In this podcast, Motley Fool senior analysts Ron Gross and Jason Moser discuss:
- Walmart's grocery division (once again) doing the heavy lifting in the company's latest results.
- Reports that Apple will unveil a $3,000 device at its developer conference in early June.
- Netflix impressing advertisers and Wall Street.
- The latest from Home Depot, Target, Foot Locker, and Deere.
- Taco Bell fighting to free the phrase "Taco Tuesday" from its current trademark holder.
- Two stocks on their radar: Owens Corning and Lowe's.
Plus, Scott Phillips, chief investment officer at Motley Fool Australia, shares the current state of play for investors Down Under, Australian stocks to watch, and predictions for this year's Rugby World Cup.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on May 19, 2023.
Chris Hill: We've got a big week for retail and a big debate over Taco Tuesday. Yes, really, Motley Fool Money starts now. It's The Motley Fool Money radio show. I'm Chris Hill, joining me in studio, Motley Fool senior analyst Jason Moser and Ron Gross. Good to see you as always gentlemen.
Jason Moser: Hey.
Ron Gross: How you doing, Chris?
Chris Hill: We've got the latest headlines from Wall Street. We'll get a check on global markets with our guest, Scott Phillips, and as always, we've got a couple of stocks on our radar, but it was a big week for retail earnings so we're going to start with the biggest one reporting. Walmart raised its full-year guidance after delivering a first-quarter report highlighted by sales up more than 7% and Ron, we've seen this frequently over the past couple of years. Walmart's grocery business, doing the heavy lifting here.
Ron Gross: Yeah, exactly. Shoppers continue to gravitate to smaller package sizes to store brands because they're trying to manage their spending and they continue to favor grocery spending over non-essentials such as apparel, home goods, electronics, those tend to have higher margins. But yes, they're focusing on grocery. This was a strong report, it was actually better than expected as you mentioned, revenue and comp sales up about 7%. Those are pretty strong numbers. Slightly slower growth, I will mention compared with the previous quarter, but just slightly, and they did gain market share or management said they gained market share in groceries so that they continue to execute, their e-commerce was up 27%, that's pretty strong. Lifted by higher advertising revenue as they focused on their marketplace, and also sales through their pickup and delivery services. So strong numbers there, gross margins did narrow just a bit on a different mix in sales, but nothing to be concerned about. Inflation in food, although on its way down, it's still 20% higher than two years ago. But operating up 17%, earnings up 13%. Management lifted its outlook as you say and things look pretty good here at Walmart.
Chris Hill: Are you surprised that they raised their guidance because CEO Doug McMillon, I mean, you mentioned the inflation, McMillon said on the call, inflation is creating uncertainty for us in the second half of this year?
Ron Gross: I think they raised because this quarter was better than expected. So just on that, you can raise, but I do think they're being cautious as are other retailers when they give guidance.
Chris Hill: Home Depot's first-quarter revenue was lower than expected. Same-store sales fell more than 4%, and the company lowered sales guidance for the full fiscal year. Despite all that, Jason, shares of Home Depot up a little bit this week. I'm not complaining, I'm a shareholder, but I'm a little pleasantly surprised.
Jason Moser: I too am a shareholder and I too am very not disappointed with the way this week turned out. I know the stock being up surprised some, I think when you look at everything in total, yeah, sure they guided down, but they really set that tone for the year a quarter ago, and I don't think really there were any surprises as far as trepidation among the consumer, sort of a shift from spending on products to a shift on spending in services. That's all playing out here, but there's nothing fundamentally wrong with the business at all. It's exposed to greater macro forces that it has no control over. The numbers themselves not terribly inspiring, I mean revenue $37.3 billion it was actually down 4.2% from a year ago, comps down 4.5%, U.S. comps down 4.6%. Ultimately earnings per share of $3.82 down from $4.09 a year ago. A lot of the metrics that matter, comp average ticket was up just 0.2%, but the transactions fell 5% and big-ticket item comps were down 6.5%. Management did point out lumber deflation. I know we talk a lot about inflation, but in this case, lumber deflation, which is impacting the company's sales.
