Dylan Lewis (2:16)

What I think is interesting with how they've set up that law is it's not just something that will affect ByteDance. The way that the law is structured, anybody enabling downloads, providing distribution to the app, et cetera, in violation of this law. So this isn't just something that affects ByteDance. This is also something that affects Apple and Google to the tune of a $5,000 fine per user. Bill, are they going to be willing to stomach that?

Bill Mann (2:44)

Well, there's 170 million monthly American users on the platform. You know, it's a little bit like the laws that make bars liable for serving alcohol to minors. It's the same exact concept, right? Like there's, there is the user, but you're not necessarily at risk for those laws. But then there are the enablers. And for them this becomes a risk that maybe not for a Google or for an Apple would put the entire company at risk. But 170 million times five turns into a lot of money really quickly.

Matt Argersinger (3:23)

Right? And if, if they do follow through, in other words, if Apple and Google really follow through on restricting the app. What's fascinating to me is I think we're going to see firsthand how sustainable TikTok's network effect is. I mean, because if suddenly the majority of US users, they go to YouTube, Instagram, most of them are already on those anyway, but they start using them a lot more. It's kind of like David Gardner's Snap test to me, right? If I snap my finger and on Sunday evening TikTok is no longer available. Am I good? Does my life go on? Or is this something that is really going to be painful for all these US Users?

Dylan Lewis (4:00)

This does feel a little bit like the federal budget. Probably something that is going to come right down to the wire or maybe have a kick the can type short term resolution. It's possible that between taping this and that deadline, there's something that moves this story along. And so I think it's important for us to. We talked a little bit about that 170 million user count to paint a picture of the scope and importance of TikTok because if it winds up being unavailable in the United States, Bill, it leaves a tremendous vacuum in the social media landscape for other people and other time attention, eyeballs to go into.

Bill Mann (4:38)

Yeah, I mean there's, there's obviously hope that, that they will migrate to reels. A lot of American TikTokers have been going to another Chinese app called RedNote, which RedNote in the Chinese name means little red book or the book that Mao puts all of his thoughts in.

Matt Argersinger (4:53)

So yeah, that won't be banned ever. I mean.

Bill Mann (4:56)

No, exactly. You can imagine just how excited the Chinese are for a whole lot of interaction between their mostly Chinese user base and the chaotic Americans who are on TikTok. So there, there actually is another little thing that's going on here. I don't know if you guys know this, but we, we were going to be inaugurating a new president on Monday and President Trump has had an entirely different opinion about what it is that we should do with ByteDance slash TikTok than the current administration.

Dylan Lewis (5:30)

And I believe the Biden administration has effectively said, we will leave that for you to decide and said, you know what, this is mostly happening during your administration is your decision. We've speculated a little bit. I'm going to invite a little bit more speculation. First up, will TikTok be forced into a sale? And if so, Matt, who do you see as a potential buyer for TikTok?

Matt Argersinger (5:52)

I think it almost has to. I agree with Bill. I mean, this thing is, I think, going to get banned. I mean, I think the fines are just too much even for Apple or Google. So I think it's sales coming. I mean, I know we've seen rumors about Elon Musk. I mean, I not knowing, not having read more into it, I feel like he must be the leading person, which is, you know, as a person who's very attached to the Trump administration, I guess that kind of makes sense.

Dylan Lewis (6:14)

Bill, do you see an ex TikTok conglomerate like Matt?

Bill Mann (6:18)

I do. So the former Dodgers owner Frank McCourt has, has a proposal out there to buy it. Oddly enough, another person who's putting together the an investing group is the former Treasury Secretary Steve Mnuchin. And under the first Trump administration, that was the first time that TikTok kind of entered the radar, you know, for, for the US Government as being something that maybe they needed to take a look at for national security concerns. But I do think that the answer at the end of the end of the day has to be someone like Elon Musk or X or, or Google to take it over.

