Motley Fool Money - The Future of Real Estate and Retail

Episode Date: May 22, 2020

Facebook, MasterCard, and Spotify announce new work-from-home policies. Lowe’s, Home Depot, Target, and Walmart report big growth in same-store sales. The U.S. Senate passes a bill that would impose new listing requirements for Chinese companies. And Take-Two Interactive hits an all-time high. Motley Fool analysts Emily Flippen and Ron Gross discuss those stories and weigh in on the future of retail and the future of real estate. Our analysts share two stocks on their radar: TJX Companies and Pinduoduo. And Motley Fool analyst Tim Beyers and Motley Fool contributor Dan Kline talk with TiVo CEO Dave Shull about television, streaming video, and the future of TiVo.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone, I'm Charlie Cox. Join us on Disney Plus as we talk with the cast and crew of Marvel Television's Daredevil Born Again. What haven't you gotten to do as Daredevil? Being the Avengers. Charlie and Vincent came to play. I get emotional when I think about it. One of the great finale of any episode we've ever done. We are going to play Truth or Daredevil.

What? Oh boy. Fantastic. You guys go hard. Daredevil Born Again official podcast Tuesdays and stream Season 2 of Marvel Television's Daredevil Born Again on Disney Plus. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Full Money Radio Show. I'm Chris Hill joining me this week, Emily Flippin and Ron Gross.

Good to see you both. How you doing, Chris? We've got the latest headlines from Wall Street. We will dig into the future of television. And as always, we've got a few stocks on our radar. But we begin with the future of the workplace. This week, MasterCard and Spotify became the latest companies to announce extended working-from-home policies for their employees. Facebook CEO Mark Zuckerberg said many employees at Facebook will work from home permanently.

And with all this new flexibility comes increased safety for the health of those employees and increased risks for the businesses that have depended on big companies having their employees in a single office building. So, Ron, we haven't really heard yet from the big banks on Wall Street. You have to imagine they're thinking about this as well. What does this mean for commercial real estate as well as the restaurants and shops in those urban areas? Nothing good, Chris. This is going to be a big deal.

Commercial real estate's got to be, I think, the biggest thing that gets impacted as a result of the work-from-home trend. And companies are inevitably going to reduce their need for office space. Vacancies will increase. Prices will drop. I think retail bankruptcies that we've been seeing are going to exacerbate this commercial real estate problem. And it's going to continue for some time. Interestingly, I think we're also going to see an exodus from cities into suburban locations from people.

And as folks move out to the suburban areas, we actually could end up seeing. a residential real estate boom out in the suburbs, again, leaving the cities in some type of pain as a result of increased vacancies that we've already started to see. As you mentioned, I think restaurants as well, especially those that rely on office parks, right around full HQ, for example, we were talking earlier. Some of those restaurants are going to be in real trouble as the amount of people that come to work each day permanently declines. And as a result, I think we are bound to see permanently less restaurants in the U.S. I think there will be some positives from the work-from-home trend.

Cars are going to last longer. We're not putting as much mileage on them. There will be a reduced demand for gas. I think the environment is likely to benefit. So there are some pros to this. Apparel is going to change as well. Less need for work apparel. Let's need for pants.

More need for sweatpants and pajamas. But there will, I think, be a change to the apparel industry as well. Emily, what do you think? I think what Ron said is true. But there is also another silver lining here that I feel like not enough people are talking about. It's pets. I mean, there's no way that a permanent work-from-home trend doesn't result in more pet ownership across the United States, all these people who are spending hours, commuting, living in cities

where they didn't have space for pets. Now we're living at home, right? Living in the suburbs, living in spaces that allow them to have cats and dogs. So that could be a wonderful long-term trend that also comes out from this movement. I hadn't thought of that until you just mentioned it. And now I'm thinking I need to look at businesses like IDEX labs and sort of the pet care industry. Or chewy. Food. Yeah, yeah, chewy. Let's move on to the home improvement industry. Home Depot and Lowe's both out with first

