C (3:23)

Yes. Mine is Cava Holdings. So this is the Mediterranean themed restaurant that is.

A (3:31)

And it's delicious.

C (3:32)

Absolutely. I wonder if they have an early bird. So this company just continues to grow like gangbusters. And the reason is, is because people like the food. That's no surprise. But I, I think what might surprise folks is the company is still expected to grow revenue at around 20% a year for the next three years. The company, these restaurants that they're opening are extremely good on a return on invested capital standpoint. So they target 40% cash on cash returns, which gives them a payback period of about two and a half years, which is pretty phenomenal in this business. And what's happened over the years as a result is now this company is generating scale, their operating margins are expanding, their operating cash flow is growing, they're able to self fund now. They don't have to go back to the equity or debt markets in order to open new restaurants. And it's all because this is a very well run, well led company that consumers like. I think that's like three or four of the traits of a rule breaker right there. The other thing is, unfortunately the stock was priced a little higher at the start of the year. Maybe it got a little carried away. But fortunately for us who are looking to perhaps put this company into a portfolio, the multiples are much more reasonable to attractive. So yeah, you have a rule breaker that continues to break the rules, has plenty of growth ahead of it, is very well run and it's trading at a nice price today.

A (5:10)

Yeah, I mean it's a premium, but it feels like a more acceptable premium.

C (5:14)

That's a better way to say it. I like that acceptable premium.

A (5:17)

It's not like it's, it's not premium priced, but like sometimes, as we've seen over the years, Rick, sometimes premiums are deserved.

B (5:26)

Yes. And kava kava with the stock and the food is worth the premium you're paying. You're paying up for the quality that it provides on both counts.

C (5:32)

Well said.

A (5:33)

I mean I, I have never been disappointed by a $25 bowl at Cabba, which for me a cheapskate is saying a lot. Rick, let's talk about what you've got going here. I mean, delicious rule breaker Cabba Ticker, C, A, V, A. What do you got?

B (5:51)

Yeah, I'm going to start with the same two letters, but I'm going to drive in an entirely different direction. I'm going with Camping World ticker symbol cwh. It's the country's leading retailer of recreational vehicles. It sells new and used motorhomes, towable RVs and related accessories. It services the RV market. It also operates the Good Sam Club, which is the equivalent of AAA for this market. It had 201 locations across the country at the end of June. So it's run by Marcus Lemonis, who some of you may recognize from cnbc. Shows the profit. And now the fixer on Fox. I didn't realize he had a new show, but I'm going to go check it out this. This year. So selling big ticket RVs is a cyclical business. And revenue starting to rise again this year after back to back years of declines. It just sold a record number of units. In its latest quarter, it posted its strongest quarterly profit in more than two years. It also pays a generous quarterly dividend, currently yielding just above 3%. Campy World shares the wealth when. When the going is good, sprinkling in special dividends in good times. Just three years ago, it distributed five times as much in payouts as it's doing today. So if the business is on the rebound, you. You can expect the quarterly dividend checks to get even bigger.

A (6:57)

Tim, sometimes we talk in rule breakers about dark clouds we can see through. And there, there have been some bumpy roads for, for Camping World. What do you think drives them forward? I'm really stretching the metaphor here, Rick, but like, take the wheel.

B (7:12)

Take the wheel, Tim. Keep going, Keep going.

A (7:14)

Keep driving.

B (7:14)

Yeah, there are potholes, there are storm clouds, there are detours, there are misdirections that you'll need to recalculate, but the risks, they're obvious here. So when interest rates and gas prices are high or when the economy is low, Camping World is going to feel like it belongs up on concrete blocks. It's not going to be an ideal investment, but I don't see it that way. To me, Camping World is built to make the most of silver linings. When the going is good, Camping World is going to use its scalability to grow its business and expand its margins. The stock today is trading for just three times what it earned in 2021 when there was a post pandemic spike in RV sales. When the going is bad as it was just the past two years, Camping World also sells used RVs. It could buy your RV in a pinch. More importantly, in this highly fragmented market, Camping World can buy out smaller players the way it has done for years, at better prices when the industry's in a lull. So this is a company that sort of wins. It's a play on the grain of America. As all of us here, we're talking about our tenure at the Fool. We're living longer, we're living happier and want to make the most of our lives. I think there's a long term bullish catalyst thesis to go in favor of Camping World. But it's also a lot of younger people are also now skewing to RVs. It's a fun way to travel and get around. So I think again right now, looking back, the last couple years haven't been so hot. But again, that dividend, that's 3% plus and it should grow as a company bounces back. I think it's an interesting play here, especially coming from the Phoenix mindset where I'm in, which is, you know, we look for stocks that offer growth, but there's also, you know, a little dividend that not necessarily a component of every Phoenix stock, but also helps with our portfolio goal.

