In this episode of Motley Fool Money, host Chris Hill joins Andy Cross, Ron Gross, and Jason Moser to tackle the latest market news. Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) breaks out YouTube and Cloud revenue for the very first time. Disney (NYSE:DIS) sees a significant increase in its Disney+ subscribers. Pinterest (NYSE:PINS) has a really nice quarter. Activision Blizzard (NASDAQ:ATVI) rides on the success of Call of Duty: Modern Warfare and Call of Duty: Mobile. Take-Two Interactive (NASDAQ:TTWO) takes a beating. Casper's (NYSE:CSPR) IPO disappoints. Twitter (NYSE:TWTR) has its biggest quarter ever for user growth. Chipotle Mexican Grill's (NYSE:CMG) shares were down, but growth is up. And Yum! Brands (NYSE: YUM) ended the year on a low note.
Also, Nell Minow talks about an SEC proposal aimed at requirements for proxy advisory firms, and she offers her insights on the Academy Awards. Finally, we have three stocks for you to put on your watchlist.
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 Feb. 7, 2020.
Chris Hill: Alphabet's fourth-quarter profits came in higher than expected. Shares of Google's parent company up a little bit this week, Jason. Overall revenue was light, but there was a lot to like in this quarter.
Jason Moser: Yeah, there was plenty to like. I think this was a quarter where they released the YouTube and cloud revenue data for the first time ever. And we were talking in production here, I think, Andy, you were saying something eventually was going to have to happen --
Andy Cross: Yeah, they probably had to do that.
Moser: But regardless, I think that's probably the clearest sign yet, to me at least, they have no intentions of spinning these businesses out from Google/Alphabet anytime soon. I think it really helps offset what is probably one of the bigger points of scrutiny that we hold on the company quarter in and quarter out on the other bets segment.
Let's look at YouTube. Reached $15 billion in ad revenue in 2019; that grew 36% from a year ago. They also ended 2019 at a $3 billion annual run rate in YouTube subscription revenue and other non-advertising revenue. So really, that's on top of the advertising revenue. That just shows you how big YouTube has gotten at this point.
Google Cloud, still performing very well. Ended at a $10 billion run rate for the year. Now, to put that in context, Amazon Web Services chalked up about $10 billion for the quarter. So there's still plenty of share to capture there. But the good news is that Google Cloud is actually growing at a faster rate than AWS, so they are picking up share, as Ron was talking about last week.
But going back to the data on YouTube and the cloud services, they strike a little bit of a defensive tone, it seems, quarter in and quarter out on the call, with the other bets segment. And that's for good reason. It brought in $659 million in revenue for the year, and it lost better than four and a half billion dollars. [laughs] So there's clearly a disconnect there. So I understand their defensive tone. But when you now have a light to shine on YouTube and Google Cloud, I think that really takes away from focusing so much on the money that they're losing in the other bets segment.
Cross: Yeah, with Sundar Pichai now the CEO of Alphabet -- who was a former CEO of Google -- he clearly had interest in and knowledge of what was going on with YouTube. So they eventually would have had to disclose the revenues for YouTube. Still, very impressive -- about a $15 billion run rate of revenue. It seems the analysts were expecting a little bit higher, so I think there was some good conversation about, wow, maybe YouTube revenue wasn't so high, but I agree with you, Jason, on the subscription and other revenues around YouTube. That's pretty exciting.
Ron Gross: Can we start a campaign to change the name back to go Google?
Moser: I would much rather -- [laughs]
Hill: I'm in. [laughs]
Gross: I'm kind of at it. [laughs]
Moser: You know, what we've not seen a lot in the headlines, you remember they bought a little company called Fitbit recently. While that acquisition has not closed, it's going to close. And you have to wonder what exactly they plan to do with it. They're convinced it's going to add strong capabilities, not only in wearables for them, but it's going to advance their vision of ambient computing for the Android ecosystem. So ultimately, we're just going to be walking computers, right? And they feel like Fitbit has a role to serve there. So it'll be very interesting to see over time how they work Fitbit into their business model. But I think there's definitely potential there. There's clearly a market out there for folks who want to wear these devices on the wrist. Whether it's a watch or a Fitbit or something else.
