Motley Fool Money - Kickoff for Private Equity Investors

Episode Date: September 6, 2024

NFL owners approved private equity firms investing in teams this season, we talk about the soaring franchise valuations and hear a player’s perspective on money. (00:21) Emily Flippen and Matt Argersinger discuss: - Weak jobs data, inverted yield curve, and whether the market will cheer a larger rate cut this fall. - Why private equity is interested in Smartsheet and putting money into NFL franchises this season. - The latest earnings updates from: Toro, Docusign, and ABM Industries (20:20) Brandon Copeland played ten years in the NFL – now the linebacker is an ivy league professor, author, and advocate for college athletes. Copeland talks through his book Your Money Playbook, the realities of an NFL contract, and how some college players are finally getting their due. (34:45) Emily and Matt break down two stocks on their radar: McKesson and AO Smith. Stocks discussed: SMAR, DOCU, TTC, ABM, MCK, AOS Host: Dylan Lewis Guests: Emily Flippen, Matt Argersinger, Brandon Copeland Engineers: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good news. Now you'll need millions, not billions, to get into this market-crushing investment. This week's Motley Fool Money Radio Show starts now. That's why they call it money. The best thing. The Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Dylan Lewis.

Joining me on the Airwaves, Motley Fool Senior Analyst, Emily Flippen, and Matt Argersinger. Fools, great to have you both here. Dylan. Hey, good to be here. We've got a preview of the NFL season and how some fresh money might be coming into the league, earnings updates, and of course, stocks, on our radar. We're going to kick off with a quick look at the big macro, though. Fresh jobs data out for August. Suddenly, this is the metric we are all watching when it comes to the rate picture.

Matt, what did our friends at the Labor Department have to say? That's right, our friends at BLS with their monthly jobs report. The jobs number came in at 142,000 jobs added in August. That was below the consensus, at least according to CNBC, which pegged the number at 161,000. To me, the more important part was the fact that there were revisions. If you look at July, going back to July, July was revised down by 25,000 jobs. June was revised down 61,000 jobs. And if you recall, Dylan, a month ago, there was a big series revision that took jobs down by more than 800,000 between March of 20203 and 2024. There was also data from BLS earlier in the week that showed that job openings at the end of July,

were the lowest since January 2021, the ratio of job openings to unemployed worker fell to 1.07, and that is the lowest. It's actually lower than it was in 2019 before the pandemic. And we were above two on this ratio back in late 2021. So I don't think there's any question right now. The labor market is weakening. And I think investors have sort of pivoted to the idea that the Fed no longer cares about inflation. Inflation's coming down.

But what is going on with jobs? And it looks like the employment picture is definitely. weakening. It's always a little bit of a coin flip what the market will actually do with this kind of news because job weakness leads to that lower rate picture that so many people are hoping for, which in theory, money back into stocks. Also a sign of macro softness, though. Emily, S&P 500, down on this news a little bit today. And we've also seen some of the market reactions slide over to treasuries. Yeah, this is a really interesting scenario for anybody who doesn't actively follow treasuries, which I imagine is a fair number of people listening to this podcast. I raised my hand.

I mean, come on. Same. There's a thing called a yield curve inversion. And this happens when long-term treasury rates fall below short-term treasury rates, basically implying many people extrapolate this to mean that there is likely a recession coming, right? Because that outlook long-term is weaker than it is over the short-term. Now, it's a little bit different since the pandemic because the Federal Reserve has been raising interest rates so aggressively. We have been in a situation where the yield curve has been inverted, I think for the better part since maybe this time in 2022. So for a couple of years now, we've had a

situation where the short-term interest rates, let's say the two-year interest rate, is higher than the 10-year interest rate. Of course, no recession has materialized. But on the back of this jobs news today, we saw that that 10-year rate actually hiked back below the two-year rate. So this is a little bit of an interesting scenario because when you see that rate rising, that 10-year rate rising above the two-year rate, it kind of does the opposite, I think, of what Matt is explaining here, which is generally speaking, you think that, okay, this is a sign that the economy is strengthening. We're getting out of the inverted yield curve back into how the yield curve should work, but given how high short-term interest rates are, which is long story short, we're getting a lot of very

conflicting messages right now from both the market, from the jobs report, from the economy, and now from treasuries as well. So where the economy is going after this, I think, anybody's guess. Matt, I'm going to force you into anybody's guess here. What does this all mean with your expectations for the interest rate outlook for 2024? Don't take it for me, but there is 100 percent certainty, no conflict here on what the Fed is going to do when it meets in about 10 days, which it's going to cut rates. But the question is by how much? As we're taping the odds of a 25 basis point cut, which is the consensus, that is at 77%. But that does mean that there is a 23% chance of a 50 basis point cut.

