Motley Fool Hidden Gems Investing - The Bull Market’s Historic Run Is Still Going

Episode Date: August 24, 2018

Target posts its best quarter in a decade. Alibaba drops despite a strong 1st-quarter report. Pepsi buys SodaStream. Gap struggles with its namesake brand. Investors put sports retailers in the penalty box. And Lowe’s hits an all-time high. As we officially enter the longest bull market in history Jason Moser, Matt Argersinger, and Ron Gross analyze those stories and share why the future looks bright for investors.  Plus, journalist Sarah Kessler talks about her new book Gigged: The End of the Job and the Future of Work.  Thanks to Away for supporting The Motley Fool. Go to awaytravel.com/fool and use the promo code “fool” to get $20 off a suitcase! Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill. Support for Motley Fool Money comes from our friends at Rocket Mortgage by Quicken Loans, who are excited to introduce their all-new RateShield approval. If you're in the market to buy a home, RateShield approval is a real game-changer, and here's why. Quicken Loans will lock your rate for up to 90 days while you shop. And if rates go up, your rate stays the same. But if rates go down, your rate also drops. So, you win either way. It's the kind of thinking you would expect from America's largest mortgage lender. And to get started, go to rocketmortgage.com. This episode also brought to you by Away. Away makes first-class luggage at coach prices that allow you to charge your phone on the go.

For $20 off a suitcase, go to awaytravel.com and use the promo code FOOL. That's awaytravel.com and use the promo code FOOL. everybody needs money that's why they call it money from fool global headquarters this is motley fool money it's the motley fool money radio show i'm chris hill joining me in studio senior analyst jason moser matt argus singer and ron gross good to you, as always, gentlemen. We've got the latest headlines from Wall Street. We'll dig into the gig economy with journalist Sarah Kessler. And as always, we've got a few stocks on our radar. But we begin with the now historic bull market. This week, the bull market hit

the mark, Matty. It hit it. 3,453 days old, now officially the longest bull market in U.S. history. How are you feeling? I feel good as a guy who recommends stocks and buys stocks and owns them for a long time. It feels great. What I guess doesn't feel so great about it, though, is that we've been at this for nine and a half years, and as we're taping this show, the S&P 500 is an all-time high. It's up about 330% from that March 2000 low, which is remarkable, more than quadrupled. But I don't feel like a lot of ... there's just not a lot of love. We talked about this earlier in the week. There's just not a lot of love for the stock market. And it's the most unsung, I feel, bull market

in history. And a lot of people just haven't participated in that. If you look at the numbers, it bears it out. The market's quadrupled, but investors have essentially been net sellers of this market all the way up. As someone who obsessively looks at his portfolio, it has been quite enjoyable to see it go up and up and up and up. I don't recommend doing that, but hey, that's what I do. So then the question comes, so now what? How nervous should I be? What should I do? I never recommend timing the market in the true sense of the word, meaning selling all your stocks, paying taxes, hoping you get back in at the right time. It's a loser's game. It's really, in my opinion, impossible to do. So therefore, what do

you do? I think you make sure you're happy with what you're invested in, which you should always do. You have some cash on the sidelines for a rainy day, especially the money you need over the next three years. That should never be invested in the stock market. And I'm personally not committing any meaningful new cash to stocks at this point, except for my typical 401k contribution, and I'll wait out to see what happens. Jason, to that point Ron made about market timing, there is absolutely a cottage industry of people out there who are banging the drum to get out of the market. The crash is coming. What do you say to people like that? Well, I think I can say with 100%

certainty that at some point or another, there will be a market crash. And we're going to be a part of it. I can't tell you when it's going to happen. And frankly, I don't really care. To me, the best time to invest is always now. I think three years ago, we had people that were beating the drum about this next correction, and the stocks were getting ready to tang. this was unsustainable. And if you sat out on the sidelines over the last three years, you're feeling pretty badly right now, because you missed out on a lot of wealth creation. So, to me, this is just a great example of why you always want to be investing. And perhaps it is a time where you want to be a little bit more particular about individual stocks.

