Motley Fool Money - 20 Stocks in 2019

Episode Date: January 4, 2019

Which stocks have true potential for upside this year? What industries and trends should investors be watching? Which CEOs are on the hot seat? And which stocks should investors avoid? Aaron Bush, Matt Argersinger, Jason Moser, and Ron Gross discuss 20 potential investing opportunities in the year ahead and make some reckless predictions. Plus, we discuss Apple’s latest stumble and upcoming IPOs we’re excited to see. Learn more about your ad choices. Visit megaphone.fm/adchoices

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And you can get unlimited expert help at no extra cost, even on nights and weekends during tax season. Visit turbotax.com to get matched with an expert today, only available with TurboTax full service experts. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money Radio Show. I'm Chris Hill, joining me in studio this week, Senior Analyst, Matt Argusinger, and Aaron Bush. Happy New Year. It is our 2019 preview. We've got stocks to watch, stocks to avoid, CEOs on the hot seat and more. And of course, a few reckless predictions, as always. Before we get to the 2019 preview, though, I think we have to talk about Apple.

Shares of Apple falling 10% on Thursday after CEO Tim Cook warned investors, first quarter revenue is going to be about $5 to $8 billion lower than previously expected. Several reasons for that, Maddie, the trade war in China, the economic slowdown in China, the battery replacement program that they had last fall. This was still a pretty shocking development. Lots of moving parts, but you're right. I think this was pretty bad. If you look back just to their guidance back in early November,

looking for between 89 and 93 billion in revenue, to come in then at 84 billion, so 5 billion below the low end of your guided range, that's a problem. I think Tim Cook came out and said CEO, Tim Cook, said that really 100% of the miss was due to China and a contraction in the smartphone market there. And I think that's a good experience.

because it's probably the right excuse. And I think investors have been questioning whether or not the iPhone, especially the latest versions of the iPhones, but the high price tags could really penetrate the highly competitive smartphone market in China. I think we're starting to see the fact that, no, that's not really the case. Yeah, I don't think it's that surprising, actually, that Apple has China issues. I was just thinking back four years ago, when Matt and I were talking about China in the context of our Supernova portfolio, just talking about opportunities and concerns, China was a big thing we were talking about. And at the time, we realized that China is a big opportunity simply

because how many people are in that country, but we didn't necessarily expect it to play out the same way as it did in the U.S. And since then, the stock is about roughly flat with the market, which is interesting. But I think we started to see the cracks in the foundation about two years ago. And about that time is when I started studying Tencent, which owns WeChat. And it made me realize that iOS is far less important in China, because WeChat really is the in-app operating system that people do everything in. And so that the same type of competitive advantage that Apple would have in the U.S. with iMessage, no, it's just various services that doesn't exist in China. And it showed in the data, because at the time, the retention rates, so people who would

have an iPhone that would buy another iPhone, outside of China was over 80%. But in China, it was 50%, which is essentially a coin flip. And I think now, because of the economic turbulence that is starting to happen, trade wars, slowdown, we're starting to see that play out at an accelerated rate. People who would be the Apple buyers either already own them or did own them, upgrade cycles are longer, and retention is still suboptimal, and Apple has become to just have mediocre market share. And I think that's not necessarily going to change.

I agree. And as long as the iPhone is such a large part of Apple's core business, they can talk about services all they want, but this is still a product that's about 70% of revenue and the majority of operating profits. Now, I will say this, because we're positive people here at the full. Coming into this report, Apple was already down about 40% from its high. And so, granted, it had a horrible day this week. It took it down even further. But even at the reduced earnings estimates now, you're looking at a stock that's only trading about 11 or 12 times earnings. Certainly below the market, average market multiple. Now, if earnings come down further, stocks could certainly follow suit, but it's hard not to call it cheap right now.

