The 10X Disruption

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From cool global headquarters, this is Motley Fool Money. It's a Motley Fool Money Radio Show. I'm Chris Helen joining me in studio this week for Million Dollar Portfolio, Jason Moser and Matt Arguessinger and from Total Income, Ron Gross. Good to see you as always, gents.

Hey, hey, hey. We've got the latest headlines from Wall Street. We will dig into the disruption coming to the auto industry. And as always, we'll give you an inside look at the stocks on our radar.

But we begin with signs of life in the general retail sector. Walmart's first quarter profits came in higher than expected, as did targets overall. A better picture than we were talking about a week ago with Macy's calls, et cetera. Before we go, big picture, Mattie.

This is a good quarter from Walmart. I guess the headline there is the 63% increase in online sales, which was a big operation. I mean, they were doing, I want to say last year at this time they were doing single digits. And so they obviously ran that business pretty well.

I think you have to put it in perspective, though. Walmart doesn't break out e-commerce revenue as a percentage or even the actual number. But the according to e-marketer, their sales last year online were $14.4 billion. So if you expect that 2017 will be a great year, maybe they grow that business 50%, they'll get to over $20 billion.

Just to put that in context, though, Amazon's online sales stripping out web services international. Just North American online sales going to do about $100 billion this year. Yeah, Walmart's playing catch up. Yeah, actually, they're second, but it's a distant second.

And so when I balanced that against total revenue increase of 1.4%, comps that were up only 1.4%, it's going to take a lot for that business to really move the needle for Walmart. It's still very early. Around target sims for sales fell a little bit. But as the management said, it's a very choppy environment out there.

It's a choppy. I want analysts to call it less bad. You know what, given what we talked about in the last week's show, less bad is pretty darn good. As Matt said, digital channel sales, we saw an increase.

22%, it's a good number, up 22%, but still only 4.3% of total revenue continues to be a struggle. They're going to invest $7 billion over the next few years into redesigning stores and lowering some prices, opening 100 smaller locations. That's the thing that everyone's trying to do now in urban centers, college campus areas. They're trying to encourage shoppers to make bigger purchases, which is kind of their copy and what Amazon does with the pantry, where you can pay one price in fill a box with stuff and ship it to you at a flat fee.

They're trying to copy that a bit. So everything was okay. You have negative same store sales, but only slightly. So I guess that's fine.

Guidance was not terrible, so we'll call it somewhat encouraging. But they've got a lot of work to do and they acknowledged that much and said specifically that things are not where they want them to be. This week in adjectives, right? It was less bad, somewhat encouraging.

Okay. Well, Jason, to the point that Ron made last week where he said, look, you look at all these retailers and the fact that some of them are going to be going out of business at some point, but you look at Target, you look at Walmart. These are the two biggest bricks and mortar general retailers in the United States. And I feel like they're sort of sticking their claims saying, you know what, we're not going anywhere.

Sure. Yeah. I think I was over picking up dinner last night from Chipotle of all places. We were supporting the Chesapeake Bay Foundation.

And I saw a store as Radio Shack right by there going out of sale, entire stores on sale. I feel like, man, I feel like a day shot of who haven't we gone through that once before Target and Walmart, I think, are a bit different animals. And I do think there is a place in this world for them. Walmart, particularly, I mean, there is a physical footprint there that you can't discount and retail is ultimately about logistics.

And in today's world, I think it's becoming more so. I think for Walmart, the real opportunity, probably, on the investing side is for them to figure out a way to return more capital to shareholders. We're talking about this yesterday on Market Foolery. But I mean, when you look at the repurchases, for example, Walmart's were purchased, they brought down their share account about 8% of the past five years.

You compare that to Apple. Apple's brought their share account down more than 20%. Now, that is a tech company. And that's material.