Dylan Lewis (6:54)

And I want to follow up on that. What would a standalone version of the US business for TikTok be worth? Because there's a very large user bas. So how do you split out TikTok just in the United States? It's not a sandwich. You can't cut it in half. They have an algorithm, they have all this underlying tech. Bill, what would the price tag be for something like this?

Bill Mann (7:18)

So it depends on what you're buying. I hate it depends answers. But you know, but it really does come down to this. TikTok has 1.6 billion monthly users. And we can see from the success of a platform like Reddit since it's become public, just how, you know, if you've got a bunch of users like that, that's a, that's a huge value. That's a huge part of the b of the battle. But the magic of TikTok is that algorithm. And I don't think that ByteDance would, would, would Sell it. Even if they were willing to sell it, I don't think Beijing would let them. And even if they did, I'm not sure that the US government would allow us to even take on the algorithm because we don't know how it would be used. So it really depends. If you are just talking about the user base, I see estimates of about $50 billion, which is a huge company. If they could extract the algorithm though, this is going to be worth probably a half of what a YouTube is worth. So 175 to 200 billion dollars. Wow.

Dylan Lewis (8:23)

The TikTok story not the only one on Apple's radar this week. Reports out that the company has lost its mantle as the top selling smartphone in China. Matt, this is a market that a lot of people have looked for growth for the company for a long time. What do you make of them slipping behind Huawei and Vivo?

Matt Argersinger (8:42)

Not a great week for the world's largest company. You've got, yeah, slipping market share in China now behind the other two players. You had holidays on Monday. If you go back earlier in the week, iPhone sales in the holiday fourth quarter dropped 5%. And you know, and you mentioned the Chinese smartphone makers, they now account for 56% of global smartphone shipments, which I was surprised to see how dominant those Chinese smartphone makers have become. And then you do have this quote, which hits Apple pretty hard if you ask me. This comes from smartphone supply chain analyst Ming Chi Ko. I hope I'm saying that right. They said, quote, there is no evidence of Apple Intelligence's ability to benefit hardware replacement cycles or Apple's service business. That to me might be slightly the bigger story because we've heard about Apple Intelligence. It was rolled out on the iPhone 16 here in the US not too long ago. But it has not been the draw that I think Apple was expecting it to be. It's not really enticing people to upgrade their phones and replacement cycles have gotten longer anyway. So to me it just says, wow, here we go. Have Apple still trading at 30 times forward earnings. It's down 12% from its recent high, yet still trading at that pretty lofty valuation. Does it deserve to? Not so long ago, 10 years ago, Apple traded for about 15 times earnings or less about the time Buffett started buying. And of course we know Buffett's been selling lately. So I don't know. This isn't a great setup. I think for Apple here in 2025.

Bill Mann (10:10)

There are two things to keep in mind, the first of which is Apple Intelligence, which is the company's AI offering has not been made available on its Chinese smartphones. And the other thing, you know, on the one hand, hearing that it's in third place in China, I mean, that, you know, that's rough. But in actuality, it's only 15% of the overall market in China. And their, their shipments dropped 17% in 2024 versus 2023. So they really do have some concerns about losing market share in China.

Dylan Lewis (10:45)

All right, coming up after the break, we've got banks, banks and more banks. Stay right here. This is Motley for money. If you got the money, honey, I've got the pie. Welcome back to the Motley Fool Money Radio Show. I'm Dylan Lewis here on air with Bill Mann and Matt Argersinger. 2025 is off to a great start if you are in the business of money. We have earnings out from JP Morgan, Morgan Stanley, Wells, Citi, bank of America. If it's a bank, it probably reported in the past week, Matt, we saw strength across most divisions, didn't seem to matter. Commercial investment banking, pretty much everybody.

