Motley Fool Hidden Gems Investing - The 10X Disruption

Episode Date: May 19, 2017

Wal-Mart surprises. Alibaba works its magic. Jack in the Box pops. And Home Depot hits a new high. Plus, Stanford economist and RethinkX founder Tony Seba talks about a big disruption to the transportation industry. Thanks to Slack for supporting The Motley Fool. Learn more at slack.com.     Learn more about your ad choices. Visit megaphone.fm/adchoices

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Slack, where work happens. Find out why at slack.com. 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 from Million Dollar Portfolio, Jason Moser and Matt Argersinger, and from Total Income, Ron Gross. Good to see you, as always, gents.

Ron Gross. Hey, how are you doing? We've got the latest headlines from Wall Street. We will dig into the disruption coming to the auto industry, and as always, we'll give you an inside look at the stocks on our radar. But we begin with signs of life in the general retail sector. Walmart's first quarter profits came in higher than expected, as did Target's. Overall, a better picture than we were talking about a week ago with Macy's, Kohl's, etc. Before we go big picture, Matty, this is a good quarter from Walmart. O'Reilly. Walmart, I guess the headline there is the 63% increase in online sales,

which was a big acceleration. I mean, they were doing, I want to say last year at this time they were doing single digits. So, they've obviously ramped that business pretty well. I think you have to put it in perspective, though. Walmart doesn't break out e-commerce revenue as a percentage or even the actual number, but according to eMarketer, their sales last year online were $14.4 billion. So, if you expect that 2017 will be a great year, maybe they grow that business 50%, they'll get to over $20 billion. Just to put that in context, though, Amazon's online sales, stripping out Web Services International, North American online sales, going to do about $100 billion this year.

O' Walmart's playing catch-up. Yeah, they're second, but it's a distant second. When I balance that against total revenue increase of 1.4%, comps that were up only 1.4%, it's going to take a lot for that business to really move the needle for Walmart. It's still very early. Ron, Target's same-store sales fell a little bit, but as the management said, it's a very choppy environment out there. It's choppy. I saw one analyst call it less bad. You know what? Given what we talked about at the beginning of last week's show,

less bad is pretty darn good. As Matty said, digital channel sales, we saw an increase, 22%. It's a good number, up 22%, but still only 4.3% of total revenue. Continues to be a struggle. They're going to invest $7 billion over the next few years into redesigning stores and lowering some prices, opening 100 smaller locations. It seems that's kind of the thing that everyone's trying to do now in urban centers, college campus areas. They're trying to encourage shoppers to make bigger purchases, which is kind of, they're copying what Amazon does with the pantry, where you can pay one price and fill a box with stuff and ship it to you at a flat fee. They're

trying to copy that a bit. So, everything was okay. You have negative same-store sales, but only slightly, so I guess that's fine. Guidance was not terrible, so we'll call it somewhat encouraging. But they've got a lot of work to do, and they acknowledged that much and said specifically that things are not where they want them to be. This week in adjectives, right? It was less bad, somewhat encouraging. OK. Well, Jason, to the point that Ron made last week, where he said, look, you look at all these retailers, and the fact is, some of them are going to be going out of business at some point. But you look at Target, you look at Walmart, these are the two biggest

bricks-and-mortar general retailers in the United States. And I feel like they're staking their claim, saying, you know what, we're not going anywhere. Sure, yeah. I think I was over picking up dinner last night from Chipotle, of all places. We were supporting the Chesapeake Bay Foundation. And I saw a store as RadioShack right by there, going out of sale, entire stores on sale. I felt like, man, deja vu. ooh, haven't we gone through that once before? Target and Walmart, I think, are a bit different animals. And I do think there is a place in this world for them, Walmart in particular. I mean, there is a physical footprint there that you can't discount. And retail is ultimately about

logistics. And in today's world, I think it's becoming more so. That's why Amazon's done so well. I think for Walmart, the real opportunity probably on the investing side is for them to figure out a way to return more capital to shareholders. We were talking about this yesterday on MarketFoolery. But when you look at the repurchases, for example, Walmart's repurchased, they brought down their share count about 8% over the past five years. You compare that to Apple, Apple's brought their share count down more than 20%. Now, that is a tech company, that's material. So, I think there's an opportunity there for Walmart, and certainly also on the dividend side as well, the yield is under 3% still. By the