quarter reports this week. Emily, we typically see a similar story with these two. This quarter was no exception. Higher revenue for Home Depot and Lowe's, but higher costs as well. Yes, Home Depot and Lowe's typically move in line with each other. So it was really interesting to see them have such substantially different quarters despite both existing in the same macro environment this quarter. So Lowe's had amazing comparable same source sales. I mean, that was up over 11 percent. And And that's nearly 5% over where Home Depot's was at 6%. So both were great quarters, but it's weird that we see such outperformance by Lowe's, especially when typically it goes in Home Depot's favor.

When I think about the tailwinds that both of these companies are experiencing, I come back to what their core customer is. And Home Depot and Lowe spent a lot of money this quarter supporting their employees, but ultimately the DIY home improvement person, you are on. is more likely to shop at Lowe's versus contractors, which will typically go to Home Depot. And they do have some overlap. There's some competition there. But I think that's what we saw really influencing on Home Depot this quarter,

was the fact that a lot of contractors who were working on big projects didn't come through those projects during this pandemic, whereas the average person who was sitting at home looking at that hole in the wall, maybe they haven't fixed in a while, thought they should probably get out to their local lows and improve that. Yeah, I think it was interesting, the comments that Home Depot made about comp sales, which in a vacuum, 6 percent comp sales is nothing to sneeze at it at all. But obviously, Lowe's, as Emily pointed out, fared a bit better. Home Depot said they were accelerating.

That'll be interesting to see what this next current quarter that we're in, how that shapes up. Do these even out and become a little bit more of the way we've seen in the past, similar types of increases? is for something changing at Lowe's that will continue the outperformance. You know, we've said in the past, these companies are similar, obviously. We think Home Depot was probably a little bit better run than Lowe's as a result of trades at a premium. Consistently, the stock trades at a premium. So, for example, now you can buy Lowe's at about 19 times

earnings where you have to pay about 23 times earnings for Home Depot. But you're getting a little bit of a better company. I actually always say I don't see the next need to necessarily choose one or the other. They're both fine companies to own, and you could split the difference. But I do want to see what kind of acceleration to comp sales Home Depot comes up with in the current quarter. Well, and one other thing that we've seen from other companies and other industries that we are not really seeing with Home Depot and Lowe's is the marketing spent. Home Depot and Lowe's are traditionally big spenders on advertising. They haven't really ratcheted that back

the way that some companies have. So, that's probably also having a little bit of impact on the margin picture. But, you know, Emily, to Ron's point about Home Depot typically being a better run company, Marvin Ellison at Lowe's, I think he's been CEO for nearly two years now. It really seems like his work is starting to pay off in terms of the way Lowe's is operating. Yeah. Ellison has made a lot of improvements to Lowe's that are similar to the improvements at Home Depot has been making over the past five years or so, digitizing the experience, making it easier for people to sign up for loyalty programs, really improving on the Omnichannel experience for shopping at Lowe's. Ultimately, if you go to a Home Depot's, there's probably Lowe's within a Stone's

throw distance, and vice versa is true for Lowe's. So there is a lot more price competition there and customer competition there than there is in other industries. But these two customers, these two companies, to Ron's point, are the two dogs in the home development space? I mean, there really is no other competition. So I think there's value in owning a basket. I do think that Ellison has more to prove with lows than Home Depot needs to prove, though. Shares of Walmart and Target flat this week as the two major retailers issued their first quarter reports.

Ron, there are a bunch of different ways we can go here, but I'll just start by saying Walmart and Target putting up same store sales growth. of 10 to 11 percent is pretty impressive. Very impressive. And these are similar stories here, right up until you get to the bottom line. But let's talk about the similarities first. Both saw revenue increases. Walmart 9 percent, Target 11 percent.

