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're most intrigued by this week, and why. Their picks: wireless tower REIT American Tower (NYSE:AMT); mortgage software leader Ellie Mae (NYSE:ELLI); and a short opportunity -- car parts player Advance Auto Parts (NYSE:AAP).
A full transcript follows the video.
This video was recorded on March 9, 2017.
Chris Hill: Time to get to the stocks on our radar. We'll go to our man on the other side of the glass, Steve Broido, to hit you with a question. By the way, also, sitting in with Steve on the other side of the glass this week, it's the Core family up from Richmond, Virginia. Linda, her sons Spencer and Will. Thanks so much for hanging out with us. Ron Gross, you're up first. What are you looking at this week?
Ron Gross: I've got Amazon -- no, I'm just kidding. I have American Tower, AMT. They're a real estate investment trust. One of the largest owners of wireless communications towers in the world. Critical part of the infrastructure of our digital revolution. Great unit economics, great yield and dividend growth. They've increased their dividend for the past 23 consecutive quarters. Dividend currently stands at 2.1%, and the stock looks good.
Hill: Steve Broido, question about American Tower?
Steve Broido: Well, I'm a shareholder, and my question is, who are their biggest competitors? Because American Tower has been a rockstar performer.
Gross: I would say, the two other big guys are Crown Castle and SBA Communications. Those three combined make up a bulk of the industry.
Hill: Jason Moser, what are you looking at this week?
Jason Moser: Talking about Ellie Mae, ticker ELLI. As we wrap up earnings season, Ellie Mae chalked up another good quarter. Their software platform Encompass now has over 242,000 users. I like the dual revenue stream in subscriptions and transactions. An example of this: in the quarter, revenue for the company grew 17% in the face of mortgage origination volume actually falling 19%.
Something that caught my interest the other day, and I can't believe I have to do this, but, Amazon -- yes, Amazon -- is looking to hire someone to lead their newly formed mortgage lending division. So, I'm not connecting the dots here, Chris, but I can't help but think about the possibilities, as Ellie Mae is moving their platform over to Amazon Web Services. Maybe there's a partnership in play here in the future. I just don't know.
Hill: Steve, question about Ellie Mae?
Broido: I was reading something from Schwab about adjustable rate mortgages. Do you have any interest, if you were buying a house today, in an adjustable rate mortgage? Does it make sense, do you think?
Moser: It makes sense if you know that you're going to be in that home for a short period of time, or you know you're going to be able to refinance. But I sure do like the certainty of a low rate 30-year deal.
Hill: Matt Argersinger, what are you looking at this week?
Matt Argersinger: Well, if you're looking for good short opportunities, about a year ago, I talked about the auto parts retailers. And I look like a genius--
Gross: You are a genius.
Argersinger: --because after I talked about it, they fell about 20%. But they've all bounced back. And I think the worst of the bunch is Advance Auto Parts, ticker AAP. Just to give you an idea, management was really excited about 2018 in the last conference call, yet they're guiding for same-store sales of -2% to 0%. So, not exactly a growth business. And of course, lots of short-term problems with Amazon -- I had to say it -- affecting their sales. But, long-term, ride-sharing, electric vehicles, it just looks really bad for the auto parts retailers. Short them all.
Hill: Imagine how low that comp number would be if they weren't excited. Steve Broido, question about Advance Auto Parts?
Broido: How do you feel when you go to an Advance Auto Parts or one of these stores, and there's about 3,000 people in the parking lot all working on their cars simultaneously? It just feels intimidating to me. How do you feel? Your take?
Argersinger: You know, I've never actually gone to one, and I never plan to, so I can't give my take on it. I don't know.
Gross: Steve, have you ever changed your own oil? Do you know anything about cars?
Broido: Very little. But I've been to, I think, an Advance Auto Parts when I needed a battery, and they did it for me. They did a great job.
Moser: Get the ball bearings. It's all about ball bearings these days.
Hill: Three stocks, Steve, do you have one you want to add your watch list?
Broido: Well, I own American Tower, therefore I will own American Tower.