In this episode of Rule Breaker Investing, Motley Fool co-founder David Gardner looks over some five-stock samplers. First, he reviews the one-year performance for Five Stocks Shrouded in Mystery. Don't remember what's so mysterious about these companies? You'll have to tune in -- or scroll down. Then, a new sampler emerges -- Five Stocks that Spark Joy. Based on Marie Kondo's KonMari tidying/lifestyle advice, David shares five companies that bring people joy -- not just him, but millions of people around the world. Tune in to learn what these five companies are, why David's so confident in them over the next three and 10 years, and why we should all consider investing in a joy-sparking way this next year.
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. 21, 2020.
David Gardner: One year ago this very week, I picked five stocks, my January 2019 five-stock sampler. It was called Five Stocks Shrouded in Mystery. Their relationship to each other, the theme behind them, was to most a confounding mystery. We will once again reveal the answer to that mystery this week, but more importantly, we'll also update their performance, That will be no mystery. Let's see, one year later, how they're doing and what we can learn.
But did someone say five-stock sampler? Because we're not just reviewing last year's. We're doing a new one this week. And you've helped me with it, because I asked a few weeks back, what stocks give you joy? Kon Mari, anyone? You pick up that company, you hold it in your hand and you ask, does this company spark joy? So, it's time for Five Stocks That Spark Joy as well, only this week's Rule Breaker Investing.
Welcome back to Rule Breaker Investing! If you joined me last week, welcome back to Rule Breaker Investing. We made quite a journey away from Rule Breaker Investing last week. It was The Day the Market Crashed. For those of you who listened, and especially for those of you who let us know what you thought, thank you very much for suffering Fools gladly. And I'm happy to say, we got really remarkable reactions to that podcast last week.
Now, if you did not get to hear the podcast last week, I would suggest you do. And if you did, and you'd like to let me know via this month's mailbag a little bit later this month what you thought, any reflections you might have, remember, we've got mailbag at the end of every month for Rule Breaker Investing. That's not this week, but that is next week. Our email address is [email protected]. You can also tweet us @RBIPodcast. You might be on next week's show.
And in fact, the week before The Day the Market Crashed was David's Biggest Losers: Vol 5. So, I feel like we've kind of been in the muck the last few weeks. The good news is, the market's doing pretty darn well, so are our stocks. We'll be talking about that today. In fact, I'll be picking some new stocks today. But I think it is good to be balanced in our thought during such a wonderful bull market that we've all been continuing to enjoy with so many multibagger winners. It's good to be reminded of market crashes and big losers from time to time. And so, that was the last couple of weeks. And if you didn't get your fill, feel free to listen or relisten. But now, we're back to programming as usual. In fact, as I mentioned at the top, I'm going to be reviewing five stocks picked a year ago this week. We're going to do that first on Rule Breaker Investing this week. Then I'm going to pick five new stocks right along the theme that I mentioned a few weeks ago. Some of you sent me some helpful suggestions. Thank you! That is what we'll be covering this week. Looking at five stocks and how they've done, and picking five new ones.
And by the way, if you're new to this podcast -- and I imagine many of you are -- it does seem as if January is maybe our biggest month with new signups, new members, new listeners at The Motley Fool. That's right, a lot of people make financial New Year's resolutions. And some of them actually find their way to fool.com and join us. And what a delight it is to have you! If you are new to this podcast, you should know that every 10 weeks or so, I'll pick five new stocks. And they're always drawn from my existing active recommendations across the two services that I've overseen for 15-plus years -- that's Motley Fool Rule Breakers and Motley Fool Stock Advisor. And so, I'm always picking a small sampling from all of the companies we have there for you, our paying members, for those services. This is a free sampler. And yeah, I do it once every 10 weeks. So, that's what I'll be doing later this show. But I would be remiss, I think, if I didn't review how those samplers do, because it's very Foolish to score oneself, to be accountable, to be transparent. It's something that I myself like to pick up, and it sparks joy for me to see scorecards and accountability. Sparking joy, of course, a big theme this week.
All right, so, it was one year ago this very week on this podcast -- you can go back and listen to it -- that I brought you Five Stocks Shrouded in Mystery. Now, I had fun with the shroud and the mystery. And I'm going to continue to have some fun here this week. For those of you who remember what we did a year ago, you might already know the secret. But if you don't, I'm going to leave you in suspense as you try to puzzle together what is the thread that binds these five stocks in some kind of thematic grouping? It's a mystery! So I'm going to go over each of these five stocks. We're just going to talk about how it's done since January 23rd, 2019. Maybe a thought or two as to why, and why we continue to like or maybe not as much like the stock. We'll see. My habit is always to present these five-stock samplers alphabetically by company name. So, without further ado, Let's get started.