Ron Gross: It's my favorite inflation.
Jason Moser: Exactly. It impacted average ticket to the tune of about 335 basis points. Remember, lumber is close to 10% of Home Depot's overall business. Put some numbers around this, they use framing lumber as an example here. Framing lumber was approximately $422 per thousand board feet this quarter. Last year, $1,170 so that's that inflation. It plays out on their top line in a bad way, but actually, it's helpful to their margins so it's not all bad news. They paid out $2.1 billion in dividends, got to love that, repurchased approximately 3 billion dollars in shares. That shares outstanding has come down 8.5% since 2019 so that's all good. I think in regard to guidance, they pulled back a little bit. Earnings per share, they see declining now between 7% and 13% versus 5% just a quarter ago. But even with that guidance, the stock is still valued at around 18 times full-year estimates, which frankly is a pretty opportunistic look at this one.
Chris Hill: Well, and you think about all of the pent-up demand in 2022, particularly over the summer, it makes sense that the guidance would not be amazing.
Jason Moser: Yeah, absolutely.
Chris Hill: Target's first-quarter results were better than expected, with inventory levels continuing to improve. Shares down a little bit this week, Ron, but it seemed like a somewhat similar quarter to what we saw out of Walmart.
Ron Gross: Except that Target focuses more on those bigger-ticket nonessential items and that's where the two diverge. Walmart was strong because they focused on grocery and essential. Target struggled because they focused on the bigger ticket. You can see that showing up in the numbers which are better than expected in some circumstances, but pretty weak in general. Sales only up 0.5%. Comparable sales came in flat, digital sales were down 3.4%, so we're seeing not great numbers here for the quarter. Sales of food and beverage were up as we saw with Walmart, but things like apparel, home goods, electronics fell rather sharply. Discretionary categories make up 54% of Target's annual sales so if those are weak, the numbers are just going to come in weak as well. Inventory was down 16%, they're trying to work through this excess inventory that they've had since the pandemic when they were inventoried in the wrong direction. Earnings down 6%, second-quarter guidance was weak, but management did maintain its full-year guidance. But as we talked about with Walmart and them being conservative, executives used the word cautious 13 times during the earnings call. They're not feeling very confident about their visibility into the future. Only 20 times forward guidance, I like the company in general, but they are working through the environment and the inventory problems they had from the past.
Jason Moser: I feel like I'm rubbing off on Ron here a little, they are searching terminology, how many times these things were used in the call?
Ron Gross: The extra mile for the listeners.
Chris Hill: I was just going to say, if you just had the past 15 months that CEO Brian Cornell had had, wouldn't you be using the word cautious over and over again?
Jason Moser: Be very cautious about how many times you use the word cautious.
Chris Hill: On a related note, Cornell, more so than really any other retail CEO this week was talking about organized retail theft. The challenge that they are facing, I know that this is something that every retail business deals with. Cornell was really talking about it as being a significant problem, is that something to watch if you're looking at Target over the next 6-12 months, how they deal with this more so than others?
Ron Gross: Absolutely, because they're calling out a big number, $500 million due to shrink or theft. That's a very big number. I almost can't see how it's going to be that big so let's keep an eye on that, but they're not the only ones. Walmart mentioned it, most major retailers are talking about it. It is a major problem in retail right now.
Chris Hill: If you've got $3,000 burning a hole in your pocket, good news. There's a brand-new gadget coming to market with your name on it. Details after the break so stay right here. You're listening to Motley Fool Money.
Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser and Ron Gross. Shares of Foot Locker fell 25% on Friday after first-quarter profits were solidly lower than Wall Street was expecting. The athletic apparel retailer also lowered guidance. Ron, CEO Mary Dillon did great things when she was running Ulta Beauty. Boy, she's got our work cut out for her at Foot Locker.
