In this podcast, Motley Fool host Dylan Lewis and analysts Emily Flippen and Matt Argersinger discuss:
- Weak jobs data, an inverted yield curve, and whether the market will cheer a larger rate cut.
- Why private equity is interested in Smartsheet and putting money into NFL franchises this season.
- The latest earnings updates from Toro, Docusign, and ABM Industries.
- Two stocks worth watching: McKesson and AO Smith.
Brandon Copeland played 10 years in the NFL. Now the linebacker is an Ivy League professor, author, and advocate for college athletes. Copeland talks through his book Your Money Playbook, the realities of an NFL contract, and how some college players are finally getting their due.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our beginner's guide to investing in stocks. A full transcript follows the video.
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This video was recorded on Sept. 06, 2024.
Dylan Lewis: Good news. Now you'll need millions, not billions to get into this market-crushing investment. This week's Motley Fool Money radio show starts now.
Everybody needs money. That's why they call it money. From Motley Fool Global headquarters, this is Motley Fool Money.
It's the Motley Fool Money Radio Show. I'm Dylan Lewis. Joining me on the Air Waves, Motley Fool senior analysts Emily Flippen and Matt Argersinger. Fools, great to have you both here.
Matthew Argersinger: Dylan.
Emily Flippen: Hey, good to be here.
Dylan Lewis: We've got a preview of the NFL season and how some fresh money might be coming into the league, earnings updates, and, of course, stocks on our radar. We're going to kick off with a quick look at the Big Macro though. Fresh jobs data out for August. Suddenly, this is the metric we are all watching when it comes to the rate picture. Matt, what did our friends at the Labor Department have to say?
Matthew Argersinger: That's right, our friends at BLS with their monthly jobs report. The jobs number came in at 142,000 jobs added in August. That was below the consensus, at least according to CMC, which pegged the number at 161,000. To me, the more important part was the fact that there were revisions. If you look at July, going back to July, July was revised down by 25,000 jobs. June was revised down 61,000 jobs. If you recall Dylan a month ago, there was a big series revision that took jobs down by more than 800,000 between March of 2023 and 2024. There was also data from BLS earlier in the week that showed that job openings at the end of July were the lowest since January 2021. The ratio of job openings to unemployed workers fell to 1.07, and that it's actually lower than it was in 2019 before the pandemic, and we were above two on this ratio back in late 2021. I don't think there's any question right now. The labor market is weakening, and I think investors have pivoted to the idea that the fed no longer cares about inflation. Inflation is coming down, but what is going on with jobs, and it looks like the employment picture is definitely weakening.
Dylan Lewis: It's always a little bit of a coin flip, what the market will actually do with this kind of news, because job weakness leads to that lower rate picture that so many people are hoping for, which, in theory, money back into stocks, also a sign of macro softness, though. Emily, S&P 500 down on this news a little bit today, and we've also seen some of the market reaction slide over to treasuries.
Emily Flippen: This is a really interesting scenario for anybody who doesn't actively follow treasuries, which I imagine is a fair number of peoples listening to this podcast.
Matthew Argersinger: I raise my hand. I mean, come on.
Dylan Lewis: Same. [laughs]
Emily Flippen: There is a thing called a yield curve inversion. This happens when long term treasury rates fall below short term treasury rates, basically implying many people extrapolate this to mean that there is likely a recession coming. Because that outlook long term is weaker than it is over the short term. Now, it's a little bit different since the pandemic because the Federal Reserve has been raising interest rates so aggressively, we have been in a situation where the yield curve has been inverted, I think for the better part since maybe this time in 2022. For a couple of years now, we've had a situation where the short term interest rates, let's say the two-year interest rate is higher than the 10-year interest rate. Of course, no recession has materialized. But on the back of this jobs news today, we saw that 10 year rate actually hiked back below the two year rate.
This is a little bit of an interesting scenario, because when you see that 10 year rate rising above the two year rate, it does the opposite, I think of what Matt is explaining here, which is generally speaking, you'll think that, this is a sign that the economy is strengthening. We're getting out of the inverted yield curve back into how the yield curve should work, but given how high short term interest rates are. Long story short, we're getting a lot of very conflicting messages right now from both the market, from the jobs report, from the economy, and now from treasuries as well. Where the economy is going after this, I think is anybody's guess.
