In this podcast, Motley Fool host Dylan Lewis and analysts Bill Mann and Jason Moser discuss:
The Russell 2000‘s unusual spike, and why it’s a mix of good news and bad news.
The CrowdStrike update that grounded planes and hurt the stock, and what it says about cybersecurity overall.
Earnings updates from Netflix, Domino’s, and Five Below.
Two stocks worth watching: Danaher and Alphabet.
Cava CEO Brett Schulman spoke at FoolFest 2024 and we’re sharing a portion of his conversation with Motley Fool analyst Kirsten Guerra about his company’s stellar performance so far as a publicly traded company, how it’ll get to 1,000 locations, and what he puts in his bowl when he visits the restaurant.
To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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This video was recorded on July 19, 2024.
Dylan Lewis: Is the great small-cap rally upon us? This week’s Motley Fool Money Radio Show starts now.
It’s the Motley Fool Money Radio Show. I’m Dylan Lewis. Joining me over the airwaves, Motley Fool senior analysts, Bill Mann and Jason Moser. Fools, great to have you both here.
Bill Mann: Is this thing working?
Dylan Lewis: It’s on, yeah.
Bill Mann: Are we working?
Dylan Lewis: You’re coming through. We’re battling through some technical difficulties today. I think that’s the theme of the day, both for us and for the economy at large. We’re going to talk about that in just a second, but we have stocks on our radar. As always, we have stocks on sale, and we have a look at one of the best-performing restaurant concepts of the past year and some insights from their CEO from FoolFest 2024. A stocked show, if you will. We’re going to start off though looking at the big picture and the market overall. Bill, when it comes to market returns, we’ve been saying it for a while, the big dogs are moving the market forward and driving the S&P 500 over the last year and a half or so. We finally have a sign that maybe that’s not the case, the Russell 2000 up over 10% in just the past month. What’s going on with small caps?
Bill Mann: Here’s something that you didn’t have on your Bingo card, I suspect. The Magnificent Seven dropped by $1.1 trillion and at the same time, the Russell 2000 was up by over 11% in about five days. Now, in the last 30 years, it’s only done this during crises, the global financial crisis, the US debt downgrade in 2011, long term capital management and the pandemic. There’s a really crazy reason why it’s happening this time, and that is apparently no reason at all. We could make up something, but an 11% move at the same time at which people seem to have decided all at once that, hey, maybe we should move our money away from these seven companies is absolutely unprecedented.
Dylan Lewis: You know, Bill, it’s interesting because you could look at that data point and say, that is concerning, or you could look at it and say, the market has been waiting a very long time for the rest of the market, all of these other companies to participate in the rally we’ve been seeing. Is this welcome news, or is this bad news?
Bill Mann: As someone who is about eight years early on the small cap rally, I’m pretty excited to see it. Yeah, we’ve talked a lot and ultimately, so much of the things that are going on right now are so unprecedented that I’m not entirely sure what to think about it. But we believe that it is not a great thing for 15% of the S&P 500 to have been beating the S&P 500, for 25 companies to account for 50% of the US market cap. Those things feel like risks that may come out to bite us at some point. The fact that some of the pressure has been relieved, I view as a good thing.
Dylan Lewis: Jason, I feel like as a stock picker, you probably have to be pretty excited that the rest of the market is excited about some of these other names.
Jason Moser: Absolutely. It’s almost like Christmas came early. I say that some what tongue and cheek, but I think the big question right now, see, a lot of this enthusiasm in small caps we’ve seen over the last week, most of it really just seems to be tied back to the inflation data. We saw the rate story start to improve a little bit. Obviously, for smaller companies, that’s a bigger deal because they’re more sensitive to higher borrowing costs. They carry typically heavier debt loads relative to their market capitalizations than these big cap companies that have been steering these returns for so long. I think we’re starting to see at least some sentiment maybe that the earnings outlook for small caps is improving. It does seem like the forecast for the back half of the year is better but that’s a big if, that’s not a guarantee. I think the big question going into the back half of this year is, will that actually be the case, is that outlook warranted? Because if not, then this could be one of those false starts. But it is also worth it. Even hedge funds and traders held record short positions in small caps going into last week’s CPI report. With that short position level where it was, and with those CPI numbers coming in, it was tantamount to a little bit of a short squeeze. I think the question is, will we see fundamental improvement going into the back half of the year or is that just temporary in nature and we go back to where we started?
