Motley Fool Money - Retail roundup, Online Advertising, and Coca-Cola’s Latest Buzz

Episode Date: October 18, 2019

Netflix reports strong international growth but shares slip on slowing domestic growth. UnitedHealth rises on healthy earnings. And Coca-Cola serves up big revenues thanks to zero-sugar sodas and Coca-Cola Plus Coffee. Motley Fool analysts Andy Cross, Emily Flippen, and Jason Moser discuss those stories and the latest from American Express, Ameris Bancorp, Atlassian, Intuitive Surgical, and Yum! Brands. Plus, we take stock in the retail industry (with the holidays looming) and the state of online advertising.   Get the money you need to run your small business. Go to Kabbage.com to get started. Credit lines subject to review and change. Individual requests for capital are separate installment loans issued by Celtic Bank, Member FDIC.   Thanks Zapier. Go to zapier.com/fool for a free 14-day trial. Learn more about your ad choices. Visit megaphone.fm/adchoices

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your work. It connects all your business software and handles work for you so you can focus on the things that matter most. Try Zapier for free by going to our special link, Zapier.com slash fool. Everybody needs money. That's why they call it money. From Fool Global headquarters, this is Motley Fool Money. It's the Molly Fool Money Radio show. I'm Chris Hill joining me in studio this week's senior analyst Jason Moser, Emily Flippen, and Andy Cross. Good to see you as always. Hey, Chris. Hey, Chris. We've got the latest headlines from Wall Street. We've We'll dip into the full mailbag, and as always, we'll give you an inside look at the stocks on our radar.

But with earnings season starting to heat up, we're going to start with Netflix. Third quarter results for Netflix were not perfect, but profits look good. International subscriber growth was stronger than expected. Andy shares the Netflix down ever so slightly this week. I'm a little surprised because I thought, in part, because of the international subscriber growth, this was pretty good. Well, don't forget that the last quarter was so bad where they came out, with their new additions. That was far below expectations. So it was nice to see that they at least moved in the right direction this quarter. Sales were up 31%, actually up 35% if you back out

some of the currency effects. Nice growth on the profit picture. Paid additions at 6.77 million, just slightly below the guidance they had at 7 million. But it was the second consecutive quarter where the additions, the subscriber additions, the paid subscriber additions were below what they estimated. And I haven't seen that at least in four years. So from that perspective, that was a little concerning. So hopefully when they look forward to the fourth quarter, we see that number reversed and they actually can beat some of the guidance. Really, Chris, as you mentioned, the strength is all on the international side and tons of investments going into the international programming. So they continue to get a little bit of boost on the pricing.

they put forth when it comes to the revenue per user. That, Reid Hastings, the founder and the CEO, talks about how the increase they put forth on the U.S. side has really impacted the additions on the U.S. side of the business. So really, it's all growth about the international side. That was the bright picture. Overall, it was an OK report, and I was glad to see they had the growth come back compared to last quarter, but clearly so much competition, as we've all talked about, that is heating up. And that's the big thing to watch for Netflix.

Jason, Reed Hastings also being very upfront about what he called modest headwinds in the near term, just the amount of attention that's going to be paid to the launch of Disney Plus next month and then Apple Plus coming online. There's going to be a lot of platforms out there with a lot of really good content. And the thing about Netflix, I mean, the challenge that Netflix faces is because they're a pure play, they can't really hide behind any other part of the business. And when you look at some of the numbers, I mean, they're projecting negative three, and a half billion dollars in free cash flow this year, I think. And they continue to talk about that slow march towards a positive free cash flow. That sounds like it's going to be a long time

coming. And all along the way, I mean, that share account continues to go up as well. So they're going to continue tapping the capital markets. Share account's likely going to continue to go up because they have to keep paying for that content. Those obligations now are closing in on $20 billion. It's just all to me. For me, it goes back to pricing power. And we're already seeing some challenges there when they, start to try raising prices, that's affecting the growth. And so, while I think it's going to be a core offering, a lot of people will keep, I just feel like we're entering this new stage. And the financials, I think, are going to come under more scrutiny now.

I actually think that Netflix has more pricing power than people give it credit for. I tend to be a little bit more of a Netflix bull, even in this environment. And that's because they still have a lot of levers to pull it the way that they can monetize the service. And so the way they historically monetized it is just by whatever's going to get than the most number of eyes. The reason why we're seeing that customer growth start to slow down is because of the fact that they've already saturated, at least the U.S. market. And so now the growth then becomes just saturating the international market. And once they have all the eyes that they wanted to aggregate, that's when they get their pricing power.

