Motley Fool Money - $350 Billion and 10 Million

Episode Date: April 3, 2020

The Federal Government launches a $350 billion small business lending program. Over 10 million Americans file for unemployment. Oil stocks rise. Constellation Brands serves up big earnings. And Luckin Coffee plummets on fraud allegations. Motley Fool analysts Ron Gross and Jason Moser discuss those stories and talk about what to look for when reading a balance sheet. And the guys share a couple of stocks on their radar: Costco and Domino’s. Plus, food and beverage industry analyst David Henkes talks about the government stimulus and the future of the restaurant business. The Motley Fool is donating $1 million to Health Research Incorporated, which is managing New York State’s COVID-19 response fund. To contribute, go to donate.fool.com.   Learn more about your ad choices. Visit megaphone.fm/adchoices

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radar, but we're going to begin with the big macro. The $350 billion small business loan program launched on Friday, although the final regulations were not released until just hours before the program began. We also got the jobs report for March. That came out Friday morning. The unemployment rate going from 3.5 percent to 4.4 percent. But Jason Moser, we know it's going to be a lot worse than that because in the last two weeks, 10 million Americans have filed for unemployment. Yeah, and I think this BLS report is, it ended, I think the survey ended the middle of March, so it's not really reflective of what we know today.

But as we say on the show, oftentimes it's more about the revisions that we witness a month from now. I think that's certainly no exception here. You're right, it is way worse than perhaps what it sounds like today. We know that. And when you look at some of the projections out there from some of these different firms, it shows you the disparity. I mean, you look at Oxford economics.

They're projecting that by May, the U.S. will have lost basically 28 million jobs and will be looking at a 16 percent unemployment rate, which ultimately, that would erase all the jobs gained since 2010. That compares to another point of data that we're seeing from the St. Louis Fed, where they're projecting that this could result in 47 million jobs lost in sending the unemployment rate past 32 percent. And then you compare that to new Goldman Sacks projections, which came out recently. And they're a little bit more in line with maybe what Oxford economics is calling for, talking about unemployment hitting 15%. You know, it seems like one of the constants here is the hope, at least, that this will be a quick recovery.

And I think that's fair to at least hope for. I mean, it really does all depend on the actions that we're taking today. Are they helping stanch the spread of the virus? And furthermore, I mean, you can't ignore the fact there's the potential of a second wave. I mean, this is not something where we just defeated and then it's over. I mean, we're going to have to manage our lives with this for the foreseeable future. And so how we do that is going to play out on the economy in some capacity. It's just a matter of how dramatic that effect, that impact is going to be. Yeah, I have to agree with Jason.

We've got to be at 10% plus unemployment right here, perhaps as high as 13 or even 15%. And it is going higher. workers haven't really even started applying for the most part for unemployment yet. We need these band-aids, these bridges to kick in the self- the small business loan program, the paycheck protection program, which is basically forgivable loans. They're a bridge and they're going to be a bridge to another stimulus program because unfortunately the two trillion that we've already got is not going to be enough. And that's unbelievable to say we're probably going to need another one of similar size to

get us past this to where the health crisis abates and people can get back to work eventually, but unfortunately, it's not going to be anytime soon. Yeah, this is really all about buying time. I mean, and Ron's right. I mean, we've already got D.C. talking about yet another package. And I mean, I think we all probably assume that was going to be the case. This is, we're all in the same boat here, right? I mean, this is really about finding it's the ultimate bridge loan.

The biggest challenge in trying to buy time is right now we just don't know how much time we ultimately need. And that certainly could change over the course of the summer as we move into next fall and winter, too. There's just so much uncertainty out there. For all of the reassurance we've gotten and the certainty that we have today that we didn't have before, there's still a lot of uncertainty out there. So assuming all of this plays out the way we hope it will that these bridge loans get

these small businesses to a point of stability over the next couple of months. Ultimately, Ron, this has to come down to states being able to flatten the curve for the virus, because everything we're talking about right now is dependent on that. For sure, and as Dr. Fauci said yesterday, you know, he can't believe that as a nation we're not shutting things down and that there's still more than a handful of states that are not complying. And we're not seeing the curve flatten as we could be if everyone was taking this extremely seriously, as some states are. All right. Let's get to some of the businesses out there.

