Motley Fool Hidden Gems Investing - Finding Long-Term Winners in a Rough Market

Episode Date: February 18, 2022

After another rough week it's worth remembering that great businesses thrive in volatile markets. So how can investors separate companies at risk from stocks that are experiencing a momentary drop? (0:45) Emily Flippen and Jason Moser make the distinction between volatility and risk, share why it's important to keep adding to your portfolio over time, and discuss: - Walmart increasing its dividend - Shopify shares falling despite strong growth in its fiscal year - Nvidia's guidance for 2022 - Airbnb reporting a profit and booking longer stays - Roku battling supply chain disruptions - Roblox getting punished for a small revenue miss - The Trade Desk wrapping up a strong year (19:20) Academy Award-nominated filmmaker Rory Kennedy discusses her new Netflix documentary, Downfall: The Case Against Boeing. (33:15) Emily and Jason ponder the threat of an avocado shortage in America and share two stocks on their radar: Upstart Holdings and Etsy. Got a question about stocks, industries, or trends? Drop as an email [e-mail] Stocks discussed: WMT, SHOP, NVDA, ABNB, ROKU, RBLX, TTD, NFLX, BA, CMG, UPST, ETSY Host: Chris Hill Guests: Emily Flippen, Jason Moser, Rory Kennedy Engineer: Dan Boyd, Rick Engdahl Learn more about your ad choices. Visit megaphone.fm/adchoices

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Because we have your number. Chris Hill. It's never fun to see your stocks go down, but these are the times when truly great businesses not only survive, they thrive. How do you figure out which companies are at risk and which ones are just taking a temporary hit to their share price? That's topic number one. Motley Fool Money starts now. Everybody needs money. That's why they call it money. The best things in life are free, but you can give them to the birds and bees. Chris Hill. 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 analyst Jason Moser and Emily Flippen. Good to see you both. Addy. Chris. We've got the latest headlines from Wall Street. We've got a preview of a new business documentary on Netflix, and as always, we've got a couple of stocks on our radar. But we begin with another rough week for investors. Continuing a theme we have seen since the start of the year. Here's where we currently stand with the major indices. The Dow Jones down 6.5% year-to-date, S&P 500 down 9%, the Nasdaq down 14%. I know we've got people listening right

now on radio stations across America, as well as through our podcast feed. On Sunday's episode of the podcast, we've got a conversation with best-selling author Morgan Housel. The title of that episode is volatility is the price of admission. And Emily, that's what I'm reminded of when I look at my own portfolio and I see a lot of red. It's certainly a challenging time and it's challenging for the markets in general, but even more for specific industries. I think fast-growing tech companies, for instance, have been hammered some of the hardest during this market, but it's important to remember that volatility is not the same thing as risk. As you extend your time horizon, as you extend your holding period for these companies, the

volatility will stay the same, the volatility will exist, but the risk of sustaining losses on that investment do go down over time. Ensure your portfolio is appropriately diversified, take that long-term time horizon and accept that, right here, volatility is the price of admission when it comes to dealing with the stock market. It's great to take that long-term approach, but we hear a lot from members and listeners that it's really challenging to deal with the short-term pressure that we're seeing in the market today. I'm not sure if it'll help any of our listeners, but sometimes it helps me to think about the market for what it is, which is really just a manifestation of human emotions, especially over the short-term.

Have you ever been just so mad with somebody that it doesn't matter what they say or what they do, you're just irritated. They could do anything and you would be upset. That's kind of how I imagine the market with a lot of these businesses right now. We see companies that are beating and raising and the market says, I don't like you anymore. It's okay. Those emotions pass for you. Those emotions will also pass for the market. Take that long-term approach, accept that volatility will happen, but your risk does go down with time and your emotions will also go down with time as well. Yeah, Jason, it's a great point. and we'll get into this when we start going through some of the companies making headlines