Gross: I say we change the whole company name to Fitbit.
Moser: Well, there you go. Problem solved.
Hill: Disney off to a solid start in its new fiscal year. The first quarter report was highlighted by the number of subscribers to Disney+, Ron.
Gross: Very impressive 28.6 million Disney+ subscribers. Significant increase from the 10 million that they had, the day after it was launched in the U.S. and Canada. It took Netflix about two years to cross that 28 million mark. So nice job, guys, over there. Now has about half the subscribers that Netflix has domestically. We saw good subscriber growth at both Hulu and ESPN as well. Subscribers at Hulu at about 30 million; ESPN+, 7.5 million. So really strong start there.
Other divisions, though, are doing really well. Overall revenue for the company up 36%. The parks and experience division up 9%. Studio entertainment, really strong on the heels of The Rise of Skywalker and Frozen 2, Disney's media unit up 23%. Everybody doing really well. The unit that houses the streaming business reported a loss, which you would expect, because they're spending lots of money to get this done.
Cross: Yeah, and they're going to continue to have a loss for at least a few years going out. But that's the real value of what Disney brings, unlike any other company -- certainly, other than Netflix. The value of having that diversified revenue stream with all the different businesses. They can price Disney -- I mean, they priced this exceptionally low, Disney+, exceptionally low. That was, obviously, a huge driver of so many of the subscribers, as well as the content, the brand, of course. But the ability for them to do this, and the fact that they can because they have the other diversified revenue streams, is really an impressive part of the Disney stock story.
Gross: Yeah, don't sleep on Baby Yoda and The Mandalorian, because it is coming back and it's extremely popular.
Moser: It is. We hear a lot of people talking about the price being so low, and when are they going to raise prices? And I actually think it's going to be a while before they raise prices. And one of the reasons for that is, because right now, they don't have a lot of new content. I mean, they have a couple of series. All of that Disney content is great, but one thing I will say about that platform, they need to come out with some fresh new content in order to keep people engaged. Until they do that, I think we'll be able to overlook it, because I'm only paying $6 a month for it. But it all leads me to believe that I don't know that they're going to be raising prices on it anytime soon. I would look over the next couple of years for them to build that content library out with new and engaging content, which they just don't really have a lot of right now.
Gross: I probably should note that Shanghai Disney and Hong Kong Disney have been affected by the coronavirus, and there will be a rather significant economic impact to that. It will be short-term, hopefully, and shouldn't affect the thesis of owning Disney.
Hill: Shares of Pinterest up nearly 20% this week. Fourth-quarter profits came in much higher than expected. And, Andy, a strong quarter for Pinterest, but it also seems like they could use a couple more of these.
Cross: Yeah, my radar stock from last week, the third quarter, was not nearly as impressive. And they guided for the rest of the year not to be that great. And that's reversed now, and the stock, as you mentioned, Chris, had a really nice jump after the earnings came out. A really nice quarter; revenues up 46%. International revenues were up more than 200%. About three-quarters of the users are international. But on the revenue-per-user basis, international was far smaller than the U.S. is in general.
U.S. revenues up 36%. Monthly active users for the quarter, as total, up 26%; that was an acceleration of the quarter of last year. The growth there, mostly on the international side, up 35%. So the revenue per user is one that I continue to watch. That, for the quarter, was at $1.22. That was up 15%. International, very strong. But the international is only a fraction of the U.S. -- U.S. is at $4 per user; international is only at about $0.21. So, obviously, a lot of interest and a lot of, can they continue to monetize their entire platform? Pinterest's entire platform?
But really, across the 335 million users they have, with so many being international, can they continue to monetize the international asset they have? And if they can, then the stock is going to do pretty well over the next five years.
