On this podcast, Motley Idiot senior analysts Ron Gross and Jason Moser focus on:
- Walmart‘s grocery division (as soon as once more) doing the heavy lifting within the firm’s newest outcomes.
- Studies that Apple will unveil a $3,000 system at its developer convention in early June.
- Netflix impressing advertisers and Wall Avenue.
- The most recent from House Depot, Goal, Foot Locker, and Deere.
- Taco Bell preventing to free the phrase “Taco Tuesday” from its present trademark holder.
- Two shares on their radar: Owens Corning and Lowe’s.
Plus, Scott Phillips, chief funding officer at Motley Idiot Australia, shares the present state of play for buyers Down Underneath, Australian shares to observe, and predictions for this yr’s Rugby World Cup.
To catch full episodes of all The Motley Idiot’s free podcasts, take a look at our podcast center. To get began investing, take a look at our quick-start guide to investing in stocks. A full transcript follows the video.
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This video was recorded on Might 19, 2023.
Chris Hill: We have a giant week for retail and a giant debate over Taco Tuesday. Sure, actually, Motley Idiot Cash begins now. It is The Motley Idiot Cash radio present. I am Chris Hill, becoming a member of me in studio, Motley Idiot senior analyst Jason Moser and Ron Gross. Good to see you as at all times gents.
Jason Moser: Hey.
Ron Gross: The way you doing, Chris?
Chris Hill: We have the most recent headlines from Wall Avenue. We’ll get a test on world markets with our visitor, Scott Phillips, and as at all times, we have got a few shares on our radar, nevertheless it was a giant week for retail earnings so we will begin with the most important one reporting. Walmart raised its full-year steering after delivering a first-quarter report highlighted by gross sales up greater than 7% and Ron, we have seen this often over the previous couple of years. Walmart’s grocery enterprise, doing the heavy lifting right here.
Ron Gross: Yeah, precisely. Consumers proceed to gravitate to smaller bundle sizes to retailer manufacturers as a result of they’re attempting to handle their spending they usually proceed to favor grocery spending over non-essentials similar to attire, residence items, electronics, these are inclined to have increased margins. However sure, they’re specializing in grocery. This was a robust report, it was truly higher than anticipated as you talked about, income and comp gross sales up about 7%. These are fairly sturdy numbers. Barely slower progress, I’ll point out in contrast with the earlier quarter, however simply barely, they usually did achieve market share or administration mentioned they gained market share in groceries in order that they proceed to execute, their e-commerce was up 27%, that is fairly sturdy. Lifted by increased promoting income as they targeted on their market, and in addition gross sales by means of their pickup and supply providers. So sturdy numbers there, gross margins did slender only a bit on a unique combine in gross sales, however nothing to be involved about. Inflation in meals, though on its approach down, it is nonetheless 20% increased than two years in the past. However working up 17%, earnings up 13%. Administration lifted its outlook as you say and issues look fairly good right here at Walmart.
Chris Hill: Are you shocked that they raised their steering as a result of CEO Doug McMillon, I imply, you talked about the inflation, McMillon mentioned on the decision, inflation is creating uncertainty for us within the second half of this yr?
Ron Gross: I believe they raised as a result of this quarter was higher than anticipated. So simply on that, you possibly can elevate, however I do suppose they’re being cautious as are different retailers after they give steering.
Chris Hill: House Depot’s first-quarter income was decrease than anticipated. Similar-store gross sales fell greater than 4%, and the corporate lowered gross sales steering for the complete fiscal yr. Regardless of all that, Jason, shares of House Depot up a little bit bit this week. I am not complaining, I am a shareholder, however I am a little bit pleasantly shocked.
Jason Moser: I too am a shareholder and I too am very not disillusioned with the way in which this week turned out. I do know the inventory being up shocked some, I believe if you have a look at all the pieces in complete, yeah, certain they guided down, however they actually set that tone for the yr 1 / 4 in the past, and I do not suppose actually there have been any surprises so far as trepidation among the many shopper, type of a shift from spending on merchandise to a shift on spending in providers. That is all enjoying out right here, however there’s nothing essentially mistaken with the enterprise in any respect. It is uncovered to higher macro forces that it has no management over. The numbers themselves not terribly inspiring, I imply income $37.3 billion it was truly down 4.2% from a yr in the past, comps down 4.5%, U.S. comps down 4.6%. In the end earnings per share of $3.82 down from $4.09 a yr in the past. A number of the metrics that matter, comp common ticket was up simply 0.2%, however the transactions fell 5% and big-ticket merchandise comps have been down 6.5%. Administration did level out lumber deflation. I do know we discuss loads about inflation, however on this case, lumber deflation, which is impacting the corporate’s gross sales.
