In this week's Motley Fool Money, Chris Hill chats with Fool analysts Jason Moser and Ron Gross about some of the week's biggest market news. Bed Bath & Beyond (NASDAQ:BBBY) lost six senior executives, and the stock popped 10%. BlackBerry's (NYSE:BB) third quarter highlighted how much the business has changed since its heyday. FedEx (NYSE:FDX) fell significantly on earnings, but just how bad is it for this bellwether company? Plus, updates from Nike (NYSE:NKE), IAC (NASDAQ:IAC), General Mills (NYSE:GIS), and Winnebago (NYSE:WGO). Jason and Ron also share some stocks on their radar and a few holiday-themed rounds of buy, sell, or hold.
Also, stay tuned for a talk with the Fool's resident retirement pro, Robert Brokamp, about year-end tax planning in light of the new tax law, why retiring later might be the way to go, how to save for college, and much 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 Dec. 20, 2019.
Chris Hill: We begin with sports retail. Nike's second quarter profits and revenue came in higher than expected. Nike's Jordan brand had its first-ever billion-dollar quarter. Despite all that, Ron, all that goodness, shares of Nike down a little bit on Friday.
Ron Gross: Nike almost always beats expectations, but the stock still sells off about a third of the time. You never know. But this was a solid quarter. 10% up sales, despite tariff headwinds. North America up 5%. Greater China, which is the fastest-growing market for Nike, up 20%. They're really doing a nice job. Direct sales up 17%. Net income up 32%. Is that enough numbers for you? The company is really executing quite well. They've done a really nice job of growing that direct-to-consumer business, which was a very important part of their new strategy.
Hill: We're a couple of years removed from Sports Authority declaring bankruptcy and the ripple effect of that. It seems like, at least for Nike, anyway, they're free and clear of any damage from that.
Jason Moser: Oh, I think so. They've been investing in this direct-to-consumer business for quite some time. Under Armour has, too. I tell you, the other company that stood out this quarter, Lululemon, they're tracking toward 30% of total sales now being direct-to-consumer. That's the new model. It makes a lot of sense. It gives these companies the opportunity to control the experience from beginning to end. And when you can own your customer like that, understand their tastes, their preferences, you can start to build product offerings toward them specifically. What's playing out with Nike's SNKRS app is to me nothing short of astonishing.
Gross: The app is big, doing really well.
Moser: It's resulted in a lot of sales, and a lot of that is because you can customize stuff and build something that you want as an individual.
Gross: A couple of things that maybe investors are focusing on and is the reason for the stock selling off just a bit. Gross margins did widen. They're 44%, pretty solid. I think, actually, expectations for them were for just a little bit higher than that, especially with the direct-to-consumer business being a growing piece of this business. Also, inventory levels were up 15%, which in certain cases can be troubling. My take is that it is not troubling in this case. They're building inventory because the global business is just very strong.
Hill: Safe to assume as we head into 2020 and the Summer Olympics that Nike's marketing spend is going to ramp up in the next 12 months?
Gross: I'd be shocked if it didn't. New CEO coming on board, John Donahoe of eBay, solid player right there. I'm sure marketing will be up. The business looks strong.
Hill: Last thing on the stock. Despite the little bit of a drop on Friday, it's still up nearly 50% in the past year. Is this an expensive stock?
Gross: 32X is not cheap, but I love this business. I'm a shareholder. I'm not even thinking about selling it. I think you're good.
Hill: Interactive Corp is a holding company with dozens of online media and services platforms. care.com is an online marketplace for caregivers. Apparently, IAC needed one more brand under their umbrella, Jason, because on Friday, IAC bought care.com for $15 a share. You look at IAC's stock price ticking up a little bit, says to me they got a good price.
