Motley Fool Hidden Gems Investing - Missing Piece of the AI Spend Puzzle

Episode Date: September 3, 2024

Nvidia continues its streak of triple-digit growth, but we shouldn’t be so surprised.  (1:08) Jason Moser and Bill Mann discuss: - Nvidia’s killer quarter, and why the market yawned over the results.  - The global IT outage’s impact on Crowdstrike’s past quarter and outlook for the rest of the year.  - Chewy’s continued turnaround, Dollar General’s merchandising woes, and the new-look mature Salesforce. (19:11) Film critic and corporate governance expert Nell Minow weights in on the summer box office and recent moves from Disney and Starbucks’ leadership teams.  (33:16) Jason and Bill break down two stocks on their radar: Birkenstock and Alimentation Couche-Tard. Stocks discussed: NVDA, CRWD, CHWY, DG, CRM, BIRK, ANCTF Host: Dylan Lewis Guests: Bill Mann, Jason Moser, Nell Minow Engineers: Steve Broido Learn more about your ad choices. Visit megaphone.fm/adchoices

The AI boom continues. This week's Motley Fool Money Radio Show 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. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Dylan Lewis. Joining me over the airwaves, Motley Fool Senior Analyst Jason Moser and Bill Mann. Fools, great to have you both here.

Hey, hey. What's happening, Dylan? Not too much. We got a little stock talk ahead of a holiday weekend that I'm sure we are all excited to get on with uh we've also got a trend that won't end at the box office this summer some earning stories you need to know and of course the stocks on our radar as we do every week we are going to get the earnings parade rolling with what i imagine jason might be the release of the earning season uh and that's nvidia chipmaker extraordinaire dropping results i feel like everyone was waiting for this one yeah it feels like nvidia this this certainly

has overtaken fantasy football drafts, I would say, right? I mean, I'll bet you there were more events planned around this earnings release and leading up to it than there were events planned around fantasy football drafts. And I don't see that stopping anytime soon, right? The thing is with NVIDIA, you need to beware the burden of great expectations, right? This was a perfectly fine quarter. It was a good quarter. But the market has its sights set high on this one, of course. And so as those expectations continue to ramp up, it's very difficult to clear that hurdle. And it's obviously a very richly valued stock, but for good reason. And when you look at the numbers, I mean, just very encouraging. Sales for the quarter more

than doubled from a year earlier to $30 billion. And profits also more than doubled to better than $16.5 billion. And again, shining performance in the data center side of the business. I mean, this really is the biggest part of the business, that revenue was up 154% from a year ago to $26.3 billion. And so based on those numbers, obviously a very good quarter. I think the guidance going forward is very encouraging. I think the question really that came out from this quarter, and to me, this is really more of a timing thing than anything else, but just a bit of a story in the delay of the Blackwell rollout. This is just their next level solution, better performance while consuming less energy. And they had executed a change to the production process there in order

to improve production yield. This just has added a little bit of a delay to that actual rollout. But again, that's just a timing thing. It's nothing fundamentally wrong with the product. And so as such, they see that demand continuing to build as they roll into fiscal 2026. So all things considered, yeah, the stock may be down a little bit, but I feel like it's been up considerably over the last several years. Based on all of the numbers, this was a good quarter. Bill, NVIDIA is kind of our proxy for AI boom and AI spend, and I think that's why there were maybe so many eyes on it this earnings season. It kind of felt like everyone was waiting for the popular kid at the party to show up in a high school movie. What do you think of that?

It's pretty clear just in terms of timing that capital spending for artificial intelligence has been a real support and an updraft in the entire U.S. economy. And video is probably a pretty good proxy. I still wonder why so many people view it as being a barometer for the health of the overall market or economy, because essentially NVIDIA's earnings report is as if you have a 500 piece puzzle and you've got 30 pieces left and they're all something like sky, right? We already know the basics by virtue of what the hyperscalers have told us they're going to be spending over the next year. So demand continues to exceed supply. I think it's pretty clear that the scaling for models, that's not something that has changed.

So we are looking at a spending cycle in which we are still in early days. But on a quarter by quarter basis, it doesn't matter all that much whether they hit or miss. And I think I think actually the market, you know, given its response is has taken that too hard. Jason, you noted that the comps are going to get a bit tougher. We are seeing them now on four straight quarters of triple digit growth. They're looking out to this upcoming quarter and saying only 80 percent year over year is what we're willing to guide for here. The numbers get tougher. The numbers get quite a bit bigger that they are lapping.

And we see, I think, with the market reaction here, a fairly muted one. Shares were down a little bit on what was otherwise an exceptional report by pretty much any measure. Is this the market taking a little bit of a breather here? I think that makes sense. I mean, as you noted, I mean, yeah, the revenue growth forecast of only 80%. I mean, and obviously we're being facetious there. That's still tremendous growth. But this isn't the type of company where it's just going to continue growing to the sky, right?

