Investing Through Impending Recessions: A Guide

On this episode of Motley Fool Money, four Foolish analysts look at the biggest news on Wall Street, including the broader market itself. It's getting ominous out here, but Jason Moser's "three Ps" of investing can help keep you calm. Toll Brothers' (NYSE: TOL) quarterly profits rise over 60% and the market yawns. Pizza Hut continues to struggle at Yum! Brands (NYSE: YUM). RH (NYSE: RH) really seems to have turned its luck around, and its loyalty program is doing bafflingly well. Amazon's (NASDAQ: AMZN) machines go rogue, injuring dozens of workers. Altria (NYSE: MO) makes a big cannabis bet. And, as always, the analysts share some stocks on their radars.

Plus, Chris Hill interviews Megan Brinsfield from Motley Fool Wealth Management for some year-end finance tips, including getting the most out of your 2018 deductions, avoiding huge IRA penalties, giving stocks without killing a student's financial aid package, and more.

A full transcript follows the video.

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This video was recorded on Dec. 7, 2018.

Chris Hill: It's the Motley Fool Money radio show. I'm Chris Hill. Joining me in studio this week, senior analysts Jason Moser, Matt Argersinger and Ron Gross. Good to see you as always, gentlemen.

We've got the latest headlines from Wall Street. We will dip into the Fool mailbag. And, as always, we'll give you an inside look at the stocks on our radar. But we begin with the market in general. Another week of wild swings. Jason, that's including the fact that the market was closed on Wednesday in honor of former President Bush's funeral. When people say that they don't have the stomach for investing, it's weeks like this that just don't help.

Jason Moser: I guess. But I would flip the coin there and say that these are the kinds of weeks they can really help you grow as an investor and become even more emotionally fit to handle future episodes like these. They're coming, one way or another. The longer you invest, the more you have to endure. Plenty of headlines out there. It's probably not even worth trying to pinpoint just one that's really the cause. Tariff talk, yield curve, talk, interest rates, unpredictability of what's going to come out of the White House today, tomorrow, next week.

Matt Argersinger: Every hour.

Moser: Probably all contributing to this to a degree. We're starting to hear the r-word being kicked around a little bit. Recession is the r-word that I'm talking about there. We do pay attention that stuff, but it's also worth noting that we like to invest with that glass-half-full philosophy here, take the longer view, because the numbers bear it out. It does work over time. With that said, I think there's enough reason here to start looking at the future and wonder if we aren't going to be stepping into a little bit more of a difficult time.

Ron Gross: Yeah, this is why it's crazy, and you have to ignore some of this macro stuff. Some days, the market loves that the economy is slowing, because it will have the Fed take their foot off the tightening gas. Other days, it's not good, because we're headed to a recession and the market sells off. And you have no idea which day tomorrow is going to be, a good day or a bad day. Invest in good companies, hold them for the long-term.

Argersinger: Right. I don't know when this is going to end and how low the market's going to go, but I know one thing -- I bought more stocks personally in the last two months than I have in the prior two years. I'll leave it at that.

Moser: I'm with him. I've clicked the buy button a few times myself. It's worth noting, in this environment, you may be scared to buy. I think it's OK to buy, but I like to focus on what I call the three P's. Ron, you're going to love this.

Gross: [laughs] I'm clicking my pen.

Moser: Patience, Price, and Predictability. We always talk about how you need to be patient as investors. That also chimes into making sure you get a decent price, a fair price. Predictability is, invest in those businesses that offer some pretty predictable business models, pretty predictable revenue streams. Things like payment companies, or when you go to get your Dunkin' coffee every morning, or when I pour that hot cup of Starbucks coffee at my house every day. That's what I mean by predictability. You focus on those three P's, I think you find yourself holding a lot of really good businesses in your portfolio.

Gross: Makes good sense. I, too, have committed capital to the markets over the last few weeks. Happy to have done so. I've also put money into index funds, both the S&P 500 and the Russell 2000. Don't be afraid to participate in the market as a whole. Nothing wrong with that.

Hill: I love how formal you are. "I've committed capital to the market," as opposed to these two guys, "I clicked the buy button."

Gross: [laughs] Sometimes I revert back to Wall Street mode.

