Motley Fool Hidden Gems Investing - Netflix, Amazon, and the Future of Sports Media

Episode Date: April 20, 2018

Amazon gives Wall Street 100 million reasons to be bullish. Netflix produces another great quarter. Wells Fargo gets a billion-dollar fine.  And Mattel’s CEO jumps ship.  Ron Gross, Jason Moser and David Kretzmann analyze those stories and share 3 stocks on their radar. Plus, best-selling author Jim Miller offers his thoughts on the business of ESPN, Disney, and the future of sports media.  Thanks to Blooom for supporting MarketFoolery.  Get a month free with blooom401k.com/fool and use the promo code “fool”. Learn more about your ad choices. Visit megaphone.fm/adchoices

Managing your 401k is hard. Bloom isn't. See what you could be doing to make your 401k better by getting a free analysis at bloom401k.com slash fool. That's Bloom with three O's, 401k.com slash fool. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill, and joining me in studio this week, senior analysts Jason Moser, David Kretzmann, and Ron Gross. Good to see you, as always, gentlemen. Howdy. How you doing? We've got the latest headlines from Wall Street. We'll dig into the business of ESPN with best-selling author Jim Miller.

And as always, we'll give you an inside look at the stocks on our radar. But we begin with the two big numbers of the week, $100 million and $1 billion. In his annual letter to shareholders this week, Amazon CEO Jeff Bezos revealed the company has 100 million members in its prime service. And on Friday, Wells Fargo agreed to a $1 billion fine as punishment for home and auto loan abuses. Let's start with Amazon, Jason. and this is the first time they've ever disclosed the number of people who are in the Prime service. Did this surprise you even a little bit? Well, I always figured at some point we would get an actual number from Jeff Bezos.

I think he was just looking for a meaningful number. And $100 million seems kind of meaningful, so, you know, nice timing there. I mean, I think we've said it for a while, and Amazon is obviously a recommendation in many of our services, but the Prime membership is just the pot of gold at the end of the rainbow for this company. I mean, that is what dictates this company's strategy. So, now we have a good idea of how big that pot of gold is. In regard to the shareholder letter, I mean, I cannot recommend enough that everybody listening read it, because he just, every year, it's always a good one.

This one, he's talking more about high standards, and I actually called on every high school in the country. You have a free day here for teachers just to teach these high school students one day, take that letter, and just, it'd be a good class. I think it would stoke a lot of good discussions for kids that need to be thinking about high standards in these days. Another thing that stood out to me, and our colleague Matty Argersinger and I were talking about this yesterday, is the bullet point India, right? Anytime you actually have a country as a bullet point in the letter, you know it's probably kind of important. And with India, and we think about how many Prime subscribers there are, we've got a lot more to come, because India is just

getting started. And that's a country with 1.3 billion people and a GDP per capita of only around $1,800 today. So, big opportunity. Yeah, and the e-commerce opportunity in India is really just heating up. You have Walmart trying to, supposedly, acquire Flipkart, which is either the leading or second-leading e-commerce company in India. So, that'll be just a fascinating competitive battle in the coming years. Something else that stood out to me, besides Jeff Bezos talking about what he learned from handstands and litter, a little teaser there to go read it, if you haven't already, just the inroads that Amazon is making into the connected home. They have the Echo devices, they have the Fire TV, they recently acquired Ring, which is a security

doorbell camera. So, when you're looking at companies making inroads into the connected home, I think Amazon's at the top of the list. It will be interesting to see, now that the cat is out of the bag, do they continue to update us on the prime number? And if so, how often? Because obviously, analysts will now be foaming at the mouth trying to get at that data on a quarterly or even annual basis. But we'll see. I could see Bezos saying, sorry, psych, that was a one-time thing. That is a conference call that they just do not give a lot of information on. So, I bet we'll hear them ask that question a lot. Probably won't get as many answers, but maybe more now than we did before.

