Motley Fool Hidden Gems Investing - Big Banks, Tech, and Zoom’s CEO

Episode Date: June 28, 2019

Nike reports a rare profit miss. FedEx delivers a warning but shares climb. Apple announces a big departure. And a Taco Bell hotel quickly sells out. Analysts Ron Gross and Jason Moser discuss those stories and dig into big banks, Constellation Brands, General Mills, Shopify and McCormick. Plus, Motley Fool CEO Tom Gardner talks with Zoom founder and CEO Eric Yuan about video conferencing technology and the future of the workplace. Thanks NetSuite. Get the FREE guide, “7 Key Strategies to Grow your Profits” at www.NetSuite.com/Fool.   Learn more about your ad choices. Visit megaphone.fm/adchoices

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It's the Motley Fool Money radio show. I'm Chris Hill. Joining me in studio this week, Senior analysts Jason Moser and Ron Gross, good to see you as always, gentlemen. Hey, hey. We've got the latest headlines from Wall Street. Zoom CEO Eric Yuan is our guest, and as always, we'll give you an inside look at the stocks on our radar. But we begin with some earnings. For the first time ever, Nike's fourth quarter sales cleared the $10 billion mark. Nice accomplishment, Jason, but it also coincided with the first profit miss in seven years

and shares of Nike down a bit on Friday. Yeah, but let's remember, the profit miss was due to investments in the business, so at least there's that. This is a really impressive business. It just feels like they can deal with virtually any macroeconomic challenge, whether it's China or the consumer or something else entirely. When we look at the geographical breakdown, China was the star of the quarter, 22% sales growth. But I think even more impressive, we've talked a lot about North America in these retailers over the last year. Nike chalked up 8% growth in the North American segment again this quarter, which is, I think, a really important number for them. It shows that

they've got that thing going back in the right direction. I have never used the sneakers app that they have. They have this Nike sneakers app. This thing's doing really well. It accounts for 20% of total digital sales now, and it's operating on a $750 million annual run rate. And Nike digital itself grew 35% for the year. So, they're keeping inventory in check, continue to buy back shares. Frankly, if I was going to ding them for anything, I'd really like to see them juice the dividend a little bit, as opposed to just buying back shares. But, to give them some credit there, the share count is coming down over the course of time. Since 2014, it's down about 10%. So, those repurchases are at least helping.

So, the more they go direct to the consumer, though, that is bad news for the footlockers of the world, yes? In theory, it would be, yes. Especially since most of their product is Nike product. Yeah. Does the Paris trade, perhaps? Well, I've looked at Foot Locker, Dick's Sporting Goods, those kinds of companies. Those are the companies that I feel like are really in a tough spot.

When you have Under Armour, Nike, Adidas, all of these companies are going more direct-to-consumer. It puts those middlemen in very precarious places. But you get such amazing service at Foot Locker. What will I do with that incredible service? That's why people keep going back, right? Does the good number that Nike put up in North America put a little bit of pressure on Under Armour to deliver, maybe not a similar number, but at least directionally a similar number? Absolutely no question about it. I mean, that's the one thing we've really been watching with

Under Armour, is they need to get that North American segment back in the right direction. It sounds like we're seeing some progress there, but it needs to keep headed in that direction. FedEx lost $2 billion in the fourth quarter and warned of the impact of an economic slowdown. And somehow, Ron, shares of FedEx were still up slightly this week. This is a confusing company to me. It was a bit of a roller coaster because they beat profit estimates, but they warned about U.S.-China trade tensions, their non-renewal of their contract with Amazon that would take a bite out of 2020.

