Apple’s Concession, Peloton’s Stumble, and Real Estate’s Future

Apple (AAPL -0.81%) loosens its rules for app developers. Peloton (PTON -0.32%) stumbles on slowing growth. Best Buy (BBY 1.41%) and Williams-Sonoma (WSM -0.13%) report big earnings, and Dick’s Sporting Goods (DKS -0.89%) hits a new high. In this episode of Motley Fool Money, Motley Fool analysts Emily Flippen and Jason Moser discuss those stories with host Chris Hill, and weigh in on the latest from Autodesk (ADSK -5.84%), Bill.com (BILL -0.13%), and Glimpse Group (NASDAQ: VRAR). 

Plus, Matt Argersinger, lead advisor of Millionacres, a Motley Fool investing service, discusses red-hot REITs, Amazon’s (AMZN -1.11%) department stores, and the impacts of COVID-19 on commercial real estate.

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 Aug. 27, 2021.

Chris Hill: It's the Motley Fool Money radio show. I'm Chris Hill. Joining me this week, Senior Analysts Emily Flippen and Jason Moser. Good to see you both.

Jason Moser: Hey, hey.

Emily Flippen: Hey, Chris. 

Hill: We've got the latest headlines from Wall Street. We'll talk real estate investing with Matt Argersinger, and as always, we've got a couple of stocks on our radar. But we begin this week with Apple's App Store. Apple has struck a deal that will allow some app developers to collect payments outside of its App Store. Some are seeing this as a major concession on Apple's part related to antitrust concerns, while some in the app community are saying the move does not go far enough. Jason, Apple makes a lot of money through that app store. How do you see this?

Moser: They do make a lot of money through that App Store, and we'll talk about that. I'm not surprised by this move. I think I tend to fall into the latter camp there, and then maybe it's not really from a developer's perspective, it probably doesn't feel like enough. To me, this really does feel like optics more than anything else. I don't actually blame Apple for that. It just is where this company is at this point, and they have to be very sensitive to the fact that they are under the microscope in regard to anti-trust, and for understandable reasons. Well, we look at the numbers. We're talking about a company here that has $350 billion in sales and is growing. There are estimates out there that the App Store grossed anywhere from $60-70 billion in revenue in 2020, and it continues to grow at a fairly modest rate. I mean, those estimates were somewhere in the neighborhood of $50 billion in 2019. But I mean, you can see that's gross revenue. That is not everything that goes down to Apple's bottom line. They do get a chunk of that, which is really nice, but it is not the crux of the business, so let's keep that in mind. 

I think it's very easy for them to make this offer. It puts them maybe in a little bit of a better light. But I also understand from the developer's perspective, they feel like it's not enough, and I think it's ultimately about the terms here. This doesn't let developers tell users about the non-App Store purchase options within the actual apps themselves. It gives these developers the opportunity to communicate externally with customers using things like email addresses and phone numbers. But it's not something where developers can go, and they just explicitly alter consumer behavior. I think that's what we have to keep in mind is while Apple is doing this, it doesn't necessarily mean it's going to change consumer behavior. We value our time today more than anything. If it doesn't really impact the consumer, are they going to go in there, and alter the way they pay for things? Some will, some may not. It's probably a little bit more about how this sets the table for future developers. All in all, I certainly understand the move. Not terribly surprised.

Hill: Peloton's loss in the fourth quarter was much bigger than Wall Street was expecting. On top of that, the company warned it will be cutting the price of its original bike machine by about 20%, and shares at Peloton fell nearly 10% on Friday after the report. Emily, 2021 is not going nearly as well for Peloton as 2020 did.

Flippen: Well, it turns out recalling treadmills being investigated by both the Department of Justice, and the Department of Homeland Security doesn't exactly lend investors to feel really positively [laughs] when you post a loss that's more than double than what's expected in the quarter. But I feel like most of the movers thing is actually about fears about guidance. Peloton changed their guidance from nearly a billion dollars in revenue that was expected over the next quarter to $800 million in part because the 20% decrease and the price of their bike, which is a big move, unexpected by many investors, says something about the need for competition, and how Peloton maybe doesn't have the pricing power that people expected. I do think that's why we're seeing the move today, not necessarily just because of that loss, which again, is largely due to that treadmill recall. I will say there are some good numbers here. Subscription revenue continues to outpace the connected fitness revenue, which is critical for the value proposition. Connected fitness, which are their bike sales up 35% year-over-year, and were 70% of revenue. But just this subscription to the Peloton App or the other 30% of revenue, and that was up more than 130% year-over-year, so keep watching those numbers, keep watching churn, keep watching engagement. But I wouldn't react too strongly due to this news. It was an unusual quarter for Peloton.