Moser: Yeah, I think they got a good price. I think it's important to understand how IAC views itself as a business. That's ultimately what dictates their business strategy. They consistently say they are the anti-conglomerate. They are not empire-builders. They aim to bring these types of businesses into their universe, grow them, nurture them, in some cases turn them around a little bit, and then set them free. We're seeing an example of that here with match.com, which is going to be spun out here very shortly. It doesn't always work. They brought Angie's List and HomeAdvisor under their umbrella, combined those two businesses. That is still a work in progress. It's worth noting that Angie's List revenue in the most recent quarter grew again for the first time since 2016. The business has a lot of experience doing this. Just, a lot of the brands that they own are just not brands that come to the top of your mind when you think about some of the more popular, powerful internet brands out there. Maybe that's where investors have a little bit of a tough time connecting the dots. But the stock continues to perform very well because the business continues to perform very well. Barry Diller, as we've talked about before, has a lot of experience in the space. I think that with care.com, they see the opportunity to take something that has a lot of secular tailwinds in home care, whether it's for children or seniors. They're going to hopefully leverage that network, maybe bring in a pet dynamic, combine that with the HomeAdvisor business, and try to figure out ways to exploit that network and grow that network.
But the bottom line is, IAC has a good track record of doing this. There's no reason to doubt that they won't give this a good run.
Hill: But if they're looking to create essentially a home version of what they have built with match.com, and how dominant that is, we're a few years away from that.
Moser: Yeah, I think that's probably a bit of a tall order. I think that match.com, given the nature of the market that type of business serves, it's a bigger market opportunity. But, the care.com business, HomeAdvisor business, Angie's List, those are all important markets that aren't going to be going away anytime soon.
Hill: Shares of FedEx down more than 10% this week. Second quarter profits and revenue came in lower than expected. You tell me, Ron, how bad is it for FedEx?
Gross: I don't think we can think of FedEx as a bellwether anymore. The dynamics of this industry and this business in particular are changing such that I don't think it's appropriate. This was a very weak quarter. They had to cut their 2020 profit forecast for a second time. They cited several factors that are hurting results. The integration of their European TNT Express acquisition was one big one. Loss of Amazon as a customer, obviously, another. They moved to year-round Sunday deliveries. That has cost them more than they expected. They even threw out the U.S.-China trade war as a headwind. Then, we go to the calendar. Of course, you have to go to the timing. The timing of the Thanksgiving holiday resulted in shifting of cyber weekend into December, which hurt results. They threw everything at this report. Just very, very weak, and you can't really see it turning anytime soon.
Hill: Well, you look at FedEx losing Amazon as a customer. That would be one thing on its own. But this is not a large customer; it's a large customer that has decided to go out and build its own competitive shipping service to FedEx. It seems weird to say about a company with a strong brand, and is worth nearly $40 billion, but FedEx actually seems like it might be in legitimate long-term trouble.
Gross: Yeah, Amazon pace to deliver 3.5 billion of its own packages to customers this year. You see a lot of headlines, Amazon is actually forbidding its customers from using FedEx to ship their products to the end user, which sounds anti-competitive. It'll be interesting to see if that becomes anything in the courts. But Amazon's playing hardball here. They contract with more than 800 delivery service partners right now.
Moser: Shipping and logistics hard business. You look at UPS and FedEx for a long time, have enjoyed more or less a duopoly because they're providing what's ultimately commodity service. You don't care who delivers it, you just want it there on time. Amazon has built this business that has changed the commerce industry completely. It's more about convenience. It's about making sure they control that experience. We're talking about Nike and retailers like that wanting to control that experience. Amazon wanting to do the same thing. So, now, you see FedEx and UPS and the like, they don't get to enjoy just sitting back and doing their own thing now. They've got to rethink this entire model and deal with some real competitors in the space.
Gross: This is one of those value investment/value trap things as well. 13X looks awfully cheap, but the business is in trouble, and you're really taking a risk. That's a risky 13X.
Moser: Probably a safe assumption it's going to cost them a lot of money to keep competing, and that's going to play out on the financials, which leads me to think this is probably a value trap.
Moser: That's why I don't own the shares.
Hill: Normally, when six senior executives leave a business at the same time, that might be cause for concern. But, shares of Bed Bath & Beyond rose 10% this week when new CEO Mark Tritton continued to make changes at the embattled retailer. Jason, this guy is one to watch.
