On this episode of Motley Fool Money, host Chris Hill together with Motley Fool analysts Jason Moser and Ron Gross hit on some of this week's biggest market stories. The Fed cut interest rates, and jobs numbers looked great, but investors shouldn't overthink the big stuff when it comes to their portfolios. Apple's (NASDAQ: AAPL) most recent quarter hammered home that iPhones are a smaller part of the story. Cereal might be so yesterday, but Kellogg's (NYSE: K) snacks division is doing great. Also, highlights from Shopify (NYSE: SHOP), Spotify (NYSE: SPOT), Procter & Gamble (NYSE: PG), Under Armour (NYSE: UA) (NYSE: UAA), Pinterest (NYSE: PINS), Square (NYSE: SQ), and Beyond Meat (NASDAQ: BYND). And, as always, the analysts share some stocks on their radar.
On the back half of the show, The Motley Fool's resident retirement expert Robert Brokamp chats with Chris about, yes, retirement. Learn some alarming retirement trends, some tips for saving enough, advice about college spending, and more.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.
This video was recorded on Aug. 2, 2019.
Chris Hill: It's the Motley Fool Money radio show! I'm Chris Hill. Joining me in studio this week, senior analysts Jason Moser and Ron Gross. Good to see you as always, gentlemen! We've got the latest earnings from Wall Street. Retirement expert Robert Brokamp is our guest. And as always, we'll give you an inside look at the stocks on our radar.
But we begin once again with the big macro. This week, we got the jobs report for July. Unemployment rate stayed at 3.7%. The fed meeting resulted in a rate cut of 0.25%. And Jason, we had more talk of tariffs and the trade war with China. I'm curious, through all of this noise -- I'm not saying there's not some substance there -- what do you focus on as an investor? I'm guessing it's not necessarily, say, for example, the 0.25% rate cut from the Fed?
Jason Moser: Well, there's a lot to digest there. I think it's a good question, what do you make of it all? For me, we talk often about with the interest rate environment being so low and the stock market being the only place to be. For me, it all comes back to the consumer. With everything that's going on, a lot of this comes back to the consumer. I wonder where we go from here. With unemployment rates so low -- clearly, a lot of people are out there working, yet you look at wage growth, and that's really a problem. A lot of people are working, but they're not making a lot of money. And we are in an economy right now, where it's really easy to do a lot of stuff for pretty cheap, with the exception of a few things -- housing, healthcare. Those are two things right there. You think of housing and healthcare, education being a third. Those are areas that are becoming prohibitively expensive for a lot of people. And in the face of consumers that are facing a little bit more of a challenging time, I wonder if there's not a disconnect there. We heard a lot of the big bank CEOs talk about feeling good about the consumer. I feel like that's backward looking. I feel like if you look at it going forward, there's some challenges on the horizon for the consumer that could end up playing out on the economy a little bit more quickly than we imagined.
Ron Gross: For individual investors, I think for the most part, you have to ignore most of this macro stuff. We like to talk about it on the show because that's what we do each and every day. But for the most part, if you buy strong companies that you think have a bright future, it's not going to matter whether an interest rate is 0.25% higher or 0.25% lower, or whether the unemployment rate just dipped to 7% from 7.2%. None of that really matters. You have to realize that the economy will ebb and flow. We do go into recessions periodically, then we do move into growth mode periodically. The things you want to see are an independent Fed. You don't want the Fed being political, you want them to make monetary policy that's in the best interest of the economy as a whole, and not subject to any political whims. And then, as long as we buy good companies and hold them for long term, I think it all works out.
Moser: Yeah, I do think that's a good point to reiterate. That's the idea of business-focused investing. We like to sit and talk about this stuff, but we're nerds, let's face it. We can talk about this stuff all day long.
Gross: Speak for yourself!
Moser: It does come back to the idea that business-focused investing is meant to be able to put this stuff aside, to make it not a part of the story when you're taking that longer-term approach. So, as the economy ebbs and flows, like Ron's talking about, these businesses maybe ebb and flow with it, but over long periods of time, good businesses are good businesses and investors benefit from owning them.
Hill: Let's get to earnings. We'll start with an e-commerce stock hitting a new all-time high. No, not Amazon!