this week. But in some cases, you look at a stock down 10%, 20%, and you think, well, wait, is the business at risk here? Sometimes that's the case, but other times it's just not. Yeah, you're right. Sometimes that is the case. But oftentimes, particularly with a lot of these companies that we recommend, dig really into these businesses to understand them better so that we have more confidence that these are good businesses that we can plan on owning for long periods of time. A thought came to me last night as I was going over in my mind, what are some of the ways that you can cope with times like these as an investor? It struck me, a collector's mindset

is a great mentality, I think, for good long-term investing. I harken back to my days as a child. I was a nerd. I was a stamp collector. Okay. Probably still a nerd, but you know, whatever. But, but, you know, I think whatever it may be, stamps, coins, comic books, whatever you collect, you know, you're collecting and you're not, you're not focused on the present value and then unloading those things in the near term. You're really, you're focused on just growing that collection of things that you really like. And I think that kind of does apply here with, with, with investing in stocks too. I mean, you're really just focusing on growing that collection right? Understanding the businesses, understanding that they have good long-term prospects,

and then just focusing on growing that collection and not getting too worked up about what's going on kind of along the way. And so, to Emily's point there about diversification, I mean, this is why you own things like MasterCard and Zoetis to go with your Rokus and Palantirs, right? I know that's not the sexiest thing in the world, and the thin Twitterazzi may hit you with an okay boomer. But you know what? Diversification works. If you've just been focused on growth stocks with no regard for price, as many have over the last several years, I think that should be a good wake-up call for you to make sure you get your portfolio where it needs to be. That diversification, owning some of those boring businesses truly does make coping

with times like these as an investor much, much easier. The drop in the broader market did not affect Walmart. Fourth quarter profits and revenue came in higher than expected. Chairs of the mega retailer were up this week. Walmart also increasing their dividend a bit, Jason. Yeah. You want to understand why you own a stock like this. Obviously, it's primarily an income play, and I think a very reasonable one, particularly in today's environment. As you mentioned, this marks the 49th consecutive year management has raised the dividend. Share repurchases continue to bring that share countdown. We know management's priorities, and from this perspective, it was another good quarter.

You look at the actual numbers, U.S. comps were up 5.6%, had its first ever $100 billion a quarter in the space, generating $105 billion in sales. Revenue overall, flat, e-commerce flat, not a lot of growth out there right now, understandable given where we've come from. But it is very, very good to see that they continue to keep inventories and check inventory is up 26%. So, they're focusing on those in-stock levels, and they're also seeing improvements on that inbound stock. So, customers that go to Walmart or order off of Walmart.com are able to get what they want in a reasonable amount of time. I think another interesting little part of this business, it's little today, but it's growing. And we talk a lot about this

in regard to Amazon. So, I think it's only fair that we bring it up with Walmart. Their advertising business is now a $2 billion business for them and it's growing. We know that partnership that they have established with the Trade Desk, which I think is also very encouraging. Walmart's not a company that's going to be lighting the world on fire there from a growth stock perspective. But again, you understand why you would own a stock like this. It goes back to that diversification point I was making just a moment ago. All things considered, the stock value today at around 22 times trailing earnings, calling for about 5% earnings growth this coming year. I mean, I could certainly understand why investors in Walmart today would be feeling good

about this holding. Shopify wrapped up its fiscal year with 57% growth, but management said the growth will slow down in 2022, and they're going to increase their CapEx spending on physical assets, all of which combined to send shares of Shopify down 20% this week, Emily. You know, it's funny listening to Jason talk about growth being hard to find in this market, especially coming out of a couple incredible years since the pandemic. That was not the case for Shopify this quarter. This quarter was outstanding. Revenue of $1.38 billion was up over 40% year-over-year. Earnings also beat expectations, but Shopify made the cardinal mistake this quarter. It's become a dirting word for businesses to say that COVID accelerated

their operations and now they're slowing down as a result. And Shopify committed that crime this quarter. The guidance was what spooked investors. Shopify said, look, 2022 is not going to be the same as 2020 or 2021. And that revenue growth, as you mentioned, Chris, is likely to slow. So as we've seen, that slowing growth is resulting in a contraction of valuation for a lot of these businesses. But fundamentally, this is an amazing business, right? Gross profits have continue to grow. Shopify payments have risen to over 50% of merchants. More and more loans being given out through Shopify Capital. Jason, in comparison to Walmart, there is more of U.S. retail e-commerce being directed through Shopify than through Walmart's e-commerce