So it's not out of the realm of possibility. And when I was looking at this data earlier in the week, it was more of a coin flip. It was actually 50-50, whether they would cut 50 basis points or 25. And maybe the fact that the wage growth number in the jobs report was a little bit higher than expected. Maybe that's why, you know, there's still some creeping fears about inflation. But hey, if the yield curve inversion works as it's supposed to and the job numbers are weakening, and we are heading to recession, you best believe the Fed is going to. front load this easing cycle and go with 50 or be more aggressive, at least early in this

cut cycle. So, well, it'll be interesting to see what happens and more importantly what they say when they meet in about 10 days. Which really interesting, though, that I don't know if you agree with this, Matt. I think if the Federal Reserve comes out and cuts rates by 50 basis points, that is going to freak the market out a little bit. I think that's going to be signaling to people, oh, gosh, things are even worse than we thought they were. And so even though interest rates are coming down fast, I don't expect the market would be up on that news. So in my world, the best thing the Federal Reserve can do is follow through at that 25 basis point cut that has been communicated for a while now,

right? Not deviate from the unexpected. I think that's right. I think that's right, Emily. Macro picture, not necessarily getting in the way of the deal-making environment. Over when we look at specific companies, shares of SmartSheet up about 15% this week. Emily, no shortage of things to catch up on here. We have earnings from the company, and we also have the fact that the project management software business is in talks with private equity for a buyout. Where do you want to dig into this one? Yeah, let's start at the beginning there with the rumors that this business is likely going to be an acquisition target from private equity sponsors. And the reason why I want to start there is because this news actually broke prior to that second quarter fiscal 2025 results that were reported later in that afternoon. So we had two big stories out on the same day. And shares were up around 5% on the news that this consortium of private equity firms led by Vista Equity and Blackstone were reportedly in talks to acquire smart sheet. Of course, we don't know the price. But I do think the fact that SmartSheet shares were only up 5% or so on this news signals maybe one

of two things, if not a combination of both. One is there's a fair amount of doubt that private equity would actually step in for this business right now. We've seen a historically low amount of private equity deals coming out of, say, 2021, when there were a ton. So there's been a lot of these talks. I think DocuSign is another good example, which I'll talk about later in the show, where there is a lot of interest from private equity firms, but ultimately no deal has had.

And in the case of SmartSheet, their results are so strong that they're not likely going to take a buyout unless it's going to be a nice pretty premium. So which private equity firm is going to do that? We don't really know. And the second factor is that the Vista equity partners and their private equity investors have actually already had a stake in SmartSheet. So I think to an extent SmartSheets valuation has been somewhat propped up by the expectation that this will eventually be a target for private equity firms. So all of that is to say things are going well for SmartSheet right now, whether or not they get acquired, still think is anybody's guess. Speaking of private equity, NFL fans might be seeing some new names in the owner's box this

season. The NFL owners approved a proposal to begin allowing private equity investments into teams this season. There are some restrictions around the size and scale of those private equity placements that'll largely have them being silent partners. But the NFL finally joins all of the other major U.S. sports in accepting private equity money. Matt, you surprised by this at all? No, not at all. Because the valuations of these teams. I mean, so Forbes came out with their annual valuations for all 32 NFL teams. And what this list should do to you every year is to spell any notion that winning on the field is correlated with how valuable a team is because the Dallas Cowboys, which have long been the most valuable

team, no surprise there. The Cowboys just eclips the $10 billion mark. They're the first U.S. sports franchise to do that, even more valuable than New York Yankees, which I checked, are valued around $7.5 billion. The Cowboys haven't won the Super Bowl since I was in middle school. I don't think Emily was even born. I think they've also won maybe three playoff games in 25 years or something like that. Let's take the Jets, the New York Jets, who are predominantly one of the worst teams in the league. Sorry, Dylan.

