The best game shows make you smarter for tuning in. And the best of the best have all-star contestants who constantly set the bar higher. Can Aaron Bush possibly live up to his 9-out-of-10 performance from the last show?
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This video was recorded on Sept. 18, 2019.
David Gardner: It's a game. It's a game. Well, you know, it's a podcast, but you also know, I love games. And once every three months on this podcast, we turn the podcast into a game. So it's a game. The Market Cap Game Show. And this week, I welcome back the presently greatest player of all time, Aaron Bush. You'll be competing against Aaron and against yourself to score as high as you can, guessing at the market caps, the values, of 10 different companies. Picked nearly at random, but mostly companies you will have heard of, including one of them, which was picked exactly 10 years ago today. Are you ready to rumble? It's The Market Cap Game Show this week on Rule Breaker Investing.
Welcome back to Rule Breaker Investing. Yep, it is that time of the quarter. The final week before the final mailbag of each quarter. March, June, September, December. If you're an investor, you recognize these as the traditional fiscal quarters that many companies report earnings on. March, June, September, December. That's also when we bring out The Market Cap Game Show. But while this is the ninth installment of this game -- we're doing it four times a year; you can see we're now in our third year of The Market Cap Game Show -- while we've done it now for a ninth time today, this is the first time I've ever brought back a returning champion who had the highest score ever achieved thus far for The Market Cap Game Show. Aaron Bush.
Aaron Bush: I'm humbled, David. Thanks for having me!
Gardner: Humbled, and yet I would think it would be the opposite. I mean, wouldn't you be coming in just top of the world, Michael Jordan, Tiger Woods at his peak? Isn't that where you are right now, Aaron?
Bush: I need to prove that I'm not a one-time wonder. I need to prove that I have knowledge of market caps in my bones today.
Gardner: Well, that is really good to hear. It sounds like you're pretty charged up. Now, we do take these Tuesday afternoons. Not that far removed from the weekend. Aaron, did you spend any part of your weekend looking at market capitalizations of companies?
Bush: ... Yes, I did. Somewhat anxiously, I will admit.
Gardner: [laughs] Now, we have a lot of new listeners. Every quarter, as we come back to this game, I'm conscious that a fair number of us might be wondering, "What the heck are they talking about?" So I think we need to define our terms. Aaron, market capitalization -- short phrase, market cap -- what is the market capitalization of a company, a stock?
Bush: The market cap of a company is the size of a company, which means that it's calculated by taking the share price, so the cost per share, times the total number of shares that are out there. If you multiply those two things together, that gives you the size of the company.
Gardner: You're right. A lot of us are used to seeing price tags on things when we go shopping in a market or an online site. This is just the price tag that you would have to pay to buy an entire company -- for example, Etsy, our traditional example, Aaron. Etsy today, the stock is ringing about $60 a share. If you multiply the number of shares outstanding for Etsy that represent all of the shares that exist in the world -- those held tightly by insiders who helped start the company, those held by large institutions, and those held by little people like you and me -- take it all together, and then you multiply all those shares times around 60, and what do you roughly get, Aaron?
Bush: About $7 billion.
Gardner: There you go. And, oh, Aaron got that right.
And that's the sound that we play when you and Aaron get it right. This is not just David playing the game with Aaron, although it is that; it's you playing the game with us. You, if you like, playing against Aaron. So, I make a point, as we introduce each of the 10 companies we'll be covering this week, of hesitating and pausing briefly so each of us, especially our tens of thousands -- yes, I'm happy to say, we do have tens of thousands of listeners at home who are playing the game along with us. I'm going to give you that opportunity, that extra second to think, "What's my number?" before I give the answer. So, Aaron just beautifully demonstrated. Etsy, our traditional example that we use just about every time on the show.
That's the sound of getting it right. If Aaron had blundered -- which, by the way, Aaron, you only blundered once the entire last time we did this.
Bush: I'm a stone-cold market cap killer, David, what can I say?
Gardner: [laughs] He did get one wrong. And this was the sound --
-- that we play if Aaron and you playing at home don't get within 20% of the answer. That's the game that we're playing. There's a band of about one-fifth you can be off, higher or lower. So, for example, the answer was $7 billion. If Aaron had said $6 billion or $8 billion, that would have been OK because that's within a 20% band either way. I will always for each of these specify what is the acceptable range so you can play along accurately at home.
Finally, before we get started, I want to mention, when we play this game, once a quarter, we always ask you to rock a hashtag. It might be #IBeatAaron on Twitter. A lot of us are on Twitter. I didn't see a lot of #IBeatAaron last time, I don't think I saw any on the entire internet. There were a fair number of #ILostToAaron. I'm not sure there were that many #ITiedAaron, but that's another hashtag you can use. Play along with us and let us know through social media. @RBIPodcast, by the way, is our Twitter feed. Aaron, you're on Twitter, aren't you? What are you on Twitter?
Gardner: Beautiful. I'm @DavidGFool. We are somewhat Twitter-centric with this podcast, but feel free in any social medium to rock out those hashtags this week depending on how you do.
Now, there is one other sound effect that rarely gets played on this show, but I think I owe it to our listeners, Aaron, to make sure that they know that it's possible. This has very occasionally happened, to nail the market cap guess right on the number. And if that happens --
that is the rarely played doinng sound. Aaron, not only did you cause that sound to be played once last time. You cause that sound to be played twice and almost a third time. You had the first-ever double-doinng episode for June's Market Cap Game Show.
Bush: I honestly forgot about that. Three months was a long time ago, I guess. I'll try to live up to that again. I'll try my best.
Gardner: I feel like you're putting a lot of pressure on yourself. The last thing I'll say before we start is, what's par for the course here? What's a batting average that we'd want the Fool, the average listener, to get? I would say 4 out of 10 is something good to shoot for. So playing along at home, think of that as your bogey. Aaron, I even think that's true of you. If you come in at 6 out of 10, I hope you won't be heartbroken, because that's an incredible score.
Bush: I'm just trying to make you proud, David.
Gardner: OK, well, you did last time. Just that you showed up here makes me proud, Aaron, because a lot of people would have said, "I retire. I'm out. I will never play again. I will have the highest score ever and retire." You didn't do that.
Bush: It's all for the love of the game. And for you, David. [laughs]
Gardner: [laughs] OK. Without further ado, then, let's get started.
