The Stock of the Summer

Summary

Motley Fool Money: The Stock of the Summer – June 3, 2025

Hosts: Dylan Lewis, Ricky Mulvey, Mary Long
Guests: Jason Hall, Matt Frankel
Release Date: June 3, 2025

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Introduction

In the June 3, 2025 episode of Motley Fool Money, hosted by Inchakabaloo alongside investment analysts Jason Hall and Matt Frankel, the team delves into the hottest stock picks for the summer, evaluates current market news, and provides insightful investment advice. The episode, titled "The Stock of the Summer," offers listeners a comprehensive analysis of key stocks poised for growth, alongside discussions on recent corporate developments affecting major players in the market.

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The Stock of the Summer: EPR Properties

The focal point of the episode is the discussion around EPR Properties (EPR), identified by Jason Hall as the standout stock for summer 2025.

Jason Hall begins by comparing EPR to major movie blockbusters, noting, “EPR Properties is America's biggest theater owner and they told us back in early May that the box office is up 17% this year already” (01:23). However, Hall emphasizes that EPR’s strength isn’t solely dependent on the movie industry. He highlights EPR’s diverse portfolio, which includes part ownership of iconic locations like the Santa Monica Pier and investments in growing sectors such as eat-and-play venues, casinos, water parks, amusement parks, concert venues, and more. This diversification taps into a substantial $100 billion market.

Hall further underscores EPR’s attractive valuation, pointing out that “the stock is up a lot over the past few years, but it's still below its pre-pandemic highs” (01:23). With a dividend yield exceeding 6%, EPR presents itself as a compelling investment opportunity despite the stock's recent appreciation.

Matt Frankel builds on Hall’s analysis, noting the strategic renegotiation of leases with major tenants like Regal Cinemas. He explains, “The leases that they just renegotiated with Regal, which is their third largest tenant, have a performance component baked in” (02:36). This arrangement ensures that EPR benefits directly from successful box office performances, adding a performance-linked revenue stream. Frankel also touches upon AMD as a strong contender in the semiconductor space, though he acknowledges his initial support for EPR as a well-founded choice.

Inchakabaloo playfully interjects by questioning the exclusivity of EPR as the top pick, prompting a reaffirmation from Hall that EPR stands out amid a crowded field of potential stocks (04:01).

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News or Noise: Evaluating Current Market Events

The discussion transitions into analyzing recent corporate news and determining their significance in the investment landscape.

1. Dollar General’s Performance

   Inchakabaloo introduces the performance of Dollar General, noting a 14% increase in stock value as the company exceeded sales and earnings guidance (04:43). The conversation centers on whether this surge signifies a broader economic trend or specific company improvements.

   Jason Hall categorizes Dollar General's success as “noise” rather than a reflection of macroeconomic health, attributing the improvement to the company’s enhanced inventory management and better alignment with customer needs (04:43). He suggests that Dollar General is rebounding from previous struggles rather than indicating a larger economic shift.

   Matt Frankel concurs, explaining that same-store sales up by 2.4% align with inflation rates, suggesting consumer caution rather than a robust economic indicator. He views the performance as a rebound for a company that was previously underperforming (05:07).

2. Disney’s Layoffs

   The team then addresses Disney’s recent announcement of laying off several hundred employees across film, television, and corporate finance sectors, adding to the 7,000 cuts in 2023 (05:35).

   Matt Frankel interprets the layoffs as strategic, indicating Disney’s focus on its most valuable segments—theme parks, cruise lines, and streaming services. He views this as a sign of cost-conscious management under Bob Iger’s leadership, highlighting the prioritization of key business areas (05:53).

   Jason Hall echoes Frankel’s sentiment but downplays the impact by noting that the layoffs represent less than 5% of Disney’s 200,000-strong workforce. He emphasizes that the real news lies in Disney's strategic refocusing rather than the reduction in employee numbers (06:26).

3. Meta Platforms’ Strategic Moves

   Inchakabaloo presents two major news items about Meta Platforms: the company’s initiative to fully automate its ad operations using AI by the end of the next year, and a 20-year deal to procure nuclear power from Constellation Energy for its data centers (06:56).

