T-Mobile/Sprint Merger, Under Armour, Renewable Energy Stocks
Thanks to health. IQ for supporting. Today's market fully. Health Accu uses science and data to secure lower rates on life insurance to see if you qualify go to health. IQ Dot com slash full. So you can take the proprietary health IQ quiz and potentially save up to forty one percent on premiums. It's Tuesday February eleventh eleventh. Welcome to market. I'm Chris L. WITH ME IN STUDIO Mr Jim Miller. Thanks for being here. Thanks for having me. We got the bane of my investing existence assistance with its latest quarterly report. We're going to dip into the full mailbag but we're going to start with the business story of the day and that is the fact that nearly two years after the merger drove T. Mobile and sprint was announced we are. We're not at the finish line but we are one big step closer to this deal being finished. US District Judge ruled in favor of sprints twenty six billion dollar deal to merge with T. mobile and in terms of the stocks shares a T. mobile mobile up about ten percent shares of sprint up. Seventy two percent. Yeah well in seventy two percent from a really low number yes absolutely is the T.. Mobile pop was yeah. That's that's pretty significant and I like it because it shows the market's expectation that this is going to be actually a good thing for both from both companies to merge into one One one of the things. I've found that Kind of unusual is that The claim is that this is going to me job creating from the get-go most mergers like this Our job destroying because you Overlap on a whole bunch of Back Back Office office things for instance and But these guys are saying yeah. We're going to create something like thirty five hundred dollars. I think is the number for the first year and eleven thousand over the next five years. That's pretty cool. Yes absolutely if they can pull that off and it's interesting because it to your point they're trying to strike a balance they're trying to say. Hey we're going to create jobs but they're also saying to Wall Street. We think about six billion dollars in synergies right. It'd be because yes absolutely some of the HR Dr Finance legal some of those jobs. Go Away I I should mention were again. We're not we're not at the final step here. It's still needs to be approved by the California Public Utilities Commission. But as you said I mean you look at the market reaction it seems teams like maybe not. I don't want to jinx it but it seems like this is going to happen I think it will. The states The thirteenth states that were challenging it led by California for New York New York Attorney General said that she still wants to really think about this as she still believes. The judge was wrong but I think and and reading the the Excerpts from the judge's decision it seems that he was pretty on board saying that this is going to be actually better for the industry T mobile He he called him out T.. Mobile has really challenged the comments. At and T. and verizon The companies that CEO John Legere Ledger Ledger ca routinely called dumb and dumber in his notes but He says the judge that has says that In an should be good for the business and we're having a fourth company stood up in in the form of dish network They're being stood up a with a With the use of a T. mobile and sprint's networks for I believe seven years and a whole whole bunch of customers that are going to be transferred over to them to get them up and running a fourth a cell provider competitor. He mentioned John Ledger. Adjourn and one of my favorite. CEO's never fails to entertain. But I think it's you know ledger because of his antics because because of the way he would go after in particular verizon an at and T. and very public ways. I should also mention both stocks down ever so slightly if you're at GMT and your verizon. You're you're not thrilled about this but maybe it it helps a little bit. John Ledger is not going to be the. CEO of the resulting company. Mike seaver is going to get the corner office on this so that was announced. November is not a new thing with this right and if if you like colorful. CEO's while there's a little bit of sadness with this but it's point out that ledger wasn't just amusing and colorful he. He was also a very effective business. Leader did a great job of adding subscribers to the bottom line for T. Mobile. If he wasn't able to do that then he would have. Just been a mouthy. CEO who wasn't backing it up. No he backed it up. No it did and One of the things he did was he got I think he got the company more more energized in in both getting its customers satisfied which for this industry is big hurdle and And getting the employee is more engaged in happy employees happy customers and that leads to better business and the revenue numbers that this company had been growing like crazy. So yeah they've been they've been doing pretty well bill under ledger and hope they continue under a seabird. Let's move on to under armour. Fourth quarter sales came in lower than expected and even