Two Sleeper Stocks for Your Radar

In this week's episode of Industry Focus: Consumer Goods, host Jason Moser and Motley Fool contributor Asit Sharma dig into two hidden gems in the industry -- clothier Lands' End (LE -0.45%) and furniture maker Herman Miller (MLKN 1.60%). Tune in and learn how these two businesses operate, why they're such alluring buys for long-term investors, the biggest risks and drawbacks to be aware of, and more. Also, the hosts report on Under Armour's (UA 1.62%) (UAA 1.94%) CEO sea change -- why this is happening now and what it could mean for the company going forward. Plus, get a preview of some retail stocks to watch this coming earnings season, and more.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on Oct. 22, 2019.

Jason Moser: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market each day. It's Tuesday, October 22nd. I'm your host, Jason Moser, and joining me in the studio today via the magic of Skype, it's Mr. Asit Sharma. Asit, it's been a while since you and I have hooked up on this show, man. How's everything going?

Asit Sharma: It has! Everything is going very well. I would like to say that in the meantime, I've been training with Shaolin monks or something exotic like that, but I have been hitting the trails for a few runs, trying to keep in shape. How have you been?

Moser: Well, a lot of the same. If it's not back and forth with family stuff, doing a little painting on the side here and there at home to keep myself entertained, trying to keep in shape as well. I'm glad to see that fall's here. It was a long, hot summer. Finally, the weather's cooling down a little bit up here.

Sharma: Yeah, absolutely!

Moser: On today's Consumer Goods show, we've got some sleeper stocks that we want to talk about. We're going to take a closer look at Lands' End and Herman Miller. We're also going to take a look at the latest news here in Under Armour. You may have seen, they have a new CEO who's getting ready to protect and hopefully grow their house. We'll also take a look at some of the companies reporting earnings later this week and talk about some of the things we're looking for from those earnings reports.

Asit, let's go ahead and get things kicked off here with Lands' End. I think that probably, most listeners are familiar with the name, with the brand. Maybe our younger listeners might not be as familiar with the history of Lands' End, where it has been and perhaps where it's going. But let's talk about Lands' End for a second, because this is a retailer that for a long time had an established relationship with Sears. We obviously know where Sears is these days, and it's not a place where we typically want our investments to be. But Lands' End, actually, there could be some light at the end of the tunnel here for them. Talk to us a little bit about what you think the future has in store for the company.

Sharma: Sure. It's a very interesting company. It is a small-cap stock. Had a long fall from grace and now trades with a market capitalization of about $250 million. This was founded in 1963 as a mail-order company, and it specialized in sailboat hardware and equipment and from there branched out into sailing-based, sailing-thematic clothing. It was a big mail-order catalog back in the day. I remember my sister, who is a fashion maven, she ordered me a couple of mock turtlenecks from the Lands' End catalog when we were teenagers because she hated the way I looked whenever her friends were around, and that was a quick, not cheap, but not overly expensive, way to make me look presentable.

If you remember -- Jason, I think we're roughly about the same age -- it used to be quite a big thing to get this catalog in the mail and flip through and maybe order some clothing.

Moser: Oh, yeah! I remember those days very well.

Sharma: They did fairly well as a private company. Eventually went public, and then were purchased by Sears in 2002 for $2 billion. Sears continued to run it as a mail-order business and also as it expanded into e-commerce. But the major change it made was to introduce Lands' End stores within Sears locations. This is the stores-within-a-store concept. Sears, as we know, got into financial troubles. One of the many steps they took to free up some capital was to spin Lands' End off in April 2014. But the two companies didn't part ways completely. Lands' End continued to operate 236 Lands' End stores, they call them Lands' Ends shops, at Sears as of 2015. This would prove to be a real weight on the company's earnings in the coming years. As you said, we all know the fate of Sears locations over that time period -- the decline in traffic, the inventory problems they had, and the onslaught of e-commerce, which ripped the heart out of Sears.

If you look at Lands' End's earnings between 2014, annual net profit margin dropped from about 4% a year to a negative 8%, and the stock just careened. It was at a high of $55 in December 2014. Bounced all the way down to an all-time low of $7.24 last month on September 3rd before bouncing hard off that level and nearly doubling when Lands' End released its fiscal second-quarter 2019 earnings report, which was quite a good report. It's trading around $12 per share today.

