Motley Fool Money - Price Hikes or Push to Ad-Tier?

Episode Date: October 20, 2023

Netflix’s premium tier is now nearly twice as expensive as it was a decade ago – is this pricing power or an effort to move more users to its new ad tier?  (00:14) Jason Moser and Matt Argersinger discuss: - Netflix’s price increases, and why the economics of its new advertising approach might be better than its subscriber business. - How making EVs affordable is eating into Tesla’s industry-leading margins. - The Craig Jelenik era at Costco and how the company is doing succession right.  (19:04) Motley Fool Money’s Deidre Woollard caught up with McKeel Hagerty, CEO of Hagerty about his company’s focus – insuring classic cars, as well as his favorite ride, and the unique ways Hagerty tries to reach new customers.  (32:11) Jason and Matt break down two stocks on their radar: Chipotle and Home Depot. To get our special Stock Advisor offer for podcast listeners, head to: fool.com/mfmdiscount Stocks discussed: NFLX, TSLA, COST, PLD, BX, TSM, HGTY, CMG, HD Host: Dylan Lewis Guests: Jason Moser, Matt Argersinger, McKeel Hagerty, Deidre Woollard Engineers: Rick Engdahl, Chace Przylepa  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Prices are going up at Netflix. but the company might not actually want you to pay them. Motleyful money starts now. You need money. That's why they call it money. The best thing. Cool global headquarters. This is Motley Fool Money Radio show.

I'm Dylan Lewis. Joining me over the airwaves, Motley Fool senior analyst Jason Moser and Matt Argersinger. Gentlemen, great to have you both here. Hey, hey. We're going to do a little rundown on the business of classic cars. We have an update from one of the most important companies in the world. And of course, we have stock.

on our radar, but we are kicking off today with updates on three big-time full stocks. We're going to get the party started with Netflix. Jason, shares of the streamer up over 15% after it reported earnings and told the street, yeah, prices are going up again. Yeah, yeah. I mean, you got to love it when a company can exercise pricing power. I think that in Netflix's case, they're demonstrating that they can do that to a degree. I think, you know, when you look back at it, I think for some, the introduction of all of these new membership tiers was a thesis breaker in some cases, right? I mean, I do get that. The argument for a long time for Netflix was it's simple. You only have so many choices. You're

paying just this small flat fee. And that was great for that time. But, you know, markets involve competition enters the fray. And obviously, streaming is a very tough, tough business, right? The bigger that you are, the easier it is to manage those content costs. And so I think that in regard to Netflix, you know, they're looking at this from sort of two different perspectives, right? They can raise prices on their ad-free offering and offer something to those folks that really don't want to deal with ads, right? And that's good. The folks that really want that, they will pay it. And as long as they continue to be thoughtful about those price increases and they don't go too much at once, I think they've still got plenty of room to go there. Now, the other side of that

point now is they have this ad-supported offering. And the ad-supported offering, and the ad-supporting offering is something that is really starting to gain some traction, right? The ad tier is a nice way, not only to bring in new subscribers, I think it's what $6.99 a month, it also offers an option for those looking to maybe whittle down their bill while still having access. So if you don't like those price increases, right? Well, now you have another option. Now you have another choice. You can quote unquote downgrade to perhaps the ad supported model. And I say quote unquote downgrade because honestly, Netflix would be very happy to see you downgrades to that ad-supported model because it is something that is very profitable for the company, right? They talk about it

in the call, the connected TV market, the linear TV market, as they sort of get into that connected TV, the advertising, supportive video on demand, it's a 180 billion dollar global opportunity now. And with Netflix, you're looking at a business that has fully 70% of their subscribers outside of the United States now. I mean, that has been a massive sea change in the customers that this business serves. So it's a different business than it used to be, but that's not necessarily a bad thing. It really does seem like they're making this all work. Jason, you mentioned the $7 a month for ad supported. The premium tier of Netflix will now cost $23 a month, which is almost a double from 2013. And I'm trying to make sense of what the growth lever is

for this business because it seems like they've got a couple different things going for them. You mentioned the ad supported tier. It seems like we have some flexing of pricing power going on, but we haven't even mentioned the password crackdown, the great password crackdown of 2023. And I think we're seeing that show up a little bit in the results too. There's no question. I mean, we saw I think 9 million net new subscriber ads for the core significantly higher than