Hill: Pinterest is a $15 billion company. There was a stretch of time where Pinterest looked like an attractive enough business but not a dominant enough business. That it was a potential acquisition target. Fifteen billion, though, it kind of seems like it's moving out of the range where a big tech company, an Alphabet or someone else, would come in and try to buy them.
Cross: They have a really interesting platform, because it's advertising-driven, although they are pushing more and more toward more direct-to-consumer revenues. They're going to be launching this verified-merchant program, so you can buy directly from trusted brands. Jason, they have an oncoming augmented-reality service that people can try on, like, say, makeup, for example, and see how they look.
So they're growing this very visual platform, and it's very impressive. But they really have to monetize it. But I think, generally, someone could still look at this business and say, "Hey, at the right price, that might be an interesting acquisition," if they can monetize that.
Gross: Perhaps the newly named Fitbit would be -- [laughs]
Moser: Of all of the social platforms, though -- the data out there is pretty clear -- Pinterest is the one that impacts consumer behavior. I mean, people actually make purchasing decisions based on Pinterest more so than any of the other platforms, which is why I'm not surprised that it's grown the way it has. It seems to me like it would be an attractive acquisition target, more so than just some of these social plays that are just ad plays, you know.
Hill: Two video game companies reporting on Friday. Activision Blizzard's fourth-quarter profits came in higher than expected, pushing the stock to a 52-week high. But Take-Two Interactive stock falling 10% on Friday after a rough third-quarter report. Although, to be fair, Ron, Take-Two Interactive had a tough comp when you think about just how big this quarter was a year ago.
Gross: For sure. Let's take them one at a time. Activision, as you say, much better than expected revenue and profits, although they were down from this time last year, but they were still much better than expected on the heels of huge success of Call of Duty: Modern Warfare. Call of Duty: Mobile installs exceeded 150 million. The company now has 400 million total monthly active users, which is up 15% year over year. Really impressive.
Guidance was fine. I'm guessing they're being conservative here on purpose, because these businesses ebb and flow with kind of the blockbuster releases. But it was fine. They increased their dividend 11%, paid a 2.65% dividend yield, which is a pretty nice dividend for a company in this business.
Now we pivot over to Take-Two. Missed estimates for quarterly adjusted revenue. Strong competition just from the likes of Activision Blizzard, Electronic Arts. They did come up against comps of Red Dead Redemption 2 last year, so revenue was actually down 25% and earnings were down 9%. They narrowed their full-year forecast range -- investors never like to see that. And the creative force behind franchises such as Grand Theft Auto and Red Dead Redemption is leaving the company, another reason that investors were not too happy.
Hill: Casper, the friendly mattress company, went public on Thursday at $12 a share. The stock ended its first day up more than 10% but on Friday fell below its IPO price. And Andy, this seems like the post-WeWork world that we are all living in.
Cross: You guys heard of fintech, adtech? Welcome to sleeptech. This is Casper trying to capitalize on what they call the sleep economy, but really it's just kind of a snooze. [laughs] Generally, they priced the IPO at $12 per share. That was actually much lower than the initial range, which was somewhere between $17 and $19 share. The investment banks clearly didn't see the demand out there. It's an interesting concept, because sleep is so important. We know more and more studies about that. But just, the market has not seen the opportunity.
The losses are building. They spent a ton on marketing. They've spent more than $400 million over the last four years on marketing. Revenue growth is OK -- 20%-ish to 30%, 40%, somewhere along those lines gross profits. But they're losing money. And just, you've got to think about the growth prospects and the competitive nature of that market. And it's a very tough spot.
Gross: Investors don't seem to appreciate that, yes, it's a mattress, but it's in a box.
Cross: Well, they appreciate it. But also, it's such a competitive space. There are, I mean, literally, probably hundreds of mattress companies out there. Big competitors. They have 60 retail locations. Retail -- not a great spot to be in right now.
Hill: Twitter's fourth-quarter report, just what the doctor ordered. Revenue came in higher than expected, and it was Twitter's biggest quarter ever for user growth.
