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Automatic TRANSCRIPT

Welcome to the Monkey Fuller. I'm Chris with me in Studio Studio Bill Man in the House. Thanks for being here. How are you Chris? I'm caffeinated Ed year working on it. Let's let's make this happen producer. Dan Is Hungry. We're GONNA look to the horizon for a huge IPO and our continuing search for the Midwest. But right here in front us. We've got some retail earnings. And we're going to start with target targets. Third Quarter was pretty much everything you want it to be if you're a target your whole harsh J.. In Fact Act III. I love the fact that the CEO Bryan Cornell got to use the word bifurcation in in in his call just basically saying I think what we're seeing in the retail market is winners and losers and they are spreading farther and farther apart. The winners are winning. Faster and target is one of them. Losers are going away. Profits and revenue in the third quarter were higher than expected. Same store sales higher-than-expected. They raised full year. Guidance the DOC gooden good those sound good yeah stocks up eleven percent this morning hitting a new high. Yeah this is about as hot as you can get going into the holiday quarter I you think so and I and another important thing is that is that they seem to have some really good visibility and one of the things that they did target had a few the operational issues a couple of years ago. And they've really gone to Delivery and and what they call same-day pickup which is you order online and you show up in their costs for that are like ninety percent lower than than either store or delivery and they are really really seeing being some tailwinds behind Having pushed that a couple of years ago so they're getting a payoff for you know for for for looking ahead. You mentioned Brian Cornell the CEO think back a few two years ago when the big news out of target was they were selling their pharmacy business and it was a perfectly legitimate question at the time to ask of Bryan Cornell. Well is this a good move because that's a profitable business that you and your stores and you're selling it off and people kind of have to come in for drugs and it was the sort of thing that even though he had had some success early on at target I think it was a perfectly fair question and coming out of that you could just sort of look at it and say okay. Well they're going to get a lot of money what they do with that. Money will determine whether whether or not this was a smart move and you look at the investments to Cornell and his team have made and Yeah a home run but absolutely it's a home run and and and I thought that I thought that when he was being asked those questions he was very thoughtful about it back at that time he said look we we see why you you. Would you know we see why one would think that this is a high risk move. We've done the research and we think that you know. We think that there are places where the the money that we will get in return are going to be full force multipliers for target and scoreboard. I mean they really really are crushing it at the moment I understand that anyone's reluctance to buy shares of a company when it's at an all time high but this also seems to be like this is not some insert name. I'm of software as a service company with a you know or or you know beyond meat or with some crazy evaluation like this is this is a business and management team at the top of their game. I'm and I don't own shares of target but the way they're performing the fact that the stocks at an all time high is is not is not why I'm not buying lying shares. There are other reasons why I'm not buying shares. I look at my own portfolio and I feel like I've got retail pretty well covered now but holy cow. This is a business on fire. I I think that if you are if you do believe that retail is not dead and I happen to you know I happen to think that the the death of retail was was greatly overstated. Did you have to own a company like target. You don't have to own. Target target target is and will be a winner lows. Third quarter was a little confusing to me. I'll be honest. Wasn't confused. Barely yeah apparently not shares of Lowe's up about five percent this morning this this. This was not a this is not what we saw out of target same store. Sales came in low overall. Sales came in a little low. They did however raise guidance. Their their profits were better than expected. And and I'm assuming it was just sort of the marketing the good outweighs the bad in our minds. Well I mean this is the interesting thing about lows is that a is that home depot just reported in Home Depot's results. I mean if you just take them at face. Value were much better than lows but this is why investing investing is all about expectations in the short term because lows expectations were not great and home depot has been has been and firing on all cylinders for for for years now. This was a rare rare miss for them so yellows came out and said that they are. They're moving out of AH OUT OF CANADA THEY'RE closing. I think it's thirty four stores in Canada. They're doing some cost cutting but yeah it is. It is sometime sometime. Sometimes it is amazing to me. What the market like picks up on and decides his great or not great? Because absent any other you know absent anything else. Home Depot's report was much better than lows. You mentioned Canada. And you know on the one hand hands management saying no. We're committed to Canada but also closing and I think the number of locations. They had in Canada in two thousand eighteen. Eighteen was around sixty so I don't know