Hill: Toll Brothers is the largest luxury home builder in America. Fourth quarter profits rose more than 60% but shares of Toll Brothers were basically flat this week. Matt, what's going on here?

Argersinger: This was, by all accounts, in my view, a good report. You mentioned the profits. Deliveries and backlog, which are also key metrics, were also at the highest level since the housing crash. But, of course, it's all about expectations going forward. They gave weaker guidance for the current quarter. CEO Douglas Yearley called out rising interest rates. That's reasonable. He also talked about, though, the fact that there's "well publicized reports of a housing slowdown affecting buyer sentiment." I think that's a little odd, for the CEO to call out the media. "Well, the media is talking about a housing slowdown, therefore people aren't buying houses."

Gross: Fake news.

Argersinger: I'm not sure I buy it. If you look at, for example, the data from the U.S. Census, new home sales have declined for 11 straight months. So, I'm not surprised the media is reporting that there may be a housing slowdown.

But if you step back for a moment away from Toll, it's been a terrible year for the homebuilders. A terrible time. Rising interest rates are probably to blame most of all, and affordability. The S&P Homebuilding Index is down more than 30% this year. That's a stark number. It's been a volatile year, I don't think many industries have fared worse than homebuilders. So, I'm starting to get a little interested in the industry. Stay tuned for radar stocks.

Hill: We're just across the river from Washington D.C. Many a politician has done well blaming the media, so why not CEOs, too?

Good week for RH Holdings, the company formerly known as Restoration Hardware. Third quarter profits came in strong. The company raised guidance. Shares of RH up more than 20% this week, Ron.

Gross: Holy cannoli is this one we all missed. Can we agree, we all missed it?

Moser: Absolutely, all four of us got this one wrong.

Gross: The stock is up 64% this year, 160% over the last five years. Kudos to them, really reinventing themselves by launching a subscription-based membership model, reducing inventory, closing distribution centers, building new high-end stores. It's all really paid off for them. Revenue this quarter up 7.4%. 4% increase in comp store sales. The company bought back a ton of stock when it was appropriate to do so. They just increased their guidance, introduced fiscal 2019 guidance which indicates additional growth coming down the pike. The stock still isn't that cheap at 17X forward earnings. Great job by RH.

Hill: Of all the information you just shared, I want to focus on one thing, and that is the loyalty program that they started back in 2016. Not only were the four of us wrong about this company, we were wrong about that. They sell high-end, expensive furniture at Restoration Hardware, and all four of us looked at that and said, "Wait, you're doing what?" We understand the loyalty program for the daily purchase, things like coffee and that sort of thing. But a loyalty program for high-end furniture?

Gross: In hindsight, we were wrong. Even in foresight, I would still bet against it. It doesn't seem to make great sense! Not every company can institute a loyalty program and think that is the cure-all. In this particular case, they were right, we were wrong.

Moser: Given what we know today, I just can't say that I'd still put this one at the top of the list. I just can't do it.

Argersinger: I like what you said before the show about how they've turned the retail concept into more of a showcase. They relied on their back channel online model. I wonder if they're ahead of the game here. Is this the future of retail, and RH is establishing that?

Hill: Yum! Brands held an investor day this week. The parent company of KFC, Pizza Hut, and Taco Bell expects sales to be higher in 2019. But, Pizza Hut president Artie Starrs made headlines when he said that Pizza Hut has a lot of work to do on its brand. Jason, I don't think any of us disagree with that comment.

Moser: Nope. I think we're all in agreement that they're missing the boat. You think back to the day when a personal pan pizza was so revolutionary. It changed the game for so many of us. Now, they're just getting lapped by concepts like Domino's and Papa John's.

I think the biggest challenge Pizza Hut has faced to date is revolving around the customer experience in a mobile world, alongside an inconsistent delivery experience. I mentioned Domino's and Papa John's. They're the ones that just keep investing in that experience and have done so well with it.

In the recent analyst day, on the transcript there, management referred to the fact that they're trying to make this pivot from being that 100% dine-in experience that it used to be, into being the dine-in experience and delivery experience. And they're having trouble making that work. One of the things they're doing, their delivery provider, QuikOrder, that's the e-commerce engine that backs their delivery mobile experience, they've acquired that business. QuikOrder is going to be rolled into the business. They feel like having that internal control will give them the opportunity to build out a more robust delivery experience.

