2 Recession Ready Stocks

In the latest episode of Stock Club, the investing team discusses Lyft’s bumpy ride on the stock market, talks about one of the most successful stocks in the MyWallSt app, and figures out exactly what an inverted yield curve is. Plus, Emmet and Rory pitch the two stocks that they think would weather the next downturn best.

JAMES: We’re going to start off today with some recent news from the past week; Rory, last time we were here we were talking about Levi Strauss IPO-ing on the market. Who have we got this week?

RORY: Well, it’s the one everyone’s been talking about; the Pepsi to Uber’s Coke, Lyft have IPO’d. The ride-sharing service based in the US and Canada went public last Friday; stock reached a high of $86 on its IPO, valuing the company at around $26 billion. It’s since tumbled back down to $70, officially entering a bear market on its second day as a public company. It’s recovered a little bit, but I think it’s going to open up at the end of today.

The thing about Lyft I think is; first of all, I’m amazingly impressed they even got to this point. For a long time, they were definitely the second fiddle, Uber was totally dominant; and very much thanks to Uber and some of the mistakes they made back in early 2016 — especially their CEO — Lyft managed to get a lot more market share.

People started seeing Lyft as the good guys of ride-sharing; they’re very pink and they claim to be very socially conscious, but I don’t actually think that’s true at all. There are still some stories — pretty much on a monthly basis — about them paying drivers terribly, cutting their wages. Just in January, they blocked a bill that was going to happen in New York, where they were going to bring the driver’s wages up to the minimum wage. What’s important to remember is that the reason this is all happening is because of us. Ride-sharing is too cheap; I lived in London for a couple of months, the difference between an Uber and a taxi in London is big, there’s no way that these companies could be making money and therefore there’s no way they can pay the drivers properly.

So really, when you take a ride-share, you are being paid to take that trip by the likes of Uber, Lyft and their drivers. The long-term story might be that there are autonomous vehicles and the drivers are eliminated, and then the companies can become actually profitable; but it’s a long, long way away. It’s a strange bet; at $26 billion dollars, that’s a crazy price.

EMMET: Have they raised that in their documentation — that there’s a longer-term strategy for autonomous driving at Lyft?

RORY: Well, it’s all in the background — that would mean that they would fire an awful lot of people, and that wouldn’t be very good press either — but they are working with Waymo on autonomous vehicles.

A few differences between Uber and Lyft I think are important to point out; Lyft are very focused on consumer transportation — Uber has UberEats, they have a freight service, they have Uber helicopters — whereas Lyft is focused on getting people from a point A to point B. That in some ways gives them more focus on their main task, but it also means they don’t have the revenue streams than Uber, the diversification.

Secondly, they’re only based in the US and Canada, whereas Uber is in multiple markets around the world; again, there’s pros and cons to that. It means that when someone gets off a plane on an international flight, the first thing they’re going to do is open up the Uber app and not the Lyft app, because they know Lyft isn’t available in those countries that aren’t in the US/Canada. But it also means that they’re letting Uber an awful lot of heavy lifting, in terms of regulations — opening new markets, getting people into the ride-sharing mentality — and also most drivers are not exclusive to one or the other. If Lyft pays a bit more, treat them better, they can easily work for both companies.

JAMES: Even from your analysis there it’s quite clear that they’re second fiddle to Uber, but do you think the bad performance of the stock so far on the market will have an effect on Uber’s IPO later this year?

RORY: I think it’ll probably get people to rethink going in on the first day anyway, which is something we always tell people not to do.

JAMES: A $120 billion valuation is pretty spicy.

RORY: It’s very spicy, but then again Uber is the big name in this space. Just on a side note to this story — going to go off the rails a little bit — but in terms of treating your employees badly, there’s a stock that we’ve been asked to put in the app an awful lot of times as a public company, and we haven’t for lots of reasons.

That stock is WWE, the World Wrestling Federation entertainment company. Anyone who hasn’t seen John Oliver’s piece on the WWE that was out last Sunday, you really should watch it. It’s a good reason why you shouldn’t invest in a company like them.

EMMET: Tell us more!

RORY: I don’t go too much into it because he does a good job of breaking it out, but they don’t treat their employees very well and wrestlers have a very short life span post-work there. It’s pretty grim, and ironically, I will be at WrestleMania on Sunday. It’s a long story — it’s kind of a joke that went too far — but I and 13 of my friends will be in New York at WrestleMania.

JAMES: I always pegged you as a wrestling fan, Rory.