Matt Argersinger (11:19)

It was great all around, Dylan. And before we get into those results a little bit, I just want to step back really quickly and review 2024 because I'm not sure many investors or maybe many of our listeners realize that financials was one of the top sectors in the S&P 500 last year. In fact, they were up 30% trailing just technology and communication services. They also offered investors one of the best shareholder yields in 2024, 3.7% if you add together dividends and share repurchases. And the fourth quarter results that have been coming in this week really back that up. I mean, if you start with JP Morgan, biggest bank, fourth quarter revenue there up 10%. Non interest revenue, Dylan, up 29% led by asset management and investment banking. Goldman Sachs net revenues up 23%. Again, investment banking fees were up, were big there, up 24% trading revenue, fixed income and equities up more than 30% year over year. And then if you go down to a more traditional bank like Wells Fargo, revenue there was, was flat, but you had significantly lower non interest expense, lower provisions for credit losses. So net income for Wells Fargo was actually up 47% year over year. Very impressive. And even some regional bank results from Truist and regions that reported on Friday were also very strong. So a really strong year in 2024 for financials. Really strong fourth quarter and a ton of momentum here starting in 2025.

Dylan Lewis (12:39)

When we see numbers come in from the banks, we get to peer Inside the mind of Jamie Dimon, the world's leading banker. And, and while the financial results were good, Dimon does continue to use his quarterly soapbox bill to remind us of some of the things that are out there. Some of the topics that popped up in his commentary, the macro picture, geopolitics, inflation, regulations. Which of those do you want to dive into?

Bill Mann (13:01)

I think the most important thing now. So what, what Matt just described in some ways is a product of a certain type of environment, which was that we saw a lot of volatility in a lot of markets and on the risk taking side of the business of banks, they a bit of, a bit of volatility which we haven't seen in the past on the regulatory side going back to the financial crisis. And Jamie Dimon, who, it needs to be said, is very close to the vest about his own political beliefs, like who he voted for, who he supports. He does not talk about that very much. And I think it's smart for him to do because he can come across as an honest broker, has said that there are regulations, particularly the ones on lending that really need to be looked at because they go so far beyond what would keep the US Economy safe. And he's mentioned the fact that it used to be that banks would lend out $100 based on every hundred dollars that they have in deposits, and now it's about $65. And he's like, it's not just that it's something that impacts the banks, it really impacts the overall economy if banks are so worried to lend up to their deposit base.

Dylan Lewis (14:18)

When we saw the results come in this week, strong, strong reactions from Goldman, Morgan Stanley, I think all the banks were really up. How much of the optimism that we're seeing here is processing these results And Matt, how much of it is looking at the reality of a Trump administration for the next four years, Maybe a pickup in some activity that generates income like IPO activity and looking forward and saying things look pretty rosy for this sector in 2025.

Matt Argersinger (14:46)

I think you're right, it is the going forward look at the market, Dylan, because, I mean, yeah, Bill kind of went into the deregulation possibilities under the new Trump administration. But what you said about IPOs, the deal pipeline in general could be huge for banks in 2025. In fact, Ted Pick, the CEO of Morgan Stanley, said his bank's deal pipeline is, quote, the strongest it's been in five to 10 years, maybe even longer, end quote. So I feel like the funnel of business for banks, particularly the largest banks, as we know is getting wider and it's going to get A new Trump administration can make it even wider if there's less regulation and less scrutiny on mergers and deal making.

Dylan Lewis (15:26)

More deal making music to our ears. We love talking about M and A activity. We love looking at new issuances and digging it into the prospectuses. That's going to be fun stuff for us to cover in 2025.

Matt Argersinger (15:36)

And so do those investment bankers with all the fees they get from those activities.

Bill Mann (15:39)

That's right.

Dylan Lewis (15:41)

All right, bringing us home in the news roundup. This week the FDA authorized Zins nicotine pouches for sale in the United States, ending a will they, won't they saga and finding that the product benefits adults looking to quit cigarettes and use alternatives. Bill, this feels like a win for adults looking for smoking alternatives, but it also feels eerily similar to the Juul saga that we've seen over in the vaping side of this market.