So I think there's an opportunity there for Walmart and certainly also on the dividend side as well, the yields under 3% still. By the same token, I think based on what Maddie was saying there, it seems like they're going to continue investing in this e-commerce opportunity for some time to come, which is probably the right move. But again, I think from investing perspective, the bigger opportunity is to get a little bit better about returning capital to shareholders. Yeah, I can't help but think it's just a little too late for Walmart and Target and online.

But actually, I kind of hope they succeed because the one big risk for Amazon now, I mean, I think Amazon's going to the moon. But the one risk is that Amazon just gets too big, too influential. And some kind of regulatory antitrust action starts to kind of come ahead and rumble. But if Walmart has success online and Walmart's already so huge and already counts for much more of total retail sales in the US, that makes me think Amazon won't face any of those challenges.

And Amazon can continue to grow even if a Walmart and a Target have some share of total on that. Well, the ultimate benefit of all of this, right? Amazon performing so well is forcing everybody to up their game. And we're going to see some succeed there.

And we're going to see some go away. I think Walmart stands a chance of succeeding as good as anyone out there, if not more so, just because they've had so much success to date and they're so big already. Yeah, when you say upping the game for different retailers, that means different things. For some folks, it's shrinking the footprint and cutting costs to be profitable, but in less grandiose kind of way.

Target here, investing $7 billion to try to compete. There's a lot of risk in there. If you're throwing that amount of money to try to compete and you're wrong, look up a lot. Well, and on the flip side, you look at Walmart making that acquisition last year of JET.com for $3 billion in change.

And I think some people sort of raised an eyebrow at that price tag. But in the early innings here, it appears to be paying off. Well, again, I feel like they had to do it. And the thing that JET brought them was a lot of talent.

And so talent and resources, they didn't really have or knowledge power. So it's the right move. And sure enough, early on here, it seems to be paying off. From general retail to athletic retail, tough week for a couple of teams, after their latest quarterly reports, shares a footlocker down 15%, shares of Dick's Sporting Goods down 20%.

And Jason, I think back to when Sports Authority went out of business. And one of my thoughts at the time was, well, this will probably help the footlockers and Dick's Sporting Goods of the world. And apparently not. One would think, yeah, it does seem like that probably hasn't played out as well as the management teams of those two companies were hoping.

I mean, Dick's Sporting Goods, I mean, ComSport were positive but they were lower than expected. They are going to be slowing down the pace of opening new stores. And I mean, I think that's one of the real marks against this company is that those stores are just such big footprints, right? It cost a lot of money to get that real estate and to keep it open.

That means you got to gin up a lot of traffic and plainly that traffic isn't going there. Furthermore, what's really, really, I think, keeping them down here, e-commerce sales grew 11% for the quarter, but they made up 9.3% of total sales for the quarter. And that compares to 9.2% a year ago. So they're basically not gaining any share on the e-commerce front either.

A lot of problems there, consequently, you got shares not trading around 11 times full year estimates, which is significant. I mean, back in November of 2016, we were talking about this and shares were trading around 20 times as well. So obviously, expectations are very low for Dick's Sporting Goods. And it's funny because when you look at Dick's Sporting Goods compared to Footlocker, I think most people would probably think Dick's Sporting Goods is a better company footlocker.

So I far away, the more successful business, bigger footprint, bigger company, better revenue, better margins. And so for Footlocker, I think it's a lot of the same, but they're far more well established. And I think that's why the stock is still trading somewhere in the neighborhood of 20 times earnings today, 3300 stores versus a much smaller footprint for Dick's Sporting Goods. What about the Footlocker is really a mall-based retailer where Dick's sometimes next to the mall or in a strip mall, but not being affected by the tough times that malls are going through?

Well, possibly. But then also, you have to remember that that mall footprint or strip mall footprint, it's far less expensive, particularly today, given the traffic challenges. And you're still catching incremental traffic that's there for whatever reason. For more reasons to go to a mall, then there would be to go to one store, for example.

