Motley Fool Hidden Gems Investing - Kickoff for Private Equity Investors

Episode Date: September 6, 2024

NFL owners approved private equity firms investing in teams this season, we talk about the soaring franchise valuations and hear a player’s perspective on money. (00:21) Emily Flippen and Matt Argersinger discuss: - Weak jobs data, inverted yield curve, and whether the market will cheer a larger rate cut this fall. - Why private equity is interested in Smartsheet and putting money into NFL franchises this season. - The latest earnings updates from: Toro, Docusign, and ABM Industries (20:20) Brandon Copeland played ten years in the NFL – now the linebacker is an ivy league professor, author, and advocate for college athletes. Copeland talks through his book Your Money Playbook, the realities of an NFL contract, and how some college players are finally getting their due. (34:45) Emily and Matt break down two stocks on their radar: McKesson and AO Smith. Stocks discussed: SMAR, DOCU, TTC, ABM, MCK, AOS Host: Dylan Lewis Guests: Emily Flippen, Matt Argersinger, Brandon Copeland Engineers: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

From morning hockey with a cup of coffee to Timbits and road trips, Tim's and Canadian Tire have always gone together. Now it's official. You can now earn Canadian Tire money at Tim's. Link your Triangle Rewards and Tim's Rewards accounts to earn twice with every Tim's run. Terms and conditions apply. Visit timhordens.ca slash triangle for details. Good news.

Now you'll need millions, not billions, to get into this market-crushing investment. This week's Motley Fool Money Radio Show starts now. Everybody needs money. That's why they call it money. The best things in life are free But you can give them to the birds and bees From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show.

I'm Dylan Lewis. Joining me on the airwaves, Motley Fool senior analysts Emily Flippen and Matt Argersinger. Fools, great to have you both here. Dylan. Hey, good to be here. We've got a preview of the NFL season and how some fresh money might be coming into the league,

earnings updates, and of course, stocks on our radar. We're going to kick off with a quick look at the big macro, though. Fresh jobs data out for August. Suddenly, this is the metric we are all watching when it comes to the rate picture. Matt, what did our friends at the Labor Department have to say? That's right, our friends at BLS with their monthly jobs report. The jobs number came in at 142,000 jobs added in August. That was below the consensus, at least according to CNBC, which pegged the number at 161,000. To me, the more important part was the fact that there were revisions. If you look at July, going back to July, July was revised down by 25,000 jobs.

June was revised down 61,000 jobs. And if you recall, Dylan, a month ago, there was a big series revision that took jobs down by more than 800,000 between March of 2023 and 2024. There was also data from BLS earlier in the week that showed that job openings at the end of July were the lowest since January 2021. The ratio of job openings to unemployed worker fell to 1.07, and that is the lowest. It's actually lower than it was in 2019 before the pandemic. And we were above two on this ratio back in late 2021. So I don't think there's any question right now. The labor market is weakening. And I think investors have sort of pivoted to the idea that the Fed no longer cares about inflation. Inflation's coming down. But what is going on with

jobs? And it looks like the employment picture is definitely weakening. It's always a little bit of a coin flip what the market will actually do with this kind of news, because job weakness leads to that lower rate picture that so many people are hoping for, which in theory, money back into stocks, also a sign of macro softness, though. Emily, S&P 500 down on this news a little bit today. And we've also seen some of the market reactions slide over to treasuries. Yeah, this is a really interesting scenario for anybody who doesn't actively follow treasuries, which I imagine is a fair number of people listening to this podcast. I raised my hand. I mean, come on. Same.