Dylan Lewis: Matt, I'm going to force you into anybody's guess here. What does this all mean with your expectations for the interest rate outlook for 2024?
Matthew Argersinger: Don't take it from me, but there is 100% certainty, no conflict here on what the Fed is going to do when it meets in about 10 days, which it's going to cut rates. But the question is by how much? As we're taping the odds of a 25 basis point cut, which is the consensus, that is at 77%. But that does mean that there is a 23% chance of a 50 basis point cut, so it's not out of the realm of possibility. When I was looking at this data earlier in the week, it was more of a coin flip. It was actually 50,50, whether they would cut 50 basis points of 25, and maybe the fact that the wage growth number in the jobs report was a little bit higher than expected, maybe that's why there's still some creeping fears about inflation. But if the yield curve inversion works as it's supposed to, and the job numbers are weakening, and we are heading to recession, you best believe the Fed is going to frontload this easing cycle and go with 50 or be more aggressive at least early in this cut cycle. It'll be interesting to see what happens and more importantly, what they say when they meet in about 10 days.
Emily Flippen: That was really interesting though that I don't know if you agree with this, Matt. I think if the Federal Reserve comes out and cuts rates by 50 basis points, that is going to freak the market out a little bit. I think that's going to be signaling to people, things are even worse than we thought they were. Even though interest rates are coming down fast, I don't expect the market would be up on that news. In my world, the best thing the Federal Reserve can do is follow through that 25 basis point cut that has been communicated for a while now, not deviate from the unexpected.
Matthew Argersinger: I think that's right that way.
Dylan Lewis: Macro picture, not necessarily getting in the way of the deal making environment. Over when we look at specific companies. Shares of smart sheet up about 15% this week. Emily, no shortage of things to catch up on here. We have earnings from the company, and we also have the fact that the project management software business is in talks with private equity for a buyout. Where do you want to dig into this one?
Emily Flippen: Let's start at the beginning there, with the rumors that this business is likely going to be an acquisition target from private equity sponsors. The reason why I want to start there is because this news actually broke prior to that second quarter fiscal 2025 results that were reported later in that afternoon. We had two big stories out on the same day. Shares were up around 5% on the news at this consortium of private equity firms led by Vista Equity and Blackstone, were reportedly in talks to acquire Smartsheet. Of course, we don't know the price.
But I do think the fact that Smartsheet shares were only up 5% or so on this news signals maybe one of two things, if not a combination of both. One is, there's a fair amount of doubt that private equity would actually step in for this business right now. We've seen a historically low amount of private equity deals coming out of, say, 2021 when there were a ton. There's been a lot of these talks. I think Docusign is another good example, which we'll talk about later on the show, where there is a lot of interest from private equity firms, but ultimately, no deal is had. In the case of Smartsheet, the results are so strong that they're not likely going to take a buyout unless it's going to be a nice, pretty premium. Which private equity firm is going to do that? We don't really know. The second factor is, is that the Vista Equity partners and their private equity investors have actually already had a stake in Smartsheet. I think to an extent Smartsheets valuation has been somewhat propped up by the expectation that this will eventually be a target for private equity firms. All of that is to say, things are going well for Smartsheet right now. Whether or not they get acquired, I still think is anybody's guess.
Dylan Lewis: Speaking of private equity. NFL fans might be seeing some new names in the owner's box this season. The NFL owners approved a proposal to begin allowing private equity investments into teams this season. There are some restrictions around the size and scale of those private equity placements, that'll largely have them being silent partners. But the NFL finally joins all of the other major US sports in accepting private equity money. Matt, are you surprised by this at all?