So I think that's where they're probably at least able to get some straight traffic, no matter what. What's also fascinating, the derivative of all this, of course, is that you see Nike hitting, I think, like three or four year low, under armor, of course, has struggled. And I wonder, this particular channel for those big athletic brands is really hurting right now. And if it doesn't bounce back, I mean, like under armor, which really depends on that channel, it's going to be struggling for a while.

Yeah, and when you look at Footlocker, Dick's Sporting Goods, he's like, a lot of their inventory is made up of Nike and under armor. So that's why we're seeing Nike and under armor sort of getting pulled back along with these drops. And Nike and under armor, those are companies that have to wear with all to build out very robust direct consumer operations. And that is ultimately going to, I think, keep them moving forward, whereas Dick's Footlocker companies, like they have got some serious challenges at it.

Home Depot's first quarter report demonstrated once again why Home Depot is the number one home improvement chain in America. Ryan Gross, profit, same-store sales, where would you like to begin? It's good stuff. It's nice to see a nice report coming out of a retailer.

And they are clearly bucking the trend as we have said week after week of retailers doing quite poorly. Continue to be held by low mortgage rates, solid housing market. That's really the big story here. Plus, the fact that it's not as easy to purchase a lot of this type of stuff through Amazon or online.

Although, their online sales are up 23%. So they're doing a good job there as well. But same-store sales up 5.5%, 16% pop in big ticket transactions, which is a big number, increase their guidance. It's not only trading 22 times really.

That's fine here for a company that's putting up numbers. Five years from now, if interest rates are different and the housing market is different, will that impact their business? Yes, it probably will. But that will ebb and flow for the life of this company.

And I still think it's just a solid operator. What's interesting to see is they perform so well here in the recent past. You look at the homeownership rate over the most recent decade. It's actually just kept on falling ever since really 2005.

It's straight down to far below where it was in even 1995 really. There's a great opportunity for Home Depot here as that homeownership rate starts to tick back up. I mean, that is the place to go, whether you own or rent, whether it's rain or shine. I mean, you just got to love these guys long gone.

Interestingly, Lowe's just announced they were investing $500 million to buy two companies that sell products to apartment building managers because they're trying to diversify away from the do-it-yourself-home owners because even though they do pretty well, Home Depot continues to just do a little bit better. Coming up, a breakup in the restaurant industry. Stay right here. You're listening to Motley Fool Money.

Welcome back to Motley Fool Money. For sale here in the studio, Jason Moser, Matt Argersinger and Ron Gross. You can catch Motley Fool Money every weekend on radio stations across America. Happy to welcome two new stations to our affiliate family, WASRAM1420 and FM97.1.

Lake Winnepasaki, New York. Hi, welcome. New England. Shares of Alibaba hit an all-time high this week, fourth quarter revenue for the Chinese e-commerce giant rose 60% and many that are also buying back some stock.

Yeah, 60% is a huge number when you think of the revenue base. We're talking about what this year is going to be a $25 billion revenue-based rally. We know how dominant they are and stocks are 40%. Earnings are not that we want to pay too much attention to them, but earnings were missed only because they're investing so much in cloud computing and particularly entertainment properties are trying to run bad with Baidu's I.G.

and Tencent right now is kind of be the YouTube of China. A good place to be investing. My thing with Alibaba, it's a 40% year-to-day. It's just it trades for 12 times sales.

It's a $300 billion company. It's just not too expensive. But I look at that compared to Amazon at three times sales and I say, well, is the risk really worth it? Even though the opportunity probably compared to Amazon is obviously so much larger.

How much attention should people pay to the cloud computing stuff? Because that got some headlines this week that Alibaba peers to be paying attention to what Amazon has done with web services and said, hey, maybe we could do that. Well, sure. I mean, you'd imagine they have the same kind of infrastructure that can do that kind of thing, but you know, there's a lot of in Chinese businesses in particular, there's a lot of sort of headline grabbing and saying, well, they're doing it.

We're going to be doing it and we can do it at a bigger scale because it's China. And it's like it's going to be a little more skeptical about those announcements. On Thursday, shares a Pandora spiked on reports of a potential deal with SiriusXM. This is not the first time SiriusXM has flirted with the idea of buying Pandora.

