In this episode of Motley Fool Money, Fool analysts Emily Flippen, Andy Cross, and Ron Gross break down some market news. Kohl's (KSS 1.32%), Macy's (M 1.51%), and Pier One (PIR +0.00%) all sunk on their reports, and don't seem sure how to turn that around.
Bed Bath & Beyond's (BBBY +0.00%) stock also tanked, but the new CEO and his drastic changes inspire some hope. Plus, updates from Grubhub (GRUB +0.00%), Luckin Coffee (LK 1.08%), Lennar (LEN 0.37%), Costco (COST +0.44%), Taco Bell, Constellation Brands (STZ +0.84%), as well as answers to listener questions and some stocks on the analysts' radars this week.
And stay tuned for some boots-on-the-ground reporting from this year's CES show, including the state of 5G and self-driving cars, some surprising companies at the show, the most overhyped and underhyped tech, 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 Jan. 3, 2020.
Chris Hill: We've got the latest headlines from Wall Street. We will head to Las Vegas for a report on this year's CES. And, as always, we'll give an inside look at the stocks on our radar.
But we begin with retail. A whole lot of retail, Ron, but we'll start with Costco. Same-store sales for December up 9%. That is 2% higher than Wall Street was expecting. I was telling you before we started, I don't think of Costco as a retailer that needs to or necessarily actually crushes holiday quarters, or months, in this case, but holy cow, they really nailed it.
Ron Gross: Never underestimate, never underestimate the power of toys, candy, and alcohol.
Gross: Because that was getting the job done in December. And it's a really strong period for them. But I agree, the company doesn't rely on it. It's not a Black Friday kind of situation where they have to wait for the holiday season to become profitable. They're profitable consistently thanks largely to their subscription-based model, not the fact that they're a retailer and rely on the sale of goods to become profitable. But this was really strong. Love to see their internet sales really be robust. Up 43% in December. That's important for a company like Costco, which has to compete in the world of Amazon.
Andy Cross: Well, especially because they had a little e-commerce blip during the Thanksgiving period, as we have talked about before. They are nearing that 100 million total cardholder mark that we talked about before. I'm sure they're going to cross over it when they release earnings for the fourth quarter, for this last quarter. So, Chris, to your point, the membership business just allows them to be able to continue that steady performance. It's very profitable. It allows members to keep going into that Costco and having all those great experiences, buying all the candy and liquor and the rest of what they're buying. So, continuing to just do really well from that market allows them to be one of the steadier performers on the retail front.
Gross: We consistently have loved Costco around here for a long time. Now, the stock is not cheap, I must be honest. It trades 34X for a value-based warehouse retailer. You've got to be a little bit careful. You can buy Walmart at 23X or BJ's at 14X. 34X is a premium, for a premium company, but be careful.
Emily Flippen: I have to wonder if there's an upper limit for Costco members. Is anyone here a subscriber?
Gross: Oh, yeah.
Flippen: Have you ever tried to go to Costco on a Saturday or a Sunday?
Gross: I don't actually go, I just pay my fee. I'm their favorite kind of customer.
Cross: Oh, they love you!
Flippen: I will say, I'm not a Costco subscriber, so take this with a grain of salt. I purposely avoid trying to drive anywhere near a Costco on the weekend. It's great for Costco. I mean, it's packed. But I know anecdotally that it bothers some people when their shopping experience is diluted by literally 1,000 other shoppers all lining up to get gas, or all lining up for that delicious rotisserie chicken.
Gross: [laughs] The one thing I will say about that is, though, they do do an excellent job of getting you in and out through the lines. Even though it's packed, and even though you have to be a little patient, they do a good job.
Hill: We've got some other retailers making news this week. And unfortunately for them, it's not all as positive as we just discussed with Costco. We've got Macy's coming out of the holidays with some store closures. Shares of Kohl's down because their holiday sales were kind of weak. And Pier One Imports, the only thing more than the fact that Pier One Imports announced they're closing 450 stores is the fact that they still have more than 500 locations left over. Why is retail so hard for everyone else?
Gross: Poor Pier One. This is not going well. If you recall, they recently had to do a one-for-20 reverse split just to remain listed. It's not going well. They've recently had to draft a bankruptcy proposal just in case, and the just in case may actually be a reality. Their comp sales just continue to plummet. They can't cost-cut their way out of this problem, I don't think, or close underperforming stores to help. I think there are just too many retailers out there, and not all of them can generate cash flow.