Moser: Hey, extensive problems require bold solutions. I think it's safe to say that Bed Bath & Beyond has been dealing with some very extensive problems and this is a bold solution. Whether they left of their own volition, or some left and some were told to leave, however that worked out, ultimately, Mr. Tritton sees the need to bring this business up to the shopping experience on par with the 21st century. You need to get rid of the old school thinking that put this company in the position that it's in today. I think this makes a lot of sense. To me, this is the do or die situation. I've obviously been giving Bed Bath & Beyond a hard time on this show for a lot of years. I'm looking at this with some cautious optimism. I think if they can make this work, this is the chance. There's a little bit of debt to deal with on the balance sheet, but there's some levers he can pull in the near term. I would actually cut the dividend completely. I don't see any reason for a business like this to pay a dividend. I think the market would receive that positively. I would eliminate share repurchases altogether and then get down to brass tacks. Close underperforming stores. Again, bring the shopping experience up on par with what we're used to now, with all of these other retailers.
It's a tremendous market opportunity, home furnishings and home goods. We're seeing Target, Wayfair, Amazon, companies like that benefiting from it. There's no reason why Bed Bath & Beyond shouldn't either. It's tremendous branding for that space. They just needed some forward thinking and I think that Mark Tritton might be it.
Gross: Yeah, Tritton did a great job at Target as their chief merchandising officer. It's actually a loss for that business that he left. But it is a gain for Bed Bath shareholders. I think there's something here. I agree with you. It might be wise to take a little nibble here because I think this isn't over yet.
Hill: He took the job in November. He was named CEO in early October. From the time he was named CEO, this stock is up more than 70%. There's a lot of optimism behind his installment as CEO.
Moser: A lot of the hard work is done. They've got the footprint. They've got the market opportunity. It's really just a business that has not been managed in this new-fangled retail environment that we're part of now. I think he aims to change that. He's got experience doing it. I think he's going to that over to the job now.
Hill: BlackBerry used to be the dominant player in mobile phones, but that was before the iPhone came along. Now BlackBerry is all about security software and services. Third quarter results, Ron, a little bit better than expected.
Gross: Yeah, not too bad. It is important to understand that this isn't your father's BlackBerry. It's a completely different business. As you said, they're focused on data security. They're also a developer of software for driverless cars. In February, an important acquisition. They acquired Cylance, which is a cyber security business. As a result of that acquisition, you saw revenue up 23% this quarter. But it really was because of that acquisition. Their revenue from their internet of things business was actually down 3%. That acquisition, lending a lot to this quarter.
Excluding one-time events, BlackBerry earned $0.03 a share. It's profitable. We have to give them, profitable is better than not profitable. But it's still a small business at this point. Revenue was only about $280 million for the quarter. They've got some things to do before this becomes any kind of a significant business.
Moser: The internet of fewer things, I guess, is what we're going toward.
Hill: Serious question here about BlackBerry. Do they just need a new name?
Gross: Research In Motion, maybe?
Hill: I'm just saying, if I'm running a business and I'm shopping around for data security software, I am old enough that I don't think I'm going to be able to get the BlackBerry phones out of my head.
Gross: I think that's fair. You could even rename it Cylance, which was the acquisition they just made, or a million other names, too. I think that's fair. Let's get them on the horn.
Hill: Second quarter profits for General Mills came in higher than expected and once again, Jason, it was the pet food division driving the bus for General Mills.
Moser: Well, it's plain as day to me, Chris, Blue Buffalo was the most important move this company made over the last decade, full stop. It's not even debatable. We could sit here and debate how much they paid for it, whether that was fair or not. But you know what that did? It gave them some hope. It gave them some time. It gave them the opportunity to highlight some growth on the call. Because when you look at the business itself, organic sales relatively flat, I think up 1%. The business isn't moving, really, as a whole. But net sales up in pets 16%. Operating profit up 14%. We'd like to see that flip flop there, but we're not going to get too picky at this point.
