Motley Fool Hidden Gems Investing - Retail, Banks, and Stocks To Watch

Episode Date: July 14, 2017

Prime Day is Amazon’s biggest ever. Target raises guidance. Citigroup, Wells Fargo and JP Morgan Chase report strong profits. HBO and Netflix rake in Emmy nominations, while Visa offers $10,000 to small businesses willing to quit cash. Our analysts discuss those stories, offer a preview of earnings season, and go bargain-hunting for stocks (in addition to the usual “Stocks On Our Radar”.) Learn more about your ad choices. Visit megaphone.fm/adchoices

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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 from Million Dollar Portfolio, Jason Moser and Matt Argersinger. And from Supernova, David Kretzmann. Good to see you as always, gents. Hey, Chris.

We'll get to the latest headlines from Wall Street. We will dip into the Fool mailbag. And as always, we'll give you an inside look at the stocks on our radar. but we begin this week with the big banks. On Friday morning, Citigroup, JPMorgan Chase, and Wells Fargo all reporting better-than-expected profits in the second quarter. Not a lot of enthusiasm for the stocks, though, Jason, although in the case of Citigroup and JPMorgan, those two stocks have had a really nice run lately. Jason Moser. Well, fire up the earnings palooza engine, Chris. It begins, right?

So, I think with all of these banks, I think really the big headline with all of these banks' earnings, it came from Jamie Dimon's tone on the conference call. And I'm not going to go into specifically what he said, because we'd have to whip out the bleep button for that. I was going to say, this is a family show. It is a family show. But I think we could sum it up by saying that Jamie Dimon is clearly very fed up with the dysfunction in D.C., the red tape, and the barriers to productivity. I mean, that was it in a nutshell. And so, somewhat critical of the administration thus far. And I don't think it's pinpointed just to this administration, but really a

a long history of unfriendly corporate taxation. He feels like there's a lot of capital out there that needs to be brought back and unlocked and put to work. It'll be very interesting to see how DC reacts to this, because obviously, the big banks do carry a lot of sway in our economy. When you look at a bank like Wells Fargo, Wells Fargo obviously owns a lot of the mortgage market. Their loan originations came in at $56 billion for the quarter versus billion last quarter. They are actually taking some initiative and bumping up their deposit rates to try to, I think, counter a little bit of the negative press, obviously, from the fraudulent accounts scandal here over the past year. So, it's nice to see them trying

to be a bit more customer-centric from that perspective. But again, I think this all kind of boils back to the interest rate environment here going forward. It looks like rates are going to go up a lot more slowly than perhaps anticipated. And that's likely going to cap these banks' profitability a little bit. I think that's the concern with the guidance that really all three banks laid out this morning. Yeah, I was going to say, that would be my key point about the banks, is the interest rates. As interest rates go up, banks can generally raise the rates they charge on loans faster than they have to pay depositors. I think that's the key point to a lot of these

banks. They want to be benefiting from higher rates. It's just that that curve keeps getting pushed out farther and flattened out, and it's coming back to hurt their earnings. From big banks to big retail, in this case Amazon and Target, Amazon Prime Day resulted in the biggest single day of sales ever for Amazon. This comes the same week that Target CEO Brian Cornell raised guidance for the retailer, citing higher traffic in their stores. Matty, let's start with Amazon. Forget Black Friday, forget Cyber Monday, it really does seem like Prime Day is the most important day for them. Right. Based on the expected growth rate of 60%, Amazon probably pulled in almost

$1 billion. Not bad for a random Tuesday in July. No, this has become a big event. It started out a couple of years ago as, well, it's the 20th anniversary of Amazon, let's have some special discounts for Prime members. And by the way, it didn't go that well. No, not initially. I remember the site being down for several hours during that first time they did it. But it's now become this phenomenon. And of course, for Amazon, it really is about getting people to join Prime, experience what they can get on Prime. And for me, I'm really watching how people are interacting with Amazon Fresh and the household staples part of the business. Because I think Amazon's goal is to get more and more

people into that, realizing that that's how they can steal a lot more market share from grocery stores, etc. Yeah, I remember in previous years, other retailers, I think Walmart and Target included, they tried to have their own competition against Prime Day on Prime Day to try to steal some of that share from Amazon. And that didn't really happen this year. But I'm just thinking back to the first quarter of this year, where Walmart's online sales grew 69%, Target's online sales grew 22%, which pales in comparison to what Walmart and Amazon are putting up. But I'll be curious to see what those online numbers look like for retailers like Walmart and Target coming up.

