Motley Fool Money - The Motley Fool Turns 25

Episode Date: June 29, 2018

Nike hits an all-time high. Bed Bath & Beyond flounders, as BJ’s Wholesale Club has a surprisingly strong IPO. Amazon moves in on the pharmacy business. McCormick serves up a spicy quarter. And the SEC has a few questions for National Beverage. Jason Moser, Ron Gross, and Matt Argersinger analyze those stories and share why they’ve got their eyes on Lam Research, Snap, and Delta Airlines. Plus, David Gardner reflects on the 25th anniversary of The Motley Fool and shares a few stocks on his radar. Thanks to Blooom for supporting Motley Fool Money. Get a month free with blooom401k.com/fool and use the promo code “fool”. Learn more about your ad choices. Visit megaphone.fm/adchoices

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From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Full Money Radio show. I'm Chris Hilton, joining me in studio this week. Senior analysts, Jason Moser, Matt Argusinger, and Ron Gross. Good to see you, as always, gentlemen. Hey, hey, hey. We've got the latest headlines from Wall Street. Motley Fool co-founder, David Gardner is our guest.

And as always, we'll give you an inside look at the stocks on our radar. With the World Cup as our backdrop, let's start the week with Nike. For the first time in a year, Nike posted sales growth in North America. That was the highlight of its fourth quarter report. Shares of Nike up big on Friday, and Maddie hitting a new online. time high. Yeah, all-around, awesome result for investors, I would say. Revenue growth of 13 percent, well above guidance, earnings per share above guidance. Total Nike brand revenue of 14 percent,

particularly strong internationally with China up 35 percent. But as you said, it's... Trump will take care of that. Of course. It really was about North America. Growth of 3 percent might not seem like a barn-burning quarter, but if you think about the amount of pessimism out there about sports apparel. And just, I feel like investors probably thought, you know, It's either going to be flat down. Nike talked about having growth resurging in the second half, but I think this is early than expected. I think a lot of investors are saying, hey, I think the trajectory is now up again.

Well, and to the extent that there's been optimism in sports apparel, it hasn't been with Nike and it hasn't been with Under Armour. It's really been about Adidas lately. That's right. And speaking of Under Armour, I was surprised that Under Armour was actually down on Friday. I thought there'd be some sympathy buying there. But I think the investors, like you said, Adidas was winning last year. And this is an idea where maybe this is just not, it's a bit of a some game right now. Where's the line between sports apparel and athleticia, the pretentious aphleisure? Is there a differentiation between the two? I think there is, because, you know, and I use Lul Llemon as an example.

Where Lul Llemon has just been on fire. And I think that category feels a little broader than what you expect with Nike, which is more performance apparel. I think it's going to be really interesting to see how Under Armour reports this coming quarter. Because like you said, I think you're right. It's that return to growth in North America. that made the difference for Nike this quarter. That has been a big point of weakness for Under Armour here recently. But Under Armour has also been hampered by some very self-inflicted wounds as well. Inventory management was a major problem. Kevin Plank, I think, took a step back, and realized he had to bring some leadership into play to help him manage this business and

take the next level. So it's going to be very fascinating to see not only where Under Armour stands in North America, but also are they working through this? inventory snafu and getting the business back in the right direction. Let's move on to a couple of retail stocks moving in opposite directions. First quarter revenue for Bedbath and Beyond was about what analysts were expecting, but same store sales were negative and shares of Bedbath and Beyond down 10 percent on Thursday. Although, Jason, they do appear to have recovered from that. Well, see, Chris, your statement right there, it's kind of like, I'm trying to find the

light at the end of the tunnel, right? I want to be a glass, a full guy. I don't believe you. When it comes to Bedbath and Beyond, I truly cannot think of one reason why you want to own this stock. I mean, there are just so many challenges the business is facing. Top line growth is anemic. Comps are down. They're still buying back shares with a net debt position. It is a very difficult space to be in these days. Bricks and mortar retail. They've spent more than $5.5 billion on share repurchases since 2014. And all the while, the stock prices down 75% over that same course of time. That's like the George Costanza, man. That's the opposite.