A (8:45)

I mean, I love getting paid like I love getting paid for holding stocks. But I mean, you're right about this. And what's interesting, I don't know if you've ever seen this, Dave, but I have noticed this. If you look around, just no matter where you are, but look in a suburban area, a pro tip, you are likely to see a camping world. You have to look for it. You kind of have to look for it. They're sort of hidden a little bit, but if you look, you're going to see it.

C (9:11)

Down in my neck of the woods, there are a lot of campers and there is a camping world down near the beach where I live in South Carolina. So I totally see it and it is amazing. This is a trend that is actually this RV trend has been going on for probably a little bit more than a decade now. And it's still something people want and it's awesome. I love it.

A (9:32)

Yeah, it'll be interesting to see if you're right about this. If Gen Z, you know, starts picking this up a little bit, that would be a significant catalyst for this business. But let's move on to mine. My Supernova stock idea is Warby Parker, which you may know as the company that started selling eyewear online and has since moved on to building out about 250 stores around the US in several US states. They're targeting about a thousand of these stores. In the short term could be much more than that. I mean to be fair, I think there are 4,40,000 different optometry locations around the United States. So they are nowhere near saturating their market. But they have a really interesting brand. And this started with a fairly simple idea. The co founders of Warby Parker, they thought that manufacturing eyeglasses was way too expensive, way too expensive. And so they decided to disrupt the supply chain and figure out how to squeeze cost out of making glasses far cheaper than they had been. And with that simple idea they started with an E commerce model. And you may remember this, you may have even done this during the pandemic where you were looking into your camera. You know the camera was giving you your, your eye prescription that you could go in and order for through Warby Parker and they send you five pairs of glasses. You could try on five different pairs. And this was a very interesting model. But ultimately what Warby Parker decided is in order to really scale, they had to get stores where they could get optometrists in stores. So like the business of actually serving somebody like me who has worn glasses since 4 years old really wants to see an optometrist that is now built into these stores. And these stores are incredibly profitable. 35% roughly four wall EBITDA margins. They've held that steady for a couple of years now. And in the most recent quarter, even when you strip out stock based compensation, you strip out all the capex, they are generating organic cash flow. So there's some risk here. We could talk about this, Tim.

B (11:45)

Let's talk about the risk. I think it's important we look at both sides. There's a lot of cool things happening. I bought my first two pairs of Warby Parker last year when we recommended it. I just said, hey, I'm going to eat my own cooking or I guess wear my own cooking.

A (11:57)

Wearing cooking sounds painful, Rick. I'm not going to lie.

B (12:00)

Oh it does, Tim. But to the point, there are risks here. And again the company's doing a lot of cool things with Google and the AI front opening in stores. But are there risks here like lack of focus or any other thing that you see that could hold the company back?

A (12:12)

The online discounters are significant and there is an online discounter which happens to Be very, very good and is a bare knuckles competitor called Zenny. You may have seen this, like if you're going around on different websites, you may have seen ads from Zenni and Zenni makes good pairs of glasses that I mean they do deliver quality arguably. Rick, I would say what Warby Parker was for online eyewear, that is where Zenny is now. I think it's fair to say they are at least the equivalent of Warby Parker in the online eyewear segment. But the good news here is that while Zenni may be disrupting Warby Parker's e commerce business, Warby Parker is massively disrupting the mall. Optometrist. I mean I have gone in to the local mall here. I don't know if either of you have seen this and gone and looked in like the Luxottica and it is barren like that. Just people are not going in there.