But to Ron's point, if you have a job, you need to be contributing to that 401 , and that is the whole point. Doing it in the good times and the bad, we view ourselves as net buyers of stock. We want to buy more than we sell, taking that 5, 10, 15-year time horizon there. It ultimately all depends on what your goal is. But for most of us, I think it is to prepare ourselves for our financial freedom later in life. Yeah, just to add, Jason's right. I mean, the drumbeat for the next bear market has been beating every year for the last nine and a half years. And I think if you're an investor out there who keeps saying to yourself, I can't get in now, I mean, the stock market's all the time high, I can't do it now. But to Ron and Jason's point,

If you just average your way in, if you put money to work regularly, monthly, quarterly, whatever it is, don't commit all the money at once, but just go in, you'll do just fine. Alright, let's get to some earnings. Target's second quarter profits and revenue came in higher than expected. And Ron, same-store sales growth, the best in 13 years. Is it OK that I'm happy for Target? Absolutely! That's not a really analytical thing to say. But, yes, comparable sales, the best quarter results in more than a decade,

with store-only comparable sales of 4.9% and digital sales up 41%. Revenue, strong. Margins slipped a little bit because there's some higher costs for digital fulfillment. I think that's to be expected. But profits up 20%. The company, Brian Cornell, has really been making a concerted effort to turn a lot of this business around by making investments to redesign stores and to boost their supply chain and their technology and their online sales. And it really appears to be bearing fruit right now. And I'm really pleased to see it. I'm pleased to see it as well. I'm not a Target shareholder, but I'm pleased because Brian Cornell has been, as you said, he's been very strategic. When you think about some of the decisions that

he's made to pare down some of their businesses, to get out of the pharmacy business and sell that to CVS Health, it really has paid off. It's paid off. They acquired a grocery startups shipped to bolster that side of the business. They've been very strategic. Committing capital sometimes to turn a business can be a dicey proposition, doesn't always work. So far, this looks like it's working. Yeah, I don't frequent Target all that often, but we were in one the other day. And our local Target, I noticed a couple of things. They had renovated the store, so it looked a lot nicer. But also, they got rid of this grody Pizza Hut snack bar that was at the front of the store, and they replaced it with a Starbucks. And so,

I think they're getting with the times there. The Starbucks, the traffic, it was a line going out into the aisles of the stores. I think looking at this in-store experience and improving that always helps. It sounds like they're making some good steps there, too. Alibaba's first quarter profits and revenue came in higher than expected. Help me understand this, Matty, because their cloud division is growing big. They're putting up big numbers. They're a behemoth. The stock's still moving south. I think there's a larger story here about Chinese tech and foreign listed Chinese companies in general. I mean, Alibaba is not the only one. Alibaba down 19% from its 52-week high.

If I look at Baidu, down 23%. JD.com down 38%. And Tencent down 26%. And these are not your fly-by-night companies. These are massive platforms. Lots of growth. I mean, if you look at Alibaba itself, the core e-commerce business there was up 61% in the quarter. that's an acceleration of growth that they had earlier in the year. And they have 634 million monthly active users last quarter. They've grown that number by 105 million users over the last year. And you mentioned the cloud computing business up 100%. I just think there's such a negative sentiment for whatever reason. Maybe it's the trade tariff talk. It's the U.S.-China trade war that we keep hearing about. Maybe that's causing it. But at some point,

these massive Chinese companies, which are so dominant, got to get some love. And they're not getting any right now from the market. Do you think maybe, if you look back a year ago, was Alibaba's stock maybe a little overheated, where you looked at it and you thought, well, this seems kind of pricey? Because that, in addition to the trade talk, would help me to understand why it's been down. Probably. I think probably the stock hit an all-time high, and the growth was starting to slow down a little bit. But what you've seen is a re-acceleration. The company's made a tremendous amount of investments that are starting to pay off, certainly on the revenue side. And so, I think now, things have reversed.

