Motley Fool Hidden Gems Investing - Volatility, Divestitures, and IPOs

Episode Date: March 28, 2025

Today we talk market volatility and inflation, the struggling dollar store industry, and a new AI initial public offering. Also, Asit and Matt have thoughts on some recent earnings reports, writer Ben Wallace joins us to talk about the history and future of Bitcoin, and, as always, we find out what stocks are on our analysts' radar. Host: Ron Gross Guests: Asit Sharma, Matt Argersinger, Ben Wallace Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

head back to the streets and FX is the drop a snowfall saga watch Wanda Bell and Leon Simmons fight to reinvent themselves in 90s Los Angeles where the fallout from the crack epidemic fuels the rise of west coast rap ambition loyalty and survival collide as everyone risks everything to build something lasting and FX is the drop a snowfall saga streaming now on hulu on disney plus click or tap the banner to sign up now Keep calm and volatility on. Motley Fool Money starts now. 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 ron gross sitting in for dylan lewis joining me today are senior analysts asit sharma and matt argasinger fools how you doing ron gross hey ron how you doing great to be here i am well Fools, a lot to unpack here. Today, we're going to talk earnings, divestitures, and a new IPO, but we begin with the big macro. This week, we had more news on tariffs, continued market volatility, revised fourth quarter GDP numbers, with the large investment houses cutting 2025 growth estimates. And on Friday morning, new inflation data came in hotter than expected.

asset. A lot to choose from. What's your headline? What are you watching? Ron, my headline is inflation coming in hot, better turn on the AC. We saw, I'm not a huge jump in core inflation in today's numbers. In February, the rate hit 2.8%. So that was higher than consensus expectations. If you can liken waiting for inflation numbers to waiting for stock results. The spending increased about 0.4%. Why is this important? I mean, that's not a huge leap up, but just the persistence of inflation we've seen these small rises month to month start to add up. And what you get here is a Fed being put in a very uncomfortable spot. As you remember, it wasn't very long ago, we were all talking about how many times the Fed would cut rates this year.

So some of those cuts are probably off the table. But I want to just briefly mention the T word here, tariffs, because that's going to play into inflation later this year. Now, the Trump administration has been going back and forth with the actual tariffs it's implementing, but some are starting to stick. And particularly in the auto sector, Ron, I think we're going to see higher auto prices later this year. What does this bring to mind for me?

anticipatory inflation. And what the heck is that? Well, that's when producers of goods and services anticipate that prices are going to rise because they see the writing on the wall. And so they start raising prices on their goods and services. So my gut is that we're going to see that inflation rate creep up as the year goes on. So you mentioned the T word. I'll mention the S word, which is stagflation, a word no investor wants to hear. Weak growth, but in persistent inflation. How worried should investors be, Asit? Yeah, I think that we're sitting on a precipice in some ways. You could say that the effect of tariffs is going to be temporary and fleeting. And so the inflationary effects won't be that significant. But you can also see this other

side of the coin where demand starts to drop off because the economy is getting tough. And that, of course, has the opposite effect. And we could see just a slowdown in the economy, which brings up the fear of stagflation. For me, I'm pretty much trying to think of this as being a feature as we go forward, inflation being a feature, tariffs being a feature of the landscape. And to make my investment decisions and personal consumption decisions sort of likewise. I'm playing as I go, Ron. Sounds good. Matty, what stands out to you? Anything other than what we've chatted about? Well, I would just say my headline would be known unknowns that are becoming ever more unknown. Because the cliche is there, but it's true, is that the stock market hates

uncertainty. And for everything Asit said about the tariffs and where things are going, there's just still a lot of uncertainty. We had sort of temporary tariffs against Canada, Mexico, and China. Those have been pulled back to a certain extent. We had the auto tariff that Asit mentioned, the 25% across-the-board tariff there. And then next week, we're supposed to get, I guess, a sweeping round of new tariffs across multiple countries and multiple regions. They're supposed to be more permanent and sticky. We don't know. And then, of course, we also don't know how countries like China, Canada, or regional blocs like the EU are going to react to our tariffs. And so, all this just leads to so much uncertainty. And I like what Asit said about

anticipatory inflation. The problem is, I just don't know how, as a CEO of any company, especially a global company, how you allocate capital in an environment where there are just so many unknowns. And by the way, it's not just on the corporate level. I think consumers are feeling that as well. We saw consumer confidence hit a 12-year low this past week. And so I just think it spells a lot of trouble for the economy as we go forward with this. So what you're saying is we don't know. We don't know anything. Do we ever? We'll find out. That's right. On Wednesday, Paychex reported what I'll call good but not stellar first quarter operating results, but investors liked it sending the stock higher. Asit, what did you think?

