In this episode of Rule Breaker Investing, Motley Fool co-founder David Gardner shares five stocks he has handpicked for you to put on your watchlist for this present environment. He shares his views on investing in bad times. He has made sure to pick stocks that will do well now and beyond and will guide your investment thinking.
Also, get details on the listener-picked topic coming up on next week's podcast and much more.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on April 8, 2020.
David Gardner: For years, let's call it almost 27 now, since The Motley Fool published its first issue in July of 1993, we've been telling you "Save money!" Every two weeks invest it in the market, good times and bad. Find the best companies. Look forward, not back, and keep investing.
So here we are, dear listener. We find ourselves having endured a substantial market drop and what are you doing? I hope the same thing, saving, and investing, good times and bad. The ironic thing is that the more bad the times feel in the near term, the more you're going to look back 5, 10, 50 years from now and realize, "Wow! for investors, that bad time; that was actually good."
So have you been saving up and have you been waiting for my latest Five-Stock Sampler to help guide your thinking? Well, great, because it's time for me to pick my newest Five-Stock Sampler for the 24th time in the history of this podcast, today, this week, now. Only on Rule Breaker Investing.
Welcome back to Rule Breaker Investing. What a delight it is to have you with us this week, I hope that you're safe, I hope that you're keeping healthy and making good decisions wherever you are in the United States of America or, of course, across the world. We have a large listener base that is not here in the U.S. of A.
Some of you are already on the other side of the flattening curve. We in the U.S. are not yet, but things are starting to look up, I think a little bit, we'll see.
What a delight it was to have author James Clear join me on last week's podcast. I hope you enjoyed James. I will say that the sound quality was not the greatest, but that reminds me to say that it may not be the greatest this week ever, because you should know that The Motley Fool having closed its offices on Friday, March 6, last month, more than a month ago now. We were quite early on that call, thanks to my brother, our CEO, Tom Gardner. But we've been doing our podcasts remotely. So Rick Engdahl is producing this one from his home. Hey, Rick!
Rick Engdahl: Downtown Hyattsville, Maryland.
Gardner: Awesome! And here I am in Washington, DC, not far from the campus of American University, where I live. And so, we are bringing this podcast to you outside of our Fool HQ studios. Now, that's been true for a few weeks now. So you may or may not notice that the sound quality may not be quite what we had hoped for. But even if it was only just fair to middling last week, it was great to have James and all of his insights. And that's one of those podcasts we do sometimes at Rule Breaker Investing that might be worth sharing out with friends and family, in particular, as we all work to be more consistent in doing good stuff and less consistent doing bad stuff. And so James Clear I think can help anyone, he certainly helped me as an author, it was great to have James join us last week.
I will mention, next week, we're going to have the much-awaited dividend investing episode for Rule Breaker Investing. Now, this one was promised weeks and weeks ago, but because of the change in the world at large and some of the schedule and what we wanted to do and say to you, over these last few weeks, we bumped our dividend investing. It didn't quite feel as relevant a few weeks ago, but I think we're going to be ready for it next week. So my friend Buck Hartzell will be back, he may have a guest or two. And we're going to talk through dividend investing, income investing and looking at stocks. Some of them won't be Rule Breakers, but that was what you voted for. You voted that a single podcast for Rule Breaker Investing would be given over to dividend investing. Obviously, a topic of broad interest. Very much looking forward to having Buck and team join me and join you next week.
But that's next week, let's talk about this week. This week I'm doing my 24th Five-Stock Sampler. We first started doing these not long after our podcast launched July of 2015. And each of these has been picked as just a small sampling of the stocks that we have on offer, recommendations in services like Motley Fool Rule Breakers, which was our advertiser this week, or Motley Fool Stock Advisor, which is our broadest-reaching service with the biggest membership. But both of them are big, broad services with lots of members who are looking to make better financial decisions to buy this stock, not that one, to buy the good ones, and avoid all the bad ones that index funds have to buy, because they're indexing. So I think part of the secret to Rule Breaker Investing and part of what The Motley Fool has done in this world is we kind of warned some people off just buying everything, because, darn it! don't you and I want to buy the good companies, avoid the bad ones? And I'm not just talking about their performance as a stock but how about what they do as a company. So choosing into companies that we think are admirable and excellent, and typically put up some excellent returns over time, that's what we're doing.
And so, when I pick five stocks, it's always just a sampler. That means there are dozens of stocks. There are things like starter stocks, if you're starting a new portfolio, well, we've got those selected for you in Rule Breakers and Stock Advisor. We have eight or so that anybody can start building a portfolio with. And as I'm the person who's overseeing those decisions, I can tell you we're going to be refreshing our Starter Stocks later this month for the year of 2020. So if you're a Stock Advisor and/or Rule Breakers member, you'll have that to look forward to.
