Motley Fool Hidden Gems Investing - The Business of Hurricanes

Episode Date: September 14, 2018

Hurricane Florence makes landfall. Apple unveils new phones. Nike hits a new high. Dave & Buster’s delivers. Sears surprises. And Volkswagen kills a bug. Motley Fool analysts Matt Argersinger, Ron Gross, and Jason Moser delve into these stories and discuss the latest with Kroger, AMD, and more. Plus, analyst Tim Beyers weighs in on Tesla, the battle for the living room, and why Microsoft might be the new Apple. Thanks to Casper for supporting The Motley Fool. Save $50 on a mattress at http://www.casper.com/fool (use the promo code “Fool”).         Learn more about your ad choices. Visit megaphone.fm/adchoices

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Just go to casper.com slash fool and use the promo code fool at checkout. 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, Senior Analyst Jason Moser, Matt Argersinger, and Ron Gross. Good to see you as always, gentlemen. We've got the latest headlines from Wall Street. We will dip into the full mailbag, and as always, we'll give you an

inside look at the stocks on our radar. But we begin with Mother Nature. As we are recording this, Hurricane Florence has made landfall in North Carolina. An estimated 10 million people are in the storm's path. So, first and foremost, hope everyone is going to be okay and is just hunkering down to ride out this storm, Jason. But this is also a story with business implications. It is, yeah. I mean, my heart goes out. I went through Hugo in 89 in Charleston, and it was just a nightmare. So, it's a tough thing to recover from. But recovery does happen, and there are companies out there that help that happen. And certainly, they can present opportunities for investors. I think the first

thing to remember, we always talk about insurance companies, I think that's the main exposure here. These insurance companies are not taken by surprise when it comes to catastrophic losses like these. I mean, that's the nature of their business. And so, they plan for these kinds of things. With that said, it does seem like there have been a lot of natural disasters more recently that are costing these insurers a little bit more than they have been planning for. Look at Travelers Insurance, for example. The most recent quarter here, they reported catastrophic losses of $488 million versus $400 million from a year ago. But they did note that they had not planned for this high of a loss. It sort of outpaced their expectations.

And so, that's something to note. I mean, they said in the call even that tornado, hail, nor'easters, hurricanes, wildfires and mudslides, we haven't seen a string like that in the last decade. It makes a difference. And so, I think you're going to see more and more insurers start to plan a little bit more conservatively here going forward, because it does seem like there's a trend building. Yeah. And that frequency has to impact premium prices. And if you don't get it right, and by the way, it's hard to get it right, then you start to take hits in your combined ratio, your profitability. And that's where it can get a little dicey as more of a longer-term trend, where insurance companies do not have

their pricing structures correct. And then you could hit the stock and really impact the business. You mentioned the combined ratio. I think that's an important point to note, because with Travelers, the combined ratio of 97.9% in 2017 was 5.9% higher than in 2016 when it clocked in at 92.0%. And just for people out there, for context here, you like that number to be under 100%. That means you are underwriting profit is occurring. If it's over 100%, then you're losing. And we do see sometimes those insurance companies turn in those combined ratios over 100%. I wonder how much of the story here is the fact that over the last 50 years, I mean, there's just been so much development right

on the coastline. And so, you know, marinas, resorts, condos, people like to live near the beach, near the ocean. I understand that. So the amount of insured property in one of the dangerous parts of the country, which is the coast, if we're going to have more hurricanes. I even read a story over the summer where a lot of these coastal towns have actually spent millions of dollars replacing their beaches, rebuilding the dunes, the sandbars just to hold onto the beach. So, even small hurricanes, and I think Florence, it's a big storm, but I think it hit shore as a category one storm. Yeah, it got downgraded to category one.