Well, and again, you go back two years to when they first did this. As you said, Matty, the site was down, they got some criticism. And I think it was fair in terms of a little bit of bait-and-switch going on in terms of the products that they were promoting that sold out very quickly, that sort of thing. But Jason, just in two years' time, as we should expect with Jeff Bezos and his team, they've really got it down pat now. And you look at what they're promoting this time around, it's very much the Echo. And it really does telegraph where they see that device in people's homes and what it means for Amazon's business. Yeah, and the pace they're rolling out in new apps and skills for the Echo,

it's very impressive. I really feel like we're going to need to get an Echo show at our house, just to test it out for sheer selfless market research, Chris. So, I may have to buy one of those and come back and tell you how that thing works. I do like the Echo on our house, have a DOT as well. It's just neat to see its functionality. I think the Echo Show gives them the opportunity to probably incorporate a bit more e-commerce. I think that's maybe one of the holdups there in making purchases with the Echo. You're not quite sure what exactly you're getting. You can't make that visual confirmation. But I also think with Prime Day, it's really important to note that this is beyond just our domestic economy.

It's very easy for us to look at it from a U.S.-centric perspective. But really, this rolled out Prime Day to 13 countries this year. This is where I think the real opportunity for Amazon still exists. They're investing so much in those international operations, and they're delivering those operating losses today. But remember, 10 years ago, that's what it looked like here. It's not too big of a leap to think that in 10 years, they are going to have a very impressive global e-commerce infrastructure and operation going that could reward shareholders for many, many years to come. Right. Well, you could see, as big as Prime Day was, maybe $1 billion in sales for Amazon,

it pales in comparison to Singles Day in China, which is sort of an Alibaba phenomenon on November 11th every year, where they did $18 billion in sales. And I'm just wondering if Jeff Bezos is thinking to himself, you know, Prime Day eventually, I think, could be this worldwide thing, as you're saying, where we pull in tens of billions of dollars in sales, and this is just the real start of it. It's a nice lever to pull. In some ways, probably not as surprising that they had this big a day, when you think about what Target did. Just in terms of retail, David, Target's news this week, the guidance

raised, the subsequent pop in Target's stock, it was almost like a sigh of relief on Wall Street, because for all of Amazon's success, Target is still a big player in this space, as is Walmart, as is Costco. So, you look at Costco's recent June sales, Target raising their guidance. Amazon has a bright future, but these bricks-and-mortar power players are doing pretty well. I think Walmart especially, they've made numerous acquisitions, including Jet.com, and then Bonobos, another fashion retailer, online retailer that they bought within the past couple of months. And as I mentioned, their online sales in the latest quarter are up almost 70%, which is phenomenal. And they

they have almost the same amount of items on their platform online compared to Amazon's. They are making a lot of progress there. Target is more treading water, I think, even though online sales were up 22% in the latest quarter compared to what Amazon and Walmart are dealing with. Target's going to have to step up their game, and I think there's still a lot of questions there, even with their slightly raised guidance for this upcoming quarter. Yeah, I was going to say, Target's all excited about their restock program, which which is essentially next-day delivery service that they're rolling out or testing in Minneapolis, which I just think is ... I mean, compare that to Prime, where you can get same-day

delivery in 5,000 cities around the world, and here's Target, where we're testing next-day delivery in Minneapolis. O'Revolutionary! We're excited about what this could do for our business. You guys are 10 years behind by now. They get a lot of snow up there, though. You can't expect everything the same day. That's true. David, you and I were talking before we started taping today. One of the ripple

effects, and we don't really get into it all that much on this show, you think about commercial real estate. When we look at the big retail trends and a lot of well-known retailers closing stores and in some cases going out of business, in some cases, all of a sudden, that commercial real estate becomes really cheap. You mentioned something that really surprised me, which is that T-Mobile, of all companies, has opened 1,000 locations so far in 2017. How have they done that? Apparently, they're finding someplace to put those stores. Maybe they're filling up this space that's opening up as all these other retailers and restaurants close up shop.