You don't want to be doing that. Now, there is potentially a catalyst that could help the business with their new Beyond Plus loyalty program. It's a membership program. It pay $29 a year. You get deals in store, free shipping on qualified items. So that's reducing the amount of couponing. What remains to be seen is if this is a program that can actually gain traction, keep members, and then renew members. Does it mean you want to own the stock? I don't think so. Wait, so if I sign up for that program, will I stop getting the 20% off blue coupons in my post office? See, that's where I'm not totally clear. You'll probably get them, but you could throw them away.

Yeah, it's like you can't stop the mail, right? I mean, that stuff, I think, is still going to come your way, but maybe you won't have to actually go to the store and use them. You could buy online or you can go to the store and just present your membership card. Is the loyalty program brand new, or has this been going on? Do you have any sense of how many people are already in it? I do not have a sense of how many people are in it. If you look at the website, they actually still classify it as a beta program. It's been, the inception started a couple of years back.

Still a very new program. They're learning a lot from it. Honestly, I think you look at something like Restoration Hardware that tried the same thing. It seems like it's given them a little bit another lease on life. And perhaps that'll play out for Bed Bath and Beyond that way too, but still a lot to be seen. See, I'm glad you mentioned that because that's what I was thinking of. Because when Restoration Hardware announced that loyalty program, I think we all sort of looked around the table and said, there's no way this is going to actually work.

And that's actually paid off for them. It's paid off so far. I mean, the big question is, can it sustain those renewals? I mean, will people continue to renew as time goes on? I mean, that's what Amazon Prime has done so well. That's what Costco has done so well. Restoration, hardware, bedbath, and beyond. I'm not sure they have the same place in the consumer's day-to-day shopping experience.

That's the question mark. R.H. also revamped their stores, the look and feel and even the merchandising of them. whereas bedbath, it's just a cluster. You walk in there with those, I don't know, who designed the carts that you can't even push down the aisle. But the shopping experience is not perfect. At least one bricks and mortar retail stock had a good week. BJ's wholesale club was taken private in 2011. It is now back as a public company and shares up 30 percent on the first day of trading for BJ's wholesale. Ron, you're buying? You know, it's like Costco, but not as big and not as good.

So I'm going to say that's a maybe? You know, if you want to get into the private equity game, this is a good deal. You take a company private at $2.8 billion at around $6 to 7 times earnings. You take $2 billion of dividends out of it while it's private. And then you take it back public at a similar valuation, which is, however, now 40 times earnings. And you retain 69% of the stock. You know, if you can get that, I say get that. But as far as differentiating itself from the Costco's and the Sam's Clubs of the world, it really doesn't. It's a very simple. similar business model, which actually is a good business model, with the membership fees. In this particular case, amounting to about 50 percent of the company's EBITDA, and that's nice recurring revenue. Nothing wrong with that. But it is quite small compared to the competitors. They have about 5 million members versus Costco, which has about 51 million members. They have about 215 clubs, where Costco has 750 clubs. So maybe one would, the glass half full. Jason over here would say there's plenty of room for growth, but I think.

It's just a very competitive space. It's very funny, the feelings that brands elicit, because the only real experience I had with BJ's was back in 2005, 2006, when we were in Atlanta, and we're getting ready to go to Kazakhstan for a two-year post there, and we had to bring diapers for two infants for basically two years. So we made like a week's worth of runs to BJ wholesale, and would walk out with like four boxes of diapers every day until our garage was actually stacked to the ceiling with boxes of diapers.

I mean, the neighbors just were beside themselves, thinking we were running some kind of black market for diapers or something. This week, Amazon moved even further into the healthcare industry when it bought Pillpack, an online pharmacy business, for $1 billion. Pillpack is licensed to ship prescriptions. Maddie, just like that, Amazon has got scale in this game. I know. If there was any doubt that Amazon was going to get into the drug distribution business, quash that this week. And I'll just note that the disruption that this is This is done, particularly to Walgreens, CVS, and Rite Aid. If you look at when the news was announced on Thursday, those three companies lost $10 billion

in combined market value. And by the way, the market was up on Thursday. So really, that is the story. This is the big step. I mean, I think Amazon made one step a week ago when they announced who the director of this new healthcare company was going to be. And now they've firmly put their foot into the drug distribution business, where there is this sort of middleman, high margin distribution business that is ripe for disruption.

