Motley Fool Hidden Gems Investing - Is Facebook Serious?

Episode Date: March 8, 2019

The government reports surprisingly low jobs growth. Facebook CEO Mark Zuckerberg lays out a new vision that doubles down on privacy. And Costco produces some bulky earnings. Analysts Andy Cross, Ron Gross, and Jason Moser discuss those stories and dig into the latest from Big Lots, Eventbrite, Okta, National Beverage, and Salesforce.com. Plus, Andy talks with Q2 CEO Matt Flake about the future of banking. Check out Hello Monday from LinkedIn Learn more about your ad choices. Visit megaphone.fm/adchoices

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The best things in life are free. But you can give them to the birds and bees From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill. Joining me in studio this week, senior analysts Jason Moser, Andy Cross, and Ron Gross. Good to see you as always, gentlemen. Hey, Chris.

We've got the latest headlines from Wall Street. We will dip into the Fool mailbag. And as always, we'll give you an inside look at the stocks on our radar. But we begin this week with the big macro. The jobs report for February surprised a lot of people with just 20,000 new jobs added to the U.S. economy, the worst month for job creation in a year and a half. Ron, the consensus expectation was for 180,000 new jobs. So, how did we miss by that much? Ron Gross. The headline is very curious. By curious, I mean confusing. 20,000, much weaker

than expected. So much, you've got to wonder if potentially, maybe it's not even correct. There could be seasonality in there. There could be weather. There could be the government shutdown. There seems like something is wrong. It doesn't jive with the ADP report we got earlier in the week, which showed construction sector adding 25,000 jobs. This report today shows the construction sector losing 31,000 jobs. That's a $56,000 job swing. Somebody's wrong there. So there's a lot of things going on.

And don't forget, also, this number today, there's a margin of error plus or minus 100,000 jobs. That's a pretty big margin of error, and I expect that we will see pretty large revision. Once somebody figures out what's going on, things to focus on, I think, are the all-encompassing U6 unemployment rate, which went down significantly to 7.3%, and a nice wage increase. Yeah, I think on the overall way to think about this is you have to remember to take these and even six-month average estimates. So, last year, we were up $223,000 per month over the course of when you look at a three-month rolling period. So, I think it's important to not

just take one number into play here. One interesting point that I did like was the professional and business services were up $42,000 for the month. And that's basically in line with the average over the last year or so. So, those tend to be high-paying, well-regarded roles that the U.S. is going to be more responsible for growing over the next decade or so. So, that one continues to be pretty impressive to me. I was going to say, you shouldn't expect to see robust job growth forever, right? Once we get closer to full employment and there's less folks to get jobs out there, you'll see that number come down.

So, I wouldn't be surprised to see that number slowly come down over time. This is just so severe that it makes me think something is a little wonky. So, it's safe to assume that we all expect there to be revisions upward when we get the numbers a month from now. But I want to go back to the construction number, Ron, because as you indicated, that was the thing that leapt out to me in the initial report. I hadn't seen the ADP numbers earlier in the week. That's one of those things where, not to get greedy here, but not only do I want to see revisions up in a month's time, I want to see that construction number up. Because if this number is correct and the ADP number is the one that's wrong, that has broader implications for the economy. For sure. You would much rather see

a robust construction industry, for sure. Now, the ADP report and this report are often at odds with each other. They don't always go in lockstep. It's just not typically as severe of a difference as this. I like that they have a margin of error of $100,000. Wouldn't it be nice if ... I'm going to start doing that. Whatever your job is in life, you had a margin of error that big. This week, Facebook CEO Mark Zuckerberg published a 3,000-word blog post outlining what he called a more privacy-focused future for the social network. This comes as Facebook is building out a new integrated messaging service

that will allow users on Instagram, WhatsApp, and Facebook Messenger to communicate in private with each other. Jason Moser, I feel like we've seen this movie before. Sure. I mean, call me a skeptic. I mean, I feel like this is really just a strategy move kind of hidden in a PR stunt, more or less. I mean, if you read the blog post, then you get what I mean by PR stunt, I think, because it equivocates, essentially. It just doesn't really commit to anything. You know, we're facing a point in time where Facebook has really lost a lot of consumers' trust, and for good reason. I mean, the privacy concerns