There are $6.9 billion, the fifth most valuable team. Meanwhile, the Chiefs, the Kansas City Chiefs, who have won two consecutive Super Bowls, and I think three out of the last five, they are the 24th most valuable team at 4.8. billion, actually near the bottom of the lead. And of course, as we know, the NFL actually operates much like a socialist system when it comes to the most important revenue stream, which is TV rights. Each of the 32 teams split that revenue equally. But it's the location and the local revenue that makes a huge difference. And whether or not a team importantly owns its own stadium venue. So the Cowboys make so much more local money when it comes to ticketing, merchandising,

sponsorships, non-sports events like Taylor Swift concerts, Some teams just don't have that kind of ownership or control. In just some context, in 2003, the Cowboys generated 800 million in local revenue, more than double the next team. They also generated more than 2x the operating income of the next past team. So that's why they're worth $10 billion. Matt, to your point on the Jets $7 billion valuation, it pains me to say this, but it is a reflection of media markets and the business of the NFL, not on-field performance. 100%. They have the longest playoff drought in U.S. pro sports right now.

I'm hoping that that comes to an end. A couple other numbers that really jumped out to me. Value of the Cowboys up a Kager of 13% since Forbes began tracking it in 1998, up over 2,300% if you're just stating it in absolute terms. S&P 500 up a modest 800% on a total return basis during that time. Emily, I look at some of these numbers, though, and I say, I think the NFL owners are being smart here because in reality, there are only so many people out there that can afford a $5 or $6 billion purchase.

They kind of need to open up the pool a little bit if they want these valuations to keep swelling. Yeah, look, listening to y'all talk about sports. It's like a kid listening to their parents talk about the checkbook or something. It's like blah, blah, blah, blah, blah. But no, I'm only half teasing. There really is an interesting angle here, which is to say there's a reason why it's private equity that is coming and expressing interest. As you mentioned, they have deep pocket books. But I think it's more than just that.

We've seen historically low amount of dealmaking from private equity over the course of the past two years. there's a fair bit of money sitting on the sidelines. I think there was an expectation from some private equity investors that valuations would maybe come down, right? And they'd be able to get a good buy. I don't know if this sounds like a goodbye to me, if I'm completely honest with you, but I do think it says something about the timing. We have this soft landing that seems to have stuck. I'm knocking on wood right now because you never know. And private equity is now thinking maybe now is a time to get in. I've held out too long. All right. We'll have more on the business of sports and a look at athlete finances with

former NFL linebacker Brandon Copeland later in the show. We're going to head for a quick break, but stay right here. We've got an earnings rundown and a look at whether consumers are buying up a piece of fall lawn equipment. This is Motleyful Money. If you're early in your career and looking for insight, inspiration, and honest advice, listen to the Capital Ideas podcast, hear from Capital Group professionals about leaning into the differences that make you unique, making decisions that last, and what it means

to lead with purpose. The Capital Ideas podcast from Capital Group, available wherever you listen, published by Capital Client Group, Inc. Welcome back to Motley Full Money. I'm Dylan Lewis, here on air with Matt Argersinger and Emily Flippin. We're working our way towards the end of earning season. It's getting close to that time where we start trading lawnmowers for leaf blowers. Matt, kind of a nice chance to check in on lawn care and outdoor equipment company Toro. Right. Not a great quarter, Dylan. You know, sales were up 6.9% for Toro. So adjusted earnings per share were up 24%. That looks good on the surface, but if you'd kind of dig in, they had some other costs a year

ago that are kind of helping juice the numbers a little bit this quarter. The golf and grounds business is doing pretty well, as is Toro's underground construction segment, and their residential segment got a nice boost because they signed a new deal with Lowe's late last year. So now TORO equipment is showing up in Lowe's. But if you look at the guidance, they went from expecting kind of low single-digit sales. sales growth for this year. Earnings per share are between 425 and 435. Now they're looking at sales growth of just 1%. They've taken down the earnings per share estimate by about 20 cents.

