In this episode of the Left Brain Thinking podcast, host Chuck Jaffe interviews Nolan Langford, Chief Executive of Left Brain Investment Research, to reassess two stocks previously highlighted in the firm’s Jarvis newsletter: NVIDIA and Bath & Body Works. The conversation opens with an overview of Left Brain’s investment philosophy—bottom‑up, earnings‑driven analysis that avoids macro market timing. Langford then reviews NVIDIA’s Q3 earnings, noting the company’s 150% YTD share price gain, strong demand for GPUs across data centers, AI, autonomous vehicles, the “Omniverse,” and Bitcoin mining, and acknowledges supply‑chain and Taiwan‑related geopolitical risks. While he doubts another 150% price jump in the next year, he believes the business momentum will continue, supporting the firm’s thesis that the stock can double in 2–3 years. The discussion shifts to Bath & Body Works, a newly public consumer‑discretionary retailer spun out of L Brands. Langford highlights its Q3 earnings beat, modest EPS growth (from $0.83 to $0.92), attractive forward‑earnings multiple (~15x), pricing power demonstrated by a $1 candle price increase, and vertical integration. He cites risks such as renewed lockdowns, supply‑chain disruptions, and rising input costs that could compress margins. Throughout, Langford reaffirms that both companies still meet Left Brain’s criteria for high‑growth, double‑in‑2‑3‑years potential, and the episode concludes with holiday greetings and promotional information for Left Brain’s research services and mutual fund.
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Welcome to Left Brain Thinking, where creative investment ideas meet logical analysis. That's the hallmark of Left Brain Investment Research, where the analysts are looking for growth companies with the potential to double in 2 to 3 years and high-yield bonds with the potential for dramatic price appreciation. And today we're talking with Nolan Langford, Chief Executive at Left Brain Investment Research, about two stocks that were highlighted in the most recent Jarvis newsletter. We're actually revisiting these stocks. We've talked about them before. Before. But because of the way Left Brain relies on earnings releases, it's really important to go back and revisit those stocks. Now, if you want to learn more about the firm and its research and the Jarvis newsletter, go to leftbrainir.com. You can learn about their new mutual fund at leftbrainfunds.com and on Twitter @leftbrainir. Nolan Langford, welcome back to Left Brain Thinking.
Good afternoon, Chuck. It's always great to be here to reconnect with our listeners. And speaking of listeners, we'd like to wish all the listeners a happy Thanksgiving, a happy Turkey Day, and hopefully people are looking forward to it.
I know I am. Noland, it's earnings season, which for you guys at Left Brain is like the most exciting time of the year. I know the holidays have us giddy and ready to go, but you guys get giddy every time there's earnings season because you're always looking to see what it's going to tell you. And today there's two stocks. That Jarvis brought to our attention previously that you're revisiting now. They are NVIDIA and Bath Body Works.
You got it right. We have a tech stock and then we have a consumer discretionary retail name that hopefully a lot of listeners, when they're out at the mall this weekend, will be visiting Bath Body Works.
These were stocks that we had talked about previously. When you look at earnings it's not just for you, do they still have that potential to double in 2 to 3 years? It's also where are they in the cycle and, and what have you. So there are people worrying that the market itself is topping out. Are these companies getting to where anything is changing on your opinion about them?
Not really. We're not a macro firm, so we don't necessarily take a view of the market, whether it's too expensive or too cheap. As we all know, the stock market is a market of stocks. We are really bottom-up, meaning that we're looking at these individual companies one at a time. We want to really take out the microscope and find out each quarter how they're performing. Is business getting better? Is it status quo? Is it getting weaker? What's happening, not necessarily economically in the economy, but in the individual sectors that these businesses participate in. So it's really important for us on quarterly earnings to pay attention to what impacts these individual companies and to see if our story still holds, if the reason that we purchased still exists.
Let's start with NVIDIA because the company hit an all-time high after releasing its third quarter earnings, and there were people wondering if it could keep the momentum going. Can it keep the momentum going?
You know, short term, that's a really good question. If we came into this year and you asked me, Nvidia, do you think the shares will do well this year, or do you think the business will do well, I would have told you a resounding yes. But as we sit here nearing Thanksgiving, the shares are up about 150% year to date. So no, I did not see that coming. And if you ask me, can they keep the momentum going, I think the business momentum— and we can talk about the use case for Nvidia's graphical processing units I'm gonna say an absolutely. From a share price standpoint, no, I don't think it's gonna go up, you know, 150% again over the next 12 months. But I do think the business should continue to accelerate, and if that's the case, the share price also should do pretty well going forward.