Well, that's the thing, because Tim Cook talked about how he hadn't seen the December numbers. Therefore, there's no way he's seen the January numbers because they're not in yet. Their first quarter report comes out in early February. If you're looking at this stock and you're thinking, boy, it looks cheap, do you buy here or do you want to see what? what the actual numbers are before you put down a little money to buy some stock? Oh, I don't know. Sounds like another coin flip to me. We don't really know. I mean, I do think that the valuation is somewhat compelling. You really are just making that iPhone sales stabilize, and you are betting that the services segment can become much more than 15%

of revenue, which it is now. I think that most people think that is the case, at least around here, like, that is the bullish stance. Personally, I have some more questions. When you have a monopoly taking 30% of every single transaction that goes on your ecosystem, regulatory issues will one day be a concern. The same thing that we've seen with Google or Alphabet, same thing we've seen with Facebook, one day the same headlines are going on with Apple too, and the services narrative will slowly not seem so amazing anymore.

All right, let's get to our 2019 preview. Aaron, I'm going to start with you. What is one industry you're going to be watching this year? I'm really interested to be watching the ride-sharing industry with Uber and Lyft and maybe even D.D., which is in China, IPOing in 2019. I think, I mean, it's just really exciting that public market investors will finally have access to this new massive, quickly growing industry. And I'm excited to see what the numbers look like. They probably won't be great from a profitability perspective, but just thinking about transportation as a service and what that means beyond just ride sharing, what it means for logistics with food and are they going to buy more of bikes and scooter companies, that type of thing. I'm really interested to hear more about that longer-term game plan.

We'll learn a lot about that in 2019. Maddie, what about you? Well, it's always interesting, but I think especially so this year, I'm going to be watching the social network, social media space. We're already seeing, for the first time really ever, a real legitimate slowdown, I think, in the user growth and in the usage rates, especially if you look at just the core Facebook platform. And so my questions are, you know, how does Facebook, how does Twitter, how do these companies solve for all the privacy risks that people seem to be somehow aware of these days, that

they weren't aware of years before? How do they prevent kind of all the vile, the deceptive behavior without damaging free speech and freedom of expression on the platforms. I think these are big challenges. And throwing money and bodies, as we've seen Facebook do, I'm not sure that's going to solve it. I think it's going to take a lot of innovation. And I really don't doubt Facebook and Twitter can do it. But I just think there's a real chance we actually see a tipping point in 2019 where the powerful network effect that has sucked in so many users over the years to these platforms starts to weaken. And we start to see meaningful declines and time spent on the platforms.

and I think it'll cause a reset of the businesses. In terms of trends, Aaron, what's got you excited in 2019? Augmented reality. And I think it's been a long time since we've had a big new consumer-facing technology to really invest in. But I have a hunch that AR and probably VR associated with it is going to be one of the next big waves. Even though some of the hype around it seems to have fizzled out. And so I think I might be off by one year, but 2019 could be the year in which, good AR products are revealed by at least one major tech company, probably Apple. And for Apple,

it makes sense. They've been acquiring companies with AR Tech since 2013. They released their AR kit, their developer toolkit. In late 2017, and they have all the pieces in place, controlling the hardware and the software, plus that developer community to make it happen. And they probably recognize that winning over the AR market might be as big of a deal one day as winning the smartphone wars-wise. So I'm a bit iffy on timing, but I'm really excited to see the pieces start to come together. And you never know. Apple might have a big AR glasses or something announcement in late 2019.

So you're saying Apple has a chance. I'm saying that they need to do this because technology is going to shift past smartphones. Services won't be enough. So fingers crossed. All right, all right. The cash that Apple has on the balance sheet, that probably also helps him sleep in night. It helps a little bit. In terms of trends, Maddie. What about you?