same token, I think, based on what Matty was saying there, it seems like they're going to continue investing in this e-commerce opportunity for some time to come, which is probably the right move. But again, I think, from an investing perspective, the bigger opportunity is to get a little bit better about returning capital to shareholders. Yeah, I can't help but think it's just too little too late for Walmart and Target and online. But actually, I hope they succeed. One big risk for Amazon now, I think Amazon's going to the moon, but the one risk is that Amazon just gets too big, too influential, and some kind of regulatory antitrust actions start to come ahead and rumble. But if Walmart

has success online, and Walmart's already so huge and already accounts for much more of total retail sales in the U.S., that makes me think Amazon won't face any of those challenges, and Amazon can continue to grow, even if a Walmart and a Target have some share of total online sales. Well, I mean, the ultimate benefit of all of this. Amazon performing so well is forcing everybody to up their game. We're going to see some succeed there, and we're going to see some go away. I think Walmart stands a chance of succeeding as good as anyone out there, if not more so, just because they've had so much success to date, and they're so big already.

When you say upping the game, for different retailers, that means different things. For some folks, it's shrinking the footprint and cutting costs to be profitable, but in less grandiose kind of way. Target here, investing $7 billion to try to compete. There's a lot of risk in there. If you're throwing that amount of money to try to compete and you're wrong, look out below. Well, and on the flip side, you look at Walmart making that acquisition last year of Jet.com for $3 billion and change. And I think some people sort of raised an eyebrow at that price tag. But in the early innings here, it appears to be paying off.

Well, again, I feel like they had to do it, and the thing that Jet brought them was a lot of talent. And talent and resources they didn't really have, or knowledge power. So, it's a right move, and sure enough, early on here, it seems to be paying off. From general retail to athletic retail, tough week for a couple of teams. After their latest quarterly reports, shares of Foot Locker down 15%, shares of Dick's Sporting Goods down 20%. And Jason, I think back to when Sports Authority went out of business, and one of my thoughts at the time was, well, this will probably help the Foot Lockers and Dick's Sporting Goods of the world, and apparently not.

One would think, yeah, it does seem like that probably hasn't played out as well as the management teams of those two companies were hoping. I think with Dick's Sporting Goods, I mean, comps were positive, but they were lower than expected. They are going to be slowing down the pace of opening new stores. I think that's one of the real marks against this company, is that those stores are just such big footprints. It costs a lot of money to get that real estate and to keep it open. That means you have to gin up a lot of traffic, and plainly that traffic isn't going there. Furthermore, what's really keeping them down here is, e-commerce sales grew 11% for the quarter, but they made up 9.3% of total sales

for the quarter. And that compares to 9.2% a year ago. So, they're basically not gaining any share on the e-commerce front either. A lot of problems there. And consequently, you've got shares now trading around 11X full-year estimates, which is significant. Back in November of 2016, we were talking about this, and shares were trading around 20X. So, obviously, expectations are very low for Dick's Sporting Goods. And it's funny, because when you look at Dick's Sporting Goods and compare it to Foot Locker, I think most people would probably think Dick's Sporting Goods is a better company. Foot Locker is by far and away the more successful business. Bigger footprint, bigger company, better revenue, better margins. For Foot Locker, I think it's

a lot of the same, but they're far more well-established. I think that's why the stock is still trading somewhere in the neighborhood of 20X earnings today. 3,300 stores vs. a much smaller footprint for Dick's Sporting Goods. What about the Foot Locker is really a mall-based retailer, where Dick's sometimes next to the mall, or in a strip mall, but not being affected by the tough times that malls are going through. Well, possibly. But then also, you have to remember that mall footprint or strip mall footprint, it's far less expensive, particularly today, given the traffic challenges. And you're still catching incremental traffic that's there for whatever reason. There are more

reasons to go to a mall than there would be to go to one store, for example. I think that's where they probably are at least able to get some straight traffic no matter what. What's also fascinating, the derivative of all this, of course, is that you see Nike hitting, I think, a three- or four-year low. Under Armour, of course, has struggled. And I wonder, this particular channel for those big athletic brands is really hurting right now. And if it doesn't bounce back, a company like Under Armour, which really depends on that channel, it's going to be struggling for a while. Yeah, and when you look at Foot Locker, Dick's Sporting Goods, companies,

