It's the new and improved Market Cap Game Show, thanks to input from listeners! In this episode of Rule Breaker Investing, get ready to take on returning stalwart and senior analyst Tim Beyers, and new contestant and senior analyst Rick Munarriz for an all-new market cap challenge!
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 March 24, 2021.
David Gardner: Given my love of games, there was really no way in hindsight that we wouldn't feature games on the Rule Breaker Investing podcast. Indeed, for instance, one of my more popular clicks each year with this podcast is our Games, Games, Games episode, where I pick out all the geeky things in the world, selling my recent favorite board games for you to take a look at, to play with friends and family. Yes, stock market investors and people of all nations, you repeatedly let me know that Games, Games, Games is an annual highlight. Well, there's another game we've focused on even more frequently on the Rule Breaker Investing podcast, and that would be the Market Cap Game Show. We play it only four times a year. Not nearly enough, I always feel and yet like Halloween or Easter, they're even more special in that they come around infrequently, regularly, but rarely. Well, so to the Market Cap Game Show. What I love about it is we play this game for you. We've devised the whole thing so that you can play along at home, learn from our contestants, play with friends and family members, maybe even beat us all at our own game. This time, for the first time ever, thanks to our listeners' suggestion, we have a new rule. We have revised the game. We have made it smarter, which I know will make you happier, and I hope at least a little richer too. Fasten your seat belt, buckle up and get ready for the first Market Cap Game Show of the year only on Rule Breaker Investing.
Welcome back to Rule Breaker Investing. Yes, as I mentioned right at the top, it is the Market Cap Game Show and in a new form, because we got a wonderful note written to us. I featured it two mailbags ago. In fact, it was the January mailbag of this year and I want to throw a shout out again to Adam Nelson. Adam, you took the time to suggest an improvement to the Market Cap Game Show and we'll be using it this first new iteration of it. You said it's similar to the old card game, acey-deucey. You said, "Why not have the guesser have the ability to state a range of market caps and then the opponent, i.e. you and me and all of us playing at home, after hearing that range of market caps, we just say inside that range or outside that range." Now let me backup a quick second and remind us that the market cap of every company is basically the price tag that the market has given that company. It's a way to understand the overall value of a company. You take the company's share price and multiply it by all of its shares outstanding, and that gives you the market cap. For years now, we played a game where my guesser will state their guess market cap and you and I would say higher or lower, but Adam Nelson has given us a smarter way to do this. He said, one would have the guessers state a range of market caps, a strategic gamers choice. Then the rest of us sitting back, say inside or outside that range and that's what we'll be doing this week.
Before we get right into it with my special guests Rick Munarriz and Tim Beyers, I do want to mention next week's podcast, of course the final Wednesday of the month is the Rule Breaker Investing mailbag, [email protected] is our email address. Already got some great stuff in the mailbag, but looking for more and more great stuff in the days ahead. If you find yourself moved by the Telling of Their Stories, Volume 1, Emily Flippen and Rick Munarriz a couple of weeks ago, or my 300th podcast, an audio assay entitled 300 last week, where we did review-a-palooza earlier this month, Five More Stocks to Feed The Next Bear, Five Stocks The World Needs Right Now or this week's podcast. If you have thoughts, questions, anything you'd like to share again, our mailbag is next week. E-mail us ahead of time, [email protected], of course, @rbipodcast on Twitter.
Now let's play the game. Let's get into it with two of my longest time analysts, two of my best friends in The Motley Fool, the aforementioned Rick Munarriz and Tim Beyers. I have flipped the coin and Rick, I'm turning to you first with stock No. 1. Now, before we get into it, Rick, would you briefly introduce yourself with your name, how long you've been at the Fool, what you do here, and one consumer product or service that you have enjoyed, an experience you've enjoyed at some point in the last year?
Rick Munarriz: Sure. Rick Munarriz or Rick Aristotle Munarriz if you go by by-lines. I've been with The Fool, this will be my 26-year. I've been there since 1995, so pretty much almost the early days. I do work with Motley Fool Rule Breakers, I also work at Motley Fool Starshot 2019 and the Supernova Phoenix II portfolio, and I do a lot of writing in the fool.com editorial site. I sprinkle myself a little bit everywhere. Consumer experience that I have enjoyed over the past year. I will say, and again, this is a pretty big deal, but it's not a big deal it's a big ticket item, but I did buy a Tesla last month. It was the thing where -- I know you can't call Tesla (TSLA +2.96%) a consumer discretionary item or something, but it was something that I've always admired and I'd never ridden in a Tesla. I know friends who had Tesla, I never wanted to ask to take me in it. I was feeling that weird about it. But sure enough, I test drove it back in January and it was everything that I thought and more and I was just so happy to get my Model Y basically two weeks later. It's the one car you can get fairly quickly, the Model 3 has a little delay right now. Obviously the other one's far more. But yeah, definitely it was just such a great experience, so different after all these gas cars that I've been driving, everything, the technology, everything is just so different with the Tesla. Very happy to gift myself a Tesla out of the pandemic.
Gardner: Wonderful Rick. Well, thank you for sharing that and also thank you for sharing yourself with us telling your story two weeks ago on this podcast. One of our most popular hit podcasts of the year was Telling Their Stories: Episode 1, featuring Rick and Emily Flippen. Rick, thank you for that. Let's get into it. Rick, you probably follow more companies than just about anybody I know. I'll at least say you follow a lot more companies than I do and I have recommendations actively on over 200 stocks and those are the ones that we pulled from the Market Cap Game Show. Boy, do I feel like you really follow the world of business like few people that I personally know. I'm curious, how much time do you spend looking at or thinking about corporate tag lines?
Munarriz: Corporate tag lines. Obviously it's not a big thing. I mean, I definitely look at companies a lot and I think about companies a lot. I could tell you ticker symbols to think about thousands of companies. Let's not play that game. I think I'm going to be pretty lousy at this game, so don't bet money on me. David, I know you're playing me up as if I'm like some heavyweight. I am a filter weight right now in this game, so I do not promise to be good. But yeah, if you're saying company tag lines like their logos and their mantras, I mean, I think about it, but I'd rather dig into their numbers and their fundamentals.
Gardner: I think that's probably where you should put your attention. Although I am a big fan of what is the company's mission, what is its purpose? Is it stated out there, it may or may not be it's ad jingle, and does it live up to that? Is it a corporate mission or purpose that you believe in that you'd like to see grow in the world and into the future? I know you like that too whether or not you follow company tag lines. I have to admit, when I saw this company's tag line, I didn't quite know what company it was, so I'm going to try it out on you, Rick, as we talk about company No. 1 here. Science applied to life. Now when I provide that corporate tag line write-off this company's homepage of their website, do you have any sense of what company that would be?
Munarriz: I mean, I'm going to say Intuitive Surgical, but I know that can't be it. Applied Bioscience. I don't know. No, I can't even guess. It's probably one of Karl Thiel biotech companies and I'm way out of my league here.
Gardner: It's very understandable to think that it would be such a company. Boy, especially in the Rule Breaker service, we have a lot of life sciences companies. Well, this company is neither in Rule Breakers nor would most people think of it first in life sciences. Science applied to life is the corporate tag line of ticker symbol MMM and that will be the 3M Corporation (MMM +2.66%), based, of course, in the twin cities in Minnesota. This company has been around for a very long time. It's only been around in Motley Fool Stock Advisor for 3.5 years now. I have to say it's been a pretty disappointing 3.5 years, Rick. So 3M down 1% from when I picked it in September 2017, the market up 67% over that time. It's been pretty disappointing. While we could talk about how much of its business has been threatened by COVID or helped by COVID, and we could talk more deeply about science applied life, really all I want to know from you, Rick Munarriz is your best shot at the range of market cap for 3M Corporation ticker symbol MMM.