When they hit $200 million, that's what we'll hear again. Am I the only one who thought that number was higher? If you had asked me to guess, I wouldn't have guessed $100 million. I might have been close. I will say that our estimates in million-dollar portfolio were at around $100 million. I mean, that was published. So, it actually took us by surprise that we were so close. Nice job! Thank you! Let's move on to Wells Fargo. And Ron, look, $1 billion for Wells Fargo, I know they've got the money. I know they can pay this fine. But I think that the optics

of this are actually the problem here for them. I think that's fair. And I think the optics have been bad for quite some time. The other big number is 570,000 clients that got car insurance but didn't need it. That's pretty bad. And Buffett's obviously a big shareholder of Wells Fargo and has been for quite some time. He thinks about culture and leadership in very strong ways. He's maintained his trust to a certain extent, I think, in Wells Fargo. Obviously, the stock has taken a hit as a result, and I think it should have. As you mentioned, this $1 billion is not going to be any big deal. It's 0.4% of the company's market cap, so it can handle that. But it's

more about, A, as a consumer, do you want to be a client of Wells Fargo? And then, as an investor, do you have a desire to be a shareholder? I think in a lot of cases, the answer is no. Yeah, I think generally speaking, the answer is no. I think that the one thing that Wells Fargo has really working in its favor, beyond just leading the mortgage market, because it's very easy to own that mortgage and then offer all sorts of free banking services to go with it. It's just that once you get a banking relationship established, it's sticky. Nobody wants to take the time to get yourself out of it and go open another bank account and make sure that all of your bills are being paid from the right. It's a hassle. They will,

I think, benefit from that. Probably five years from now, we'll look back and think, eh, it wasn't that big of a deal after all. But I tend to not like investing in companies that have to pay fines this size. And honestly, this isn't the problem, this is just a symptom of what has been clearly a bad culture for a long time. Well, and it's not the first fine. The first time this happened, when the fake account story first broke, there was genuine surprise because of Wells Fargo, the reputation that the bank had. This is now no longer a surprise, this is now a pattern. Yeah. And what maybe is even more important than the fine is, back in February,

the Federal Reserve passed out a punishment that said, Wells Fargo will not be allowed to be any bigger than it was at the end of last year until they prove that they've got their act together. So, as an investor, you've got to keep an eye on that, that you now have kind of a regulation that is constraining growth on purpose because of how you screwed up in the past. So, buyer beware. Wells Fargo has been a tremendous performing investment for Berkshire Hathaway for a long, long time. I will be interested to see, in the coming years, as Warren and Charlie ride off into the sunset, if that status doesn't change at one point or another, and they decide to maybe take those gains

and move elsewhere. Well, hopefully, we're going to have Becky Quick from CNBC on the show next week as our guest, in advance of the Berkshire Hathaway meeting. I'm assuming that there are going to be more than a couple of questions that come up at that annual meeting about Wells Fargo. Netflix added nearly 7.5 million subscribers worldwide. That is just one of the highlights from the first quarter report that Netflix issued earlier in the week, and shares up about 6%, David. Yeah, pretty darn rootin' tootin' as far as a quarter goes. And remember, Netflix just raised prices at the end of last year, and the company grew revenue over 40%. That's

the fastest revenue has grown since the fourth quarter of 2011. So, the company is actually accelerating its growth as it gets larger, which is an incredible feat. I don't know. You're almost speechless. I'm almost speechless because Netflix continues to do this quarter after quarter to the point where the only thing I find surprising about Netflix results is the fact that management, for some reason, continues to feel the need to say, hey, we were surprised by this. Like, really? You were surprised by your own growth?

