Motley Fool Hidden Gems Investing - End of an Era

Episode Date: February 5, 2021

Jeff Bezos announces he’s stepping down as CEO, with Andy Jassy (the head of AWS) named to take over. Amazon also reports a $125 billion quarter. Activision Blizzard, Alphabet, PayPal, and Pinterest rise on earnings. Chipotle and Unity Software fall on earnings. And Uber surges after it announces plans to buy alcohol-delivery company Drizly. Motley Fool analysts Ron Gross and Jason Moser discuss those stories and share two stocks on their radar: Scotts Miracle-Gro and Synaptics. Plus, Chad Millman, Chief Content Officer at The Action Network, talks about the big business of Super Bowl betting. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill, joining me this week, senior analyst Jason Moser and Ron Gross. Good to see you, as always, gentlemen. Hey, how are you doing, Chris? We've got the latest earnings from Wall Street. We'll talk sports gaming and Super Bowl prop bets with our guest, Chad Millman. And as always, we've got a couple of stocks on our radar, but we begin with big news from the C-suite. On Tuesday afternoon, Amazon founder Jeff Bezos announced he will be stepping down as CEO later this year. Bezos will stay on as chairman of the board and taking his place as CEO will be the head of Amazon Web Services, Andy Jassy. Ron, let me start with you. CEO transitions can be rocky, particularly in the case of a founder-led

company. That said, Andy Jassy's been at Amazon since 1997. This really seems like the right person for the job. Yeah, two high-level thoughts I have. First, I'm not surprised that Bezos is moving on to the executive chairman. It was bound to happen. He wants to focus on things like Blue Origin, Day One Fund, the Bezos Earth Fund. He's got other things he wants to do. I think it's important maybe to point out that this continues the trend of CEOs moving on to an executive chairman role rather than just a chairman role. What that means is he's going to also be an employee, which also signals to investors that he will still be involved in some capacity on a day-to-day basis. Now, is that going to actually happen? I don't know. Is this a move just to

to placate investors as it was done with Bob Iger, for example. Well, it remains to be seen, but I think the executive chairman is a signal to folks like, don't worry, he's not abandoning the ship here. He's going to still be highly involved, even more so than a regular chairman of the board. As far as Jassy goes, I think Jason probably knows both him and the cloud business better than me, but he seems like a total solid choice. As you said, been with Amazon since 97. He built the entire cloud business. My guess is this is a signal that cloud will be doubling down on the cloud, which should be a surprise to no one. It's a very important part of their business. So I'm fine with the transition. I'm not selling my shares. I think good days are still

ahead. Yeah, I'm with you, Ron. I mean, I'm definitely not selling my shares. I mean, we'll obviously see in time if Mr. Jassy has the chops to run the business, but I do agree. I think he's the sensible choice given what we know about him and given what we know about the direction of Amazon, the business. It feels like they've really got the North American retail business where they want it. Plenty of growth to come as more and more people go towards e-commerce and the international business is following suit. But I think Amazon Web Services, AWS, that's the key part of the business to focus on. When you look at Jassy's track record there, if you just go back a few years here and look at the data,

in the fourth quarter of 2018, they reported AWS was operating at an annual revenue run rate of $30 billion. A year later, in the fourth quarter of 2019, it was $40 billion. This most recently reported quarter, it was $51 billion. The asterisk there for this quarter was they actually added more revenue quarter-over-quarter and year-over-year this past quarter than any other quarter in the company's history. Clearly, we can see that AWS is where they see the puck going, so to speak. I think that having Mr. Jassy running the business makes a lot of sense given his history, not only with the company, but his intimate knowledge of the AWS business as well. Jason Moser.

