In this Motley Fool Money podcast, host Chris Hill is abutting by Fool arch analysts Andy Cross, Matt Argersinger, and Ron Gross to reflect on a week’s account of above business and bread-and-butter account items, starting with chat from the Labor Department that U.S. accomplishment rose aftermost ages at their fastest amount aback 2009.
On the balance front, Wall Street adored Five Below (NASDAQ:FIVE) and Okta (NASDAQ:OKTA) for accomplished quarters, but took a chaw out of Tesla (NASDAQ:TSLA) over apropos about CEO Elon Musk and administration turnover. Also, toymaker Mattel (NASDAQ:MAT) is starting its own cine studio, and the possibilities for cast amplification are vast. Finally, the analysts will acknowledgment the question: What banal is on your alarm this week? One will acknowledgment with a ticker that doesn’t accord to a stock.
A abounding archetype follows the video.
This video was recorded on Sept. 7, 2018.
Chris Hill: It’s the Motley Fool Money radio show! I’m Chris Hill. Joining me in studio: arch analysts Matt Argersinger, Andy Cross, and Ron Gross. Acceptable to see you as always, gentlemen! We’ve got the latest account from Wall Street. We’ll allocution with acknowledged columnist Charles Duhigg. And, as always, we’ll accord you an central attending at the stocks on our radar.
But we activate this anniversary with the big macro. The account jobs address featured bigger than accepted numbers, including the actuality that accomplishment added at their fastest clip aback June 2009, Matty.
Matt Argersinger: Yeah, that’s the amateur for me, Chris — alternate balance up 2.9%. We’ve been cat-and-mouse for a while for accomplishment to absolutely alpha accepting momentum. And it looks like they assuredly are. The accomplished advance in about nine years. Accomplishment are key determiner for inflation. This is why I anticipate it’s absolutely important for investors. If you anticipate about it, businesses accept to pay workers more. That starts to about arise in the afterwards stages of an bread-and-butter cycle. That means, generally, companies are activity to account that by adopting the amount of appurtenances and services, which spreads aggrandizement throughout the economy.
It has a lot of consequences. One of the concise consequences, usually, is that band prices will advertise off, yields will rise. We’re seeing that, actually, on Friday. It sets the date for added absorption ante raises from the Fed, which can advance to lower banal prices, at atomic in the abbreviate term.
Ron Gross: Yeah, that’s what I was activity to say. You saw the bazaar barter bottomward on this abundant news. There’s consistently a adverse to every argent lining. Annihilation can aloof be good. Appropriate now, everyone’s worried, including our Administration, I’m sure, about continuing to bind budgetary policy. Absorption ante will rise. That could put a damper on banal prices.
Interestingly, though, the job bazaar is so able that there are now added accessible jobs than there are bodies out of assignment attractive for jobs. Changing demographics, added backward people, a crumbling bearing rate, is absolutely ambience us up for a problem. To get to that huge 3-4% GDP cardinal afterwards the able workforce, I would accept to say, that’s about impossible.
Andy Cross: Yeah, the allowance numbers, the advance is trending up, which is good, because it’s been so low for so long. It’s still beneath the pre-recession, pre-financial crisis days. We’re not anywhere abreast aback to area we maybe should be.
But what’s interesting, I think, from the advance side, for me, is, in a barter of ascent costs and ascent inflation, you absolutely appetite to be a banal investor. You don’t appetite to own bonds. I mean, that’s not a abode to absolutely be. That’s activity to be a boxy atom for bonds. As Matty mentioned, yields are activity to go up. That abnormally affects band prices. And, you appetite to decidedly own companies that accept appraisement power, the adeptness to handle these amount increases, because they are coming. Aggrandizement is bit-by-bit up. The adeptness for companies to administer the amount increases for one of their accomplished amount inputs, their product, is activity to be absolutely important for investors. Stocks are the way to go in that market.
Argersinger: Yeah. I appetite to end this on the acceptable news, because I do think, to Ron’s point, Andy’s point — it is nice to see workers absolutely accept best now in this economy. In added words, I anticipate for a continued time, workers were activity like they had to break with their organization. They didn’t booty vacation, they didn’t attending for added jobs, because the abridgement was still about shaky. It’s stronger today, and workers are absolutely activity out there and award jobs and accepting some acceding power.