Flippen: With Pier One, I think the writing's been on the wall for a while. I first realized it -- I'm at that age now where I'm getting invited to a lot of weddings, and there was a time when people would have registries at Pier One.
Gross: Wicker, wicker was in.
Flippen: Yeah. I mean, it really was the place to be if you were going to buy premium furniture. But when I'm invited to these weddings and I look up the registries, it's Wayfair. It's Amazon. You've got some other retailers in there. But I think it's just been hard for traditional retailers of all sorts to compete with what's now an increasingly convenient experience of purchasing online. For gift registries in particular, that involves seeing immediately what that person wants, clicking a button, and having it automatically delivered to them.
Hill: I'm just wondering how Pier One got to the point where they have 1,000 locations.
Cross: A lot of wicker baskets.
Hill: But, there was a good stretch of time where Macy's was doing well as a business, and therefore as a stock. I don't think Macy's ever even came close to having 1,000 locations.
Cross: Different kind of storefronts. And also, the U.S. continues to be way over-retailed when you look at the square footage compared to other developed nations around the world. And to Emily's point, there's just much more competition. Look what happened with Ulta. Ulta continues to be a very high-performing company, but even they are starting to see a little bit of the pressure on some of the changing purchasing habits of consumers, and they have to adapt very quickly. And if you don't, retail is one of the most competitive spaces, you'll just be creamed.
Gross: Yeah. In the vein of retail being tough, it's interesting that Macy's is being applauded for having November, December same-store sales that were only down 0.7%. People were expecting it to be much worse. Third quarter, for example, was down 3.9%. So, a little bit better, but still down. They're doing their best. They're revamping stores, about 150 of them. They're trying to get their digital business in shape. They're having some traction there. They're going to close 29 stores, 28 Macy's and one Bloomingdale's. They're doing their best, but it's tough. There's a lot of department stores out there, and perhaps there are too many of them.
Hill: Well, and just to close out on retail, it was a rough week for Bed Bath & Beyond. Shares were down around 20% in the middle of the week. They came out with third quarter results that weren't good. In fact, Mark Tritton, the new CEO, came out and was very clear right at the top of the call that this was not satisfactory. They withdrew guidance for the full fiscal year, which maybe we shouldn't be surprised, given the bold moves that Tritton has already made in the short time that he's been CEO. But despite all of that, I still feel better about the prospects for Bed Bath & Beyond than I do about Pier One, Macy's, or Kohl's.
Gross: I think that's because it feels fixable, and maybe it's because of Tritton. He did a great job at Target, and Target is a wonderful company and stock today. Perhaps he can do it again. He's been really basically brought in to fix this business. We recently saw a major shakeup in leadership with six executives leaving. They did a $250 million real estate sale leaseback transaction. They're closing 60 locations, cutting costs. I'm sure we'll see Tritton do a bunch of stuff like he did over at Target, with a private label, an exclusive brand business. Don't sleep on this company, this could be an interesting one.
Flippen: With all of these retailers, and especially Bed Bath & Beyond, I have strong opinions that a lot of their failures are associated with merchandising. And so I'm not completely sold on the turnaround story. If I had a choice to not buy any of these companies, I wouldn't buy any of these companies.
Gross: Don't you have that choice?
Flippen: I do have that choice. I don't own any of these companies. There we go. But, when I think about the potential for a turnaround, I do think it depends entirely on merchandising, something that would make you choose to shop at a Bed Bath & Beyond versus all of the other cheap, convenient options that you have in your life.
Cross: And Tritton just started, too, so this is turnaround 101. He's just getting all the bad news out there and trying to turn things around. I do want to say that they're competing not just in the operating market, but in the public markets with Walmart and Target stocks doing so well. So it's like those options you have to go to, Costco, you have options to buy other stocks. So the hurdle rate for the company is not just on the operating fund, but on the stock front, which is why I think people are a little bit perhaps excited about Bed Bath & Beyond, and the stock rebounded a little bit after its major drop.
Gross: Toys, candy, and alcohol. That's all they need to know.