There is a thing called a yield curve inversion. And this happens when long-term treasury rates fall below short-term treasury rates, basically implying many people extrapolate this to mean that there is likely a recession coming, right? Because that outlook long-term is weaker than it is over the short-term. Now, it's a little bit different since the pandemic because the Federal Reserve has been raising interest rates so aggressively. We have been in a situation where the yield curve has been inverted, I think, for the better part since maybe this time in 2022. So for a couple of years now, we've had a situation where the short-term interest rates, let's say the two-year interest rates, is higher than the 10-year interest rates. Of course,

no recession has materialized. But on the back of this jobs news today, we saw that that 10-year rate actually hiked back below the two-year rate. So this is a little bit of an interesting scenario because when you see that rate rising, that 10-year rate rising above the two-year rate, it kind of does the opposite, I think, of what Matt is explaining here, which is generally speaking, you think that, okay, this is a sign that the economy is strengthening. We're getting out of inverted yield curve back into how the yield curve should work. But given how high short-term interest rates are, we're just, long story short, we're getting a lot of very conflicting messages right now from both the market, from the jobs report, from the economy, and now from treasuries

as well. So where the economy is going after this, I think, is anybody's guess. Matt, I'm going to force you into anybody's guess here. What does this all mean with your expectations for the interest rate outlook for 2024? for. Don't take it from me, but there is 100% certainty, no conflict here on what the Fed is going to do when it meets in about 10 days, which it's going to cut rates. But the question is, by how much? As we're taping the odds of a 25 basis point cut, which is the consensus, that is at 77%. But that does mean that there is a 23% chance of a 50 basis point cut. So it's not out of the realm of possibility. And when I was looking at this data earlier in the week,

It was more of a coin flip. It was actually 50-50 whether they would cut 50 basis points or 25. And maybe the fact that the wage growth number in the jobs report was a little bit higher than expected, maybe that's why there's still some creeping fears about inflation. But hey, if the yield curve inversion works as it's supposed to, and the job numbers are weakening, and we are heading to a recession, you best believe the Fed is going to front load this easing cycle and go with 50 or be more aggressive at least early in this cut cycle. So, well, it'll be interesting to see what happens and more importantly, what they say when they meet in about 10 days. It's really interesting though that, I don't know if you agree with this, Matt, I think if the

Federal Reserve comes out and cuts rates by 50 basis points, that is going to freak the market out a little bit. I think that's going to be signaling to people, oh gosh, things are even worse than we thought they were. And so even though interest rates are coming down fast, I don't expect the market would be up on that news. So in my world, the best thing the Federal Reserve can do is follow through with that 25 basis point cut that has been communicated for a while now, right? Not deviate from the unexpected. I think that's right. I think that's right, Emily. Macro picture, not necessarily getting in the way of the deal-making environment.

Over when we look at specific companies, shares of Smartsheet up about 15% this week. Emily, no shortage of things to catch up on here. We have earnings from the company, and we also have the fact that the project management software business is in talks with private equity for a buyout. Where do you want to dig into this one? Yeah, let's start at the beginning there with the rumors that this business is likely going to be an acquisition target from private equity sponsors. And the reason why I want to start there is because this news actually broke prior to that second quarter fiscal 2025 results that were reported later in that afternoon. So we had two big stories out on the same day and shares were

up around 5% on the news at this consortium of private equity firms led by Vista Equity and Blackstone were reportedly in talks to acquire Smartsheet. Of course, we don't know the price, But I do think the fact that Smartsheet shares were only up 5% or so on this news signals maybe one of two things, if not a combination of both. One is there's a fair amount of doubt that private equity would actually step in for this business right now. We've seen a historically low amount of private equity deals coming out of, say, 2021 when there were a ton. So there's been a lot of these talks. I think DocuSign is another good example, which we'll talk about later in the show, where there is a lot of interest from private equity firms, but ultimately no deal is had.

And in the case of Smartsheet, their results are so strong that they're not likely going to take a buyout unless it's going to be a nice, pretty premium. So which private equity firm is going to do that? We don't really know. And the second factor is that the Vista equity partners and their private equity investors have actually already had a stake in Smartsheet. So I think to an extent, Smartsheet's valuation has been somewhat propped up by the expectation that this will eventually be a target for private equity firms. So all of that is to say things are going well for Smartsheet right now. Whether or not they get acquired, I still think is anybody's guess. Speaking of private equity, NFL fans might be seeing some new names in the owner's box

this season. The NFL owners approved a proposal to begin allowing private equity investments into teams this season. There are some restrictions around the size and scale of those private equity placements that will largely have them being silent partners. But the NFL finally joins all of the other major U.S. sports in accepting private equity money. Matt, you surprised by this at all? No, not at all, because the valuations of these teams, I mean, so Forbes came out with their annual valuations for all 32 NFL teams. And what this list should do to you every year is dispel any notion that winning on the field is correlated with how valuable a team is, because the Dallas Cowboys, which have long been the most valuable team, no surprise there,