operations. Nearly 10% of all U.S. retail e-commerce. Shopify is a giant, it's not going anywhere. I do view this pullback as a buying opportunity. I continue to be surprised that Wall Street analysts are surprised that things are going to be different after the pandemic than they were during the pandemic. No kidding. Fourth quarter revenue for NVIDIA was higher than expected. Their guidance for 2022 was good. And despite all those signs of strength, Jason, shares of the graphics chip maker down slightly this week. I've been saying for a while that no one is getting the benefit of the doubt in this environment. And I feel like NVIDIA is the poster child for that statement.

Amen to that. I think you're right. I would not judge the quarter based on how the market responded. This was a very strong quarter with encouraging guidance, but we've talked about it before, the power of great expectations. NVIDIA has been a darling, and for good reason, but that can cut both ways, particularly in a market like this one, and I think we're seeing that to some effect. But when you look at the numbers, another great quarter revenue of $7.6 billion. That was up 53% from a year ago. Full-year revenue of just under $27 billion, that was up 61% over the previous year. Non-GAAP earnings per share, up 69% to $1.32. The Ford drivers of this business continue to really impress. Save automotive, but we're going

to see some acceleration there, no pun intended, in the back half of the year. But gaming revenue up 6% sequentially, up 37% from a year ago. Pro visualization revenue was up 11% sequentially, up 109% from a year ago. Automotive, as I mentioned, that declined a little bit, 7% sequentially and 14% from a year ago. But they're going to see that sequential growth pick back up here in quarter one. Again, that growth will continue to accelerate toward the back half of the year. Then the data center opportunity, which just represents a tremendous one for this business. That grew 11% sequentially and 71% from a year ago as they continue to push out their AI products. The Nvidia Omniverse, which they call the Metaverse for engineers,

has now entered general availability to positive reception. While this is not a company that's exempt from those supply chain constraints that we've talked so much about lately, management is very confident about their position. They are in a good place right now. Yes, demand is exceeding supply, but that is starting to narrow and they do see the back half of the year easing up. All things considered, you look at the guidance for this coming quarter, $8.1 billion, that would represent 45% growth from the previous year. It feels like this is a business that just has so many tailwinds at its back. Don't own it at your own peril. I think this is one relay that you got to feel good about owning. More 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 Emily Flippen. Airbnb reported record revenue for 2021 and said they expect bookings in the first quarter to exceed pre-pandemic levels for the first time. time. A lot going right for the business, Emily. You got to include the fact that they're seeing an increase in longer stay bookings. There's so much that is extremely impressive to investors coming out of this quarter. As you just mentioned, they had their first quarterly profit ever. Revenue is up 78%, also beat expectation. The business raised guidance. But there was one little red flag, or I should say yellow flag for me as an investor

in this earnings report. They did miss on expectations for nights and experiences. It was down 8% versus last quarter, but they did beat on their top line. Naturally, they had more revenue per night than they were expecting to have in the quarter, which is to say their average daily rate continued to rise. That's a wonderful thing. It's been amazing to see it surpass the likes of even Marriott in terms of their average daily rate for their bookings. But it was the belief of the market, it was a belief of myself, that we'd see this rate come down as more and more people return to urban areas post-pandemic, because the average daily rate for an urban state tends to be lower than that of a rural

or suburban state. That didn't happen this quarter. We saw that ADR continue to rise. We haven't seen it normalized. I think there is some risk that exists with normalization of ADR as people go back into urban areas. If those nights and experiences continue to miss that revenue growth could slow down. But it was crazy to see that more than 50% of their bookings last quarter for a week stay or longer, 20% were for a month or longer. There's so much optionality in this platform for transitioning from short-term traveling to long-term living. Supply chain problems hitting the streaming video industry. Roku blamed their slowing revenue growth on chain disruptions and shares of Roku