And management talked about a lot of those macro factors that we heard from Home Depot and Lowe's last month, which is just, there's just this hesitancy among consumers to buy big ticket items. And believe me, Toro is in the business of big ticket items. We're talking multi-thousand-dollar lawnmowers. There were a few positives. Inventories have been a bit of an overhang on the business. have come down nicely. They kind of overstuffed some of their sales channels. So, inventories are down, generating nice cash flow, paying off debt. Maybe they get to a situation where this time next year, the balance sheets in better shape, business is bounced back. But the business is going to be a bit of a struggle over the next day, six to nine months, I believe.

It definitely feels like a company going through a little bit of the macro spin cycle here. When we check in and kind of take the broader view on the business, shares back down around where they were pre-pandemic. But the valuations crept up a little bit. it's where they've been historically. They're currently around 33 times earnings. How do you reconcile that? Where does this sit for you? Right. I would say earnings are probably pre-depressed right now. On a forward basis, if you trust those earnings estimates, those new earnings estimates, the stock is around 20 times earnings, still feels a little bit of expensive. I will point out that management bought back $100 million worth of stock in the quarter. That's their biggest quarterly buyback

in about three years. So I think management is maybe looking a little more ahead. All right, e-signature company DocuSign out with some fresh numbers this week and a rosier outlook for the rest of the year. Emily, in production, you joke that DocuSign shareholders have had to get used to a bit of a bumpy ride when it comes to earnings reports. This one actually feels like it was a break from that bumpy ride. Really? Yeah. Because, you know, that's something like $800 million revaluation of those defer tax assets that led to this insane level of profitability in this quarter feels a little bumpy to me. me, Dylan. Immediately digging in. I love it. Look, this is another quarter of, even if you take

out those deferred tax assets, which is making this profitability in this quarter, second quarter, second quarter looked absolutely insane. Even removing that impact, this is a business now that has been gap profitable since the fourth quarter of 2023. So we have a lot of quarters of profitability under this belt. We continue to see operating income tick up. In fact, in this quarter, DocuSai noted that they had their highest operating margin ever. of course, on an adjusted basis. But that's all to say that this is a business that is very much still in turnaround mode. So lots of good things to see here. I think the word that would describe this quarter would, to your prior point, Dylan, probably be stabilization. We had two quarters in a row

now, 7% revenue growth in this quarter, same as a previous quarter. Ninety-nine percent dollar-based net retention rate, same in the previous quarter. Now, typically you want to see those numbers ticking up. But in the case of DocuSign, stability is appreciated, right? Let's keep it the same for now. Let's just prove that we can make this business model work. And I think they are proving that. Free cash flow is also up. But this is still a business that has a lot of competition. It's great to see the improvements that they had as part of their go-to-market strategy. But that alone, I think, will not be enough. They really need to prove out the value ad of being a DocuSigned customer versus, say, an Adobe customer or somebody else. Definitely some help padding that profitability

number there, Emily. But I can't help but draw some comparisons here between DocuSign and Salesforce. kind of tech businesses that were doing one thing for a very long time, being very high growth oriented and have now kind of had to adjust and become much more profitability oriented. Kind of feels like that is the rubric that the market is grading a lot of these businesses on. When you're as bloated as DocuSign was slash is, I can understand why. I will say, though, I think DocuSign has a further uphill battle than Salesforce. Salesforce, I think, has a product that on its own stands independently. DocuSign really failed with their contract lifecycle management product, really relying on

the e-signature solution, which is very competitive. So they still need to prove out CLM ambitions to really make your points. All right, wrapping us up here on the earnings takes. ABM industry is not exactly feeling the love after providing its quarterly update. Shares down around 5% following the report. Matt, this is a company that focuses on managing facilities, janitorial, HVAC, parking. Bit of a look into the world of offices. What are you seeing here? You got it, Dylan. It's actually one of the largest employers in the country. They have over 100,000 workers that perform a lot of those critical services that you mentioned. They really help businesses and industries keep functioning on a day-to-day basis. If you go to the airport or a major sports arena, chances

are you'll see someone in one of those kind of orange ABM vests. One thing that Anthony and I have been worried about in our dividend investor service is ABM's exposure to commercial office properties. ABM doesn't really break it out, but service contracts within that segment could account for as much a third of ABM's revenue. But not so much of worry so far. If you look, Organic revenue was up 3% in the quarter, adjusted earnings up 18%. Management actually raised guidance for the year. On that question about office, CEO Scott Salmer has pointed out that ABM's waiting to Class A office properties kind of insulates them from some of the problems they're seeing in the work-from-home era that we're all living in.