Right. So, even that storm, which you wouldn't think looking back, how much damage could this really cause? But even a storm like that is probably going to end up causing tens of billion dollars worth of damage, given all the development we've seen over the past decades. Yeah, the interesting thing is just sort of this cycle that plays out, because like Ron mentioned there, eventually, insurance premiums go up. These insurers are protected by other insurance companies known as reinsurers, and their rates go up. So, it all sort of plays out as just higher costs of doing business, and those costs eventually can be recouped. But then, if you look on the other side of the coin, look at those companies, those restaurants, those retail

operations that will never gain those sales back. I mean, every day that they're closed, those are sales that are never going to get back. And I was looking here at Bojangles, and God Godspeed, little Jangler. 40% of their stores are in North Carolina. My guess is, we will see Bojangles in particular. That's a good example of a company that is probably going to witness a good ding to their revenue here for at least a quarter, if not more. This week, Apple held an event to unveil the latest versions of various gadgets, including its largest and highest-priced iPhone ever, the iPhone XS Max, which starts at $1,100. And Ron, the new Apple Watch now comes with the ability to take an electrocardiogram.

That's FDA approved. That's a little scary. You know, when I first read the headline here, I was underwhelmed. And I am an unabashed Apple enthusiast. I own the stock, the phones, the iPads, the computers. Like, I'm all in. But this didn't excite me. I was wondering what the impact would be on the stock.

But I dug a little deeper, and I got a little more comfort here. I actually think the larger XS Max, which you know is the most expensive, is going to be attractive to a certain subset of folks who really love the phone getting bigger and bigger and bigger. But I think the bigger opportunity is actually the lower-priced XR, which is at $749, and I expect that will do well. You give up a little functionality, it's made of aluminum, for example, but it's actually a larger screen than the iPhone X was at a price point of $749, and I think that will do well. Yeah, I agree. I think we've seen where there are people out there that will pay

that really high price point for a phone. The majority of people, though, are not looking to do that. We've seen unit sales stagnate a little bit. But I think that $749 price point is pretty encouraging. I'm still sitting here on my iPhone 6, and I'm trying to get everything I can out of that. And I did that $29 battery replacement, it really extended the life of this phone. So, I'm not in the market to upgrade, but I have to imagine when I am ready, I would be focused more on that $749 phone, not that $1,000-plus phone. The Apple Watch and the FDA-approved electrocardiogram, I mean, if you're Fitbit and you're watching this, how disconsolate are you if you're Fitbit? Because it really

seems like, even if they don't have the Apple Watch flying off the shelves, they've absolutely raised the bar in terms of what people can and possibly should expect out of that kind of device. Yeah. If you're Fitbit, you're saying, they're coming for us, and they're here. And I don't think this particular watch is a game-changer, but it's the beginning of Apple really moving forward with the health functionality of that watch in a pretty big way. And it'll probably get better and better. And once doctors start to kind of rely, you know, prove it, I think it'll be, you know, even more of a game-changer. We've talked plenty of times in the past about Intel, the $200 billion chip maker.

We rarely talk about its competitor, Advanced Micro Devices. And maybe that should change, Matty, because shares of AMD are up 200% in just the past five months. What is going on with AMD? I know, I couldn't believe that number when you said it. So, get ready for me to talk about things I know very little about. Which happens more often, of course. No, no, this happens quite often, actually. But, you know, AMD, I think this was, for a lot of investors, a cryptocurrency play. Kind of early on, you go back six to nine months, the AMD chips kind of powered the

computers and servers that were doing all this heavy number crunching behind Bitcoin and other currency mining, of which I understand very little. But I think overarching all of this, and I think this is why you've seen a lot of chip companies really hit all-time highs and have great years, it's just the whole rise of cloud computing in general. If you think about the heavy-duty cards, enable things like data center virtualization, all the graphics work, visualization that happens there in the cloud. It's a massive trend, and I think AMD has ridden it like a lot of companies. They've done a great job. And I think that we're now at the point where AMD is out of