Also interesting the news recently where they're trying to really work on that last mile, the actual delivery to the home, where now you can become your own kind of trucker, franchisor with an Amazon van for $10,000 investment. You too can have your own Amazon delivery business. That's going to be really interesting, too, especially as we move to things like one-day, same-day delivery of things like prescriptions. That sounds like an adult version of having a paper root. That sounds like the paper root of the 21st century. I'm glad Ron brought that up, because if you look at FedEx and UPS, another $3 billion

in market cap lost on Thursday as well. So let's go back to the drugstores for a second, because beyond the loss in market cap, and I don't want to paint them all with the same brush, but the head of Walgreens made some comments that really struck me as sort of whistling past the graveyard in terms of, well, Well, you know, there's a lot more to the pharmacy business than delivering medication. And I understand that. And yet it really did seem like they're not taking this threat very seriously. Well, I question that. Is there really, I mean, yes, it's probably more complex than we think.

But ultimately, that's what we're doing here. People are getting drugs, whether it's a drugstore or delivery. And the nice thing about pill pack is it's delivered, it's kind of on demand. It comes in sort of pre-sorted packages so you know what to take on a given day. I just think that's a really compelling value proposition for customers. So I question whether or not it has to be any more complex than that. And by the way, I know we're long-term investors, but Walgreens has been in the Dow Jones Industrial average for less than a week. And it's already down about 10%. Congratulations. Some bad timing there. Up next, we've got something spicy and something else to wash it down with. Stay right here. You're listening to Motley Fool Money.

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So don't buy yourself stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here in studio with Jason Moser, Matt Argusinger, and Ron Gross. Shares of McCormick up 10% this week. Spice Maker's second quarter profits came in 20,000. 23% higher than a year ago. Jason, I don't love this company as much as you do. I don't know anyone who loves it as much as you do. But, I mean, they are totally getting it done. I just wish on one conference call we'd have management just say, oh, that was a spicy,

meat, the ball, or something like that. I think the enthusiasm, I mean, there are a lot of reasons to be enthusiastic about this business. I think the market's enthusiasm is based mostly on the fact that the RB Foods acquisition from a few quarters ago is proving to be really the right decision, a smart decision, a good decision that the business is benefiting from. If you look at the two segments, the company operates in the consumer segment, which is what we stock our spice cabinets with. That grew 16 percent with growth in all three regions. The flavor solutions segment, which, man, I still love that renaming right there. It used to be industrial. They call it flavor solutions now. Growth of 15 percent there.

And I think the most encouraging thing is that the balance sheet, post-acquisition, that was one the big question marks. It continues to strengthen. And while operating income is covering interest expense, about six times over, that will get better as time goes on. They've actually made $350 million in prepayments to the borrowing that they took out for this acquisition. So they're going to pay it off ahead of time. And then from there on out, you've got this company with just some of the most powerful brands in flavor and spice around the world. And again, I say it every time. The value proposition, I mean 90% of the flavor and only 10% of the cost of what you're eating. That's just, you can't miss out on that.

It's been amazing given what we've seen with the rest of the consumer staples sector, which, you know, McCormick kind of falls in that, and yet McCormick has sort of defied all that. Do you think it's because they just have such good brand placement either on the high end and low end? So they're not really suffering as a lot of high-end. I think that's the key. I think a lot of people ask about, well, if I go to the spice aisle and I see all that, McCormick stuff, but I'm going to buy this other store brand stuff. Well, that's the thing, is McCormick has a lot of that store brand private label business as well. And then when you look at French's and Franks Red Hot and all of these different seasonings and flavors and spices, they just have such a big share of it all together. It's just a tough thing to compete. Well, and you know, let's face it, there are a lot of companies that make a lot of acquisitions and a lot of them don't work out. And so, I mean, kudos to McCormick for, among other things, making the recent acquisitions work.