Gross: [laughs] I'm sure will mention it somehow.
Hill: We're talking Shopify. Second quarter revenue for Shopify grew nearly 50% compared to a year ago. Ron, what do you think?
Gross: I think it's one of those ones I don't own! Incredible numbers, really. Continue to put up really, really incredible growth numbers. Revenue up 48%. The gross merchandise volume that flows through them up 51%. Subscription revenue up 38%. These are very, very strong numbers. Shopify now facilitates approximately 5% of all retail e-commerce sales. That's placing it third -- behind, yes, Amazon and eBay. They're expanding their service offerings to continue to drive growth. That helped their merchants solutions revenue to be up 56%.
Now, they do remain unprofitable. And as I am wont to say often, profits do matter at some point. At least, let's hope they do, for rational investors. But they're continuing to spend heavily for growth and for expansion. We'll let them slide for now in terms of not bringing anything down to the bottom line. But they did increase their revenue guidance. That also came with increased operating loss guidance. So, no profits anytime soon, but really impressive numbers,
Hill: Shares of Apple down a bit this week despite third quarter profits and revenue coming in higher than expected. Jason, the iPhone revenue continues to fall. I'm wondering how big a concern you think that is.
Moser: This wasn't one of those who's your daddy quarters. We're used to Apple bringing the noise quarter in and quarter out. This was a bit more subdued. But to your point in regard to the iPhone, it now is not the majority of revenue. As silly as this may sound, I think that's actually a good thing, because we were headed there anyway. This was exactly the quarter that Apple needed to show us they can continue this narrative of becoming something more than a just phone company. They're doing good things with wearables, with services, but it's not all pinned on one particular product or service. Air Pods are playing their role, the Apple Watch is playing its role. Apple Music, cloud, all that stuff is playing its own little role. That's good. Phones are obviously still going to be a big part of the story. We're talking about 5G, that's a nice catalyst. Soon, we'll be talking about 6G, and that'll be another catalyst.
I was really excited to hear all the talk about augmented reality on the call. That is something they're investing a lot in. The ARKit version 3.0 is the dominant platform out there, and Apple is doing some really cool stuff with it. For example, google the Apple AR art exhibit. They're doing an augmented reality art exhibit where you can sign up, check out any one of their stores worldwide. It's a clever little way they're utilizing the technology. I think that's a sign of things to come in regard to that.
The one area I'm probably not as big on, I think Apple Card and Apple Pay, they're fine, they're nice engagement for device owners there. They're just not meaningful parts of the business. I would probably encourage investors to temper their expectations there.
But all in all, I think, again, it was exactly the quarter they needed to continue the conversation.
Gross: And they've got this incredible war chest of cash, which allows them to pay dividends, buy back stock, return lots and lots of capital to shareholders consistently, year after year, and allows them -- if they want -- to make either tuck-in acquisitions or perhaps big ones. It could be bringing semiconductors and chips in-house, or acquiring whole other business lines. And let's hope they don't waste that money, as sometimes companies tend to do for the sake of growth. But I think that war chest is a competitive advantage.
Moser: Yep. And they did do that. They made that acquisition, they'll be wrapping that up with Intel's modem chip division there. That's basically a 5G play. Bring that in, you make yourself a little bit more vertical there, get a lot of intellectual property in the process. That'll be something where, I feel like, they'll realize some good returns from that investment.
Hill: Pinterest's loss in the second quarter was smaller than expected. You pair that with Pinterest growing its base of monthly active users. Shares up more than 20% on Friday, Ron.
Gross: It's really impressive!
Hill: It really was!
Gross: They only went public back in April, if you recall, at $19. Here we are around $34. That's pretty impressive! As you said, they beat expectations. Revenue was up 62%. That's a huge number. Monthly active users up 30% to now 300 million globally. Global average revenue per user -- ARPU, if you will -- up 27.5% to $0.88. Now what's interesting, though, is international ARPU is only at $0.11 vs. U.S. ARPU, which is $2.80. So, one has to keep an eye on international. Is that business even worth focusing on if numbers are going to be that low? U.S., obviously, much more robust. The company is still not profitable, but they did raise revenue guidance.
Hill: Shares of Square down more than 15% on Friday. Jason, second quarter revenue looked good, but Square's guidance definitely spooked a few people on Wall Street.