But yeah, they initially had guided to open 1,000 new stores total in 2017, and this is coming off a base of 2,000 stores at the end of last year. But they hit that mark earlier this week. So, by the middle of the year, essentially, they reached their mark, and now they're saying, oh, we're going to open 1,500 total stores this year. So, their existing store-based now covers about two-thirds of the U.S., and now this will really help boost their store coverage outside of the main metro areas in the country. And this is a company that has, over the past four years, each quarter they've added at least one million new customers, just stealing customers from Verizon and AT&T bit by bit. And they also have a record low

churn rate as of the latest quarter. So, a lot of things going well for T-Mobile there, just in full-on expansion mode. Rough week for recent IPOs. Snap, the company got a couple of analyst downgrades and shares of Snap fell more than 10%, maybe even worse than the downgrades. A professor at NYU's Stern School of Business said that investing in Snap is something no responsible person should do. And he compared it to drunk driving. Wow. I mean, I'm not looking to buy shares of Snap, David, but that seems like a gratuitous shot. It's a strong statement, but I don't know if I disagree with him at this point. And

And of those downgrades, I think the one that stings the most for Snap is Morgan Stanley downgrading the company. Morgan Stanley was one of the lead underwriters on the IPO. So, this was a company that really brought the company, brought Snap public. And then within a few months, they're basically saying, yeah, this story isn't as great as we thought. We're going to downgrade the stock. We think it should go down.

So, that's not a good situation for Snap to be in, especially just a few months after the IPO. And something else to keep in mind is, the lockup expiration period happens on July 29th, and that's essentially the time when early investors and insiders in the company will finally be able to sell their shares for the first time since the IPO. So, you might see a lot of people cashing out, especially now that the stock is down a little bit. Maybe they want to get out before it goes down any lower.

Speaking to Ron Gross about that Morgan Stanley downgrade earlier this week, he made some good points about the fact that you just rarely see that from a bank that just recently led the underwriting of a new company. And so, you tend to have to believe that a little more if Morgan Stanley is willing to say, we're making this call, even though we just led the IPO a few months earlier. So, dire lookout for Snap there. Hey, if you own a small shop or a restaurant, Visa would like to offer you a bribe. Details coming up. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Matt Argesinger, and David Kretzmann. Before we get to more news from the week, we've got a Fool gathering later

this month in Hong Kong. July 29th, CEO Tom Gardner is going to be there. David Kuo, our man in Singapore, is going to be there. So, hey, if you're in Hong Kong on July 29th, drop us an email, radioatfool.com, and we will send you all the details for this Motley Fool event. That's radioatfool.com. Also, we're hiring for Fool Japan. So, if you're living in Japan and you're fluent in Japanese and interested, check out careers.fool.com. The Emmy nominations came out this week. HBO leading all the networks with 110 nominations. Not a big surprise, because, guys, that makes the 17th year in a row that HBO has earned the most Emmy nominations. But the lead is shrinking. Netflix, which just a few years ago had zero nominations,

came in second with a total of 91. And, Jason, Time Warner, HBO, Netflix, they invest in their programming, and it is paying off. Absolutely. I think it's a matter of when and not if we see Netflix take that No. 1 spot at some point. And, I mean, don't dismiss Amazon either. I mean, I think I've been more surprised, honestly, by Amazon's progress in that realm as opposed to Netflix or HBO. I mean, because they picked it up so quickly. But with that said, I think that, I mean, this all boils down to creative freedom, right? It's something that network TV has really got to figure out how to deal with. And I don't know that there really is a simple answer,

because these Amazon, Netflix, HBO, these streaming services, even Hulu, I mean, they have the opportunity, really, to give these artists, these producers, these actors, creative freedom to kind of do whatever they want. And they're not really hamstrung by language, sex, violence, whatever it may be. I'm liking that to a serious XM, in just that you're able to get more of, perhaps, what you want, and hey, if you don't like it, you just change the channel. We can't do that, really, with traditional network television today. I suspect we'll keep on seeing this happen. It's certainly playing out, I think, in the movie theater, in that I'm just not really very compelled by movies that are out there

today. I think you're seeing a lot of reboots of old franchises that are not that good. seeing sequels that are really kind of pointless, because I think that Hollywood at this point has really kind of run out of answers, because there is so much great stuff on TV. So, there's more content than I think anybody really has time to consume. And I think, the flip side, the potential rub here, it's a lot of great content spread across a number of different networks. And so, you have to kind of wonder, at some point, when do we reach parity between the old cable bundle, and now sort of your a la carte collection of channels that you like. Something Jason said earlier, some of the constraints that the networks and the traditional