abound. And we're also facing a point where we're seeing the evolution of social media, where I think more and more people are finding the drawbacks of living your life out in public to be a bit greater than they initially anticipated. So, Facebook needs to come up with something new, and messaging is really it. That's not really a surprise. But, I mean, again, you go back to the actual blog post itself, there really was nothing committal. I mean, he didn't commit to really anything other than just things he'd like to see. So, I mean, I appreciate that he's getting out there and talking about privacy. It's certainly an issue. But this is something that could have a material impact on the business. I mean,

if they go towards a messaging platform with end-to-end encryption, that very much limits their ability to advertise based on what they're doing today. The idea of bringing commerce and payments into their universe is a great one. That would drive revenue growth. The problem is, they've been working on that since they went public. I don't know really why people would bring that behavior into their universe now with companies out there like Amazon and PayPal and Square that have built such strong competitive advantages and networks in their own right. If I'm an investor in Facebook, I don't know that I'm feeling a lot better about the situation. They've got a monumental task ahead.

Listen, Zuckerberg and the company have been under significant pressure over the last couple of years relating to privacy, whether it's from the Senate, the media, consumers. So I think it was inevitable that we would see something to shore up or move to a more privately secure functionality. But, Zuckerberg's got $22 billion of net income to protect here. This is not him changing the business model overnight. Not unless he wants the stock to plummet and layoffs to follow. So, this will be a very measured move that will take quite some time, and how it actually ends up shaken out, I don't even think we can envision quite yet. There's a lot of stuff out there today comparing what they're thinking about doing

to what WeChat in China is doing today, essentially being that one-stop shop, where you can get everything done just in WeChat. And I don't have any doubt that, in a perfect world, that's the strategy that Zuckerberg would pivot to. I think it's worth also remembering, though, this is China vs. what we're doing here. They're very different cultures. And perhaps this is a testament, really, to the forward-thinking that was involved with what WeChat has built out. They kind of went to that from the very beginning, almost, vs. what Facebook had built up to this point. So, it's going to be more difficult, I think, for them to pivot into that direction when you see what WeChat has already built from the ground up in that regard.

Well, and as you indicated, Jason, nowhere really in that 3,000-word post did Zuckerberg lay out specific steps. There weren't specific promises in terms of, and here's what we're building as we try to create this more privacy-focused platform. I mean, you go back to last year when he talked about how, yes, we're going to come out with this functionality where people can clear their history. That really hasn't materialized yet. Not at all. And I mean, if you read that blog post, you see exactly what we're talking about. It's a lot of ifs and maybes and possiblies, but nothing really concrete whatsoever. Shares of Salesforce.com down 6% this week after guidance for the first quarter came in light.

Andy, you look at the fourth quarter results for Salesforce. They were pretty darn strong. Really impressive for a $100 billion company. And that guidance, I mean, it was not that light. I mean, let's just look at the quarter, Chris. It was $3.6 billion in revenues. That was up 26%. That was above guidance. Subscription and support revenue up 26%. A non-gap EPS of $0.70, which was far higher than the estimates. Cash generated up 24% for the full year. And they have a cash flow yield, if you just look at cash flow versus the revenues, of 26%. So, Salesforce continues to be the leader in the CRM, customer relationship management space, and they are growing their influence. They guided for a four-year growth rate of sales

north of 20%, which again, for a $100 billion market cap company, it's exceptionally aggressive. And maybe some analysts think, yeah, that might not be possible. But Mark Benioff, who is a co-founder, owns more than 4% of the company, it's almost $5 billion worth of stock, has his life built into Salesforce. And I certainly wouldn't doubt him too much because his history of delivering is pretty exceptional for Salesforce customers and shareholders. We were talking before, we started taping. You go back a couple of years, Salesforce was in the conversation, all these reports that we saw, of possibly acquiring Twitter. When you look at this business and the way Benioff has built it out, do you look and think,