the Cowboys just eclipsed the $10 billion mark. They're the first U.S. sports franchise to do that. Even more valuable than the New York Yankees, which I checked are valued around seven and a half billion. The Cowboys haven't won the Super Bowl since I was in middle school. I don't think Emily was even born. I think they've also won maybe three playoff games in 25 years or something like that. Let's take the Jets, the New York Jets, who are apparently one of the worst teams in the league. Sorry, Dylan. They're worth 6.9 billion, the fifth most valuable team. Meanwhile, the Chiefs, the Kansas City Chiefs, who've won two consecutive Super Bowls and I think three out of the last five, they are the 24th most valuable team at $4.85 billion,

actually near the bottom of the lead. And of course, as we know, the NFL actually operates much like a socialist system when it comes to the most important revenue stream, which is TV rights. Each of the 32 teams split that revenue equally, but it's the location and the local revenue that makes a huge difference and whether or not a team importantly owns its own stadium venue. The Cowboys make so much more local money when it comes to ticketing, merchandising, sponsorships, non-sports events like Taylor Swift concerts. Some teams just don't have that kind of ownership or control. In just some context, in 2023, the Cowboys generated $800 million in local revenue, more than double the next team. They also generated more than 2X the operating income

of the next best team. That's why they're worth $10 billion. Matt, to your point on the Jets' $7 billion valuation, it pains me to say this, but it is a reflection of media markets and the business of the NFL, not on-field performance. 100%. They have the longest playoff drought in U.S. pro sports right now. I'm hoping that that comes to an end. A couple other numbers that really jumped out to me. Value of the Cowboys, up a CAGR of 13% since Forbes began tracking it in 1998, up over 2,300% if you're just stating it in absolute terms. S&P 500 up a modest 800% on a total return basis during that time. Emily, I look at some of these numbers, though, and I say, I think the NFL owners are being smart

here because in reality, there are only so many people out there that can afford a $5 or $6 billion purchase. They need to open up the pool a little bit if they want these valuations to keep swelling. Yeah, look, listening to y'all talk about sports, it's like a kid listening to their parents talk about the checkbook or something. It's like, blah, blah, blah, blah, blah. But no, I'm only half-teasing. There really is an interesting angle here, which is to say, there is a reason why it's private equity that is coming and expressing interest. As you mentioned, they have deep pocketbooks, but I think it's more than just that. We've seen historically low amount of deal-making from private equity over the course of the past two years. There's

a fair bit of money sitting on the sidelines. I think there was an expectation from some private equity investors that valuations would maybe come down, right? And they'd be able to get a good buy. I don't know if this sounds like a good buy to me, if I'm completely honest with you, but I do think it says something about the timing. We have this soft landing that seems to have stuck. I'm knocking on wood right now because you never know. And private equity is now thinking maybe now is the time to get in. I've held out too long. All right. We'll have more on the business of sports and a look at athlete finances with former NFL linebacker Brennan Copeland later in the show. We're going to head for a quick break, but stay right here.

We've got an earnings rundown and a look at whether consumers are buying up a piece of fall lawn equipment this is motley fool money from morning hockey with a cup of coffee to timbits and road trips tim's and canadian tire have always gone together now it's official you can now earn canadian tire money at tim's link your triangle rewards and tim's rewards accounts to earn twice with every tim's run terms and conditions apply visit tim hordens.ca slash triangle for details Welcome back to Motley Fool Money. I'm Dylan Lewis, here on air with Matt Argersinger and Emily Flippen. We're working our way towards the end of earnings season. It's getting close to that time where we start trading lawnmowers for leaf blowers. Matt, kind of a nice chance to check in