And first up for this five-stock sampler, the ticker symbol is CRI. The company is Carter's (CRI +0.93%), That's right. Carter's, the kids' clothing company. They have the Oshkosh B'gosh brand. This is a company that is a long-term player and its industry. Multi-channel player. It's not just its own stores. It's some co-branded stores. It's also, of course, online sales these days. Now, a year ago, this week, it was at $80.86. Today, it's at $110.33. That's up 36%. It's been an excellent first 12 months for Carter's. I should mention, all of my five-stock samplers are picked with generally a minimum of three-plus years of performance. So, here we are checking in just one year later. Anything that sounds good, we won't pound our chests too hard, it's only been one year. Anything that sounds bad, hey, we've got a chance to make it up here in the next few years. So, Carter's over the last year, a really nice start, up 36%.
By the way, the competition is always the stock market average, the S&P 500. And over the course of the last year, the S&P 500 is up a remarkable 26%. That is an outstanding year of investing. So, Carter's, well, 36.4-25.8 is 10.6, so we're going to give Carter's a plus 11 in the win column, 11% rounded, ahead of the market averages.
So, it's been an interesting year for this company because higher costs in the form of tariffs have hurt Carter's overall. A lot of its manufacturing is in China. The clothes you might give your niece or nephew or your grandchild or your own child, those have been harder to come by because of the trade wars between the U.S. and China. As a consequence, Carter's has been scaling back its Chinese manufacturing and amping up its manufacturing in other regions. Good news for Carter's over the last year -- the company's cotton prices, the price of cotton, is down around 10% over the last year. So, you can imagine, if you're a company whose products are largely made of cotton, that's a good thing. And so, margins are up even despite the trade wars. I did mention, again, the strong brand names. This is a company that is a real leader in its field, and has been so for decades. So, certainly any year in which Carter's would be up 36%, that's going to be a really good year. But it comes against an interesting backdrop of some ups and downs in the world at large for this company. So, really happy that I picked Carter's.
I do want to note, when I picked these stocks a year ago, we had just had a really bad fourth quarter. Do you remember that? 2018, the fourth quarter, a lot of these companies had sunk fairly substantially, like 30% to 40% from their highs just a few months before. So it, in some ways, set us up pretty well for this five-stock sampler as I picked these stocks Shrouded in Mystery one year ago.
Company No. 2 is Ellie Mae (ELLI +0.00%). The ticker symbol, which no longer functions, was ELLI. The reason I mentioned that is because within three months of my picking this stock, it got bought out. Ellie Mae, taken out in April of 2019. When I picked it a year ago this week, it was at $70.27. In April, it was bought out at $99 a share even. So, it was up 40.9%, 41% against the S&P 500's comparable 10% return over those first few months of last year. So, we're going to put a big plus 31 in the win column. So, this five-stock sampler is off to a wonderful start, 42% ahead of the market.
Given that Ellie Mae is no longer a public company that you or I can own stock in, I'm not going to spend a lot of time looking back and thinking about this business. I will just say, it had an industry-leading platform, the Encompass platform, to help mortgage professionals. 2018 had been a tough year for Ellie because, well, interest rates were up some. Anytime you have mortgage rates go up, people don't want to refinance as much. Also, it's more expensive to buy a house when there are higher interest rates. So, that had dinged Ellie over the course of the previous six months or so. But here it was, getting bought out at a 41% premium just a few months after I picked it for the five-stock sampler. So, that was a surprising win.
All right, let's go onto company No. 3. Spoiler alert, company No. 3 is the only one of these five companies over the last year that has underperformed the stock market. So, good news, Five Stocks Shrouded in Mystery is looking like a rocking good five-stock sampler from last January, except for this company, IPG Photonics (IPGP +1.26%). The ticker symbol is IPGP. A year ago this week, it was at $126.17 as the market closed on January 23rd. Today, it's gone from about one $126 to about $145.50. So, good news, it is up, it's up about 15%. Bad news -- well, with some rounding, that's about 11% behind the market. So, that plus 42, the ongoing score for this five-stock sampler, we're going to deduct 11% from that. So, we're a plus 31 averaged out over these three stocks. So, on average, they're ahead of the market by about 10%. But this one is the one that's behind the stock market averages by about 10%.
Now, IPG Photonics, which is an amazing 10-plus-year success story on the markets, has had a few bad years. And especially over the last year, it's mostly gone sideways, even though I'm happy to note it is up 15%. Earnings in the fall, that's the most recent quarter reported -- of course, winter quarter, December, earnings usually don't get reported until February for most companies, so we won't know yet how the fourth quarter looked, but it probably wasn't great for IPG Photonics. Fall earnings themselves were lagging estimates. The sales for the company -- which, by the way, is the worldwide leader in fiber lasers. So, IPG Photonics is a broadly diversified laser company using superior technology, actually brought to this country by Russian immigrant Valentin Gapontsev, who has been the CEO, the founder, and the engineer behind this company's greatest inventions over the last several decades. It's been, again, an amazing success story overall. But sales for the third quarter of last year were 8% behind where they were the year before. And in fact, Chinese and European demand for the company's continuous wave lasers was falling off. And by the time the fourth quarter was estimated, I see Zacks -- which is the investment research firms, Zacks -- was estimating initially $324 million in sales of these lasers for the fourth quarter. But the company itself, with its third quarter earnings, announced its expectations that its sales would come in not at $324 million, the analysts' consensus estimate, but instead $272 million to $300 million. So, we're talking about a company that's going the other direction right now. It is shrinking, it is consolidating. Of course, overall, the market for lasers and fiber lasers, I think, will continue to grow worldwide into the future. But this company in particular has been hurt by the tensions between U.S. and China. So, IPG Photonics, the laggard in this five-stock sampler, although let's keep everything in context, it's still up 15% over the past 12 months.