Well, a big trend this year, the past year already, but even bigger now, this year, sports betting, taking off. And while I've been known a place a bed or two in my time, I think there are actually broader implications for the economy. I think the world is far more efficient, far more innovative when it becomes gamified. And a competitive marketplace of ideas and dollars that are wagered, I think inefficiencies tend to get streamlined out. It's interesting. If you go back to this fall, I mean, you could have placed real money on which party was going to lead. the House of Representatives after the November election. You could have placed money on where Amazon was going to open its second headquarters. We kind of talked about that on the show. But imagine

betting on things like what the weather's going to be like tomorrow. Who's going to succeed Warren Buffett as CEO of Berkshire Hathaway? What's the over and under on the minutes it's going to take for Domino's to deliver my pizza? These might seem like silly things to bet on, but I think when you're wagering really dollars at scale on a lot of these things, they tend to be incredibly informative to the marketplace and they make the economy more efficient. I'm just excited about all the innovations that I think are going to come out of sports betting, especially when it becomes so much more of a mobile application. Well, and one of the ripple effects that we saw in 2018 in terms of sports betting and the

legalization played out in media, where you look at in the subsequent months, pretty much every major network, both on the regional level and on the national level, started to roll out programming aimed specifically at betting. Yeah, absolutely. You see it all the time now. Up next, where can investors find upside in 2019? We've got a few thoughts. Stay right here. This is Motley Fool Money.

Welcome back to Motley Full Money. Chris Hill here in studio with Aaron Bush and Matt Argusinger. It's our 2019 preview. Aaron Bush, what is a stock or an industry? You can go broad if you want in terms of upside for investors. Because let's face it, it's been a volatile couple of months here. We're looking for some upside. What do you got?

Yep. So I'm going to go big and then narrow down. So software as a service, the past two years have been, huge for emerging software companies, but I do think this is an instance in which winners will keep on winning, and a lot of these stocks have been beaten down in the recent turmoil, too. And so unlike the consumer-facing innovation, which is occurring mainly in startups and the massive tech companies, there are tons of great options to invest in small and mid-cap. Software companies with lots of room to multiply, some of these will turn into the next

Oracle or Salesforce. So a basket of three stocks that I have super high conviction in, that I think will do well in 2019, definitely beyond. Twilio, which is a leading communications platform, Altrix, which is a leading data-blending and analytics platform, a MongoDB, which is a next-gen database services company. All of these companies are growing super fast, are dominant what they do, have very little competition.

And at scale, they're going to be producing ridiculous amounts of cash flow. So I'm super excited to see what these companies do, even though they've already been hyped in past years. Also, a fun basket of names. It is. It's fun to say Twilio. What about you, Maddie? MongoDB.

I'm going to jump way out, and I'm going to actually talk about an entire sector. Real estate has really underreformed recently, and, as you'd expect, with higher interest rates. Home builders especially have been really hit hard. But I think the sector itself is what you want to have some exposure to over the next few years. Because despite what the conventional thinking might be, real estate actually does quite well in periods of higher interest rates, higher inflation. I think one save, cheap way to play it is just to buy the Vanguard real estate ETF, the ticker's VNQ, pays a nice 4% dividend yield, gives you a broad exposure to a bunch of publicly traded real estate companies in REITs. And I think it has a real chance of outperforming

the S&P over the next few years. On the other side of the spectrum, it can be a stock to avoid, or maybe just one to have on a really short leash. But in terms of that category, Aaron, where are you? So I think the marijuana industry is super interesting, but it was so hyped in 2018. I think 2019 is going to bring disaster to investors investing for the most part in that industry, but especially in the companies that were the most hype, like canopy growth, Tilray, Aurora Cannabis. If you're investing in those, watch out. 2019 is definitely going to be very rough for you.

It was funny because Aaron and I, we talked back in the fall, and we both said, watch out. As soon as cannabis gets legalized in Canada, which was mid-October. Mid-October. You can almost draw a straight line from that point on. That was the peak, really, of a lot of these stocks. And they are down huge since then, even more so than the market we've seen. So it was just funny to kind of, it was one of the easiest calls I think you could have made. And it still has more to go.

Well, and it was interesting, in part because it wasn't just individual investors who were excited about this. We saw major companies, consumer brands that everybody knows, investing. hundreds of millions and in some cases billions of dollars. Coke, Philip Morris. I mean, just amazing. What do you got on a short leash? Well, I started the show, and you'd probably guess. I'm going to say Facebook needs to be kept on a short leash, if not avoided at all. All the problems I mentioned regarding the social networking space, I just think the stock

price looks cheap, and you can call it that, and if you assume that they're going to continue to grow their advertising revenue at a similar pace or even slightly slower pace, yes, the stock looks very, very compelling. I just think there's going to be a big reset and expectations across the space. And I just have big questions about whether Facebook can really effectively monetize Instagram and WhatsApp without really damaging the user experience. And I'm not even getting into the leadership questions you have to have right now around Mark Zuckerberg and Cheryl Sandberg. So I just think you can do better elsewhere.

