Motley Fool Hidden Gems Investing - Tesla, Twitter, and Real Estate Trends to Watch

Episode Date: April 22, 2022

Comments from Fed Chief Jay Powell on Thursday sent the overall market lower. How should investors think about the impending interest rate hike in May? (0:30) Ron Gross and Jason Moser discuss: - A challenging immediate future for Netflix - Tesla's record profits in Q1 - Elon Musk's progression towards buying Twitter - Papa John's signing a new 3-year deal with board member Shaquille O'Neal - The latest from Gap, Boston Beer Co., and Johnson & Johnson (19:00) Matt Argersinger, lead investor for Millionacres, analyzes the current state of housing, why we still have too much office space in the U.S., and areas of real estate investing he likes right now. (31:00) Ron and Jason return to answer a listener's voicemail question about Traeger, and share two stocks on their radar: Atlassian and Twilio. Stocks discussed: NFLX, TSLA, TWTR, GPS, SAM, JNJ, PZZA, HD, TREX, PEB, RHP, MTN, LYV, MAR, ABNB, COOK, TEAM, TWLO Looking for even more stock ideas? Get a copy of our free investing starter kit at http://fool.com/starterkit Host: Chris Hill Guests: Jason Moser, Ron Gross, Matt Argersinger Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

Don't you wish you could just hit skip on the worst parts of your life? You know, the same way you can skip an ad? I get it. I'm Siaya and I live in Ice Cove. I've made some questionable decisions that didn't end up the way I planned. And today I'm still figuring it out. Somehow things usually get worse before they get better. Apparently, that's how I roll.

So bundle up and come along for the bumpy ride. Stream a new episode of North of North Tuesdays on CBC Gem. Elon Musk, Jay Powell, and Shaquille O'Neal walk into a bar. They didn't really, but we're going to talk about what investors can pick up from each one of them. Motley Fool Money starts now. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill, and I'm joined by Motley Fool Senior Analyst Jason Moser and Ron Gross. Good to see you as always, gentlemen. Hey, how are you doing, Chris? We get the latest headlines from

Wall Street. We will get the latest on real estate investing with our guest, Matt Argersinger. As always, we got a couple of stocks on our radar, but we begin this week with the big macro. The overall market fell towards the end of the week after Federal Reserve Chairman Jay Powell gave a speech indicating an interest rate hike is coming next month, probably an increase of a half percent. Ron, let me start with you. What does this mean for investors? Way to ruin a good rally, Chairman Powell. Thanks a lot. But the guy's got to do what he's got to do. You've got consumer inflation running at an annual pace of 8.5%. So he used the word expeditiously. The bank is committed to raising rates expeditiously, which

which means a 50 basis point hike in May most likely. Expectations for that level of a hike rose to 98% from traders. It looks like that's a gimme. Traders also priced in additional increases through year-end. It would take the Fed funds rate to 2.75%. It's at an effective rate of around 0.33% now, and then 3.25% to 3.5% is in the range currently priced into the markets a year from now. So clearly, the Fed is saying inflation is the most important thing that we need to get under control. The economy otherwise is pretty strong, including the very tight labor market. So that is the biggest thing on their mind. If that means stocks remain weak or take a hit, so be it. We need to get this under control. The Nasdaq on that Thursday got hit especially

hard, filled with growth, heavy stocks, stocks that rely on future growth to make their valuations make sense. That was down about 2% following Powell's comments. Some shakiness still to come for sure. Jason, part of me wonders why there's any real surprise here on Wall Street. We've been talking about this all year. It doesn't seem like a half percent hike is anything other than what we all expected. To Ron's point about the NASDAQ, however, it does seem like more of a case for investors moving maybe more towards steady profitable businesses rather than unprofitable upstarts. Yeah. And I'm glad you used that word surprise, because that was the first thing I was thinking

of. I was like, we've been talking about this for so long, I don't understand how anybody in the right now can be surprised with any of this. And in fact, the longer these discussions go on, just to give you a little insight into how I view these things, the longer these discussions go on, the more I tend to just go ahead, instead of discounting it, I'm thinking, okay, they're talking about maybe 50 points. You know what? Let's bump it to 100. All right. Let's look at the world as if they're going to go ahead and go a full point. Like, let's just go ahead and assume that that's at least on the table, because I bet you somebody's at least mentioned it. But to your point there in regard to where investors are flocking, it has

been very interesting to note that because, yeah, the high growth unprofitable names become a little bit less attractive as the cost of doing business goes up. But we're also in this weird state where we've got the supply chain crunch. Obviously, inflation is out of control. I think most people would agree. And so, you know, you're seeing a lot of really good profitable businesses out there that are kind of being taken down with this, right? Sort of babies being thrown out with the bathwater. And then you're also seeing at the same time, a lot of interest going into names that might not necessarily be perceived as such good protection in inflationary times. And I'm just looking recently here, if you look at the S&P Consumer Staples Fund, that's 32 holdings.