And, Ron, I want to start with oil stocks, because oil stocks had a pretty good week. Exxon Mobil, Chevron, Royal Dutch Shell, they're all up around 10%. And this is an industry that so many people have been asking us about, Ron, I'm not asking you to time the bottom on oil stocks, but do you get the sense that the geopolitical risk within this industry has at least been diminished? Perhaps, but it's going to depend on the emergency meeting on Monday between OPEC and Russia.

The hopes are that they're going to strike a deal to cut production and that will shore up prices, which were basically decimated over the last month or so. cuts of perhaps 10% of global supply, I think, are going to be discussed and we'll see where the value will shake out. They've got to do something, though. Interestingly, demand for oil is way down, right? We're not driving. A lot of production has been cut. Business activity has been slowing. So you've got a demand problem as well in this industry. But if prices confirm up and then rise, I would imagine that bodes well for these companies and these stocks. Now, I don't like these companies long term. And as a long-term investor, I would stay away because if I don't,

if I don't like an industry or a business long-term, then there's no point in trying to play a bounce or hit the bottom or call the bottom. And as you say, you won't make me do that. So I won't. But certainly those companies that have strong balance sheets that will benefit from rising oil prices will survive and probably do well. Others are not going to survive. The small and the middle-sized guys are still going to go bankrupt, whiting petroleum. I think filed for bankruptcy recently as one example. But the big boys, like the Exxons, will probably define. Yeah, it's interesting.

You mentioned the price of gas. And I don't know about you, Jason, but I've been seeing that on Twitter this past week. People just sort of tweeting pictures of gas stations where the price is less than $2 a gallon. And there's that, for me, just sort of that momentary like, oh my gosh, that's great. But then I remind myself like, yeah, I'm not really driving anywhere. Yeah. Yeah, most people aren't. And I mean, it is just a fascinating time.

I mean, we would normally look at those types of conditions and think, man, that is just so wonderful for the consumer. And yet, here we are. We know that there's pretty much nothing right now that is just wonderful the consumer as we're all just in the state of trying to figure out how to move forward. Well, maybe one silver lining there is just the distribution companies across America, the trucking companies that are trying to move goods from point. A to point B, particularly as there appears to be a national shortage on toilet paper.

Oh, man. I'm still not sure I fully get that. And I got the email from Amazon the other day that our subscription for toilet paper is slated to arrive here next week. I'm really curious as to whether I'm actually going to get it or not, because apparently the grocery store shelves are not fully restocked with toilet paper yet. Coming up, two beverage companies making headlines for two very different reasons. Stay right here. You're listening to Motley Full Monday. Welcome back to Motley Cool Money, Chris Hill here in studio with Jason Moser, Ron Gross, joining from his home. We've talked on this show before about Luckin Coffee, the Chinese startup company that IPOed last year,

trying to go head-to-head with Starbucks in China. Shares of Lucken fell 80% this week after an internal investigation found the chief operating officer fabricated sales last year. And, Ron, there's more information to come. This is an ongoing investigation. But this is every investor's nightmare, right? The company that you own shares of, someone was high up in the food chain, was lying about the sales, and it just craters. It's a disaster.

If you're an investor, especially a foolish investor, who really thinks that management teams are such an important part of the investment decision-making process and the running of a business. And then you have those folks who you've trusted, lie to you, it literally is a betrayal and it hurts you in the wallet as well, as well as your ego, I would imagine, because you trusted these folks. In this particular case, fraud can happen in any company in any country. It's more likely, I think, we're finding in China because of the oversight problems we have there where U.S. regulators are prevented from inspecting the audit

work of auditors over in China. And that's a real problem. If we can clean up that oversight and it's been hard to specifically with China because they're not cooperating, we could maybe get some of this to go away. You'll never get it 100% probably because people do lie unfortunately and it's hard to catch them in every circumstance. But, you know, this is just a disaster. The company hasn't been public that long. Last May you went public at $17 a share. They did a secondary offering in January at $42 a share.