fell 27% on Friday. Jason, is this a long-term problem for the business or a buying opportunity for people who had Roku on their watch list? I would favor probably more the latter than the former. I mean, we know the power of expectations, what happens when a company misses and then adjusts, right? I mean, the market just adjusts what it's willing to pay for that given business. And that's what's happened here, I think, for the most part. And so while investors may not want to see the forest or the trees right now, I think that could be a mistake. Because when you look at the numbers that Roku continues to turn in, it tells us that the business is gaining traction. Active accounts reached 60.1 million. That was up 9 million from

a year ago. Total revenue, 33%. Platform revenue up 49%. Interestingly enough, they estimate that advertisers in the U.S. spent just 18% of their U.S. TV budgets on streaming in 2021. So that shows a lot of opportunity out there still, a lot of spending that could still be happening on this platform in the coming years. Streaming hours up 15%, average revenue per user up 43%. I mean, this tells the story of a business that's doing a lot of things right. And so they explicitly know their three-phase business model. It's build scale, drive engagement, and monetize. I think everybody in the investing world, they just want them to go straight to monetize. That's not how it works. We know that. Did the stock get ahead of itself? Sure. I think most have. But this is

a business still very much in the first two phases of this model. They're not trying to pull that monetization lever right now. And there's some content-related costs that are weighing them down in the near term as streaming offerings continue to grow. That means more promotional spending on the part of Roku to bring more users into that universe. That won't last forever, though. and they've demonstrated an ability to get users in and keep them. So for me, I like what I'm seeing. I understand the sell-off in the stock today based on expectations, but this is still a very good business, I think. Fourth quarter revenue for Roblox came in at $770 million. Analysts were expecting revenue to be $772 million. And based in part on

that tiny margin, shares of Roblox fell 26% in one day. I could be wrong, Emily. I don't think the underlying business of Roblox is necessarily 26% worse than it was, say, a week ago? Not necessarily, but investors are balancing two things. That's daily average user growth with monetization. Daily average users were up 33% year-over-year, but they did miss expectation. Bookings growth, which is a sign of that monetization, also missed expectation. We don't want a situation like Pinterest where we have declining user growth and declining monetization. They want to be sure to balance both for Roblox to be a good investment for the long term. The trade desk wrapped up the fiscal year with a strong fourth

quarter and good guidance for 2022. Jason, shares of the trade desk are down slightly over the past year, but compared to what we've seen from other stocks on the NASDAQ, it seems like they're doing pretty well. This thing's a winner. Yeah. I mean, this is another nice quarter, I think, for the trade desk. They crossed the $1 billion revenue mark for the year with $1.2 billion up for the 43% from the previous year. Listen, I think if you're looking for a really good business pursuing a really big market opportunity, this is a company that needs to be at the top of your list. Revenue for the quarter up 24%, 36% if you actually exclude the political spend from a year ago. Growth spend on the platform for the entire year around $6.2 billion,

that was up 47%. Retention rates remain strong at 95%. They're guiding for 38% revenue growth here in this current quarter. They witnessed the successful launch of their Solomar product as they continue to iterate on the data-driven marketplace. And that's actually going to shift their data pricing away from fixed rates and towards a percentage of CPM, cost per thousand views. And that's good to see, right? It gives them an opportunity to succeed as their clients succeed. So all things considered, I think you've got the connected TV remains a very attractive driver for this business. An interesting partnership there, as I mentioned before, now with Walmart. We're starting to see some reshoots there and no impact from the iOS changes to this business that we can

see. So I remain a shareholder of the Trade Desk and I think this was a wonderful quarter. All right, Jason Moser, Emily Flippen, we'll see you later in the show. Netflix has a new documentary about Boeing and about how culture can change a business for better or worse. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. In 2018 and 2019, the crashes of two Boeing 737 MAX airplanes resulted in the tragic loss of hundreds of lives. How and why it happened is the subject of Academy Award-nominated filmmaker Rory Kennedy's new documentary, Downfall, The Case Against Boeing. She joins me now from New York City. Thanks for being here.