As you said, both had comp sales increases in the 10 percent range. Walmart doing just a little bit worse than Target, Target at 10. And Walmart at 10 percent. Big numbers there. Obviously the beneficiary of being open, being a necessary. necessary business while other businesses got shut down and then really taking advantage along with folks like Costco. Very strong online sales, as you would expect.

Walmart up 74 percent, target up 141 percent, different bases, obviously. But targets, I think, their investments that they've made over the last few years. And same-day delivery and pickup, really paying off seeing the same-day business up 278 percent. A huge number, obviously aided by the crisis that we're going to be. that were all being impacted by. Both had to spend a ton of dough as a result of COVID-related costs and wages to keep employees.

Walmart put the costs at about 900 million, targeted about 500 million. Margins were lower for both companies as a result of those lower margin items like food being sold and some of the higher margin items like apparel being weak. But then when you get to the bottom line, you see that Walmart was kind of able to absorb

these extra costs quite a bit better with earnings per share up 5 percent versus Target getting kind of whack there down about 60 percent on an earnings per share basis. No guidance from either company, but they're both really strong companies. I expect them to continue to execute well, even when the country reopens and they're not necessarily the only game in town, but they will be one of the winners of this retail shakeout that we've been talking about. And I wouldn't want to downplay the importance of the permanent changes and habits that will come from people who have adjusted their grocery or food delivery to different platforms as a result of this pandemic. If I can bring everybody back to the beginning of

2020 when Walmart spent millions of dollars on their Super Bowl ad, reminding people that they had grocery pickup in most of their locations, I mean, I was one of the people who laughed and said maybe that was a waste of money, right? And the people who are ultimately shopping at Walmart are aware of the fact that they do grocery pickup. But that money, as it's been proven out over the past few months, was well spent. I think people who have made a shift to grocery pickup are probably more likely to retain those habits once this pandemic is over than we may have given them credit for a few months ago.

Ron, just real quick on the apparel question, obviously apparel, a higher margin item. Target has made investments in apparel. It really seems like, you know, I'm not looking to add pressure to CEO Brian Cornell, but it really seems like they are set up to succeed in a future where we're wearing fewer suits and more casual clothing. They are very well positioned here. They've brought designer brands in-house. They've private labeled some.

The designers they brought in, they've created a new price point for those designers who have been willing to kind of dilute their brand and sell more to the masses at a value proposition a value point that lots of folks can afford. They make absolutely fine clothes at a reasonable price. I think that continues. I think they continue to steal business from some of those retail apparel companies that are either going to reduce their footprint or perhaps even go out of business. Are Chinese stocks in danger of being delisted? That story is next. Stay right here. You're listening to Motley Full Money. Welcome back to Motley Full Money. Chris Hill here with Emily Flippin' and Ron Gross. On Wednesday, the U.S. Senate passed a bill that could force Chinese

companies to give up their listings on American stock exchanges. Coincidentally or not, Wednesday was also the day that shares of Luckin coffee resumed trading. Luckin had been halted in the wake of an accounting scandal and shares down more than 40 percent this week. Emily, we're getting a lot of questions about this issue. I mean, obviously the House of Representatives would still need to take this up and then it would need to go to the president. But this seemed like a pretty strong signal. Yes. This is Senate bill 945 and it actually had bipartisan support in the Senate. This bill would essentially say that any foreign listed company in the U.S., and this is really targeting Chinese companies since they have been made offenders, would need to certify that

they are not controlled or owned by foreign governments and then also get the public company accounting oversight board to audit their financial statements. or have an auditing firm that is approved by the PCAOB. So this would be a big change in response to how Chinese companies are listed in the U.S. exchanges today. They do escape some of the oversight from the Securities and Exchange Commission because the Chinese government is one of those governments that says the financial information of our companies is relatively proprietary. Now, as you mentioned, Chris, this would need to be taken up in the House of Representatives and approved. then voted on by President Trump. It's also worth noting that this, as you mentioned, is in connection with Luckin. It's not a coincidence that this bill is proposed around the same time that Luckin'