Maybe that works out for them. It'd better. Historically, Pizza Hut does account for about 20% of Yum's operating income. It is significant. So, they've got a lot of work to do. It really does matter.

Hill: You look at the opportunity that they have right now with Papa John's struggling the way it is, with the new NFL partnership that Pizza Hut has. We've seen this before, where an executive -- take Patrick Doyle at Domino's. Was it 10 years ago where he came out and said, "Our pizza's not very good. We're going to fix that." That was a great turning point, and that was an opportunity for investors to get in. I'm wondering if this might also be an inflection point. It seems like every quarter, the story for Yum! Brands is the same, which is essentially, Taco Bell and KFC are doing well; Pizza Hut is struggling. If Pizza Hut actually starts to turn it around, that becomes a much more compelling business to own.

Moser: It's a consistent product. When you compare the three concepts, they're all basically the same. They're not exceptional pizza, but it's pizza nonetheless and it's easy to get. It's just, Pizza Hut has been tougher to get. Trimming down the menu, making a little bit more sense of it, building out that mobile experience, making it easier to order, and coming up with a consistent delivery experience, they have a lot of opportunity there. There should be better days ahead.

Hill: Shares of Vail Resorts (NYSE: MTN) down 15% on Friday after the resort operator lost more money in the first quarter than Wall Street was expecting. Matty, ski season cannot come soon enough for Vail.

Argersinger: That's for sure, Chris. Seasonally, this is Vail's slowest quarter, as you can imagine. The ski resorts in North America are still closed. Kids are back at school, so they're not doing summer activities at the resorts. So, you expected them to report a loss, but this was a much wider loss than expected. The CEO called out acquisition-related expenses and some offseason operating losses at some of the newer resorts. Vail's been in a pretty big acquisition mode over the last few years. They're actually always in that mode.

I'd say on the positive side, you had season pass sales up 21%. At the unit level, that's the most promising thing. That talks about the demand for skiing at the resorts, which obviously feeds into all the other hospitality revenue streams that they offer. CEO Robert Katz talked about the fact that a lot of the early season numbers for a lot of the resorts are doing better.

I've owned this for a long time. I'm amazed it's down 15% on Friday. It's really rare to get any kind of sell off in this company. It's down about 25% from its recent high. The dividend is almost 2.5%. This is one of those everlasting companies, to me, that you want to keep an eye on.

Hill: When it comes to the season passes, obviously there are discounts or special deals that they'll throw it every now and then. I'm also assuming that that's the sort of revenue generator that they can incrementally tick up year after year.

Argersinger: That's right, tremendous pricing power, always heavy demand. And as they expand the number of resorts underneath the umbrella, the Epic Pass, which is their big season pass, that just gets more and more compelling.

Hill: Third quarter results for Ulta Beauty (NASDAQ: ULTA) look good but shares down 10% on Friday after the cosmetics retailer lowered guidance for the holiday quarter.

Gross: Yeah, holiday guidance is what folks are most focused on now in the retail space. And that came in a little light. But, boy oh boy, another one that I did not participate in, up 190% over the last five years. I didn't believe in the growth story here, but it keeps on ticking. Sales up 16% last quarter, with comp sells up 7.8%. They continue to put up these incredible growth numbers. That's driven by 5.3% transaction growth, 2.5% growth in the average ticket, both doing the double whammy leading to great comp-store sales. E-commerce up 42.5%. Both in-store and out-store, they're getting it done.

It's just a great story. They were helped by the tax cut, as everyone was. EPS was up 28% as a result. Buying back stock consistently, opening new stores consistently, about 40 so far this year. They're up to about 1,160 so far, and there really isn't an end in sight.

Hill: We were talking during the break, this is another company that changed its name in the past few years. It used to be Ulta Beauty and Salon. Have they started to de-emphasize the salon part of the business and focus more on the front-of-store retail?

Gross: Front-of-store retail, and obviously online. In this day and age, you have to focus on that. But the salons are still a part of it, still putting up comp-store, same-store salon sales that are positive, definitely contributing to profitability, and definitely part of the ongoing rollout. But, as you see in the name, perhaps not as much emphasis.