even worse under armor said that they expect sales to drop in twenty twenty and I get that they are also dealing like a lot of companies with a AH ripple effects of the corona virus in China. They've got hundreds of shops in China. So obviously that's going to have a material effect in Q. One They expect that's GonNa hit sale somewhere in the neighborhood of fifty to sixty million dollars but if that were the only problem under armor had if the only problem they had was the virus than maybe the stock wouldn't be down eighteen percent today not at all. That's just one of many many problems you know. They're they're doing they're they're doing pretty well internationally. That's growing double digits. And then and they're expecting that for next year as well but when the international win the North American business is seventy percent of your sales and it's expected to go down next year. Yeah that's that's not a good sign and under armour really needs to refocus on its core competency either get a little unfocused. I think With wearables and stuff like that Yeah they have to compete against Nike and Lulu Lululemon but they haven't been able to really focus on on what they need to focus on. Yeah it really seems like among their problems. They're discounting too much. They talked about being heavily. Reliant on Cole's and discounting that went on at Kohl's it also also seems like they just have too many skews they just have to. You know they make good stuff. I've said this before about under armor. They they appear to have gotten in in some ways the most challenging part of athletic apparel correct. They make good stuff. They just appear to have a problem with almost every other part of retail. Right I don't follow the company extensively so you Who is the Jason Follow it better but Another thing I noticed was is that In two thousand nineteen they brought in less cash through the front door as well even though they they grew revenue just a little bit And God gross margin to improve Thanks to pull him back. Some of those discounts you were talking about. They brought in about a hundred and twenty million dollars less than free cash flow from operations. So That's money coming me in the front door. Not as much on the good side though they are they are working down. There long-term debt that was down by five Down nineteen percent something like that and their cash balance was up significantly so the balanced stronger This is CEO Patrick frisks. First quarter I believe. Yes and so We'll I think it's okay to give them a little bit of Give him a little bit of time to get to get really good going on on his job but if they continue as they've they've been going. Yeah the IT's going to be not fun for shareholders you own a lot more stocks than I do and I'm curious how you think about. Look this is a stock that is down and fifty percent for me and I'm not I have no plans to sell it. Because it's such a tiny part of my portfolio and it's they basically moved it both mentally and emotionally just like off to the side. It's a business that yes I'm rooting for. Yes I would love for Frit over the next three years to triple but I I've almost stopped caring about it and I'm curious you know. What is your experience various? How do you deal with stocks that have a similar path where you went in? You had your thesis. It didn't work out and now you look at your portfolio uh-huh and it's one percent or less of your investing portfolio. How do you think about a business like that? Well unless I can see a way for the company to turn around I'd rather get rid of it personally even though yeah. It's a little tiny piece and it doesn't feel like it's worth selling but there is some money tied up even if it's only a few hundred dollars tied up in that and you probably have better ideas where to put the money and have a even adding a few hundred dollars to a winner Could help boost that down the road. There's also the psychological thing every time you look at your portfolio. I don't know how often you do that but every time you do you see that thing. There's some their armor. I bet you do and even though you say you've put it aside it's still hits. You like little needle every time. So he does. Although I've I've like I said I've have kind of stopped caring about or I shouldn't have stopped carrying about. I've stopped being upset about it and to me it's almost a visual reminder reminder of a mistake I made and that I I hope it's going to be helpful to me as an investor in other businesses going forward there is that and I've heard many many investors I admired Say that You Might WanNA still trimmed down and recover some that money and put it back to us is rather than consigning it to the depths. You Know Me. I'll just spend it on coffee. Well he loved coffee and it's supposed to be healthier right absolutely another. Another study came out. Now it's good for your abundance. I love it quick shoutout to health. IQ If you're a runner cyclist or cross it or any type of athlete or maybe maybe a vegetarian maybe eat healthy. You