Ron Gross: It is my favourite inflation.
Jason Moser: Precisely. It impacted common ticket to the tune of about 335 foundation factors. Bear in mind, lumber is near 10% of House Depot’s total enterprise. Put some numbers round this, they use framing lumber for instance right here. Framing lumber was roughly $422 per thousand board toes this quarter. Final yr, $1,170 in order that’s that inflation. It performs out on their prime line in a foul approach, however truly, it is useful to their margins so it is not all unhealthy information. They paid out $2.1 billion in dividends, received to like that, repurchased roughly 3 billion {dollars} in shares. That shares excellent has come down 8.5% since 2019 in order that’s all good. I believe in regard to steering, they pulled again a little bit bit. Earnings per share, they see declining now between 7% and 13% versus 5% only a quarter in the past. However even with that steering, the inventory remains to be valued at round 18 instances full-year estimates, which frankly is a reasonably opportunistic have a look at this one.
Chris Hill: Effectively, and you consider the entire pent-up demand in 2022, notably over the summer time, it is smart that the steering wouldn’t be superb.
Jason Moser: Yeah, completely.
Chris Hill: Goal’s first-quarter outcomes have been higher than anticipated, with stock ranges persevering with to enhance. Shares down a little bit bit this week, Ron, nevertheless it appeared like a considerably comparable quarter to what we noticed out of Walmart.
Ron Gross: Besides that Goal focuses extra on these bigger-ticket nonessential gadgets and that is the place the 2 diverge. Walmart was sturdy as a result of they targeted on grocery and important. Goal struggled as a result of they targeted on the larger ticket. You possibly can see that displaying up within the numbers that are higher than anticipated in some circumstances, however fairly weak usually. Gross sales solely up 0.5%. Comparable gross sales got here in flat, digital gross sales have been down 3.4%, so we’re seeing not nice numbers right here for the quarter. Gross sales of meals and beverage have been up as we noticed with Walmart, however issues like attire, residence items, electronics fell relatively sharply. Discretionary classes make up 54% of Goal’s annual gross sales so if these are weak, the numbers are simply going to return in weak as nicely. Stock was down 16%, they’re attempting to work by means of this extra stock that they’ve had because the pandemic after they have been inventoried within the mistaken course. Earnings down 6%, second-quarter steering was weak, however administration did preserve its full-year steering. However as we talked about with Walmart and them being conservative, executives used the phrase cautious 13 instances throughout theearnings name They don’t seem to be feeling very assured about their visibility into the long run. Solely 20 instances ahead steering, I like the corporate usually, however they’re working by means of the atmosphere and the stock issues they’d from the previous.
Jason Moser: I really feel like I am rubbing off on Ron right here a little bit, they’re looking terminology, what number of instances these items have been used within the name?
Ron Gross: The additional mile for the listeners.
Chris Hill: I used to be simply going to say, if you happen to simply had the previous 15 months that CEO Brian Cornell had had, would not you be utilizing the phrase cautious over and over?
Jason Moser: Be very cautious about what number of instances you employ the phrase cautious.
Chris Hill: On a associated word, Cornell, extra so than actually every other retail CEO this week was speaking about organized retail theft. The problem that they’re dealing with, I do know that that is one thing that each retail enterprise offers with. Cornell was actually speaking about it as being a major downside, is that one thing to observe if you happen to’re taking a look at Goal over the following 6-12 months, how they take care of this extra so than others?
Ron Gross: Completely, as a result of they’re calling out a giant quantity, $500 million resulting from shrink or theft. That is a really huge quantity. I virtually cannot see how it’ll be that huge so let’s control that, however they are not the one ones. Walmart talked about it, most main retailers are speaking about it. It’s a main downside in retail proper now.
Chris Hill: In the event you’ve received $3,000 burning a gap in your pocket, excellent news. There is a brand-new gadget coming to market along with your title on it. Particulars after the break so keep proper right here. You are listening to Motley Idiot Cash.
Welcome again to Motley Idiot Cash. Chris Hill right here in studio with Jason Moser and Ron Gross. Shares of Foot Locker fell 25% on Friday after first-quarter income have been solidly decrease than Wall Avenue was anticipating. The athletic attire retailer additionally lowered steering. Ron, CEO Mary Dillon did nice issues when she was operating Ulta Magnificence. Boy, she’s received our work reduce out for her at Foot Locker.