Hill: Unlike Peloton, Bill.com ended its fiscal year with a bang. Fourth quarter sales came in higher than expected for the business software company, and shares of Bill.com rose more than 25% on Friday. Jason, was it that good? That's a heck of a move.

Moser: It's a nice way to wrap up the week, Chris [laughs]. I think there are a lot of great parts to this Bill.com story. I think the part that has the market so amped right now is the guidance. The company management is guiding for revenue to double for this upcoming fiscal year, and that's thanks in part to 45% organic Bill.com growth. Remember, Bill.com is a cloud-based software provider that basically digitizes and automates back-office financial operations for small and mid-sized businesses. But the numbers were very impressive, and we will get to the valuation in a second. But core revenue growth of 73% was driven by 32% growth in subscription fees, and 137% growth in transaction fees. They added 5,600 customers and now serve 121,200 customers. That is growth of 24% from a year ago. Total payment volume $41.7 billion, up 64%, processed 8.2 million transactions. That was up 46% just from a year ago. Retention continues to improve; they are seeing the network effects at play here. The members who receive or make electronic payments to that platform, at the end of the quarter, had 3.2 million network members, that was up 28%, and then net dollar-based revenue retention rate continued to impress 124% this quarter versus 121% a year ago. They've made a couple of big acquisitions along the way. The Devi acquisition for around $2.5 billion, they closed that. They've made another little acquisition here that's in the process of invoicing to go, which is an accounts receivable solution, mobile solution. The stock is valued with this purchase today at around 130 times gross profit. I can't tell you, Chris, that this is a great time to get into this company, but I can congratulate shareholders who did get in earlier and have had the patience to hang on here. This is a high-quality business doing a lot of great things. Maybe now isn't the greatest time to push that buy button. But if you do own shares, I would hang onto them.

Hill: You've read my mind on the follow-up question I had prepared. We'll move on to Best Buy. Second quarter revenue was up 20%. Same store sales were three times higher than Wall Street was expecting. Best Buy also raised guidance for the full fiscal year, and shares up nicely this week, Emily.

Flippen: I will say, I think there was a question mark for Best Buy heading into this quarter. Unlike some of the businesses that we'll talk about, Peloton being a good example. I think investors had low expectations or high expectations, respectively. Best Buy, on the other hand, you could make a case for a good, and a bad quarter. We still see high demand. Consumer spending, at least in the United States, is still strong. Engagement with Best Buy has consistently remained strong among its core customers, and management has always been innovating. But on the flip side, we're seeing things like chips shortages. Supply constraints in many of Best Buy's competitors, and lapsing a year where e-commerce was really strong, and despite e-commerce being down nearly 30% year-over-year revenue still rows for Best Buy, and they proved we can continue to engage with the customers that we acquired in 2020, and increase their spending even into 2021. That's exactly what we saw with demand, boosted by just demand for their core products, and stimulus, home theater, appliances, phones, all of these things are in demand, and they didn't have any supply constraints even with the chip shortage, which I was surprised by personally, I will say they also increased guidance. It's scary looking at the full-year guidance, which now is going aiming for same store sales of 9-11%, feels really strong. But I like this management team, they're innovating. They have a total tech solution versus subscription for highly engaged customers. They're testing out new store prototypes, moving into new categories like outdoor living. Really interesting and strange innovations going on here at Best Buy.

Hill: I'm with you on the guidance, although I guess we should remember we got the holidays coming up in a few months. Maybe the guidance isn't that crazy.

Flippen: I agree. But I will say that I think holiday demand can be great. But I'm worried about Best Buy running into some supply constraints. Again, they haven't experienced it right now, but their competitors have. I worry about them eventually needing to pull back guidance if for some reason they aren't able to keep up with demand. But again, that's a problem outside of their control. Even if they aren't able to keep up with demand, the demand is still there for Best Buy and their products. For long-term investors, I wouldn't worry too much about the short-term guidance.