really what was expected. And a lot of that was attributable to this page sharing that they're rolling out. And that paid sharing offering does make a lot of sense, right? And we're going to see that rolling at it. I mean, it's not just Netflix as it's doing this. I mean, this is going to become basically just standard operating procedure for streamers as they go forward. And so they find a way to kind of, you know, expand that subscriber base, so to speak. And granted, it's going to be a little bit short-lived. They do feel like they're going to see some incremental boost to those paid to those page sharing subscriber ads here in the coming quarters. And that will eventually die down. But again,

It gives them a chance to continue the relationship with the consumer without necessarily losing the consumer. And ultimately, what it does. And we saw this reflect in the financials. It's meaningfully boosting their margins, their cash flow numbers. They raise the share repurchase authorization here to, I think, $10 billion now. I don't know that I really am so focused on watching Netflix repurchasing shares given the content costs that come with running a business like this. But clearly, expanding the offerings, right, giving more tiers. of membership, that's working out very well for them. It's having a boost of the subscriber numbers. It's obviously playing out well in the financials. And I suspect we'll see that continue. All right. Over to another big earnings mover, shares of Tesla down 12% after the company reported Q3 results. Matt, I look at the market reaction here. And it seems to be a mix of what's in

the rear view in the earnings report, but also what's ahead for this company. I think that's right, Dylan. I mean, it's a tough environment right now to be in the business of making electric cars. I mean, it kind of always is a tough business to be in. I mean, and look, despite what many investors think and say, this is still Tesla's core business. I know there's AI, there's the robotaxy business, autonomous driving, but building and selling electric vehicles is Tesla's core business right now. So on the good side of things, production was up 18% in the quarter. Delivery numbers were pretty solid, up 27%. I mean, there's still really healthy demand, particularly for the Model 3 and Model Y vehicles. And it's good for Tesla for being able to continue growing at that kind of

pace when other vehicle manufacturers aren't coming in or near that kind of growth. At the same time, though, you've got production expenses which are higher, the cost of capital is higher. Consumers are more strapped because, you know, probably more so than any time since the pandemic. I mean, it's just, you know, we've been through, you know, kind of ups and downs in the economy, and now there's a lot where uncertainty, especially with interest rates higher. So you look at gross margins for Tesla, they fell to 17.9%. That's down from 25.1% a year ago, and I think a lot of that has to do with sales price. I mean, the average Tesla sold in the quarter for $44,000. That's down about $10,000 from a year ago. So Tesla, like a lot of companies, is trying to find the right price mix,

while at the same time trying to control costs, and that's hard. I'd say the good news for Tesla, It's got $26 billion in cash now, plenty of room to keep experimenting, innovating, investing. And even though shares are down from the report, as we've talked about, Tesla's got this cult of investors that, you know, it kind of doesn't really care about bad news, certainly in the short term. And that keeps its equity price pretty high. They can always raise equity if they want and get access to the capital markets. You keyed in on something there too that's really important. I mean, Tesla is still at the end of the day, it's a car company, right?

But, you know, one thing Musk knows how to do it. He knows how to sell the sizzle. I think we can all agree there. You read through the call, and we look at Tesla as a car company through today's lens. But in the call, you know, you see him saying things like, we're going to continue investing significantly in AI. That's the massive game changer. And then he goes on to say, you know, if you have a fully autonomous cars at scale and fully autonomous humanoid robots that are truly useful, then it's not clear what the limit is. And so that's, that's a where you see like, yeah, it's a car company today, but obviously that cult of investors that we refer to. I mean, they're looking farther, farther down the line here. And they're looking at that language, fully autonomous cars at scale, autonomous humanoid robots that are truly useful. I mean, it is going to be fascinating to see. I mean, he obviously has a track record of overpromising and under-delivering, at least on a timeline. It's going to be really interesting to just what this company looks like in 10 years and 20 years, because they have very bold aspirations, clearly. All right, from a company that is incredibly forward-looking and maybe always changing to one

that is perhaps one of the most predictable businesses of all time. We saw a change at Costco being announced this week. CEO, Craig Jelinek, will be stepping down after the holidays, ending an 11-year run at the head of Costco. Jason, in some ways, a little bit of a surprise, but I think if we take a step back and look at some of the movements that this company has been making, maybe not so much of a shock? No, I guess I was a little surprised just to see the Jelanick was stepping down. McCosco is not a company that I have undercover, so I'm not following it on a daily basis. I guess I just felt like time, time has just flown by. He was there for what, 11 years, and now I guess it's time for him to go ahead and step down and pass the torch, so to speak.