Ron Gross: This isn’t going to be simple for her. She joined final yr they usually developed what they’re calling their lace-up technique. Perhaps too cute there. However their lace-up technique, it contains shifting away from purchasing malls, closing 400 underperforming shops, lowering their dependence on Nike, which was vital, and bettering their digital operation. Not working fairly but, Chris, as a result of these numbers are very weak they usually have been compelled to decrease steering. Whole gross sales down 11%, same-store gross sales down 9%. They blame macroeconomic headwinds, together with decrease revenue tax refunds, altering vendor combine. They’re repositioning their Champs model they usually needed to take increased markdowns as a way to transfer product, they usually additionally did speak about shrink and theft as nicely. Adjusted income down 57%, these are actually weak numbers. They reduce their steering, they anticipate gross sales for the present yr to fall between 6.5% and eight%. They did title a brand new CFO this week, however they have their work to do, buying and selling solely 15 instances steering, in all probability applicable, and possibly must be even cheaper in quotes. To guess on this firm could be to guess on a major turnaround.
Chris Hill: I used to be simply going to say, you have a look at the inventory, the valuation. It is clearly cheaper at the moment than it was final week, however, to make use of a phrase Jason Moser has used prior to now, it looks as if you’ll want to pack a lunch on this one.
Ron Gross: It should take some time they usually do not actually appear to be very totally different to me than a number of the opposite attire shops that you simply see within the common mall, in order that they have their work reduce out for them.
Chris Hill: Apple is planning to carry its annual builders convention on June fifth, and particulars of the occasion are beginning to leak out. The Wall Avenue Journal reported this week that Apple is predicted to unveil a mixed-reality headset resembling a pair of ski goggles that comes with an exterior battery pack at a price ticket of $3,000. Jason, I can’t be among the many first to purchase this system, but when any firm can pull this off, I’ve to imagine it is Apple.
Jason Moser: Perhaps. I believe shopper units for this nascent market in blended actuality, it can’t keep $3,000. I believe that is simply prohibitively costly and I do not suppose very many individuals will likely be clamoring to get that system, however it’s Apple, there will likely be some. Then that basically is the ability of their model and in the end the truth that they actually make great things. As time goes on, we’ll see that worth come down. We’ll see an increasing number of experimentation with core use instances. Is it simply that normal {hardware} factor they usually introduce one thing new that can discover its approach into the market. Demand both materializes or it does not, if it does not, you carry the value down. I believe sooner or later, although, the value is simply a part of the equation. Actually, in relation to this mixed-reality stuff, it is discovering the use instances. I believe there are two alternatives in the end in play right here and I do know a number of the main focus is on the buyer. Getting a headset and escaping off into one other world, however you have a look at industrial augmented digital blended actuality, industrial has gained much more traction lately merely due to the clear and useful use instances. You are pondering of issues like 3D, step-by-step working, restore directions, a dashboard of the analytics information to have the ability to assist assess and full a job, issues like healthcare. In the event you’ve received corporations like PTC and Ansys on the software program facet, Microsoft with its HoloLens, a number of investments they’ve made there, not likely figuring out both. Apple’s simply sitting there, biding its time, watching this market unfold and I believe that is the suitable factor to do, notably with its scale and its assets. However I might think about $3,000 is just not going to have that factor flying off the cabinets.
Chris Hill: There are a few fascinating issues at play right here. One among which is the very fact, a minimum of in accordance with the report in The Wall Avenue Journal, that is extra so than any new system launch that Apple has had in all probability in its historical past — this factor is just not able to go. They’re reportedly planning to return out with one thing that’s within the beta part at this level. The opposite factor is suppose again to earlier this month, the response we noticed for Alphabet, Google had its annual builders convention. The response was so optimistic to what they unveiled. By the way in which, this $3,000 system, this isn’t going to be the one factor Apple unveils at their developer convention. From a inventory perspective, it’ll be fascinating to see what occurs in early June, the response to this and what might are available in out there?
Jason Moser: I do not suppose that is something that may be a tailwind or a headwind, both, for the enterprise within the close to time period, I believe it is smart they should get into this market sooner or later sooner relatively than later, until they only get handed by everybody. However once more, it does really feel like from the buyer’s perspective, this actually is a market that is nonetheless in search of these core use instances and the know-how is simply going to have the ability to achieve this a lot there.
Chris Hill: Final week on the present, Andy Cross known as out Deere because the inventory on his radar. On Friday morning, Deere raised steering after second-quarter income got here in increased than anticipated. You inform me, Ron, how they do?