Bezos News overshadowed Amazon's fourth quarter results highlighted by a record $125 billion in revenue, which Jason, that was a few billion higher than Amazon's own guidance. Yeah. It was, what, a week or two ago, we were talking about Apple finally hitting that $100 billion quarter, and so Amazon right there with them. It feels like a broken record. Every quarter, we just talk about, wow, Amazon did it again. And guess what, Chris, they did it again this quarter. North American retail up 40%, international retail was up 57%, and they are inching closer to sustainable profitability there. Again, eye always goes towards the AWS side of the business first in looking at that. Revenue

growth of 28% might have been a little bit below what analysts were looking for, but they also grew operating profit in the AWS segment by 37%. You can really see how they're able to leverage that model and drive profitability for the business. AWS represents well more than half of the company's total operating profit. Again, going back to the selection of Mr. Jassy. Looking at these results, it really all makes sense. Amazon had the bigger headlines, but Alphabet may have had the better week. Shares up 12% and hitting a new high after a great fourth quarter, fueled by strong numbers out of Google's core ad business. Ron, YouTube's revenue was up big too.

Now, a $1.4 trillion company that continues to post impressive results and move higher, beat expectations for both ad and cloud, although cloud continues to lose money, but at a lower rate. They give us details about the segments, so a lot of folks were looking at cloud. But total revenue up 23%, Google services up 22%, YouTube, as you said, up 46%, incredible numbers, search up 17%. Cloud was up 47%, but still lost about $1 billion. But net income up 43% on widening margins, incredibly impressive, and that will continue to get better as cloud improves. Ron, this is the first time they broke out the cloud revenue, and as you said, they're still losing money on it. Did you take the

breaking out of the revenue as a separate division as a sign that they're really confident they're close to profitability there? Yes. I think they wanted to show you that cloud as a percentage of the business was improving. We're at about 7% now, so obviously still a small amount, but it is growing. $1.2 billion loss for the quarter sounds like a lot of money, but that is improving too. We saw those margins really important for this business and the stock going forward widen pretty impressively, and that will only go up as cloud gets closer to profitability. Then if it turns, margins will be significantly higher than they are now, and theoretically the stock will as well.

PayPal's fourth quarter report capped the best year in company history, shares up 14% this week, not just because fourth quarter profits and revenue came in higher than expected, Jason, but PayPal's guidance for 2021 was really strong. It was. This was the best year in the company's history with record everything, basically. We talked about Amazon feeling like a broken record. Well, PayPal is getting there, too. It seems like we're just saying the same thing every quarter. Wow, they just continue to get it done. When you look at the numbers, total payment volume for the quarter, $277 billion. That's up 40% excluding eBay from the equation. Revenue is up 23%. 16 million

accounts added. They ended the year with 377 million active accounts. That's up 24%. The total take rate, which ultimately is what's flowing down to the profitability line for the company, total take rate of 2.21%. There's slight compression there just as costs continue to come down for consumers, but I mean, that's no real surprise. Getting to the guidance, as you mentioned for fiscal 2021, calling for total payment volume growth in the high 20% range with revenue of around $25.5 billion, that would be up 19%. Calling for an additional 50 million accounts added for the year. And listen, man, they called for 35 million at this same time last year, and they wrapped up the year with more than 70 million. So let's just take that 50 million with

grain of salt. But so many things they're doing well. And it's really interesting to see, there was a question on the call in regard to what's really catching their attention, what's being received well, because they're doing all of these new things with credit and with crypto and with buy now, pay later. And CEO Dan Shulman actually said the biggest surprise was the response to that buy now, pay later offering that they've rolled out for consumers. they've seen a tremendous response. Three million customers using it now, paying with hundreds of thousands of merchant customers. And so, just given the growth in that particular space with IPOs like companies like Affirm, you can see. I mean, PayPal is just utilizing that massive network

and rolling out new products and services to consumers, and it seems like they like them. Real quick, before we go to the break, PayPal is having an investor day next week. It's their first time in a few years of having an investor day. Is there anything in particular you're anticipating for that, or are you just going to sit back and see what they come out with in terms of their three- to five-year outlook? I think it's interesting that they really feel comfortable giving that three- to five-year outlook at this point, because they did mention in the call here that this behavior, this shift in consumer behavior they feel like due to the pandemic, this is sustainable and it's not going back. I think this big focus on cashless, on