But, you know, this is one of those companies where when it comes to succession, I think you really are looking for someone to be able to step into that role to, Just keep that ball rolling. Keep doing what has been done all of these years to make this such a successful business. I mean, Costco at the end of day, it's not a very complicated business, right? You're selling stuff to your members and you're trying to give them the best price possible. And I think as long as they continue to do that, chances are good. They'll continue to be successful, particularly when you're when you're hiring from within, I think the cultural, the value there from a cultural perspective is probably really difficult to put a number on.

To your point, Jason, Jellinick's replacement. Ron Vatchis started as a forklift driver with the company over 40 years ago. We look at this internal promotion and someone who has been with the company for a long time. Matt, does this feel like succession planning done right? Absolutely. It's what you'd love to see. Both Vatris and Jelinek were C.O before they became CEO. They were both with the company. Jelinek, I believe, joined in 1984. He was a warehouse manager and kind of moved his way up. You mentioned Vatris, who was a forklift driver moved his way up. I mean, this is how you love to see it done. But I like the points you guys made about what's unique about Costco's business, though? Maybe it's not so unique, but it's

just such a steady, consistent business, almost unshakable business model, right? So I'm not saying a CEO coming in, you know, can't really change things or might or could, you know, mess things up. But I mean, this is kind of the opposite of that famous Warren Buffett quote, which is, you know, when a management with a reputation of brilliance tackles a business with a reputation for poor fundamental economics. It's the reputation of the business that remains intact. Well, in this case, with Costco, you have a business with very sound fundamental economics, and that's going to remain intact, really, no matter who is at the helm. But I do love the way they do the succession of Costco. And I can understand why there's been really no reaction to the stock price

because this is a business that's just going to keep churning. All right. Coming up after the break, we've got updates from major bellwether companies. Stay right here. You're listening to Motley Full Money. Welcome back to Motley Full Money. I'm Dylan Lewis. joined over the airwaves by Jason Moser and Matt Argersinger. With earnings season in full swing, we wanted to zoom in on results from a couple of different companies that help paint a picture of the overall macro environment right now. Matt, let's start with Prologis. This is a lesser known name, but you like digging into this industrial reet because

you kind of see it as a bellwether for the economy. I do, Dylan. It's, I mean, it's the world's biggest industrial real estate investment trust, over 200 billion in assets. And those assets are primarily warehouse and logistics facilities. It's kind of the backbone of the modern e-commerce-driven economy that we're evolving toward. For example, Amazon is Prologis' largest tenant. You've also got tenants like 3M, PepsiCo, UPS, Walmart, major kind of global companies that

rely on Prologis facilities to move goods, store goods, and really participate in commerce around the world. And if you look at Pelagia's results, they were pretty good. You had solid, same store net operating income growth, occupancy up to 97.5 percent. at the end of the quarter, that's near a record. Core funds from operations, kind of a cash flow metric for REITs of 14.6% year every year, and Prologis raise guidance, again, for the full year. So all good news there.

But then when you look at management's comments, either in the press release or the conference call, get a bit of a different picture. You've phrases like negative customer sentiment, increased market vacancy, moderation of demand, lack of clarity. So I think Pelagis' management is foreshouting a little more economic, and uncertainty than perhaps I think it's being reflected in the overall market. But it's certainly being reflected in Prologis' stock, which I think looks really attractive right now.