Moser: Yeah, it spooked them because typically, when they turn on these types of results, Wall Street's expecting them to raise guidance a little bit, and they didn't do that this time. They didn't ratchet guidance down, either. They just left everything status quo. Hey, the market being a little irrational, go figure. One of the great things about this business is, I think it's becoming more apparent the two-sided effect that it has -- it's not only helping out sellers, but it's helping out buyers as well. We saw strong results. Again, when we talk about gross payment volume going through their network, $26.8 billion. That was up 25%. I always like to compare this to PayPal's numbers because it gives you some context. PayPal's total payment volume was $172 billion. Considerably higher. I think that shows a lot of opportunity there for Square. But again, I talked about the two-sided effect there with not only sellers but buyers, talking about the Cash app. The Cash app drove $135 million in revenue for the quarter. That's essentially up from nothing just a few years ago. We're seeing a lot playing out there with the network they're building on the buyer and seller side. A lot of attention there with the sale of Caviar. I have to say, I love the fact that they did this because while Caviar is a neat business, I guess it's the lower-margin business of their entire model anyway.
Hill: Right. We're not talking about the delicacy.
Moser: Yeah, we're talking about the food delivery app. It ultimately doesn't go in line with the rest of the business. I think it took away from focus, it took away from investing those dollars in the wisest way. So, to see them sell that off, I think makes the most sense. Let's put some context in here for listeners as far as this drop and share price today. Last quarter, Square shares closed at $73.62 the night before earnings. The next day, the stock closed at $67.74, and we saw it hit $62.39 cents in subsequent days, all based on the same exact thing here -- guidance that perhaps didn't quite meet up to expectations. They're not profitable yet. They're getting there. But when you have a stock that's not based on fundamentals, this volatility happens. Still a very good business, I still own it myself.
Hill: Kellogg is best known for its line of breakfast cereals, but it was the snack division that drove second quarter results, pushing shares of Kellogg up nearly 10%. Meanwhile, Procter & Gamble hit an all-time high this week after a strong fourth quarter report. P&G also raising guidance for 2020, Ron.
Gross: I think P&G is the stronger story here. Beat expectations. Organic sales up 7%, strongest in 13 years. Strong demand for some of their beauty products. Organic sales in all of 10 of P&G's global categories grew. Price hikes really were important here. That's part of their new strategy to help offset increased freight and raw material costs. Gross margins widened. Excluding items, EPS was up 17%.
Now, they did take a big, whopping $8 billion charge in the Gillette business. I think the writing was on the wall for some time about that. Obviously, the shaving business is not what it used to be. Lots of competition out there at cheaper price points. But overall, a really strong quarter. That stock is up 26% this year.
Hill: It's nice for Kellogg shareholders, because the narrative for so long has just been about the steady decline of breakfast cereal. So it's nice that the snack that pulling its weight. But Procter & Gamble, you think about this company as this solid blue chip -- it's up more than 40% over the past year! This is like a growth stock!
Gross: [laughs] They've done a great job of getting rid of so many of their product lines that just weren't getting it done, then moving to a strategy of, we're going to stop the discounting strategy, we're actually going to raise prices when we need to because our margins are demanding it, and if we don't do something, our profitability is going to continue to wane. It's all worked out nicely.
For Kellogg's, they're doing a good job, too. It's not as robust. Net sales up 3%, for example. If you recall, they sold their Keebler biscuit business for about $1 billion back in April. But they are spending money, conversely, on some selective acquisitions to fuel some growth. And their earnings were pretty solid, up 8%.
Moser: I've heard the word cereal too many times. I'd feel remiss if I didn't offer my opinion on a recent cereal that I tried. I was out of town. I got back. I found out my daughter bought the Sour Patch Kids cereal.
Hill: Oh, my!
Moser: On the face of it, I was like, "I can't imagine that's good!" I tried a bowl. You know what? Not half bad!
Moser: A little bit sour, then sweet. They may be onto something.
Hill: That sounds like a stock that goes into a quarterly report with super low expectations and then beat by a penny.
Moser: Maybe that's it. I don't know if it's first on the grocery list for me. I liked it better than I thought I would have.