And I actually think that, well, there's been a lot of critiques over Netflix originals, Netflix TV shows. They're one of the only platforms that's giving a platform to international producers, international TV shows. And I think people misunderstand how much power that that has for the international markets in particular. So there's lots of different ways they can monetize. I think they'll get to profitability. They'll be free cash flow positive. It's just a matter of figuring out when they want to make that move from attracting the

most number of consumers with a low price point to upping the price point. Well, yeah, it'll be a while into their free cash flow positive. They are nicely profitable, but they're investing so much and they have content obligations north of 19 billion now. But Emily is absolutely right. The international platform and the contribution margin on the international side is half what we have on the U.S. side. So they're ramping up so much of the United States.

they're spending and they're programming around international. That's an advantage. Hopefully, a profitability curve international continues to ramp up, and that drives the stock price eventually higher. And that international dynamic really makes a lot of sense why Amazon 2 is investing so much in that market as well. From video streaming to surgical robots, Intuitive Surgical's third quarter was better than expected, and the stock up more than 6% on Friday, Jason. Yeah, I mean, the investment case for Intuitive is that management's going to keep finding new ways to get its robotic systems in the hospitals to perform more procedures. And I mean, honestly, when you look at the numbers, it does seem like everything is working

out quite well. Global procedure growth was 20 percent for the quarter. In the U.S., it was 18%. They placed an additional 275 DaVinci surgical systems that was up from 231 in the third quarter of 2018. Their installed base now stands at 5,406. Total recurring revenue for the quarter, 817. million, and that represents 72% of the total revenue of the company. That's one of the attractive parts of this business, is that razor and blade model. You get those machines in the hospitals, and then you continue to benefit from the recurring revenue that comes from servicing them and using them. From a personal point of view here, I really enjoyed spotting the phrase augmented reality

in the call this quarter, talking about their iris system. And iris, just a reminder for everyone, it's the integration of preoperative imaging and 3D imaging into real-time case study for doctors. So it's helping train physicians on using the DaVinci robots. And again, I mean, I think this is a company that is based on technology, very forward-looking. And you know healthcare is a market that I really like a lot. There's just so much opportunity there, particularly as technology continues to evolve. Shares of United Health Group up 10% this week after the Healthcare Giant posted third quarter profits of $5 billion. Emily, United Health, still down a bit from its 52-week high, but I kind of feel like a couple

more quarters like this should do the trick. I think there's a lot of pessimism in the market right now for health here, maybe not for intuitive surgical, but for United Health, definitely. And that's largely because of the macro environment right now heading into 2020. It's hard not to see health care being a cornerstone issue in United Health in a lot of ways is positioned right in the middle of that. So while the stock price hasn't really reflected the strong performance for this quarter, United Health actually owes a lot of its strong performance to its new Optum business.

I will probably buy someone lunch if they could name all the different businesses within their Optum business. Can anyone? No. Well, I could go find them on the website and read them off to you. As you're right, it's a lot. Honestly, good luck. I tried.

Here's what I got. Optum Health, Optum RX, Optum Insight, Optum Bank, Optum Care. I don't know if that's all the optoms out there. Is there Optum web services? Yeah, probably. Sounds like they're optimizing their business model. But all of their opt-in businesses grew at double digits last quarter, which is really impressive for a company this large, whose overall revenue grew about 8% year-over-year.

So the opt-in businesses are definitely performing well. They're doing a great job of increasing shareholder value. They issue dividends. They have share buybacks. It's overall a good, stable business. The macro environment right now might continue to see a company like this pressured, though. Over the last decade, United Health has up more than 10 times in value, has a nice little dividend.

It's a very stable stock. As Emily mentioned, the volatility is much lower than the market. So, at $230 billion market cap, it's a pretty stable company to be able to stick in your portfolio. It's nice that Teledoc Health is partnering up with Optum 2, right, Mac? Third quarter profits and revenue for American Express came in higher than expected, but shares not really moving on Friday. Jason, you look at Amex. It's up around 15% for the past year.

