Dec 18, 2012|
Stock Talk - Lyons George, Motley Fool
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
It's time for stock -- and we are joined by -- George from the Motley Fool good morning welcome to show -- tired on. -- yourself good they you know I was down in New York over the weekend and my daughter always uses yell. Before work she'll buy anything or go to a restaurant. I guess I am not really familiar with what they do -- could explain to us a little bit then are are not under 25 years old what yell isn't and what they do. That's been my pleasure let me start by saying that your daughter pretty represented about her age -- there's a lot of young people in New York using Yelp before they go to the bathroom let alone a restaurant. So it's a very popular business to be -- it at the leading on line. Local business directory. What that means essentially. Today a website that city by city. You know built out the traditional business directory like the yellow pages. But they have on top of that lead Tuesday really reach base user generated reviews so. If you wanna go to do sushi place you type in the name of it on Yelp you're probably gonna get out fifty reviews are from people who really care about food. -- and were generally writing. You know pretty spot on content. What can -- do they have as any any of any competition from other you know other companies that do the same thing. There's there's absolutely competition. I get Princeton. You know has been in the business for very long time. -- Is trying to break its way into. Sort of the the LB the local business directory game and actually purchased -- and attempted to purchase Yelp. In 2010. Out there vote is very clear to me and that is just the content they've got about. 35 million user generated reviews okay that they post yup and that. Florida way bigger than it. Now -- and when it's trading yet almost nineteen dollars a share 1898. Shares to billion dollar company do you buy this. At nineteen bucks a share because you think Apple's gonna -- amber in your Jersey you are you buying it because you like the franchise. I would buy it because I like the franchise you know one thing we look forward. You know it is amongst. -- -- Be hotter tech stocks is the strength of the brand Yelp has achieved that kind of brand as a verb -- especially among show people that they're Yelp and something. So. I think that speaks pretty highly. How much consumers trusted I also like. You know in the long term. I think local business owners are going to be convinced of how directly. Yelp informs on the street consumer spending decisions yet. And you know I think Yelp knows how directly than one that that's why they didn't -- to Google in 2000. How did they make money they do they sell advertising and is that advertising taint their recommendations. -- -- disease kind of look at any sale of that all of a sudden McDonald's has buying ads on there obviously -- it's not gonna say anything bad about McDonald's. Right well so did they -- advertising to someone like McDonald's that is consult traditional display advertising on the side there's site that only makes up about. 10%. Revenues that 80% of revenues that majority is coming. From advertising deals with the local businesses and so you know they've got. A hundred million businesses may be that are just listed on their side. Right then about a million of those businesses. The owners have come in and and claimed their accounts they signed in and that L regulars on reviews. That about 40000 of that million at decide to pay -- 300 a month. To to not only enhance their age. But that advertised. -- You know you don't want on Google news search something. They'll be just three result at the top that are in yellow those are advertising results and then there's the rest which organic. I Yelp is doing the exact same thing up so you know. A dry cleaner pays 300 a month Yeltsin promised them. They won't show up at the top result but clearly delineated as an advertising result maybe. You know hundred times that month. -- -- There has pretty weak via our written an analyst report on they think in a year to be 26 what do you guys think going to be. You know. I wouldn't want and nail it down I would -- thirty dollars a year wouldn't be unheard of. Well okay. Another stock and I've got to tell you I interview stock analysts every day. I don't think anybody has picked Bank of America all year. You like Bank of America it's up now. No I know I have to stop and Leah I'm not here I'm not going to bank America actually going to. Bank of the Internet. Oh what's the symbol for an upstart. I'd be OF five start -- a student and static. -- the the. My a BO. FY OK let's take a look at it together. 26 dollars a share why do you like this one. -- while I see why. Yeah exactly that Beckett Internet did the holding serve at the holding company for bank -- -- USA which tong and she calls itself America's oldest. And most trusted Internet bank. I think it is just stay out. You know so what do they do strictly online -- bank. No branches which means obviously low cost is passed a lot of that value down. Not the consumers are attractive rate on loans and savings it's just us two really lately comment sort of forward looking. Business model but that coupled with just really conservatively run but traditionally strong. Bank. Would they haven't deposits to you know. Yet the deposit bases about little under two billion right now that's tripled since 2008. I was up 570000005. Years ago. What makes him different is -- get you know fidelity can give your bank account Schwab can give you like everybody. If everybody's got to bank account now what makes these guys any better than fidelity Schwab Bank of America. I think what it really comes down through. You know. And that added that is a very good question -- it that it just even compared to guys like. Fidelity or Schwab they're efficiency ratio so you know. Non interest expenses. The percentage of net income due to significantly lower yup they're operating about 40% efficiency ratio. -- -- they're not making. Stupid loans to help. But they are making loans stade de -- lenders they're not just like I NG where he put your money -- -- the deposit base but they are actually soliciting things like car loans and home loans things like that. Absolutely again and they're making good money on that spread income has -- about 57%. Annually over the last five years and again the majority of those are those long third sort of old fashioned. Home and auto loans that -- not. Not doing a lot of sort of risky commercial type stuff. It's a five by today for 26 dollars a share we think this one's worth than a year to. Well it's already up 60% this year it got got a leg right now. Again. You know. You never know open I would I would be surprised this was at forty dollars in the year I think it could be. I'd like to slack and let it. In Macon is they're making a lot of money to -- in two dollars and 43 cents a share the Mets that's -- Louis and and and not paying out yields. They did there's no dividends so if you're getting into it nontraditional financial. You know on that -- -- but I think I think this stock it is going to be equivalent to -- All right thank you very much -- appreciate it. You there to stock picks there do you go one or just talking about it's deal bank of Internet. The symbol Ford is. BOF. -- it's 26 dollars in the united cents a share right now but here's the thing and I -- -- as soon as I looked at the screen. They're earning two dollars and 43 cents a share that's in the second pick that he in this the first pick. Is yell. In Yelp from what I can -- basically eight consumer reviews I just went on and I love yup I've never been on there. You get a phone app for your -- I can't EL I I absolutely in love with miss him at like it now I have this before when my daughter used it on Saturday we are New York. Do some shopping. And she used it to pick a -- -- -- dinner on Saturday night and it -- yeah it was a really good dressed. They use the the service was good but the food is fantastic a lot of sites like that nowadays that you could just be on your Google Maps which by the way just came back to the iPhone he just threw it. And by this one's better days I've seen those sites this one. It's if it's a little bit more intricate obviously because this place right in my neighborhood that I knew you'd think it was that great and they give -- full glass of wine right to the brand. Huge. And that's important attention to restaurants. And if you have classmates -- -- found it in like three minutes is Aaron and -- -- the place and -- a Yelp is the the name of the site are password for today's little contest is the word shopping. And as a matter of fact June is actually helping you with your shopping because if you win the prize today. You can put the tickets -- -- their BSO tickets. So guys. Line up. Because when you hear the symphony sound. You can win the tooting its compliments of June night in the financial exchange. And you can wrap a -- in you can tell your wife for your girlfriend. Look cutting himself thoughtful and other but I did I did this months ago -- think if I I was thinking ahead -- You know January when he gets a little cold we go to the the editors of the symphony and the password is shopping so when you hear the symphony sound. 8082052263. And. Sponsor today shows Cushing handle my email address is very Armstrong at wrko.com.