Ron Gross: They did nicely and as you mentioned, they have been capable of enhance their steering as provide chain issues ease, not go away, however they’re easing and the corporate was capable of profit from increased costs. It is a very cyclical enterprise, however they’re in a robust a part of the cycle proper now, even an improve cycle, you would in all probability name it, gross sales have been up 30%. There’s demand by farmers for brand spanking new gear and elements to restore growing older equipment that they have not actually upgraded in fairly a while. Gross sales rose throughout every of the corporate’s three segments on increased costs and quantity. Their massive farm gear section, which is their largest, rose 53% from a yr earlier and the income greater than doubled for that section. Actual sturdy. Building up 23%, small equipment up 16%. Margins widened as they managed prices and as these provide chain constraints, as I discussed, began to ease. The one weak a part of their enterprise was their monetary providers enterprise. That is a really small a part of the enterprise down considerably due to the actions round rates of interest, however nothing to be involved about. Earnings up 42%, raised steering, orders stay sturdy though crop commodity costs proceed to return down. If that continues, that is the place the cycle goes to reverse sooner or later finally, however for now they felt like they may elevate steering, solely buying and selling 12 instances ahead, which is analogous to the place Caterpillar is now, in order that is smart.
Chris Hill: John Might is a kind of executives whose timing is possibly a little bit unlucky, he grew to become CEO of Deere proper earlier than the pandemic. Spectacular that he is elevating steering at a time like this, notably if you consider, as Doug McMillon mentioned, the uncertainty round inflation impacts each enterprise.
Ron Gross: Deere has executed job with new merchandise, bringing software program to their merchandise in a fairly large approach which can impression margins in a great way going ahead. However it’s cyclical. You possibly can’t actually escape these macroeconomic cycles, so investing in Deere, it’s important to perceive that.
Chris Hill: On Wednesday, Netflix held its upfront presentation to advertisers and mentioned that its new ad-supported tier has almost 5 million month-to-month energetic customers. That will need to have been music to Wall Avenue’s ears as a result of on Thursday, shares of Netflix up 10%, Jason.
Jason Moser: I perceive the passion right here and let’s dig into why that is the case. At the beginning, it feels just like the honeymoon is over right here. If you would like ad-free TV, you bought to organize to pay up for it, as a result of a transparent technique right here for these companies going ahead, the economics of ad-supported is that they’re very compelling for these companies, in order that they’re actually attempting to push an increasing number of subscribers to these ad-supported fashions. You begin with Netflix, for instance within the U.S., they famous of their most up-to-date earnings report that the adverts plan has already reached a complete common income per member, which is the subscription plus the advert income that is higher than their normal plan. Because of their licensing offers, the ad-supported plan has on common round 95% content material parity globally with their ad-free plans. You are getting principally apples-to-apples there. Going to Disney. You are taking a look at Disney, you’ve got seen the identical factor, Iger talked about on the decision right here. They’ve realized the financial advantages of the ad-supported plan. They’re truly going to boost the value of the ad-free plans as a way to create basically extra demand for the ad-supported plan as a result of the ad-supported plan is so economically useful to the fashions there. They’re seeing the identical factor, common income per consumer’s simply handing over some very promising numbers there. Then you definately have a look at one thing like Commerce Desk, which is the spine of a number of these programmatic promoting to start with. They speak about listening to this language from Netflix concerning programmatic adverts, they’re clearly partnering with Disney on that entrance as nicely. You see quite a lot of alternative ways to win on this house, however clearly, Netflix, Disney, and The Commerce Desk are three of the businesses which are actually main the way in which right here it appears.
Ron Gross: I am so spoiled, each time I hit fast-forward on a present and it says fast-forward is just not enabled, I will simply throw the distant.
Jason Moser: Effectively, and also you’re seeing an increasing number of content material getting on platforms like Freevee, that Amazon-supported Freevee providing. What have you ever seen Jury Obligation? Come on, guys. You bought to test that one out.
Chris Hill: Guys. We’ll so long within the present. After the break, will get our man in Australia’s Scott Phillips. That is Motley Idiot Cash. Welcome again to Motley Idiot Cash, I am Chris Hill. Scott Phillips is the chief investing officer at Motley Idiot Australia. He’s additionally the host of a very fashionable investing podcast, which additionally goes by the title of Motley Idiot Cash. He joins me now from the Gold Coast. Scott, it has been too lengthy. Thanks a lot for making the time.
Scott Phillips: Chris, you’re very type man and I am at all times humbled to look on the radio present and may I say, I drafted shamelessly off Motley Idiot Cash. The unique, the OG, known as ours the identical factor as a result of hey, imitation is the sincerest type of flattery.
Chris Hill: Completely, I do wish to discuss in regards to the market in Australia, however I’m curious what the view of the U.S. inventory market is out of your vantage level. At a excessive degree, 2022 was the worst yr in over a decade. 2023 right here within the States has been dominated by, sure, on a enterprise degree, a number of discuss of AI, but additionally at a macro degree, a number of dialogue of rate of interest hikes and the debt ceiling and I am curious, if you have a look at shares in America, what stands out to you?