a lot of their inventory is made up of Nike and Under Armour. So, that's why we're seeing Nike and Under Armour sort of getting pulled back along with these drops. The nice thing is, with Nike and Under Armour, those are companies that had the wherewithal to build out very robust direct-to-consumer operations. And that is ultimately going to, I think, keep them moving forward. Whereas, Dick's, Foot Locker, companies like those, they have got some serious challenges ahead. Home Depot's first quarter report demonstrated once again why Home Depot is the No. 1 home improvement chain in America. Ron Gross, profits, same-store sales, where would you like to

begin? It's good stuff. It's nice to see a nice report coming out of a retailer. And they are clearly bucking the trend, as we have said, week after week, of retailers doing quite poorly. Continue to be helped by low mortgage rates, solid housing market, that's really the big story here, plus the fact that it's not as easy to purchase a lot of this type of stuff through Amazon or online, although their online sales are up 23%, so they're doing a good job there as well. But, same-store sales up 5.5%, 16% pop in big-ticket transactions, which is a big number, increased their guidance. Stock's only trading 22 times, really. That's

fine here for a company that's putting up numbers. Five years from now, if interest rates are different and the housing market is different, will that impact their business? Yes, it probably will, but that will ebb and flow for the life of this company, and I still think it's just such a solid operator. What's interesting to see is, they've performed so well here in the recent past. You look at the homeownership rate over the most recent decade, it's actually just kept on falling. Ever since 2005, it's trended straight downward, to far below where it was in even 1995, really. There's a great opportunity for Home Depot here as that homeownership rate starts to tick back up. That is the place

to go, whether you own or rent, whether it's rain or shine. You just have to love these guys' market opportunity. Interestingly, Lowe's just announced they were investing $500 million to buy two companies that sell products to apartment building managers, because they're trying to diversify away from the do-it-yourself homeowners. Because even though they do pretty well, Home Depot continues to just do a little bit better. Coming up, a breakup in the restaurant industry. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with Jason Moser, Matt Argersinger, and Ron Gross. You can catch Motley Fool Money every weekend on radio

stations across America. Happy to welcome two new stations to our affiliate family, WASR AM 1420 and FM 97.1, Lake Winnipesaukee, New Hampshire. O'Reilly. All right. New England. Shares of Alibaba hit an all-time high this week. Fourth quarter revenue for the Chinese e-commerce giant rose 60%. And, Matty, they're also buying back some stock. Yeah, 60%. It's a huge number when you think of the revenue base. We're talking about what but this year is going to be a $25 billion revenue base for Alibaba. We know how dominant they are. Stock's up 40%. Earnings, not that we want to pay too much attention to them,

but earnings were missed only because they're investing so much in cloud computing and particularly entertainment properties. They're in a battle with Baidu's, iQiyi, and Tencent right now to be the YouTube of China. Good place to be investing. I think with Alibaba, it's up 40% year-to-date. It trades for 12 times sales. And it's a $300 billion company. It's not too expensive. But I look at that compared to Amazon at three times sales, and I say, well, is the risk really worth it? Even though the opportunity probably compared to Amazon's is obviously so much larger. How much attention should people pay to the cloud computing stuff? Because that

got some headlines this week. Alibaba appears to be paying attention to what Amazon has done with web services and said, hey, maybe we could do that. Well, sure. I mean, you'd imagine they have the same kind of infrastructure that can do that kind of thing. But there's a lot of, in Chinese businesses in particular, there's a lot of headline grabbing and saying, well, they're doing it, we're going to be doing it, and we can do it at a bigger scale because it's China. So, I tend to be a little more skeptical about those announcements. On Thursday, shares of Pandora spiked on reports of a potential deal with SiriusXM.