What we're seeing with this latest quarter, is this a valuation thing? Well, maybe. I mean, you know, I love a good membership business. And really, I mean, American Express is essentially a membership business. I mean, you pay a membership fee in most cases to have the card. And, I mean, a couple of years ago, we had some real concerns. I know I specifically did in the face of this tech threat in payments and card services. Amex seemed kind of like a legacy provider that might be missing that next wave. But you fast forward to today, I mean, the business continues to chalk up good results. And the excluding currency, adjusted revenue, was up 9%. That marks the ninth straight quarter of revenue growth of at least 8% for the company. So I think that's really impressive. They're paying a little bit more on the reward side, making sure that they invest in co-branded partnerships to keep their card users, their card holders using the cards. I mean, those are good long-term decisions, in my opinion. I mean, that is seeing the forest for the trees, knowing you're going to take a little short-term pain in order to make that network bigger and get people spending more with them. Very

cool to seem saddling up with PayPal and Venmo to do more things like splitting card purchases and even enabling customers to pay with AMX points where PayPal is accepted. From the stock perspective, I mean, over the past three years, it's been a really good performer. The stock has basically doubled. When you compare that to other companies in the space like PayPal, it's still lagging. To me, AMX is more like a bank investment at this point. They're doing a lot of good things to keep up with the times. As a cardholder, I love it. I'm not terribly enthusiastic on it as an investment, given the

other options that are out there today. You think we're the only ones paying attention to the success of Olive Gardens' never-ending pasta pass? Coming up, we've got a similar offer from another giant in the restaurant industry. So stay right here. You're listening to Motley Fool Money. We'll get back to the news in a second, but first, let's talk about you. Because when you own a small business, your time is valuable because you're doing it all. managing inventory, you're covering payroll, you're doing 100 things before lunch, and that's just the typical day.

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Go to Cabbage.com to get started. K-A-B-B-A-G-E.com. Credit lines subject to review and change, individual requests for capital are separate installment loans issued by Celtic Bank, member FDIC. Let's get back to the news. Welcome back to Motley Full Money, Chris Hill here in studio with Jason Moser, Emily Flipping and Andy Cross. For more earnings news, we will start down under with Atlassian, the Australian-based enterprise software company out with first quarter results that were better than expected. Atlassian also raised guidance for the second quarter. So, Andy, wire shares down 7% on Friday. This is what we like to see.

Yeah, I think the reason they are down is probably more to happen with just the general kind of malaise around some of the SaaS companies, some of the software cloud businesses this year. There were some comments from some other SaaS companies that clients are pushing back some of their purchases are a little bit more slow to develop them. So I think there may just be some concerns on there. But at last thing, this is one of my favorite management teams, the two co-founders that own almost 30% of the stock are very involved in the business. Sales were up 36%. They've offered. They have their GERA software. They have Trello, which we use around the office here. They're continuing to innovate into those businesses, but also on the

pricing side. They now have been more aggressive on the free to premium side, so they have these different free offers that clients are gravitating to. It helps continue to grow their revenues, and their expected revenue growth will continue going forward. You look long term, a $30 billion business. It's a very large market for them to be able to play in. We're getting more and more collaborative as organizations work together. They serve 160,000 global clients. And I see the growth just continuing for it lasting. It's just very well-run. And they actually generate, when you adjust for some of them heavy stock compensation, they generate some nice free cash flow. You kind of hit it on the head there, too, about how well-run this company is.

There's type of co-founders that you really look for an investment, you know, people who can lead a company for the long term and have its best interest in mind. And as a result, have your best interest in mind. I will just add that. Alassian is interesting because you talk about a lot when you think about SaaS companies, the idea of being developer-focused. So the people who are actually the ones using the technology, making it friendly to them. And Atlassian does a great job of being developer-focused.

Unfortunately, that makes it a little bit harder for them to get into other areas of the business. They have a lot of product suites that once you have one, and once you've made that decision, developers have gotten a Lassian, it's easy to expand it. But you have to convince them, right? The developers have to convince the company to bring it Lassian in the first place. They've been doing great doing that so far, but I do think it comes down to the fact that if you're a developer, I mean, their products are just so much easier to use in the competition. Yeah, I agree. And they make these little acquisitions. They bought Code Barrel, which makes

automation for GERA, which partners very well with their large GERA business. And they bought OpsGGENI last year, and that's an incident response and management software, and that's been plugging in. And they're very patient. They let the businesses, grow that they acquire and they slowly integrate, then that's just good long-term. Coca-Cola's third quarter was fueled by strong sales of Coke Zero. Shares a big red up on Friday and Emily close to an all-time high. You're actually missing the big story here, Chris. The big story here is the fact that they launched coffee-infused soda in 20 markets

across the world. And so, sure, while the great results were associated with Coke Zero and lots of people buying little tiny cans of Coke, I know you'd like to do that, Chris, right? By the little tiny cans of croak. Yeah. Well, the big story to me is the idea that there is, in fact, coffee-infused Coke out there in 20 markets. I don't believe the U.S. is one of them yet. But I think they actually tried to do something like if memory serves, I think they tried to do something like this, like maybe a decade ago, and it really fell flat on its face. But based off this quarter, maybe it's being more successful in other markets.