Mac was asking earlier, before we started taping here, where do we stand in the world of cereal? Is cereal on the way out? Well, let me tell you, the word pet was mentioned 53 times in the earnings call, Chris. Cereal? Just 21. There's clearly more enthusiasm for the pet side of this business as opposed to the cereal and I think that makes a lot of sense because for people, there are a lot more substitutes out there, as opposed to that space that cereal filled for us years and years ago.
There are some concerns with the business. They've spent close to $4 billion in share repurchases since 2015, and the share count's actually up.
Hill: It sounds like they're doing it wrong.
Moser: That's totally it wrong. For me, I see that and I immediately question, what are you thinking? You have to go the other direction there. The stock yields 3.7%. That's nice. It's had a wonderful year; over the last five years, it's essentially flat. I don't know that I look to this as one of those businesses that has this tremendous growth ahead, but there's no question that Blue Buffalo is buying them some time and it's working out for them.
Gross: I know last quarter, they were emphasizing they were moving to healthier snacks, which is obviously a trend here. Any talk about that?
Moser: Listen, when you go through the PowerPoint earnings presentation, you see all the Old El Paso, Yoplait yogurt, a lot of sugar, a lot of sodium still in the portfolio.
Gross: They do love that Old El Paso brand.
Moser: It's tough to say that they're really capitalizing on this health food craze yet.
Hill: I hear what you're saying about the five-year chart of General Mills basically being flat, but you go back five years, they didn't have this division. They didn't have Blue Buffalo. I look at it, the next five years could be more profitable.
Moser: I think it could be, but I think that they're going to have to probably make another acquisition of some sort. You know how I feel about the pet industry?! I think it's a wonderful one. Frankly, it's probably more exciting than the people industry at this point, Chris. But I don't know that organically, they're going to be able to get it done. They're going to have to make some other type of acquisition. Fortunately for them, they have the size. They can do that.
Hill: And pick up a copy of stock buybacks for dummies. Get that right.
Shares of Winnebago hitting a 52-week high on Friday after strong first quarter results. Both profits and revenue coming in higher than expected for Winnebago thanks to strong sales in their motor home segment. You doing a little shopping there, Ron?
Gross: [laughs] Not quite yet. It's interesting, I was under the assumption, incorrectly, that the RV businesses was still hurting pretty badly. 2018 was really rough. 2019 has been pretty good for some of these companies, especially for Winnebago. Shares are up 120% almost this year. I honestly didn't realize that.
This was a strong report, beating expectations. Revenue up 19%, and that includes 12% organic growth if we exclude the recent acquisition of Newmar that they just made, Newmar being a luxury motorhome manufacturer. 12% organic growth, pretty good there. Strong growth in their towable segment. Not so much from their motor home business. Towable kind of getting it done here for them. Gross margins down a bit, but that was a result of the acquisition and the product mix. Earnings up about 4%. Operating cash flow actually even better, much stronger, up 46%. That's a pretty big number. This company continues to do well after an industrywide debacle in 2018.
Moser: Do you see yourself at some point later on in life wanting to acquire one of these Winnebagos and drive around the country? I don't know, for me, I've got zippy desire to do that. So, it's difficult for me to fully relate to this. But, to your point, the business performs well.
Gross: I would travel in one, I just don't want to drive it. I think I would hit things.
Hill: If you buy it, I'll drive.
Gross: Alright, now we've got a deal!
Hill: We can get a little road trip going.
Moser: Wreck it Ron!
Hill: Producer Mac Greer sat down with The Motley Fool's resident retirement expert, Robert Brokamp. It's safe to say that Robert was in a good mood.
Mac Greer: Bro, how are you doing?
Robert Brokamp: I'm doing fabulous. It's my favorite time of year, Mac.
Greer: It is one of my favorite times of the year. I don't want to be so dismissive of the other times of the year.
Brokamp: [laughs] The rest of the year?
Greer: Yes, it's all good. OK, it is the end of the year. In light of the new tax law, what are a few things we should keep in mind as the year comes to a close?
Brokamp: Well, one thing I'll point out, one of the great tax benefits a lot of people have at work is their flexible spending account. For a lot of those, you have to spend that money before the end of the year. I just want to highlight that right off the bat.