   Matt Frankel identifies the AI ad automation as the more impactful development, particularly benefiting small and medium-sized businesses by simplifying ad creation and enhancing campaign effectiveness (07:24). He views the nuclear power deal as less significant, noting it aligns with similar moves by other tech giants like Google and Amazon (07:24).

   Jason Hall concurs, arguing that the AI automation initiative holds greater potential for enhancing Meta’s ad business profitability. He considers the nuclear deal as "noise," unlikely to substantially alter Constellation Energy's investment appeal (08:16). Both analysts agree that the AI-driven ad automation could unlock significant value for Meta’s shareholders.

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Buy, Sell, or Meh: Investment Recommendations

The episode concludes with a "Buy, Sell, or Meh" segment, where Jason Hall and Matt Frankel provide their investment stances on Dollar General, Disney, and Meta Platforms.

1. Dollar General

   • Matt Frankel: Meh
     Frankel opts for a cautious approach, remaining in "wait and see" mode despite the company’s recent positive quarter. He cites ongoing store expansions and past performance issues as reasons for his non-committal stance (09:59).

   • Jason Hall: Meh
     Hall is slightly more optimistic but still concludes with a "meh." He acknowledges improving comps and margins but expresses concerns over rising operating costs and the costs associated with store renovations. He suggests adding Dollar General to a watchlist rather than committing to a buy (10:20).

2. Disney

   • Matt Frankel: Buy
     Contrarily, Frankel recommends buying Disney shares, highlighting them as underappreciated and resilient even during economic downturns. He points to Disney’s strong performance in theme parks and cruise lines, aggressive stock buybacks, and potential growth in streaming monetization (11:17).

   • Jason Hall: Meh
     Hall remains skeptical, citing uncertainty in Disney’s leadership succession and growth strategies. Despite Disney’s valuable entertainment intellectual property, he questions whether the current stock valuation justifies investment, leaning towards a neutral stance (12:01).

3. Meta Platforms

   • Matt Frankel: Meh
     Frankel classifies Meta as "meh," citing concerns over high valuation, aggressive capital expenditures, and competition within the ad technology space. He prefers other major tech players like Amazon and Alphabet for his investment portfolio (13:03).

   • Jason Hall: Meh
     Supporting Frankel, Hall also rates Meta as "meh." He acknowledges the company’s robust ad business and potential value from AI automation but remains cautious due to ongoing cash burn and unclear profitability from newer ventures like the Metaverse (13:27).

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Conclusion

The "The Stock of the Summer" episode of Motley Fool Money offers a nuanced exploration of EPR Properties as the season's top stock, alongside critical evaluations of Dollar General, Disney, and Meta Platforms. Hosts and analysts provide balanced perspectives, combining optimism with caution based on current market dynamics and company-specific developments. For investors seeking informed opinions and strategic insights, this episode serves as a valuable resource for navigating the summer stock landscape.

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Notable Quotes

• Jason Hall (01:23): “EPR Properties is America's biggest theater owner and they told us back in early May that the box office is up 17% this year already.”

• Matt Frankel (07:24): “The leases that they just renegotiated with Regal, which is their third largest tenant, have a performance component baked in.”

• Jason Hall (12:01): “The stock basically is within 5% of 2015 levels. That either sounds cheap or a business that still has a lot of work to do.”

• Matt Frankel (11:17): “Management's buying back stock aggressively. I think they're still in the pretty early stages of figuring out monetization of streaming and that could be a really big deal.”

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Timestamp Reference

• All timestamps refer to the episode's timeline, formatted as MM:SS.

Transcript

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[Inchakabaloo]

Can a stock beat Superman? You're listening to Motleypool Money. I'm an Inchakabaloo and I'm joined by two of my favorite fools, Jason hall and Matt Frankel. Today we're talking news or noise with Dollar General and Disney. We'll play buy, sell or meh with Disney, but fun. First, we're talking the stock of the summer. Lilo and Stitch is in the early lead for Movie of the Summer, but that's with movies like Superman, Jurassic World, Rebirth, and of course the Netflix. Only happy Gilmore 2 yet to come. But who cares about movies when you can talk stocks? Jason, what's your call for the hottest stock this summer? You can't say Nvidia. That would be boring.

