Podcast Summary
Effective communication skills and Hurricane Harvey's impact on business discussed: The Think Fast, Talk Smart podcast offers communication tips and Motley Fool Money covers Hurricane Harvey's effects on industries like biotech and retail, with significant damage and lost sales in Houston.
Effective communication skills are essential in business and life, and the Think Fast, Talk Smart podcast, with its expert guests and practical advice, can help individuals hone these skills. Meanwhile, the economic toll from Hurricane Harvey is estimated to reach unprecedented levels, with most of the damage being uninsured due to flooding. The storm will have a significant impact on various industries, particularly in Houston, where the majority of the damage occurred. Companies like Texas Roadhouse, CarMax, Starbucks, and O'Reilly Automotive will be affected, with lost sales unlikely to be recouped. In the biotech industry, a major deal saw Gilead Sciences acquire Kite Pharma for $12 billion. These were just a few of the topics discussed on this week's Motley Fool Money radio show.
Gilead Sciences Acquires Kite Pharma for $12 Billion in Immunotherapy Deal: Gilead Sciences made a large acquisition to enter the immunotherapy market, boosted by FDA approval and investor pressure, while Wells Fargo faced a fine but its stock remained stable, and Best Buy reported strong Q2 earnings but saw a decline in shares due to CEO comments.
Gilead Sciences made a $12 billion acquisition of Kite Pharma, a leading experimental stage company in the field of immunotherapy to treat cancer patients. This acquisition came after years of investors pressuring Gilead to make a large acquisition, and the approval of the first US approved immunotherapy cancer treatment by the FDA this week for Novartis boosted Gilead's shares. Despite Gilead's conservation of cash and the lack of immediate earnings contribution from the acquisition, investors are optimistic about the potential of Kite Pharma's technology and its deep pipeline. However, the stock's future growth is expected to come from the hepatitis and HIV markets, where Gilead currently derives most of its revenue. Meanwhile, despite the discovery of millions of fake accounts at Wells Fargo and a large fine, the stock remained unfazed, highlighting the different treatment of large financial institutions compared to smaller businesses. Best Buy reported better than expected Q2 profits and revenue, but its CEO's statement that the strong sales were not a new normal led to a sharp decline in shares.
Best Buy's Digital Growth and Lululemon's Ecommerce Performance: Best Buy sees a 31% increase in online sales and aims for $5B, while Lululemon's profits boosted by one-time sale and ecommerce growth, but comparable store sales excluding ecommerce were flat.
Best Buy is making strides in the digital space, reporting a 31% increase in domestic online comparable sales and aiming to bring in over $5 billion in online sales this year. Despite a projected decrease in mid-single digit same store sales, the company is expanding its in-home consultation service, aiming to roll it out nationwide this month. This shift towards in-home services is a smart move in the age of Amazon and increasingly complex homes. However, there are concerns about transparency and honesty in Best Buy's financial reporting, as the CEO's recent comments about mid-single digit same store sales being an outlier may have been an attempt to boost investor confidence during a strong quarter. Lululemon, on the other hand, reported higher-than-expected 2nd quarter profits and revenue, but the increase was largely due to a one-time online warehouse sale and ecommerce growth. While the company has a unique direct customer relationship, investors may be pricing in a rebound that isn't quite there yet, as Lululemon's comparable store sales excluding ecommerce only rose 2%.
Retailers face challenges in attracting customers amidst online shopping and competition: Retailers must differentiate themselves and find unique ways to attract customers, while tech companies can explore subscription-based services for revenue growth
The sports retail industry is facing significant challenges with the rise of online shopping and increasing competition. Companies like Finish Line and Dick's Sporting Goods are struggling to get customers into their stores and are being squeezed on both sides as traditional apparel retailers add sports apparel offerings and brands go direct to consumers. Meanwhile, in the tech world, Match Group's new Tinder Gold subscription service has caused a surge in stock prices, despite being relatively minor in comparison to the company's earnings and forward estimates. These trends highlight the importance for retailers to find unique ways to attract customers and differentiate themselves in a crowded market. Additionally, the success of Tinder Gold demonstrates the potential for subscription-based services to drive revenue growth for tech companies.
Electronic Arts merges traditional sports and esports with NFL partnership: EA's NFL partnership brings mass market esports engagement, $400,000 prize pool, and opportunities for additional purchases. First major US sports league involvement in esports.
Electronic Arts is blurring the lines between traditional sports and esports with their new NFL partnership, creating an online tournament where anyone over 16 can compete for a $400,000 prize pool. This mass market approach not only drives engagement for the game but also creates opportunities for additional purchases. This is the first time a major US sports league has been involved in esports to this extent, with 32 players emerging to represent each NFL team. The excitement for investing is growing globally, with easier access to information and increasing enthusiasm for individual stock purchases. During his recent travels to Tokyo, Hong Kong, and Singapore, Tom Gardner saw the potential for innovation and change in Asian markets, making them intriguing investment opportunities.