Hill: After the break, we've got software, sports, retail, and more. It pays to listen, so stay right here. This is Motley Fool Money. 

[...] 

Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Emily Flippen. [email protected] is our e-mail address. David Whitmire writes, "Chris, you do a good job, good audio, good voice, good guests. But whoever does the music selection is doing a really great job. The stock talk is good, but it's the music that makes Motley Fool Money a great show." Thank you, David. I agree with you. The music is the cherry on top, and that is our man behind the glass, Dan Boyd, who picks the bumper music every week. Let's get onto some more headlines from Wall Street. Last week the stock on Jason Moser's radar was Elastic. This week, the SaaS company posted strong profits in the first quarter. Their shares of Elastic were flat for the week. You tell me, Jason, it was your radar stock, what stood out to you?

Moser: I said last quarter that this is one that needs to be on your shortlist in regard to enterprise data and I think this quarter just reiterated that. If you remember, Elastic develops software and services that enables users to search through structured and unstructured data for all consumer and enterprise applications, so they're serving big businesses. This was the first quarter of the new fiscal year and the numbers absolutely did not disappoint. Total revenue for the quarter, $193 million, up 50% from a year ago, blew past their internal guidance for 33% growth. They also raised full-year guidance to $811 million at the midpoint. That was just from $785 million just a quarter ago. If you look at the other numbers, the key performance indicators, everything looks really encouraging. Total subscription customer count is over 16,000 now versus 15,000 from just a quarter ago, and versus 12,100 from a year ago, the total customer account with annual contract value greater than $100,000 is now at $780. That's up from $730 a quarter ago and $630 a year ago. Even more encouraging that growth is accelerating, which just means they're bringing products and services to the market that their customers' value and they're expanding those relationships. This is a really attractive business from a business model perspective. Subscription revenue represents essentially 92-93% of total revenue. Net expansion rate steady at 130%. Billings, I think perhaps could have created a little trepidation there at 27% growth. Not anything to shy away from, but you can see sometimes where billings can be a little bit lumpy and create some knee-jerk reactions. But with the stock value at 28 times gross profit today, I think it looks like a reasonable time to consider perhaps adding a few shares to your portfolio, Chris.

Hill: What a week for Dick’s Sporting Goods, a strong second quarter report came with raised guidance for the full fiscal year, and shares of Dick’s Sporting Goods up more than 20% and hitting a new all-time high. Emily, this business is on fire.

Flippen: I really should issue an apology statement for all the listeners who listened to me complain last year about how Dick’s success in 2020 was going to be a one-off result of a rising tide lifting this boat in particular. Dick’s, the thing I missed was the really strong retention that they had for virtually all of the customers that they acquired over the last year, and they continued the millions of new customers that have come in through this quarter. They're actually not dissimilar from Best Buy in innovating in their store concepts, getting into more things that are higher margin like footwear, what they call soccer shops. They're making it more of a destination. Average tickets and transaction size all increased in the quarter, and in-store sales, as many expect was up nearly 40% year-over-year, but that's still 36% higher than it was in 2019. The decline in e-commerce sales was more than made up by the in-store transactions. It's an interesting business. I still feel nervous about it when I think about the next year. I still think some of these numbers are really challenging. But the fear of making the same mistake twice, I will just say Dick’s is executing on a level that I did not expect.

Hill: Software giant Autodesk got a little less gianter this week. Second quarter profits in revenue were higher than expected, but Autodesk guidance for the third quarter sent shares falling as much as 10% on Thursday. Jason, this is one of the stocks in your portfolio. What do you think of the guidance?

Moser: I think this is another example where billings guidance might create the illusion of a problem that isn't really there, much like we were talking about with Elastic. Management noted in the call that some restructuring of the billing guidance, the way they're going from multi-year contract terms to annual billing terms. That changes a little bit of that billings growth, which could create some uncertainty in the near term, but I don't think that's a mark against the business at all. I think the numbers bear that out. They grew the top line, 16% non-GAAP earnings per share of $1.21 versus $0.98 a year ago. Again, a lovely subscription business here. Subscription revenue was 96% of total revenue for the quarter, and net revenue retention remains in that targeted 100-110% range. I think that one thing to consider is the word infrastructure. We've heard a lot about infrastructure in this ongoing debate in DC about how much is going to be spent. All of management's guidance here for this coming year, there's nothing that really includes the potential of infrastructure. So it's just worth keeping in mind, there is a potential tailwind forming there that's not being realized in the numbers today. But all in all, this is a very strong business. We're going to learn a lot more about this coming year on September 1st when they have their analyst day. This is actually profitable, and Chris, shares valued at around 63 times full your earnings estimates, that's pretty much in line with how it's been valued here recently. I think all things considered, things are pretty good for Autodesk.