Bill Mann (16:08)

I've always been very confused about what the policy goal is. If it is to stop people from smoking something like a Juul or something like a Zinn seems like an obvious benefit. If it is to stop nicotine use, then obviously they're not. But so the FDA has come out and said it actually more is the former than the latter. So the release said that the Zinn pouches posed a lower risk of cancer and other serious health conditions as compared with cigarettes and other smoking devices, as well as in relation to other smokeless tobacco products. So we have some clarity here and I think it's good for consumers. It's also good for Philip Morris and other tobacco companies.

Dylan Lewis (16:54)

Yeah, I was going to say we don't talk about Philip Morris a ton on the show. They are the owners of the U.S. distribution rights to Zinn. And Matt, it's a dividend stock and it's had what looks like a pretty good last few years. It's beat the market on a total return basis. It's got that 4.5% dividend yield. Is this at all interesting to you?

Matt Argersinger (17:14)

It is interesting. And I'll be upfront and say I own shares in Altria, which spun out Philip Morris International. Gosh, it must have been 15 years or so now. And these companies have been surprisingly resilient. And maybe that's not a good commentary on our health situation in the US but, you know, you've seen revenue kind of flatline decline. But these companies have done such a good job of finding new markets like Zinn or returning capital shareholders via dividends, like you mentioned, Dylan. And so on a total return basis, you've actually gotten a pretty good return as a shareholder even though the revenues have been roughly flat to down as we know. And the market for cigarettes thankfully continues to decline pretty steadily year to year.

Dylan Lewis (17:54)

Matt, when you look at a business since you are a shareholder of Altria, there is a legacy business that is largely where a lot of the money comes from. And then there are smaller alternative options that are encouraging, growing and maybe meeting that next generation of user or that person that is trying to quit traditional cigarettes. How do you value the two segments there?

Matt Argersinger (18:13)

Well, I think you always hope that those niche add on investments are going to grow because yes, they are less harmful. What you tend to see though is there are some big hit or misses in that. Altria had one pretty big one with Juul as we saw recently.

Bill Mann (18:26)

The primary difference between Juul and Zinn at this point is that Zen has not really been something that's been very popular with the youth. Whereas with with Juul, one of the big issues is that they were doing things like having it cotton candy flavored and other things that specifically attracted the youth.

Dylan Lewis (18:44)

All right, Bill, Matt, we're going to see you guys a little bit later in today's show. Up next, we've got what to expect from the stock market in 2025 and through 2045 with Motley fool co founder David Gardiner. That's next on Motley Fool Money. Stay positive news.

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Dylan Lewis (19:37)

Welcome back to Motley Fool Money. I'm Dylan Lewis. Now, where will the stock market be at the end of 2025? It's hard to say for anyone that isn't being paid to give a number, but Motley Fool Co founder David Gardner has a guess on whether we'll be in the black or in the red come the end of December. Small spoiler. It's the same guest that he has every year. Last week, David chatted with my colleague Ricky Mulvey about the annual market prediction game and how to Keep short term noise out of the way of your long term returns this year.

Ricky Mulvey (20:05)

There is a favorite foolish tradition which is sort of ragging on market forecasts. And I know this is one of your favorite topics. I got one from Goldman Sachs, a big headline. The s and P500 is expected to return 10% in 2025. There's some very smart bankers that will tell you exactly what they think the stock market will do this year. David, you've been doing this a long time. What do you expect the market to do in 2025?