Hill: Another absorbing anniversary for Tesla shareholders. On Thursday night, CEO Elon Musk went on actor Joe Rogan’s accepted podcast for a two and a bisected hour interview. It was streamed alive on YouTube, area admirers could see Musk at one point smoker marijuana. On Friday morning, arch accounting administrator Dave Morton arise his abandonment — beneath than one ages afterwards he started. Shares of Tesla bottomward 11% this week. Andy, is one of those two things worse than the other?
Cross: Well, I anticipate the account are advancing from Elon on the podcast, captivation a blaze thrower, I saw a account of him accomplishing that, and smoker declared marijuana and bubbler some whiskey. But for me, aloof continuing to see some of the controlling turnover. We additionally saw the arch of animal assets will not be abiding afterwards leave of absence. Dave Morton, who abutting one day afore Elon fabricated his acclaimed cheep —
Hill: Allotment secured.
Cross: — allotment anchored with a amount of $420 for a Tesla buyout. I anticipate aloof the accessible analysis of a aggregation like this is aloof so abundant college than what he realized. They said in the columnist release, this has annihilation to do with the leadership, with the banking accounting, which is acceptable to hear. I booty him at his word. I anticipate from the actuality that we are seeing these admiral at actual aerial levels abide to accept accelerated about-face at Tesla, for shareholders, it’s article we accept to abide to watch.
Argersinger: Yeah. I assumption I aloof admiration area the band was beyond here. We attending at a lot of these CEOs. We accredit the words brilliant, innovative, maybe a little eccentric. But at some point, I aloof feel like Musk ability accept stepped over the band into a little bit of crazy?
Gross: Off the rails? Yeah?
Argersinger: Yeah. I’m attractive for the appropriate adjective here. I aloof anguish about the future. We apperceive how difficult it is to run a car business. I apperceive Tesla has a lot of band out there in added fires. But this is a boxy business. I anticipate Elon’s authoritative it added adamantine on himself and his aggregation by accomplishing some actual awe-inspiring things in the public, and it’s causing a lot of about-face at his company.
Gross: Yeah, and aback it rains, it pours with Andrew Left of Citron Research filing a accusation adjoin Tesla and Musk for actionable federal balance laws aback he did advertise that allotment was anchored for a take-private transaction. Normally, I would booty Citron with a little bit of a atom of salt. They’re belled abbreviate sellers, they allocution up their own book absolutely a bit. But I think, maybe, he has a point here, because that does, on the face of it, arise to me as a federal aegis law violation.
Hill: Yeah. I’m not abiding that Musk is allowance shareholders. But, as addition who hosts a business new show, I absolutely acknowledge it.
Cross: It’s about like every week, you could allocution about Tesla, at atomic recently. We accept talked about this — investors in Tesla, you accept to understand, you are affairs into Elon, into his vision. You accept to understand, we are seeing a little bit added of the eccentricities of his advancing out. Investors in Tesla are affairs Elon Musk.
Hill: Aftermost anniversary in Minneapolis, JD.com (NASDAQ:JD) architect and CEO Richard Liu was arrested afterwards an accusation of rape. He was afterwards appear and is aback in China. The aggregation has said Liu is accommodating to abet with authorities added if asked. Matt, this is an absorbing adventure on several levels. What I’m addled by is the adverse letters we’re getting, both from U.S. media and from the media in China. As of this taping appropriate now, the analysis is still ongoing.
Argersinger: It’s still ongoing, and I anticipate it’s article that, the allegations accept to be taken actual seriously. I think, as Andy aloof acicular out about Tesla, an advance in JD.com is actual abundant an advance in CEO and architect Richard Liu. He’s the founder, he congenital the business basically from a baby electronics abundance 20 years ago. He’s congenital it into the better direct-to-consumer banker in China. He’s a billionaire. He’s additionally somewhat of a celebrity figure. He owns 16% of the stock, but additionally controls 80% of JD.com’s voting power, to the point area the lath of admiral at JD absolutely can’t accomplish decisions afterwards Richard Liu involved.
These allegations are serious. We don’t apperceive the facts. It sounds, from what JD has said, like there aren’t any accuse coming. If that is the case, and that does prove out, the banal is acceptable activity to rally, because it’s been hit appealing adamantine afterwards this news. We’ll accept to see. I worry, if there’s alike a sliver of believability to the allegations — it’s not aloof JD’s acceptability or Richard Liu’s reputation. You accept companies like Alphabet, Walmart, Tencent, who accept taken above stakes in this business and accept partnered with JD.com in a cardinal of abiding initiatives. They’re absolutely not activity to pale their acceptability on what happens with JD.com.