The tricky thing about the new tax law was, in a good way, it made it easier to do your taxes because you had a much higher standard deduction now. What that means is, far fewer people are itemizing. It's gone down from some 30% of people itemizing to just 10%. So, there's not as many things to do nowadays as a year-end type of save-some-money-on-your-taxes.
One thing you still can do, if you are itemizing, or at least close to being that limit, is to donate to charity. If you're close to the limit, what you can do at this time of the year is just bunch your contributions. Do two years, basically, worth of contributions to charity in one year. If this is the year you want that great tax break, do it now. If you want that tax break next year, wait until January 1st and do two years of contributions to the charity then.
Greer: A-ha. Otherwise, you're not going to be donating enough to get that deduction.
Brokamp: Right. The standard deduction for singles in this year, 2019, it's $12,200. For married, $22,400. So, you have to have itemized deductions that exceed that amount to get any value from additional contributions.
Greer: One great way to donate, we know, is to donate stock. A lot of people sitting on appreciated stock. It's been another good year for the stock market.
Brokamp: Right. The great thing about donating appreciated stock is, it has to be stock that's held outside of a retirement account, an IRA or 401(k). Let's say you paid $10,000 for the stock and it's gone up to $20,000, and you've held it for more than a year. If you sold that, you'd have to pay taxes on that $10,000 capital gain, and then donate the money, and you have less money left over because you've paid the taxes, so even your deduction is worthless. If you donate appreciated stock, you donate it directly to the charity. You do not have to pay capital gains taxes on those gains. Plus, you get that higher deduction because you could deduct the whole full market value of the stock that you've donated. If you're interested in doing this, contact the charity directly and they'll help you with it.
Greer: Robert, another creative way people are donating is through donor advised funds. Now, what are donor advised funds, and who should be considering them?
Brokamp: This is another way of contributing that's basically bunching one, two, three, four years' worth of charitable contributions together in one year. Let's say you donate it all today. You get that full deduction. It goes into a fund. It's no longer your money anymore. But you do get to direct how the money is invested and when it gets distributed to the charity. So, you're basically running your own little minor philanthropy. You can decide two, three, four, five years from now which charities get that money. But again, it's a way to get that deduction today.
Greer: Robert, let's switch gears here. Let's talk some retirement. Something that you and me, we're getting closer to.
Brokamp: We're in shouting distance.
Greer: We're in shouting distance. I'm actually probably getting close. I'm almost at whispering distance. But, when you were on the show this past summer, you said that 70 was the new 65. Now, for anyone who did not hear that interview, what do you mean by that?
Brokamp: The average retirement age these days in America is somewhere between 63 and 65. But there are two reasons why that's not a good idea. No. 1, most people are not prepared for that. There's a study from the Center for Retirement Research from Boston College that found that about 50% of people run the risk of running out of money or having to cut back on their lifestyle in retirement if they retire at 65. We just haven't saved enough. But the other issue is, we're living longer. We may not be built for 20, 30, 40 years of leisure. There are plenty of studies that have shown that retirement may not be healthy for a lot of people. So, I think just for our own benefit, it probably makes sense to work well into our 70s -- emotionally, physically, and financially.
Greer: That's such an interesting point. We talk so much about how much you need to retire. What's the number, right? What's the number, and we have the retirement calculator. But we don't spend nearly as much time talking about how to retire, and what retirement might look like.
Brokamp: Yeah, some of the disturbing stats about retirement is, first of all, the average retiree watches like four to seven hours of TV a day. Retirees have a 40% higher risk of depression. Your social networks shrink once you retire. If you think about all the things you do that's part of your office, the people you know, the parties, the gatherings. Then, when you retire, you're on your own. So, you really have to think of all the things that your job provides besides money. How are you going to replace those when you retire?
Greer: Bringing it back to the financial piece, though we're in a 10-year bull market, essentially. Going forward, when we think through retirement, we should assume lower returns from the market, right?