Don't try to catch Facebook, even though it's a snazzy name with now a cheap valuation. So this happens at this time every year. Investors, and particularly the business media, start to look ahead in terms of private companies going public. And despite the volatility that we've seen recently, you've got executives on Wall Street saying, actually, that might accelerate plans for private companies to go public. So in 2019, I mean, some of the best known names, Aaron, Uber, Slack, Airbnb, Lyft, is there one that you're either really hoping, hoping goes public, or you're just eager to get your hands on the S-1 filing? I hope Stripe goes public sooner or later. It might not IPO this year, but they're a payment

platform that makes it super easy for companies to sell things online. Their developer tools are known to be excellent. They continue to roll out new solutions. The founder and CEO, Patrick Colson, seems to be super thoughtful, and it wouldn't surprise me one day just because this market is so big buying things online that Stripe becomes a larger payments company than PayPal one day. And I think that's super fascinating. Right now, they've a market cap about 20 billion. So I would love for them to go public sooner than later before they start hitting the upper tens of billions in their valuation. Do you think they're at the point now where they're way past the acquisition standpoint?

It would be a big acquisition. I doubt it would happen, at least from another payments company. So I bet they'll go solo public. Maddie, what are you eager to get your hands on? For me, you mentioned it, Airbnb. My wife and I have actually been Airbnb hosts for over a decade now. And what you have is essentially the world's largest, most expansive hotel company that really doesn't own any of its rooms. I mean, it's fascinating to me. It has somewhere on the order of 5 million listings, 150 million users in close to 200 countries. It has a profound network effect, maybe actually the strongest in the world, I think. I think we're going to realize

that. And I don't really know what the market capital is. going to be when it becomes public. But just in terms of room count and customer count, it's bigger than all the major publicly traded hotel companies combined. Okay, I really wasn't expecting that at the end. I'm assuming the answer is yes, but you got a good rating? Like, what kind of rating? We've got almost five-star rating across our listing. I'm not surprised, but I'm very pleased for you. All right, we got just a couple minutes left. Before we wrap up, we do this every year. Reckless predictions. Make them reckless.

They don't have to be about business, although they can be about business. You can go off the board to sports, pop culture, whatever. Aaron, what do you got? So I think that even though the Chinese trade wars and economic slidons will continue to generate headlines, I predict that in 2019, we'll see the largest technology acquisition in which a Chinese company buys a U.S. company. So I don't know if that's 10-cent buying one of the big three video game companies. Maybe Alibaba acquires eBay as a way to get into U.S. e-commerce. Maybe DD, which is larger than Uber, I think of their last valuation, acquires Lyft as a way

to get to the U.S. markets and get a partnership with the Waymo. I don't know. I think there are interesting possibilities there. That would be fascinating. Maddie, what about you? I think Warren Buffett's going to buy an airline. Really? Well, look, Berkshire Hathaway already owns.

He owns major stakes in all the major U.S. airlines. The industry has changed. Consolidation has made this much more a value creator than a value destroyer. I think, you know, you have a strong airline like Delta that's actually been assigned an investment-grade credit rating. It's buying back shares and paying a dividend. I think there's – and the valuation is very cheap. I just think this is a different industry now, much like how Buffett viewed the railroads 10 or 15 years ago. I think he views the same with airlines today.

That would be maybe the greatest example of someone taking emotion out of investing. When you think back on how much Buffett used to openly hate the airlines as an industry. All right. Matt Argusinger, Aaron Bush. Guys, thanks for being here. Happy New Year. Happy New Year. Coming up, our 2019 preview rolls on with Ron Gross and Jason Moser.

