In this Motley Fool Money podcast, host Chris Hill kicks off the year with a 2018 preview show, aided by Motley FoolHidden Gems' Abi Malin, Million Dollar Portfolio's Jason Moser, and David Kretzmann of Rule Breakers and SuperNova.
In this segment, Chris asks them for their forecasts -- but not the obvious ones. He's looking for some wild, even unlikely, bets. And the team obliges with a trio of acquisition predictions.
Chris Hill: Time to get to some reckless predictions. We're not going to make conventional ones. We're going to make reckless predictions. Jason, I was reminded by our producer Mac Greer before we started taping, your reckless prediction, a year ago this time, you were in the ballpark, because your reckless prediction was Starbucks buying Panera Bread.
Jason Moser: Yeah, I forgot about that. I guess I should take at least half of a victory lap?
Hill: I mean, Panera Bread is no longer a standalone public company, so we'll give you partial credit for that.
Moser: Hey, I'll take it. I'll take whatever I can get.
David Kretzmann: Nicely done.
Hill: What's your reckless prediction for 2018? It can be about business; it can be about anything else.
Moser: It's kind of in line with last year's. I didn't craft it this way, but I'm going to call this. I think Chipotle Mexican Grill ends up going private after all is said and done. I know they're looking for a CEO. But we've gotten to the point where you can eat at Chipotle and then fart, and then report it on a website that you got food poisoning, and then you can materially move the stock. I mean, it's been two years since they had this problem. And Steve Ells was clearly not up for fixing it. So now, you have this company where no matter what they do, they can't seem to do anything right, even if they do something right. And you have no ownership in the company with the founder, no real inside ownership to speak of. And you have a 10% or so position from Bill Ackman at Pershing Capital. I just feel like this is a prime opportunity to try to pique some equity interest in this company.
And honestly, I think it's probably the better bet. I don't know that a new CEO can really turn this thing around fully. But I think, at least if they go private, it gets them out of that public market spotlight, and it lets them make some better decisions. And maybe they take a page out of that Panera playbook and get things turned around here in 2018. I guess we'll see.
Hill: Yeah. For anyone who thought activist investor Bill Ackman and his team were going to really help, that didn't work out.
Moser: No.
Hill: David Kretzmann, your reckless prediction?
Kretzmann: Along similar lines of Jason. Although I won't be quite as vulgar. [laughs] I look at Target, and I see the company getting squeezed on both sides from Amazon (NASDAQ: AMZN) and Wal-Mart (NYSE: WMT), and I wouldn't be surprised if this year they tried to acquire Wayfair (NYSE: W), because Target has actually been pushing more and more into furniture on their own. And I think going after Wayfair could be a way they start to really differentiate themselves, both in terms of e-commerce and the breadth of their offerings compared to Amazon and Wal-Mart. And they could pull it off. They're still producing about $4.5 billion in free cash flow a year. Wayfair, right now, valued at about $7 billion. So, if they wanted to, I think they could do it. And I think they'll get increasingly desperate as they struggle to compete with these bigger players.
Hill: Boy, that would be fun. I mean, Amazon being Amazon, we had Wal-Mart buying Jet; I would love to see Target buying Wayfair, just for the optics of it.
Kretzmann: Absolutely. It'd be a lot of fun.
Hill: Abi Malin, what do you have for a reckless prediction?
Abi Malin: I think mine is right along the same path there as David's, to try to compete with Amazon, I would like to see eBay (NASDAQ: EBAY)buy Etsy (NASDAQ: ETSY).
Kretzmann: Nice.
Hill: Isn't there a lot of Etsy stuff on eBay right now? And by "Etsy stuff," I mean arts and crafts. Said the old man in the room.
Malin: Yeah, there is. I think part of that is, it's an obvious pair. I think they could help each other out, both in, Etsy is looking to expand more internationally, I think eBay could help them there. And they're both in that search functionality, machine learning, things like that. So, I think that would be an interesting pair.
Hill: Let's bring in our man, Steve Broido, behind the glass, because we're going to get to radar stocks in a second. Steve, three reckless predictions, do you have one you want to bet on there?
Steve Broido: I'm betting that the market will not continue to rise 1% every day for the rest of this year. Seems like this market cannot go down, and I'm betting that trend will not continue every day.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Abi Malin owns shares of Starbucks. Chris Hill owns shares of Amazon, eBay, and Starbucks. David Kretzmann owns shares of Amazon, Chipotle Mexican Grill, Etsy, Starbucks, and Wayfair. Jason Moser owns shares of Chipotle Mexican Grill and Starbucks. Steve Broido owns shares of Amazon and Target. The Motley Fool owns shares of and recommends Amazon, Chipotle Mexican Grill, eBay, Starbucks, and Wayfair. The Motley Fool recommends Etsy. The Motley Fool has a disclosure policy.