Stock's a lot lower, growth is a lot higher. It's looking pretty compelling. Lowe's second quarter, as expected, was not quite as good as Home Depot's second quarter. But you know what, Jason? It was good enough to push the stock up 10% this week, and Lowe's shares hitting an all-time high. Yeah, it was a good quarter. And guidance going forward, perhaps, was a little bit light. But I think, really, the headline of the story was, new CEO Marvin Ellison, he went in very prepared for this call, and he painted a very believable picture of success for this business in the coming years. And they're talking about things like simplifying the organizational structure. We heard that omni-channel word

mentioned more than once. Rationalizing the supply chain and inventory management. And also, pulling back on needless expenses and really whittling down that expense structure for the business going forward. So, I mean, we already know that this is a very strong market opportunity in home improvement. We see that quarter in and quarter out with Home Depot and Lowe's always kind of running the second fiddle there. To me, I mean, we know there's going to be a large population of homes in the coming years that are going to be needing that home improvement. And so, I stand by what I've been saying with Lowe's. I think that when we look over the course of the next five years, I think both Home Depot and Lowe's are poised to win. But I think because Lowe's has always played second fiddle and the market's kind of attached that multiple there,

I think the opportunity for investors is actually more in the Lowe's side right now as opposed to Home Depot. Question from listener Aaron Kelly. I always hear you guys talk about Home Depot and Lowe's. How do you feel about Midwest up-and-comer Menards? I know it's private, but it is gaining traction quickly and growing like crazy. Is an IPO in the future? I'd love to hear your thoughts on the show. Thanks for the question, Aaron. I was unfamiliar with Menards. They've got over 300 locations across the Midwest. Well, I was unfamiliar too, Chris, but then I did a little Google-foo, and I found out a little bit more about the company. And this is an interesting concept. They're actually beyond just home improvement. I mean, they

sell groceries and mattresses and stuff out of there. It's basically seen as the third player in this space, based on size, bringing somewhere in the neighborhood of $8 billion, $9 billion in revenue. If it went public, you'd see this thing at about $10 billion market capitalization, still much smaller than Home Depot and Lowe's. I don't think they want to go public, though. The market can be just ruthless on retail IPOs. This is a family-run business. My bet is, Much like Wegmans, they want to stay out of that IPO spotlight and just keep it family-run and private. I can get groceries and tools. That seems odd.

I mean, there's a lot to be said for that. Yeah, I don't know. It sounds like food and stuff. Food and stuff. You can get food and stuff. Perhaps they give Mac's beloved Costco a run for their money. Don't tell him that. Pepsi CEO Indra Nooyi is stepping down in October, but she is going out with a $3 billion mic drop.

Details coming up. This is Motley Fool Money. Alright, quick word about buying a home. Because of rising interest rates, a lot of unpredictability when it comes to buying a home, and it's causing some folks to get anxious. And the good news is, our friends at Quicken Loans are doing something about that. It's called the power buying process, and here's how it works. Quicken Loans will verify your income, assets, and credit in less than 24 hours to give you

a verified approval. This gives you the strength of a cash buyer. Then, once you're verified, you qualify for their all-new exclusive RateShield approval. First, they'll lock your rate for up to 90 days while you shop. And the best part is, if rates go up, your rate stays the same. If rates go down, your rate also drops. So, you win either way. It's the kind of thinking we've come to expect from America's largest mortgage lender. And to get started, just go to rocketmortgage.com. It's that easy.

Rate shield approval is only valid on certain 30-year purchase transactions. Additional conditions or exclusions may apply based on Quicken Loans data in comparison to public data records. Equal housing lender licensed in all 50 states. NMLSconsumeraccess.org, No. 3030. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Matt Argersinger, and Ron Gross. Second quarter profits for The Gap came in higher than expected thanks to Old Navy and

Banana Republic. So, Ron, it appears that once again, the weak spot in Gap's business is Gap. And it seems like it will be for quite some time. They continue to just have inventory problems, and they can't get it done. Comp sales down 5%. This is the same old story. I feel like a broken record. Whereas, Old Navy, just the opposite. Comp sales up 5%. The one difference, I would have to say, Banana Republic was a little bit better this time around. You saw comp sales up 2%, which is a really nice improvement and had been negative relatively recently. So, that's pretty good. The guidance is basically the same. They think they'll still come in where they thought they would at the beginning of the year.