Scott Phillips: Chris, I nonetheless imagine that you’re, do not let an Australian take heed to this. The U.S. financial system has a few of the easiest companies on the planet. That is no shock to you or no shock to your listeners. I believe what’s been fascinating for Australian buyers is the final 12 months, 2022 specific, I ought to say. In Australia wasn’t as unhealthy as within the U.S. as a result of we have now an abundance of assets, corporations, and banks in Australia. Regardless of a few of the banking dramas you guys have been having, 2022 is definitely a comparatively good yr as a result of the power sector, which actually is huge in Australia, was actually profitable. I have a look at the U.S. during the last 12-18 months. I believe there’s been a little bit of a shock. A number of our progress and tech shares received smashed as yours did throughout 2022. The restoration of your market not stunning in any respect. I’m very excited in regards to the future for American corporations. I believe the work that is being executed by a few of the easiest, largest, fastest-growing corporations on the planet is occurring on the Nasdaq and the New York Inventory Alternate. Whereas the index itself with nice alternative for Australian buyers to leap within the U.S. shares final yr. However I am each bit as excited as ever have been about the way forward for U.S.-listed corporations, of the worth that is being created by a few of the finest companies on the planet.
Chris Hill: What’s the present state of play as of late for Aussie buyers? Primarily based on feedback that you have made in your present or issues that you have written — we observe one another on Twitter — primarily based on a few of your tweets, I get the sense that, you suppose the ASX is, I do not know if cut price is the suitable phrase, nevertheless it looks as if a chance.
Scott Phillips: I believe that is proper. I really like the way in which you phrase that, mate. I believe there’s at all times somebody on the market, your listeners know this. There’s at all times somebody on the market who’s ready to say, the following crash is coming or all the pieces’s going to be horrible. Be careful for the following bear market. We all know the standard suspects. In the event you have a look at the long-term historical past of the Australian Inventory Alternate, the U.S. inventory markets, the developed world inventory markets, they go up and to the suitable. Not in a straight line, not with out pullbacks, not with out years like 2022, however the future is at all times vivid. The perfect time to purchase shares is at all times at the moment. Not as a result of essentially I do know what is going on to occur tomorrow, however as a result of if you happen to look again over any stretch of time, the immense worth created by investing in public markets has simply been phenomenal. I assumed fairly actually mate for the final I have been working for The Motley Idiot. Not fairly so long as you have got, however for a very long time now and I have been saying since day 1, and at the moment and hopefully a few years into the long run, purchase shares at the moment. Not as a result of I am making any macro forecasts or market forecasts. All of us suppose that is a foolish factor to try to do. However as a result of the superior energy of compounding by a few of the finest corporations on the planet is simply one thing you do not wish to stand in the way in which of. Betting in opposition to that’s loopy. Actually, I truly do suppose proper now, notably for inventory pickers within the Australian market, a few of our corporations are very costly, however there are loads which are nonetheless affected by market jitters. From pessimism, from concern about what may come subsequent economically, that I believe in 3, 5, and 10 years time we’ll look again and say, why did we let the following three months fear us when the ten years adopted which are very prone to be excellent. I completely could be investing usually as at all times, however I do suppose there may be completely a fantastic alternative for inventory pickers within the ASX.
Chris Hill: You and I’ve talked prior to now about Domino’s Pizza, amongst different corporations primarily based within the U.S. is doing nicely in Australia. For folk listening, what’s one other American enterprise that you simply suppose is faring fairly nicely and connecting with both shoppers or companies in Australia?
Scott Phillips: That is a fantastic query, mate, and I believe I hope your listeners know that, no, I have not seen the numbers just lately, however not that a few years in the past, half of the income from the S&P 500 corporations got here exterior the U.S. In the event you open up any cabinet in Australia, if you happen to work with any enterprise in Australia, the variety of U.S. corporations that we take care of and work with stays actually sturdy. This would possibly not shock your listeners, it is not a very unique reply, however I am a long-term shareholder of Amazon. I really like that enterprise. I believe it is an incredible firm and it continues to do rather well around the globe. If I provide you with all that is an antipodean, a Down Underneath perspective on Amazon, that it’s making each little bit of the identical inroads right here as has been making within the U.S. for a few years. It stays an extremely sturdy, extremely profitable enterprise. I believe it will likely be for a very long time to return. Another companies that I believe MongoDB, a enterprise that you have talked about loads is a enterprise that does proceed to once more, make inroads right here.