And now where are we $5 or $6? dollars, it's been a pure disaster. It is a risk of when you invest in Chinese companies. Yeah, Jason, we've talked a lot about what the future will look like in terms of regulations across any number of industries as regulations get relaxed to help small businesses stay in business. And this is one of those incidents that makes me wonder if we're going to see a regulatory change or a policy change because there have been U.S. senators who have pushed for this type of thing. If we're not going to see, if not greater oversight over China, maybe quicker punishment, you know, the idea that something like this would lead to a Chinese company

being delisted by the NASDAQ or the NYSE. Yeah. I mean, there's certainly that potential, right? I mean, as Ron was talking about, I mean, it's the lack of cooperation on the part of China. We have this thing called the public company accounting oversight board, which ultimately is geared towards helping create transparency with all companies that are going to be publicly traded. But when you have, I mean, essentially a country, they're saying, no, we're just going to kind of go our own way with it. Then you have to start taking a little bit more drastic action.

There has to be consequences for behavior. And in this case, I mean, there's clearly going to be an investigation. I think there are going to be all sorts of considerations as to potential actions. I'm not saying it should be a blanket action. Certainly, Luckin should suffer. some consequences here. If this proves to be as true as it sounds, it goes back to the questions we get all the time about investing in China. How do you feel about doing it? And for me, it's always been a very difficult leap to make because of things like this. We had track records of companies doing this over the last decade, particularly 10 years ago a little bit more than that when these Chinese small caps started coming onto the scene. Sometimes,

that's saying, if it looks too good to be true, then it usually is. And I think this is another example. Constellation Brands has a portfolio of beer, wine, and spirits. Fourth quarter profits and revenue came in higher than expected for Constellation. Shares down a bit on Friday, despite this report, Jason, we've seen, speaking of regulations, we've seen governors across America designate liquor stores as being essential. This seems like an environment where Constellation brands would do well. Yeah, yeah, I think so. I mean, this is sort of a good news, bad news, good news situation. So follow me here. Good news, as you mentioned, it was a good quarter.

I mean, the beer business in particular was pretty impressive. The depletion's growth in the beer business was 11.4%. Now, the Modello brand family was responsible for a lot of that. Depletions there are more than 18%. The Corona brand family grew nearly 5%. That's encouraging. And it does sound like the Corona-Hard-Seltzer launch has been successful. And Hard Seltzer really does seem to be taking off.

and I'm glad to see that Constellations are playing a part in that role. Bad news, right, no guidance. We really don't have an idea of what the rest of the year is going to look like. And you couple that with what has been an ongoing drag in the canopy investment. I mean, canopy is just not working out. I don't know what the future holds there. Clearly, that's a greater market type of situation. But there's still potential there.

And then the good news, ultimately, again, as you mentioned, This is an environment where Constellation should do okay, given that beer, liquor, wine, I mean, those spirits industry has been deemed more or less essential. I mean, I think a lot of us are very appreciative of that fact. And given Constellations, broad portfolio of offerings from beer to wine and spirits, I mean, I think that plays out pretty well for them. The essential part is interesting because just about an hour ago I saw it come across the tape that Corona is going to stop brewing beer because Mexico deemed non-essential.

So, it's really interesting, I think, where you're domiciled, what laws your country is going to put forth, what's essential, what's not essential. It'll be interesting to see the impact on this company and this business. As you mentioned, Jason, they pulled their guidance. We're going to expect more companies to do that earnings season when it kicks in later this month. Constellation, still down about 30% year-to-date. Would you buy at this level?

I don't know that I'd buy necessarily. I think it's generally speaking a good business with a good position in what is a fairly reliable market. I just feel like right now, I just feel like things are going to get worse before they get better. I'd love to get some more clarity here as earnings season progresses just to see how all of these companies are approaching this and what the general consensus is for how the rest of the year is looking. Our email address is Radio at Fool.com from Phil Creniddy in Philadelphia. He writes, There's a lot of talk these days of finding and investing in companies with strong balance

sheets. These are companies that will be able to weather this storm and possibly come out in a stronger position. What do you tend to look for when evaluating the strength of a company's balance sheet? P.S. Coffee is the greatest drink on earth. Agree 100%, Phil. Ron Gross, what do you look for? So we could talk ballot sheets for hours, but we won't. I'll go quick here. Take a quick look at the cash and the debt levels. Let's use Microsoft an example. 134 billion of cash, total debt of 87 million. You want to make sure the company has enough cash flow generating to cover the interest expense. So in Microsoft's case, 2.6 billion of interest expense each year. Their cash flow minus their capital expenditures covers that 18 times. That's

very, very strong. Also look at the debt to capital ratio. The higher, the more risky. Microsoft's is 44%. That's pretty good. Lots of different metrics you can use also to look at short-term solvency, like the current ratio, the quick ratio. I'll let you look that up or Google that. But, yes, Balanchi is extremely important. Jason? Yeah, I mean, looking at a good business like Microsoft in a good position there, let's take a look at a business that perhaps is dealing with some challenges here, and that's a Carnival Corporation, the cruise liner company.

