But for 5 MM-MMM Good Stocks it’s year three, so we’ll give it one last look and a final tally before sailing it off in honor and glory…to Foolhalla!
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This video was recorded on Sept. 8, 2021.
David Gardner: Thirty separate times, about every 10 weeks on this podcast, over six years, I picked five stocks. I chose a theme that made sense to me at the time. Sometimes sublime, sometimes silly, and then I thought to myself, what are the five best recommendations that I can come up with for stocks that fit that theme? Aiming, of course, always to beat the market, the S&P 500, otherwise, hey, why are we bothering? Then one year later we review the picks. What was the theme again? How are the stocks doing also? How are they doing versus the market? More important for our learning, our way of thinking, why have the stocks done what they’ve done? A one-year review and then another year passes the two-year review. Then what we never forget, we hope you wouldn’t also, we score everything transparently and accountably because we’re Fools, you should expect that of us. Then the three-year review, which is often the most telling. First, because three years have passed since I picked the five stocks. We really can’t be smarter about what has happened and why and what we can learn. That’s the smarter part, but if I’ve done my job well, then we’ll also be happier and richer as well. Now, that three-year review is also telling because most of the time we end the game right there. We’re going to keep holding those stocks in real life, mind you. You should, too, if you own them. But if I kept reviewing all 30 of my samplers in years 4 and 5 and 6, etc., we wouldn’t have time to do much else on this podcast. Well, 30 separate times I’ve picked five stocks, what I’ve also called my five-stock samplers, and we’re going to review three of those samplers today. Five stocks indistinguishable from magic, five stocks with a tailwind blow, and five stocks that are good. Review them we will with my three analysts, guest stars, Sanmeet Deo, Yasser El-Shimy, and Maria Gallagher. Only on this week’s Rule Breaker Investing. [MUSIC]
Welcome back to Rule Breaker Investing. I’m rubbing my hands together with excitement this week. I love reviewing how our five-stock samplers have done. It’s a funny discipline being a stock picker. You would know this, too, I hope, dear listener, and many of us do at The Motley Fool. I’m a big sports fan and when something amazing happens in sports, the feedback is instant. The crowd stands up and cheers. The athlete usually gets to do a dance depending on what sport we’re talking about. Everybody celebrates. It’s all over the news that night, highlights, final score. We all know it. What you and I do, fellow listener, as investors, is the exact opposite. We take actions that we hope will win, that we think are exciting. But we don’t know five seconds later if it worked, we don’t know a day later. We don’t know usually a year or two or three later until it works. But when it does work, I do like to celebrate it because this is our moment. This is our time as non-athletes to do a little dance, to put some numbers up on the scoreboard, and to cheer. I’m really happy to say that this week, with three more five-stock samplers being reviewed, stocks picked exactly one year ago this week, two years ago this week, and three years ago this week, well, that’s what we’re working on now. I also want to mention, since I’ve done it 30 times, one of those samplers will be retired today, five stocks that are good.
This episode, therefore, marks the 15th sampler of those 30 that are going up to what I’m now going to call going forward, Foolhalla. That’s right. Sitting in Foolhalla already are 14 past samplers. They’ll be joined by the latest warrior that will ascend to Foolhalla when Maria Gallagher joins me later this show and we go over five stocks that are good. But brief reflections on performance before we get started with the first of our five-stock samplers. First, I would like to say that of the 15 that have ascended to Foolhalla, I’m really happy to say 13 of those 15 have beaten the market. Yes, spoiler alert, I’m including the one that we send off to Foolhalla today. Thirteen of the 15 beating the market, two did not, that is a hit rate, that is an accuracy that I cannot possibly maintain and that astonishes me. Yet it’s all real. I’m very happy to report to you that 13 of the 15 of the first 15 retired samplers have beaten the market, maybe even better, eight of those 15 have actually returned 100% or more. Now that performance isn’t too shabby given that most of these last for only about three years. Often a single stock can sink a group of five with a really bad performance. It’s hard to maintain a high accuracy hit rate for these. It’s even harder to maintain a triple-digit return rate. I’m really happy to say, it’s happened eight of the 15 times. I should note the best performer in Rule Breaker Investing sampler history was five stocks the world needs right now that was picked February in 2017, that lasted for four years.
We were talking about four more years back then, and five stocks the world needs right now over its four-year run just concluded this February, was up 346% against the market’s 67%. In fact, a little later this week, I think I will tweet out the list of Foolhalla samplers. If you follow me on Twitter @DavidGFool, I will put out a graphic with the names of the 15 and the performances of each, including the two losers because yes, we’re transparent and we publish all our losers as well. Let’s queue it up. In fact, let’s crank up the way back music machine right now because even though it was just a year ago, well, it’s been quite a year and it was a year ago. Let’s go back in time [MUSIC] and start to reflect on the five stocks picked a year ago this week. Five stocks indistinguishable from magic now. I’m proud to say, if you Google the phrase, five stocks indistinguishable from magic, all Google results, all 10 results above the fold on the first page of Google point to this podcast. We really own this phrase, five stocks indistinguishable from magic, well, at least for this point in time, I do want to mention Arthur C. Clarke. He’s the one who came up with the phrase that we’re rocking. He had three laws, and the third one was any sufficiently advanced technology is indistinguishable from magic. But before welcoming my friend Sanmeet Deo, I want to share Clarke’s first two laws. I love all three of these. You know the third one, but let’s review the first one. This distinguished scientist and futurist said, law No. 1, “When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong.” I love that one. Law No. 2, “The only way of discovering the limits of the possible is to venture a little way past them into the impossible,” and of course, law No. 3, “Any sufficiently advanced technology is indistinguishable from magic.” I was looking at the bleeding edge that even to us in 2020 sounded like magic. I remember Sanmeet, getting away from SaaS stocks a little bit. I think I said something about this because they were all the rage and there was so much talk about them. While it’s a very interesting part of our world, there are so many bleeding interesting edges venturing a little way out into the impossible. I think that was what we were doing with this five-stock sampler. How are you doing, friend?
Sanmeet Deo: I’m good. I had a nice Labor Day, so I’m excited to be here with you.
David Gardner: Excellent, Sanmeet. You did a great job when we did a review-a-palooza a few months ago. I thought, let’s have you back and let’s have you look at these five stocks. Well, I’ve already explained the theme. We’re going to cover the worst performer in these five one year later, the best performer, and then anything else we want to say about the other three. But before we get started, I thought a good icebreaker for this particular episode, I will be asking each of my friends, and Sanmeet, I’ll start with you, what’s something funny that’s happened to you recently?
Sanmeet Deo: What’s funny, because when you asked me that as a prelude, I had to dig in a little bit and think about it. I even asked my wife and she was like, “You got to get out of the apartment to actually have something funny happen to you.”