Yeah, Ron, I thought these paycheck numbers were sort of like a bowl of warm soup in this very chilly environment of uncertainty, as Matt points out. I mean, looking at the just headline numbers here. Paychecks revenue for the quarter increased by 5%. Operating income increased by 6%. We had a nice adjusted diluted earnings per share bump up of 8%. So these aren't screamingly exciting numbers. But businesses like this with high returns on capital, with solid cash flows, built-in customer bases, they start to look attractive in times of uncertainty when growth companies, as Matt so rightly points out, are pulling back on their capital expenditure. So the stuff they need to invest in to grow,

they're wary of spending that money. Then we like to look at businesses like Paychex. And I also like the fact that it's a bellwether stock. I like combing through the results to see what management is saying about the economy at large because they see so many hundreds of thousands of payrolls across the country every week. And so far, so I guess good. Paycheck said that based on the checks they're counting, so this is actual just running the numbers on payrolls, the labor market looks steady from management's perspective. So I wanted to just throw this out there when times get really iffy and the markets are volatile, the warm soup companies are ones we should pay attention to. Did you know, and I know both of you knew this, but did listeners know just how

effective a capital allocator paychecks is? It throws off a lot of free cash flow, intends to pay out a very nice dividend. This is a company that generated quite a bit of free cash flow last year or last trailing 12 months. And it's paying out something like 60% to 70% minimum in its dividend payout. So I think it's the kind of company that might appeal to Matt on a total return basis. It's absolutely skunked the market over the last 10 years in excess of 320% in total return when you reinvest those dividends. I like companies that can skunk other companies. Nice verb there. For sure. And warm soup companies, let's trademark that. So they're acquiring Paycor. Are you a fan of that acquisition?

I think I am, Ron. And I'll just be brief here. This is a smaller company that operates in the payroll and human capital management space. So think HR out of Cincinnati. This is an all-cash acquisition for $4.1 billion. That's paying roughly 35 times pay course trailing 12-month free cash flow. So it's a tad expensive, and it's going to throw some more goodwill onto Paychex's books. But they're buying a company which has native cloud and AI strength, which Paychex is trying to bulk up. So that's good. It'll complement Paychex's small and medium-sized business portfolio. They can cross-sell services. I like that. So if you picture a gas gauge in your car with the left side being just a financial acquisition, just doing it for the numbers and

the cash flow. And the right side, the F or the full being more of a strategic acquisition, this sits for me somewhere about three quarters of the way towards a strategic acquisition. I think they can make something out of the parts they're acquiring that will help earnings and cash flow in the future. So I'm in favor. Sounds good. Also on Wednesday, Dollar Tree reported fourth quarter earnings and announced that it would sell its struggling family dollar business to private equity for $1 billion. So Matty, let's unpack these one at a time. Dollar stores in general have been struggling lately. How did these earnings look to you from Dollar Tree? From Dollar Tree, the results, well, just taking on the continuing operations, Ron,

which is the Dollar Tree business going forward, actually were pretty decent. You had same-store sales up 2%, 0.7% increase in traffic, and a 1.3% increase in ticket for a business that is mostly catering to kind of your lower spending consumer. Those are pretty decent results. Earnings per share came in a little better than expected as well. And guidance looked pretty good to me. I mean, same-store sales growth expected to be between 3% and 5% this fiscal year. And at the midpoint, earnings per share of 5.25% up about 9% from fiscal 2024. So not a terrible story for Dollar Tree at all in this quarter. Okay. Now, they're dumping family dollar for about $7 billion to $8 billion less than they paid for it. Shrewd. But is it still the right

thing to do regardless? Right. That is the story here. Actually, it is. It looks like it's a fire sale price, right? I mean, they paid almost $9 billion for this business, Family Dollar, in 2015, now selling it for just over a billion. There are so many reasons why this turned out to be a failure. We don't have time to go into them. But I think this tells the story. If you look at Family Dollar, it's very different than Dollar Tree. I didn't really know this, but Family Dollar, mostly urban, mostly rural, sells more items, food items, essential items. And that part of the dollar store category has not held up as well. Dollar Tree really thought they could raise the profitability profile of Family Dollar. It