Dylan Lewis: Bill teased at the start of today’s show some technical difficulties. We were seeing those observed across the board and across the economy. As we record Friday morning, shares of cybersecurity company CrowdStrike down almost 15%. Many of the world’s IT systems started the morning down. Everything from airlines to banks, saw service disruptions and outages. Jason, what the heck happened?
Jason Moser: Well, this seems to be a CrowdStrike specific issue. It was just tied back to a small update that they pushed through, there was a problem in that coding. I can only get so technical with it, Dylan. It’s not really my scope of jurisdiction to dig into the nuts and bolts of it, but this was a CrowdStrike specific issue. I think this just speaks to the nature of cybersecurity, the risks that come with investing in cybersecurity, because to me, this is one of those things. It’s not a matter of if, but when. We’re just going to see this happen. Then it begs the question for customers of cybersecurity vendors, how many eggs do you want to place in that one basket? Because we obviously have been talking a lot about CrowdStrike and its success up to this point. The company has been doing a lot of great things but we do see some stumbles along the way and this is one of those stumbles for sure. Now, they appear to be on the road to recovery. CEO George Kurtz, I think, was very quick to get out there and try to mitigate the damage, take some responsibility there. I see some criticisms out there, he could have probably been a little bit more apologetic with it. I’m not going to get into that.
Bill Mann: Mistakes were made.
Jason Moser: It does go to show you the risks that come with our dependence on technology. Technology giveth and it taketh away, and this is one of those times where it taketh away. With a company like CrowdStrike that already trades at around 150 times free cash flow in 25 times sales, it’s not surprising to see the market pull back. I think what really is going to be interesting is the longer term implications of this, how they ultimately respond to this, and how much the market actually believes that this won’t happen again.
Dylan Lewis: Yeah, I feel like CrowdStrike’s a bit like the referees at the Super Bowl or the World Cup. If everybody in the world is talking about them, something has probably gone wrong. It’s probably not for good reasons. Earnings couldn’t possibly be that good for a company like this. Bill, this was one that hit you personally this morning.
Bill Mann: Yeah, had to go and extract a kid from the airport because suddenly flights that were supposed to go decided not to go. Southwest Airlines actually oddly came out and said that they were operating normally, probably because they’re still running on MS-DOS or something. Does this terrify you? How fragile are we? Because it’s not just airports, it’s hospital systems, it’s banking systems. This is wild to me.
Dylan Lewis: To your point, Bill, we praise the Cloud for the scale and the speed that updates can be distributed on, and this is the exact drawback of that.
Bill Mann: Yeah, it is. It’s also a sign why the web security industry is probably not going to be one where you’re going to see consolidation. There’s not going to end up to be one winner in web security. The fact that there’s a diverse number of companies in this space probably makes the overall system more secure, even on a day when somebody seems to have accidentally cut the red wire.
Jason Moser: One thing I’m going to pay attention to here, just as we wrap this up, if you remember a couple of weeks ago, the radar stock I lobbed up was Rubrik. Rubrik, it’s a new cybersecurity company, getting its feet and finding its way as a publicly traded company. But what they do is essentially address situations like this, Rubriks raison d’etre, if you will, right. Bill, come on, Olympics are coming up here, let’s speak a little French. They exist to help businesses deal with continuing operations when cybersecurity issues like this hit. I’m going to be fascinated to pay attention to Rubrik in the coming weeks in their next earnings call, just to hear their perspective on this and to hear if it actually had any positive implications for their business.