Stay right here. You're listening to Motley Full Money. Hold on flame. Welcome back to Motley Full Money. Chris Hill here in studio with Jason Moser and Ron Gross. Thanks for being here, Jens. How are you doing, Chris? I'm doing well.

The 2019 preview rolls on. Real quick, though, we talked about Apple at the top of the show. Jason, any thoughts in terms of... one of the largest companies in America and where it is right now? Yeah, I mean, as Aaron was saying, I'm really kind of surprised that people are surprised by this. It's not really something that I'm all that taken back by because in November, we were talking about Apple's chip suppliers ratcheting back their guidance, which was more or less implying that there may be some weakness in iPhone performance like we're seeing.

Now, granted, they seem to be holding China accountable for most of this, But, I mean, it all makes total sense. As iPhones get better, they last longer, you don't have to upgrade as much. They can only raise prices so far until consumers become a little bit more sensitive. And so everybody wants to just get on Apple's case here and predict that maybe this is the beginning of the end. But let's be clear. I mean, it's still Apple. They're still selling millions upon millions of devices.

They've lost control of the conversation a little bit because they're not going to be announcing those unit sales anymore. But there are a number of different ways they can win. It's not going to be just services. Services will have to be part of it. But when you look at services, other devices, the portfolio of wearables, you can't discount the potential big acquisition at some point or another either with that balance sheet. I'm well for the take a step back approach. I think that makes good sense.

I'm going to be really curious to see if Warren Buffett and Berkshire Hathaway are buying stock during this period of weakness. I think I would be one of those analysts that would recommend that investors take a position. at these levels, 11 or 12 times forward earnings. There's not a lot of growth built into the stock at this price, and they've got a lot of ways they can win. And let's remember, too, we have a whole generation of smartphone users that haven't bought smartphones yet. I mean, there are going to be plenty of opportunities to get new smartphones and new consumers' hands, and there is a brand loyalty there that is quite impressive. All right, Ron, let's get to the preview. When you think about 2019, what's your biggest question as an investor?

Our biggest question is, will value investing rise from the dead? As most of us, I think, are aware, growth has nicely outperformed value over the last, let's call it a decade, not just a few months here and there, but quite a few years. Fang stocks are perhaps the most obvious examples of growth stocks that have really led the way. Obviously, we've had an extended bull market that tends to favor growth stocks. So my big question is, do we see a resurgence of interest in stocks that are considered value? Growth often does underperform in bear markets.

If perhaps we are entering a bare market or going to see a sustained bear market, then one would expect value to come back into vogue. But you know what? We haven't seen it any time in recent past. What about you, Jason? Yeah, you know, to me, we've talked a lot about Disney and their move to over-the-top distribution. They obviously own part of Hulu, which I think they've done a good job building out, especially with that live Hulu offering.

ESPN Plus seems like it's gaining some traction. And now Disney Plus is going to be their service that launches sometime in 2019. And we talked before on the shows. They really need to make sure they execute there because I do think that is a compelling product. It's going to take a lot of content away from other streaming partners, namely Netflix. I find it interesting to see that really the shows on Netflix that garner the most views as a percentage. percentage are all shows that are not Netflix shows, which I think is telling. I mean, Netflix is still having to put up a lot of money to get content that people want to see,

and Netflix is not the one producing that content. So they still, I think, have a little ways to go in really succeeding on that original content front to justify all that money that they're spending. And I think that Disney Plus is going to, it's going to reemphasize, I think, the asset, the competitive advantage that they have there in that intellectual property. So I'm excited to see how that product arrives. I'm certain that we will at least be testing it in our house, if not becoming full-fledged subscribers, unless they just really drop the ball.

Well, and wasn't there sort of a minor freakout in the Netflix universe when they said they weren't going to renew the show Friends? Yeah, yeah. I mean, in my household for sure. And, I mean, that is something that they at least need to pay attention to because as a percentage of views, Friends is number two on the list just behind the office. But when you look at that list of the shows that are garnering the most views on Netflix, It really kind of takes you back.