Moser: Every once in a while, we still get Lands' End catalogs in the mail at our house. My wife, much like your sister, probably thinks I could dress a little bit better, I'm sure. I'm not known for going too far out there on the wardrobe side of things. But every once in a while, she'll very thoughtfully order me a couple of things from here and there. She's pulled in a few things from Lands' End for me, pullovers and whatnot, that I actually really like. I'm not married to any particular brand today. I do like Under Armour's stuff a lot because it fits and it's quality stuff. I tend to wear a lot of jeans. But when it gets to be this weather, especially, those Lands' End pullovers start coming in handy.

The one thing I like about Lands' End, it's not overstated. It's fairly plain Jane. You don't get some big logo on it. It's just good, classic-looking stuff. I feel like maybe we're coming to a time where that could be an advantage for a company like this.

Sharma: I think that's a great point. Understated but timeless clothing is coming back into fashion, especially as the whole buzz about going to the malls for millennials has just faded away. Millennials have a real sense of style. They like style and aesthetic looks that last. I think it has that momentum that can help it come back.

Let's talk about what it's doing to actually make a turnaround, after talking about how badly the stock has been hit. The first major thing that Lands' End has done is to get rid of all those Sears leases from 236 stores, which I mentioned. It has gradually pulled out of leases, let them expire. It's down to 37 leases, all which will expire at this year-end, and they're not going to renew any of those.

Moser: So they're going to cut that Sears relationship basically completely off, then, is what you're saying?

Sharma: Yeah. It's finally finished. It's been a drag on revenue and earnings. One of the elements we look for in a turnaround are the things which are dragging the stock down: how can management combat them or cut the bleeding? And there you go. It's time to move forward. Lands' End has embarked on reestablishing a retail presence. It has 21 stores. It's going to add four more this year. These are contemporary-looking stores that are opened in fairly affluent areas. They're going back to their roots, to present a curated product when you walk into the store that's slightly higher end, not a luxury product, but something that people of affluence may want to buy and keep a couple of pieces of in their wardrobe. They also have these on-site kiosks which help you order merchandise if it's not in the store. And each store has a pretty small footprint, 5,000 square feet. They're economical. They're not producing a big economic drag.

What do you think about this transition from the musty old Sears retail into a little bit of their own stores? What's your take on that, Jason?

Moser: I personally think that's the move to make. You look at that and you think, if they went the other direction and tried to deepen that relationship, or link up with another concept out there, that opens you to that same old risk that you've had before. Clearly, distribution is much different today than it was back in the day when Lands' End was founded and prospering. We're at a point in time now where a lot of people can just order their clothes on their phone and have them shipped. I'm a good example of that. I know what I like, I know what fits, so I tend to order a lot of that stuff. And I can order it from my phone. We also live in the age where more and more people are happy with the quality of store-brand clothing. Look at what Costco is doing with the Kirkland brand. Look at what Amazon is doing with their Amazon Basic brand. Having a couple of those Amazon Basic shirts myself, they fit well, the quality's there, they're inexpensive, and they're delivered right to my doorstep in no time. Not to mention all of these different subscription services, where you can have your wardrobe delivered right to your front door as well; you keep what you like and send back what you don't. So, I think skating where the puck is going, it sounds like, is what Lands' End is doing, and utilizing not only a modest store base but also being able to reach out to consumers via the online presence, I think, makes a lot of sense.

Sharma: Yeah, I think so. They've actually been able to transition that whole catalog business online. They still send out direct-mail catalogs, but you don't call up a service representative anymore or send back something in the mail to get your clothes. Most of the time, you're going straight to a URL and ordering those clothes. About 72% of their $1.5 billion in annual revenue is through e-commerce. That's a stable revenue stream for them. I think, too, they were an early adopter of e-commerce, actually, one of the first stores to jump into e-commerce. That was a developing line of business before they were acquired by Sears. Subscription models like Stitch Fix are really catching on. I would be interested to see if they also dabble a little bit in that in the coming years.

I want to briefly talk about an interesting business segment which makes up about 20% of revenue now which they call outfitters. This is a segment which maybe has some potential, where they're making uniforms for big corporate enterprises. Lands' End did a launch of Delta Airlines' uniforms last year, which was pretty good to the top line. It's following that up this year with a fiscal fourth quarter 2019 launch of American Airlines' new uniforms, which is going to be worth about $40 million to $50 million in new revenue for the company. I don't know, listeners, if you heard about all the controversy surrounding American Airlines' uniforms. This is now about a year ago. Basically, American Airlines was seeking to have new uniforms that its flight attendants and crew, all staff, would be comfortable in, and what they ordered turned out to not be optimal, [laughs] and some people thought it was giving them skin rashes. The upside is that Lands' End ended up with a new contract. I think it's a really interesting fledgling line of business which could turn into a more meaningful revenue stream in the coming years.