okay, these plans are great in terms of organic growth, but do you want to see him go out and make some acquisitions, whether it's Twitter or something else? I don't. They bought MuleSoft for $6.5 billion. They're continuing to integrate that into their platform. They just partnered with Google Analytics 360, so now their clients have access to Google Analytics more seamlessly. They continue to invest in things like AI. Their Einstein AI delivers more than 6 billion predictions every day. So, they're really building this platform for all kinds of global customers to have a really 360-degree view to their entire customer lifecycle, from sales to bringing them into the platform. And that's really impressive as we think about the world

being more and more integrated. Salesforce is a leader in that space. Coming up, a check-in with one of the biggest retailers in America. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Andy Cross, and Ron Gross. Shares of Costco up 5% on Friday after second quarter profits came in higher than expected. Ron, you looked at the quarter. What's your headline? I think I'd have to go with U.S. same-store sales, excluding gas, up 7.4%. That's strong.

That's strong. It's a great quarter. Total revenue up 7%. Some weakness internationally, so we do have to address that. Less than 1% same-store sales increase internationally. Canada was actually down slightly, but the bulk of this business is U.S., so it all offsets to shake out to be same-store sales increase company-wide of 5.4%. Very, very strong. Largely the result of a 4.9% increase in traffic to stores and websites. Online sales rose 20%. Membership revenue up 7%. Margins are up. Translates to a profit increase of 27%. Fantastic quarter for Costco. Great numbers in the U.S., but as you said, international, it seems like, I hesitate to use the phrase weak spot, but it seems obvious

to me that Costco management really hasn't been able to make international work close to the same way it does here in the States. That's correct. And I'm glad to see that they've rolled that out in a very measured pace because you plow into some region with huge capex and it just doesn't work out and it can turn a great business into a weak business. One final thing I want to say is they did just raise wages for their hourly workers to $15 a share. That certainly has implications to the cost structure. But in the end, I think it's a great move, very shareholder-friendly. Rough week for Eventbrite shareholders. The event ticket platform posted a loss for the fourth quarter, and revenue guidance for the first quarter was not what

Wall Street wanted. Shares of Eventbrite down 25% on Friday. Jason, was it that bad? Because it seems pretty bad. Well, the question, I think, is, knowing what we know today, is this a bad business, or is this a business that is being repriced for good reasons? And I think it's the latter. I think this is a good business, But you got to remember, this is a young company, just fresh to the public markets, low float, stock price based on zero fundamentals, because they're not making any money yet. So, to me, this was more a matter of when, not if. And frankly, I'm kind of interested in the stock now with this pullback. Because when you look at the numbers, it was a good fourth quarter,

when you're talking about net revenue and paid tickets are up. Quarter one guidance was a little bit light. Now, there are good reasons for that. Before Eventbrite went public, they acquired Ticketfly, which was another big player in the ticketing space. And they're integrating that acquisition ultimately in the back half of the year. They're going to shut down Ticketfly completely and rely on Eventbrite Music. So, that will present some near-term challenges. But, yeah, I really like CEO Julia Hartz here. She is focused on the forest, not the trees. A lot of great language in the call and presentations. They're focusing on years, not quarters. Really, she's our kind of CEO. Another interesting little

side note there, because this is a global business, it was nice to see that they added Mercado Pago as a payment provider for their Latin American business. All in all, to me, it's a business I like. I do own some shares. I'm looking at this pullback with some greed, because I think there is a great market opportunity here for a business that is run very much in line with the things that we look for here. There are a lot of different industries that we talk about where we say, look, there's going to be more than one winner in this space. There'll be more than one winner when it comes to event ticketing. But it seems like there's not going to be a ton of winners. How do you

feel about Eventbrite going up again? Because when it comes to buying tickets to an event, there are a lot of different platforms out there. And it really seems like five, 10 years from now, there's going to be fewer dominant players than we have right now. Yeah, I think you're right. I think that's why we saw some of the consolidation there with the Ticketfly acquisition, for example. And where Eventbrite focuses primarily is that smaller to mid-market event management. They're not focused on these big concerts and events. They're trying to help the smaller bands and events and whatnot gain some traction and have some low-cost ways to promote their events. So, they do focus on a particular