Hill: Shares of Under Armour down more than 20% this week. The sports apparel company lost money in the second quarter and lowered guidance in North America. Jason, Nike had challenges in North America and turned it around. Under Armour is still having them.
Moser: Chris has been beside himself all week with this one. I get it. We were talking about this, you see Under Armour stuff everywhere, yet the stock is in the tank. The disconnect here is, Kevin Plank made a bad business decision a little while back in trying to raise inventory levels to get more stuff to more people more quickly. It didn't work out. Now, I think he's atoned for that somewhat. He has some checks in place to get the business headed back in the right direction, namely in COO Patrick Frisk. But to give you some numbers around this, we talk about North America sales. This year, the first two quarters, they're down 3%, down 3%. A year ago, it was flat and up 2%. Inventory, though. I think this is really interesting. You look at inventory, this quarter was down 26%. Last year same quarter, it was up 11%. First quarter this year, inventory was down 24%. A year ago, it was up 27%. So they're doing the right things to get the financials back in order. It's just going to take some time.
Something to consider -- Lululemon, a company we gave a really hard time over the past several years, is a $24 billion market cap now, with $3.4 billion in sales. Under Armour is a $9 billion market cap with $5.2 billion in sales. You can see there is a big discrepancy there, and it's on the earnings side. Under Armour can turn this around. If they do, I think there are going to be a lot of nicer days ahead for investors.
Hill: Beyond Meat announced second quarter results as well as a secondary stock offering. Shares of Beyond Meat felt 22% this week. Ron, this soon, we're going with a secondary offering?
Gross: Yeah. Forget about the stock for a second, let's just talk about the business. Really getting it done. Net revenue up 287% as they continue to move into restaurants and other retail chains. They're actually kind of profitable if you take out non-recurring items. For example, adjusted EBITDA was about $6.9 million. The company, for all its high-flying-ness and all its newness, is actually growing and is making money. Adding partners like Dunkin' Brands, for example a Beyond sausage breakfast sandwich being tested. Really interesting.
Now, they wanted to make room for some of their former investors and the CEO, for example, to get liquid. So, they announced a secondary offering at a pretty severe discount to where the stock price was. That's why you saw the stock take that hit. Not just regular dilution, but you price it at a discount, the stock's going to adjust to where you priced it. But the stock has rebounded. Not all the way, but a significant amount since then. That'll give the company some extra money to use for growth. Short interest remains pretty high on this one because, even though they're slightly profitable, the valuation is pretty enormous.
Hill: Spotify's second quarter report featured higher revenue, more paid subscribers, but Jason, considering this is the market leader in streaming music, this stock really hasn't gone anywhere since they went public in early 2018.
Moser: It's had a nice interesting range there. But you're right. It's where it started. I think the bottom line for investors is that streaming is the future. Industry data shows clearly that physical music is on the way out, and digital and streaming is the way it's going. I think that Spotify is building the entertainment platform of the future where this is concerned. A lot of forward thinking there, a lot of early bets in things like podcasts and whatnot are starting to pay off. Like you said, users grew considerably. 232 million. They have premium subs of 108 million now, up 31%. We talk a lot about this with Disney's new streaming services. I think Spotify did a good job on the pricing side here because they have some room to raise prices as things go forward. When you see Sirius making that acquisition of Pandora, that was a very defensive move. Nobody even listens to Pandora anymore, I don't think. So, I think Sirius could be in a little bit of a spot of difficulty there as streaming continues to take over.
If I'm going to ding Spotify for one thing, it is the share repurchases. They bought back around $187 million worth of shares over the quarter. Just invest that money elsewhere. Don't buy back more shares.
Hill: When it comes to retirement, do you want solid advice or do you want sizzle? That was the opening line of the very first issue of The Motley Fool's Rule Your Retirement newsletter, which debuted 15 years ago this summer. Joining me in the studio is the author of that line, The Motley Fool's resident expert on retirement, certified financial planner Robert Brokamp. Thanks for being here!
Robert Brokamp: Such a pleasure! Such a great line, don't you think? Huh? [laughs]
Hill: I do think it's a great line! There are things about retirement and money in general that I want to get to. But I do want to start with this first issue that you wrote 15 years ago, because it leads to a part of your past that I had forgotten, which is that there was a brief stint of time that you were on Wall Street, where sizzle was very much part of the culture.