mobile, that isn't going to go away. And I think really, it's just a point of understanding what kinds of products and services they have on their radar to roll out in the coming years. But I'm going to sit back and take it all in, and I will let you know what I find out. What's better than video games and burritos? Video game and burrito stocks hitting new all-time highs. 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 Jason Moser and Ron Gross. Shares of Activision Blizzard up 10% on Friday after a strong holiday quarter. And Ron, I know they make a lot of video games at Activision Blizzard, but the Call of Duty franchise just

continues to perform well. Yeah, that Call of Duty, World of Warcraft, and Candy Crush, which I never understood, are clearly getting it done. This stock is up 75% over the last year, and as you said, adding another 10% this week. Numbers are really strong. The revenue is up 21%, with net bookings up 12.5%. Net bookings from digital channels, which is where this industry has certainly moved and is continuing to move, is up 24%. So they've got monthly active users now of 397 million. Call of Duty Black Ops Cold War, I love the names of the Call of Duty games, was the bestseller across all platforms in 2020, according to research firm NPD. And as I said, World of Warcraft and Candy Crush were really strong as well. So, you've got adjusted earnings

of 23%. Guidance was solid. They increased their dividend 15%. You now get a 1.8% yield on that. They authorized the new two-year stock repurchase program for $4 billion worth of stock. You know, the company, the whole industry for that matter, you know, whether it's Electronic Arts or Take-Two, benefited from the fact that we've all basically been on lockdown, sitting on our couches, some of us playing video games, others watching Netflix. New console refresh, PlayStation 5, Xbox Series X certainly also helped. Whenever there's a console refresh, there's a renewed interest in repurchasing or adding new games. And so, the company continues to execute really, really well.

Shares of Unity Software have had impressive gains lately, but gave some of those gains back on Friday after fourth quarter results showed that revenue growth is slowing down. And Jason, this is a growth stock, and we don't like when revenue growth slows down. Not even just a little bit? Not even just a little bit. I guess you're right. As I say, this is a shareholder, I wouldn't let the market's reaction fully. This was a really strong quarter. Revenue of $220 million and $772 million, well-exceeded guidance set last quarter for both the quarter and the year respectively. Losses were lighter, guidance for the coming year right in line. They're closing in on $1 billion

in annual revenue already. I think this is a business that's doing a lot of what we were hoping it would do. It's just valuation is usually the biggest risk for a company like this that just IPO-ed and it's been on a tear ever since. But when you look at the numbers, the engagement, I think it makes a lot of sense. Games made with Unity accounted for 71% of the top 1,000 mobile games in the fourth quarter of 2020. Monthly active end users who consume content created or operated with Unity that reached on average 2.7 billion people per month in the fourth quarter of 2020. That was up 63% from the year earlier. Again, valuation being a little bit of a risk, I think management did a good job on the call. They set the expectation appropriately, I feel,

that some of 2020's success was pulled forward due to the pandemic. There are also some concerns that are not quite as quantifiable in the long-term just in regard to the Apple privacy risk that they talked about on the call as well. But all in all, this is a tool that is not only a gaming engine, really, what Unity is building here, but it is a creation engine that extends well beyond the gaming universe. I think the long-term story for this business is absolutely intact. Again, as a shareholder, I feel really good about owning these shares. Fourth quarter revenue for Pinterest rose 76%, capping off a year in which they added 100 million users to the platform. Maybe no surprise then that shares of Pinterest were up on Friday

and hitting a new high, Ron. How about up 270% over the last year? Boy, did I miss this one. But it's not about me, Chris. It's not all about me. Let's get to the numbers. As you said, just unbelievable. Fourth quarter revenue jumped 76%. This is for a business that I didn't even understand until relatively recently, and I had no interest in until relatively recently. As we saw with Google, ad spending rebounded significantly as businesses has moved online in a big way as a result of the pandemic, and people started spending again, ad spending really popping up and affecting a lot of the advertising businesses that we follow. Now has 459 million monthly users. That's up 37%. And as you said, added over 100 million users

globally in 2020. Adjusted net income. Look at this number, up a whopping 283%. Now, it's not a multi-trillion-dollar company. It's still relatively small, but that's still $294 million in quarterly earnings for a company, again, that I had no interest in, but the numbers speak for themselves. Management said they'll continue to invest in the business. That's going to include additional headcount. They're going to go expand their international business significantly. They think there's a significant amount of growth there. And guidance, they think revenue will increase in the low 70% range in the first quarter. So, there seems to be no let up in that growth. Chipotle shares hit a new high earlier