Aaron, do you cook at all?
Bush: I cook approximately zero. Maybe not a good start.
Gardner: I, too, cook approximately zero. Somehow, you and I, at different stages of life -- I'm 53, I think you're 24?
Bush: Twenty-four, yep.
Gardner: And each of us has somehow found a way to not have to cook. I assume you're eating on a daily basis?
Bush: I try my best. No, I do eat on a daily basis.
Gardner: OK, good. Regardless of how you're getting those meals, that's not really germane, necessarily, to this company. But I'm curious, when you do eat, do appreciate some spice? One or more spices on the things that you eat?
Bush: It certainly doesn't hurt, David.
Gardner: OK. I would say, not only does it not hurt, it helps. I think there are a fair number of studies. I'm not the first to be quoting these studies. But I'm regularly hearing that spices really help us in different ways. After all, these have been around since the dawn of creation. Our bodies like certain ones, they make us happy in some cases. They do make us healthier. Ginseng is like a magic spice. They're out there, Aaron, even if you and I as noncooks are largely ignorant of which ones really work. But I know one thing -- I like cinnamon. Do you like cinnamon?
Bush: Cinnamon is great.
Gardner: What about nutmeg?
Gardner: Okay, what's your favorite spice?
Bush: Chocolate's not a spice, right?
Gardner: [laughs] Do you like pepper?
Bush: Pepper's all right. I can't say I know much about spices.
Gardner: OK, well I hope you know a little bit more about McCormick & Company, ticker MKC. McCormick, I think of them as the definitive spice company. This is a stock that, for members of Motley Fool Stock Advisor -- and if you're not already member, darn it, you sure should be -- McCormick & Company, I first picked in October 2014. It was at $61.49. I'm going to tell you ahead of time, it is higher than that. It has been a good stock. We'll talk about that a little bit later. But McCormick, definitive. I grew up with the brand. You probably grew up with the brand. Did you have a spice cabinet? Can you picture one in your house growing up, Aaron?
Bush: Yeah, definitely.
Gardner: Yeah, always smelled good. Tip it open. Maybe just eat some paprika, just straight from the bottle. But, more germane to this game, Aaron, Bush is the market cap of McCormick & Company. Within 20% either way, Aaron, what is the market cap of MKC?
Bush: It's a pretty well established business, so I think it's somewhere around ... I'll go $21 billion.
Gardner: [laughs] Doinng! You nailed it! [laughs]
Bush: Good start. I'll try not to break your game, David. I feel a little bad.
Gardner: [laughs] This is really great. This is super fun. OK! That's a remarkable way to start The Market Cap Game Show. Aaron, yes, you were exactly right. McCormick tipping the scales today -- the stock as we tape is at $159.55. That comes out to a market capitalization of $21 billion. Players at home, if you said anywhere from $17 billion at the low end to $25 billion on the high end, that band, give yourself a big green check mark. You're one for one to start this episode of The Market Cap Game Show.
Aaron, a most fortunate start, but I'm not going to say fortuitous start, which would imply chance, because I feel like you're bringing the hard blue glow of potential greatness to this episode of The Market Cap Game Show. I don't think there's necessarily a lot of luck there.
Bush: I don't think there was much luck in that one either, David. We'll see what happens in these coming questions.
Gardner: OK. I see my producer Rick Engdahl across the glass indicating maybe we need to narrow the band to make this game a little harder. But while, Aaron, you might be super good at this game -- and I would hope you would be, because you're an analyst here at The Motley Fool -- I don't want to make it inaccessible to the average listener. I include myself as one of our average listeners, because I would not be as good as you are at this game. So thank you, Aaron. Well done!
Bush: Thank you!
Gardner: All right, stock No. 2. Aaron, I know it, but a lot of our listeners may need to be reminded -- your home state, sir?
Gardner: Texas. That's right. Now, I don't often see you coming into Fool HQ wearing a 10-gallon hat.
Bush: I can't say I own one. Sorry. [laughs]
Gardner: While I did not grow up in Texas -- and I think most of our listeners didn't, some of whom are international -- when they see shows like Dallas in reruns, they imagine the people from Texas, I think some of us would think that you would be wearing a cowboy hat to work some of the time.
Bush: Texas is a big place. Depending on where you are, there are people like that. There are people of all types in Texas.
Gardner: I really do like that about Texas. Obviously, I'm having some fun here, because I've been to Texas a bunch of times. I have seen people rocking the 10-gallon hats. And then I'm in Austin, and I see entrepreneurs who dress like Steve Jobs and even imitate him some, too. And everybody in between. It's a great big state; a great big world. Have you ever been into a Tractor Supply Company store?
Bush: I can't say that I have.
Gardner: You know that it's an American retail chain of stores. It's home improvement, agriculture. I'm pretty sure you could buy a 10-gallon hat at a Tractor Supply.
Bush: I would be surprised if you couldn't.
Gardner: Unbeknownst to many of us, it's also a public company. This is a company that's present in 49 states. I'm looking at Wikipedia right now. I'm not sure what the 50th would be that it's not. Let's go with Hawaii, maybe?
Gardner: OK, good. Everywhere but Hawaii. We're half making that up. But, yeah, Tractor Supply Company, even though it's a quieter company, it does have an online presence, but I think a lot of people wouldn't realize that 10 years ago, it was one of America's hundred fastest-growing businesses. That was still early days for e-commerce. Today, it remains a successful stock for investors.
I will mention, I first picked this stock in February 2017. Stock Advisor members, those who bought in with us, have held it for about 2.5 years. It's been a good performer, albeit volatile. We got in below $70. It hit as high as $115 in the meantime, it's down to about $95 though now. Bouncing around, not that different from the market. In fact, I will say that since we picked it 2.5 years ago, the stock is up 39%; the market's up 34%. Tractor Supply Company, a market-beater, but not by much.
Aaron, you have no childhood or adult association with the Tractor Supply Company.
Bush: I've driven by Tractor Supply stores, but I've never made it a pit stop before.
Gardner: All right. Aaron and all my players at home, within 20% either way, what is the market cap of Tractor Supply?
Bush: It's bigger than you might think. I think it's about $12 billion.
Gardner: Very nicely done. You were close to doinnging again, but this one is at $11.7. So you would have had to say $11.7 billion to trigger that sound again. Players at home, if you said anywhere from $9.4 billion to $14 billion, you are within the 20% band either way, and along with Aaron, you can give yourself a big green check mark. Aaron, nice job. Two for two.