coffee is being delisted from the NASDAQ here in the U.S. because of fraud allegations. So Chinese companies are definitely being targeted right now. This is not something to be overly panicked about. There would be a three-year period as proposed in the Senate bill for these companies to essentially come into compliance with this new law. It would also need to be passed by the House of Representatives. But if these Chinese companies weren't able to come into appliance or compliance, then they would potentially list themselves on other exchanges, Hong Kong, London potentially, which would prevent American investors from being able to get exposure. Is it possible they could list on the Toronto Exchange?

It is possible. It only applies to U.S. exchanges, and this includes the over-the-counter Exchange, the OTC or Pink Sheets market here in the U.S. So, the New York Stock Exchange, the NASDAQ, and the over-the-counter exchanges. Neiman Marcus and JCPenney are just two of the retailers that have filed for bankruptcy so far this year. And Macy's CEO, Jeff Kinnett, sees an opportunity. Canette said this week, there's $10 billion worth of sales up for grabs in the retail landscape. He's not wrong, Ron, but can Macy's be one of the retailers to capitalize on this?

They could potentially be able to capture a small portion. I think the lion's share will go to stronger retailers. Right off the bat, the few that we always talk about as being the survivors here, Walmart, Target, Costco, Amazon will get the lion's share and then the rest can kind of divvy it up. I don't think it's going to be kind of the savior for companies like Macy's that are struggling. And these department stores, we just saw JCPenney, obviously recently, filed bankruptcy finally. As you mentioned, lots of other folks, Pier 1, J. Crew, Neiman Market, stage stores, and lots of smaller ones that we don't talk about or really don't hear that much about it.

And that's going to continue. So, sure, there is going to be a demand from the consumer for these items still. But I think it's going to continue to be the big guys that benefit. Emily, do you think we see, I mean, I think we all think we're going to see more retailers going out of business. Do you see retailers essentially spinning off part of their brands just so that the remaining business can survive? We see some retailers doing that right now, right? So, J.C. Penny has potentially talked about spinning off their retail brand versus the real estate aspects of the company. But it's worth noting that the underlying economics or demand

trends that exist don't change just because you spend something off. Ultimately, all of these retailers have really struggled with merchandising. Trying to predict what people are going to want to buy and in what quantities and in what colors next season has been this struggle that companies like JCPenney and Macy's have been put up against, which has really supported discount retailers, which happened just to take excess inventory. They're not trying to make any predictions about where the market will be a season or two from now. That produces a much lower cost model. And there's really not much that a lot of these traditional retailers can do to completely

change their business model at this point. Shares of Take 2 Interactive hit an all-time high this week as the video game company wrapped up its fiscal year. Fourth quarter revenue up more than 40%. Emily, this is a great quarter and really a great 12 months for Take 2. And most people can assume why it was such a great 12 months for the company, because this Pandemic has caused a lot of people to play games that weren't necessarily playing games before. Take 2 has an amazing collection of really great brand names, including Grand Theft Auto,

Red Dead Red Dead Red Dead Red Dendption, Borderlands. These are stalwarts in the gaming industry that are not going away anytime soon. Take 2 Interactive has had impressive recurring revenue growth. And interestingly enough, Epic Games released Grand Theft Auto for free for a lot of people, which could potentially increase the in-app purchases. for Take 2 next quarter. So, a lot of things going Take 2's way. All right, Emily Flipin, Ron Gross. We will see you later in the show. Up next, a conversation about the future of television with TiVo CEO, Dave Scholl. Stay right here. You're listening to Motley

Full Money. Welcome back to Motley Full Money. I'm Chris Hill. There was a point in time when the hottest name in consumer electronics was TiVo. Today, it's fair to ask, is TiVo still around? That's the question Dave Scholl asked before he became CEO. He'd already been an executive at DISH Network and the Weather Channel. Recently, Dave Scholl talked about TiVo's business and future with Motley Fool analyst Tim Byers and contributor Dan Klein, who kicked off the conversation. Dave, to set the stage here, and I cleared this question first because I didn't want to come off as glib. But there was a point where TiVo was a pop culture company. There were jokes on late-night TV, you know,