Moser: Yeah, I mean, it was a good quarter, I was a little bit surprised at the market's reaction. It does feel like, to your point, we were talking about this earlier -- it feels like we've seen this before. We've heard this story before. If you just look back at the last quarter, I mean, the stock was hovering around $40. They came out with the earnings report where they had some concerns on their ad tech and guided down a little bit. And the stock got shellacked. And so this is essentially the opposite. It's the George Costanza quarter.
The numbers are pretty good. Monetizable daily active usage grew 21% year over year, and that number is accelerating over the past several quarters, which is great. Eleven percent top-line growth, eh, that's OK. Nothing to write home about. But they made $3.5 billion for the year in sales and brought in just a little bit under $2 per share. So there's nothing wrong with that either. You know, it feels like they need to do something more still, you know?
Hill: Well, it's like we were saying about Pinterest. This is nice; let's do it for a couple of more quarters, and then you'll really be cooking with gas.
Moser: Yeah, and you know they're calling for a 20% increase in expenses for the year. And they're going to increase headcounts. So I wonder if they're not repeating some mistakes made in the past. We'll see there. But the fact of the matter is that Twitter does have a really very important audience from an information perspective. I mean, they have journalists, politicians, celebrities. I mean, that doesn't seem like it's going away. So figuring out a way to keep the platform engaging is going to matter. But I do feel like they have a little bit of a competitive position there and just the nature of the platform.
Hill: Shares of Chipotle down slightly this week, despite the fact that same-store sales in the fourth quarter grew more than 13%. Andy, any restaurant would kill for those comps.
Cross: Absolutely. Brian Niccol was my CEO of the Year, from our end-of-the-year special in 2019, and just continues to show why he deserves such respect. And his team, Jack Hartung, the CFO. Revenue up 18%. Chris, you mentioned that comparable-store-sale line, up 13.4%. The eighth consecutive quarter of accelerating comp growth. Transaction growth was up 8%. And they got some pricing and mix help that was up 5%. So, really continuing to get it done with operational excellence -- they called that out in the call -- and, really, innovation. Digital sales growth was up 78% and now accounts for 1 in 5 sales at Chipotle, and they are higher margin. So as they continue to push the innovation curve, Chipotle is really seeing the results.
Hill: So last fall, Brian Niccol was asked about breakfast, which has been a question for Chipotle for a couple of years now. He said we have no plans to do this in 2020. This week he said the same thing. But it also seems like they're ready to pull that lever whenever they need to.
Cross: Yeah, they could. I don't think they really have to right now. I mean, they're innovating what they call Chipotlanes, which is the drive-through. They're going to open a bunch more of those this year. And they're just continuing to do what they need to do, coming off a terrible problem with the health -- they've just operated really well, and they don't have to necessarily go to something that they don't feel comfortable with.
Moser: Maybe they got one of those DEFCON charts in the executive suite. So, like, when comps hit 5% or lower, it's like, all right, everybody, we are getting ready to introduce burrito.
Gross: Get the breakfast burrito. [laughs]
Hill: Well, and to Andy's point about the delivery lanes -- that could be part of the master plan, right? If we're going to move the needle with breakfast, we're going to move it in a bigger way, if we make it easy for people to just pick up their breakfast on their way to work or wherever they're going in the morning. And it may just be something they're rolling out in 2021-2022.
Moser: We can only hope.
Hill: Yum! Brands ended its fiscal year not with a bang but a whimper. The parent company of KFC, Taco Bell, and Pizza Hut delivered a familiar story in the fourth quarter, Ron, namely that KFC and Taco Bell had positive same-store sales and Pizza Hut did not.
Gross: You put ketchup on bread, and that's what you get, Chris. [laughs] It's not the best pizza, and the competition is pretty steep, not just from the likes of Domino's and Papa John's, but from all the food delivery apps that now allow users to order from a wide variety of restaurants. And Pizza Hut is really suffering in that regard. As you mentioned, KFC and Taco Bell are kind of doing better, so it can offset, KFC comps up 3%, Taco Bell up 4%, but perhaps it would be better to jettison Pizza Hut if they don't think they can turn this, because it's been struggling for quite some time now.