Well, and I think the skepticism, at least on this R.B. Foods acquisition, initially, that skepticism was warranted. A big deal. They had to borrow a lot of money to make it happen. But it's just proving to work out. National Beverage is the parent company of several brands, including LaCroy Sparkling Water. Shares of National Beverage fell 12 percent in two days after the SEC raised questions about the company's sales metrics. Ron, for background here, Nick Caparilla is the CEO at National Beverage. He is known for, among other things, some creative, fun press releases. But I guess he got their attention when he started rolling out things like VPO, Velocity Per Outlet.

I don't even know what that means. I love Wacky CEOs. It's just so fun. But, yeah, Velocity per capita. You know, they help National Beverage create growth, quote, never before thought possible. So, you know, what more do you need? Obviously, the SEC doesn't like that. It also doesn't like comments like, VPO was flashing solid green numbers.

There's a lot of bluster there. I would warn investors to be careful of CEOs with a lot of bluster that like to type in all caps. They're very promotional. And listen, to companies out there, if you want to use a metric, then explain the metric or don't use the metric. Here they told the SEC to go take a hike and that the metric really was, they did not need to define it because it didn't really affect the company as a whole. It was just a goal set by certain customers. And they, quite frankly, did not respond to the SEC. And it seems to have been dropped. But be careful of Bluster. LaCroy is the best-selling Sparkly Water in the country. So, I mean, they have a little bit

more going on than just Bluster. No, for sure they do. I'm not a fan of the stock at 27 times forward earnings, where you get Pepsi and coconut on 19 or 20, but the growth probably is higher. But there's a bit of a fad element going on here. I drink a lot of flavored silter. Those LaCroy flavors are a little much for me personally, but they sell. All right. Let's get to the stocks on our radar and our man behind the glass. Steve Broido is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week? An interesting one for me. Lamb Research, LR CX, leader in the semiconductor industry. They make the

machines that make the chips. A really fast-growing company, high margin, recurring revenue, strong return on invested capital and free cash flow. They're returning at least 50 percent of their free cash flow through buybacks and a growing dividend. The dividend was just increased 120 percent, which gives you a forward yield of 2.5 percent. Recent pullback in the stock creates a pretty nice entry point. Steve, question about Lamb Research? Is there any relationship between Intel and AMD here? So, AMD is the biggest competitor, I would say, to Lamb Research. And then you've got companies like Micron and Taiwan Semiconductor who are actually clients of the folks that

make the machines that make the chips. Jason Moser, what are you looking at this week? Going with SNAP, ticker SNAP, and this is not in the good way. I'm thinking investors might want to steer clear of this one for a little while still. We probably saw here recently in the news that Instagram recently hit 1 billion users. 400 million daily users, which is more than twice of SNAP's platform, Snapchat, and Instagram now getting in a long-form video to compete more with YouTube. So I think Instagram is starting to scratch a lot more itches at there, so to speak. And again, we talk a lot about the valuation on the Snap side. If you look at Snap today, now trading 18.5 times sales, Facebook 12.7, Twitter 13.

The problem is Snap is still not profitable. You can't give these guys the benefit of the doubt. If you're going to buy this one, wait until they demonstrate some success and buy it on way up. Steve, question about SNAP? In five years, is SNAP still around? I have a hard time seeing it, but perhaps they've diversified into some other apps that sort of bring in a little bit more on the user side. Matt Argusinger, what are you looking at?

Delta Airlines, one I've brought up before to you guys, but in case you haven't noticed, oil prices are kind of high. And therefore, fuel prices have searched. In fact, fuel prices are up 50% year-over-year. That was kind of unexpected. But look, it's kind of overshadowing what Delta doing in terms of passenger revenue, costs X fuel, buying back shares. Stock's below 50 again. You've got almost a 2.5% dividend yield. Ticker DAL, Delta Airlines.

Steve, question about Delta. Do you have a preference when you're flying? I actually do. I found my experience on Delta, and maybe I'm biased, but it is better than most other U.S. airlines that I've experienced. Delta Airlines, Snap, Lamb Research. Steve, you got one you want to add to your watch list? I think I'm heading to the sky. Hey. There we go. Do you have a preferred airline, Steve? Not really. Southwest is always fun.

Ron Gross, Jason Moser, Matt Argusinger, guys. Thanks so much for being here. Thanks, Chris. Up next, a conversation with Motley Fool co-founder, David Gardner. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill.