Dylan Lewis: We’re going to stick with tech here. Over the past month, Apple, Meta, and TikTok, have all been in focus for regulators in the EU with the new Digital Markets Act rules. Bill, the DMA is intended to set rules for these large operating platforms and the gatekeepers of the internet, so to speak. It’s a little hard to know exactly what the impact of these rules will be, but what do you see as some potential outcomes and things we need to be watching in this space?
Bill Mann: I want to start from the top and say that the European countries, the EU, they absolutely have an interest in regulating. This is something that they ought to be doing. But have you ever stopped to wonder why the US has 5% of the world’s population, but functionally all of the world’s largest tech companies? You know who else isn’t really seeming to wonder about this, it’s European regulators. It’s huge news that Apple and Meta are withholding certain AI models from European users. I think it has to do with the fact that European regulators are putting policies into place, some they’ve done several years ago. They’re trying to regulate data without any real consideration that technology business practices will continue to develop. There are a lot of implications here. The fact that the largest companies are American means that it’s all downside for Europe for these companies to dominate. I think that we’re seeing a real canary in the coal mine in terms of how international non-American companies are regulating these big platforms.
Dylan Lewis: One of those stories that probably going to come back again at some point in the next couple of months, we’ll be keeping tabs. We’re heading a break, but coming up after, we’re starting to get a look at what businesses might be expecting for the rest of 2024. In some cases, it’s not so great. Stay right here. You’re listening to Motley Fool money.
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Dylan Lewis: Welcome back to Motley Fool Money. I’m Dylan Lewis. Here on air with Bill Mann and Jason Moser. We’re in the midst of one of the first major weeks of earning season. A lot of fun stuff to wade through, including an update from everyone’s favorite streamer Netflix. Results came in ahead of expectations on the top and bottom line, but Jason, not a very big reaction from the market, a yawn when it came to the results here from Netflix.
Jason Moser: Like some of their shows. Right? Just kidding. No, listen, that had to be done. Well, I think we probably see this more and more given that Netflix is as big as it is today. It’s not a secret. I think we all know, this is clear in a way the market leader in streaming, and most of us probably suspect that to continue for some time to come, so reactions probably will be a little bit more muted, but this was a very good quarter I thought for the company. They added just over eight million subscribers in the quarter versus just under six million from the same quarter a year ago and ended the quarter now with just under 278 million customers globally, which is just phenomenal to think. But it is expecting new customer additions to be a little bit lower in the current quarter versus that same quarter last year because that’s when they started limiting the password sharing really in full, and so that makes a little bit of sense. But to be fair, they did raise revenue guidance for the full year slightly from a range of 13-15% to a range of 14-15%, so they do see a little bit of a bump there, which is nice. I thought it was really interesting to see that they’re phasing out their lowest ad-free tier. I think it’s that $11.99 cent tier. That simple basic Netflix subscription. I have a theory here, and I think all you got to do is wait for it because right now the ad subscription tier that they’re selling at $6.99, my suspicion is we will see that ad tier pricing at $11.99 soon enough. That’s just essentially four, five little $1 bumps in price to get that thing up to $11.99 or somewhere close to it. Then they’re going to have the benefits of the advertising on top of it, and that advertising is working. It’s slow going, but it is working, and they noted that that ad tier now accounts for over 45% of all sign-ups in the markets where it is available. I think that while it’s not going to be a meaningful driver this year or next year, it is something that’s going to be a meaningful driver. We also saw that they are developing relationships on the programmatic side as well. They mentioned Trade Desk, and I think that’s really encouraging for Trade Desk shareholders, given the size of Netflix’s subscriber base.
Bill Mann: Jason, I’m glad that you didn’t recommend that they raise prices on you again.
Jason Moser: Well, I’m going to tell you, Netflix that’s one where I’m not going to pay anything. Into Spotify, we could go into that another week. Netflix is one where I won’t pay anything, but they have demonstrated pretty impressive pricing power through the years.
Dylan Lewis: All right, a rough week for Domino’s shares down over 15% following earnings. Bill, revenue and earnings came in around expectations, but the look forward, not quite as rosy, particularly when it comes to the company’s store opening plans. They are reducing planned store openings by 25% for the year. Market did not love that.