the woods, because you go back five or so years, and yes, it was a direct competitor to Intel, but it was so much smaller. There were really times where you just thought, gosh, if Intel wanted to, they could probably go through their sofa and find some pocket change and just buy them out. That's right. I think AMD's probably found its niche in a few areas, and so it's building that consistent demand. I would just point out, though, that it's not necessarily a growth company. I mean, if you look at the revenue, it was up 6%. Last year, it's risen about 7.5% over the last five years. And gross margins have risen a little bit, but still well below historical highs. Compare that to NVIDIA,

which is kind of a player in the same space. Revenue there is growing 40%. So, I just want to say, these stocks tend to be cyclical. I'd be a little careful about AMD. Second quarter revenue for Dave & Buster's came in 11% higher than a year ago. Not a perfect quarter, Rob, but it was good enough to send the stock to a new 52-week high. Yeah, definitely a mixed bag, some good, some bad. The bad is that same-star sales actually fell 2.4%. One of the good things was that it actually was better than expected. one of those expectations games. As you mentioned, revenue was up nicely. Earnings were up nicely, 18% earnings per share, also better than expected. The company is doing better as they open new

stores. That's kind of what helped the revenue pop. All things being equal, with same-store sales down, if they didn't open new stores, you would have seen a decrease in revenue. So, they're continuing to put up new stores, which are adding to the bottom line. Earlier the week they instituted a dividend, which they now have a 1% yield. They put in a share repurchase program of $100 million. They raised guidance. So, all in all, a mixed bag, but I think it leans towards a nice report. Should they be buying back $100 million worth of stock? The authorization doesn't mean they'll execute it. The stock is, I want to say, 22X forward earnings based on the new guidance.

incredibly expensive, but I bet they'll be opportunistic. Coming up, one iconic brand is driving off into the sunset. Stay right here. You're listening to Motley Fool Money. Quick shout out to TD Ameritrade. You're always on the cutting edge of technology, and TD Ameritrade prides itself on being ahead of the curve, too. Their latest innovations put their resources and services on the popular platforms that you carry and use every day. I've been using TD Ameritrade for nearly two decades. And now, to stay on top of the markets, all you have to do is enable the TD Ameritrade skill for Amazon Alexa or message them on Facebook. You can learn more about their commitment to innovation at tdameritrade.com

slash innovation. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Matt Argersinger and Ron Gross. Shares of Kroger down more than 10% this week after second quarter sales came in just a little bit lower than Wall Street was expecting. I don't know, Jason, this seems a little bit like an overreaction. This seems like a pretty solid quarter for Kroger. It feels like an overreaction. I agree with you there. I think the one thing to always remember with this space, it's a really difficult space in which to operate, because it's all about low prices. And you can see that play out on their margin line quarter in and quarter out. But I do think that Kroger actually continues

to do a very respectable job in the space. And if you remember a little bit over a year ago, when we got the news that Amazon was acquiring Whole Foods, and then we saw all of the grocers in lockstep just fall straight down. And we felt like that was an overreaction then, and over time it's proven to be. Kroger is still up from around $22 per share when that news came out. So, I think that the positives, I mean, they're doing a good job in driving digital sales, 50% growth in the quarter, 66% last quarter. They continue to push their private label brands. And what I think is really encouraging, too, is they're opening up distribution to international markets via Alibaba's Tmall platform. So, I think all in all, I mean, grocery is a very difficult

space. It's a thin margin space. But Kroger is a big presence in it. Remember, they also own Harris Teeter. Interesting. They tried to acquire Boxed a little earlier this year, and Boxed said, thanks, but no thanks. We're going to keep on trying to do this on our own. So, I think they're doing well. I think you're right. It was a bit of an overreaction. Well, and you look at CEO Rodney McMullin. I mean, he's got a three-year plan to really build up, in particular, delivery to e-commerce. And he seems like he's got a steady hand on the wheel there, because they're not deviating from that three-year plan, and they're just in the first six months of it right now.