Great to be here with you. This story is about Boeing, but it's also, I believe, a cautionary tale about how important culture is at any business. And I'll get to that in a little bit, but let me start with the story itself. In your career, you have covered a wide range of topics in your film. What was it about the 737 MAX crashes where you thought to yourself, I think that's going to be my next film? Well, I, like so many people, fly a lot and I don't love flying. I'm a little scared of it. So, you know, I, I watched the news, uh, about these stories, the fact that there were two 737 maxes, um, that crashed within five months of each other, 346 lives were lost. And I all, and, and, you

know, as, as our, uh, lead reporter says in the film, Andy Pestor, who we follow as he's uncovering this story, it happened under eerily similar circumstances. And yet, when I saw how Boeing responded to these events, who was the manufacturer of both of these planes, there seemed to be a lot of focus on the pilots, that the suggestion this was pilot error, that it happened in third world countries, that they weren't American pilots, et cetera. And it seemed curious to me. And I felt that I really wanted to explore this story to understand exactly what happened and who knew what, when, who was responsible for it. And hopefully in the interest of making a film that would contribute to something like this never happening again.

In the immediate aftermath of the first crash, and this is something you lay out in the film, the reaction makes a little bit more sense because, look, it's a brand new plane. Boeing has historically a great track record for safety. So that's in the immediate aftermath. But then as we start to get more details, the obvious question that is posed by some of the people you interview. And I think a lot of other people is like, well, why didn't they just ground the planes? Well, I think particularly knowing now what we know, which is a good bit more than what we knew when this story was unfolding. We now know that Boeing knew as far back as 2016 that the system on this plane, the MCAS system connected with the AOA

sensor, that there was a likelihood that if, um, that pilots, if something went wrong, which it was one AOA sensor, it gets hit by balloon or a, you know, a bird, something goes wrong there that the pilots needed to respond within 10 seconds. And if they didn't, because this MCAS system was on the plane and would take over the plane, that it would be catastrophic. The result would be catastrophic, which means the airplane would crash and everybody on the plane would die and if they didn't respond within 10 seconds. And I think what's particularly damning with that first airplane is that the pilots were not told that the MCAS system was even on the plane. They had no idea what it was. So it took over the plane. It started pushing the nose of the plane

down. It would push it down every 10 seconds. It would push it and push it and push it and take over the plane. Pilots had no idea what they were dealing with. They had never been told. Yeah. Among other things, this documentary is a wonderful primer in the economics of the aviation industry with the engineers that you interview, the pilots that you interview. You also, and I was surprised by this, you also kind of tell the origin story of Boeing in the middle of this documentary. This is a company known for excellence in engineering, in aviation safety. Boeing contributes to the space program. And some of the people you interview are former employees who clearly have a lot of pride in where they worked and what they

did. And they speak glowingly about the culture at the company. And that's sort of the piece that I wasn't expecting that, you know, in some ways, this is a story about a single company, Boeing. But it's also the story about how every company in any industry has a culture to it. And in the case of Boeing, as one of the people you interviewed says, Boeing had this culture of telling bad news to executives at the company. And in the mid-90s, they acquire McDonnell Douglas, the culture changes and it turns into this culture where essentially, as the person says, the boss doesn't want to hear any bad news. Yeah, that was Michael Goldfarb who said that, who was fantastic. And what Congressman DeFazio says in the film, who was the leader on the

infrastructure, congressional infrastructure and transportation committee that led the the mammoth investigation, 18-month investigation, biggest investigation in their history, says now that Boeing more recently had a cultural concealment, that there's a history more recently of hiding things, hiding things from the pilots, hiding things from the FAA that might require more training and more money to be spent, hiding things from the public that they don't want the public to know. And that culture of concealment has directly contributed to these crashes. When you and your team were investigating this story, what surprised you the most? I think the thing that was most shocking to me was something called a Tarim report, which was

a report that was initiated through the FAA, and it happened after the first crash, after the Lion Air crash, but before the Ethiopian crash. And that TARAM report, which Boeing was made aware of the results of that report, concluded that there was a likelihood that this plane would crash 15 times over the course of its lifetime and Boeing and the FAA knowing that decided to keep the airplane in the air and they banked on the fact that they would fix the plane before there would be another crash while the plane was flying that's a significant wager right and if you're michael stumo and your daughter was on that second plane and that you have to deal with not only the horrendous loss of your child

