In this segment of the Motley Fool Money podcast, host Chris Hill asks Million Dollar Portfolio's Jason Moser, Hidden Gems Canada's David Kretzmann, and Total Income's Ron Gross about the companies they're most intrigued by this week and why.
A full transcript follows the video.
This video was recorded on April 20, 2018.
Chris Hill: Alright, Ron Gross, what's on your radar this week?
Ron Gross: Steve, I'm going to go with an oldie but a goodie. It's Home Depot, ticker symbol HD. Have you heard of it?
Steve Broido: I have! I have, indeed!
Gross: Obviously the leader in the home improvement industry -- sorry, Lowe's. Huge scale, gives it a great competitive advantage. Returns on capital increased over each of the past five years, currently at 34%. Paid a dividend for 124 consecutive quarters, increased that dividend for the last nine years. Just raised it 16%. 2.3% yield. Guidance is strong. Stock is very reasonably priced for a company that puts up results like Home Depot does.
Hill: Steve, question about Home Depot?
Broido: What do you think of their HDX-branded products?
Gross: I have not partaken of them myself, but I believe they are selling through very nicely.
Hill: Jason Moser, what's on your radar this week?
Jason Moser: I'm going to go with a twofer, actually, because earnings season is in full swing here next week. We have Facebook, ticker FB, and Twitter, ticker TWTR, earnings coming out on the same day, Wednesday, April 25th. So, you get Twitter in the morning, Facebook in the afternoon, it's just very interesting to see how the narratives have changed on these two companies over the past year. Facebook, obviously in crisis mode here with the whole data concern. I mean, let's be clear, everybody is going to keep lobbing up pictures of their sandwich that they just ate and whatnot. I think they're going to be all right.
But really, Twitter has been pretty fascinating. A couple of upgrades this week, and I think they've been along the lines of the message we've been communicating in Million Dollar Portfolio in that this is a very powerful network that isn't going to get disrupted any time soon. I think Jack Dorsey has done a good job of really patiently building out a business here, and it's starting to perform.
Hill: Steve, question about either Facebook or Twitter?
Broido: What is the likelihood that Facebook buys Twitter?
Moser: I think that ship has sailed. Facebook tried to buy Twitter many, many moons ago before Twitter went public. I think at this point, Facebook would have a very difficult time convincing regulators that that would be in the best interest of people.
Hill: David Kretzmann, what are you looking at this week?
David Kretzmann: JaMo cheated a little bit there. My stock is Facebook, ticker FB -- so Steve, I hope you have some more questions on Facebook. I agree with JaMo. I think the pessimism with any potential regulatory pushback is already priced in. Facebook is growing faster and more profitably than Alphabet, but trading at a lower valuation compared to Alphabet. The company is printing cash, about $17 billion in free cash flow a year and counting, almost $42 billion in net cash. I think the company is going to be fine. Any new regulations or a slap on the wrist, I don't think, is going to change the powerful business model that they have.
Broido: Given what we've heard in the news recently with Facebook, do you have any concerns about your privacy, anything you post on Facebook?
Kretzmann: I was actually one of the 87 million or so users who were impacted by this Cambridge Analytica scandal, but, no, I'm not personally concerned. I think, if you're online, you should understand that that data is not yours, necessarily, it's going to be shared if you're using a free platform. So, I'm OK with it. But I'm a millennial, so what do I know?
Gross: I can't believe people know my birthday and that I love pizza. [laughs] It's just tragic.
Kretzmann: [laughs] Yeah, absolutely.
Hill: Steve, do you have one you want to add to your watchlist?
Broido: I think I'm going to go with Home Depot.