David Gardner: [laughs]
Sanmeet Deo: As we’ve been all working from home and digging in here, it’s been a little bit more challenging to find something funny. This happened, but I did find it. Couple of months ago my family and I went to just go out in the city, have some fun, go outdoors. We took a speed racer boat called The Beast, which boards out into the, I want to say it’s the Hudson River because that one west of Manhattan. It goes, I think 45 miles an hour. It was quite an experience. A lot of fun the kids loved it and we went with some other families and we’re sitting in the boat, we’re just zipping along any they’re like bounces around on the waves. What’s funny about it, like they said, you’re going to get wet during the [laughs] boat and so you think the water is going to splash and it’s going to hit you but little do we know until we actually rode the boat that there’s actually a guy with a super soaker slashing everyone. That’s why most people got wet. [laughs] We’re cruising on this boat. It was beautiful view, beautiful day. We saw the city skyline, we saw the Statue of Liberty. Near the end, he took a bucket and he is coming down the little aisle way and I just look up, and here’s the bucket ready to pour right onto me and I’m just like, oh no, here we go. He pours it, nothing comes out. [laughs] No water, it was all surprise and shock, but I was prepping for it almost like an ice bucket challenge. [laughs] It was quite funny and we all laughed and it was a good time.
David Gardner: Would you recommend The Beast to another family in the greater New York area?
Sanmeet Deo: Highly recommend The Beast to anyone in the greater New York area, any visitors. We’re planning on going on it again, this is a fun time. If you get a little seasick, maybe I wouldn’t recommend it but if you’re OK with that, I highly recommend it.
David Gardner: That’s wonderful. Thank you for sharing that Sanmeet. That might be one of the top tips of this entire podcast this week [laughs] is just that so love you sharing that. Thank you. Now let’s get into these five stocks indistinguishable from magic. As I mentioned earlier, I like to start with the worst performer, but before I do that, I should say, how’s the market done? As of this recording, we’re recording Tuesday mid-afternoon, Sept. 7th, just about a year 9/2/20, the stock market is up 26.4%. That’s an awfully good year. We would take that every single year to retirement and beyond. All of us, if we get somehow make the stock market rises 26.4% every year so that is the target. That’s what we’re trying to be with each of these stocks. I’m really sorry to say that this particular stock we’re going to start with Sanmeet has not: Pegasystems (NASDAQ:PEGA), ticker symbol PEGA. Pegasystems a year ago was about a 135, today it’s about a 140 so it’s up 4%, but that’s 22 percentage points behind the market. We start in the hole with Pegasystems, the AI company, whose founder and CEO, Alan Trefler is still very much active. In fact, I interviewed him on Motley Fool Live somewhere around the time that I picked this stock a year ago and Mr. Trefler I hope things are better in the year ahead. We’re 22 percentage points behind the market with the stock here in year one. Sanmeet, what is happening with Pegasystems?
Sanmeet Deo: This is one of those interesting ones where it’s currently a market cap about $11.5 billion. As you said, it was founded by Alan Trefler, it’s a leader in real-time interaction management it’s really helped use AI in real time to improved business outcomes. It’s a smaller name than what is typically in the S&P. Sometimes as we do these analyses on companies, you look for what’s been going on, why it’s been underperforming or outperforming. Sometimes you don’t find much and early on, since those picked in the sampler last year, the first couple of quarters after that, it did miss on revenues and earnings and it grew at about a single-digit year-over-year revenue growth. That took the stock down a little bit but over the past couple of quarters, it’s beat on EPS and grown revenue, 18% in quarter 1 and 42% in quarter 2. This is a tough one to figure out why it was underperforming. One of the reasons I would guess as well, S&P is driven a lot by some of the big-cap names and this isn’t in the S&P, so it’s a little difficult there but also it’s migrating to a more recurring revenue model. It’s not probably being valued at a high multiple like some of the cloud and SaaS and some of those stocks out there. That might have held the valuation down. But it’s doing some very interesting things and as I was listening to the podcast from last year on the magic with this company it’s almost like it’s helping businesses predict how to retain customers and improve their customer retention as well. One thing that was cool was they acquired a company called Curious.io for AI-powered speech analytics. I’d be interested in seeing and digging on how they’re going to use that and are they going to be able to see inflections in voice and trends in what people are saying to predict how they’re feeling that, that will be very interesting to see how they use that company. Then also they announced the Pega process AI, which is a new set of Pega platform capabilities that, it really is an only solution that intelligently triages millions of incoming customer requests, transactions, and other events like an enterprise scale. While it has underperformed the market over the past year, it’s in a pretty nice secular trend of growth and they’re adding onto the businesses that they have. They’re still growing nicely as they’ve come back to that higher revenue growth in the past few quarters so it’s very interesting name for sure.
David Gardner: Thank you very much for that Sanmeet. It continues to be, of course, I’m bemoaning one bad year of performance [laughs] for the stock is up, just not up with the market, but it’s been a spectacular performer over the long term for Motley Fool Stock Advisor. Let’s make it clear that we really do like Pegasystems quite a lot in part because it has done so well for a lot of Fool members and we feel a lot of promise going forward. In fact, to put a number on it, I think I first picked it in October of 2011 so we’re just about to come up on the 10-year anniversary and it’s up eight times in value, well more than doubling the market over the course of that time. This is a quieter company, isn’t it Sanmeet? There are no big headlines about Pegasystems, but real-time AI-driven interactions. Or if you’re a customer service person, knowing the right thing to say at the right moment potentially or being coached to do that by software, could be very effective for one’s business. We’ll hope in the year ahead they actually, since this is a three-year game in the two years ahead, that Pegasystems continues to put up some good numbers and flourishes, a company indistinguishable from magic. Now, from the worst performer, we’re going to go to the best performer. While I might have been bending indistinguishable from magic a little bit to fit in Pegasystems because I think a lot of us would say it’s amazing to be given real-time AI about what to say in a certain circumstance. I remember in the past when I’ve tried to describe what indistinguishable from magic would’ve felt like 1,000 years ago, let’s say explaining the internet to a Viking, I think almost anybody 1,000 years ago would also be amazed to think that you could be told the right thing to say at the right moment by software. Of course it would take a long time to explain to a Viking what software was. But anyway, ASML logic (NASDAQ:ASML), ticker symbol ASML. This really is a company that I think, whose products, I think are indistinguishable from magic. I’m going to have you tell us a little bit about them in a sec but first let me mention how has ASML Holdings done. The good news is it’s more than doubled so with the stock market up 26.4%, happy to say ASML up 116.7%, we’ll just round that off to a plus 90 in the win column in terms of being 90 percentage points ahead of the market averages. ASML, could you explain to our listenership, Sanmeet a little bit about what this company does?
Sanmeet Deo: Yes. It basically uses photolithography to make semiconductor chips using a process called extreme ultraviolet lithography. But essentially, you need to talk about this on your podcast last year. It makes 7-nanometer chips which go into it like an iPhone. I was amazed, there’s 25.4 million nanometers in an inch.
David Gardner: In an inch.