Hill: Imagine that, a company that's actually profitable.

Moser: It's unheard of.

Hill: Williams Sonoma's second quarter profits came in higher than expected. They raised their quarterly dividend by a healthy amount and shares of Williams Sonoma were up more than 12% this week. Emily, is another specialty retailer showing everyone this is what winning looks like?

Flippen: At the risk of making another Dick’s Sporting Goods mistake, I'm convinced this is a one-off experience for Williams Sonoma. I can't fathom the demand that is there for the home furnishing markets, in particular, such a fragmented market of which Williams Sonoma is fighting to become a more digitally-native brand. That being said, they did have a great quarter. They had earnings of over $3.20 cents a share versus the $2.60 expected, and earnings are up 30% year-over-year. Raise the guidance, raise their dividend, all of these things pointing in an interesting direction. But Williams Sonoma has convinced the housing market's going to stay really strong which is going to support their business. If their underlying thesis is all the housing market's going to be really successful, so we'll be really successful, I don't like that because it takes the power away from the brand, it takes the power away from the strategy of management and puts all the power and the demands of the underlying market itself of which Williams Sonoma has no control. If housing demand and housing market expansion is weaker than expected, they could be in a situation where they have to pull back the guidance that they just increased.

Hill: But isn't that somewhat similar to a Restoration Hardware or even to some extent, a business like Wayfair, like look, if people are spending more on their homes, they're investing more in their living rooms, their bedrooms, their kitchens, it doesn't seem that crazy?

Flippen: That's fair. I'll give credit where credit is due. But Home Depot if you look at their most recent quarter, they actually had a drop off in shoppers year-over-year, which says something about the demand for housing. Not that it's a one-to-one comparison, but it is just to say that raising guidance in such an unpredictable time like this is a risky move and I would prefer Williams Sonoma have a more concrete strategy for how they're going to turn their very retail-based stores into a digitally native strategy with way more direct-to-consumer sales. While they have been doing that, it's still again, a very fragmented market and they're up against a lot of digitally-native competitors. I can see it being challenging. But then again, maybe this is the millennial in me talking, who just doesn't have the same heart for the Williams Sonoma brand that many other homeowners do.

Hill: All right. We'll see you both later in the show. Up next, Matt Argersinger with the latest on commercial real estate, REIT investing, and more. Stay right here. This is Motley Fool Money. 

[...] 

Welcome back to Motley Fool Money, I'm Chris Hill. Time to check in on the real estate market with Matt Argersinger. He is the lead investor for Millionacres, The Motley Fool's real estate investing service. He joins me now from his home. Matty, good to see you.

Matt Argersinger: Good to see you as always, Chris.

Hill: There are a bunch of things I want to get to, but we should probably start with REITs because real estate investment trusts have been on fire this year. What is driving that?

Argersinger: I think there are a few things. First thing is that 2020 was a bad year for REITs and so they're bouncing back from what was a historically challenging year across the board, whether it's retail, office, hotels just got crushed because of COVID. You had a lot of REITs back in 2020, they cut their dividend, they were experiencing rent collection issues, reporting lower results, and so you had a bad year there. 2021, surprising to me, of course, they bounced back. But bounced back even stronger than even I was thinking coming into 2021. A lot of them have restored their dividend, traffic has come back. Even on the retail front, we've seen big increases in consumer spending this year. Outside of real offices and maybe hospitality hotels which are still struggling to get back on their feet, it's been a fantastic year for real estate. If you look at the industrial REITs, data center REITs, they are already fairly strong in 2020 anyway, and they've only gotten stronger in 2021. I was looking at the Vanguard Real Estate Index, which is a good overall gauge of the REIT market and it's up 25% this year, so it's outperforming the stock market, it's outperforming most other indexes. Bouncing off in 2020, that was pretty bad. But also REITs coming into 2021 had under-performed four out of the last five years, and that just really hasn't happened in history. I feel like they are really overdue for a good year and with the vaccine distribution, the economy bouncing back so sharply, they're really benefiting more than other sectors.