But yeah, whether it's the Starter Stocks that can really start a portfolio for a new member or the Best Buys Now, which we bring to you every single month, repicking some of our favorite stock picks of yore, saying, "Yes, we like those today for the next 3, 5, 10 years going forward." So those are the Best Buys Now of our services. So Starter Stocks, Best Buys Now and, of course, new picks that we make month-in and month-out and the forums. Probably one of my favorite features of our services is just the discussion boards where I learned so much from my fellow Fools as we talk about some of the companies that I'll be featuring today.
So it is but a sampler, and yet I've handpicked these, as I try to think about, what are some stocks that I oversee, stocks in my services, that I think are well positioned for the present environment? And that's why we have -- I never thought I'd do a sampler called this-- but Five Stocks for the Coronavirus.
I sure wish, the coronavirus had never happened, although this kind of thing had been foreseen and has happened before. I think the first coronavirus was identified in the 1960s; we talked about this a few weeks ago on Thoughts on Our World in 10½ Chapters. Coronaviruses, specifically ones that start in animals, nonhuman animals, and then make their leap into humans. So it's happened before, it'll happen again in future, but this one has been a humdinger in 2020, starting, of course, in 2019.
And so, just as this topic seems to dominate so many of the conversations I find myself in today, whether casual or professional conversations, how could I not also allow it to influence some of the stocks that you or I might be thinking about buying here in April 2020, and so hence, Five Stocks for the Coronavirus.
Now, each of these companies is an active recommendation. In most cases, I picked them well before coronavirus. Some of them are well up, a couple of them are down, but each of them, I think, is positioned to, I won't say "flourish," because I don't want to pick a word with such a positive connotation when we're talking about such a bad time on planet Earth, but I'll say these companies will adapt and evolve well in the COVID-19 environment. But, of course, this too shall pass. I sure hope it's not going to stay around that long. And so, we're picking stocks that I think will do well in any age. Of course, we believe these companies will thrive over the next 3, 5, and 10 years, and coronavirus is only going to be around, I hope, for a matter of months, not years.
So yes, I'm picking these fully thinking about the quarter that these kinds of companies are having right now, suspecting it'll be good quarters, but I'm mainly thinking 3, 5, 10 years forward as I share this Five-Stock Sampler with you.
And before we get into the first of these five stocks, I guess I want to say something a little bit more generally about some of these companies. Now, I would say some of these companies I'm sharing with you this week as my latest picks are pretty obvious. They are companies that are making headlines, their businesses are clearly well set up in a cloud world in a digital age in a stay-at-home environment. And you might think, well, "Hey, Dave, that seems pretty obvious." And if you would think that, I would say back to you, "Yeah, you're right, but here's the key." The key is that we're looking past the traders, who are often saying these kinds of stocks are -- this is their parlance -- overbought.
So I think the real success formula, for you and for me here, is not that we're identifying obscure companies that nobody would have thought of ahead of the headlines. Which by the way, some of these, we were well ahead of the headlines on. No, it's that you're willing to wade in right now, even in the face of some significant rises, and establish, if you don't already have one, a long-term position in these kinds of companies. So it's one thing to say "Well, that company is obviously a beneficiary of what's happening right now," it's another to be willing to invest your money in it, especially if it's quite volatile right now or has run up. And yet each of these five stocks I'm presenting to you this week, I believe will beat the market going forward from here. And so, it's being willing to go out and buy in the face of the headlines, that's the real key to success here, I think.
So I want to share that ahead of time. But now without further ado, let's get into it, shall we?
Stock No. 1. Now, for each of these, I'm going to mention the company name, the ticker symbol, what it does, I'll mention its market cap, its brief history within The Motley Fool services, and then, two things I like about it and one thing to watch.
So stock No. 1. And, yes, we're proceeding alphabetically by company name, once again this sampler. Stock No. 1, we're dropping all the way down to the letter P right away. The company is Peloton Interactive (PTON +6.50%), the ticker symbol is PTON. Peloton is a fitness company that brings the feeling of community to at-home workouts through its bikes. And while you may not own one -- I don't myself -- I think you probably would recognize the company's products and some of its recent history. In fact, it made some big waves with its holiday ad for 2019, but that's getting ahead of things.
So the market cap for Peloton Interactive is $7 billion. I first picked this stock in November of 2019, right around the time that holiday ad was starting to hit the airwaves. The stock was at $32.16; I regret to say it's down from there. It's clocking in -- well, let me see, we are recording this right around market close yesterday, that is Tuesday, April 7, where it closed right around $27.5. So that means Peloton Interactive is down 12% from where I picked it for Rule Breaker members in November. If there's good news, it's that the market is down more, the market is down 15%, so Peloton Interactive is beating the market, though, not by much, and it is down.