Sanmeet Deo: [laughs] In an inch, which is mind-blowing when you mentioned that. Basically makes the equipment that chipmakers use to create the chips that basically power everything in our world now, and it’s pretty amazing. This really does define to me a company that is creating magic for the world. Because the secular end-market drivers for this are 5G, AI, high-performance computing. It’s fueling demand for all of those things and their customers are the big dogs, Intel, Taiwan Semiconductor, and so they are basically needed. One thing I saw too that was very interesting about them is that they have almost an earned monopoly with their business, but it took almost decades to master their techniques, and they spent lot of blood, sweat, and toil to create the business and the equipment that they provide to these chipmakers. Interesting thing too is that now there has been such a supply shortage of semiconductor chips, a lot of it driven by just the increased digitalization that’s come about with the COVID pandemic and the need for these digital solutions in our life. They’ve been able to perform well, consistently beating revenues and earnings since it was picked, and even beyond that. They’re looking at 35% revenue growth for the next year, and they’re just gushing cash. It’s amazing to me to see that this is a company that has almost 25% net margins, which any business that has that net margins. Net margins is pretty unbelievable and the market is not even done growing. The semiconductor industry and makers have combined sales of over 500 billion, and it’s estimated that could even reach a trillion by the end of the decade, and that’s just its market.
David Gardner: One of the big stories we’ve heard about over the last year is how there’s a semiconductor chip shortage worldwide. We’re hearing things like cars, especially electric cars, aren’t coming as fast off of the manufacturing line because they can’t find the chips. Maybe Sanmeet, part of the reason they can’t find the chips is the chips are invisible. [laughs] We’re about 7 nanometers. We’re talking about invisible technology that is driving everything in our world today. I’m just so happy that we selected this Dutch company, by the way, this is a Netherlands-based company. I always love it when we find European Rule Breakers. There aren’t as many of those, but this is clearly one of them. The stock basically straight up since we picked it a year ago. Of course, we picked it before that in Stock Advisor. I hasten to mention every stock ever picked in a five-stock sampler was picked well before that, often in Motley Fool Rule Breakers or Stock Advisor with lower cost bases than we play the games with here, this is another example. But wow, if this stock pretty much hasn’t gone straight up in the 12 months intervening. While I’m going to keep us moving here because we’ve got three more stocks. I would just like you to speak to briefly, and they are in no particular order: Nvidia, which is up 32 percentage points ahead of the market, Repligen, which is up 90% that’s 64 percentage points ahead of the market, and then SolarEdge Technologies, which is basically even with the market up 26%. There are three more companies. We don’t have time for depth on all of them, but is there one that you’d like to pick up and say something about?
Sanmeet Deo: Well, in spirit of the magic theme, I have to mention Nvidia, and in one of their more recent conferences, the CEO did a Print Keynote presentation at their GTC Conference in April. Nvidia, in a blog post, revealed that a portion of that was a virtual replica of Jensen Huang, the CEO. [laughs] It says that only 14 seconds of the hour and 48-minute presentation were animated. If that’s not magic, I don’t know what it is. It’s there demonstrating their technology and their capabilities with this new software tool that they have called the Omniverse, which to me is almost like the holodeck in Star Trek, if you’re a Star Trek fan or you can basically create a virtual reality universe. That was just magical to see and hear around. This is a 565 billion market company that just hitting on all engines, is growing even despite the chip shortages. Now they make the chips so they’re one step beyond where ASML is, but they are just knocking out of the park, growing their TAM even. Again, among those secular trends of AI, autonomous driving, even cryptocurrency mining, which has been controversial for them. They created a whole new chip just for cryptocurrency mining, and they are also in process of potentially buying Arm for $40 billion in cash and stock, which is going to take some time. There’s going to be some regulatory challenges with that. But if you ever thought that this company was done with what they’re doing, they definitely are not. Their TAM and their optionality just continues to just expand beyond magic.
David Gardner: Well set, absolutely. You’ve used TAM a couple of times. A lot of our listeners will know that, but for those who don’t, that’s an acronym for total addressable market and that’s something that Sanmeet and a lot of other Motley Fool investors look at, and I do, too, because it helps you think, how big could this thing become? What is the total addressable market? I feel as if the world of semiconductors, it just keeps getting bigger, it enlarges over time. Nvidia was a much smaller company with a smaller footprint on the world’s smaller possibilities 25 years ago, and yet it just keeps growing, not just itself, but its total addressable market and Jensen Huang, who to me, Sanmeet has got to be one of the truly underrated CEOs of our time. He helped found this company. It’s worth $0.5 trillion today, and that is greatly to his credit and the work of many others as well. But I’m glad you mentioned just the size of the market cap for Nvidia. It’s nice to know that even with a big market cap like that, you can find winning stocks. A lot of people feel like sometimes they miss stocks like this or they think they are too big. Well, I hope you didn’t think that a year ago if you were listening to this podcast, dear listener, because the stock’s up 58% in just the last year and yet it keeps growing. By the way, should mention really quickly, ASML has a market cap of $350 billion, so close to about half the size of NVIDIA, but both of these are very large and growing companies. Well, not enough time to talk too much about Repligen or SolarEdge this time. But you know what? This is just the first year for the sampler, so we’ll come back a year from now and we’ll reflect on some of those, especially if they’ve done particularly well. But to put a bow on it now Sanmeet, these five stocks taken together are up 59.1% against the market’s 26.4%. That means we’re up 32.7 percentage points per stock up and down that list of five with some winners and even one loser. But this is an awfully good way for us to start this first year with this sampler. I really like the theme. I feel as if adopting themes like this and asking yourself questions periodically, like what is indistinguishable from magic today? Then being willing to take a position in that, maybe a starter position or maybe in a bigger-cap company, you feel more comfortable with a full position that can lead to, I think, very successful Rule Breaker investing. Before I let you go, Sanmeet, we’ve just talked about five stocks indistinguishable from magic. I’m not going to ask you for a specific stock plug, although you can plug a stock if you’d like. But how about another technology that for you comes to mind here in the year 2021 as indistinguishable from magic.
Sanmeet Deo: I’m going to say mRNA technology, and that is primarily been used it by Moderna in the COVID vaccine, and I’m excited too, as I’ve done a lot of research on the stock to see where it’s going to go with, the technology is essentially coating the body to fight disease and the magic of being able to sequence a disease quickly and create a vaccine or a treatment or therapy that will help our body and teach our body to fight the disease is pretty magical to me. I think there’s so much potential for the technology and it has been in development like ASML has been working on its technology for so many years. It’s been in developed for mRNA technology that is for over 40 years before the COVID pandemic hit, and they were at the right time and the right place with the technology to make it work and succeed.
David Gardner: Wonderful, love that. That is also another Rule Breaker and a successful Rule Breakers stock pick that has had a great year, but we just closed looking at a year, but we both know Sanmeet. It’s not about a year. It’s fun to live another year and play the game for another year, but one year does not an investment career make and one year does not a stock return make. We’re in it for a lot more to win it for a lot more than that, yes?
Sanmeet Deo: Yeah. Absolutely.
David Gardner: Thank you Sanmeet Deo so much for helping us look at 5 stocks indistinguishable from magic. Again, doubling up on the market averages here in the first year, a great start. Sanmeet, have a great week.
Sanmeet Deo: Thanks, you, too, Dave.