Moser: Yeah. If you're going to outfit a global staff of employees, you have to make sure you get that right. I don't know how much of a Seinfeld fan you are, but it makes me think of George Costanza's genius idea to change the Yankees uniforms out to cotton, and the uniforms shrink and the players can't move around in them. Yeah, it seems pretty simple, but you have to get in there and make the right decisions, or it can be costly.

OK, bottom line, you have a thumbs up on Lands' End in CAPS. It seems like you are somewhat optimistic of their chances.

Sharma: Yeah. I'll just say a few things about why I think it's an interesting and a good purchase. If you look at their trailing 12-month price-to-earnings ratio, it looks high. It's trading at 40 times the past 12 months' earnings. But if you look forward, because of the earnings growth that company has had, its forward P/E is 21 times. For a small-cap company, that's actually not very pricey. They've got a manageable long-term debt load. They've got working capital, that's $224 million. That's excess of current assets and current liabilities. Their total debt is only $380 million, and it's less than the inventory they keep on their books. So I think that if you look at manageable risks, including a potential slowdown in the economy -- which all retailers are subject to, which could impede sales -- I think this is interesting. It's not quite a value play. Even though it's been beaten down, you can't say it's vastly undervalued. But a lot of the downside risk with Sears is out of the stock, so from here, there's probably stability and upside potential if the company can extend those e-commerce sales, build out those stores, and sell this uniforms business to a few more large-scale companies. What are your thoughts?

Moser: Well, I do like that they have eliminated the Sears risk. I do like that the brand itself isn't really flashy. I think it's fairly...I don't want to say innocuous, but it's a brand that's not flashy. It's not out in front of you. There's not that fashion risk that you would probably see with a lot of those teen retailers, for example. They're clothes that fit any age, any stage of life -- man, woman, girl, boy. I feel like you have a lot of opportunity there from a market opportunity perspective. So, yeah, it seems like they made some good decisions to put themselves in the position that they're in today.

Let's move over to furniture. Nice segue, we'll go from fashion to furniture. I was glad to see you put this out here for us to talk about today, Herman Miller. I actually have been to a Herman Miller store once. It was a few years ago. We were looking at some furniture for the office here at Fool HQ. We had gone to a Herman Miller in D.C. I was part of a group that got to go over there and offer some feedback. Man, I'll tell you what, talk about outfitting a global staff, it's the same thing when you talk about buying furniture for a global HQ. It is not one-size-fits-all. There's a lot there from which to choose, and particularly today, when you talk about the ergonomics of it all, it's a way different world now. I was astounded when I saw that Herman Miller store.

Moser: Yeah, they are surprising in the depth and the breadth of really functional products -- again, we were talking about timeless fashion. Let's talk about timeless design. Many of these core products were designed in the '40s, '50s, '60s, '70s, and '80s, but they were just so gorgeous they continue to sell well today.

Herman Miller has made a business out of outfitting all types of corporate renovations, new office spaces. They have a competitor in Steelcase, which is not quite a familiar name, but between these two companies, they are riding a wave of redesign that has everything to do with the rise of co-working, flexible office spaces. If, listeners, you're lucky enough to visit Fool headquarters, you'll see this amazing, gigantic, multifloor collaboration space, the way I think of it. That type of aesthetic has been taken up by companies which are very forward-thinking and innovative. Its products fit well within that.

Why this is a sleeper stock: let me read you guys some numbers. This is a small-cap company, but it's not a tiny company. It's got a $2.7 billion market cap. The company has been around since 1905. Total return year to date 56%. 42% positive over the last trailing 12 months. But when you start expanding that window out, Herman Miller is averaging a 25% total return yearly over the last three years, 23% total return yearly over the last five years, and 24% annually over the last 10 years. Investors who reinvest their dividends, they're basically doubling their money every four years over the last decade or so.

But beware -- this is a volatile stock. It has a beta of 1.8. What that simply means is, if you look at the whole market as a baseline and call that a beta, or a volatility measure of 1.0, then Herman Miller is almost double the volatility of the market. If you look at their stock chart, you will see that. So great returns maybe earned with a little bit of heartburn.