They forecast a mid-single-digit percentage point decline in adjusted earnings for fiscal 2020. So, you know, it's good and bad. adjusted revenue up 3%, adjusted operating income down 7%. A mixed bag, the stock trades just that way. Well, and the stock trades basically where it was five years ago. They are a good operator. They have arguably the dominant brand in their industry. And I'm not sure why they can't reward shareholders. And I'm not a shareholder. Either am I. I do like what they're doing, going out to reach the customer. So, for example, most recently, they're putting in Dollar General stores places

to pick up or drop off FedEx packages. That's 8,000 stores. Really good touch points with the consumer. Contrast that with Amazon, who is in Kohl's, much smaller footprint, not as exciting. Of course, Amazon is doing many other things as well. But I do like that FedEx is going to meet the customer. Are they, and I mentioned this in our production meeting, I'm wondering if big delivery companies like FedEx and UPS are now in danger of becoming analogous to the beer industry, where for a long time you had the dominant players in the beer industry. With the rise of craft beer and more local produced beer, they start sort of snipping away at the margins there. There are a lot more companies, including, by the way, Amazon, who are in the delivery space.

You have a lot more independent players, and it seems like it's tougher now for them. I agree with that, but it is such a capital-intensive business that it's not just anybody who wants to do it can get a fleet of airplanes or a fleet of trucks. It's real. You got to be a big boy, like Amazon is. The smaller players, it's hard to compete. Johnny Ive, the longtime chief design officer at Apple, is leaving the company after more than two decades. I've designed the iPhone, the iMac, and the iPad. He is leaving to start his own design firm, and Apple is going to be a client. You tell me, Jason, how big a loss is this for Apple? Eh, I don't really think it is.

I think it's a great headline. I don't really think this is a big deal. I think it's just one more sign that this is the Steve Jobs era is over. This is the new Apple trying to move beyond just being the hardware company and being more of a services and software company as well. I didn't realize, Johnny's designs were somewhat of a polarizing issue there. I was reading some articles where people were really happy to see this, because they don't like what he did in making Apple's products difficult to repair, difficult to replace batteries, always in pursuit of shaving this thing down one more millimeter to make it just a little bit more sleeker. Sorry for the great products.

Yeah, I mean, it does seem to be a little bit nitpicky, but I mean, I think this is really just another move, and what we're seeing is sort of the transition of this company. It's becoming something different. You know what I bet none of those people were? Apple shareholders. Well, yeah, but I mean, I think you made a good point in our production meeting earlier today, is really with him gone, and Tim Cook, I mean, he's not getting any younger, let's just put it that way. None of us are. No, and that's just, you're right. But what is the succession plan there? because I'm sure some people kind of wondered if he wasn't part of that. Clearly, he's not

going to be now. Jeff Williams, the COO of the company today, he's been with them since 1998, so that's a name to keep in mind. We do like COOs that can make that step, because they know so much about the business already. It seems like maybe they were going to split the role into two, which I'm not sure I love. Steve Jobs always talked about Sir John as his soulmate, his right-hand man in creating the rebound that was Apple. And I think Tim Cook or whoever the CEO is into the future needs that as well. Somebody really creative, really innovative. Otherwise, I think Apple will lose something. Shares of Constellation brands moving higher on Friday after first quarter

profits and revenue came in higher than expected. Constellation is the parent company of Corona Beer and a number of other alcohol brands. Ron, the wine division seemed like it was doing pretty well for Constellation this quarter? Actually, Wine & Spirits were down for the most part on a shipment basis, but it's such a small part of the business. The beer segment, I want to say it's about seven times as large as the Wine & Spirits sales. Spirits not really getting it done for Constellation. The higher demand was in the beer segment. As you said, the Modellos, the Corona brands, doing quite well. Net sales overall, 2.5% an increase, but beer sales are up 7%. Operating margins widened, really nice to see. Favorable

pricing, stronger dollar helping them out there. But they did report a net loss due to their investment in marijuana maker Canopy Growth, their $4 billion-plus investment there. If you strip that out, you're fine. You've got earnings growth of 9%, and they did raise their guidance. But Canopy, for now, has taken a bite. You know, in general, Constellation Brands has done a pretty good job over the years of acquiring these different alcohol brands, bringing them into the portfolio and their distribution network. Do you think what happened with Canopy Growth has essentially put, maybe not the company off marijuana altogether, but has hit the pause button in terms of future