Because you've watched the Simpsons, you would like to watch the Jetsons. And TiVo has 10 trademarked noises. And some of those noises were actually like the beep boops that everybody knew. And the company does not have that profile right now. Can you set the table for sort of what TiVo is compared to what it used to be? And I'm excited about where it's going and share a little bit about where it's going. So we, it's interesting. When I talked to the company, my first question was, are they still around?

Right. This amazing heritage of innovation goes back more than 20 years. It's like, damn, that's pretty cool. But the company's changed a lot. We've done two acquisitions in the last 15 years. We've had four CEOs. When I first came in, we had four CEOs in eight quarters. So things had changed a lot. And there was a lot of sort of turmoil. What people don't understand is there's maybe a million people out there. They'll have T-Bos. And I love those fans because they're so tied. to the technology and they can tell me sort of the 20 years of history on our tech. But we've got sort of the broader business. We have 22 million households around the world that are using Tebow technology, but they're doing it through their cable company. They may not realize that it's actually Tebow technology that's powering that. But 22 million around the world is pretty broad.

And so that's really the bread and butter of the company. Where are we going? When I said, listen, we've got to get in on the streaming wars. And so, you know, we announced this product, Peeville Stream 4K, which we think puts us kind of squarely into the streaming wars and is really the future of the company. Now, so I looked at the 4K and I'm very excited to order one. But I would like to hear, is this you taking on Roku? Like, is that sort of you are you throwing down the gauntlet going after, you know, Amazon Roku of the other players in this space? Or is it a little bit of a differentiated product?

And just to add to that, Dave, before you answer that, you have a partnership with Roku, if I understand right, so if you can sort of paint the whole picture here, this is kind, because it's a little strange and it would be really great to get like the whole picture there. So there's got to be a little bit of Roku envy. I think, I think those guys have done, Anthony there has just done an absolutely amazing job, right? You look at his market cap, I don't know what it is today, but $14, 15 billion, our market cap is a little bit less than a billion dollars. They've done a phenomenal job. So kudos to them. But I do think there's really, a missed opportunity, which is when you look at the Roku device, it's easy to install, it plugs into

your TV, but what it does is it gives you a bunch of different apps. And you have to remember, is that, is that on Netflix or is that on Hulu or is that on Prime or Sling TV? When we look at our research, on average, people have seven different apps that they're trying to manage, and it could be an advertising based on-demand service. It could be a Netflix or a Prime or a Hulu. It's like, where's that show? Where do I find it? And so we think that's a missed opportunity in the stream. And so because we have decades of experience dealing with complex content recommendations, we can say, you know what? It's not about the apps. It's really about the shows. And so what I want to know is what show do I want to watch now? And we have all the metadata. We have all the content recommendations and the algorithms. So we can say, hey, we're going to bring all your entertainment together.

And we're going to make it really easy for you to find the show that you want to watch. And you don't have to remember what app is out there. And so that's kind of the magic ativo stream. When I look at the financials of the company, the biggest part of your business is intellectual property and licensing. And so you're primarily a software company here. And it sounds like what you're doing here is building out an operating system of sorts. It's sort of a layer on top of all of these services that is consumer-friendly, intended to be consumer-friendly, that organizes the mess that otherwise exists. Yeah, so that's fair. Let me kind of back up at a higher level and talk about TiVo as a company, if that makes sense.

Right. So, $650 million in revenue, roughly, $2,000-some million in EBITDA, right? And we've given project, I'm in the middle of closing a merger, so we've given very specific projections on the proxy. So I would direct the investors to that proxy ask for. But it's roughly half and half intellectual property and half product. And so on the intellectual property side, there's a base of about 5,000 patents. And we license those patents out, and those patents go back decades.

