The 3 Stocks on the MFM Team's Radar This Week
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 Jeff Fischer, Ron Gross, and Jason Moser -- which companies they have their eyes on, and why. Their picks for this episode: pest-control major Rollins (NYSE: ROL); website chat-platform service provider LivePerson (NASDAQ: LPSN); and cloud security provider Zscaler (NASDAQ: ZS).
A full transcript follows the video.
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This video was recorded on March 15, 2019.
Chris Hill: Time to get to the stocks on our radar this week. Our man behind the glass, Steve Broido, he's going to hit you with a question. You're up first, Ron, what are you looking at?
Ron Gross: I'm looking at Rollins, ROL. Pest and termite control company. Really steady performer. Delivered 51 straight quarters of increased revenue and earnings. Largely a recession-proof business. More than 80% of sales are recurring. Now, they're an acquirer, a serial acquirer of companies. They acquired 38 companies in 2018. But they've got a rock-solid balance sheet with no debt. Constantly increase their dividend: 17th straight year that Rollins has raised its dividend by at least 12%. Yield is only 1%, but the stock is up over 200% over the last five years.
Hill: Steve, question about Rollins?
Steve Broido: Who's the money pest? Is it termites?
Gross: [laughs] Termites are a nice, recurring revenue stream because you do not want your house infested by termites.
Hill: Jason Moser, what are you looking at?
Jason Moser: Taking a look at LivePerson, ticker LPSN. This company seems like it's getting its second wind here. The business is focused on building out its AI empower platform to enable what they like to call conversational commerce, essentially brands partner with a live person to then reach out to their customers via places like their own websites, WhatsApp, SMS text, and whatnot. As a little extra here, on Monday's Industry Focus, we've got another fun Between Two Fools interview with founder and CEO of the company, Rob LoCascio. We talked about what the future holds for the company and a lot more. Tune in on Monday.
Hill: Steve, question about LivePerson?
Broido: Are there any universal findings this company is finding from their engagements with customers?
Moser: It's interesting, in the interview I had with Rob, it seems that we've really hit this peak with social media. He's calling a lot of those folks out. They kind of have to get their ducks in a row working on things like privacy and the influence that they have over the world.
Hill: Jeff Fischer?
Jeff Fischer: Zscaler. Do y'all know that company?
Gross: Never heard of it!
Fischer: Alright, good.
Moser: Well, I've heard of it.
Gross: I've never heard of it.
Fischer: [laughs] Ticker is ZS, $8.5-billion company selling security in the cloud. Right now, companies have a stack of security. Security for internal software, for accessing the internet, et cetera. This blankets your whole enterprise with security that you can get through the cloud from them. The stock came public one year ago, almost to the day. It's doubled since then.
Hill: Steve?
Broido: Can companies like this afford any failures? It seems like, if you're a security company, just one mess-up and you're done.
Fischer: You know, I would think that, but companies bounce back from it if they handle it right.
Hill: Three very different businesses. Steve, you have one you want to add to your watch list?
Broido: I hate termites, but I love Rollins!
Gross: Whoo-hoo!
Chris Hill has no position in any of the stocks mentioned. Jason Moser has no position in any of the stocks mentioned. Jeff Fischer has the following options: short April 2019 $60 puts on Zscaler, Inc. 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 Zscaler, Inc. The Motley Fool recommends LivePerson and Rollins. The Motley Fool has a disclosure policy.