It's trading around a three-year low, 3.1 percent dividend yield, just 20 times core FFO for share guidance. But that number is actually a lot lower today than it's going to be in the near future. They've got a ton of growth ahead as their leases roll to market over the next several years. So there's a lot to like about Prologis. I would just say in the near term, though, it's telling us a pretty cautionary tale about the economy. Matt, you mentioned that the numbers themselves looked pretty good, but the commentaries where things started to get a little bit more concerning, as you start to see more

results come in over earnings season, especially from some companies that are a little bit more in the real estate game, is that where you're looking for some management commentary to kind to help you understand where things are going? I think so. And the reason I like to follow real estate, obviously, is space is used for a lot of different things. In the industrial space, like for Pelagis, you know, that's really where a lot of economic commerce is taking place. And so I I think as more companies report, we're going to get a fuller picture of where things stand. All right. Over to one of the world's most important companies, Taiwan Semiconductor.

Jason, you dug into the results from the world's largest chipmaker. What did you see? Yeah, tremendous position in the value chain for this company. I mean, they go out of business in the world probably stops turning, right? So it's an important one. And from that perspective, it was a good quarter, I think, in that the company exceeded its targets and expectations. I mean, they're dealing, I think, with some difficult near-tortar.

term issues in market conditions and inventory levels. But it's nothing they can't handle. When you look at the numbers in U.S. dollars, third quarter revenue was $17.3 billion. That was down 14.6% from a year ago, but actually up 10.2% sequentially. They're seeing a little bit of improvement there in the gross margin number. Operating expenses accounted for 12.6% of revenue. That was up 50 basis points. But again, you know, you look at this business, I mean, they're balancing. sheet, just a fortress, $48 billion in cash in short-term investments, and they continue to build out facilities in order to be able to meet the demand in what they do. Now, again, back to sort of

these difficult near-term issues in market conditions. And they did talk about that in the call. They tightened their capital expenditures. Previously, they were within a range of $32 to $36 billion. They brought that down to $32 billion, given just general market conditions right now. And they talked about in regard to this overall macroeconomic state of things, right? They see slow demand recovery in China. They see, you know, just a weaker overall macroeconomic conditions. And right now, their customers are very cautious in inventory control. So in the near term, customers are going to kind of continue to get through that inventory, right, going through the fourth quarter.

But they are seeing some early signs of demand stabilization and PC and smartphones, which is not a surprise that, There was weakness there. We've been talking about that weakness for many quarters now with a lot of these chip makers. But I think that what we're looking for is this company to be able to get through that inventory, watch their customers get through that inventory towards the end of the year and start 2024 in a little bit of a little bit of a healthier level. And it does look like they see revenue growing, guiding for revenue growth up about 11% sequentially here for this coming quarter. So some near-term issues, yes, but generally speaking, the big picture still remains very optimistic. Jason, for folks that are more casual observers of the chip market, they may be a little surprised to hear moderate demand or even slow demand, just given what a boon AI has been for some of the chipmakers.

Do you feel like basically, if we're talking about chips that are in AI applications, we are off to the races, and if we're talking about chips that are more in conventional consumer electronics, that's where we're seeing a lot of this more kind of stagnant demand? Certainly AI is the phrase de jour, right? I mean, it's no surprise to see. see those replacement cycles and PCs and smartphones extend. Just the technology is getting better and better. And so I suspect we'll continue to see that that is the case. All right. Finally, over to one of the big money movers, the world's largest alternative asset manager, Blackstone reported. And Matt, it seems like maybe money isn't quite as easy to come by

as it used to be. It is not, Dylan. And, you know, the investors have taken that hard, pretty hard on Blackstone's stock this week. I mean, yeah, Blackstone is in the business of raising capital. investing capital and earning management and performance fees on that invested capital. And raising capital has become a bit of a struggle. So they raised $25 billion in the quarter, and that's still a really gargantuan number, but it's much lower than forecast and down from the second quarter when it was $30 billion. They also raised just less than $1 billion for corporate buyouts this quarter. That's a fraction of what Blackstone normally raises.