Matthew Argersinger: No, not at all, because the valuations of these teams. Forbes came out with their annual evaluations for all 32 NFL teams. What this list should do to you every year is dispel any notion that winning on the field, is correlated with how valuable a team is. Because the Dallas Cowboys, which have long been the most valuable team, no surprise there. The cowboys just eclipse the $10 billion mark. They're the first US sports franchise to do that, even more valuable than New York Yankees, which I checked are valued around 7.5 billion. The cowboys haven't won the Super Bowl since I was in middle school. I don't think Emily was even born. I think they've also won maybe three playoff games in 25 years [laughs] or something like that. Let's take the New York Jets who are parentally one of the worst teams in the league. Sorry, Dylan. There were 6.9 billion, the fifth most valuable team. Meanwhile, the Kansas Chiefs, who have won two consecutive Super Bowls, and I think three of the last five, they are the 24th most valuable [laughs] team at 4.85 billion, actually near the bottom of the lead. Of course, as we know, the NFL actually operates much like a socialist system when it comes to the most important revenue stream, which is TV rights. Each of the 32 teams split that revenue equally. But it's the location and the local revenue that makes a huge difference, and whether or not a team importantly owns its own stadium venue. The cowboys make so much more local money when it comes to ticketing, merchandising, sponsorships, non-sports events like Taylor Swift Concerts. Some teams just don't have that kind of ownership or control. Just some context, in 2023, the cowboys generated 800 million in local revenue more than double the next team. They also generated more than 2X the operating income of the next past team. That's why they're worth 10 billion.
Dylan Lewis: Matt, to your point on the Jet $7 billion valuation, it pains me to say this, but it is a reflection of media markets and the business of the NFL, not on field performance. Hundred percent. They have the longest playoff drought in US pro sports right now. I am hoping that that comes to an end. A couple of numbers that really jumped out to me, value of the Cowboys up a Kager of 13%, since Forbes began tracking it in 1998, up over 2,300%, if you're just stating it in absolute terms. S&P 500 up a modest 800% on a total return basis during that time. Emily, I look at some of these numbers though, and I say, I think the NFL owners are being smart here. Because in reality, there are only so many people out there that can afford a five or $6 billion purchase. They need to open up the pool a little bit if they want these valuations to keep swelling.
Emily Flippen: Yeah, look, listening to you all talk about sports, it's like a kid listening to their parents, talk about the checkbook. But no, [laughs] I'm only half teasing. There really is an interesting angle here, which is to say, there's a reason why it's private equity that is coming and expressing interest. As you mentioned, they have deep pocketbooks, but I think it's more than just that. We've seen a historically low amount of deal-making from private equity over the course of the past two years. There's a fair bit of money sitting on the sidelines. I think there was an expectation from some private equity investors that valuations would maybe come down and they'd be able to get a goodbye. I don't know if this sounds like a good bye to me, if I'm completely honest with you. But I do think it says something about the timing. We have this soft landing that seems to have stuck. I'm knocking on wood right now because you never know. Private equity is now thinking maybe now is a time to get in. I've held out too long.
Dylan Lewis: We'll have more on the business of sports and a look at athlete finances with former NFL linebacker Brandon Copeland later in the show. We're going to head for a quick break, but stay right here. Got an earnings rundown and a look at whether consumers are buying up a piece of fall lawn equipment. This is Motley Fool Money.
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Dylan Lewis: Welcome back to Motley Fool Money. I'm Dylan Lewis. Here on air with Matt Argersinger and Emily Flippen. We're working our way toward the end of earning season. It's getting close to that time where we start trading lawn mowers for leaf blowers. Matt, a nice chance to check in on lawn care and outdoor equipment company Toro.
Matthew Argersinger: Right, and not a great quarter, Dylan. Sales were up 6.9% for Toro. Adjusted earnings per share were up 24%. That looks good on the surface, but if you dig in, they had some other costs a year ago that are helping reduce the numbers a little bit this quarter. The golf and grounds business is doing pretty well as is Toro's underground construction segment, and the residential segment got a nice boost because they signed a new deal with Lowe's late last year. Now Toro equipment is showing up in Lowe's. But if you look at the guidance, they went from expecting low single digit sales growth for this year, earnings per share of between 425 and 435. Now they're looking at sales growth of just 1%. They've taken down the earnings per share estimate by about $0.20. Management talked about a lot of those macro factors that we heard from Home Depot and Lowe's last month, which is just this hesitancy among consumers to buy big ticket items. Believe me, Toro is in the business of big-ticket items. We're talking multi thousand dollar lawnmowers. There were a few positives. Inventories have been a bit of an overhang on the business. Those have come down nicely. They overstuffed some of their sales channels. Inventories are down, generates cash flow, paying off debt. Maybe they get to a situation where this time next year the balance sheets in better shape, business is bounced back, but the business is going to be a bit of a struggle over the next 6-9 months, I believe.