Ron Gross: This is not going to be easy for her. She joined last year and they developed what they're calling their lace-up strategy. Maybe too cute there. But their lace-up strategy, it includes moving away from shopping malls, closing 400 underperforming stores, decreasing their dependence on Nike, which was significant, and improving their digital operation. Not working quite yet, Chris, because these numbers are very weak and they were forced to lower guidance. Total sales down 11%, same-store sales down 9%. They blame macroeconomic headwinds, including lower income tax refunds, changing vendor mix. They're repositioning their Champs brand and they had to take higher markdowns in order to move product, and they also did talk about shrink and theft as well. Adjusted profits down 57%, these are really weak numbers. They cut their guidance, they expect sales for the current year to fall between 6.5% and 8%. They did name a new CFO this week, but they've got their work to do, trading only 15 times guidance, probably appropriate, and maybe should be even cheaper in quotes. To bet on this company would be to bet on a significant turnaround.
Chris Hill: I was just going to say, you look at the stock, the valuation. It's obviously cheaper today than it was last week, but, to use a phrase Jason Moser has used in the past, it seems like you need to pack a lunch on this one.
Ron Gross: It's going to take a while and they don't really seem to be very different to me than a lot of the other apparel stores that you see in the average mall, so they have their work cut out for them.
Chris Hill: Apple is planning to hold its annual developers conference on June 5th, and details of the event are starting to leak out. The Wall Street Journal reported this week that Apple is expected to unveil a mixed-reality headset resembling a pair of ski goggles that comes with an external battery pack at a price tag of $3,000. Jason, I will not be among the first to buy this device, but if any company can pull this off, I have to believe it's Apple.
Jason Moser: Maybe. I think consumer devices for this nascent market in mixed reality, it cannot stay $3,000. I think that's just prohibitively expensive and I don't think very many people will be clamoring to get that device, but it is Apple, there will be some. Then that really is the power of their brand and ultimately the fact that they really make good stuff. As time goes on, we'll see that price come down. We'll see more and more experimentation with core use cases. Is it just that standard hardware thing and they introduce something new that will find its way into the market. Demand either materializes or it doesn't, if it doesn't, you bring the price down. I think at some point, though, the price is only part of the equation. Really, when it comes to this mixed-reality stuff, it's finding the use cases. I think there are two opportunities ultimately in play here and I know a lot of the focus is on the consumer. Getting a headset and escaping off into another world, but you look at industrial augmented virtual mixed reality, industrial has gained far more traction in recent years simply because of the clear and beneficial use cases. You're thinking of things like 3D, step-by-step operating, repair instructions, a dashboard of the analytics data to be able to help assess and complete a task, things like healthcare. If you've got companies like PTC and Ansys on the software side, Microsoft with its HoloLens, a lot of investments they've made there, not really working out either. Apple's just sitting there, biding its time, watching this market unfold and I think that's the right thing to do, particularly with its scale and its resources. But I would imagine $3,000 is not going to have that thing flying off the shelves.
Chris Hill: There are a couple of interesting things at play here. One of which is the fact, at least according to the report in The Wall Street Journal, this is more so than any new device launch that Apple has had probably in its history -- this thing is not ready to go. They are reportedly planning to come out with something that is in the beta phase at this point. The other thing is think back to earlier this month, the response we saw for Alphabet, Google had its annual developers conference. The response was so positive to what they unveiled. By the way, this $3,000 device, this is not going to be the only thing Apple unveils at their developer conference. From a stock perspective, it's going to be interesting to see what happens in early June, the response to this and what may come in in the market?
Jason Moser: I don't think this is anything that is a tailwind or a headwind, either, for the business in the near term, I think it makes sense they need to get into this market at some point sooner rather than later, unless they just get passed by everyone. But again, it does feel like from the consumer's perspective, this really is a market that's still looking for those core use cases and the technology is only going to be able to do so much there.