marijuana-related acquisitions? Because at the time, one of the things we said on this show was, not just, wow, that's a lot of money to put into a marijuana company, but if they're looking to spend that kind of money, why wouldn't they spend it on another alcohol brand? Yeah, certainly. Well, it's time to hit pause, but it should be anyway, because it's a big number, it's a big investment. Let's see how it plays out, and then they can decide what they want to do for the future. I actually like that they're divesting things that aren't working. They're selling some of their wine and spirits brands to Ernest and Giulio Gallo, for example. So, they're kind of trying to right-size their product portfolio. But obviously, that entree into the marijuana

business is a big, big investment. Yeah. And I think they've also been feeling really good about where Corona stands today. Because if you go back just over the last decade, they really had a period of time there where Corona beer sales kind of fell off of a cliff. It took about eight or nine years for them to basically get back to those levels of eight years ago. But they did get it back. Now, the trend is such, they've done a good job of selling this lifestyle kind of brand, right? And we see Kraft Brewing Alliance doing the same kind of thing with their Kona brand. There's a lot of power in being able to sell that lifestyle in the alcohol business, and Corona is making a little bit

of a comeback. Yeah, and keep an eye on trade wars, specifically with Mexico. Hopefully, that's behind us. But a significant percentage, a majority of Constellation's beers are imported from Mexico. When your doctor orders a stress test, it means you get on a treadmill and the doctor cranks up the speed to get your heart racing. When Wall Street banks undergo a stress test, it's not quite the same. Details next. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser and Ron Gross. The big banks on Wall Street passed the latest round of stress tests from the Federal Reserve.

J.P. Morgan, Bank of America, and Goldman Sachs were so happy with the results, Jason, they're getting ready to increase their dividends. Who doesn't like a higher dividend? Everybody loves higher dividends. On the one hand, I really do like the fact that we're putting these banks through this scrutiny. I think that the Great Recession, the housing crisis, all of that together, we saw a lot of investors that were relying on those bank stocks as income plays. And they really had the rug pulled out from under them for quite some time. And that really, for me, for most investors, banks represent that ideal income opportunity. So, for these stress tests, I think, to be performed on a regular basis, no, they're

not perfect. Can they be better? I'm sure. But they do address four key capital ratios for these banks. You can find those capital ratios in their SEC filings and learn more about them. But ultimately, they're just trying to make sure that the banks are healthy and that what they're paying back out to shareholders in the form of dividends and repurchases is something they can sustain. So, in this case, it sounds like all banks passed. I think JPMorgan and Capital One had a little go back and maybe do over on a couple of questions, but ultimately they passed as well. I'm actually surprised in this age of deregulation that these stress tests are still in place to the extent they are. I'm happy they are,

but I'm actually a little bit surprised that the government hasn't lightened up on some of those questions, the four key metrics, in order to let these banks do their own thing. I wonder if that's not because, maybe politically speaking, it's just not as high up on the priority list. I mean, I guess, coming into this presidential election, we're going to see all sorts of different priority lists, but maybe that's one where they can feel like they can kick that can down the road if they want to address it later. You know how you go by a construction site and they have a sign up there, it's like X number of days since the last accident? Maybe what the government is waiting

for is like, let's get 25 years or more past the Great Recession before we decide to cut the bank some slack. I think that's a good policy. I like that. The struggles continue for General Mills. Fourth quarter sales were down in the snack division and shares of General Mills down a bit this week. Ron, they've got a lot of different divisions. Obviously, General Mills has their cereal division, snacks, all types of things. What are they going to do to turn this thing around? Pet food, baby. I mean, they're going to continue to diversify through acquisitions, as they did with the Blue Buffalo pet food business,

which is actually really strong for them. 38% increase this quarter. The rest of the business, not so much. Organic sales, which are sales not of organic food, but not including acquisitions, is what we mean by organic, fell 2% for the North American retail segment. Obviously, everyone's looking for healthier breakfast snacking options. It's hitting everybody. Kellogg, Mondelez, Kraft Heinz, they're all seeing it across the board. They're all trying to diversify into healthier products or other complementary businesses, like a pet food business. And General Mills is doing it.