cable channels face with programming, I think one of the constraints you didn't mention was just the episode time. I remember several years ago when House of Cards first came out, and I feel like I read an interview where directors, producers were talking about the projects they have coming for Netflix. And one of the things they love is the fact that you don't have to be constrained by, I have to have a 42-minute episode for an hour long because I have to factor in commercials and all these things. We watch shows on Netflix now where one episode can be 47 minutes, one episode can be 67 minutes, and you'll find an episode with 30 minutes and it's all in the same season. I just think that alone has been so disruptive to traditional

programming and content. I think it's really easy to jump on that train and be concerned about how much it costs to make all this content. But really, At the end of the day, it doesn't matter if you have a pretty big loyal subscriber base and you're just charging a pretty nominal fee. Netflix, you can go anywhere from $10 to $15. HBO, something like $15. You're targeting that point where people aren't really going to sit there and fuss about that as long as they feel like they're getting value out of it. And I think that Netflix's big point of success to this point is, it is just a phenomenal value for the price you pay. So, I think they even still have some room to run on the pricing

side there as well. On Wednesday, Visa unveiled a challenge to small businesses in the United States. Visa wants them to convert to a cashless payment model and is offering an incentive of $10,000 to up to 50 different businesses. David, we talk about businesses competing against one another. Visa appears to be competing with cash. Visa is declaring a war on cash with this move. And cash is still the most widely used payment form in the U.S., with about a third of transactions in the U.S. being done in cash. So, Visa obviously wants debit cards and credit cards to be a bigger percentage and eventually the entire piece of the pie.

So, cash and check transactions total worldwide is $17 trillion. As of last year, that was up a little bit. So, there's a huge market opportunity there for Visa. And I actually wonder if this is that great of a deal for the 50 restaurants or food vendors who will eventually get that $10,000 check from Visa. I wonder if they deliver it by credit card or check. But, I mean, credit card interchange fees, which is essentially the cut that Visa takes of each transaction that's made, it's about 2% of each transaction. I think if you're a vendor getting paid $10,000 to upgrade your payment technology and market the program, I don't know if that's all that great of a trade-off when you're still paying that 2% fee to Visa.

And if we lived in a cashless society, we wouldn't have stories like this one. Also on Wednesday, at an ATM in Corpus Christi, Texas, customers weren't just getting their money during their transactions. They got their cash, their receipts, and a desperate plea for help. Out of the receipt slot came a handwritten note that read, Please help, I'm stuck in here and I don't have my phone. Please call my boss. Some customers thought it was a joke and walked away. But two hours later, when police finally arrived on the scene, they discovered that a repairman had accidentally locked himself into a small room connected to the ATM.

He did not have his phone or his key card. He did, however, have his pen. Let's go to our man behind the glass on this one. Steve Broido, we have just a few seconds left. you saw this story. What was your reaction when you read this? Awesome. I mean, you're stuck in a place with infinite money. It doesn't get much better than that. You think he pocketed a few bills on his way out the door? I hope so. All right. Up next, a look ahead to earnings season, and we're going to do a little bargain hunting for stocks. 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 studio with Jason Moser, Matt Argesinger, and David Kretzmann. Earnings season kicks off in earnest next week. Let's just go around the table. David Kretzmann, I'll just start with you.

It could be a company, it can be an industry. What, as we head into this earnings season, are you most curious about? Well, this isn't directly related to earnings, but it's something I'm paying attention to closely. Just this week, an FDA panel unanimously recommended that the FDA approve the first-ever gene therapy treatment. So this is a treatment that genetically alters a cancer patient's cells to fight the cancer, in other words, a living drug. And this was a test that was done under Novartis, one of their drugs. And in the study starting in 2015, 63 patients, this was a type of leukemia, received treatment, and 52 of them, or about 80%, are in remission now.