James Cameron (20:29)

I think the market's going up this year, Ricky. And that's because I think the market's going up every year. And my record as a market timer predicting one year ahead each year somewhere around this time is enviable because I think most people are kind of a coin flip and I get it right two thirds of the time. And that's because two thirds of the time the market rises. And I think it's always worth expecting it to rise but recognizing it may not. In fact, one year in three the market loses value. The Goldman Sachs example you cited, they basically predicted what would be a traditional market year, about a 10% gain. Now coming after two very good years in which the S&P 500 rose more than 20% back to back years. That's a little contrary. That's probably a little bit more bullish than a lot of forecasts. But I think the market's going up this year. I don't put a percentage on it because I don't really care that much. I don't like it when the market goes down. Who does? But I feel very confident that the real conference conversation is of course about the long term and be invested your whole life so that one year doesn't really matter much. But I think the market's going up this year.

Dylan Lewis (21:32)

Good.

Ricky Mulvey (21:33)

I hope so too. Then why do we. I understand why, why the large banks like offering the, I'll call it the false certainty of very specific market predictions. It, it makes you feel more comfortable that the market is, is more certain than it actually is over the short term, over the long term. It's been the greatest, the greatest wealth generation machine ever for people that have stayed invested for, for decades. We see the large banks doing this offering one year market forecasts. But when you think about the foolish style of investing, why don't fools think in terms of those one year increments?

James Cameron (22:09)

Well, it's because we don't have to. I mean the, the beauty of being an individual investor especially if you're self directed, if you're rolling up your sleeves and doing at least some of it yourself, is that you're in command. When you give your money away to somebody else to manage, they're in command. And of course, a lot of people make good decisions and they don't want to spend that much time. So they put it toward index funds, which the Motley Fool's always favored. And index funds have very low costs usually and typically mimic the market's returns. So that's a perfectly good approach. But even then, those funds rebalance on a regular basis. So that means they, they can't allow any stock to become too big or too successful. If Nvidia starts becoming a titan, they have to start selling Nvidia and put it into things that are down in order to maintain the charter of the fund, which is to remain highly diversified. And so they're having to play a quarterly or one year kind of a game. I think a great advantage to those who want to be self directed, I think a lot of them are listening to us right now, are that you can actually make these decisions yourself. You can decide whether you want to cash in and increase your tax bill this year or not. When you're investing in managed mutual funds, you're handed a tax bill near the end of every year that you didn't have much control over. And the average managed mutual fund turns over 70 to 100% in a given year. So 7 out of 10 positions in actively managed mutual funds are no longer the same by December 31st. From the first day of that year, there's huge activity and turnover. And we, we benefit so much as fellow fools from finding good stuff and sticking with it. So I think we don't have to think in one year increments. It's fun to make predictions. And of course they're quotable for Goldman Sachs and their ilk this time of year. But I guess I would, I would rhetorically ask Ricky, where is the reporting at the end of that year on who said what and who got it right and who got it wrong and what anybody's baseball stats card looks like for their annual market predictions? We seem enamored of making them at the start of the year. Very few people are around at the end of the year holding anyone accountable with any kind of scorecard, which is why I spend so little time looking at that.

Ricky Mulvey (24:21)

Well, you mentioned friction there and the lack of friction for, for selling and buying. The advantage of it being for the individual investor where you don't have to Pay a salesperson commissions for buying anything. But then you mentioned the amount of turnover going on in these, in these actively managed mutual funds. It's never been easier to sell as well is the flip side of it being much easier to buy. So we kind of ragged on the one year. But then what is your expectation? I'll make you. How about, how about a forecast for 2044 or 2045? If we're not thinking in one year increments, what's your expectation for the stock market then? 5, 10, even 20 years from now for someone who is investing regularly, I'm.