Dylan Lewis: It definitely feels like a company going through a little bit of the macro spin cycle here. When we check in and take the broader view on the business, shares back down around where they were pre-pandemic. But the valuations crept up a little bit to where they've been historically. They're currently around 33 times earnings. How do you reconcile that? Where does this sit for you?
Matthew Argersinger: I would say earnings are probably pre-depressed right now. On a four basis, if you trust those new earnings estimates, the stock is around 20 times earnings. Still feels a little bit expensive. I will point out that management bought back $100 million worth of stock in the quarter. That's their biggest quarterly buyback in about three years. I think management is maybe looking a little more ahead.
Dylan Lewis: E-signature company DocuSign out with some fresh numbers this week and a rosier outlook for the rest of the year. Emily, in production, you joke that DocuSign shareholders have had to get used to a bit of a bumpy ride when it comes to earnings reports. This one actually feels like it was a break from that bumpy ride.
Emily Flippen: Really? Because that something like $800 million revaluation of those deferred tax assets that led to this insane level of profitability in this quarter feels a little bumpy to me, Dylan.
Dylan Lewis: They will immediately digging in. I love it.
Emily Flippen: Look, this is another quarter off, even if you take out those deferred tax assets, which is making this profitability in this second quarter look absolutely insane. Even removing that impact, this is a business now that has been gap profitable since the fourth quarter of 2023, so we have a lot of quarters of profitability under this belt. We continue to see operating income tick up. In fact, in this quarter, DocuSign noted that they had their highest operating margin ever, of course, on an adjusted basis. But that's all to say that this is a business that is very much still in turnaround mode. Lots of good things to see here. I think the word that would describe this quarter would to your prior point, Dylan, probably be stabilization. We had two quarters in a row, now, 7% revenue growth in this quarter, same as the previous quarter, 99% dollar base net retention rate, same in the previous quarter. Now, typically, you want to see those numbers ticking up, but in the case of DocuSign, stability is appreciated. Let's keep it the same for now. Let's just prove that we can make this business model work. I think they are proving that. Free cash flow is also up. But this is still a business that has a lot of competition. It's great to see the improvements that they had as part of their go to market strategy. But that alone, I think will not be enough. They really need to prove out the value ad of being a DocuSign customer versus, say, an Adobe customer or somebody else.
Dylan Lewis: Definitely some help padding that profitability number there, Emily, but I can't help but draw some comparisons here between DocuSign and Salesforce. They're tech businesses that were doing one thing for a very long time, being very high growth oriented and have now had to adjust and become much more profitability oriented, feels like that is the rubric that the market is creating a lot of these businesses on.
Emily Flippen: When you're as bloated as DocuSign was slash is, I can understand why. I will say though I think DocuSign has a further uphill battle than Salesforce. Salesforce, I think has a product that on its own stands independently. DocuSign really failed with their contract life-cycle management product, really relying on the e-signature solution, which is very competitive. They still need to prove out CLM ambitions to really make your point.
Dylan Lewis: Wrapping us up here on the earnings takes. ABM industry is not exactly feeling the love after providing its quarterly update. Shares is down around 5% following the report. Matt, this is a company that focuses on managing facilities, janitorial, HVAC, parking, bit of a look into the world of offices. What are you seeing here?
Matthew Argersinger: You got it Dylan. It's actually one of the largest employers in the country. They have over 100,000 workers that perform a lot of those critical services that you mentioned. They really help businesses and industries keep functioning on a day-to-day basis. If you go to the airport or a major sports arena, chances are, you'll see someone in one of those orange ABM vests. One thing that Anthony Shavon and I have been worried about in our dividend investor service is ABM's exposure to commercial office properties. ABM doesn't really break it out, but service contracts within that segment could account for as much as a third of ABM's revenue. But not so much a worry so far. If you look, organic revenue is up 3% in the quarter, adjusted earnings up 8, 19%. Management actually raised guidance for the year. On that question about office, CEO Scott Selmer has pointed out that ABM's waiting to class A office properties insulates them from some of the problems we're seeing in the work from home era that we're all living in. Also point out that ABM just declared it's 234th consecutive quarterly cash dividend. If you're in the hunt for dividend pairs of dividend growers, don't overlook ABM.