Bush: all right.
Gardner: We're about to move on to number three. I will mention, as a little bit of foreshadowing, that we will be covering one company that was on last Market Cap Game Show with you. But the other nine, we haven't covered before. In fact, most of these companies have never once appeared on any previous episode of The Market Cap Game Show. McCormick and Tractor Supply are both examples. MKC, TSCO, these are brand new ticker symbols to The Market Cap Game Show, but not to some of my analysts who cover these companies, in this case in Stock Advisor. Both of those companies come from Stock Advisor.
Company No. 3 comes from Motley Fool Rule Breakers and was first picked January 21st of 2009. Now, in contrast to Tractor Supply, which is only up about 39% in the 2.5 years we've held it, this stock is a 10-bagger since being picked in 2009. And it's a company that we picked it, and it had one name, and then three years later, it changed its name, which is not always the best sign out there, when companies change their names. And yet, this company has gone on to greatness. It basically took its primary product, a soda, and decided, "Let's just call the whole company by that name." Hanson Natural, which was the stock I picked on January 21st of 2009, later decided, "Monster Beverage, that brand, our best-known brand, why don't we just call ourselves The Monster Beverage Corporation?" which is what the company did decide to do in 2009.
Gardner: Now, Aaron, I know you only stayed in college briefly before deciding just to come to work here at The Motley Fool. I know that we covered this last time. Listeners with a long memory will remember that you went to UT for about a year. A lot of us picture college students, before exams, slamming down the energy drinks -- caffeine, extra sugar, usually a fair amount of carbonation -- in order to make it through exam period. Have you ever had a Monster beverage?
Bush: Of course.
Gardner: Was it in a university context?
Bush: Yes. I have had Monster in a university context. Along with many, many other people, very late at night. Yes. I live the stereotype.
Gardner: When was the last time that you had a Monster beverage?
Bush: One of those late nights in college.
Gardner: All right, so it's been a few years. This is a company, I think in a lot of ways, that's gone on to greatest because it had distribution. It's an interesting story. I do love corporate histories. Hansen Natural started as a juice company in Southern California in 1935. Some 60 years or so later, energy drinks started showing up, and Hansen had Monster. They've grown from there.
One of my favorite statistics, before we talk about the market cap of this company, is that when we picked Monster Beverage in 2009, it had been -- get this -- the best-performing stock on the market over the previous 10 years. Hansen Natural was up 49 times in value. It was up 4,800% from 1999 through 2008 when we picked it in 2009.
Bush: I wonder what the market cap was at that time.
Gardner: [laughs] Well, if I started telling you, you'd start piecing together that it's up 10 times from that since, so I wouldn't want to tell you. Nice try.
Bush: Well, I tried my best.
Gardner: [laughs] It's a remarkable reminder of another one of my favorite hashtags that we rock all the time on this podcast, and say it along with me, listeners, #winnerswin. This company had already been such a winner, and yet, we picked it 10 years later, it's a 10-bagger again. But a lot of it for these kinds of companies comes down to having distribution, to be able to get into the grocery stores and the 7-11s. It's not nearly the presence that Coca-Cola or Pepsi is, but it did have a longtime footprint in many of these places, and they've just leveraged that with the popularity of their -- it's not just about the Monster drink, but especially their Monster brand.
Aaron, I know you're thinking right now in your head a number. A number that would be your best shot at guessing Monster Beverage's market cap. The ticker symbol is MNST. Aaron and all of my fellow Fools, what is the market cap of Monster Beverage Corporation?
Bush: $32 billion.
Gardner: [laughs] If we could, play a double ding.
That'd be more appropriate, because Aaron, you were really, really close to nailing it spot-on again. It's $31.5 billion as we tape, so $32 billion is an awfully good estimate of Monster Beverage's market cap. Players worldwide, if you said anywhere $25 billion at the low end to $38 billion on the high end, give yourself a big green check mark. If you've gotten three so far, well you've tied Aaron, who comes in as -- what did you say earlier? A stone-cold ...
Bush: Market cap killer. I guess. I guess that's what's going on today.
Gardner: Now, it is, at this point, a fair question to ask -- did this guy, rhetorically, just memorize all of the market caps? But the thing is, we draw from over 230 companies. I guess there's a chance, Aaron, that you spent some time literally memorizing for 230 different companies, their market caps. And yet, even if you did, the market trades Monday, it trades Tuesday, and they keep changing all the time.
Bush: I will say, looking at market caps every single day for many years helps. There is that slight advantage that I have that isn't so slight probably. I did spend some time trying to fill my weaknesses this weekend, for sure.
Gardner: That is awesome. all right, company No. 4. I mentioned earlier that we would be bringing one back from our last episode of The Market Cap Game Show. It's right about now that we're going to do that. Now, I almost nudged this forward with trepidation, Aaron, because I feel like you could even doinng this one. In a lot of ways, you'd be haunted by this company because this is the one company that you missed last time. The ticker is EBAY. I think most of us recognize the company behind that ticker symbol. That would be eBay. Now Aaron, you didn't miss eBay by much last time, but you did miss it.
Bush: I missed it by a decent amount last time.
Gardner: I'm guessing, probably, you may have spent some time looking to see eBay in case I would ask you the very next episode about the one company you missed once again.
Bush: I don't like holding grudges, but I've held a grudge against eBay for three months now, David.
Gardner: [laughs] This stock was first picked -- a little history here -- May 10th of 2002 in Motley Fool Stock Advisor. Motley Fool Stock Advisor launched in March of 2002. This was the third stock that I ever picked. But it wasn't eBay -- I picked PayPal back then on May 10th of 2002. The market cap of PayPal when I picked it was $1.6 billion that day. Fast-forward a few years later, and eBay buys PayPal. So now we own eBay's stock, which we did for years and years, until eBay then decided to spin PayPal back out. We've just been holding the stock all the way through since May of 2002 in Stock Advisor. I like both companies. These days, if you've been a patient, long-term shareholder here, you will own shares of both. You will now have some eBay in your accounts and some PayPal. It's amazing to me that PayPal is so much bigger today than eBay is. I think a lot of us in 2019 would say, "Well, yeah, of course. PayPal is really big. eBay is still the auction market that doesn't feel as big-time as the world's leading, maybe, payments and transactions companies here in the U.S." But both of them are worth tens of billions of dollars. It's an amazing story of persistence for anybody who's held for 17-plus years. So, a little background, little history. We have to give it here on my initial recommendation of PayPal. But here we are. We're talking now about eBay.