I like Ron's idea there of looking at net interest expense compared to the money the company's bringing in. So a lot of times I'll just look at operating income, the company's reporting, and look at the net interest expense, and that's essentially the current ratio. And that's giving you, you want that number to be high, right? You want to see that interest expense number can go into that operating income number many, many times over. That just tells you they can afford the debt that they have, and there are no concerns there.

And when you look at Cardival today, it's a pretty good looking situation based on their trailing 12-month financials, right? I mean, operating income of, looks like, $3.3 billion dollars, and net interest expense of 183 million. So they cover that many times over. I think it's a pretty safe bet that operating income is getting ready to fall off of a cliff. And that could be a big problem. And then you look at what Carnival has ultimately had to do. They've resorted back to the debt markets to raise more money. That's good. They're going to need it, but they're certainly paying a lofty price for it. Jason brings up a good point. Don't just look at quoted ratios or quoted multiples that are backward

looking usually. Because when you have things that are a problem in the future, You need to take the future into account because a company like Carnivals, cash flow generation going forward will look nothing like it was over the last 12 months. Ron, we got less than a minute. Last week on the show, we talked about Warren Buffett and what he might be buying. When you look at the big tech companies, Microsoft Apple, with all that cash on the balance sheet, is it safe to assume that those companies are going to be doing some buying over the next six months looking to make some acquisitions? I would think for sure. The question is, are they going to go in big and buy big companies? I think most big companies wouldn't want to sell at current prices, but some tuck-in acquisition, some smaller companies that wouldn't mind getting taken out at these levels. That may make more sense. Yeah, I think that's the point there. These big companies with a lot of value, they know what they're worth. They're not going to sell at a loss. All right. Jason Moza, Ron Gross guys. We'll see it a little bit later in the show. Up next, a look at the restaurant industry with analyst David Hankis. Stay right here. You're listening to Motley Full Money.

Welcome back to Motley Fool Money. I'm Chris Hill. The restaurant industry generates roughly $900 billion in revenue a year. Even with the recent stimulus plan passed by the federal government, more than half of all restaurants could still go out of business. David Hankis is one of the top food and beverage industry analysts in the country. On a recent live video chat for Motley Fool members, my colleague Bill Mann and I talked with him about the challenges facing restaurants and the extent to which the stimulus could help. I think it's good news. I think it's not going to be nearly enough. I think it certainly provides a bridge. And the big question is how long this lasts, right? I mean, so providing two and a half times payroll is what I understand it does. But listen, I mean, you know, we're looking at projections where the restaurant business may not be fully up and running again until the fall. And so it's good for now. But it's pretty clear that it's not going to be enough, especially if some of our mid-to-long-term projections hold. true, which is that the restaurant business doesn't really come back for a while. And so it's a good start,

but, you know, I think they're going to have to come back and revisit it probably in a month or less. So, David, I'm reading some of the research that you have done. A lot of restaurants have moved into takeout. They've moved very quickly. And, you know, I've been, I've been really impressed by a lot of sit-down establishments, how they've made that shift so quickly. Maybe you could break down for us, the difference in economics for these companies that have moved, you know, have moved from sit down to takeout. How does that work for them? Or does it work in the long term? Well, that's the big question, right? And so I would say generally speaking, when you look at the takeout business for sit down restaurants, it's a, it has historically been a very small percentage of their sales,

10, 15% of sales. You know, some that do it well might be doing 15 to 20%, but not fast food restaurants. They're not generating 60 or 70% of their sales from off-premise dining. And so what ends up happening now is you've got, let's say it's just 10% of a million dollar restaurants. Their revenue for that was $100,000. Well, that's now 100% of the total restaurants revenue and it's not sustainable, right? And I give a lot of restaurants credit for shifting on the fly.