22 year old beautiful young woman who had committed herself to to health care and international work. This child is now gone. But on top of that, to know that it was really a decision by Boeing and the FAA that was driven by profits. They did not want to ground that plane because it would cost the company money. So they took that risk. And so you can imagine if you had a family member who was on that second plane, that plane should never have been put up in the air. I mean, it should never have been put up in the air knowing what we now know. You mentioned Andy Pastor from The Wall Street Journal, who's investigating the story. And in some ways, he provides words of guidance for all of us as consumers and investors when

he speaks to the importance of skepticism. You know, again, Boeing had this amazing track record. they did have this great history that they earned for decades. And yet, maintaining skepticism, even in the face of that, is important. Well, this is Andy Pestor, a dogged journalist who really followed this story. And one of the reasons that we understand so much of what happened is because of his extraordinary reporting, along with the massive job that DeFazio did with the investigation. So I'm deeply grateful to him.

And, you know, that was really the response to the question of what are the lessons that we can learn from this? And I, you know, there are a lot of lessons, but I think synthesizing it down to that sense of skepticism. I think for me and so many people, we walk down that jetway and get on an airplane and we think, the manufacturer of this plane is going to do its job and they're not going to let this plane fall out of the sky. And the FAA, the regulatory agency is going to make sure that the manufacturer

is doing everything safely and looking out for the public interest. And Congress is going to make sure that those regulations are in place and are encouraged for the regulatory agency to do and not for Boeing to do, which is what was happening. And we trust that, you know, and none of that happened. And it led to these horrendously tragic events where there's so much loss of life. And so I think, you know, if, if you have to come synthesize it to one thing, I think that that level of skepticism and having us all demand answers to these basic questions along the way is really one of the major lessons of this story. Before I let you go, I want to just ask about your work as a filmmaker, because one of the

things we've talked a lot about on this show is the entertainment business, movies, streaming video. Obviously, there are so many options for consumers, which means there are also a lot of options for filmmakers. You've worked with HBO. This documentary is on Netflix. For consumers like me, the decision is about the content. Where can I see the movies that I want to watch? I'm curious, though, what is the process like for a filmmaker like you? What

are you looking for from a studio or a network when you've got a film? Yeah, I appreciate the question. Well, it's been wonderful making this film with Netflix. Um, you know, this is a pretty hard hitting documentary and, um, and Netflix never asked me to hold back on anything. Um, and I have great respect for them for doing that, that they took on the subject in the first place and they knew it would be controversial. Um, I really appreciated working with my executives and the creative team there. and, and, and it's wonderful working with Netflix on the launch of the film. Um, they're enormously supportive of the film. Um, and they, they really want eyes on the film. They helped, uh, make a

trailer for the film that's been seen by over 3 million people. Um, and I encourage folks to check that out. And, you know, the other great thing about working with Netflix is that they're in 190 countries. Um, and it all, you know, they press a button on, on Thursday night, um, Friday morning, really at 12 AM, uh, Friday, the 18th of February, and it's available in all of these countries all over the world. So I, I want to make the best film possible. I'm also interested in it being seen by as many people as possible. So I really appreciate the partnership. The movie is Downfall, the case against Boeing. It is available on Netflix, and to say the very least, it is gripping viewing. Rory Kennedy, thank you so much for being here.

Thank you so much, Chris. It's something to take notes with. Coming up after the break, Emily Flippen and Jason Moser are coming back. They got 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 Emily Flippen

and Jason Moser. Remember, our e-mail address is podcastsatfool.com. You can send in your questions about stocks, industries, trends. We'll see if we can answer them on an upcoming episode, podcastsatfool.com. Last week, the United States placed a ban on avocados imported from Mexico due to a security threat. If you're thinking, well, that's just one country, I would hasten to point out that Mexico accounts for 80% of the U.S. supply of avocados. But right before we started recording this show, we got breaking news that the import ban could be resolved within 24 hours. So, Emily, I'm breathing a sigh of relief because I love guacamole maybe as much as you do. This was one of those stories that I just thought, oh, that's kind of interesting. And then I saw