Chris Hill: Last week on the show, Andy Cross called out Deere as the stock on his radar. On Friday morning, Deere raised guidance after second-quarter profits came in higher than expected. You tell me, Ron, how they do?
Ron Gross: They did well and as you said, they were able to increase their guidance as supply chain problems ease, not go away, but they're easing and the company was able to benefit from higher prices. It's a very cyclical business, but they're in a strong part of the cycle right now, even an upgrade cycle, you could probably call it, sales were up 30%. There's demand by farmers for new equipment and parts to repair aging machinery that they haven't really upgraded in quite some time. Sales rose across each of the company's three segments on higher prices and volume. Their large farm equipment segment, which is their largest, rose 53% from a year earlier and the profits more than doubled for that segment. Real strong. Construction up 23%, small machinery up 16%. Margins widened as they controlled costs and as those supply chain constraints, as I mentioned, started to ease. The one weak part of their business was their financial services business. That's a very small part of the business down significantly because of the movements around interest rates, but nothing to be concerned about. Earnings up 42%, raised guidance, orders remain strong even though crop commodity prices continue to come down. If that continues, that's where the cycle is going to reverse at some point eventually, but for now they felt like they could raise guidance, only trading 12 times forward, which is similar to where Caterpillar is now, so that makes sense.
Chris Hill: John May is one of those executives whose timing is maybe a little unfortunate, he became CEO of Deere right before the pandemic. Impressive that he's raising guidance at a time like this, particularly when you factor in, as Doug McMillon said, the uncertainty around inflation affects every business.
Ron Gross: Deere has done a good job with new products, bringing software to their products in a pretty big way which will impact margins in a good way going forward. But it is cyclical. You can't really escape those macroeconomic cycles, so investing in Deere, you have to understand that.
Chris Hill: On Wednesday, Netflix held its upfront presentation to advertisers and said that its new ad-supported tier has nearly 5 million monthly active users. That must have been music to Wall Street's ears because on Thursday, shares of Netflix up 10%, Jason.
Jason Moser: I understand the enthusiasm here and let's dig into why that's the case. First and foremost, it feels like the honeymoon is over here. If you want ad-free TV, you got to prepare to pay up for it, because a clear strategy here for these businesses going forward, the economics of ad-supported is they're very compelling for these businesses, so they're really trying to push more and more subscribers to those ad-supported models. You start with Netflix, for example in the U.S., they noted in their most recent earnings report that the ads plan has already reached a total average revenue per member, which is the subscription plus the ad revenue that's greater than their standard plan. Thanks to their licensing deals, the ad-supported plan has on average around 95% content parity globally with their ad-free plans. You're getting basically apples-to-apples there. Going to Disney. You're looking at Disney, you've seen the same thing, Iger talked about on the call here. They have realized the economic benefits of the ad-supported plan. They're actually going to raise the price of the ad-free plans in order to create essentially more demand for the ad-supported plan because the ad-supported plan is so economically beneficial to the models there. They're seeing the same thing, average revenue per user's just turning in some very promising numbers there. Then you look at something like Trade Desk, which is the backbone of a lot of those programmatic advertising to begin with. They talk about hearing this language from Netflix regarding programmatic ads, they are obviously partnering with Disney on that front as well. You see a number of different ways to win in this space, but clearly, Netflix, Disney, and The Trade Desk are three of the companies that are really leading the way here it seems.
Ron Gross: I'm so spoiled, every time I hit fast-forward on a show and it says fast-forward is not enabled, I'll just throw the remote.
Jason Moser: Well, and you're seeing more and more content getting on platforms like Freevee, that Amazon-supported Freevee offering. What have you seen Jury Duty? Come on, guys. You got to check that one out.