in the week before issuing fourth quarter results. Jason, I get that expectations were high. That's why the stock sold off a little bit later in the week. But I mean, the same store sales were solid and Chipotle's digital sales just continue to impress. Yes. At first blush, you would wonder what in the world has the market paying 140 times trailing earnings for a purveyor of burritos. I mean, this isn't coffee, Chris. Delicious purveyor. Yes, you're right. They are very, very tasty. I agree. But when you couple the execution along with what still appears to be a very significant market opportunity, I get the market's enthusiasm here. The stock's up 68% over

the last 12 months, and I think there's a lot more where that came from. Sales were up 11.6% from a year ago. Comps 5.7%. All relatively okay. But yeah, you made the point there. Digital sales for the quarter grew 177.2%, accounted for 49% of all sales, half of those were delivery. Listen, going forward, I think it's reasonable to assume that's going to be a big part of this company's story. Working on initiatives like Chipotle Lanes that are gaining some traction, they're even testing out a digital-only store, closing in on 20 million rewards members, and then talking about that market opportunity, they're going to open 200 more stores this year on top of the 2,750 stores that they have today. And it feels like they could open a lot more from

there as well. So, again, I mean, as long as they can avoid those real problematic things like health scares, for example, it does feel like this is a business that's being very well-managed. And they got kind of that Jamie Dimon thing going on with the balance sheet too. It's a fortress-like with $1.1 billion to zero debt. Jason, remind me, are we anywhere with breakfast, because a breakfast burrito is pretty good. It sure feels like we keep on hearing rumors and rhetoric, and I just don't know that there's anything really firm there, but it feels like it's something on management's radar that they eventually want to introduce. I agree, that would be a stellar addition to

what is already a very good menu. Real quick, Jason, do you think at some point in the next five years they take a run at another food concept? Honestly, I would prefer not. I think that they have such a market opportunity ahead with just the core Chipotle store. Learn the lessons from the past, right? And get your house in order first. And I think that if they just pursue this Chipotle concept for the next several years, that should do them and investors just fine. All right. Jason Moser, Ron Gross, guys, we will see you later in the show. Up next, Chad Millman from the Action Network analyzes the state of sports betting in America and what he's going to be watching for in Super Bowl 55.

That's next, so stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. The American Gaming Association estimates that more than $4 billion will be wagered on this year's Super Bowl. An increasing number of those bets are going to be placed online. Chad Millman is an expert when it comes to the sports betting industry. He is the Chief Content Officer at the Action Network. joins me now from Connecticut. Chad, thanks for being here. Thank you for having me. So, before we get to this year's game, let's go big picture. Let's talk about the overall industry. Just in the past year alone,

six states and the District of Columbia have given the green light to sports betting. It's now legal in 20 states. There are at least a dozen more that have legislation that's being considered. Is this the greatest time ever in America for sports betting as an industry? Because it sure seems that way. It's truly extraordinary, and it's extraordinary to be a part of it. Action Network, we launched three years ago, in January of 2018. And in that time, in that moment, sports betting wasn't legal anywhere except the state of Nevada, as we sort of think about sports betting. And then there were lotteries in Delaware and Montana. In May of that year, the Supreme Court overturned the federal ban on sports betting. New Jersey

immediately legalized. And as you noted, since then, there's been this just tidal wave of states legalizing it. And this particular moment is the best moment of all of them. The state of Virginia, You know it well. Just legalized online sports betting. The state of Michigan just legalized online sports betting. And there's a very big distinction between what is happening in a place like D.C., where it's run by a lottery and it's much more rigid in how you can make your bets and where you're allowed to make your bets, and a state like Virginia, where anybody who is at any place within the state can open up their computer, they can play with their phone, and they can register for a sportsbook. And it has made the industry explode when you talk about the places