Hill: Altria Group was built on tobacco. This week, Altria announced it is buying a big stake in Cronos, a cannabis producer. This seems like a logical move, Jason. We talked about this a few weeks ago, when this was rumored. Of all the big companies that we hear -- Coca-Cola, Pepsi -- kicking the tires on potentially investing in tobacco, Altria was the one that we all looked at and said, "That makes the most sense."

Moser: Yeah, you're making the move from tabaccy to wacky tabaccy, right? I think it's something we're going to see more of in the coming quarters and years. Cronos is one of those moonshots for Altria. Altria, obviously a very big company with plenty in the way of capital resources.

When you look at these marijuana companies, these producers, these medical marijuana companies, they're trying to enter a space where the regulatory barriers, particularly here domestically, are still very high. They will come down over time, there's no question there. We're already seeing that trend.

The other big hurdle is one of capital. Getting the capital to be able to grow these businesses is not always so easy. You see these big players come in and offer this really attractive carrot, it's tough to pass up. We saw Constellation taking partnership in Canopy. My guess is that Tilray is probably next on this list. I think it at least helps explain, somewhat, those crazy valuations in the market today. It's a way for them to gain entry in this space, start building out offerings, distribution for the inevitable regulatory changes that are coming.

Hill: We've seen this play out in the beverage industry, whether it's craft beer companies starting up and eventually being acquired, or, locally here in the D.C. area, Honest Tea, Coca-Cola taking a stake years ago in Honest Tea and acquiring it. It makes sense that some of these smaller start-up cannabis companies would be very open to, if not being bought outright, this kind of stake.

Argersinger: Well, it definitely makes sense for them. I just look at the Altrias and Constellations and Cokes of the world who have invested in this, and I'm thinking to myself, "Why not just wait to see how this plays out? Don't commit billions of dollars to what should be a fairly commoditized business in the very near future, no matter the size of the market." I just don't think there's going to be a lot of pricing power. I just think they're going after a little hype to try to diversify their revenue stream.

Moser: To that point, you're talking about $1.8 billion that Altria is sinking in this. And it's not much bigger than that. Granted, these are going to be newly issued shares, so it's going to expand that pool. But that doesn't necessarily mean the share price is going to follow. The market will dictate that. And when you consider the fact that Cronos makes like $10 million a year in revenue, none of it makes any sense.

Clearly, there are some great expectations here. Whether it's something that you smoke or eat or drink, we're going to see more of this as time goes on. It's just going to take a little while to play out. But, I mean, it's not like they're trying to build self-driving cars, either. That's going to take a little bit longer.

Hill: What, you want Altria to hike their dividend yet again? Come on, roll the dice!

Amazon has grown its warehouse operations over the years in part by using tens of thousands of robots. This week, one of those robots went rogue and sent 24 Amazon employees to the hospital when the robot punctured a pressurized can of bear repellent, causing the pepper spray to spread throughout the warehouse. Ron --

Gross: [laughs] Ron? What am I going to say about that?!

Hill: -- this is how it begins.

Gross: The rise?

Hill: The rise of the machines. You can maybe talk me into the fact that this was -- and I'm using air quotes -- "an accident." But if we see anything like this happen again -- once is an accident. Two times, that's a trend, Ron.

Gross: It's interesting, even Jeff Bezos himself has been warning about the rise of artificial intelligence and how dangerous it can be to us, and perhaps be the end of us one day. Is this the beginning? Will we look back on this?

Argersinger: We have to remember, these robots are all programmable, by humans, I assume. Even without the artificial intelligence, bad actors can get in there, reprogram these things, and do some very vicious things.

Hill: You think one of the programmers in the New Jersey warehouse really had it out for some people on the floor?

Argersinger: You know, he could have been on the out.

Moser: Echo is going to go rogue. "Alexa, turn on the lights." "No." "Alexa, turn off the oven." "Uh-uh."

Hill: [laughs] Let's go to our man behind the glass, Dan Boyd. Dan, what was your reaction when you saw the news of the robot going rogue?

Dan Boyd: Pure fear. It's the nightmare scenario. It's the worst thing that could happen.