This is not the first time SiriusXM has flirted with the idea of buying Pandora. What do you think, Jason? Match made in heaven? Well, maybe I wouldn't quite go that far. Match made in purgatory? Match made somewhere. I feel like a deal here could probably make sense from the perspective that Pandora does, I think, possess some brand equity through all of its shortcomings, and there have been a lot. I do think they possess some brand equity that could be meaningful to SiriusXM in the internet radio space as we start to see competition ramp up and a

little consolidation occur here. But I think Pandora needs this deal or a deal to happen far more than the other way around. They are in a position where they're going to be a desperate seller at this point, which is great for the acquirer. They can more or less name their price. Whether it's $10 a share or $9 a share, who really knows? I think SiriusXM has to start thinking about life after Howard. About three and a half years, he is responsible for a lot of the subscription growth, a lot of the subscriber growth there. Now, Pandora probably isn't going to bring in a lot of paid subs, but it does have a lot of free listeners, and those listeners are OK being subjected to some advertising. So, Pandora

can make some money on the ad side, and it may just be a nice little addition. You tuck that thing in a series, you can mask those financials for a while and get some better operators setting that thing up for better success. They need to think about life after Howard Stern, but I think SiriusXM might be taking a close look at this, because they're also thinking about life outside the car. If you just think about SiriusXM, and the majority of consumption of their programming is in the car, whereas Pandora, it's outside the car. So, this may be a way for SiriusXM to really get more into people's homes.

It could be, but by the same token, I think SiriusXM has made tremendous progress on their outside-the-car initiative. the app that they have that you can keep on your phone gives you access to their entire catalog of offerings as well. I use it all the time. It's really terrific. I think you're right, Pandora could couple very nicely with that. Second quarter profits for Jack in the Box came in higher than expected, but that is not what pushed the stock up this week. Jack in the Box is the parent company of Qdoba, and it is looking to sell its Mexican chain because, in the words of CEO Lenny Kama, our valuation is being impacted by having two different business models. What is he talking about, Ron?

I sense some sarcasm in you. They're both restaurants. I don't get this. So, I tried to do some digging to figure out what he could potentially mean. So, first I looked. Maybe the Jack in the Box stores and the Qdoba stores have different business models in the sense that one is franchised and one is not, and that is not the case. They're both somewhat equally franchised. Then I went to the conference call to see if perhaps one of the analysts asked a question to say, could you please clarify what that means and no one asked that either so i kept digging and i couldn't find anything and i just

left to believe that what he meant was one's a burger joint and one's a mexican place that's what he meant i think and he that's two different cuisines that's not two different business models and for some reason he believes that's dragging valuation down and what's truly dragging valuation down is that qdoba is just not putting up numbers that that are similar to jack is and you know the same-store sales have been declining and there's weakness. So, he wants to spin those off and hopefully create shareholder value as a result, which he actually might be right about that. Well, I was just thinking, Chris, about what we talked about before the show, which is, I just think he's a little too late on the whole spin-off idea. I think you're right.

When Chipotle was kind of at the trough, I guess, of its struggles with E. coli and Kedoba's sales were still somewhat decent, that would be the time to really raise value. I'm not sure now was the right time. O' Jack in the Box bought Qdoba for $45 million in cash in 2003. They're going to make some money off of whatever they do with this, but yeah, it really does seem like a year ago was the time to pull the trigger on this. For sure. But it's still a small franchise. There's only 699 Qdobas at the end of the fiscal year. There's plenty of runway out there as long as they can get their act together and people continue to want to consume Mexican

cuisine. Matt Argersinger, Jason Moser, Ron Gross, guys, we'll see you later in the show. Up next, disruption in the automotive industry might be coming a lot sooner than you think. Stay right here. You're listening to Motley Fool Money. Alright, before this week's interview, I've got to say thank you to Slack for supporting this week's edition of Motley Fool Money. Slack is a messaging app that brings together all of your team's communications in one place, making your work life simpler and more productive. Slack connects the tools and services you need in one place and allows you to organize your team with real-time messaging, video or voice calls, group file sharing, and searchable archives,

all in one easy-to-use app. We've been using Slack here at The Motley Fool for the past few years, and it has been fantastic. It has made us more productive. It has dramatically cut down on the amount of internal email that we use. It's great. Slack saves you time. It makes you more productive. You don't have to search through multiple emails just to find that one follow-up. And plus, you can tailor Slack to your work with over 900 apps. And with mobile apps for iOS and Android that syncs seamlessly, you can always pick up where you left off, no matter where you are. So, check it out. Slack, where work happens. Find out why at slack.com. Welcome back to Motley Fool Money. I'm Chris Hill. Earlier this week, I got the chance to