Dylan Lewis: I had to expect you to go to the dividend, Matt. There's no way you had to leave that one hanging. That's a pretty impressive streak there.
Matthew Argersinger: Of course not. Though the yield right now if you look at ABM, the yields only about 1.6%, but the growth of the dividend is really impressive.
Dylan Lewis: Matt, Emily, Fools, we're going to see you guys a little bit later in the show. Up next, we've got some more football talk and lessons from the game. You can apply to your personal finances. Stay right here. You're listening to Motley Fool money.
Welcome back to Motley Fool Money. I'm Dylan Lewis. The NFL season kicked off this week with the Ravens and Chiefs on Thursday night. If you're like me, you're ready to get back to football Sundays. For 10 years, Brandon Copeland was putting on the shoulder pads on Sunday, playing for several teams, including my beloved New York Jets. Now, the linebacker is an Ivy League professor, author, and advocate for college athletes. Ahead of the 2024 season, I caught up with Copeland about his book, Your Money Playbook, the realities of an NFL contract, and how some college players are finally getting their due. Well, you've worn a few hats and a few different helmets in your life. I want to talk through your pro story and the way that money weaves into that a little. You came into the league in 2013 as an undrafted free agent. You made the Baltimore Ravens, walk me through the process of coming into the League and the way that players are looking at money.
Brandon Copeland: Went undrafted, but I remember signing on draft weekend, so to speak, a three-year 1.45 million contract, and only saw 24,000 of those dollars before being fired the first time. Coming into the league, especially being an undrafted free agent, frankly, I thought that I was, one, I knew I had a chip on my shoulder because I knew being undrafted was not as good as being drafted, so to speak. But two, I also have had a grandfather who is literally sitting over my shoulder. He played 11 years in the League, so I understood that none of this was promised, and it was just the beginning once I actually got that call. I went into it with a mindset of just, like, I need to just hustle up and make the team. I did have some friends of mine who at the time, they would be going and they'd be buying nice things. Their signing bonuses were a lot bigger than mine. I had $1000 signing bonus, which I thought was, like, I thought was great, and then we did Rocky Talent shows, and guys started saying, I got 75,000, 350,000, 950,000, and I'm just looking around like, what did my agent do? What's wrong with me? I always just went into it with like, for me, the dream was to be playing in the NFL, and my kids watched me play one day. I didn't have kids when I came in the NFL in 2013, but it wasn't just to make it to the Baltimore Ravens and get signed as an undrafted free agent. I think that that's what kept me focused on actually legitimately making the team, and it helped me avoid a lot of distractions, as well, too, when it came to my money. Frankly, like I said, being fired and only having seen 24,000 of those dollars, and then going a few weeks without a call, you realize how quickly this whole thing could be over.
Dylan Lewis: Let's talk a little about the playbook. Your book that's out is Your Money Playbook, very intentionally, four quarters, when it comes to the playbook, walk me through the game plan.
Brandon Copeland: Everything, it's easier for me to break concepts into things that I love, and I love football. Football has changed my life and my family's life even before I was born. Again, my grandfather playing football. For me, we literally take the entire book and we break your whole financial evolution and your journey from ground zero to financial confidence or financial freedom, whichever one you'd like to call it into a whole season, but also an entire football game. That starts with training camp. I always tell people, as you become an older player, you hate training camp. I'm just go ahead and say it. You can see a lot of guys who don't want to go to training camp, but the beautiful thing about training camp in the off season is what you're doing is you're preparing your body and your mind and your soul and your spirit to make plays in the playoffs. There are things that you are working on in training camp and during the preseason that may not show up again until week 16, and that's what it's all about. Being unable to sit down and prepare yourself and write out your why, write out your plan with your money, put a budget together during the beginning stages of training camp in first quarter of basically a lease, a low stress environment. Putting a plan together for yourself and your money is one of the keys to actually reaching your own financial goals versus somebody else's. The reason why I emphasize a low stress environment, we're putting together our game plan for the team we're going to get on Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, on Sunday, that's when things are flying. Things happen that you never expected, and that's the market dropping 600 points or some news coming out about some geopolitical tensions overseas that shift your whole perspective. But because we've put in the work of putting together that game plan for ourselves during the week, now we know what to fallback into when chaos starts happening. That's what happens with our money all the time. I'm not going to say so many times all the time, life lives. Anyway, continue on this journey, we go through the simple foundational steps in quarter 1 of budgeting and finding your why and things of that nature. We get to the art of the hustle, actually going out, and making money and how to create more revenue streams for yourself.