on lawn care and outdoor equipment company Toro. Right. Not a great quarter, Dylan. Sales were up 6.9% for Toro. Adjusted earnings per share were up 24%. That looks good on the surface, but if you dig in, they had some other costs a year ago that are helping juice the numbers a little bit this quarter. The golf and grounds business is doing pretty well, as is Toro's underground construction segment. Their residential segment got a nice boost because they signed a new deal with Lowe's late last year. Now, Toro equipment is showing up in Lowe's. But if you look at the guidance. They went from expecting low single-digit sales growth for this year. Earnings per share were between $4.25 and $4.35. Now, they're looking at sales growth of just 1%. They've taken down

the earnings per share estimate by about $0.20. Management talked about a lot of those macro factors that we heard from Home Depot and Lowe's last month. There's just this hesitancy among consumers to buy big-ticket items. Believe me, Toro is in the business of big-ticket items. We're talking multi-thousand-dollar lawnmowers. There were a few positives. Inventories have been a bit of an overhang on the business. Those have come down nicely. They overstuffed some of their sales channels. Inventories are down, generating nice cash flow, paying off debt. Maybe they get to a situation where this time next year, the balance sheet's in better shape, businesses bounce back. But the business is going to be a bit of a struggle over the next, say, six to nine

months, I believe. It definitely feels like a company going through a little bit of the macro spin cycle here. When we check in and take the broader view on the business, shares back down around where they were pre-pandemic, but the valuations crept up a little bit to where they've been historically. They're currently around 33X earnings. How do you reconcile that? Where does this sit for you? Right. I would say earnings are probably pretty depressed right now. On a forward basis, if you trust those earnings estimates, those new earnings estimates, the stock is around 20X earnings. Still feels a little bit expensive. I will point out that management bought back $100 million worth of stock in the quarter. That's their biggest quarterly buyback in about

three years. So, I think management is maybe looking a little more ahead. All right. E-signature company DocuSign out with some fresh numbers this week and a rosier outlook for the rest of the year. Emily, in production, you joked that DocuSign shareholders have had to get used to a bit of a bumpy ride when it comes to earnings reports. This one actually feels like it was a break from that bumpy ride. Really? Because that's something like $800 million dollar revaluation of those deferred tax assets that led to this insane level of profitability in this quarter feels a little bumpy to me, Dylan. Immediately digging in. I love it. Look, this is another quarter of, even if you take out those deferred tax assets,

which is making this profitability in this second quarter look absolutely insane, even removing that impact, this is a business now that has been gap profitable since the fourth quarter of 2023. So we have a lot of quarters of profitability under this belt. We continue to see operating income tick up. In fact, in this quarter, DocuSign noted that they had their highest operating margin ever, of course, on an adjusted basis. But that's all to say that this is a business that is very much still in turnaround mode. So lots of good things to see here. I think the word that would describe this quarter would, to your prior point, Dylan, probably be stabilization. We had two quarters in a row now, 7% revenue growth in this quarter,

same as the previous quarter, 99% dollar-based net retention rate, same in the previous quarter. Now, typically you want to see those numbers ticking up, but in the case of DocuSign, stability is appreciated, right? Let's keep it the same for now. Let's just prove that we can make this business model work. And I think they are proving that. Free cashflow is also up, but this is still a business that has a lot of competition. It's great to see the improvements that they had as part of their go-to-market strategy, but that alone, I think, will not be enough. They really need to prove out the value add of being a DocuSign customer versus, you know, say an Adobe customer or somebody else. Definitely some help padding that profitability

number there, Emily. But I can't help but draw some comparisons here between DocuSign and Salesforce. The kind of tech businesses that were doing one thing for a very long time, being very high growth oriented, and have now kind of had to adjust and become much more profitability oriented. Kind of feels like that is the rubric that the market is grading a lot of these businesses on. When you're as bloated as DocuSign was slash is, I can understand why. I will say, though, I think DocuSign has a further uphill battle than Salesforce. Salesforce, I think, has a product that on its own stands independently. DocuSign really failed with their contract lifecycle management product, really relying on the e-signature solution, which is

very competitive. So they still need to prove out CLM ambitions to really make your points. All right, wrapping us up here on the earnings takes, ABM Industries not exactly feeling the of after providing its quarterly update. Shares down around 5% following the report. Matt, this is a company that focuses on managing facilities, janitorial, HVAC, parking. A bit of a look into the world of offices. What are you seeing here? You got it, Dylan. It's actually one of the largest employers in the country. They have over 100,000 workers that perform a lot of those critical services that you mentioned. They really help businesses and industries keep functioning on a day-to-day basis. If you go to the airport or a major sports arena,