[Jason Hall]

Okay, yeah, I wasn't going to say Nvidia anyway, but Anand, you already brought up movie blockbusters and EPR Properties is America's biggest theater owner and they told us back in early May that the box office is up 17% this year already. And like you said, man, the biggest releases are probably still yet to come. Here's the good news though. We don't have to count on a healthy box office for EPR to be healthy. It's also one of the largest owners and managers of experiential properties in the country. That includes like part owners of that includes being a part owner of an irreplaceable asset like the Santa Monica Pier and growing categories like eat and play, casinos, water parks, amusement parks, concert venues, fitness centers, museums, zoos, you name it. Ana, that's a hundred billion dollar market. Even if we don't include movie theaters. Chances are if it's a part of your summer plan, EPR may own it and lease it to the operator. Now lastly, we got to talk valuation. We got to talk opportunity. The stock is up a lot over the past few years, but it's still below its pre pandemic highs. The dividend is in growth mode though, with a yield above 6%. I say EPR is my hot stock for the summer of 2025.

[Matt Frankel]

I'm glad Jason took EPR because that's the one everyone expected me to take after Anand was talking about movies. I do love epr one really interesting thing you mentioned. The box office is up, I think 16% this year. The leases that they just renegotiated with Regal, which is their third largest tenant, have a performance component baked in. So good box office means they get more rent. It really was resolved favorably, the bankruptcy over there. But for my hot stock. I know I can't say Nvidia, but I'm going to say Nvidia's younger cousin, amd. AMD is the most recent addition to my portfolio. I know the stock is up recently. It's up about 15% in the past month, but for good reason. They've had a few big wins recently. For example, their latest gaming processors are being compared as to as like better than Nvidia. They're saying they're kind of a direct shot at Nvidia's business. And I know that AMD is a distant, distant second when it comes to things like data center GPUs. But the momentum is going in the right direction. The Stock trades for 28 times forward earnings even though its revenue's growing at 36% year over year. Rate data center revenues up 57%. So if you think Nvidia is the only player in that market, think again. I think there's a lot to like about this company. That embedded segment, which includes their autonomous vehicle chips, has a lot of opportunity. I think AMD could be a very hot stock for this summer and for years beyond.

[Jason Hall]

Honored. Are we allowing this on a technicality or is this a clean, a clean pick?

[Inchakabaloo]

I think it's fine. I think Jason, both of us moved in to be like, all right, fine, fine. I think everyone wants to hear a little bit about semiconductors. Let's move on to news or noise. A Jason hall hat tip here in a classic Beat and Raise. The largest dollar store in the US is up about 14%. As we're taping, Dollar General beat its sales and its earnings guidance and raised its outlook for the year. We'll give thoughts on Dollar General as an investment soon, but for now. Jason Hall News or noise? Consumers flocking to dollar stores is bad for the economy.

[Jason Hall]

I think it's noise. The news is that it's happening, but honestly it's because Dollar General has struggled with inventory and delivering on what customers want and need in prior years. Not that there's really a macro reason that's happening here. This is more a case of maybe a company just doing a better job. You could almost say a company that was doing bad, maybe just kind of doing less, less, worse.

[Matt Frankel]

I would agree with that, I mean, same store sales were up 2.4%. That's like exactly in line with inflation. So it's not really that that things are spiking. I mean, if we do see sales spike, it's a sign of consumer caution, but not necessarily a terrible thing. I mean, like Jason said, the company hadn't been executing well. So this is not like Walmart in 2008 when sales shot up from a great, perfectly run company. This is more of a rebound story than anything.

[Inchakabaloo]

Next one. Reuters is reporting that Disney is laying off several hundred employees in film to television and of course corporate finance. That's on top of 7,000 Disney cuts in 2023. About 200 a few months ago. Matt, are the Disney layoffs news or noise?