Moser: I can imagine. What's interesting to me is, with a company like this, it's not the biggest company in the world, but you're right, it's making its way out of that small-cap space; but to see that they pay a dividend is, to me, pretty telling. When you look at the financials, this is not a dividend that they're stretching to pay, either. That payout ratio is always 25% to 35%. Obviously, they can afford that dividend. When you think office furniture in this world of SaaS companies, these tech companies that scale, 90% gross margins, this is not that kind of a business, but they clearly make a very quality product, they hold a reputation in the space as a leader, and you see that in the financials. Their margins are strong and stable. Again, paying out a dividend on a consistent basis. They're cash flow positive by a mile. Financially speaking, there are a lot of things to like about this business.

Sharma: Absolutely. One thing that you mentioned is this potential. A solid company that has very stable cash flow, pays out a dividend -- not enormous potential, but potential to grow into a growing market space. This is a company which is doing about 7.5% of annual revenue growth. Let me speak for a moment about how their business is structured. For those listeners who are trying to think of their products, we didn't mention the Herman Miller Aeron chair, which may be their most famous product. Also, the Eames lounge chair and the marshmallow sofa. If you've ever heard of these products or seen them, now maybe that rings more of a bell.

The company operates in three segments -- North America, international, and retail. The North American segment is about 68% of revenue, followed by international at 17% and the last 15% is supplied by retail. They've got a store called Design Within Reach, which is consumer-oriented, which you can walk in. If you want a Herman Miller chair, you can go buy it there.

One of the reasons the stock is volatile is because the business depends on order flow. In other words, which big companies, Fortune 500 companies, middle-market companies are doing renovation projects or moving into new office space? That tends to vary from quarter to quarter. Because that number can be lumpy, the revenue can be a little bit lumpy. But, as I said, once you throw everything into the wash year after year, the numbers fall out positive. Cash flow positive, revenue positive, earnings positive.

I also want to mention a couple of things that the company is doing to take advantage of all of the rise of collaboration and flexible work spaces. It's made a couple of acquisitions in the last few years. It bought a Danish accent venture specialist called HAY, and a Dutch collaborative furniture manufacturer called Maars Living Walls. These are actually solid glass walls that you can configure a room within a room if you need privacy. They make beautiful glass walls for contemporary office spaces. These are the types of spaces that Herman Miller needs to move into to keep up with changing tastes in office design. They're obviously doing that.

Finally, I want to mention, it has a new CEO in Andi Owen. She is a career executive with Gap and the Banana Republic, who just completed her first year in August at Herman Miller. She's been really good at helping the company up its profile in the consumer space. She is expanding the number of Design Within Reach stores that are out there in the marketplace. Expect to see more of these when you're driving around, again, in maybe the affluent areas where you might see that Lands' End new store that we were talking about.

A lot of great things going on for it. Risks include competition from Steelcase, which I mentioned. They're also vulnerable to a potential recession, because that tends to hit projects like office renovation and moving into new office space, for example.

Moser: Yeah, no question about that. You mentioned recession. Another thing that got me thinking was this WeWork fallout and how big of a mess this has turned out to be. I'm not drawing a connection between Herman Miller and WeWork, but you have to figure that those WeWork spaces are furnished with something. Who knows how robust that business is going to be in the near future? But, wow, there are a lot of things to like about this business, just given the nature of what they do, the market opportunity that's out there. It does seem like it's a fairly robust refreshment cycle. It does seem like offices are willing to spend in order to keep their work environments current, fresh, new. There's a big focus, obviously, on culture and creating a workplace where people are happy to be. We talk about it all the time here, Fool HQ, this is a great place. People love to be here. That's why we are able to get the best out of so many, because we've created a place where people like to be. And part of that is, we have a very diverse furniture assortment here. We have everything from beanbags to standing desks and everything in between -- which, by the way, let me tell you, I've got one of those Varidesk standing desks. I vowed after my time in the golf business, because there's so much standing in the golf shop involved there, that I was never going to have a standing desk. But man, did my tune change. I love that Varidesk. So, I was happy to see that Herman Miller has a presence in that standing desk space as well.

Sharma: That's right. I think that's a really sharp insight, too. Corporate expenditures, if you look at the list of what's important, that tends to bubble up to the surface, to the top, cyclically. As you said, after a few years, savvy managers are like, "Let's replace all this stuff because we want to attract the best people and keep these great employees happy and motivated." It is something that is rarely ignored in terms of keeping great employees.

Moser: All right, Asit, the question that remains, then, if you get to choose one over the other here, what are you going? Are you going Lands' End, or are you going Herman Miller?

