Earlier this year, The Motley Fool had three talented high school students from St. Albans attend our "Student to Investing Whiz in a Day" program to gain investing and finance skills. "Student to Investing Whiz in a Day" is part of The Motley Fool's commitment both to local education and to charity (the day of educational fun was raffled off as part of a fundraiser). Watch the video below to learn what these young men learned!
A full transcript follows the video.
Gaby Lapera: Hello everyone! Welcome to "MBA in a Day" at The Motley Fool, a special program with local high schoolers. We're taping today on Friday, Feb. 17th, and we're joined by a few young men from St. Albans, a local school. Hi, how are y'all?
Jack Burnett: Doing well.
Robert Gerber: Great.
Lapera: Awesome. Why don't you guys introduce yourselves? We'll start in that corner with the blue mic.
Burnett: Hi, I'm Jack Burnett, I'm a senior at St. Albans. I'm really excited to be here today. It was a pretty great day, I learned a lot.
Gerber: I'm Robert Gerber. I'm a sophomore at St. Albans. I've always had an interest in business and investing, and this has been a pretty great day so far.
Brian Geffroy: I'm Brian Geffroy, I'm a senior with Jack, and I agree with him, it's been a very exciting day and I'm really excited to talk to you guys about what we learned.
Lapera: Awesome, thanks for joining us. Can one of you tell me why y'all are here? How did you end up at the Fool today?
Burnett: Yeah, this started, actually, as part of the Christmas House Tour fundraiser that's done every year for our school to raise money for the faculty and the school in general. This was an auctioned item. David Gardner was gracious enough to put it up, he's a dad of one of our classmates. So, we were lucky enough to win this raffle item, and we're happy to be here.
Lapera: Awesome. Can you tell me who you've met today, some of the things you've learned?
Geffroy: Yeah, we met a lot of different people that have come and talked to us about different parts of investing. We met David Gardner, too, himself, which was really interesting. He really talked a lot about how it's not all luck, and he showed us the numbers. He, over time, was obviously a very successful investor, and he showed us some of the tips he had, like be patient, and don't be sporadic, don't just change your stocks every day, be patient and stick to a three to five year, even a 10-year plan. That was one of the biggest things I took out of that.
Lapera: That's awesome. I know you guys also talk to Buck Hartzell. Did he give you guys any really important pieces of knowledge you'd like to share?
Gerber: I'd say the most important piece of information that, on each slide, he gave what you would hear in the newspaper, what Wall Street's analysis would be, and then he says what a Fool's analysis would be, and how you look for something ...
Geffroy: But not an actual fool, someone who works at the Motley Fool.
Lapera: Don't worry, our listeners are familiar with us, it's Fool, not fool.
Burnett: Capital "f", right.
Lapera: What about you, anything super interesting you learned today?
Burnett: Yeah, Buck was great, talked about not quite contrarian ways to approach these retail stocks in particular, but as a way to look for hidden clues in the statistics on different companies. Beyond that, in the morning, we got an overview of why to invest your money vs. storing it in your mattress or under your bed, there's a lot of stuff that can be done simply by putting stuff into a 10-year plan.
Lapera: Definitely. I think that what you're getting at is the power of compounding interest. Listen, if you listen to Industry Focus, this is something you've heard me harp on time and time again. The earlier you get started, the better off you are, because that compounding interest will have time to work. And you guys are very young. If you guys start investing or saving now, it'll work out way better for you guys in the long run. So, very important question for you guys. Do you like it here so far?
Gerber: Absolutely, I think the work environment is really unique here. I've visited a couple office buildings, but this seems really cool.
Lapera: Yeah, it's a lot of fun. We gave them donuts, that's why they like us.
Burnett: Sign me up.
Lapera: You guys talked a little bit about some of the things you learned from David Gardner and Buck Hartzell. I know that you guys have picked three different companies, each of you have picked one, and I would love to talk to you guys a little bit about them. I'd like to know, why don't we start with Costco.
Gerber: That's me. The reason I chose Costco as a great stock to go after is because it's a very unique company in its approach with discounted and wholesale items. And although it has competitors like Wal-Mart, they don't sell products at the same sort of the bulk level that Costco does.
Lapera: You can't see this unless you're watching the video version of this, but he's throwing a little bit of shade at my friend right here, because I believe you did pick Wal-Mart, right?
Geffroy: Yeah, I did pick Wal-Mart. I disagree. I think Walmart is obviously a very successful company. It's quite arguably the most successful company in America. But there's a lot of problems with both of our models, especially going into the future with e-commerce soon to be the number one way to buy things. I think the wave of the future might not be Wal-Mart and Costco, unless they start to adapt, and that might actually be a segue into the next segment, Jack's company, Amazon.