just didn't work. And if you look at, they don't break out the Family Dollar results, but what you can, if you compare Dollar Tree to Dollar General, Dollar General being very similar to Family Dollar, the profitability per store of a Dollar General is about half that of Dollar Tree. So you can see, Family Dollar has been pretty deluded to Dollar Tree's results. In fact, it lost, if you look at the discontinued operations, it lost about $4 billion last year. So Dollar Tree getting rid of that is really going to boost their profits. I think it's the right move, even though it feels like a fire sale price. Coming up, we'll talk athleisure, housing, and a brand new IPO. You're listening to Motley Fool Money.

Welcome back to Motley Fool Money. I'm Ron Gross, here with Asit Sharma and Matt Argersinger. On Thursday, Lululemon reported fourth quarter earnings that beat expectations, but it was forward guidance that spooked investors, sending the stock down sharply. Asit, quarterly results look pretty good, but management concerns about consumer spending, the potential impact of tariffs are really what investors are focused on. Short-term concerns are something more to worry about here? An interesting question, Ron. Lululemon, well-known brand, had a great quarter in my eyes. Their top line increased by 13%. Even if you take out an extra week in the last trailing 12 months, they had a benefit of a 53rd week. They still

increased their revenue by 8%, hit operating income of a billion bucks, gross margin expanded. All that looked good. But going forward, Lululemon is looking at some slower growth, particularly in the U.S. and North America. So this is what the market is getting hung up a little bit. The company is expecting revenue to hit somewhere between $11.2 and $11.3 billion. That's growth of 5% to 7%, which you might say is not bad in this economy. But I think the drag here is that most of the business is anchored in the U.S. and that is slowing down. There are a few factors that are affecting the outlook. One is lower foot traffic into the stores, which management says is sort of an industry-wide concern. And that's not hard to figure out. We're seeing

consumers pull back everywhere. Another is a little bit of worry about margins, how those might be affected by tariffs. Management has said it's accounting for a little bit of tariff impact, not a huge amount, about 20 basis points out of a point in gross margin decline. But really, the story here is just the speed at which China is growing. And actually, that's not bad for tariffs because they can manufacture some goods in China and sell them there. China's growing at 25% to 30% annually. But the drag with the U.S. is what's producing that sort of mid-single-digit growth. And it leaves open speculation that some of these very fierce competitors, brands like Fiori, are really starting to grab customers' attention. Now, Lululemon is replenishing

apparel lines, Ron. They're going to have a lot of new styles and matchments. They've been M-sizing new colors as well. Okay. But maybe it's great athleisure lines with different colors are going to pull customers back in the store. The worry is, what is the customer going to be feeling later this year? We've talked about the big macro. If that customer is reluctant and has more choices, it means they may disappoint a little more on that top line longer term. I don't have concerns about this brand. It is a stellar brand with highly technical clothing and a loyal base, but the near-term does look iffy. Earlier in the week, KB Home's shares got smacked as first quarter results came in lower than expected. Matty, take us through the quarter, but then I'd

love to hear your thoughts on the housing market, the home building industry in general. Not great on the home front, Ron. First quarter revenue, earnings per share, both below consensus for KB Home. Deliveries were down 9%. Absorption rates were lower. Average selling price, however, was up 4%. That's been the theme for these homebuilders, just lower deliveries but higher selling prices. Still, gross margin overall came down about 100 basis points. If you look forward, management's comments about net orders are now going to be down 17% in the quarter. Backlog value has declined. They lowered the full-year revenue guidance by about $500 million from about $7.3 billion to $6.8 billion, which is a pretty decent

move. Not a great report. Management's comments about the housing market echoed of what we've heard from other homebuilders. It's a slower than expected spring selling season. At least so far, it's still pretty early. You have consumers that are facing affordability issues. That's well known. There's economic uncertainty now with tariffs and those kinds of things that are weighing. Even though management says they're seeing strong traffic to a lot of their communities and show rooms. Buyers just aren't pulling the trigger. I think this is concerning for the overall housing market because we know the situation on the existing home side. Homes are not moving. You've got would-be sellers locked into those low rates, 4%, 3%, even less. They're not willing to move up