Any place where you see people playing video in some sort of linear stream fashion or targeting ads around video, we have some pretty good intellectual property claims. And so vast majority of pay TV operators, certainly in North America, but also in Europe and in Asia, license our patent portfolio for that. On the product side, we're the Tvo consumer base, this million loyal customers that we have tied to the DVR. and many of these people have very high-end complex sort of TV systems, and so that's really the value of the technology. We then have built out a software stack, to your point, that's in 22 million households around the world, where we've deployed sort of the best of all the TiVo know-how and put that in place for the consumers to experience that, but in a traditional cable setting. We're now taking the best of all that, and we're synthesizing all that down to a $49 dongle that you can just plug into the back of your TV.

and any content that's available on the Android TV platform is immediately sort of integrated and gives you recommendations across live TV. So we have a very unique partnership with Sling TV, on-demand content, Netflix, Prime Hulu, and then also all the Avod content, 2B, Zumo, and now Pluto. And so basically it's kind of the culmination of,

okay, intellectual property invented stuff. It got deployed in millions of set-top boxes around the world. And now we're saying, how do we distill the best of that software, platform down to this dongle that we call TiVo stream. Let me ask the business question. So Roku makes money from if I don't have Netflix and the first time I subscribe to Netflix, I do it through my Roku box or dongle or whatever device I have.

I have all of them. They make a cut of money. Do you have the same relationship with some of your, the brand? So if I've never been a Sling customer and I sign up through them, I am a Sling customer, but and I sign up, do you get a cut of the money? Yes. Yeah. answer is, again, I think Roku's done a brilliant job with trailblazing here. So we make very little

money on the hardware, which is why it's $49.99 for a product that's 4K and Dolby and a bunch of other stuff, right? So it's an amazing little piece of hardware for that price, which means that we have to make money in the future. So the way we make money in the future is a cut of your additional subscriptions, but also most of these A-Bod services like TB and Zumo and Pluto are ad-based. And so there's some revenue sharing there because what they want is they want an engaged consumer. In our view is consumers can't process 50,000 titles. And so that recommendation engine on top of the metadata makes it much more likely that someone's actually going to watch that show. And so it's a valuable relationship for both us and for the provider. And Tim, I'll let you jump in

with the real business questions, but I have one more question. I live in a house with a 16-year-old and my wife, who is also my age. And we all have very different television choices. Is it we need device per person? Are there multiple accounts on the same device? How does that work? So right now the devices are intelligent by room and by time of day. So what we haven't done is we haven't layered another set of sort of profiles on top of that. So the box in my office knows that I'm sitting here at this time and it knows that it's kind of my box. So I'm going to put another one up in the playroom where the kids are. And so it'll have very different content recommendations for them based on the time of day because it knows it's a different box.

We're looking at profiles in the future, but we're trying hard to make it a really, really simple interface. And so we think lots of people provide recommendations. Very few companies actually provide recommendations based on time of day. And so that's sort of a proxy for profiles because the view and habits tend to be very different at 5 o'clock at 9 versus 10 o'clock at night. Can you just for context here and maybe to oversimplify things a little bit, I think most of us who followed TiVo in the past know that you have some patents that are really, to the four-letter words you were relating to the DVRs and so forth. But there are probably a lot that we don't really know about that are TiVo innovations.

I'd like to invite you to maybe give us two or three that are patented technology, that TiVo introduced, that people just, you know, we gloss over and we don't realize that's TiVo technology. Give us a couple of examples of that. Well, I would say a lot of the voice technology that you use today when you talk to your set-top box actually originated with TVo. And we would argue that some of the companies that maybe haven't licensed our technology, I'm not going to name names at this point,

but you can kind of impugate on what we just talked about. They have their voice capabilities from our voice patents. And so we provide voice technology around the world, actually much more than the 22 million households that I talked about, because we actually have a know-how

and a dedicated team that's focused on that. So what's interesting about the Tivo voice product, we call it conversation is is you can say, hey, what's on, what's on tonight? So it has to understand what's on TV tonight and that I'm talking about entertainment content. No, I actually want a comedy, comedy from the 80s, right? Something with Tom Hanks.