So what are two things I like about ticker symbol PTON? First thing I'd say is that its present price, it's right around where it IPO'd. I think, it IPO'd in late-September right around $27.5, that's kind of where it would have closed its first day, and so here it is now at $27.5, but in the meantime it ran up to $36 the first week of December and then it dropped to $18 a share in mid-March in the doldrums of the lowest market point hit in 2020. So look at that volatility. And that kind of volatility, you know, $27 up to $36, all the way down to $18, back to $27, all within less than a year. That kind of volatility scares a lot of people off.
But the thing I like about it, No. 1, is -- that's good for you and me. I mean this is a digital business that's based on stay-at-home fitness that I think is primed not just for near-term but also long-term growth, and volatility tends to scare off investors. And so, here we find ourselves able to purchase the stock right around where it IPO'd before it ran up.
So yes, I like volatility. I realize it can cause stress for some people, but if you're really taking the long-term view, if you're playing the game we are, the long-game, volatility really won't matter too much 5 or 10 years from now in the near-term, but it does tend to scare people away, and so we get better prices. That's thing No. 1.
Thing No. 2 I like. This company is a lot stabler than you'd think, given its stock market volatility. I mean, in part because of its holiday ad, which I'll talk about in a second, it's a company that has a lot of brand recognition. It's also a brand that's kind of a higher-end brand, more like the Starbucks within its industry, so kind of a stronger brand. And the closest analogue I can think of right now is maybe Lululemon. There's probably a lot of overlap between Lululemon customers and Peloton customers. And yet, the good news here is, this company is worth about a quarter of what Lululemon is today, but again, I think it's a lot stabler than you think.
Here's an amazing stat: The average monthly churn of its customer base, people who are watching the videos on their bike as they try to keep up with the trainer in New York City or wherever the trainer is, the average monthly churn is less than 1%, that's right, it's 0.90%. So if you do the math, over the course of the year, Peloton loses only 6% of its buying customers. It retains 94% or has over the past year. So that's a lot stabler than you'd think.
But now let's talk about that ad a little bit, and I'm going to borrow from my friend Wikipedia, my sometime co-host that I tend to bring out from one podcast to the next and share stories that I wouldn't be good enough at remembering on my own. But do you member November 2019 when the company released its new holiday commercial, it was entitled "The Gift That Gives Back?" And Wikipedia reminds us, it's where a wife receives a Peloton Bike for Christmas from her husband, she begins recording a video diary of herself using the Bike, and a year later she proclaims that she "didn't realize how much this would change me."
Well, in late November, again, right around when I was picking the stock, the commercial began to receive criticism from viewers who claimed that its plot implied that the woman's husband was unsatisfied with her physical appearance. Peloton defended the ad, arguing, it was intended to celebrate a "fitness and wellness journey," inspired by how often its users were often "meaningfully and positively impacted after purchasing or being gifted a Peloton bike or tread, often in ways that surprise them."
Whatever you thought of that ad, if you even ever saw it, it became a thing. It was commented on in popular culture, it received a lot of criticism. Obviously, the company felt a need to explain itself.
Now, a few months later, in a world where everyone is staying at home, it seems to me Peloton has really found a place to thrive. So while it maybe got some bad publicity -- sometimes people say, even bad publicity is good publicity -- I would say it's certainly raised Peloton's profile. And then coronavirus struck and all of a sudden, we began to see the value of a stay-at-home fitness business. And I don't think anybody does it anywhere near as well as Peloton Interactive does it.
So thing No. 2 I like about Peloton, it's a lot stabler than you think. I think it's here to stay. And just think about that customer retention, which is really impressive.
Okay, as I said earlier, I'm going to close with one thing to watch. Sometimes this might be, sort of, a risk factor, it's something you and I should be paying attention to. This is a money-losing business. So Peloton Interactive does not yet make a profit. In the past year, it had losses of around $200 million. Now, I should point out that it has about $1.5 billion on its balance sheet.
So if you're not familiar with burn rate, let's talk about that really quickly. This is a phrase I most often use in the context of biotechnology companies or other development-stage companies where they're burning, that is, losing a certain amount of money a year. And then the question is, well, how much do they have in the bank? Like, how many years could they lose that much money? So for Peloton Interactive, again, $1.5 million on the balance sheet, losing $200 million a year, I will mention, it has $500 million in debt. So if you net that out, it's got net cash of $1 billion losing $200 million a year. So it could go this way for at least five years before it started getting in a tight position. In the meantime, it certainly, I'm sure, could borrow more money or refinance. But really, I think we should expect Peloton to begin making profit. So this is obviously something that we should be paying attention to, and investors who are already in the stock I know are.
I will mention in closing, that I usually like to add to or replug winners. Like, when I bring out stocks for Five-Stock Samplers, these are usually companies that are winning, because what do winners do? They usually keep winning in my experience. So this is unusual for me to pick a stock that's down, because I usually like to add to my winners. So we'll see how Peloton Interactive does in the years forward, as we go back and score, as I do for all of my 24 Five-Stock Samplers, go back and score it and see how we did and what we can learn.
