In this segment of the Motley Fool Money podcast, host Chris Hill asks Million Dollar Portfolio's Jason Moser, Supernova and Rule Breakers' David Kretzmann, and Motley Fool Hidden Gems' Andy Cross about the companies they have their eyes on this week and why: restaurant and entertainment chain Dave & Busters (NASDAQ:PLAY), long-distance health-care provider Teladoc (NYSE:TDOC), and freight rail giant CSX (NASDAQ:CSX).
A full transcript follows the video.
This video was recorded on Oct. 13, 2017.
Chris Hill: Let's get to the stocks on our radar this week, and Steve will hit you with a question. David, you're up first. What are you looking at?
David Kretzmann: I'm going with Dave & Buster's, ticker is PLAY. This is part restaurant, part sports bar, they also have arcade and games, which now make up 57% of their total sales. That's a diversified business, and those arcade games are high margin as well. They have 100 stores right now. Management thinks they can open up 200 stores in North America in the coming years. So, still some expansion opportunities there. The stock has come down after they last reported earnings a couple of months ago, even though they raised their guidance for revenue and earnings. Like a lot of restaurants, they're lowering their same-store sales guidance, their comps guidance. But now, the stock is trading for a P/E of about 18X, a reasonable multiple. Still opening new stores and growing sales and earnings. So, I think it's worth a closer look.
Hill: Steve, question about Dave & Buster's?
Steve Broido: I'm actually going to Dave & Buster's for my kid's six-year-old birthday party. My question is, is this for kids or adults? I don't know what the store is for.
Kretzmann: I think it's a little bit of both. Hey, everyone eats, everyone plays some games. Mix it up.
Andy Cross: Bring your Purell.
Kretzmann: There you go.
Hill: Jason Moser, what are you looking at?
Jason Moser: Taking a look at Teladoc, it's one that I've talked about here before, ticker is TDOC. Talking this week to my guy Rory over at Rubicon about this one. This is the internet healthcare provider. They're basically taking healthcare to the internet, making it a little bit easier to deal with than having to go into the office. They made a recent acquisition of Best Doctors, which I think is going to be very complimentary to their business, as it adds a lot of value to their network of providers. A small but growing company, a lot of value in the network that they're growing, they're scaling healthcare, adding efficiency and privacy to a system that is just in dire need. I think all of this kerfuffle here with the healthcare questions we're reading about this week might present an interesting opportunity for the stock.
Hill: Steve, question about Teladoc?
Broido: Is there an opportunity in emergency areas, like Puerto Rico, for example, where there's no electricity? And perhaps Teladoc could serve some medical needs there?
Moser: I think there's no question about that. And that really is, I think, the attraction of this business. You're taking a network of providers and basically giving them the entire world, thanks to the internet.
Hill: Andy Cross, what are you looking at?
Cross: CSX, the third-largest railroad company here in the United States, reports earnings on Tuesday. New CEO, Hunter Harrison, who came in in March under great fanfare, a huge pay package, did wonders at Canadian Pacific and Canadian National, to turn around CSX. Stock reacted very positively. The company has been under a little bit of fire recently because some of the operations haven't worked as smoothly and some customers are starting to complain late cargo. So, I want to hear what he is saying specifically about what he's doing to fix some of those issues.
Broido: We're hearing a lot about autonomous driving. Why aren't trains autonomous? It seems like they have very little turning to make. It's one track, can't they be automated?
Cross: That's very true, and that will likely be a push going forward. The difference is, the person driving the train relative to a person driving a car is a much smaller part of the operations and insuring.
Hill: Three stocks, Steve, do you have one that you want to add to your watchlist?
Broido: I'm literally going to Dave & Buster's, so I'm going with Dave & Buster's.
Andy Cross has no position in any of the stocks mentioned. Chris Hill has no position in any of the stocks mentioned. David Kretzmann owns shares of Canadian National Railway. Jason Moser 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 Canadian National Railway. The Motley Fool recommends CSX and Dave & Buster's Entertainment. The Motley Fool has a disclosure policy.