Companies like Procter & Gamble, Coca-Cola, Mondelez, Walmart, the median trailing PE ratio now for that collection of companies is 31.3 times, which if you look at that compared to other businesses out there in the market, like Facebook or Alphabet, for example, 31.3 times seems pretty high. It feels like maybe this encapsulates that one-year view versus the three-year view. The market seems maybe very focused right now on the near term where companies like these staples are perhaps in higher demand and they might be able to pass along at least some of those inflationary costs in the near term. But I think if you're willing to extend your timeline just a bit, it feels like there's some great opportunities forming out there in other

areas where the pessimism is a bit more real today based on valuations or interest rate policy concerns. The PEs of those companies are really interesting. One thing that came to mind is that perhaps the E of that equation is somewhat depressed as a result of supply chain disruptions and margins getting hit as a result of inflation. If you project recovery from one or both of those things, the P might settle down to something a little bit more reasonable. Yeah, I think you're And I believe I saw a statistic out there that referred to the forward multiple in that same index at around 22 times, which still, given the nature of those businesses, more stayed kind of boring dividend-paying companies. It still seemed fairly high, given the current

state of affairs. Let's get to some of the companies making headlines this week. And we're going to start with Netflix. Positive first quarter earnings were completely overshadowed by the news that for the first time in over a decade, Netflix lost subscribers. It was only 200,000, but Netflix guided for a loss of 2 million subscribers in the second quarter and shares fell more than 35%. Jason, this was a rough one. It was. And I do want to be fair here because if you adjust for the situation in Ukraine right now, I think, actually, they didn't technically lose subscribers. But the bottom line is, they did lose subscribers in the real world, and it sounds like that is poised to continue.

I mean, it doesn't seem like it's that big of a stretch to assume that maybe they are hitting a ceiling in regard to growth. I mean, they've got 230 million-some-odd subscribers at this point. So, I mean, it's clearly a good business. Otherwise, they wouldn't have so many subscribers. But with that said, there are obviously a lot of criticisms out there in regard to the content. I think the criticisms in regard to the business model are probably a bit more fair as we see more and more competition enter the fray. We heard talk on the call there, which this is a big pivot, of course, in regard to the ad-supported model, which founder Reed Hastings has been just adamantly against for so long.

now they seem very open-minded to it. And I think, frankly, that's the right call. Because when you look at the rest of this landscape, I mean, most streaming services out there today that are succeeding are built on some form of an ad-supported tier. So, I think for Netflix, that could be a wise decision because it gives them the opportunity to not only grow subscribers, perhaps capture some of those freeloaders that they mentioned, but it also, I think, it's a good way for them to maintain subscribers. If you're a user and maybe you're not really using the service all that much, you could downgrade to that ad-supported tier without necessarily leaving the service. Then while Netflix may not necessarily capture the subscription revenue,

at least they have the opportunity to monetize on the ad side. I think the flip side of that is just that they are light years behind the competition when it comes to building out an ad-supported model. Don't look for that solution to offer any meaningful results over at least the next year or two. Yeah. On the non-ad supported side of the business, the thing that would concern me the most is pricing power or the lack thereof. It appears that based on the competitive landscape out there, so many other streaming services with great content, Netflix with some good content, their ability to continue to raise prices in the future is questionable. and to me, that changes the model quite a bit. Busy week for Elon Musk. Tesla reported record

profits in the first quarter, and according to documents he filed with the SEC, Musk appears to have found the money necessary to buy Twitter. He is planning to pay $21 billion himself, and he's lined up loan commitments from Morgan Stanley and other banks. Like I said, Ron, busy week. Where do you want to start? Let's start with Tesla. Boy, oh boy, what a quarter. Highest quarterly profit ever. Sales up 80%. Delivered 310,000 vehicles globally. That's up 68%. That's despite rising input costs hurting the business. Surging prices for everything from lithium to nickel. Musk said the company would likely produce more than 1.5 million vehicles in 2022. That's up 60% over last year. Let's see what happens. But perhaps

