In this segment from Motley Fool Money, Motley Fool analysts Jason Moser, Matt Argersinger, and David Kretzmann share the companies they have their eyes on this week, and why: Boston Beer (NYSE:SAM), Skechers (NYSE:SKX), and Grubhub (NYSE:GRUB).
A full transcript follows the video.
This video was recorded on April 21, 2017.
Chris Hill: We're going to go to our man, Steve Broido, behind the glass. Also joining us this week, special guest Keith Fredrickson visiting from New York City. [applause] Thanks for coming by, Keith! All right, Jason Moser, you're up for, Steve will hit you with a question. What's on your radar this week?
Jason Moser: Sticking with the health theme, looking at Boston Beer, ticker is SAM.
Hill: [laughs] I'm sorry, the "health theme"?
Moser: Well, it makes you feel good. We've really talked a lot about the headwinds that they've been facing in the craft industry, as more and more craft brewers pop up around the country, and I don't think that threat is abating anytime soon. I expect to see a lot of the same here in this coming quarter with falling depletions, just them trying to figure out new ways to get products out to consumers. It's really difficult in this space when you have so many options, and Boston Beer is in that twilight zone, not quite small enough to be craft and not quite big enough to compete with the big boys. They have to figure out a way to do that. And I actually think Jim Koch, if he's not too proud, has the opportunity here, perhaps, to be the Buffett of craft beer, and start bringing the smaller, regional players in under their umbrella, give them the distribution, give them that capital, the public markets, give these public companies, there could be an opportunity there. But, the earnings slated for Wednesday, it's one we're watching.
Hill: And the ticker symbol?
Hill: Steve Broido, question about Boston Beer?
Steve Broido: Is there a low-end opportunity for them? Is there a PBR somewhere-like opportunity for Boston Beer? I think of them as being very classy beers.
Moser: They are classy. I think, really, the opportunity is figuring out a way to convince those PBR and Bud Lite drinkers why they should be drinking Samuel Adams instead. I think the biggest challenge there, it's going to require a little bit lower pricing, which could play out on the company's profitability, in the near run, at least.
Hill: Do you think they want to buy Juicero?
Moser: [laughs] I would imagine they'll take a pass.
David Kretzmann: Might be a discount.
Hill: David Kretzmann, what are you looking at this week?
Kretzmann: I'm looking at Skechers, ticker SKX. This is a global shoe company, known especially for the casual, work, and walking shoes. They have over 2,000 retail stores worldwide, including 550 in China. They're still working through some of the retail headwinds domestically in particular, but that international business makes up about half of revenue today, and it's still growing. They reported results this week. It was their first $1 billion-plus quarter in terms of sales. They have a strong balance sheet, over $500 million in net cash. And it's just trading at 16 times earnings, so I think the expectations are low. But I think the company might be able to top that.
Hill: Steve, question about Skechers?
Broido: Do you wear Skechers shoes yourself?
Kretzmann: I do. The company is getting into athletic shoes, running shoes in particular, and they have the highest rated running shoes on Amazon and the lowest price point. I'm a happy customer.
Hill: Matt Argersinger, what are you looking at this week?
Matt Argersinger: Well, if you believe all those things I said in the earlier segment about people spending a lot more time at home, then I think we should all be taking a closer look at GrubHub, ticker symbol, appropriately, GRUB. I think most people know that GrubHub enables people to order food delivery from over 50,000 restaurants in over 1,000 cities, and it takes a nice piece of every transaction. The company grew revenue 37% last year and is very profitable.
Hill: Steve, question about GrubHub?
Broido: How does anyone make any money here? It seems like GrubHub gets a cut, the delivery people get a cut, everybody gets a cut here, who's making money?
Argersinger: Middle men are everywhere, Steve, I know. GrubHub does a good job. You're paying for the delivery, you're paying a small portion of the menu cost. Restaurants like it because it builds their business, so they'll make it up in volume in most cases.
Hill: Steve, you can wear your Skechers, walk to pick up a six-pack of Boston Beer, and while that's happening, GrubHub is going to deliver something to your home. Do you have one of these three stocks you want to add to your watch list?
Broido: I might look at Skechers.
Kretzmann: All right!
Hill: If you could have Olive Garden delivered via GrubHub, are you going that route?
Argersinger: There you go!
Hill: I didn't know if the in-restaurant dining experience was part of the attraction of the Olive Garden for you.
Broido: The in-store pick up experience is also delightful.
Kretzmann: As long as you're wearing your Skechers shoes while you pick it up.
Chris Hill has no position in any stocks mentioned. David Kretzmann owns shares of Boston Beer and Skechers. Jason Moser owns shares of Boston Beer. Matthew Argersinger owns shares of Boston Beer. Steve Broido has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Boston Beer and Skechers. The Motley Fool has a disclosure policy.