Hill: With that, let's move on to housing. Lennar closed out its fiscal year with a bang. The No. 2 home builder in the U.S., Lennar's fourth quarter profits and revenue both came in higher than expected, and shares up 4% this week, Andy.
Cross: Yeah, really nice quarter. Revenue's up almost 8%. Home deliveries up 16%. New orders for the quarter up 23% to 13,100. And the dollar volume of those orders continue to be healthy, up more than 20%. Boosted the dividend nicely. Buying back some stock. Paying down some debt. Really trying to get not just the operating picture in place for a stock that really hasn't done a whole lot when you look at the competition, but the operating front, too. The financial services doing very well. They're capturing more of the mortgage market on the houses they sell. So overall, a kind of nice second half of the year for Lennar, and it showed in the stock price.
Hill: Well, and you look at the fact that they also increased guidance for the number of homes they expect to deliver in 2020. It might be a stock that has a little bit more room to run.
Cross: Yeah, it's very cheap. It's only about 10X earnings. Now, the housing business is very cyclical. We know that. But it's relatively inexpensive. And, like I said, the second half, they really got some momentum and they're building into the 2020 year.
Hill: Shares of Constellation Brands up a bit this week. Third quarter results for the alcohol beverage company were mixed, with growing profits in the beer business helping to offset another non-cash loss in Constellation's investment in Canopy Growth. Emily, what stood out to you?
Flippen: To be clear, from Constellation Brands' core business alone -- that's their beer, wine, and liquor business -- they actually raised earnings guidance for that core business. So, pushes into new areas, in particular new brands such as their Corona Refresca, that's a Corona-branded hard seltzer, have really been paying off for the company. I think Constellation Brands is making more of a concerted effort to diversify their product stream to match with what's trendy. They are admittedly a little behind on the hard seltzer push. However, they did have great results from that Corona brand. That Corona brand has continuously performed well among specific groups here in the United States. But what else is interesting is that they're kind of earlier adopters of canned wine as well. I've gotten some flak for talking about boxed wine. I will avoid the boxed wine conversation.
Hill: Not from us!
Cross: That's unfair! Who's doing that?
Flippen: But, here's the new thing. You don't need boxed wine, you need canned wine. So their brand of canned wine, that's Crafters Union, it was the No. 1 growth driver in the canned wine business over the past 12 weeks. Now, that's a short period of time but they're pretty early on in this launch. So, that will be exciting to watch. And as you alluded to, their investments in cannabis company Canopy Growth haven't been performing that well. They continue to see losses there. However, they just installed their former CFO as the CEO of Canopy Growth. So it'll be interesting to see how that plays out.
Hill: You know, I haven't tried the canned wine, but if anyone at Constellation Brands is listening and wants to send some samples over to Fool headquarters, we'll be happy to give them a shot.
Gross: I prefer white to red. It needs to be cold, I feel.
Hill: Real quick, Emily. Bill Newlands. We were talking earlier about CEOs at retail companies. Bill Newlands has been the CEO for about 10 months at Constellation Brands. Kind of like Mark Tritton at Bed Bath & Beyond, he's done a lot of cleaning up. The stock's still up about 12% in the time that he's been CEO. Is he setting himself up for a good 2020? Because it seems like a lot of the bad stuff, including that Ballast Point acquisition, is out of the way.
Flippen: Yeah, although with the lingering investment in cannabis, I think it's too early to make that call. But I will say, I like a lot of the initiatives that they're making right now. Obviously, selling off a lot of their underperforming segments, putting more of an emphasis on newer segments that are meeting current demand trends, as well as putting emphasis on their premium segments. So, premium wine and beer that sell for higher price points, those have also been doing really well under his leadership.
Hill: Rough end of the week for Grubhub. Shares of the food delivery company fell more than 7% on Friday after Grubhub had to publicly deny media reports that the company is for sale. Andy, I feel like that is never a good sign, when you have to basically come out and say, "No, really, we're not dead."