to a mortgage of 6% to buy a new house or move. You've had this inventory freeze on the existing side. That's been lasted for three years now. That left the homebuilders as the only game in town, but now they are facing challenges. Inflation has made housing construction more expensive. they're reluctant to cut price to move homes so this is a bad housing market i think all around existing or new and if it persists this could be widespread damage i mean we're already seeing results from companies like whirlpool home depot trex that show this and there's a lot of companies hoping even praying now that we have a better housing market in the near future i don't see one coming concerning that's reverberating around the economy for sure okay let's move to something

that is new in the news lately. On Thursday, artificial intelligence startup CoreWeave raised $1.5 billion in its IPO, pricing shares at $40, significantly lower than the expected range of $47 to $55 per share. Asit, tell us what you think about CoreWeave the company, and then what about this weak IPO? What does that mean for either IPO or AI stocks? Well, Ron, CoreWeave the company is pretty interesting. It is a renter out of GPUs. So it buys a bunch of GPUs. They're NVIDIA GPUs, about 250,000 spread across 32 data centers. So it's a lot of computational power. The company has a concentration in Microsoft. So Microsoft is using a lot of its services. That's like a 62% concentration. It's a business model that on the surface of it has a lot of promise

if AI computation is the future, which most of us believe it is. But sort of the issue I have with this is they've spent so many millions to buy NVIDIA GPUs and NVIDIA is moving so fast with new generations of its Blackwell and going on to Vera Rubin computational platforms. So it's almost like, will their stuff be outdated in just a few years? And last thing I'll say about this is the IPO is sort of like underpriced because the buzz is going away from AI as companies pull back on that data center spend.

So one to monitor, not necessarily jump into, in my opinion. I saw one report that NVIDIA is going to anchor the public offering by investing $250 million. Perhaps it'll be interesting to see if that order gets filled and if that happens. Use some chump change to help support the youngins. Chump change. Or NVIDIA, right? Right. All right, fools.

We'll see you a little bit later in the show. Up next, a conversation with author and reporter Ben Wallace about the evolution of crypto and his book, The Mysterious Mr. Nakamoto. You're listening to Motley Fool Money. welcome back to motley fool money i'm ron gross over the past 16 years we've seen bitcoin go from internet fringe to being fully embraced by the big money of wall street and even be considered as a store of reserves for companies and the u.s government for as much as the world of crypto has evolved, it's still left with one fundamental question. Who founded Bitcoin? Who is Satoshi Nakamoto? Ben Wallace set out to answer that question. He's an author and reporter who has

written for Wired, The Wall Street Journal, Vanity Fair, and New York Magazine. He spoke with my colleague Dylan Lewis about his latest book, The Mysterious Mr. Nakamoto, and how Bitcoin's pseudonymous founder shaped its development and adoption. I want to get into Satoshi Nakamoto and the lore and the appeal of this anonymous founder, but I want to lay some of the foundation on cryptocurrency first for some of our listeners who maybe aren't as familiar, aren't as initiated. Can you take me back to the Bitcoin white paper and the initial appearances of Satoshi? The first time that the pseudonym Satoshi Nakamoto appeared on the Internet was October 31st, 2008. I believe it was Halloween night, 2008.

And there was a listserv known as Metstout. It was a cryptography listserv, people who are either cryptographers or very cryptography interested, which, you know, a certain percentage of them were like libertarian computer scientists. And out of the blue, Satoshi Nakamoto posts this. The first thing he posted was not the white paper itself, but kind of a paragraph or two with the basic idea for Bitcoin. And then he subsequently posted this white paper, which was a more elaborate, more scholarly in style document breaking down the idea. So you pick up this story several years after that, as you begin reporting on it. We are now a decade and a half past that moment. At what point did you realize we are looking at something that has tremendous staying power and this is going to be a story

that you're following for such a long time? Well, it was definitely not when I first wrote about it because the headline on that article for Wired was the rise and fall of Bitcoin. I think that headline's been written many times. It has. And there's actually a website, I think, called Bitcoin Obituaries that has more than 400 articles, including the one I wrote, that have prematurely stated that Bitcoin's over. So obviously, it had incredible and unforeseen staying power. It's gone through at least five major booms and busts. And I think each time it's had a bust, people declared it over, and then it rose again from the dead. Each boom was kind of bigger than the previous bust. And so

it sort of fitfully has made its way onward and upward. So when did I first realize that it had staying power? Again, I mean, I would say that in, so in 2014, so that's three years after I wrote my article, I had bought a small amount of Bitcoin when I was writing about it in 2011. 2014, I think it had already gone above a thousand, but now it was back down to 500 or $400. And I thought it's going to go to zero. Like I better just sell off my remaining seven Bitcoin. And so I put in a sell order with the exchange that held those coins. Unfortunately, it was just before the exchange, which was known as Mount Gox, imploded in a fireball of hacks and scandal and bankruptcy. And so I, you know, I lost my Bitcoin. But my point being only that even then