Brokamp: Yes, it's right up there with me being a seminarian and being a pole vaulter that people find surprising to know about me. But yes, there was a time where I wore a suit every day, and went into a branch of Prudential Securities and was a traditional broker.
Hill: Where did the sizzle part come in?
Brokamp: The sizzle came from, I joined an existing group of guys at Prudential. One of the main guys there was my high school English teacher's husband, who was a great guy. Another guy was a guy I used to play football against in high school, and I went to elementary school with. So these were really good guys. But I did have to go through financial training with Prudential up in New York. We'd learn from the various folks during the day, but at night, we had to cold call people. And one of their lines was like, "You have to provide more sizzle. More sizzle, more sizzle!" And that's where that comes from.
Hill: [laughs] I just like that you went to New York for financial training, but really, a big part of it was just salesmanship training.
Brokamp: That's absolutely what it was. Here's the deal about that whole experience. I was never really taught how to be a good financial planner, how to pick a good investment, what are the principles of asset allocation. I was taught who to contact in the firm for that. My job was to go out and acquire clients and acquire assets.
Hill: Alright, let's get to the financial landscape in America. The last time you were on the show earlier this year, we talked about a couple of troubling numbers in terms of student loan debt, which continues to rise; the number of Americans in the millions who are late on their car payments. When you look out across this country, what do you see that troubles you? I'm assuming those two things are -- certainly, student debt is still very much an issue. Is there anything that you've seen in the last couple of months that you think, "Boy, not a lot of people are talking about this, and this is a legitimate problem"?
Brokamp: To piggyback on that part, it is the debt that Americans have, but particularly older Americans. One of the stats I had mentioned when I was on the show in February -- I don't want to go into much detail on this -- was basically that the debt of folks who are 60 and older is up 84% since 2010. That can hurt your retirement plans in a couple of ways. First of all, it's harder to save money when you owe so much money. But secondly, having debt payments in retirement increases your expenses, which means you have to draw money from your retirement accounts, which increases the chances you'll run out of money, but that also drives up your tax bill. So, it's definitely one of my goals to go into retirement debt-free.
The other thing I would say that is among the biggest mistakes that people make when it comes to retirement is basically retiring too soon. We all know that on average, the typical American is not doing a great job of saving for retirement. Depending on what study you look at, something like 25% of a third of Americans have nothing saved for retirement. According to the Center for Retirement Research at Boston College --
Hill: My alma mater.
Brokamp: That's right, and home of America's oldest collegiate improv group, My Mother's Fleabag.
Brokamp: Something you know about.
Hill: I know a little something about that.
Brokamp: That's right. So, the Center for Retirement Research at Boston College has found that 50% of Americans who retire at age 65 basically have to cut down their lifestyle. They don't have enough saved. The interesting thing about that is, most people are not retiring at 65. Most people are still retiring at 62 or 63. The solution for this really is just working longer. There was a study released last year that found that just working six months longer would have the same impact on your standard of living as if you had saved 1% more over the previous 30 years of your life. That's the power of delaying Social Security, which increases your benefit; you'll have a bigger 401(k) and IRA because it's more years for that to grow, and you'll be putting more money in it; and it's because you're, frankly, going to have a shorter retirement because you've retired later, so you'll end up with fewer years you need to spread your money across.
The bottom line is, in this country, 70 is the new 65 when it comes to retirement. Another study by the Center for Retirement Research at Boston College found that if people in America retired at age 70, around 90% of them would be perfectly fine.
Hill: Really? The compounding is that powerful?
Brokamp: It is that powerful, really. And a big part of it is Social Security. For every year you delay, around between 65 and 70, benefit goes up about 8%. The great thing about Social Security is, it's immune to the ups and downs of the stock market, and the benefit is increased for inflation every year. It really is the perfect source of retirement income. And for every year you can work longer and increase that benefit, the better off you're going to be.
Hill: You recently turned 50.
Brokamp: It is true, yes.
Hill: [laughs] Welcome to the club!
Brokamp: Thank you very much!
Hill: As you get, maybe not close to retirement, but closer to retirement, you've been doing this a while, what has been the biggest shift in your thinking when it comes to your own retirement?