Hill: For people who don't own any REITs and they're starting to look at that, should they be looking at specific sector-oriented REITs like data centers or something like that?

Argersinger: I think it's always good to have a good mix. I would say if you're looking to get some real estate exposure into your portfolio, I'd say buy at least eight to 10 in that range of REITs, and I think you want a nice diversification like you mentioned. I think you want maybe an industrial REIT, like a Stag Industrial or Prologis, you'd want a data center REIT, like you said, Digital Realty Trust is the biggest one out there. Then you'll want maybe an office REIT, a retail REIT, and the beautiful thing is you can really find there's hundreds of REITs out there to choose from. That's what we do in Real Estate Winners, they had to throw the plug-in there, Chris.

Hill: Absolutely.

Argersinger: Having a nice diversified group of REITs for the real estate side of your stock portfolio, I think is a great place to start.

Hill: Where are we now in your eyes when it comes to office space commercial real estate? We're basically 18 months into the pandemic. It was looking pretty promising earlier in the Summer. Some very large companies have pushed back from this fall to early 2022 in terms of their return to office. What are you seeing when you look out there? Just like office space writ large?

Argersinger: Yeah. It is really unfortunate. You saw some traffic coming back to the office in the earlier part of this summer. I think with the Delta variant now out there and there's a lot more uncertainty now about what that's going to lead to. It's leading to another surge in a lot of states, but what's that mean for the fall? I think a lot of offices, corporations are getting a little more cautious. You can see that CoStar came out with some data the other day showing that the office traffic was bouncing back and now it's fallen off in most major markets, and as you mentioned, re-openings have been pushed back until either later this fall or even into 2022. I'm still very concerned about office short-term and long-term. We just talked about the short-term, but in the long-term, there's still so much uncertainty about what the office demand is going to be for most companies. Does every company move to somewhat of a hybrid approach where they only demand that workers are there two, three days a week or even less? Do a lot of companies go fully remote for at least certain parts of the business because they can and they find their employees are just as productive? There's so many questions out there and so many smart opinions, and right now I'm just, with office, you got to be on the sideline. I think every company's going to figure it out on their own. But of any part of those real estate markets I think is changed forever by the pandemic, I think office is it. I just think it's created a paradigm change and not only what we think about office, but just in general, how we think about work and employee space in relationships with other workers. It's really changing. I don't think we'll know until probably late 2022, if not in 2023 how it all shakes out.

Hill: One of the things you and I talked about back in May when you were on the show, we were talking about residential housing because maybe the dominant story in the first half of the year, when it came to real estate, was house prices were just through the roof, no pun intended. You reminded me and our listeners that part of what was at play was really the long-term effect of the past decade coming out of the great recession in 2008-2009. Even if you look at going into those years, the residential housing market was probably overbuilt. We were just flat out building too many houses, new houses as a country, they may have overcorrected. So from 2010 through 2020, we basically had a decade of a much lower number in terms of new houses. Is that a possibility at play when it comes to office real estate that we're just going to see over the next decade because there's so much uncertainty right now? A lot of people who are in that business might be saying, you know what? There's no real great incentive to throw up a bunch of new office buildings.

Argersinger: I think that's exactly right. I think if you look at developments, new construction of offices, virtually non-existent in most cities. In fact, it's going the opposite way. You're seeing office buildings be converted into multi-family apartment buildings or into other uses. I think the overall pie is too big for the office and I think that it's going to shrink just like we might have seen with the residential market back in the last decade. Could it be over-correct? That's a good question. I don't know. Given how sharp the change in employee-work relationships is going to be, we still might end up with having too much office several years from now, even after we've converted a bunch back or stopped using a lot of it. So much uncertainty that I wouldn't say that it's a matter of we could overcorrect in that market because I would say given what I expect how this is all shaking out, I think we probably end up in a situation where there's still too much office supply, even a year or two from now.

Hill: Let me go to retail for a second because one of the things we've seen over the past year and a half is large general retailers like Walmart and Target really thrive by investing in curbside pickup, e-commerce delivery, digital sales, all that sort of thing. But at the same time, maintaining that store presence. There's some target locations that are almost like mini-malls within themselves because they've got a Starbucks, they've got an altar beauty store in there, they've got a CVS pharmacy, they've got a Disney Store. When you think about malls themselves, are malls going to have any kind of resurgence, or is that still not a great way to invest?