where you can bet online. I'm sorry to make the comparison I'm about to make, but it immediately leapt to my mind when you were providing that context of what we have seen as investors over the past few years with the marijuana industry, where an increasing number of states are legalizing marijuana at varying levels. And yet on the national level, we certainly haven't seen that same type of movement over the past few years. And there's not a lot of reason to think there's going to be a big push for national legalization. Is it the same case with sports betting where, yes, we've got 20 states where it's legal. We've got a dozen more. Some section of those will, you know, we're going to see this steady drumbeat on the state level. Is there a

drumbeat for national legalization or does that even matter? I don't think a drumbeat for legal, for national legalization exists right now. A, there's just not going to be at a federal level, at a congressional level the appetite to take it up in any committee. It's just not going to be something that rises to the priority list because it has been legalized in so many states. And you can't put the toothpaste back in the tube, right? Like New Jersey had $6 billion in handle. That is $6 billion bet on sports in 2020. That's more than Nevada. That's more than Pennsylvania. It's more than Illinois. In two very short years, New Jersey became the bellwether for all of the states that have legalized sports betting. Is New Jersey going to have the appetite to then

pull back on what they do and have to figure out how to play at a federalized level? No, And none of the states are. And now that it is becoming legal state by state, there's no appetite for anybody to figure out, okay, how do we nationalize this? Online betting for the Super Bowl is an estimated 60% higher this year than it was last year. How much of what we're seeing in the rise of online betting is natural? We would have seen this no matter what's going on. And how much do you think is driven by the pandemic? A lot of it is driven by the pandemic. I think the rise in online betting would have happened. It would have happened at a much slower pace. And by slower, I mean, instead of 12 months,

it might have been 24 to 36 months. It's all within five years. Every state that wants sports betting, there might be two or three that aren't going to do it, but pretty much every state is going to do it. And you mentioned off the top, there's 12 states that sort of have some kind of legislation that they are trying to push through. 20 states have done it. You know, this past year we saw acceleration, Colorado launched in May, right? Uh, Illinois, which had legalized it, um, but legalized it in a politically friendly way, but not a consumer friendly way. Um, then change their, they originally said you can bet online in Illinois, but you have to go to a legal sports book, a brick and mortar sports book to do it.

And in that case, you can only go to one of them. They gave a individual company the monopoly on doing it. And of course, what happened was the pandemic came, nobody was going to the casinos. So that casino lobbied the state and was like, hey, we need to get online betting. So the state allowed online betting, right? So what you're seeing is an acceleration of states because they're realizing, oh, my God, New Jersey did $6 billion in Handel. How do we get a piece of that? Let's go to this year's game and specifically prop bets. For those unfamiliar, prop bets, obviously, you can bet on who's going to win the game, Kansas City or Tampa Bay. Prop bets are side bets, which really have become a bigger and bigger part of sports betting,

particularly around the Super Bowl, because you can bet on things like who's going to be the MVP of the game, how many receiving yards is Rob Gronkowski going to have? You can also bet on some more esoteric things like, what's the over-under on the national anthem? Two minutes, over or under. One I saw today, will the jersey number of the first player to score be over or under 17.5? Before we get into the nitty-gritty of prop betting, how do you think about it? How do professional gamblers think about it? Do they think, well, that's just a fun thing to get people interested, but serious bettors don't do it? Or are serious bettors involved here? Serious bettors are seriously involved here. These are markets that to them, they think they

can take advantage of. I do a podcast every week called The Favorites with a professional bettor named Simon Hunter. Our entire show yesterday was dedicated to the props, and that's short for proposition bets. Another way that people talk about bets are markets. And so we spent the entire show talking about the prop bets, the markets that he sees an advantage of based on his models, his algorithms, his simulations, where, uh, the market is either underpriced or overpriced and he can win one way or the other. He sees an advantage. Um, it's, it, in, in the sports betting world, college basketball has always been the sport

that a lot of professional bettors love because there's the volume of games is so high that bookmakers can't keep up. It's similar with the Super Bowl. There are so many markets, even though the bookmakers are the ones putting them out, like they get mispriced and the professional bettors know that the public, which is sort of the Joe Schmoes like you and me will come in and make bad decisions and move prices and lines in different ways. And they could take advantage of that. So, you know, if you ask professional bettors, they would say this is an amazing week. Are there prop bets that look particularly interesting to you, either from the standpoint of, oh, I think there's money to be made here, or ones that you just look at and