Cross: Yeah, there's been rumors that someone would come and by Grubhub. They had a really tough third quarter where they reported just really slowing growth, trouble with the competitive landscape that they are facing from the likes of DoorDash and Postmates and others. And Uber Eats especially. Just, this business is very competitive because these companies don't care about making money, apparently, and that's just starting to affect Grubhub, which has been very profitable as the market leader. They used to have more than 50% market share in the U.S. That's down now to about 30% according to some studies. And the profit picture has just gone with them. So, there's some thinking, some analysts out there and some stories floating around, that Grubhub would be a very good fit for the likes of a Walmart maybe, where some have talked about, they could take their expertise in delivery and really add that value to Walmart. Maybe even questions about Amazon jumping in there too, as well. It's a $5 billion company, so it would be a small buy for those large companies. And they do have some expertise in delivery. But I think it's probably a stretch, and Grubhub came out and denied those acquisition talks.
Flippen: Food delivery is a hard business to make economical, but I do think that one of the things that could help them are partnerships. So we've seen a lot of partnerships very recently, a big one being between Barclays, so Barclay cards, and Uber as well as Uber Eats, giving people benefits that would encourage them to use one delivery service over another. Just this week, Chase announced that their Chase Sapphire Reserve card was partnering with Lyft and DoorDash and giving people DoorDash benefits. So maybe what Grubhub needs to do is look to see, what can we do to encourage people to use our platform that would make it stickier? But what's not helping them is a May 2019 study from U.S. Foods that found 28% of food delivery drivers admitted to taking food from orders. Eek!
Hill: Maybe not surprising? I don't know, I feel like, are we talking about French fries? Just a couple of fries?
Gross: Yeah, just don't touch the other ones.
Cross: Yeah, if you're talking about taking the top of the burger, the bun, off, and eating, like, a pickle --
Hill: You can't make it obvious.
Cross: Yeah, you can't make it obvious. Maybe chicken nuggets.
Hill: Shakes of Luckin Coffee up 25% this week after the Chinese coffee start-up announced plans to expand into vending machines to increase its market share. Emily, no one in this room is more bullish on the power of coffee than I am, but 25%? That seems like a lot for a basic announcement.
Flippen: This initiative could be an unmitigated disaster for Luckin, but it could also be the only thing that saves their company. It's one or the other. The problem is that Luckin Coffee, while many compare it to Starbucks, it's a completely different business model. They sell really cheap coffee in China. They continuously have promotions, which still exist today, that essentially give you one free coffee for every coffee that you buy, and their coffee's already dirt cheap. They're going to deliver it to you. You don't sit down and go to the restaurant. So the idea of installing a machine that makes the coffee for you -- some people, obviously, that 25% pop there, is associated with the fact that this would be a higher-margin business, presumably less fixed costs associated with employees. The problem is that there are actually a lot more fees associated with putting in and installing these machines than you may think. These machines, do you have any idea how much they might cost? Anyone want to guess how much one Luckin Coffee machine will cost?
Gross: $79.99.
Flippen: [laughs] They're expecting them to cost around $25,000.
Gross: That's what I meant.
Flippen: [laughs] So, it's a lot of money. And they're competing with incumbents in this space. So the big one is [...] which is a machine that's already in 160 cities, which have more than 3,000 machines across the country, and 7 million registered users of the machine. So the point is, it's a competitive space. They're already burning money like nobody's business, and it might cannibalize their existing business.
Hill: Managers wanted: starting salary $100,000. No, this is not a job posting for the latest restaurant from Jose Andrus or Wolfgang Puck. It's Taco Bell. The company announced this week it is going to start testing higher salaries in the Midwest and Northeast. And Ron, I'm thinking about just jumping in, because I figure I'm going to get all the queso I can get.
Gross: [laughs]
Hill: In all seriousness, though, I'm fascinated by this, because this has been a business that's performing really well for Yum! Brands, and it wouldn't shock me if this was one more step to Taco Bell being spun out.
Gross: I guess I could see that, kind of the way like Chipotle really used to be part of McDonald's back in the day. It's an interesting story, and I think it speaks to our tight labor market more than anything else, and how we really have to pay not only a living wage, but a pretty hefty penny to get good folks to come in and manage your business.
Hill: Alright, Ron, Emily, Andy, we'll see you later in the show. Up next, we're heading to Sin City for the latest headlines in the world of consumer technology. Stay right here, this is Motley Fool Money.