David Gardner: Well, onto sampler No. 2 of 3, this particular review-a-palooza. I mentioned the name of the sampler at the top, 5 stocks with a tailwind blow, But I do want to just recall how we came up with this particular sampler theme. It was a listener, Paul Kannappan. Paul, I hope you’re out there and listening right now, Paul had been president and CEO of a company that sold Catholic church bulletins. Going to church on Sundays, if you have a little bulletin included with your church program, it might have been Paul’s company that was producing that and he noticed he is doing a good job managing that business, but it was just a single-digit sleepy growth rate, a print newsletter company. All of a sudden he saw e-commerce showing up and thought, “What if I added to my business the idea that people might give donations online?” Yes, we pass around and had many different forms of churches globally, but Paul started thinking now there is a big tailwind behind e-commerce and online transactions. He moved his smaller business into the bigger business of online transactions and hit a home run. He tell that story and I was happy to read that story. It was right there and maybe from a mailbag, but that formed the basis for five stocks with a tailwind blow. I was thinking about, well, one of my favorite assertions about the stock market and investing is that most people are actually confused about how to earn success because they think it’s about buying low and selling high. They think you need to have a target price that the most important trade you can exhibit is sell discipline, so that you can ensure you limit your losses. Now in a world too focused, I would say, on the when of investing, I’ve always preferred the what of investing. I think what you buy matters most, it’s hard to make 10 times your money on a stock, if what you’re buying never goes up 10 times in value and many stocks on the market never do, so if you get your what right, I remember saying your when starts to matter less and less. Five stocks with a tailwind blow, I’d now like to welcome in my friend Yasser El-Shimy. Yasser, welcome back to Rule Breaker Investing.
Yasser El-Shimy: Hi, David. Good to be here.
David Gardner: Thank you and thanks for taking the time to look over these 5 stocks, which we’ll cover very shortly. We’ll start with the worst performer, get to the best and talk about the sampler, but I’m going to ask you the same question I asked Sanmeet, and that is Yasser, what’s something funny that’s happened to you recently?
Yasser El-Shimy: Oh boy. My 4-year-old daughter, who’s by the way the funniest person in our family, extended family included. She has been wondering for a while now as to why she cannot whistle but I can. She thought it was some superpower ability that dads have. The other day I was just whistling at the dog to come which she did come over and she is a good dog. Ria looked at me and she said, “Baba, you can whistle because you speak Arabic.” Apparently only Arabic speakers can whistle in her mind, and that’s why she can’t be faulted for not whistling. Mystery solved, case closed.
David Gardner: [laughs] Do you remember when you first whistled back in the day, Yasser?
Yasser El-Shimy: Oh my God, I must have been at least in my pre-teens because I remember struggling for the longest to be able to whistle.
David Gardner: She’s got some years ahead of her, it is an awfully helpful skill. I think it’s a life skill. Are you one of those people who can put two fingers in your mouth and make it incredibly loud, or are you like me and you just hum whistle?
Yasser El-Shimy: [laughs] Absolutely not, I can only hum whistle, and even then just barely, [laughs] the fact that my daughter thinks that I have some superpower is in itself amazing, but she doesn’t know any better.
David Gardner: It sounds like your ability to whistle, at least to one 4-year-old is indistinguishable from magic.
Yasser El-Shimy: There you go.
David Gardner: That’s the way we like our dads and moms. Well, thank you for that, Yasser. Let’s get to 5 stocks with a tailwind blow. This was first picked in the podcast by the same name, Sept. 4th of 2019, here we are, just about exactly one year later, and the stock market, wow. Yasser, the stock market is up 53.6% from two years ago this week. I was saying earlier with Sanmeet, I will take 26% every year, looks like pretty much we have these last two years because if you double 26, you get somewhere around 53.6, which is the return of the market overall, of course, I’m not including compounding for the mathematical pedants out there, but we’re having fun, 53.6%, it’s been a spectacular two years of investing.
Yasser El-Shimy: Absolutely. That’s definitely a high bar to clear for any investor to try to meet that performance let alone beat it. I hope I’m not, please give away the performance so that everybody knows how the 5-stock sampler did.
David Gardner: Well, we’ll keep that hidden in the wings, but I will mention speaking of hard to beat, two stocks in the sampler have had a hard time beating 53.6%. We’ll focus on the great underperformer here, two years later. Now, I’m happy to say overall that Waste Management (NYSE:WM), which is a company I deeply esteem and I’m grateful for is up over these two years, it’s up 27%, but when the market is up 54%, that means you’re down 27 percentage points to the index funds up there. Yasser, what has been happening or not happening with Waste Management ticker symbol WM?
Yasser El-Shimy: Waste Management is an all familiar American company. It has been a leader in the environmental services of Waste Management’s space for many years now. If you have traveled across the country, you will see those green and yellow emblems adorning those trash trucks. They do have a moat of being the sole trash collector across numerous municipalities, owning the largest number of landfills across the country, and they have also championed 18 consecutive years of dividend growth. It’s definitely a good business. The thesis you laid out two years ago David, was one where population growth as well as greater amounts of waste and recycling leads to further growth for Waste Management. So far that did not play out exactly as anticipated. While some people might argue that this can be attributed to the slowing pace of population growth and immigration in the United States. It’s actually more likely attributed to the fact that Waste Management had some really adverse impacts caused by the COVID-19 lockdowns. For the full-year 2020, revenue decreased around a $141 million in the company’s collection and disposal business compared to 2019, and that was primarily driven by $669 million in volume declines, that is, less waste being generated and collected. Similarly, gross operating profits in 2020 declined year over year for the first time in five years, so lockdowns, work from home, and disruption to supply chain may have taken hopefully temporary toll on the business. However, I’m glad to report that for the first half of this year, there are signs of life. The margin is bouncing back, revenue growing over 9%, and management guiding to about 16% top-line growth for fiscal year 2021. We have another year left in this basket of stocks and I think Waste Management may catch up.
David Gardner: Thank you very much for that analysis. It is funny to be a shareholder, fan, owner, stock picker of Waste Management because you’re cheering for more garbage out there that way we get more business. The pandemic has met a lot less of many different things; fewer graduations, fewer parties, fewer theatrical events, and yes a lot less garbage as well and so Waste Management is very much dependent on the global economy, or in this case the national economy, which like the rest of the globe, was depressed for understandable reasons over these last two years. Are you surprised that the stock is still up 27%?
Yasser El-Shimy: No. Based on the performance they’ve had so far this year I mean, this is a steady Eddie business they’ve had a revenue CAGR of about 5% for the longest. But the fact that they’re guiding for 16% revenue growth this year tells you that, the economy is bouncing back and it’s bouncing back hard and Waste Management tends to benefit from all that trash that’s about to be generated by everybody who’s unshackling themselves from the lockdowns and going out and enjoying life once again.