RORY: I don’t know what’s going one; of the guys has come up with a little book of the storylines to try and keep us all informed when we should cheer and when we should not. It’s 19 pages.

EMMET: Just get WWE for your PS4 or Xbox and spend the weekend studying.

RORY: I’m flying out tomorrow!

JAMES: Bit late then.

MÉABH: That was a voyage; thanks, Rory.

RORY: You’re welcome,

JAMES: Moving on, I want to talk about Apple again. Last week Apple had one of their trademark big events in the Steve Jobs Theatre in California; but instead of revealing a new iPhone or Mac, as usual, they revealed a host of new services.

There were four main announcements: there was Apple TV Plus, which is Apple’s long-awaited entry into the streaming industry; there was Apple News Plus, which is an overhaul of the current News App; they’re gonna have more than 300 magazine subscriptions for a subscription price of $9.99. There was Apple Card, which is Apple’s first credit card in partnership with Goldman
Sachs — Tim Cook actually called this “The most significant change in the credit card experience in 50 years” — understated as always — and then finally, the last big announcement I thought was the Apple Arcade. Off the back of Google announcing Stadia, Apple have said that they’re going to release this subscription gaming service also in the fall, and users will have access to more than 100 games exclusive or new to Apple. There was no price mentioned for that, but it’s going to launch this autumn in 150 countries.

There’s been a lot of talk over the last week about all these new services Apple have unveiled, and especially the Apple TV Plus is quite interesting; but what I want to talk about is, how this is indicative of Apple’s massive move towards services.

Towards the end of last year, there was a lot of worries about falling hardware sales, iPhone saturation — the most recent versions of the iPhone haven’t really had anything different, there’s been slow uptake on them — and then we saw in their fourth quarter report in January that iPhone revenue was down 15% from the year previously.

But this isn’t new for Apple, it’s not unexpected for Apple; they’ve been long
saying that Services are going to be their new big industry. Services revenue was up 20% in the last quarter to hit $10.9 billion — which is incredible for just one arm of Apple’s businesses — and I think what’s most interesting is that the gross margin was nearly 63%; some massive margins in the service industry.

Tim Cook also said in January, which ties in with this, I think, and I quote: “I believe if you zoom out into the future and you look back and you ask the question ‘What was Apple’s greatest contribution to mankind?’, it will be about health.” Not the iPhone, not the Mac, not any of these groundbreaking things; he sees health — which will fall under that services arm, I imagine — as what is going to be the greatest contribution Apple has set to mankind.

I thought it was this announcement of all these massive things, with Apple’s cash pile, really indicates a huge move towards services.

RORY: But are they massive?

JAMES: I think they’re pretty big.

EMMET: I’ve heard of them.

RORY: I thought that was such a weird event, ’cause I don’t think they announced anything new at all. It was Apple TV Plus, it’s Apple News Plus — it was tiny little add-ons — and the gaming thing was interesting, but they didn’t say anything about pricing. The card, they’re doing what other card companies are doing in an Apple way.

JAMES: Very funny thing about the card; it’ll be available on your phone with Apple Pay, but you can all order a physical card — which will be made of titanium, classic Apple — but what I thought was funny was that you can’t use the tap to pay with the card. There’ll be no ‘tap to pay’ function; you’ll have to put it into the machine, which I think is crazy. I don’t think I’ve ever… in the last week, I probably haven’t put my card into the machine, I’m always
tapping it.

RORY: The whole thing about cards is they can be cool and Apple isn’t a cool company anymore.

MÉABH: (GASPS)

RORY: Are people going to be that impressed when you take out a platinum Apple Card?

MÉABH: Well, it’s going to make your wallet heavier! That is big, especially for men; every guy in this office has a really lightweight, small compact wallet. I want to go back to the statement that you just announced, which is that Apple is no longer cool?!

RORY: Well, are they a cool company? Are they trendy?

MÉABH: You obviously don’t think so!

RORY: Well, I suppose maybe that event put a sour taste on it, because it was just these middle-aged men coming in and saying—

MÉABH: Oprah was there!

RORY: —‘We have made the best X ever.’

MÉABH: Reese Witherspoon was there.

RORY: It was a weird thing where they’re panning around to all the celebrities sitting in the front row.

MÉABH: Totally, the celebrity thing threw me; and I’m the same as you guys, the card and the arcade are just concepts for me. The Apple News Plus I did tune into. That’s them saying that they’re going to add more than 300 magazine subscriptions for a monthly price of $9.99, right?