What do you think, Jason? Match made in heaven? Well, maybe I wouldn't quite go that far about the inventory. A match made somewhere.

I feel like a deal here can probably make sense from the perspective that Pandora does, I think, possess some brand equity through all of its shortcomings. And there've been a lot. I do think they possess some brand equity that could be meaningful to SiriusXM in the internet radio space as we start to see competition ramp up in a little consolidation of career. But I mean, I think Pandora needs this deal or a deal to happen far more than the other way around.

There's a lot of competition where they're going to be kind of a desperate seller at this point, which is great for the acquirer. They can more or less name their price. And I mean, I, whether it's $10 a share or $9 a share, I mean, who really knows? I mean, I think, uh, SiriusXM has to start thinking about life after Howard, right?

I mean, about three and a half years. He is responsible for a lot of the subscription growth, a lot of subscriber growth there. Now, Pandora probably isn't going to bring a lot of paid subs, but it does have a lot of free listeners and those listeners are okay being subjected to some advertising. And so Pandora can make some money on the ad side and it may just be a nice little addition.

You tuck that thing in a series. You can kind of mask those financials for a while and get some better operators setting that thing up for better success. They need to think about life after Howard's term, but I think SiriusXM might be taking a close look at this because they're also thinking about life outside the car. If you just think about SiriusXM and the majority of consumption of their programming is in the car, whereas Pandora, it's outside the car.

So this may be a way for SiriusXM to really get more into people's homes. It could be, but I mean, by the same token, I mean, any SiriusXM has made tremendous progress on their outside the car initiative. The app that they have that you can keep on your phone gives you access to their entire catalog of offerings as well. I mean, I use it all the time.

It's, it's really terrific. So I think you're right. Pandora could couple very nicely with that. Second quarter profits for Jack in the box came in higher than expected.

But that is not what pushed the stock up this week. Jack in the box is the parent company of Cudoba and it is looking to sell its Mexican chain because in words of CEO, Lenny, comma, our valuation is being impacted by having two different business models. What is he talking about? I mean, they're both restaurants.

I don't get this. So I tried to do some digging to figure out what he could potentially mean. So first I looked, maybe the Jack in the box stores and the Cudoba stores have different business models in the sense that one is franchise and one is not. And that is not the case.

They're both somewhat equally franchise. Then I went to the conference call to see perhaps one of the analysts asked a question to say, could you please clarify what that means and no one asks that either. So I kept digging and I couldn't find anything and I just left to believe that what he meant was one's a burger joint and one's a Mexican place. That's what he meant, I think.

That's two different cuisines. That's not two different business models. And for some reason he believes that's a dragging valuation down. And what's truly dragging valuation down is that Cudoba is just not putting up numbers that are similar to Jack is.

And the same sort of sales have been declining and there's weakness. So he wants to spin those off and hopefully create your holder value as a result. He actually might be right about that. Well, I was just thinking Chris about what we talked about before the show, which is I just think he's a little too late on the whole spin-off idea.

I think you're right when Chipotle was at the troth, I guess, of its struggles with E. coli and Cudoba's sales were still somewhat decent. That would be the time to really raise value. I'm not sure now is the right time.

Jack in the box bought Cudoba for $45 million in cash in 2003. They're going to make some money off of whatever they do with this. But it really does seem like a year ago was the time to pull the trigger on this. For sure.

But they're still a small franchise. There's only 699 Cudobas at the end of the fiscal year. There's plenty of runway out there as long as they can get the act together and people continue to want to consume Mexican cuisine. That are a second-case of most of Ron Gross, guys.

We'll see you later in the show. Up next, disruption in the automotive industry might be coming a lot sooner than you think. Stay right here. You're listening to Motley Fool.

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Slack, where work happens, find out why at slack.com. Welcome back to Motley Fool Money, I'm Chris Hill. Earlier this week, I got the chance to talk with Tony Siba. Tony is the co-founder of an independent think tank called Rethink X.