they're working through a recovery from the shutdown of the Shanghai facility as a result of widespread COVID in China. Musk also said he hopes the robo-taxi will enter volume production in 2024. I don't know about that. Let's hold our breath on that for a bit. He likes to talk his book quite a bit. But listen, record quarterly profit of $3.3 billion. You can't deny that. Turning over to the Twitter saga, Musk, who has 82 million Twitter followers, has an outstanding bid of $54 and change for the company to take it private. Following the bid, Twitter management adopted a poison pill, which will make it virtually impossible for Musk to increase his stake above 15%. He owns around 9% now.

Given the fact that Twitter's board has not been responsive, Musk is exploring a tender offer to go directly to shareholders, maybe to purchase stock from them. Again, I think that's going to be difficult. As you said, funding looks like it has been committed to, which is essential. You can't just go out there and make offers without funding. That's a no-no, according to the SEC. But we'll see who else steps in, maybe some other private equity buyers. Big tech is going to be tough because of antitrust. But LBOs are tough for a business like Twitter because it doesn't have those stable cash flows that LBO buyers really require. So it's going to be fun to watch this play out at the very least. It really is, in part because, Jason,

I have no idea how this movie is going to end. I think it's a difficult ending to predict for sure. I mean, at the outset of it, my general thought was he's going to try to rock the boat. he's going to end up not being able to make this deal happen. He will then sell the shares that he purchased at whatever gain and just move on. It still doesn't seem like really a stretch for that to happen. I guess it really does boil down to exactly how Twitter's board responds to this. I understand where he's coming from. Given Twitter's status, it's that town square. and it feels like his No. 1 focus or priority here really would be censorship. That's a difficult one to really fully unpack because Twitter is not an entitlement. You don't have

a right to use Twitter. It's a service that you can use and they have rules. If you don't follow those rules, then they have the right to stop you from using the platform. Now, it could also be argued that they don't enforce or apply those rules in a coherent or consistent fashion, which then potentially limits the utility of the platform, particularly a platform like this that's got so much power. It tilts so heavily towards news and politics that makes content moderation a very, very difficult thing. Even if this does work out and he does end up getting this, that's only one part of the problem there. Then figuring out how to fully crack that nut and make this a platform that is as productive as possible,

That's another thing entirely. Coming up after the break, we've got pizza and beer. Don't go anywhere. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Ron Gross. Shares of The Gap fell 20% on Friday after the company cut revenue guidance and announced the CEO of Old Navy will be leaving. Ron, of all the apparel makers, this is the most confusing to me because the Gap seems like such a straightforward value proposition, and I don't understand why they have struggled for so long. They can't get it right, and it's not just in one of the divisions. They can't get Gap right, Banana Republic right, Old Navy right. It's really been

a struggle for them for many, many years. The CEO said they're looking to bring in a new leader with with the operational rigor and creative vision to execute on the brand's unique value prop, which sounds like a shot to me on exiting Nancy Green. But they don't even have a person yet. External search is underway. And as you said, they lowered guidance to reflect the weak business, supply chain disruptions, rising inflation, hurting the gap as well as most retailers. Plan is in place to close 30% of Gap and Banana Republic stores in North America by early 2024. four. I think that's important. Got to decrease the footprint here. You got to focus on getting the right merchandise in the stores at the right price. They're increasing promotional activity,

which is going to hit margins again. It remains a bit of a mess. Boston Beer continues to struggle. The parent company of Samuel Adams posted a loss in the first quarter. Overall sales were not great, and yet somehow Boston Beer has a PE ratio just above 300. Jason, on paper, this looks like a software startup. Yeah, let's forget about that for a second because there's numbers you would need to adjust for to get to where you want to go. But ultimately, let's talk about the business. There's a term that management uses now in regard to the business that I think should help investors frame their expectations on what kind of investment this is going forward, and that term is

beyond beer. You got that right. We're not talking about beyond meat, we're talking about beyond beer. Now, we've talked for a while how it's becoming more dependent on things other than beer. That really is a story, I think, with this company going forward. It's ciders, seltzers, partnerships, cannabis, it's all going to be on the table. I think the difficult part for them is really just spotting the trends early enough and rolling out product accordingly. But the numbers themselves, depletions down 7%, revenue down 21%, margins getting hampered due to supply chain constraints. But it's also worth remembering that's coming off of a crazy first quarter from a a year ago. The comparable from a year ago was an anomaly, so let's not hold that against them.