I also point out that ABM just declared its 234th consecutive quarterly cash dividend. So if you're in the hunt for dividend payers or dividend growers, don't overlook ABM. You know, I had to expect you to go to the dividend. Matt, there's no way you had to leave that one hanging. That's a pretty impressive streak there. Of course not. And though, the yield right now, if you look at ABM, the yield is only about 1.6%. But the growth of the dividend is really impressive.

All right, Matt, Emily, Fools. We're going to see you guys a little bit later in the show. Up next, we've got some more football talk and lessons from the game. You can apply to your personal finances. Stay right here. You're listening to Motley Full Money. night where we mention how we tripped into this dimension that about this let me say Welcome back to Motley Full Money. I'm Dylan Lewis. The NFL season kicked off this week with the Ravens

and Chiefs on Thursday night, and if you're like me, you're ready to get back to football Sundays. For 10 years, Brandon Copeland was putting on the shoulder pads on Sunday, playing for several teams, including my beloved New York Jets. Now, the linebacker is an Ivy League professor, author, and advocate for college athletes. Ahead of the 24th, season, I caught up with Copeland about his book, Your Money Playbook, the realities of an NFL contract, and how some college players are finally getting their due. Well, you've worn a few hats and a few different helmets in your life. I kind of want to talk through your pro story and the way that money weaves into that a little bit. You came into the league in 2013 as an

undrafted free agent. You made the Baltimore Ravens. Walk me through the process of coming into the league and the way that players are looking at money. Yeah. So when, But I remember signing on draft weekend, so to speak, a three-year, $1.45 million contract and only saw $24,000 of those dollars before being fired the first time. And so coming into the league, especially being an undrafted free agent, you know, frankly, I thought that I was, you know, one, I knew I had a chip on my shoulder because I knew being undrafted was not as good as being drafted, so to speak. but two, I also have had a grandfather who is literally sitting over my shoulder. He played 11 years in the league. So I understood that none of this was promised. And it was just the beginning once I actually got that call.

And so I went into it with the mindset of just like I need to just hustle up and make the team, hustle up and make the team. And I did have some friends of mine who at the time they would be going and, you know, they'd be buying nice things. Their signing bonuses were a lot bigger. in mind I had a $1,000 signing bonus, which I thought was like, I thought was great. And then we did rookie talent shows and guys started saying, oh, I got 75,000, 350,000, 950,000. I'm just looking around like, what the, what did my agent do? What's wrong with me? Right?

I always just went into it with like, you know, for me, the dream was to be playing in the NFL. And my kids watched me play one day. I didn't have kids when I came in the NFL in 2013, but it wasn't just to make it to the Baltimore Ravens to get signed as an undrafted free agent. And I think that that's what kept me focused on actually legitimately making the team. And it helped me avoid a lot of distractions as well, too, when it came to my money. And frankly, like I said, being fired and only having seen 24,000 of those dollars and then going a few weeks without a call, you realize how quickly, like, this whole thing could be over. Let's talk a little about the playbook. Your book that's out is Your Money Playbook.

You know, very intentionally, four quarters. When it comes to the playbook, walk me through the game plan. Yeah, so everything, it's easier for me to break concepts into things that I love and I love football, right? Football has changed my life and my family's life for even before I was born. Again, my grandfather playing football. And so for me, we literally take the entire book and we break your, whole financial evolution and your journey from ground zero to financial confidence or financial freedom, whichever one you'd like to call it, into a whole season, but also an entire football