Hill: And it's only the beginning.

Gross: Especially if you're a bear.

Hill: Alright, we'll see you later in the show, guys. Up next, Megan Brinsfield with a few year-end financial planning tips. Stay right here, you're listening to Motley Fool Money.

Welcome back to Motley Fool Money. I'm Chris Hill. Megan Brinsfield is a certified financial planner and the director of financial planning at Motley Fool Wealth Management. She joins me now in Studio Five. Thanks for being here!

Megan Brinsfield: Thank you for having me! I'm excited.

Hill: I wanted to talk to you about year-end tips around taxes. I know you're one of those people who genuinely loves the world of taxes.

Brinsfield: I do. Did you see my eyes light up?

Hill: I know! That's how I knew you were going to be like, "Yes! If that's what we're going to talk about, I'm all in." It always makes me smile in an odd way when I see articles online that are usually coming out literally the last week of the year, saying, "Hey, here's some last-minute tax tips." I always think, "Who wants to deal with that in the last couple of days of the year?" So, let's get this in now while people have a few weeks before the holiday. What are a couple of things that people can do in the next few weeks to help out with taxes next year?

Brinsfield: The general idea in taxes is that you want to accelerate deductions and defer income. When we talk about deductions, it could be anything like traditional IRA contributions that you make sure you get in this year, charitable donations, or even medical expenses. If you think you'll be able to deduct your medical expenses -- and remember, there is a 7.5% of your income hurdle to get over, but it's been a big medical year for you, any additional costs that you can fit into this year are going to be deductible for you. If that means you move up a major medical visit, like LASIK surgery, or getting glasses, or other things that might be big items for you, fill your prescriptions, get that three-month prescription filled ahead of time, just so you can deduct those things. I'm sure you're getting lots of mail right now from all sorts of charities that are asking you for donations. If you do write a check, even if it's not cashed until 2019, you can still deduct it on your 2018 taxes.

Hill: In terms of new tax laws that may have been enacted this year, is there anything that people need to know? Anything new or different or curious?

Brinsfield: The biggest difference between last year and this year is related to itemized deductions. There are a lot fewer people who are going to be able to itemize because of that limitation on state and local tax deductions. Everything from your personal property tax, here in Virginia you have a car tax, real estate taxes and state income tax payments, those are all in the aggregate limited to $10,000. If you're a high earner living in a high-income state, you're likely to be affected by this and you may even be taking the standard deduction this year instead of the itemized.

Hill: Your day job as a financial planner, what is the most common question that you and your team get at Motley Fool Wealth Management.

Brinsfield: Unsurprisingly, people just want to know if they have enough to retire. The first question that I ask in return is, "How much are you spending?" And most people don't know the answer to that question. I think that's an important starting point. It's really the pivot around which all financial planning rests: how much money do you need to maintain your lifestyle?

Hill: I guess if you're thrifty, then you're probably a lot further along than the average person.

Brinsfield: Right. What's surprising to a lot of people is that it's not about how much you earn necessarily. It's about how much you're saving and the delta between what you need and what you have are.

Hill: Obviously, at The Motley Fool, we focus very heavily on stocks. I imagine that at least some of the questions that you and your team get are around investments in a given person's portfolio. That's one of those things that's kind of hard to overcome on gut level, if you think about sunk costs and individual companies. How do people look at their investment portfolio with the proverbial fresh set of eyes? Are there any guidelines that you and the team provide to help people do that?

Brinsfield: There are a few ways you can do that. The first is, if you do have an objective third party that can take a look at your portfolio, that's something that will help evaluate stocks that you may have an emotional reaction to, that someone who doesn't own the stock personally may be more open to making changes to that. If you do have an advisor, checking in with them this time of year is good.

The other thing to do is to find an online risk assessment tool, take that quiz, and compare the results to your actual portfolio. A lot of times, we're just thinking year-to-year changes rather than literally starting anew and comparing that to what you have.

Hill: What is your experience with the people that you work with, the clients that you have, in terms of their tolerance for risk? Are people more risk averse than they think they are? Or are they actually able to tolerate more risk than they initially think?