Munarriz: Yes, obviously we're guessing here 3M is a company that I don't know that well obviously, I'm friendly with the posts and they have an amazing long track record of innovation. I'm going to just say $80 billion to $150 billion.
Gardner: We'll lock it down right there. Again, this is true innovation. The first time we've ever played the game this way, Rick, you just broke new ground. Now we're going to welcome in your guest star contestant and competitor here, Tim Beyers. Tim, great to have you back on the show.
Tim Beyers: Thanks, David, great to be here.
Gardner: I know you're already thinking about 3M and ask yourself, is it inside the range of $80 billion to $150 billion, or outside that range? But before we get that answer from you, I would love it if you could remind us again of your name, sir, how long you've been at The Fool? What you do with The Fool, and a consumer product or experience that was memorably good for you in the last year?
Beyers: I'm Tim Beyers. I've been at the Fool since December of 2003. Like Rick, I was a contractor for most of those years. I came in house and in 2018 and now I continue to work on Rule Breakers with you and Rick, David. I have been on Odyssey too, helping lead that portfolio, and I'm the Lead Adviser for our Cloud Disruptors Service, which is in the discovery universe. Tech has been one of my specialties for a really long period of time and I love it. This is an interesting tech company, but my favorite consumer experience over the last year. I don't know if this is cheating, David, because I could easily say Amazon grocery delivery because that's been awesome. I think I'm going to continue with that even post-pandemic. But honestly like CBS and watching the Syracuse Orange, my graduate alma mater, go to the sweet 16. I think that's been my favorite consumer experience [laughs].
Gardner: Very well put at very timely and I've enjoyed watching them. It's been spectacular all around. I always love it when a coach is coaching his son and boy when he is that accomplished a coach and that accomplishes a son. That's an extra special twist. Well, thank you, Tim, and again, thank you for all your work. Rick is making his debut on this Market Cap Game Show, Tim, you're an old hand at this point, having been back a few times. I know you still feel a little bit like Brain Gallagher's punchbag after last time, but we had you back looking a little bruised and bloodied, but still resilient and ready to play. Let me now turn to you, Tim Beyers and everybody listening at home, and ask you the important question. Tim, Rick specified 3M, $80 billion to $150 billion; inside the range or outside the range?
Beyers: I feel like Rick is trying to back me into the pain here. I know you've positioned them as the rookie here, but I'm not buying it. I think Rick got a real good left-handed hook here. I'm going outside the range and hopefully, I can get the rebound here, but we'll see I'm going outside the range. I think it's lower than $80 billion.
Gardner: Well, Rick is pretty KG, Tim, and Rick nailed it with his range. I'm happy to say for Rick and I'm sorry to say for Tim that it is inside the range. 3M market cap is $111.05 billion, as I quoted here today, midday, Tuesday, March 23rd. A pretty solid guess because Rick almost the midpoint from 80-150, if my math is right, as read about $115 billion.
Munarriz: $115 billion, yes.
Gardner: Yes, you threw some wisdom of the crowds out there, just average it and you get the truth. Pretty good corn and I have to say, Rick, 3M continues to be a big part of my life because anybody who knows me knows I have lots of different colored post-it notes all around my desk everywhere in my life. Too many of them. I really like the product. It's Rick-one, Tim-nothing as we proceed to stock No. 2 and Tim, we're turning to you, of course. It's funny, you recently mentioned this company's name earlier on this very podcast. I'm curious, Tim, when you see a founder of a company leave often after many years, we are talking about the founders who stay around. What do you make of that?
Beyers: Man, it depends. I mean, if the founder has been around for a really long period of time and built a sustainable business and built a bench. You can be really confident that the people who are stepping up to takeover have a lot of that founder's DNA and the way they are going to operate the company, then I'm fine with it. But you're in for two years and then that's it. You're cashing out. That's a little bit more troubling. But some of my favorite companies have had these founders who have stuck around for years, and then finally after, like in the case of say, MongoDB, 13 years at the company, building it into the monster that it's become. They've built a very deep bench and I'm fine with that. I mean, after 13 years, yes, I think you're allowed to have a vacation after 13 years?
Gardner: They're all going to head out at some point, whether it is being carried by others, being fired by the board, or indeed riding off into the sunset, waving their cap, and that's exactly what Jeff Bezos announced on February 2nd of this year. I think it caught most of the world by surprise. You would assume that Bezos would be around with Amazon (AMZN +0.26%) forever, and yet at the same time as I think we were one to say, he will be around Amazon forever. It's where his net worth is centered, and of course so much of his love and attention, but he also announced that he will be stepping down later this year as CEO. You might have guessed by now, Tim, that the stock I'm asking you about, its market cap, is Amazon.com. By the way, it still retains the ".com." A lot of companies after the dot-bomb years of 2001 dropped the ".com" from their name, but Amazon.com remains the official corporate title, ticker symbol, of course, AMZN. Tim Beyers, please provide your best guess at the range of Amazon's market cap.
Beyers: I've been looking at this one recently, and I recently bought a share of Amazon after I'd famously sold it at $7 a share back in 2001. I'm back-in with one share. I have looked at it recently. I think I'm roughly right here, but my range is going to be $1.485 trillion to $1.565 trillion.
Gardner: Wow, and I love how tight that range is until we realize this is in the trillions. So Rick Munarriz, he's still given you more than $70 billion to work with within that relatively tight range.
Munarriz: That is very thin, Tim and congratulations. I mean, Amazon Fresh has also been a big part of my life through the pandemic. Definitely a game-changer, lifesaver in so many ways. Okay, I know Amazon is the third largest company by market cap. I know that, but I could never come as close as you did to it. I know it's somewhere around there, but I think you've gone so narrow that it must be out of your range one way or another. Either you went too low or too high. So I am going to say it's outside of that range. You're just too specific on this.
Gardner: He was very specific. He was specific enough. He had it right. So congratulations, Tim Beyers and those who said inside the range, because that was the correct answer here. So you've both scored a point on your good range stated. Let's talk about briefly where Amazon is today. The stock is around $3,170 a share as we record on Tuesday, March 23rd. That means Tim, you spent about that probably if you bought a share recently, and yes, that is a little bit more than seven, but you know what? It's not about where things were, but where they will be. That's all that really matters to us when we buy shares and I love it when people add to their winners of course. I would like to point out, speaking of winners, that for Motley Fool Stock Advisor members who were with us back in September 2002, we first picked this stock, yes, it was around $15 at that time for Stock Advisor. So it's up 20,219% against the S&P's 536%. In other words, it's a 203-bagger. It has been one of the great stocks, not just of this era, but of any era. Of course, it would never be a great stock unless it weren't a great company.
While every company is challenged to be better, and there's talk of unionizing some aspects within Amazon's business, which I'm sure is troubling for somebody like Jeff Bezos. Nevertheless, this has been and is a great company and I too am grateful for the deliveries [laughs] I've gotten all the way through the pandemic. Well, Tim and Rick, you guys are tied one all. Again, those playing at home, if you said inside and then inside, give yourself two points in your winning. Let's get to stock No. 3. Rick, what was one of the first stocks that you ever bought? Back in the day, early days, Rick Aristotle Munarriz an early stock?
Munarriz: An early stock that I bought? I mean, I own Disney but I didn't buy it myself. My wife, then girlfriend at the time, gave it to me as a gift. I bought some bad stocks. I mean, again, this was late '80s.
Gardner: So did I.
Munarriz: Early 1990s. Like Wang Labs. I bought Amgen and lost money on Amgen in the early 1990s, which was ridiculous at the time. So yeah, most of the companies that I bought in the 1990s I do not own now unfortunately, some of them turned out to be decent companies, but not those.