You're right. Extremely forward-looking and also very, very transparent and communicative on the call. It's very encouraging. Less than two weeks after unveiling a new ad campaign featuring Colin Kaepernick, Nike shares have hit a new all-time high. Matty, probably a good time to remind people that Mark Parker has been the CEO of Nike since 2006, and maybe give him the benefit of the doubt. I think so. I think I would give Nike the benefit of the doubt. I mean, I know there's a lot of hubbub about this Kaepernick ad.

It's created a lot of controversy on Twitter and on the news, and then there's a record Instagram likes thing going on out there. But let me take you guys back 25 years ago. Steve, can you roll the tape? I am not a role model. I'm not paid to be a role model. I am paid to wreak havoc on the basketball court. Parents should be role models.

Just because I dunk a basketball. Doesn't mean I should raise your kids. All right. So that premiered in the summer of 1993. Obviously, at the time, there was no social media, so I'm sure there had been uproar about it. Charles Barkley. Yeah, Charles Barkley.

Great amount of rebound. Exactly. I mean, and, you know, that's a long time ago. Nike got a lot of, you know, there was a lot of hubbub about that one as well. Here's a number for you, though. 33. Chris, when you hear 33 in sports, what do you think about? Well, I'm a Boston sports fan, so I think Larry Bird.

I do, too! But it's also the number of times that Nike's market cap has increased since the summer of 1993. It's a 33-bagger since then. So, just to make that comparison, Nike has taken risks like this before, and it's paid off. And just look at the growth in the company since that controversial ad 25 years ago. In 33, I'm thinking it's a good front nine. The second quarter loss reported by Sears came in at just over $500 million. Ron, since 2010, Sears has lost close to $12 billion. How in the world do they still have more than 800 stores? I wrote here on my notes, pathetic and big bold print. This is a nightmare. Just go away.

Go away. I mean, comp sales down 3.9%, which everyone is saying is great because it's less than the 11.9% from the first quarter. But everything is just bad. But I'm going to give them, I got to be an analyst here. There is one silver lining, and that is in the most recent months, comp sales have actually increased. 3% in July, 2.5% in August. So, if you're an optimist and you think this is a trend and they're finally getting their act together by closing hundreds of stores and cutting costs, by all means, go for it. But caveat emptor, I would stay away. Well, and you have Eddie Lampert, who's running Sears, talking about, and for context, Sears has a market cap of around $140

million. He's out there talking about not just, well, yes, we're going to be smaller, but we're also going to be more profitable. He's talking about buying back the Kenmore brand, which would cost somewhere around $400 million, how's he going to make that? In what universe does that make sense? The board has a special committee looking on it, and then there'll be a go-shop provision where other people will be able to come in and make bids against him if he was successful, according to the board. He's been selling assets, closing stores, giving cash injections,

anything he could possibly think to do to keep this afloat. Don't forget, though, there's over a billion dollars in pension obligations on this company as well, which we tend to forget, because we're mostly focused on the fact that they don't sell stuff. But the balance sheet's a mess also. This is remarkable, because if you go back 15 years ago, roughly when Eddie Lampert took Kmart and he merged it with Sears, and you could hear every value investor in the world say, hey, this is great. I mean, yeah, Sears as a retail business isn't doing very well, but you've got real estate, you've got Kenmore, you've got Craftsman,

he's going to be able to create all kinds of value from these assets. But I just think the lesson here is, if the core business itself is crumbling apart, I don't care what kind of other asset plays that you might have with the business. Generally, unless there's some kind of private equity and you can take it private, it's not going to work out. Volkswagen announced this week that it is ending production of the Beetle in 2019. Last year, Volkswagen sold just over 15,000 Beetles in the United States, which is, honestly, that's about 15,000 more than I would have guessed. What strikes me about this story, particularly, Jason, in relation to Sears, is, if five years

ago you had said, which one is going to be gone first, Sears or the Volkswagen Beetle? Even though I didn't have high expectations for the Beetle, I still would have bet on that. Sears is going to outlast the Beetle. That does seem odd, because cars haven't really changed all that much. I mean, yeah, we're in the age of Tesla now, and we're moving over to the electric vehicle, perhaps. But it hasn't changed like the face of retail has changed. And I tell you, Sears, they're on the way out, for sure. But to see that this bug is not going to be anymore, I mean, it's the end of an era. That takes me back to my childhood.