The stock's been strong. It was up 25%, I think, this year, even after it took a hit on this earnings report. So, people really liked that pet food acquisition. I think we're going to see continuing acquisitions. Well, and in some ways, it's sort of the opposite of what we talked about earlier with Constellation Brands, where General Mills got a lot of attention when they went out and bought Blue Buffalo. And the success they have had with that acquisition, I think that's just going to fuel the fire inside that company to go out and find more acquisitions like that. And honestly, if you're running the cereal division or the snack division, you've got to be a little nervous.

Yeah. Probably all these companies are going to start competing for acquisitions. It's going to make the price of these acquisitions go up. They have to right-size their product portfolio also. They're focusing on Haagen-Dazs and Old El Paso. They want their snack bars to kind of firm up a bit. And obviously, their organic food offerings. So, they're working on the stuff they already own, but for sure, I think acquisitions are coming. And I love cereal. It always kind of confounds me that it's such a headwind. So, we just got this new ... So, Pop-Tarts has a cereal now. Have you seen this? No.

Yeah, it's like Pop-Tart cereal. It sounds very old. They're little Pop-Tarts with little Pop-Tart filling, and man, that's really good stuff. Sugar in a bowl. Oh, the box lasts like a day in our house. Where do you find little toasters? It's milk in lieu of toaster. Oh, OK. Clearly, I'm confused. Second quarter profits for McCormick came in 21% higher than

a year ago. The Spice Maker's overall sales, however, not as impressive, Jason, although McCormick did raise guidance. Well, I mean, if there's one thing that's going to get me more excited than Pop-Tart cereal, it's McCormick. You know that as well as I, Chris. So, I think the big story with McCormick, and this is a bit of a prediction here, is I think that within the next 12 months, we're going to see them make another meaningful acquisition. With these consumer staples businesses, that's really where growth comes from. I mean, they did chalk up modest growth, 30% total sales growth of the quarter. It was a nice team effort from the entire business there.

You know, they have the consumer side of the business, which is the stuff that we get in the store. They also have the flavor solution side of the business, which is industrial customers, restaurants. And they lock into some pretty long, attractive contracts with those businesses as well. But it all really did boil down to, for the longest time, this Arby Foods acquisition with Frank's and French's, and were they going to be able to pull that off? They pulled it off really nicely. They paid down the debt on that deal. Their coverage ratio of 5.5 means they can afford pretty much whatever they want to do going forward as well. They continue to focus on costs, margins continue to tick up a little bit. So, they continue

to run this business very efficiently. They reward shareholders in the process. I'd like to see that they're not repurchasing shares. They're paying that dividend out, but they're not repurchasing shares. But again, I think the language of the call is very clear that they are now on the hunt for the next acquisition. I want to get to some of the language they used in a second. But when you think about acquisitions that they make, do they need to think in terms of something that has a national footprint already? Because certainly, there are acquisitions that they could make that are more regional-based. Yeah. I mean, there's no doubt that immediately buying some big national brand could have a

bigger impact. I do feel like there are some neat brands out there on the regional level they could get for far less that they could plug into their distribution network immediately that could probably do really well. So, one of the things that the company said regarding this latest quarter was they referenced a late start to grilling season. I was wondering when we were going to get to that. I had no idea that ... Grilling season never ends. I grill all year.

That was what I thought. I didn't realize it ended. But I guess it's like one of those, you can't wear white, what is it, after Labor Day? Yeah, something like that. I've got the sartorial senses of a tree. But I think, listen, that's one of those weather things, right? We see that, we make fun of it, and we think, okay, whatever. I don't read too much into it other than they're looking for something to say. Don't you use spices regardless of where you actually cook the food?