them have already been, you know, working with third-party delivery age companies like Grubhub or DoorDash and had that infrastructure in place. But it's not going to be enough. And I just had a restaurant friend earlier today call me and said he's shutting down two of his four restaurants because they just can't make it work. And so I think in the short term, a lot of restaurants are trying to make it work. And, you know, again, this government bill may help some of that in terms of bridging, you know, with payroll and things like that, but there's still a lot of fixed costs, rent and mortgage if you own the building, whatever it is, that need to be covered. And, you know, generating or trying to survive on that 10%, that's now your entire pie or the entire revenue of your restaurant,

it's just not going to be sustainable. And so, you know, and that's in addition to increase paper costs and the margin structure is pretty different on delivery or takeout versus in-store dining. So listen, it's, you know, every, every hand is on deck trying to save their, their business. But it's, you know, I think it's in the long run going to be very hard if we don't get this economy up and running pretty soon. David, as this, everything we're seeing playing out with the COVID-19 pandemic, as it affects every industry, one of the things that we're talking about at the Motley Fool is consolidation within a given industry. Last year, you and I had the chance to talk on Motley Fool Money.

One of the things we talked about was Kaiva Grill acquiring Zoe's Kitchen. So that was no longer, I was taken out of the public markets. Maybe it's too early for this question, but I'll ask it anyway. Are there restaurants on a national level that you look at and you think to yourself, it's entirely possible someone's going to buy them? There are, and I do agree it's too early, but I do think what could end up happening as private equity companies, which already have been on a role

through the restaurant business, right? I mean, there's still, I mean, money is cheap right now. You guys know better than anything. There's, I mean, you know, negative interest rates. And so, you know, companies that have the financial wherewithal, potentially in the next several months could have their pick of a lot of restaurant companies, right? And so not to name anyone that, you know, looks weak or that,

you know, but listen, I mean, even the best of companies right now in two or three months, if this is still going on, their balance sheets could look horrible. And I think there will be some private equity that's going to scoop in to acquire some. I think consolidation probably is the order of the day. And I think, you know, if you look at like a cracker barrel, right, last year they bought Punch Bowl Social, which if you've ever been is a phenomenal concept, a lot of high energy, the millennials, the Gen Z, they love it. I actually went once or twice. And they are essentially saying they're pulling support from that. And they don't

necessarily see that as viable going forward. And it's likely that that's going to go into bankruptcy. And it may or may not cease to exist. But it's certainly one where Cracker Barrow is pulling out. And they're saying, you know, we can't. And they just bought that last year. And so I think, you know, the financial toll on the restaurant business, certainly, you know, there's a lot of talk about the mom and pops. And that's Main Street. And that's where a lot of the damage is going to occur. But I think, you know, to your point, Chris, there's going to be a lot of consolidation and a lot of brands that will end up being for sale or that where there will be consolidation. Don't know who they are necessarily yet, but I can't imagine that even the big companies are

going to come out of this unscathed. Yeah, someone mentioned to me this morning, they were asking whether I thought that Darden might be, you know, might be an eventual acquirer of certain names. And I mishandled the answer just a little bit because I said, yes, of course they might be interested but then it occurred to me, you know, Darden's not, you know, they're not living in an environment that's different from anybody else. They also need every bit of cash that they have. You mentioned McDonald's as being a real estate company, and that's long been my thesis for McDonald's as well, but what are some other companies that you view as being safe is not the right word, but being somewhat well structured for the upcoming couple of months?

Yeah, you know, it's interesting. I'll preface it by saying we've been talking to our clients. I was at a beverage conference in February, and it seems like, you know, 20 years ago now. But we had always been preaching to our clients, our restaurant clients, that increasingly the basis of competition is either on experiential, where you build a great experience inside the restaurant that you can't have anywhere else, right? And a lot of fine dining or casual dining focused on that. Or the other sort of piece of the competitive pie was convenience, right?

So that was sort of the two axes that restaurants were increasingly competing on. Anyone that was really trying to build that experiential factor, it was shut down for the most part right now, right? And those are the ones that are trying to pivot. And so those that already had a off-premise strategy are well positioned. And so certainly most quick-service restaurants that have drive-thrus. Now, you know, everybody assumes that QSR is dominated by drive-thrus. Only about 30%, actually less than 30% of fast food restaurants actually have a drive-thru. Right.