market opportunity, which I'm encouraged by. And it is a big market opportunity when you look at it from a global perspective. So, I think they continue to do the right things. Okta's loss in the fourth quarter was smaller than expected, but guidance for the first quarter was lower, and shares of Okta down 5% on Friday. Andy, you tell me, is this a speed bump? Because shares of Okta are up about 80% over the past year. Well, I don't know if it's a speed bump, Chris. They are certainly investing a lot into the platform, and that's worked exceptionally well. Just look at the quarter results for the fourth quarter. Revenue was up 50%. Subscription growth of 53%. They ended with 6,100 clients.

That's up 40% for the year. They generated some free cash flow during the quarter, which is really nice to see. So, when I think about the balance between growing the revenues and growing and adding to the cost structure to be able to grow those revenues, I think there's maybe some concerns in the analyst community trying to think about how that balance may work out. The guidance for the year was certainly slower growth than we've seen over the past couple of years, which have been north of 50%. Now they're looking more in the 40% range. But they'll continue to invest more and more in research and development, more and more in their sales cycle. As they continue to try to grow the business, they now have more than 1,000 clients that generate

more than $100,000 billion per year. And that's about 70% of the total they have. And the more they can add to the larger clients, the better it is for profits and for cash flow. So, the Okta story continues to be in play, and it's a business that I think as we continue to expand and use more and more applications, all of us globally, we are going to need identity managing systems to be able to integrate all those applications, and Okta is a leader in that space. Obviously, a 5% drop, not as bad as a 25% drop, but to the point that Jason made about Eventbrite, do you look at Okta and think, this is a stock that's a little pricey? Well, it's a little less pricey now. I mean, they're now, they used to sell higher than 10

times revenues, but now they sell more like the eight to nine range. So, it's a healthy growth story and maybe the pricing at times is ahead of itself. Certainly, shareholders have to be ready for the volatility that any company selling at those levels will come with. Discount retailer Big Lots has had a rough few years, but fourth quarter profits came in much higher than expected and shares up more than 15% on Friday, Ron. Biggest one-day gain for big lots in five years. And they needed it. Stock is still down 35% on the year, even accounting for this. They got crushed in December when they reported weak results. These results are better. They exceeded both companies' guidance as well

as analysts' estimates. Comp sales up 3.1%. Their remodeling efforts, their loyalty rewards program seems to be paying off. Profits were up 4%. Not knocking the cover off the ball, it's still an increase. Nice to see. They're going to buy back $50 million worth of stock. And listen, for those that are interested, this isn't a recommendation, but nine times earnings, 3.8% dividend yield, maybe worth a look. Is a loyalty reward program now table stakes for any retailer? Is it just a red flag if a retailer doesn't have one of those? It appears to be, and they appear to be actually working across the board, whether it's something

like Restoration Hardware or something like Big Lots. All right. Ron Gross, Jason Moser, Andy Cross. Guys, thanks for being here. Q2 Holdings is not exactly a household name, but with the way the stock has performed over the past few years, maybe it should be. Up next, a conversation with Q2 CEO Matt Flake. Stay right here. You're listening to Motley Fool Money. All right. Before we get to this week's interview, let's talk about you for a second. Let's talk about you and your work life. Because over the course of a lifetime, the average person spends more than 115,000 hours at work. That's about 13 years. So finding a way to make work

more rewarding, fulfilling, and enjoyable is pretty much guaranteed to be a good use of your time. Hello Monday is a new podcast from LinkedIn's editorial team about how to get the most from Monday and your career. Each week, host Jesse Hempel sits down with featured guests to investigate the role that work plays in our lives, uncovering lessons that you can apply to your own career. So whether you're just starting a new job or you've just got a few weeks left to retirement, you're going to be ready to take on Monday and the rest of your work week with the knowledge to make your career work for you. I had the chance to not only listen to the first episode of Hello Monday, I got the chance to talk to Jesse Hempel on the phone. Called her up. I've