David Gardner: Yeah, and I’m glad you mentioned the 18 years of dividend increases. I don’t know if that qualifies officially for the Dividend Aristocrat label, but I’ll say this, it’s an awfully good, steady dividend payer and a big company that can generally afford to do that. You also mentioned CAGR. I want to break down our term so again a lot of our listeners will know this, but not everybody knows that that is an acronym CAGR for compound annual growth rate. When you can compound your annual growth rate at double digits and you’re a large company that’s going to spell good things in general for investors. I will say yes as I picked this stock two years ago this week I wasn’t thinking that Waste Management was going to light the world on fire, in fact, I like to mix in some slower, steadier companies within these samplers it’s not just an all out go for alpha. Although we do hope that we can find enough good stocks to fill a five-stock sampler with some that will trounce the market. I’m happy to say we’re about to talk about one of those right now, but Waste Management again, I feel really good about this company. Still up 27% during two of the hardest years, probably in its recent history and I really like what you’re pointing to, which is the forward expected growth rates, so we’ll keep our fingers crossed. You’re right, this particular sampler has one more year to perform well, from worst, let’s go to first. First, it’s been pretty great now, spoiler alert, three of these five stocks have more than doubled, so this has been a pretty spectacular five-stock sampler, but the best of the best for this one so far anyway, is The Trade Desk (NASDAQ:TTD), ticker symbol TTD. The stock was at 24 when I picked it two years ago this week, these days it’s closer to around 75. It’s a triple, up about 214%. The Trade Desk has been volatile, certainly over the course of these two years, Yasser, why is it so far out on top at this point?
Yasser El-Shimy: Well, if you have been following this company, you would not be surprised at all. This company has almost single-handedly reinvented the programmatic advertising space providing an online stock market-like marketplace where sellers and buyers of digital ads can match their needs on prices. In fact, the founder himself, founder and CEO Jeff Green, used to be a stock trader and he got the inspiration for building this company from working on the stock market and wondering why is it that two other markets that exist lack the dynamism, transparency, and ubiquity that we currently have with the stock market and trading stocks, so he built this company from scratch and provided a compelling proposition to buyers and sellers of digital advertisement.
David Gardner: I’ve never used the platform myself, have you, Yasser?
Yasser El-Shimy: I have not, unfortunately. I have never had anything to advertise.
David Gardner: [laughs] Fair enough. But for those who will use it or one day may use it, it really is just matching buyers and sellers at a price instead of shaking hands on where stock should be in a given second or minute, we’re shaking hands on how much that bus wrap in Louisville Kentucky would be worth this upcoming weekend. In this huge world of both offline and online advertising, The Trade Desk is so well positioned and boy has it been just a spectacular performer for Motley Fool Rule Breakers. While I’m delighted by our cost of 24 for this sampler two years ago really delighted to note that The Trade Desk was first pick point, this isn’t even that long ago, February 22nd, 2017, the cost that day, three dollars and forty-three cents, so for it to be up around 75 puts it more than a 20 bagger just four years later now. These are all split-adjusted numbers because Yasser, this stock has split in the meantime, but I guess I’d like to point out not just that we recommended it in Rule Breakers at three dollars and forty-three cents February 2017, but that we recommended it just three months later, it had gone to five dollars and 15 cents. That may not sound like much but 3.5-5. From a percentage standpoint, the stock was up nearly 50% in just three months. Again, a lot of people would at that point feel they missed it and not go there but that is the opposite of how we’re inclined as Rule Breaker investors. Adding at five, watching the stock go to 75 has been spectacular. Is there anything else you’d like to add about The Trade Desk before we move onto some of the other stocks in the sampler?
Yasser El-Shimy: Sure. I can just hear in my mind so many institutional investors gasping of the idea of adding after a 50% run. But that’s exactly what RB investing is like. [laughs] According to eMarketer, connected TV ad spending has risen by 47.5% and 40.6% in 2019 and 2020, respectively, is also poised to grow by another 48.6% this year. Now, this is a forceful tailwind behind any business in the segment, let alone this market leader here, The Trade Desk, which has done very well in this connected TV advertising space. Now, last year, The Trade Desk’s growth was affected by cut downs in digital ad spending during a time when a lot of advertisers had paused. During the pandemic, a lot of buyers stop buying ads, but I’m glad to announce that it has rolled back to action this year, revenue growing over 50% during the first half of 2021 and it’s a great business the CEO and founder, Jeff Green has an astounding 94% employee approval rating on Glassdoor. That’s just unbelievable and also despite the business growing at the high double digits, it is already profitable and is increasing profitability, year in year out. They’re projected to just have so much cash by 2030, they’re probably going to have to issue a dividend or something or look for some major acquisition.
David Gardner: Thank you for that and all of those facts, I really appreciate that I’ll add another fact that market cap today, 37 billion for this company. It’s still like a tenth the size of well, ASML logic, which we talked about last sampler, but a lot of room still to grow for this market cap. It’s funny to see the stock Yasser was around 90 in February of this year it nosedive to 45, just three months later so this stock got cut in half this year in just three months. It’s a reminder of how volatile Rule Breakers can be and certainly when the environment turns against either all of our stocks, like the whole market, or against the single one I’m presuming, I don’t remember. I’m thinking they had bad earnings announced maybe in the summer, but yeah, the stock got cut in half, but it’s now since come back from 45-75 where it is today, a huge winner captaining this five-stock sampler. The other three stocks well, let’s go over them real quick Yasser. NextEra Energy (NYSE:NEE) up 52%, basically just a percentage point or two behind the market. Roku is up 104% that’s one of our doublers in this one and Teladoc (NYSE:TDOC), up 143% another stock that’s doubled in this five-stock sampler so those are each very interesting, radically different businesses. We don’t have time for them all Yasser but would you like to pick up one of those and give us some insight whether it’s NextEra Energy NEE, Roku, which is, of course, Roku (NASDAQ:ROKU), or Teladoc, ticker symbol TDOC.
Yasser El-Shimy: Absolutely and just one general comment that the two stocks that were supposed to be the anchors of this portfolio, NextEra Energy and Waste Management have been the relatively speaking, the worst performance of the group. Whereas the more higher-growth names have done absolutely spectacularly well. Now the stock I’m going to talk about right now is Teladoc which as you put it back then, it was a bet on the rising adoption of telehealth in a world where the internet is available to everybody and people are busy and don’t have the time to go to the doctor most of the times now. The softness in the stock prices here comes on the back of a spectacular 2020, a pandemic year which was effectively the reason why Teladoc existed people can see their doctors without having to go to the hospital or to a clinic to be at risk of infection. They acquired this other company, Livongo last year, also which is a specialist in chronic care management and that has provided the company with more opportunity to grow their total addressable market and offer a more comprehensive solution to Teladoc members. Now competition is fierce in the space I must warn and Teladoc will probably need to prove that it offers a compelling value proposition compared to its peers in the space in order to continue its very strong run over the past couple of years.