Brokamp: First of all, I have to say I was insanely happy that for years writing about how people who are 50 and older can contribute more to their 401(k)s and IRAs, I'm finally able to do it. Very happy to be able to join that club!
A couple of things. One is related to that previous point of working longer. I know for a lot of people, that's probably discouraging. But the truth is, there's a lot of research that indicates that retirement may not be healthy or even that interesting. The average retiree watches four to six hours of TV a day. Retirees are 40% more likely to become depressed than those who are working. Because a lot of people get purpose from their jobs, a lot of people get social interaction from their jobs, when you retire, it can be isolating. Something like 25% to 40% of people who retire eventually go back to work. Now, half of those people are doing it for money, but the other half is, frankly, they were just bored. When I look at my own retirement plan, what my wife and I have been talking about is, I think we're the type of people who will want to work well into our 70s. But that doesn't mean we want to put off everything that we want to do in retirement. So, we have the classic vision of riding around the country in an RV. So, what we're planning on doing in a few years, once we're empty nesters, is getting an RV, driving around the country, but figuring out how we can do our jobs in an RV.
Hill: Please tell me you're going to video that. I would watch the hell out of that series!
Brokamp: [laughs] Another thing I'll add is, my wife is almost 50, and she's now earning her PhD. She's preparing for a new phase of her career. I think anyone who is not happy with their current job, and the idea of working to their 70s basically makes them feel ill, they should think, what kind of job do I want to do until my 70s? Especially if you haven't saved enough yet. And what do you have to do to get that job? You might be perfectly happy working well into your 70s if you just change careers. My wife isn't totally changing careers, but she's adding a different aspect to it that she thinks is going to make her feel more satisfied with it all.
Hill: Now, as you're planning for this retirement, I don't want to get overly personal, but you're also preparing for college for your children. That is something that a lot of people struggle with to some degree when they are thinking about balancing the financial requirements of paying for children to go to college with putting away money for their own retirement. How should people be thinking about weighing those two things?
Brokamp: By far, the No. 1 thing you should do is take care of your own retirement first. There are so many ways for kids to go to college at a reasonable price, whether it's in-state, community college for a couple of years, or even just going to a regular college, but taking care of a lot of the electives at a community college in the summers. There are lots of ways to cut the costs. Even if you have to take out a loan, it's not unreasonable as long as it follows a good rule of thumb such as, you shouldn't borrow more than the amount you will earn in your first year after college. So, there's ways to go to college if you haven't saved. But if you haven't saved for retirement and you reach your 60s and 70s, you can't take out loans, you can't get a scholarship, you just can't retire. So, it's definitely more important to save for retirement first.
Hill: Obviously, saving for retirement is the No. 1 problem in terms of what a lot of Americans struggle with. After that, what's No. 2 on the list? What's the most common mistake that people make other than just not saving enough for retirement?
Brokamp: I think a lot of people, especially now, when times are good, they take what has happened in the recent past and extrapolate it to the future. Unemployment is very low. I don't think anyone is now thinking about, "I'm worried about losing my job." But everyone should have a plan B, because at some point, there's going to be something that happens that's not as good. You're going to get laid off, something's going to happen to your company, the stock market is going to drop. You may have heard a stat from the Federal Reserve that 40% of Americans couldn't cover a $400 expense. There's a little bit of controversy about how accurate that is, but we do know, the bottom line is, a lot of people don't have a sufficient emergency fund. A very high percentage of people don't have enough life insurance. The majority of people don't have an estate plan, a will and stuff like that. So, I would say, generally speaking, take a little bit of time to think of what could be... I wouldn't say worst-case scenario, but what are some things that could torpedo your financial plan? And take steps now to protect yourself from those.
Hill: Well, and you touched on something that we've talked about before among our colleagues here at The Motley Fool for the last couple of years, which is, you look at the bull market run now in its 10th year, and it can be hard sometimes to remind yourself, "Oh, right, a downturn is coming. It is absolutely coming." In terms of retirement planning, is there a general rule of thumb in terms of a number to, reasonably, if you're looking to project out how your money can grow for the next 10, 20 years, is there a general rule of thumb number we should use?