Brinsfield: I think there's a big misconception that age equals risk in some way. I'll listen to people who say, "Well, I'm in my 70s, so I have to be conservative." That's not necessarily the case. In the traditional trajectory, yes, as you get older, you need to rely on that money more. But what I tend to see is folks that have been diligent savers, but have enough income from Social Security, pensions, rental, etc., to cover their ongoing expenses, so they're not relying on their portfolios in the same way that someone is that doesn't have all those other income streams. So, it is really more personal than just saying, "Well, I'm older, I need to have more conservative allocation."

Hill: Our email address is We got a great question from a young listener named Ellis Laura. He writes, "With Christmas right around the corner, I have a few questions on gifting stocks." This is a young guy who's looking to give stocks to his younger sisters. He writes, "My hope is that they will see the benefits of investing and eventually start adding money on their own."

I won't go into all the details of his email, but he's basically asking, what's the most efficient way to gift stocks to young people without impacting their ability to obtain financial aid for college? And, by the way, I just love that he's asking this question at all. It's amazing that he has this kind of foresight as a young man himself, and that he's trying to instill the benefits of investing to his younger sisters. It's really great.

Brinsfield: It's so admirable. I took that view as well when I read the email. I thought, "Oh, I wish I was this thoughtful. Or had younger sisters. One of the two."

Really, the first thing to consider with financial aid is understanding these high-level formulas that take place in terms of what the government calls your expected family contribution. They'll gather information about your assets and income, both for parents and the child that's going to be attending school. The idea is that a child's assets can contribute a lot more than the parent's assets. It's almost 4X as much that the child's assets are expected to contribute to college. So, in general, it's frowned upon to give stocks to kids who are going to college, because they're going to be expected to use that asset in order to pay.

So, one thing that you might consider in order to avoid having that impact on financial aid is not necessarily gifting the stock to them outright, but perhaps setting up a separate account in your own name that you collaborate with the younger sisters on and then transfer ownership to them later, after they're out of the financial aid system, which would be as early as their senior year in college.

Another consideration is, if they are working, setting up a retirement account, because retirement accounts do not count toward that expected family contribution calculation. That's also an option.

Hill: Last question for you. It seems like anytime I talk to you, you seem really busy. I'm just curious -- we were talking right before we started taping, it's a busy time because there's a lot of year-end stuff. You were telling me about this penalty around IRAs that I had no idea was so punitive. If you're 70.5 and not taking money out, you're going to be punished in a big way, right?

Brinsfield: Big trouble, yeah. It's RMD season.

Hill: If you're like me and you go, "Wait, what is RMD season?" It stands for ...

Brinsfield: Required minimum distributions. That's the IRS' way of making sure that they get to tax your money. All these years that you've been socking away on a pre-tax basis, they want to make sure they can get their paws on it at some point. Once you turn 70.5, you have to start taking a portion of money out each year. In December, it's that time for procrastinators to get their required minimum distributions in. If you don't do it in a given calendar year, the penalty is 50% of what you should have taken. So, it's really important to get that done. There are waivers, but you don't want to be asking for forgiveness every year. You want to just make sure it gets done quickly.

Hill: You're dealing with stuff like that in the month of December. Obviously, the calendar is going to turn, and then people are going to start thinking about their taxes. When do you get to relax? When do you get to say, "I'm going to go stick my toes in the sand and be on a beach somewhere for a while?"

Brinsfield: That's a good question. I'll have to get back to you.

Hill: [laughs] If you want to learn more from Megan Brinsfield and her team, you can go to Megan Brinsfield, thanks for being here!

Brinsfield: Thanks, Chris!

Hill: Coming up, we'll give you an inside look at the stocks on our radar. You're listening to Motley Fool Money.

Our email address is Write us, won't you?

Gross: Please!

Hill: We're lonely. Email from Nick Burgess in Atlanta, Georgia. "Thanks for the amazing content and helping me understand the stock market better, one day at a time. I'm 26 years old and a beginning investor. A lot of brokerage services like Stash and Acorns advertise that you can start investing with as little as $5 since the service utilizes fractional shares. As someone with not a ton of start-up capital, are fractional shares a good idea?" What on earth are fractional shares, and how do they work? Ron?