We get to the power of growth, one thing that was a huge lesson for me as I came into the NFL, but also just in Wall Street when I was in college and beyond is like, you grow up thinking, put your money in the bank, save money. But at some point, you have to convert your mindset to a let me put my money to work for me. it's either I will put my money to work for me or I'll work the rest of my life for money. We have a whole quarter dedicated to growing your money. The power of growth. Then finally, we all talk about, not we all, I won't say we all. Let me not put it out on everybody. But some people, and a lot of times, people talk about generational wealth and my legacy and all those things, and so we have a whole quarter dedicated to that, because generational wealth is dope as a guy who is entering into a life with, God willing three children soon. One of the things I always tell people is, while we're out here hustling, working hard, growing our money, and all that type of stuff, and you say you're doing it for them. Well, are you teaching them what to do with the money? Are you teaching them how to deal with pressure?
I saw 50 Cent speak a couple of weeks ago at Invest Fest in Atlanta shout out to the amazing event that they put together. But one of the things he said is you pray for success, but you don't pray for all the things that come with it. You don't pray for the jealousy, the envy, the entitlement, and things of that nature. Are we teaching our children how to manage what we're giving to them, because if not, as Ocho Cinco likes to say, you're going to save up your whole life, and as soon as you're gone, your kids are going to spend it all, so you might as well spend it yourself. Anyway, it's a fun book. We are using my real life stories as well, too, and I'm unlearning some of my own traumas throughout the book and delivering that message to you all. But, man, we worked really hard on Your Money Playbook, and you can get it at www.yourmoneyplabook.com.
Dylan Lewis: One of the things I wanted to ask you about with the post football chapter for you is the work that you've done with athletes.org. We've seen the name image and likeness deals in college football, get a lot of coverage. We've started to see this cresting wave of. Hey, these college players deserve to be making money. They're doing quite a bit for these universities they work for. It feels like we're in the early innings of that, though, and there's probably a lot more to come when it comes to money in college sports. How are you looking out at that space?
Brandon Copeland: We're in the absolute early innings of this. In July or June 30th of 2021, well, college athletes couldn't earn money. Now, you got college athletes getting paid million, 0.5 million, 100,000, 50,000 here, 20,000 here to go out and play the sport of their dreams, which is phenomenal. I want to separate this. NIL is great as phenomenal, but it is a marketing deal. It is Pat Mahomes doing a state farm deal. It's Pat Mahomes doing a subway deal. It's good. Go making money. But it's not the check that Pat Mahomes gets from the Kansas City Chiefs or the check that I used to get from the Baltimore Ravens and so what we at athletes.org we're going after is, how do we make sure that those athletes are getting the check that they deserve from the UGAs of the world, the Clemson's of the world, the Bombas of the world, because the NCAA generated $17.5 billion in 2022, the NFL generated 11 billion. There's money to go [inaudible] a lot of money.
While, not every school is UGA, Clemson, etc. you can see, for me, being a financial educator, being someone who understands the importance of compound interest, and seeing the opportunity that a lot of college athletes have to come out of those schools with more to show for than bumps and bruises and memories, but also a little jump start on life based off the revenue they help the school generate. That's what we have been working to make sure college athletes are represented and the great thing is, it's the right place, the right time. The NCAA has agreed to pay college athletes for the first time in history. That'll start fall of 2025. You'll get about $22 million the top schools that they can share directly with their athletes. Now, every single school gets to determine how they want to share that themselves, what they want to give to the football team versus the men's basketball team versus women's basketball team versus Olympic sports, and we believe and our athletes believe we got over 3,000 members, believe that college athletes should be at that negotiating table helping them determine all of that split, but also, hey, we want more health insurance. Hey, we need some mental wellness benefits, as well, too. Hey, I want some extended tuition, because during my time here as a UGA football player, I can't really focus on school.
