In this segment of Motley Fool Money, host Chris Hill asks analysts Jason Moser, David Kretzmann, and Ron Gross to share which companies they have their eyes on, and why. Their picks are Southwest Airlines (NYSE:LUV), niche healthcare play iRhythm Technologies (NASDAQ:IRTC), and Canadian cannabis company Canopy Growth (NYSE:CGC). But let's be clear -- not all of these are buy recommendations.
A full transcript follows the video.
This video was recorded on June 22, 2018.
Chris Hill: Let's get to the stocks on our radar this week. 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 another great ticker symbol for you, that's LUV, Southwest Airlines. Largest U.S. airline, flying 120 million customers a year. Strong balance sheet, unmatched record of profitability, high returns on invested capital, great free cash flow, recently increased their dividend by 28%. Stock is not necessarily cheap relative to its peers, but it is trading at a discount to its historical average. It always does trade higher than the competition. Quite frankly, that's because it deserves to. It's a much better run airline, and really the only major that's never declared bankruptcy.
Hill: Steve, question about Southwest Airlines?
Steve Broido: I like flying Southwest Airlines. Why is it so difficult for Southwest Airlines' tickets to be sold on places like Expedia? I don't think you can buy Southwest tickets on Expedia. Why is that so hard?
Gross: I don't have a direct answer. I think it's because they want to drive people directly to their website, rather than third-party websites, and they can control the process a little bit better.
Hill: Isn't JetBlue the same way?
David Kretzmann: They used to be. I don't think they are anymore.
Hill: Jason Moser, you're up. What do you have?
Jason Moser: Sure, a new one here. iRhythm Technologies, ticker is IRTC. A little tip of the cap to a Twitter follower of ours, Phyllis Schuster, who actually shot this out there on my radar earlier in the week. It's a healthcare company focused on cardiac arrhythmias. Their main offering is a system called Zio, which is a biometric patch, a data-collecting system for patients at risk of atrial fibrillation, which is just fancy-talk for irregular heartbeat. AF affects as many as six million patients in the U.S., 35 million or so patients worldwide. This is an FDA-approved platform. I'm really digging in this to find out if it's a business worthy of investment dollars. Thus far, I'm compelled to keep looking.
Hill: Steve, question about iRhythm Technologies?
Broido: Do you know if insurance companies are bought in to this technology at this point?
Moser: That's a very good question. Because it's FDA approved, they are. It's worth noting that most of their money is levered to collections from insurance companies, government agencies such as Medicare, Medicaid, etc.
Hill: David Kretzmann, what are you looking at?
Kretzmann: This was a big week up in Canada. Canada officially announced that October 17th will be the date that legalized adult-use recreational cannabis will be available in the country. Canada is going full legal. This will be the first major G7 Nation to embrace legal recreational marijuana use. There's no question in my mind that a legit industry is forming here. We're still in the very early stages. But once we cross October 17th, I think we'll begin to see which companies are walking the walk and actually forming a sustainable business model here.
I think a company worth watching here is the top dog in the space, that's Canopy Growth, ticker CGC. That's not a buy recommendation at all, but I think it's a company worth watching just as we start to pay closer attention to this space.
And, by the way, up north, Motley Fool Canada is launching our first-ever cannabis investing recommendation service. If you're interested in that, go to fool.ca/marijuanamoment.
Hill: Steve, question about Canopy Growth?
Broido: Do you see legalized marijuana hitting the lower 48 any time soon? I know in certain States, but, across the country.
Kretzmann: Yeah. Even Trump has said that he would support a bill that would decriminalize marijuana on a federal level, so I think it's a matter of when, not if.
Hill: Steve, do you have a stock you want to add to your watchlist?
Broido: I'm going LUV.