Chances are you'll see someone in one of those orange ABM vests. One thing that Anthony Chavone and I have been worried about in our dividend investor service is ABM's exposure to commercial office properties. ABM doesn't really break it out, but service contracts within that segment could account for as much as a third of ABM's revenue. But not so much a worry so far. If you look, organic revenue was up 3% in the quarter. Adjusted earnings up 19%. Management actually raised guidance for the year. On that question about office, CEO Scott Salmers pointed out that ABM's waiting to class A office properties insulates them from some of the problems they're seeing in the work-from-home era that we're all living in. I'll also point out that ABM just

declared its 234th consecutive quarterly cash dividend. If you're in the hunt for dividend payers or dividend growers, don't overlook ABM. I had to expect you to go to the dividend, Matt. There's no way you had to leave that one hanging. That's a pretty impressive streak there. Of course not. And the yield right now, if you look at ABM, the yield is only about 1.6%, but the growth of the dividend is really impressive. All right, Matt, Emily, Fools, we're going to see you guys a little bit later in the show. Up next, we've got some more football talk and lessons from the game you can apply to your personal finances. Stay right here. You're listening to Motley Fool Money.

we are going and it might not be worth it knowing we're unequipped for that comprehension how we tripped into this dimension that about this let me say welcome back to motley fool money i'm dylan lewis the nfl season kicked off this week with the ravens and chiefs on thursday night and if you're like me you're ready to get back to football Sundays. For 10 years, Brandon Copeland was putting on the shoulder pads on Sunday, playing for several teams, including my beloved New York Jets. Now, the linebacker is an Ivy League professor, author, and advocate for college athletes. Ahead of the 2024 season, I caught up with Copeland about his book, Your Money Playbook, the realities of an NFL contract,

and how some college players are finally getting their due. Well, you've worn a few hats and a few different helmets in your life. I kind of want to talk through your pro story and the way that money weaves into that a little bit you you came into the league in 2013 as an undrafted free agent you made the Baltimore Ravens walk me through the process of coming into the league and the way that players are looking at money yeah so went undrafted but I remember uh signing on draft weekend so to speak a three-year 1.45 million dollar contract and only saw 24,000 of those dollars before being fired the first time and so coming into the league especially being undrafted free agent you know frankly i thought that i was you know one i knew i had a chip on my shoulder

because i knew being undrafted was not as good as being drafted so to speak but two i also have had a grandfather who is literally sitting over my shoulder he he played 11 years in the league So I understood that none of this was promised and it was just the beginning once I actually got that call. And so I went into it with the mindset of just like I need to just hustle up and make the team, hustle up and make the team. And I did have some friends of mine who at the time they would be going and, you know, they'd be buying nice things. Their signing bonuses were a lot bigger than mine. I had a thousand dollar signing bonus, which I thought was like I thought was great. And then we did rookie talent shows and guys started saying, oh, I got seventy five thousand, three hundred fifty thousand, nine hundred fifty thousand. I'm just looking around like, what the what did my agent do? What's wrong with me? Right.

I always just went into it with like, you know, for me, the dream was to be playing in the NFL and my kids watched me play one day. I didn't have kids when I came in the NFL in 2013, but but it wasn't just to make it to the Baltimore Ravens to get signed as undrafted free agent. And I think that that's what kept me focused on actually legitimately making the team. And it helped me avoid a lot of distractions as well, too, when it came to my money. And frankly, like I said, being fired and only having seen twenty four thousand of those dollars and then going a few weeks without a call, you realize how quickly like this whole thing could be over. Let's talk a little about the playbook. Your book that's out is Your Money Playbook. Very intentionally, four quarters. When it comes to the playbook, walk me through the game plan. Yeah. So everything, it's easier for me to break concepts into things that I

love. And I love football, right? Football has changed my life and my family's life for even before I was born. Again, my grandfather playing football. And so for me, we literally take the entire book and we break your whole financial evolution and your journey from ground zero to financial confidence or financial freedom whichever one you'd like to call it into a whole season but also an entire football game and so that starts with like training camp i always tell you know as you get become an older player you hate training camp i'm Just go ahead and say it. You see a lot of guys who don't want to go to training camp. Right. But the beautiful thing about training camp in the offseason is what you're doing is you're preparing your body and your mind and your soul and your spirit to make plays in the playoffs.