talk with Tony Siba. Tony is the co-founder of an independent think tank called RethinkX. He's also the author of a just-published report entitled, Rethinking Transportation 2020 to 2030. And what Tony Siba and his colleagues are predicting in this report will have a dramatic impact on some of the biggest industries in the world. Let me start with this, because the type of disruption that you have been studying and researching, particularly when it comes to the transportation industry, that's something we've talked about on our show for years. And what struck me about the report that you and your colleagues put together is the timeline. Because if I'm reading this correctly, and I like to think

that I am, you believe that driving in America is going to reach a tipping point, not in the far, far future, but in three years. Do I have that right? You have that right. 2021, essentially, when autonomous vehicles are approved that's going to be the key enabler at that point essentially the the disruption of the whole transportation system road transportation system in america is going to start and then yeah it's going to take just a decade for 95% of the miles traveled to be electric, self-driving, and on-demand. Yes. So, one of the key phrases in what you just said is, if approved. Because that's, in some ways, the technology disruption, the business model innovation, those, I think, are almost taken

as given at this point. I think for a lot of investors, they look at autonomous vehicles and think of the government, whether it's the federal government or state and local governments and the approval process. And I'm curious, from where does your confidence come that the United States federal government is going to move quickly when it comes to approving autonomous vehicles? Oh, there is two things. One is that this is not U.S. dependent. essentially think about basically transport as a service about these vehicles as computers and wheels they're essentially they have no steering wheel they have no pedals it's a computer run by an operating system and a gpu or a computing platform that's going to run that operating

system. It's not unlike personal computers or tablets or an iPhone. So the key thing is going to be to, when you look at the history of computers, there have been two operating systems that essentially dominate. In personal computers, it was Windows and Mac, and then in smartphones, It's iOS, Apple, and Android, and so on. So there's going to be a whole rush to develop the one operating system that's going to come in first. And that one operating system may or may not come from the United States. So China is investing a lot of money. You see companies like Didi in China, which pushed out Uber, beat Uber in China.

They're investing massively in creating this operating system. Baidu is developing this operating system. A lot of companies in Europe are developing this operating system. So all you need is one of these operating systems to work at level five, which is full autonomy, in order for this race to start. And it may not happen in the United States. So, you know, while we did the numbers for the United States, the truth is that this can happen anywhere. And any economy that does not get onto task, onto this transport as a system, is going to be uncompetitive. It would be essentially like an economy running on horses trying to compete with the internal combustion engine 100 years ago.

And so once one country gets it and approves it, essentially it's going to have to happen everywhere because it's going to be a competitive thing. You can't compete with a technology that's 10 times cheaper, essentially for transportation and logistics and so on, than your competitor countries can. So this is a race. This is not going to be dependent. Yes, it's going to be dependent on regulation, but it's not going to be dependent just on Washington, D.C. And in the United States, this is being done at the state level, mostly. In California, essentially 30 companies have been approved for as soon as the end of this year, 2017, to do autonomous testing pilots on public roads. So California as a state is way ahead of the game in this respect. And several other states are in the process of approving autonomy in the United States at the state level. The subtitle of the report that you and your colleagues put out recently is

The Disruption of Transportation and the Collapse of the Internal Combustion Vehicle and Oil Industries. Last time I looked, the oil industry was enormous with deep pockets. The type of disruption that you're talking about really seems like something that will be fought very hard, not just from regulators, but also, I mean, there are enormous companies that have very keen interests in the automobile industry staying pretty close to what it is right now. I mean, do you really think that 10, 15 years from now, the oil companies are going to be dramatically smaller than they are right now? Yes. And essentially, yes, you're right in that they're going to push back and they're already pushing back. But if you look at the gains from

the transition to transport as a service, and also if you look at the companies that they're going to be pushing back against, the largest companies in the world by market capitalization are getting google amazon apple and so on are basically getting into this uh game so into into this game into this this industry so essentially it's not going to be just the large oil companies versus you know the little you know hippies doing an electric vehicle it's going to be you know the large oil companies versus Apple and Google and Tesla and then Amazon and so on. And then on top of that, when you look at the idea that transport as a service is going to provide cheap, accessible transportation to a lot of groups, door to door, to a lot