Lapera: Doing my job for me, man.
Burnett: Yeah, I chose Amazon. While you have Costco and Wal-Mart, Amazon is headed more toward the future in the sense that while e-commerce is growing, right now, it's only 8% of the world's commerce is done online. So, while Amazon might seem like a massive company, they're worth about $250 billion, they can only go up, essentially. They're expanding into all these crazy endeavors, into drone delivery and those creepy Amazon Alexa things that sit in your house and listen to everything you say. It's getting into people's lives through every way, they've started buying up more and more movies and rights for their Amazon Prime movie services. So, really, expanding into everything and growing in almost all possible ways.
Lapera: Awesome. But I know that you guys all picked your stocks for a reason, right? There's a reason you picked Wal-Mart. Why? Why do you think it's a good company? Why is it worth investing in?
Geffroy: I think it's a really good company, just because of how widespread it is and how many stores there are. It has the most supercenters out of all of these types of companies. I thought because of how massive it is, it's --
Lapera: You think it has staying power.
Geffroy: Yeah. I definitely think it could do well in the long-term, because it's not going anywhere. I don't think Walmart will be going out of business any time soon, based on their profits and how much money they make and how much stability there is. They're the largest employer in America. I think it's very stable, and it's a very smart stock to look into. They're not going out of business like RadioShack did, like we talked about earlier.
Lapera: Yeah. And Wal-Mart also has a couple of interesting advantages in that they do prescription sales. They're selling medicine, which is something that Amazon can't really do. And who knows, maybe that'll change. But they definitely have a business model that's a little bit outside of where Amazon is operating. Costco.
Gerber: The reason I chose Costco primarily is because it's very much like Wal-Mart, except for the fact that there's a constant enrollment and renewing of memberships. That's a steady stream of earnings, in addition to their bulk wholesale model of advertisement and scaling.
Burnett: And talk about a loyal customer base right there. Most people who go to Costco keep going back for everything.
Lapera: Absolutely. Another really interesting thing about Costco is they're a very ethical company. I think a lot of investors like them for the way they treat their employees.
Geffroy: Yeah, people don't think that about Wal-Mart in the same way. I just read about the amount of money that the Waltons have and how little they donate to charity, could bring a bad light on the company.
Lapera: Absolutely. If ethics is something you're concerned about, maybe something to think about when you're trying to choose between Costco and Walmart. What about Amazon? We know you think it's great, we know they also think it's great.
Burnett: [laughs] Yeah. I mean, again, the amount of potential it has to grow in all facets, it's looking like Alphabet is expanding into new endeavors, and looking into alternative ways to address these things, like the idea -- I'm a little skeptical of delivering groceries by drone when you could just drive them there. But, expanding into these what can seem like gimmicky products eventually, you have the potential to turn into something massive.
Lapera: Yeah, by pushing the boundary, maybe they'll find the next new thing. Moment of truth, are you guys actually going to invest in any of these companies?
Geffroy: I think I'll probably be investing in Amazon, he just chose it before I did.
Lapera: What about you?
Gerber: I probably will invest in Costco, just because I haven't already, and also in Amazon because of the potential.
Burnett: There you go.
Lapera: And you're obviously sold on Amazon.
Lapera: That will be really interesting because Amazon's stock price is creeping up. Let me see, I can see how much it is right this second.
Burnett: $845 a share.
Lapera: Yep, $844.35 right this second at 3:56 p.m. eastern time. I just saw an article the other day that said, will Amazon break $1,000? So, you believe the stock is on the rise, right now might be a cheap time to buy it. And that's a good concept to think about, too. Stocks can be cheap, like actually cheap, like $1, or they can be relatively cheap like Amazon at $844. It's not cheap, no one is saying $844 isn't a lot of money, but it's maybe a lot less than it will be in the future. What about you, Rick? Did any of them convince you on a stock?
Rick Engdahl: I already own Amazon and Costco and, sorry, Wal-Mart's not on my list.
Gerber: Oh well.
Lapera: OK. As usual, people on the program may have interests in the stocks they talk about, and the Motley Fool may have recommendations for or against, so don't buy or sell stocks based solely on what you hear. Contact us at Fool School at fool.com, or @TMFFoolSchool on Twitter if you have any questions. Thank you, again, to Rick, today's awesome producer, and thank you guys for joining us. It was great to have you here.