In this segment of the Motley Fool Money podcast, host Chris Hill asks Fool analysts Jason Moser, Matt Argersinger, and Ron Gross to tell us about the companies they have their eyes on this week and why: strip-mall focused REIT Retail Opportunity Investments (NASDAQ:ROIC); virtual healthcare provider Teladoc (NYSE:TDOC); and Arcos Dorados (NYSE:ARCO), which is the exclusive franchise operator for McDonald's across most of Latin America.
A full transcript follows the video.
This video was recorded on May 18, 2018.
Chris Hill: Let's get to the stocks on our radar. Our man behind the glass, Steve Broido, is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week?
Ron Gross: I have Retail Opportunity Investments Corp, ROIC. They are a REIT focused on retail shopping centers, which, rightfully so, has some investors nervous. The stock has not been strong, we can say. But I think they have great properties in affluent areas, a really strong management team. They're grocery store-anchored, which I like. Great dividend, as most REITs typically do. They've increased that dividend each year for the past seven years. It now stands at a 4.5% yield. I think the stock itself has some nice upside.
Hill: Steve, question about Retail Opportunity Investments Corp?
Steve Broido: If I'm looking at companies like this, am I just looking at the yield? Is that all I'm looking at? Or am I looking at more?
Gross: No, you can look at cash flows, for sure. There are some certain metrics that REITs have, we won't get into the nitty-gritty, but you want to make sure the cash flow is strong. And, be aware of that because they distribute most of their cash in dividends, they constantly need to raise equity or debt to fund future acquisitions. So, you'll want to keep an eye on the balance sheet, as well.
Hill: Jason Moser, what are you looking at?
Jason Moser: Not a new name. Listeners are probably familiar with Teladoc, ticker TDOC. Little bit of a question I had going into this most recent quarter's earnings, they have a different part to the business here they've introduced for a fee-only member. Like, they have a membership model, but then they also have a fee-only model. And I wanted to know the incentive there. Why wouldn't you just try to make everybody a member of your plan? So, I contacted investor relations, they gave me a lot of great information. The bottom line, the fee-only model is really about attracting these big millions of users, bases, with health plans like Aetna or Blue Cross Blue Shield. So, the economics simply make more sense. It gives Teladoc a chance to really grow that base out. We're seeing this big move toward virtual healthcare and telehealth, and Teladoc is helping lead the way. So, continue to really love what these guys are doing.
Hill: Steve, question about Teladoc?
Broido: When is my primary care doc a virtual one?
Moser: Well, it could be right now, actually, Steve. If you go to Teladoc's app, you can enter all of that information in and boom, it's like magic.
Hill: I was really hoping Steve was just going to ask you a medical question.
Moser: I would come up with an answer. It might not be the right one, but I'd come up with an answer.
Hill: "Can you look at this thing on my shoulder?" Matt Argersinger, what are you looking at this week?
Matt Argersinger: Also one I've mentioned in the past, Arcos Dorados, ticker ARCO. Exclusive operator and franchiser of McDonald's restaurants in most of Latin America. It's off to a great start to 2017. Comparable-store sales -- excluding Venezuela --
Gross: [laughs] You can't do that.
Argersinger: Yeah, I know. That gained 9.8% in the quarter. Revenue up 5.5% to $800 million. Arcos' EBITDA margin, which reached a six-year high in 2017, expanded again in the first quarter. That brought in $68 million in adjusted earnings, up 12.5% over the last year. Argentina is facing some trouble right now, I see that. It's always volatile in Latin America. But this is one of the cheapest stocks I see.
Broido: How old is too old for a Happy Meal?
Argersinger: Oh, man, I don't know. I think I could go for a Happy Meal right now.
Hill: Arcos Dorados, Teladoc, Retail Opportunity Investments Corp. Do you want to add one of those to your watchlist, Steve?
Broido: I'm going to take a look at Ron's REIT.