But they continue to struggle. So, what is one to do? Do you pare back the Gap Store footprint and just focus on the Old Navy brand and, to a lesser extent, Banana Republic? Perhaps the answer to that is yes. Well, and when you look at the stock down about 9%, 10% this week, it's still up over the past 12 months. Still up, and only at 11X earnings. So, if you're one who wants to take a little retail gamble, it might not be too bad if you think they're going to make the right moves. Shares of Toll Brothers up 10% this week after third quarter profits for the luxury home builder came in higher than expected.

Jason, last week, Redfin's CEO came out and said that buyer demand is waning. Doesn't seem like Toll Brothers' business is waning. No, no, it doesn't. And I think that what we ultimately have here is a tale of two markets where homebuilders are concerned. So, on the one hand, you have pretty strong demand on the lower end of the market. And that's where supply is still somewhat lean. And so, that demand then starts pushing prices up, which then pushes a lot of those buyers to the sidelines, waiting for prices to come down. And then, that inventory doesn't seem so lean anymore. It can be a difficult cycle to get out. On the other hand, you have high-end builders like Toll Brothers, they're doing really well. Part of that is because

the average Toll Brothers home is around $850,000. And they have actually a pretty big sum of cash buyers in their business. They noted in the call that cash buyers jumped to roughly 24% this year vs. 20% last year. So, when we talk about the more affluent buyer, they're not nearly as sensitive to economic times, whether good or bad. They just have a lot of cash on the sidelines, they can do what they want. So, to me, it is just a matter of Toll Brothers knowing their customer, being able to cater to that customer, and really exploiting the ongoing demand in that part of the housing market. Someone's walking around with $800,000 in cash in a suitcase just walking up and

buying a home? Seems odd, doesn't it? A little odd, yeah. Earlier this week, Pepsi announced it's buying SodaStream for $3.2 billion. Matty, a month ago, SodaStream stock was in the high 80s, and Pepsi is buying it at $144 a share. So, I guess, first and foremost, congratulations to the SodaStream shareholder base. Absolutely. This was a shocker to me. I guess I'll just say upfront, I don't really get this. $3.2 billion for SodaStream. I think in Pepsi's mind, we've got this razor, razor blade model. It's growing. It helps our soda business, which has been struggling. It's a platform that takes a lot of the main

costs out of making soda. If you think about water bottling, you have consumers who have these machines at home, they're obviously using their own water. Most of the time, they're just using the same bottles. Those costs are taken out of the equation, and you're still selling soda. My problem is here, I feel like, in essence, this is cannibalizing Pepsi's existing beverage business in a lot of ways, because the SodaStream is an open platform. People can use all kinds of beverages, not just Pepsi's. And then, you said it, talk about buying at the top. Yeah, it might have been trading in the 80s a few months ago. This stock was trading at $13 just two years ago. So, Pepsi is paying 10X what they could

have bought the company for two years ago. It's a remarkable premium. I know we have a couple of them in the office. Do any of us have a SodaStream at home? Yeah, we've got one at home. Do you use it? I do, as well. I don't use it, no. But I'm not a sparkling water person. We have one, and my wife primarily uses it for sparkling water. Let me just push back slightly in this regard. Pepsi's got the cash. We've been critical in the past of, company X comes out and announces that they're raising their dividend, and we ask the question, well, is this really the best idea you have to do with your money?

at least they're being creative. Although, on the flip side, Ron, would it have been better for Pepsi shareholders if they had just said, you know what, we thought about spending $3 billion on this, we're going to put it towards a one-time dividend? Perhaps. Or buy back stock. I mean, the future will tell if this makes any sense. I agree with Matty, I'm scratching my head a bit. Yeah. I mean, it's an interesting acquisition. I feel like they just paid way too much. I am saying it now. I just think, within the next two years, we're going to know clearly whether this works or not. But I think we're going to see a big write-down of Goodwill