And from a business standpoint, I understand why Volkswagen has made this decision. But I think there's a lot of emotion, a lot of fondness for the Beetle. And for this, we turn to our man behind the glass, Steve Broido. Steve, when you heard that the Beetle was going to cease production what was your reaction on a gut level kind of a bummer i mean i remember riding uh as a kid in an old one and then the new ones came out around you know in 2099 something like that and it was exciting it was like the beatles back and now it's gone the vw bus you remember the hippie bus back in the day that's completely gone too they make a lot of iconic things that eventually go away they got to bring the bus back they got to bring that they are

bringing the bus back oh oh nice there we go oh man that thing looks like it's just ready to tilt over at any turn i'm glad we're ending on a positive note all right guys we'll see you later in the show up next we're talking media and entertainment with analyst tim byers stay right here you're listening to motley fool money Welcome back to Motley Fool Money. I'm Chris Hill. On the line is Tim Byers. He analyzes the media and entertainment industries for The Motley Fool.

And he joins me from Colorado. Tim, thanks for being here. Great to be back, Chris. Love being on. Let's start with Apple's big event. It's bigger phones, more expensive phones. Yeah. What's your headline for the event?

The phones don't matter. Why are we ignoring Apple's next big thing? I mean, really, the phones, we have entered the incremental era of Apple Inc. Now that they're a trillion-dollar company, we can expect that the Microsoft of 30 years ago, which was the next point, you know, upgrade is now the new Apple. That's not to say that that's a bad business. I mean, they are raising prices. They have a great brand. These are great products. You know, the three big phones, the XS Max, which is if you want a phone that's almost as big as your computer, you can get that one. I mean, it's $1099. Then there's the Apple, you know,

the iPhone XS. So the Max is the bigger one than the XS, which is essentially the same phone, loss of functionality just a little bit smaller and then there's the xr which is like the cheaper version of all of it it's like you know the everyman's phone if you want an upgrade and you don't want to quite spend for the iphone x that's the one that you get they're all really good and it's going to be a good business for apple because prices are going up but the new apple watch is where apple is headed and i i am a little mystified as to why there's no coverage of that Because when you think about the phases of Apple, Apple was computers, then it was phones, and it's going to be wearables. And I'm not just making that up.

That's already happening. They're selling watches. They have people they've brought in from the fashion industry to design the next phase of Apple products. So where Apple is moving, where they're skating to, the puck is going that way, and where they're skating to is wearable devices. much smaller, not iPhones anymore. If there was a signal from this conference, it's that iPhones are going to be around forever, just like Macs, but they don't quite matter as much as they used to. But in terms of the money, I want to go back to your original comment of the phones don't matter. I mean, this is a cash cow for them. And the iPhone appears to be the

one piece of consumer electronics that continues to be the exception to the rule. The rule being when it comes to consumer electronics costs go down over time and that's true for televisions that's true for so many things except for this one thing tim yeah i know and it is amazing and that's because apple has a brand you know a premium brand and it is you know it is still a relatively new product in some parts of the world so it does have that going for it so you know there is there's something to say for that. But you're right. It is a cash cow. It's just something like, you know, the Mac was for years after Apple sort of found its footing and created an ecosystem around the iPod. Mac sales started spiking. And for a time there, it was only Apple

that was growing its share of desktop and laptop computers and everything else was falling. And that was the cash cow that was funding the development of new iPhones. Now what I see is that the iPhone is the cash cow that is funding the next phase, which is wearables, computing everywhere. And nobody has more dedicated engineers to making stuff small and beautiful that people would want to actually wear than Apple. I don't think you'd get that in a Windows device or even in an Android device. But I think Apple could pull that off. I want to get to Apple's role in the entertainment industry in a minute, but Tesla has been all over the news lately. And you've mentioned that an early warning sign of Tesla's problems may actually involve Apple.

