Motley Fool Hidden Gems Investing - Big Tech's Latest Plans, Emerging Trends To Watch

Episode Date: July 8, 2022

As U.S. job growth continues, the biggest tech companies plot their next moves. (0:30) Maria Gallagher and Jason Moser discuss: - June's jobs report, falling gas prices, and the shifting employment landscape - Apple and Google looking to monetize the lock screen of your phone - Meta Platforms planning to launch a $1,000 VR headset - A big rationale for Levi's dividend increase - The latest from Amazon, Upstart Holdings, and GameStop (20:17) Rachel Warren talks with Jay Jacobs, U.S. Head of Thematics and Active Equity ETFs at BlackRock, about the trends he and his team are watching in infrastructure, emerging markets, and healthcare. (33:33) Maria and Jason answer a listener's question about Warner Bros Discovery, and share two stocks on their radar: Paycom and Procore Technologies. Our free investing starter kit includes research on 15 stocks and 5 ETFs. Get a copy by going to http://fool.com/starterkit Stocks discussed on the show: UPST, AMZN, JET, DASH, META, AAPL, GOOG, GOOGL, TWTR, GME, LEVI, WBD, PAYC, PCOR Host: Chris Hill Guests: Maria Gallagher, Jason Moser, Rachel Warren, Jay Jacobs Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

This family is on the brink of civil war. On September 18th, Mobland, the hit original series, is back on Paramount+. We are the Hartigans. Don't know them yet? Then Google us. From the underworld of Guy Ritchie. Do you want to step up the ladder?

I want Comet dead. Starring Tom Hardy, Pierce Brosnan, and Helen Mirren. Do I have to do everything myself? You want more? I'll give you more! Mobland, new season hits September 18th We've got the latest from big tech, the big macro, and a preview of the next big consumer electronics device. Motley Fool Money starts now. Everybody needs money. That's why they call it

money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill, and I'm joined by Motley Fool senior analysts Jason Moser and Maria Gallagher. Good to see you both. Nice to see you. We've got the latest headlines from Wall Street. We'll get an update on emerging trends. And as always, we've got a couple of stocks on our radar. But we begin with the big macro, The U.S. economy added more than 370,000 jobs in June. The unemployment rate stands at 3.6%. The average rate for a 30-year fixed mortgage fell to 5.3%, and the average price of gas has fallen by $0.30 per gallon over the past three weeks. Maria, no shortage of macro data points.

What stands out to you? I think actually right now is a really fascinating time to study the job market. So like you said, there were about 372,000 new hires, which is about 100,000 more than expected. This is powered by leisure, hospitality, and healthcare. Their unemployment, like you said, is at the post-pandemic low of 3.6% for the fourth consecutive month. Average hourly earnings rose 5.1% from the last year and 0.3% on the month. And the number of hours work average is about 34 and a half. What I think is really interesting too is, So when we're looking at this record low unemployment as that continues, but we still have inflation and we have wage increases, you have a lot more calls for unionization

because I think we're in a situation where labor has more power that we haven't really seen since the late 1970s. Union membership is at a multi-decade low, but the majority of workers across sectors say they support increased unionization in their own workplaces. So I think that's going to be really fascinating to see as we see more calls for increasing unemployment and seeing how that power continues to shift. Jason, what stands out to you when you look at all the macro data out there? Yeah, I agree with Maria there that labor right now does have probably more power than it has in a long, long time. And they really need

to make use of that. I think they know that they're on the clock. And I think that at some point here, these things obviously go in cycles. At some point here, we're going to see the shoe on the other foot in regard to these jobs, right? I mean, we saw the labor force participation rate ticked down just a little bit. And I think when you look at the data beyond just the jobs market, it paints a picture of a consumer that's starting to feel pretty pinched here. The personal savings rate for May quoted at 5.2%. That was cut literally in half from a year ago. But even more concerning, I think, is it's down from 7.4% in 2019. Now, you couple that with the fact that the ongoing revolving credit numbers, people are spending more and

more on their credit cards. That was up 20% in April from the previous month to just over $1.1 trillion. That broke the pre-pandemic record of $1.1 trillion. You're seeing more people having to rely on credit cards in order to get things done, obviously, coping with very high inflationary environment. Wages are not keeping up with that inflation. I think we're starting to see this clock, it's taking down to a more challenged consumer, which it's ultimately going to play out, I think, here on this jobs market. It's going to be interesting to see at what point we see that flip over. Let's get to some of the companies that are making headlines this week. After the closing bell on Thursday,