David Gardner: Well said, and that merger obviously wasn’t just important for this company. By the way, both of those companies were on the Rule Breaker scorecard, so it’s always fun to watch two of our stock picks merge with each other, but really a big story for its whole industry. This is a company that’s now clearly out front in the race to bring you better and more frequent telemedicine and I really like its positioning. This is a stock, well, it was riding really high on optimism and expectations. That merger you mentioned stock was around 300 in February, today it’s 143, so this is actually a stock that has been cut in half and stayed there. The Trade Desk came back, this one cut in half and stayed there. It’s still up 140% from where it was two years ago. These are almost titanic numbers in both directions to wrap our minds around. This is not an every year phenomenon, this is not an every kind of stock phenomenon, either. These are really interesting times for a business like this. But there’s no question, as you pointed out, Yasser, there’s a tailwind behind this company, an awfully big one, so we’ll keep our own dollars and our members long. That’s Teladoc. We’ll take it all in all. Dear listeners, you probably would expect if we’ve had three stocks that have more than doubled in just two years from when this one was picked two years ago this week. Stock market is up 54%. That’s awfully nice our stock’s up 108% so I’m happy to say, as the market closes and we record here this Tuesday afternoon, I can officially say we’re exactly a double on the market averages with this five-stock sampler. Five stocks with a tailwind blow, Yasser, let’s hope the wind keeps blowing for at least another year.
Yasser El-Shimy: I’m sure it will David, no doubt about it.
David Gardner: Now, before I let you go Yasser, it occurs to me, well, I asked Sanmeet for another indistinguishable from magic technology or stock. I don’t want to let you go without asking you, there are other tailwinds blowing out there. Do you see a tailwind blowing behind a particular company or industry today?
Yasser El-Shimy: Well, David, I think that we are probably headed into a world where the next operating platform is not going to be the laptop necessarily. I think that we’re going into a world of augmented reality and virtual reality, where people’s offices are effectively headgear. [laughs] You put either glasses or headset on your head, and you’re suddenly transformed into a different place. Now that you can imagine all the applications that can come with that, work, travel, fun, sports. The world is yours for the taking right from your own house, so I believe there’s probably going to be a tremendous tailwind for that trend. We’re very early on that. But I do view that trend as one that’s going to unfold and there will be multiple winners in that space for sure.
David Gardner: I love it, and that enables me to mention actually a few apps I’ve enjoyed using on my iPhone over the last few months that are all part of that AR space. A few free plugs here. Flightradar24, have you used this one, Yasser, this is really geeky.
Yasser El-Shimy: I have not used it but I have enjoyed watching other people use it.
David Gardner: That’s right. You just wear your iPhone up, aim it at any plane you see in the sky and augmented reality will show you where that flight is headed, where it came from, name the aircraft type, and a few other fun fact, so Flightradar24. Slightly more seriously, PictureThis is one I’ve really enjoyed. If you find yourself surrounded by beautiful flowers or you still can’t identify what an oak tree looks like. Just aiming your camera using PictureThis, you can basically ID any form of plant life, which is pretty cool. Seek is another one which does plant life. Critters, it’s not quite as technical or accurate in my experience as PictureThis, but it’s an awfully fun app. Smart Bird ID also will grab a picture that you’ve take of a bird or listen to what you’re hearing in the sky and will ID bird, so I’m thinking already about various consumer uses. Just pure fun for someone like me of AR in various forms. I agree with you, Yasser.
Yasser El-Shimy: A couple of weeks ago we were in Giza, Egypt and my nine-year-old stepson entered inside of the Great Pyramids of Giza. He was actually looking for Pokémons using his Pokémon GO app on his phone, chasing them inside the great pyramid of Giza. That’s amazing.
David Gardner: Love it, that sounds like a tailwind blow to me. Well, thank you again, Yasser El-Shimy and have a great week.
Yasser El-Shimy: Thank you, David.
David Gardner: Well, it’s time to go even further back in time, Rick. [MUSIC] Thank you very much. Let’s get back into the mentality. You’re sitting wherever you are sitting, maybe you’re standing, but let’s just say you’re sitting. You’re sitting in the seat of you in 2018, it’s September 2018. As I keep a calendar that shows me where I was every day of my life since well, whenever I started adopting iCal moved over to the Mac platform back in 2008, so 13 years running. I can see, oh my God, I had just gotten back from Bermuda. We were celebrating my sister-in-law’s 50th birthday, a wonderful place to celebrate. I’m a big Bermuda fan. Some of my earliest favorite memories of traveling abroad, well it was abroad from the U.S. was going to Bermuda, the beautiful island that’s just east of North Carolina. A lot of people who’ve heard Bermuda but have not been there may not realize it doesn’t actually get that warm in the winter. No, that’s the lower part of Atlantic Ocean, the Caribbean. Bermuda is actually equal with North Carolina so not necessarily a huge winter destination for those seeking warmth in the winter, but wow, what a beautiful island. I remember an island that has no snakes. That’s another thing to like about Bermuda. But enough about Bermuda or me on 9/5/2018. Let me welcome my friend Maria Gallagher as we start to look at five stocks that are, mm-mmm good. Maria, do you remember roughly what you might have been doing in September of 2018?
Maria Gallagher: September of 2018, I was working for the Motley Fool.
David Gardner: Excellent.
Maria Gallagher: Just hanging out [laughs]. I wasn’t in Bermuda, but I was still having a good time. [laughs]
David Gardner: Good. I’m delighted that you’re with me because in part and I didn’t intend this, but sometimes Kismet impart — your first name starts with what letter?
Maria Gallagher: M.
David Gardner: The letter M. This is perfect. We have five M stocks for, mm-mmm good, and we can throw in one of my favorite analysts at The Motley Fool, Maria Gallagher, for the 6th M. Maria, it’s been fun to look over these five companies. What I remember about the theme of this sampler is that it was completely silly. I think I randomized a letter and then I thought oh it’s M. Then I thought, well, what are five stocks that are M stocks and part of the work that I did for years over Stock Advisor and Rule Breakers is that I worked up to about 225 actively recommended stocks because one month after another, one year after another, I would recommend stocks to buy, but it rarely sell and if you do that long enough, you end up with a few hundred stocks. So admittedly, I did have a fair number of good M’s to pick from and as we look through this list together, well, I picked at least one really good one. But wow, at least one really bad M stock. Actually before we start there, let’s talk about the market. That’s the 7th M, the stock market. The market is up 56.2% from three years ago. It was actually a slow year, 2018 into ’19. But when you think of the three-years 56% return, we’ll take that every three-year period so Maria 56.2%, that’s the number we’re trying to beat. These stocks were picked on 9/5/2018. That means we officially closed them out on 9/4 of 2021. That would be this past weekend, these numbers are now final. Let’s start with ticker symbol M-O-M-O. The company’s name is MOMO (NASDAQ:MOMO). MOMO a Chinese dating business, really regret to say that I picked it because back then it was at $45.23. It closed over the weekend at 13.5. The stock is down 70%, the market up 56%. Maria, this might be the worst stock I ever picked in any of our 30 samplers. What happened, is happening, has happened to MOMO?