Brokamp: [laughs] We should assume so, but I've been saying that, as have other financial experts, for three or four years, and it just keeps going up. But, certainly, as far as I'm concerned, I want to have some sort of indication of where the market is going, because I do love playing with my retirement calculators. I certainly think that over the next decade, we should not expect that historical 10% annual return. I think anyone with a diversified portfolio should expect 5% to 6% just to be safe.
Greer: Whether it's retirement or any other research or any other things you've been writing about, what's the biggest eureka, a-ha moment you've had in the past year?
Brokamp: I don't know if I would call it a eureka, I would just say it's a surprise. First of all, let's get back to the market. The S&P 500 is up almost 30% this year. No one a year ago expected that. If you go look at the predictions for the end of 2018, what 2019 would be like, no one said we'd have 30% returns.
The other interesting thing that happened this year is, interest rates came down. The Fed started raising rates at the end of 2015. I think we had nine hikes. People expected that to keep going. Now we've had three cuts. Now interest rates are back down to where they were from a year or two ago. That has been surprising to us who think that these low rates can't go on forever. It seems like they can. Not to even mention the trillions of dollars of negative-yielding rates from bonds from Germany and Japan. What's that meant is, as rates go down, bonds go up. This has actually been one of the best years for bonds in the century. They've been up almost 9% this year. It's been a great year to be an investor in general.
Greer: As we wrap up, we've got to talk college. I know that you have a daughter who's a freshman this year. What wisdom can you give, as someone who is going to be looking at the college decision in a few years, for my two sons? What wisdom have you gleaned about paying for college, saving for college, the whole college shebang?
Brokamp: This is sort of unique to my situation, and maybe unique to Fools in general, but anyone who has a stock plan at work -- my College Savings Plan was four prongs. No. 1, I contributed to a 529 savings account as soon as the kids were born. No. 2, we have employee stock here at The Motley Fool, so I always figured that would be part of it. I sold some of that stock along the way and put it in my kid's 529. 3, inheritances. My wife and I figured, between our parents and some other relatives, we would inherit enough to pay for maybe two years' worth of college for one of our kids. And that's about worked out. And the other one is cash flow. When you reach your late 40s and early 50s, most people are in their peak earnings. But also, when your kid leaves home, your expenses drop a bit. When we took my son off our auto insurance policy, from being the primary driver to being a kid in college, our insurance dropped hundreds of dollars. We don't buy as much milk as we used to because he's out of the house and another one's out of the house. Your expenses do drop. You don't have to have every penny saved before you get to college. Your cash flow will drop, so you'll have some extra money.
The final thing I'll say is, fortunately for me, I was able to convince my kids to go in-state, which is huge.
Greer: Nice! I like it! Well, as we look at 2020, do you have a new year's resolution? Or do you have some advice for anyone contemplating what their new year's resolution might be?
Brokamp: For me, I always need some sort of external accountability. I may have talked about this on the show in years before, but I'm down about 20, 30 pounds for my peak --
Greer: You look great. You're my inspiration.
Brokamp: Thank you very much! It took me basically putting $200 on the line with our in-house personal trainer, saying, "I have to lose this weight in a certain amount time, or I owe you $200." I needed that external accountability.
Greer: Maybe that's what I need to do.
Brokamp: And my wife and I recently joined a gym that we could both encourage each other to go. If I just joined a gym and it was up to me whether I decided to go, it didn't happen as often. But now, we're both pushing each other, and that's been helpful.
Greer: I started doing spin fusion. It is a game changer. Although, I skipped the spin this morning. But I did the fusion.
Brokamp: The one here at The Motley Fool?
Greer: It's so great.
Brokamp: We're very fortunate to have Sam here in-house. That's part of it. There's a culture of wellness here at The Motley Fool. Study after study shows that your weight is going to be something close to the five people you're closest to. So, if you want to get in better physical shape -- and financial shape -- hang out with people who are good at keeping in shape and good with their money.
Greer: Well, true story, we were doing the stretching, and I was obviously doing something wrong and in some sort of pain. Sam says to me, "I'm trying to get you not to make that face." Robert Brokamp is a Certified Financial Planner and our in-house retirement expert. Robert, Happy New Year.
Brokamp: Happy New Year to you!