David Gardner is the co-founder, co-chairman of the board, and chief rulebreaker here at the Motley Fool. And he joins me in studio. Thanks for being here. It's my pleasure, Chris. It's always good to spend time together. It was 25 years ago this weekend. And I know as an investor you always like to look forward, but we're going to take a moment. We're going to look to the past. 25 years ago this weekend, you, your brother Tom, your friend Eric Riedholm, put the finishing touches on the very first

Motley Fool newsletter, late nights at Kinko's copy shop, put it in the mail. Do you remember that moment? Do you remember any sense of anticipation? of either, we'll see how this goes. I think this could be good. What do you remember about 25 years ago this weekend? I remember three things. Chris, the first I remember is that we were trying to get our articles in, and I'm sure we were all late over deadline. But given that it was just going to be a newsletter mailed out to our friends and family, there really was no deadline anybody was expecting. But I remember using Microsoft publisher. I had been the editor-in-chief of my high school yearbook. So I had some skills, but I'm buying off-the-shelf publisher, which was kind of like a, yeah, a publishing software. It was kind of like Adobe back in the day.

And just putting together this 12-page newsletter, number two, sent it out to a thousand people. Now, did we know a thousand people at that time? Probably not. That's because this list included things like our high school classes, where kindly the high schools would allow us to send to our class. Or our cousin had just been married in North Dakota, and he had about 150 people at his wedding.

We said, hey, Jamie, would you give us your list of 150 people at your wedding? Any list that we could find, we would add to our list, But we could only get it up to a thousand. And then number three, Chris, the number of subscriptions we got one month after we sent out that trial newsletter to our friends and family. And the answer is we got 35. Now, at the time, I think it's fair to say I was disappointed. I don't think I was heartbroken because I don't think we could have had high expectations. But to think that we sent out to everybody who loved us grandparents, aunts, uncles, cousins, best friends, high school friends, college friends.

and only 35 of them subscribed for $48 a year, which is what we were charging, seemed really disappointing at the time. We did publish our next issue, and we got 13 more that following us. We were up to 48 after two months. But sometime I was at a cocktail party back then, and I was telling that story to somebody who was chumming up to me. And he said, well, I'm actually in the direct mail industry, and just so you guys know, the typical response is a 1% response. So you really should only have gotten 10. So 30, 35 is a 3.5% response rate. That's pretty great. That's huge.

It didn't feel great at the time, but these are all facts, and that's how the motley fools started. We started with our name straight from Act 2, Scene 7 of As You Like, an incredibly great scene celebrating foolishness in Shakespeare's maybe greatest scene about fools. A fool, a fool, I see a fool of the forest, a motley fool. I was flipping through a penguin book of quotations one night and just found that quote. I just thought, let's go with that name. I like that because we're going to screw up. And when we do, we can say, hey, at least we told you we're fools ahead of time. Wall Street doesn't do that. But when we succeed, then it's fun, too. You can say things like, well, we're fools and we're trying this and seems to be working. And those other wise guys

may not do that. So I love that we picked the name that we did. And I said this at Fool Fest a few weeks ago. I love that 25 years later, there's a thing in the world called the Motley Fool. And it's, I hope, an increasingly powerful force for good, for investors, for personal finance, and for the world of money. And to think that it bears the name the Motley Fool, I'll probably never quite get over. I still get chills going to be. down my spine, that that's what we're called, and that's what we do. I love it. Early on, did you ever encounter in business meetings as you're meeting with AOL? Because eventually the newsletter, you decide to fold the printed newsletter, and we're going

to go online with this thing called the Internet. At any point along the way, did business partners or potential business partners say, hey, listen, the name. Are you flexible in the name? Can we change that? Was there any? Or they just said, no, no, no. We'll go with whatever By the time that we actually went online, so we published 12 monthly issues from July of 1993 to June of 1994, at which point we shut down the Motley Fool printed newsletter, because we had signed a contract with AOL to go online with AOL. We just wanted to take our small resources and divert them all to online. But over the course of that year, we certainly had friends and families saying, I don't

know about the name, guys. One of my best friends from high school said, when I say it, I feel kind of embarrassed. I feel ashamed. It feels like a stupid name. And I said, Tom, that's not my brother, Tom, my friend Tom. Tom, I understand that. But once you start understanding what the fool is and what it represents, and, you know, educated, muse, and rich, we were playing that phrase up at the time.