James Cameron (25:03)

Pretty sure when I was asked this by somebody 20 years ago, I said about the same thing and I hope it's about happened. 20 years is a good amount of time. First of all, Ricky, because it's a fourth or fifth of a life, it's long enough to really not be able to visualize what the world's going to look like, but it's still short enough to be meaningful and worth talking about in a way that is rational. So I would say rational expectations of a rational optimist over the next 20 years are that the stock market would return roughly 10% a year. Goldman Sachs's call for 20, 25, 2 years and 3. I think I've already given you this ratio but it's really helpful to remember at all times two years in three, over those 20 years the market will go up. One year, in three, the market will go down. So something like, yeah, 13, 14 of those 20 years the market will go up. This year might be one of them or we might be one of the six or seven that goes down over the next 20 years and one year in 10. I would say twice over the course of the next 20 years there will be a horrifically bad bear market. And over the last 20 years we can see it, we can see the Great Financial Recession 2008, 9 and then 2022 was absolutely brutal for me as a motley fool stock picker and rule breaker investor. I think I got cut in half in 2022. Others may have done better than I, but that's a really, really bad year. So. So I think twice over the next 20 years there's going to be a very, very bad stock market for reasons we can't quite predict. And those usually last 18 months or so. The average bear market, 6 to 18 months. So just realize. And they always go down faster than they go up. That's one of my watchwords. So I would say in conclusion, it'll be a great 20 years. You will be well rewarded to invest and invest regularly. And I would say you're even more likely to outperform if you take my rule breaker approach to investing, which means you're holding for long periods of time the best companies of our time. And that's my thought about the next 20 years.

Ricky Mulvey (27:10)

David, if you're going to play this game, you have to be a long term optimist which is going to be which can be exceptionally difficult. Few things to be pessimistic about crushing national debt. We got drones over New Jersey. We don't know what they're doing. There's plenty of geopolitical risk going on with a war between Russia and Ukraine. You don't know what China's going going to do with Taiwan. There are things to be scared of and pessimistic about. What are the reasons then? Why not not just the past market returns, but why should someone listening to this be a long term optimist?

James Cameron (27:44)

History is on your side.

Ricky Mulvey (27:46)

All right, next question.

James Cameron (27:47)

Yeah, I mean my often when I was talking to people last year and they were upset about the election and on either party, just the whole feeling. Dave Barry, the humorous Miami Herald columnist always does a year end review and hilariously I recommend reading Dave Barry's column about 2024 and the craziness of the year we just lived through. But as we got near the end of last year and it's true right here at the start of this year, you can call it every bad thing, some of which are serious and some of which drones anyway to me not that serious. You can call it every bad thing. And yet I would ask you rhetorically why is the stock market at all time highs? And the reason is because the stock market is smarter than reacting to near term. If it bleeds, it leads headlines. The stock market is reflecting the growth of business. American business is the best business in the world. American business has better products and services today than at any point in history. And we often are in danger of taking things for granted, like how cheap it is to tap in over facetime with a relative halfway around the world for free. Or to eat food that is far healthier or drive cars that are far less dangerous in every way to the environment and to humans than they were 25 years before. These things are constantly improving around us. AI is here to make things even better than that. And so I think it's very obvious if anybody takes a moment to look at the graph of the S&P 500 or Dow Jones if you like, or the NASDAQ over any meaningful period called the last 10 years, call it the last 25 or 50, it goes lower left to upper right. And each of the really hard things that we live through, which were really hard 2008, nine was really hard. Each of those things at backwards through a meaningful amount of time is a small blip on the graph at the time you're living it. It doesn't feel good. But there is, there are very rational, repeatable reasons why things go lower left to upper right over the last 50 years and will over the next 50 years. And that's really what has to be spoken to. I don't feel like I have to prove out why that is or that that is, that those are the facts. I think I would need to hear from somebody to explain to me why that won't continue to recurrent when I'm very confident that it will. And I think, Ricky, a lot of the Motley fool has always started with people who are optimists. Our company has been built by optimists and most of the people who are staying with us 20 years later with their memberships and really grateful, those are people who are optimistic. They recognize the goodness that's in the world. And, and I think that's so important to call out at all times. Maybe, maybe especially this year, I'm not sure. But the American economy, by the way, is such a wonderful. Warren Buffett never bet against America. He's right.