I feel like the Quickster debacle gave Reed Hastings a lot. And I think a little dose of humility is one of the things he took away from it. And it's made him, I think, a better CEO, and honestly, just more pleasant to listen to. So, when you hear him say, hey, we were surprised, too, I think there's a little dose of humility there. But, yeah, it's the standard, right? Internet TV, that's Netflix, and everybody really still is chasing after them. The biggest question mark with Netflix, I think, clearly remains how much they're spending on content. Increasingly, they're spending more on marketing. They're spending about $8 billion on content this year. They're expecting to burn $3 to $4 billion in free cash flow

this year alone. They have $4 billion in net debt. They said they're going to tap the debt market again. So, the ultimate question here is, at what point do those skyrocketing content costs plateau? Is it $12 billion? Is it $15 billion? Is it $15 billion? We don't really know. And I don't know if management honestly knows at this point, either. And that's kept idiots like me, or maybe I should say value investors like me out of the stock for years to come. Is it time for me to call, say, uncle and say, I was wrong? Clearly, the stock is telling me I was completely wrong. But I don't think the final chapter has been written yet.

Netflix has been a scary one to get behind, though, because of those metrics David was just talking about. But it makes you wonder. Amazon, really, I think, is similar in that regard. People have always griped about those profits, or lack thereof. I feel like you've got to have a price-to-member metric or a price-to-subscriber. And to go back to something David mentioned about Netflix recently raising prices, that's one other ripple effect of Amazon sharing this $100 million Prime number, is now people can look at that and say, OK, well, what happens when they decide to bump up the price of Prime $10, $20, which absolutely everyone who's a Prime member will pay?

Yeah, they will. They will pay it, Chris. I demand it. You're just standing up with your wallet out saying, take my money. Listen, I've said more than one occasion that they could quadruple the price of Prime, and I'd pay it happily. Hey, hey, hey, that's you. The math bears it out, OK? Speak for yourself here, Buster. On Friday, shares of Mattel hit their lowest point in more than nine years

after CEO Margot Giorgiotis left the company after just over one year in charge. And let's be clear, Jason, she was not pushed. she jumped. That tells me she got there, looked around, and decided this thing might be going to zero. Yeah, this thing is just the worst. I mean, losing that Disney deal, looking back now, I mean, that really, I think, was the beginning of the end for Mattel. And it's amazing to think about this. I mean, this is a company that probably played a role in all of our childhoods at one point or another. And we're sitting here debating it now, 45, 50 years later. It's just amazing to think about. But I cannot overstate how much trouble this company is in. And honestly,

they need a deal. They need a deal, and they need it now, because their balance sheet is becoming a big-time liability. And I think that the dynamics of the toy market are not going to change back. I mean, that window just continues to get smaller as kids move on to devices and whatnot at younger ages. Mattel is in a big, big bind here. Well, the man that they named to take over as CEO. In the past, he's sold a couple of his companies to Disney. And I think him stepping in as CEO and just the situation that Mattel is in, this really raises the likelihood that they'll sell out to Hasbro, Disney, some other company. But I think they're looking for an acquisition at this point. Jason, you mentioned in regards to

Wells Fargo, you don't want to be a shareholder of companies that are getting these types of fines. in terms of Mattel. I think it's also maybe a corollary of that is, if you've got four CEOs in four years, you might have a problem. That's a good observation. Coming up, we've got three stocks and three new flavors of M&Ms. You decide which one you like better. Stay right here. This is Motley Fool Money. Thanks to Bloom for supporting this week's episode of Motley Fool Money. Do you have a 401k? Do you remember how frustrating it was deciding what to invest in without any professional help? Well, now there's a better way to grow your 401k. That's with Bloom. Bloom

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slash fool and enter the promo code fool for your first month free and see the difference that Bloom could make in your retirement. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, David Kretzmann, and Ron Gross. You can catch Motley Fool Money every weekend on radio stations across America, and I'm happy to welcome a brand-new affiliate in Spokane, Washington, KXLY-NFM100.7. Hello, Spokane! Intuitive Surgical increased sales of its da Vinci robotic surgical system in the first quarter, and consequently, shares of Intuitive Surgical increased about 7% this week, David. It's all about this razor and blade model. Their total revenue this quarter grew 25%.