Upstart Holdings shared preliminary results for its second quarter, and the reaction from investors was both swift and negative. Shares of the consumer lending company fell 20% on Friday. Jason, last fall, Upstart Holdings was $400 a share, and today it's below $30. Yeah, it's obviously been a very tough slog for Upstart. Stock is down, I think, somewhere around 80% year-to-date. I like the value proposition applying artificial intelligence to the credit industry. It sounds great on the surface, but the big question over the last several quarters was, and I think still is, how will they perform in a higher interest rate environment? I guess we're starting to see how. It is clearly becoming a more difficult

environment to assess creditworthiness. I think we're going to continue to see lending balances going up, going back to what we were just talking about in the big macro there. We'll see late payments. We'll see more defaults. So I think the key really is, is Upstart going to be able to prove out their value proposition, that their AI is as predictive and as helpful as they claim it to be? Maybe it is. I don't know. It really is going to have to be kind of a wait and see. But you can't guide down like this and expect anything else from the market, particularly in this environment. I mean, they guided down on revenue now. They're calling for $228 million for the quarter versus $295 million to $305 million they called for just a quarter ago. That net loss is

going to become greater than they initially guided for as well. They quoted the reasons for the change. First, of course, the marketplace is funding constrained. There's concerns about the macroeconomy among lenders and capital market participants, as they quoted in the release there. That makes a lot of sense. They also noted that they converted some loans on their balance sheet into cash, and that impacted revenue growth as well. I mean, you put it all together, there are just a lot of question marks as to how this business is going to be able to perform as the cost of doing business continues to rise. And it looks like that trend is poised to continue. So yeah, I just don't have this one at the top of my list. But I think really, it just boils down

to whether they can prove out the case that their AI is really as good as they say it is. We've talked recently about companies, and Upstart Holdings is certainly one of them, whose valuations have come down dramatically as you think about the second half of the year and the prospect for larger tech companies coming in, snapping up smaller ones. Do you think Upstart Holdings is now at the point where larger companies are starting to kick the tires and think about maybe making an acquisition if they can't turn it around on their own? I mean, it's possible, but this is certainly a very competitive environment. There are plenty of companies out there that are trying to tackle this from a few different angles. I don't know

that looking at Upstart as an acquisition target, at least in the near term, makes a lot of sense. But it's certainly possible that valuation becomes a little bit too attractive for a bigger player in the space to just glance over. This week, Amazon shook up the food delivery industry by taking a stake in Grubhub. It's part of a deal that will give Amazon Prime members food delivery perks as part of their subscription. Maria, you tell me, how do you think DoorDash is feeling about Grubhub's new partner? It's interesting because I think DoorDash probably isn't feeling great. DoorDash isn't feeling great. There's a large group of people who now have their competitor for free, essentially. But it's important to remember how

much market share DoorDash has. So DoorDash has about 60% of the meal delivery services. Uber Eats is second. Grubhub is in third place. And so what this deal looks like is that Prime members get a free year-long Grubhub membership, zero delivery fees. Amazon can buy additional stake in Grubhub as well in the future. But I think what's interesting is Grubhub at the end of this is either really hoping that the end of the free year it's provided such value people keep paying for it or that people forget that they are now paying for it. And it just becomes part of your unknowing subscriptions that a lot of us have at this point. But what we're thinking, what they're thinking and what this strategy is to retain people, right? And so DoorDash had something