been an admirer of her work as a journalist, and I'm really excited about this new podcast that she's heading up. So, check it out when you get a chance. Find Hello Monday on Apple Podcasts or wherever you listen to podcasts. Now, let's get to this week's interview. Welcome back to Motley Fool Money. I'm Chris Hill. Q2 is a software company that helps banks of all sizes offer their customers digital services, services like mobile banking and online bill payment. And with a stock up more than four times in value over the past five years, Q2 has paid big returns for investors. Last week at our member event in Austin, Texas, Motley Fool Chief Investment Officer Andy Cross sat down with Matt Flake, the CEO of Q2.

They discussed security, the future of banking, and Andy kicked off the conversation by asking Matt Flake about the business of Q2. You have about 400 clients, mostly focused here in the U.S. Just talk a little bit about Q2, the business and the software and really what you specialize and how you serve your clients every day. Yeah, so I think one of the things my mom always asked me, have you signed Wells Fargo yet? And it's like, there's Wells Fargo, Chase, Bank of America, and Citi, right? Those are the four banks that are vastly different than almost any other bank in the United States or in the world for that point. So there's about 11,000 banks and credit unions in the United States, and we service, our market is all

of them but about 100. They build their own stuff, and they live a very different life in how they do technology. But for the rest of the financial services space, whether it's fintechs like acorns or money lion or square or alt finance companies that do leasing and lending or community banks and credit unions that's who we provide technology to and our technology essentially takes the data that resides in these back office systems and allows you as a as an end user a small business a corporate customer or a retail customer to do your bank see your balance transfer funds pay your bills pay your payroll and if you think about what's happening in the world today. If you watch TV, every TV show, there is one advertisement from

a financial services company about getting a loan, making a deposit, you know, where to use your debit card. And that pressure is really mounting itself on these types of financial institutions. And our technology allows them to go compete against the people that are doing the advertising to whether it's Bank of America, Wells, Chase, Citi. So a huge market opportunity for us. We had our investor day yesterday up in new york where we talked a little bit more about the business and then when we started the when we went public in 2014 our total addressable market was about 3.5 billion dollars we were zeroed in on virtual banking and digital banking which is really the deposit side of the house where you view your balance and transfer funds we have expanded with

our product suite now to where we do loan origination we do some banking as a service And so what that has done is expanded our total addressable market. And we announced yesterday that our total addressable market has gone from $3.5 billion to $8 billion. And it's just a dramatic increase over the last five years. And so it's a great opportunity that continues to grow. That's awesome. Congratulations. Rather significantly large merger announced between two larger banks, SunTrust and BB&T. I think it's combined maybe $600 billion in assets or $400 billion in assets for a large company.

Talk about some consolidation, how that impacts your business, opportunities, challenges of the small and regional bank world, and then what it might mean for your prospects when you look at the next five years. Yeah, so there's consolidation happening. I mean, SunTrust PB&T is one example, but the M&A activity in the banking space has been well documented. For us, what drives our revenue are the people that have accounts at community financial institutions. So there's no doubt that you're going to see fewer banks and credit unions. And I think, as I said, I want to have a lot of community banks and credit unions. I don't know that we need 11,000, but 5,000 or 6,000 is probably a good number, and I think that's probably where it's going to land on.

But they're merging with each other. Bank of America, Wells, and Chase and Citi aren't buying them. So what's happening is the billion-dollar banks are becoming larger, and that's really our sweet spot. We don't do a lot on the $200 million and below unless they want to use technology as a way to compete. So I think that the emerging market, they're merging with each other. They're not going out of business, and we're driving more usage through the platform that way. One of the things is when we went public in 2014, we had one bank that was greater than $10 billion in assets. Today we have 30 that are greater than $10 billion in assets.