Wasn't the one where he was on an island, right? And it starts to bury down to that. And you can have that contextual conversation is really unique. Now, we're not magicians. The way we're able to do that is we understand we're talking about entertainment. And we have a very, very deep understanding of the medicine. of data and sort of the linkages between all of these different assets based on our knowledge base. And so there's a lot of IP tied to that. And we think there's some strong claims around

that as well. So, Dave, is your vision on the TiVo side to eventually just organize everything, the mass of content, whether it be podcasts or video or YouTube videos or all the other things to just provide sort of a blueprint in order for people? Is that sort of the bigger, grander plan? Yeah, I think so. So our tagline, which they're always a little bit. right you got to blend the marketing but but actually kind of like it our our tagline is bringing it all your entertainment together making it easy to find watch and enjoy and so there's two there's two parts of that statement really one is we want we do want to bring all of your entertainment together on one place and then we want to make that finding process easy and so we we think there's a lot

of challenges in the streaming world right now and so we want to solve that for you where do you think the bulk of your business is like let's talk about the future here we're five years ahead and Tivo and Experi have merged. Where is the business coming from? You know, five years from now? Is this, you know, the wind's at your back because of cord cutting? Where is your growth coming from five years from now? If you had to cast a vision for what we as investors want to be looking for,

if we're investing in your company. So I think the future is still to the plan is to split the IP business away from the product business. And I think what that does is that gives you a team that's very, very focused on building up intellectual property as an engine and making it recurring. And then the product team is not having to deal with litigation. They're very focused on sort of new innovative products. So when you look at the product side, I think the future is very much, you know, hopefully TiVo or some version of the TiVo experiences that across hundreds of millions of devices, right, whether it's a TV or whether it's an automobile. And I think that very quickly becomes a very long. light, software-only solution, doesn't require any hardware changes.

I think that's really the win. Because I think there's a proliferation of streaming content that is going to continue over the next couple of years. And I think consumers love having that choice. And they love having a free choice, which is Avod. So if you look at, you know, your investors may have, may not attracted it, but Pluto was sold to Viacomc, CBS, 2BTB was sold to Fox, Zumo was sold to NBC. right so these are all free to consumer advertising based on-demand services and so consumers love

that model and then they're still willing to pay a premium for unique content like Netflix and prime and hulu in that five-year future then in this area where tivo as a technology is pervasive does that mean tivo also is bringing you exclusive content as well like programmed shows i think that's something we want to avoid and the reason why i say that is i think our value in this new world is not shows, right? NBC and Fox and CBS are always going to be able to out-produce us. And our value is if we have the best user interface, the best content recommendations, the easiest way to find new shows, then we provide value to the consumer, of course, but we actually provide value to the show producers as well because they want to find a way

to quickly get to tens and millions of people that want to watch their shows. Serving as that neutral intermediary, I think there's a great strategic place to be. Coming up, we'll give you an inside look at the stocks on our radar. Stay right here. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy ourselves stocks based solely on what you're here.