you think, well, that's just fun? There's both. I can give you a few. There's some that we've been talking about. I will say also, one other contextual framing here, prop bets have become increasingly more important for bookmakers and bettors the last five years. More and more, they've been offering on a game-to-game basis, not just in the NFL, but in college football, in the NBA, in Major League Baseball, college basketball, etc., the ability to bet on player performance. All season long, you could bet from Patrick Mahomes down to the total number of catches for the fourth string receiver on the chiefs. And there are many, many betters whose livelihoods are based only on that. And so, um, that's also helped with the rise in popularity

of prop bets. Uh, some of the ones that, that I've been looking at, I know that a lot of professional betters, um, like the over one and a half field goals to be scored in the first half, largely because the Kansas City Chiefs are the lowest scoring team in the red zone when it comes to touchdowns in the NFL. They're great at sort of longer drives, big plays, but they're not as effective from inside the opponent's 20-yard line. And oftentimes, and this is historic for Tom Brady's teams in the Super Bowl too, first quarters are very low scoring. And the data set, if you look back at the conference title games for the AFC and the NFC and the Super Bowl for, I think, the past 50 games, there's only six or seven that went over 10 points total in the first

quarter. So, you're looking at high probability for a lot of field goals because teams come out tight. There's been a lot of talk in the investing world over the past couple of weeks about GameStop, everything going on there. What will people learn from the GameStop story? Where I'm going with this is, I saw a thing that, because for those unfamiliar, the Super Bowl is going to happen on Sunday. And on Monday, sportsbooks in Las Vegas are going to come out with their odds for the 2022 Super Bowl. So, I saw this story that a year ago after the Super Bowl, the Tampa Bay Buccaneers, a pretty nondescript team, were 50-1 shots to win the Super Bowl. Then a few months later, Tom Brady went to Tampa Bay, and all of a sudden,

the odds went from 50-1 to, I think, 15-1. If they win the Super Bowl, how bad is it going to be for some casinos that a year ago were saying, oh, sure, 50-1, we'll give you that. Is it bad enough that we're going to see a change in that behavior? It'll be bad. It'll definitely be some mid to high six-figure payouts. But sportsbooks learned their lesson in 1999. I remember this very specifically. The whole reason I got into sports betting is because I wrote a book called The Odds about guys who bet on sports for a living. And in 1999, I moved to Vegas for six months and I tracked professional bettors and I tracked the bookmakers at the Stardust Hotel, which at the time was the premier sports book

setting all the lines that every other bookmaker in Vegas and every other illegal bookmaker they followed, right? So it was like the sort of tipping point for all the sports betting universe. The Stardust had the St. Louis Rams in 1999 at 200 to one to win the Super Bowl. And they took several bets of a couple hundred dollars up to a thousand dollars. And lo and behold, at the end of the year, the St. Louis Rams win the Super Bowl. It didn't bankrupt the Stardust, you know, but it didn't help them. They lost quite a bit of money. After that experience, sportsbooks stopped letting themselves have huge liabilities on futures. You were no longer going to be able to get a team

at $150 to $201. If you could get that team, you're not getting down more than $10 or $12. They were willing to take the liability that they felt comfortable with, but not a dollar more. Las Vegas, the innovation, they're way ahead of their time in terms of learning. Yeah, right? You can follow him on Twitter. You can check him out on The Favorites Podcast. Chad Melman, great talking to you, and good luck on Sunday. Thank you. Appreciate it. Coming up, Jason Moser and Ron Gross return with 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 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 Jason Moser and Ron Gross. Guys, one more news item before we get to the radar stocks. Shares of Uber up 14% this week, not on earnings, but an acquisition. Uber Uber is buying Drizzly, a wonderfully named alcohol delivery service, for $1.1 billion. Ron, this is intriguing to me for a couple of reasons, one of which is, we've talked

plenty of times about the Uber Eats part of Uber's business. This is Uber making a billion-dollar investment in that direction. I actually like this investment. I don't usually like acquisitions, but I do like this one. I think it makes good sense, especially as more and more states open up the ability for alcohol delivery. I think Drizzly is in 1,400 cities and counting now. I'm not sure personally I want it to be any easier for me to get my hands on alcohol. But for you guys, I'm sure that's great. No, but I do think it makes sense.