from this acquisition. And, you know, New Year's not going to have to really answer to that. But, hey, that's the way it goes, I guess. Nice being the CEO on the way out, right? If the packaged goods industry is having a rough time, the sports retail industry is giving it a run for its money in that regard. Foot Locker and Hibbett Sports both reporting second quarter results this week, and both stocks falling hard on Friday. Foot Locker down 13%. Hibbit Sports down 29%. Ron, I guess this is where we look back a year ago and see Sports Authority going out of business and look back and go, oh, yeah, that was a warning sign. Yeah, but I don't think you can just look at the stock to see what's going on here,

because I think Foot Locker had a good report and Hibbit not so much. Foot Locker results were strong, beat expectations. Adjusted net income up 21%. Margins are up. Com sales only up a half a percent, which I think was a bit light. And that's maybe what's spooking some investors. But even with the hit that the stock took this week, the stock is only down slightly for the year. That's because it had a 30% run in June, because the quarter last time was really, really strong. And people thought perhaps they'd solve their inventory problems. They sourced most of their product from Nike. New Nike products were going to be able to come on board and really drive prices and drive sales. And it does appear to be happening.

Hibbett, on the other hand, is kind of a mess. They're not profitable. They're losing money. Sales increases were less than expected. They had to cut guidance. And folks are really just abandoning that stock. OK, I'll take you at your word that Foot Locker had a good quarter. But in general, when you look at these two, when you look at Dick's Sporting Goods, which has struggled as well. I mean, this really seems like a very troubled industry, and I'm not exactly sure why. Because it seems like this is a viable business if someone can run it right. Well, and it just flies in the face of what we've seen a little bit lately, which is great news out of Nike, some more positive

traction from Under Armour. I think it's just the fact that these companies, the shoemakers, are finding other distribution channels beyond the traditional sports retailers. Yeah, it's that direct-to-consumer line item you see in every release with these two. they're investing just loads and loads of money in there. And it's becoming more and more a part of their sales going in quarter in and quarter out. So, the more they do that, the more Trouble Dicks and Hibbit and all those other companies are going to be in. All right, guys, we'll see you a little bit later in the show. Up next, journalist Sarah Kessler talks about the end of the job and the future of work.

Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Sarah Kessler is a deputy editor at Quartz, and is the author of the new book, Gigged, The End of the Job and the Future of Work. Sarah joins me now from New York City. Sarah, thanks for being here. Thank you for having me. So, you write about what you call the gig economy. Let's just start there. What is the gig economy, and how big is it? Well, you'd be surprised at how much debate is actually going on around this very simple-sounding question. So, the gig economy is basically a term,

like a buzzword, that we started using maybe within the last five years. And often people use it to describe apps like Uber, where you press a button and someone comes and does something for you and that person is classified as a freelancer. There are things like this that will find you a dog walker, someone to drop off your dry cleaning, a house cleaner, an accountant, a lawyer. There are all sorts of versions of this. Some people also, when they say the gig economy, they're talking about anyone who's a freelancer in general. And that's a much bigger piece of the population. So the app based version, the best estimates we have is that there's about half of a percentage of the workforce is working this way. When it comes to freelancers in general,

it's more like 10 million people, which is a significant amount of the workforce. One of the questions that is constantly asked about generations in America has to do with, essentially, how well generations are going to do relative to their parents' generation. Based on the research that you've done, when we're looking at the gig economy, how is the millennial generation doing relative to their parents? So, there are two sides to that question. One, it seems as though a lot of people are doing this in addition to a full-time job or a part-time job, which kind of indicates that there's something about those part-time

jobs and full-time jobs that aren't meeting people's needs. The other is, if you're only working this way, you don't have any sort of social safety net or labor protections. All of the things that employees get, like lunch breaks and unemployment insurance, maybe health insurance, those don't apply to independent contractors at all. So if we do have more people moving into this, it means we don't have that kind of baseline security that we work to develop around the full-time job. How much of this is being driven by Silicon Valley? I know you spent a bunch

of years covering Silicon Valley for Fast Company. You mentioned Uber. Uber seems like it's only the latest company that when they are starting out and they're making their pitch and they're going around to VC firms, part of it has to do with, well, our labor costs are going to be low because we're going to have freelancers, we're going to have people who are doing this as a side hustle, and so we won't have to pay benefits. Yes. It is between 20% and 30% less expensive to use somebody you call an independent contractor than it is an employee. That's the big driver of it. In terms of how much Silicon Valley is driving it, this is part of a long trend that goes