All right, Aaron. We're reading our sound cues here. What is the market cap for eBay within 20% either way?
Bush: Well, last time I was wrong by $10 billion. I said $25 billion. I don't think the stock has moved much at all since then. I think it's right around $35 billion.
Gardner: Great job. I'm not going to say that was a softball for you, although I think, relative to many of our listeners, who don't remember that that was the one that you missed and were haunted by for three months, they couldn't have necessarily known or expected that I would ask this one. But, well done, Aaron!
That's right. The market cap as we tape for eBay is $34 billion. Aaron, wow, huge miss there for you. You missed by a billion dollars. That's horrible compared to what you've already done this week.
Bush: I'm terrible. I'm sorry, David.
Gardner: [laughs] Players at home, if you said anything from $27 billion at the low end to $41 billion, you got it right. Aaron, you are now four for four. #ITiedAaron is the best that anybody could say right now on social media. Let's see if we can make it a little harder with this next one.
Stock No. 5 ironically has a ticker symbol that is the very same number as the stock we're featuring today. The ticker symbol is FIVE. The company, of course, is Five Below. I say "of course" because, if you're a Motley Fool Rule Breaker member, I hope you've held this stock for a few years. I first picked it in April of 2014. It's been a five-year hold for ticker symbol FIVE, which is the fifth stock being featured on this The Market Cap Game Show. There are fives everywhere. I'm not going to say yet how the stock has performed, but it's performed admirably. A lot of us have gotten to appreciate this company not just for its retail presence, though I personally have been in and enjoyed a Five Below store -- Aaron, have you been inside a Five Below?
Bush: I have. I know both of us went together to visit the headquarters up in Philadelphia, too.
Gardner: That's right. In fact, one of the learning journeys that we send some of our employees on who raise their hands and say, "I want to do a little mini MBA inside The Motley Fool for a few months," we took that group -- you were in it, just a couple of years ago -- to Philadelphia. That is, in fact, where Five Below is based.
Bush: Yeah. It was a fun trip. Five Below I thought was particularly Foolish. More Foolish than I thought. All the way from their founders being David and Tom, to walking in the building. It had a really fun vibe, how they approached their purpose and core values and their thinking about scale, and a lot of different elements. It felt like being right here at our HQ. I learned a lot from them. I hadn't paid close attention to Five Below before going to the headquarters, but it definitely made me more interested.
Gardner: I think a lot of us probably recognize the brand. For anybody who doesn't, this is a company that generally, you walk into their retail stores, and everything costs $5 or less. There are a lot of party favors, kids' knickknacks, this kind of thing. They go for an energetic, positive retail presence. It's fun to walk inside a Five Below. It sounds like more fun, for you anyway, than a Tractor Supply, Aaron.
Bush: I don't know. Tractor Supply sounds pretty fun, David. I don't know.
Gardner: I do think, before whenever you next appear on this podcast, Aaron, you owe it to America to go into a Tractor Supply and learn a little bit more about the heartland.
Bush: I'll try my best. Do you know if we have one around here?
Gardner: Forty-nine states!
Bush: [laughs] OK.
Gardner: There's a lot of farmland in Virginia and Maryland. You know those are two states -- I would think, I would hope -- where Tractor Supply is. Forty-nine states' presence. But I'm too lazy to look that up for this podcast.
all right, Aaron. Ticker symbol FIVE. The founders, David and Tom, have created a more valuable company -- hint, hint -- than our company. I think their market cap is higher than ours. Great job to that David and Tom.
Bush: Give it time.
Gardner: [laughs] Aaron, what is the market cap of Five Below, within 20% either way?
Bush: It's not below $5 billion. It's above $5 billion. I think it's around $7.5 billion.
Gardner: Yeah, you missed that one pretty badly. You were off by $200 million.
Bush: [groans] I'm getting worse.
Gardner: [laughs] You were really close, let's be clear! The market cap for Five Below is $7.3 billion. Maybe I should have thought twice before giving you a company that you literally already met the CEO and been inside the headquarters of. That was maybe an oversight of mine. But the fives were wild. I had to do it this week. And it is kind of fun to think that since April 23rd, 2014, when we picked the stock at $38.56, today, it's right over $130. It's up 237%. The market, up about 80% over that time. A substantial market-beater for a company that is not a big e-commerce portal or a SaaS company. In fact, this is a company with a bricks-and-mortar retail presence that's selling stuff below $5. And that's the business, and it's growing.
Bush: I'm sensing a theme in this podcast, that Amazon is not killing all retail establishments out there.
Gardner: There are, that is true. We do have at least one more retailer that's not Amazon coming up. But I do think part of the reason Five Below is successful is, it's hard to compete against this company with an online site. Who wants to mail stuff out from their e-commerce portal that costs $3 to people when shipping usually costs at least a third of that?
Bush: Some of us are lazy, but yes, I understand your point.
Gardner: I'm not saying I'm not lazy, too, but when you're selling stuff at a very low price point, it feels like that is Amazon-proof territory, somewhat.
all right, Aaron, you are 5 for 5 going into halftime. I feel like I might have at least one stumper coming up. But you've taken The Market Cap Game Show to a level that I never thought we would reach because you are nailing almost every single one. There's like a Ken from Jeopardy thing going on here? Or maybe AI powered? Are you fully human?
Bush: I don't know. I know the great Conor McGregor, the UFC fighter, he has a line, "We're not here to take part, we're here to take over." And that's my mentality today.
Gardner: [laughs] I will say, a world in which everyone knows their market caps is a better world. Aaron, I feel like you're being an example to the rest of the human race with what you're bringing to The Market Cap Game Show these days.
Bush: I hope so. I hope everyone out there enjoys the joy of market caps as much as we do, David.
Gardner: At a serious level -- because at least half the time, we're serious on this podcast -- people who can look and know the value of other things, and understand those relative to completely disparate things -- you and I talked about this last time. It's really fun to think about how this company is worth about the same as that company. For example, eBay is about the same value as Monster Beverage. That's just interesting. That's a conversation point. You can talk about that with kids, older people, people in investment clubs, people who know nothing about the stock market. The market cap is really the lingua franca that enables us to talk about any company in relation to any other company.