Welcome back to Motley Fool Money. I'm Chris Hill. This week, more than 180,000 people headed to Las Vegas for CES, the largest consumer technology trade show in the world. Motley Fool analyst Rex Moore is one of those people. Earlier this week, producer Mac Greer caught up with Rex to learn about what's hot and what's not at this year's CES. And as Mac indicated, Rex Moore is no stranger to this event.
Mac Greer: Now, this is your eighth straight year at CES. What is your headline for CES 2020?
Rex Moore: Ah, well, the headline for me is that there are some companies that are choosing not to exhibit this year, like, Nvidia is not here. They've usually had one of the bigger booths on the floor. We did get to meet with them privately because they sent us an invitation. They have a private suite at the Wynn. So, I'm seeing more big companies pulling out, and maybe slightly lower attendance here this year.
Greer: One of the storylines I know that you've been writing about is 5G. Now, I get that 5G makes things faster, but where am I really going to see the benefits of 5G, and how do you see it playing out there at CES?
Moore: Well, maybe you could liken it to, as computer processors get better, you're able to do more and more things. And so, as the cellular speeds get faster, the technology that relies on it will become much greater. So for instance, self-driving cars that will allow better stability for cars to be connected to one another. Not even self-driving, just connected cars is going to be a big boon for the consumer. Even if you're driving your own car, you'll be able to get signals that there's potholes ahead, or accidents ahead, that type of thing. And of course, many other industries rely on this type of communication, whether it's digital health. Just, a number of things.
Greer: Rex, you mentioned self-driving cars. I know you took a spin in a self-driving car courtesy of Yandex, which is sometimes called the Google of Russia.
Moore: You got it.
Greer: Now, what was the ride like? Paint the picture for us.
Moore: The ride was awesome. With nobody in the driver's seat -- usually, there's a safety person behind the wheel on these demos. But this one just went out without a person behind the driver's seat, and we went out, stopped, waited for a bicycle to cut in front of it. We went out onto the streets of Vegas. It was great. At one point, some pedestrians kind of stepped into the crosswalk in front of us, and the car had to break really hard, and it worked perfectly.
Greer: Now, is there someone in the front seat? Who else is in the car with you?
Moore: There is Yandex person in the passenger front seat. So, if something did go crazy, I assume he could hop over there or something. [laughs]
Greer: And Rex, when you look at self-driving cars, when you look at a car like that and the way that may unfold in the future, do you think the primary market is going to be commercial use by the likes of an Uber or Lyft? Or do you think consumers are going to buy self-driving cars for private use?
Moore: I think that's a question that's still to be answered. But I think obviously, robo taxis and Ubers and Lyfts will be a huge part of it. It will be interesting to see, for especially urban dwellers, will they ever need to buy a car again? Will they ever need to get a driver's license again? I would assume that would be available for individuals to purchase. But I think at this point, we still don't know.
Greer: And what's a company that you've seen at CES this week that you wouldn't have thought would have been there?
Moore: Well, last year, I surprised Chris Hill with Procter & Gamble was one of the most exciting exhibits. This year, how about John Deere? Because agriculture -- again, this goes back to 5G and the Internet of Things -- agriculture benefits greatly from things like this. If you think about sensors in the ground that can tell you how much moisture is there, or the composition of the soil, and exactly what type of fertilizer you need, for example, that can all be done automatically with a connected type of farm. So, John Deere had a great big old tractor there and everything. It's a little jarring to see that at a big tech show, right?
Greer: Oh, yeah. Yeah. But that makes total sense, that there could be some profound implications for ag.
Moore: Yes, indeed.
Greer: Rex, when I went to CES a few years ago -- and I think you were there as well -- 3D printing was all the rage. It was everywhere. And that excitement, I think it's fair to say, has worn off a bit. For CES 2020, what's one overhyped technology and what's one underhyped technology?
Moore: OK, have you heard the thing where McDonald's fries are both the most loved and the most hated nationwide?
Greer: Yes.
Moore: You could say 5G is overhyped, because we see it in almost every booth, somebody is putting it up as a buzzword. "5G whatever," even if it's not really that relevant to that company. But at the same time, it may be the most underhyped, because as much as we're hearing about it, it's really, I think, going to change the landscape once it starts rolling out and available to everyone.
Greer: And what about 3D printing? What is the state of 3D printing these days?