So just a phenomenal number. So for gene therapy companies like Juno Therapeutics or Bluebird Bio, they're on the smaller end of the spectrum trying to develop that technology within the biotech space. I'll be paying close attention there. Interesting. Jason? Yeah, so Twitter earnings come out on July 27th. 27th. This has been one we've been following closely in MDP. We still own shares there. There seems to be, at least, a growing shift in the view on how these guys are doing. There

was a very interesting data point I ran across here recently. Recent e-marketer data showed that Twitter actually tied with Instagram as the No. 1 digital platform for influencing Americans' purchase decisions. That made me do a little bit of a double-take there. Really? Essentially, Twitter as an influential platform. I think that probably is more success on the brand awareness side, just because of the nature of the platform. It seems like Jack Dorsey is doing what he said he was going to do when he returned. He's making more measured decisions that are geared more towards the long-term success of the business, versus just cowering to Wall Street's demands for

immediate profitability and user growth and whatnot. I think they're figuring out new ways to define success for the business. This could be a situation where patience really does pay off. I think we've seen very clearly that Twitter is not a platform that's just going to be able to go away, or even be disrupted, a la Facebook vs. Snapchat. Like I said, we still own shares in NDP, we're still optimistic. I haven't sold any of my shares, and I'm usually a glass-half-empty guy, Chris, so take that for what it's worth. Is there any talk that you've seen of Twitter being an acquisition target? Because it seemed like a year or two ago, the drumbeat for that was pretty loud.

Yeah, I think the drumbeat was a little bit louder because that was seemingly the only light at the end of the tunnel. And now that there seems to be at least some more light at the end of the tunnel, I think it becomes a more attractive acquisition target if you know that what you're buying is not in a state of disrepair. And it seems like at least Twitter is not in that state of disrepair, which certainly could make it a more attractive target. Honestly, I'd love to be able to see these guys just continue to go their own way way. But I suspect, if we see a good quarter here, if they play out the rest of 2017 in a positive way, I imagine that drumbeat will only grow louder.

Alright, Matty, what are you watching this earnings season? Well, it's just, as we watch, the Amazon tentacles keep extending into various parts of the ... That's a good visual, by the way. Yeah, I know. But I mentioned, I guess about a month ago on the radio show, looking at the auto parts retailers. And I have to say, looking at AutoZone, for example, Advance Auto Parts, O'Reilly Automotive. These have been wonderful investments for decades now. But I have to say, I think there are some serious challenges ahead. If you look at the near term, do-it-yourself mechanics, and even auto shops now. I had a follower on Twitter

tweet me who runs an auto shop, who's buying a lot of his stuff on Amazon now. And so, those sales are moving online. And then, in the medium term, you have the share-driving, ride-hailing phenomenon. I think that's going to take a lot of private cars off the road. And of course, in the very long-term, electric vehicles, less moving parts, and maybe autonomous driving, hopefully less collisions and accidents requiring auto repair. So, there's just this big, huge amount of challenges ahead, even in the near-term for these guys. And so, full disclosure, I'm actually short AutoZone and Advance Auto parts in my own portfolio, so I'll say that right here. But I just think this is one I want to watch. We're kind of

on the cusp of some major disruption for these players. And so now, earnings season and beyond, I'm going to be watching them. Well, and it's interesting, and this is something we've talked about before with other industries, which is the idea that a business doesn't need to lose all of their customers to be in significant trouble. And in the case of the auto parts dealers, if just a handful, in terms of percentages, of auto body shops, small independent shops, decide, you know what, I know I've been buying directly from them, but I'm going to take take 20% of my business, and I'm going to take it elsewhere, whether it's Walmart with

Jet.com, or I can get these supplies on Amazon, or something like that. It really doesn't take that much. Absolutely right. Disruption happens at the margin. I think we always think, well, these businesses are just going to go away. Well, they're not going to go away, but if a significant part of their business is going away, then they're not going to be great investments. And that's how disruption happens. So, the market has had this amazing run for the last seven or eight years, which is great in general for anyone who's been invested in the markets. What this means in the business media is that, speaking of drumbeats, as we just were a moment ago, the doom and

gloom drumbeats are just getting louder. And maybe it's just me, because I spend a lot of time consuming business media, but it seems like I can't go 24 hours without someone coming out and saying, oh, it's all going to end, this is just like 2000 all over again, that sort of thing. I don't believe that, but I do believe that even though the market in general has had a great run, there have got to be some areas of value out there, whether it's an industry or a stock. And if we could just, I don't know, go around the table, David, is there something that you see out there that you look at and you think, boy, this really isn't that pricey?