Bush: Yeah, and market caps are incredibly useful when we think about investing. I know you think about this in Stock Advisor and Rule Breakers. We thought about this together in a service like Blast Off, where we're looking for stocks that not only the stock price goes up, but things that can significantly multiply. And it tends to be companies with lower market caps that are able to exponentially grow at that rate.
Gardner: That's right. If you gave me two companies that looked mostly the same, they might be in the same industry, they might have the same general growth rate, and one of them for some reason is trading at $10 billion and the one is at $100 billion -- first of all, you probably wouldn't see that, but if you did, you would go, "Let's go with the one at $10 billion, because it looks like it could multiply and get to a five-bagger faster than the company at $100 billion," all other things remaining equal, which of course they never do.
Bush: Yeah, I think that's a good rule of thumb. One last thing I would say is, I think it's really interesting learning lots of different market caps because context is such an important thing when we think about investing. The more pieces of context that we have, the better we're able to piece together what the world looks like. The better we can piece together what the world looks like, the better we can get a sense of what companies are growing more important, and then can therefore help grow our portfolios.
Gardner: Absolutely. We've often said, invest like a VC. VCs look at things and say, "I think that could go up 10 times from here," or, "I don't think it could." They're thinking about forward growth multiple possibilities. Often not constrained by backward-looking valuation techniques, which so much of the world is using to value stocks. Anyway, let's move on!
Company No. 6. Is streaming video a part of your entertainment life, Aaron Bush?
Bush: Yeah, definitely.
Gardner: What kinds of shows recently have you enjoyed or watched, or would you recommend maybe to Rule Breaker Investing podcast listeners?
Bush: I like shows that think about the future. I have watched a lot of shows like Black Mirror, for example. There's a pretty underrated show on Netflix called Travelers. Most shows and movies that handle time travel tend to do a pretty bad job, in my opinion, but I thought this one was a really interesting take. I don't know, I like a lot of the dystopian-type shows.
Gardner: Black Mirror certainly is that. I haven't watched that much Black Mirror just because so many of them are dystopian. That's not really my view of the future. I don't enjoy watching dark, ironic twists that make it all look like we're going down.
Bush: I think that's fair. I think that's totally true. But there still is something to learn, I think.
Gardner: Totally. I know it's a really compelling series. It's on Netflix. I think I read once that -- and again, I don't know the show that well, but I believe there was one in the first few seasons that had actually a very positive ending, and it's the highest-rated, most beloved of all of the Black Mirror shows. I don't know if that's still true today, but I remember remarking on that at the time as I read that article.
Bush: I don't know, but I believe it.
Gardner: Okay. Did you ever watch Breaking Bad?
Bush: I did.
Gardner: Did you like that show?
Bush: It was a fantastic show.
Gardner: What about The Walking Dead?
Bush: Yeah. I think it got slower as the seasons went on.
Gardner: Did you keep watching? Did you watch any of the spin-offs?
Bush: I did not watch any of the spin-offs.
Gardner: OK. There's a fair amount of dystopia in The Walking Dead, I would say.
Bush: Zombies can bog you down after a while.
Gardner: [laughs] What about Mad Men?
Bush: I never really got into Mad Men. But I see where you're going with this, David.
Gardner: You do. You see that I'm very purposely asking about Breaking Bad, The Walking Dead, and Mad Men. That's because we're talking about the next company, company No. 6, AMC Networks.
It's fun to look back on stocks that I've picked and say, "Wow, that one's a 10-bagger," like Monster Beverage 10 years later. This, though, is one of those where I don't feel great about it. I first picked AMC Networks in the flush of Breaking Bad's success and the perception that AMC was beautifully positioned for the future. A close partner to Netflix. A lot of people watching Breaking Bad, discovering it on Netflix. Mad Men as well, or The Walking Dead. Big brands at the time. And I thought, streaming going forward, these guys own the content, this is great content, they're going to keep innovating. And they have kept innovating, but unfortunately, the stock price is up 2% from where I picked it about seven years ago. The market, Aaron, up about 140% over the course of that time.
Bush: Probably not your finest stock.
Gardner: It's been a dog. The ticker symbol is AMCX. I think a lot of us maybe can come to a number in our minds more readily or easily than some of the others, like, let's say, Five Below or Tractor Supply. Aaron, I feel like you have a really good sense of the numbers here. I'm going to guess many of our listeners -- I'm going to say this ahead of time, not trying to influence anybody -- are going to over-guess on this one. I'm just putting it out there. Stock No. 6, AMC Networks. Aaron, the market cap within 20% either way?
Bush: It's pretty small. It's about $2.8 billion.
Gardner: All right, that's the double-going moment.
Bush: There we go!
Gardner: Sure enough, it is exactly $2.8 billion. The stock is trading at $50.50 today as we record this podcast. Dear listeners at home, gather around the fire in that Rockwell setting that we've talked about, that Norman Rockwell setting, multigenerational around the fire, playing the show together. Listeners, kids, $2.2 billion up to $3.4 billion, that would be a correct answer. But if you guessed right at the median point there, $2.8 billion, along with Aaron, give yourself a check mark point one, because that is the extra doinng sound of nailing it right on.
Aaron, this is a stock that we picked in Motley Fool Rule Breakers. Now, you don't presently work on the Rule Breakers service, but we did for several years. Why didn't you tell me to get rid of it as an analyst years ago? We would have kept investors from underperforming.
Bush: I don't know. In the Odyssey 1 portfolio in Supernova, we made the same mistake. AMC was on our scorecard for a while. We did get out of it in order to concentrate into other stocks that we like more and think are better positioned for the future of their own industries.
Gardner: Yes. I'm really glad you said that. Aaron, you helped run the Odyssey 1 portfolio in Supernova, a real money portfolio with stocks. That's right, AMC was in your portfolio and you did decide to sell it, even though I kept holding it, as is my wont, in Motley Fool Rule Breakers. So yeah, good job!
Bush: Well, we'll see. AMC could make a comeback.
