Fool.com contributor Matt Frankel, CFP, is a big fan of Zoom Video Communications‘ (NASDAQ:ZM) platform, using the company’s videoconferencing software on a daily basis. However, in this Fool Live video clip, recorded on July 9, Frankel tells fellow contributor Brian Withers and chief growth officer Anand Chokkavelu (both of whom own Zoom) why he hasn’t bought Zoom stock in his portfolio.
Matt Frankel: I’ve never owned the stock. In addition to being the banks and real estate guy, I kind of consider myself to be the reopening guy. When you think of all the stocks I pitch, REITs, banks, whatever, they’ve all been with the thesis that the world is going to get back to normal quicker than anyone expects. For the most part, it’s panned out so far. You look at some of the REITs I recommended last year like Tanger Outlets (NYSE:SKT), which was trading as a penny stock at one point last year and now it’s really rebounded or Empire State Realty (NYSE:ESRT), they own the Empire State Building. It shouldn’t be at an 80% discount to its asset value.
Anand Chokkavelu: On Ryman (NYSE:RHP), too, right?
Frankel: On Ryman, I bought it at $14 last year and it’s at $80 right now, because people thought hotels were going away. But I think the reopening it’s going to be tougher on some of these stay-at-home stocks than the market is thinking and that’s really why my Zoom ranking was so low. I love the business, obviously, I’m on a Zoom webinar as I’m talking right now. I love the product. I love what it enables us to do. I think our services are better now than before the pandemic because of Zoom in large part. I love the product, I love the service, but I think the reopening is going to be tougher on the numbers than a lot of people are thinking.
Brian Withers: That’s interesting. I agree with you for the most part in recreational and people getting out of the house but I think business, and the way people work, and the way people get things done, is permanently changed and companies are going to have to rethink. It’s going to be very difficult to demand that 100% of people come into the work five days a week. I just don’t see it happening after people have been at home. Companies have admitted it, they’ve been more productive than ever. Zoom, to me is a part of an absolutely a reason why companies can say that. When I went through the scores recently with Zoom, I looked at it pre-pandemic and I looked at it post-pandemic and every single metric was better, the revenue was better, the gross profit, the cash flow, the margins, everything is better. It’s investing more in R&D and so after my cost basis of $90, I went in at $336 in the middle of April and bought my largest ever position of a company all at one time I bought into Zoom.
Frankel: Well, I’m rooting for you, I hope I’m wrong.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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