of groups who have been left out of the car ownership or even the public transportation system, the elderly, the disabled, and so on. There you have it. You're going to have, you know, oil companies on one side, and you're going to have Apple and Amazon and AARP and groups lobbying for disabled and so on, on the other side. So it's going to be a big fight. It's not going to be a one-way fight in that respect. Let me add one thing. This is on day one, 2021 the day that autonomous vehicles are approved the cost per mile of transport as a service is going to be 10 times cheaper than buying a new car 10 times cheaper every single time that there has been a 10x difference in cost for a similar product or service in history

And all the disruptions that I've studied in history, every single time that there has been a 10x difference in cost, there has been a disruption. I don't know of a single case in which that has not happened. And this transport as a service disruption is a 10x disruption. In terms of the many ripple effects this type of disruption could cause, certainly when you think about the average city in the United States, one of the things you touch on in the report, fewer cars on the road overall and parking becomes obsolete, really? Yes. So when you look at the fact that today we drive our cars 4% of the time, when you have a vehicle that is autonomous, it can drive 40% of the time, 60, 80% of the time, it can be driving around all the time. So we modeled 40% of the time, which is 10 times

efficiency. And what we got was that you needed a fleet that is 80% smaller than what we have today. So we'll need 80% fewer cars on the road than what we need today. So yeah, parking is going to be obsolete, especially in the high real estate areas in San Francisco, New York City, London and Chicago and so on. Parking is essentially a waste of space. We could use that for productive uses, whether you want a green space, whether you want new businesses or housing and so on. But yeah, we're going to have 80% fewer cars And they're not going to need to park. I mean, we park our cars 96 percent of the time right now, which is a huge waste of money and space and so on. And what that's going to bring to America and to the world is essentially new land.

It's going to open up real estate that hasn't been available in 100 years. And if you just think about the numbers, L.A. has 200 square miles of parking and, you know, 180 square miles of that, at least maybe 160, 180 square miles of L.A. is going to be vacant. It's going to be empty. And just to give you an idea, you could fit three and a half San Francisco's into the vacant parking space in L.A., three San Francisco's. So policymakers in L.A. are going to have to decide, do we want to create the wealth of three San Francisco's or do we want to have that, you know, a desert, basically 180 square mile desert? So, yeah, a lot of land is going to be available for development because it's going to be vacant, parking space. There were reports earlier this week that Ford Motor is planning to lay off 10% of its employees around the world. Meanwhile, Ford Motor's stock is hitting a 52-week low. We talked earlier about the oil companies.

It kind of seems like unless they are investing heavily in the next generation of transportation that you and your colleagues are writing about in this report, it seems like the traditional automakers are in deep trouble as well. They are. So what's going to happen is the auto market is going to shrink by about 70%. We're going to need 70%. The production of new vehicles is going to go down by 70%, which means that a lot of them are not going to survive. And on top of that, you have new entrants. You have electric vehicle companies like Tesla and computer companies like Uber and so on who are getting into the space. So you're going to have a smaller market and new entrants. So it's going to be a very difficult space. Having said that, today the

traditional automakers have an advantage over the startups. I mean, they have the manufacturing capability, they have the skills. Making an electric vehicle is actually quite easy. An EV has 20 moving parts as opposed to 2,000 moving parts in a combustion engine automobile. So it's very easy to make. The question is, will they actually commit to going in this direction? Do they see this as the existential threat that it is? And if they move quickly, they have a good chance of surviving and thriving. But those who deny it are not essentially are going to be in trouble. Last question, then I'll let you go. Just because I'm curious, what do you drive right now? I don't. Basically, I don't own a car. I use Uber and Lyft and Zipcar and so on. I've been using

what we call pre-task, pre-transport as a service for years now, for 10 years. And initially, it started as research. I started doing research into this new thing 10 years ago. It's not something that just popped into my head. And I've done the numbers for a long time. and yeah it makes total economic sense to go in this direction and transport as a service is going to be even 10 times cheaper than what i paid today so i drive i have access to a million cars as opposed to owning one i love that you're walking the walk i am that's how that's you know but in order to do real research you have to live it and basically I've been doing it for 10 years and I've been doing the numbers and it makes sense a lot of of the pushback that you're going to hear