My initial reaction to was ‘My interest is piqued’; this means that I will have an amalgamated news service, and I will maybe see content from magazines that I’m interested in, but would never buy a hard copy of. Then I thought about it more deeply — and also observed other people’s reactions — and realise that actually, it was Apple taking control, homogenising news and presenting what they wanted in the world in one app, for another tenner a month. And I was like, ‘I’m going to hold on this’; I’m going to see what the service is and see how the news is actually chosen and curated, and what the element of control is like.

RORY: You can’t even test it yet, it’s not available here. Can I read a really interesting tweet I thought was the best tweet of the week by far? It’s by a guy called James Wang, and he wrote, “The most disturbing thing about Apple’s event yesterday is that the services weren’t created to solve unmet user needs but rather to support Apple’s financial model. It is a dangerous thing when management — consciously or not — serves Wall St. as its primary
customer.”

MÉABH: This is it; this is what I think people are reflecting on when you see the services and the control within them.

JAMES: So maybe we don’t have confidence in Apple’s pivot?

EMMET: Well, the question “Is Apple cool anymore”; cool, I think is an amalgamation of aspirational and maybe scarcity — and I know that Michael Kors example is very, very far way away from Apple — but Kors lost its strategic advantage by not being exclusive — by having a Michael Kors bag shop in virtually every mall in the US — and lost what made them special. If
Apple or if cool has a degree of scarcity — well, I’m not so sure if having any Apple device is cool. I do think they’re extremely well-designed and wonderful function, but they are ubiquitous. I don’t personally see Apple as cool anymore.

RORY: You don’t see people wearing an Apple Watch and go ‘That’s really cool.’

JAMES: Sorry, people in our office.

RORY: And also, Steven Spielberg; he’s not cool. He’s a great filmmaker, but he’s not cool.

JAMES: There are some major statements being made today!

RORY: If they put Jordan Peele up there…

MÉABH: We need to qualify what we believe cool is.

RORY: I will decide.

MÉABH: [LAUGHS] You’re not cool!

JAMES: It was very old world Hollywood, is that what you mean? All these guys from 10 years ago, 20 years ago.

RORY: When Apple put U2 and a U2 album on my phone, that was the end.

MÉABH: You are completely correct, I forgot; they’re no longer cool, and we’ll never forgive them.

RORY: They also talked a lot about Apple Music; it’s going to be human-curated. Human curation at Apple is making sure there’s a Coldplay song on every playlist; that’s not cool!

MÉABH: Well, humanly controlled and tightly curated is how they describe News Plus.

RORY: Dangerous.

JAMES: That was the recent news; we’re going to go on to the ‘Company We Never Talk About’. This is where we have a look at one of the companies in the MyWallSt app, that maybe doesn’t get as much attention as it deserves. Emmet, you’re up this week; what company do you want to talk about?

EMMET: I’m choosing one of our top performers — I think it’s in our top three performers at the moment — it is the company formerly known as China Lodging Group, which is now known as Huazhu.

Huazhu Hotel Group is a hotel management company in China, and we
more commonly refer to it around here as China Lodgings. Before I discuss Huazhu, I’d like to zoom out and talk a little bit about China, which we’ve done many times on this podcast. China is the world’s number one tourist destination when you bring in Hong Kong and Macau, and the biggest segment of Chinese tourism is mainland domestic tourism. We’re starting to get a feel for the biggest country in the world, is the biggest tourist destination in the world; and the biggest segment of Chinese tourism is mainland domestic tourism.

Increasingly Chinese have surplus spending money, time to travel; and they have a very good transportation system which is being used. The petri dish for a hotel company is primed in China; domestic tourism has been increasing by about 10% per year for the longest time, and it contributes about 4% of China’s GDP which is a huge $9 trillion, so it’s a big ticket item.

With China Lodging — if I might call it by its old name for the time being — we’re looking at one of the biggest hotel groups in the world. I have an old piece of data where they were the fourth biggest hotel operator in the world — which they may have improved on since, but I couldn’t get up-to-date figures — but by two weeks ago the company reported their Q4 results,
and they were extremely impressive. Revenue increased over 20% in the quarter to almost $400 million, which is way above the guide and the estimates that were out there. They added 214 new hotels, and on the big picture, the hotel network grew 13% year over year.