C (13:12)

So that's pretty amazing because I don't and I don't think a lot of people know this, but Luxottica absolutely owns this market. Yeah, they're huge and I didn't realize that until there was an expose about them. It was like three or four years ago, I think. And the fact that Warby Parker has been able to not only enter the market via the online channel but to extend into Luxottica's in store channel is phenomenal. Yeah, like that is a feat considering Luxottica literally owns every piece of the supply chain for glasses.

A (13:51)

Yeah, this is a great point, Dave. This is so when we're talking about supernova stocks, when we're talking about rule breakers, we're very often talking about meaningful disruption. And Luxottica. Luxottica's strength is also its weakness here. For Warby partners it is now it is because they own a supply chain that is an expensive calcified supply supply chain. And Warby Parker has come in, dismantled the traditional supply chain and offered an alternative that is highly rule breaking. And I own these shares I've been buying. I really like this company. But we're going to move on here. We want to know what you think. What is your idea of a great Supernova stock? Leave a comment for us. Up next, we're going to have some supernova reflections.

D (14:37)

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A (15:39)

All right, welcome back to Motley Fool Money. For those who may not know or remember, Supernova was and will be again a suite of real money portfolios built from stocks with rule breaker characteristics as defined by fool co founder and chief rule breaker David Gardner. So we want to take a look back to look ahead because, because we're bringing back Supernova. And Rick, when I, I, I go to you first, I'm just going to tee you up by saying it is going to be bringing back a bit of what we did, but it will also be a little bit different. So what do you remember about those halcyon days of Phoenix 1 and Phoenix 2 and, and what are you looking forward to with the new Phoenix? I have nothing but great memories of.

B (16:26)

Of Phoenix 1 and Phoenix 2. This, this was 13 years ago and both the Phoenix 1 and the Phoenix 2 were able to crush the market with the basket of stocks that that David Gardner provided for us. And since then we've grown that basket and that's what I'm looking forward to the most. Not only did I have this great experience, I have a great team. Four of the five of us were part of the original Supernova team. Emily Flippen, who's my co captain, came in towards the late of the Supernova tenure, but obviously you all should probably know her. Jim Mueller was part of the Phoenix 1 team and took over Phoenix 1 when I went to run Phoenix 2. Matt Argenser was also part of other missions and led some so and then Alicia Fury from our Rule breakers team wasn't around during the initial Supernova days, but clearly a rule breaker and supernova investor at the core. So it's going to be an amazing group. But I'm looking forward to all the new tools, all the new devices we have because our pool of stocks is obviously a little larger now and we also have the Rule Breaker database, which gives us a totally new pool of to explore. And I enjoy this. I, I, I enjoyed the fact that we were playing with real money, which was nerve wracking at the beginning. Like, oh my God, this is coming out of the Motley Fool's balance sheet. What if I mess this up? Will I ever be able to show my face again? And I'd like to think even if, if we, if we had lost to the market, I would still be around. But I do think that this is the kind of thing where there's just real simulation and you're seeing this happen. And in the Phoenix case, whether you are a retiree or near retiree or even someone that just came across an inheritance or has a lot of money to spend, it has a lot of applications, Phoenix will. I think it's gonna be very exciting. I don't use the word love often, but I love my team. I'm very excited about what's gonna happen here.

A (18:00)

Dave, give me your reflections here. What, what can you remember about the old supernova and what are you looking forward to?

C (18:06)

How do I follow that?

A (18:07)

I don't know.

C (18:08)

That was the most impassioned.

A (18:10)

Just be yourself, Dave.

C (18:11)

Yeah, so I was not on the Odyssey or Phoenix team. I was actually heading up the Explorer mission, which was the battle royale. And it was great to interact not only with the teammates that we had to figure out, okay, what, you know, what theme are we going to bring? What stocks do we think represent this team? But it was also incredible to engage with the members because members voted. And so, you know, that's one thing that I'm really looking forward to because the other thing that happened was I actually left the publishing side of the business and went down to our asset management side. So I brought Rule Breaker investing down there, which was really cool. I learned a lot. So the other thing I'm looking forward to is taking those experiences and bringing them back up to share with you things that I've learned and obviously to share with members things that I've learned. But I could not agree more with what Rick said. In terms of one, the universe itself is bigger. That's one of the awesome things about Rule Breaker investing is the innovation never stops. The disruptive companies keep coming to the marketplace, so there's opportunities there. But the fact that we can now use the Rule Breaker database as a way to source completely unique, potentially investments for the portfolios, that's going to be a lot of fun too, because we have a pretty good team that we really like and are Looking forward to working with as well.