Maria Gallagher: MOMO is a company I hadn’t heard of until I started looking into it and I talked to some of our other analysts who follow it more closely. It launched in 2011 as a location-based online dating app. It then eventually launched a livestream functionality. Since 2018, there’s been a deceleration of growth. In 2018, it grew 51% of revenue, 2019 it grew revenue about 27%, and then 2020 it actually declined revenue about 9%. There was a sharp drop in premium users at the time, which is really actually very interesting because 2020 is a year where other online dating apps thrived. So that is not a great thing to see. Additionally, in 2019, Chinese regulators cracked down one of their apps. They were only temporary pulled from the App Store, but it hurt sales, it hurt popularity. Last month it changed its name. It’s now Hello Group to try to evolve to a social entertainment app. It still has a pretty cash-rich balance sheet but it’s definitely not a strong winner and it seems like it has lost a lot of its luster in users, which is something you don’t like to say.
David Gardner: I have to admit I did not know the company had changed its name. You’re absolutely right. It kept the ticker symbol MOMO, which sounds a little bit like momentum stocks to some people probably, which always made me smile a little bit. But MOMO is now Hello Group as you have wisely pointed out. You mentioned 2020, a great year for dating apps, at least at the start of 2020. Maria, I was thinking, oh my gosh, Match Group, by the way, another M stock. We’ll be talking about Match Group, MOMO. This is going to be really bad I would have thought for them. People aren’t going out, everybody is locked down. Why would you need a location-based dating app or maybe any dating app at all? But that is not actually how the pandemic has played out.
Maria Gallagher: Well, it’s because you have no options to meet people in-person anymore. Effectively, all of your other options to meet somebody is gone. If you’re sitting in your house, don’t have very much else going on. It’s a good way, an opportunity to meet people and when all of your [laughs] other options are gone. Then when people are on the app, it seems that they’re saying on the app they’ve found it, they’ve used it, it’s accelerated how acceptable online dating is.
David Gardner: Well, again, one of our M stocks, not this one has been a beneficiary of this trend, apparently has played the game right, but Hello Group, which is how I will now [laughs] refer to MOMO going forward. Goodbye Hello Group, you’re [laughs] the worst performer we’ve had for a five-stock sampler and since this sampler is now done, I can I guess say goodbye to Hello Group. Let’s move from worst to first. Wow, MercadoLibre (NASDAQ:MELI) has appeared in a number of our samplers, this being one of them. Three years ago, I don’t think it was in a great place as I recall. I don’t think the stock was performing that well. The stock was at $328 a share. So to have it close over the weekend at 1,946, brings a smile to this aging Foolish face. I see the stock is up 493%. That on its own is going to carry any five-stock sampler to glory. I’m really happy about MercadoLibre. It’s a stock that we’ve certainly talked about for months and years on this podcast. Anybody who has been a Motley Fool member, you’ll see it in many services as a recommendation. Maria, what jumps out to you as we think about the three-year period we’ve just closed out? Or maybe you could give us a little bit about the next three years if you like. But what is a big-picture reflection for you on MercadoLibre?
Maria Gallagher: I think it’s just an amazing company with really strong tailwinds. You saw all of that combined in the past couple of years. COVID definitely accelerated that, but they continued to deliver outperformance in all its areas of investments. If you’re just looking at things like user growth, at the end of 2015, it had about 144.6 million registered users. By the end of 2019, there was over 320 million registered users.
David Gardner: Wow.
Maria Gallagher: I can pull out lots of different statistics that look like that. Also very interesting, in 2019, PayPal actually increased its partnership with MercadoLibre and invested $750 million in this company. It makes lot of sense. A lot of people refer to MercadoLibre as a combination of PayPal, Amazon, and Latin America. But a lot of times when you look at this space, the response from people is, well, what if Amazon does tries to do it, or what if PayPal tries to do it? This shows that PayPal at least started looking at this area and said, “You know what? This infrastructure already exists. Instead of trying to compete with it, we’re going to encourage it, we’re going to partner with it.” I think that that’s a really strong growth for long-term tailwind for MercadoLibre. Additionally, in the past couple of years it’s spent a lot of time investing heavily in logistics to maintain their leading fulfillment times that launched same-day delivery in Brazil, Argentina, Chile, and Mexico. It’s been ramping up its marketing and rolling out point-of-sale terminals to support its network growth. I think it has lots of things going on, but it’s doing all of them super well and investing in really smart ways and partnering with really great companies. I am happy to see how well it did, and I don’t see that slowing down any time soon.
David Gardner: Stock was first picked, ticker symbol M-E-L-I in Rule Breakers on Feb. 18th of 2009, so it’s been a 12.5-year hold. It was at $14 that day. So for it to go from 14 to nearly 2,000, it’s been the best pick in Rule Breakers‘ history. I think the important thing to note, in addition to being 137-bagger for those who play the long game with us and who’ve been around the Fool for a long time, it’s just a note that, “Hey, we’re all looking at the numbers now, just these last three years thinking, man, if I didn’t own it, why didn’t I own it? I really missed it.” When I picked it three years ago this week, It was at 328. That’s right, we’d already watched it go from 14-328, and we said, “You know what? We’re going to buy it. We like it right here going forward,” and boy, if it hasn’t gone up another five times in value, and I think many of our listeners already get this. They have their Rule Breaker hats on and they realize, you’ve never missed great companies. You haven’t missed Apple, you haven’t missed Amazon, you haven’t missed MercadoLibre. Great companies keep growing. Even if we’re not going to have 137-bagger anytime soon in MercadoLibre again, how about just a five-bagger over the last three years? So yeah, I’m really happy that this company started with the letter M, and I’m delighted to know that on its own, it’s created a winning five-stock sampler. But that leaves three other M stocks that we should talk about briefly. Maria, maybe you can just give us highlights of any of them that you’d like to underline. I do want to mention Match Group because that was the M stock that’s a dating company that I referenced earlier that has done really well. In fact, Match Group picked at $50.53, three years ago, closed the weekend just over $148 a share, up 193%, so matching the market up 137 percentage points over the market’s 56% return. While Match Group closed at 148.19 over the weekend, I’m happy to say the company announced excellent earnings over the weekend, and this Tuesday, the first day of market trading here in the U.S., it jumped from 148-159. Now sadly, this sampler will not get any credit for that move because we closed it all out last Friday. But it still counts, I hope in your portfolio and mine. A great stock just keeps getting greater. You want to say something about Match Group?
Maria Gallagher: Yeah. Match Group effectively owns the online dating space. Some acquisitions since 2019, that’s what they do is they just keep bringing on more and more dating sites to their group. It partnered with Betches to launch a dating app Ship, which allows users to help friends pick out dates in 2019. It also acquired Harmonica, which is an Egyptian online dating site. In 2020, it partnered with a safety platform to increase safety tools on their products. In February of 2021, it acquired Hyperconnect, which is a Seoul-based social network, which is their biggest acquisition to date. It’s growing outside of just dating. It’s entering the S&P 500. More and more people are just using online dating. A 2019 study before the pandemic, about 50% of 18-29-year-olds had used online dating apps, and 1 in 10 adults in the U.S. was married from the online dating app according to the study. It’s only accelerated by the pandemic. It just continues to do well and I think it continues to really impress. It’s effectively very difficult to compete with them because they have so many apps in this.