Gardner: All right, stock No. 7. I just got back from a luncheon at the Economic Club of Washington. I'm a member. I'm sure some of our listeners might be in the greater D.C. area, businesspeople who might be a part of the Economic Club. It's a large group of people. C-level, but not just public, for-profit companies, but certainly a lot of civic groups as well. I'm a Motley Fool private-company person. It's people who love business. David Rubenstein, the Carlyle Group billionaire who's probably the most generous person living in the greater D.C. area, helps run that. He does interviews. I just watched the CEO of Delta Air Lines get interviewed. I learned one interesting thing, which is that if you were to guess, which do you think is a higher-margin flight for the Delta Airlines business: a domestic flight or an international flight?
Bush: I have no idea. I would guess domestic.
Gardner: And you guessed correctly, but I think a lot of people would think "Well, hold on now. The international flight, those are the big tickets." Presumably, if you keep people sitting in the seat for 15 hours, that's probably easier to do than have to keep shuttling them back and forth on one-hour flights. But as it turns out, Aaron, you're absolutely right. Sounds like all your instincts are right this week.
I was surprised by that. I was thinking that the international flights would be higher margin. But really, it is the domestic flights. Delta Airlines, by the way, has been a pretty good stock. It's been about at market-perform level for the last few years. But take a look at Delta Airlines over the last 10 years, it's a serious market beater in what is increasingly an oligopoly today.
Why are we talking about airlines? Because one of the stocks that we picked in Motley Fool Stock Advisor last year is Alaska Airlines Group. Alaska Air is one of those non-big-time players. The whole U.S. airline environment seems to come down to Delta, United, and American. And then there's some bit players on the side. Sometimes those bit players get bought out by the big guys. We'll see. But Alaska Airlines, like Hawaiian and a few other brands, is one of those where they're still operating independently. JetBlue would be another example of this. Not everybody is one of the big dogs. Anyway, I thought the CEO of Delta was outstanding. I would highly recommend anybody going on and seeing how he talks about his industry, his company. He's been there for a while and he's there for a lot longer, according to him. Bully to you, Delta shareholders.
Back to Alaska Airlines Group, ticker ALK. Aaron, have you ever flown, in your memory, an Alaska Airlines flight?
Bush: I don't think I have.
Gardner: Well, it is one of those that typically gets pretty strong reviews. People like their Alaska Airlines. It's dominantly a West Coast player. It's one of those companies that has not been a great stock. We picked it about a year ago. It's up 4%; the market up 8%. It's underperforming. Not nearly as badly as AMC Networks. But it is one of those that, I like the regional players. I think that they're well positioned to either continue to profit as they are from their niche areas, or potentially get bought out by the bigger players in this consolidating field.
By the way, Delta Airlines, this is just free PR for them, but they are the largest carrier in the world. Which I didn't realize.
Bush: I didn't know that either.
Gardner: There you go. But back to Alaska. Aaron, what is the market cap within 20% either way? Alaska Airlines Group, ALK.
Bush: I think they have also been one of the acquirers. They merged with Virgin Atlantic, which was another one of your recommendations at some time.
Gardner: That was a good airline. It feels like, whenever I pick airlines stocks, we don't do so well. But Virgin Atlantic did get bought out by Alaska, Aaron. Did well.
Bush: This one is bigger than some of the other more regional players. It's about $8 billion.
Gardner: Triple doinng!
Bush: Hey! [laughs]
Gardner: [laughs] You and I talked about this last time -- for ones that are right on an even number, it makes it easier to doinng it. If it had been $8.5 billion, you're probably not going to say $8.5 billion, are you?
Bush: I don't know.
Gardner: You might. But, you're absolutely right. Alaska Airlines Group is valued today, market cap at $8 billion. The band of correctness for this one is $6.4 billion up to $9.6 billion. We're going to stick on those. Take it out to an extra digit. If you said 10 billion, you may not give yourself the big green check mark. Aaron, 7 for 7.
Bush: The pressure is mounting.
Gardner: This is a remarkable performance. Before you nailed 9 out of 10, the very talented superstar Emily Flippen came to the show and did 7 out of 10. I was aghast at her ability. And then you came up and did 9. And right now, you're 7 for 7.
Bush: [exhales] So much pressure right now. I will say, Emily was quizzing me earlier. Any success here is partially due to Emily as well.
Gardner: Awesome. Before we go on to stock No. 8, I do want to mention, one of our very talented listeners created a site that can help the whole world learn their market caps. It's just marketcapgameshow.com. This is an unsolicited plug. I don't see any advertising on the site. I think this wonderful fellow Fool isn't actually trying to make any money from it. But it is a fun site to go in and just quiz yourself on market caps. There's an easy mode, a hard mode, it keeps stats, gives you a little bit of information about the companies. Marketcapgameshow.com absolutely deserves a plug on this week's episode. If you want to be half as good as Aaron Bush, the way to start is by playing the game. Quizzing yourself.
Aaron, I feel like, looking over the last three, the only one that I see you missing based on just the stone-cold-ocity that you've brought into this podcast, the only one I can imagine you missing would be this next one.
Bush: All right, let's hear it.
Gardner: You and I started this podcast by saying neither of us cooks. We don't really know that much. So you're probably a little bit more out of your wheelhouse when you just don't know what's happening in the world. I'm guessing you haven't spent a lot of time purchasing women's shoes.
Bush: I can't say that I have.
Gardner: Is that fair? You have a girlfriend?
Gardner: Have you ever given her, as a gift -- birthday, anniversary, etc. -- shoes?
Bush: I don't believe I have.
Gardner: If you did, could you imagine going into Designer Shoe Warehouse, DSW, or the company today, Designer Brands, maybe, to do so?
Bush: Sure? I'd have to do some research to figure out what this market is, what's going on. But it's very possible.
Gardner: The company name is Designer Brands, which is interesting, because it just changed its name from DSW earlier this year. A lot of us would recognize DSW as a very large place that sells tons of shoes aimed at women and has served in that capacity for a long time. I first picked the stock in October of 2015. It was at $21.86. It's down from there. We'll talk about that in a bit. Designer Shoe Warehouse. The company announced earlier this year that it wanted to change it same to Designer Brands because it thinks it's more of a brand manager, per say. It can find brands and grow them and make that part of the business story. The stock market doesn't seem to have been greatly enamored by this possibility. The stock hasn't really traded that well. It's not bad, either. But it looks like a nonevent. For DBI, which is the ticker symbol these days, I'm curious, Aaron, what you would guess the market cap of DBI is within 20% either way.