Ricky Mulvey (30:37)

So let's move on to a technology that's easy to be pessimistic about. I don't have to look far on the Internet to find long term pessimists about artificial intelligence, whether it being the percentage of doom people thinking that it will cause civilization collapse because of super intelligent robots coming to take us all. I know it's something James Cameron has been worried about for a number of decades, since creating the Terminator movie. But when you're looking at artificial intelligence through the lens of long term optimism, through the lens of rational optimism, why is it something that you're hopeful about?

James Cameron (31:10)

Well, because it's going to make us smarter and it's going to improve so many things around us. Tied very closely to AI is of course robotics. And once you start putting AI into robots, you start seeing a much more automated world where a lot of the jobs that are lower quality jobs today that ideally humans could spend their minds and their potential on higher callings. I think a lot of those jobs are going to be taken over the amount of automation. Just for that. Amazon.com uses today is remarkable and has been for quite a while, but you ain't seen nothing yet. So I'm very confident that AI is obviously for real. One of my favorite lines from Stuart Brand, the longtime tech visionary, and Stuart Brand said, when a new technology shows up, an important one, a big one, you're either part of the steamroller or part of the road. And so I think it's very much worth being part of the steamroller with AI And I appreciate caution and cautionary thinking there. And, you know, so I think there has to be always a balance. But let's not make the mistake of doubting the Internet, doubting E commerce, which is what we faced as early stock pickers online with fool.com a lot of people didn't even believe in e commerce. I remember being on CNN and, you know, championing the idea that people would give their credit cards over the Internet. And that was at the time that was questionable. That seemed a little crazy because, you know, who's or will that person on ebay actually send you the thing that you just bought from them online, whatever online means. These things we take for granted today, they've been such an enabler for our economy worldwide. That'll be the case for AI as well. And yes, AI will be used for ill in the same way that the Internet has been used for ill. It's a powerful tool, but we're going to be part of the steamroller at the Motley fool on this.

Dylan Lewis (33:08)

Listeners. This week's interview was from last weekend's Motley Fool Money podcast episode. You can catch Ricky and David's full conversation, including their breakdown on what to make of the world and business of space travel over in our podcast feed. We'll be sure to drop a link to that episode for anyone listening to this week's radio show in the podcast version. And you can catch more Motley fool money in just a minute. Matt Argersinger and Bill Mann will be back with me after the break with stocks on their 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. So don't buy or sell anything based solely on what you hear. All personal finance content follows Motley fool editorial standards is not approved by advertisers. The Motley fool only picks products it'd personally recommend to friends like you. I'm Dylan Lewis, joined again by Bill Mann and Matt Argersinger, and we are jumping right into stocks on our radar this week, as he does every week, our man behind the glass, Rick Engdahl, is going to hit you with a question after you pitch your stock. Matt, you're up first. What are you looking at this week?

Matt Argersinger (34:16)

Dylan I'm going with Invitation Homes Ticker invh, a real estate investment trust I've mentioned a few times on this show. It owns single family rentals and as of the latest quarter owned about 85,000 of them. So it's one of the largest institutional owners of single family homes. And there's this weird disconnect right now, Dylan, that I can't explain and credit to Anthony Chavon, who I work with in Dividend Investor. He's been on this for the better part two years, which is if you take Invitation's current enterprise value, which is its market cap plus its net debt, and divide that by the number of homes in its portfolio, you arrive at an average home value of about 318,000. But if you look at the median US home price, that's closer to 400,000. And in fact, if you look at the average sale price for homes in the markets where Imitation homes operates, it's around 415,000. And this is all, by the way, data from Green street from a recent Wall Street Journal article. So either the average US home price is about 25% overvalued or Invitation Home share price is around 30% undervalued. I think something's got to give and I don't think home prices in the US are going to drop 25% without some kind of economic calamity. So I'm going with Invitation Homes is really cheap. And by the way, if you buy shares today, you get about a 3.8% dividend yield, almost three times the yield on the S&P 500 at the moment.