So President Jonathan Gray, he gave an interview to the Financial Times this week. You know, he mentioned that, look, institutional investors kind of holding back new commitments to private equity until the new year. He pointed to higher rates as being kind of a key factor as well. I mean, 10-year treasury, it's at a 16-year high. So the risk-free rate, you know, where they are, it just makes potential returns in the private equity space look less compelling. And then if you look at the results for Blackstone, Distributable earnings, which is kind of their big metric, that was down 12 percent year over year. If that continues, you're going to see Blackstone, there's dividend fall because that's closely tied to distributable earnings. So this is kind of a wait

and see until 2024 story. I can understand what the stock's beating down right now. Institutional investors, retail investors, turns out not that different. When yields start looking attractive, people start paying attention to debt and other places to put their money. Matt, appreciate the commentary there. Jason, appreciate your thoughts on earnings. We're going to see you guys a little bit later in the show. But up next, we've got a breakdown on a name you need to know if you're into muscle cars. Stay right here. You're listening to Motley Full money. These days I'm all about quality over quantity, especially in my closet. If it's not well-made and versatile, it's just not worth it. That's honestly why I love Quince. The fabrics feel elevated,

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365 day returns. That's a full year to wear it and love it. And you will. Now available in Canada, too. Don't keep settling for clothes that don't last. Go to QINCe.com slash Motley for free shipping and 365 day returns. Quince.com slash Motley. Welcome back to Motley full money. I'm Dylan Lewis. Here on the show, we like to find companies that operate in unique spaces and shine a light on them. For every interest, there's probably an industry. If you're into classic cars, short of having doubles or triples, your best way of protecting your collectible ride is probably having specialty insurance. Motley full money's Deidreau-Wollard caught up with McKeel Haggerty, CEO of Haggerty Insurance about his company's focus, insuring classic cars, as well as his favorite ride and the unique ways Haggerty tries to reach new customers. Let's talk a bit about Haggerty because you went public in 2021, but the history of the business is so much older.

So tell us a little bit about where it was and where it is now. Well, thanks. We are in our 39th years of business, celebrate our 40th anniversary next year. And it started in an even smaller niche than insuring classic cars. We actually started as a family company in the basement of the house I grew up in, insuring wooden boats, if you can imagine, just classic boats. But many of the ideas that we're there are really the same. And that is insurance is a well-known product or service that people buy out there. But when you sell, you sell, into a community of people, a community of like minds, the risk dynamics are pretty different. So that was certainly true in the early days with wooden boats. And it's a big part of what makes our classic car, collector car insurance business so different. Well, it's interesting because you've, so you went from boats and you've got the insurance business. It's, you know, we see this is a pretty, pretty niche business, but you're growing this larger brand, which I think is really fascinating and sort of catering to the classic car enthusiast, going deep. And you're

into events. So why are events so important? Tell us a little bit about the world of classic cars. Well, the car world is large and not just the new car buying world with OEMs trying to sell us new cars every year, but the vintage car world has, it's almost a century old, believe it or not, in the very, very early decades of the last century, people even then were interested in the earliest of cars, and they kept them running, and they would bring them out for special events, they would show them. And it would, it created this community of car lovers that it would, it would move forward each decade and each generation, the interest in different types of cars evolves. But it's always been this community piece. And so when you, you fast forward all the

way to today, you know, large population, and I'm just using U.S. numbers of, you know, a few hundred million people, there are tens of millions of people that consider themselves in some fashion a car enthusiast in those tens of millions of people. Not everybody owns a vehicle that's special to them, but many, many do. And these are not just the big celebrity car owners. These are not just multi-millionaires. These are just kind of everyday folks that have a special car that they keep in the garage, and it has a special place in their world.

And events are part of it. Media is part of it. They consume car magazines and obviously a lot of online content today. watch television shows on, you know, streaming and cable television, all of those things are kind of a hallmark of a big community. And that's the world we serve. And it's, again, insurance is not the maybe sexiest product out there that people ever think about it. Nobody wants to buy car insurance. But if you love your car, like truly love it, then you think very carefully about decisions like, how do you take care of it, how do you protect it? Where am I going to

park it when I'm out on a Sunday drive and stop for lunch somewhere. Those are the things that car people think about. And that's our world. That's the community we play into. So if you own a classic car, why do you need special niche insurance versus just like insuring it through one of the big insurance companies? Well, many of these cars are insured through the big insurance companies. And we partnered with many of those companies to work with them. That's the second part of the story. The big difference is this. We've all heard the old saw that, you know, you go out to a car dealership, you buy your, you know, a brand new car, you drive it off the dealer lot and a mile down the road, you get into an accident. Now, hopefully you're okay, but the car is destroyed.