Hill: Well, and on top of all that, he doesn’t absolutely accept a additional in command, does he?
Argersinger: No, he doesn’t.
Hill: Okta, the billow aegis tech company, is not profitable, and Wall Street doesn’t assume to apperception at all. Shares of Okta up added than 20% on Friday afterwards additional division acquirement came in college than expected. No earnings, Andy, but the acquirement was activity in the appropriate direction.
Cross: Right. Aback you’re growing 50% on the announcement subscriptions and 57% on the acquirement band … I mean, Okta continues to appearance why this aggregation that provides software solutions for companies and for enterprises, to advice them administer their agent login accreditation and aegis credentials, continues to win. The actuality that stood out for me was that audience that accomplish added than $100,000 in anniversary alternating acquirement was up added than 55% this quarter. That was a record.
They abide to appearance why they are added meaningful, why this absorption in aegis management, simple logins, scalable solutions, continues to absolutely bell with the audience they’re serving, audience like 20th Century Fox, Cisco, Allergan —
Gross: The Motley Fool.
Cross: — The Motley Fool, right, Ron. Their assimilation ante abide to be arctic of 120% on a dollar basis. Their headcount was up alone 27% aback revenues were up added than 50%. Continuing acceptable account advancing out of Okta, and it’s assuming in the banal amount that it was up about 20% today.
Hill: Shares of abatement banker Five Below up 15% on Friday afterwards additional division profits came in college than expected. Ron, same-store sales looked appealing good, too.
Gross: It’s a firing-on-all-cylinders moment. This aggregation is absolutely accepting it done. Stock’s up 95% year to date on absurd advance numbers. Sales of 23%, as you said, atone sales up 2.7%. We saw a abundant operating assets access of about 16%. And then, aback you band on the tax allowances that all companies are benefiting from, you accept a 50% access in balance per share. Absolutely absurd numbers.
Now, do you appetite to pay 53X for a abatement banker aback you could buy Dollar General or Dollar Tree at 14-15X? Well, maybe you do, because these guys are growing much, abundant faster than those and there’s a appealing continued aerodrome of advance ahead, with alone 700 stores. They anticipate they can get to 2,500.
Hill: Are the food concentrated in any accurate allotment of the country?
Gross: They’re in 33 states now and expanding. California has apparently the most, off the top of my head, but they’re boring accepting into added and added states.
Hill: This week, Mattel arise it is ablution its own cine studio, Mattel Films. Among the toys that Mattel can advantage from its portfolio, we’ve got Barbie, Hot Wheels, Monster High, Thomas and Friends, as able-bodied as added brands, Matty, that I absolutely accept a adamantine time apperception on the big screen.
Argersinger: Yes, that’s right. But there’s some acceptable ones in there. I mean, I alone was a big Hot Wheels fan growing up. I had so many. I was one of those kids that had a chest.
Gross: Oh, I had a little suitcase, with the slots.
Argersinger: Oh, yeah! The chest was, like, 50% Legos and 50% Hot Wheels. Maybe a aftereffect to Cars, but not absolutely Cars, it would be its own thing. I anticipate that’d be appealing cool.
Hill: Aboriginal cine out of the gate, if you’re active the cine studio, is a Hot Wheels themed movie?
Argersinger: Right, abnormally if there’s an all-electric Model S in it. [laughs]
Hill: Andy, what about you?
Cross: Well, I anticipate the best acknowledged one will be Minecraft. But the one that I would appetite to see is Rock’em Sock’em Robots. I don’t apperceive how they would accomplish it. Aloof booty The Rock, maybe, vs. some added wrestler, and about-face that into a accomplished cine franchise. Rock’em Sock’em Robots.
Gross: The actual acknowledgment is Masters of the Universe with He-Man and Skeletor, Now, I’m not aboveboard or ignorant. I apperceive that this was attempted in 1987 with Dolph Lundgren as the star, and it was a disaster.
Argersinger: I admired it! I was seven years old.
Gross: In the appropriate hands, you accept a He-Man authorization on your hands. Come on!
Hill: We accept to go to our man abaft the glass, Steve Broido. Steve, I’m academic you ability accept a anticipation or two on what the aboriginal cine out of the gates should be from Mattel Films.