He's also the author of a just published report entitled Resinking Transportation 2020 to 2030. And what Tony Siba and his colleagues are predicting in this report will have a dramatic impact on some of the biggest industries in the world. Let me start with this, because the type of disruption that you have been studying and researching, particularly when it comes to the transportation industry, that's something we've talked about on our show for years. And what struck me about the report that you and your colleagues put together is the timeline.

Because if I'm reading this directly and I like to think that I am, you believe that driving in America is going to reach a tipping point, not in the far far future, but in three years. Do I have that right? You have that right. 2021, essentially when autonomous vehicles are approved, that's going to be the key enabler.

At that point, essentially the disruption of the whole transportation system, the road, transportation system in America is going to start. And it's going to take just a decade for 95% of the miles traveled to be electric self-driving and on demand. Yes. So one of the key phrases in what you just said is if approved, because in some ways the technology disruption, the business model innovation, those I think are almost taken as given to this point.

I think for a lot of investors, they look at autonomous vehicles and think of the government, whether it's the federal government or state and local governments and the approval process. And I'm curious from where does your confidence come that the United States federal government is going to move quickly when it comes to approving autonomous vehicles? There is two things. One is that this is not US-dependent.

Essentially think about basically transport as a service about these vehicles as computers and wheels. They essentially have no steering wheel, they have no pedals. It's a computer run by an operating system and a GPU or a computing platform that's going to run that operating system. It's not unlike personal computers or tablets or an iPhone.

So the key thing is going to be to when you look at the history of computers, there have been two operating systems that essentially dominate in personal computers, plus Windows and Mac and then in smartphones, it's iOS, Apple and Android and so on. So there's going to be a whole rush to develop the one operating system that's going to come in first. Then that one operating system may or may not come from the United States. So China is investing a lot of money.

You'll see companies like DD in China, which pushed out over, beat over in China. They're investing massively in creating this operating system by do as developing the operating system. A lot of companies in Europe are developing this operating system. So all you need is one of these operating systems to work at level five, which is full autonomy in order for this race to start.

And it may not happen in the United States. So while we did the numbers for the United States, the truth is that this can happen anywhere. And any economy that does not get on to task, this transport system is going to be uncompetitive. It would be essentially like an economy running on horses trying to compete with the internal combustion engine 100 years ago.

So once one country gets it and improves it, essentially it's going to have to happen everywhere because it's going to be a competitive thing. You can't compete with a technology that's 10 times cheaper, essentially for transportation and logistics and so on, than your competitor countries can. So this is a race. This is not going to be dependent.

Yes, it's going to be dependent on regulation. It's not going to be dependent just on Washington, DC. And in the United States, this is being done at the state level, mostly in California. Essentially 30 companies have been approved for as soon as the end of this year, 2017, to do autonomous testing pilots on public roads.

So California as a state is way ahead of the game in this respect. And several other states are in the process of approving autonomy in the United States at the state level. The subtitle of the report that you and your colleagues put out recently is the disruption of transportation and the collapse of the internal combustion vehicle and oil industries. Last time I looked, the oil industry was enormous with deep pockets.

The type of disruption that you're talking about really seems like something that will be fought very hard, not just from regulators, but also, I mean, there are enormous companies that have very keen interest in the automobile industry staying pretty close to what it is right now. I mean, do you really think that 10, 15 years from now, the oil companies are going to be dramatically smaller than they are right now? Yes, and essentially, yes, you're right and they're going to push back and they're already pushing back. But if you look at the gains from the transition to transport as a service, and also if you look at the companies that are going to be pushing back against, the largest companies in the world by market capitalization are getting Google, Amazon, Apple, and so on, are basically getting into this game, so into this game, into this industry.