Argersinger: Yes, good question. I don't think the traditional mall is going to have a resurgence. I think it'll be used differently. The space itself will be reconfigured to be a place where data centers can be, warehouses can be; we've seen those conversions. But it can also become a place where there's entertainment venues or the space is used to attract people for experiential activities. There's going to be a use case for that real estate and you're seeing it play out in a lot of spaces. Interestingly enough, though, CoStar had a report, I think the company was placed for labs, and did some research about customer traffic trends. Actually in July, just this past July, the foot traffic to malls was actually back to pre-pandemic levels, back to 2019 levels. Now, most of that actually was on the outdoor mall side. It is a measure of the outer malls and indoor shopping malls. Indoor shop malls are still lower but the customer traffic is essentially back. 

We don't know how this new Delta variant's going to play out, but the retail traffic is back. But I still think, to the larger point, a lot of this space is going to be reconfigured. This can be turned into mixed-use entertainment or other types of service-oriented retail real estate. Because we do have too much. I don't know about offices, I don't know about other things, but I know for a fact that the United States has way too much retail real estate. The comparisons are out there. We have something like 10 times the per capita retail real estate as your average European country. It's far too much. Given just the changes in the way people shop, for most things, it has to shrink. But that doesn't mean places like Target and really good shopping centers and places like that won't thrive because there's a reason to go to those places. The customers are obviously finding reasons to go because the traffic has certainly bounced back.

Hill: Well, one of the ways, at least some amount of that space is going to get used this fall. It's something we talked about on last week's show and that is that Amazon in what is truly a through the looking glass type of story, Amazon is going to be opening department stores in, reportedly, California and Ohio. What did you think when you saw this story?

Argersinger: Yeah, what is old is new again with Amazon. It's interesting. My first thought was not thinking so much about how Amazon plans to use this space and what things they're going to do with the business. It's just really about the deals they're probably getting on the real estate. Because a lot of these really big department stores, anchor stores, and malls, the price per square foot, the leasing value of that property has declined so much. No matter what Amazon decides to do, I know they're getting a great deal on the real estate so they can experiment all they want. I'm sure they'll probably try a bunch of different concepts allowing people to come in and experiment, window shop with apparel companies or other things of the third party seller networks. But at any rate, they can fail at this. I wouldn't be surprised that it wouldn't do Amazon whatsoever, because I'm sure they're getting a fantastic deal on the real estate. It's just another way of, I think, Amazon expanding its footprint in creative ways. In this respect, they could do it in a very large way but probably at a very affordable way just because of how that real estate has fallen in the last decade or so. But you just cannot count out Amazon. Just when they think they're disrupting one area of the market and changing it forever while they're going back to the drawing board saying no, this actually could make sense in some interesting way for our business. It's amazing.

Hill: Do you think we're going to know pretty quickly whether or not it works? Because given the amount of available space, it seems like at least one potential outcome is that they test these department stores and, given what we know about Amazon and their love of data, the different ways they can use the space, including for logistical purposes. It's entirely possible that in early 2022, we see this expanding beyond California and Ohio.

Argersinger: I think so. That's the beauty of Amazon, that they have the balance sheet. By the way, the investor market supports that they've always had to try things and fail at things. They'll optimize that real estate in a way that will be successful. Once they do, then they'll start rolling it out in more places. We've seen that with other concepts they had like the Amazon Go or Amazon Fresh, in trying things out, finding out what's triggering customers to come to a certain place and make the orders that they do, and once they do, they can roll that out pretty quickly given their amazing footprint and reach. Another way that Amazon is eating the world. Now, they're eating the world. You can actually go and see them eat the world instead of seeing it online. There you go, Chris.

Hill: You mentioned the hospitality industry earlier and I wanted to get your thoughts on Airbnb (NASDAQ: ABNB), because you're someone who looks at Airbnb not just as an investor but as someone who has used it as renting out property. How bright is the future for Airbnb?