All right. Stock for coronavirus No. 2. Ticker symbol is ROKU, the company's name, same as the ticker symbol, it's Roku (ROKU +7.29%). This company is a leading platform for video streaming services. Many of us are familiar with it. I have at least one Roku box in my house, perhaps, you have a box or a stick in your life as well. The market cap for Roku is $11 billion. And any longtime listener of this podcast knows that I'm a market-cap junkie and I'm trying to create as many market-cap junkies as possible in the world. That's why I'm mentioning the market cap for each of these. So it's worth mentioning that Roku is about 50% larger than Peloton Interactive, which is just kind of interesting to note.
Now, the stock was first picked in Motley Fool Rule Breakers. I picked it on March 4 of last year. So we're just 13 months later, the stock was at $61.82 back then. Today it's right around $87. So good news for Rule Breakers members, you're up 45%. That's against a market that's down 3%. And as I looked at that figure, I almost needed to double-check my math. So over the last 13 months, despite the horrific first quarter for the stock market, over the last 13 months we're down 3% overall. That doesn't sound too bad to me, but if you're a Roku shareholder, you're a lot happier than that, you're up 45%.
And yet, I hasten to mention that I then rerecommended it on July 11 of last year, it was up to $104.5 at that point. In fact, it went from $104.5 to $170 in September. So those of us who bought last March at $60-ish, got to see it go to $170 in about half of a year. So it was a megawinner. However, since then it has, of course, dropped back down to where it is now at $87, which means that re-recommendation in July is down 15%, market down 10%. So we're beating the market. Suffice it to say, Roku has been a very volatile stock, but mostly to the upside.
And what is thing No. 1 I like about Roku? Well, it might sound a little bit like thing No. 1 I liked about Peloton, and that is the volatility. This is a stock that in a single month, basically from February into March, went from $150 to $60 and then bounced back to $90. That is a gut-wrenching drop $150 to $60. And again, this is a business that's helped by this environment. Some people are saying coronavirus has been the mother of all great imagined benefits for streaming, not just Roku, of course, but Netflix, Hulu, HBO, the list goes on, Amazon Prime. And sure enough, this has to have been a really strong time for streaming businesses, so it's amazing to me to think that Roku dropped from $150 to $60 in the face of that.
Now, this is a company with over $1 billion in sales. That's right, for 2019, it reached for the first time $1 billion in sales. That was 52% growth over the previous year. This is a company with 37 million active accounts at last count. And I know once quarterly numbers are reported, it'll be higher than that. So as was the case with Peloton, here too with Roku, this is a much stabler, stronger business than you might think. It is worth 50% more than Peloton Interactive, and yet it's being treated as if it's a fly by-night company that may not live through this environment. I doubt that.
And thing I like No. 2 about Roku, is that in 2019, the average Roku user -- I guess I'm one of them, I wonder if I generated this amount -- the average Roku user generated $23.14 for the company and that's mainly through advertising, of course. Many of us may have bought our Roku hardware a few years ago -- the company doesn't really make much money on hardware -- but just advertising that business, which is the primary business for Roku today, $23.14 were generated by each of us users. That was up 29% from 2018. So the company knows how to make money from this platform, and that money is increasing. It's also interesting to note, the company had no debt at all until very recently. It just tapped its $70 million credit line with Morgan Stanley. Now, a lot of people may have scratched their heads saying, "Why is Roku borrowing money? It had no debt, it doesn't need the money, does it?" And yet, it seems to me, the company is probably trying to be opportunistic, tapping its credit line in order to sell even more of its at-cost devices to even more potential new users for 2020 and beyond.
So those are reasons, in a nutshell, why I really like Roku right here and I'm adding it to this Five-Stock Sampler.
One thing to watch? Well, in the here and now, this may seem a dissonant note to sound, but physical distancing is a phrase and a hashtag and a way of life, this too will pass, this will end. I sure hope it'll end before too much longer in 2020. We'll all be more vigilant going forward. But the age of physical distancing is going to be -- well, it's going to be a short chapter in world history, I think. So some of the big ups that this company is benefiting from right now are going to slow down. And so, we'll see whether Roku can keep up the pace and have benefited from this hard quarter in most of our lives, but I'm sure a great quarter of growth for Roku, but when that slows down, will the stock slow down too, and will that be a negative? So it'll be interesting to watch physical distancing as it ends and we're all back together again, whether a business like Roku starts to be viewed as a detrimental one as the world returns to normal. I suspect not, but I'll be watching.
All right. Stock for coronavirus No. 3. The company is Sea Limited (SE +5.75%), the ticker symbol is SE. Sea Limited is an e-commerce gaming and payments company that serves Southeast Asia, countries like, Vietnam, Indonesia, Thailand, the Philippines, etc. This company is headquartered in Singapore, by the way. I'm going to mention that again in a little bit. Now, a lot of us have probably -- especially in the U.S. -- have probably heard of Peloton, probably heard of Roku, but I submit to you, very few of your fellow Americans will have heard of this company if you mention it at the next cocktail party, whenever that is for any of us, or maybe the next virtual cocktail, which is probably imminent for many of us.