Absolutely. You do, but more on the grill? But I will say, too, you have to at least acknowledge the fact that if you break the year into halves, the front half and the back half, the back half of the year is stronger for them due to the holiday season. If you think about cooking for things like Thanksgiving and Christmas and all the different holidays that follow the back half of the year, there is something there. So maybe they just felt like they had to attach the grilling season on the front end of the year to give Easter a fair shake. I don't know. I'm just speculating, but it is what it is.

All right. Ron Gross, Jason Moser, guys, we'll see you later in the show. Up next, a conversation with Zoom video CEO, Eric Yuan. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. The video conferencing tech company Zoom has made a big splash on Wall Street, IPO-ing in April at $36 a share. Zoom now trades around $90 a share. Part of that rise was fueled by Zoom reporting better

than expected earnings in its first quarter as a public company. The company's founder and CEO is Eric Yuan. After a long career at Webex and Cisco Systems, he started Zoom in 2011. Recently, Motley Fool CEO Tom Gardner talked with Yuan about a number of topics, including interesting applications of Zoom's technology, corporate culture, and growing up in China. But here's how Tom kicked off the conversation. Eric, we just wanted to start right in the first paragraph of your S1

with a line about the aspiration of the company to make Zoom meetings better than in-person meetings. And I'd just love to hear your vision for that. What does that look like for you relative to the standard in-person meetings that we've all been having for our entire lives? Yeah, so we are working very hard to improve the meeting experience.

However, I think compared to the face-to-face meeting, I think we're far from being there, meaning, you know, face-to-face meeting is still much better. So, like, I can shake hands with you or I can give you a hug, right, and it's a face-to-face meeting. But online meeting, I would say the video quality is great. I can see you. I can, you know, collaborate, share content. But, again, you know, not as good, not as intimate as a face-to-face meeting. However, I think technology can change. I think in the future, the online video collaboration experience like Zoom can even deliver a much better experience than face-to-face meeting.

I give one example, like a feature we introduced one year ago, which is a meeting transcription. I think for face-to-face meeting, I do not think anybody is going to, you know, have meeting notes, right? And with Zoom, we can do that, you know, automatically. So I think we are going to get there, but it will take several years effort. Eric, I want to ask a question just in general about the – how do you think about the workplace? Like just when you think out like 10 years, what will be different in the workplace and how will Zoom be benefiting from that over time? Yes, great question. If you look at what's happening today in the workplace, I think over one-third of workforces are millennials.

They need flexibility. Not like 10 or 20 years ago, everybody had to go to the office, physically working together. I do not think that will be the case in the future. Any time you want to work together, this is great. You want to get together, go to workplace or go to Zoom and, you know, online video collaboration experience is even better than face-to-face meeting. I think that's going to happen in the next 10 years. I guess my question for you is, what was it that motivated you and the other leaders of Zoom to leave your previous employers? Because when I think about what Zoom does, it was a crowded marketplace.

You were talking about, you're talking about huge companies and huge competitors that already did video conferencing. So there was a certain confidence there that I'm fascinated by and would love to hear your take. I don't think I had confidence, but I was, seriously, I was not thinking about leaving Cisco to start a new company because I, you know, sort of built Webex before as one of the first several founding engineers, and ultimately I became vice president of engineering. The year before I left Cisco, Cisco Webex,

every time I talked with a Webex customer, seriously, I did not see a single happy customer. Every morning, I really don't want to go to office. I feel very embarrassed. I really wanted to fix that problem. I really did not look at the market, look at how crowded it is. That's not what I thought about that. I only thought about one thing, how to bring happiness back to WebEx customers.

What can I do to fix that problem in sort of eye credit, right? And that's why I decided to leave, to build a better solution. If I look at it from a market perspective, look at it from a competitive landscape perspective, you are so right. I don't think anyone wanted to start a company, you know, for that very crowded market. Yeah. You talk about happiness today and in many of your communications about Zoom. I'd love to hear maybe a few specific examples about how happiness is alive inside of a company that's growing at 100%. I mean, we hear in very high growth situations that it can be hard to enhance the culture, that the culture may start to get diminished by all that growth and change.