All right, let's next go to stock No. 4 of Five Stocks Shrouded in Mystery. By the way, are you starting to figure out the relationship between these companies? Carter's, Ellie Mae, IPG Photonics, and now stock No. 4, the ticker symbol is MELI, MercadoLibre (MELI 1.24%), which one year ago was trading at $328.88. We'll call that $329. Today, tipping the scales right about $656. This has been a spectacular stock over the last year. Again, the market up 26%. As we record this podcast Tuesday afternoon, right around 3:15pm Eastern, 45 minutes left in the market's trading day, the stock is up 99.5% over the last year. It might even fluctuate to be a solid double, as the first one in this five-stock sampler to double our money in just one year. MercadoLibre continues to fulfill all of the ambitions we had for this stock when I first picked it in February of 2009. It was February 18th of 2009. The stock was at $14.13. Today, over $650 a share. It's been the single best performer in Motley Fool Rule Breakers, the premium service, Motley Fool Rule Breakers' history. Up almost 50X in value now. But in particular over the last year, an important development. PayPal made a strategic investment into MercadoLibre. Now, MercadoLibre for years has been competing with Amazon, which has some Latin American operations. MercadoLibre is, in a lot of ways, the Amazon of Latin America. It also started as the eBay of Latin America. But these days, it's also increasingly the PayPal of Latin America. And by the way, it does logistics, too. So, you can see how deepening ties, especially the payment portion of MercadoLibre's business, bigger and bigger volumes, increasingly relevant. So, PayPal made a significant investment, and then announced toward the end of the year -- I wasn't fully clear on what this looked like -- a deeper partnership between the companies. So, these developments, I think, just adding to the velocity of the tailwinds behind MercadoLibre. It's up 74%, rounded, over the stock market over the last year. On top of the plus 31 we already had, we're now at plus 105. That's 105% above the market averages for these four stocks.
And let's next go to the final one, Planet Fitness (PLNT 1.52%). The ticker symbol is PLNT. Planet Fitness was at $57.80 a year ago this week. Today, it's just over $79. So, it's up 37%. That's 11% ahead of the market. So, I'm going to wrap up this five-stock sampler with numbers in a sec, but let me just first say a couple of things about Planet Fitness. In the last year, Planet Fitness began an international expansion. In fact, it announced 35 locations in Australia. Now, for a company of its size -- and Planet Fitness, by the way, about a $7 billion market cap -- 35 locations in Australia is not going to move the needle in a big way for Planet Fitness. But what it did show is the company's international ambitions. And think for a second, if you will, about the name of this company. They didn't call it Fitness USA, my fellow Fools. It was Planet Fitness from the get-go. And while its simple membership model is being proven out successfully here in the U.S., I predict that it'll work worldwide as well. Now, not every country is as interested in fitness as perhaps the U.S. or Australia, but at about $10 a month, which is the basic membership fee -- by the way, the company revealed that the average member at Planet Fitness goes in 5X a month. So, a nice regular usage. That's about $2 each time you walk in Planet Fitness, doing the math. There is a higher tier, and this represents part of the company's future as well, it's the Black Card. Those of you who are using it -- I'm not, I'm a little bit too lazy -- you're paying $23 a month. So, simple membership model. $10 basic, $23 Black Card, which gives you all of the features Planet Fitness can offer. But it's such a simple model as this company democratizes fitness. And you know, thinking about some of our best stock picks over the course of The Motley Fool's 27-year history, a lot of them are companies that democratized other things, that make something more accessible, cheaper, more useful, more convenient for lots and lots of people. Planet Fitness very much fits in that tradition.
A very fine year for Planet Fitness. It was up 37% last year. I would take that every year for any stock. But to wrap up our numbers, as I mentioned, if you add 11 more points to the plus 105, we end up with 116 points ahead of the market averages. Summed up for these five stocks, dividing, of course, the average stock here is up 46%. The market is up 23%. Now, if you're listening carefully, you're like, "Wait, I thought, Dave, you were saying the market was up 26% over the last year. So why are you saying that the market average for these five stocks is just plus 23?" That's because Ellie Mae, as you'll remember, was bought out after just three months. So, that had a lower market average to compete against. Anyway, take it all at all, plus 46 on average for these five stocks, the market -- plus 23. That's right, it exactly doubles the stock market's average over the last year, this five-stock sampler.