So, I mean, McDonald's and Burger King and all of those that you think of, but there's a ton of them that don't, right? and whether they're in airports or train stations or just standalone places or in malls. There's a big chunk of QSR that doesn't. But anyone that has a drive-through has an off-premise strategy, certainly the pizza chains. You see Papa John's hiring a ton of people. Dominoes continues to be in my play more of a tech company that delivers pizza than a pizza company. But they've always, you know, at least in recent history, been doing very well. And so those that really had already played in this space, and I mentioned Domino's only because I think, I mean, I can't think of a Domino's that has a dining room, right? And so they were already 100% off premise. And, you know, so those types of operators predominantly fast food, you know, not even fast casual, but fast food, you know, more traditional quick service, I think are probably going to be the ones that weather this the best.

And listen, QSR, fast food has been growing faster than sit-down restaurants anyway over the last several years. That's only going to accelerate, obviously. And so I think, you know, what the ultimate endpoint is of the restaurant landscape is that you're going to have a lot more fast food and a lot fewer sit-down restaurants over the next even three or four months, but certainly a year or two years from now the landscape's going to be dramatically different. So, David, you've also mentioned DoorDash Grubhub and the delivery companies. like that, is that a part of the business that you track or that you have any insights on how how they will be transformed by this? It is. I mean, you know, going into the beginning of this year, I want to say the growth and I don't

remember the exact number, but it was about 35% year over year growth in third party delivery. And so, you know, again, it's still a relatively small part. I think the total sales that we tracked for third-party delivery of all types, you know, grubhub, caviar, DoorDash, Uber Eats, was about $10.2 billion. And that sounds like a lot. And it would be probably one of the top five largest chains if you actually looked at it in that way. But it still is a share of the total restaurant business, two or three percentage points, right? And so it's not huge.

and certainly they've been on the front lines of this because they're the ones that a lot of consumers turn to for delivery. The challenge I think for them is that first of all, they just need to make sure that most of their partners or their restaurant companies that they work with stay in business. Right. So, you know, while the business has been growing, it's also been growing as an ancillary part of most restaurants business, not as the primary part. And so everyone says, oh, I'm sure, you know, Grubhub or DoorDash are doing great. And, you know, I think they've seen, you know, some of that. But, A, you've got to still have a driver to deliver it.

And B, you've got to have restaurants that make the food. And so it'll be interesting to see how it develops. A lot of restaurants push back because the fees that those companies charge are essentially most of the margin that a restaurant would otherwise make on the product. And so there's been some pushback, right? And, you know, it's grown because it's up till now been incremental business for the restaurants. And, you know, if you can get some incremental revenue with, you know, even if the margin is lower, you're going to do that. And I think as this evolves, and again, as takeout or as delivery at least is such a big part now of your total revenue, it's, you know, the questions remain on how restaurants, you know,

know, we'll handle the different margin structure because, you know, what we consider sort of a typical restaurant's P&L is out the window right now. It's completely changed. And I'm not sure there is even a typical P&L right now for a restaurant. But yeah, no, I mean, they should continue. Now, the other thing that, you know, it's important to note on them, and we spent a lot of time actually talking about them and we've done a couple studies on them, none of those guys were making money before this, right? I mean, and so if you look at, you know, Uber Eats had pulled out of a couple markets. If you look at Grubhubs, you know, they made news a couple months ago when they put out a shareholder letter that, you know, basically, you know, in some ways, almost, you know, questioned the business.

And so, you know, I think there is a, it's not going away, right? Delivery, obviously, and in today's day and age, I mean, you know, consumers are so used to delivery. And so we do think there's probably going to be some changes in how that business works. What that looks like is not quite clear, but we'll see how it plays out. David, as we get ready to wrap up here, what is something that investors should be watching for other than the obvious good news that we all hope for? But what should we be watching for for positive signs in the next, say, month or so. Restaurants really don't survive when people have shelter-in-place orders, right?

And so I'm sitting here just outside Chicago. My entire state is a shelter-in-place. The mayor just prohibited people from going down to the lake in Chicago. I mean, you know, a big piece of restaurant success is going to be the ability to get back to whatever the new normal is. And so, you know, we're certainly keeping an eye on that. Again, we've done some forecasts. We think restaurants this year, even best case, as an industry, will be down 11%

relative to last year. Worst case scenario is about 27% down, which is similar to what the restaurant association had independently predicted. So, I mean, either way you cut it, you know, the business isn't going to be good this year. And it's just how quickly we get back to it. Going back to the first question about the stimulus, right? I mean, that's a bridge.