You know what's better than coffee-infused soda? Oh, nothing. Coffee. Oh. I challenge that. Straight to the source. in the storage. Coffee-infused stout. That's a really good one. Founder's Breakfast Stout. Third quarter profits in revenue for Ameris Bank Corp came in higher than expected, but shares

of the Southeastern Bank, not moving on the results. Jason, I know you're a fan of this one, but you look at Ameris Bank Corp's stock over the past year, and it's basically flat. Oh, yeah. And I think a lot of that is tied to this Fidelity acquisition, and just the general challenges in banking, given the interest rate environment. The small banks just have a tougher time dealing with that. But you go into a quarter like this, you really are just looking for the red flags. I don't see any. The metrics that matter most are all looking very strong. The Fidelity Acquisition added $5.2 billion in total assets, $3.8 billion in total loans, and $4 billion in total deposits. You put all that together now, and they stand at total deposits of $13.7 billion.

Total assets now just under $18 billion. For the quarter net interest margin, staying in check, it was down just a tick to 3.8.4 percent. but a good number given the interest rate environment. I think that one of the key justifications for the acquisition was this access to a lower-cost deposit base. When you look at that, you see this non-interest-bearing deposits representing almost 30 percent of total deposits. Now, that's up from 25 percent a year ago.

That's important because it was a key justification of the acquisition. So the president of Fidelity, Palmer Proctor, he's now stepped in to fill the CEO role. like he's got a good grip on the business, excited to hopefully get him on industry-focused soon for an interview. But as a shareholder in Ameris, I feel very good about what they're doing. Emily made the comment about health care, probably going to be a spotlight issue in the 2020 election. It sort of feels like big banks are going to be in the spotlight as well. Do you think that is even more of a bull case for smaller banks like Ameris Bank Corp? because, let's face it, to the extent that banks get attention from politicians thinking

that they're too big, it's, I mean, this is, we're talking about a bank here. It's less than $3 billion. Yeah, I tend to think, like if I'm going to prioritize the list, I feel like tech is really at the center of the bulls for this election season. Banks will probably play second fiddle there. To your point, yes, big banks obviously possess a lot of advantages there, and I think ultimately that's where we're going to continue to see consolidation in the space. I think a lot of bigger banks look at Amaris today and think, boy, they've loved to swallow

that thing up at the right price. But for now, I'd really love to see this team just get the room to keep on doing what they're doing. And it's not necessarily a name that flows off the tongue, but it's also not truest. Hey, listen, I mean, money's money. People like money, so. This week, it took less than two hours for KFC to completely sell out of its seasoned tickets promotion.

For just $75, the deal entitles the holders of the sales. seasoned ticket to have four dozen made-to-order chicken wings delivered to their home every week for 10 straight weeks. Emily, I feel like this can only be a win for parent company, Young Brands. It's only a lose for the people who, it's only the lose for the people who missed out on buying the season tickets. It's a win for everybody else, undoubtedly. I think this was referred to as the Netflix of chicken wings. I don't know how that connection was made. I see it as a stitch fix of chicken wings, except I'm a lot more bullish on these wings. You get a box.

Exactly. This is what I want, though. I want them to customize the box, like Stitch Fix does. I want them every week to send me, like, what is it? Is it 48 wings a week? 48 wings every week, and I want the flavors customized to me. You know, like I've had a bad week. Maybe send me some spicy wings, you know, like spice up your life a little bit.

And then the ones I don't like, maybe I can send back, get a little refund. I don't know. There's an idea here, though. I think they should also include a card for a cardiologist. Your local cardiologist as well, too. Well, I mean, if you're getting four dozen wings delivered every week for 10 weeks, hopefully you've got some friends over, right? I guess so.

Either that or perhaps a Peloton membership? I don't know. I don't need it. I will say this. To be serious about it, though, they're definitely losing money on this deal. For $75, $528 wings, that's about 14 cents a wing, if my math is correct. And there's probably somebody out there who's crunching the numbers. He's saying, that's not right.