Yeah, it's very interesting, right, that you have a few years ago, I think it's 2013, that when Apple started messing around with who are we going to partner with in the auto industry? because you know music was changing uh you know getting things on demand the ipod was very very popular that was another cash cow product for a long time and you would think that the the brand that apple would partner with would be tesla i mean it's just a natural fit and they chose volkswagen which was a little bit shocking and they're still working with volkswagen And, you know, it's like Apple smelled the stink at Tesla some years ago and said, I'm not sure that we like what's going on here. I'm not sure that that's true. I still think Tesla is an interesting company.

I think there's a lot of things broken there right now. But I would have thought that was a natural partnership. But when they had the best chance to partner, they didn't. And that was Apple's choice. And that tells me something. So, I think we've been seeing this coming for a little while. Let's move on to the battle for the living room. AT&T has completed its acquisition of Time Warner.

And earlier this week, AT&T CEO Randall Stevenson was talking up his new portfolio of content and said that if Netflix is the Walmart of director-consumer streaming, then HBO is Tiffany. And he took some heat for that because, of course, if you're just looking at two standalone companies, Walmart is so much bigger than Tiffany. But I think directionally, he probably wasn't too far off in terms of the analogy. What did you think? I think it's ludicrous. I think it's absolutely ludicrous. Well, here's why.

In terms of the technicalities of the analogy, yes. Okay. I get what he's trying to say. HPO is a premium premium brand. It is a brand leader. It's always showing up at, you know, the the award ceremonies. It is brought out more critical programming and brought us more, you know, amazing original content than anybody else. HPO did set that standard.

OK, that's fair. there's a big problem with his argument which is that hbo is a content creator and has no distribution tower whatsoever zero except for the what they're doing online which is starting to get a little bit of traction whereas netflix has customized content for every country they're in and they're in 190 countries and they have a one-to-one relationship with every customer in those 190 countries. That is extraordinary. So I know what he's getting at, but in terms of value, and if you're trying, if I'm an investor and trying to say like, HBO is way more valuable than Netflix, that is ludicrous. No way is he right. So where is YouTube in all of this? And

you can use a retail analogy if you want, but YouTube does seem to be the X factor when it comes to streaming services, because if you put a gun to my head, Tim, I don't think I could name a YouTube show. Yeah, no, and me either. But can you name the number of things that Amazon.com, you know sells i mean i could name some things only because i know that they're things and i know that amazon probably has it because amazon has everything so i could name some things like music videos and tv shows and old shows and because youtube has everything i think it's probably on youtube you know so i i kind of compare amazon and youtube i think youtube is the catch-all. It gets everything. And it gets it for a pretty low cost and it gets it to you

pretty fast and you know how to use it. And so it's very familiar. YouTube has stickiness that I think other services don't have because it's been around a while and people just know how to use it. And not only that, but you have younger generations that use it to consume stuff in like 30-second bits. And so it's just a permanent part of the infrastructure. Let's go back to Apple, because when you were on the show a few months ago, Apple was close to a deal for an animated feature film. They've completed that deal. They're acquiring television shows. Are we going to see a streaming service from Apple in 2019? Because Lord knows they've got the cash to make a big push on something like that.

I think we will. I think we'll at least at the very least, we will see a much more aggressive and interesting effort in in consumer devices that you sort of, you know, everything in your home. Like, I think Apple, the next thing, you know, like wearables, wearables goes into home. Like, it's just, you know, Apple is going to surround you with electronics and be pervasive in your life. And so, yes, I think that's going to happen. I think it'll come through Apple TV and Apple will be an aggregator of stuff. That's what they're really good at, by the way. You know, Apple and what Tim Cook is really amazing at is bringing a lot of things together, bringing processes together. Because remember, he was Steve Jobs' number two guy. He was the chief operating officer. If anybody knows how to squeeze efficiency and make things that aren't supposed to work together work together, it's Tim Cook.