Yeah, I'm looking at retailers and restaurants. I think, obviously, Amazon is causing a lot of disruption and chaos, especially in the retail space. Because of the tentacles? The tentacles. You can't ignore the tentacles. That's just such a solid visual. But if I can find solid operators that have a consistent record of generating free cash flow, are growing over time, have experienced leadership, then I'm pretty interested. So, Cheesecake Factory is one that I'm keeping an eye on. Tractor Supply Company. And Matt, I'll disagree with Matt here. I think AutoZone is actually pretty compelling right now. I actually

bought shares recently in my own portfolio. AutoZone is trading at the lowest valuation since the Great Recession. I think people are placing a lot of blame on the company's struggles when, in reality, it's just warm weather that's causing it. I think people are jumping the gun a little bit on AutoZone. So, we'll see what happens. Jason, before we get to whatever you think is undervalued, do you want to cast a deciding vote when it comes to AutoZone? You can stay on the sidelines. I'm going to defer my decision until a later date. Smart man. Yeah. I just run straight over

to my MDP best buy analysis for this, because it's really hard to pinpoint anything in this market that is actually undervalued. But with that said, I think there are companies out there that present some interesting opportunities. And I think, really, when you run into a frothy market like this, you want to really focus on quality names. Facebook is one that, whether you use it or not, the fact of the matter is, they have 2 billion users now, and the scale to pretty much do whatever they want. And interestingly, Instagram, I think, is becoming the new Facebook. I mean, I'm seeing this through my kids and their friends. They're not interested in a Facebook profile, but boy, they're all signing up for Instagram. And really, that is

just fine by them, because Facebook owns Instagram. So I think with a young founder in Mark Zuckerberg, who seems like a genuinely good and grounded person, I think the world's going to benefit from having him. And he seems to have a lot of good ideas on where he can take this business over the long run. And then another one we have there is Nike. And I think that Nike is just a global sports behemoth. Everybody knows the brand. The move to direct-to-consumer is happening faster than I think Dick's Sporting Goods and Foot Locker would like. But companies like Nike are benefiting. They brought in $2 billion in sales last year through their own apps alone. And we think, in MDP, it's a pretty low-risk way to get to some 8% annualized

returns over the coming five years. So, Facebook and Nike, a couple of ideas. Matty? Like Jason, I'm giving a nod to our MDP Best Buy list. And on there is Disney, and I've had it on there for a couple of months now. A company of Disney's quality, of its extension across the world in terms of entertainment branding and all kinds of things like that. I know investors seem to be just hung up on the network's business and just how that's kind of flattening out, and the ESPN subscriber losses. I get all that. But I mean, just think of Disney is just this entertainment IP powerhouse that can find all kinds of ways to deliver

that entertainment in whatever form. And then, I think you look at a company that's trading for around 18X earnings, roughly a market multiple for a company of Disney's quality. And I think that, to me, screams undervalued. Well, and it's interesting, because when you look at what, not just ESPN, but all the networks that have any kind of sports rights deals. They've all paid exorbitant fees, whether it's for the NBA, the NFL, whatever it is. They're all paying up and they're all paying increasing amounts. But just like we've seen with individual sports teams that go through ebbs and flows with their own budgets, where you can just look at your favorite sports team and think, you know what, there was a

point in time when they were just handing out checks to athletes like they were candy, and then they sort of ratcheted that back. I sort of feel like, yeah, it's a tough time right now from a budget standpoint for ESPN, for Fox Sports 1, for CBS, all of them. But I feel like the next round of sports rights contracts, I feel like there's a good chance that it's going to be corrected. Yeah. I think the world gets a little more rational about those contracts, for sure. Up next, we will dip into the Fool mailbag and share a few stocks on our radar. Don't go anywhere. You're listening to Motley Fool Money.

All right, before we get to the mailbag, got to say thanks to our friends at Rocket Mortgage by Quicken Loans. Chances are you're confident when it comes to your home, your hobbies, or your life. Chances are David Kretzmann is confident about buying shares of AutoZone, while Matt Argesinger is confident of his short of AutoZone. I love it. I love it. Absolutely. Rocket Mortgage gives you that same level of confidence when it comes to buying a home or refinancing your existing home loan. And with Rocket Mortgage, you can apply simply and understand fully

so that you can mortgage confidently. To get started, go to rocketmortgage.com slash fool. Equal housing lender, licensed in all 50 states, NMLS, consumeraccess.org, number 3030. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Matt Argersinger, and David Kretzmann. You can check out past episodes of Motley Fool Money and all of the Motley Fool's podcasts.