Bill Mann: It actually was a good quarter for them. They executed everywhere that they wanted to execute. They actually turned in earnings growth of 30%, which is pretty good. A lot of that was non-cash in the form of writing up an investment that they had. But yes, they are pulling back a little bit on their store openings, and for a stock that was a little bit on the surface expensive, that’s a pretty reasonable response. But still a great company. There doesn’t seem to be anything going wrong at Domino’s. They’re just doing it a little slower than the market wants.
Dylan Lewis: They are one of the earlier restaurants to report this earning season. Is there anything that you can look at in these results and take a step back and keep in mind for the rest of the industry as we start seeing results?
Bill Mann: Well, we’re going to talk about this in another industry in just a moment. It’s a question of whether Domino’s is a trade-up or a trade-down meal experience for people, given the fact that we have, in a lot of parts, the market seen such a huge amount of food inflation. They didn’t actually raise prices. They generated much more in terms of number of tickets and number of visits, and so that’s potentially very beneficial for them, but it might be stealing from other restaurants that are at a similar or slightly higher price point.
Dylan Lewis: Domino’s shares on sale this week and some discounting going on over at Five Below as well shares of the retailer down 25% this week following earnings. Jason, the announcement that CEO Joel Anderson is stepping down after about a decade running the company. What’s going on at Five?
Jason Moser: That was a tough one-two punch for the week. Obviously, shares had a difficult week, and not surprising given the news. The executive change always garners a strong headline there, but it’s also worth noting, they did pull back on guidance, and that is something that I think is probably a little bit more concerning, at least in the near term. Calling for revenue for this fiscal second quarter to be in the range of $820-826 million versus $830-850 million just shortly ago. That is, of course, going to impact earnings as well, so that’s not good. Obviously, Joel Anderson leaving, and it was very quick. I don’t know that really anybody expected it, and he’s just leaving to pursue other interests. It makes you wonder what those other interests are if there wasn’t something else more behind this. But it is nice to know, Kenneth Bull, the chief operating officer is going to jump in there as the interim CEO, and then Tom Vellios, one of the co-founders of the business, will play the role of executive chairman for a little while until they get this leadership musical chair figured out.
Dylan Lewis: As Bill noted, we need to keep an eye on the consumer spend when it comes to the rest of earning season, and where exactly some of these businesses are fitting into consumer wallets and decision-making. Bill, Jason, we’re going to bring you guys back on the show in a little bit. But up next, we’ve got the CEO of one of the tastiest and best-performing restaurants on the market over the past year. Stay right here. You’re listening to Motley Fool Money. Welcome back to Motley Fool Money. I’m Dylan Lewis. This week was FoolFest 2024, and we have the pleasure of hosting members and a few special guests in Washington, DC for a few days of fun and stock talk. One of those guests, Cava CEO, Brett Schulman. My colleague, Kirsten Guerra, spoke with the leader of the Mediterranean fast-casual chain about his company’s stellar performance so far as a publicly traded company, how they’re planning to get to 1,000 locations, and what he puts in his bowl when he visits the restaurant.
Kirsten Guerra: I want to start maybe with a classic investor question to set the stage, maybe you’ve heard this before, is Cava the next Chipotle?
Brett Schulman: It’s certainly high praise to be compared to a company that’s grown to its stature and created so much value. But we like to say, Cava is the next Cava. What I mean by that is that we are creating and defining what we believe to be the next large-scale cultural cuisine category in Mediterranean, the unique cuisine where taste and health unites that’s meeting the moment and the needs of the modern consumer.
Kirsten Guerra: Absolutely. It is a great comparison, but nice to have that formula to start with, but to really add to the equation yourself, so that’s fantastic. It is very fair to say that you’ve stood on your own from this point. Up, just year to date, I think, around 113% since I last looked the stock. Not quite Nvidia levels, but actually quite close at similar levels of magnitude, which is very impressive. That’s a similar trend across a lot of fast-casual chains this year. Cava, Chipotle, Sweetgreen, the likes of those companies have been doing quite well, while the legacy fast food companies have struggled a bit more in the past year. What do you think is behind the consumer momentum toward fast casual?