And, you know, I mean, like any. industry, you know, the longer we're, you know, relying on, you know, the government to support something while the economy shut down, the worst it's going to be for everybody. And so, you know, I think the restaurant industry is probably one of the best parameters of the broader economy. And as the economy gets better, the restaurant industry should improve and vice versa. As the restaurant industry improves, that means the economy is improving. So, you know, I think those are things to keep an eye on. You know, a lot of people are talking about things that they can do to support, restaurants. Certainly just ordering takeout and delivery from them. You know, I've seen mixed

responses about buying gift cards, right? Some restaurant tours are selling them. I think other restaurants say, you know what that's creating is essentially an unfunded liability for later in the year, right? You get the revenue now and it does support the restaurant in the short term, but now they've got to, you know, capitalize on that or, you know, it'll be something that is a debit for them later on. So there's some mixed feelings in the industry on gift cards, but I would say the more, you know, if you're in a situation where you still have your job and you're still working and getting income, you know, support your restaurant community as much as you can and buy beverage alcohol and, you know, tip your drivers and tip the servers and people that are there because they all need your help

right now. Don't think of it as drinking more alcohol. Think of it as doing a little something to support your favorite restaurants. Up next, we've got a couple of stock ideas for your watch. list. Stay right here. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy ourselves stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here in studio with Jason Moser. Ron Gross, zooming in from his home. As the public health crisis goes on, no state has been hit harder than New York. And in response, the Motley Fool

has donated $1 million to New York State's COVID-19. 19 Response Fund, which is being managed by the nonprofit group Health Research Incorporated. The funds will be used to buy medical supplies, set up field hospitals, and support the medical staff. If you'd like to join us in helping New York, you can go to donate.fool.com. Also, I mentioned earlier that the interview with David Henkis was something we did in a live video stream for Motley Fool members. We've been doing a lot of those lately. And if you're not already a member and want to join us, a great way to do that is with our free investing starter kit. It's a 15-page report to help you set up a brokerage account. It includes

five stocks selected by our investing team, and it's free. You can get it by going to fool.com slash starter kit. Let's get to the stocks on our radar. Our man behind the glass, Steve Brod is going to hit you with a question. Ron, you're up first. What are you looking at? I've got Costco, C-O-S-T, continued to be just so impressed with their business model and their culture. Stock not as badly hit as some currently down, only about 20% from its highs, but that creates a nice entry point, I think. Interestingly, they, along with Walmart and Target, have started to see some weakness in traffic now that everyone is kind of stocked up. I guess that was a bit inevitable. But I think long term,

this is one of the survivors of the retail fallout, and there will be a fallout. Great membership model, great value prop for customers, tremendous culture and leadership. I really like it here. Steve, question about Costco? So pure speculation, given that this virus may go on longer than we think, do they have supply chain issues we should worry about? They certainly are out of stocked on several items. Toilip paper, of course, being one of them. But I think they're pretty good with respect to their relationships with suppliers. And I don't think it'll be a long-term problem. Jason Moser, what are you looking at?

Yeah, well, I'm tugging at Ron Gross's heartstrings this week, Chris. I'm going with Domino's Pizza, ticker DPZ. I was really impressed to learn about how I actually diversified their customer bases between delineousies. delivery and carryout. I think most of us would just think this is a delivery company, but actually 55% of transactions are delivery versus 45% carryout. 67% of sales are delivery versus about 33% of sales being carryout. And I suspect that delivery, we're going to see a little bit more of a tilt in that direction here in the near future.

And that's part of the reason why I really like the business. But 17,000 stores today, the targets that they've set out for 2025 are strong. I mean, whether they hit them or not is a different story. is a different story. But they're looking by 2025. They want to have 25,000 stores worldwide, and they want to be generating $25 billion in global retail sales. I feel like the given situation today, there's some tailwinds here for Dominoes. I wouldn't be surprised to see them hit those targets. Steve? How much should I tip my Domino's pizza delivery driver? Boy, oh, boy, Steve. If you ever work in the service industry, you know. The better you tip,

the better you feel and really the people out there that need it. I see no reason not to be tipping 50% in these days if you can afford it. What do you want to add to your watch list, Steve? I do like Costco, and I own some Costco, so I think I'll want some more. All right, Ron Gross, Jason Meuser, guys. Thanks for being here. Thank you. Thanks, Chris. That's going to do it for this week's show.

I'm Chris Hill. Thanks for listening. We'll see you next week.