The world of software program is one thing Australian corporations simply do not compete wherever close to in addition to we do in different industries as a result of essentially the most dominant world software program companies are typically born over there. Now, the place you’re and the pace of the web, everyone knows is simply phenomenally quick. The expansion of that has been unimaginable. I’m as you mentioned, interested by AI and the expansion of that. Once more, take into consideration the cloud, the online companies, take into consideration Microsoft’s cloud enterprise. Amazon’s cloud enterprise once more, Google, the identical factor. I personal shares in Alphabet as nicely. These are simply phenomenal companies and I believe the expansion of those around the globe. I really need your listeners to know you possibly can make investments globally from proper there at residence, due to the sheer scale and breadth of a few of your finest companies.
Chris Hill: Talking of software program, one Australian-based enterprise that we talked just lately on the present about was Atlassian. Let’s transcend that. What’s one or two different publicly traded Australian companies that you simply suppose extra People ought to find out about?
Scott Phillips: Let me provide you with two Chris. One is Xero, the code in Australia is XRO. It’s a cloud accounting enterprise. A few of your listeners could also be utilizing Xero. It’s accessible within the U.S., it is not wherever close to as dominant there as it’s right here. It is truly a New Zealand enterprise however Australia claims all inside New Zealand companies as our personal. We’ll preserve doing that. It’s ASX listed although. It’s a firm that has one thing like 70% market share in New Zealand. It is essentially the most dominant cloud accounting software program bundle right here in Australia. Massive within the U.Okay., hoping to develop within the U.S. It’s a actually incredible enterprise, with visionary management. It took the Salesforce software-as-a-service mannequin and actually ran with it exhausting and continues to make each publish a winner. The opposite one’s a really totally different enterprise known as TechnologyOne. You guys speak about enterprise useful resource planning software program loads. This can be a firm — TNE is the code on the ASX. It’s a firm that principally gives enterprise software program, as I mentioned, for some actually sticky prospects and if you happen to’re in search of defensive software program, these guys present software program for presidency, schooling and healthcare. They’re three sectors that are not going away anytime quickly. Their prospects are fairly sticky and they will be round. Their earnings progress has simply been virtually staircase during the last 10, 15, years. They proceed to get prospects. Their retention price is above 99% when it comes to variety of prospects. It is a actually nice high quality Australian software program enterprise that I believe has a protracted, lengthy approach to run.
Chris Hill: I do know you are captivated with investing, however I do know there’s something else arising in just a few months that you simply’re additionally captivated with and I am speaking in fact, in regards to the Rugby World Cup. It should be held in France. It has been 24 years. Scott, since Australia has gained the Rugby World Cup and I am curious how you are feeling in regards to the Wallabies’ probabilities?
Scott Phillips: Mate, we’re going to win this one. No, there isn’t a query about it, Chris. We’re completely lay down [inaudible]. I also can say, by the way in which, the ladies’s World Cup is being held in Australia very quickly, too. We have now two huge World Cups. I really feel excellent about our probabilities in each. I am sorry to your Kiwi listeners, to your U.Okay. listeners, to your European listeners, who suppose their groups are going to win. I hate to interrupt it to them. I’ll say right here first and solely, Chris, on Motley Idiot Cash, Australia will win each rugby World Cups. I’ve completely each confidence. Not even a query, however I would as nicely in regards to the turning up with that good.
Chris Hill: You possibly can take a look at the Australian model of Motley Idiot Cash on no matter podcast app is your favourite. It’s free. You get a unique perspective on the inventory market and also you get extra insights and evaluation from this man, Scott Phillips. At all times nice speaking to you. Thanks a lot for being right here.
Scott Phillips: Chris, that is completely my pleasure and mate, I can’t depart this podcast with out thanking you to your a few years of loyal service to The Motley Idiot. Extra importantly, I believe to Motley Idiot Cash and to your listeners. I am a loyal listener, I’ve at all times been. We’ll miss you dearly on the firm. Your listeners will miss you much more, mate. Thanks very a lot for all the pieces you’ve got executed for buyers and for listeners throughout your time at The Motley Idiot. We’re very fortunate and grateful to your service.
Chris Hill: I admire it, Scott. Thanks a lot. Up subsequent, Jason Moser and Ron Gross return. They received a few shares on their radar. You are listening to Motley Idiot Cash. As at all times, individuals on this system might have curiosity within the shares they speak about and The Motley Idiot might have formal suggestions for or in opposition to, so do not buy or promote shares primarily based solely on what you hear. Welcome again to Motley Idiot Cash.