Steve Broido: I do, indeed. American Girl’s 2018 Babe of the Year. Meet Luciana Vega, a creative, assured 11-year-old babe and ambitious astronaut who dreams of actuality the aboriginal actuality to go to Mars. I apprehend that anon from Mattel’s website. That is the aboriginal movie, you can bet on it.
Hill: Well, I mean, American Girl, they got a lot of options there, in agreement of backstory, and that array of thing. All right, let’s get to the stocks on our radar. Our man abaft the bottle is activity to hit you with a question. Ron, you’re up first. What are you attractive at this week?
Gross: I got CME Group (NASDAQ:CME), ticker CME. Operates the world’s better futures and options exchange. They’re in a abundant position to either innovate or access assets to grow. They booty a little assessment for every transaction that goes beyond their platform. Institutions managing risk, derivatives are added important than ever, which is acceptable for their business. They pay a 3.6% yield, including a appropriate allotment that they about pay on an anniversary basis. Trading volumes are skyrocketing. The business is strong.
Hill: Steve, catechism about CME Group?
Broido: Your better options abort bang and your better win, Ron?
Gross: Wow! I haven’t traded options in a continued time, but I have, in the old days, rode options all the way to aught and absent a ton of money on some healthcare stocks. And then, I believe, aback in the day, I fabricated my best money on Pepsi Cola call options.
Hill: Andy Cross, what are you attractive at this week?
Cross: Adobe (NASDAQ:ADBE) reports balance abutting week. The stock’s been on fire. It’s up about 50% this year. The maker of software solutions for absolutely artistic types — writers, artists, illustrators, photographers. They accomplish Photoshop and Acrobat, Illustrator. They’re absolutely accomplishing absolutely able-bodied beyond all their businesses, abnormally as they’ve pushed aggressively to the cloud. It’s been a massive win for them. I appetite to see if they can abide to abound all of their businesses arctic of 20%, or at atomic abutting to it.
Hill: And the ticker symbol?
Hill: Steve, catechism about Adobe?
Broido: Who’s their better adversary currently?
Cross: You anticipate about altered software providers they may have, they attempt adjoin the big ones, Google and the likes. But as far as owning that space, aback you anticipate about who they are confined with the creators, there’s not actual many. They’ve done a absolutely acceptable job locking up that space.
Hill: Matt Argersinger, what are you attractive at?
Argersinger: I’m activity with not a banal but an ETF.
Gross: Is that allowed?
Argersinger: Ron. This is the iShares MSCI China (NASDAQ:MCHI) ETF. Ticker MCHI. We talked about JD.com beforehand in the show. I apperceive there’s some actual specific problems for that company. But really, beyond the board, Chinese stocks accept aloof been clobbered. If you attending at the capital Chinese banal indexes, like the Shanghai and the Shenzhen, they’re bottomward added than 25%. Absolutely in a buck market.
I like this ETF. It’s a simple way, I think, to comedy a backlash in China. You’ve got Tencent, Alibaba, and Baidu actually accomplish up 30% the ETF, which is high. But I attending at all three of those companies, and I anticipate they’re actual cheap, accustomed the advance in the platform. But also, the blow of the 70% is accurately adapted beyond China. An easy, adapted way to comedy a backlash in China.
Hill: MCHI, Steve.
Broido: Aback I attending at ETFs, how abounding stocks charge to be in a bassinet that is an ETF? Roughly.
Argersinger: It absolutely varies, Steve. You can accept an ETF that can accept as little as 15 stocks in it, or some ETFs accept hundreds. I think, already you get to 15 or 20, you’re appealing able-bodied diversified, and that should be aloof accomplished for advance in a basket.
Hill: Steve, three tickers. Do you accept one you appetite to add to your watch list?
Broido: We use a ton of Adobe articles here. I’m a shareholder, as well. I go with Adobe.
Hill: By the way, am I the alone one who thinks that if the aboriginal Mattel cine is based on American Girl, Steve gets an accessory ambassador acclaim on that, doesn’t he?
Cross: He has to!
Broido: [laughs] Thank you!
Hill: Ron Gross, Andy Cross, Matt Argersinger. Guys, acknowledgment for actuality here! Beforehand this week, Silicon Valley admiral were in the spotlight on Capitol Hill. We will dig into that affair and added with Pulitzer Prize champ Charles Duhigg. Don’t go anywhere. You’re alert to Motley Fool Money!
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