Gross: Well, kudos for starting on your investing journey at 26 years old. Well done. Fractional shares are simply, some brokers will allow you to buy less than one full share of a company stock. Let's use Amazon as an example. Maybe you can't afford $1,670 for one share of Amazon. Some brokers will allow you to buy a fraction of that, thus allowing you to become a part owner of Amazon, but perhaps for not a full share. It's actually a great thing. Those listeners who are familiar with dividend reinvestment plans or DRIP plans will be familiar with the concept of fractional ownership. It's a great thing.

Some brokers do charge commissions or fees, so be careful that whatever transaction costs you're paying are not too big a percent of the amount of capital you are committing to that particular investment.

Argersinger: Nick's question also makes me wonder if we've seen the end of share splits. We've seen a decline in the number of companies wanting to do share splits. In the past, it was done for various reasons, but one of the reasons was to enable retail investors to buy shares. Now that you can do fractional shares, there really isn't a need for a lot of companies to split their stock.

Hill: I'm curious, Ron, when it comes to dividend-paying stocks, are you someone who prefers to get the cash? There are some where you can automatically reinvest those dividends, get more shares.

Gross: I have two answers to this. Personally, I reinvest my dividends so I don't have to think about it. Professionally, when I've managed money, I would always take them in cash, so I can then accumulate the cash and redeploy it into the best opportunities I saw at any particular time.

Hill: Two things before we get to the stocks on our radar. First, we're hiring here at The Motley Fool, not just here in Alexandria, but also in our office in Colorado. We are looking for developers, investors, content strategists, performance marketing manager, which as I understand is very hot job these days.

Gross: It sounds good.

Hill: You can check out all of our jobs by going to

Second, if you have an Amazon Echo or a Google Home Assistant, you can listen to all of The Motley Fool's podcasts over your device. But, Jason, did you know you can also get The Motley Fool's daily news briefing? Just look for The Motley Fool on your Amazon Echo or Google Home app, click subscribe and you're good to go. Every day, seven days a week on your home assistant.

Moser: I did know that, Chris. Do you want to know why?

Hill: [laughs] Because you participate in that?

Moser: Not only that, but also use it. Whenever I get home and I'm in the kitchen cooking dinner, I tell my Echo to tell me what's in the news. Quite conveniently, she goes straight to our stock watch.

Argersinger: Just make sure to hide the bear repellent.

Gross: My kids used to think that was pretty cool. Now they're over it.

Moser: [laughs] Yeah, it doesn't last long.

Hill: The last thing before we get to the stocks on our radar, and our man behind the glass, Dan Boyd, is going to hit you with a question. Also behind the glass this week, shout-out to our special guests [Nick], [Ian Yi], and his son, Aiden, who are visiting us.

[all applaud]

Moser: Thanks for coming!

Hill: Appreciate it. Alright, Ron Gross, what are you looking at this week?

Gross: I've got Equinix (NASDAQ: EQIX), EQIX. They're an internet-focused real estate investment trust, a REIT, that operates 200 data centers, 52 metro areas, 24 countries, five continents. They're kind of the backbone of the internet. They're the hub that makes the internet flow and operate efficiently.

They've got a strong competitive advantage. It's very hard to replicate. They've got great strategic locations. They're going to certainly capitalize on the growing data consumption and the cloud outsourcing. As all our device counts go up, they'll benefit from that. Management is really strong, a very long track record of creating value.

The stock has a 2.4% yield. REITs are typically known for their yields. I like it both from a yield perspective as well as an appreciation one.

Hill: Before we go to Dan, I have a question of my own. This does not strike me as a Ron Gross type of business. How did you find this one?

Gross: It's a Total Income recommendation because of that 2.4% yield.

Hill: Alright, Dan Boyd, question about Equinix.

Boyd: Ron, last week, you brought a chemical manufacturer. Now, you're bringing me a data center real estate investor.

Gross: You're welcome.

Boyd: Could you please find more interesting stocks for me next time?

Gross: Give me a list of what you're interested in.

Boyd: Not that!

Gross: Alright, duly noted.

Hill: Jason Moser, what are you looking at this week?

Moser: I feel like the snoring sound effect would be appropriate for Ron's --

Hill: You know what, though? To Ron's point, if you like yields, this might be one.