called DoorDash for Students. And then after that ended, they had customer retention of less than 50%. So this isn't actually that proven of a strategy. So I understand where they're coming from, but I don't know that that value proposition is there. I don't know that their unit economics are there that that after a year is going to be profitable for Grubhub. We were talking about this before the show, Maria. I mean, you're not only much younger than me, you also engage in food delivery a lot more than I do. And it really seems like the sort of thing where from the consumer side, there's no real big switching cost. You can have all these apps on your phones. And until one of these businesses steps up with some sort of real incentive,

these are businesses that at the moment aren't that sticky. Yeah. And I don't know if anyone heard about the Grubhub free lunch in New York that was a complete debacle in New York City where they didn't really warn the drivers, they didn't really warn the restaurants. People thought they were getting their lunch at 12. They didn't get their lunch till 4 p.m. or didn't get it at all. So Grubhub doesn't really even have the infrastructure to scale the way they might want to. And so you have these incentives for users and trying to get them interested. But then when you get them interested, if they have a bad experience, I think that's going to be more of a net negative for Grubhub than maybe they wanted

it to be as they lost a lot of money and they didn't gain that many people liking them. If you've got $1,000 burning a hole in your pocket, Meta Platforms has a device that they would like to sell you. Details after the break, so stay right here. You're listening to Motley Fool money. Welcome back to Motley Fool Money. Chris Hill here with Maria Gallagher and Jason Moser. This week, Bloomberg reported that later in the year, Meta Platforms is planning to sell a high-end VR headset called the MetaQuest Pro, and the price tag will be over $1,000. Maria, that is a higher price point than I would have guessed, particularly since this is coming from a company that has poked fun at Apple in the past for selling expensive

devices. It's a high price point and it is trying to compete with Apple's headset that is going on sale next year. It's apparently going to have better graphics processing, it's going to include high-resolution cameras, there is going to be more eye tracking, more storage, new controllers, high-resolution displays, it's just kind of this continued push into the metaverse obviously and they're talking through some other advancements with very fun code names like butterscotch starburst holocake and mirror lake so they're talking about this new line of augmented reality smart glasses which are meant to project images onto the real world instead of just blocking with the screen they're working on

making the headsets less bulky and more easy to use they're talking about using them for medical school. And fishing with your dad was one of the examples if you're living very far away. So they're working on making it applicable to a lot of different people. And I think they're just continuing to try and blur this line of what is real and what isn't. And are people going to pay for something that isn't real? And can they make it real enough to make it worth it? I think is the biggest question on everybody's mind. It's going to be really interesting to see what sort of consumer reviews come out about these devices when they're finally unleashed. Jason, let's stick with high-priced devices, because there were also reports out this week

that both Apple and Google are looking to make use of the lock screen on iPhones and Android phones. If I'm reading this correctly, I might be seeing ads pop up on my phone when it's locked? Well, it sounds like that is a possibility. That's certainly what they're investigating. It seems like that happens at least in some capacity now. There's a startup company called Glance in which Google has an investment. But ultimately, yeah, the idea is here that they view this lock screen as very valuable digital real estate. And ultimately, this is just going further upstream in order to capture those eyeballs. And I can actually imagine here that advertising partners would find that to be some of the most

valuable digital real estate in that it's essentially first in line. That lock screen is the first thing you see when you open your phone. So I think really, from a consumer's perspective, this doesn't sound ideal necessarily. It sounds kind of exhausting. So I think execution, implementation is a question mark. How would they do this in such a way where users feel like it's helpful as opposed to a hindrance or something that they don't want. I can't imagine this is something that would offer a lower price point phone, at least in Apple's case, if they decide to pursue this. Maybe Android. It seems more in line with their business model. I would hope there would be some way to opt out of it if you're a consumer. If you don't like it,