Moore: You know, I was considering that for maybe an underhyped thing, because now it's just completely dead. No one talks about it. The space dedicated to it has dwindled to not very much. None of the big companies are there anymore, like 3D Systems or Stratasys. It's well past the hype cycle. Maybe now, people could be looking for some value out of it. I don't know. But it really has dwindled quite a bit, and no one talks about it much anymore here.
Greer: And Rex, what was the strangest thing you saw at CES?
Moore: The strangest thing ... How about a smart toilet that had poop emojis they were handing out of the toilets to people as they passed by?
Greer: Wow.
Moore: [laughs]
Greer: Now, explain what a smart toilet is.
Moore: You know, I don't even know. [laughs] Is this a family show, Mac? I keep forgetting.
Greer: This is a family show, but we can clean it up a bit.
Moore: I don't know, it was a smart bidet. Things like that, sometimes I just grab the poop emoji and keep walking.
Greer: OK, fair enough. We'll just leave it at a technology-enabled toilet. There you go.
Moore: There we go.
Greer: OK, now, Rex, in one of your email missives, you had a picture of a robot that plays ping pong.
Moore: Oh, OK, yeah.
Greer: I also read an article about a robot at CES that can make 31 different salads. So, here's the question. If you had to pick between robots, you've got a robot who can play ping pong, or a robot that can make you a salad. Which one you going with?
Moore: I'll go with the ping pong. I've got Whole Foods near me, I can buy salads anytime I want. But I need a ping pong partner, Mac, badly.
Greer: OK, I like it. I like it. I think I would probably go ping pong as well, although I like me good salad.
As we wrap up, coming out of CES, what's one thing you'll be watching? It could be a company, a trend, a technology. But, as an investor, as someone surveying kind of the public markets, what's one thing you're watching going forward?
Moore: I am just waiting to see when the big break will be for the self-driving technology. Because honestly, we've been talking about it for years. I've been getting into cars for years. Now, maybe I'm a little too close to it, and I'm getting impatient. And a lot of people had mentioned 2020 as the year we'd finally see them on the road, and that obviously is not going to happen yet. So that's what I'm watching. Like, when are we going to get the big break for this to come out?
Greer: Do you think self-driving cars are the new flying cars? Because when we were young, flying cars were just around the corner. And there's still around the corner. And I'm just curious, are we really going to have fully self-driving cars in our lifetime? Or is that going to be the new flying car?
Moore: No, no, I believe that we will, assuming I don't get hit by a bus today. But, no, it's here. The technology is pretty much ready to go. There's regulations to be taken care of. But I think the benefit to society is too great to ignore and just go away.
Greer: Alright, and you're willing to take one on the DC Beltway tomorrow.
Moore: Hey, I've been in Eric Bleeker's Tesla with the self-driving on. I've already been on the Beltway with partial self-driving technology. So yes, I'm ready Mac.
Greer: OK, well, there you have it. Rex Moore joining us from CES 2020. Rex, thanks for joining us.
Moore: My pleasure.
Hill: Coming up: we'll dip into the Fool mailbag and share a few stocks for your watch list. Stay right here. You're listening Motley Fool Money.
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.
Welcome back to Motley Fool Money. Chris Hill here in studio with Andy Cross, Emily Flippen, and Ron Gross.
Our email address is [email protected]. Question from Ben in Iowa City. He writes, "I'm a college student and looking for a little help on research. Other than looking at a company's SEC filings, where do you go for information on a particular industry? Also, if you have any investment books to recommend, I'm all ears." Let's take the first part of that, Ron.
Gross: Alright. Ben, I love the fact that you're researching companies. That's great. The company's website is an obvious place to go. Fish around there, learn about the business. Go to the investor relations portion of the website. Check out a presentation, perhaps, from a latest shareholder meeting, or an investor conference. Don't be taken in too much by the rosy picture that all of these presentations kind of paint, but go there for the facts that are represented. You'll rarely see negative things in the presentations, but they do provide some pretty good overview of the companies.
Hill: Emily?