David Gardner: I think I’m going to give short trip to McCormick (NYSE:MKC), a company I love, ticker symbol MKC. I love spices. We’re all trying to make our meals more interesting. Either we’re cooking in our den, wherever we’re cooking in our kitchen these days. McCormick, a timeless company up 38% by the way, unfortunately, 18% points behind the market over this three-year period. But Masimo (NASDAQ:MASI), ticker still, M-A-S-I. Maria, you and I were talking about that offline. An insider too please for you, about this company that I think of as, you know when you go to the hospital and you’re just there for maybe something routine. But they put a little clip on your pinkie and it’s a pulse oximeter and it’s just measuring the oxygen levels in your blood, which by the way, increasingly Apple Watches purport to do, too. Masimo, that’s a staple product for this company. But wow, Maria, the stock up 118 from three years ago to 277 through the weekend. That’s more than a double. What do you have for us on Masimo?
Maria Gallagher: Obviously, COVID resulted in our surge of demand for those blood oxygen content centers, which is their core business, like you said. It’s in most of the top hospitals in the U.S. Its tech is used to monitor nearly 100 million patients a year. But they’ve also been producing a lot of new products. One that’s really interesting and exciting is it has technological advances to include a neurostimulation device that actually reduces symptoms of opioid withdrawal, which could have a massive impact on people suffering from opioid use disorder. I think that that was something that as I was reading about it, I just think that that could be so powerful and so helpful long-term for people. I think some of their products and a lot of their inventions have been really brilliant. I’m excited to see what they do.
David Gardner: Well, it continues to be a founder-led company and one that has been led very ably for years and years. One of those quieter companies, Masimo market cap of 15 billion, which is a small candle next to some of the bright lights we’ve talked about elsewhere this week. But I’m really glad you mentioned that one, Maria. I think about that new product, and I’m just wondering because Maria, you and I share that we didn’t major in finance at college. You and I both went through college. My recollection is that you majored in psychology. I definitely know my major was English literature, but we’ve always connected at a humanities level on some of these stocks. Isn’t that fun that you’re there reading about neurotransmitter that Masimo’s making that could help combat opioid? Did you ever expect in college that we would be having a conversation like this?
Maria Gallagher: I absolutely didn’t. I do think it’s fun when I start reading some of the more science-heavy companies and I remember stuff from my bio classes in college, and I remember things and like, oh yes, I did study this. This is useful.
David Gardner: Love it. I think Maria and I are living proof that if you want to learn something, you really can. We can be learning machines as people. The internet has enabled that wildly. I really do think that so many of us I bet you’re not in your head right now, dear listener, wherever you are. We have an opportunity to learn almost anything we’d like about almost anything. To be able to say that in human history in some ways for the first time really since the internet showed up, gives me goose pimples a little bit. I think about all that’s done for me. I hope you, too, as an investor, the opportunity to learn new things, to see what might be indistinguishable from magic. To look around for the tailwinds and actually be able to hold your thumb up and maybe catch a few of them. Because you’ve found out about it, because you cared, you were interested in the stock market. You may not have majored in it, but you were interested in business and in learning and in technology. Those are big themes that we’ve traced out for you this week. Well Maria, thank you very much for joining me. Before I let you go, I led off with Sanmeet and Yasser, I just forgot about it. I meant to ask you right up top, has something funny happened to you recently? I want to make sure I ask you that before we conclude.
Maria Gallagher: I don’t think that anything super funny has happened to me recently. But I will say that something very fun has happened which is I live in New York as a lot of people know and there are lots of things coming back and lots of community gatherings. I recently went to an ABBA cover band outside Interpark and everyone started dancing to “Gimme, Gimme.” It was the most fun I’ve ever had in my life, so I want to share that here.
David Gardner: The cover band, do they go by a name? Do they advertise themselves, or are they just an ABBA cover band?
Maria Gallagher: They’re an ABBA cover band. They had four costume changes and were the greatest thing I that I’ve ever seen in my life.
David Gardner: I know you have a lot of New York in you, did you ever get to see Mamma Mia on Broadway?
Maria Gallagher: I didn’t, no.
David Gardner: You’ll have to. Because I’m pretty sure it’s going to be playing for a long time, but that’s great. Even if it’s not funny, it’s fun, and that counts on this podcast. Thank you so much Maria. Have a great week.
Maria Gallagher: Thank you so much for having me. This is great.
David Gardner: Well, it’s time for a final accounting for, wait except before I get to the numbers, I see my producer Rick holding up his hand it’s time for a newsflash?
Rick Engdahl: I don’t know how newsworthy it is, but I wanted to make sure that Maria knew that ABBA is back together after 40 years with new music, a new album and a concert that, Yasser mentions the tailwinds behind VR and AR. Well, ABBA is onboard with some virtual concert where they are creating ABBAtars using Lord of the Rings, Smeagol [laughs] technology. They’re wearing weird suits with little balls on them. I’m not sure what’s going on with it, but it looks pretty exciting.
David Gardner: It sounds amazing. ABBAtars, no less. Maria, did you in fact know that ABBA is back together?
Maria Gallagher: I did. I’m thrilled about it. Spotify knows how often I listen to ABBA. Spotify emailed me to let me know that Jonas Brothers were playing in concert near me, and ABBA is back together. Thank you, Rick. Thank you Spotify, for getting who I am as person.
David Gardner: Wow. We’ll take it all in all these five stocks over the course of the three years, closed last weekend up 157.4%. That is outstanding performance against the market average of 56.2%. Meaning, this is always nice when it happens this way. That this five-stock sampler average beating the market by 101.2%. I love it when we get the triple-digit wins over the market. Wow, considering that one of the stocks on its own was down 71% [laughs], it reminds us of the importance of diversification and not overloading on any one stock fair starting line, my fellow Fools. A fair starting line got us a huge win as we send, five. That’s what 5 good stocks off to what we’re now going to call Foolhalla. That’s right. As I mentioned at the top of the show, we’ve done 35 stock samplers historically. This is the 15th to go off to what I used to say was pasture. To go off to pasture to say goodbye and leave right off into the sunset. Except that when you start creating this much magic and these many wins, I think it’s something bigger than just a pasture or a sunset. I think it’s like Valhalla. Whether or not you still believe in the Norse gods. I think few people do still believe in the Norse gods. You can still be with me here in our collective belief, not just in Valhalla, but in Foolhalla. For the first time, we’re officially sending a five-stock sampler with the 14 trailing behind it, some of which outperformed it off to Foolhalla. I have asked my talented producer Rick, by the way, my daughter Kate, who listens to this podcast almost every week said, “Dad, you realize whenever you mentioned Rick, you always say my producer, Rick Engdahl. You never just say, Rick.” I thought that’s funny. You’re right. Do you have anybody who whenever they mentioned a friend of theirs, they always use their full name every time. It’s a little odd. My daughter said to me. My producer, Rick, has specially chosen this Foolhalla music to send this sampler along with the 14 others off to the heavens with. I’ll just foreshadow that the 15 more to come as we review them in the following three years, if you enjoy this exciting theme music, you’re going to get to hear it over and over again as the review-a-paloozas stroll by as the months and the years while away.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.