They have 4,230 hotels; that is a lot of hotels, and yet it feels it’s only scratching the tip of the iceberg. Revenue per available rooms — as we know Rory, from our analysis of Marriot some time ago — is a key metric in the industry, and it rose 10%; the average daily rate increased almost 10%.

When you go to Huazhu.com, the only thing you might recognise
unless you actually speak standard Mandarin is a few hotel logos such as Novotel, Ibis, Mercure — which they own a stake in. I couldn’t go to the website and derive much, but if you go to the Investor Relations website — which if you google any business that’s listed with IR beside it; should bring you to Investor Relations website — there is a deck in their most recent
deck — which has a lot of graphs, which I won’t dive into — but they’re all very reassuring that it’s a business trending very much rapidly in the right direction, with a huge market opportunity. CEO Jenny Zhang called the results very strong in her conference call and said “At the end of 2018, our hotel pipeline was a record high of 1105 hotels” — or in other words,
one-quarter of the hotels that they have in operation. They have that many on the conveyor belt on the way into their network; therefore she said, “We expect our hotel network expansion to further accelerate in 2019, and our hotel network expansion will be primarily driven by mid-scale hotel openings.”

It’s not appealing to the exclusive, it’s appealing to the mass-market; the everyday traveller, the normal business person, and of course families who
are touring and travelling around mainland China. In the year ahead there will be a gross opening of around 800 to 900 hotels in China; about 75% of the new hotels will be in their mid to upper scale brands, and they’re going to close 200 underperforming hotels. It’s not a group afraid to shut the doors on the underperforming assets.

JAMES: I think when you’re talking about China, it’s always important to mention big China is! I was looking there; there are 160 cities in China with a population of over 1 million people. It’s mind-blowing.

EMMET: I was on the phone with people to make sure it was big, and they reassured me it’s very big [LAUGHS].

China is mind-blowingly large; my wife got back from Beijing the day before
yesterday, and even anecdotally, everything we know here in the Western world — if you live in New York or LA, California, Chicago or even in Dublin, you have a frame of reference of what a crowd is — but there was an event in Tiananmen Square with 1 million people in the square. Not while she was there, but a year or two ago, and it is really mind-blowing, the
scale of the country. I believe that HuaZhu Hotel group — despite my rickety pronunciation — it’s one that is just going to slowly burn away and it stays off most retail investor’s radars because it’s over there. It’s completely isolated in China where the rules of business are different, and where the ability to analyse the business is a little bit more difficult. I think over the long term, it will make a very fine investment.

RORY: Do you want a fact about how big China is? It’s my favourite big China fact.

They built this damn about 10–15 years ago called the Three Gorge Dam — the biggest dam in the world — and in order to start it up, they had to flood some land and move people away. There were 13 cities flooded by that dam.

EMMET: That’s a very good example; I read about this, and it was a thorny and sad story. An absolutely mind-blowing number of people were displaced — and I think now I’m straying into waters where I shouldn’t — but I think the Chinese government are quite good at relocating families. What I mean by good is, they want families to be not just relocated but reemployed, and redeploy their skills, but I’m not saying that it’s done in sympathy of the
unsettled. I think it’s “Get out of the way, we’re coming.”

JAMES: That’s the Huazhu group; it’s actually nearly a four-bagger in our app, it’s the fourth-best performing stock we have.

Speaking of stocks in the MyWallSt app, we have a new Stock Of The Month, added this week on Monday. It’s a SaaS company that’s well-positioned
to weather a downturn, because of its extremely sticky and diversified product — some big clients like Airbnb and Netflix on its books — so you can read that full report in the MyWallSt app now. Rory, we’re adding a new stock to the app this Monday coming as well.

RORY: That’s right, it’s one that Emmet likes a lot.

EMMET: I’m a fan; I think long-time listeners will be will take a good guess of what it is. Just thinking of Apple’s subscription business as unveiled there in March, it plays into that mega-trend of subscription services and transcends the digital world into the real world.

JAMES: You can read that full report on Monday.

MÉABH: Next up we have ‘Jargon Busters’; we’ve asked you guys, our listeners, to send us things that you don’t fully understand in the industry or phrases that might be a little difficult to comprehend. We have a number of things that were sent in by you today, so thanks very much.

We’re starting with something that I’m not familiar with, I don’t fully have a grasp on and that is something called an Inverted Yield Curve.

The question is, what is an inverted yield curve and why is it used as a signal for a recession?

RORY: A yield curve is a yield that you get based on how long you’re putting money away for, in terms of lending money to people.