So, again, we're just in our first year for these Five Stocks Shrouded in Mystery. But since I'm full of baseball analogies, even in the offseason, if it's a nine-inning ballgame, we're now through three innings and we have a big lead on the opposition. So, I feel great about this group of companies. But if you listened to me last week, you know things could change dramatically at any point. You never quite know as an investor. We don't make any big market predictions here. But we'll continue to find great companies like these and hold them.
Al; right, I'm starting to warm up my hands here for our coming five-stock sampler this week. But first, what was the mystery? What's this shroud that I've been referring to? Well, most people -- I would include myself in this group -- would say, OK, Carter's, Ellie Mae, IPG Photonics, MercadoLibre and Planet Fitness. I see no relationship between these five stocks. I can't really see a theme there. And if you're that way, and I would be too, I would say you're right. There is no specific thing that binds them together, except for this one magical mystery that I'm about to convey to you.
The first five-stock sampler I ever did on Rule Breaker Investing was done on September 2nd of 2015. It was Five Stocks for the Next Five Years. And guess what? We'll be closing that one out. In September of this year. Those have done pretty well. A couple after that, every three months or so, we found ourselves in February of 2016. That day, February 10th, I picked Five Stocks to Feed the Bear. Well, I just thought of it as five of my favorite-lesser known Supernova stocks. But my friend Rick Engdahl, who names our podcasts, decided to call it Five Stocks to Feed the Bear. And that kind of made sense because the stock market had declined in excess of 20%. Companies like Apple (AAPL 2.15%), etc., were down 20% in just the three months leading up to February 2016. Do you remember those troubled days, Fools? I think people tend to forget that there have been some really tough periods in this long-running bull market. That was certainly one of them. So, I picked that day Five Stocks to Feed the Bear. And indeed, the five companies that I picked that day were the very five I've just shared with you today. So the mystery, the magical mystery between the Five Stocks Shrouded in Mystery is that after an incredible run for that five-stock sampler, from February 2016, to February 2019, these five stocks that I just shared with you were up 160% as a group. The market, up 50%. More than 100 points ahead of the market averages on average across these five companies.
And I decided a year ago, I'm just going to reup them again. And in addition to the natural laziness and complacency that might be suggested by that action, I was actually trying to prove a point, which is that every one of these five-stock samplers, I'm always saying a minimum of three years. Now, I keep them just a three-year scorecard, because otherwise I'd spent all of every week just reviewing old stock picks if I didn't end the contest. So, I like to keep them to three years. But having ended that one a year ago, adding to my winners -- because what do winners do? Rick Engdahl? What do winners do?
Rick Engdahl: Winners win.
Gardner: That's right, winners win. And so I decided, let's just take those very five. I bet a lot of people last year were thinking, "Wow, they were up 160% on average as a group. Is it time to sell?" No. Instead, I went right on to highlight them as my new five-stock sampler a year ago. And look what's happened in the meantime, up another 46% on average. I hope this is a profound lesson, not that this works every time, but especially for newcomers to this podcast, you might think it's all about buying low, selling high, looking for the downtrodden, or believing that investing is a parabola. Some people think what goes up must come down.
In my experience, especially with Rule Breaker Investing, investing is not a parabola, it's a hyperbola. The winners tend to keep on winning. And this Five Stocks Shrouded in Mystery sampler is a living embodiment of what we're talking about. So, again, I hope these will keep going up over the next year or two. If the market crashes, maybe they won't look so good in a year or two. We'll see. But I know anybody who's listened this podcast or been around The Motley Fool for more than a month or a year knows that it's not just about how they do next year or the year after. It's about that lifetime commitment that I've made to the stock market, that I think everybody in the whole world should make to the stock market. And in particular, not just the stock market averages. That's what it seems everyone else is doing these days. But we're Fools. We believe in finding the best companies buying those and ignoring all the other laggards and index funds. And so, this five-stock sampler is an excellent example.
All right, time to get to the new one. This is the month that maybe more than any month of the year, you and I are awesome. We come into the year; we have a resolution. We're going to lose some weight. We're going to eat better. We're going to simplify our lives. By the way, that was kind of mine this year. The word simplify kept coming to mind as I thought about 2020. I'd like to simplify my life a little bit. Wouldn't you like to simplify yours? And for some of us, simplify is the stuff in our lives. Like, for example, tidying up, like maybe having less stuff. And for at least some of those of us who are thinking about that, we're aware of Marie Kondo. Now, she is a worldwide phenomenon. So, if you've never heard the name Marie Kondo, I bet you would have even without hearing this podcast, it's going to come to you at some point. But now that you're listening to me, you're going to know about Marie from Rule Breaker Investing. She's a 35-year-old Japanese woman who wrote an amazing book called The Life-Changing Magic of Tidying Up. She wrote that in the year 2011. That's right, in her mid-20s, she brought her Kon Mari approach to simplifying the things in your life through The Life-Changing Magic of Tidying Up. And in fact, since Wikipedia has always been one of my best friends, I'm going to share just one paragraph out of her Wikipedia page to give a little bit about Marie's background. Kondo says that she's been interested in organizing since childhood. In junior school, Kondo ran into the classroom to tidy up bookshelves while her classmates were playing in physical education class. Whenever there were nominations for class roles, she did not seek to be the class representative or the pet feeder. Instead, she yearned to be the bookshelf manager to continue to tidy up books. She said she experienced a breakthrough in organizing one day. Quote, "I was obsessed with what I could throw away. One day, I had a kind of nervous breakdown and fainted. I was unconscious for two hours. When I came to, I heard a mysterious voice like some god of tidying telling me to look at my things more closely, and I realized my mistake. I was only looking for things to throw out. What I should be doing is finding the things I want to keep. Identifying the things that make you happy, that is the work of tidying."