Hill: I was just going to ask that. I mean, it really seems like we've seen this story quarter after quarter. And this is America. A lot of people like pizza. There's a playbook here for them to turn it around, and if they can't, yeah, if I'm KFC or Taco Bell, I'm giving the stink eye to everybody at Pizza Hut, because they're dragging my stock down. [laughs]
Gross: Yeah, if it's not going to be accretive to earnings, if it's going to consistently be a drag, then something has got to be done.
Hill: All right. Jason Moser, Andy Cross, Ron Gross, guys, we'll see you later in the show for stocks on our radar. The debate on Capitol Hill is heating up over SEC proposals that would impose new requirements on proxy advisory firms and make it harder to submit shareholder proposals.
We are days away from the Academy Awards, so for that we turn to our favorite expert in the realm of corporate governance. Nell Minow is the vice chair of ValueEdge Advisors. She is also the film critic known as the Movie Mom. She joins me now from Washington, D.C.
We'll get to the movie business shortly, but let's start in the boardroom and specifically the SEC and some proposals that are generating a lot of opposition. And as I understand it, these are proposals that would make it harder for investors to challenge corporate management on environmental, social, and governance issues. You filed some comments with the SEC. What is at stake here for investors like you and me?
Nell Minow: Oh, the future of capitalism. Nothing important.
Hill: Oh, OK, we can move on to movies then.
Minow: [laughs] Yeah, you know, what's odd about this is there's a sharply divided vote in the commission proposing these rules. You had the Democrats voting in favor of free-market transactions between financially sophisticated buyers and sellers having to do with access to independent research and recommendations on shareholder proposals that are non-binding on the company. So even if they got a 100% vote on a shareholder proposal saying, "Company, pay more attention to climate change," the company can ignore it, and they do.
So yeah, the Democrats, supporting the current system. And you had the Republicans coming in like the nanny state saying, "Well, these may be the most sophisticated professionals in the country -- fund managers managing hundreds of millions and sometimes billions of dollars -- but we don't trust them to know whether they want to subscribe to these publications or not."
And the corporations, the CEOs, are putting a ton of money into it. In fact, this week they took out a full-page ad in The Washington Post, clearly the publication of record for individual investors. I don't know why. Maybe they wanted government people to read it. But they took out a full-page ad in The Washington Post saying that this was absolutely essential. And they've hired all kinds of operatives and fake front groups. In fact, it's been such a disaster that Senator Van Hollen of Maryland told the chairman of the SEC, "You've been duped because the seven comments you relied on in your opening remarks on this proposal were all fake. They were all from people who later said that they didn't know that they had signed comments and that they however did have a son-in-law working on K Street in Washington." So it's often very fake. It's so fake that there's actually a hearing today in Washington on this issue of fake front groups filing comments on government proposals.
Hill: It seems like a lot of time and effort, to say nothing of money, on something that's non-binding.
Minow: Absolutely. The two issues that they seem to be the most concerned about are shareholder votes on CEO pay, of which, 98% voted in favor of CEO pay plans last year -- only 2% of companies had a "no" vote. And once again, even those didn't have to do whatever the shareholder said. And the other issue seems to be climate change, but you can see they're really having a meltdown over it. They've got parallel rule-making going on over at the Labor Department.
Hill: We'll definitely keep an eye on that. Let's move to Wall Street. Specifically, Goldman Sachs' CEO, David Solomon, came out recently and said, "Goldman Sachs, which has done a very good bit of business taking companies public," Solomon said, "Goldman Sachs is no longer going to take a company public, unless it has at least one diverse board member." And he said that "in the past four years, IPOs of U.S. companies with at least one woman on the board performed significantly better than those without."
First, are you surprised that Goldman Sachs is taking this stance?