Gardner: If it's like me, you kind of wish that you just held everything and never sold anything and you'd probably be ahead of where you were. So often, that is the lived experience of many a Fool I know I think probably me included. When we bought stocks back in those days, you had a pretty clear sense that if it was a one, two or three letter ticker symbol, it was from the New York Stock Exchange or maybe the American Stock Exchange back in the day and it was a four or five letter ticker symbol Rick, it was on what?
Munarriz: The Nasdaq (NDAQ 0.29%), of course, over-the-counter.
Gardner: That's right. A lot of people don't realize that Nasdaq is itself a stock which of course is listed on the Nasdaq with a four-letter ticker symbol. Now, these days, those previous conventions no longer exist. So if The Motley Fool ever goes public, which I'm not sure it ever will, but if we ever did, we'd have to have the ticker symbol F-O-O-L I imagine, but that would not force us to come public on the Nasdaq. We could come public on any exchange it seems these days as you can pick your poison with the lettering. But let's go to that ticker symbol N-D-A-Q. A lot of us have bought Nasdaq stocks over the years. While I have to admit, I don't really pay too much attention where anything's listed anymore and the number of letters don't help me anymore.
Gardner: It has been a pretty good business itself. Now again, a lot of new investors might not realize, wait, you could actually buy stock in the stock exchange itself? Well, the answer is yes. Whether we're talking about the New York Stock Exchange, which is owned by Intercontinental Exchange, I-C-E or the Nasdaq, which is on the Nasdaq, yes, you can be the house in a sense. So let's zero in now Rick on a range for Nasdaq's market cap. What is your range for ticker symbol N-D-A-Q?
Munarriz: Again, I'm going to give a -- you know what, I'm not going to give a wide range this time. Again, the thing is with Nasdaq is that a lot of these exchanges like the CME Group and stuff, they own so many other things that you think you're buying one thing, but they own so many other businesses that are in different phases of growth and value. But honestly, I have not looked at Nasdaq, at the stock, in a while. So I'm just going to say $70 billion to $95 billion.
Gardner: Excellent. $70 billion to $95 billion. I will mention by the way, that Nasdaq has a female CEO. I always think that's special in a day and age where certainly most of the CEOs continue to be men. You always think, well, for the women who are CEOs, they really have worked extra hard to get there. So they are usually pretty special people. I think Adena Friedman is one such example. This is a somewhat local company. This is a Greater DC area company. In fact, CEO Friedman herself was born in Baltimore, Maryland back in the day. But let me now turn to Tim Beyers. Tim, you heard from Rick, and players at home you heard from Rick. The range $70 billion to $95 billion. Tim, inside the range or outside the range?
Beyers: So I think Rick is pretty close to spot on here. I was personally thinking like $81 billion. So I'm going to say inside the range.
Gardner: I'm sorry to say you possibly have both been swayed by the sense that it's a much bigger deal than it really is. Now I liked Rick's point earlier, which is that a lot of these companies, they've got multiple exchanges, right? Although in the case of Nasdaq, I think it makes a lot of its money off of technology that it provides as a supplier to other exchanges out there. It's not been that acquisitive when we look at the world's exchanges. But all of that equals today, well, a market cap of $24.11 billion. So Rick, your guess at $70 billion-$95 billion, well larger than Nasdaq and Tim, your willingness to believe Rick was your downfall on stock No. 3. Rick takes a 2-to-1 lead. Before we move to stock No. 4, let me mention briefly that any time on the Market Cap Game Show, somebody thinks something is much bigger than where it is. I always say, add that to your watch list.
At The Motley Fool and at fool.com, you can add stocks, you can favorite them and add them to your watch list, but for bright people like Rick and Tim, who really do spend a lot of time thinking about the markets. I'm always glad I'm not playing this game. I like to be Alex Trebek and never look silly because Alex Trebek always looked smart. God rest his soul. But isn't that telling that we were all willing to believe that maybe Nasdaq was about three times the size of what it is. So you start thinking, that stock could probably grow there at some point and maybe that's a watch list or so thank you, Rick, for adding one to our watch list. All right, let's move to stock No. 4 and we're going to stay in the realm of pretty big cap companies, here. Tim, so I'm thinking right now, the company that really dominates its categories. Tim, think about it for a sec, what's a company that you think, wow, it is almost iconic for its whole industry?
Beyers: For its whole industry? Iconic for its whole industry, well certainly Nike for athletic wear, I feel like is iconic. Part of that just has to do with the ads. I guess I'm aging myself here and maybe I just have basketball on the brain but like right? Air Jordans, like the Michael Jordan poster, that horizontal poster with the wingspan, I mean.
Gardner: Absolutely.
Beyers: Just iconic images.
Gardner: Yes, and usually, I'm not looking right now at the Nike stock chart, but usually, you can expect that those companies that we would tend to name. In this context we're talking about probably great stocks too. If a company is so big that it feels like it's the obvious player in its own industry, and if its industry is meaningful, probably that's a great company and a great stock and not just looking backward, but again looking forward. So I agree with you Tim, Nike is that way. I watched 55 hours of college basketball [laughs] last weekend. As I watched the first seven hours on Thursday and then 12, 12, 12, and 12. Yes, I was there in front of my screen, Friday, Saturday, Sunday and Monday.
Beyers: Dedication.
Gardner: So I am with you. Let's think though of a different industry. Let's think of an industry that imbibes one of the world's most beloved brews. Not just in the here and now, but people were drinking it 100 years ago, 500 years ago, they'll be drinking it 100 years from now. A company that's from its positioning in the Pacific Northwest grabbed a bull by its horns around 30 years ago. Is that occasioning any word that's coming to your mind, Tim Beyers?
Beyers: Oh gosh, I hope you're not talking about the former Molson Coors and the Rocky Mountain. But I feel like I badly want to say Boston Beer, but I know that can't be it. So I'm going to go with Starbucks (SBUX +1.64%) [laughs] because that's the only thing that could be like, so you said, brew and I thought beer and I'm thinking this must be coffee.
Gardner: It is coffee, Tim, and Starbucks Corporation ticker symbol S-B-U-X, based in and around Seattle, Washington. Founded, well not exactly, but purchased so early on by Howard Schultz, the great visionary behind Starbucks. This has been one of those market beaters that we've all watched grow up as we've grown up over the years and decades. I first picked this stock for Motley Fool Stock Advisor in February of 2006. So here we are 15 years later, happy to say it's up 630%. The market is up 315% by comparison. So it's exactly double the market over the last 15 years. Now we've certainly had some better performers than that seven bagger return over 15 years. Yet that's double the market which I think I would take every single time. But more to the point, Tim Beyers and everybody listening, what is the range of market cap that you're going to put on Starbucks Corporation ticker symbol S-B-U-X?
Beyers: This one is hard. I feel like yeah, I don't want to give Rick any extra points here. So let me see. I'm going to say between $78.2 billion and $116.7 billion.
Gardner: Of course, all of us playing at home love that Tim adds the decimal, such a critical component to a range. [laughs] So I'm hearing Rick Munarriz repeat $78.2 billion to $116.7 billion. My question to Rick and all of the Fools playing at home is, is Tim inside the range or is the market cap outside Tim's range?
Munarriz: Starbucks. I mean, it's an amazing company. I'm going to say outside the range only because you actually went with a wide range this time, which tells me you're not very confident and I'm not very confident either. Though I know Starbucks reach is global and massive. But I'm going to say, I'm almost tempted to think it's higher, though it's probably not, but I don't think it's in your range, Tim.