But generally, that's a really, really cheap wing. So they're probably losing money on this deal. Up next. a deeper dive into the world of online advertising. Also, dip into the Fool mail bags, so stay right here. This is Motley Fool Money. You know, well, I'm a ticket fried and cold beer on a Friday night. Welcome back to Motley Full Money. Chris Hill here in studio with Chason Moeser, Emily Flippin, and Andy Cross. Let's talk retail for a moment, because the retail sales in the

month of September fell by 0.3%. Jason doesn't seem like a big number, but This is getting a lot of attention, and I think it's reasonable that it gets a lot of attention, in part because it's the first drop since February, but also because we're going into the holidays, and you've got the National Retail Federation coming out and saying, everything's going to be great around the holidays. Consumer spending growth is going to be double what it was last year. And you've got some economists saying, I don't know, you take this, you combine it with, you know, traction in manufacturing and others. When you take this data point and you look at retail, what goes through your mind?

I mean, it seems to me like they're trying to make this the Lego holiday season, right? I mean, everything is just awesome and let's just keep on doing it. Maybe that's how it works out. I'm taking a little bit of the counter view to that, though. I mean, I feel like, you know, a year ago, we were just getting into this whole trade war thing in the ramifications of it, thinking it would probably be resolved by this point. It doesn't look like that's going to happen. I think with uncertainty, it makes retail a little bit more of a difficult space. And then there's data out there that says, I mean, while unemployment is great, wages are still a little stagnant. Personal consumption expenditures have slowed

a little bit. And when you look at the state of a consumer, I mean, there's some telling data out there in regard to the state of consumer credit card debt. And I think we talked about this earlier during the week on market fullery, but on average, households with the lowest net worth are the ones with the most credit card debt. And so that ultimately is kind of the fuel that feeds this retail fire. At some point that slows down. I feel like we're seeing some signs that things are starting to slow down. So, I mean, I'm not saying that we're on the tip of a recession or whatever, but I can certainly see how maybe this is a slower holiday season than some might expect. And I'll play devil's advocate to that a little bit, because that

quote in particular was year-over-year growth. So looking at this time last year, there was a lot of fear in the market, a lot of concern about the economy. And so maybe that led to lower spending last year than what should have been seen. And I think it was just earlier this week that was that JP Morgan Chase reported. And the real big story was that Jamie Diamond coming out and saying, yeah, manufacturing's been weak. But the American consumer is still extremely healthy. So while we're seeing this weird kind of contraction with the manufacturing industry, at the same time, it seems like American consumers are still willing to spend. And so I tend to think that maybe we're going into a good holiday season for retailers. Also, the monthly number is the

change from last month. When you look year over year, just on that month, we're still up more than 4% on the overall consumer spending. That's a little bit below the long-term historical average of about 4.2%. And it's down from what it was last year, last month year over year. So we're still spending, spending. The consumers are still spending and spending 4%. more than we spent last year in the month. So I think we have to take the month-to-month results all with a grain of salt. I mean, I think the trade issue is going to cause some a little bit longer-term ramifications for the consumer spending. But Emily is right. The consumer is the driver of the U.S. economy still spending money, and that's a good thing to see,

especially with the manufacturing economy, not working at all. Not all retail is created equal, right? I mean, that's a big market with a lot of players. I mean, there are plenty of names we could look at, plenty of companies we could say, well, I'm not terribly optimistic. But I mean, I look at a company like Etsy, for example, admittedly a smaller niche market, but man, do they own it? And it just seems like quarter in and quarter out, that consumer stays very healthy. Well, and you think about all the retailers out there. It seems like either you need to be big or you need to have a moat. And I think that when we look at Amazon, Walmart,

Target, and I'll throw Costco in there as well, they're probably okay weathering any type of storm here, and I think Etsy is a good example of a smaller retailer with a good moat. And to your point on those big retail names, look at companies that benefit from those names, something like a Hasbro that over the past several years, Hasbro has separated itself from the other competitors in that space. I suspect Hasbro will continue to do very well, because we know that holiday season is the biggest one for these toy makers. And we talk a lot about some of these bigger retailers, and it's important not to forget

the discount retailers, too, which have also been performing really well. So when I think about, you know, that's the T.J. Max's of the world, the Burlington's of the world. I mean, these are businesses that have actually done really, really well in their niches. So when it comes down to it, I think when you think about what retailers are going to do poorly this holiday season, it's probably the same retailers that I've been doing poorly for the past few years. Let's move on to online advertising, because the latest forecast indicates that Google and Facebook will continue to dominate, as they have. But most noteworthy in the forecast, Jason, was Amazon's ad business is looking like it's going to top $7 billion in 2019.