Minow: I'm not surprised. I am gratified, though. And it does show, from the facts that you just mentioned, that he relied on, that this is 100% a market-driven decision. Whether it's chicken or the egg, I don't know. Whether it is their investors respond more positively to companies with diverse boards or whether companies with diverse boards just do better, nobody will ever know. But certainly, the days of the male, pale, and stale boards should be over.
Hill: I was a little surprised. Maybe I shouldn't be, but I was a little surprised at some of the pushback on this proposal -- some cries of tokenism and that sort of thing. Because again, this just seems like, when you run the numbers, this just seems like smart business by Goldman Sachs, particularly when you consider, over the last six months, going back to last summer when we had Uber, and Lyft and then the whole WeWork debacle, that IPOs of the last six months or so have been a little touchy, a little dodgy. And I don't know, if I'm Goldman Sachs, I want to back IPOs that are going to make me money.
Minow: Absolutely. This comes out, by the way, just as a new study about European initiatives to increase board diversity are lagging. And that may be because they were designed to be a little more tokeny. This is definitely a very strongly market-based decision. It is not "this would be nice to do"; it's "this is essential to do." In an era of #MeToo, in an era of growing numbers of graduates from business schools, growing numbers of executives who are diverse, it just makes no sense from the standpoint of business to ignore those people.
Hill: Let's move on to the business of entertainment. Disney recently reported. They've got more than 28 million subscribers to their Disney+ service, which is pretty nice when you consider it just launched three months ago. I know you're a subscriber. Did that number surprise you, though?
Minow: Not at all. Disney went about it 100% right. As you know, they started the same time as Apple TV and they had the great advantage that Apple did not have, of just the world's greatest content to put on there. They brought back stuff that was guaranteed to please everybody. So they had stuff on there for baby boomers; they had, crucially, stuff on there for the parents of today's children. So it's not just that they want to get access to the Disney Jr. content and the Pixar content for their children, they're bringing back the stuff from the old Disney Channel series from when today's parents were in elementary school. And of course, they've got Star Wars; they've got the Avengers. So it makes absolute sense to me that that would be a bonanza. And that's why I bought more Disney stock before they started it.
Hill: Bob Iger, the CEO at Disney, was talking about the Star Wars franchise and said that the short-term priority is television. To what extent do you think Star Wars is, if not tapped out as a movie franchise, it is at least on the back burner for the next three to five years?
Minow: Well, some of their Star Wars-related movies have not done as well, particularly the spinoffs. And I think they are looking at what is gone on with their own Marvel characters and also their rival DC characters, which have really transitioned to television so well. And I think they're seeing that they're just a lot more opportunities and that there are certain kinds of stories that are better suited for television. The Mandalorian is a perfect example. It is so well done. It is so satisfying, both to hardcore Star Wars fans and to newcomers, that I think that's very smart. It's not just Star Wars that's transitioning to television. It's pretty much everything.
Hill: Before we go to the Oscars, I want to ask you about your friend, the late, great Roger Ebert. I was listening to an interview he had done with The Motley Fool back in 2002. And he was asked about the most negative change in the movie industry during his career. And he said it was marketing. That marketing had taken over for art and that moviemakers were no longer trying to make the Great American Movie. That was nearly 20 years ago that he said this. To what extent do you think marketing has taken over for art when it comes to movies?
Minow: I agree with Roger, as I just about always do. I think the turning point for me, going back to Disney, was the year that the original Lion King movie came out. It was at that time the highest-grossing film of the year, which was nice and everybody was happy about that. But I think that what made the real difference is that even at the very, very top of the pyramid of movie box office, they still made more money from merchandising than they did from box office. And I think that really turned movies into infomercials.
And I was at a screening of the Birds of Prey movie, which is going to be a big hit this weekend. And somebody came dressed as one of the characters, and she told me that she got the outfit from Spencer Gifts. So, ahead of time, they're already marketing the costumes for these characters. So I think movies are increasingly being used just to sell merchandise.