Now, with that said, again, I think there was particular weakness in Seltzer. We have seen this story play out before with cider, and they continue to have some difficulty there on the beer side of the business as well. It is really going to be that beyond beer mentality going forward and what they can come up with to add to that portfolio. Shares of Johnson & Johnson hit a new all-time high this week after a first quarter report highlighted by the board of directors approving a 6.5% increase to the quarterly dividend. Ron, this is 60 years in a row of increasing the dividend at J&J. Love it, love it. 2.5% yield right now, not too shabby for a company that's putting up pretty good results. Revenue up 5%, 6% increase

in the pharmaceutical division. That remains the company's strongest growth area that is expected to be the profit engine after the plan split with the consumer device division, which J&J will end up being two companies. The medical device business, which will join pharmaceuticals, was up 6%. Now, the weak business was consumer health, down 1.5%, hurt by, you guessed it, global supply chain disruptions, inflation exchange rate. Much more excitement on the drug and medical device side, earnings up 3% overall. Love to see that dividend increase. I think we're going to continue to see acquisitions on the pharmacy and the medical device side of this business once the split happens. I like J&J. Papa John's announced a new three-year

endorsement deal with board member Shaquille O'Neal. You may recall Shaq joined the board three years ago when Papa John's was reeling as a business. Jason, some in the investing world laughed at the idea at the time that the Basketball Hall of Famer and Celebrity Pitchman could help revive the pizza chain, but not us, not on this show. No, sir, not on this show. I think we recorded it for posterity, if I'm not mistaken. Yeah, I mean, you look back to March 22nd, 2019, I was actually looking through my show notes for that particular show. And I said in this, I'm calling it the worst is over for Papa John's. This is officially now a comeback story, and I think they're pulling it off nicely. Stock component to all his compensation, one half cash,

one-half stock. So, Shaq is calling this stock a buy, me too. And you know what? It's worked out okay. And I think a lot of that is because, honestly, at the end of the day, this was a PR problem, obviously a very bad one, but it wasn't a problem with the food. And that really is important to remember. You look at the ad campaign that focused on the owners of the local chains, I think that was brilliant. They really pushed Schnatter out of the way there so they could just sort of disassociate from that issue at the time. And so what we've seen now is obviously a terrific turnaround. Jason, you got to eat Papa John's or Domino's for dinner. Which one? Oh, I'm going with the Papa. Oh, interesting. Stock has doubled since Shaq joined the board three years ago.

So thin and crispy, Ron, thin and crispy Italian sausage Papa John's. Oh, he knows it. He knows the menu. All right. You guys can continue this debate during the break. We'll see you later in show. But up next, we're going to get the latest in real estate investing with Matt Argersinger. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Time to check in on the state of the real estate market and to do that, we go to Matt Argersinger. He's the lead investor for Millionacres, The Motley Fool's real estate investing service, and he joins me now. Matty, good to see you. Good to see you, Chris. Let's start with residential housing, because I'm curious where things stand now that we

live in a world where mortgage rates are above 5%. Right. A world that we have not been to for many years, actually, at this point. When it comes to the housing market, I think it's it's really a tale of two markets. On one hand, you've got inventory that is still extremely low in most places, while demand is extremely high. People are looking to buy a house. Either they are at an age where they're starting a family, they're tired of renting, or they're moving to a new location because their work allows them to. There's just a huge demand for homes. At the same time, we've just underbuilt homes for so many years, since really the great financial crisis almost 15 years ago now. And so there's just so little supply of available homes to meet the

demand. So fundamentally, I don't see any kind of housing crash or anything like that, given just the sheer imbalance between supply and demand in most markets. That said, as you said, we do have mortgage rates that are now over 5%, the highest they've been in about a decade. And I think you're seeing the effects of that. My wife and I are in the process of trying to sell one of our rentals in D.C., and we've met with a couple of brokers who give us a sense of the market and what we could price it for. Buyers are getting more cautious because the open houses that they're having, they're seeing less traffic, they're getting less offers for the deals they have that are coming to the market, and that's with a tight inventory supply situation in D.C.