They sold 185 of those Da Vinci surgical systems, which is up from 133 a year ago. The number of procedures performed on those systems increased 15%, and recurring revenue from instruments, accessories, and services now makes up 73% of Intuitive Surgical's overall revenue. The company's basically printing cash at this point. They're generating about a billion dollars in free cash flow annually. They have no debt and $2.5 billion in cash on the balance sheet. So, very strong business model. And they're trying to expand their systems to cover more different types of surgeries, just increase adoption of those systems in general. So, probably still a lot of growth to come.

We should relabel this show, Stocks That Ron Missed. I'm just thinking about accessories on a robotic surgical system, and all I can think is, like, maybe they bedazzle it, they just add a little bling or something like that. Sure, yeah, little add-ons. Make it look a little better. Lower corporate taxes are helping a lot of companies, but Philip Morris International does not appear to be one of them this week. Shares of Philip Morris falling more than 15% after first quarter revenue came in lower than expected. What's going on, Ron?

Well, obviously, a secular decline in cigarettes is part of the problem, but this was actually worse than expected. A 5.3% decline for the quarter in cigarette shipment volume with Japan, Russia, and Saudi Arabia actually being the culprits for the most part. Perhaps An even worse situation, though, is the new technologies that are coming out, which companies including Philip Morris are spending billions and billions on to replace cigarettes. Their IQOS device growth has significantly slowed. It was gangbusters in Japan, which was seen really as a bellwether for how this perhaps could take off. Growth is slowing, so that causes investors to be quite worried. If your main product is slowing and your thoughts

for the future has slowed in growth as well. Stocks sold off pretty severely, pretty much the worst since they split from Altria back in 2008. So, we're going to have to see these billions of dollars pay off, otherwise these stocks are going to continue to be under pressure. I feel like this vaping thing is just quickly becoming such a bad move. I mean, because it seems like it's worse for you than smoking. And man, say what you will about cigarettes, but I don't recall those things exploding in your mouth. The vaping things can and people are getting this popcorn lung. It's not good. Whatever Skechers shared in its first quarter report was overwhelmed by the company's

guidance for what's coming in the second quarter. Shares of the sneaker company falling 30% on Friday. 30%, David? How bad was this guidance? It hurts. For this latest quarter, revenue grew 17%, operating income increased 20%. Their global same-store sales actually grew 9.5%. And believe it or not, Skechers now has over 2,600 stores worldwide, and they're opening another 450 or so this year. So, the company is growing quickly. But like you said, Chris, the guidance for this upcoming quarter was weak. They're just guiding for 4% to 6% revenue growth, earnings to be flat or up 13%. So, management is saying that their guidance for the year as a whole hasn't changed. They're

saying it's just an issue of timing of distribution and orders moving from the second quarter to the third quarter, but the company's gone through this in the past, so I think the market's a little skeptical. Do you feel like opening more stores is the answer? I mean, in all seriousness, I feel like more and more, you can buy your shoes online, obviously, have them shipped to you for free. I kind of look at J.P. Morgan as another company where I guess they're going to be opening more branches here locally, which to me, is the answer more banking centers? I don't think so. Well, I go back to something that Ron said earlier this morning when we were

planning this week's show. Look, I get that guidance wasn't great, and I get that the stock is selling off. If the stock is selling off 30%, I want to see that the CEO has been arrested or something like that. Unless a stock is irrationally exuberantly priced, no quarterly report, unless there's fraud involved or some major thing, should wipe away a third of a company's value. I haven't delved into this, but sometimes those types of sell-offs create opportunities for patient, longer-term investors? Yeah, I think longer-term this could be an opportunity. Skechers has, in general, been a well-run company. You have Robert Greenberg at the helm. He's been head of this company for

25 years or so. He owns the majority of the company. The company's still producing strong free cash flow, has over $600 million in cash, no debt. So, the company's okay. They'll probably be buying back a lot of stock this quarter with the stock lower, but it's going to be volatile, That's for sure. Mars Chocolate is bringing back its M&M's limited edition voting campaign, asking consumers to vote for a new flavor. Kind of seems like a page out of the Mondelez Oreos playbook. Here are your options, guys. Crunchy mint, crunchy raspberry, or crunchy espresso?