That's roughly 30 percent growth year over year. I shouldn't be surprised by this, but that's a pretty big number in terms of growth. It is a big number, particularly when you consider that the space is really ruled by Google and Facebook, Alphabet and Facebook. And I think with Amazon, you know, you've got the ad opportunity on the commerce. site, but also, you know, there's the entertainment side with the fire TV stick and fire TV box, the way people are getting their entertainment now. I mean, there's a big opportunity. There's no question about it. We talk about the trade desk a lot, and I think the trade desk is

even a company looking at this as a big opportunity because they recently came to an agreement with Amazon to be able to sell ads on those, on that platform with all of the third-party providers for that Amazon entertainment platform. So, I mean, I think Amazon is going to be, they're going to capture their fair share, I don't think this is really ultimately a major threat to something like a Google. I think Facebook is dealing with a lot of their own challenges right now. I mean, it's hard for me to imagine five years from now. We're still not looking at Google and Alphabet really as the kings of online advertising, but it's a massive market. Yeah, in that point, it's more than a $730 billion market. The total advertising market,

and digital is still a very small part of that, right? So this is, and digital search is even a smaller part of that, right? So you have Google and Amazon definitely making inroads. We've talked about this and search on Amazon. Amazon's platform, a huge opportunity. They saw that, and now they have the advertising for it. One reason Jason mentioned the trade desk, we continue to like that because the programmatic sides are matching up from a very algorithmic, much more efficient way to do this in the non-walled gardens, so not in the Facebooks, not in the YouTube's of the world, but elsewhere on other media platforms, a company like the trade desk, has an opportunity because that market is growing much faster than the overall digital market.

And it also begs the question of what are regulators going to do about this market that increasingly seems to be focused around what is only a few of the biggest companies here in the United States. And to Jason's point about Amazon allowing third-party ad providers on their platform, it feels like that's almost by force because they know if they don't, then they could have some sort of antitrust suit against them regarding preventing third parties from advertising or providing advertising support on their platform. But it poses an interesting problem for regulators because typically monopolies are by force. This is like a monopoly by choice. Google, Facebook,

Amazon. They're monopolies because consumers use them. They're not monopolies by nature. So from a lot of perspectives, it's hard to imagine regulating these advertisers because the place that naturally aggregates eyes would receive advertising credits. Although it did make me think when I was looking at this story initially and to your point, Jason, about how big tech is going to be in the spotlight for politicians in 2020. This is one more reason to go after Amazon is there growing increasingly dominant ad business. Oh, yeah. Well, and it also makes you appreciate a business like Roku. When it first came public, we kind of just looked at it as this hardware play.

But clearly, that's taking a back seat to what is becoming a very real. robust partnership and advertisement-based model, which again, I mean, I would imagine the Trade Desk will be able to benefit from that. And I'm sure that Amazon's opening up of its Walgarden, so to speak, is partly in response to that competition. You know, we've talked before about startup beverage companies, whether it's a small craft brewery or even just a non-alcoholic beverage company that more often than not the business plan of whoever is starting that business is, I just want to get bought by a giant. I want Budweiser to buy me. I want Coca-Cola or Pepsi to buy me. Do you think that's now

the play for small startup digital advertising businesses, that this is now so dominated by Facebook, Google, and increasingly Amazon, that it's, you know, for startups out there, they just think, well, hopefully we can just catch their attention and they'll buy us out. I mean, Jeff Green, the founder of the Trade Desk did sell his first advertising business, I think to Microsoft eventually, but I think he sees this. I mean, I mentioned that, 730 billion-plus market. That's obviously a total advertising spend. But the way this business is evolving, yes, they do have big players. But when you start moving outside those walled gardens, you have companies like the trade desk. If they can be more efficient and more friendly

to their clients and independent, that's important. And independent, there's a huge opportunity for them. I mean, I'm not going to lie, I kind of zoned out after you said craft brewery. You can email us. Radio at Fool.com is our email address. Or you can be like Derek in Japan. who sent a physical letter to us here at full global headquarters in Alexandria, Virginia. Derek writes, I've been listening since 2010. The majority of that time, I've been in Japan, stationed here while on active duty, and after that, working with the military here. It's a great show. Keep up the good work.