Chris Hill: Guys. We'll see you later in the show. After the break, gets our man in Australia's Scott Phillips. This is Motley Fool Money. Welcome back to Motley Fool Money, I'm Chris Hill. Scott Phillips is the chief investing officer at Motley Fool Australia. He is also the host of a very popular investing podcast, which also goes by the name of Motley Fool Money. He joins me now from the Gold Coast. Scott, it's been too long. Thanks so much for making the time.
Scott Phillips: Chris, you are very kind man and I'm always humbled to appear on the radio show and can I say, I drafted shamelessly off Motley Fool Money. The original, the OG, called ours the same thing because hey, imitation is the sincerest form of flattery.
Chris Hill: Absolutely, I do want to talk about the market in Australia, but I am curious what the view of the U.S. stock market is from your vantage point. At a high level, 2022 was the worst year in over a decade. 2023 here in the States has been dominated by, yes, on a business level, a lot of talk of AI, but also at a macro level, a lot of discussion of interest rate hikes and the debt ceiling and I'm curious, when you look at stocks in America, what stands out to you?
Scott Phillips: Chris, I still believe that you are, don't let an Australian listen to this. The U.S. economy has some of the very best businesses on the planet. That's no surprise to you or no surprise to your listeners. I think what's been fascinating for Australian investors is the last 12 months, 2022 particular, I should say. In Australia wasn't as bad as in the U.S. because we have an abundance of resources, companies, and banks in Australia. Despite some of the banking dramas you guys have been having, 2022 is actually a relatively good year because the energy sector, which really is big in Australia, was really successful. I look at the U.S. over the last 12-18 months. I think there's been a bit of a surprise. A lot of our growth and tech stocks got smashed as yours did during 2022. The recovery of your market not surprising at all. I am very excited about the future for American companies. I think the work that's being done by some of the very best, biggest, fastest-growing companies on the planet is happening on the Nasdaq and the New York Stock Exchange. While the index itself with great opportunity for Australian investors to jump in the U.S. stocks last year. But I'm every bit as excited as ever have been about the future of U.S.-listed companies, of the value that's being created by some of the best businesses on the planet.
Chris Hill: What is the current state of play these days for Aussie investors? Based on comments that you've made on your show or things that you've written -- we follow each other on Twitter -- based on some of your tweets, I get the sense that, you think the ASX is, I don't know if bargain is the right word, but it seems like an opportunity.
Scott Phillips: I think that's right. I love the way you phrase that, mate. I think there's always someone out there, your listeners know this. There's always someone out there who's prepared to say, the next crash is coming or everything's going to be terrible. Watch out for the next bear market. We know the usual suspects. If you look at the long-term history of the Australian Stock Exchange, the U.S. stock markets, the developed world stock markets, they go up and to the right. Not in a straight line, not without pullbacks, not without years like 2022, but the future is always bright. The best time to buy shares is always today. Not because necessarily I know what's going to happen tomorrow, but because if you look back over any stretch of time, the immense value created by investing in public markets has just been phenomenal. I thought quite honestly mate for the last I've been working for The Motley Fool. Not quite as long as you have, but for a long time now and I've been saying since day 1, and today and hopefully many years into the future, buy stocks today. Not because I'm making any macro forecasts or market forecasts. We all think that's a silly thing to try and do. But because the awesome power of compounding by some of the best companies on the planet is just something you don't want to stand in the way of. Betting against that is crazy. Honestly, I actually do think right now, particularly for stock pickers in the Australian market, some of our companies are very expensive, but there are a lot that are still suffering from market jitters. From pessimism, from concern about what might come next economically, that I think in 3, 5, and 10 years time we'll look back and say, why did we let the next three months worry us when the 10 years followed that are very likely to be very good. I absolutely would be investing in general as always, but I do think there is absolutely a great opportunity for stock pickers in the ASX.
Chris Hill: You and I have talked in the past about Domino's Pizza, among other companies based in the U.S. is doing well in Australia. For folks listening, what's another American business that you think is faring pretty well and connecting with either consumers or businesses in Australia?