Brett Schulman: We think we sit at the nexus in between legacy, traditional, full-service chain dining and below us, limited-service, traditional fast food. I think what you’re seeing play out is something that’s really been building over the last 20 years, has been building under the surface, and much like we saw the pandemic accelerate trends that were building under the surface. The pandemic, not only the pandemic, but the post-pandemic high inflationary period, has accelerated the trend of what I like to call consumer convergence. I wrote about this in our annual shareholder letter. Where to meet the needs of a modern consumer and that value proposition, I think it’s really interesting you hear about the value wars in fast food right now, and I think it’s a bit of a misnomer. We think of value as a combination of factors. There’s the price of something, which is really the cost, but there is the value, which is the worth. Value to us is a combination of quality, the quality of your cuisine, the relevance of your cuisine or on-trend Mediterranean cuisine, the convenience in which you can access it, and then the experience you have when you engage with the brand. We think fast casual is a format that’s able to deliver a really compelling value proposition. You think above us a traditional full-service chain dining, especially in a suburban market or a small town, a family of four going out on a Wednesday night, from a time commitment, a price commitment, the experience in food quality, they’re saying, hey, I can just go to Cava and have a more affordable meal, better quality, better experience. Then below us, if you just look at the time period from the end of 2019 to the end of 2023, we raised prices during that time period, about 12%. CPI grew at about 18%. The Department of Labor has noted that fast food raised prices upwards of 30% or even higher, so that’s only enhanced our relative value proposition or amplified what we’re able to deliver, and consumers are sitting there looking and saying, I can get this bowl of fresh Mediterranean food versus a traditional freezer to fryer fast food meal, and that’s really helped drive the momentum we’ve seen.
Kirsten Guerra: You mentioned a family of four, I am happy to just go by myself, so you certainly have that diversity of everyone benefiting in the same way, and it’s fantastic to have those tailwinds with your business, of course. I want to ask you, as an analyst myself, it’s somewhat easy, in some ways to look at you and your growth story, or any company, any brick and mortar store in their growth story, and make that math happen and make sense inside a spreadsheet. It’s new stores each year. It’s comparable store sales growth. In reality, I imagine that’s much harder to actually do. You take a company like Cava, who has a stated goal of 1,000 locations by 2032. For some reference, I think you are around 337 stores, I want to say, so let’s say roughly one-third of the way there. Again, it’s easy for me in the spreadsheet, but how do you, in reality, make that happen in a sustainable way?
Brett Schulman: Well, that’s what’s so interesting about the restaurant industry. Some of you have heard me say this line before that restaurants do not scale like SAAS software. It’s hard. It takes a lot of people, a lot of infrastructure. It’s a very straightforward, fairly simple model, it’s just really hard to execute consistently thousands of times a day across hundreds if not thousands of restaurants in the 25 states we currently operate in the District of Columbia. What we’ve done over the years is try to be really thoughtful and invest in robust infrastructure to support sustainable long-term growth, because we know how hard it is to do that consistently and to empower our team members. I’m not in Cava right now making the food and cooking the food and serving the food, so how do we set our team members up for success? That’s everything from our manufacturing infrastructure, so we have two production facilities, one in Laurel, Maryland, and a new state-of-the-art one we’ve opened down in Augusta County in Southwest Virginia in Verona, Virginia. What this allows us to do is, and we’ve invested in specialized equipment that allows us to produce our fresh chef-crafted dips and spreads at scale. That Tzatziki with fresh dill, fresh cucumber, fresh lemon, fresh garlic, or a crazy feta with fresh jalapenos, olive oil, and onions. The same ingredients we used back when Chef Dimitri made it in the original full-service restaurant, we’re now making it 9-10,000 pound batches.