Gardner: It's nice to have a ding sound after we led with some bzzz to start this Market Cap Game Show, so well done. You're right, Tim did provide a generous range, Rick, and yet it was outside Tim's range. The range $78.2 billion to $116.7 billion, Starbucks's market cap $128.17 billion as we speak. I would say a pretty doggone, good range and good guess by Tim overall, but it is about $10 billion more and we're here to learn. That's what we do on the Market Cap Game Show on the Rule Breaker Investing podcast. So it is wonderful to be reminded of just how large a little coffee company could become once it had global ambitions. Going back to Tim for a quick second. Tim, do you drink coffee at all? Yes, you do.
Beyers: Yeah. I mean, the listeners can't see here and it's probably hard to see the camera, but this is my Denver Starbucks cup, so I am literally drinking some coffee in my Starbucks local cup for Denver, Colorado.
Gardner: Excellent. A lot of people are doing that, not just here, but in China. I'm not sure any American company has made better inroads into China with its core business than Starbucks. All right, well, Rick, you just took a three to one lead. Pretty good guess just outside the range. Tim provided a generous rate. I find myself really enjoying this new version of The Market Cap Game Show. It's a [...] think. It's not just higher or lower, it's ranges and inside or outside. I hope this is working for everybody at home. Again, thanks to Adam Nelson, longtime listener for his suggestion for what I think is going to be our new format going forward.
All right, stock No. 5, we're going to turn it back to Rick Munarriz for this one. Rick, we're going to stay in the world of brew and beverage. Yeah, that's right. Rick, I know you're a football fan. What iconic advertiser did not put any ads into the Super Bowl this year? Did you notice any prominent advertiser missing?
Munarriz: Well, I know basically Budweiser they had, I think they had a vaccination ad, but not a traditional ad of theirs. I don't know if Coca-Cola and Pepsi were present at all this year in the ads. But yes, I think it was bullshit. One of the beer makers said, "Hey, we're just going to put an ad about going and getting vaccinated and we're not going to actually be taking up the Clydesdale horses again this year."
Gardner: That really is the company that I met and my apologies that I missed that they were the ones potentially behind that COVID vaccine ad, which I think is really meaningful and apparently memorable even though I missed it. I guess I was looking for the Clydesdale. There were no Clydesdale. So in my mind, Anheuser-Busch InBev (NYSE: BUD), ticker symbol B-U-D, went missing from the Super Bowl this year. Well, it sounds like they weren't, but one thing is for sure, they didn't plaster the Super Bowl with ads. In years past talk about March Madness as well guys, this is a company that often advertises around sports. Well, whatever we think of the quality of their beer, a lot of us are familiar with this company and part of the reason I picked it. November of 2015 is in my mind, this is a timeless business, "People will always be drinking beer" I was saying to myself back then, and so let's pick the stock. I am sorry to say, and I particularly apologize to Stock Advisor members that I've been wrong. The stock is down 44% over the last 5.5 years. So yeah, we've been patiently holding Anheuser-Busch InBev. There've been some changes to the management and changes to the business. They've mostly been down while the market is more than doubled. So this has been a substantial underperformer.
Now, I love my winners on this podcast, and winners count so much more than our losers. But we always like to talk about losers too as fellow Fools because we know losing is part of how we win. I do want to mention before turning to Rick and asking him for his range of market cap for ticker symbol BUD. I want to mention that we recently we put the stock into the penalty box, which for the Motley Fool Stock Advisor services where we put stocks on hold while we're not selling it, we're telling you, "Don't be actively adding to it or buying it right now, it's in the penalty box." The write-up that we provided mentioned that despite the occasional stories that you might see regarding increased alcohol consumption during the pandemic, it does turn out that global alcohol consumption may actually have dropped in 2020. I feel like a lot of people don't know that by as much as 8% according to one analysis, now the U.S. was a different story with consumption up 14% among adults over 30. That's right. As global alcohol consumption decreases, Americans stepped up to the plate and grabbed another beer to compensate, but guys not enough to help this stock that much, at least in the near-term. Let me now turn to Rick. Rick, what is your market cap range for Anheuser-Busch InBev, ticker symbol B-U-D?
Munarriz: I mean, clearly they are a beverage jog or not, but I mean, this is a cutthroat market, very competitive market. It's very easy. Their barriers to entry are not that high, which is why we have great companies like Boston Beer. It just came out of nowhere and became iconic. Again, I'm not that familiar with spuds Mackenzie and all that, but I'm going to go with, let's say $60.3 billion. I can play to the right of the decimal like Tim, to $82.1 billion.
Gardner: All right, $60.3 billion to $82.1 billion, perhaps the inclusion of the decimal point almost becomes a convention that everyone will use going forward. I see you guys leaning on it, I like it. Now turning to Tim Beyers and all of my players at home. Tim, inside Rick's range or outside Rick's range, $60.3 billion to $82.1 billion?
Beyers: Jeez, I think Rick is trying to dunk on me here, so I'm going to go for the block and say, David, that it is outside the range, hoping that I'm right.
Gardner: Indeed you are, which always adds a little bit more interest when we don't have a blowout score. I watched a lot of March Madness blowouts. I kept watching them, but it's not as fun when the score is highly imbalanced. I'm happy to say, Tim and everybody who said outside at home, that you got it right. Now Rick didn't have a bad guess there, $60.3 billion to $82.1 billion, but the market cap of Anheuser-Busch InBev is $106.55 billion, so measurably 25% on top of the high end of Rick's range. This is a $100+ billion company. I have to admit, I'm somebody lifelong who's never liked beer, so I have almost no association with this product. Tim or Rick, do you guys like Bud?
Beyers: I haven't. The last time I had a beer would've been a Guinness, and that's got to be years ago. [laughs] Although, no, I'm not much of a beer drinker anymore, David. I used to be more and my Irish background definitely supports the good friends at Guinness, but no, haven't for a long time.
Gardner: Well, I'm going to say, Tim, I'm happy to say, I know it's just on Zoom, but I've never really seen a buyer's beer belly. You look in pretty good shape to me. So I'm not surprised that your tea, perhaps in part your way through some of your latter years, it's doing you well. Rick?
Munarriz: Yeah. I do have the beer belly but not the beer. [laughs] Yeah, I mean, I'll have a beer every now and then but yeah, I was in a fraternity and I was always the designated driver because they knew that my beverage of choice, like Warren Buffett, was a can of Diet Coke, so yes. Again, a market that I can appreciate for its growth, a very important product out there but yeah, I'm not much of a beer drinker either.
Gardner: Outstanding. Well, it sounds like you guys were not helping out this industry during the pandemic. Many Americans have been. We'll hope though that overall, this company continues to succeed. It's the first to say things like, take care of yourself, don't drive while you drink, those kinds of things. They are probably the biggest purveyor of those messages in our society just about, and yet, of course, they are selling alcohol. Now, some of us object to that and I could easily understand that. Often, I've talked in the past where I'm making your portfolio reflect your best vision for our future. Some people don't think alcohol's a good force in our society, and I could certainly see their viewpoint. Other people don't like Starbucks Coffee one jot. They love coffee, they just think Starbucks is bad. Great. Don't buy those stocks then, there are lots of other great picks out there. Although I really shouldn't mention Anheuser-Busch InBev right now next to the phrase, great pick, [laughs] because it has not been for me.
Let's move to stock No. 6. Now, ever since Aaron Bush broke this game show more than a year ago, I've made a point of including stocks that are not under active recommendation. We've led off with five companies, all of which are active recommendations of mine and Stock Advisor or Rule Breakers, but this next company is neither. In jotting some notes out to myself before this show, Tim, I was going to turn to you at this point and say, are you watching any March Madness, but I think we now know that you are watching.
Beyers: Oh yes.
Gardner: March Madness. So Syracuse was your graduate school?
Beyers: Yes. I have a master's degree from Syracuse. When the Orange play, I like to tune in and watch, and it's been awfully fun to see Buddy Boeheim go unconscious from outside the three-point arc. It's been really fun to watch him drain the threes.