So maybe two or three examples of happiness in the workplace and for employees at Zoom. Sure. So one thing I often told our employees, also told myself every day is when you wake up in the morning, the first thing you have to think about, are you happy or not? If you are happy, it's great. Please come to the office, you know, start working, right? If you do not feel happy, absolutely fine. Don't come to the office, you know, take a step back, really understand what had happened. If that's a family related, you know, please figure out a root cause,

you know, fix that problem. If the business related, also think about what's the root cause. You might ask, you know, to the head of your department, you also can talk with me or you talk with a peer to really understand what had happened and what's the cost to come up with the solution. If you do not feel happy, absolutely okay, stay at home. No need to come to the office.

Like every morning, I ask this question to myself as well. Like if I feel very happy, immediately come to the office. Otherwise, I really want to understand why. I think if employees are not happy, I think, guess what, the customer will not be happy either. Because we truly believe if we can do everything we can to make sure the customer is happy, our business will be okay. To make our customers happy, the number one thing is we need to make sure employees are happy.

This is our guiding principle. I'm curious about just the simple end of the experience of a Zoom call with the thumbs up and thumbs down. And I know that must have emerged somewhere for you. I know from your history that when customers canceled early on in Zoom, you would contact them right away to understand why. So just a little bit from you on how to ensure that you're getting the information back from the end user that they're having a good experience and how that developed. Yeah, great question. It boils down to our company culture to really care about the customers. You know, got to do from a top down and the bottom up as well.

I cannot say, hey, guys, let's focus on customer experience, care about the customers. If the customer already canceled, I still don't know what had happened. I do not think, you know, that's right. I should lead by example. Where we're canceled, I send a personal email, have a Zoom call, really understand what had happened. If that's product-related, I need to drive other engineers to fix that problem. I mean, pricing-related or anything related, I want to understand what's the real cost. Otherwise, the customer already left.

You already lost the customer. As a CEO, you still don't know what had happened. I think that's number one priority. Why customer, you know, they left you, right? I think if you think your business is doing well, the product works so well, why customer to cancel? I think that's the number one priority. That's why I personally involved early stage.

For now, we have a very scalable team, a process. Anyway, for the bigger con, for whatever reason they wanted to cancel, I still involved. Sometimes the company, you know, they got acquired by one of our bigger competitors. No matter what I do, you know, still they will cancel. So I still understand what we can do better, right?

I think it's very important to understand, you know, what had to happen. So at our company, we've spent a lot of time studying Jeff Bezos and what they did at Amazon, particularly early on. And one of the things that they always, you know, that they always emphasize that any free cash that they had, they were plowing back into operations, into marketing and things of that nature. Zoom is blessed with $700 million on its balance sheet. And I was wondering if you might speak to how you think the company is going to deploy that most effectively. Yeah. Yeah. Back to Amazon, I really like their philosophy, the day one philosophy, right? That's where our border in the conference room, you know, the name is the day one, right?

And we got to, you know, think about where we are coming from, right? I think having said that, we do have a lot of cash in the bank. That does not mean, you know, we should not have a decision to spend, right? I think, you know, this is one of the top priorities, you know, for us, for our management team to look at how we can leverage our cash, right, to further drive our growth. Unfortunately, I do not have an answer now, but, you know, I'm really not good at spending. Well, I'm going to encourage you, Eric, to consider this, not that I have any great insight, but looking at your company versus other companies, looking at the incredible growth rates, the extremely high levels of satisfaction, Net Promoter Score of 70, the extreme enthusiasm in your workplace and the great opportunity you have in front of you and the high margins, gross margins rising north of 81 percent. I would look at the situation and ask, should we at Zoom spend a lot more on marketing right now? Because as the more people we get onto our platform, we know it's sticky.