Apparently, they figured out that people like crunch in their M&M's. I don't know. I love M&M's. I don't think I'm voting for any of these, Ron. Yuck. But mint is okay. But definitely not raspberry. Jason?

I think I'd go espresso, but that was the first thing that came to mind was Oreos. Just don't go down that rabbit hole, guys. I'd go with espresso. Let's go to our man behind the glass, Steve Broido. Steve, any one of these three you want to vote for? Because the winner is going to be rolled out into sort of a longer campaign. I'm going strong to the hoop with mint. Really?

Mint all the way. Can we all agree raspberry is just a bad move altogether? Absolutely. Mix it. All right, guys, we'll see you a little bit later in the show. Coming up, we're going to talk Disney, ESPN, and the future of sports media with best-selling author Jim Miller. Stay right here. You're listening to Motley Fool Money. welcome back to motley fool money i'm chris hill james andrew miller has written best-selling

books about hollywood saturday night live and the united states senate he's also the creator of Origins, a podcast that explores the beginnings of creative endeavors. Season one focused on HBO's hit comedy, Curb Your Enthusiasm. But Miller is probably best known for writing the best-selling book, Those Guys Have All the Fun, Inside the World of ESPN. For a long time, ESPN was the goose laying golden eggs for its parent, the Walt Disney Company. But as the network plows money into an expensive new morning show as well as its brand new streaming app, ESPN is at a bit of a crossroads. Earlier this week, I sat down with Jim at his hotel in Washington, D.C., and I asked him how I, as well as all other Disney shareholders, should feel about James Pataro, the new guy in charge of

ESPN. You should feel like there's much stronger connection between Bristol, Connecticut, ESPN's headquarters and burbank john skipper uh i think he was a loyal employee to bob eiger but i think he was a bit of a rebel i think there were certain things that skipper um disagreed with skipper and eiger kind of didn't agree on and i think the biggest one there is the nfl um i don't believe that ESPN has a 15.3 billion dollar deal with the with the NFL that's coming up in a couple years I I believe I'm on terra firma suggesting that Skipper wouldn't have just blindly said okay let's do that again ESPN now is the fourth worst schedule right I mean when we were growing up every single team in the NFL had three great stars at least two or three like great players

marketable players you know there's just not enough great product at the nfl and at the same time that there's not enough great product they've expanded it so thursday night football which i think is one of the worst inventions since liquid prel i i mean it is just it is the epitome of greed and the nfl owners should be ashamed of themselves because not only is that is a deleterious to the schedule but the recovery time for the players the burgeoning rate of injuries I mean, there's just it's a big bowl of wrong, but at the same time they've done it and they've gotten away with it And there's Fox paying enormous amount some money for it So I think what ESPN saying is wait we got Monday Night Football

We're paying 2 billion a year technically 1.9 plus 100 million for the wild card when they get it Like and we got the fourth worst schedule and that's for like 17 weeks of programming Give me that 1.9 and I'll do something else for 17 weeks I may not get exactly the number, but here's the real key which When I I actually not to brag but I broke it in a story for Hollywood Reporter ESPN is now has Distribution agreements that are wholly independent of them having the NFL so it used to be in You know in the late 90s and 2000s that they were able to garner those monthly subscription rates because they had the NFL

now they can actually get that money without having the NFL now that's not to say that certain cable companies wouldn't grab pitchforks and start protesting but in terms of the actual language that's not there anymore that's a big big signal to them that they have you know margin for error and they can be a little bit more creative so to get back to your question I'm sorry to be long-winded about this. Patara is not going to take on Iger about that like the way Skipper would have. In terms of the rights that sports have been able to command from television networks, do you see that continuing to rise the way that it has? Because people have talked about and written about the sports media rights bubble, and it still hasn't popped yet. But at some point,

some network is just going to completely pass. It's one of the great paradoxes, isn't it, Chris? Because it would be like me saying when Amazon hit $100 a share. Now, this thing's got to, I mean, this thing is just not working. How can this go any higher? It's $100 a share, and they're not making any profit. And, you know, I, of course, listened to that and didn't buy any Amazon for my kid's college fund.