On the other hand, because of the other issue that we've just talked about, which is television and the unquestioned golden age of television, the content that's available on television right now, you have a whole new category of lower-budget content that would never have found a movie theater in the past. It's absolutely terrific. It's a very, very strong fan base and doesn't have to make $20 million or $100 million to provide an adequate return.
Hill: It's amazing that somehow the Birds of Prey people were able to get their stuff together. But for all the success of The Mandalorian, Disney couldn't get Baby Yoda toys out before Christmas.
Minow: That was shocking, and I suspected it was because they wanted it to be a surprise, and I felt very lucky that I watched that first episode with the surprise at the end without knowing anything about it ahead of time. I had just the purest sense of delight; I laughed out loud when I saw that. And I thought it was perfectly handled, and I wondered if that was why. They were just trying to keep it a secret.
Hill: All right, let's get to the Academy Awards. We'll stick with the three of the biggest awards, anyway. And as always, I'm going to ask you who should win and who you think will win. And we'll start with Best Actor. This is Joaquin Phoenix's fourth time being nominated. And it really seems like the fourth time is going to be a charm for him.
Minow: Yeah, I'm afraid you're right. I wasn't that crazy about the performance, although you have to admire his commitment. I wasn't excited about the movie. I think he is going to win. Somebody told me a long time ago, and I didn't believe it, but I've grown to believe it, that the Hollywood voters for the Oscars pay a lot of attention to the acceptance speeches that people give. And if they think it's going to be an acceptance speech that's going to really promote their industry, they're more inclined to vote. And I think Joaquin Phoenix, who has been known as something of an unpredictable participant in these events in the past, has been on his very best behavior. And I think for that reason he's probably going to win.
But my choice would be Adam Driver, not just because he gave a sensational performance in Marriage Story but because what a year that guy had. He was in three very different movies. He was in Star Wars. He has just become one of the most interesting and really varied performers that we have in Hollywood. And I would love to see Adam Driver get the award.
Hill: In the Best Actress category, Renee Zellweger appears to be an overwhelming betting favorite. Who do you think will win, and who do you think should win?
Minow: Yeah, I think she is going to win. And certainly, again, talk about commitment. She gave a tremendously committed performance in Judy. Which is the story of the last few months of the life of Judy Garland. To me, it was a little stunt-ish. And I think she's a person who has a lot of affection in the Hollywood community; everybody loves a comeback, all of that. If it were my pick, I would go with Saoirse Ronan, who, first of all, should just get an Oscar every year. She's the Meryl Streep of her generation, but her performance as Jo March in Little Women was absolutely dazzling.
Hill: And finally, eight films nominated in the Best Picture category, but it does seem like it is 1917's to lose?
Minow: You know, I think that's right. And yet, out of a lot of the preliminary awards that are important indicators, we saw Parasite, Parasite got the Screen Actors Guild Award, their equivalent of Best Picture. It would be stunning for a Korean film to win Best Picture. It would be stunning for any non-English language film, for a horror film, all of those reasons, no-name actors that are known in the United States, and yet it has a lot of support. I'm guessing we may just see a split. We may see Bong Joon-ho get the Best Director. And 1917 gets Best Picture. 1917 is the quintessential Best Picture. It's a big historical epic that's just got a lot of heart to it and a lot of technical achievement. Look for Roger Deakins to get the Oscar for cinematography for that; well deserved.
Hill: And finally, please fill in the blank, when it comes to the Academy Awards, don't be surprised if ... ?
Minow: I'm going to say, don't be surprised if Disney does not win Best Animated Film. They usually have a lock on everything, but this is a very crazy year. And I don't think that Toy Story is going to get it. I think it could go to Missing Link, which is a stop-motion animation. They've never had one of those win best animated before. I Lost My Body, a very strange film that nobody saw, but it's got a lot of support. So I think that's kind of the wild card category this year.
Hill: One of the best reasons to be on Twitter is so you can follow Nell Minow. Get her thoughts on corporate governance, movies, and a lot more. Nell, enjoy the Academy Awards, always good talking to you.