[Matt Frankel]

I mean, I think it's news in the sense that it shows how Disney's focusing on its most valuable businesses, the theme parks, the cruise line and the streaming business. Because you mentioned there have been three rounds of layoffs, including that massive 7,000 people layoff. Not one layoff had to do with the parks or the cruise line. The first round was very streaming focused. Bob Iger definitely right sized the streaming business. I do think it's news. It shows that Disney is being very, very cost conscious like Bob Iger set out to be. But it also shows what areas of the business they're prioritizing.

[Jason Hall]

To Matt's point, you have to really invert it to see where the news is. And the news is not that they are eliminating a few hundred positions. It's like Matt said, it's where they're not acting that talks about where their focus is. Beyond that, I think it's largely just noise. But if you're a Disney shareholder, it's, it's a reminder that they're focusing on certain parts of the business.

[Inchakabaloo]

And just to put it in perspective, there's in the neighborhood of 200,000 Disney employees. So what we're talking about, even if you add all those together, is less than 5%.

[Jason Hall]

Tell that to the people that got the pink slips.

[Inchakabaloo]

Absolutely. And we don't want to miss sight of that. Let's move on to Meta platforms. We've got two pieces of news we're going to see. Which one's the bigger piece of news? Facebook's aiming to allow full AI automation of its ads by the end of next year. Second story is Meta's 20 year deal to buy nuclear power from Constellation Energy to help power its data centers. Matt, which is the bigger story?

[Matt Frankel]

They're both bigger for consumers. I Definitely think that the ad automation is bigger. That really favors small and medium sized businesses that don't have the big ad budgets to really create what they want to create. Basically the idea is that a smaller business will be able to upload its logo, answer a few questions and set its budget and Facebook will create like a, you know, a stunning ad campaign for them. So I do think it could boost the ad business. The power thing, the data center need. Power is going to have to come from somewhere. The focus on nuclear is definitely news for the industry. I mean, both Google and Amazon have had similar nuclear deals announced in the past few months. So it's not that big of a surprise, I'd say. But I definitely think the ad automation could be the bigger story for Facebook's bottom line.

[Jason Hall]

Yeah, I don't even think the, the, the power deal is news for Constellations.

[Matt Frankel]

For Constellations, but.

[Jason Hall]

Well, I mean, maybe, maybe that it's gonna, it's gonna get, it's gonna, it's gonna be, it's gonna, it's noise that gets turned into news by investors that think this is gonna make Constellation this great investment because of all the steals they've signed with, with tech companies for power that are not going to change the unit economics for that business. That hasn't been a great business for a long time. I definitely think the AI automation is a bigger deal. Meta is an ad business and anything they can do to do a combination of driving out cost and improve the results of the ads to make them more valuable is a win for shareholders and a win for the bottom line for Facebook. So that's definitely news.

[Matt Frankel]

Yeah, I mean, well, there's a big race going on in the ad space to get the best ad technology. I mean, Pinterest was just upgraded today because of their improving ad technology. You have companies like PayPal that just launched an ad platform. You have a bunch of companies launching ad platforms stealing ad executives from other companies. It's really a race. And Meta sounds like it's one of the winners of the race.

[Inchakabaloo]

That's what they're best at. If Pinterest could monetize like Facebook could. Oh my gosh, watch out. But I think I did hear Matt say both stories were bigger. But we'll move on. We'll move on to, to buy, sell or decide.

[Jason Hall]

Matt, come on.

[Matt Frankel]

I didn't know. I said the ad automation's clearly bigger. The energy deal is big for Constellation.

[Inchakabaloo]

Okay, okay, fair enough.

[Jason Hall]

Fine. Another. Yet another technicality for Matt.

[Matt Frankel]

I just got back from vacation.

[Inchakabaloo]

I'm rusty Buy, Sell or Meh. Let's take news or noise one step further with this round for each of these companies, the three we were talking about, let's start with Dollar General. Matt, Buy, Sell or meh?

[Matt Frankel]

For me, it's a meh. I'm kind of in wait and see mode about it. I mean it doesn't seem like a great value. The quarter was definitely a strong one. They're opening stores fairly aggressively right now. So I'm in wait and see mode. I mean, as Jason mentioned, the dollar store story hasn't been doing great for a little while and 1/4 doesn't make me totally change my mind about it.