Scott Phillips: That's a great question, mate, and I think I hope your listeners know that, no, I haven't seen the numbers recently, but not that many years ago, half of the revenue from the S&P 500 companies came outside the U.S. If you open up any cupboard in Australia, if you work with any business in Australia, the number of U.S. companies that we deal with and work with remains really strong. This won't surprise your listeners, it's not a particularly original answer, but I'm a long-term shareholder of Amazon. I love that business. I think it's an amazing company and it continues to do really well around the world. If I give you all this is an antipodean, a Down Under perspective on Amazon, that it is making every bit of the same inroads here as has been making in the U.S. for many years. It remains an incredibly strong, incredibly successful business. I think it will be for a long time to come. Some other businesses that I think MongoDB, a business that you've talked about a lot is a business that does continue to again, make inroads here.
The world of software is something Australian companies just don't compete anywhere near as well as we do in other industries because the most dominant global software businesses tend to be born over there. Now, where you are and the speed of the internet, we all know is just phenomenally fast. The growth of that has been incredible. I am as you said, interested in AI and the growth of that. Again, think about the cloud, the web businesses, think about Microsoft's cloud business. Amazon's cloud business again, Google, the same thing. I own shares in Alphabet as well. These are just phenomenal businesses and I think the growth of these around the world. I really want your listeners to know you can invest globally from right there at home, because of the sheer scale and breadth of some of your best businesses.
Chris Hill: Speaking of software, one Australian-based business that we talked recently on the show about was Atlassian. Let's go beyond that. What's one or two other publicly traded Australian businesses that you think more Americans should know about?
Scott Phillips: Let me give you two Chris. One is Xero, the code in Australia is XRO. It is a cloud accounting business. Some of your listeners may be using Xero. It is available in the U.S., it's not anywhere near as dominant there as it is here. It's actually a New Zealand business but Australia claims all within New Zealand businesses as our own. We'll keep doing that. It is ASX listed though. It is a company that has something like 70% market share in New Zealand. It's the most dominant cloud accounting software package here in Australia. Big in the U.K., hoping to grow in the U.S. It is a really fantastic business, with visionary leadership. It took the Salesforce software-as-a-service model and really ran with it hard and continues to make every post a winner. The other one's a very different business called TechnologyOne. You guys talk about enterprise resource planning software a lot. This is a company -- TNE is the code on the ASX. It is a company that basically provides enterprise software, as I said, for some really sticky customers and if you're looking for defensive software, these guys provide software for government, education and healthcare. They are three sectors that aren't going away anytime soon. Their customers are pretty sticky and they're going to be around. Their earnings growth has just been almost staircase over the last 10, 15, years. They continue to get customers. Their retention rate is above 99% in terms of number of customers. It's a really great quality Australian software business that I think has a long, long way to run.
Chris Hill: I know you're passionate about investing, but I know there is something else coming up in a few months that you're also passionate about and I'm talking of course, about the Rugby World Cup. It's going to be held in France. It's been 24 years. Scott, since Australia has won the Rugby World Cup and I'm curious how you're feeling about the Wallabies' chances?
Scott Phillips: Mate, we are going to win this one. No, there is no question about it, Chris. We are absolutely lay down [inaudible]. I can also say, by the way, the women's World Cup is being held in Australia very soon, too. We have two big World Cups. I feel very good about our chances in both. I'm sorry to your Kiwi listeners, to your U.K. listeners, to your European listeners, who think their teams are going to win. I hate to break it to them. I'm going to say here first and exclusively, Chris, on Motley Fool Money, Australia will win both rugby World Cups. I have absolutely every confidence. Not even a question, but I might as well about the turning up with that good.
Chris Hill: You can check out the Australian version of Motley Fool Money on whatever podcast app is your favorite. It is free. You get a different perspective on the stock market and you get more insights and analysis from this guy, Scott Phillips. Always great talking to you. Thank you so much for being here.