And I think he's doing the right thing in terms of putting resources where he can have the most impact, and he can have a really big impact in Hollywood. And he can do something that the rest of the players really can't. He can control distribution in a way that Amazon and Netflix can't and create something that's unique because he's got Apple TV. So, yeah, I think we're going to see it. I think it'll have space, you know, to operate. It'll be a niche operation to start. But Apple has so much cash. How could you bet against them? All right. Before I let you go, what's a stock that you're excited about these days? One that we have not talked about yet. OK, well, we talked about the company just a couple of minutes ago, but I really like the stock and I'm going to bring it back around and say Microsoft is cool again. Microsoft is arguably cooler and doing more innovative stuff than Apple. And I yeah, I never thought I'd ever say that. But I mean, Microsoft is the company of Dr. Evil style freaking underwater data centers that operate on saltwater. I mean, this is intensely creative and brilliant stuff. And it's the home of GitHub now. It was a few months ago that Microsoft made the winning bid.

They beat out Google to get the home of most software developers. GitHub is a place where software developers gather. They share projects. They share workflows. If you have a problem that you need to solve, chances are, if you're a developer, you'll go check GitHub and see if somebody's posted something up there. And Microsoft was able to convince the founders that they should go with them instead of with Google. I thought that was an extraordinary thing. And then I looked into it a little bit more.

Microsoft happens to be the biggest contributor by far to GitHub. They're doing a lot more in the development stage. You know, some of our listeners might remember a sweaty Steve Ballmer dancing around on stage saying developers, developers, developers, developers. It really is all about developers again at Microsoft. And they're creating a lot of value. The stock is fairly priced. Satya Nadella has changed that company for the better, and I love the stock. So just to be clear, when you said Microsoft is cool again, did you mean to say Microsoft is cool again for software developers? Yes, I guess that is fair to say. I'm an Apple guy, so I'm not really much of a Windows guy,

even though I use Windows regularly for the job. But I will say that, shockingly enough, Microsoft is making cool stuff. And the people that are ignoring this company right now are ignoring one of the potentially great stories of the next 10 years. Tim Byers covers media and entertainment from Motley Fool, Rule Breakers, and Supernova.

Tim, it's always good to talk with you. Same here, Chris. Take care. Coming up, we'll give you an inside look at the stocks on our radar. Stay right here. This is Motley Fool Money. All right, before we get to the stocks on our radar, I don't know the last time you bought a mattress, but if it's been a while, you got to check out Casper. Their mattresses are designed by humans for humans.

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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. before we get to the stocks on our radar, and Ron, even before we dip into the Fool mailbag, I have to say that we're hiring here at The Motley Fool. We've got many positions open, and you can check them all out at careers.fool.com. Two words, pizza day.

Two more, cake day. And a lot of other benefits, careers.fool.com, if you're interested. Our email address is radio at fool.com. Question from Matt Riley, who writes, I think I may be overweight in one of my current stock positions, but I'm hesitant to sell and reinvest the funds somewhere else because the stock has been on such a tear and the future continues to look good. Have you ever been in this position? How do you weigh the costs and benefits of moving money from one position to another? Love the show. Keep up the good work. Thanks for listening, Matt. Great question. Ron, I'll just start with you. Have you been in that position before? I have. Not as many times as I'd like.

It's a good problem to have. It's a good problem to have. A couple of things in his statement. The fact that the stock has been on a tear is irrelevant, but I like what he said about the future. Concentrate on the future. 100% of the future returns of the company will be based on the future, not the past. Give a thought to that relative to where you think the stock and the valuation is. Now, one other thing, I hate for the tax tail to wag the investment dog, but if it's in a non-retirement account and you have a huge capital gain burden that would come from selling the stock, you do want to account for that, too, in your analysis.