The other thing that higher rates do is, it actually encourages, if you think about it, it encourages people to hold on to their homes longer. If you're someone who bought a house several years ago and locked in a 30-year fixed mortgage at 3.5%, are you going to sell and move out of that house to buy a bigger house, even if you want to? No, you're probably going to hold on to that house and that very low mortgage for as long as you can. We got this really crazy demand supply imbalance. I don't think home prices are going to come down, but I do think that higher rates are going to slow things down a bit. You'll probably see a flattening out of prices and sales at least for the next several months, if not longer.

When you and I talked last summer, it wasn't looking great for the commercial real estate market. Now we've got major tech companies opening up their offices. The pandemic, knock on wood, looks like it is in its last days here in the U.S. What do the next six to 18 months look like for office real estate? Do you see it coming back? and if so, how quickly and to what extent? As you probably know, Chris, Robert Morse passed away. Great actor, Broadway musical star for decades. He played Burt Cooper on Mad Men. I spent a few minutes today watching old Mad Men clips of Burt Cooper and Don Draper walking around these majestic 1960s era offices. I just was like, wow, that era feels really gone.

That era in the show was over 50 years ago, but I just feel like the era of the office feels like it has reached a peak. I do think the pandemic is waning finally. You do see headlines with major companies like Facebook and Google. They're leasing office space really at record paces. The problem is, I just think we have too much office still in this country, millions of square feet of office in a lot of cities that I just don't think is going to be used traditionally the way it has in the past. That's going to mean I think a lot of that office space gets converted to apartments, hotels, maybe co-working places or other uses. I don't necessarily see a strong rebound in the office market. That doesn't mean that certain segments of the market and certain

REITs and companies might do okay that have just been beaten down with the decline in the office market. But I just think we have too much. We have an excess supply of office, and that's going to way on the markets for quite a while. I mean, it's remarkable because if you just go back 10 years ago, office was by far the biggest part of the commercial real estate market. It's been kind of trumped by industrial and multifamilies become a really huge category. And I can kind of see that trend continuing. It does seem, and this is, you know, you and I live in the greater Washington, D.C. area. But I do see a lot of what they refer to as mixed-use buildings going up, where we're going to have retail and restaurants and that sort of thing on the first level. Then above that,

we're going to have apartments, condos, what have you. Is that more the trend in commercial real estate? I think that is a big trend. There's this idea of taking what we love about urban living and transporting it to everywhere, suburban, even rural in certain instances. I think the idea of, can I have the place where I live, where I can shop, where I can go be entertained and work all in one place, that makes a lot of sense. You see that in a lot of European countries, for example. There's also this big adaptive reuse trend that I think is happening. I'm looking at a deal right now for one of the services I work on where they're going to take an old office complex in Alexandria and turn it into what you just described, a big mixed-use retail, multifamily,

maybe some co-working places as well. It's just a stone's throw from Amazon HQ2. I think there's going to be huge demand for properties like that, just continuing away from that traditional office to more dynamic uses. What are a couple of areas in the real estate market? Feel free to think in terms of broad areas, but also in terms of stocks or REITs, if you want, that you feel are worth shining a light on right now? Sure. We start off by talking about the housing market. Even though I see the housing market slowing down, one area that really intrigues me right now is the home improvement stocks. If I look at Home Depot, which is down

about 30% from its high just since December. The market's been volatile, but I think a lot of it's based on this idea that the housing market is slowing down. But I view that as a strength. I think a lot of people are going to stay home. They are going to work on building out a home office because maybe they're working from home more often or they're interested in doing more landscaping. The Home Depot or Trex Company, Trex is famous for the composite decking that has become really popular, replacing traditional wood decking. Those two companies have just really been beaten down. I like what I see there, where people are staying at home, the nesting trend of investing more in the place where they live. The other area of the market that I like a lot, I think we've

talked about a few times on the show, which is just the hospitality market. Especially, as we said, with COVID ending, hopefully, knock on wood, there's a lot of opportunity in some of these these companies which are still beaten down. I'm thinking of companies like Pebble Brook Hotel Trust, ticker PEB, or Ryman Hospitality Trust, ticker RHP. They own big tourist resorts, destinations, places where a lot of people have waited to travel to, places that host weddings and other events that have been put on hold. Those are intriguing to me. Or more well-known names like the Vail Resorts, ticker MTN, or even like Alive Nation, which is not a real estate company in a sense, ticker there is LYV, but they own a lot of real estate, a lot of big concert