Gardner: Tim, was that for communications in Syracuse psychology?
Beyers: It was.
Gardner: Okay.
Beyers: Yeah, exactly.
Gardner: I forget that about you. I associate you because you've been working for us as a contractor, now an employee, for years, coming from your home in Colorado. So I forget about Syracuse, but I think one thing is true of both. It's cold this time of the year, even this time of the year sometimes in both places.
Beyers: Yeah, for sure.
Gardner: That's not a problem for you, Tim. You're not looking to retire one day to the Bahamas because you're sick of the cold.
Beyers: I'll retire to Hawaii [laughs] if I can. But no, I mean, we had a pretty big snowstorm here a few days ago in Colorado, and I got out and shoveled a little bit. Actually, it was refreshing to see the spring snow because it is when it's not like the heavy icy kind and it's just quiet and the snow's coming down. That's actually not so bad. But yeah, I'm ready for spring. We can warm it up. I'm good. We don't need too much snow here anymore.
Gardner: I can certainly relate and that was a heck of a snowstorm that Colorado faced about a week ago or so. But one of the things about watching 55 hours of college basketball is that you see ads and you see the same ads over and over, and I appreciate the advertisers that have like five or six different ads, right? There might be some storytelling, you're not having to see the exact same message over and over. But if you've watched 55 hours of basketball on the various CBS networks, you have seen all of those versions of all of those ads one too many times, and certain product categories or industries tend to dominate. If you watch carefully, the Medigame of watching ads is ask yourself, what is the company that's putting out that advertisement, and often, what does their competitor in the same industry that is also putting out advertisements? If you were to look at the categories like automobiles or let's say beer, you'll start to see certain industries highly represented in our ads.
Now, among other people, I've watched games over the weekend, I was watching some with my nephew and he said, "Uncle David, did you notice just how many insurance companies advertise here and just how many ads they have?" He said, "Well, I don't fully know the dynamics of that industry, man, must they have high-margins if they can put out that many ads as an industry." So I think right away of GEICO, which has to be one of the best known advertisers, at least for sports fans, the GEICO, the Caveman. The list goes on and on.
I think of Progressive, Flo, who wasn't that funny to me initially, but some of the more recent Progressive ads with Flo featured have been better, I think, and funny. There is that one of them relaxing on the beach and she cannot just enjoy the beach. She has to dance away and correct somebody about his or her impression of Progressive's business models, so GEICO, Progressive, but at least one more big corporation is going big this time, and why? I didn't really follow the Pet Shop Boys back in the day. Their song, which includes the lyrics, I've got the brains, you've got the looks, let's make lots of money. You've got the brawn, I've got the brains, let's make lots of money, right? The ad song is going through my head, and I can also picture Dennis Haysbert, who I think of as the president of the United States in '24, but it turns out he is also just a talented actor and somebody who is the frontman for the Allstate Corporation, another big advertiser this time of year.
So let's talk about the Allstate Corporation (NYSE: ALL), ticker symbol, A-L-L. I have never recommended the stock. I did a quick check over the last five years. If you just bought and held Allstate stock, ticker symbol again, A-L-L, you would've made 70% of your money. The market's up 90% over the last five years, so you'd be underperforming, but you're probably getting some dividends there. You may have owned it 30 years ago, you might still own it 30 years from now. I personally just don't like the insurance business. I always feel like I'm paying in and never getting paid out and the few times I feel like I should be paid out, they come over, start kicking the tires and ask me tough questions that are you sure and we don't really owe you. I just have never liked this industry. I realized some people love it, including Warren Buffett. Anyway, our thoughts about the industry aside Tim, more to the point. The market cap range for the Allstate Corporation, ticker A-L-L.
Beyers: This is really interesting. I have not looked at this company. So this is going to be an interesting guess. I'm telegraphing that to Rick here. Rick, I'm dribbling up the court here behind the line clock's running down [laughs]. So I'm just launching it up here, and we'll see what happens. What's funny about this is the name of that song, David, is opportunities.
Gardner: You're right. I didn't know that, but I've looked it up and that is the title.
Beyers: Yes, lots of opportunities. That's the refrain from that Pet Shop Boys song. I remember it from the 1980s, I remember it well. I mean, a fairly big insurer, been around for a long time, pays a fat dividend.
Beyers: I know some other smaller insurance companies, so I'm going to guess it's bigger than most of the small insurance companies. That puts the range somewhere around $34.7 billion- $62.8 billion.
Gardner: Excellent, players at home. Rick Munarriz, Tim just stated that the market cap for Allstate is somewhere between $34.7 billion-$62.8 billion. Rick, inside or outside?
Munarriz: That is Tim's widest range to date right now in this game. Like Tim, I don't really follow Allstate at all. But I'm just going to say that Tim just shot it from basically half court and it was basically an air ball, but an understandable air ball since none of us know the company. I'm going to say you were outside of the range even after that wide $30+ billion range, you gave so I'm going to say outside the range.
Gardner: I want to turn to you both gentlemen, and I'm not going to sing again, but I want to say, Rick, you've got the brawn, but Tim's got the brains. Let's make lots of money. It was a heck of a great guess because the very low-end of Tim's range, $34.7 billion, he said the market cap is $34.83 billion [laughs]. So just barely within Tim's admittedly wide range, he nailed it. So you've got the looks, Rick, but Tim's got the brains. Friends, let's all make lots of money. I think that makes it three to three, guys. Things are just warming up. Let's go to stock lucky No. 7.
All right, stock No. 7, I'm going to turn to my friend, Rick Munarriz, and say, Rick, what are some of the best picks that Tim, in your mind, has brought to Rule Breakers members? Now, both of you have been on the team for well more than 10 years. Anybody who knows how Rule Breakers works knows that I ask talented people like you, what's your best idea this month? And then I take Rick's best idea, Tim's best idea, I take Alicia, a new member of our team, her best idea, my best idea. Tom King is a member of our team, Karl Thiel is a member of our team. Many others, Aaron Bush, David Kretzmann. The list goes on and on over the years of so many people who've been through Rule Breakers and added value. Anybody who is a member, and I hope everybody listening to me right now is a member of Rule Breakers, knows that it's a team effort. My task, and it's not always that easy, is to look among all of these great suggestions each month and decide which one do I favor? Which one will we go with? That is, I guess, the gatekeeper role that I've assigned myself for a long period of time. But if you love this service and you follow what we're doing, you know, actually, that was Tim's pick or that was Rick's pick. While I'm not expecting you guys to have memorized what the other guy has brought to Rule Breakers, Rick, what are a few of the best picks, in your mind, Tim has brought to Rule Breaker members?
Munarriz: I know salesforce.com has done really well, and that's when Tim was on early. More recently, Peloton, like you don't expect, Tim brought this one to the table and obviously did really well since he brought it up.
Gardner: So many examples.
Munarriz: Basically, if there's a cloud-based computing company, it's him, except for, I guess, Datadog, which was mine. But yes, there's just so many. I am going to guess wrong, but let's say Salesforce. If you want me to guess what I think you're going with here.
Gardner: Well, I'm not actually. I really just wanted you to highlight some of Tim's great work. Guess what I'm about to do? Tim, what are some of the best picks that in your mind, Rick has brought to Rule Breaker members? One or two.
Beyers: Oh man, one of my favorites, the one that I wish that I had come up with, that I think Rick deserves so much credit for putting Twilio into your view. David, I mean, Twilio has just been a monster. What a great pick that was. I always want to give Rick credit for MercadoLibre. I know that Rick wasn't the one who brought it in, but that's one of them. Then another that Rick and Carl together brought is The Trade Desk, and that too has been just a monster.