Argersinger: Yes. Well, my wife and I had been hosts on Airbnb for, gosh, more than 10 years now. I think the future is bright. Whether that means buying the stock today is going to work out, I don't know, but the company itself has such a network effect. I'll give you just one example. When my wife and I were hosting and renting out our apartments in Washington DC, generally with Airbnb, you're looking at stays of two to three days, someone's coming in for the weekend. But now, we're actually using Airbnb to find long-term renters. Because Airbnb is such a vast network of not only apartments, but also renters and prospective tenants. A lot of those tenants nowadays, especially in your post COVID world, are looking for longer-term stays. They're going to a city for not just a weekend, but maybe three months or six months. We actually had several bookings of longer than a month or two at our apartments via Airbnb. Two or three years ago, I would have never thought of Airbnb as a place to find long-term renters. Now, when you look at Airbnb, they've got from the spectrum of short-term rental and long-term renters. They also have the experience business, which I think is taking off. Once we're traveling again, I'm thinking about traveling abroad and people coming to the United States. Once that fully reopens, and hopefully by the end of this year or early next year that happens, I just see the traffic on the platform is going to explode. Whether the stock is going to follow suit and reward investors from today's price, I don't know, but I think the business has tremendously bright prospects.

Hill: Last thing and then I'll let you go. We're just days away from the start of the NFL season. Las Vegas sports books have put out their projected win totals for every team and they have our New England Patriots at 9.5 win. Are you taking the over, the under? How are you feeling?

Argersinger: Chris, I'm taking the over on that. Mac Jones or Cam Newton, whoever is the quarterback, I don't know, but of course I'm always optimistic about my New England Patriots as I know you are, so take the over.

Hill: If you want to read more from Matt Argersinger and his team, go to millionacres.com. It's the place to be if you're interested in real estate investing. Matty, thanks so much for being here.

Argersinger: Thank you, Chris.

Hill: Up next, Emily Flippen and Jason Moser return with a couple of stocks on their radar. Stay right here. You're listening to Motley Fool Money. 

[...]

Welcome back to Motley Fool Money. Chris Hill here once again with Emily Flippen and Jason Moser. Time to get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Emily Flippen, you're up first. What are you looking at this week?

Flippen: I'm looking at Traeger. It's a relatively recent IPO. Their ticker symbol is COOK, and they are a popular seller of wood pellet grills. Over 60% of U.S. households own a grill with more than two million replaced every single year. Wood pellets are placed at a higher rate. Those two things make Traeger a potentially interesting addition to your portfolio. I will say I'm keeping my eye on this one but not necessarily buying. It's a very competitive market.

Hill: Dan, question about Traeger?

Dan Boyd: Yeah. Well, first thing, great ticker. COOK is fantastic for Traeger, love that. Here's the thing, Emily. When I bought a wood pellet smoker, I didn't buy a Traeger. I bought a less renowned brand and saved a couple $100 and I'm very happy with it. I think a lot of people are starting to do that too.

Flippen: I won't give you credit where there are cheaper options. But they think they're a better option. They have a WiFIRE service, WiFIRE that actually hooks up to your grill, tells you when your meat's done. It is a premium product and the brand and the price reflect that.

Hill: Jason Moser, what are you looking at this week?

Moser: Man, you had me a WiFIRE. That's just great. Dan, I'm looking at the Glimpse Group this week. The ticker is VRAR. Glimpse is a platform company made up of a diversified group of wholly owned and operated VR and AR -- that's virtual reality and augmented reality, Dan -- companies. Similar to a fund, this is less about one company and more about a collection of many small companies, which I think is an interesting way to look at this immersive tech space. A couple of examples, they have Immersive Health Group, which is working on VR/AR solutions for medical professional training, and then there's also Early Adopter, which is developing VR and AR solutions for K through 12 education. This is a small company, Dan. Market cap below $100 million, this is not an idea we can consider today, but it is absolutely one I'm going to learn more about, keep on my radar.

Hill: Dan, question about the Glimpse Group?

Boyd: Not really a question, more of a comment. I just love the idea of an aggregate company for virtual reality and augmented reality stuff. Jason, this seems to be exactly the type of thing you've been looking into lately. 

Moser: It is. I run our Augmented Reality and Beyond service here and that's what fascinated me with this business, is its collective approach. Many businesses spread that risk around, much like we espouse with a well-diversified portfolio. Right, Dan?

Hill: What do you want to add to your watch list, Dan?

Boyd: I'm going to go Glimpse Group. I'm intrigued by the concept.

Moser: All right.

Hill: We're out of time. Thanks everyone for listening. We'll see you next week.