if they're closing all they're closing thirty four that at a minimum. That's half of what they've got up in Canada. So maybe it's just a look. Let's hit the pause button and figure out how to make this work a that for all we know may contribute to a little bit of the bump today that you you know. It's all the credit in the world to retailers who make the tough decision to say you know what some of these locations that are performing as well. We're GONNA shut them down they have of A couple of concepts in Canada that that that they don't have in the. US One is called Rona. The other is called Reno Depot and those are primarily what. They're cutting in Canada so they're moving away from mostly from other concepts that they have and not from Loza closing six lows storage and you have to imagine. Imagine that that's a that's a consolidation. The reality in Canada is that it is made up of somewhat large cities and then you know so it it may just be that they felt like they had Too much capacity across these concepts Within the Canadian cities you go back a year and a half ago with lows the board sort of pushing out the CEO bringing in Marvin Ellison who made his bones at home depot in the year and a half. He's he's been in the corner office. The stocks up about thirty five percent so clearly getting things done although as you said this is a business that for the five to ten years has had lower expectations in part because it just hasn't performed as well. Yeah I think that's exactly right and and and you are. You're spot on on in that. It is admirable when a company looks at something. That's not working and says hey let's stop spending money on that. Let's stop trying to make that work. I mean that it. It doesn't seem like good news ever when a company says. Hey we're closing down things. But that's that's really not the case. So the fact that they've rip the band aid out offer I think is probably what the market is really focusing on and it's why the stock was up about six percent as we as we recorded our email address this is market hillary at full dot com questioned from Bassem album mastery whose name. I'm almost certainly. That was pretty good. Sorry about that. It's I would like your opinion on the Saudi Aramco. IPO This is projected to be the largest IPO in history however the New York Stock Exchange as well as the London stock. DOC Exchange are slowing it down and not giving approvals. What is the issue? And do you think this is something. The Motley fool would invest in given that Aramco is wholly owned by the government in an information. Usually coming from companies on calls would not really happen. Due to national security concerns. Would love to hear your opinion on this so when I was working with Motley fool asset management we actually held some shares in some Saudi companies. Dairy company and a bank Aramco is getting ready to come public and they're they're trying to raise. It's about you know they're selling one point. Five percent of the company which if it goes out at the one point six to one point seven trillion dollar caller valuation that the company and the Saudi government. One means it will be the largest. IPO In history larger than the ALIBABA IPO I po of a few years ago There is a there is a tried and true belief in investing that you should be buying what the king is selling because when a government prioritizes they're not looking to maximize the amount of money they make because they don't want their citizens who tend to be the ones who by to lose money right. They want the citizens to be happy with the privatization they want them to be happy with The the amount of money they're making so it is very note worthy that this is only being Is only going public on the Saudi market. The reason it's not going public public in the US or in Japan or in in the UK doesn't have as much to do with the exchanges because the exchanges would sell their grandmothers that they could get away with it. It's the fact that the big investment banks are not biting at this valuation. So they are not getting enough interest in so they're saying okay. We're just going to do it in Saudi Arabia. I don't see any so you know I don't see any real Chance that the Motley Fool's Services would own or recommend Aramco at these evaluations It could come down. I don't think that's good news for Saudi Arabia. But it's not something that I'm particularly invested or interested in other than as a spectator just so I didn't miss here. You could you say this is GonNa go public at a valuation of one point six trillion dollars Kinda blow past that making it overwhelmingly the large. Not just the largest IPO in history but the largest public company to the tune of fifty five five percent higher than whatever Microsoft or Apple. That's right that's right. It instantly comes out as you know as a charter member of the four Comic Club. Yeah it is. It is by not very close. The largest oil company in the world and the one that defines pricing because Getting oil out of the ground in Saudi Arabia is so much cheaper than it is almost anywhere else. Their their their their their cost of production is about two bucks a barrel. And you know you you look at some of their some of their comparable. It's it's twenty thirty forty dollars a barrel. So Saudi Arabia has a natural advantage and Aramco is is is the government owned entity but as with every other government owned entity and this one will still be ninety eight point five percent owned by the government you have to understand that. Prophets are not generally their highest order interest. Quick Shoutout to audible. We've got Thanksgiving next week.