Gardner: Those are a couple of more great examples. We don't have time because this is a game show we're playing right now, and I try to bring this show in around an hour each time. We could go on and talk a lot more about what you both have brought, not just through your picks, but of course, through your writing and words to members, especially Motley Fool Live in the last year, I think about that too. Thank you both for all that you've done. I'm going to go though. Turning back to Rick now for company No. 7. I'm going to go to one that Tim didn't mention and I understand why. Because this stock is only up 554% since January of 2016. This isn't one of Rick's best picks, but that's a pretty good return in five years, a six-bagger, the market up 130% over that time. A lot of this company's business was probably inactive for portions of 2020 because Planet Fitness (PLNT +1.83%), Rick, ticker symbol PLNT. One of those brands that most Americans recognized, might even have that low subscription price, which is part of its strength, by the way, competing against higher-end gyms, low-subscription-price-gym for the rest of us, positioning that Planet Fitness has staked out, and yet it wasn't a great business in 2020.
Munarriz: Yes, definitely. Planet Fitness yet, again, you couldn't go to gyms early on, and that sort of led us to talk about Peloton just a couple of minutes ago that led to the Peloton revolution, a lot of people working out at home. But Planet Fitness is obviously doing well. Hey, I've put on this pandemic weight, we've all have, and it's almost like a new year's resolution, just post-vaccine world where it should be pretty good for Planet Fitness. I should just go and just give you my market cap range now on this, because I don't know the market cap on Planet Fitness. I'm going to tell Tim right now, this is my nightmare that David brings up a stock of recommended and somehow I'm blanking on the market cap because it's just been that I know it was a very small company when I first brought it, it wasn't that large necessarily, it was a newish company.
Gardner: Rick, I'm not going to throw you a lifesaver here or a lifeline, but I will throw you a little tidbit if it helps. This, of course, helps all of our players at home as well. I'm happy to generously let you know that the stock right now is around $75 a share now at the nadir. Do you guys remember how it felt to be an investor in March of last year? Right around this time, one year ago, wow, the whole market was selling off, the stock dropped from- it was just short of $90 to $25 in a matter of weeks. Delightful now to think that it's back to $75. Frankly, to think that it's tripled from its lows, given the business conditions for largely a brick-and-mortar operation, it's remarkable to me. I think it's probably fair to say, Rick, Tim, and everybody listening, that the market is trading in advance of expectations. Its present pricing is not based on the great performance it had last quarter. It's more on a belief that the world will return. While it's a new normal, there will be a lot of normal in the new normal. One of it probably is that Planet Fitnesses are going to open up again and begin growing again. I think you point out part of the reason why, Rick, which is a lot of us probably would benefit from that a little bit. If that helps, you should know that the stock hit a recent high of $90, it's dropped back to $75. That's not just a hint for Rick, that's a hint for Tim, that's a hint for everybody listening. But not too big a hint because most of us aren't mapping market caps to stock prices. Rick Munarriz, provide your range for Planet Fitness, ticker symbol, PLNT.
Munarriz: This is my second nightmare, we're playing a game called, do you know how many shares outstanding are in Planet Fitness so you can calculate [laugh] David's $75 gift to what it's worth and I'm blanking on that too. But again, Planet Fitness is a great company growing briskly, but it's a franchisee-driven model. So it's not that asset-heavy, which is great for margins and everything, but it's not as rich as you would think it would be as far as market cap. I'm going to say between $20 billion and $30 billion.
Munarriz: Yes, I'll leave it there.
Gardner: Excellent. Big round numbers, Tim Beyers and players at home, $20 billion to $30 billion. Tim, is Planet Fitness's market cap inside or outside that range?
Beyers: For some reason, I have a lower market cap in mind. But usually, and I'm just playing my brain here, my brain usually tricks me. So I'm going to say, even though my instinct is outside the range, I am going to go against it and say inside the range. I think Rick may have found the range here, but we'll see. I'm going against my instinct here David. [laughs]
Gardner: Sure enough, [laughs] this is such a great example of why I love this game show because Rick was completely wrong and it was his nightmare and he had confessed that to all of us, that this is his stock. It's been such a great six-bagger for members over five years and yet he guessed dramatically higher than Planet Fitness' actual market cap. Planet Fitness has a market cap of $6.94 billion and Tim, you had the right instinct, but you said you would go against it.
Beyers: I know, my instincts are usually so wrong in this game. That's funny.
Gardner: So again, if you were outside the range, the many people playing at home, give yourself a point. Rick Munarriz, you can take a point, even though ironically it's your stock and it's one-third the size [laughs] of the company you were imagining. But again, Rick, would you not say that this is a pretty bullish indicator for those of us listening because a lot of us have heard of the business and we can imagine how it would do well in the future as things open back up. So maybe, one to add to the watch list.
Munarriz: Yes, definitely. Again, yes, $20 billion, $30 billion sounds sort of ridiculous for a very fast-growing, but it's a gym operator. Again yeah, I think I over overestimated, like at a buffet line, I am putting everything on my plate. [laughs] But yeah, maybe this is like the right answer in the 2025 edition of this game, hopefully.
Gardner: [laughs] Great point. I will say probably a portion of your thinking and a lot of people listening right now is, what were the market caps of the company's covered so far, 3M, $111 billion, Amazon, $1.5 trillion, Nasdaq $24 billion, but Starbucks $128 billion, Anheuser-Busch $106 billion, Allstate $34 billion. Those are all much bigger numbers. So I wouldn't be surprised if there's some unconscious bias in your head there, Rick, just thinking it's got to be a bigger number because all of them that went before are so much bigger. But as it turns out, no. Let's keep moving. Stock No. 8, by my count, Rick four, Tim three, you at home, anywhere from zero to eight. But I'm cheering for you, I hope you have a big number. All right, turning to Tim. Tim, when roughly would you estimate the phrase meme stock entered the vernacular?
Beyers: Oh geez, meme stock? I mean, that feels very 2020 to me.
Gardner: Actually, I would say maybe more recent than Tim, because using Google trends, trends.google.com, you can kind of lookup the frequency of any search term. They're kind of graph-like stocks. You can see a graph of where that term was. So I did that recently in meme stock, get this, January 17th to 23rd of this year. So it's two months ago. It was sort of where it had been, like a really dull stock going sideways for years and years, not particularly searched. One week later, January 24 to 30th, a 10X the search volume of one-week before. So I'm going to place the popularity of meme stock, entering the vernacular between January 24th and 30th, which is probably why some of the companies that have been called meme stocks started to pop and pop big.
Now, Tim and Rick and everybody at home, there are a number of companies I could have chosen here. A lot of people might think GameStop because I think GameStop probably is like the iconic meme stock of 2021, which is the iconic year for meme stocks. I love the irony in that name because from almost the first day it started, I started saying, "When will this game stop?" Because I think it is a game and I think the music is going to end and probably before too long. But GameStop was too obvious. I figured you guys might be doing your due diligence that Dave's maybe going to ask GameStop's, so I try to be cagey that way. But there is another company and I think we've all benefited from this company's services, just like I myself have appreciated GameStop over many years, not the last seven, but many years. That would be AMC Entertainment Holdings (AMC +15.53%) , the ticker symbol is AMC and I'm sticking with you here, Tim. I think a lot of us can think of many fond memories. Maybe we paid a little bit too much for that ticket and or for that popcorn. But especially when we were still going to movie theaters, I would always choose Imax and it was usually at AMC Imax in the greater DC area that I would go to.
Now, AMC pretty dull stock, I'll tell you over the last five years, this includes the recent move. Over the last five years, the stock market is up 90%, AMC is down 60%. That's a really bad five-years, which includes recent pops. Not a great situation. I don't think a company I previously appreciated, I question the relevance going for it. I'm not saying I'm rooting against them though, but I'm doubting that this market cap holds up. Well, enough spoilers and enough stalling, Tim Beyers, let me turn to you and ask, Tim, your range for the market cap for ticker symbol AMC, AMC Entertainment Holdings, the movie theater company.