is how can I you know I love my car how can I do this or that how do I go to the supermarket I've been doing that for 10 years and and the truth is that once you go in that direction and it's very easy to do it actually you can just get an uber uh and try it you can and and and in 2021 it's going to be get uh you know an uber or lyft or whatever that's autonomous you don't have to sell your car before you try it's very easy um and then you go to the supermarket one day and you decide you know what it's you know not the end of the world as we know it and you use it more and more and more it's a product that's easy to try and once you try it enough you make the decision it doesn't make sense for me to own a car i can do this and that's when the mass migration

of people selling their cars and transitioning to tasks is going to begin if you want to learn more from tony seba and read the report for yourself just go to rethinkx.com up next we'll give you an inside look at the stocks on our radar. This is 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 Argersinger, and Ron Gross. You can check out past episodes of Motley Fool Money and all of our podcasts by going to podcast.fool.com.

And while you're there, you can kick the tires on our flagship investing service, Motley Fool Stock Advisor. The brand new issue just came out. Two new stock recommendations from David and Tom Gardner. So, check it out by going to podcast.fool.com. Time to get to the stocks on our radar and our man behind the glass, Steve Broido, hit you with a question. Ron Gross, what are you looking at? I got a recent total income recommendation for Steve. It's National Grid, NGG. It's a London-based company, but it's ADR Trades here on the New York Exchange. They own and operate regulated electric and gas distribution networks, both in the U.S. and the U.K.

Transmission business is kind of like a toll booth, which is a nice business. It's very consistent cash flow streams, which makes it a really great stock from a dividend perspective, 4.4% yield. That should be a pretty safe dividend. Just sold their U.K. gas distribution business, special dividended, if that's a word. It isn't. Out the profits on that to shareholders. And I think the stock has potential as well, not just in the yield. Steve, question about National Grid? With a utility company like this, what is one metric I should look for, not understanding distribution of power at all? Certainly, industrial output, the strength of the economy in general. This business is less

... Commodity prices don't affect this business as much as in other businesses, because it is a distribution play. But I think economic output in general would do you well. Jason Moser, what are you looking at this week? some dividending in biggins, all investors, OK? It's not a secret, Nike, ticker is NKE, we were talking about this earlier, how poor results from Dick's Sporting Goods and Footlocker have brought down companies like Nike and Under Armour. I think this is fairly short-lived. I think the upside with these guys, particularly Nike, they have very strong direct-to-consumer businesses. You look at Nike, the direct-to-consumer business represents more than a quarter of

total sales today. That's up from about 20% in 2014. We have Nike on the watch list and MDP. We've been really patient with this one. We target about $50 per share. It's a pretty risk-free way to get what we think is 8%, 9%, even possibly 10% annualized return over the coming five years. So, we are very close on this one. Steve, question about Nike? Do you understand their relationship with Apple? They have the thing you can put in your shoe for a while, and then it's the watch, and I don't know what they're doing with that.

Yeah, I don't understand the relationship with Apple at all, Steve, so I'll just ... Don't we all have a relationship with Apple? In some way, right. Matt Argersinger, what are you looking at? Really simple, Walt Disney, ticker DIS. Everyone keeps worrying about ESPN and the network's business. Just stop already! Disney's doing fine. Double-digit growth, Star Wars, Marvel, Pixar, Beauty and the Beast, which was a monster, literally, buying back loads of stock. You've got Bob Iger in the saddle for the next two years. If you want

A 10% annual return for the next 10 years, right now, by Disney. Steve? I'm a shareholder. How many more Star Wars movies do you think there will be in the next 20 years? 77. Infinite. Three different businesses, Steve. You got one you want to add to your watch list?

I might look at Nike, just so I can understand their relationship with that. All right, Ryan Gross, Jason Moser, Matt Argesinger. Guys, thanks for being here. Thanks, Chris. That's going to do it for this week's edition of Motley Fool Money. Our engineer, Steve Broido. Our producer, Matt Crear. I'm Chris Hill.

Thanks for listening. We'll see you next week. We'll be right back.