Flippen: When I look at industries and I try to evaluate the status of an industry, there's a lot of helpful resources that I think people don't think about. One of which, I love recommending him because I was an NYU student myself, Aswath Damodaran, a professor at NYU, makes a lot of his material free online. So, if you just Google Search him. He has a lot of valuation metrics that are easily accessible for industries. So, if you're looking for industry-level data, he has a lot of that. Now, whether or not that's useful for you depends on how much you really use valuation metrics in your investing activity. I don't tend to use it a lot. So, what I like to do is compare against competitors. So, to the extent that you have publicly traded competitors, if you're interested in a company, be sure to pull up all the competitors' financial statements and compare. It could be a thing like, oh, their growth is drastically outpacing competitors, which can be great. But it could also be a red flag, right? It could show some sort of manipulation. So, it gives you a better idea about the status of the overall industry, as opposed to just one company in it.
Gross: And what he'll do also, he'll take a company and he'll break it down for you. He'll take Amazon and he'll run you through the valuation of Amazon from his perspective. And you can pick it apart. You can say, "I don't agree with that. I think he's being too conservative there." He typically misses all of these high-growth companies, as value investors often do. It's an interesting website, for sure.
Cross: Definitely do not abandon or ignore YouTube. I think that's a great place to be able to learn information about the company and the leadership. I know Tom Gardner does a lot of that. He's turned me on to looking more at YouTube because it's a very valuable place to get a good understanding of a business and the culture. And also, pivoting off what Emily said about the financials, look at the risk factors and the management's conversation in the 10-K, which is the annual letter. That's really valuable information for the competition perspective.
Hill: I'll just throw out there, I'm a big fan of trade industry media. To your point, Ron, a company is never going to put super negative stuff on their own website. But there's a lot of niche media out there covering specific industries, and you can usually find some good information there.
Gross: Yeah, and it's often free as well.
Hill: Question from Denise in Maryland, who writes, "You get to spend a month shadowing any CEO in America. Who do you choose and why?"
Gross: I mean, I think I have to go with Warren Buffett, just because I think I have to go with Warren Buffett. How could I not? But in the absence of that, I would love to hang out with Jamie Dimon for a bit, even though I'm not a big investor in financials, but I think he's a fascinating figure.
Hill: Maybe you could pick up a couple of tips about financial companies.
Gross: [laughs] Perhaps!
Hill: Also, if you're with Buffett, as we know from the documentary on HBO, every morning, you know where you're having breakfast. At a McDonald's drive-thru. Emily?
Flippen: I feel like this is cheating because I found a way to get a twofer in. I'm going to pick Jack Dorsey. Not just because he is the CEO of one of my favorite companies, which is Square, and a really interesting company -- I don't think I'd call it my favorite company -- an interesting one, Twitter. I'd get to see both of those. But he has a very similar schedule to me. He's a morning person. I love CEOs that get up early and go to bed early.
Hill: Do you think he could get you some more followers on Twitter?
Flippen: [laughs] It's possible. Hopefully not, though.
Hill: Andy Cross?
Cross: I'm going with the Elon Musk.
Flippen: Low-hanging fruit.
Cross: I think that'd be a ride I did not forget, spend some time there. Just, for all the feelings you might have about Elon Musk aside, just looking at the technology and how he thinks about the world and Tesla as well as just energy efficiency, I think that would just be fascinating, to spend some time with him and watch how he goes about his day.
Hill: But Emily just brought up something that I hadn't considered for when looking at this question, and that is, what is the daily pattern of a given CEO? So, in Emily's case, she's picking someone who she knows is a morning person, like her. Have you considered what Elon Musk's schedule might be?
Cross: Absolutely, that's what I'm looking forward to! Just spending some time with him, that's why -- I think just the craziness with what he must go through every day, it would just be fascinating to see.
Gross: Fascinating. Can we circle back and give Ben some books that may be helpful to him?
Hill: Absolutely.
Gross: I definitely would start with some Peter Lynch books, whether it's One Up on Wall Street or Beating the Street. All the series of little books, whether it's Common Sense Investing or Valuation are great. And, the essays of Warren Buffett, really, really good reading.
Hill: Emily?
Flippen: I always mention this one, because it was kind of the first book that I read that laid out investing in a really simple, easy-to-understand manner. To Ron's point, it's The Little Book that Beat the Market. It's hard to be better than that. If you're just starting out investing, it lays everything out so that somebody like myself, who was just learning, could easily understand it.
Cross: (unclear 34:00) Warren Buffett CEO, a look at some of the CEOs at Berkshire Hathaway, it was written a few years ago, so it's a little bit outdated, but I think it's just a fascinating look at some of the leaders of the businesses inside Berkshire Hathaway.