Long-term investment in Asian small caps: Asian markets like Japan and Hong Kong offer attractive long-term investment opportunities in innovative, growing small caps due to cultural shifts, undervaluation, and tax incentives. Investing in great companies, regardless of size or location, is a superior strategy to short-term trading or passive indexing.
Dynamic markets in Asia, particularly in Japan and Hong Kong, are becoming increasingly attractive for long-term investors due to cultural shifts towards entrepreneurship and undervalued small caps. These markets offer opportunities to invest in innovative, growing businesses over the long term, contrasting the day trading mentality that still prevails in some regions like Singapore and the US. The absence of capital gains and dividend taxes in Hong Kong and Japan further encourages investment. Despite the historical burns in markets like Japan, the long-term returns on equities in these countries still outperform other asset categories. Investors like Joel Tillinghast at Fidelity are already capitalizing on this trend by investing in Japanese small caps. The focus on long-term investment in great companies, regardless of their size or location, is a superior strategy to short-term trading or being overly cautious. This shift towards long-term investment in smaller companies is a response to the increasing dominance of large, established companies and the opportunities they present for passive indexing.
Navigating the Modern Investing Landscape: Negotiate fees, join the right online community, and demand transparency from advisors for individual investors to outperform.
The investing landscape has significantly evolved since The Motley Fool's first book was published in 1996, but individual investors still face challenges. The Fool's unique approach to investing, which combines indexing and stock picking, along with their advocacy for negotiating fees and leveraging online communities, remains relevant. The 3rd edition of their Investment Guide, with updated research and examples, continues to serve as a valuable resource for investors. Despite the abundance of information available today, negotiating fees, getting into the right online community, and demanding transparency from financial advisors are essential for individual investors to outperform. As David Gardner emphasized, asking "Are you taking the exact advice you're giving me?" to anyone in finance is a crucial question, as those with "skin in the game" are more likely to provide trustworthy advice.
Exploring Small Cap Companies and Future Investment Opportunities: Study small cap companies for potential great returns, focus on consumer-facing businesses and technology trends like automation and healthcare advancements, and consider investments in Amazon and Starbucks for future growth.
Investing and running a business are serious matters with significant consequences, but they can also be enjoyable and competitive games. The speaker emphasizes the importance of studying small cap companies, which have underperformed in recent times but historically have shown potential for great returns. He also discusses his focus on consumer-facing businesses and technology trends, specifically automation and healthcare advancements, for future investment opportunities. The speaker's current investments include Amazon and Starbucks, with the latter being more optimistic about over the next 5 years due to the stability of the coffee delivery system. The speaker also mentions his upcoming book and encourages listeners to check out Motley Fool Services for more investment insights. Overall, the speaker encourages an active and informed approach to investing and business leadership.
Listeners can save on Casper mattresses with promo code 'fool'. Discussed Ulta Beauty, Lowe's Home Improvement, and Dunkin' Brands as investment ideas.: Listeners can save $50 on Casper mattresses with promo code 'fool'. Ulta Beauty's strong sales and earnings growth may not be fully reflected in its stock price. Lowe's Home Improvement could benefit from Hurricane Harvey and operational improvements. Dunkin' Brands is a potential investment idea.
Listeners can save $50 on a Casper mattress purchase by using the promo code "fool" at casper.com. The discussion also touched on some investment ideas. Ulta Beauty (ULTA) has seen its stock drop significantly despite strong sales and earnings growth. Investors may want to consider whether the market's pessimism is justified, given Ulta's strong business fundamentals. Lowe's Home Improvement (LOW) has been affected by Hurricane Harvey, but the company has a history of benefiting from natural disasters in terms of sales growth. Additionally, Lowe's has been improving its operations and stock performance compared to Home Depot. Dunkin' Brands (DNKN) was also mentioned as a potential investment idea by Matt Argersinger.
Dunkin' Brands: A Favorite Dividend Stock for Income Investors: Dunkin' Brands, with a focus on franchising, offers a 2.5% dividend yield and potential for double-digit growth. Despite debate over co-located Dunkin' Donuts and Baskin Robbins stores, investors appreciate growth opportunities in the popular US coffee and donuts chain.
Dunkin' Brands, the parent company of Dunkin' Donuts and Baskin Robbins, is a favorite dividend stock for income investors like Mike Olson at The Motley Fool. With a focus mainly on franchising, the company operates with high margins and sells two addictive products: coffee and sugar. Although trading at a P/E ratio of around 22, it offers a decent 2.5% dividend yield, which could potentially grow double digits in the future. The co-location of Dunkin' Donuts and Baskin Robbins stores, often with a shared entrance, is a topic of debate. While some see the convenience of having both desserts and breakfast items available at the same location, others, like Chris Hill, prefer separate establishments. The ice cream and donuts combination doesn't appeal to everyone, and there's a concern that the synergy might not be as effective as expected. Despite this, investors seem to appreciate the potential growth opportunities in Dunkin' Brands, especially given the popularity of its coffee and donuts in the US market. If you're considering adding dividend stocks to your portfolio, Dunkin' Brands could be worth exploring further.