Welcome back to Motley Fool Money. Chris Hill here with Emily Flippen and Ron Gross. Our email address is Radio at Fool.com. Got a question from Nick in Canada who writes, I can't begin to thank you and the rest of the analysts at the Motley Fool for everything you've taught me. My financial life has been completely changed by you. I'm a very dedicated listener to many of the Motley Fool podcast. Thank you, Nick. We appreciate that. He goes on. I had a question about spend allocation between ETFs and individual stocks. I've heard a few different analysts at the Motley Fool mentioned. They think it's a good

idea to be buying both shares of an ETF and individual stocks. So my question is, what would be the appropriate split between these two. Ron, for those unfamiliar with the ETFs? Exchange traded funds trade just like stocks, but they are baskets of stocks. So you can buy the S&P 500, the Russell 2000, technology ETFs, commodity ETFs, any strategy you want to pursue. There is a basket of stocks waiting for you to buy. And it's just like buying or selling a stock, unlike a mutual fund, which only trades once a day at the close of the market at 4 p.m. I think it's a great question. I'm a big fan of ETFs. When I tell people that about 50 percent of my personal portfolio is an ETFs, they're often surprised. Now, that's a little

bit skewed because of my 401k is primarily in an ETF. So if you strip that out, I'm about 25 percent ETF, 75 percent individual stocks. I don't think there necessarily is the right number. I think a person could have 100 percent of their portfolio in ETFs if they wanted to, if they were not the type of person that liked to pick stocks and find them. follow stocks. So I also don't think it depends necessarily on age either. I think either way is fine to go, depending on how much attention you want to give to your portfolio. Emily? I would generally agree. I've also been open about the fact that a lot of my assets, virtually all of my retirement funds, are in index funds, not necessarily ETFs, but funds

that track the market. It's because I don't like the volatility and a lot of the funds that I know I'm going to need to retire with, for instance. But everything else that I'm, invest in is in individual stocks. And that's a totally personal preference, mostly because I know that if I have my individual assets that are volatile on a daily basis, invested in Chinese companies, cannabis companies, whatever you put into it, I know that that money goes away. I still have my retirement funds. So without digressing too much into my personal finances, I don't think there is a right answer. I think it depends on you and your personal risk tolerance. All right. Let's get to the stocks on our radar. Our man, Dan Boyd, is going to hit you

with a question. Ron Gross, you're up first. What are you looking at this week? Speaking of discount retailers earlier in the show, I'm going to go with TJX companies, ticker symbol TJX, retailer best known for TJ Max, Marshalls and Home Goods, focused on a wide assortment at very competitive prices for its customers. Obviously, this last Q1 was a mess. Sales down 52 percent. Stores were closed.

As of May 2nd, stores have started to reopen. 1,600 open so far out of about 4,500. Certainly, the company is seeing sales above last years for those reopen stores. So all things being equal, we may be back to a growth mode. Balance sheet is strong thanks to a $4 billion float of notes. They did suspend their first quarter dividend and probably their second quarter. But before that, they had 23 years of consecutive dividend increases with a compound growth rate of 22%.

Dan, question about TJX? Certainly. Ron, so when I was a kid, my mom would take me and my brother on shopping trips to the TJ Max in Springfield, Virginia, and I remember it as being a very boring time. What can be done to make shopping at TJ Max more exciting for children? Well, it's commonly thought of as kind of this treasure hunt experience. You walk in, it's almost like looking at a tornado of clothes. They're everywhere, and you've got to find exactly what's right for you at the right price. So think of it as a little bit of a treasure hunt.

Emily Flippen, what are you looking at? I'm looking at a Chinese company called Pinduodua, the ticker is PDD. They reported this week and had really impressive sales, especially as compared to Alibaba, which didn't quite meet expectations. They had a 42% year-over-year increase in active buyers on their e-commerce platform. And impressively, they had nearly as many active buyers as Alibaba. So they've scaled up really quickly in China. Dan? Yeah, Emily, the Senate bill doesn't give you any pause with a company like this. It may in the future, but right now, no. Two very different businesses, Dan.

You got one you want to add to your watch list? You know what? As much as I remember those times in T.J. Max and I didn't really enjoy myself, I got to go with the discount retailers on this one. So, Ron, you're the winner. Nice. Finally. All right, Ryan Gross, Emily flipping. Thanks for being here.

Thanks for having. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Dan Boyd. Our producer is Mac Career. Chris Hill. Thanks for listening. We will see you next week.