So it all came to light on AOL when we launched in August of 1994, and there was no one at AOL who was against our name at the time. And within a month, we were going to be in the New Yorker Talk of the Town. We were written up in the New Yorker magazine. And then we started having agents and publishers saying, hey, there's a book here. It all happened so fast from our debut. on AOL. I don't think we ever thought twice about changing our name or not being fools. And definitely in the intervening 25 years, so many things have gotten better for investors

in terms of access to information. Access to information much more cheaply. Just so much in terms of improvement when it comes to individual investors. Agreed. When you think about the next 25 years, I'm not asking you to look into your crystal ball because you, I guess, don't bring it into the studio when you come in here to talk to me. But what do you imagine for the next 25 years? Because one of the thoughts I had was, I'm wondering if it's going to be ever so slightly harder for individual investors to invest in stocks for no other reason than there are fewer

individual stocks than there were 10, 15 years ago. And if there are fewer choices, I wonder if that makes investors. just a little bit harder for us. Well, I mean, there are still, I think there's over 3,000 public companies of consequence or enough size that they're not penny stocks. So that's down from, maybe it was even double that number of 15 years ago. I'm making up numbers as I often do. No, I think that's about right.

Not on my show, but just here on Motleyful Money, Chris. I make numbers up. But 3,000, that's way more than you or I need in our portfolios. And I've literally been picking three stocks every month. month since October of 2004, one stock for Motley Fool Stock Advisor and two for Motley Fool Fool Rule Breakers. So that's three times 12. That's 36 a year. And now here we are coming up on 14 years later. So 36 times 14, I'll let you do the math, Chris. But that is a lot of stock recommendations. Happy to say enough of them have worked that a lot of Motley Fool members

are pretty happy. That's still a tiny percentage of 3,000 plus. So just at a broad view, I don't have any problems finding more great companies to invest in. And that would still be true, even if I think we were down to a thousand for some reason. Let me ask you about one of the companies that was one of your early recommendations. And I know as a consumer, it's one of your favorite companies because you've got the product in front of you next to your microphone, and that's Starbucks, which has had a little bit of a rough go of late. And I'm curious as someone who has gotten to know Howard Schultz a little bit. He stepped away from the company. When you look at Kevin Johnson, the CEO, and you look at

the landscape for Starbucks, what goes through your mind right now? Well, I mean, first of all, I think about the great history of Starbucks and just what a tremendous company it is. I mean, Howard, who's not technically the founder, as you've established on Market Foolery. And on this show, Howard found Starbucks early on as kind of an investor. I think it was at store number eight or something like that. And really has grown it from there. So, in many ways, he is the driving force behind Starbucks and has been for about 30 years now. That's the first thing I think about the long story history. Number two, just an investment lesson. I remember when Starbucks came public in the early

1990s, and the big question about it at the time was, is this just a fad? Or really, it was more of an accusation. This is just a fad. We're all the coffee houses that America has had in the last 20th century. There's no real chain that's done this, and they're charging too much for coffee. And so the whole idea was, this is an overvalued IPO. It's kind of a joke, and it's going down. And often when I've heard people say things that are stronger than I think that they think they are, and they call them fads, that becomes a potential buy signal for me. And so number three that I think about Starbucks is that Jeff Fisher, a longtime Motleyful advisor, I know a wonderful personality here on Motleyful Money, Jeff came to me one day.

We were co-managing the online portfolio that people found on AOL back in the day when the Mottley Fool started. He was like, Dave, Starbucks. And I was like, Jeff, you're right. I probably had a Starbucks cup in front of me right then, but it had not occurred until 1998 to Jeff Ordomy. I think the company had been public for about eight years at that point, but it hadn't even occurred to us to buy shares in that company. I'm so glad it did, because from 1998, if you run the math over the last 20 years, this has been a monster investment. It's up something like 30 or more times in value. So it's just been a huge winner. And then finally, number four really briefly, Howard Schultz. I think he's running for president.