back to maybe the 70s of companies pushing more and more responsibility onto workers and doing things like outsourcing and hiring freelancers that put more work in the domain of people who aren't their direct employees. That's been happening for a long time. What I'd say things like Uber and some of the new technologies are is an extreme version of this trend. And also, perhaps, an early look at where this is going. Without some of this technology, you couldn't use independent contractors or manage them in the ways that they're being used. And so, you might say that technology offers the potential for this trend to grow. Part of what you do in this book is find the people who are actually involved in the gig

economy, not just in New York, where you are, or out in Silicon Valley, but across America. I'm not trying to ask you who your favorite child is, but when you think about the people that you've met along the way writing this book, what are one or two of the stories and the people behind them that really stand out to you? Yeah, I think that the important trend that I took away from this is that it looks a lot different depending on who you are. There's not like one story of the gig economy that is the truth. So, for instance, one of the people who I followed, his name was Curtis, and he was a software developer, a new graduate, really, really bored at work, you know, didn't have enough to do, wasn't being challenged. So he quit his job

and joined the gig economy on one of these apps that routed programming jobs to him. And, you know, he didn't have to do the things that he would have had to do if he were traditionally freelancer, like advertise or go find clients. You know, they just routed it to him. And it really was like the thing that gig economy companies often say it will be, you know, he was independent and had flexible work. He could choose challenging projects. Um, but also Curtis had saved a year's worth of living expenses before he started. He had a really highly in demand skill that paid him really well. He could afford his own health insurance. His savings allowed him the stability to not worry about if a client left, would he be able to buy groceries? On the other hand,

I followed this man in rural Arkansas who had basically found a gig economy job because there weren't a lot of other good options around him. His job was answering customer service calls for Sears. So, if your air conditioner was broken, you might have ended up on the phone with him. But his actual employment relationship with Sears was that he was an independent contractor that worked for a small business that had a contract with a call center that had a contract with Sears. So, at this point, he has almost no relationship with Sears. Like, if something goes wrong, they're not going to say that they're responsible for him. And when he has to pay for his own training or not get paid for a month when they're training him because he's an independent

contractor, you know, his bills are piling up and it's not like he can do other work. And that's a big deal. You know, not having health insurance is a big deal. You know, he's worried that he's not being paid fairly, but he can't complain about it because he knows that there's no wrongful termination laws that protect independent contractors. And so he's afraid that he'll get fired, and there's nothing that he'll be able to do. The company made him commit to working 30 hours a week, but there was no reciprocity in that there'd always be hours available for him. So, when the company had a lot of work that needed to be done, he could get work. But if they didn't, he couldn't. So, that's flexibility for the company, not flexibility for him.

And so, it really does look a lot different depending on who you are. We talked about Uber. Uber, obviously, is still a private company as a show that likes to focus on public companies. In your observation, what are some of the public companies that are really tapping into the gig economy and transforming how we work? Probably every company uses some workforce that is not its direct employee. The janitor works for another company that contracts them out. They work with freelancers. They have temp workers. I mean, Microsoft in the 90s was sued because it hired software developers as independent contractors, but basically treated them as employees. This is a really old story. I think

that. Apps like Uber demonstrate the potential of this. And they also give us a talking point that this is something that has been happening a long time, everywhere, for a long time. What surprised you the most when you were working on this book? The extent to which the stories really were different depending on where you were coming from, but that the pitch was so often the same. There's this mentality about the hustle culture and being an entrepreneur. That is really true if you are somebody who's starting a small business or a startup, but you also have this huge potential upside. That got hijacked and applied to these things that don't look at all like starting a business or being an entrepreneur.