I know I would. But again, I understand in theory, that is some very valuable real estate that ultimately is not being utilized to its fullest today. It'd be really interesting to see what kind of pricing power comes with that type of real estate. Maria, let me tie it back to Meta Platforms for a second, because Meta has already put a freeze on hiring. CEO Mark Zuckerberg made comments that some current employees may want to leave of their own accord if they're not up to the challenges ahead. Along those lines this week. Twitter announced it's laying off some employees as it continues to try and close its deal with Elon Musk. I was saying to Jason before we started recording, I'm so happy

I'm not a Twitter shareholder because the drama going on at that company just seems to go higher month by month. It seems like an episode of succession, honestly, seeing what the drama unfolds with Twitter. They laid off a third of their recruiting team, which of a group of people that I think indicates that they're probably not planning to hire again for a while. Like you said, there is a hiring freeze. We are seeing this with the tech companies. There was Coinbase who both rescinded offers and laid off a bunch of people. There are hiring freezes at Facebook, like you said, or at Meta. And so I think it's interesting to see a lot of these companies that for many years were talking about how there's no end to their growth saying, okay, maybe there's

an end to our growth, or maybe there's a little bit of a slowdown of a growth that we're seeing right now. I don't think it's uncommon, and I think we're going to keep seeing it over the next couple of quarters, next couple of years. Thursday was an eventful day for GameStop. In the morning, the company announced a four-for-one stock split that will take effect later this month. In the afternoon, GameStop fired its CFO and announced it will be laying off employees as a way to cut costs. A lot to unpack there, Jason. What stands out to you? It feels like, Maurice said it just a minute ago in regard to Twitter, the drama. It feels like we could set up a little drama basket here, Chris. Twitter would be in that

basket. I think GameStop belongs in it as well. This is the gift that keeps on giving as far as covering investing news, because there's always something. What ultimately stood out to me, though, is the company has made more than 600 corporate hires since the start of 2021. on. I can't fathom what led to that decision-making. We're not talking about store managers. We're not talking about store-based employees. We're talking about corporate hires here. It just strikes me as completely the opposite of what you would really want to do. This is a company in turnaround mode. Anytime you're in turnaround mode, you need to be paying attention to every single cost that's going out that door. I was very surprised to see that it

had become that bloated. I appreciate the fact that they are going to try to right-size the business there. It does seem like a CFO who was there for only a year, they quoted he was fired because he wasn't a right culture fit and he was too hands-off. Yeah, I get that. You want that CFO to be very, very hands-on, Chris. GameStop is just one where I'm happy to watch this one. It's entertaining, I think, from the perspective of just what goes on day-to-day. But you know, like they say with turnarounds, oftentimes they don't end up turning around, and that could be the case with this one. Thank you for those details on the CFO, because whether I own shares of the company or not, anytime a CFO leaves suddenly,

I am always curious to find out why. What is the story behind that? Second quarter profits for Levi's came in higher than expected. The iconic jeans company also announced it's raising its quarterly dividend 20%. Maria, nice to see the strong results from Levi's, but this is a business that has struggled over the past year. Why are they hiking their dividend this much? The people who are really going to benefit from this hike of the dividend are the Levi Strauss of the House family, who still own nearly 40% of shares outstanding. I wrote in my notes, they gave themselves a nice little gift for doing well. They had net revenues of $1.5 billion, up 15%, up 17% in the U.S., up 3% in Europe, and up 16% in Asia. I was actually kind

of interested to see their numbers from last year that most of their sales are men's. I kind of thought that most of their sales were women's, but 65% of their sales are in the men's category. So they're really shifting more and focusing more on the women's category and trying to expand in tops. Also, the global jeans market is a $100 billion industry, which I also didn't know. So they still think they have a lot of room to grow within that industry, but I mean, it was a good quarter and they really are benefiting from the people who are benefiting the most are, is there that family from this hike in their dividend? I'm actually not surprised by the gender breakdown. Um, because when I think of Levi's, I just think of men wearing leave Levi's. Like I don't, I don't know