Bush: I don't think it's very big. I don't know how much success it's really had with lots of its other brands. I'm going to go with $1.2 billion.
Gardner: OK, that's four doinngs in one show! I was fairly convinced that this ... I think for a lot of our listeners, this has been a hard one. DSW, I think, presents itself as bigger. It is down, I'm sorry to say, 22% since I picked it almost four years ago now this October. It hasn't been a great performer. It's a little bit off the radar, but not off your radar, Aaron Bush.
Bush: No market cap in the Supernova universe is off my radar, David. Not today. [laughs]
Gardner: [laughs] OK! Well, At $1.2 billion even, if you guessed from $1 billion to $1.4 billion, in that tight band of possibility, give yourself a big green check mark. Outside of that, you will not be beating Aaron this week, because it sounds like you have to be perfect if you want to even tie Aaron on this game show.
I want to turn to my producer, Rick Engdahl. Rick, you've produced all of our Market Cap Game Shows. In your opinion, is it more fun when somebody gets every single one? Or less fun?
Rick Engdahl: I think it's fun once.
Bush: That's fair. I will say, a lot of these smaller-market-cap ones are a lot harder. Your margin of error becomes so much smaller. I've just been waiting and worried for you to throw out one of the $170 million companies or something like that.
Gardner: Yep! I appreciate that! Spoiler alert, you're not going to get that for the rest of the show.
Bush: Thank goodness.
Gardner: That was my one shot at flipping over a stone and hoping that you wouldn't recognize the market cap. Players at home, Aaron Bush, let's go to company No. 9.
This one is a very well-known player. An AB5, for those who would recognize that acronym or phrase. Very much in the minds today of companies that participate within the gig economy.
Much has been made of California's proposed new law, may be signed into law, that changes the nature of employment for a fair number of people who are contractors today. California would like them to be recognized as full-time employees with benefits. Now, the day that AB5 earlier this month hit the news for "this thing may actually happen, it's been voted up for the governor to consider signing," the day that happened, Uber's stock was actually up. Uber and Lyft were up 5% or so. Some of the perception was that maybe Uber and Lyft won't be subject to AB5. They may have a different way of viewing their employees and legally, they may have a basis for what they're saying. In fact, at the Economic Club luncheon earlier today, I sat next to somebody who works at Uber. It was interesting to hear her perspective, in terms of how much is Uber actually threatened by AB5. It's something we'll continue to watch. It's fun to talk about companies in the headlines.
Now, it's not fun for me to look at the performance of Uber's stock since I recommended it on May 23rd of this year. It's down 15%; market up 7%. Uber for Rule Breaker members, thus far anyway, is a market loser. I continue to like this company because I think it passes the snap test. I think if you snapped your fingers and Uber disappeared overnight, a ton of people worldwide would notice and be fairly upset. Now, there are other examples. In Texas, in Austin, Uber and Lyft at one point were banned. Others spring up. You could imagine others doing this service. Taxi cabs have done this for a long time.
Bush: Sure. I will say, the ones that have sprung up have not tended to be successful, though.
Gardner: OK, fair. It's not an easy thing to do, what Uber does every single day. Hundreds of thousands of miles driven in support of both taking passengers and food and other things, potentially. The optionality that Uber has to take its platform, it would say, in different directions, is big. In fact, it's worth paying attention to the company name, Aaron. I'm going to quiz you on the market cap in a sec. Do you know the official company name?
Bush: Uber Technologies?
Gardner: Exactly. I think that's instructive. I think it reminds us that if you really get into Uber's head, they think of themselves as a technology platform that could be a super-brand one day, kind of like WeChat is in Asia, where people look to it and use it for lots of things having to do with transportation. Maybe shipping, certainly food delivery, certainly people delivery. If it achieves that, "our corporate name is a verb and everybody's using us for lots of increasingly convenient needs," that's what they're shooting for at Uber Technologies.
Bush: And that's a really big deal if they can nail it.
Gardner: Right. Speaking of really big deal, I will give a little hint to our listeners. Aaron, I don't think you need any hints. Having just talked about Delta recently, their market cap is right about $38 billion. This company, Uber, in less than two decades, is larger than Delta. That's interesting on its own.
Aaron and everyone playing at home around the fire, what is the market cap of Uber within 20% either way?
Bush: Let's go with $55 billion.
Gardner: Well, you didn't doinng this one, but you got close, Aaron. I think you preserved the sanctity of the game by not abusing it too badly. The correct answer is $60 billion as we talk right now. Simple math reveals that if you were $12 billion higher or lower either way, you can give yourself a green check mark along with Aaron. That's right, from $48 billion up to $72 billion for Uber Technologies.
Gardner: Aaron, you and I talked about this briefly last episode. You didn't own the stock at the time. Do you own the stock today?
Bush: I still do not.
Gardner: I know we talked about how, when you have a market cap of $60 billion -- we talked about that earlier this show -- it's not necessarily as exciting or interesting as finding a company has a lot of promise at $6 billion instead of $60 billion.
Bush: Sure, and I don't think it's necessarily a deal breaker. You see companies that can still be 10-baggers from $60 billion to $600 billion.
Bush: But yeah, I just personally like other stocks better. Uber's burning a lot of money. I don't think a lot of the optionality is fully proven yet. So I still have some questions. But I certainly respect what they have accomplished.
Gardner: One thing, having traveled a fair amount the last few years internationally, I'll say, it's always impressive to me to see Uber is basically anywhere you'd want to go. All of us tend to think about Uber within maybe our city, or maybe our state, or country. It's there anywhere. But once you actually get out and see the world, you're like, "Wow, they're everywhere."
Bush: Yeah. I remember being in Europe earlier this year, France, and just seeing Uber Eats bags on bikers everywhere.
Gardner: I'm glad you mentioned France as we go to company No. 10.
Bush: Really? [laughs]
Gardner: Yeah. I said at the very top of the show in my cold open to kick off this show, I mentioned that one of the companies we'd be featuring -- in fact, it's company No. 10 -- was picked exactly 10 years ago the day we are publishing, which is, in our case, September 18th, 2019. We always come out around 4 p.m. Eastern. That's when this podcast hits iTunes and Google Play, etc. On September 18th, 2009, I picked my one and only French company, Dassault Systèmes. This is a company that is integral to visual designers and what they can do, these days more recently with augmented reality, but before that, think about all of the CGI. So much of the movies like Lord of the Rings, which actually look so much better than when they tried to make a Lord of the Rings 30 or 40 years ago. The special effects that we take for granted today. The virtual worlds in gaming. Dassault Systèmes is one of those players, kind of like Adobe, that is a big-time global player, helping out visual artists in every dimension, it seems. Certainly 4D, 3D, 2D. I don't know that 1D is that interesting to do from a graphical standpoint. I think it's like a dot, right? Isn't that what 1D is?