I think there's no question. And I might even vote for him. I think he's a dynamic leader. I think he's a great guy. He understands business. He also understands the limits of business. And I deeply respect Howard Schultz. And then finally, number five, thinking about the stock going forward. It's a great worldwide brand. They're closing some stores. When Howard has stepped away from the company in the past, it hasn't always done so well. Is it at the top of my buy list? Not necessarily. I think everybody could or should own shares of Starbucks. Chris, I believe that you own some shares. It's my biggest holding. Of Starbucks. So I think it's great in a portfolio. Do I think it's going to go up another 30 times in value over

the next 20 years? Probably not, because it's already a pretty large global company. But it's going to be a company that probably pays a dividend over time that increases. And so it ends up being, I think, a strong, it's going to be around the rest of our lives, brand and company. And I like Starbucks very much. In terms of investing ideas, what do you find your eyes gravitating towards? Are there technologies? Are there things from your personal life that you're interested in that you start to think, Well, wait a minute. I'm interested in this. Is there a public company attached to it? Where is your mind wandering to, in terms of investing these days?

Well, thanks for asking. Yeah, I mean, I'm going to be picking three more stocks this month, and three more stocks the month after, and this is what I've been doing for years. So, if I were to look back at some of my most recent picks, let's see in Motley Fool Rule Breakers, I Chi, which is the so-called Netflix of China, has been a tremendous winner in just a very short period of time. So that shows that I like and continue to like internet-based businesses, digital businesses, and I really like China in part because a lot of people don't like or trust China. They think these companies, you know, what if you really analyze their books or what if the Chinese government came in and just started taking stuff

over? There are always those worries, but then those worries have been in place over the last 10, 15 years when Baidu and NetE's, which are two of our best stocks ever and rulebreakers were public, right? So the doubt about China, I'm a believer in China. A couple more companies that done really well. I really like Axon Enterprise. This is the company used to be Taser, but now they have police body cameras. And in a world where there's a lot of questions about law enforcement and transparency, I think, should be all the rage in lots of areas of our society. And I celebrate that. I like Axon. HubSpot, which has been a wonderful company conducting email outbound marketing campaigns, basically sending customers emails they want to receive. So that's...

Imagine that. Yeah. So, I mean, advertising and things that serve up advertising are going to continue to be huge. A couple other companies, MongoDB, which is basically an open-source database company, so sort of disruptive to companies like Oracle. So I love the rule breakers. I love companies that come along with a new model, like Red Hat Software, when it came out with Linux open source years ago or MongoDB more recently. And Editas Medicine, you know, CRISPR, for those who are looking into gene editing or cell gene, which is kind of a fall and star in the last couple of years, but basically the worldwide leader in blood cancer solutions. So it's a wide array of companies, but if you try to look at these

recent picks and say what's going through them, they're the innovators in their fields. I'm always going to favor the companies that are innovating. As I've often said, Chris, I think I've said this on Motley Full Money before. If you're not the lead Husky, the view never changes. So I love to find the lead Huskies that are leading their Editarod sleds to glory and fortune, but they're the dog that's out front. And they can take it in directions. Sometimes they can take us in directions we didn't expect, like when Amazon all of a sudden said,

oh, and by the way, we're going to sell not just books, but music and video. And not just music and video. The list goes on. So I love the innovators. And we're living at a time where innovation is higher and broader than it's ever been before, and it's accelerating from here. There are more teams globally innovating in more ways today than one year ago, and that'll be even true or five years from now.

So let's make sure we're following an event. investing in the innovators. Coming up, more with David Gardner. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill in studio talking with Motley Fool, co-founder, David Gardner. I know you're a big sports fan, and because I know roughly how your beloved Minnesota twins are doing, I'm not going to ask you.

No baseball questions. I'm not going to ask you about baseball. But the World Cup is going on, and you had talked about that recently on your podcast. When you think about this as an event through the lens of investing, what do you come up with? Well, I mean, for me, first of all, I love the event itself. I'm not even a big soccer fan, but I love global, worldwide events, things that bring people together. I love the incredible juxtaposition of countries from completely different climates, cultures, backgrounds, playing with each other.