deserve to be rewarded for your hard work with more affordable life insurance rates that's where health. IQ comes in. It can save you up to forty one percent because because physically active people have significantly lower risks for heart disease cancer and diabetes but these savings are exclusive to help. I Q and You won't find them anywhere else. You must qualify Vita get special rate to see if you qualify. That's easy just go to health. I Q dot Com slash fool. Take the Proprietary Health Ecu Quiz and depending on your score as well as other related qualifying factors. You can save up to forty one percent on your life insurance premiums compared to other providers that's health IQ dot com slash full. You can hit us up on twitter at market foolery is our twitter handle questioned from Daniel Shelton in Sacramento California. Who writes? It's on twitter. Hold the phone. Is Your Swag Shop Gun. I was hanging hankering for a full t shirt. But it's gone. Why Oh why? It's not gone on Daniel. It really needs one of those signs like you see at the mall or on mainstream. That just says pardon our dust. Were renovating the swag shop is going to be unveiled new. Bigger better more robust more products in. I'M GONNA say April I don't want to over promise but right now it's looking like April so hang in there Daniel. Personally I just love that he say's he's hankering for it. Yes I love that a good word. Our email address is market fully at full dot com question from Jude assignment in New Jersey. Who writes I never little about the UN resolution to limit high sulphur fuel in the world ports and I know that renewable energy is a good thing so do you think clean energy ticker symbol? C L E E is positioned to take advantage of these trends. What do you think that's a really good question I like? I like where he's going with this So just a little background. He's referring to I am which is I had written down. Oh International Maritime Organization Twenty Twenty Rule. And it's the latest and maybe maybe the last. I'm not sure Reduction of the sulphur levels in the fuels that oceangoing ships are allowed to use. Brings it down two point five percent which it has a significant drop from the previous that's been going on for fifteen sixteen years As a result ships are requiring are being required to use new fuel's new blends of fuel to lower the sulfur amount Use the same fuel but install scrubbers on the exhaust to capture the sulfur dioxides. It's or just change. It altogether such as liquefied natural gas. And that's where clean energy comes in but not directly Clean Energy is focused focused primarily on fuel as over the road transport specifically in trucks Those out in back delivery trucks waste management's. It's a big company a big customer clean energy for instance Where they go out and run around and come back and can be fueled overnight But clean energy he is really Waiting for the class. Eight trucks the big semi Rigs to get into natural gas in a big way And that's not been helped by low prices of diesel because a low prices of oil and so they've been struggling But if you want to play this trend you might have It might might think of some other ways of doing it. A cruise lines for instance are transferring. Their ships over to Liquefied Natural Natural Gas Ellen G For Instance Carnival as one of the eight Nova. I think is the name of the ship in the Mediterranean. That's all ellen. G RUN A BIG OIL Such a Shell is investing in both as a producer and as running ships that fuel other ships with Ellen G. They go out to the ship and and refill it. Those are called bunker ships Their storage Kinder- Morgan has a facility in Jackson County and Georgia Oh Mississippi and Georgia Chenier Energy Energy Dominion Energy. They're all into that kind of storage and export out of the US In Ellen G. So there's there's many ways to play it but there's no direct link between Clean Energy and the ILO twenty twenty so it sounds like you like the trend but not clean energy fuels as the best way to play the trend I do like the trend. I am invested in clean energy fuels. I think they'll be able to do it. It's just taking a lot longer than anybody's ever ever hoped. It is a Active recommendations talk adviser from David Garner unfortunates down about ninety percent or something but He hasn't closed it Probably because There's a couple of us here at the full of like it There are many ways to play Natural gas both the shipment of it Such as through pipelines. That's can gender Morgan for instance Or liquefying it and exporting it and those are like uh Chinook Salmon and those guys. Fortunately I'm pretty sure David. It has some winners to make up for that. Just a few Jim Mueller. Thanks for being here thanks. Chris has always people on the program of interest in the stocks. They talk about on the Motley fool. MAN FORMAL RECOMMENDATIONS SINCE FOR AGAINST SADDAM BUYER SELL stocks. And what you hear. That's going to do it for this edition of market. Flurry show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you tomorrow yeah.