game. And so that starts with like training camp. I always tell, you know, as you become an older player, you hate training camp. I'm just going to go ahead and say it. You see a lot of guys who don't want to go to training camp, right? But the beautiful thing about training camp in the offseason is what you're doing is you're preparing your body and your mind and your soul and your spirit to make plays in the playoffs right there are things that you are working on there in training camp and during the preseason that you're that may not show up again until week 16 and that's what it's all about and so being able to sit down and prepare yourself and write out your why right out what your plan with your money put put a budget together during

the beginning stages of training camp in the first quarter of basically a lease a low stress environment putting a plan together for yourself and your money is one of the keys to actually reaching your own financial goals versus somebody else's. The reason why I emphasize a low stress environment, we're putting together our game plan for the team we're going against on Monday, Tuesday, Wednesday, Thursday, Friday, Saturday. On Sunday, That's when things are flying. Things happen that you never expected. And that's like the market dropping 600 points or, you know,

or some news coming out about some geopolitical tensions overseas that shift your whole perspective. But because we've put in the work of putting together that game plan for ourselves during the week, now we know what to fall back into when chaos starts happening. And that's what happens with our money. all the time. I'm not going to say so many times, all the time. Life, lives. And so anyway, continuing on this journey. We go through the simple foundational steps in quarter one of budgeting and finding your why and things of that nature. We get to the art of the hustle actually going out

and making money and how to create more revenue streams for yourself. We get to the power of growth. One thing that was a huge lesson for me as I came into the NFL, but also just in the Wall Street when I was in college and beyond is like you grow up thinking put your money in the bank, save money, save money, save money, save money. But at some point you have to convert your mindset to a let me put my money to work for me. It's either I will put my money to work for me or I'll work the rest of my life for money. And so we have a whole quarter dedicated to growing your money, the power of growth. And then finally, you know, we all talk about not we all, I won't say we all.

Let me not put it out on everybody. But some people, and a lot of times people talk about generational wealth and my legacy and all those things. And so we have a whole quarter dedicated to that because generational wealth is dope. As a guy who is entering into a life with, God willing, three children soon, right? One of the things I always tell people is like, wow, we're out here hustling, working hard, growing our money and all that type of stuff. And you say you're doing it for them. Well, are you teaching them what to do with the money? Are you teaching them how to deal with pressure? I saw 50 cent speak a couple weeks ago at Invest Fest in Atlanta.

a shout out to the amazing event that they put together. But one of the things he said is you pray for success, but you don't pray for all the things that come with it. You don't pray for the jealousy, the envy, the entitlement, and things of that nature. And so are we teaching our children how to manage what we're giving to them? Because if not, as Ocho Cinco likes to say, you're going to save up your whole life.

And as soon as you're gone, your kids are going to spend it all, right? So you might as well spend it yourself. So anyway, it's a fun book. We are using my real-life stories as well, too, and I'm unlearning some of my own traumas throughout the book and delivering that message to you all. But yeah, man, we work really, really hard on Your Moneyplaybook, and you can get it at www.yourmoneyplaybook.com.

One of the things I wanted to ask you about with the post-football chapter for you is the work that you've done with Athletes.org. And we've seen the name, image, and likeness deals in college football, get a lot of coverage. We've kind of started to see this cresting wave of, hey, these college players deserve even making money. They're doing quite a bit for these universities they work for. It feels like we're kind of in the early innings of that, though.

And there's probably a lot more to come when it comes to money in college sports. How are you looking out at that space? We're in the absolute early innings of this. I mean, in July or June 30th of 2021, schools couldn't even, well, one, athletes couldn't even earn money, right? College athletes couldn't earn money. Now you got college athletes getting paid a million, a million. $1,000, $50,000 here, $20,000 here to go out and play the sport of their dreams,

which is phenomenal. NIL, and I want to separate this, like, NIL is great as phenomenal, but it is a marketing deal. It is Pat Mahomes doing a state. farm deal. It's Pat Mahomes doing a subway deal. It's good. Go make your money. But it's not the check that Pat Mahomes gets from the Kansas City Chiefs or the check that I used to get from the Baltimore Ravens. And so what we at Athletes.org are going after is how do we make sure that those athletes are getting the check that they deserve from the UGAs of the world, the Clemsonsons of the world,