Right. There are things that you are working on there in training camp and during the preseason that you're that may not show up again until week 16. and that's what it's all about and so being able to sit down and prepare yourself and write out your why write out what your plan with your money put put a budget together during the beginning stages of training camp in the first quarter of of basically a a lease a low stress environment putting a plan together for yourself and your money is one of the keys to actually reaching your own financial goals versus somebody else's the reason why i emphasize a low stress environment we're putting together our game plan for the team we're going against on monday tuesday wednesday thursday friday saturday on sunday that's when things are flying things happen that you never

expected. And that's like the market dropping 600 points or, you know, or some news coming out about some geopolitical tensions overseas that shift your whole perspective. But because we've put in the work of putting together that game plan for ourselves during the week, now we know what to fall back into when chaos starts happening. And that's what happens with our money all the time. I'm not going to say so many times, all the time. Life, life's. And so anyway, continuing on this journey, we go through the simple foundational steps in quarter one of budgeting and finding your why and things of that nature. We get to the art of the hustle, actually going out and making money and how to create more revenue streams for yourself.

We get to the power of growth. One thing that was a huge lesson for me as I came into the NFL, but also just in the wall street when i was in college and and and beyond is like you grow up thinking put your money in the bank save money save money save money but at some point you have to convert your mindset to a let me put my money to work for me it's either i will put my money to work for me or i'll work the rest of my life for money and so we have a whole quarter to that dedicated to growing your money the power of growth and then finally you know we all talk about now we all i won't say we all let me not put it out on everybody but some people and a lot of times people talk about generational wealth and my legacy and all those things. And so we

have a whole quarter dedicated to that because, um, generational wealth is dope as a guy who is entering into a life with God willing, three children soon. Right. One of the things I always tell people is like, wow, we're out here hustling, working hard, growing our money and all that type of stuff. And you say you're doing it for them. Well, are you teaching them what to do with the money? Are you teaching them how to deal with pressure? I saw 50 Cent speak a couple of weeks ago at InvestFest in Atlanta. Shout out to the amazing event that they put together. But one of the things he said is you pray for success, but you don't pray for all the things that come with it. You don't pray for the jealousy, the envy, the entitlement and things of that nature. And so

are we teaching our children how to manage what we're giving to them? Because if not, As Ocho Cinco likes to say, you're going to save up your whole life. And as soon as you're gone, your kids are going to spend it all. Right. So you might as well spend it yourself. So anyway, it's a fun book. We are using my real life stories as well, too. And I'm unlearning some of my own traumas throughout the book and delivering that message to you all. But, yeah, man, we work really, really hard on your money playbook. And you can get it at www.yourmoneyplaybook.com.

One of the things I wanted to ask you about with the post-football chapter for you is the work that you've done with Athletes.org. And we've seen the name, image, and likeness deals in college football get a lot of coverage. We've kind of started to see this cresting wave of, hey, these college players deserve to be making money. They're doing quite a bit for these universities they work for. It feels like we're kind of in the early innings of that, though. And there's probably a lot more to come when it comes to money in college sports. How are you looking out at that space? We're in the absolute early innings of this.

I mean, in July or June 30th of 2021, schools couldn't even, well, one, athletes couldn't even earn money, right? College athletes couldn't earn money. Now you've got college athletes getting paid a million, a million point five, 100,000, 50,000 here, 20,000 here to go out and play the sport of their dreams, which is phenomenal. nil and i would separate this like nil is great it's phenomenal but it is a marketing deal it is pat mahomes doing a state farm deal it's pat mahomes doing a subway deal it's good go make your money but it's not the check that pat mahomes gets from the kansas city chiefs or the check that i used to get from the baltimore ravens and so what we at athletes.org are going after is how do we make sure that those athletes are getting the check that they deserve