[Jason Hall]

I'm very close to calling it a buy. Improving comps and margins are positive, but you're really lapping a period where the end of some negative comps and bad inventory issues so just kind of less worse. On the positive side, again, the stock also trades for about 10 times its prior peak earnings. So maybe it's cheap. But then you start digging in a little closer. Operating costs are still rising and I don't know if we can continue to count on higher gross margins offsetting that in a year where the company is going to spend a lot of money fixing thousands of of broken down stores. And it actually in the first quarter was a net closure of stores, but by the end of the year it will have opened a few hundred net new stores. So right now I'd say it's meh. But can I get a technicality too on it and get a watch list? Meh.

[Inchakabaloo]

You're behind like five technicalities on Matt, so go ahead Jason. We'll go to Disney. Matt Disney Buy seller. Meh.

[Matt Frankel]

I bought it in my own portfolio lately, so I'm going to say buy. It's one of my favorite stocks to buy right now. I think it's a very underappreciated business. I think people overestimate how recession prone it is. People still go to Disney World when there's a recession. The cruise industry, which Disney is going very all in on the cruise business with new ships has been surprisingly resilient. Even in the 2022 bear market it held up really well. Management's buying back stock aggressively. I think they're still in the pretty early stages of figuring out monetization of streaming and that could be a really big deal. So I think Disney is a buy right here.

[Jason Hall]

Hey Matt, who's replacing Bob Iger?

[Matt Frankel]

Probably someone named Bob.

[Jason Hall]

I mean that seems to be the plan. Maybe they can get another good Bob this time. But to my point, I'll be the first to acknowledge that Disney has the most valuable entertainment IP on earth. There are some things they're doing really well. They're expanding that ip. They might be closer to unlocking the cash cow power of ESPN as they bring it over the top service. But again, no succession plan. The Stock trades for 23 times earnings. I think there's just still uncertainty in the C suite and in its growth ambitions. The stock basically is within 5% of 2015 levels. That either sounds cheap or a business that still has a lot of work to do. And I lean towards the has a lot to work to do. So I'm going to call it a May.

[Inchakabaloo]

Jason I wish I historically agreed with you. I bought Disney in I think 2008 and I've added to it since. Oh, I've never sold a share. It's not been great versus the market at least. Let's move on to the last one. Meta. Matt Buy seller. Meh. Meta.

[Matt Frankel]

I say meh. It's not my favorite of the Mag 7 stocks by any means. It doesn't look expensive. They're executing really well trades for I think 26 times earnings right now. The aggressive capex of not just Meta but most of the big tech companies kind of gives me pause. But I think Amazon and Alphabet are my two favorite Mag 7 stocks, so I'd put it in the map pile.

[Jason Hall]

Meta's not expensive. I agree with Mather. It's certainly not cheap either. At 26 times earnings, they continue to find more people on earth to get active on their social platforms, which is incredible with the billions that they already have. The ad business is the most valuable in social by far because you have access to the largest, most diverse audience and and you get the best return on that investment, it seems. So that continues to work extraordinarily well. We talked about automating more of it and that's probably going to unlock value there over the long term. But I do think that because of the scale of the business, the continued cash burn on the next phase things next leg of growth rings around the Metaverse and around artificial intelligence that we haven't seen a clear transition to those things being profitable. We see growth shoots. There's things like they're doing things with the enterprise now to. For. For Llama. Right. That could be future monetization, that could be big money. But those things are less clear and without that clarity, I don't want to pay full price for this business. And I think it's 26 times earnings you're paying. You're paying full price. You're buying the market. I don't think you're getting anything that's going to be supercharged returns. So I'd say it's meh right now too.

[Inchakabaloo]

We talked earlier about hot stocks this summer. We're hoping to heat up our podcast as well by incorporating Listener feedb and experimenting with our formats on Motley Fool Money. You've heard some of those experiments today. To be part of that feedback, email [e-mail] to share your thoughts as we go along. 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 or sell stocks based solely on what you hear. All personal finance content follows Motley fool at Standards is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. If they are full advertising disclosure, Please check out our show notes for Jason Hall, Matt Frankel and the entire Motley Fool Money team. I'm on in Chocobolieu. We'll see you tomorrow.