We know we have the discipline of really caring about the end user. We're going to solve their problems. So let's make sure they come to us before anywhere else. We've got $700 million. Let's just continue to amp up our online spending so that there's no question in anyone's mind that Zoom is the dominant brand in the category. I think you're right on. That's why we wanted to become a partner of yours, right? Working together to guide us, you know, how to spend more effectively online.

So I'm curious because I know that you all have done a great job interacting with the people who are using Zoom system and learning from them. What are some of the most interesting use cases that you have seen how people are using Zoom? Oh, I think several years ago, the first time I heard about a doctor is using Zoom, you know, for telemedicine. This is several years, five years ago. I think that's really, really impressed, you know, how doctor, you know, talk to the patient, you know, get a job done, you know, without letting the patient to visit the doctor. This is, you know, part of the telemedicine. That's one use case. I think another use case is more like online teaching, online learning.

Because quite often the professors, seriously, they can live in Australia. The students can't be anywhere in the world, right? I think that can change the learning experience. I think all kinds of use cases, you know, I think Zoom can help. Can you talk a little bit about your personal journey? We know about the WebEx Cisco experience, experience and you mentioned um the the difficulties you faced in serving the end user there and why that advanced you to start zoom but maybe even before that a little bit

about your childhood a little bit about your journey in life and some of the some of the values or principles that you hold dear sure absolutely so i was born in china i was born 1970 and i got my master degree and from beijing china as well and i traveled to japan for four months, back to I think 1994. And I remember that Bill Gates, you know, he was visiting Japan as well to give a keynote speech to one of the industry events over there. I was so impressed, you know, by his speech, you know, very inspirational. And at that time I realized, oh, internet is going to change everything. So after that, back from Japan to Beijing, and I thought about what should I do? You know, because I worked for a publishing

house of electronic industry. And my biggest hobby is to collect books. At that time, I thought about, hey, why not start a business to sell books online? And I think in 1995 in China, but it's too early. And nobody even had the email. At that time, I thought about I should come to Silicon Valley to take a look. And however, I tried to get a visa, I got a decline. It took me one and a half years. Finally, I got my visa. I tried to eight times. Next attempt, I was successful. And when I got a visa, it already became the working visa, H1 visa. It's not a business B1 visa anymore. So I joined Webex in 1997 as one of the first several founding engineers. I remember, you know, before I came here and

my father told me that, hey, you are going to go to a different country. We know that's a worldwide innovation center. However, you know, you are not familiar with the culture And also, you know, you even do not speak the language well. And you got to remember two things, hard work, stay humble. And every day I think about, you know, what my father told me that, you know, over the past 21 years, 22 years, seriously, I reminded myself of that. Hard work and, you know, stay humble. Those two things I think really helped me a lot.

You can learn more about the company by visiting their website, zoom.us. Coming up, do you have a watch list? If so, we've got a few stocks on our radar. Stay right here. You're listening to Motley Fool Money. If you don't know your numbers, you don't know your business. and the problem growing businesses have that keeps them from knowing their numbers is their patchwork quilt of business systems.

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so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here in studio once again with Jason Moser and Ron Gross. Our email address is radio at fool.com. You can also hit us up on Twitter, at Motley Fool Money. That's where Kevin Rice hit us up with this question. Do you consider Shopify a good starter stock to buy and hold at the current price? I'd love to hear some feedback. I love all the Motley Fool podcasts. Thank you for the question, Kevin. Thank you for listening. I should point out, shares of Shopify have doubled in the

past year, and this company is not yet profitable. Yeah. And I think that's the big concern. And It's a reasonable one. I will say, I like the business a lot. Generally speaking, it ticks all of the boxes for me, as far as when I look at these companies. Is it something I'd want to own? Shopify is definitely something I would want to own, save for one glaring problem, Ron. The valuation just is out of hand. Oh, details. Well, to your point, it's not profitable, it's not cash flow positive. And the thing is, we know that it's not going to be profitable for some time to come, based on what they continue to say, in their earnings calls. So, you can't hold that against them, right? You can't hold

