a $370 billion company? I don't know. NVIDIA did it. I don't know. Microsoft did it. I don't know. Tesla has done it. Procter & Gamble, $370 billion stuck in the mud.

But, you know, it's a consumer staple, 2.7% dividend yield. When we visited Cincinnati not that long ago, saw the Padres play there. I saw the Procter & Gamble headquarters there, pretty impressive. And a formidable company, yes. Use their products all the time, yes. But it's a lousy stock, what can I say? It is the epitome of soggy.

Nothing against Cincinnati. Okay. They also warned a little bit. Let's see. They talked about a soft consumer, too. Well, you've got to blame something. Looking ahead, blah, blah, blah. Okay. They also talked a little bit about the tariffs impacting their business. They say they warned of the impact of the volatile consumer and geopolitical environment.

amid the trade war. So that's what they're blaming 2% growth on. But they've had 2% growth under Biden. They had 2% growth under Trump the first time. But that's what they're using as their reasoning for the soft report. Merck trims 2025 earnings outlook amid tariff impact. Okay, Merck is going to blame tariffs. And of course, Merck has had very little growth lately.

Merck, I believe it's in the Dow PE ratio of 10. They come in with sales that were up 7% year over year. Horrible chart. Just a lifeless stock chart. I mean, why would anybody own Merck yet? That's a very widely held stock. $200 billion up there with IBM in size.

about half the size of Procter & Gamble. Lilly, by contrast, is now almost a trillion dollars. Was I the guy that said... Yeah, Merck's in the doubt. Merck's in the doubt as well. Yeah, and Pfizer. Am I the guy that said Lilly's headed for a trillion? You can look up my article on Seeking Alpha. Lilly is four times the size of Merck.

So I don't know, for whatever reason, maybe at the time it was put in the Dow, I'm sure it represented the pharmaceutical industry more than Lilly did. But this is 2025, and things have changed quite a bit since then. I would kick Merck out of the Dow. Two pharma ones in there is Johnson & Johnson and Merck. And Pfizer. I don't see Pfizer in here. I'll keep...

Okay, all right. And you've got UnitedHealthcare in there, too, which is a stinker. Yeah, I saw that. Okay, the other worrisome sign, and they're blaming a weak consumer, the airlines. Okay, well, you know, traveling on an airline is not exactly a piece of cake these days. You get herded around like cattle.

And I've never been on a flight. We've got a full flight. You better grab. You better fight for that overhead bin or we're going to have to leave it here in Cincinnati and you'll have to come back and get it another day. But anyways, American Airlines, their loss widens. The airlines are having a tough time, and I don't know what to blame there.

But they are up 1.5%, but they pulled their 2025 guidance. Has the tariff war hurt tourism? I don't know. Is there an anti-American backlash? I would think so. Anyways, well, we are out of time. We've finally pinned down Cleveland, Ohio. It will be Lakewood Ranch about a month after that, and then we're headed out to Bloomfield Hills, Michigan.

And then we'll go from there, but you've got four weeks. Fill out the calendar. I like it. To book an appointment there while we're in Cleveland for two days on site and 855-611-BEST to get a four-week trial to the newsletter. I sent out some alerts here this morning. Today looks like a buying day to me. Yesterday was not. Monday was not. Tuesday was not.

But I saw some things that were shaping up yesterday. We shall see. I do have some cash on the sidelines. To get a free four-week trial, go to GundersenCapital.com. GundersenCapital.com. View all six portfolios on a daily basis that I manage. Have a great day, everybody.

This show is not a solicitation to buy or sell any securities. Bill Gunderson or clients of Gunderson Capital Management may have long or short positions in stocks mentioned during the show. Past performance is not indicative of future performance. Gunderson Capital Management is a fee-based registered investment advisory firm. All accounts are held at Charles Schwab. Schwab is a member of SIPC and FINRA.