Beyers: Gosh, this my worst nightmare, Rick. I mean, I love movies and I love going to the movie theater but this is like that awful half-core trap, like I can't get it out, [laughs] this is going to be a turnover. I will say that I don't think it's a big market cap even with the recent run-up but I don't think it's a terribly small market cap either. I'm going to go not with a tight range, but maybe a little tighter than is wise because if I'm right, then I think I'm really right. So I'm going to say $4.7 billion to $8.1 billion.
Gardner: $4.7 billion to $8.1 billion. Let's cut to the chase, players at home, Rick Munarriz, is it inside Tim's range or outside Tim's range?
Munarriz: So this is the market cap game and not the enterprise value game because AMC is a company that has a lot of debt and I know that's baked into its total valuation, which is what's happening now.
Gardner: But it would be a bigger number. You're saying if we included its debt and if you wanted to buy this company, you'd have to assume the debt. So enterprise value is technically the better number. It's just not as easily calculable or as fun, but you're absolutely right, Rick.
Munarriz: Yeah, it's not fun so let's keep this fun of course. So I know that AMC does not have much of a market cap even after the pop because a lot of its value that's just been taken on debt and it's just a lot of shares outstanding and it's sort of an issue. I'm going to say lower.
Munarriz: I know that the stock is, I mean, it was basically around $10 a couple of days ago. I don't know where it is right now, but I think it's more of an enterprise value than a market cap value. I'm going to say it's lower than Tim's range.
Gardner: You're saying outside Tim's range.
Munarriz: Yes outside, Yes.
Gardner: I have to say Tim did a pretty good job. I noticed $4.7, $8.1, which by the way would have fit Planet Fitness. It is interesting to think of the value of AMC in light of Planet Fitness. Again, Planet Fitness, we've established has a market cap of $6.94 billion. AMCs as it turns out at present is at $5.65 billion. Now, this is one of the more volatile market caps. You could fall asleep, rip and we go but just for seven days, not 70 years or whatever it was. Seven days from now could be quite a different number, which is part of what's happening with the meme stocks. But at present, the stock was down 15% today, Tuesday, now that the market is closed as we near the end of this podcast and so that puts it at $5.65 billion for now. We're having some problem with that. The stock started this year, right around $3 a share. For it to be at $10 isn't too bad. A triple in just a few months. How sustainable is that? Well, I'll leave that for history to show. I will point out though guys, sticking with trends.google.com, the phrase meme stock here at the end of March is about where it was a year ago.
Now, that phrase is losing currency rapidly and if you are graphing the phrase meme stock on google trends, that looks like the meme stocks themselves, a huge spike, and then a lot of loss of value. I'm expecting that that's probably going to continue for the phrase, and for many of these companies. Well, the good news for people who like suspense, I'm counting it as Rick four, Tim four home stretch stocks No. 9 and 10. Let's go to stock No. 9. Turning to you now Rick. Rick, do you know my snap tests? I've talked about this some in the past and written about some occasionally podcasted. When I use that phrase, do you know what I mean by that?
Munarriz: I've heard it. I can't recall it right now.
Gardner: I never expect that anybody, even if they're working alongside me for years, would know all of my eccentricities and things. This gives me a quick opportunity to restate what it is. Especially for so many people who are new as listeners or new to Rule Breakers in the last year or so. The snap test is a fairly simple concept, you'll get it right away. If you snap your fingers and the company that you're looking at disappeared overnight like what Thanos did to the superheroes in Marvel Avengers. If you could snap your fingers and make it disappear the next morning, would anyone notice, would anyone care? My belief about the snap test, it's just a simple way of asking yourself, should I buy the stock or not? Because I think if everyone would know this or if a lot of people would care or care deeply then you probably are barking up the right tree when you're looking at those kinds. If you snap your fingers and GameStop disappeared, I've got real questions, who would really notice, especially as consumers, and who would really care?
The snap test is something that I've written about for quite a long time, but I mention it just here and there occasionally, I want to lock down and just make sure Rick and everybody know the snap tests. Now, for the most part, I've applied that friends to companies, to individual companies. But for this one stock No. 9, Rick, I want you to think about industries. What are some of the most consequential and important industries where if you snap your fingers, and an entire industry disappeared overnight, would anyone notice, would anyone care? Now I have to say, when you talk about industry level, Rick, I mean, someone is probably going to know it's almost anywhere. But some industries are more consequential than I would say, plastic surgery, which is still a really interesting business, but it's not as critical to the future of the world as some other industries. Rick, what are one or two industries that come to mind when you think about what would really hurt if we lost those right now?
Munarriz: If we lost? I think the entertainment industry, I know we think it's a luxury, but especially this past year, where would we be without entertainment and the media stocks is one. Obviously, a more to life stuff, just like the Amazons. The retail in general. Obviously, you can't live without retail, there has to be commerce somehow. I mean, maybe just broader industries, bigger nets than you're asking me to throw out, but I think some of these are just industries that obviously have healthcare and just all the different facets of it. But you just couldn't outside of plastic surgery and other aesthetics-related ones. They are just so critical.
Gardner: I agree. I'm glad you mentioned both of those because boy we've made a lot of money as investors with our members over the years by focusing our investing in entertainment and in retail and e-commerce especially. This is part of the point. I think that if we are focused on investing in the best industries, the most disruptive and consequential and dynamic industries of our time, we're going to do a lot better than if we're putting our stock in fly by-night companies or industries that don't have a lot of heft or meaning to that many people worldwide. Well, you didn't happen to name the industry, I'm thinking of here, but I'd like to put forward that semiconductors and chips are put in so many devices around us these days. It's such a critically important part of not just our present, but of course the future. One thing I've heard in recent months and this is not my industry. I do not work within this industry, but I've heard that there's a worldwide chip shortage. Just like sometimes we hear there's a worldwide software developers shortage.
We can't make enough of these people, we're giving them boot camps to teach them coding because before the machines take over, we humans want to make sure that we're controlling the machines, we're designing them. Well, I hear the same thing just about semiconductor chips. I think about companies that are in that industry, and are so consequential, and I go to the Netherlands. I realize not a lot of people go to the Netherlands with either they're investing or maybe even their tourist days although I've spent at least one beautiful day in Amsterdam, among other worldwide great cities. But Rick, let's turn our attention to ASML Holding (ASML +3.42%), the ticker symbol is ASML. Now, this is one of those companies that is integral to the creation on a daily basis of the chips that make our world run and they are operating at some of the highest levels of sophistication and technology.
Rick, I won't make you guess this because I'm going to ask you about the market cap very soon so you're going to be thinking about that, but I will mention how many nanometers are in an inch. The answer is 25.4 million nanometers are in an inch. This company is operating at eight nanometers. That's the size of the chips that are happening. That's why I included this company in one of my five stock samplers from last year. In fact, I'm looking at it right now. September 2nd, 2025, stocks indistinguishable from magic. Boy, if you can make something that's intelligent, that runs the world at eight nanometers, that seems pretty indistinguishable from magic. Now let me turn to you more formally and ask you Rick Munarriz for your best guess at the range of the market cap for ASML Holding, ticker symbol ASML.
Munarriz: I'm guessing Tim may know this company better than I do, but I mean, it's to me, semiconductors. It can be a cutthroat industry. But you still have companies like Taiwan Semiconductor, which is really one of the largest market companies on the planet, and obviously the Intels and other companies. I'm just basically throwing this out there. I have an excuse for Planet Fitness.
Gardner: That's how we play this game.