Now, I never did buy her book. I certainly had friends who would mention it. But I did have a chance to watch her streaming Netflix series, which certainly has contributed to her fame. Yep, it's right there, a streamable Netflix series. You could watch it this month if you want. Tidying up with Marie Kondo. It was released just last year. And in fact, she was nominated for the Primetime Emmy Award for Outstanding Host for a Reality or Competition Program. And while Marie doesn't speak a lot of English, the show still works. I've only watched the first episode or two, but it was enough to remind me of her overall approach. And anybody who knows her or loves her, her method these days is referred to as the Kon Mari, kind of like Marie Kondo but reversed, the KonMari method. You know that at the heart of it, as you go through your sock drawer, or maybe that closet full of hardware, honoring the amazing youth soccer player that you were, looking over all kinds of trophies, you're supposed to pick up your socks or your trophy and say, looking at it, does this spark joy for me? And if it does, keep it. And if it doesn't, toss it. Or, this is something I do sometimes, take a photo of it with your phone so you have that photo preserved forever, and then toss it. It makes it a lot easier, for me, anyway, to toss things. But it's not so much, as we talked, about getting rid of stuff, although that is what happens. It's about holding onto the things that spark joy for you and organizing your life around them.
Now, as a humanities major, my approach to life and to investing is often to look outside of traditional investing, like the Warren Buffett books and all, and look to things happening in our culture and map those back into investing. So, as I thought some about Marie Kondo, I realized she has a really good investment philosophy for all of us, as well. What are the companies whose products or services, when you pick them up, either literally or figuratively in your mind, when you pick up those companies, that spark joy for you? And my contention is, you'll be a much better investor if you're filling your portfolio just like Mari wants you to fill your house with things that give you joy. And maybe not just for you, companies that spark joy for millions of people. And that's what gives rise, then, to this five-stock sampler, Five Stocks that Spark Joy.
And graciously, my producer Rick Engdahl has agreed to lend an ear and make some contributions as I reveal, Rick, each of the five stocks as part of this five-stock sampler. I might mention how this company gives me joy, but it wouldn't be that great a pick, maybe, if it just gave me joy. So, Rick, we haven't talked about this ahead of time, I don't know if these five stocks will give you joy, but if they do, I hope you'll share some of that joy with me.
Engdahl: I'm already weeping with joy. Or maybe that's the cold.
Gardner: [laughs] It is that time of year. Rick, I do want you to be part of this because to me, joy is shared. And in fact, each of these five companies, they're bigger, better-known companies, because it's important, I think, for our stock returns long-term that we do pick companies that broadly and grandly produce joy for millions of people, if possible. So, as I go through each of these five alphabetically, I'm going to be the first to say ahead of time, most of us have probably heard of all of these companies. And, after the shockingly great performance of Five Stocks Shrouded in Mystery, and some lesser-known companies, I would expect this particular five-stock sampler probably won't have the dramatic gains that some of our others have had. And yet, there are few five-stock samplers I would feel more confident in over, let's say, the next 10-plus years than companies like these, because the companies that grandly spark joy -- definitely for me, maybe for Rick -- those are going to be making our portfolio reflect our best vision for the future. And the future should be full of joy, and it shouldn't just be one voice, and that's why I'm so glad, Rick, you're joining in this week.
So the first company, alphabetically, that sparks joy for me is Amazon (AMZN 0.87%). The ticker symbol is AMZN. And when I think about Amazon, first and foremost, for me personally, it's a consumer relationship that I have had for 20-plus years. It amazes me, in fact, that if you know how to do this, and you can find it through your profile, you can go back and see the first thing you ever bought on Amazon and everything since then. So, just the data and the history and the service. It used to come in a few days, then it came in two days, sometimes it comes in one day, and it's free shipping. It doesn't cost that much for shipping. And it's an incredible assortment. And almost a day does not go by where I don't buy something on Amazon, as somebody who particularly tries to avoid shopping altogether. That even includes grocery shopping. It gives me great joy to click into Amazon on a regular basis, click a button. It's convenient and quick. One-click buying, and it shows up a few days later, and it gives me joy. Rick, does Amazon give you joy?
Engdahl: I also am not a fan of shopping, so it's really nice to have things delivered for free. Well, you're paying a subscription.
Gardner: Yeah, there's an Amazon Prime.