the Bamas of the world? Because the NCAA generated $17.1, no, 17.5 billion in 2022. The NFL generated 11 billion, right? So there's money to go around and a lot of money, right? And while not every school is UGA, Clemson, et cetera, UNC, for me, being a financial educator, being someone who understands the importance of compound interest and seeing the opportunity that a lot of college athletes have to come out of those schools with more to show forward,

than bumps and bruises and memories, but also a little jumpstart on life based off the revenue they helped the school generate. That's what we have been working to make sure college athletes are represented. And the great thing is it's the right place, the right time. The NCAA has agreed to pay college athletes for the first time in history. That will start fall of 2025. You'll get about $22 million at the top schools that they can. can share directly with their athletes. Now, every single school gets to determine that how they

want to share that themselves, what they want to give to the football team versus the men's basketball team versus the women's basketball team versus Olympic sports. And we believe, and our athletes, believe we got over 3,000 members, believe that college athletes should be at that negotiating table, helping them determine all of that split, but also, hey, we want more health insurance. Hey, we need some mental wellness benefits as well, too. Hey, I want some tuition, extended tuition, because during my time here as a UGA football player, I can't really focus on school.

So can you guys give me the opportunity to come back here within two years after I graduate to really get my full degree and take advantage of this student athlete thing that you call me, right? And so it's been an amazing growth opportunity. community, like I said, we got over 3,000 members. They are absolutely amazing. These are current college athletes who believe in us. We're getting closer and closer every day. But again, revenue sharing is happening. So there will be more college athletes making money now. Next year alone, it would be $1.5 billion that college athletes will be receiving. And over the next 10 years,

it's $20 billion. So the opportunity of a lifetime for some young people to change their lives, we just think that similar to every other leader in the space, college athletes deserve to have their own representation. What I mean when I say that, and then I'll pass you the microphone back. The NCAA, it's an organization that represents the schools. It says that on this website. That's the interest it represents.

You have NABC, which represents the interests of the basketball coaches. You have AFCA, which represents the football coaches. You have NADA, which represents the trainers. You also have NACTA, which represents the athletic directors. And there's no group. You know, all of these different organizations represent the adults. But there's no one that represents the college athletes and say, hey, we shouldn't be capping their revenue or, hey, they deserve this. Or, hey, do we need the practice for three hours and 45 minutes in full pads in the spring?

Ah, they don't do that in the NFL. Can we protect the athletes here? Right. And so athletes deserve their own representation through athletes.org. And we're literally watching a renaissance of college athletics right before our eyes, which is pretty incredible. I'm going to ask you for a reckless prediction before things kick off. Who's holding the Lombardi Trophy at the end of the year? Oh, my heart tells me to Baltimore Ravens.

My heart tells me Lamar Jackson is finally hoisting the trophy. Is it extremely hard for the Kansas City Chiefs to do a three-peat? yes but i was actually literally my oldest son starts football next weekend and so we've been i was watching some highlights of the miced-up super bowl last year and literally it starts with the end of it pat my homes holding one of his children and talking to i think chris jones and saying man i got to get a third one i need a third one we got to get three i know it's hard It's never been done before. We got to go for three.

But I'm like, the fact that I'm not, I want to go ahead and put this out here because I know there's somebody who take this and say that I'm comparing myself to Pat Mahomes, right? I'm not a quarterback that Pat Mahomes is. I'll go ahead and say that. But from a competitive standpoint, from a mindset standpoint, me and him, yeah, I'm with you, right? Like, I'm in the moment and I'm like, I'm already thinking about the next one, the next one, the next one, the next one, next one. The fact that he was in that moment, confetti dropping with the family, all that stuff. And instead of, you know, doing the snow angels, he's like, I'm trying to get the third.

Ooh, that's, that's an interesting dynamic. That's a, that's a hungry quarterback that just one. Yeah. And the chiefs are, I mean, from a coaching perspective, a game planning perspective, I mean, you know, I was watching get up this morning and I didn't realize that they drafted the fastest guy ever in the combine. And I'm just like, oh, oh, it's just, you guys just get better. Okay, this is interesting.