So essentially, it's not going to be just the large oil companies versus the little hippies doing an electric vehicle. It's going to be the large oil companies versus Apple and Google and Tesla and Amazon and so on. So then on top of that, when you look at the idea that transport as a service is going to provide cheap, accessible transportation to a lot of groups that door to door, to a lot of groups who have been left out of the car ownership or even the public transportation system, the elderly, the disabled and so on, there you have it. You're going to have oil companies on one side and you're going to have Apple and Amazon and ARP and groups loving for disabled and so on, on the other side.

So it's going to be a big fight. It's not going to be a one-way fight in that respect. Let me add one thing. This is on day one, 2021, the day that autonomous vehicles are approved, the cost per mile of transport as a service is going to be 10 times cheaper than buying a new car, 10 times cheaper.

Every single time that there has been a 10x difference in cost for a similar product of service in history, in all the disruptions that I've studied in history, every single time that there has been a 10x difference in cost, there has been a disruption. I don't know of a single case in which that has not happened and this transport as a service disruption is a 10x disruption. In terms of the many ripple effects, this type of disruption could cause, certainly when you think about the average city in the United States, one of the things you touch on in the report, fewer cars on the road overall and parking becomes obsolete, really? Yes.

So when you look at the fact that today we drive our cars 4% of the time, when you have a vehicle that is autonomous, it can drive 40% of the time, 60%, 80% of the time, it can be driving around all the time. So we modeled 40% of the time, which is 10 times efficiency. And what we got was that you needed a fleet that is 80% smaller than what we have today. So we'll need 80% fewer cars on the road than what we need today.

So yeah, parking is going to be obsolete, especially in the high real estate areas in San Francisco, New York City, London, and Chicago, and so on. Parking is essentially a waste of space. We could use that for productive uses, whether you want a green space, whether you want new businesses or housing and so on. But yeah, we're going to have 80% fewer cars and they're not going to need to park.

I mean, we park our cars 96% of the time right now, which is a huge waste of money and space and so on. So that's going to bring to America and to the world is essentially new land. It's going to open up real estate that hasn't been available in 100 years. And if you just think about the numbers, LA has 200 square miles of parking and, you know, 180 square miles of that, at least, I mean, 160, 180 square miles of LA is going to be vacant.

It's going to be empty. And just to give you an idea, you could fit three and a half San Francisco's into the vacant parking space in LA, three San Francisco's. So policymakers in LA are going to have to decide, do we want to create the wealth of three San Francisco's or do we want to have that, you know, a desert, basically 180 square mile desert. So yeah, a lot of land is going to be available for development because it's going to be vacant parking space.

There were reports earlier this week that Ford Motor is planning to lay off 10% of its employees around the world. Meanwhile, Ford Motor stock is hitting a 52 week low. We talked earlier about the oil companies. It kind of seems like unless they are investing heavily in the next generation of transportation that you and your colleagues are writing about in this report, it seems like the traditional automakers are in deep trouble as well.

They are. So what's going to happen is that the auto market is going to shrink by about 70%. We're going to need 70% the production of new vehicles is going to go down by 70%, which means that a lot of them are not going to survive. And on top of that, you have new entrants.

You have electric vehicle companies like Tesla and computer companies like Uber and so on who are getting into the space. So you're going to have a smaller market and new entrants. So it's going to be a very difficult space. Having said that, today, the traditional automakers have an advantage over their startups.

They have the manufacturing capability. They have the skills. Making an electric vehicle is quite easy. An EV has 20 moving parts, as opposed to 2000 moving parts and combustion engine automobile.

So it's very easy to make. The question is, will they actually commit to going in this direction? Do they see this as the existential threat that it is? And if they move quickly, they have a good chance of surviving and thriving.

But those who deny it are not essentially are going to be in trouble. The last question, then I'll let you go. Just because I'm curious, what do you drive right now? I don't.

Basically, I don't own a car. I use Uber and Lyft and Zip and so on. I've been using what we call pre-tasks pre-transport as a service for years now, for 10 years. And initially, it started as research.