I thought, OK, it's over. And then again, it rises. So at that point, I just I kind of tuned out for a few years, but every now and then I would receive an unsolicited email from someone. And I imagine other reporters who are on this story early also received these emails saying, you know, I know who Satoshi is or I am Satoshi. I loved reading the book because it was kind of a haul of the internet in a way. Like it was fun to be able to kind of walk through and relive some of the moments and the way that the internet it worked over the last 20 years or so. It's fun to revisit that and also to go to all of these characters and doors that you knock on in trying to figure out where this idea came from, where

this cryptocurrency came from. Where were some of your favorite places to visit with that? So from the beginning, there were some usual suspects, like people who would come up every time someone tried to crack this mystery. And they tended to come from one of two communities. And they were both Silicon Valley sort of techno-utopian subcultures of the 1990s. One was called the cypherpunks. And these were guys who were, again, either cryptographers or cryptography interested, who during the 90s, I mean, it's ancient history now, but there were something called the crypto wars when the government was trying to keep cryptography or strong cryptography, like in browsers, for instance. They were trying to keep that as the

preserve of the government and not allow it to be exported to other countries. And the cypherpunks' commitment was to try to make cryptography available to the masses. And so that included a lot of libertarians. And these were also people who were interested in digital money, because digital money that would be decentralized and divorced from governments and banks. And so you can see the sort of seeds of the Bitcoin idea there. The other group were called the extropians. And these groups had some overlap, and several of the usual suspects were in both groups. But the Extropian's focus was longevity and sort of future positivity and extreme life extension up to and including cryonics, which meant freezing yourself when you

die or are deanimated, as they like to call it, in the hope of being reanimated when the technology has advanced to the point where you could be reanimated and back to a real living person. I think on that, then, who do you believe or what's your favorite theory for who Satoshi is? It depends what you mean by favorite, because, I mean, there's sort of my favorite person who I would like to be Satoshi and who is a leading candidate to be Satoshi. And that is Hal Finney, who I actually got to interview by email when I was working on the original story. and by that point he already had ALS and he was he could only communicate by he used an eye tracker and so it was an email interview but he you know graciously agreed to to field some questions he is by far the most likable of any of the the people who are you know considered to be leading

candidates for Bitcoin people liken him to kind of almost a Mr. Rogers type of person or someone else said he reminds me of the Monty Python song always look on the bright side of life I mean almost to a comical degree. Like when he was in the advanced stages of ALS, he was on message boards on the internet talking about how he was kind of looking forward to some of the challenges of ALS because he'd never experienced them before. And he's like, you know, most people don't understand what I mean when I say that, but I, you know, it's really exciting to me. And I mean, it's just like a very positive, interested and future positive person. And there's a lot of evidence for why he might be Satoshi Nakamoto. And then there's some evidence for why he might

not be. My favorite candidate, because he was so unexpected, was a guy who was on both of those lists, the Extropians list and the Cypherpunks list. His name is James Donald. He was kind of an ethereal figure. Some people thought he was dead. Some people thought he was Canadian. Some people weren't sure if it was his real name. And I just kind of stumbled upon him as a candidate because when I really got into the weeds researching this, I was, you know, scrutinizing everything, including people's, you know, the different candidates' use of the English language. And I found this one word that Satoshi Nakamoto used and that had only appeared once in all of the years of the Cypherpunks mailing list, the Extropians mailing list, a bunch of other mailing

list, fenceable, able to be fenced, right? And I think Satoshi had used the word non-fenceable and Donald had used the word fenceable in 1998 on the Safer Franks list. So I got, you know, I just was like, this is it. I found him. I found, and it wasn't only because of that coincidence. I mean, there were a bunch of other coincidences that made him a real candidate, but what interested me about him was that once I kind of got focused on Donald and began looking into who he was, He was a radical, politically radical, had a blog that wasn't attached to his last name in which he espoused extremely offensive opinions about lots of things. And I thought, well, that would be very interesting if it turns out that Satoshi Nakamoto is not this benevolent god that he has been made out to be by some of the more zealous Bitcoin people. And in fact, perhaps he left his name off the project, not because, you know, of Bitcoin becoming a problem for him, but because he might be a problem for Bitcoin.