Engdahl: But it is a service, for sure. And I've appreciated it around the holidays. But just as another thing, of course, Amazon does hundreds of things, but Mrs. Maisel alone makes the Prime subscription worthwhile. Just the Prime video and all that's come out of that, it's just been very entertaining for the family.
Gardner: It's great for you to mention that. And yeah, as part of an Amazon Prime subscription, we all have subscription to Prime video. So, The Marvelous Mrs. Maisel, which I haven't seen, but just gets great applause -- Rick, you love it?
Engdahl: Absolutely.
Gardner: So, I've been enjoying The Expanse recently. Have you ever seen The Expanse?
Engdahl: I have not.
Gardner: All right, great. It's another Prime video show that sparks joy for me as a Trekkie fan and a fan of outer space and futuristic shows. Pretty great show as well.
Engdahl: Excellent.
Gardner: All right, so, it's clear that Amazon sparks joy across multiple dynamics for both me and Rick. And I'd be the first to say, if Amazon does not spark joy for you, don't buy it. I can't imagine there's a long list of people who would be on that list, but I'm the first to say, make your portfolio reflect your best vision for our future. So, Amazon sparks joy for me and Rick. It clearly sparks joy for tens of millions, if not hundreds of millions, of people worldwide. But there's always a little bit of subjectivity to this. And I'm always encouraging you to look into your own heart and say what sparks joy for you. So, Amazon becomes the first stock pick for this five-stock sampler. And again, we'll be checking in a year, two, three-plus hence, and see how these companies do.
And by the way, before I go to stock No. 2, I want to actually highlight three listeners, each of whom contributed their ideas. I think Amazon was on at least one of your lists. So in no particular order, [...], @jameschen810, @plumpychicken, I think that's Jason Andrews. Ram, James, and Jason, thank you very much, because these five stocks I think were somewhere on all of your lists. And if I have any real value to add to this five-stock sampler, it's not so much even in the individual stock selection themselves. It's in the concept, the idea that the KonMari method might well lead you and the rest of the world to better investment returns. Sometimes people are chasing high-tech things that they don't know that much about, or a dream stock that has a low price per share. And if it just went up a few dollars in value, you'd make a lot of money. That's very different from the way that we invest in Rule Breaker Investing. Taking a page from Marie Kondo and suggesting she can help us all with our returns, that's the value I'm adding. But these ideas come, in a lot of ways, from our community. So, thank you for that.
OK, onto stock No. 2. Stock No. 2, the ticker symbol often misrepresented, one of my pet peeves, I've shared it before on the show, when people use the ticker symbol APPL. I think if you're a longtime investor, maybe it's your pet peeve, too. You know that Apple's ticker symbol is AAPL. In fact, I'm just checking now online. I see the ticker symbol APPL does not exist. I'm pretty sure that used to be a company's ticker symbol. But I wouldn't be surprised if it got yanked back by the NASDAQ because too many people were mistyping in or misunderstanding Apple's ticker symbol, and it was artificially pumping up some undeserving company. So, there is no APPL these days. By the way, there is an Apple Hospitality, a REIT, with ticker symbol APLE. Anyway, Rick, you and I know it's AAPL.
Engdahl: Yes, but I kind of think maybe Apple got it wrong, and they just grabbed AAPL and it's their fault, and that's where the pet peeve is should be directed.
Gardner: Shakespeare said, thereby hangs a tale. In fact, that's from As You Like It, from the very scene where The Motley Fool name is taken from. But I'm wondering, there must be a tale which I don't know. We should all look it up. Why did Apple use the ticker symbol AAPL and confuse an entire generation. Well, I think for years now -- and yes, we are measuring this in decades -- Apple products, people picked them up and they smiled, whether it was an iPod, or well before that, maybe an Apple 2e back in the day, right through to, I just got my new iPhone 11 Pro Max last week. Millions of people, maybe a billion or more people these days, have picked up an Apple product at some point the last 10 years and it has sparked joy. Now, not every one of them exceeds all of our expectations. And these days, the iPhone 11 might not be so radically different from the iPhone 8 in a way that the iPhone 4 was probably pretty radically different from the initial iPhone. But nevertheless, Apple for decades now has been sparking joy for the whole world, and especially people who don't want to have to figure out an operating system or know all of the settings on something to make it work, or all of the menus on, I don't know, Microsoft Excel. They're simplifying the use of software and hardware for all of us. Rick, does Apple spark joy for you?
Engdahl: Again, I'm with you on this one. I recently got a new iPad Air. I've been sitting on the same old iPad for a long time, and I guess I sat on it too hard and broke it. So, I got a new iPad Air. And I got the pencil with it. I hesitated, because I thought, $100 for a pencil?
Gardner: I wouldn't have even thought to do that myself.
Engdahl: But I handed it to my kids, and within minutes, they had created these beautiful animations and drawings using Procreate and RoughAnimator. Birds flapping their wings. My kids are 10, 12 years old. And without any effort at all, picked up a brand new tool and made beautiful art out of it. And if that doesn't spark joy, I don't know what does.
