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At The Motley Fool, we're buy-and-hold investors, but before we can hold a stock, we have to pick the stock. So our analysts are always on the hunt for excellent investment ideas. And every week, some businesses stand out from the crowd, which is why every Motley Fool Money episode ends with host Chris Hill asking his guests -- this time, senior analysts Andy Cross, Aaron Bush, and Ron Gross -- which companies they have their eyes on, and why.
Their picks for this episode: specialty insurance company Markel (MKL 0.60%), Delta Airlines (DAL 2.15%), and online conglomerate and holding company IAC (IAC +0.00%).
A full transcript follows the video.
This video was recorded on Jan. 11, 2019.
Chris Hill: Let's get to the stocks on our radar. We have a little extra time, so our man behind the glass, Steve Broido, is going to hit you with a question, but we've got time, so if you want to hit one back to Steve, go for it.
Ron Gross: I'm not prepared for that.
Hill: Ron Gross, you're up first. What do you have?
Gross: I'm going to go with Markel, MKL, a stock I added to in late December. It's a recent Best Buy Now in our Stock Advisor service. A specialty insurance company. The stock is down 15% from its September high due to market weakness and also an investigation into some loss reserves into a small division of theirs, which, frankly, I'm not concerned about. They consistently generate great returns, both from the insurance side of the business as well as the investment side. Dirty little secret is that insurance companies don't always produce profits on the insurance side. Sometimes they just come from the investment side. But they do both really well. They invest in both public and private companies in their investment business. I love to see that! Really stellar management led by co-CEOs Alan Kirshner and Tom Gayner.
Hill: Steve, question about Markel?
Steve Broido: I know they ensure some odd things. What's one of the more unusual things that Markel insures?
Gross: [laughs] Ballet studios is a good one. I'll go with dude ranches.
Hill: Do you have a question for Steve?
Gross: Steve, when the last time you went to a dude ranch?
Broido: I was a small child. It was in Arizona, in Tucson, I think.
Gross: Nice.
Broido: I didn't like riding the horse. I was a little too small.
Gross: [laughs] That's a big part of it! I'm no dude rich expert, but ...
Hill: Any truth to the rumor, Steve, that you were the inspiration for the movie City Slickers?
Broido: [laughs] No.
Hill: It is a rumor. It is out there. Andy Cross, what are you looking at?
Andy Cross: Delta Airlines, DAL, reports earnings on Tuesday. It's really had a tough run. The stock over the last month has gone from $56 to $48. It's underperformed all the other airline peers. Its revenue per seat mile estimates for the quarter continue to go down. They said one thing in October, it's now different than what they said back then. They just continue to lower that to the lower end of the guidance.
Looking to see what Delta is going to say about the profitability of the business. It's a cheap stock. We've added to it recently in a couple of our portfolios at The Motley Fool. Its debt picture is under control. Airlines are now finding real purpose and a better way to run. Long-term, I like Delta. Looking to see what they say about the upcoming year in their upcoming quarterly results.
Hill: Steve, question about Delta Airlines?
Broido: Do you find any airline comfortable? I flew recently. The experience is just miserable, and it seems like across the board, it's uncomfortable, unless you're doing first class or business, which is a little too rich for my blood.
Cross: I tell you, we flew British Airways over to London last year. It was fantastic, even in coach. It was great!
Hill: Aaron Bush, what are you looking at this week?
Aaron Bush: I'm looking at InterActiveCorp, IAC. IAC, now chaired by Barry Diller, has a pretty wild history. I was looking into it. In the 80s, it started as a broadcast company backed by Liberty Media. It had controlling stakes in ventures like Home Shopping Network, USA Network. It then took its winnings and started to simply just invest where it saw opportunity. They bought Ticketmaster, which later sold the Live Nation. They acquired Expedia, which later spun out. They had huge gains from that. The same goes for LendingTree, TripAdvisor, Match back in the day. Much of that is sold off. But today, they own over 80% of Match Group, which became the top dog in online dating by compiling lots of different brands. They own over 80% of ANGI Homeservices, which more recently became the top dog in home service marketplaces by compiling lots of brands. They own various online publishing properties like Vimeo, Investopedia, dictionary.com. An interesting mix of companies, but I feel pretty good about what they have in their portfolio.
What's most striking to me is their track record of being able to take their winnings from all these companies and reinvest it in other companies defining the future, and being able to make billions repeatedly off of it. So, I'm really interested in InterActiveCorp.
Hill: Steve, question about InterActiveCorp?
Broido: It sounds like an excellent holding company. Do they do anything themselves? Or do they just own other businesses?
Bush: It ebbs and flows over time. They do own partial stakes in companies, but they also fully own lots of companies, too. They have a mix of buying companies outright and starting things up internally. It's an interesting incubator, accelerator, big acquirer of sorts.
Hill: InterActiveCorp, Delta Airlines, Markel. Three very different businesses. Steve, you got one you want to add your watch list?
Broido: I think InterActiveCorp sounds pretty fascinating. Those are some big names.
Hill: They are some big names. Steve, one bit of news from the airline industry that may pique your interest, may change your mind in terms of your flying habits. I don't know if you saw this. United Airlines is putting out a cookbook. It retails for $30. If the airline food really swings in your direction, does that get you interested?
Broido: As long as it's a snack box that costs $44.