any women who own Levi's jeans. I, all my friends own Levi's jeans. Really? Yeah. This is why you're so much hipper than me. I think it's coming back in style. I think Levi's weren't super in fashion for a while, but now they're really making a comeback. I'm wearing Levi's right now, Chris. Jason's ahead of the curve. The lesson is always never listen to me when it comes to fashion. All right, Maria Gallagher, Jason Moser, we'll see you later in the show. Up next, we've got a conversation with Jay Jacobs from BlackRock about emerging trends investors are going to want to watch. So don't go anywhere. You're listening to Motley Fool Money. All right. Our conversation with Jay Jacobs is coming up next, but first,

a message from our friends at BiggerPockets. and we make it fun. I promise you, On The Market is definitely not another boring news show. Each week, I chat with a panel of experts about the latest news and trends affecting the real estate investing world. We touch on things like government policy, 3D printed houses, investing in the metaverse, and more. So join us every Monday for On The Market, the podcast designed to help you invest with confidence. Just search On The Market in your favorite podcast app. That's On The Market. Welcome back to Motley Fool Money. I'm Chris Hill. You've heard us talk on this show before

about investing in trends, and in particular, trends that have staying power. One person who's focused on this is Jay Jacobs. He's the U.S. head of thematics and active equity ETFs at BlackRock. Earlier this year, Jay co-authored The Great Acceleration, a report about mega trend changes that Wall Street may be underestimating. Motley Fool contributor Rachel Warren caught up with Jacobs to talk about the trends he and his team are watching in infrastructure, emerging markets, and healthcare. There's a quote from the report that notes, you know, development of the COVID-19 vaccines were highly compressed from pre-clinical research to official authorization. The development times were nearly 10 times faster than historical timelines for vaccine development.

So from your vantage point, what do you see as being some of the most exciting trends and developments that are shaping the healthcare industry at this point in time? And so at a broad level, I think one of the most exciting and maybe one of the most optimistic viewpoints in the world today is the growth of the field of genomics. Doing medicine at the genetic level, a really refined, precise, personalized form of medicine that can treat many different diseases in ways that we've never been able to treat them before. So if you think about, you know, if you go to a doctor and you say, you know, I have this issue, what do they tend to ask? They ask, you know, family history, they ask for age, they ask for

gender, just really basic biomarkers that then they try to tell you this is the right medicine for you, or this is what you might experience with this, uh, with this ailment. But what if you can get at a genetic level where they really look at all the different markers that makes an individual who they are, and they can treat an individual based off of those genomics, those simple genetic characteristics, you can get much more precise, much more accurate forms of medicine going forward. So mRNA-based vaccines were a huge leap forward for genomic medicine. This was really programming a vaccine at a genetic level to attack the coronavirus. It's worked incredibly effectively, but it's also brought billions of dollars of investment to

mRNA-based vaccines. It's brought regulatory excitement around mRNA-based vaccines. mRNA has been around for decades, but frankly, it didn't have the funding or the regulatory environment to support it. Now it does. So the question is, how do we take the success of mRNA-based vaccines and apply it to something like the common flu or to HIV? Can it even be applied to some cancers? So it's really amazing to see this technology being used in different applications going forward. And then beyond that, can we do more genetic testing to get more genetic data at the individual level? Can we build precision medicine that can edit or modify individuals' genes? There's over 10,000 diseases that if we just modified one gene in

someone's genome would completely alleviate the disease. So can we get to that finite of a level and treat people at the genetic level? I think it's incredibly exciting. I think we're really just at the beginning of this new wave of healthcare going forward. Yeah, you know, there's so many innovations, uh, that I think are so exciting for investors to watch right now. And that kind of leads me into the third and final mega trend that the great acceleration report highlighted, which is the power of the purse. And I want to highlight a key quote here. Um, the report said, you know, while lockdown slowed economic activity, they could not derail major demographic trends. And amid the pandemic, millions of us millennials entered peak spending