Thank you very much. But the truth is there is this weird disconnect. which is that we keep on lamenting and the networks completely continue to lament the rising acquisition costs but there it is I mean look at the last NBA deal it's enough to make you a Bolshevik how how was ESPN able to pay that money and Turner but at the same time look at the NBA numbers and not to mention the fact that look ESPN produces as eight thousand seven hundred sixty hours a year to produce so at some point something like baseball's tonnage it's

just great because you just like four games a week and three games a week and whatever it's like you you just have these live events which further distinguish yourself in the marketplace they've spent over 20 billion dollars on college football and like you know in less than a decade I mean there's big That Big Ten deal was crazy. And Fox did too. And Turner spent a ton of money. And what CBS spent on NCAA and Pac-12 and everything else.

So everybody says it's crazy, but at the same time, what was that joke at the end of Annie Hall that his cousin thinks he's a chicken and everybody says it's crazy, right? Yeah, but we need the eggs. We need the eggs. And so the question becomes, I think the end of your question is kind of provocative, it, which is, is there going to be a network that's going to just say no Moss? And I think

to a certain degree, CBS and NBC have decided that they're not going to just go blindly for everything that they can't. Fox seems more willing to do that. Although I think their debt threshold is changing. But as long as that happens, as long as you have all these bidders, and by the way, you have now Silicon Valley coming in. Facebook's starting to do it. Amazon paid for Thursday night football. So in a way, it doesn't even matter just what the four or five competitors are saying. You got these other people that are driving the price up.

So I'm not sure it stops. I'm curious, since you mentioned Bob Iger, as you and I are sitting here, earlier this week, Netflix reported their earnings, their stock continues to rise. and now disney's market cap is somewhere in the neighborhood of 150 billion and netflix has in relatively short order i haven't completely caught up to them but their market cap is around 130 billion to what extent if any do you think that matters to bob eiger to what extent of any

Do you think he's looking at Netflix and watching them creep up and views them as not just a threat, but maybe a primary threat? Well, I don't think he's doing it from an ego point of view, but I do think he has fully appreciated what streaming means to the audience. I think it's something it means to the customers. He wants to be in that business. he is trying to do things to move to that kind of world he understands that it's here to stay i think some of his critics may have said why didn't you see that earlier but i think in fairness to bob he's arguably one of the great media executives of the past quarter century what he's been able to do since eisner left so no one can bat a thousand no one can anticipate

everything but i think that he isn't going to just sit around with his arms folded and let netflix write off into the future particularly given what we all know which is that kind of formula that kind of recipe in the marketplace is something that the customers they've they've already decided they're good with it they like it it's comfortable i was on the treadmill this morning and on the menu in front of me um there was an option for netflix it's not just a it's not just a it's not just a tv you know where you you have a little button on your treadmill and you you raise the channel you can go lower there was netflix i mean that's the way it is seeped into our into the fabric of our daily life and the way that people are just used to binging and you know

they they love having it there look they raised their prices like a dollar a month the other nobody noticed nobody's like are you kidding me who cares so you know i don't know if by the way i don't know if eiger sits around fretting about market cap so much because as you know much better than i in the marketplace the stock market there are some crazy market cap stories that also never go wait why didn't i short that the market cap was 300 million you know it's like I mean, that's part of the legacy of the late 90s, right, and the crash around 2000. So I'm not sure if he pays that much attention to that, but he does pay attention to the business model. Pretty soon the Supreme Court's going to issue a ruling on sports betting.