And one of the most frustrating things that people find out is that even that mile down from the showroom floor, that car is already depreciated in value. And the insurance company will pay you a depreciated amount for that total loss. That's true. So cars, you buy them, they depreciate in value, they go down to maybe not nothing, but next to nothing. And then many of them go away. They, you know, they just fade into the ether of old cars and junkyards, that kind of thing. But some of them hit bottom, and then they start going back up again in value. And that's the collecting feature.

And it can take years. It can take even decades before cars collected. But that's when we start seeing clubs form buying those cars or somebody wrote an article. Wouldn't that be a cool old car to have? And those cars start appreciating. in value. And insurance, normal car insurance doesn't take into account that appreciation of value. And that's what we do. We come in, we help people or our insurance partners value these cars, make sure that they're well protected for their appreciated value. And then we offer great

coverage. But then it's the claim part that's most difficult because claims fixing an old car, not the total loss, but think a fender bender or something that happens out on the road, those cars need special care. You have to go to special restoration shops, repair shops. And the big insurance companies, again, many of them who are our partners, they're just not set up to deal with that. You know, they put on new plastic parts out of a new, you know, for a brand new car. They're very standard ways of fixing things.

They put in, you know, kind of third-party windshields when a windshield is broken. But, you know, for our car owners, you know, the windshield on a 1965 Mustang is a special windshield. and it needs to be handled very, very differently. And so that's where we step in. And, yeah, we're a growing business. We've been growing a lot for, well, really since the beginning. But that's where we step in both for the consumer but also the big insurance companies and kind of solve that problem for them.

And it kind of makes everybody happy, too, because we get to play with people's toys. Well, speaking of that, the reason I became interested in your company is I have an uncle who collects cars, collects classic cars. He's got around 70 of them in a warehouse in Florida. It's a whole lifestyle for him now. He goes to the car act to auctions a lot. And, you know, it doesn't buy every time, doesn't sell every time. But it really is this lifestyle.

So you talked a little bit about the events. And I know they attract, you know, a wide variety of people. But the auctions especially, why are auctions so important to Haggerty? Well, it's, first of all, they're super fun. I've been attending auctions for 30 years. And, you know, it's fun just watching any car sell at an auction. They're kind of sometimes rowdy environments, and there's this kind of gladiatorial feat quality to a car auction when it pulls in and maybe it's loud.

And, you know, the bidding starts and the auctioneers start calling out numbers. And when a really, really valuable car sells, you just, I mean, I still, I get shivers thinking about, you know, sometimes millions of dollars being bid on a car and it rolls out and it goes to somebody, some new collection. but there are many, many different types of auction companies that do high-end, low-end, sports cars, different kinds of things. And we had been sponsors of many of these auctions through the years, and they're great. They're fun.

They're awesome. But we also knew that they were a great way to attract new customers for us in the insurance in our membership business. And we also knew that maybe there was a better way to think about serving some of these customers. So we actually, after going public, acquired an auction company and have been kind of layering them into our other event strategy and saying, look, we're not trying to control the auction world. I was going to be many choices, but we want to be a really high quality choice where service is really good. Cars are described really well.

Both buyers and sellers, you know, get all the information they need to make good choices. And then you let the excitement happen. So auctions are super fun and they're a big part of our world now alongside insurance. You've also got a membership model and that grew about 20% in the last court. It seems like an interesting entry point for getting involved and getting engaged with Haggerty. So how does that work? Well, if you think from the lens of insurance and think of some of the big, well-known larger insurance companies, you know, when I was growing up, AAA was figured very prominently in people's minds.

They're an insurance company that also did roadside assistance. They had a membership component there. You think USAA, one of the just titans of our insurance base, great company, served originally U.S. military officers and their families. They've since expanded that to families of enlisted soldiers, which made for a much larger total addressable market. But there was always a membership component under that. And I always really looked at those businesses and said, wow, they sell insurance. France is a good business, but they engage with people in between just sending them a bill for their policy. And they engage with them, you know, offering different things, different services, maybe engaging them in a community aspect.

And that was really what we dreamed about doing. So we have a program called the Haggerty Drivers Club, and it is available to anybody. It's a $70 a year membership. You get a roadside assistance in a magazine and discounts and access to a number of our events. But the model really here is, you know, insurance is great, but insurance isn't the most fun thing to talk about. And having cars to talk about is a lot of fun. And so if you were to look at our magazine, for example, I think we're the second highest circulation car magazine in the world of any kind, audited circulation. And there isn't, there's no talk of insurance in there.