And so all that's a function of the consolidation. Some of those are signing net news, but a lot of that's growth that's occurring through acquisitions. So because strategic financial institutions are buying our platform, those are the ones that are doing the acquisitions. If you think about it, I'm not going to go pay more for a technology platform if I plan on selling the business, but I will go buy a top-end technology platform if I'm trying to grow and be around for a long time. The name Q2, if you want to share some insights into where the name came from, And then just the brand of Q2, do you continue – how do you continue to support and grow the brand? Or just how do you think about the brand of Q2, if you do at all, or if it just may just be a software solution?

Hank started a company called QUp, which was quotes and updates. That was the one he started in the mid-'90s where I started working for him. That business sold to a company called S1. It was an exponent. A lot of different things happened with that transaction. Hank wasn't very happy about the way some of the customers and employees were treated, so then he started Q2, and the tagline was exponentially better. I had to explain to Hank that that means nothing to anybody other than the other people, but we've gotten all past that. That's Hank.

He's the chairman. What are you going to do? That was $3 billion ago. Yeah, yeah, right, but it was fun. But so from a branding perspective, you know, we're trying to drive the brand globally now. So we're trying to – we have operations in the U.K. and ANSI and India. So trying to drive the brand more. We have not been known as a big marketing company around pushing our name.

And that's somewhat representative of Hank. It's let's just go execute and people will hear about us and do that. I don't know if that scales globally. So we're putting more into the brand around Q2, as you'll see more. But it's – we are excited, I think. we're going to have the website q2.com instead of q2ebanking.com thank you very much yeah we're very much we go to your site a lot yeah yeah the um we talked a little bit before we came on stage about the regulatory environment how that might change with with um whoever's in the various um

divisions of of of uh government um but just talk to us a little bit about the regulatory environment right now after um uh the year is now over and uh how is that impacting either the opportunities for Q2 to continue to promote your solutions as being superior and challenges it may it might possess as well yeah so just put some context around their comment Andy and I were talking about how 2016 um let me just frame this by saying my mother would if Jimmy Carter and Oprah had a baby that would be her my father is just to the right of Genghis Khan and um has a gun and a sticker on the back of his truck still so obviously the marriage didn't work but i'm neutral as can be on politics but in the middle of 16 um when it started to become apparent that

it was hillary or trump one of those two uh decisions stopped because people if you're in a regulated business those are very different things elizabeth warren and hillary clinton were going to come in so i got to figure out what's going to happen because there's going to be a change in the regulatory environment and then you know november whatever trump happens and then it changes and so we were talking about in 20 what's it going to be like i have a feeling it's not it's going to be two very contrasting decisions and so in a regulatory environment that's one of the things that we're trying to get our arms around what's that going to mean who's going to if it's bernie sanders elizabeth warren whoever on the other side of it versus

trump or if there's a third it could freeze decision making and so regulations are things that actually are barriers to entry for other companies to get in to it's a competitive advantage for us, but it also creates a lot of cost and burden for us and our customers. And so from a regulatory perspective right now, the regulators are finally getting up to speed with where the cloud is and where technology is, which is a good thing. Our customers are getting more comfortable with it. We spend a tremendous amount of time educating them on security versus running it in your own facility, any amount of money we spend. So it's a differentiator for us. But in 2020, who knows whether it could be a slowdown or not. I will say that one of the things is we're a

vastly different company than in 2016. We have far more products to cross-sell. So if you do have a slowdown in decision-making, people will lean on more cross-sells. So I feel better about 2020 now than if it would have been 16 where we were. Right, great. How does Q2 technology make my accounts more secure? Yeah, so from a technology perspective on the security piece, we started using machine learning in 2009. We hired mathematicians from the University of Texas to come in and look at the behaviors as they occur on devices and and and we also so when you log in who you pay how much you pay if you think about you or a business we usually receive money about the same day of the month we pay the electric company the cable company all about the same day of the month the amounts

about the same you usually log in from your computer around the same time and when those behaviors are outside of that we have machine learning that says this could be the person saying it but it's not the normal behavior so we can stop that transaction and so there's that layer of it and then there's the layer around you know i i would encourage anybody in this room to not use email as a way to authenticate to get your password if somebody sends you an email here's your new password just get the text is a much better way get a text it's much harder to spoof so because i always tell people my mom is the weak spot in the chain not the data centers and those things the hackers have really gone after um through phishing emails and those things to get