If you're ESPN or Fox Sports, what are you hoping for? What are you preparing for? It's like renting a tux, and you're looking at your closet, it and you got the tux ready you got the shirt pressed and you're like am i going to wear it or not i mean there are certain companies that are you know already have it on and they're like tying their bow tie just to push the metaphor a little bit more i think that espn has had a somewhat tortured relationship with gambling you know it used to be that you couldn't even mention spreads then they started mentioning spreads scott van pelt himself was uh on his show was very adept

at it every once in a while i love it's so delicious where al michaels late in the fourth quarter of a monday night football game there'll be a field goal this yeah a couple people were interested in that a couple people like because you saw the spread dissipating um i think it's probably coming i mean not to be able to i'm not trying to predict the spring court but i think that given what's happening in the rest of the world and that's a topic that where i think there is some knowledge that we gain from the rest of the world and how they've been able to engineer hear this and put some safeguards on that are desperately needed. Um, you know, I think that a lot of companies now are, are preparing for it and, uh, it's going to be like the wild,

wild West when it happens, man. There are plenty of people and I am one of them who, um, at the end of the day, done with work, you know, kids are in bed, that sort of thing, want to relax. Um, I'll listen to one of your podcasts or flip through one of your books. what do you what do you do for fun what do you do to just kick back and relax i'm trying to learn how to do that um i'll admit are you're not are you one of those people who only needs four hours of sleep a night i i think that um i'm not one of those people who only needs four hours of sleep a night i'm one of those people who gets only four hours of sleep i probably um i probably should it's one of my goals to learn how to sleep more and learn how to unwind

um i have a tendency to you know work pretty late and um that's that's a that's a problem i don't my biggest problem is i used to be able to read a lot um just stuff that i want to read and um i don't get as much time to do that um as as i'd like or as i used to my um youngest child is unfortunately going off to college and I've officially started the mourning period and I'm not looking forward to it I would say the only silver lining and a big dark cloud to be selfish is that you know I have a tendency to put my children's needs above my own and I my schedule is revolves around them so now with them out of the house no I you know I really

want to be a smart architect about time management in a different way. But I love the idea, this concept of relaxation, Chris. It's a very interesting concept. I think I want to get into that. You can check out Origins wherever you get your podcasts. And if you want to hear more from Jim Miller, good news. We took the entire conversation I had with Jim and published it as a bonus episode in our Market Foolery podcast feed. So when you're done listening to Motley Full Money, you can head over to MarketFoolery and hear Jim's thoughts on Saturday Night Live, including the one person that he believes could follow in Lorne Michaels' footsteps. But don't go just yet. Coming up, we'll give you a few stocks you can put on your watch list.

Stay right here. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here in the studio once again with Jason Moser, David Kretzmann, and Ron Gross. Our email address is radioatfool.com. Question from Dimitri, who asks,

One company that's come across my radar that intrigues me is a company called Boston Omaha. It's tiny compared to Berkshire Hathaway, and while it's been public for less than a year, it has already doubled in price. One of Warren Buffett's grand-nephews is one of its CEOs, and the company seems to follow the Berkshire model pretty closely. Has Boston Omaha come across your radar at all? I wanted to get your take before I take the plunge. Ron, I'll be honest, I've never heard of Boston Omaha before. But it does seem like it may fall into the the, quote-unquote, Baby Berkshire category. Yeah, you've got to be careful with that whole Baby Berkshire thing,

because sometimes people think any conglomerate can fall under the category of Baby Berkshire. But I think it's more of a cultural title than it is a business model one, where you have to kind of think like Warren Buffett, or you have to think like Tom Gaynor over at Markel. It's not just about a diverse set of businesses. Yeah, I think I agree with Ron.

You want to be careful here, because people have been saying similar things about Sardar Beglari of Beglari Holdings. Not me. That stock has gone nowhere over the past five years. I think people are also saying similar things about Eddie Lampert when he took the helmet Sears. I don't think that's gone so well.