from the UGA's of the world, the Clemson's of the world, the Bama's of the world, because the NCAA generated 17.1, no, $17.5 billion in 2022. The NFL generated 11 billion, right? So there's money to go around and a lot of money, right? And while not every school is UGA, Clemson, et cetera, UNC, for me, being a financial educator, being someone who understands the the importance of compound interest and seeing the opportunity that a lot of college athletes have to come out of those schools with more to show for it than bumps and bruises and memories, but also a little jumpstart on life based off the revenue they help the school generate. That's what we have been working to make sure college athletes are represented. And the great thing is it's the

right place, the right time. The NCAA has agreed to pay college athletes for the first time in history. That'll start fall of 2025. You'll get about $22 million, the top schools that they can share directly with their athletes. Now, every single school gets to determine that, how they want to share that themselves, what they want to give to the football team versus the men's basketball team versus women's basketball team versus Olympic sports. And we believe, and our athletes believe we got over 3000 members believe that college athletes should be at that negotiating table, helping them determine all of that split, but also, Hey, we want more health insurance. Hey, we need some mental wellness benefits as well too. Hey, I want some tuition, uh, extended tuition

because during my time here as a UGA football player, I can't really focus on school. So can you guys give me the opportunity to come back here within, you know, two years after I graduate to really get my full degree and take advantage of this, you know, student athlete thing that you, you call me. Right. And so it's been an amazing growth opportunity. Like I said, we got over 3000 members. Um, they are absolutely amazing. These are current college athletes who believe in us. Um, we're getting closer and closer every day, but, um, again,

And revenue sharing is happening. So there will be more college athletes making money now. Next year alone, it'd be one point five billion dollars that college athletes will be receiving. And over the next 10 years, it's 20 billion. So the opportunity of a lifetime for some young people to change their lives. We just think that similar to every other leader in the space, college athletes deserve to have their own representation. What I mean when I say that, and then I'll pass you the microphone back. The NCAA, it's an organization that represents the schools. It says that on this website. That's the interest it represents.

You have NABC, which represents the interest of the basketball coaches. You have AFCA, which represents the football coaches. You have NADA, which represents the trainers. You also have NACDA, which represents the athletic directors. And there's no group. All of these different organizations represent the adults. But there's no one that represents the college athletes and say, hey, like we shouldn't be capping their revenue or, hey, they deserve this. Or, hey, do we need to practice for three hours and 45 minutes and full pads in the spring?

Ah, they don't do that in the NFL. Can we protect the athletes here? Right. And so athletes deserve their their own representation through athletes that org. And it's we're literally watching a renaissance of college athletics right before our eyes, which is pretty incredible. i'm gonna ask you for a reckless prediction before things kick off who's holding the lombardi trophy at the end of the year oh my heart tells me the baltimore ravens my heart tells me lamar jackson is is finally hoisting the trophy is it extremely hard for the kansas city chiefs to do a three-peat yes but i was actually literally my oldest son starts football next weekend and so we've been i was watching some highlights of the mic'd up super bowl last year

and literally it starts with the end of it pat mahomes holding uh one of his children and talking i think chris jones is saying man i i gotta get a third one i need a third one we gotta get three i know it's hard it's never been done before we gotta go for three but i'm like the fact that i'm not i want to go ahead and put this out here because i know that there's somebody who'll take this and say that i'm comparing myself to pat mahomes right i'm not a quarterback that pat mahomes is i'll go ahead and say that but from a competitive standpoint from a mindset standpoint me and him yeah i'm with you right like i'm in the moment and i'm like i'm already thinking about the next one the next one the next one the next one next one the fact that he was in that moment

confetti dropping with the family all that stuff and instead of you know doing the snow angels he's like i'm trying to get the third oh that's that's an interesting dynamic that's a that's a hungry quarterback that it's a tough man to beat yeah and the chiefs are i mean from a a coaching perspective a game planning perspective i mean you know i was watching uh get up this morning and i didn't realize that they drafted the fastest guy ever in the combine and i'm just like oh oh it's just you guys just get better okay this is this is interesting so most teams lose a lot of steam after winning the super bowl because all of their players can go everywhere they want and get the highest that they've ever made but they found a way to continue to keep some of their best