A (19:48)

Yeah, I'll just mention that because you and I get to work together on this. I'll harken back in a minute on, on Odyssey 1 and Odyssey 2. But just looking ahead here, Dave and I have Sammy Dayo, Anders Byland and Keith Speights for the Odyssey team. And Rick and I have known anders for like 20 years. Dave knows Anders. Keith has been a wonderful contrib. If you don't know Keith, you're gonna really like hearing from Keith because he's got some real biotech expertise. You've probably seen him on Fool 24, talking biotech with Brian Aureli. But he's also a really good writer. He's been a contributor to me on Cloud Disruptors. He's just, I mean, such a solid guy. And of course, San Meat, we've worked with Sam Meat since he's joined as a, as a full timer. Really good analysts. I, I think like Rick said, I mean, the Phoenix team is phenomenal. I'm real happy with our Odyssey team. And it was like that with Odyssey 1 and Odyssey 2. We had a very eclectic group of people and we were selecting from what we called the Supernova Stock Exchange to build something that we thought was durable, built from the world's best businesses that we could find. And we get to do something magnificent, I think, which is when you're dealing with a real money portfolio, there is this element of if we give you a scorecard, we're like handing you some fish. Like we, we, we think these are this, this is, this is worth having to put it to use. But when you're building a portfolio and modeling a portfolio for members, I think we get to more actively teach fools to fish. And I think that is so exciting. I love that. It's my favorite part of the job. And so now that we're bringing that back, I can't wait to do that because we're going to be talking capital allocation. I know these sound boring, like managing risk capital allocation. But trust me, like in the path of building long term durable wealth, experiencing that together in a way that is meaningful and we're going to demystify it. That's just going to make life so much better. And to me, I guess I'm a.

B (22:05)

Nerd on this, but I know Dave.

A (22:06)

Likes this too and I know Rick likes it too, because we all do this job that is fun for us. Yes, that's good stuff. So I'm very much looking forward to that. So those are our reflections. Up next, A bit more on how to get involved with Supernova when we open it up on October 1st.

E (22:26)

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A (23:13)

Finally, we're going to close out here because this is a longer episode. We wanted to give a lot of space to Supernova coming back on October 1st. So I'm going to end with a short plug here. If you want to learn more about Motley Fool Supernova and what's coming on October 1st, we have a special URL for you and this will be in the show notes. It is called Supernova is back.Fool.com Supernova is back.Fool dot com and a quick word on David Gardner and his book here. His book is Rule Breaker Investing how to Pick the Best Stocks of the Future and Build Lasting Wealth. Please pick up that book if you, if you haven't done so yet. It's a great read and it really gives all some deep insights into what we're doing with Rule Breaker Investing and the principles behind all of the stocks that we're going to be choosing from that are in the Supernova Stock Exchange. Go ahead, Dave.

C (24:22)

We've all learned at the feet of David Gardner and we've been become better investors for it. I'm about halfway through mine and I'm still learning things from him.

A (24:31)

Yeah, 20 years in and it's, and it's still happening. The learning just never stops. David will be serving in a strategic advisory capacity for the Motley Fool Supernova service. Remember this closed in 2021 and the portfolio average at that time of closing was 21.8% annually over nine years. So it's, it's really something special. Thank you for being here. Thanks to, to Dave and to Rick. As always, people on the program 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 stocks based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Thanks so much to Dave Meyer, Rick Yaneres for our engineer Bart Shannon and our producer, producer Anand Chakavalu. I'm Tim Byers. We appreciate you being here, fools. Check out Motley fool supernova. Remember the URL. Here to learn more is supernovaisback.fool.com full on everyone. We'll see you again tomorrow.