Yeah, definitely account for the tax implications, but chances are, if you feel like you're overweight, you very well may be. One way I like to look at this is, if I feel like the future is still bright, I want to hang on to shares of this company, Play the house money concept, right? See if you can't sell enough shares to recoup your original investment, you keep the remaining shares for free, makes it a lot easier to sleep at night, and you've got a little extra capital to deploy elsewhere. But as Ron mentioned, yeah, definitely pay attention to the tax implications. Well, Matt, when I hear the words, the stock has been on such a tear and the future

continues to look optimistic, that makes me think the stock you're looking at is probably a flower. And as David Gardner always says, water your flowers, trim your weeds. So, if you see opportunities elsewhere, I would strongly consider selling your losers first. Also saves you on the taxes. Alright, let's get to the stocks on our radar, and our man behind the glass, Steve Broda, is going to hit you with a question. Ron Gross, what are you looking at this week? I'm going to go back to McCormick & Company, MKC. I know a favorite of Jason's. Manufacturer of spices, herbs, seasonings. Stock has been on a tear this year, up 30%. But I still like it at 25X forward earnings. Market leader by far, with a 20% market share.

Loved their recent Arby Foods acquisition, which brought in Frank's Hot Sauce. Who doesn't love Frank's Hot Sauce if you're a Buffalo Wings fan? Paid a dividend for 94 consecutive years. McCormick. 94 consecutive years? Yes. Steve Broido, question about McCormick? What is your favorite spice, Ron?

I make a lot of chili, so it would be cumin. It's not pronounced cumin? It is now. Jason Moser, what are you looking at? Well, this rarely happens. Ron and I did not put our heads together on this one, but I, too, am going with McCormick, ticker MKC. I was a little disappointed in myself a few weeks back, because I realized that I talk about this company all the time, yet I owned no shares. But, Chris, that has changed. I opened up a position in this company, this

dividend aristocrat. I love how the RB Foods deal is working out. Earnings are coming up in a couple of weeks. And another side note here, I was making some ribs the other night, seasoning them up with this Dizzy Pig Dizzy Dust. Now, Dizzy Pig is just based out of Manassas, Virginia here. I can't help but wonder, it's just a small little owner-operated place. I can't help but wonder if maybe McCormick wouldn't be interested in them at some point, because they have one heck of a brand, and they make a lot of really good products. Check it out, Dizzy Pig. I'm in favor of that acquisition as long as they keep the Dizzy Pig name. I think that would be the crux of the acquisition, to really keep that brand and spread it.

Steve, do you have a second question about McCormick & Company? I'll take the favorite spice question, Steve. I do have a question, and it's not that one. Is there really room for two McCormick recommendations? Are spices that big of a deal that we care this much to recommend it? Hey, listen. It's 90% of the flavor, 10% of the cost. And I'm going to give you a freebie here, Steve.

I just found the merits of putting Old Bay on your popcorn. Give it a shot, maybe a cold beer. You will thank me later. Quick follow-up. Are you cumin or cumin? I have always said cumin, and old habits die hard. I think we're going to get some emails. to radioatfool.com. The funny thing is, I say Cuban, too,

but for radio, I changed it. I watch a lot of Diners, Drive-Ins, and Dash, and they say Cumin and Cumin. I think both are acceptable. It's like data and data. There you go. Matt Argersinger, what are you looking at? Well, like McCormick, I know everyone sitting at this table or behind this glass has used this company multiple times. DocuSign, ticker D-O-C-U, IPO-ed earlier this year, open for trading at $38 a share, shot up quickly to almost $70, now back to around $55. I think this is one of those can't-miss brands, making it easier for individuals and corporations to transact legal agreements. Great subscription model. Huge market

opportunity. DocuSign. Steve, question about DocuSign? Is the faux cursive signature really necessary? I mean, it's clearly a digital signature. I'm not using a pen on my screen. Come on. We're better than that. I actually like it because I don't like my signature very much, so I kind of like when DocuSign uses their signature. Two stocks, Steve. You got one you want to add to your radar? I think I'm going with McCormick Spice. Way to play the odds. Matt Argesinger, Jason Moser, Ron Gross. 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 Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.