It's a nice adjunct to their business. Well, and apparently part of Drizzly's business in a couple of cities involves cannabis delivery. and Uber was pretty quick to point out they did not acquire that part of Drizzly's business. They're just focused on the alcohol. But I don't know, Jason, I mean, you hear about food delivery and the challenges with keeping the food warm, all that sort of thing. I think it's one more reason to like this acquisition. It's not like you need to worry about what shape your alcohol is in. As long as the bottle hasn't been broken, you're fine. Yeah. Or just don't shake the beer excessively, right? I don't know. I mean,

The name still kind of has me scratching my head a little bit. Drizzly kind of sounds like the way you would feel the morning after you get too big of a delivery from Drizzly. You know what I mean? Like, how are you feeling today? I'm just feeling kind of drizzly. But yeah, alcohol, we talk about it with restaurants. It's a tremendous margin booster for restaurants.

It is, you know, I said Chipotle is not coffee. Well, alcohol is very close to what coffee is. It's a legally addictive substance for many folks, and for better or worse, I have a feeling that we will see a lot of alcohol delivery in the future. Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week?

Scott's Miracle-Gro Company, SMG, manufacturer of consumer lawn and garden products, founded in 1868, for those that are keeping score, shares up 90% over the last year. company-wide sales up 105% in the recent quarter. Now, their hydroponics segment, they call it Hawthorne, had an increase of 71%. And hydroponics is basically growing plants indoors without soil. And Dan, this segment is strong with the cannabis industry, which I think will continue to grow and be a nice boost to their business. This is the first time they've ever made a profit in this quarter in the history of the company. Things are going quite well for them. Their first commercial will appear on the Super Bowl in the second quarter of the game. Keep your

eye out for Scott's Miracle-Gro. Not too cheap, not too expensive, really, at 29 times forward earnings, but I don't think this incredible growth continues unabated. Dan, question about Scott's Miracle-Gro? Not so much of a question, Chris, more of a comment. Scott's Miracle-Gro, you know, they're all over the place. They have a huge market share when it comes to lawn care products. But I just wanted to say, I miss the Scottish guy they had in the ads a few years back. He had a lot of great personality. I don't know why they got rid of him. Jason Moser, what are you looking at? Yeah, nice week for a company called Synaptics. Ticker is S-Y-N-A. I think I've mentioned this company on the show maybe once before. It's a recommendation

I brought into our augmented reality service a while back. Done very well for us. They reported a very good quarter this week. The market has received it well, but Snapdix makes its hay by selling its technology to some of the world's largest original equipment manufacturers, companies like Alphabet, Samsung, Sony, Lenovo, and more. That technology covers a very broad spectrum, chips, firmware, software, AI, you name it. They do a lot of different things as we move more towards tech and the capabilities that 5G is going to roll out, which is a big market opportunity, I think, with a lot of runway in front of it and a little bit of a business in transition. It looks like that transition is really working. They're really focused on taking

the company towards the IoT, the Internet of Things opportunity. There may be some hiccups in the near term due to supply chain constraints due to the pandemic. That's a macro thing. That is not a business thing. So, very encouraged with the direction that Synaptics is headed. Dan? So, Synaptics, they're in a pretty saturated market space with all of the different interface technologies out there. What gives them the advantage over their competitors? Well, typically, it is the technology coupled with the length of the relationships with those original equipment manufacturers. The longer that you have those relationships, then those iteration cycles,

those product design cycles, they can take long periods of time. You really don't want to switch unless you absolutely have to. So that technology coupled with those long, well-established relationships has helped put Synaptics in a pretty good place. What do you want to add, Dan? I'm going Scotch Miracle-Gro because I'm trying to grow my portfolio. We're out of time. We'll see you See you next week.