Can you guys give me the opportunity to come back here within two years after I graduate to really get my full degree and take advantage of this student athlete thing that you call me. It's been an amazing growth opportunity. Like I said, we got over 3,000 members. They are absolutely amazing. These are current college athletes who believe in us. We're getting closer and closer every day, but again, revenue sharing is happening, so there will be more college athletes making money now. Next year alone will be $1.5 billion that college athletes will be receiving, and over the next 10 years, it's 20 billion. The opportunity of a lifetime for some young people to change their lives, we just think that similar to every other leader in the space. College athletes deserve to have their own representation. What I mean when I say that, and then I'll pass you the microphone back, the NCAA. It's an organization that represents the schools. It says that on this website. That's the interest it represents. You have NABC, which represents the interests of the basketball coaches. You have AFCA, which represents the football coaches. You have NATA, which represents the trainers. You also have NACDA, which represents the athletic directors, and there's no group. All of these different organizations represent the adults. But there's no one that represents the college athletes and say. Hey, like, we shouldn't be capping their revenue or hey, they deserve this or hey, do we need to practice for three hours and 45 minutes and full pads in the spring? They don't do that in the NFL. Can we protect the athletes here? Athletes deserve their own representation through athletes.org. We're literally watching a renaissance of college athletics right before our eyes, which is pretty incredible.
Dylan Lewis: I'm going to ask you for a reckless prediction before things kick off. Who's holding the Lombardi trophy at the end of the year?
Brandon Copeland: My heart tells me to Baltimore Ravens. My heart tells me Lamar Jackson is finally hoisting the trophy. Is it extremely hard for the Kansas City Chiefs to do a 3P? Yes. But I was my oldest son starts football next weekend. I was watching some highlights of the miked up Super Bowl last year, and literally it starts with the end of it. Pat Mahomes holding one of his children and talking to I think Chris Jones is saying. Man, I got to get a third one. I need a third one. We got to get three. I know it's hard. It's never been done before. We got to go for three, but I'm like, I want to go ahead and put this out here because I know that there's somebody who will take this and say that I'm comparing myself to Pat Mahomes. I'm not a quarterback that Pat Mahomes is. I'll go ahead and say that. But from a competitive standpoint, from a mindset standpoint, me and him. I'm with you. I'm in the moment, and I'm like, I'm already thinking about, the next one The fact that he was in that moment, confetti dropping with the family, all that stuff instead of doing the snow angels, he's like, I'm trying to get the third. I'm like, that's an interesting dynamic. That's a hungry quarterback that.
Dylan Lewis: It's just ton Man to beat.
Brandon Copeland: The Chiefs are from a coaching perspective, a game-planning perspective. I was watching Get Up this morning, and I didn't realize that they drafted the fastest guy ever in the combine. I'm just like. Oh, you guys just get better. This is interesting. Most teams lose a lot of steam after winning the Super Bowl because all of the players can go everywhere they want and get the highest that they've ever made. But they've found a way to continue to keep some of the best players and their talent in house and continue to grow. That's a long way to way of me saying the Chiefs.
Dylan Lewis: You're rooting for the Ravens, but don't sleep on the Chiefs?
Brandon Copeland: Exactly.
Dylan Lewis: Listeners, you can catch Brandon's book, Your Money Playbook out this September. You can catch me on the couch this weekend watching football. We're heading for a quick break. But we'll be back in a minute with stocks on our radar. Stay right here, you're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. Don't buy something based solely on what you hear. I'm Dylan Lewis joined again by Emily Flippen and Matt Argersinger. Fools, we're going to roll right into stocks on our radar. Each week, you guys bring the stocks. Our man behind the glass Dan Boyd brings the questions and or the comments. Dan, I'm going to give you a little bit of an early heads up here. In production, Matt and Emily were throwing some shade at each other's pick, so we might be in for a little bit of a spicy radar stock segment. We'll see. Emily, you're going to be a first. What are you looking at this week?
