In this segment of the Motley Fool Money podcast, host Chris Hill asks Motley Fool Hidden Gems' Abi Malin, Million Dollar Portfolio's Jason Moser, and David Kretzmann of Rule Breakers and SuperNova about the companies they're most intrigued by this week, and why: avocado specialists Calavo Growers (NASDAQ:CVGW), wellness-services software maker Mindbody (NASDAQ:MB), and home security and connected-device player Alarm.com (NASDAQ:ALRM).
A full transcript follows the video.
This video was recorded on Jan. 5, 2018.
Chris Hill: All right, let's get to the stocks on our radar. Jason Moser, you're up first. What are you looking at?
Jason Moser: This week, I was talking with my guy Rory in Ireland, works with Rubicoin. We were talking about Calavo Growers, CVGW. They are one of the leading distributors of avocados. In this age of avocado toast, Chris, I mean, everybody loves avocados. Chances are, if you buy an avocado from the store, it's coming from these guys. No one likes it when you hear about a shortage of avocados. To me, it's a profitable business, they're cash flow positive. It's a little small cap. I don't know if it's on your radar in Hidden Gems, Abi, but we should probably talk about it some more.
Hill: Steve, question about Calavo Growers?
Steve Broido: Is guacamole overrated or underrated?
Moser: Oh, you can never get enough guacamole, Broido. It's so underrated. And the beauty of it is, in my house, I'm really the only one that genuinely loves it, so I get it all.
Hill: Oh, that's a beautiful thing. Abi Malin, what do you have?
Abi Malin: I think right in time for New Year's resolutions and being healthier and active, a stock I'm thinking about on my radar this week is Mindbody, ticker MB. They're a business software built specifically for that health and wellness market. Things like spas, fitness studios, yoga studios, massages, haircuts, all of the above. They help their clients manage logistics, including consumer-facing things like websites and apps and appointment scheduling to back-end tasks like payment processing and arranging staff schedules.
Hill: Steve, question about Mindbody?
Broido: It seems like the first quarter of any year is always very critical for health companies. With the cold weather, is there risk there?
Malin: I don't think so. I think part of their mission, especially, is that fitness is a habit and routine. I think, hopefully, while you see a new influx of people right at the new year, I hope that builds habits.
Hill: David Kretzmann, what do you have on your radar?
David Kretzmann: I'm looking at Alarm.com, ticker ALRM. This is a company that was founded about 15 years ago focused on home security systems, but they're increasingly becoming the platform for connected devices, whether it's connected doorbell, video camera, thermostat, things like that. They already served over 5 million subscribers in the U.S. They sell through over 7,000 service providers. Increasingly a subscription-based business with high retention rates. I think there's a lot to like.
Hill: Steve, question about alarm.com?
Broido: What percentage of companies like alarm.com have customers that never use the products? I mean, I subscribe to alarm.com, but I don't turn the alarm on. I'm busy. I'm not saying this personally, of course.
Kretzmann: [laughs] Of course.
Broido: We're heavily fortified at my house. [laughs] But what percentage of the people that use the services just don't use them?
Kretzmann: I don't know the exact percentage, but they are increasingly looking at the data to find, what is the optimal engagement to keep people retained on the platform.
Hill: Three stocks. Steve, you got one for your watch list?
Broido: I think I'm going with the health-related Abi choice.
Abi Malin has no position in any of the stocks mentioned. Chris Hill has no position in any of the stocks mentioned. David Kretzmann has no position in any of the stocks mentioned. 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 recommends Alarm.com Holdings and Mindbody. The Motley Fool has a disclosure policy.