I mean, this is about the love of the car. This is about events. It's about cool cars to drive or celebrities that own certain cars. you name it, we covered in there. And that's the brand building part as well that you mentioned, that, you know, I'd always admired, you know, some of the best companies, insurance or otherwise. They just really thoughtfully built their brands around engaging with people in things that they care about. And, you know, having these media components around with associated with membership has really been, it's been very successful for us.

Last question for you. What would you like potential investors in your company to know about Haggurdy? Well, what I'd say is that it may sound niche, but it's a much larger group than many people think, and it's probably been the biggest surprise of investors when they've looked at the company. So when we talk about a total addressable market of 44 million vehicles now, this is not some media number that we're making up. This is actual data we have of registered vehicles. So it's large, large audience, very persistent economically, you know, across the board, all the way from buying cars, all the way down. through insuring them and very resilient in downturns. Like we may be, if we're calling this a downturn today,

an inflationary environment. And so it's just good, steady business, and it's actually fun. So fun to look at it. It is fun. Thank you for your time. But one quick last question. What's your favorite collectible car?

Or what car do you wish you could own maybe? Well, I'm, you know, I kind of grew up in the Midwest. So we were definitely kind of, we were a Ford family, But for whatever reason, my very first car that I dug out of a snowbank when I was 13 years old was a 1967 Porsche 9-11S. And before anybody thinks like, oh, you're at a Porsche when he was 13. Like, I paid $500 for it and was my lawn knowing money and I still have that car. And in fact, it's a beautiful sunny day and I drove it today. If you're into classic rides, Haggerty's site has blog posts for free for the aficionados.

And if you're into stock ideas, we're offering our Motley Fool Money listeners a discount on our flagship service, Stock Advisor. With Stock Advisor, you get two stock recommendations per month, access to our analysts on our members-only live-stream, Motley Fool Live, and Stock Advisor's full scorecard of stocks generating market-beating returns. To learn more, head to Fool.com slash MFM discount. That's fool.com slash MFM discount. If you listen to the podcast version of our radio show, we'll drop a link in the show description. Coming up after the break, Matt Argersinger and Jason Moser return with a couple stocks on their radar. Stay right here. You're listening to full money.

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and the Motley Fool may have formal recommendations for or against, so don't buy or sell anything based solely on what you hear. I'm Dylan Lewis, joined again by Jason Moser and Matt Argusinger. We've been talking a lot this year about consumers cutting back, and there's one spot that just doesn't seem to be happening. boats. Matt, in prepping for this week's show, you shared what might be my favorite headline I have seen this year. It comes from Axios, quote, Americans sound miserable, but they are buying lots of boats. What do you make of this? Yes, I mean, it's fascinating. I guess post-pandemic, there was

kind of this surge in buying for boats. And when we say boats, we're not talking about yachts. These are fishing boats, you know, small sailboats, jet skis. And, I mean, the numbers are massive. I mean, there are more people buying boats today than ever before in the country. And the demand just doesn't seem to go away. And there was something like 800,000 first-time boat buyers that entered the market in 2020 and 2021. I've never owned a boat. I know it's not the cheapest and easiest thing to have, but it's fun. I can understand why in a post-pandemic world, the boat is a thing to have.

Jason, is the boat on the holiday shopping list for you and the Moser family? Listen here, man. Okay. I grew up with boats, and I love them. But this headline, Americans sound miserable but are buying lots of boats. Two things can be true here, right? You can be buying boats and you can be miserable. And I think going back to that first-time buyer's number that Maddie pulled out there,

that probably has something to do with it. Because once you buy a boat and you realize everything that comes with it, then you start asking yourself, was this really worth it? Boats are super. They're fun. They are also a big responsibility, and they are a big money suck. There's just no question about it. So I'll be interested to see how this ultimately plays out,

particularly given the first-time purchasers. But, you know, I was looking to see how this might translate into something investable, right? I mean, Brunswick Corporation, which this plays right into their market. Boy, I tell you, the stock price isn't really reflecting this, right? The three-year chart, it's up maybe 15%. The one-year chart, it's up only 7%. Year-to-date, it's just flat. So I don't know.

