At The Motley Fool, we're buy-and-hold investors, but before we can hold a stock, we have to pick the stock. So our analysts are always on the hunt for excellent investment ideas. And every week, some businesses stand out from the crowd, which is why every Motley Fool Money episode includes host Chris Hill asking his guests -- this time, senior analysts Aaron Bush, Ron Gross, and Jason Moser -- which companies they have their eyes on, and why.
Their picks for this episode: Hill-Rom Holdings (NYSE: HRC), which operates in the medical equipment and services segment; fast-casual restaurant chain Chipotle Mexican Grill (NYSE: CMG); and videoconferencing upstart Zoom (NASDAQOTH: ZOOM).
A full transcript follows the video.
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This video was recorded on March 29, 2019.
Chris Hill: Time to get to the stocks on our radar. Ron, you're up first. Our man behind the glass, Steve Broido, is going to hit you with a question. What do you got?
Ron Gross: Stick with me, Stevie. Hill-Rom Holdings, HRC. Spun off from Hillenbrand in 2008. A medical equipment company. A recent recommendation here at The Motley Fool. They have a long-established presence in the medical equipment market. 14 consecutive quarters of double-digit earnings growth. Great opportunities in connective care and technology. International expansion is a great opportunity as well. They've raised their dividend for eight consecutive years. Very strong management team. Well-run company.
Hill: Steve, question about Hill-Rom Holdings?
Steve Broido: What medical device are they best known for?
Gross: I'm going to say they're best known for cardiac monitoring, some ophthalmology equipment as well that they got through an acquisition. Some respiratory care equipment as well.
Hill: Jason Moser, what are you looking at?
Jason Moser: The power of the burrito, Chris. It is unbelievable to me. Chipotle Mexican Grill, CMG, the stock is up 66% this year alone. You know what? I'm digging in there and I'm starting to see why, actually. Brian Niccol has the full faith of investors everywhere that he knows what he's doing. If you've been to a Chipotle recently, you probably have noticed a little bit of a difference. I certainly have. The in-store experience has much improved. They're incorporating these digital order pickup areas, much like the Panera across the street. The food is better. They've got a legit rewards program now. I'm actually a member of that, too.
Gross: How's the queso? Stabilizer-free?
Moser: I was never that critical of it to begin with. Either way, I think it's gotten better. But I think most of all, he's actually taken them off that pedestal that we were always so critical about under Ells' leadership. Now I think it's a little bit of a less of a target there. The shares are 56X forward earnings. I'm not sure it justifies that valuation. But they're doing one heck of a job.
Hill: Steve, question about Chipotle?
Broido: I think they still sell alcohol. Is that a good idea? Yes or no?
Hill: Aaron Bush, what are you looking at?
Aaron Bush: I'm going to go back to Zoom. I just want to share some reasons why I think Zoom is so interesting. Looking at their S-1, their revenue growth over the past year was 118%. Their expansion rates were best in class. Their payback period to break even is nine months, which is fantastic for an enterprise software company. They're already profitable, which at this stage is very rare for this type of company. Their balance sheet is rock solid. It reminds me of Atlassian in some ways at a much earlier stage, which has been a fantastic stock in its own right. It's still founder-led. The founder owns something like 20% of shares. I think investors are going to maybe make a lot of money in Zoom.
Broido: When do you expect them to go public?
Bush: Probably in the next couple of months.
Hill: You got one you want to add to your watch list, Steve?
Broido: We use Zoom here. I love it. I'm going with Zoom.
Aaron Bush owns shares of Atlassian and Chipotle Mexican Grill. Chris Hill has no position in any of the stocks mentioned. Jason Moser owns shares of Chipotle Mexican Grill. Ron Gross has no position in any of the stocks mentioned. Steve Broido has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Atlassian and Chipotle Mexican Grill. The Motley Fool recommends Hill-Rom Holdings. The Motley Fool has a disclosure policy.