Bush: Yeah, but what if you have lots of dots? That could be pretty cool.
Gardner: That's true. Have you ever read the book Flatland by Edwin Abbott?
Bush: No, I haven't.
Gardner: It's a really good way to think about dimensions. You ask the dot, "Could you imagine what it would be like to be a line?" And the dot just can't imagine because the dot's a dot. And yet, all of us operating in three dimensions can easily see a line and a dot. We can look down on it and see it. But as three-dimensional people, Aaron, you and I, try to imagine a fourth dimension, time, it's hard to see that. In the same way, dots can't see the lines around them.
Bush: I don't know where this is going, but it is fascinating.
Gardner: [laughs] Flatland is a very fine read. OK, so, 10 years ago today, Dassault Systèmes, ticker DASTY -- Aaron, you have been NASTY this episode for The Market Cap Game Show. Truly nasty.
Bush: I'll take that as a compliment.
Gardner: It is intended as such. I'm so happy I didn't have to compete against you. But, from NASTY, we go here to DASTY. Sometimes it's hard to see it quoted on some online sites because it's over the counter. One that I regularly quote, you can't even see the ticker symbol DASTY. But if you're a Schwab or Ameritrade shareholder, and you wanted to buy some shares, type it right in, you'll see it's very easy to buy this stock. Anyway, Dassault Systèmes was at $26.45 10 years ago today. Today, it's closer to $145. So it's been a wonderful long-term investment. It's up more than a five-bagger over 10 years. The market, by the way, up 246% in 10 years. It's sometimes worth remembering that just owning the index fund ain't bad when you hold it over great periods. 246% for just mailing it in. But we've just about doubled up on the market with this stock.
Aaron and all players at home, stock No. 10, Dassault Systèmes. What is the market cap of this company within 20%?
Bush: $38 billion.
Gardner: Quintuple doinng! An incredible way to end this! It's worth pointing out right away that Aaron has no foreknowledge of any of the companies -- we put you not literally in a soundproof chamber, as they do on some game shows, we don't have one here at The Fool; but you have no idea what I'm doing.
Bush: No idea.
Gardner: And for a fifth time this show, you nailed it exactly right.
Bush: I've been very paranoid about market caps the past few days.
Gardner: [laughs] So, $38 billion is in fact Dassault Systèmes' market cap, which isn't even that easy to find on a lot of online sites today. That is the market cap. As low as $30 billion, as high as $46 billion, give yourself a correct answer if you were within that range. But Aaron, I have to say, 9 out of 10 was amazing. Ten out of 10 will always be remembered, and you may have broken the game. I may have to actually reassess The Market Cap Game Show, or at least you as a contestant on The Market Cap Game Show, because that was perfection. Rick said it's good once, though.
Bush: It is good once, so I'm glad it could be me. [laughs]
Gardner: That was 100% earned. I can only imagine. I know looking at market caps every day gives you insights, and you've done that for years here at The Fool. You probably put in a little extra elbow grease over the weekend, but again, over 200 companies with prices changing all the time. Five doinngs. I don't think we'll ever see that again unless you do it again. It feels like you put pressure on yourself. Maybe if we have you back sometime, you'll say, "I have to get six this time."
Bush: The pressure then will just be unreal. I don't know if I can handle that.
Gardner: [laughs] It was a delight to share this with you, Aaron. Ten out of 10 is the best score possible. Therefore, players at home, you could only go with #ITiedAaron. If so, drop us an email, email@example.com, and let us know that you, too, were 10 out of 10 on this episode of The Market Cap Game Show. I think the rest of us can rock the hashtag #ILostToAaron. And yet that's a very noble sentiment at this point. You might have gotten 9 out of 10 and still lost to Aaron. Chin up, Fools!
Bush: Thank you! Can I throw one fun market cap fact your way?
Bush: Guess what the market cap of the company of II-VI is. This is a stock that does lasers, photonics. It's a Stock Advisor recommendation. I'm surprised you didn't throw this one at me.
Gardner: I was definitely playing with numbers here. We had 10 years ago today was the 10th stock, and Five Below was the fifth. Are you about to tell me it was $2.6 billion?
Bush: It's $2.6 billion. We might never have an opportunity like this again on The Market Cap Game Show, so I just had to bring it up.
Gardner: We're having a lot of fun with numbers. Aaron, you had a lot of fun with this game. I had a lot of fun just watching you be a star at the game. Congratulations! You are an exemplar to all the rest of us. I would say the rest of the investor world. I will pit anybody on Wall Street or Main Street against my guy, Aaron Bush, when it comes to knowing your market caps.
Bush: I appreciate that. Thanks for having me, David!
Gardner: all right, next week, it is our mailbag. I mentioned just minutes ago, firstname.lastname@example.org is our email address. You can also tweet at us, @RBIPodcast. We take those in. It usually equals about 20 pages or so of notes and questions. I read through them all and try to figure out what are the best ones, the most interesting ones to feature. That's what I'll be doing next week on the show.
And then, starting October, I think it's about that time -- pet peeves. I'm feeling a "Pet Peeves Volume 4" podcast coming back. I try to do this once or twice a year. I've seen some recent stuff which I think qualifies maybe not just as my pet peeve, but perhaps yours as well. I also want to mention that I enjoy hearing your pet peeves. It's just two weeks ahead of our pet peeves show. If you have a pet peeve you'd like to explain to us and the world and send it our way, email@example.com. Those are the next two weeks in this podcast. They can't possibly be as good as this week was.
Thanks again to Aaron Bush and to my producer, Rick Engdahl, as always, for all the extra sound effects. Boy, that doinng sound is just going to stick with me throughout the week. In fact, I know the way that it would really most likely stick with me and remind me of greatness, is if we just closed the show by hitting it five times in a row to celebrate Aaron Bush.
[doinng] [doinng] [doinng]
As always, people on this program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Learn more about Rule Breaker Investing at rbi.fool.com.