At The Motley Fool, we're buy-and-hold investors, but before we can hold great stocks, we have to find them. So our analysts are always on the hunt for strong new investment ideas. And every week, some businesses stand out from the crowd, which is why each Motley Fool Money episode includes host Chris Hill asking his guests -- this time, senior analysts Ron Gross, Emily Flippen, and Jason Moser -- which companies they have their eyes on and why.
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This video was recorded on Oct. 25, 2019.
Chris Hill: All right, let's get to the stocks on our radar. Ron Gross, you're up first. What are you looking at this week?
Ron Gross: I'm going to go with a stock we talked about earlier this week on YouTube Live. Plug for YouTube Live. It's Rollins, ROL. Provide pest and termite control. Stock has not done much this year, but it did have a strong week. But since it was weak earlier in the year, there's plenty of room here, I think. Steady performer. Increased revenue and earnings every quarter over the past decade. They grow organically and through acquisitions. More than 80% of sales are recurring. Raised their dividend every year for the past 17 years.
Hill: Steve, question about Rollins?
Steve Broido: Do we really need these people? Can we just do this stuff ourselves? It seems like they're spraying chemicals. I can get chemicals. What's the value here?
Gross: I don't know, you can't be messing around with chemicals. That's a lot of work. Setting traps, spraying in the house, out of the house. Hire somebody.
Hill: Emily Flippen, what are you looking at?
Emily Flippen: I'm looking at an Australian company called Afterpay Touch. It's traded on the ASX, the ticker's APT. It's a fintech company that essentially operates of a small scale lender. Any listeners here in the U.S., if you go to a website, say, Urban Outfitters, you purchase some clothes, you check out, you have the option to check out with Afterpay Touch. It lets you pay in installments, interest-free. Just spreads it out over a longer period of time. They get the majority of their revenue not from people who end up not paying them, but actually from, like, Urban Outfitters themselves, who pay for that option.
Hill: Steve, question about Afterpay Touch?
Broido: What sort of yield do you think they're getting on these if they're not collecting interest? What's the yield on this?
Flippen: The way they're getting paid is by charging the company themselves to offer the services to them. The company's paid them a flat fee just to offer that to their customers when they check out.
Hill: Ron, you gave a shout out to The Motley Fool's YouTube channel. I want to give a quick shout out, since Emily's mentioning a company in Australia. Quick shout out to Motley Fool Money Australia, the Australian version. Worth checking out. You can find it anywhere you find podcasts. It's Motley Fool Money, but with much better accents.
Gross: [laughs] Nice.
Hill: Jason Moser, what are you looking at this week?
Jason Moser: This may be a new one for Motley Fool Money. It's a company called Instructure, ticker INST. Their business is best summed up by the mission statement, which is to help people learn and develop from their first day of school to their last day of work. The actual business itself, it is a software-as-a-service that provides applications for learning assessment, performance management. They do this through two platforms -- Canvas, which is their learning management platform for kindergarten through 12th grade and higher education, and then Bridge, which is basically employer-based. They have over 4,000 customers, representing colleges, universities, school districts. 30 million-plus people learning on their platforms today. Looking at it for the augmented reality service. Really neat business.
Hill: Steve, question about Instructure?
Broido: How do they compete with LinkedIn learning, which seems like it dominates that space right now?
Moser: LinkedIn is a bit more professional-oriented, but Blackboard is the company that Instructure is trying to disrupt, and I think they're doing a pretty good job of it.
Hill: All these years, my kids in high school are going on Canvas. I didn't realize there was a public company behind it the whole time.
Moser: You just click a button.
Hill: Steve, we've got Instructure, we've got Afterpay Touch, and we've got --
Hill: -- we've got basically a pest business. Do you have one you want to add to your watch list?
Broido: Well, I don't like the name. I think it's a little creepy, but I will go with Afterpay Touch.
Hill: Is it safe to assume, given your questioning of Ron, that you actually are a hands-on person at home when it comes to getting rid of pests?
Broido: Well, if you have ants, you just spray. It's not that big of a deal. I don't need to hire somebody. But maybe if I've got raccoons or squirrels in my attic, I'm probably not getting involved.
Hill: Ron Gross, Emily Flippen, Jason Moser, thanks for being here!