What do you think of the role that Satoshi being anonymous has in the Bitcoin community and what Bitcoin's been able to become? Like, do you think that would have been possible if there was a figurehead, a very public figurehead for Bitcoin? I don't. I don't. I think it's been very key for Bitcoin's growth. First of all, it's very much like on brand for a decentralized currency to not have a leader. And the Bitcoin community likes that Satoshi is unknown. And they sort of are, you know, generally not big fans of people like nosy reporters who try to investigate who Satoshi is. And I think that the mystery has been an amazing marketing benefit for the currency. I mean, it's just incredible.

People are so interested in this mystery because it's such a weird and unusual and unprecedented thing. Like there really aren't other inventions like this where you don't know who the creator is and the person doesn't take credit for it and doesn't touch what seems to be an enormous Bitcoin stash. The minute you put a face on Bitcoin, maybe they're palatable to one group and not to another. It just not having a creator makes it sort of inoffensive. Inoffensive. One of the interesting developments for me in tracking this space was seeing institutions and what we'd call big money starting to step in here. I mean, we kind of had an inflection point a little while ago where Bitcoin spot ETFs were approved. We had very large money managers buying and selling and having long positions in Bitcoin. How do you think that

that financialization of it stacks up with the original founder vision and kind of what people thought it would be originally? I think it's pretty far from it. I mean, you know, the whole idea of a money that was kind of freedom money, freedom internet money, that was a response to problems in the banking system, the idea of it being then adopted and co-opted by the banking system seems quite at odds with this, certainly with the spirit of its invention and the early adopters who, who many of whom were either libertarianly focused or kind of alt money nerds who, you know, were interested in things like Ithaca dollars and just like random money projects like that. Was that inevitable? I mean, I look at like other things that have developed

over the internet over the last 20 years. And there is, I think, kind of a microcosm here with Bitcoin, where you have something that is cool and kind of cottagey that becomes mass market and all of these other trappings kind of come along with it. I do think it was inevitable because all the sort of the truly more ideological Bitcoin people from the beginning, they all wanted their money to increase in value, right? The only way Bitcoin was going to increase in value is by the market size increasing. So it was just inevitable that if you want the thing to become more popular, which they all did, but without maybe totally like taking into account or foreseeing that that had to mean eventually it went mainstream. And that meant eventually that

again, the adoption would become co-option. Coming up after the break, Asit Sharma and Matt Argesinger return with a couple of stocks on their radar. Stay right here. You're listening to Motley Fool Money. As always, people on the program may have interests 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. All personal finance content follows Motley Fool editorial standards and are not approved by advertisers. The Motley Fool only picks products that it would personally recommend to friends like you. Welcome back to Motley Fool Money. Ron Gross here with Asit Sharma and Matt Argersinger. Fools, we've got time for one

quick story before we hit stocks on our radar. This weekend, the Elite Eight of March Madness will be determined fellows it took nearly a decade but someone and a lucky someone has finally won warren buffett's one million dollar ncaa tournament bracket challenge the winning berkshire hathaway employee took home the grand prize after picking 31 of the 32 first round games correctly only one person got that prize 11 runners up got a hundred thousand dollars each from the company. Pretty exciting. Does this excite you guys? Are you March Madness people? I mean, it excites me, Ron, if you're offering us some money for next year. I'll briefly say it's so Buffett, right? Because he's so interested in future projection and

understanding where things will fall out. And he's talked in the past about the impossibility of getting a bracket correct. So I think it's fun. I mean, from that perspective, just to try to vision out the future and for someone to get it right. Wow. well didn't and didn't he lowered it used to be a lot easier used to be well i'm sorry a lot harder because you had to actually pick the entire sweet 16 i think and now it's even easier but it just shows you and it's funny this year and i'm not following it very closely but this year a lot of favorites have won there haven't there's only been a couple maybe surprising upsets yet it's still an impossible tournament to predict even at the sweet 16 level yeah absolutely any predictions