Brokamp: The way the ups and downs of the stock market really matter to me as a retirement planner is that I am always using retirement calculators to determine whether I've saved enough. The evidence is clear that when you start at a point where the stock market has a high valuation, the returns over the next decade or so are going to be below average. So anyone that uses any kind of calculator to determine whether they're saving enough for retirement, for college, any other financial goal, should assume that the stock market's returns over the next decade -- we don't know what it'll be over the next year or two or three -- will be lower, closer to 5% or 6%, rather than the long-term average of 10% and the 15% we've seen over the last decade.
Hill: As we wrap up, do you ever think about the alternate universe? The alternate universe where you stay on Wall Street? You're great at the sizzle. You stay on Wall Street. I feel like in that universe, you have a lot more money, but you don't look as good as you do. You're probably not as healthy --
Brokamp: [laughs] Thank you very much!
Hill: -- and your soul is pretty empty. That's what I think.
Brokamp: Again, the guys I was working with are such great guys. Really, the one guy who was my high school English teacher's husband -- hey, Joe! -- really was a father figure to me. So, I think I could have been happy. It would have meant that I continued to live in Florida, where I grew up. But I actually am happier here in Virginia. I like the seasons. I like the mountains. I think I still could have been happy. I would have gone to more Tampa Bay Bucs games, for example. But I'm pretty happy being a Fool!
Hill: You can get a weekly dose of Robert Brokamp by listening to Motley Fool Answers, the free weekly podcast from The Motley Fool. He's a certified financial planner. He runs Rule Your Retirement. We love him, and hopefully he'll be working here until he's well into the 70s. Robert Brokamp, thanks for being here!
Brokamp: [laughs] I love you too, Chris!
Hill: Our email address is firstname.lastname@example.org. A question from Eric Davis, who writes, "I just listened to the analysis of Bed Bath & Beyond on another podcast."
Hill: He adds parenthetically, "Sorry, I sometimes listen to non-Motley Fool podcasts."
Gross: [laughs] That's fair.
Hill: "All the positive things they said sounded good, but I have a hard time getting over my personal opinion that this is just a bad business. I'd love to hear your team's thoughts." Ron, what do you think of the business of Bed Bath & Beyond?
Gross: I think we dunk on this company a lot, and for good reason. It's been a tough go with all the competition out there. Certainly Amazon is the big one there. Maybe Jason will disagree, perhaps -- I don't think it's over yet. I think there's a place for Bed Bath & Beyond. You've got three separate activist investors in there, trying to get things done. I think you can shrink the footprint, close underperforming stores, clean up the stores -- the merchandising is horrendous -- have less SKUs, less products offered. And I think there's a place for a profitable Bed Bath & Beyond.
Hill: What do you think, Jason?
Moser: Maybe. I'd probably take the other side of that bet. I do feel like it's a bad business, generally speaking. I think it's just one that's being displaced through time and technology. For investors, there probably is something here in an acquisition or some type of a value-realizing event. The problem is, if you want to jump in there and try to participate as a retail investor on our level, it's very difficult to do so because you have to know something. Otherwise, you're just flipping a coin. And when I get to that point, well, there are a lot of great opportunities out there, so I wouldn't even put this one on my list of consideration.
Hill: Question from Sal, who writes, "I'm looking for a stock suggestion to hold for the future in the segment of auto parts. Research shows that the No. 1 cause for auto repairs is sensors. I believe that as new car sales slow and the increase of autonomous vehicles is on the horizon, a good long-term holding will be in the manufacturers of these auto sensors, if I'm not too late. Do you have any recommendations for stocks to consider?"
Gross: I like how he's thinking there. That makes perfect sense. I think that thesis is a good one. When I think of auto parts manufacturers, four names popped into my head-Advance Auto, O'Reilly, Genuine Parts, and AutoZone. I think AutoZone is probably the better of the four, the better position, certainly the better historically, from both a price perspective as well as an operational perspective. It's only 17X forward earnings, so not even expensive at this point.
Hill: Also, AutoZone has a good track record in terms of buying back their own stock.
Moser: I'll take it in a little bit of a different direction. Check out Nvidia. Nvidia's DRIVE platform, just google that up, and their autonomous vehicle development platforms. They're developing chips that are helping steer -- no pun intended -- that autonomous vehicle movement forward.