It's not a lot of their original content as on that list. It just tells you they still have a little ways to go. What's a trend you're excited about this year, Ron? It kind of piggybacks off of what Jason was just discussing. 5G technology, fifth-generation wireless cellular technology, is coming, and it's coming pretty quickly. It's going to be pretty exciting. It's going to make devices more capable of accessing the Internet.

It's going to deliver much faster speed than 4G. some say 20 to 100 times faster than 4Gs. Lots of companies are going to benefit here. The most common names would be the AT&T, Verizon T-Mobiles of the world. But I think Nokia, even Apple, will benefit as people upgrade to 5G-enabled phones. It's going to be in a really exciting trend to watch from an investing perspective, but also from a consumer perspective because I think we'll all benefit. Yeah, I'm glad you mentioned Apple there because that is another point with a 5G. They're going to be a little bit behind, I think, others in getting their devices up to speed there.

But once that does happen, that's going to be another sort of catalyst there in the upgrading. For me, hey, I'm excited about podcasts and where podcasts are heading, Chris. I mean, I'm not going to just pat ourselves on the back here too much. But, I mean, it's worth noting that you and Mac and our partners here, you had the sense to make some early bets in this market back in 2010 and 2011. And lo and behold, now in 2019, we've got a full-fledged family of podcasts. They're doing very well. We've seen Series XM acquire Pandora, noting in their call that, you know, to their dismay, they kind of passed on podcasts for a while.

They admitted that mistake, and they're going to start putting some resources into podcasts and building out that environment. So I just think that we're in a day and age now where Netflix really changed the game for content, for people being able to watch what they want, when they want, and where they want. I think now we're seeing the same thing play out on the audio side. We're able to give people what they want, where they want it, when they want it, and it's nice to be a part of it. Let's talk stocks, Ron, whether it's an industry or a specific stock. What do you think is poised for upside this year? So, industry I'm looking at, it's kind of a sector slash industry, and I'm not ready to call

the big R word yet, the recession. I'm not freaking people out yet. But I think it's important to have... You are a little bit just by saying that. I think it's important to have some allocation to some defensive stocks in the environment that we may be approaching. And so when I think of companies in those sectors, I would say some utilities might be a good bet right here. Some of the discounters, in fact, discount retailers, Costco, Dollar Tree, Walmart would be some nice stocks, defensive stocks to have as we enter an economy that might not be as robust as it has been.

What about you, Jason? I don't want to time when a recession might hit because really that's just bad for everybody. But I do think we are entering a period where banks are going to have some opportunities to boost their earnings a little bit as interest rates continue to nudge upward. And in particular, I'm looking more at small banks. And when we've talked about before, Ameris Bank, or they, I think this stock has a tremendous risk-reward scenario playing out here. The stock is now trading around 15 times earnings. They recently announced this merger with Fidelity Bank in Georgia. It's about a $750 million deal.

And given that Ameris is about a $1.5 billion company, you can see it means a lot. The market rightly sold the stock off because I think there's some skepticism there. That's rolling in a big acquisition. But they are two very similar cultures. It gives Ameris tremendous exposure to the valuable Atlanta market. And it also is going to help grow that asset and deposit base, particularly in a period where a lot of these banks are really competing now for getting those deposit bases. So to me, this could play out kind of like the McCormick thing.

Remember when McCormick acquired RB Foods and the market thought, whoa, this is a big one to digest here. And they kind of held off for a couple of quarters to see how things worked out. Lo and behold, it worked out pretty well and the stock recovered nicely. I think we could be looking at the same thing here with Ameris if they execute this acquisition well. So, Ron, if defensive stocks have you interested, what's at the other end of the spectrum? What are you avoiding this year? Specifically, I have one stock in mind. And I come back to it often, and it's Fitbit.

And I really have never been excited and probably will never be excited about this one. Now, they entered the smartwatch market in 2018, and I give it to them. They've done pretty well, but this is a formidably competitive market with the likes of Apple, for one, right there behind them. And you even have some Chinese upstarts that really could be a problem as well. I don't think, I don't see Fitbit being the company that is constantly able to innovate, either, market share or defend market share, and I'd be real careful about this one. What about you, Jason? Yeah, I think Zillow, to me, is one that I just, I've changed my tone on this company a bit over the past year.