the stat about how dependent our country is on Mexico for avocados, and it turned into a full blown crisis for me. Well, you never realize how fragile the supply chain is until one thing breaks and then suddenly you can't get guacamole anymore. I mean, this is disastrous for the United States. But I'll tell you what, Chipotle said something. And I heard a lot of investors saying, oh, this is why I'm a Chipotle shareholder. They handle their supply chain so well. I have to say, though, as a consumer, I was horrified. Chipotle's response to this was to come out and say, look, we have enough avocados for several weeks of operation. Several weeks, that's not enough time. That's not enough avocados. Jason, I feel like you're prepared

for the avocado apocalypse if it comes to that. Well, you know, you can't really pantry stuff guacamole, right? So what do you do? Maybe you just try to take the operations in house, Chris. And I mean, I've got one of these avocado plants is now, I think I can call it a tree. I've got another plant that's catching up to it. And hey, man, spring is almost here. I've got another pit that's sprouting. Getting these things back outside. Hopefully, we can get some fruit bearing here soon. I mean, you know, I might not have to worry about these headlines much too longer, Chris. Yeah, you might also have a side hustle on your hands if it really comes to that. One of many. Let's get those stocks on our radar. Our man behind the glass can,

boy, it's going to hit you with a question. Emily Flippen, you're up first. What are you looking at this week? I am looking at Upstart this week. The ticker is UPST. Upstart, as many investors will know, is an AI-driven lending platform. They reported earnings earlier this week and had an outstanding quarter. They saw an increase in their conversion rates, which means more and more customers coming to their platform, get approved and apply for loans. That rose to 24% in the quarter. More importantly, they're showing that they can expand from just personal loans into new industries, auto loans being one of them. So it's an interesting company. They're doing a really great thing for the world

and their mission of trying to make credit more affordable to everyone, less based on things like FICO. I will say investors should probably keep an eye out on default rates, right? They need their algorithms to be better than the alternative, but this quarter is definitely pointing in the right direction. Dan, question about Upstart Holdings? It's interesting, Chris, that the first time I've heard about Upstart Holdings is today from Emily. With a name like Upstart, you think maybe I would have heard of it more. Sarcastically, of course. So Dan, you did start off our conversation before taping, telling me that and leaning really hard into the idea that you did not know what Upstart was. And after many minutes of

prodding, I actually thought that this was the first time you had heard of Upstart. I'm relieved to find that's not the case. Jason Moser, what are you looking at? Sure. Yeah, we highlighted an earnings season stock about a month ago, I think, on this show. And if you recall, it called out Etsy, Etsy, ticker E-T-S-Y. Earnings come out on Thursday, February 24th. And the stock has been cut more than in half from its 52-week high. But for the business that generates $600 million in trailing free cash flow, it feels like the pessimism is a little excessive. We do know that online spending took the biggest hit last December, non-store retailers reported a decline of 8.7% for that month. But I think Etsy is a

standout business. They've got three initiatives. I'm really interested in hearing more about this quarter, their fulfillment investments, making sure that all of their listings now show an estimated delivery date. They have their Star Seller program, which ultimately looks to motivate their merchant customers to deliver exceptional customer service. And then also the Gift Finder feature that they rolled out over the holiday. Having tried that myself, I thought it was really handy. So I'm looking forward to understanding how those investments are paying off. I think this is a far better business than the market would have you believe today. Dan, question about Etsy? Maybe not a question, more of a statement. I think

Etsy is a great company because it absolutely terrifies me of how much money you can spend on Etsy buying really cool handmade stuff. Oh, Dan, just wait until that baby comes, my friend, your fear levels will reach new heights. I'm shaking in my vans right now, Jason. What do you want to add to your watch list, Dan? I'm going to go with Etsy. I feel like a retail operation that actually terrifies me is probably a good business. Emily Flippen, Jason Moser, thanks for being here. Thanks, Chris. That's going to do it for this week's Motley Fool Money radio show. The show's mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time.

We'll be right back.