Gross: If you like yields, kids ...

Moser: Who doesn't like yields? I'm going Apple (NASDAQ: AAPL), ticker AAPL. They make this thing called the iPhone, you've probably heard of it.

I was thinking about this, the holiday season is a great time of year. If you have kids and you want to get them into investing, Apple makes a great stock to get them started. It's something they probably understand, they've seen the phones, the devices everywhere. If you have someone in your life and you want to get them started investing, take a look at Apple. I think the shares actually represent a pretty good value right now.

There's a big headline out there that iPhones are starting to slow down. Be that as it may, this is still a massive company, and there's a younger user base that's coming up, and they will continue to use those iPhones and iPads. I think they will do very well pivoting toward Services as time goes on. We'll get some more clarity into the costs that go into the Services side of that business. Also, you can't discount what they're going to come out with in the future. They've got more resources than fill-in-the-blank. At the end of the day, this is Apple, one of the most important companies in the world. I think the pullback in the shares represents a good opportunity.

Hill: Dan, question about Apple.

Boyd: Jason, you mentioned a younger user base. I was curious to know if your children can expect any Apple products in their stockings this Christmas?

Moser: I can neither confirm nor deny this at this point, Dan, because --

Gross: They might be listening.

Moser: -- I don't think they listen, but there's a chance it could happen. I can't commit to anything right now.

Hill: I just like that your kids are using the Amazon Echo device in your home, but it's really just to try and get clues as to what's going to be under the tree on Christmas morning.

Moser: Oh, let me tell you, the make an announcement thing has caught fire in our house. Three floors, and we've got all sort of stuff going back and forth. They love it.

Hill: Matt Argersinger, what are you looking at this week?

Argersinger: We talked about the homebuilders earlier. They've been bludgeoned this year with rising interest rates and lower affordability, especially among new homeowners. NVR (NYSE: NVR), ticker NVR. It's actually a favorite of John Rotonti in our investing group here at The Fool. It's got a great management team, great track record, excellent returns on capital. It's the only publicly traded homebuilder, by the way, which remained profitable through the housing crash. Really impressive. If you'd like to bet on a rebound in the homebuilders, I'd start with NVR.

Hill: Dan, question about NVR.

Boyd: Matty, will I ever be able to afford a house in a place I want to live?

Argersinger: Absolutely not. That's no longer a possibility, Dan. I'm sorry.

Boyd: That's too bad.

Hill: I'm going to go on a limb and assume that Ron's stock is not one that Dan wants to add to his watchlist. So, Dan, between --

Gross: That's unfair.

Hill: You know what? You're right. It is unfair. Dan, three stocks. Equinix, Apple, NVR. Do you have one you would like to add to your watchlist?

Boyd: I hate to turn my back on my current champion, J-Mo, but I prefer NVR for Matty Argersinger today.

Hill: One last thing on Apple. Is it just me, or is there just a drumbeat of analysts on Wall Street who continually downgrade that stock?

Moser: Let me tell you, I will say, I just got the XR, the new iPhone, and I am underwhelmed. I went from a 6 to a XR, and I kind of miss the 6. The changes are so incremental now. They have to come up with something more special, I think.

Gross: Wall Street analysts are in the business of the next 12 months. Don't always focus on that if you're a longer-term investor.

Hill: Ron Gross, Jason Moser, Matt Argersinger, guys, thanks for being here. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Dan Boyd. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening! We'll see you next week.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Hill owns shares of Amazon and SBUX. Jason Moser owns shares of Amazon, Apple, and SBUX. Matthew Argersinger owns shares of Amazon, SBUX, and Vail Resorts and has the following options: long January 2020 $45 calls on SBUX. Ron Gross owns shares of Amazon, Apple, and SBUX. Megan Brinsfield is an employee of Motley Fool Wealth Management, a separate, sister company of The Motley Fool, LLC. The information provided is intended to be educational only, and should not be construed as individualized advice. For individualized advice, please consult a financial professional. The Motley Fool owns shares of and recommends Amazon, Apple, Equinix, and SBUX. The Motley Fool owns shares of NVR and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends STZ, DNKN, RH, Ulta Beauty, and Vail Resorts. The Motley Fool has a disclosure policy.