I love how they walk out with the little kids there, the little Russian kids in front them. They shake hands. There's great sportsmanship. There's really good camaraderie in the stands. You see generally two different color shirts and nations celebrating their teams right beside each other. It's a reminder to me that globalism in a very positive way is maybe the strongest force of our time. I've always said that the internet is the biggest technology of our time still is. But really what's behind that, the internet is just a subset of globalization, which is going to continue to bring really positive things for all of us. We're meeting people we never would have met before. We're tolerating and learning about cultures or ways of living

that we would never have had exposure to in the past. We're trading with each other. I sure hope those tariffs don't go too high. We're trading with each other. We're trading with each other. We're accelerating each other and we're teaming up and collaborating globally in a way that has never happened in the history of the world. I realize there are a lot of questions these days about, you know, pitting people, different political parties or this polarization. And I understand that that's kind of a media narrative. But for me, I think it's missing the real story, which is that we're empathizing today more than we ever did before as a human race. We're trading more together than we ever did before. And the technologies that we're building are pretty

remarkable when you think that, you know, it was a year or two ago that I first said goodnight to my kids from an airplane live via Skype. And when you and I were growing up, it was a collect call from Chris or David, you know, back home, paying money per minute, not being able to see people. So that's just a silly example, Skype versus pay phones. But that's true of medicine. It's obviously true of the efficiency of purchasing today on the Internet, et cetera. The list goes on of how amazing the world is today. And sadly, perhaps, but maybe helpfully to me, that seems to be a contrarian viewpoint. A lot of people don't seem to see that or agree. But those of us who do and who are investing into it, buying into that and being part of that, we're prospering. We've been prospering pretty dramatically over the 25 years of the Motley Fool. And I expect the next 25 to be maybe even better.

As we head into July, one piece of advice for investors to get us through the summer. Sure. Yeah. Keep holding your stocks. Keep owning. Don't listen too hard to people who are going to tell you that the market is high or it's about to drop. They might even be right, although they were saying the same thing a year and three and five ago. Usually stopped clocks as it turns out are right twice a day. But the real story of our lives as investors is in it to win it for the long. term. Just like those World Cup fans are wearing the jerseys of their nation, I think of stocks that way. Companies that I love, like Netflix or Amazon, those are jerseys that I wear as a part owner of those companies. And just if they have a bad day, sometimes they do, or month or, yeah, a year, sometimes a bad couple of years like Netflix had around the Quickster fiasco. Keep those jerseys on. The biggest mistake made by most people, whether it's July at the beach or just any odd day, is they react backwards to what just happened

to the market, and they tend to trade in and out too much. Even people who own the Vanguard index fund, which is a good selection for a lot of people who don't want to pick stocks like I do, and I think we're all rewarded by picking stocks. But for the people with index funds, Chris, a lot of people don't even get the Vanguard returns because they're jumping in and out of their index funds. So I think a big focus for the Motley Fool in the next 25 years is going to be training more people to have the right temperament about how to really succeed using these amazing investing tools we have, whether it's Motley Fool stock, advisor or a Vanguard Index Fund. You don't have to wait for him to show up here on Motley Fool

Money. You can get a weekly dose from David Gardner. You can get his insights and observations by simply subscribing to his podcast. Rule Breaker Investing. You can find it on Apple Podcasts, Stitcher, Spotify, Google Play. Just click subscribe. David Gardner, always a pleasure. Thank you, Chris. And thank you to all of our listeners of all of our podcasts. And anybody who's called him or herself a fool at any point over the last 25 years, let's keep making it more awesome in Full on. We've got a couple fun things going on in celebration of the Motley Fool's 25th anniversary. This weekend, click on over to Fool.com.

We've got some highlights from the past 25 years. Also, check out our podcast shop. For the entire month of July, everything is 25% off. We've got T-shirts, hoodies, ball caps, coffee mugs, and more. Let the world know that you are one of the dozens of listeners by going to be. to shop.fool.com. That's shop.fool.com. That, my friends, is how the radio podcast team is celebrating our 25th anniversary. Everything's 25% off at shop.com. That is going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido, special help this week from Rick

Engdahl. Producer Matt Greer is on a well-deserved vacation, so if the show wasn't as good, that's why. I'm Chris Hill. Thanks for listening. We'll see you next week.