Typically, if someone’s buying a US bond, they’re going to get a smaller interest rate on a three-month bond than they get on a 10-year bond. The longer you’re putting money away, the more interest you expect to receive; what happens sometimes is that that inverts, that the price for a short-term bond is actually higher than a 10- year bond — which is strange — and it is a harbinger that the mood is souring in the short-term; that things are going to change soon, things are going to go different.

It typically happens before a recession, but because it happens doesn’t mean there’s a recession happening, and it doesn’t mean it’s going to happen right away.

MÉABH: The next question that we were asked is from a well-known contact of ours, Colm, who I think is studying for exams, so good luck Colm.

It’s asking us about the SaaS industry and how do companies within SaaS differ from each other. What’s the differentiation between… I suppose he’s talking about the SaaS companies that we have in the MyWallSt app because we have a number.

So SaaS?

RORY: Between the companies, there are loads of differences, they all do lots of different things. SaaS is a catch-all term for any business that’s selling you software on a month by month subscription basis — you think about how most people used to use Microsoft Word and Microsoft Excel, you’d buy a disc with a license code key on it, and you’d own the license to that software forever. That was a one-time purchase that you then have forever, but that model has gone totally out the window in the last years with the emergence of the cloud, and businesses from Intuit to Microsoft to Autodesk to Adobe with Photoshop have switched over to a subscription model where you are renting the software.

Typically what happens is you pay per person using it on a monthly basis and it’s very easy to expand, so if your business is growing fast — you have 200 users one month and 500 users the next month — then it’s literally turning a switch on and off.

JAMES: Puts out piracy a lot too.

RORY: I’m sure pirates will always get their hands on something somehow, but it definitely cuts it down an awful lot.

MÉABH: That’s the industry.

RORY: That’s the industry and there are so many different companies that we consider SaaS companies today. Atlassian that we use with Jira, we pay on a monthly basis to use that software; Veeva Systems is a SaaS company for the life sciences industry, with all their and product’s fault and so forth. We’ve loads of SaaS companies.

MÉABH: Is there differentiators, even in the ones that we have in the app? Are there separate sectors or things that make them stand alone?

RORY: There’s also Platform-as-a-Service, which would be instead of using software, you’re actually on someone’s platform. Salesforce could be considered Platform-as-a-Service, the infrastructure is a service. Amazon Web Services is a cloud infrastructure that you’re renting off Amazon; they’re providing a service to you to use that.

EMMET: We are running a software as a service company in it’s, I suppose, most stripped-down version. I supposed he could probably draw a line between B2B software and B2C; our business-to-business and business-to-consumer SaaS.

I suppose the B2C example that jumps to my mind at the moment is recently acquired Mindbody — well, actually it’s B2B2C; it’s business to business to consumer, they sit in the middle — but the way of assessing the SaaS companies is to first think, has he used that service indirectly or directly? It might be unlikely that he’s touched Atlassian’s software products and then he might rely on someone like us to say they’re great, or he might have used Airbnb or Uber and knows therefore that the communication mechanism inside is powered by Twilio and can get a feel for what they’re doing.

But B2B SaaS companies usually derive bigger ticket sales from fewer customers and B2C have smaller ticket sales to many more customers.

MÉABH: That was helpful. We have one more for today, and it’s from another longtime user; it’s not exactly something that we’re going to bust from a jargon perspective, but it is an outline, Emmet — which I know customers are very interested in — on your investment in Netflix, and I suppose, the journey that brought you to that.

EMMET: Pardon me if I’m repeating the story, I think I have.

MÉABH: Once or twice!

EMMET: My investment Netflix is predicated on the observation… I was a Dow shareholder in the mid-90s and I had missed the bull run for Dell — had grown dozens and hundreds-fold even — and probably made a decent return on Dell.

But what I realised at the end of the decade, the almost last week of 1999, that it had grown 1,600 fold in that decade and I was a young investor and did back-of-the-envelope calculations. About a grand ten years ago would have turned into $1.6 million, and $4.2 grand into $3.2 million.

Dell for a small number of people augmented their lives, their wealth; it was for those who had the foresight in 1990 to say that home computer is going to be a big thing, as it was in the 1990s, and it took a lot of foresight; it took a lot of patience; took a lot of moments of truth, because there are multiple times in the 1990s where Dell stock fell 40% or more in the space of a couple of months. But when you zoom out to the 10-year picture, it’s the hockey stick curve and that particular Dell story completely captivated my thinking.