So most teams lose a lot of steam after winning a Super Bowl because all of their players can go everywhere they want and get the highest that they've ever made. But they found a way to continue to keep some of their best players and their talent in-house and continue to grow. So that's a long way to me saying the chiefs. Yeah, so you're rooting for the Ravens, but don't sleep on the Chiefs. Yeah, exactly, exactly.

Listeners, you can catch Brandon's book, Your Money Playbook out this September. You can catch me on the couch this weekend, watch football. We're heading for a quick break, but we'll be back in a minute with stocks on our radar. Stay right here. You're listening to Motleyful 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. There's no prior to anything based solely on what you hear.

I'm Dylan Lewis, joined again by Emily Flippin and Matt Argersinger. We're going to roll right into stocks on our radar. Each week, you guys bring the stocks. Our man behind the Glass, Dan, brings the questions and or the comments. Dan, I'm going to give you a little bit of an early heads up here. In production, Matt and Emily, we're throwing some shade at each other's picks, so we might be in for a little bit of a spicy radar stock segment. We'll see.

Emily, you're going to be up first. What are you looking at this week? Well, really, it was a challenge to see who had the most boring option for radar stocks this week. I think mine wins, not in terms of boringness, but also in terms of, I don't know, attractiveness right now is what I'll say. My radar stock is McKesson, the ticker is MCK. Now, a lot of people, including yourself, Dan, may not be familiar with McKesson, but chances are you do use their services. They're the largest pharmaceutical distributor in the United States, which basically just means their job is to deliver drugs to retail change like CVS or such, where other consumers get it. They also have a kind of burgeoning oncology services businesses, as well as a prescription technology

and data services business. But really, drug distribution is their bread and butter. Now, the stock is down nearly 20% since the beginning of August, which I think is a somewhat timely buying opportunity, in part because they had a pullback full year guidance just this week because of some higher than expected tax bills, and also because I had a weak first quarter result as a slowdown in drug launches from some of their pharmaceutical partners, as well as the expansion of generic which have a lower margin profile. But I definitely think this is one of those businesses that is in it for the long haul. Very hard to disrupt this industry, excuse me.

And they also have an amazing share-wey purchase program. They pay dividends. They're also expanding their oncology businesses at higher margin. Lots of stuff to like. I've taken up all of my time now. Dan, do you have a question for me. Yeah, I actually do have a real question. Why can't a company like UPS or FedEx just do this?

Why do we need a McKesson? That's a great question, Dan. And you know what? I'm not going to answer. it. I'm going to let Deloitte answer it. And they say the role of drug distributors is to amplify value in the health care system by delivering aggregation efficiencies and economies of scale that reduce capital. Can't ask FedEx to do that. Goodness gracious. Dan, aggregation efficiencies? Come on. Yeah, I don't know what that means, Dylan, if I'm going to

be honest, that sounded like a little bit of a word salad to me. The worst kind of salad. Matt, what are you looking at this week? Dan's coming in hot. Watch out. I know. I'm scared here, but I'm going with A.O. Smith, tickers AOS. What are my favorite dividend growth companies? It's a leading manufacturer of, get this, residential and commercial water heaters and boilers and water treatment products. It doesn't get more boring than that. But it's been doing business in that space for 150 years. I probably already lost Dan at this point. But what's interesting about AOS is that they get about a quarter of their revenue from China and India. In fact, and just purchased a water purification business that serves primarily India.

So you have a business that's founded, headquartered in Wisconsin, but also already has a significant presence in Asia. I mentioned the dividend. AOS is a, the yield is only about 1.5%. But they've grown that dividend by more than 330% over the last 10 years. Dan, a question about A.O. Smith. Well, not really a question. More of a comment, but like water.

Yeah, it's important. Matt, you think I wouldn't like a company like this. but hey, everybody's got to drink water. Yeah. Everyone's got to do drugs. No, not really. But you do need water. Dan, water, drug transportation.

Which one's going on your watch list this week? I think it's pretty obvious that A.O. Smith is going on the watch list. Love it. Emily Flippin, Matt Argersinger. Thanks for being here bringing your stocks. Dan, appreciate you weighing in. That's going to do it for this week's Mountain Food Money Radio Show. The show is mixed by Dan Boyd.

I'm Dylan Lewis. Thanks for listening. We'll see you next.