Hill: Before we get to the stocks on our radar, something we have not done in a very long time, and that's buy, sell, or hold. I figured, because of the season, it's going to be a holiday-themed buy, sell, or hold. Again, for those unfamiliar, we're not talking about stocks, we're talking about objects or concepts or things that we would treat if they were stocks. Ron.
Hill: I'll start with you. If eggnog were a stock, are you buying, selling, or holding?
Gross: Don't tweet me, don't email me, but I have to be honest, I've never tasted eggnog in my entire life. It seems very thick, in a not-good way, and yellowy. So, I'm going to have say sell, because the thought of it makes me gag a little bit.
Hill: I'll just throw out there that firstname.lastname@example.org is our email address -- for anyone who wants that. Jason, what about you?
Moser: Feel free to @ me, because I'm selling that stuff all day long. I hate it. I don't touch it. When it enters my fridge, I might as well throw it out, because I think it's gross.
Hill: I'm also a strong sell on that. But let's go to our man behind the glass, Steve Broido.
Moser: [laughs] Mac is just shaking his head!
Hill: Producer Mac Greer is buying all of the shares that we're selling. Steve, what about you?
Broido: I've never tasted it either, so I guess it would be a hold. But, there's alcohol in it, right?
Moser: I'll take the bourbon. But, you have to add the bourbon.
Greer: Mac loves it.
Hill: Let's separate the eggnog, I'll just take the bourbon.
Moser: I like that thinking.
Hill: Jason, buy, sell, or hold the idea that Die Hard is a Christmas movie?
Moser: This is probably going to piss somebody off, but I feel pretty strongly about this. It's not a Christmas movie. I'm in line with Bruce Willis's thinking here, if I'm not mistaken. It is a movie that occurs during Christmas. Christmas is not integral to this story. And let me just say, I love this movie. I'll watch it anytime it's on. It's just not a Christmas movie.
Gross: I have to agree. It's a fantastic movie. It holds up. I'll watch it all day long. It's absolutely not a Christmas movie.
Moser: I mean, is Gremlins a Christmas movie, Chris?
Hill: No, but it's also not a classic in the way that Die Hard is.
Moser: Whoa, whoa, come on.
Hill: Steve Broido, what do you think?
Broido: I didn't even know there was a relationship between Die Hard and Christmas. I didn't even know.
Hill: Come on, the first guy that Bruce Willis offs, and he writes on him, "Now I have a machine gun, too, ho ho ho," yes, it is a Christmas movie. You're both wrong.
Gross: Oh, taking the other side of the trade.
Moser: We have some disagreement here.
Hill: Ron, sweet potato latkes, are you buying, selling, or holding?
Gross: Oh, hello. I love sweet potatoes, and I actually love sweet potato latke. But, if it's the holiday season, I have to be a traditionalist here. If it's Hanukkah, I've got to go with regular potato latke.
Hill: See, I'm a big fan of latkes. I've never had the sweet potato ones. I think I'm a hold on this. What about you?
Moser: I'd have to go hold, because like you, I've had regular latke. I'm OK with sweet potatoes, but I really only eat them during Thanksgiving and that's about it. Undecided.
Broido: I must be living under a rock because I don't believe I've tasted one. What am I doing with my free time?
Gross: The Golden brand in the frozen food section is pretty good.
Broido: I do like sweet potatoes.
Hill: Steve, before Ron and I hit the road in the Winnebago for our road trip across America, Ron's going to host a party, and we'll make sure he cooks up some latkes, because they're fabulous.
Two more before we get to radar stocks. Mistletoe, Jason. Are we buying, selling, or holding mistletoe?
Moser: Listen, man, I don't understand how this isn't a lawsuit just waiting to happen. I mean, if I see mistletoe at a party, I'm running the other direction. I'm happily selling.
Gross: I'm selling. I do not like to kiss strangers nor acquaintances. So I have to stay away.
Hill: [laughs] It really seems like it is a product of a bygone era and is worth selling now. It's sort of decorative to look at --
Gross: It's like a holiday spin the bottle.