players and their talent in-house and continue to grow. So, that's a long-winded way of me saying the Chiefs. Yeah. So, you're rooting for the Ravens, but don't sleep on the Chiefs. Yeah, exactly. Exactly. Listeners, you can catch Brandon's book, Your Money Playbook, out this September. You can catch me on the couch this weekend watching football. We're heading for a quick break, but we'll be back in a minute with stocks on our radar. Stay right here. You're listening to Motley Fool Money. Dylan Lewis. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations

for or against, so don't buy or sell anything based solely on what you hear. I'm Dylan Lewis, joined again by Emily Flippen and Matt Argersinger. Fools, we're going to roll right into stocks on our radar. Each week, you guys bring the stocks. Our man behind the glass, Dan Boyd, brings the questions and or the comments. Dan, I'm going to give you a little bit of an early heads up here. In production, Matt and Emily were throwing some shade at each other's picks, so we might be in for a little bit of a spicy radar stock segment. We'll see. Emily, you're going to be up first. What are you looking at this week? Well, really, it was a challenge to see who had the most boring option for radar stocks this week. I think mine wins, not in terms

of boringness, but also in terms of, I don't know, attractiveness right now is what I'll say. My radar stock is McKesson. The ticker is MCK. Now, a lot of people, including yourself, Dan, may not be familiar with McKesson, but chances are you do use their services. They're the largest pharmaceutical distributor in the United States, which basically just means their job is to deliver drugs to retail chains like CVS or such where other consumers get it. They also have a kind of burgeoning oncology services businesses, as well as a prescription technology and data services business. But really, drug distribution is their bread and butter. Now, the stock is down nearly 20% since the beginning of August, which I think is a somewhat timely buying opportunity,

in part because they had to pull back full-year guidance just this week because of some higher than expected tax bills, and also because they had a weak first quarter result as a slowdown in drug launches from some of their pharmaceutical partners, as well as the expansion of generics, which have a lower margin profile. But I definitely think this is one of those businesses that is in it for the long haul. Very hard to disrupt this inner industry, excuse me. And they also have an amazing share repurchase program. They pay dividends. They're also expanding their oncology business at a higher margin. Lots of stuff to like. I've taken up all of my time now. Dan, do you have a question for me? Yeah, I actually do have a real question.

Why can't a company like UPS or FedEx just do this? Why do we need a McKesson? that's a great question dan and you know what i'm not going to answer it i'm going to let deloitte answer it and they say the role of drug distributors is to amplify value in the health care system by delivering aggregation efficiencies and economies of scale that reduce capital can't ask fedex to do that goodness gracious dan aggregation efficiencies come on yeah i don't know what that means if i'm going to be honest that sounded like a little bit of word salad to me. The worst kind of salad. Matt, what are you looking at this week? Dan's coming in hot. Watch out. I know. I'm scared here, but I'm going with AOSmith,

ticker AOS. One of my favorite dividend growth companies. It's a leading manufacturer of, get this, residential and commercial water heaters and boilers and water treatment products. It doesn't get more boring than that, but it's been doing business in that space for 150 years. I probably already lost Dan at this point. But what's interesting about AOS is that they get about a quarter of their revenue from China and India. In fact, it just purchased a water purification business that serves primarily India. So you have a business that's founded, headquartered in Wisconsin, but also already has a significant presence in Asia. I mentioned the dividend. AOS, the yield is only about 1.5%, but they've grown that dividend by

more than 330% over the last 10 years. Dan, a question about A.O. Smith. Well, not really a question, more of a comment, but water, yeah, it's important. Matt, you'd think I wouldn't like a company like this, but hey, everybody's got to drink water. Yeah. Everyone's got to do drugs. No, no, not really. You just need water. Dan, water, drug transportation, which one's going on your watch list this week? I think it's pretty obvious that A.O. Smith is going on the watch list. Love it. Emily Flippen, Matt Argersinger, thanks for being here, bringing your stocks. Dan, appreciate you weighing in. That's going to do it for this week's Mountain

Full Money radio show. The show is mixed by Dan Boyd. I'm Dylan Lewis. Thanks for listening. We'll see you next time.