Gardner: Sparking joy for people of all ages. So, no surprise that Apple, and Amazon, frankly, are two of the last largest public market caps in the world. And if you're an old hand -- Rick, you and I are right around early 50s -- we've watched that over the course of our whole lives, especially the last 25 years. Those two companies, and just how they've gone on. So, it does make me confident in the next 25 years with these stocks. But it also, as Rule Breakers, always has us asking, what are the new emerging companies that are sparking joy? The next Apple, the next Amazon? Well, this week, anyway, I'm here to tell you the next Apple and Amazon might just be Apple and Amazon, and those are our first two picks in Five Stocks that Spark Joy.
All right, stock No. 3. The ticker symbol is ETSY. The company name is, of course, Etsy (ETSY +0.06%). Now, this is kind of an unusual one for me in the sense that I've personally never bought anything over Etsy. I have great familiarity with the company as a stock. It's been a winning pick for us in Rule Breakers. Any longtime listener of the Rule Breaker Investing podcast knows Etsy for a variety of reasons. But in contract to my own habits on Amazon and Apple, I am not a very regular purchaser. And yet, I see a world of people who are, and a growing world of people who enjoy buying arts, crafts, unique gifts over Etsy. And I will admit, as I pick up this stock, ETSY, the ticker symbol, and hold that in my figurative hands, it sparks joy for me as one of our better picks, not just longer-term, which it has been, but even more recently, after it had a really bad late summer and fall, repicking it and watching it start to bounce back. So, I wanted to include Etsy in this five-stock sampler. Rick, do you have any direct consumer experience with Etsy?
Engdahl: Yes. And David, if you're looking for something to buy on Etsy, give it a try. I recommend that you pick whatever your favorite board game of the moment is, type it into the search field, and hit enter. You will find wonderful, upgraded game components for all of your favorite games, Storage, all those things.
Gardner: Love it. I am aware that, people blinging out their games, right? You buy just the basic copy of Monopoly, and then you can get totally different pieces or chips and all the rest, and it's artistic, and people are making and selling it.
Engdahl: Both beautiful and useful. If you, for instance, go for Terraforming Mars, you'll get trays that actually hold your little cubes, so they don't find every time someone sneezes.
Gardner: [laughs] Yeah. So, those are for geeky gamers like Rick and me, there's a great use for Etsy. Of course, for millions of craftsmen worldwide, because that's how it operates today, it's a great place to sell. But for tens of millions of buyers of all different backgrounds, Etsy with increasing relevance. So, Etsy is stock No. 3 that sparks joy, joy for many of us.
All right, we move on to company No. 4. Now, this is definitely one that gives me joy, although admittedly, this is a company whose products are not as accessible worldwide for reasons of cost for many of us worldwide. And yet the cost keeps coming down. This company's stock keeps going up, but that doesn't scare me from recommending Tesla (TSLA 0.88%), ticker symbol TSLA. For many of us who've either driven a Tesla or might have one, it is one of the most amazing consumer products that we've ever seen, not just because of how well it works as a car that you can drive, whether it's a Model S, 3, or X or a Roadster; no, it's also what it means for the world. Electric cars, the revolution of a cleaner world, a simpler world. I don't fill my gas anymore. I haven't for about four years now. I just come home at night and plug my car in and go to bed. Tesla's also the bane of auto repair shops because there are very few parts in electric vehicles. You don't have 1,000 parts -- I'm making up the number there -- that are in combustion engines today, and you don't need to come in for an oil check. And so, as a consequences, as a Tesla owner, which increasing numbers of people in the United States and worldwide are, you know that there really isn't a lot of maintenance we're paying anymore for our cars. So it, for me, has sparked joy ever since buying my first years ago. I'm now on my third. And I'm really happy to see the price points continue to come down and more and more people get to enjoy the fantastic experience that is driving a Tesla. Rick, I haven't seen you rocking a Tesla necessarily. I'm not even sure what you drive. But, does Tesla spark joy for you or not?
Engdahl: Any company that pushes us toward a future of lower carbon emissions and the electric future that we all really need to move toward is a great company in my book. I have not had a chance to drive a Tesla yet. I think I'm supposed to borrow yours someday.
Gardner: I believe we had a charity auction a year or two ago, and it was to drive somebody's Tesla. I think was mine. I think you won the auction, and you still haven't cashed in your chip?
Engdahl: It's my own fault. I just haven't found the weekend when I'm thinking of it.
Gardner: OK, it's not my fault. At a certain point, I should be pushing this on you.
Engdahl: I think you have.
Gardner: OK, but in fact, I'd forgotten about it before this podcast. But thank you for the reminder. And here I am in 2020 for you, Rick. But yeah, ticker symbol TSLA joining with Amazon, Apple, Etsy and now Tesla as stock. No 4.