Scott Phillips: Chris, this is absolutely my pleasure and mate, I will not leave this podcast without thanking you for your many years of loyal service to The Motley Fool. More importantly, I think to Motley Fool Money and to your listeners. I'm a loyal listener, I have always been. We will miss you dearly at the company. Your listeners will miss you even more, mate. Thank you very much for everything you've done for investors and for listeners across your time at The Motley Fool. We are very lucky and grateful for your service.
Chris Hill: I appreciate it, Scott. Thank you so much. Up next, Jason Moser and Ron Gross return. They got a couple of stocks on their radar. 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 or sell stocks based solely on what you hear. Welcome back to Motley Fool Money.
Chris Hill here in studio with Jason Moser and Ron Gross. Guys, where we sit right now in the studio, we're just two blocks away from the U.S. Patent and Trademark Office. This is relevant because this week, Taco Bell petitioned the PTO to be able to use the phrase "Taco Tuesday," which of course begs the question, why can't they? That's because another restaurant chain holds the trademark on the phrase and it is not the restaurant you may have guessed. It is Taco John's, a chain headquartered in Wyoming. They have held the trademark on the phrase Taco Tuesday since 1989, Ron. I'm a little torn here because look, Taco Bell is 20 times the size of Taco John's, this is David versus Goliath. I'm on Goliath's side because Taco Bell isn't saying we want the phrase, they're saying, hey, everybody should get to use this phrase.
Ron Gross: Well, since I own the trademark on the word Tuesday, I'd pay a little bit every time they use Taco Tuesday. Who am I to complain? But it's a little much for me.
Jason Moser: The history, this is fascinating and it started out as Taco Twosday, T-W-O-S-D-A-Y. They were just saying, hey, we're going to say, two tacos for $0.99 to try to gin up some sales back in like 1980 or something like that. It worked out. Then they took it from here. It's fascinating to see the Patent and Trademark Office. They granted this trademark in '89. Attorneys say it's eligible for protection. Other attorneys feel like Taco Bell has a strong case here because U.S. trademark law, "Prevents the registration of common phrases or phrases that become commonplace after a registration is granted." Ultimately Chris, the biggest tragedy of all of this, it seems like the lawyers are ultimately winners here.
Ron Gross: Am I right that LeBron James tried to do this as well unsuccessfully?
Chris Hill: He did. Give it to the people. This should belong to all of us. Before we get to the radar stocks, I need to mention something that came up earlier in the week, an announcement that went out to podcast and radio trade media that I will be leaving The Motley Fool at the end of the month. My last episode on the podcast is going to be May 30th and I will at that time share some thoughts and answer some questions about my departure. But this is my last appearance on our radio show. I wanted to say a quick word of thanks to the people who run our affiliate radio stations. We started Motley Fool Money in February 2009. In January 2010, this became the first podcast to be heard on commercial radio. I know podcasting has grown in popularity over the years, but broadcast radio is an important form of media.
I'm proud of the fact that this show is now heard on more than 75 stations, making it the No. 1 stock investing radio show in America. The economics of weekend talk radio are such that rather than running original programs like ours, a lot of talk stations just sell the time to run things like hour-long commercials for health supplements. I wanted to thank a few of the radio executives who made the decision to make this show available to their audience. Robin Bertolucci in Los Angeles; Russ Reynolds in San Francisco; Lisa Wolf right here in Washington, D.C.; Rene York in Phoenix; Max Miller in Sacramento; and Janine Lee in Hartford, Connecticut. These are the early investors in Motley Fool Money as a radio show. Their stamp of approval helped us get to where we are today. I just wanted to thank them on my last appearance on the radio show.
Ron Gross: Well said, Chris. I'll be brief so I don't get emotional here, but we've been doing this together for around 14 years. It has been a highlight of my time here at the Fool. You've made it so easy and so fun, and it's been a true pleasure. We will miss you, but don't be a stranger, please.
Chris Hill: I won't.