I used to be excited about the potential there, and I feel like they have just failed to convince me of the sustainability here. They're yet to really become meaningfully profitable at all, and now in this most recent quarter, they put in their shareholder-related. letter that Zillow Group has entered a period of transformational innovation. And to me, that is code for we're not going to be profitable anytime soon. And for a company like this, that company's been around for a while and such a big market opportunity is our housing market, they should not be entering this period. They should be coming out of this period because I think that's what they were trying to do over these past few years.

This instant offers business, it's not up their alley. I mean, that's buying homes and renovating them and selling them. It's not scalable. There are a lot of people out there doing it. I don't know that they have any real advantage there. Goodwill now represents essentially half of the total assets on the balance sheets. It's not a bad company. I'm disappointed in the way they've executed, and I think they've still got a ways to go before they get the meaningful profitability.

Well, I think one of the things that ties these two businesses together, Fitbit and Zillow, is the word optionality has been used in connection to both of these business. they were seen as, well, they have options in terms of where they can go. And optionality is something we like to see as investors. But, Ron, it almost seems like optionality only works if you've got, or it certainly works better, if you've got one dependable cash cow in your portfolio. You nailed it, right? Optionality is great for additional upside. And maybe you can't even see the different options that a company might have three to five years down the road.

But if they don't have that profitable company, that cash division, that cash flow, producing segment of the company, then optionality, you're relying on all of the value of that company being in the optionality category, and that's just too much risk for me. Up next, which CEOs are on the hot seat? We've got that, along with a few reckless predictions. Stay right here. You're listening to Motley Full Money. As always, people on the program may have interest in the stocks they talk about, and the

Motley Fool may have formal recommendations for or against. So, don't buy or sell stocks based solely on what you're here. Welcome back to Motley Full Money. Chris Hill here in studio once again with RONALDly Full Money, Ron Gross and Jason Moser. Guys, 2019 has just begun, but the Motley Fool is already looking for summer interns in investing, editorial, software development, and much more. Come, spend the summer at Full. Join us. Join us here at Fool Global headquarters this summer. Go to Careers.fool.com for all the information and to apply to be a summer intern here. That's Careers.fool.com.

Happens every year, Jason. There are a few CEOs who are who are on the hot seat. We're long-term investors, but let's face it, over the long-term, if you're not delivering, that means in the short-term, you're on the hot seat. Who do you got? Well, I think in 2018, I certainly had Kevin Plank of Under Armour on the hot seat, and he's not off yet. So I'm calling him out again. I mean, I think that while we are seeing signs that he is embracing, relying more on his team, in particular the CFO and CFO of the company, I think that when you look at the expectations we've had for this business over the course

of the last several years, as it's been a recommendation in a number of our services, this has been a phenomenal disappointment. And the real disappointing part there is that they were essentially self-inflicted. I mean, they just made some dumb investments for the sake of growing as opposed to just making good strategic decisions in letting the growth come from making good decisions. And so I think he's on the right track. We need to make sure that team stays intact here. If we see that CFO or CFO leave, and we've got a real big problem. But at this point, with the market seeming like it wants to recover, if we don't have any kind of a recession in sight any time soon,

I mean, this is a company that should be performing a lot better than it is today. What about you, Ron? I think Wells Fargo CEO, Timothy Sloan, probably should go. He was probably the wrong choice from the get go as he was really, has been at the company during all of the controversies. And having taken over the CEO role in 2016 has really not done anything to turn the tide, both from an operations perspective, the company is not really doing very well. And as from a controversially perspective as well, things don't seem to be getting better. I think it's time for some outside blood to come in and kind of write the ship. You know, I think back to last year's show, and I mentioned that John Flannery,

who was CEO of General Electric at the time, I mentioned he was certainly a CEO to watch because I thought he was laying all his cards on the table, and I thought, boy, this is going to be a really interesting company to watch. And in hindsight, I probably should have said he was on the hot seat. I didn't think he was on the hot seat. He didn't make it to the end of the year. As I talked about with Matt Argusinger and Aaron Bush, It's interesting to see not only the companies being named in the private market as potential