Emily Flippen: Really, it was a challenge to see who had the most boring option for radar stock this week.
Dylan Lewis: That's right.
Emily Flippen: I think mine wins, not in terms of boringness, but also in terms of I don't know, attractiveness right now is what I'll say. My radar stock is McKesson. The ticker is MCK. Now, a lot of people, including yourself, Dylan, may not be familiar with McKesson, but chances are you do use their services. They're the largest pharmaceutical distributor in the United States, which basically just means their job is to deliver drugs to retail chains like CVS or such where other consumers get it. They also have a burgeoning oncology services businesses, as well as a prescription technology and data services business. But really drug distribution is their bread and butter. Now, the stock is down nearly 20% since the beginning of August, which I think is a somewhat timely buying opportunity, in part because they had a pullback full year guidance just this week, because of some higher than expected tax bills, and also because they had a weak first quarter result as a slowdown in drug launches from some of their pharmaceutical partners, as well as the expansion of generics, which have a lower margin profile. But I definitely think this is one of those businesses that is in it for the long haul. Very hard to disrupt this inner industry and they also have an amazing share we purchase program. They pay dividends. They're also expanding their oncology business at higher margin. Lots of stuff to like, I've taken up all of my time now, Dan. Do you have a question for me?
Dan Boyd: I actually do have a real question. Why can a company like UPS or FedEx just do this? Why do we need a McKesson?
Emily Flippen: That's a great question, Dan. You know what? I'm not going to answer it. I'm going to let Deloitte answer it. They say, the role of drug distributors is to amplify value in the healthcare system by delivering aggregation efficiencies and economies of scale that reduced capital, can't ask FedEx to do that. Goodness gracious.
Dylan Lewis: Dan, aggregation efficiencies, come on.
Dan Boyd: I don't know what that means. Dylan if I'm going to be honest, that sounded like a little bit of a word salad to me.
Dylan Lewis: The worst salad. Matt, what are you looking at this week? Dan is coming in hot. Watch out.
Matt Argersinger: I know I'm scared here, but I'm going with AO Smith, the ticker is AOS. What are my favorite dividend growth companies? It's a leading manufacturer of get this residential, commercial water heaters and boilers and water treatment products. It doesn't get more boring than that. But it's been doing business in that space for 150 years. I probably already lost Dan at this point. But what's interesting about AOS is that they get about a quarter of the revenue from China and India. In fact, it just purchased a water purification business that serves primarily India. You have a business that's founded headquartered in Wisconsin, but also already has a significant presence in Asia. I mentioned the dividend, AOS the yield is only about one and a half percent, but they've grown that dividend by more than 330% over the last 10 years.
Dylan Lewis: Dan, a question about AO Smith.
Dan Boyd: Well, not really a question, more of a comment, but, like, water. It's important. Matt, you'd think I wouldn't like a company like this, but hey, everybody's got to drink water.
Dylan Lewis: Matt, everyone's got to do drugs?
Dan Boyd: No, not really. You need water.
Dylan Lewis: Water, drug transportation. Which one's going on your watch list this week?
Matt Argersinger: I think it's pretty obvious that AO Smith is going on the watch list.
Dylan Lewis: Love it. Emily Flippen, Matt Argersinger. Thanks for being here and bringing your stocks. Dan, appreciate you weighing in. That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Dylan Lewis. Thanks for listening. We'll see you next.
Dan Boyd has no position in any of the stocks mentioned. Dylan Lewis has positions in Docusign. Emily Flippen, CFA has positions in Docusign and Home Depot. Matthew Argersinger has positions in A. O. Smith, Abm Industries, Blackstone, Docusign, Home Depot, and United Parcel Service and has the following options: short October 2024 $115 puts on Blackstone, short October 2024 $135 calls on Blackstone, short October 2024 $80 puts on A. O. Smith, short September 2024 $310 puts on Home Depot, and short September 2024 $370 calls on Home Depot. The Motley Fool has positions in and recommends Adobe, Blackstone, Docusign, FedEx, Home Depot, Salesforce, and Smartsheet. The Motley Fool recommends A. O. Smith, Abm Industries, CVS Health, Lowe's Companies, McKesson, and United Parcel Service. The Motley Fool has a disclosure policy.