Gross: Nice, I like that!
Hill: Alright, before we get to the stocks on our radar, if you're looking for even more stock ideas and recommendations, you can check out our flagship service, Stock Advisor. You'll get stock recommendations from Tom and David Gardner. You'll get their Best Buys Now and a lot more. Go to radarstocks.fool.com. And yes, of course, we've arranged for a nice discount for our dozens of listeners.
Let's get to the stocks on our radar. Our man behind the glass this week, MarketFoolery producer Dan Boyd sitting in. He's going to hit you with a question. Ron Gross, you're up first. What are you looking at?
Gross: I'm going to go back to Waste Management, WM, which really hasn't moved much since I last talked about it. Obviously, a trash removal and recycling company, helping residential, commercial, industrial and municipal customers. A dominant company in a very essential business. Limited outside threats. They have a strong competitive advantage in that they're entrenched in North America's largest network of landfills. They've got organic growth, they've got acquisition-based growth. They've increased their dividends for 16 consecutive years.
Hill: Dan, question about Waste Management?
Dan Boyd: Yeah, Ron, I've got a hypothetical question for you.
Gross: Yes, sir!
Boyd: Let's say somebody is going through your trash. What are you worried about them finding?
Gross: That's interesting, because every time, my wife says, "Shouldn't we be shredding the bills, shredding this and that?" I go, "No, it's fine." [laughs] So now the whole country's going to be digging into my garbage.
Hill: Jason Moser, what are you looking at this week?
Moser: A new company on the radar here. Haven't talked about it much. Teladoc Health -- Mac, that was for you! Earnings out this week for Teladoc, TDOC. Another good quarter. A couple of leadership additions there with Mala Murthy coming on as CFO and David Sides in the position of COO. Rounding that executive team out is a good thing. Strong metrics continue with members and visits growing nicely, resulting in strong utilization. There's some good catalysts on the horizon here as Medicare Advantage comes into play into 2020, which is going to open them up to a very large additional membership opportunity. And then, the CVS and Aetna relationship continues to develop. A lot of positive language in the call there. Lot of things going well for these guys.
Hill: And the ticker symbol?
Hill: Dan, question about Teladoc?
Boyd: Yeah, Jason, what procedure are you not interested in Skyping your doctor about?
Moser: That would probably be something like a hernia operation. I've actually, believe it or not, had a couple of hernia operations. I'm over it. But I feel like you have to be face-to-face. I really want to know he's giving me the appropriate attention.
Hill: You got a stock you want to add to your watch list, Dan?
Boyd: I'm breaking the streak -- no, just kidding, Ron. Sorry, I'm going with Teladoc.
Hill: Alright, Jason Moser, Ron Gross, thanks for being here! That's going to do it for this week's edition of Motley Fool Money! Our engineer is Dan Boyd. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening! We'll see you next week!
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Hill owns shares of Amazon, eBay, PayPal Holdings, Under Armour (A Shares), Under Armour (C Shares), and Walt Disney. Jason Moser owns shares of Amazon, Apple, Intel, Nike, PayPal Holdings, Square, Teladoc Health, Under Armour (A Shares), Under Armour (C Shares), and Walt Disney. Robert Brokamp, CFP has no position in any of the stocks mentioned. Ron Gross owns shares of Amazon, Apple, Nike, Square, and Walt Disney. The Motley Fool owns shares of and recommends Amazon, Apple, Lululemon Athletica, Nike, NVIDIA, PayPal Holdings, Shopify, Spotify Technology, Square, Teladoc Health, Under Armour (A Shares), Under Armour (C Shares), and Walt Disney. The Motley Fool owns shares of Intel and Pinterest. The Motley Fool is short shares of Procter & Gamble and has the following options: long January 2021 $60 calls on Walt Disney, short September 2019 $50 calls on Intel, short October 2019 $37 calls on eBay, short October 2019 $125 calls on Walt Disney, long January 2021 $18 calls on eBay, short October 2019 $97 calls on PayPal Holdings, short September 2019 $70 puts on Square, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool recommends CVS Health, Dunkin' Brands Group, eBay, Sirius XM Radio, and Waste Management. The Motley Fool has a disclosure policy.
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