I started doing research into this new thing 10 years ago. It's not something that just popped into my head and I've done the numbers for a long time. And yeah, it makes total economic sense to go in this direction. Transport as a service is going to be even 10 times cheaper than what I pay today.

So I drive, I have access to a million cars, as opposed to owning one. I love that you're walking the walk. Yeah, that's how in order to do real research, you have to live it. And basically, I've been doing it for 10 years and I've been doing the numbers.

And it makes sense. A lot of the pushback that you're going to hear is, I love my car. How can I do this or that? How do I go to the supermarket?

I've been doing that for 10 years. And the truth is that once you go in that direction, and it's very easy to do it. Actually, you can just get an Uber and try it. And in 2021, it's going to be an Uber or Lyft or whatever that's autonomous.

You don't have to sell your car before you try. It's very easy. And then you go to the supermarket one day and you decide, you know what? It's not the end of the world as we know it.

And you use it more and more and more. It's a product that's easy to try. And once you try it enough, you make the decision. It doesn't make sense for me to own a car.

I can do this. And that's when the mass migration of people selling your cars and transitioning to task is going to begin. If you want to learn more from Tony Siba and read the report for yourself, just go to rethinkx.com. Up next, we'll give you an inside look at the stocks on our radar.

This is Motley Fool I got a recent total income recommendation for Steve. It's national grid, NGG. It's a London based company, but it's ADR trades here in the New York exchange. They own and operate regulated electric and gas distribution networks both in the US and the UK.

Transmission business is kind of like a toll booth, which is a nice business. It's very consistent cash flow streams, which makes it a really great stock from a dividend perspective, 4.4% yield. That should be a pretty safe dividend. Just sold their UK debt, gas distribution business, special dividend, if that's a word.

It isn't. The profits on that to shareholders. And I think the stock has potential as well, not just in the yield. Steve, question about national grid?

With a utility company like this, what is one metric I should look for, not understanding distribution of power at all? Certainly, industrial output, the strength of the economy in general, this business is less commodity prices don't affect this business as much as in other businesses, because it is a distribution play. But I think economic output in general would do you well. Jason, most of what you're looking at this is divvidending in bigons.

All investors, OK. It's not a secret Nike ticker as NKE. We were talking about this earlier, how poor results from Dick's Sporting Goods and Footlocker have brought down companies like Nike and Under Armour. I think this is fairly short-lived.

I think the upside with these guys, particularly Nike, they have very strong direct-to-consumer businesses. You look at Nike, the direct-to-consumer business represents more than a quarter of total sales today. That's up from about 20% in 2014. We have Nike on the watchlist and NDP.

We've been really patient with this one. We target about $50 per share is a pretty risk-free way to get what we think is 8.9%, even possibly 10% annualized return of the coming five years. So we are very close on this one. Steve, question about Nike?

Do you understand their relationship with Apple? They have the thing you could put in your shoe for a while and then it's the watch and I don't know what they're doing for them. I don't understand their relationship with Apple at all. Steve, so I'll just- Don't know what relationship with Apple at all.

It's somewhat interesting. That's really simple. Walt Disney ticker DIS. Everyone keeps worrying about ESPN and the network's business.

Just stop already. Disney's doing fine. Double-digit growth. Star Wars, Marvel Pixar.

Beauty and the Beast, which was a monster literally buying back loads of stock. I mean, you've got Bob Iger in the saddle for the next two years. If you want a 10% annual return for the next 10 years, right now, buy Disney. Steve?

I'm a shareholder. How many more Star Wars movies do you think there will be in the next- 77? Infinite. Three different businesses.

Steve, you got one you want to add to your watch list? I might look at Nike just so I can understand their relationship without them. Inna. Alright, Ryan Gross, Jason Moser, Matt, Argus, and your guys.

Thanks for being here. Thanks Chris. That's going to do it for this week's edition of Motleyful Money, our engineer Steve Broido, our producer's Mac career. I'm Chris Cael, thanks for listening.

We'll see you next week.