Broido: Yeah, I'm selling. [laughs] Just leave it there.
Hill: Good, because I was really worried you were going to come to the table with, "I'm unfamiliar with this mistletoe!" Maybe this is a reflection of my age. I'm not going to put this on anyone else's. But, Ron, buy, sell, or hold staying up until midnight on New Year's Eve?
Gross: This actually makes me a little sad because I have to sell it, I think, because I'm old. In the olden days, I would have easily stayed up and been very proud of it, and it would have been fun. Now it's difficult.
Hill: It really does seem like one of those things that's age dependent. I remember being a kid and I wasn't allowed to stay up. Then at some point, it's like, you're old enough now, you can stay up. Now I'm like Ron. I'm a hold on this because if I happen to be up, OK.
Gross: That's fair. Hold is good.
Moser: I think for right now, it's still a buy, because we get to stay up with our kids. They're 13 and going on 15. But I think in the next couple of years, they're going to start going out and causing trouble, which isn't going to make me feel like I have to stay up too late. That's going to make me probably take this in a little bit of a different direction. But for now, I like being able to do it. So, that's a buy.
Hill: Steve, does the fact that we're not just flipping a year, but we're flipping a decade, we're going to be kicking off the 2020s, does that move the needle at all for you on this one?
Broido: I don't think so. I think it's because every year, I know exactly what's going to happen at midnight: nothing. Nothing happens.
Hill: Well, the ball drops in Times Square.
Broido: All those people in Times Square, nothing happens!
Hill: Drop an email, email@example.com, and bring the heat on eggnog, Die Hard as a Christmas movie, any of the things we've talked about.
Let's get to the stocks on our radar. Steve will hit you with a question.
Ron, you're up first. What are you looking at?
Gross: As the year draws to a close, I'm going to go back one last time to American Tower (NYSE:AMT), AMT, a real estate investment trust. One of the largest owners of multi-tenant communications towers. Over 171,000 towers. Providing a critical part of the country's digital infrastructure. Strong unit economics, competitive advantages. 5G revolution, a really nice catalyst. Raised their dividends for the last 30 consecutive quarters. Stock's up 40% this year, but there's still lots of upside.
Hill: I'm sorry, I just have to make a comment about the 5G thing.
Gross: It's oversold? Overplayed?
Hill: I'm just worried that it's the new buzz phrase that companies throw in there. A few years ago, it was China. "And we're looking into China." Now it's like, "Our business, it's going to play a role with 5G."
Gross: Oh, it's coming.
Moser: Internet of Things! Ron told you with BlackBerry, it's the internet of fewer things apparently now.
Hill: Steve, question about American Tower?
Broido: I'm embarrassed to say this, I own the company, does American Tower just find tall objects to put things on? Is that the whole business?
Gross: [laughs] They build the towers and put communications equipment on them, yes. I'm glad you own it.
Broido: They build the tower. It's not just finding a water tower and sticking something on it.
Gross: They don't own the land, but they own the tower.
Hill: Jason Moser, what are you looking at?
Moser: A company called Cerence, the ticker is CRNC. If you've not heard of this company, that's OK, because it's still relatively new to the public markets. It was a spinoff from Nuance Communications back in October. This is a small-cap company. Cerence builds automotive cognitive assistance solutions.
Gross: Easy for you to say.
Moser: It really plays into that augmented reality and AI, artificial intelligence, market that I continue to follow. Ultimately bringing that into automobiles in the form of assistance, whether it's for information communication or entertainment or safety or convenience. Cerence is looking at ways to help change the automobile space. I think this is an interesting business. Going to learn more about it from CES this year. Got it on the radar on the AR service.
Hill: Steve, question about Cerence?
Broido: Self-driving cars, what year? I keep hearing it's coming. What year? Fully automated, when's it happening?
Moser: I think a decade at least.
Hill: You got a stock you want to add to your watch list, Steve?
Broido: I think I may go with Cerence. It sounds kind of interesting. I like the towers, though.
Hill: Alright, Ron Gross, Jason Moser, guys, thanks for being here. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening! We'll see you next week.