Taking that complexity out of the four walls of our restaurant and able to deliver it to our guests with consistency, quality, and cost-effectiveness at scale. That’s one example. Another example on our team member side is investing better than market wages, investing in benefits outside the four walls of our restaurants for our team members, and developmental programs like our academy GM network. This is our developmental system we’ve set up where our best general managers go through a certification program. They become an academy-certified general manager. They can make additional compensation, and then their restaurants become training restaurants. We have training restaurants in all markets of the country that then help to develop high potential team members to become those future leaders, because one of the biggest governors of growth for us is not necessarily finding, securing the real estate, and developing the real estate, it’s having qualified, trained, highly skilled leaders to run and open those restaurants successfully.
Kirsten Guerra: Since you’ve mentioned those working in the stores every day trying their best for efficiency.
Kirsten Guerra: You have mentioned before that some locations can do north of 300 bowls an hour, I can tell you right now I would not be able to contribute at that level, so never need to hire me for a restaurant. But I am curious since we’re talking about it, is there any tech that you have now or that’s coming that will help those individual workers achieve that level of efficiency?
Brett Schulman: Yeah, we’re very mindful of speed of service, but unlike some of our peers who right now are very focused on what they call throughput, we call it speed of services. We’re in a brand-building phase. Many of our guests are interacting with us, meeting with us, sharing a meal with us for the first time, let alone eating Mediterranean cuisine for the first time, so we want to make sure that’s a really great quality experience, but we also don’t want people waiting in line too long. I was in New York last week and lined to the door, and I watched two people walk out and I never want to see that. We never want to see people frustrated by the length of the line. So we think about, how do we use technology to enhance the human experience, not necessarily replace it, not force our team members to be thinking about pushing five more people through the serving line every 15 minutes, and so that they’re naturally improving speed of service without even really thinking about it.
One of the things we’ve talked about that is going into test this summer is what we call the first phase of our connected kitchen. I heard the last panel starting to talk about generative AI and how companies are leveraging it. We think there’s a real near-term opportunity to leverage modern data technologies for productivity enhancements and to free up our team members from more complex calculus calculations and tasks. What this project will do is it leverages sensor and camera data over the lines to detect how much food is being depleted from our serving line, as our team members are building bowls, cross-referencing that with real-time digital sales data with historical sales data, weather data, and event data to then project to our grill cook how much chicken to be cooking every 30 minutes or project to back of house how much-pickled onions to be making and prepping in real-time, mitigating foodways, taking that off of their plate, so they can focus on speed of service and hospitality, really the things that matter for our guest experience.
Kirsten Guerra: Okay, that’s incredible. Maybe I could contribute at [laughs] that level, who knows?
Brett Schulman: We try and make it easy.
Kirsten Guerra: That’s fantastic. In your last public quarter, Cava had digital revenue mix around 37% I believe, that’s been growing. I imagine there is still room for some expansion there company like Wingstop, for example, is around 70, so there could be a room for expansion. I think it’s fair to say to some degree though that digital channels now are table stakes, so what is Cava doing to really set itself apart in those digital channels?
Brett Schulman: It’s a great question. I mentioned earlier, we sit the nexus in between full service and fast food that’s converging where we sit. To us, it’s not an either-or, it’s an and. We think we can have great digital channels and great physical channels because often the same guest that wants the digital order pick up and maybe pull around to one of our, I think we’re up to almost 40 drive-through digital pick up windows or off the shelf in any of our restaurants, have it delivered to their doorstep. That same guest wants to come in and share a meal with a friend and sit in our dining room on a given day. We want to create this multichannel format, and digital has been a huge part of that. I noted again, in our shareholder letter, we’ve just exited a decade-plus of digital transformation. Going back to our very early days when we first opened, we had a humble little online order website. Then in 2013, we did a white label, third-party digital order mobile payment loyalty app.