My question is, how do I get my kids more interested in investing? I started investing for them years ago, but I'd like to get them more involved. When it comes to picking stocks, should I have them focus on companies that actually make something? It might be easier to understand what a company like Disney does as opposed to what a company like J.P. Morgan Chase does. Would that be easier for them, or should I just stick to the financials as I do when I invest? P.S. enclosed is this fall's versions of Kit Katz from Japan. Enjoy it. So, first of all, thank you for listening for so long, Derek. Thank you for a great question, which we'll get to in a moment. But thank you also for the Green Tea Kit Katz and the toasted Green Tea KitKats. I think

I think the consensus around the table here is slight favoring of just sort of the straight-up traditional green tea one. Is that fair to say? Yeah, that's mine. In fact, I'm going to grab one right here. Oh, by all means. Just chew into the microphone. I'm not going to chew into the microphone, but just wanted to look at it. Yeah, I think, a little better than the other one. Jason, let me start with you. It's a great question because I think that, you know, it's always great to get your kids involved in investing, but chances are they're going to be

more interested if it's a business. that they can understand like Disney as opposed to, well, JP Morgan Chase. Well, yeah, and I mean, I think hats off first and foremost for getting your kids into investing. And I'm not sure how old your kids are at this point. But I will say that, you know, my wife and I have worked on making sure our girls are financially literate and aware of what's going on in the world. And part of that is investing. They've been owning stocks for several years now.

And two things I always come back to when it involves kids and investing. It's companies they know. and it's also taking the business owner's mentality. And so I think that the more you're able to get companies on their radar that they know, and I'm not saying understand their business model fully. I mean, understanding generally what the company does, but also then giving them this understanding that owning their stock is actually owning the business. And then once they've got companies they know and like on their radar,

and then there's this possibility of actually being an owner of that business, that lights a fire, I think, in a lot of people. I know it definitely peaked my girls' interest as well. And so that's one thing we've continued to do with our girls, is trying to make sure the businesses that we're shooting across their radar are ones that they just run across every day and then create that ownership mentality. Jason's given you the wise answer. I'm going to give you what I think is the more realistic answer.

And that is to say kids and parents, sometimes things that parents try to get you into, you're going to hate automatically. I don't know how old your kids are. Maybe if they're younger, this doesn't apply. But I remember when I was growing up, I came from a family. My father's a history professor. My mother was a lawyer. I am now working in finance, if that tells you anything about my desire to get into history or law. I will say that I like the idea of buying companies that your kids can understand and owning businesses. What got me started in investing was buying a biotech fund that I knew nothing about. And then watching it go up 50%. And absolutely losing that, you know,

my high school mind based of how much money I suddenly had. And so I think there's something to be said for, depending on how your kids view the world, maybe they're like Jason's kids and they're more business-minded, well-rounded children than I was. But I was very excited by the idea of capital appreciation. Well, let me make sure, first and foremost, the wise answer, was that code for old? Are you calling me old, Emily? That's how I took it.

No, and I think an important point here, because I think you're right. I mean, with kids, that interest, it's not like we sit there and talk stocks all the time. I mean, they take a look at their portfolio. maybe four times a year. We look at their portfolio to see what it's doing. So keep your expectations in check as a parent. This isn't about getting your kids talking stocks every day because I think that's an unrealistic expectation. But yeah, I mean, set the expectations appropriately and understand it's a marathon, not a sprint. Yeah, I think it's getting your kids interested in the inquisitive nature of learning about

businesses and understanding how the products they operate or use or enjoy every day. and how that basically manifests itself into business and capitalism and how that grows. Emily's right. I think sometimes you start lecturing them. They're not going to listen to you. So I think the approach of trying to get them started into the products and the businesses and what they enjoy as much as the finance and the actual stock side. I'm just starting to do the stock part to it.

I get a lot of glazed eyes for my kids right now. Well, and to Emily's point, I think, yeah, if you have a couple of stocks that they're interested in, that's great. If there are a couple of stocks that you know as a parent are going to be monster winners over the next 20 years, don't let that stop you from Biden. Don't let your kids' ignorance or lack of caring about the business stop you. Coming up, we will check in on one of our reckless predictions for 2019. We also have a few stocks for your watch list.