years, ages 35 to 55. Similarly emerging market consumers cemented their place as a dominant customer group representing over 50% of global spending. And as a result of these trends, millennials and emerging market consumers are now and will be for several decades to come essential drivers of the global economy. So against that backdrop, what are some of the industries or sectors that you see as being most affected by these millennial and emerging market consumers over the next five to 10 years? We really see it as two distinct segments. One is looking at emergent food and ag tech. Looking at the millennials in the United States, this is a very sustainably-minded generation that really thinks about when they're buying food,

what is the source of this food? How clean is it? Is it organic? How did it get to this farmer's market? How did it get to this store that I'm buying it from? They're making these really sustainable decisions. That's really important because if you're a food manufacturing company and you are developing products that are unhealthy or unsustainable or using more negative processes and creating that food, millennials are going to gravitate away from that product and move towards something that's healthier and a more sustainable process. So what are the companies that are leading in the process of moving towards more sustainable practices of food? We think they're going to be a big beneficiary of this millennial generation

that has more money because they're in their peak earning years, are spending more money because many millennials now have homes and kids. We don't necessarily think of millennials as 40-year-olds with homes and kids, but that's a lot of millennials these days. And millennials are inheriting trillions of dollars from the baby boomer generation. So their spending preferences really are going to matter a lot to the American economy. And those spending preferences are different because they care about things like sustainability much more than previous generations. And then similarly, if we look overseas, the emerging market consumer, because of the rise of the middle class overseas and because of the growing population that's primarily happening

overseas is now the dominant consumer in the world today. So if you're a consumer packaged goods company selling internationally, and you're not thinking about emerging market consumers, you're missing out on the majority of your potential market. So what are their unique challenges and unique preferences? Well, there's over 2 billion consumers overseas that don't have access to banking today, but they do have a cell phone. 60% of them have a cell phone. So how do we think about extending financial services to those 2 plus billion and people overseas that have an electronic connection to the internet. We think one of the big beneficiaries will be decentralized finance, being able to help at scale these

individuals invest, borrow, lend, all the basic banking technologies that are much more available in developed countries like the United States, but so far have not been made widely available to people in emerging markets. So it's really looking about these distinct groups and thinking about what are their unique challenges and needs and who are providing the products and services to them going forward. Yeah. I'd love to talk a little bit more about the thematic investing approach. You know, what does that look like in practice and how can investors, you know, we as long-term investors weave that approach into our investing strategy against the backdrop of the current market? Absolutely. So one of the things that we like to look at in thematic

investing is what's called the adoption curve. And it's really this S-shaped pattern of adoption where we see what is a technology today, you know, pick anything that's kind of a newer tech like electric vehicles. And we can look at one end of the curve is what is the total addressable market? So in the case of electric vehicles, it's basically the 90 million or so cars

that are sold each year. And then how many cars are actually sold that are electric? And right now we're in kind of high single digits penetration. So we're around, you know, seven, eight million electric vehicles being sold each year.

We have a lot of ways to go for that adoption. And we think about things like, what will it take to get that adoption? Is it cost? Is it quality? Is it just espousing the benefits of electric vehicles? Is it the infrastructure? But really trying to understand, what is the conviction behind this theme? And what is the opportunity behind this theme?

That is step one. Step two is, is this theme investable? So many of these really powerful structural trends we're seeing around the world today are investable, and many are not investable. And the idea behind investability is, can we find a basket of companies that has high purity to this theme. Sticking with the electric vehicles example, I'm sure you can think of many famous electric vehicle companies, but also ones involved in lithium mining and battery production and parts and components for electric vehicles, really thinking about that entire

ecosystem that would benefit from the rise of electric vehicles. So we think about conviction, we think about investability. And then the third thing we think about is time horizon. When is this theme likely to take off? Is this going to happen tomorrow, which would be very soon? Or is this going to happen 100 years from now, which would be very far away? Really, the sweet spot for us is thinking 5 to 20 years in the future, which gives us plenty of time to develop the theme, to research the theme, to bring it out to investors. And it doesn't put as much of an emphasis on entry and exit points. This is not a trade. this is an investment over time. So when we think about those three themes, those three