Chris Hill right here in studio with Jason Moser and Ron Gross. Guys, the place we sit proper now within the studio, we’re simply two blocks away from the U.S. Patent and Trademark Workplace. That is related as a result of this week, Taco Bell petitioned the PTO to have the ability to use the phrase “Taco Tuesday,” which in fact begs the query, why cannot they? That is as a result of one other restaurant chain holds the trademark on the phrase and it isn’t the restaurant you might have guessed. It’s Taco John’s, a sequence headquartered in Wyoming. They’ve held the trademark on the phrase Taco Tuesday since 1989, Ron. I am a little bit torn right here as a result of look, Taco Bell is 20 instances the dimensions of Taco John’s, that is David versus Goliath. I am on Goliath’s facet as a result of Taco Bell is not saying we wish the phrase, they’re saying, hey, all people ought to get to make use of this phrase.
Ron Gross: Effectively, since I personal the trademark on the phrase Tuesday, I might pay a little bit bit each time they use Taco Tuesday. Who am I to complain? Nevertheless it’s a little bit a lot for me.
Jason Moser: The historical past, that is fascinating and it began out as Taco Twosday, T-W-O-S-D-A-Y. They have been simply saying, hey, we will say, two tacos for $0.99 to attempt to gin up some gross sales again in like 1980 or one thing like that. It labored out. Then they took it from right here. It is fascinating to see the Patent and Trademark Workplace. They granted this trademark in ’89. Attorneys say it is eligible for cover. Different attorneys really feel like Taco Bell has a robust case right here as a result of U.S. trademark legislation, “Prevents the registration of frequent phrases or phrases that change into commonplace after a registration is granted.” In the end Chris, the most important tragedy of all of this, it looks as if the legal professionals are in the end winners right here.
Ron Gross: Am I proper that LeBron James tried to do that as nicely unsuccessfully?
Chris Hill: He did. Give it to the individuals. This could belong to all of us. Earlier than we get to the radar shares, I want to say one thing that got here up earlier within the week, an announcement that went out to podcast and radio commerce media that I will likely be leaving The Motley Idiot on the finish of the month. My final episode on the podcast goes to be Might thirtieth and I’ll at the moment share some ideas and reply some questions on my departure. However that is my final look on our radio present. I wished to say a fast phrase of due to the individuals who run our affiliate radio stations. We began Motley Idiot Cash in February 2009. In January 2010, this grew to become the primary podcast to be heard on business radio. I do know podcasting has grown in reputation through the years, however broadcast radio is a crucial type of media.
I am pleased with the truth that this present is now heard on greater than 75 stations, making it the No. 1 inventory investing radio present in America. The economics of weekend discuss radio are such that relatively than operating unique packages like ours, a number of discuss stations simply promote the time to run issues like hour-long commercials for well being dietary supplements. I wished to thank just a few of the radio executives who made the choice to make this present accessible to their viewers. Robin Bertolucci in Los Angeles; Russ Reynolds in San Francisco; Lisa Wolf proper right here in Washington, D.C.; Rene York in Phoenix; Max Miller in Sacramento; and Janine Lee in Hartford, Connecticut. These are the early buyers in Motley Idiot Cash as a radio present. Their stamp of approval helped us get to the place we’re at the moment. I simply wished to thank them on my final look on the radio present.
Ron Gross: Effectively mentioned, Chris. I will be transient so I do not get emotional right here, however we have been doing this collectively for round 14 years. It has been a spotlight of my time right here on the Idiot. You’ve got made it really easy and so enjoyable, and it has been a real pleasure. We’ll miss you, however do not be a stranger, please.
Chris Hill: I will not.
Jason Moser: I’ll echo these sentiments. I imply, 14 years, it is extra nice reminiscences that I believe in all probability any of us can actually pull. However one that can at all times stand out was if you and Dan and I loaded up the prepare and went as much as New York Metropolis and taped Market Foolery on location at Shake Shack to have fun their IPO. We had lunch, they introduced us considered one of each desert. It was only a chic day and that’d be one which at all times stands out. Thanks for all the pieces and we’ll miss you.
Chris Hill: I admire that. Let’s get to the shares on our radar. Our man behind the glass, Dan Boyd goes to hit you with a query. Ron, you are up first. What are you taking a look at this week?
Ron Gross: Dan, you are going to find it irresistible. I am going with good outdated Owens Corning, OC, largest producer of fiberglass insulation and the second-largest producer of asphalt roofing shingles within the US. If that does not get your blood pumping Dan, I do not know what’s going to, 30% of income generated internationally. This is similar Owens Corning that needed to file for chapter again in 2000 because of asbestos-related accidents. The corporate did reemerge six years later. Their plan to reorganize features a belief to resolve each the present and that future legal responsibility from that. Demand is clearly pushed by new residential development restore and remodelling. More and more tough constructing codes that require power effectivity. Since initiating its dividend in 2014, elevated its payout yearly at a compound annual price of 12.5%, additionally lowered its share rely by 23% over the identical interval, at the moment has a 2% dividend yield, buying and selling for a little bit over 10 instances, which is comparatively low-cost in comparison with others in that trade.