Sea Limited, in my experience, has very limited awareness among most U.S. citizens and certainly many, many investors. And yet here's the market cap of this company: $21 billion. That's right, you could take Peloton Interactive, merge it with Roku and add money on top of that and you still wouldn't be at the size that Sea Limited is at today.
This is a stock I first picked a couple of months ago in Rule Breakers, it was at $45 a share then. Good news if you didn't act then: Today it's at $45 a share. That's right, it's pretty much right where it was a couple of months ago, 0% return. The market over that time, the last two months, down 10%, so it's beating the market even though it hasn't made us any money yet.
So what are some things I like about Sea Limited? Well, the first thing I like is, I feel like we've seen this movie before. So one of our best performers in Motley Fool Rule Breakers has been MercadoLibre. It's a stock that's gone on to rise more than 20 times for those who have patiently bought and held MercadoLibre. It's also been a star of some of my past Five-Stock Samplers over the years. This has been a wonderful outperformer. And MercadoLibre is basically like the Sea Limited of Latin America, or if you will, Sea Limited is the MercadoLibre of Southeast Asia.
In fact, MercadoLibre, for all its success today, its market cap is not that different from Sea Limited. MercadoLibre is at $26 billion. I like both of these companies a lot going forward.
So we've seen this movie before, in fact, the company has, as I mentioned earlier, it has an e-commerce platform called Shopee. It started out as kind of a consumer-to-consumer like eBay, but then added a business-to-consumer like Amazon. But in addition to its e-commerce business, it has its gaming and esports platform. In fact, this is the majority of its business today, it's called Garena. And so, this part of the company, within Southeast Asia, gets to distribute games like FIFA Soccer or Call of Duty.
Southeast Asia is, of course, a very vital place of growth in the world, still many people are unbanked in Southeast Asia, it's an area of real development. And so, just like MercadoLibre in Latin America is kind of raising up Latin Americans, serving a growing middle class, we're going to see the same thing here for Sea Limited. And it also has its Sea money business, and that's its digital financial services, much like PayPal.
So yes, thing No. 1 I like, I feel like I've seen this movie. It was called Amazon before, it was MercadoLibre before, it is now Sea Limited. We really like these companies. I'm so grateful for my teammate, Auri Hughes, who made this contribution. He is an analyst here at The Motley Fool. It was his stock that I picked, Sea Limited, for Rule Breakers.
Thing No. 2 I like about Sea Limited. A classic trope, a classic trait of Rule Breaker Investing, strong past price appreciation. So this is a company that came public in the fall of 2017. I wasn't paying attention back then, maybe you were, the stock was right around $15 a share, today it's around $45. So this is a stock that's tripled since its IPO back in the fall of 2017, two and a half years ago. And I really like stocks that perform well. To me, it tells us that the market recognizes what the company is doing and it is rewarding it actively, and yet we're still early on. This stock recently dropped down to $35 from $45, but it's bounced back a little bit. Really, it's only within 15% of its all-time high. So that's a really strong performer given how far down some stocks are from their all-time highs; that's not the case for Sea Limited. So yes, I like strong past price appreciation. I like it when my stocks do well. It gives me confidence that the company is doing well, the market recognizes it and you and I as investors will do well if we but buy, if we have the guts to do so in the first place, which many don't, if we but buy and then continue holding over a long period of time. I trust Sea Limited will be yet another winner within this global business of e-commerce/everything else.
And what's one thing to watch for, for Sea Limited? Well, when I say "/everything else" it was a little bit tongue-in-cheek. It's worth noting for this company that it is not yet profitable, like Peloton Interactive, but in particular here, this company, the bulk of its revenue is its video game business. So you might have been picturing a big e-commerce platform and something like PayPal, a big payments business. But really, the bulk of the company's revenue comes from video games, and in particular, one big hit, a game I've never played -- no doubt it's pretty popular in Southeast Asia -- called Free Fire. So do know that this company needs to continue to spread its wings and diversify. The three big businesses I described are not as big in some cases as one would hope, and so we'll see how Sea Limited grows from here, I hope the growth will be unlimited. I feel really good about Sea Limited. I'm happy to add it to this Five-Stock Sampler.
And while my first two stocks were more explicitly about coronavirus and what it's done to the world. I mean, I guess we can say, video games at home are a significant contributor right now to some people's mental health, mine included. I love me some video games in good times, but in bad times I even more love my video games. I'm really happy as a Hearthstone player, that the big new bunch of Hearthstone cards just dropped, for those of us who are Activision Blizzard fans, this week. So I guess Sea Limited fits that part of the narrative. I would have picked this stock anyway; I just really like this business and the stock where it is right now.