Sharma: There's a lot of upside in Lands' End if all the pieces come together, but I will say, I would go with Herman Miller. Their forward P/E ratio is only 12 times, meaning that they've got some earnings multiple expansion that's available to them. And they've got a track record. They really have impressed me with how, year in and year out, they've managed to grow that stock price with everything else we talked about. So if I had to choose one -- I like them both -- I would go with Herman Miller. And you?

Moser: I'm on board with you there. I like them both. I think there's a really interesting story there with Lands' End. I think there's a future there. But if we're talking about investments, and we're talking about making money, and that's what we're here for, yeah, I'd have to be going with Herman Miller as well.

OK, Asit, this morning, we saw some news break that we wanted to roll into the show here. Kevin Plank, the founder and CEO of Under Armour, is going to step down, and president and chief operating officer Patrik Frisk will become the company's CEO. This is going to be effective January 1st, 2020. Frisk will serve as the CEO and the president of the company. He'll report to Plank. Plank is going to step aside and become the executive chairman and brand chief of the company. So he's still maintaining a presence with the business. But this is a situation where it looks like the leader, the CEO, the person who's going to take this company hopefully to the next level, is going to be changing hands here, and Patrik Frisk is going to be the man.

I tell you, when I first read this news this morning, I personally think this is a very good move. It sounds like it was something that Plank ultimately wanted. He said this was his decision. I was watching an interview with him earlier today. It seems like he's really excited about this opportunity. What were your feelings when you saw this news?

Sharma: There are some pluses and minuses. This may be good all around on a couple of fronts. One, Kevin Plank has had some controversies, made some controversial statements, controversial actions in the last year. That tends to distract from the business at hand. And Patrik Frisk is an operations guy. The analogy is when Kevin Johnson took over Starbucks, he was also the operations guy at Starbucks who had made everything happen beneath Howard Schultz, the visionary. So we had sort of the same equation. I think Frisk can do a pretty good job. He's executed their growth strategy over the last three to five years. He's also got a great love for the brand. I think he can make it competitive.

The minuses that we might look at. Does he have the vision? Does he have the same keen eye for product innovation? Does he have that cutthroat competitiveness that Plank brings?

I think all in all, it's positive. One thing it does do, when something like this happens, when a CEO realizes, "Maybe I should step back, stay involved with the company, let someone else run the day-to-day and try to help coach strategy," it can, down the line, clear up the clouds for everyone involved in the company, and clears away distractions, probably unneeded distractions that they've had over the last year or so, to just focus on winning market share. But we'll have to see. Time is obviously the proof here in this transition.

Moser: There's a blueprint out there that tells us this can work. Again, it doesn't mean it will. But you look back to Chipotle and the troubles that they had for so long. Eventually, Steve Ells stepping down, allowing Brian Niccol to come in and take the CEO role on. That's worked out very well. Now, I think a couple of reasons why that worked very well. Obviously, Niccol having experience in the industry didn't hurt. I think it was also a matter of Ells knowing his new role and staying in his lane, and not getting in the way, so to speak. I think that's going to the real key here. Is Plank going to be able to stay in his lane? They both have pretty big egos. Steve Ells showed that it's OK to put that ego aside for the greater good. Hopefully Mr. Plank will feel the same way. But like you said, time will tell.

We've got earnings coming up here this week. Earningspalooza now in full force. We've got lots of companies every day. Next week, it's going to be hundreds and hundreds of them, it seems, on a daily basis. But we've got a few companies that are announcing here later this week we wanted to bring forward to your attention that are on our radar, and mention a couple of things we're looking for.

Let's go ahead and start with O'Reilly Automotive. They're announcing on October 23rd. Asit, what's your quick take on O'Reilly?

Sharma: Oh, oh, oh, O'Reilly. I can't get that jingle out of my head. What I'm looking for is basically solid comps, solid comparable sales. Last quarter, the company had moderate comps growth of 3.4% because of what they called unseasonably cool and rainy weather. I want to see that those customers came back through the door. I want to see these comps rebound, maybe to the higher end of 3% to 5%. Also, they were on this track to build out 200 new stores this year. They did about 43 in the second quarter, which brought them to 107 stores year to date. They're behind schedule, also blaming the weather on this. I want to hear that management said, "Yeah, we're back on track, we opened a substantial number of new stores and we'll hit 200 by year-end." Those are the two big things that I'm looking for. O'Reilly's stock is up about 19% year to date. It's outperformed some of its peers in the auto parts space.