Jason Moser: I will echo those sentiments. I mean, 14 years, it's more great memories that I think probably any of us can really pull. But one that will always stand out was when you and Dan and I loaded up the train and went up to New York City and taped Market Foolery on location at Shake Shack to celebrate their IPO. We had lunch, they brought us one of every desert. It was just a sublime day and that'd be one that always stands out. Thank you for everything and we'll miss you.
Chris Hill: I appreciate that. Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd is going to hit you with a question. Ron, you're up first. What are you looking at this week?
Ron Gross: Dan, you're going to love it. I'm going with good old Owens Corning, OC, largest manufacturer of fiberglass insulation and the second-largest producer of asphalt roofing shingles in the US. If that doesn't get your blood pumping Dan, I don't know what will, 30% of revenue generated internationally. This is the same Owens Corning that had to file for bankruptcy back in 2000 as a result of asbestos-related injuries. The company did reemerge six years later. Their plan to reorganize includes a trust to resolve both the current and that future liability from that. Demand is obviously driven by new residential construction repair and remodelling. Increasingly difficult building codes that require energy efficiency. Since initiating its dividend in 2014, increased its payout every year at a compound annual rate of 12.5%, also reduced its share count by 23% over the same period, currently has a 2% dividend yield, trading for a little over 10 times, which is relatively cheap compared to others in that industry.
Chris Hill: Dan, question about Owens Corning?
Dan Boyd: Ron, what equipment do you have at your house for installation and roofing? I know you're a big DIY guy. You got to be a big fan of some of Owens Corning's products.
Ron Gross: Me and the Pink Panther are constantly insulating my house.
Chris Hill: Jason Moser, what are you looking at this week?
Jason Moser: Well, Dan, I am a little bit more of a DIY guy. I don't know how I can follow up Ron here, but I'm going to try. Lowe's, ticker L-O-W, we've got earnings for Lowe's coming out on Tuesday morning next week. A fun fact for you all, the five-year charts here, we were talking about Home Depot earlier. Lowe's is up 165% over the last five years versus Home Depot's 75%. Now, Lowe's share account is down about 28% compared to Home Depot's 8.5%. That has played into that calculus for sure. But just interesting to see, for all the talk and the credit we give to Home Depot, Lowe's has really brought the results these past five years. The question of course, is, given what we saw with Home Depot this week, what will things look like for Lowe's? Next week they did talk about residential investment being under some pressure. Talked about inflation, higher interest rates, more cautious consumer. They are forecasting a slight decline in the home improvement market. To that end, they did guide for sales ranging in 88-90 billion range, which would be down from a year ago and then comps expected to be flat to down 2%. I think really the big question mark is, will we see revisions to that guidance given what we saw with Home Depot this week? I wouldn't be terribly surprised to see that, but we shall see.
Chris Hill: Dan, question about Lowe's?
Dan Boyd: Not really a question Chris, more of a comment. I always really enjoy Lowe's, a whole lot more than the Home Depot. I think it is a much better shopping experience. The stores are nicer, the staff is more knowledgeable and I think it's just better. I always prefer Lowe's to a Home Depot.
Jason Moser: That's really interesting. I guess I go wherever it's most convenient. I have to go to Home Depot tomorrow. As a matter of fact, to pick up some deck wash -- one hell of a weekend plan and let me tell you.
Ron Gross: By the way, plug for Ace Hardware, don't sleep on Ace Hardware, a very strong experience.
Jason Moser: That's where I go get all my traeger stuff because it's really close to our house. They've got all the traeger goodies.
Chris Hill: What do you want to add to your watch list, Dan.
Dan Boyd: I'm going to go with Lowe's, Chris. I just like going. As a homeowner, I think it's a great place.
Chris Hill: Jason Moser, Ron Gross, guys, thanks for being here.
Ron Gross: Thanks, Chris.
Chris Hill: That's going do it for this week's Motley Fool Money radio show. This show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time.