your information and then go scam you but but the we've put 150 million dollars into infrastructure which includes you know gates at the front of the data center to prevent these types of attacks that go on but i just encourage people to um like i wouldn't do much banking via email let me just put it that way and somebody that tells you that if you just put some money in your in your account for a couple days and you can keep a little bit of it it's probably a scam especially if they're from nigeria or if you fall in love with a guy in afghanistan and he just needs some money um and he's a soldier he may be i hate to discourage that but he may be a scam artist too so maybe wait till he gets home um what's what's one of the top characteristics that you and q2

look for in hires when you hire uh well hank says uh hire the heart train the mind but i like to hire smart people too the big hearts is the best combination that's great so yeah we look for people that are passionate about what they're doing eager ready to learn humble um and that that seems to be a winning formula that sounds like hank and roy spence and herb keller are all just kind of cut from the same cloth what's the best piece of advice that you've ever got i'm kind of a quote of the day guy and i heard one recently that stuck with me which is humility is not thinking less of yourself it's about thinking more of the other person and i just think it's really important that uh humility the longer you can carry it with you uh the better you'll

learn more you'll people want to be around you more and um you just it's just a better place to be so i really like that advice if somebody had to um tell me about you one strength and one weakness what would they say uh someone you work with oh man i could give you the weaknesses he's never happy um he focuses on the five percent of the problems not the 95 percent of the things that are working well um and but the other thing i would say that they would probably say that i that i i i'm there's nothing about i'm not above anything i'll i'll i'll i'll lead from the front if i got to get on a plane with somebody i'll do it if i got to stay up late and do it we'll do it i'm i'm i never forget my roots where i came from you meet with uh still to this day meet with

clients quite frequently uh two of them today how has your leadership changed over the last decade especially going through the financial crisis you know i think that uh moving to the mission driven company in the 10 years ago i wouldn't say we were as mission driven as we are now i just realized that if i can just get people to connect with what they do every day and be passionate about it it may be community banking it may be you know one of the i love community financial institutions, but I'm probably more proud of the fact that we've paid $700 million in payroll and that's gone into the system

and plus the people that have built buildings for us, the lawyers, the real estate, the accountants, everybody, the money that goes into the economy with, you know, Hank had one idea and put his money behind it and that has led to, you know, a lot of wealth transfer. We've had more than 100 people that are employees of the company that

are worth more than a million dollars on paper. Now most of them sold it long ago and they have depreciating assets in the parking lot, but But still, if they would have held it, they would have done well. That was Matt Flake, the CEO of Q2. Coming up, we've got a few stocks on our radar. So stay right here. This is Motley Fool Money.

Tell me, tell me how to be a millionaire. Tell me, tell me how to be a millionaire. 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 in studio once again with Jason Moser, Andy Cross, and Ron Gross. Our email address is radioatfool.com.

from Ben Farber, who writes, I'm a subscriber to several Motley Fool services and consider myself an avid listener of MarketFoolery and Motley Fool Money. I'm not a shareholder of National Beverage Corp., but I saw their latest earnings report, and I think it's a contender for most unhinged company press release. I'm interested if you agree. Love the shows. Keep up the great work. Thank you, Ben, for the question. So, for those unfamiliar, National Beverage, the parent company of LaCroix Sparkling Water. Came out with their third quarter report. Shares down 20% on Friday. Chairman CEO Nick Caparella blamed the drop in sales and profits on, and I'm quoting here, injustice. He wrote, we are truly sorry for these results. Negligence, nor mismanagement,

nor woeful acts of God were not the reasons. Much of this was the result of injustice. Managing a brand is not so different from caring for someone who becomes handicapped. Brands do not see or hear, so they are at the mercy of their owners or care providers who must preserve the dignity and special character that the brand exemplifies. It is important that LaCroix's true character is not devalued intentionally in any way. National Beverage Corp. is and will remain the preeminent innovator that adds zest and authenticity to the sparkling water phenomenon in North America. Wow.