Munarriz: [laughs] But I'm going to say again, I know the company and I know it's important for what it does, I don't know if it's basically just licensed with technology or if it's the one that is actually doing the manufacturing and making the revenue. I am just going to say for the company's sake, I am going to give it a market cap between $50 billion and $80 billion.
Gardner: Players are done, Tim Beyers, Rick Munarriz has guessed a range of $50 billion to $80 billion. Tim, inside or outside that range?
Beyers: You know what's interesting about this, ASML has ultra lithography technology. It's a maker of semiconductor manufacturing equipment. Its peer's, I think, are a little bit bigger. There are some that I follow that are a little bit bigger. It's a very interesting company and that's a good market cap range. I could easily be wrong here, but this time I'm going to go with my instincts. Say, it is slightly lower outside the range, even though I think Rick is really pretty darn close here.
Gardner: Tim, the beauty of this game is that you get credit for it and yet your logic was not correct, and yet, that's part of what we love about the Market Cap Game Show. Because as it turns out, and maybe let's go back to the snap test and think about the incredible importance of this technology and the global nature of it. This is a much larger company than you guys are realizing or frankly than I was realizing as we initially researched it and put it into Motley Fool Stock Advisor in July of 2020. Now I was earlier celebrating stocks that have much lower market caps than we think, saying we should add them to our watch list. But in this case, it's the exact opposite, but I still think you should add it to your watch list because it is a reminder of how big this world is, how big this industry is, and how competitive ASML is. Rick's guess of $50-$80 billion Tim, you're saying slightly on the lower end, it is $243.73 billion.
Beyers: Right then.
Gardner: A quarter of a trillion dollars. Despite how large, I am really happy to say this, since July of last year, it's up 50% with the market up 23%. Even at a big market cap friends, it has been a significant market beater. Well, that sets up a dramatic conclusion because if my math is right and I only get by with the help of my friends here, Tim you are saying and you're right, you've got five. Rick, you've got four, five to four as we go to the final stock for this Market Cap Game Show. Turning to Tim. Tim, one letter ticker symbols. Any thoughts?
Beyers: No. Oh no. [laughs]
Beyers: Oh, God.
Gardner: I'm not going to ask you to guess what stock I'm on. Just what do you think about when you think about a one letter ticker symbol? What does that say to you?
Beyers: I mean it does say that you definitely get some credit because there can only be 26 one-letter ticker symbols, but the other thing about them is this is not always true, but for a lot of them, they are the older companies and so they may not be the innovators that I follow most closely.
Gardner: I'm glad you said that Tim, because of the 10 companies we presented at this Market Cap Game Show, two were not in my universe of picks. The ones that are not are Allstate and AMC Entertainment Holdings. The other eight are, and yet I tend to pick the companies that I think are going to win in the future. A lot of those single letter ticker symbol companies are industrials that we're doing the same thing 50 years ago, but the few that have broken out with a one letter ticker symbol and yet are relatively new and are very forward-looking with their operations or their dreams, those as a small group have been an out-performer, and it makes sense.
They're big enough within what they do or iconic enough. For example, Unity, a recent IPO, ticker symbol U which is not the company I'm about to ask you about, but that would be a good example of a company that somehow got its one letter ticker symbol and yet is a really important newer company and so is Zillow Group (Z +6.31%), ticker symbol Z, although some people would say ZG because this is one of those companies that understandably but in my mind unfortunately gave itself a second class of stock and annoyed me and many other investors as we have to talk about two different ticker symbols for the same darn company, for the most part Zillow Group of course, a company many of us got to know initially through the Zestimates that all of a sudden were put on the property that we owned or the one we were looking at and made it easy and democratized information about what that home on the corner might be worth. Now a lot of professionals would be the first to say, I don't believe in the Zestimates, that's all silly, and yet those same professionals were often advertising on Zillow in the platform within a few years of saying that as Zillow came to prominence.
More recently as you both know, Zillow has gotten into the market of house flipping. It itself becomes a buyer of some of the properties that it puts numbers on on its platform and might buy or sell you a house these days. It's been a radical move for the company to make and yet the company has come through pretty successfully. Speaking of success, as I turn to Tim very shortly, for this market gap, speaking of successful, Zillow Group has rocked it for Rule Breaker investors since my friend Rick Munarriz brought this dock in September of 2011 to our attention. In Rule Breakers, it's up 1,411%, that's a 15-bagger. The market is up 300%, so it has whomped the market for those of us who love rule breaking and are willing to hold through thick and thin. Let me now turn to Tim with that wind up. Tim, the market cap range you want to give for admittedly Rick stock, although Rick's already showed he doesn't always know the market caps for his stocks, even if they're big winners, the market cap range for Zillow Group, ticker symbol Z or ZG.
Beyers: Yes. The one in this space that I really like and the one that I own is Redfin.
Gardner: That you brought to Rule Breaker and it's been a big winner for our members as well.
Beyers: Yes. I know it's smaller than Zillow, so I know where to start, but admittedly here, again I'm just firing it up from way beyond the ark here Rick, so don't put too much stock into this guess, but I'm going to say I have a reasonable idea, but this is still a big guess. $17.8 billion to $26.2 billion is my guess here for Zillow.
Gardner: Excellent, $17.8 billion to $26.2 billion, and I'm so delighted to close with stock No. 10 which I selected at random, but to think that Rick you brought Zillow, Tim you brought Redfin, you both have enriched Rule Breaker members with those suggestions and to be able to think about both those stocks here even though I'm just asking about one of them is a perfect way to conclude this Market Cap Game Show. Again the range that Tim specified Rick and players at home, $17.8 billion to $26.2 billion. Rick, inside or outside that range?
Munarriz: Again, stock I picked and this is my nightmare coming back to life. David started off the whole podcast basically talking about how he hates march benders blowouts and who we are, 5-4, the ball is in my hands. I have to nail both free throws to take the game to overtime. I don't think there is overtime in this game anyway, and I really don't have much of a clue as to what Zillow's market cap is, but I'm going to go say that it is outside that range, because well Redfin and Zillow are doing great. I think it's going to be outside of your range.
Gardner: That brings us to a tie and you're right, there is no overtime because Rick, you nailed it. It is outside Tim's range. Tim had a good shot at it, no question. As a Redfin fan, he probably was dialing a little bit low even though he was remembering that Zillow is bigger than Redfin, but Zillow's even bigger than that. The market cap as we speak, $32.65 billion. That is outside the range. Again only about $5 billion or $6 billion outside the top of the range that Tim specified and yet it was bigger than that. The stock today is around $135 a share as we talk, and yes, one of those newer wave technology-based owners of a single letter ticker symbol. So a fun way to close and I'm delighted guys that you tied each other, therefore there doesn't need to be one-way trash talk and we'll have to have you both on sometime later again to enrich our Market Cap Game Show experience. I really want to thank Rick Munarriz and Tim Beyers for your time, your good shear, and your smarts this week on the Market Cap Game Show.
Beyers: Thanks David.
Munarriz: Awesome David. Thank you.
Gardner: Again thanks to my players, Rick Munarriz and Tim Beyers. Rick scored five, Tim scored five, but we three are wondering, what did you score? What did your friend do right alongside your elbows score or your 10-year-old daughter's score? This game is for you and we have fun playing four times a year. I hope you enjoyed it and appreciated Adam Nelson's wonderful rules tweak which I sure had fun with and I suspect that will be the standard of the game going forward. So again thank you to Adam. I also enjoyed Tim's basketball analogies. I didn't know he was that big a fan and he was bringing the March Madness analogies throughout. A quick reminder before I go, Rule Breaker Investing Mailbag on next week's show, so [email protected] is the mailing address. In the meantime, hey, keep studying up and learning your market caps. Fool on!