investing in growth, and then they clearly are doing something right. So, I view Shopify as a great buy-in-thirds stock. If it's something that you want to own, great. Take the total amount of money you feel like you would want to invest in the stock, and let's, for simplicity's sake, say that's $3,000, split that up into three $1,000 purchases, perhaps. And you get some skin in the game, even if it's what seems like a crazy valuation, because I'll tell 100% ago, we were saying evaluations seem crazy, too. And then you can follow it, learn more about the business and whatnot. Yeah, I think it's a fine company to own. Specific to his question about, is it a good starter stock? I feel like the answer is no.

Maybe that's because I'm a little more conservative, perhaps. But I'd rather see more stable, cash flowing, profitable companies as starter stocks. Yeah, I think that's right. Starter stock, I'd go with something a little bit less conventionally risky. A while back on this show, we talked about the latest innovation from Yum! Brands, parent company of, among others, Taco Bell. I'm referring, of course, to the Taco Bell-themed hotel and resort in Palm Springs. It opens for a limited time in August, and this week, they started taking reservations. Ron, they sold out in two minutes. There's a lot of fun people in the world, aren't there, Chris?

There really are. I don't get it, but I like people that like to have fun, and I'm not going to begrudge them their fun. I kind of feel like this is going to be happening again in the future, that maybe they do this again next year, and the limited run of this hotel and resort, Jason, is extended. Oh, there's no question. I mean, next thing you know, we have a Taco Bell Invitational Golf Tournament to go along with it, and perhaps a Taco Bell Pet Hotel. I mean, there are all sorts of different ways you can run this thing. The food. They're taking over the restaurant and obviously tweaking the menu to make it Taco Bell-centric, I can only imagine.

Let's get to the stocks on our radar. Our man behind the glass, Steve Broido, is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week? I've got waste management. WM provides trash removal, recycling, and other services to both residential and commercial customers. Dominant player in, let's face it, a very essential business. We've got to get rid of that trash. Limited threats of seeing demand outsourced or disrupted. They are entrenched because they have North America's largest networks of landfills that they own. Organic growth and acquisitions have fueled their revenue growth, really great to see. They have increased their dividend for 16 consecutive years.

Love a nice, stable business that can continue to do that. Yield currently stands at 1.8%. Steve, question about waste management? If executives could go in a time machine and change the name of that company, do you think they would? The word waste in the title does get me. That seems fair to me. We'll have to come up with another name and maybe help them rebrand. Jason Moser, what are you looking at? Well, speaking of rebranding, you know, when I did our porch at the house,

I had all this lumber that I tore off that thing. To get it picked up, I used Waste Management Service Bagster, where you buy this thing at Home Depot, you fill it up with all this stuff, and then they bring their big waste management truck out there and pick it up with a crane and take it away. Perhaps Baxter is that rebranding, Steve. I don't know. I don't think so. It was a great service, and I will definitely use it again. I am looking at a company called PTC. Ticker is also PTC.

This is a company I've got on the watch list for the augmented reality service, and they are in the business of augmented reality for the enterprise. You've heard me talk about Autodesk before. Somewhat of a similar business, but just an interesting data point of things that consumers probably don't really see, is that around 42% of U.S.-based industrial companies currently use smart glasses as a part of their workforce. We just don't see that kind of stuff. But this is a company that is really firing in on that market, and I'm going to dig in and learn more. Steve? I heard Google Glass is coming back. Are you for that or against? I am all for it,

baby. Two very different businesses, Steve. You got a stock you want to add to your watch list? I think I'm going with Waste Management, despite the name. All right, Ron Gross, Jason Moser, guys, thanks for being here. Thanks, Chris. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido, our producer is Mac Greer. I'm Chris Hill, thanks for listening, we'll see you next week.