I mean, maybe we'll see this flow through, or maybe those first-time buyers, have had a quick case of buyers or more. Matt, you've been talking quite a bit about how this high interest rate environment has been in a way, an upper class and upper middle class stimulus. Do you feel like that might be playing into what we're seeing here? It could be. I mean, I believe in that a lot, by the way. I just think the high interest rates that people are getting on their savings,

especially in the upper tiers, it has been somewhat of an economic stimulus. I just think this has more to do with people being at home, a lot more, especially office workers. and it's just a great new hobby recreation. But I have to believe Jason that some healthy portion of this 800,000 first-time boat buyers are probably going to be handing in the keys this year and next. Maybe that's why Brunswick's stock's not doing so well. There's that old adage.

There's two great days when you buy a boat. The day you buy it and the day you sell it. So we'll see what day two looks like for some of those folks. Let's get over to stocks on our radar. Our man behind the glass, Rick Engdahl is going to hit you with a question. Jason, you're up first. What are you looking at this week? Yeah, just keeping an eye.

on Chipotle Mexican Grill, ticker of CMG. They have earnings coming out next week on Thursday. You know, there's a recent announcement they just came out with. They're going to be raising prices again. Talk about Netflix raising prices. Chipotle is another company that has demonstrated. They do have a modicum of pricing power. Now, we're not entirely clear on how much and where at this point, but this isn't the first time, right? I mean, they've raised prices several times over the last several years. You do start wondering if they aren't flying a little too close to the sun, right? You can't raise those things forever, particularly in this environment. But I think, furthermore, in just looking at the earnings release, to keep an eye on traffic and transactions

to get a better idea of how the stores are going in the digital orders as well. They continue to great things with the app and the rewards program. They've grown that rewards program now to 35 million members that's up from 29 million a year ago. They've got this new initiative called Free Poli, which, hey, listen, I'm all on board with Free Chipotle, but this was something they launched earlier this year, where it's essentially, you know, just 10 free food drops that they throw to their rewards members throughout the year, Koso, Bonco, Guac, whatever it may be. But I guess my real question is, could these price increases cause some near-term friction in the coming quarters? I guess time will tell. All right, Rick, a question about Chipotle. How important is it to Chipotle that

everybody who goes there has a single order that they always get. Nobody ever changes up. Nobody ever thinks about it. It's got to be fast and keep their menu limited. Well, I think that's something they've really exploited, certainly through their app, right? Once you get your favorite order there, they make it very easy to order and pick up. So it's something they've definitely benefited from. All right, Matt, what is on your radar this week?

I'm going with the Home Depot, ticker HD. No introduction needed for this one. You've got 2,000 stores in the U.S. and U.S. territories, 300 plus stores and Canada, Mexico, fourth largest U.S. retailer by sales, fifth largest online retailer. I'm thinking most investors don't know that. But look, this has been a tough year for Home Depot. They've had to deal with an inventory overhang, comp sales has been down, customer transactions are down. Big ticket items like lumber and appliances have really struggled. That's one side of the story. The other side is inventory is under control. Sales trends have started to improve.

They're going to lap those record results from a year ago, so comps will start to look better. and they just put in a new $15 billion buyback program. Over the last 10 years, Home Depot has bought back almost 30% of its shares. That's pretty impressive. So I look at the stock today, beaten down under 20 times forward earnings, 3% dividend yield. I feel like sales and earnings will be bouncing back in the new year. Looks like a bargain to me. Rick, a question about Home Depot.

How much of their bottom line is attributable to the giant skeleton? Well, this month, it's huge, Rick, it's huge. Rick, which one is going on your one? watch list this week. Hey, it's October. I got to go with a giant skeleton. Got to. Oh, go get you a burrito. Actually, I'll get the burrito on the way to the Home Depot to get the there you go. Maybe both are on my radar. Rick, appreciate you waning on our radar stocks. Jason Matt, appreciate you bringing them. That's going to do it for this week's Motleyful Money Radio Show. Show is mixed by Rick Engel. I'm Dylan Lewis. Thanks for listening. We'll see you next time.