Moser: On the 24th, Callaway is going to be releasing their earnings report. Callaway, for those of you who are not familiar with the company, this is golf equipment, gear, and apparel. I was in the golf business for many years before I ever made it here to Fool HQ. I've played golf all my life. So it's a business that's always interested me. By the same token, I know that golf is a very tough business, and it can usually be a tough one on the margins as well. Not a whole heck of a lot of pricing power, with a few exceptions, it seems like. But Callaway itself, the business has done a very good job in a tough time, where golf has been a little bit on the decline. But it does seem like the numbers are starting to tell a different story here. Maybe some people are taking up the game, giving it another shot.

The interesting thing with Callaway Golf, and one of the reasons why I think we're seeing some of those numbers come back up, Callaway owns about a 14% interest in Topgolf International. Topgolf is a driving range where you go out there and hit balls at targets. They gamified it. It's a bit like a Buffalo Wild Wings, but for golf. You're going to go there and have a couple of beers, some wings, they get sports on TV, you're hitting golf balls with your friends. It's a neat experience. There's this potential that Topgolf is looking at a possible IPO here in 2020. Honestly, if I'm looking at Callaway and Topgolf, I'm more interested in Topgolf, to be honest with you, Asit. But the two companies together right now, you get a lot of information from the earnings reports there, so that's what I'm going to be looking for from this report they have coming up here.

Let's go into another one that reports on the 24th. It's a company that we've highlighted on this show before, you and I have -- Tractor Supply. Talk to me about that one.

Sharma: Tractor Supply, very interesting company. It's a retailer and it caters to the rural lifestyle. This company has just about everything when you walk in the door, if you live in a rural area, from farm implements to fashionable clothing for that lifestyle. It even has a subsidiary called Petsense, which caters to this really explosive revenue stream in the consumer goods space of pets. We can't seem to stop spending on our pets, but that's good business for companies like Tractor Supply.

Moser: Three dogs at home, I understand the spending.

Sharma: [laughs] Tractor Supply's stock has done OK over the last trailing 12 months. It's appreciated about 9%. It trades at 20 times forward earnings. Let's look at comps again. They were pretty decent in the second quarter, 3.2% over the prior year. Not bad for a consumer goods retailer in this space. I'm looking for margins, which are typically around 34%, 35%, to be healthy this quarter. They've had this trend of improving product mix. Good pricing management, along with some in-store innovations, technology that they use to help customers find the inventory, and if you can't find what you're looking for in their store, they've got these mobile hand devices which help them locate it at a nearby store and get it delivered. All these different initiatives are making those margins healthy. I'm looking for those margins to improve a little bit this quarter. I think comps will fall into the 3% to 4% range. I'm looking for revenue to be in that mid-single-digit range, somewhere between 6% to 7%, which is incidentally their year-end target for the complete and total year.

The only other thing that I probably will look for, if you have time, listeners, to listen to the conference call or read up on the transcript later at fool.com, is how that Petsense development is coming along. They've got a goal to add about 10 to 15 new Petsense stores this year. It's a lucrative category. They have a base of about 180 stores. I'm always interested to hear those plans because that's like gravy on the top of their margin, this whole pet business. So that's what I'm looking for. Tractor Supply, a very interesting business. If you're not familiar with it, listeners, I encourage you to take a look.

Moser: Any listeners out there that know me know I love the pet market. That's a good point to bring up there. That can be a real nice bonus.

Finally, on October 24th, we've also got Amazon reporting. Always, with Amazon, it's about the top line, how much they're growing that revenue top line, the consolidated top line. Paying attention to that revenue growth, and also getting any signs of what they're seeing coming down the pike here for the holiday season. That's always a key time of year for a company like Amazon.

Also, I keep a spreadsheet of the operating margins quarter by quarter over the last several years for the company. Breaking it down from the domestic North American versus their international business versus the Amazon Web Services side of the business, it's funny to watch those numbers trend. You've got the North American business, which is nice and mature now, bringing in those mid-level operating margins. The international business, still negative as they build that out. And then you've got the AWS side of the business, which is 25% to 28% operating margins. It's really such a nice bonus for this business.

They do play their cards very close to the vest. You don't get a whole heck of a lot from the call. But it's still always one you learn a little bit of something new from every quarter. So, looking forward to that one.

Asit, it was great catching up with you! Thanks for joining us this week!

Sharma: A pleasure! Thanks so much, Jason!

Moser: As always, people on the 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. Today's show was produced by Austin Morgan. For Asit Sharma, I'm Jason Moser. Thanks for listening! And we'll see you next week!