IPOs this year, but the possibility that the recent volatility we've seen might accelerate those IPOs in the first six months of 2019, whether it's the S1 that you're eager to look at or a company where you just think, no, I want this thing to go public now so I can get a few shares. What's on your radar, Jason? Yeah, one that probably a lot of people are thinking won't end up IPOing, but I hope it does is SpaceX, Elon Musk's rocket company, and they are set to raise $500 million at a $30.5 billion valuation here shortly. And to me, space is one of these markets.

It's one of these trends. I think that's going to open up a lot of fascinating investment opportunities over the course of the next decade and beyond. that I think SpaceX is going to be a part of that. And one thing that SpaceX is doing today is this project called Starlink. Essentially, the idea he's looking to build out a constellation of satellites all over the globe in low orbit that will basically be able to beam high-speed internet connection to every corner of the globe. And it seems like he's getting buy-in from all the regulators, too.

And we've seen what he's been able to do here in the rocket launches that have taken place less far. I just think this is a fascinating company. I think it's going to offer a lot of opportunities if we do get a chance to see it go public. I more than likely would want to own a few shares just to be a part of it. But, yeah, I'd really want to read that as one. Do you think Tesla shareholders are eager for the prospect of Elon Musk at the helm of yet another public company? Well, maybe we saved that for another show, Chris. Ron, what about you?

A favorite company in my household is Fast Casual Mediterranean Restaurant Kava. And they have recently acquired publicly traded Zoe's Kitchen. So I'll give them a little time to digest that acquisition, decide what they want to do with all the Zoe's locations. But then let's take the whole darn thing public, some great capital that they can use for growth to kind of take the world by storm and expand the concept. Have they given any more color on what they plan to do with those locations? Because I remember we talked about that acquisition on this show. And the only thing that surprised me was the fact that they really seemed like, we're not necessarily going to turn these all into Kavis.

And I think our general reaction was, why not? Yeah, I've seen more along the lines of making some menu changes, changes to the way the kitchen operates to be more efficient and have offerings that are more appealing to the consumer. All right, just a couple of minutes left. Reckless predictions for 2019. What do you got, Jason? Yeah, so I was thinking about going with the Red Sox repeating as World Series champions.

And I thought about it. That's not that far-fetched, really, Chris. I'm calling it. They're going to repeat, and that's not. My reckless prediction. So I will go with a more business-related story here today. I was talking earlier about the potential acquisitions that Apple could be looking at here. And hey, what would stop them from wanting to acquire Square?

I mean, you want to look at expanding your business and becoming a little bit more integral part of the commerce scene here, not only domestically, but globally, really. I think Square and Apple have a lot in common. that are in the business of developing sleek hardware that people like to use, generating some pretty strong brand loyalty there. And then we know, of course, the payment space is one that's growing very quickly. So I'm not saying it'll happen, but it's certainly an acquisition that Apple would be capable of executing.

So, hey, maybe it will happen. Ron? I went a little off the rails here, Chris. There's going to be more definitive signs of previous life discovered on Mars in 2019. That's going to build off of the work done by the Mars Curiosity rover earlier in 2018, found some organic molecules. We'll figure out where those actually came from and build on that. They're not going to be any signs of actual Martians running around, but I think we're going

to see signs of some previous life. All right. Reckless prediction number two, Ron Gross and Jason Moser will be heading up the new Motley Fool space investing service to launch either late 2,000. 2019 or 2020. Sell that short. I'm just going to say that regardless of where free agent, Bryce Harper ends up, the Washington Nationals are going to the World Series.

Wow. Wow. I'll take that bad. Ron Gross, Jason Mouser. Guys, thanks for being here. That's going to do it for this week's edition of Motley Full Money. Our engineer is Dan Boyd, producer Mac Rear, on a well-deserved vacation this week. I'm Chris Hill.

Thanks for listening. We'll see you next week.