I'll have to check in on that story. But you want to like the company for the sake of the company and not just the aspirations of following one key person or another. I was reading through the Markel shareholder letter recently, and one of the things I love about those guys, they constantly refer to it as, quote, your company. I mean, they're talking about your company. They really take a lot of pride in them. I don't know if we were helpful to Dimitri,

but in the broader skew of things. What was the company we were talking about? Boston-Omaha. Boston Red Sox? Yeah, I love them! I mean, they're great. Off to a hot start. They are. Before we get to the stocks on our radar, and of course, our man on the other side of the glass, Steve Broido, is going to hit you guys with a question. Also, got to give a shout-out to the other guys on the other side of the glass this week. Clay Deckard and Ash Pomeroy visiting us. Love it when we have visitors.

Thanks so much for visiting and hanging out with us this week, guys. All right, Ron Gross, what's on your radar this week? Steve, I'm going to go with an oldie but a goodie. It's Home Depot, ticker symbol HD. Have you heard of it? I have. I have indeed. Obviously, the leader in the home improvement industry.

Sorry, Lowe's. Huge scale. Gives it a great competitive advantage. Returns on capital increased over each of the past five years, currently at 34%. Paid a dividend for 124 consecutive quarters. Increased that dividend for the last nine years. Just raised at 16%, 2.3% yield. Guidance is strong. Stock is very reasonably priced for a company that puts up results like Home Depot does. Steve, question about Home Depot? What do you

think of their HDX-branded products? I have not partaken of them myself, but I believe they are selling through very nicely. Jason Moser, what's on your radar this week? I'm going to go with a twofer, actually, because earnings season is in full swing here next week. We have Facebook, ticker FB, and Twitter, ticker TWTR, earnings coming out on the same day, Wednesday, April 25th. So, you get Twitter in the morning, Facebook in the afternoon. It's just very interesting to see how the narratives have changed on these two companies over the past year. Facebook, obviously, in crisis mode here with the whole data concern. I mean, let's be clear, man, everybody's going to keep lobbing up pictures of their sandwich that they just ate. I think

they're going to be all right. But really, Twitter has been pretty fascinating. A couple of upgrades this week. And I think they've been along the lines of the message we've been communicating in Million Dollar Portfolio. And this is a very powerful network that isn't going to get disrupted anytime soon. So, I think Jack Dorsey has done a good job of really sort of patiently building out a business here that's starting to perform. Steve, question about either Facebook or Twitter. What is the likelihood that Facebook buys Twitter? I think that ship has sailed. Facebook tried to buy Twitter many, many moons ago before Twitter went public. I think at this point, Facebook would have a very difficult time convincing regulators that that would

be in the best interest of people. David Kretzmann, what are you looking at this week? Well, JMO cheated a little bit there. My stock is Facebook, ticker FB. So, Steve, I hope you have some more questions on Facebook. But I agree with JMO. I think the pessimism with any potential regulatory pushback is already priced in. Facebook is growing faster and more profitably than Alphabet, but trading at a lower valuation compared to Alphabet. But the company is printing cash, about $17 billion in free cash flow a year and counting, almost $42 billion in net cash.

I think the company is going to be fine. Any new regulations or a slap on the wrist, I don't think it's going to change the powerful business model that they have. Steve? Given what we've heard in the news recently with Facebook, do you have any concerns about your privacy in anything you post on Facebook? I was actually one of the 87 million or so users that was impacted by this Cambridge Analytica scandal, I guess.

But, no, I'm not personally concerned. I think if you're online, you should understand that that data is not yours necessarily. It's going to be shared if you're using a free platform. So I'm okay with it. But I'm a millennial. I can't believe people know my birth date and that I love pizza. This is tragic. Yeah, absolutely.

Steve, you got one you want to add to your watch list? I think I'm going to go with Home Depot. Nice. All right. Ron Gross, Jason Moser, David Kretzmann. Guys, thanks so much for being here. Thanks, Chris. That's going to do it for this week's edition of Motley Fool Money.

Our producer is Matt Greer. Our engineer is Steve Broido. I'm Chris Hill. Thanks for listening. We'll see you next week.