Hill: The first investment book I read was actually The Motley Fool Investment Guide. It was recently updated. It's in paperback form, so it's a lot cheaper --
Cross: Can't leave that out.
Hill: -- than when I bought it. Before we get to the stocks on our radar, if you're looking for even more stock ideas and recommendations, you can check out our flagship service, which is Stock Advisor. You get recommendations from David and Tom Gardner. You get their Best Buys Now and a lot more. You can just go to radarstocks.fool.com. 50% discount for the dozens of listeners for Stock Advisor. So, check that out when you get a chance.
Let's get to the stocks on our radar. Our man behind the glass, Steve Broido, is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week?
Gross: This is a radar stock for me, not a recommendation yet, although it is a recommendation in our Stock Advisor service, a recent one. Accenture, ACN. A consulting technology and outsourcing company. Operates in over 120 companies. World's largest consulting company by revenue. Strong operating results and cash flow. Cloud computing, security, and digital are areas of growth. Increased their dividend for the last 15 consecutive years. And that dividend yield currently stands at 1.5%.
Hill: Steve, question about Accenture?
Steve Broido: Do you think that model is changing? I remember hearing about companies like Accenture hiring people right out of school, they'd work them into the ground, and two years later, they're gone.
Gross: That is, I still think, the way it goes.
Flippen: [laughs]
Gross: They work you to the ground, you go back to business school, and then you either return at a higher level or you move on to something else.
Hill: Emily Flippen, what are you looking at?
Flippen: I'm looking at a Chinese company called Meituan Dianping. It's listed over the counter here in the U.S. The ticker is MPNGF. I'm excited about this one because I really don't get the opportunity to ever talk about it. It has a lower average daily volume than we typically look at. But it's one of the better performers in my personal portfolio. It's essentially your everything app in China. They do everything from book you a flight, get you a movie ticket, to, yes, food delivery. That is the Dianping part of that company. And they do it in a way that's more economical, in my opinion, versus Grubhub or Uber Eats. And they integrate every part of the experience. So, it does a lot more than you'd think, and it's relatively under-appreciated here in the U.S.
Hill: I'm going to help listeners out by not attempting to pronounce that name, but I will repeat the ticker, Steve. MPNGF.
Broido: What is the closest analogue in the United States to this company?
Flippen: Combine Yelp, your back-end inventory management system, Uber and Lyft, and Uber Eats, and whatever travel site you use, so maybe some Expedia, then you get something that's kind of close to Meituan Dianping.
Hill: It sounds like a butler.
Flippen: That's a good way to describe it!
Gross: Oh, that sounds good.
Hill: Andy Cross, what are you looking at this week?
Cross: Livongo Health, symbol LVGO. Provides digital health services and solutions to more than 200,000 members. They help them manage their chronic diseases. Mostly diabetes. There are 30 million people in the U.S. that suffer from diabetes. Mostly type two. Livongo Health is a cloud-based solution that helps them understand, manage, connect with communities, and help that more than 200,000 members manage their diabetes and understand it. So it's a $2.5 billion company. Lots of cash on the books. So, interesting to watch their growth picture continue to progress.
Hill: Steve, question about Livongo Health?
Broido: Sure. How does the site integrate with a patient's physician?
Cross: Yeah, it does tie together with all of those communities. Physicians ties in with their own personal health and allows them to connect in ways that gives them the health nudges to be able to better manage their diabetes than what they have right now. So, really interesting to think how it evolves outside diabetes in the complete holistic health picture.
Hill: Livongo Health, Accenture, MPNGF. You got one you want to add to your watch list, Steve?
Broido: I think I'm going with the butler of China, the Ask Jeeves of China.
Hill: Real quick, Steve, you got a book recommendation for Ben in Iowa City?
Broido: No.
Hill: [laughs]
Broido: I'm sorry, I wasn't prepared for that. I have no idea.
Gross: I will throw in Intelligent Investor just from the value investor perspective. Some really good learnings there.
Hill: Alright, but Steve gets the credit for it.
Gross: OK, done.
Hill: Ron Gross, Emily Flippen, Andy Cross, thanks for being here. That'll do it for this week's 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.
