Germany's Aging Population and Record Social Spending: A Preview of America's Fiscal Future?

**SPEAKER_1** (0:01)
This is Invest Talk from KPP Financial, helping investors make sense of the markets one day at a time. Here's your host, Justin Klein.

**Justin Klein** (0:16)
Good afternoon, fellow investors. Happy Nvidia Day to everybody. Here's the big news after hours. This is Invest Talk. This is our, forgot to set the stage here. It's August 26th.
And we are here to, as usual, help you become a better investor, give you some insights, what's going on in the markets, and how to make smarter decisions with your money. We're here to answer your finance and investment questions. And hopefully by the end of this, you will be better prepared for your own situation. Everyone has their own situation that differs slightly, but the fundamentals are the same. And so we're here to instill those fundamentals of smart money management, smart investing, to you. Now just a bit, we'll talk about today's market activity. But first, let's answer this first caller question now.

**SPEAKER_3** (1:07)
Hey, Justin, Luke, this is Justin calling from New Jersey. I wanna know what's your opinion on Old Dominion Freight Line, ODFL, thank you.

**Justin Klein** (1:16)
All right, looking ODFL, Old Dominion Freight Lines. This is an interesting one because historically, it's been a very, very profitable business. High return equity, if you go look at long-term returns, it's one of the best performers, I don't wanna say in history, but over the last 20, 30 years. What do they do? They are in the logistics business, asset light logistics.
Their return equity is 25%. Let's see, is that rising or falling? Yeah, it's been coming down. It was a high of 38%. But if you zoom out over 10 years, it's still kind of at the 10-year average. So it's still very profitable, good balance sheet, free cash of about 1.1 billion, but it's been in a downtrend. And I think what you're seeing is that, you know, there's just a correction in the profit metrics.
Operating margins have come down a bit, but earnings is supposed to be up 20% this year, but it's 14% next year.
I still generally like it. What I don't like, though, is that chart. And I think it's one of those names where it was trading at, it kind of had this great reputation, and there was a premium that was built into it. And that premium is slowly bleeding out because I think those margins are compressing a bit. So I would be very patient with it. It is now certainly in a downtrend.
And I think there's much more downside potentially to come.
I would want to be buying this at a relative discount. Right now, Enterprise Value EBITDA is around 21 I still think it's pretty high for a name that doesn't have a lot of growth. You know, it's a $41 billion market cap. It's gonna be very, it's very cyclical in its business, but it's still a very good business. But I would want to own it back when it's in, let's see, the trough was around 16 times the enterprise value of EBITDA. You know, if this gets to 150, 160 in that range, it's about 200 now, that's probably where I'd pick up ODFL, Old Dominion Freight Lines. I made a great show yesterday. It was both Luke and myself. We looked into Ray Dalio's debt crisis warning and the US heading for a fiscal breaking point. So we dug into that kind of both sides, each argument and we also answered a question about Costco and many other companies. But Costco is more most important, especially to Luke, he's a big fan of Costco. But if you happen to miss that show, it was a great one. Go check it out. The best way to get every show is to follow InvestTalk wherever you get your podcasts. Now we have a lot of ground to cover over the next 45 minutes today and time for me we'll get to all of it. And our main focus point is about German's aging population. New data came out around how much of their budget is going towards entitlements. And is that a harbinger of things that come here in America because from a demographic standpoint we're a bit behind Europe and Germany. So we're going to look at that. In addition, we are going to touch on leverage ETFs. Regulators have approved them, but the outcome for investors has been horrendous. So we're going to look at that. And then we're going to look at all different types of investments that prey to the worst instinct of the average investor. What's good, what's bad, and what you should avoid, like the plague. So we'll look at that. We also will answer questions about which sector to invest in. And then Lockheed Martin, these are from the Invest Talk Voice Bank.