I should mention, by the way, Tesla has been on an absolute tear. In fact, as we record this podcast Tuesday afternoon, it's just over $500 to share. It's at $501. It is up more than 100% in the last three months. And you might think that is crazy, to be recommending the stock now. With a $93 billion market cap, you can put Ford and General Motors together, add those market caps up, you won't reach Tesla. And yet, yep, I still feel confident that over the next three-plus years, it will be beating the market. We'll see. And some of my five-stock samplers haven't worked out so well. Although I will mention, I've now done 23 of them with this one, and so far 18 have beaten the market together and four have lost to the market. So we have a crazy high hit rate for these five-stock samplers. And we'll see if Tesla can make a positive contribution here from a price of $501 going forward.
Engdahl: I wouldn't put it past them, because you and I are old enough to remember, it wasn't that long ago when people thought electric cars weren't even possible, or if they were possible, they'll never sell. Nobody else is going to make electric cars. All these things. They're such a trendsetter that I have no doubt that they will push forward into new ideas and new technologies going forward.
Gardner: Well, it'll be really interesting to see. I'm glad you mentioned that, Rick. You know, it was Elon Musk coming to our office. It was in October of 2011. He gave a free speech to our employees on that day right here in Fool HQ. And just a few weeks later, I made it my next recommendation for Motley Fool Rule Breakers. It was November 23rd, right around Thanksgiving 2011. The stock was at $31.45 then. So, yeah, it's been a spectacular performer from $31 to $501, despite a lot of volatility, years of average to middling performance like barely budging from 2013 to '18, and Elon doing some crazy things. And while we're big Tesla fans, I don't think you or I, Rick, necessarily think that Elon is the ultimate great CEO. He is a remarkable figure, though. And we like to invest in those types. But we're not huge crazy fanboys over here at Fool HQ. But we're admiring. So, yeah, go Tesla.
All right, and that takes us to the final stock of this five-stock sampler, Five Stocks that Spark Joy. And this is probably the most obvious pick of the bunch. So, dear listener, wherever you are, whoever you are, if you think about what company, starting with us as kids, around kids, probably has sparked more joy than any other worldwide over the last hundred years? And darn, it is just about 100 years, because Disney (DIS 0.14%) Brothers Cartoon Studio started I believe in 1923, founded by brothers Walt and Roy, oh, Disney. Yep, here we are in 2020, 97 years later. I would say Disney has probably sparked more joy in the last 10 years alone than maybe the 80 before that, because it's become so expensive. It's not just a theme park anymore, not just movies. It's now Pixar. It's Marvel. It's Star Wars, streaming. It's ESPN. It's global. Not just a theme park in Anaheim, California or Orlando, Florida. So, how could I not include Disney in this five-stock sampler? The ticker symbol is DIS. But, because I think the official company name is The Walt Disney Company, that's why I made it fifth alphabetically. Rick, does Disney spark joy for you?
Engdahl: I'll tell you, I didn't hesitate at all to sign up for Disney+ when it came around, and I haven't been disappointed, although I don't love everything there, but there's just so much to choose from in their catalog. Didn't, at all, tempt me to drop Netflix, I will tell you that. Dark cloud I can see through, I had no problem signing up for both services there.
Gardner: Yes. And I understand, it is interesting to think that two of these five companies have big streaming services, Amazon Prime and Disney+. And also that I didn't include Netflix. I easily could have. Other stocks that I think broadly spark joy not included because it's just a five-stock sampler. But I think for a lot of people, Starbucks does that on a daily, weekly basis, and for decades.
So I think, to take it all in all now as we close this one out there, there are the five companies -- Amazon, Apple, Etsy, Tesla, and Disney. And whether these five together beat the market or not over the next three years -- I think they will -- I feel very confident over the next 10-plus years, and not just for these five, but for the overall thought that companies that spark joy when people pick up their products or services, or just look at their brokerage statements with these stocks in them, these tend to be the market-beaters. And you need to let time happen to really enjoy the benefits. After all, Tesla tread water. The stock was just about in 2018 where it was in 2013. There can be periods of underperformance. But if you are playing the long game, the only game that counts, the game that we're playing here at The Motley Fool, I'm pretty sure you're playing it, too, that's why you're listening to Rule Breaker Investing, these tend to be the ones that go on to make you rich. So, for a company, The Motley Fool -- whose purpose is to make the world smarter, happier, and richer -- the emphasis particularly this week is what makes us happier, what sparks joy. It's a way to thin out your closet, simplify your life, and increase your profits as an investor.
Well, there you have it. From Five Stocks Shrouded in Mystery to Five Stocks that Spark Joy. I want to thank my pal, Rick Engdahl, for joining me and having some discussion. You know, it is much more fun to have a conversation with each other. That's really what all Motley Fool podcasts are, aren't they? Generally, we have conversations with each other and share them out with you. Sometimes we just have conversations with you. And that's what we do every month on mailbag. So next week, our Rule Breaker Investing mailbag, where you can join in the conversation, whether you want to talk about stock stories as we started the month, your biggest losers, the day the market crashed, or five stocks that spark joy, I look forward to joining with you next week. In the meantime, with a quick thanks to Marie Kondo, Fool on!