Probably was one of the most interesting analysis I’ve ever run on a company — because I really wanted to find the next Dell — and in order to do so, you have to go back to the first day — the first week of January 1990 — and look at what Dell had. A founder, a passionate founder, who was Michael Dell. It had a product that was very future-relevant, on the front of the wave; it was catching a wave, it was building a name for itself in an emerging industry. Lots of other attributes — and we have spoken about those attributes many times here in this podcast —those attributes are what Rory, James, the team and I look at when we’re finding the next best thing.

When I invest my money, in part I’m looking for the next Dell; that is to this
day still a sponsoring thought when I buy a stock, and that comes with knowing that they are in a future relevant industry and I’m going to invest in this for ten years at least. Netflix so happened to be one of the ones I called right and held for the longest period of time.

So if we transpose what I learned about Dell to Netflix; it had a passionate founding CEO in Reed Hastings, it had a future relevant business model — at the time I bought they were posting DVDs, I think, in five states — and they were very, very small, which Dell was at the start from 1990. It was a mixture of when preparation meets opportunity, and I was lucky; that is my story of Netflix.

I sold quite a few of them along the way, but I kept more than I sold, and that’s possibly one of the best things I never sold in my life.

MÉABH: Well, we all said that we’d heard you tell that story before, but that was a good rendition.

JAMES: It was, I really liked the comparison to Dell. It’s nice to have that anchor in your mind of that company still having success going forward, looking for it again and again, and never selling.

MÉABH: That’s Jargon Buster for this week; we had three items — as I mentioned, we had a lot more contributions when we asked for your ideas about what to include on email and Twitter — so we’re going to come back to them in the next pod.

We’re moving on to ‘Elevator Pitch’. The theme for this week’s ‘Elevator Pitch’ is Recession Ready Stocks. That’s worth noting that it’s linked to the recent Stock Of The Month that went live in the app on Monday if you
want to go and check out what that is.

Emmet and Rory, one stock each; let’s get into the lift.

EMMET: I’m going to go with American Tower.

American Tower is again a stock we don’t talk about too much, it’s a real estate investment trust — and the key to finding a stock that will survive and thrive through a recession or downturn over the long term is a business
that won’t get disrupted.

American Tower has a massive barrier to entry; and that barrier to entry is a portfolio of 170,000 cellular towers, which it leases out to the likes of AT&T and Verizon and all the other mobile telecom joints around the world. They have towers and rooftop solutions in 17 countries, so they are geographically diversified; they are infrastructurally diversified, and 5G is bubbling up. 5G is starting a mega rollout this year, it’s being switched on a certain countries and I see it like getting your hair cut, you don’t stop doing it in a recession. Mobile networks will not stop renting tower and roof space in a recession.

RORY: Recession ready stocks are weird — well, first of all, people talk about recession-proof stocks and I actually think there’s no such thing because every recession is different and every industry is affected in different ways.

Like you said Méabh, if you’ve read the Stock of the Month report, I think enterprise software as a group is a good place to be in tough times because they actually save companies money.

But the company I’m going to go for is Costco, which is one of the best run businesses in the world in my view. They are the anti-Walmart; they’re a business that likes to deliver value while also treating their employees well and being socially conscious.

If you look back to the last 2009 financial crisis as an example,Costco stock dropped from peak to trough 37% in that time, which obviously is very painful. But if you look at the way it’s rebounded it is up five and a half-fold since then versus the S&P which has tripled, which is very good. The pitch is, during economic hardship people will dine in anymore, they’ll buy in bulk and cook more, and despite the tough environment, they’re still racking up comp sales of 9–10% and they have a membership service with 90% renewal rates.

MÉABH: Pitches are in, James; what do you think?

JAMES: I think Costco; I like that pitch. I think a company that’s surviving right now — when times are good against the likes of Amazon and stuff — is impressive enough, so I would have confidence in Costco.

MÉABH: I’m probably going to go for Costco this week too.

That’s it, we’ll wrap there; as I mentioned in the Jargon Buster segment, we do want to hear what you guys want us to talk about, so always get in touch if you have a suggestion for that segment or for anything else, you can find us on Twitter or you can email us directly at pod@mywallst.com.

If you enjoyed listening to us today, we would appreciate a review on iTunes or whatever podcast player you use. It helps us get the podcast to more listeners.

Thanks for listening; we’ll see you in two weeks and as always happy investing!


MyWallSt staff may hold long positions in some of the companies
mentioned in this podcast.