you know, that might be being a house cleaner for a cleaning company that calls you an independent contractor. But still, kind of all the messaging is, you're flexible and independent and you're mini-business. And I thought that that was really surprising. You're a reporter, a journalist, an editor. It sort of seems like writing this book was your gig. You kind of did this on the side. This is your first book. So, I'm curious, what do you know now about writing a book that you didn't know when you started? Yeah, you're right. A lot of people in the gig economy, this was my supplemental income gig. What I know now is that it's a lot of work, which I suspected. But this was

many years in the making. It was two full-time jobs, not a part-time job and a side project. Where do you think the future of work is going? Do you think it is continuing down this path where, if you and I are talking a few years from now, the numbers that we talked about earlier are going to be double what they are now in terms of tens of millions of freelancers? Or do you think the gig economy has a ceiling? I think that there's always going to be traditional jobs. Just like there's traditional retailers, but we wouldn't say e-commerce is totally irrelevant, which is now still, I think, 10% of retail or something very low. I do think, though, that we're setting ourselves up for this to grow, if I had to guess.

I mean, the fact that companies are so incentivized by the way we've set up our whole system and our laws to hire independent contractors whenever they can, because it makes it between 20% and 30% less expensive, coupled with technology offering new ways to manage independent contractors and find them at short notice and plug them into your work in a way that maybe you couldn't have without the technology. I think that those two things would make me predict that this will grow. If you're interested in the future of work, this book is absolutely essential reading. The book is Gigged, The End of the Job and the Future of Work, and you can find it anywhere you find books. Sarah Kessler, thanks so much for being here.

Thank you. Coming up, we'll give you an inside look at the stocks on our radar. Stay right here. You're listening to Motley Fool Money. Before we get to the stocks on our radar, a quick shout-out to Away. Away makes affordable, high-quality suitcases that charge your phone. By cutting out the middleman, Away is able to offer the perfect luggage made with high-quality materials at a much lower price. The luggage comes in five different sizes and over 10 colors, and it comes with a lifetime warranty

so that if anything breaks, Away will fix or replace it for life. Away sent a few pieces of luggage here to The Motley Fool, and I got a chance to use one of them on a trip, and it was fantastic. I loved it. It just made it easier. It just made traveling easier. Traveling's a hassle, and when someone can make traveling easier, I'm all for it. They also offer a risk-free 100-day trial period. So, if at any point you decide it's not for you, you return the luggage for a full refund, no questions asked. Let me tell you, though, I don't think you're going to need the 100 days. I think you're going to fall in love with the bag and you're just going to keep it.

Away has a special offer for our dozens of listeners. For $20 off a suitcase, go to awaytravel.com slash fool and use the promo code FOOL at checkout. That's awaytravel.com slash fool. Don't forget the promo code FOOL. 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 once again with Jason Moser, Matt Argersinger, and Ron Gross. Guys, before we get to the stocks on our radar this week,

our email address is radio at fool.com. Drop us an email. Let us know how you're doing, where you listen. And if you want, you can ask a stock question, like Joseph Hardy did when he wrote, why do stocks move down following great news? I'm currently long several bio stocks that have moved down following FDA approval. Great question. And Matty, I don't know a lot about bio stocks and FDA approval. Here's what I do know, though. Sometimes approval is not a blank check. Sometimes the FDA says, we've approved your drug, but we've put restrictions on it that you probably weren't hoping for. Right. I'm going to let our expert, Ron Gross, talk about the biostocks. But to answer the question, I would just say,

perception and expectations play actually a much bigger role in the stock market than most investors think. We think good news comes out, this revenue rose up 20% for a particular company and they beat expectations, great, stocks should go higher. The problem is, there's a lot of built-in expectations that suggest maybe the stock investors were expecting revenue to be even higher or earnings to be even better. And sometimes when that doesn't happen, or especially if a company is rather tepid with their guidance for the future quarters of the year, that can play a huge role. So, it's not always the good news, it's really just what investors are expecting. Yeah. Sometimes it can just be what

we hear, profit-taking. A lot of those Wall Street firms are much more short-term focused than we are here. And so, they're investing in these businesses to take a bit of a more quarterly approach to things. If good news comes out, they see an opportunity to take some money off the table and take some profits, that's great, they do that. And it's always worth remembering that when you flood the market with a lot of shares for sale, that typically is going to push that price down in the near term. And specific to biotech, which is truly a beast unto itself, those rules don't necessarily apply to all regular, in quotes, industries. A lot of it depends on how effective

a clinical trial was. If things came back positive, but not as positive as perhaps the company had hoped, the stock will sell off. If the FDA makes an approval of a drug or a technology, but the market size perhaps isn't what people thought it would be based on what the approval looks like, there's a million reasons that people would take money off the table in biotech. But Often, you will see a buy on the rumor, sell on the news type of effect, but then it doesn't happen because you get a blockbuster FDA approval or a blockbuster third clinical trial, and the stock will skyrocket. So, biotech's tough.