Stock for coronavirus No. 4. Remember how earlier I said that some of these might be pretty obvious, like, you hear their names in the headlines, "Well, of course, David would pick that for this Five-Stock Sampler." Well, here's one of them, the ticker symbol is TDOC and the name of the company is Teladoc Health (TDOC +6.03%). Teladoc provides video conferencing consultations for everyday customers with general medical professionals, dermatologists, behavioral health specialists. The company's market cap is $11 billion. Teladoc Health, as important as it is today, getting to do physically distanced health consultations over video, a really important thing here in 2020. As important as that seems, yep, Teladoc's market cap is just $11 billion, less than half of Sea Limited about the size of Roku, as I mentioned earlier.
I first picked this stock in Motley Fool Rule Breakers in November of 2017. It was at $34 a share. Even today, it's at $141.34 that's up 342%. That's a lot of 34s if you go back and listen to that line again, rewinding your podcast 15 seconds. $34 a share to $141.34, up 342%. A monster winner. The market just up 8% by comparison over that time. I did re-recommend the stock in September of 2019. That's right, just last fall, it was at $69 back then, again, it's up to $141, now it's up 117%. For members who listen to me, not much more than six months ago, a clean double.
So what do I like about Teladoc Health? Well, what's not to like about Teladoc Health? This is a business that not only was thriving before coronavirus, but now the acceleration toward using video for new purposes that solves some old problems in this world, Teladoc is almost the poster child for me when you think about what companies has the world been turned on to that are clearly going to keep benefiting well past coronavirus.
So the thing I like, No. 1. Well, as one analyst said recently, "Healthcare companies are finally joining us here in the 21st century by using technology to offer us better care more efficiently." And again, that was said before coronavirus. So the company in March reported that it was experiencing "unprecedented daily visit volume." You're seeing Teladoc explode. Again, the stock already had done wonderfully in its first few years before coronavirus showed up and just about doubled it again.
But let's not spend too much time looking backward, shall we, right, because I'm all about what happens next for every one of us, fellow investor. All that really matters is what happens going forward. We can't benefit from any past returns unless, of course, we did own the stock, which many Rule Breakers members have for the last few years, but we're all about what's going to happen next. And I'm pretty sure Teladoc is very well set up to be the leader, the top dog and first mover here, which is the definition of a Rule Breaker in this important, emerging industry of telehealth, video health, call it what you will.
So thing No. 1 I like, I started by saying what's not to like, but I'm pretty sure this company was already set up to be the answer in a medical world that needed to transition to lower costs and more online use and then along comes coronavirus to accelerate that.
Thing I like No. 2 about Teladoc: Well, the company is bigger than you think but smaller than you think. And let me paint both sides of that fence for a second. It's bigger than you think, because Teladoc operates in 130 countries on five continents at last count. The company serves over 40% of the Fortune 500. So this is not a company that's hoping to get big countries or big institutions to believe in its services; it's actively already working with countries and institutions. But I also said it's smaller than you think. It's only an $11 billion market cap, double underline that, I really like that going forward from here. And by the way, 60% of the Fortune 500 is not yet using Teladoc, and so there is the room for growth. So can't you just see this business growing from here in the nearly unlimited way with lots of different optionality?
That's what you get when you buy a Rule Breaker. A company that is the top dog and first mover in an important, emerging industry. The analogy I've used in the past is the lead husky, and the line is, "If you're not the lead husky, the view never changes." I don't like to buy the companies that aren't lead huskies. It's not that interesting to be back there on Iditarod sled, just gazing forward at something else's flank, I'd much rather be the lead husky. And that's what you get when you buy these Rule Breakers. And they can take our sled off at an angle into an unforeseen place, maybe a place of greater prominence or profitability, because the optionality that is inherent in technology businesses gives the CEO of Teladoc and the management team opportunities that others don't have, and often they'll see it first and can take the company's sled that direction.
So Teladoc is a classic Rule Breaker. It has the return so far to show. And yet, what I'm focused on, what you should be focused on, is not what's already happened, but what is yet to happen. So I really like having Teladoc join this Five-Stock Sampler.
What's one thing to watch out for, one thing to watch before we move to stock No. 5.? Well, I think one of my online analysts, CMFJambo, Joe Martin, who's made a lot of contributions as a Motley Fool contractor over the years, answering questions on our discussion boards, and on this particular one, as he was talking about Teladoc Health. Joe said it's about being first to market and better than your competitors. And I agree with that. Of course, I've already double underlined being first-to-market from what I just said, but Joe also reminds us, it's about being better than your competitors. Now, the competition already exists, and believe me, more competition will show up. This is a huge market, distance health. So what you and I will want to be watching, is Teladoc Health worthy of that? Will it remain the leader?
Netflix sure has remained the leader in its business with a lot of copycats and others coming in some cases late to the party, and yet the party keeps going, and Netflix remains the leader. So let's hope Teladoc can do the same in its industry.
