Three different stocks have grabbed the attention of the Motley Fool Money radio team for very different reasons. Two of their picks are big names that have been in the news. The third is a company you may not know much about that's worth following.
In this segment from the Motley Fool Money radio show, Ron Gross, Matt Argersinger, and Jason Moser talk about the stocks that have pinged their radar this week.
They explain why they're watching Apple (NASDAQ: AAPL), consumer-directed benefits programs company WageWorks (NYSE: WAGE), and Activision Blizzard (NASDAQ: ATVI). They also each answer a question about their company from Steve Broido. Only one company will get Broido's much-sought stamp of interest, tune in to find out which makes the cut!
A transcript follows the video.
This podcast was recorded on May 6, 2016.
Chris Hill: Let's get to the stocks on our radar. We'll bring in our man, Steve Broido, from the other side of the glass. Ron Gross, you're up first. What are you looking at this week?
Ron Gross: Stevey, I'm really thinking about adding to my position in Apple, AAPL. The stock's down 25% over the year last year. I get that. Concerns over China -- I understand that. And really, I think the overriding concern is, is this company going to be able to continue to innovate? I think the answer is yes; $11 billion in operating cash flow during the most recent quarter alone. $230 billion cash on the balance sheet. Now, the iPhone 7 and future iterations do need to be strong. That's a given. But 10 times earnings, 2.4% yield, I think it's a bet worth taking.
Hill: Steve? Question about Apple?
Steve Broido: What would make the iPhone 7 knock your socks off? Is there anything they could put on it that would make you go, "This is it." Ever since the first iPhone, it's incremental. The screen has gotten better, it's got a camera on the other side, it's cool, but ...
Gross: That's fair. This will never happen, but I used to love the old StarTAC flip phones that you could feel like it was a real phone...
Hill: Star Trek?
Gross: Like the Star Trek, but no, the StarTAC. The Motorola StarTAC, remember those?
Gross: If they made one with a flip up, I'm in.
Hill: (laughs) Retro, I like it. Jason Moser, what are you looking at?
Jason Moser: Yeah, one I've talked about here before, WageWorks, ticker WAGE. They provide consumer-directed benefit programs like flex spending accounts, health reimbursement arrangements, things like that, to employers. So, I like the value proposition there, helping employers save on the tax bill, helping employees save on the tax bill, talking about companies that run their own show and meet their own expectations. They met their own expectations that they set for themselves last quarter.
Couple of interesting catalysts here on health reform. As you see new healthcare coming in, and many will pay lower prices for higher deductible plans, which means more out-of-pocket expenses, more incentive for them to participate in those plans, and they just signed a really big deal with the USOPM that's going to bring in a number of customers as well. So, interesting stock I'm going to take a look at for MDP.
Hill: Steve, question about WageWorks?
Broido: With a company like this, what do I as a consumer have to lose for WageWorks to win? Is it higher fees, and I'm like, "Oh man, they're winning and I'm losing!" I want win-win!
Moser: I think they're actually setting it up as a win-win. You get to stash those dollars away as pre-tax dollars. They're helping you save on your tax bill.
Matt Argersinger: I talked about Activision Blizzard earlier, ticker ATVI. Listen, we are close to a watershed moment for eSports, which, for those who don't know, is competitive video gaming. Activision has the best games -- they have a massive audience. They recently acquired Major League Gaming, which is one of the big eSports leagues. Bobby Kotick, the CEO, can't stop talking about it. I think it's a massive opportunity.
Broido: My question is, when is virtual reality and Activision Blizzard synonymous?
Argersinger: That's going to take a little more time. At least five years, even longer. I just don't think the technology or the costs are low enough to give it to mass audiences just yet.
Hill: What do you want to add to your watch list, Steve?
Broido: I've owned Activision Blizzard, and I regret selling it. So I might add it back to the watch list. It seems like it's done very well recently.
Jason Moser owns shares of Apple. Matthew Argersinger owns shares of Activision Blizzard and Apple. Matthew Argersinger has the following options: short August 2016 $90 puts on Apple. Chris Hill has no position in any stocks mentioned. Ron Gross owns shares of Activision Blizzard and Apple. The Motley Fool owns shares of and recommends Activision Blizzard and Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool recommends WageWorks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.