venues. I see a lot of people going back to that as well, especially during the second half of this year. Home improvement, hospitality, two areas that I think offer a lot of value to investors right now. Last thing before I let you go, earlier in the show, we were talking about Netflix and what happened with Netflix this week. One of the things we've seen in the streaming video space is essentially this convergence of you have this upstart years ago in Netflix, and now you have legacy media companies coming in with sort of their own version of streaming to compete with Netflix. Do you see something analogous happening in the hospitality space in this regard? Airbnb, with all due respect to Vrbo, Airbnb

really seems like the leader in this space when it comes to rental. Do you anticipate major chains like Marriott, Hyatt, Hilton, et cetera, do you see them going into that space as well? Or are they just going to say, you know what, we're going to stick with what we do, you stick with what you do? That is something I had not thought about. And what's fascinating is, as Airbnb has been very volatile, stocks like Marriott have actually recently hit new highs. And part of it is, I think, people are realizing, well, I'm getting back to traveling. And generally, when I travel to someplace, especially someplace I haven't been, I like what I'm going to get, the familiarity with a hotel room and a hotel service.

Whereas the service on Airbnb, it's not predictable. It changes from host to host. I think there's opportunity for them to take advantage. In a way, I always think about real estate as space. What's the best use of space? These companies have a lot of space. They don't have quite the network or reach that Airbnb has because it's just on a personal level, but they also have tremendous real estate in tremendous locations. Ways they can advertise and market that space in more Airbnb-like ways, I think that is certainly a possibility. If you want to read more from Matt Argersinger and his team, you can go to Millionacres.com. Matt, always great talking to you. Thanks for being here.

Thank you, Chris. Up next, Jason Moser and Ron Gross return with a couple of stocks on their radar. 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 once again with Jason Moser and Ron Gross. We love getting questions from the dozens of listeners. You can email us. You can post a review on Apple and Spotify and include

a question in the review. You can also call the Motley Fool Money Hotline, 703-254-1445. Dan Boyd, our man behind the glass, we got a voicemail. Hi, my name is Carson Blank and I'm from Jacksonville, Florida. The talk I wanted to asked about was Traeger, with the ticker COOK. It's not a company I own, but I listen to a lot of your stuff. As a college student who likes cooking, I think Traeger is really cool. I think it's a company that has a lot of potential to tap into the market. I see that amongst people of all ages, mostly my dad and my grandfather on both sides. I think it's interesting to me that it's something that can get me excited about wanting to buy

some type of grill in the future, and also seeing it with older people and people of my age connecting over that. I thought it'd be cool to hear you guys talk about that company, because honestly, it hasn't performed very well since IPO. That's it. Have a good one. Love it. Great question. Love the way this guy is thinking, Jason. Looking for opportunities, thinking about the market, but also keeping in mind that Traeger, again, the ticker COOK, has not done well since it's gone public. But you are a fan of the product, yes? I am a fan of the product. I should tell you how well my Easter Dizzy Pig Raging River ribs came out from that smoker last week. It was heavenly, to say the least. But we'll save that

for another time, okay? Listen, I love the question here because it could be one of those things where, hey, it's a great product, maybe not the best stock. And I'm not willing to say that yet. I will say it's a great product. The stock I'm still a little bit out on, but I was digging through some of the company's filings to get a better idea of where they sort of see this going, how big they see their opportunity. They talk about their total addressable market, which ultimately is what they offer today as well as what they'll offer in the future, their longer term opportunity. And it's comprised of approximately 75 million households that own a grill here in the U.S. And that represents about 60% of households in the U.S. And so they said

that they sold approximately 2 million Traegers in the United States between 2016, 2020. And so they have that penetration somewhere in the 3%, 4% range of their total U.S. TAM. Now, we're not assuming they'll collect all 100% of that total addressable market, but can they collect more of that. Can they get more of that? Yeah, I think they can. And if they can continue to innovate and come up with some sort of recurring type sales products, there might be something there. For me, Traeger versus Weber, for example, is all about Traeger's hardwood pellets that they use versus Weber, which is either charcoal or those flavorizer bars we've even talked about. So for me, who grills three times a week, but I'm not a purist or a grilling snob