Well, biotech is tough, and broadening it to all industries, we've talked before about headline risk and how that can affect certain companies, and as we saw recently, Jason, how it didn't affect Chipotle. Yeah, yeah. I mean, I think we throw that bromide around that the market in the short term is a voting machine, and in the long term, a weighing machine. And we see that dynamic play out all of the time on these quarterly releases. Obviously, we take the longer views, so we're looking to have very heavy companies.

We're focused more on the weighing machine part of things. But that voting machine nature is something I'm afraid is always going to be there. For the record, I would never throw bromide. And I agree. To Jason's point, we talked about the Chinese companies earlier. Look at how the market is voting against those companies right now, even though in my mind, based on the results, they're getting heavier. Let's get to the stocks on our radar. Our man Steve Broido is on vacation this week, as is producer Mac Greer. So, if the show isn't any good, that's why. But fortunately, behind the glass, MarketFoolery producer Dan Boyd

is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week? Dan, I hope you're hungry. I got Texas Roadhouse, TXRH, full-service casual dining restaurant chain with 565 locations, solidly profitable. I think plenty of room for growth. 33 consecutive quarters of same-store sales growth. Their new concept, Bubba's, is doing well and has room for growth. They have raised their dividend since their 2011 inception of that dividend at an annual pace of 17.6% per year. Dan, question about Texas Roadhouse?

So, Ron, that's all very impressive, but would you rather eat at Texas Roadhouse or watch the Patrick Swayze masterpiece, Roadhouse? Wow! That's a good movie! It really is. I'm going with the movie. Alright, Jason Moser, what are you looking at this week? Yeah, taking a look at Chipotle, ticker is CMG.

I'm a little bit befuddled here. I mean, I can't help but wonder, is the headline risk really actually over? I mean, is this something that the company has finally gotten past? Because we know it wasn't very long ago a lot of folks in Ohio got sick from some store-related issues. Look at some of these numbers here. National Avocado Day drove digital sales up 60%, giving the company its best summer day ever. The recent back-to-school BOGO offer resulted in 1.9 million entrees sold on Saturday, giving Chipotle its best weekend ever for the company.

I mean, I feel like maybe the market's going to give Brian Nichols some slack here to try to work his magic. And that's why the stock is actually up on that Ohio news. It's just confounding. Dan, question about Chipotle? So, Texas Roadhouse concept is doing well, Jason. But what about all those concepts we were hearing about from Chipotle? Well, I think they found very quickly that working this type of restaurant in fast casual with those types of ingredients is a lot easier said than done. So, I would erase all of those other concepts from your mind and just get used to these guys focusing on Mexican and Mexican-only.

Matt Argersinger, what do you got? Camping World, ticker CWH, a stock I brought up a little while ago. I'm just not sure why the stock is trading at an all-time low. Speaking of investor expectations, I thought the second quarter results were solid. Sales of RVs were up 8% to a record. Same-store sales were positive. And Camping World's inventory, which has been growing faster than revenue in recent quarters, took a big dip, fell 6%, actually, and that's despite opening more stores in the quarter. It's very impressive. Dan?

So, RV sales are up, but who's buying RVs? You'd be surprised, Dan. I mean, I think you probably fall in the millennial category, but Generation X, which I fall into, apparently are big RV buyers. Dan, three stocks. You got one you want to add to your watch list? Yeah, I actually like Texas Roadhouse out of all those. I love that guy.

All right, Ryan Gross, Jason Moser, Matt Argersinger. Guys, thanks for being here. Thanks, Chris. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next week.