kind of checklist items for thematic investing, that's how we arrive at many of the themes that we've discussed today. Rachel, in terms of your question of where does this fit in a portfolio, this is actually a slightly more nuanced question for thematic investing because many themes cut across sector and cut across geography. We don't care if an electric vehicle company is in the U.S. or if it's overseas. We don't care if it's categorized as a tech company, or an industrials company. We're trying to find the companies that are best positioned to benefit from the materialization of this theme. So sometimes that makes it a little bit harder to fit in a portfolio. But what we suggest is that people keep a core portfolio intact using

a very efficient, broad-based core. And then they create a satellite portfolio where they might put three or four themes in that satellite, where they understand that this might have more tracking error to something like the S&P 500. It might be a little bit more volatile because these are concentrated positions, but also that this satellite is designed to be a long-term buy and hold piece of one's portfolio. I think that's a really helpful and informative way to break down that style of investing. And we're certainly dedicated to long-term investing here at The Motley Fool. Something I know as well that you and your team have written about and discussed often recently is the resilience that certain types of sectors have, particularly in a current

inflationary environment, but also over the long term. And one of the sectors you've identified is the infrastructure space. And I'm curious, in your view, what sectors within the broader infrastructure industry pose the most compelling opportunities as you see them now for long-term investors? And then what are some of the durable driving factors there beyond the current inflationary environment? Yeah, absolutely. So infrastructure is one of the themes that we're most excited about right now, and it's for several reasons. So we really look at infrastructure in two different ways. One is who's enabling infrastructure? Who's building the infrastructure or rebuilding the infrastructure in the United States and around the world today.

That could be construction engineering companies, that could be machinery companies, that can even be raw materials companies that produce things like cement and steel that get used in infrastructure. We just had last year, the Infrastructure Investments and Jobs Act pass Congress, which was a $1.2 trillion bill to accelerate the reinvestment in U.S. infrastructure. We believe those enablers that are building that infrastructure are going to be the big beneficiaries. They're going to start seeing the cash flow from that congressional act to rebuild U.S. infrastructure. We see them as immediate winners. Over the long term, some of the other winners are going to be infrastructure asset owners. These could be

people that operate airports, toll roads, highways, bridges, different pipelines and electric companies and water utilities that benefit from this reinvestment in infrastructure. because previously these companies had to spend the money on it. They had to use their own CapEx to improve an electrical power line. Now the U.S. government's going to pay for it. So that's a good thing for these businesses and they're really going to get to benefit from the passage of this act and the improvement of infrastructure around the country. Also, we believe a lot of those infrastructure asset owners are very well positioned in this inflationary environment because a lot of their contracts are tied to CPI or PPI, meaning the amount that they're able to

charge for their service automatically adjusts when inflation rises. So they have a built-in layer of inflation protection, which is really enviable by many companies in this type of environment where they can just naturally start to raise prices due to their contracts. So we believe infrastructure is really kind of this dual-faceted theme with enablers and asset owners that's also uniquely well-suited for this inflationary environment. And then over the long term, just has incredible tailwinds because of this reinvestment in infrastructure, which will take several years to be put into place. Coming up after the break, Maria Gallagher and Jason Moser return. They got a couple of stocks on their radar. So stay right here.

You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here once again with Maria Gallagher and Jason Moser. Before we get to the stocks on our radar, we've got a question on The Motley Fool Money hotline. Dan, what do we have? Hey, Fools.

This is Tyler from LA. Is Warner Brothers' discovery stock going loony? It's down 30% since becoming bigger and probably better. I know the market is concerned about the money that is being spent to produce new content, but the CEO, David Straslop, seems to be making the right moves by trying to cut budgets and spend money wisely. The valuation seems to be attractive because of the IP Warner Bros. Discovery has, but the stock is a falling knife at the moment. Thoughts on this?

