In this segment of the Motley Fool Money podcast, host Chris Hill asks Million Dollar Portfolio's Jason Moser and Matt Argersinger, and Hidden Gems Canada's David Kretzmann about the companies they're finding most intriguing this week and why. Their picks this time around: leading toy company Hasbro (NASDAQ: HAS), social media player Snap Inc. (NYSE: SNAP), and an asset class (not an individual stock) -- Argersinger is predicting good things for real estate investment trusts (REITs), and sees the Vanguard REIT ETF as an easy way to play that whole segment.
A full transcript follows the video.
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This video was recorded on Feb. 2 2018.
Chris Hill: Let's get to the stocks on our radar. Our man behind the glass, Steve Broido, will hit you with a question. David Kretzmann, you're up first. What are you looking at this week?
David Kretzmann: Speaking of possible stocks for kids, a stock on my radar is Hasbro, ticker HAS. A company with a lot of dominant toy brands and characters that we're all familiar with. They also have licensing deals with companies like Disney, with the princesses and Marvel and Star Wars, all these different properties. Mattel just recently reported another so-so quarter. That company has been in a steady decline the past few years. Hasbro, to its credit, has really taken advantage and is clearly the dominant player in the American market, certainly. They're just a slow, steady, reliable business. Free cash flow continues to tick up over time. The stock is trading at a reasonable 20X trailing earnings valuation. 2.4% dividend yield. They've very reliable raising that dividend over time. So, I think there's a lot to like here.
Hill: Steve, question about Hasbro?
Steve Broido: What percentage of their business is digital, in apps and games and things like that?
Kretzmann: I don't know off the top of my head. I haven't looked at the latest quarter. But ballpark, it's between 15 to 20%. With some of these brands, they'll have some digital games, they have the movies. But altogether, I think that 15-20% number is what comes from digital.
Hill: Jason Moser, what are you looking at this week?
Jason Moser: This week in stocks I would avoid, I'm taking a look at Snap, ticker is SNAP. Earnings are coming out Tuesday, or lack thereof, rather. I have a really hard time understanding why the market is still paying up so much money for this company, as it seems like more red flags come up. It seems like to me, if anything, the platform is becoming a little bit less relevant, and I think you can see that from the move to attempt to share content across other social platforms. It seems like, from the initial commentary, that this redesign that they put a lot of work into is not being received very well by users. I just really have a hard time understanding why this stock doesn't get cut in half even from today's levels.
Hill: Steve, question about Snap?
Broido: We talked about your kids earlier. Are they on Snapchat and turning themselves into little animals or whatever you do there?
Moser: You know, I can proudly say that neither of our two daughters is on Snapchat, and that's because we won't let them on Snapchat. [laughs]
Hill: Matty, what are you looking at this week?
Matt Argersinger: A few times on the show recently, I've talked about real estate investment trusts, REITs. If you look at REITs, they really underperformed the market over the last 18 months. It has a lot to do with the rise in bond yields that we've seen, which act as competition to REITs. But if you go back over the last 40 years, and I'm actually going to be sharing a lot of this data with some of our members in San Francisco next week, but, REITs have generally outperformed the market with less volatility. So, rather than throwing out an individual stock that I like, I'll just say, if you want to bet on REITs, maybe a rebound here, I would look at the Vanguard REIT ETF, the ticker is VNQ. Extremely low-cost fund, as all Vanguard funds are, and it yields over 4%. A great, conservative way to play REITs.
Broido: Hypothetical: if electric cars take off in, let's say, 20 years, and people don't have to worry about traffic, they can live further out, do REITs get hurt by that? Or helped?
Argersinger: Tricky. It depends on what kind of REIT you're talking about. Maybe multi-family apartment REITs would get hurt because, yeah, there would be less desire to live in closed-in urban centers. But, I'd say overall, REITs should do just fine.
Hill: Steve, three very different stocks. You got one you want to add to your watchlist?
Broido: I think I'm going with REITs.
Hill: Really? Jason didn't tempt you with his endorsement of Snap?
Broido: Not so much.
Moser: How grown up of you, Steve.
David Kretzmann owns shares of Hasbro and Walt Disney. Jason Moser owns shares of Hasbro and Walt Disney. Matthew Argersinger owns shares of Walt Disney. Steve Broido owns shares of Walt Disney. The Motley Fool owns shares of and recommends Hasbro and Walt Disney. The Motley Fool has a disclosure policy.
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