Just go to podcast.fool.com. You can subscribe on iTunes, Stitcher, Spotify, Google Play, anywhere you find podcasts. You can find The Motley Fool. Just click the subscribe button, and you've got Motley Fool podcasts on demand whenever you want. Not when the man wants, whenever you want. Our email address is radioatfool.com. From Brian Lumadu in Tampa, Florida, Brian writes, You've talked about Mercado Libre on numerous occasions.

Could you ask your experts to weigh in more specifically on why they think Amazon won't go south and eat their lunch? Amazon is such a juggernaut on all other fronts. How could MercadoLibre have a big enough moat to defend against a full-frontal assault from Jeff Bezos? I love that phrase. I think if the last book about Amazon was The Everything Store, I think the next book about Amazon is going to be called Full Frontal Assault. Not tentacles? Not big, massive tentacles? You know, that'll be the cover art on Full Frontal Assault. It'll be an octopus with tentacles and Bezos' face on it. You're welcome, author out there. What do you think,

Matty? You're a MercadoLibre fan. It's a legitimate question. Absolutely. I think Brian's nailed my key primary risk factor for MercadoLibre, which is Amazon. For MercadoLibre to hold its leadership position, to maintain its moat, you have to kind of look at what they have right now, where they're going. So, 180 million registered users. They're on pace this year to have 10 million unique sellers and over 30 million unique buyers. That's a sizable network that Amazon hasn't come anywhere near. Now, Amazon is making inroads in Mexico, but they've kind of left Brazil, Chile, Argentina, some of MercadoLibre's other markets alone for now, which is good. And I think, if you

look at MercadoLibre, they have twice the amount of user traffic in Brazil as the next competitor, and Amazon isn't even in the top 10. They're the IT e-commerce company in Brazil, which is the biggest market, biggest economy, biggest internet market in Latin America. I think what Macau Libre is doing to follow the Amazon playbook, you've got investing in payments, shipping, even fulfillment now. They're even looking at maybe a membership business. Those are the kind of things that endear users to the platform. They're providing a good experience. And I have to say that Amazon is really focusing on India right now. their big emerging market that they're putting all their capital in. That's where Jeff Bezos

is having the full-fledged assault right now. That makes me a little confident that maybe Brazil and Argentina are a little bit off the radar, and maybe they're not investing as much there. That just gives MercadoLibre more time to establish a bigger moat that maybe Amazon couldn't eventually cross. Fingers crossed for me as a MercadoLibre shareholder, for sure. Yeah, Amazon's been competing against MercadoLibre in Mexico for about three years now. And over the past five quarters, MercadoLibre's revenue in Mexico has actually accelerated each quarter. So, even as Amazon has been investing more in Mexico, including launching

Prime Mexico in March, MercadoLibre is still churning out accelerating results there. But that'll be a key thing to watch now that Prime has launched in Mexico, how does MercadoLibre hold up? And I think, in many ways, Mexico and Latin America in general, e-commerce is still relatively young and new. And so, even Amazon coming in might actually help MercadoLibre in the short term. It just gets people interested in buying things online and being more confident about doing it. Question from Charlie Fox in Arizona. I'm thinking about picking up more shares of Diplomat Pharmacy. I've held through the drops, and I'm asking if doubling down is

a good idea here. Jason, we can broaden this beyond Diplomat Pharmacy, because as we say from time to time, we can't get personal advice. But I am intrigued by just this idea and your gut reaction when, as has probably happened at some point in your investing life, you buy shares of a company, you feel good about it, it drops 25%, 40%, something like that. What is your gut reaction in those situations? Is it to double down? Well, maybe not the gut reaction. It is one of the things that comes into play, I think, though. I'll use a very recent example, because I have a modest investment in TripAdvisor, and it's down probably, I think, about 45% or so from my call spaces. And so, I've been