And now on to stock No. 5. And I'm going to give you an opportunity to guess this one. You want to guess with me? The ticker symbol and the company name both start with the letter Z. And earlier I was saying, don't be afraid to buy the obvious winners in a given environment, even if you feel like you missed the stock or the company is getting some criticism, don't be afraid to make sure you own the zeitgeist as the age proceeds, that you own the spirit-of-the-age kinds of companies as those ages proceed.
And so, I hope I've given you about 15 seconds to think and maybe you came up with Zoom Video Communications (ZM +2.17%), the ticker symbol is ZM. I probably don't need to tell the world this, but Zoom Video Communications provides a cloud-based communications platform that concentrates on making your video conferencing experience better, including features like online collaborative meetings, voice and chat capabilities, collaborative file sharing. The company's market cap -- you know what, let's play a mini version of the Market Cap Game Show right now.
So I'm going to give you about 10 seconds, including the time I'm spending speaking right now, to think about what you would guess, let's say within 20% either way, is the market cap of Zoom today, ZM. The stock has been very volatile, it ran up, it's dropped quite a bit in just the last week or so. What do you think, dear listener, the market cap of Zoom Video Communications is, you're ready?
All right, well as of, market close-ish Tuesday, April 7, Zoom's market cap is $33 billion. So if you guessed anywhere from $26 billion up to $39 billion, give yourself a gold star. You won this mini version of the Market Cap Game Show. Now, what did I want to turn this one into a game show? Well, I think it's pretty amazing to think about how big Zoom is in light of the other companies we've talked about. We just talked about Sea Limited and Teladoc, if you add them together, they're just slightly behind the market cap of Zoom alone. I find that pretty amazing. I'll talk about that more in a second.
Let's talk about the history of this company in Motley Fool services. Well, most recently, I made it my Stock Advisor pick. It was at $123.77, that was at the close of market on March 19, that was a Thursday. By the way, Stock Advisor members, and I know a legion of them are listening, but you'll recognize that our picks, our new picks go out Thursdays at noon when we make them. For example, Thursday, March 19, when I picked Zoom, I would like to make sure you know that we always mark-to-market at the end of the day. So sometimes our stock picks, because a lot of people are buying all at once, can zoom up a little bit in price, speaking about Zoom, but we only ever record the price at the end of the day, the market close. That's why I'm giving you $123.77 for our cost, for my cost, for Zoom Video.
I will mention the stock is actually down from that point. It had an amazing Monday. It was up 20% the Monday after I picked it, and I was feeling great, it's given all that back and more with some security concerns and market volatility in recent days. So my pick is actually down 9%, the market is up about 10%, so we're 19% behind. It's only a few weeks in on my pick of Zoom.
But what's thing No. 1 I like about Zoom? Well, I like that my brother Tom found it in July of last year. I really like that. Tom gave it to our Stock Advisor members. He'd interviewed the CEO, he had great feelings, went into depth about them. He's up 36%, so that makes me happy for Tom and for our Stock Advisor members. And the stock from that point in July went down. There was a lot of skepticism about Zoom. I'll share more about that in a minute. So Tom rerecommended it in October, I really like that about Zoom, it's up 60% from where Tom picked it in October.
So I like that it has a clearly demonstrated track record of being a winning stock, even though I'm temporarily down in Zoom stock. And there are a lot of understandable questions about the stock. It is very expensively priced. It's been very volatile. But, of course, I think we can make money from here, even though it's down for me. Thing No. 1 I like, in addition to Tom having picked it so well and getting it, is it's a Snap Test, it's a clear Snap Test winner for me. Now, this is something I've talked about a lot in years past on the podcast. I know my regular dyed-in-the-wool Rule Breakers will know the Snap Test, but if I snap my fingers and all at once, the company I snap my fingers over disappeared overnight, the question is would anyone notice the next day, would anyone care? And I mean in real volume, would people, would the world notice, would the world care?
And in my experience, when I've been able to snap my fingers and say yes to any company, that often has led to a winning stock. Some of my best stock picks would clearly, everybody would notice, everybody would care. That's been true of Amazon almost since I first picked it in 1997. The world would have noticed, the world would have cared, it sure would today for Amazon.
I believe the same thing is true for Zoom Video. Sure, there are other video platforms, FaceTime for Apple users or Skype, the longtime initially independent company that eBay owned it, then Microsoft owned it. There are a lot of different video platforms. But I think what we've especially seen is that the black swan event of COVID-19 created a dream opportunity for whoever could make online video conferencing easy, could make it convenient. And so, even though I myself had skepticism about the stock as recently as last winter, thinking that there are any number of platforms, so why would you choose Zoom Video over, I don't know, BlueJeans? Have you ever heard of BlueJeans? I did a video conferencing event for conscious capitalism in Germany last summer, and they had me download and use BlueJeans, which I had never heard of before, it seemed great, it seems to work just as well, in my mind, as Zoom. So I thought, where's the real edge here? And yet, I believe that Zoom has become so integral to the lives of so many people here in America, in particular, that I think this one-time black swan event has created incredible tailwind for Zoom going forward.