So it can't do the 150% that it's done in a calendar year, but it still meets that you could see it doubling in 2 to 3 years It still has that potential, which is why it remains in the portfolio. Correct?
That is correct. So I know it's a popular name, Chuck. It's in a lot of portfolios. As you mentioned, we're coming up on a trillion-dollar market cap and it's still not a household name. So the first thing I want people to know is the risks that are involved in NVIDIA. For those that aren't aware, NVIDIA makes those GPUs, which is the graphical processing units, and they're used for a variety of applications. They are used in the data center. NVIDIA chips are used to power AI for self-driving cars. And then the big application that people are getting excited about, not just artificial intelligence, but there's been a lot of talk about the metaverse. NVIDIA calls it the omniverse. And no matter what you call it, the NVIDIA graphic chips will be very important for that. And then they're also used in data mining. So Bitcoin mining, the NVIDIA chips are used for that as well. If you take a look at the end markets, they're all accelerating. NVIDIA does have a few risks that people need to be aware about. One is they're not immune to supply chain issues. So to the extent that the supply chain issues continue to be an issue, they would impact NVIDIA. And then also their chip supply is largely in Taiwan. So there's a little bit of geopolitical risk there in regards to the situation with China. But just leaving those alone, NVIDIA is still a name that we think has a lot of upside potential, and we're really happy to see the third quarter earnings continue to show strength.
So now let's flip it around to Bath Body Works. That was a company that was spun out of L Brands. There's a lot less history to it in terms of what we're used to seeing off of earnings reports. What did it prove to you with the third quarter earnings?
So Bath Body Works, I think most people are familiar, you know, if you go to the mall, you'll go in there and get fragrances and hand soaps, hand sanitizers, and those general products. A couple things that are interesting here. One is Bath Body Works just really became public. Prior to that, it was part of L Brands, which was the conglomerate that contained Victoria's Secret and Bath Body Works. And then earlier this year, both companies were turned loose. Victoria's Secret now trades publicly, as does Bath Body Works. Coincidentally, they both produced really good earnings reports last week, but Bath Body Works is the one that we're focused on. It's the one that we've greenlit. We think the earnings and the momentum there are very sustainable. We're actually pleased to see that through the third quarter earnings, even with the supply chain issues, the fact that people are coming back out in society, the report was very pleasing. So it's a, it's a name in the retail space. A lot of people don't have exposure because it's a recently publicly traded stock, but we think this can do very well over the next few years.
By very well, it still meets that definition of a double over the next couple of years.
Yes, the multiple here isn't very expensive as far as if you're taking a look at what the earnings are. So Bath Body Works last year in the third quarter did about $0.83 a share. This year they delivered about $0.92 a share in the quarter. They traded about 15 times forward earnings, which we think is really attractive. You know, they dominate this space, the goods for women. You know, again, candles, soaps. And the other thing that we like about the business is that they are vertically integrated. So yes, they'll have some risk with supply chains. They also have some risks with the input cost. You know, inflation is affecting everyone on what they pay for their goods. So that is also a risk for Bath Body Works. That's what really excited us, because this quarter with their candles, they actually raised pricing by $1. And they still had really good, not only good returns, but good sell-through. So it gives us a lot of confidence.
I'm not questioning that confidence, Nolan, because I love it. But at the same time, I would be remiss if I didn't ask you for, for what's the risk? What's the scenario here where you wind up being somehow disappointed by Bath and Body Works?
So for Bath and Body Works, you know, if we have a return to lockdowns where people are back in their home and they're not going to the malls, that obviously will not be good for Bath Body Works. The other thing too is if the supply chain issues does start to impact domestically, that's an issue. And if their input costs continue to go up a lot and they're not able to pass those on to consumers or purchasers, then their margins will contract. So that's a really big risk for them.
Nolan, great stuff as always. Thanks for joining me. We'll talk to you again soon. Happy holidays.
Happy holidays to you and to the listeners.
Left Brain Thinking is a joint production of Left Brain Investment Research and Money Life with Chuck Jaffe. Our conversations are not personalized investment recommendations but are designed to engage your brain. Please do your diligence before making any financial transaction. I'm your host, Chuck Jaffe, and you can learn more about my hour-long weekday podcast at moneylifeshow.com. Thanks to my guest, Nolan Langford, chief executive at Left Brain Investment Research. Go to leftbrainir.com to learn about the firm and to sign up for the Jarvis newsletter to keep tabs on all of their latest research. The firm's new mutual fund has its own website at leftbrainfunds.com, and they're on Twitter at Left Brain IR. Left Brain Thinking is available every other Wednesday. Subscribe via your favorite podcast app, and until we don our left brain thinking caps again, happy investing and happy Thanksgiving, everybody.