batting that idea around in my head a lot. And I think the key for this is to always look at it from the perspective of, the market knows more than you do. Let's throw that out the window immediately and figure, OK, the market's onto something. What's the big difference between what perhaps we as individual investors and the market can apply? Here's our timeline. longer the timeline, the more you can let the story play out. So, with TripAdvisor, for example, I'm looking at it from the perspective of, can I identify why I think this is still a good investment? And for me, not only is it a good brand, and not only does it provide a valuable service, but when we look at the actual metrics of the business, it's still

a platform that's very engaged, growing users. The metric that really matters there, revenue per hotel user or per hotel shopper, that is recovering nicely as well. So, I see these metrics that indicate to me, this is not a platform in peril, it's not a platform in decline, but perhaps the market is a little bit upset with some near-term promises they made in this instant booking initiative that hadn't really played out the way they thought it would. I think the key, if you want to think about doubling down on a stock, go dig in, figure out a little bit more, learn more about the business, and really identify why you think that business is going to be OK and why it's going to be able to continue

to perform well, because chances are, it's going to take a little bit of time for it to play out. But if you can identify it, that can be very rewarding in the end. Alright, let's get to the stocks on our radar this week, and our man Steve Broido will hit you with a question from the other side of the glass. David Kretzmann, you're up first. What are you looking at? I'm looking at Camping World Holdings, ticker CWH. RV sales in the U.S. are actually hitting the highest level they've ever been at in about 40 years. As more baby boomers are retiring, and as younger people are trying to travel more while they are still young and

working, RV sales are continuing to increase each year here in the U.S. And Camping World Holdings is essentially the largest national retailer of RVs. They have 130 stores in 36 states. And they also own the Good Sam Club, which you can think of as the RV Industries Membership Club, or kind of the AAA for RVs. And they have 1.7 million members in the Good Sam Club, which provides some high-margin recurring revenue for the company and keeps that relationship with their customers over time. There's a lot of mom-and-pop operators in this space. So, what Camping World can do is, they can acquire those mom-and-pop brands, rebrand them, and build this national RV brand under Camping World. So, a lot of things to like here. It's a small cap, but

I'm keeping a close eye on it. Steve, question about Camping World Holdings? I'm legitimately fascinated with RVs. I have looked at them online. It's an interesting, Interesting place to look, by the way. But would you go with fifth wheel or a motorhome? Which are you going with? Man, I am not an expert there, Steve. It depends on your respective circumstances. I'm going fifth wheel. Fifth wheel, that sounds good.

Jason Moser, what are you looking at? Yeah, looking at Wayfair earnings coming out on August 8th. The ticker is W. I've been covering this business since it IPO-ed back in 2014. It continues to perform, and all of the metrics seem to really be going in the right direction. They're growing sales, sales. They're growing users. Margins are actually pretty steady. The big metric there is the percentage of orders from repeat customers, and that continues to appreciate over time. So then it's going to be a question of whether they can pull back on that acquisition at some point and really unleash some profitability in the business. There was a report of Amazon

jumping into this line of work a month or so ago. It doesn't seem like that may be the Wayfair killer others thought it might be, but very interested in their quarter here. Steve, question about Wayfair? Is there a membership model in place here, maybe like Restoration Hardware has done, where you become a member, you get a discount, that kind of thing? There is not yet. I do believe they have something in the mix there to try to develop a little bit more loyalty. Manny Argersinger, what are you looking at? Sure. One stock recently on my watch list is Live Nation Entertainment. The ticker is LYV.

Yes, music streaming has been around for years. We talk about things like virtual reality. But in my mind, you just can't replace the experience of going to a live concert or sports event. Live Nation's largest events promotion ticketing company in the world. Last year, they promoted 26,300 events, 71 million fans came and attended. They also own Ticketmaster, by the way, which is the largest ticketing company in the world, 480 million tickets last year. I just think there's a lot going for this company, and I like the idea of a live events business in this Amazon-disrupted world we're kind of living in now. Steve, question about Live Nation Entertainment?

It's a question for Matt. What's the best concert you've ever attended? Oh, my gosh. I'm going to go old school. I went to Bruce Springsteen about 15 years ago, right out of college. It was one of the best times I've ever had. Three stocks. You got one you want to add to your watch list? I'm going camping, man. I'm buying an RV. Let's do it. Sounds good, Steve. All right, guys. Thanks for being here. That's going to do it for this week's edition of Motley Fool Money. Our engineer, Steve Broido. Our producer is Mac Greer.

I'm Chris Hill. Thanks for listening. We'll see you next week.