by any means, I like the convenience of it. I like propane. I'm not really going to probably ever go Traeger. I think that's a smaller subset of the overall market that is willing to go there. I'm not surprised to see demand wane now that COVID is behind us, selling at 16.5 times EBITDA right now. That's pricey for me for a company that is not really putting up the growth numbers I would need to see. Jason, let me throw out an idea to supercharge the subscription possibilities for a Traeger. It's just a monthly box that you can send people. Send me a spice rub, a marinade, a couple of new recipes. I grill a couple of times a week. Just a quick Google search showed that there are some smaller

businesses that are doing this type of thing that are charging an incredible amount of money to me, I mean, $100 for three months, that kind of subscription. So, I don't know, it seems like for the power grillers, which I think people like Ron and I are, and you are as well, yeah, give us some new ideas along with a little spice and some marinades. I think that's a great way to look at it, and certainly they are looking at it from that same perspective. I mean, that's a very competitive space for sure, but any and all brand building opportunities, I think, are on the table. Subscriptions, obviously, the recurring sales of the hardwood pellets. There are a lot of different ways to go about it.

I think this is really just the beginning stages of a very interesting story to follow. Chris Hilliard- Carson, thanks again for the question and the call. We're going to get to stocks on our radar in just a second. But if you know anyone who's looking to get started investing, we have a free investing starter kit, covers everything from saving money to 401k plans to buying your first stock. It also includes stock ideas and ETF ideas from our investing team. It's free. You can just go to fool.com slash starter kit. That's fool.com slash starter kit, all one word. Let's get to the stocks on our radar. Our man behind the glass can, boy, it's going to hit you with a question. Ron Gross, you're up first. What are you looking

at this week? I'm going to go with a stock that's been around The Fool for a while, but that I never spent much time with personally. That company is Atlassian. T-E-A-M, team is the ticker symbol, a recommendation across many, many Foolish services. Atlassian's gotten smacked around with lots of other tech and software companies. Shares are down almost 50% from the 52-week high reached in October, so I'm taking a fresh look. They're a provider of collaboration and project management software founded 20 years ago. Most of its revenue comes from their Jira and Confluence products. Some people may know Trello. They've got a unique sales model that's a free product, a freemium product, and then you can upgrade to the paid

just from their website. They're serving almost 50 more customers now than they did just two years ago. Large enterprise customers are playing an increasingly important role as well. So I'm taking another look on the stock's weakness. Dan, question about Atlassian? Yeah. We at The Fool are actually, at last, seeing customers using Trello quite a bit in our workplace. Ron, what do you think makes this stock interesting after coming down back to its July 2021 levels? Yeah. The reason I actually look at it is because of The Fool's affiliation with it. First using Trello, and now we're switching over to Jira a little bit, and I've been exposed to it as a result. I do think that Jira is probably one of the

bright spots that will lead to the company's future growth and that makes the stock interesting. Jason Moser, what are you looking at this week? Yeah, just circling back on the stock I purchased last week, I noted this week once trading guidelines lifted, but I added to my position in Twilio, which is a cloud-based communications company. They enable developers to build and scale and operate real-time customer engagement within their applications. But to me, it's a very interesting business. I think it's kind of one of those babies being thrown out of the bathwater here. It's mission critical for a lot of these companies out there. They have very sticky service with a low cost of adoption,

continuing to grow customer base, 256,000 customers now. That was up 16% from a year ago. They're growing organically. They're maintaining their dollar-based net expansion. They got big customers out there, including Airbnb, Stripe, Salesforce, and others. The stock has really pulled back now at seven times full-year sales estimates. I think it's starting to look a little bit more attractive in the face of a lot of these businesses, which are still trading at higher multiples. So, earnings on May 4th after the market closes, Twilio. Dan, question about Twilio? Well, it looks like it's Software Friday here at The Motley Fool. That's something. Jason, it's a very crowded market with Twilio. What really excites you moving forward about the company?

Dan, I'm going to have to get back to you. I've got a Boston butt out here on the Traeger that I need to go check on real quick, so we'll talk about this next week, all right? Dodging the question. Dan, what do you want to add to your watch list? Listen, man, I don't like question dodgers whatsoever, so I got to go with Atlassian with Ron Gross for this one. Nice. No pork nachos for you, Dan. Jason Moser, Ron Gross. Guys, thanks for being here. Thanks, guys. That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd.

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