Chris Hill: Dan, query about Owens Corning?
Dan Boyd: Ron, what gear do you have got at your home for set up and roofing? I do know you are a giant DIY man. You bought to be a giant fan of a few of Owens Corning’s merchandise.
Ron Gross: Me and the Pink Panther are always insulating my home.
Chris Hill: Jason Moser, what are you taking a look at this week?
Jason Moser: Effectively, Dan, I’m a little bit bit extra of a DIY man. I do not understand how I can observe up Ron right here, however I’ll strive. Lowe’s, ticker L-O-W, we have got earnings for Lowe’s popping out on Tuesday morning subsequent week. A enjoyable truth for you all, the five-year charts right here, we have been speaking about House Depot earlier. Lowe’s is up 165% during the last 5 years versus House Depot’s 75%. Now, Lowe’s share account is down about 28% in comparison with House Depot’s 8.5%. That has performed into that calculus for certain. However simply fascinating to see, for all of the discuss and the credit score we give to House Depot, Lowe’s has actually introduced the outcomes these previous 5 years. The query in fact, is, given what we noticed with House Depot this week, what’s going to issues appear like for Lowe’s? Subsequent week they did speak about residential funding being beneath some strain. Talked about inflation, increased rates of interest, extra cautious shopper. They’re forecasting a slight decline within the residence enchancment market. To that finish, they did information for gross sales ranging in 88-90 billion vary, which might be down from a yr in the past after which comps anticipated to be flat to down 2%. I believe actually the massive query mark is, will we see revisions to that steering given what we noticed with House Depot this week? I would not be terribly shocked to see that, however we will see.
Chris Hill: Dan, query about Lowe’s?
Dan Boyd: Not likely a query Chris, extra of a remark. I at all times actually take pleasure in Lowe’s, a complete lot greater than the House Depot. I believe it’s a significantly better purchasing expertise. The shops are nicer, the workers is extra educated and I believe it is simply higher. I at all times want Lowe’s to a House Depot.
Jason Moser: That is actually fascinating. I suppose I’m going wherever it is most handy. I’ve to go to House Depot tomorrow. As a matter of truth, to choose up some deck wash — one hell of a weekend plan and let me inform you.
Ron Gross: By the way in which, plug for Ace {Hardware}, do not sleep on Ace {Hardware}, a really sturdy expertise.
Jason Moser: That is the place I’m going get all my traeger stuff as a result of it is actually near our home. They have all of the traeger goodies.
Chris Hill: What do you wish to add to your watch checklist, Dan.
Dan Boyd: I’ll go along with Lowe’s, Chris. I identical to going. As a house owner, I believe it is a fantastic place.
Chris Hill: Jason Moser, Ron Gross, guys, thanks for being right here.
Ron Gross: Thanks, Chris.
Chris Hill: That is going do it for this week’s Motley Idiot Cash radio present. This present is blended by Dan Boyd. I am Chris Hill. Thanks for listening. We’ll see you subsequent time.
Suzanne Frey, an government at Alphabet, is a member of The Motley Idiot’s board of administrators. John Mackey, former CEO of Entire Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Chris Hill has positions in Alphabet, Amazon.com, Apple, Atlassian, House Depot, Lowe’s Corporations, Microsoft, Nike, Goal, The Commerce Desk, and Walt Disney. Dan Boyd has positions in Amazon.com and Walt Disney. Jason Moser has positions in Alphabet, Amazon.com, Apple, House Depot, Nike, The Commerce Desk, and Walt Disney. Ron Gross has positions in Amazon.com, Apple, Domino’s Pizza, Microsoft, MongoDB, Nike, Goal, and Walt Disney. Scott Phillips has positions in Alphabet, Amazon.com, Microsoft, and Walt Disney. The Motley Idiot has positions in and recommends Alphabet, Amazon.com, Apple, Atlassian, Domino’s Pizza, House Depot, Microsoft, MongoDB, Netflix, Nike, Salesforce, Goal, Expertise One, The Commerce Desk, Ulta Magnificence, Walmart, Walt Disney, and Xero. The Motley Idiot recommends Deere, Foot Locker, Lowe’s Corporations, and Owens Corning and recommends the next choices: lengthy January 2024 $145 calls on Walt Disney, lengthy January 2025 $47.50 calls on Nike, and brief January 2024 $155 calls on Walt Disney. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