Anybody want to throw out a name as the ultimate winner? I will go out on a huge limb here and say that number one, Duke is probably going to win. I mean, Cooper flag is a beast. I, so I think that's the, that's my favorite. Anything else? Yeah. As a UNC alumnus, I will say that Duke university is my second favorite choice to win. I want my conference to do well, but boy, I like Florida. Wow. Talk about fluid offense, really aggressive defense a passion to win so many points off the bench i think they're going to be formidable and and tough to beat so yeah duke will maybe uh maybe maybe they'll take it

but but i like florida's is it like an underdog here can we say call them that dan boyd give us the right answer who's gonna win i'm more excited about the return of baseball mlb baseball played opening day yesterday, so it is back. That's what I'm paying attention to, Ron. Sounds good. All right, fools, time for a couple of stocks on our radar, and I'll bring in our man Dan Boyd to ask a question and pick his favorite. Asit, you're up. What do you got? Sure. I've got McKesson Corporation, symbol MCK. This is the United States' largest distributor of pharmaceuticals. I like that they sort of win whatever happens with GLP-1 drugs between the different manufacturers. They're going to distribute those drugs. It's a company that

throws off a lot of free cash flow, Ron. It's sort of like Walmart. The margins are very skinny here, but because they're so big, they have a sizable bottom line and they usually convert most of their net income into free cash flow and use that free cash flow to buy back shares. So it's a real simple, almost mathematical proposition. Lastly, I'll say the margins are starting to improve because they're moving into buying like oncology practices, even like ophthalmology practices and sort of adding that to the mix. So it's an interesting business. It's a radar stock to me because it floats under the radar for most investors. But McKesson is one I think, again, it's a little bit warm soupy. Dan, you got a question about warm soup for us? Yeah, this

company seems rather mature, Asit. Are you expecting big time growth out of McKesson or is this more of a value play? Yeah, I like the story of the senior citizen who discovered stationary rowing. I think he's from Scotland and just became this champ at it. So in that sense, Dan, they're not going to just blow the covers off that ball, but they really will start to see a little bit of acceleration for a mature company. Even a few percentage points makes a difference. Matty, you're up. What are you looking at? All right. Well, Austin's going warm soup. I'm going cold fish because cold fish is what the mag seven are so far this year look at this apple down 14 percent from their hot from its high microsoft down 16 amazon down 17 meta down 18 alphabet

down 21 nvidia down 27 and tesla bringing up the rear down 45 from its all-time high but guys there's one there's one mag 7 that i'm interested in buying and that is amazon ticker am zn the reason? I can point to strong reasons why I don't like all the other in Mac 7. NVIDIA could have a bad semiconductor cycle. Customers realize they can do AI stuff much cheaper. Another deep seeker too. Apple, super high valuation, low growth. Chinese phone competition. Microsoft, super high valuation, low growth. Alphabet, AI disrupts core search business. Meta, shifting user behavior. Weak advertising market in a bad economy. Tesla, where do you begin? But then there's Amazon. Double-digit revenue growth, high but reasonable valuation, less than 30 times forward earnings.

That's cheaper, by the way, than both Walmart and Costco. AWS is stronger than ever. Third-party e-commerce business is unmatched. Retail margin is improving. Fast-growing advertising business, prime membership, and AI can actually have real impacts on Amazon's business when it comes to automation, logistics, warehouse distribution, robotics. This is the one Mag7 people that I want to bet more on. Passion. I like it.

Dan, question. So I'm already an Amazon shareholder, so I don't know if I can actually put them on my radar. I guess I could, but whatever. Is anything, anything, Matty, disrupting Amazon as kind of the top of e-commerce infrastructure? Dan, short of a meteor hitting the world and us all going away, no, I don't think so at all. I just think this is a company that's already, what, $2 trillion? I'd see it going to $5 trillion and beyond. Just kidding.

I got it. Is McKesson on by default, Dan, or what are you going to do? You're going to double up on Amazon? I think I'm a little more interested in McKesson, to be honest, Ron. Sounds good. All right. Asa Charma, Matt Argesinger, thanks for being here. That's going to do it for this week's Motley Fool Money. Our engineer is Dan Boyd. I am Ron Gross. Thanks for listening. We'll see you next week. you