So stay right here. You're listening to Motley Full Money. All right, before we get to the radar stocks, let's talk about you again. Because when you're running your own business, your to-do list is never ending. And the solution is to automate tasks. That's where Zapier comes in. Zapier is built to automate your work because it connects all your business software and handles work for you so you can focus on the things that matter most. Go to Zapier.com slash fool. Connect the apps you use and let Zapier take it from there in just minutes. You've heard me talk about this before. At the Motley Fool, we have a lot of people using a lot of different systems.

And Zapier helps us integrate them all. Because when you're going from Google Docs to Zoom Video to Sour, to Solution, to Slack, back to Zoom Video, back to Google Docs. You can lose track, and Zapier is really great at helping us ZAP from one app to the next. Right now through November, try Zapier free by going to Zapier.com slash fool. That's ZAPI-E-R.com slash fool for your free 14-day trial. Zapier.com slash fool. Let's get to the stocks on our radar. 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're here. Welcome back to Motley Fool Money, Chris Hill, here in studio with Jason Moser, Emily Flippen, and Andy Cross.

Let's go back to January 4th of this year. It was our preview for the year ahead. And if you're a long-time listener, you know on our preview show. We talk about stocks to watch in the coming year. We're CEOs on the hot seat. We also make reckless predictions about anything, not just business. And let's go to our man behind the glass, Dan Boyd, for My Reckless Prediction. for 2019 that I made on January 4th. I'm just going to say that regardless of where free agent, Bryce Harper ends up,

the Washington Nationals are going to the World Series. Wow. Wow, I'll take that, though. You're welcome, everybody. It's drawn. I didn't put money on that. I probably should have. That's what I get for not taking my own advice. All right, let's get to the stocks on our radar and our man behind the glass.

Dan Boyd, it's going to hit you with a question. Emily Flippin, you're up first. What are you looking at this week? Okay, I'm looking at a company called Avalar It's ticker is A-V-L-R. It's a cloud-based tax-compliance software business. Its flagship products includes tax processors that allow companies to better calculate sales tax. So, if anyone remembers a 2018 Supreme Court case, I believe the South Dakota versus Wayfair, they require people who sell online to start calculating sales tax for the jurisdictions in which they operate. So Avala simplifies that process. It's a relatively small business, but expanding quickly.

Dan Boyd, question about Avalara? Generally, it's Ron Gross who brings the most boring stock to the table here on Motley Fool Money. So I just want to thank Emily for picking up the slack while he's not on the show this week. Always looking out. Jason Moser, what are you looking at? Oh, I'm going to try to one-upper then here. I've got Massimo, ticker M-A-S-I. Earnings coming out next week from Massimo.

This is the company that is in the business of, say it with me folks, pulse oxymetry. other non-invasive blood monitoring equipment. Well, of course. Last quarter, again, shipments were up. They have now an installed base of almost 2 million worldwide. A lot of parallels to intuitive surgical that we were talking about earlier with a razor and blade model, recurring revenue dynamic. Massive market opportunity in healthcare.

Be very interested to see how this latest quarter shakes out. Dan, question about Massimo? So, Jason, Chris clued me in before the show that there is another company called Massim. in the world, but I believe this one is a coffee company. So, to our earlier discussion about coffee, who you got, Jason, blood or coffee? Well, I mean, my blood is fully enriched with coffee 24-7. Little thing we call Fusion. Andy Cross, what are you looking at? I'm looking at Manhattan Associates, symbol M-A-N-H, has nothing to do with Manhattan, New York. It is actually a logistics, a software, logistics, inventory management business. It's really making this big push to the cloud. Five billion

dollar market cap. They report earnings next week. So for them, it was a legacy business. They've shifted to the cloud. It's really helped the stock price. So I want to see how that continues to grow their overall business. Manhattan Associates, Dan. Okay, Andy, if it's not associated with New York or New York City, with Manhattan, of course, being the most iconic part of New York City, what Manhattan is it associated with? I think it's actually from Manhattan. Beach, California. Not Kansas? I immediately went to Manhattan, Kansas. Yeah, could be Kansas. Three very different businesses, Dan. Maybe not the most scintillating trio, but Avalara, Massimo, Manhattan Associates. You got one you want to add to your watch list? Well, it seems like we can't

live without blood or coffee, so I'm going with Massimo. That's two weeks in a row, folks. Thanks, Dees. Also worth pointing out, you know that's just bragging rights, right? I mean, listen, I got to have something to go home to, Chris. Jason Moser, Andy Cross, Emily Flipman. Thanks for being here. Thanks for having me. That's going to do it for this week's edition of Motley Fool of Money. Our engineer is Dan Boyd. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.