Thanks. Have a good one. Bye. Thank you, Tyler in LA, for a great question. Jason, we talk a lot about streaming video and entertainment. Warner Bros. Discovery is not a company we talk about as much, although parent company of HBO Max. We talk about that when we're talking Netflix and Disney Plus and all that sort of thing. What do you think to Tyler's question? I mean, this is a stock that

has been knocked down, but the CEO, David Zasloff, is not being shy about making moves. No, he's not. And it's not his first rodeo either. So, thanks for the question, Tyler. I think it's a really good one. We are seeing just such a massive shift here in the media landscape and the streaming landscape, the ways to go about doing it, distributing that content. And I think that ultimately, and you hit in on this a little bit, Warner is going to need to figure out ultimately what that strategy is for them, what strategy is going to work best for them. And that is ultimately still a work in progress right now because this merger is still so new. So we do need to give them some time, I think, to really decide and articulate what that strategy is. Mergers like

has come with a lot of cleaning up of old messes, investments that weren't panning out, reprioritizing of strategies. It's not like they are alone either. You look at streamers in the space of Disney's down close to 40% year-to-date, Netflix down 70% year-to-date. This is a very tough business where companies are spending a ton on content, but not yet realizing the profits from this as this landscape continues to shift. But you made a really good point there in their IP. You've got these brands that just have done so well for so long and that will continue to keep on giving, whether it's HBO, whether it's Food Network, HGTV, whatever it may be, they do have a lot of valuable IP there and I believe they'll be able to exploit it. I

think they just need a little bit of time. I think the unknown here in exactly what the strategy is, is probably what has the market on the sidelines, but the known in that valuable intellectual property that they have, I think it'd help offset that. And this could very well be an opportunity. If you'd like to give us a call, the Motley Fool Money hotline number is 703-254-1445. Ask a question about stocks. Tell us where you're from. Let us know if you're a Motley Fool member as well. 703-254-1445. Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Maria Gallagher, you're up first. What are you looking at this week? So the stock on my radar is Paycom,

let's take our simple P-A-Y-C. You might be familiar with this company. It does payroll and other human capital management services. But one reason I'm interested in it is what we've been talking about a lot is things like recessions, inflations. And what they do is they specialize in small and medium-sized businesses who will really show, I think, how the economy is really doing and how that evolves in the next couple of quarters. So I think it's going to be really fascinating to hear their take on the current market environment and see how companies are spending their money with them. Dan, question about Paycom? Absolutely, Chris. Maria, payment software is a pretty saturated market. What really separates

Paycom from the other players in the space? What they do, it's pretty interesting because they do focus on those small, medium businesses. I think they've really carved out a really good name for themselves in that niche. They are with you from recruitment to retirement. They help with your HR systems. They help with all your payroll. And so, what you see is people go on the platform and then they keep spending more. And they have really high retention, especially within that small-medium business. So, I think where they operate is really what differentiates them. Jason Moser, what are you looking at this week? Yeah, digging more into a company called Procore, ticker is P-C-O-R. Procore is a provider of construction management software. They focus

exclusively on construction and connecting the owners and the general contractors, specialty contractors, architects, and engineers, think Vandelay Industries, Chris, in order to collaborate really from any location. I think that really is what it's all about for them. They break out into four product categories, pre-construction, project management, resource management, and financial management. I think one potential advantage is their open application programming interfaces, those APIs, and they have an application or app marketplace. This ultimately allows customers to integrate Procore products with their own internal systems. that could be ultimately an advantage. But I'm looking more into that as I try to learn

more about the company itself. Dan, question about Procore Technologies? Not really a question, Chris, more of a comment. We can follow this one under things that make sense. Procore Technologies is housed in Carpinteria, California, which, of course, Carpinteria is Spanish for carpentry. Got to love that. Yeah, I do love that. That's a great selling point there, Dan. Thanks. Two very different businesses, Dan. You got a stock you want to add to your watchlist? Listen, man, I said it. It just makes sense to me. I'm going to go Procore. Let's all visit Carpinteria, California one day. Road trip, Jason Moser, Maria Gallagher,

thanks so much for being here. Thanks for having us. Thank you. That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Chris Hill, Thanks for listening. We'll see you next time.