I'm stunned by this. React. I'm stunned that a lawyer at the company said, sure, go ahead and put this out. And unhinged is one word to describe this. Yeah, if you told me that was a tweet, like a la Elon Musk or something like that. John Legend, T-Mobile. I'd be like, OK, that's still kind of weird. But this is a press release reviewed by the company, the CFO, the general counsel.

I would imagine the employees around that CEO are just scratching their heads. And that guy's full of something. I mean, I'm just full of fizz. I mean, as a—hey, listen, man, I'm a big seltzer drinker. I love it. But you know what? I find myself buying more of the store-brand seltzers than LaCroix. And we were talking this morning, Ron and Green, they have some really funky flavors as well.

Coconut turmeric? I don't know. I mean, maybe the injustice is they can't give me a simple lime seltzer. Well, there's also more in competition, too. There's some more lines in Whole Foods. When we go to walk down the street to our local Whole Foods, we're seeing those. I see them more in the office, those competitors. So they're not the only—

Coke has a Pepsi, has one. I was just going to say, look at the biggest carbonated beverage companies in America. They're pushing these brands even more. Investments from Guggenheim just moved to a seller recommendation, actually, which you don't see very often, because it's going to be hard for them to regain market share. And you see a lot of discounting in that space, too. Again, with the grocery stores becoming more and more cost-competitive now, and you see those LaCroix's are getting more and more discounted shelf space.

Let's get to the stocks on our radar. Our man behind the glass, Steve Broido, is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week? Alright, following our conversations about Costco and Big Lots, I'm in a discount retailer mood. I'm going with Dollar General. DG operates more than 15,000 stores in 44 states. They're going to report earnings on March 14th. The company cut their full-year guidance when they released their third quarter earnings. So, I'm really curious to see what this report looks like. There was a lot of weather-related issues in that last report

that theoretically shouldn't be repeating themselves. They expect to deliver their 29th consecutive year of same-store sales growth with this report. So, I'll be keeping an eye out. Steve, question about Dollar General? I haven't seen a Dollar General around the D.C. area, but I've been to one somewhere in Maryland or Virginia, I think. What exactly is Dollar General? It's a retail store where you can get inexpensive merchandise, often at $1 or below, Not always. It's similar to a family dollar, which is also part of Dollar Tree. Jason Moser, what are you looking at?

Well, at first mention, billboards and surety insurance may not seem to go together like peanut butter and chocolate. But Chris, Boston, Omaha is making a very good business out of it. This is a small-cap business that is led by two founder leaders, building up a strong business and actually billboards those ones you drive by on the interstate, and an attractive surety insurance business as well. And I'll give you a little bit of a heads-up here on Monday's Industry Focus. I am going to air an interview. I recently sat down with our own Buck Hartzell here. And Buck knows this company very well. He's spoken with management before. So, we dig in a little bit more on Boston Omaha and present why it looks like

a compelling investment option. And the ticker? Ticker is B-O-M-N. Steve, question about Boston Omaha? So, I'm going to ask a similar question. What is this company? I don't understand. They make billboards? What's going on? They own and monetize billboards that are on the roads everywhere, and they also run a nice little shirt-y business on the side. Andy Cross, what are you looking at? Ulta Beauty operates 1,200 beauty stores around the country. They report fourth-quarter earnings

next week. They have 30.6 million loyalty members. That's up 15% over the past year. And those people generate more than 95% of total sales of the company. So, I really want to see that number continuing to grow. And that means more comp store sales growth of 8% to 9%. Anything above that is a bonus. Steve? I do know Ulta. So, my question is, is it the salon business that they're most well-known for or selling cosmetics?

Selling cosmetics. Three very different businesses. Steve, you got one you want to add to your watch list? Well, there's only one I understand. So, I'm going with Ulta Beauty. Sorry, guys. Steve-o. Not my best work today.

Jason Moser, Andy Cross, Ron Gross, guys, thanks for being here. Thanks, Chris. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido, our producer is Mac Greer. I'm Chris Hill, thanks for listening, we'll see you next week.