In 2015, we put in those second digital production make lines. In ’17, we brought the app in-house and built our own ecosystem. In ’18, we started building the digital drive-through pickup lines, ’21, digital menu boards, ’22, we replatform. Fast forward to today, we’re over 300 million 37% coming through digital channels. Going forward, I think we’re on the precipice of a decade of data transformation. That we can take those digital channels but also digitize our physical transactions and leverage data and generative AI technologies to really drive our first-party audience and create true one-to-one personalized relationships with each and every guest, even as we scale. How do we engage with you to make you feel like we woke up today to cook you lunch or cook you dinner? How do we understand your behavior through all of our channels? How you engage with us at lunch versus dinner, versus pick up, versus delivery, versus in-person, and then start to really engage with you and suggest relevant recommendations and content that’s going to be specific to your needs and add value to you as a guest and ultimately add value to the business.
Kirsten Guerra: I love that. Data is the next big step. Our colleague, Tim Beyers has said at this very FoolFest, data is the food of AI, so it sounds like data is also the food of Cava [laughs] but also delicious Mediterranean is the food of Cava. Everything working in its favor. Speaking of food, what is your go-to order at a Cava?
Brett Schulman: [laughs] It changes probably every six months. My partner, one of my co-founders, Ted Zeno Cristos is our chief concept officer, and he’s driving our culinary innovation team. When innovation comes to the market, I’m usually trying it often incorporating into my bowl. Currently, my current bowl is half arugula, half saffron basmati rice, a scoop of hummus, a scoop of crazy feta. You got to get crazy feta in your bowl. Half harissa honey chicken and half steak, our new grilled steak.
Kirsten Guerra: There you go.
Brett Schulman: Then I’ll add a bunch of things like roasted fiery broccoli, roasted corn, pickled onions, pita crisp for a little crunch, crumbled feta. Then I’ll switch between lemon herb tahini, tahini Caesar if I want it really spicy, some harissa vinaigrette.
Kirsten Guerra: I love that. See the variety right there in that order. If you didn’t get all that, this is recorded, so you can write that down. Or if we roll up to a Cava and we order the Brett Schulman, is that possible?
Brett Schulman: It’s not possible to get that, but we did do recently. We did with our marketing team. We had customers make videos on TikTok of their favorite mix, and then we picked four of the best videos, and then we highlighted it on our digital exclusive channel. So you too, in the future, could be highlighted on one of our digital order exclusives.
Kirsten Guerra: That’s awesome. My go-to order, by the way, is the harissa honey chicken.
Brett Schulman: It’s addictive.
Kirsten Guerra: I don’t want to talk, going down the line, I just want to say you’ve crafted the perfect bowl. That’s all I want. Also the pita chips.
Brett Schulman: I was going to say, the harissa honey chicken is almost as addictive as the pita chips.
Kirsten Guerra: Yes, those are, there you go.
Dylan Lewis: Coming up after the break. We’ve got Jason Moser and Bill Mann back to talk about a couple of stocks on their radar. Stay right here. You’re listening to Motley Fool Money.
As always, people on the program may have interests in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, it’s not biased or anything. Based solely on what you hear. I’m Dylan Lewis joined again by Jason Moser and Bill Mann. We’ve got stocks on our radar coming up in just a minute. But first, we got to talk Prime Day. Amazon hosted its annual customer event this week. Early indications or that it was another banner year, Adobe Analytics estimating that sales topped $14 billion up 11% year over year and gentlemen, I think we’ve gotten used to some record-setting numbers each year. One thing that was new, at least to me, was the announcement that Rufus, the Amazon AI-powered conversational shopping assistant was helping millions of customers this Prime Day. Jason, are you buying Rufus as an E-commerce tailwind for Amazon?
Jason Moser: I think it’s a form of engagement, and I’ll just leave it to that. I saw Rufus, and immediately, my mind goes to Bill and Ted. I could also imagine that Chewy is wishing they got a hold of that name first for their AI.
Bill Mann: Oh, it’s the worst name since the whopper.