Dylan Lewis (35:36)

Rick Whew, that was a tight radar stock pitch there, Matt, and an arbitrage opportunity.

Bill Mann (35:41)

It's Rick.

Dylan Lewis (35:43)

Rick, a question about invitation homes ticker invh.

Rick Engdahl (35:47)

Matt, I've listened to you about REITs before. I think Pebblebrook might be one that I bought. It's not doing real well. I've had really bad luck with REITs. Can you promise me that this one's going to go up?

Matt Argersinger (35:59)

Yes, it's going to go up. Rick. No, I can't guarantee you.

Dylan Lewis (36:03)

Just on behalf of our lawyers, I'd like to hop in and say no. Matt Cannot promise that will go up.

Matt Argersinger (36:09)

Ricky. Better for you, I promise.

Dylan Lewis (36:13)

Bill, what legally non binding radar stock do you have this week?

Bill Mann (36:17)

I have to get myself back together. I'm sorry. So my company is actually a company that you probably wouldn't have thought to have benefited from the potential shutdown of TikTok, and that is Duolingo. Duolingo reported a 216% spike in US users learning Chinese as TikTok users in the US move over to the other Chinese platform, RedNote. The company also had its stock go up really substantially in the last week because they've opened up their AI powered video chat feature to Android, which opens them up to a lot of different markets. This is a subscription business. It trades at 21 times sales, which gives me the vapors. But I think that Duolingo has done an incredible job of being a default for casual language learners.

Dylan Lewis (37:09)

Rick, a question about Duolingo Ticker.

Rick Engdahl (37:11)

D U O L so my wife, my kids, they've been using Duolingo for a couple of years now. They love hitting their streaks. The gamification really works. Not one of them is speaking any Spanish as far as I can tell. So as our resident polyglot, does it work?

Bill Mann (37:30)

It actually does. My daughter has learned Mandarin and she's actually made it to the end of their offerings and they make it to.

Rick Engdahl (37:37)

The end of the thing. They just don't learn the language.

Bill Mann (37:40)

Well, maybe they should not be studying Welsh then. Their Spanish would be better.

Rick Engdahl (37:44)

Yeah. Actually, my daughter is supposed to be studying Spanish for school, but she really wants to learn Swedish so she keeps jumping between them.

Dylan Lewis (37:51)

It's the classic dilemma. Right, Spanish or Swedish? Rick, I have a follow up question on Duolingo. Bill and I have some personal beef. That's where it comes from. I need to learn Tagalog. My fiance's family is Filipino. It is the 25th most spoken language according to Ethnologue. It is not supported by Duolingo. That seems like a missed opportunity to me.

Bill Mann (38:14)

Mabuhay. I think part of it has to do with the fact that the Philippines in particular is one of those countries where if you show up and try and speak Tagalog, they just immediately say, oh, no. Well, I speak English, so yeah, there are some definite gaps. And it is, and it is definitely driven by demand and the demand isn't there. But Dylan, given your, given your bully pulpit, I think you can make it happen.

Dylan Lewis (38:42)

Yeah. To Duolingo. I say hi to Ho for the Filipino listeners out there. Rick, which company is going on your watch list this week?

Rick Engdahl (38:49)

This is a tough one. Do I trust Mattie?

Bill Mann (38:51)

A?

Rick Engdahl (38:53)

Do I go with what you've been one more chance, Matt. One more chance.

Dylan Lewis (38:57)

All right. Invitation, homes, it is.

Matt Argersinger (38:58)

I will not let you down.

Dylan Lewis (38:59)

Rick, Matt and Bill. Appreciate you guys bringing your radar socks. Rick, appreciate you weighing in, listeners. If you want more stock ideas, you can get two recommendations a month over at Motley Fool Stock Advisor. To join, head over to fool.com signup. Today's show is mixed by Rick Engdahl. I'm Dylan Lewis. Thanks for listening. We'll see you next time.