Minow: Thank you.
Hill: Two quick things before we get to the stocks on our radar. First, The Motley Fool is hiring. We want you, yes, you, listening. We have literally dozens of jobs that we're looking to fill in marketing, in tech; we're looking for software engineers, SEO experts, and more. So if you're interested, go to careers.fool.com, check out all of the jobs we have posted.
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All right, 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: Empire State Realty Trust (NYSE:ESRT), ESRT. It's a real estate investment trust that I'm looking into. They went public back in 2013. Their flagship asset is the Empire State Building, which I think we've all heard of. About 93% of their assets are office space, 7% retail. Portfolio currently consists of 14 different office properties, really strong management team, decades of experience in Manhattan office real estate. It is a real estate investment trust, a REIT, currently has a 3% dividend yield.
Hill: Empire State Realty Trust. Steve, you got a question?
Steve Broido: So, in a sentence or two, why should investors buy REITs?
Gross: So REITs, by law, have to distribute 90% of their net income to shareholders. So, typically, the dividends are higher than other types of companies. So if you're looking for yield, that's a nice place to look.
Hill: Jason Moser, what are you looking at this week?
Moser: Yeah, putting together a small-cap report for the augmented-reality service, and I am going to feature Limelight Networks (NASDAQ:LLNW) in this report; ticker is LLNW. This is a small-cap, right, about a $600 million market cap, but they are in the business of digital content delivery, and they utilize edge computing to do that. Now what is edge computing, you say, Steve? Well, in simplest terms, it's just bringing the cloud closer to us and reduces latency as we download and stream more stuff. So it's a business I'm looking into learning more about. Their customers operate media, entertainment, gaming technology and they have a big customer in Amazon, who accounted for approximately 30% of revenues last year. So I'm trying to ascertain what the competitive advantage is here or if it's just something that could ultimately be wiped out by big tech.
Hill: Steve, question about Limelight Networks?
Broido: Seems like a very crowded space. What's the one thing they can do to stand out?
Moser: Well, I think deliver that content as quickly and as vibrantly as possible, right? I mean, when you're streaming and you've got a good picture and zero latency, that really stands out for consumers, I'd say.
Hill: I'm not saying it's on the level of Datadog, but that's a good name. Limelight Networks, that's a good name.
Moser: Limelight, makes me think of Rush.
Hill: Andy Cross, what are you looking at this week?
Cross: Steve, one that you might have heard of, Moody's (NYSE:MCO), symbol MCO. One of the largest credit ratings analysis firms of fixed-income and debt instruments. It has basically a duopoly with S&P, where they have more than 80% market share. It's a recommendation in our Moneymakers service, because it makes a lot of money, has exceptionally high profit margins, they can price their debt ratings, they can increase the prices 3% to 5% a year. Sales at about 30 times on the earnings front at 11 times sales. So it's had a magnificent run. Stocks up 70% for the past year. So I'm looking for a little bit of pullback but want to see what they have earnings next week.
Hill: Steve, question about Moody's?
Broido: How much should investors rely on these ratings?
Cross: Well, if you're a debt instrument investor -- a lot. I mean they have to buy -- most of them are required to have the debt instruments rated before they can buy them. So I think it's important to look at them and understand them.
Hill: Standard & Poor's has the 500 Index. How come Moody's doesn't have an index?
Cross: I don't know. They probably need one. They do have a little Moody's Analytics business, which is growing really rapidly.
Hill: Not as good as an index. [laughs] Moody's, Limelight Networks, Empire State Realty -- you got one you want to add to your watchlist there, Steve?
Broido: Let's go to New York, Ron.
Gross: All righty, I'm in.
Hill: A road trip. Woo-hoo! Will you film that, because I would totally watch a road trip movie with you two.
Hill: All right. Ron Gross, Jason Moser, Andy Cross -- guys, thanks for being here.
All: Thank you.
Hill: 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.