In this segment of the Motley Fool Money podcast, host Chris Hill asks Million Dollar Portfolio's Jason Moser and Matt Argersinger and Total Income's Ron Gross about the companies they have their eyes on this week and why: gene-therapy hopeful Sangamo Therapeutics (NASDAQ:SGMO); pet health specialist Idexx Laboratories (NASDAQ:IDXX), and industrial REIT Stag Industrial (NYSE:STAG).
A full transcript follows the video.
This video was recorded on Nov. 17, 2017.
Chris Hill: Let's get to the stocks on our radar. Our man behind the glass, Steve Broido, will hit you with a question. Ron Gross, you're up first. What are you looking at this week?
Ron Gross: Stevey, hang on to your hat here, ready? Sangamo Technologies, SGMO, a biotech focused on gene therapy which will one day allow doctors to make changes to DNA to cure previously incurable diseases. This last week, for the first time ever, they tried to technology in a human patient to try to cure Hunter's disease. We'll have to see if that ends up being successful or not. Obviously, a very risky stock. A lot of companies exploring gene therapies and there's a lot of different ways to make changes to DNA. If you're like me and you want to participate in this kind of investment, you might want to take a basket approach and buy more than one.
Matt Argersinger: Ron is talking biotechs!
Hill: I'm stunned.
Gross: I'm a shareholder of this company.
Jason Moser: Someone switched out Ron Gross for David Gardner when we weren't looking.
Argersinger: Yeah, who is this guy?
Hill: Steve Broido, question about Sangamo Technologies?
Steve Broido: When I hear "waiting for FDA approval" I want to run for the door, because it seems like so many businesses are just waiting for that critical FDA approval, and then everything will be great. Should I think differently, Ron?
Gross: No, you're right. That's why biotech is so risky. You have to make sure they have the cash to succeed and stay around a long time. And that's why I advocate a basket approach. Buy a bunch of these.
Hill: Jason Moser, what are you looking at?
Moser: Guys, I love my dogs, that's why I'm going with Idexx Laboratories this week, ticker is IDXX. Their primary focus is on the U.S. pet diagnostics market, focus on companion animals primarily, so cats and dogs mostly. We all know the market trends there. They have a very attractive razor and blade model where they get their equipment in veterinary offices around the country and then sell the consumables that go with that equipment. They hold about 70% of the market today, and a big investment in growing their direct sales team, with a focus on higher levels of service to compete with Mars, which owns VCA, Andec, and Banfield, among others. According to my vet, those investments are working. He is an Idexx customer, and seems to be very happy with the service. We've got it on the watch list in MDP, and just waiting for the right price.
Hill: Steve, question about Idexx Labs?
Broido: Is there a clear tie in with an insurance provider? So, you buy insurance before any of the testing gets done, so you know you're covered?
Moser: No, and that's really the attractive part about this market. The pet care business is really a cash business. There are pet insurance plans, but those revolve around catastrophic type events. General health and well-being of your animal, that's just a cash business.
Hill: Matt Argersinger, what are you looking at?
Argersinger: I'm looking at STAG Industrial, ticker is STAG. I'm adding it to our watch list in Million Dollar Portfolio. STAG is a real estate investment trust. It owns more than 300 properties, primarily warehouses, distribution centers, light industrial buildings. You kind of see where I'm going here. If you're looking to play the e-commerce trend and you're worried about the shifting retail landscape, this is one way to bet on the growth of omni channel distribution. I think it's a great little business. You get a 5% dividend yield, as well.
Broido: Is that dividend going up or down in the next year?
Argersinger: Oh, it's going up. It's going up, Steve.
Hill: STAG Industrial, Idexx Labs, Sangamo Technologies. Three companies that really aren't household names, Steve. What do you think?
Broido: I do like me some dividends, I'm going STAG.