Jason Moser: I’d love to know the history behind the name. It’s no surprise that they’ve launched this. I mean, it is going to be ultimately just a form of engagement to stoke people into buying more and helping consumers educate themselves a little bit more. So certainly don’t blame them for doing it. It seems to be one of those things where large language models, that’s a perfect fit.
Dylan Lewis: Bill, are you looking forward to a future where you’re upsold by an AI chatbot?
Bill Mann: Listen. Rufus let me down this time. I got one of those automatic banana slicers, and it was facing the wrong way.
Dylan Lewis: Oh, my goodness.
Bill Mann: Rufus has let me down.
Dylan Lewis: You’re going to have to put some feedback. The theme of today’s show, Bill is that technology doesn’t quite work the way that we want it to sometimes.
Jason Moser: Sure, you didn’t get just the left-handed model. I mean, maybe they were sourcing from the left thorium or something. I don’t know. It is possible.
Bill Mann: I didn’t ask for it, but that’s what Rufus sent me.
Dylan Lewis: Let’s get over to stocks on our radar. Our man behind the glass. The OG man behind the glass for Motley Fool Money, Steve Broido is going to hit you with a question. Bill, you’re up first? What are you looking at this week?
Bill Mann: One of the sneaky greatest companies in the United States of America is a company called Danaher, and they will be reporting this next week. They have a number of businesses. You don’t go out and buy Danaher stuff, but you do buy things from Paul and Beckman Coulter and Leica Microsystems. So they’re going to be reporting, and I’m really interested specifically, they are a supplier in the biopharma industry. We have had a huge amount of increase in spending and research, particularly the GLP-1 drugs and similar things in that area. So I’m really interested to see what the revenue base looks like.
Dylan Lewis: Steve, a question about Danaher ticker DHR.
Steve Broido: Sure. Who is the primary customer for Danaher?
Bill Mann: Well, they’ve got 23 different businesses, so it’s a little hard to say, they do actually have some retail in the deforms of like Leica, for example, but they are usually supplying into large industrials, biopharmas, researchers, and things of this nature.
Steve Broido: Not going to see it at CVS, is what you’re saying?
Bill Mann: Unlikely.
Dylan Lewis: Jason, what do you got on your radar this week?
Jason Moser: Well, going back to the top of the show in Big Tech, Alphabet earnings are out on Tuesday after the market closes, ticker is GOOG and GOOGL, depending on what you like more. You look at the results from last quarter, revenue growth 16%. Operating income was up 46%. In operating margin up a full six percentage points. The business is performing very well, Cloud operating income was up 370%, and YouTube revenue continues to recover as well. One of the big stories we’ve been focusing on with Google is in regard to Sundar Pichai, and if he’s going to be around, if we just get a culture issue there, so that’ll be interesting there and we’ll learn a little bit more about this potential WIZ acquisition I’d imagine as well.
Dylan Lewis: Steve, which one’s going on your watch this week?
Steve Broido: I’m going to have to go with GOOGL, I own it, I believe in it, and I think it’s a good call.
Dylan Lewis: Got to love it. No time for questions. We’re wrapping it up quick this week. Steve, appreciate you weighing in. Bill, and Jason, appreciate you bringing your radar stocks. That’s going to do it for this week’s Motley Fool Money Radio Show. The show is mixed by Steve Broido. I’m Dylan Lewis. Thanks for listening. We’ll see you next time.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bill Mann has positions in Domino’s Pizza. Dylan Lewis has positions in The Trade Desk. Jason Moser has positions in Adobe, Alphabet, Amazon, Apple, Chewy, Chipotle Mexican Grill, and The Trade Desk. Kirsten Guerra has positions in Adobe, Alphabet, CrowdStrike, and The Trade Desk. The Motley Fool has positions in and recommends Adobe, Alphabet, Amazon, Apple, Chewy, Chipotle Mexican Grill, CrowdStrike, Danaher, Domino’s Pizza, Meta Platforms, Netflix, and The Trade Desk. The Motley Fool recommends CVS Health, Cava Group, Five Below, and Sweetgreen. The Motley Fool has a disclosure policy.
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