So yeah, I really like that about ticker symbol ZM. And the second thing I like about this business and I've already kind of spoken to it a little bit, but I love businesses that are the most convenient choice, the easiest, quickest way to get something done and done well. What have people said about Apple products for years? It just works. Well, I hear people say that all the time about Zoom. We've used Zoom at The Motley Fool for a couple of years now. It was much better than the service it replaced. And what we've all seen in our nation today is it's replacing all kinds of stuff no one dreamed it would be six months ago. For example, your college classes. I've seen that in my own household. How many students today are using Zoom for free in order to continue their education at any level? And that's just one big use of Zoom today. It's the convenience of Zoom. It really just does work.
And yet, that is also its weakness, because as we've seen, with the CEO in the headlines in the last few days, it's not as secure a platform as otherwise it might have been. Zoom CEO Eric Yuan has acknowledged that. He said, "We did cut some corners to make it as convenient and easy to use as possible." And now the company is furiously working to add security back into the platform. I'll tell you this, I'm somebody who likes to have security working in my platforms whatever software app I'm using on my handheld device or my PC, but at the same time, there's no doubt in my mind that Zoom has been a huge net positive for all of us who've been able to use the service for free, to keep our lives as normal and productive as possible. So I'm very glad that CEO Yuan is making the effort to acknowledge (A) we can do better at this and (B) we're working hard on it. I've already had at least one new download of a new client as a Zoom myself, maybe you as well. I trust our CEO. I believe the company is going to work to make that better. And in the meantime, the whole world, at least my whole world, seems to be using Zoom. So it's created an incredible tailwind for this stock, I believe, going forward.
I also, and I have commented this, I think on recent podcasts, I've definitely talked about this on Motley Fool Live, which if you don't know what that is, go to a LiveChat.Fool.com, where you will find, if you're a Motley Fool member, a streaming video platform with our analysts, including me and my brother Tom from time-to-time, there for you. It's like our own CNBC on our website. It's something we've just introduced in the last couple of weeks.
Anyway, on that platform we're using Zoom. Zoom is what makes it possible for us to reach thousands of members with live video on our site. So yes, we're going to continue using it. It's being used in new ways all the time. And I really like how this company is positioned going forward. And, yes, I started to say this, but I'll finish the thought, on Motley Fool Live, I've talked about how maybe higher education, with its very high costs, its ever-rising costs, creating ever-rising amounts of debt and its dependence on bricks and mortar. Heretofore, one of the only industries in the world that seems immune it seems to the internet, perhaps even higher education will now have been changed forever. And if so, Zoom will have had a hand in doing so and will probably be a beneficiary going forward.
So yes, very happy to add this stock to our Five-Stock Sampler, Five Stocks for the Coronavirus.
I will mention, going forward, just as I said for each of these companies, what's one thing to watch. Well, I think we need to hold the CEO accountable and we need to expect the customer focus which I think Zoom has clearly demonstrated in its first few years as a business. I mean, this is a relatively new business, let alone public company. I think we're going to hope to continue seeing that customer focus with security releases and a CEO-owned business that, in the end, will only thrive if, like Amazon, it's trying to be the most customer-centric player in its industry. If it does, I think the sky is the limit for Zoom Video even with that $33 billion market cap it sports today.
So, well, there you have it. Peloton Interactive, Roku, Sea Limited, Teladoc Health, and Zoom Video Communications. This 24 Five-Stock Sampler, Five Stocks for the Coronavirus.
All right, that closes it out. I would be remiss if I didn't say again, "Wash your darn hands, stay safe out there, and make the best choices you can, not just for yourself and your family but for all the rest of us." Because for every one of us who decides borderline to stay-at-home, some people have pointed out that, that really does save lives. It could even save dozens of lives just your decision not to go out for a month. It's not an easy month, hasn't been for anybody and it's not just true here in New York City or the United States, it's true worldwide, it's something we're all living together, we'll all be marked by this, and we'll all be reflecting back with kids and grandkids about what we did, what we said, how we acted back in that historic time.
In the meantime, I hope that the stock market will continue to rebound. I sure hope this Five-Stock Sampler will put up some historic numbers. And I want to mention to you again, next week on Rule Breaker Investing, we will be talking dividend stocks. So if you have any questions, tweet us @RBIPodcast, help guide our conversation, if you will. If you have some thoughts just tag #DividendInvesting for @RBIPodcast, and we're always paying attention, and that might help guide the show a little bit next week. I'm really looking forward to that.
And, of course, if you haven't already, please subscribe to this podcast on iTunes or Spotify or Google Play. You can follow us, as I mentioned, on Twitter at @RBIPodcast. You can follow me on Twitter if you like, I'm @DavidGFool.
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