At some point, that capital spend from all of its customers sort of taps out and you hit a reset. They have to iterate in advance and build new products, which I'm certain they'll do. But there's a big question mark, I think, is exactly how AI is going to play out, right? We've seen so much about how it's going to do all of these things. You know, it's still not fully clear, right, from NVIDIA's customers all the way down to us consumers, how AI necessarily is going to impact our lives to the extent that all of the spend in the market ultimately makes sense, right? We ultimately want to see that return on that investment. And that isn't as clear as probably it will be in a year or two. but in a year or two, you have to figure that a lot of that capital spend will have been spent, which then makes you ask the question, okay, what's next for NVIDIA? How far will this actually go?

So we've got a little time still until we have to pay the piper when it comes to some of that AI spend. We'll be checking in along the way. We also had a highly anticipated earnings result for a slightly different reason though. We had the quarterly update from CrowdStrike. Of course, the company causing the worldwide IT outage at the very end of this most recently reported quarter. So not exactly working into the results too much that we saw reported, Jason, but there were a lot of eyes on commentary and what management was saying about the impact of the outage. You dug into the results. What did you hear? Yeah, that definitely worked in a little bit to the guidance going forward, and we'll get to that in a minute.

But I really do think this was actually a good report, all things considered. And I think it was an encouraging one, given what the company has gone through and ultimately what it's put its customers through with that bungled update that shut down so many of their customers. And the other thing to keep in mind with a CrowdStrike, and this is probably something that you could extrapolate to the greater cybersecurity space. But, I mean, they pegged this AI native security platform opportunity at $225 billion by 2028. That's up from around $100 billion opportunity today. Remember, CrowdStrike is only bringing in $3.5 billion, $4 billion in revenue annually right now. So while the valuation has always been a bit rich, maybe a point of contention for some, that's also a very big opportunity ahead if they continue to execute.

And judging from this quarter and judging from their guidance going forward, it does seem like they're recovering from this mistake as well as could be expected. Revenue was up 32% from a year ago. they recorded earnings per share of 19 cents versus three cents per share in the same quarter a year ago. Encouragingly, annual recurring revenue stands at $3.86 billion. That's compared to $2.9 billion a year ago. And net new annual recurring revenue of $218 million per quarter was up 11%. So they do, much as we're seeing with a lot of these companies, those longer sales cycles are playing into exactly how quickly they're going to grow, but the adoption is still strong.

And these numbers, I cover these every quarter because I think it's important, but 65% of their customers are using five or more modules, 45% with six or more, 29% with seven or more, and then 48% of their large customers, those customers that spend $100,000 plus per year, have eight or more modules. And so that really is kind of the nature. That's the strategy behind this business with that Falcon platform. And assuming that this recovery continues, assuming that they've responded to this appropriately, it feels like better days are ahead. Bill, how do you feel about how management at CrowdStrike has been handling the situation overall? So two months after the crisis and the stock is down about 25% from where it was beforehand. And part of that has to do with

the fact that we don't yet know what the aftermath is going to be. They probably have some legal liability. They are probably going to be coming out of pocket for some of the damages that happened elsewhere. I have to say so far, though, that CrowdStrike's handling of this crisis goes up in the pantheon along with Tylenol following the tampering crisis. They have been fairly sensational. And even in terms of just marketing, they went to a conference a couple weeks ago and they accepted the most epic fail award and the president of CrowdStrike, Michael Santona, showed up to take the award and they're going to display it at their headquarters to say, look, this is something that we need to own and we need to make sure does not happen

again. So they have been very good at getting onto the same side with their customers. All right. Coming up after the break, a dollar doesn't quite get what it used to, and that's continuing to hurt America's largest dollar store chain. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Dylan Lewis here on air with Bill Mann and Jason Moser. Nvidia and CrowdStrike stealing some of the headlines this week, but plenty of other companies giving investors some fresh numbers with earnings reports, including go-to pet supplier

Chewy, Jason, shares up 10% on the report. Seems like Chewy gave the market a treat this quarter. Well, I'm just going to tell you, I'm glad that we're recording now because the Chewy delivery came earlier today. So my dogs went nuts earlier. So we don't have to listen to them go crazy on the show this week, thankfully. This has been a good year for the company. They've recovered nicely, I think, from a little bit of a difficult stretch earlier in the year. And shares up year-to-date just over 20%.

sales growth, it's modest. I mean, 3% sales growth for the quarter up to $2.68 billion and adjusted earnings growth of 55%, which was encouraging. Part of the story with Chewy that we're going to talk about every quarter is auto ship and auto ship customer sales grew 6% for the quarter now represent 78% of net sales. And that's encouraging net sales per active customer set a new record at $565. That was up over 6% in the quarter. And they actually saw some gross margin expansion, which is encouraging to see as well. I think in regard to Chewy, the story going forward, I think it's worth paying attention to the progress that they make in their vet care side of the business, right? It's a very new part of the business. It's just getting

started in only a handful of clinics. But it can be a very powerful acquisition tool for customers, right? Kind of that top of the funnel, bringing them in and ultimately selling more services and products. And then I think more importantly, even perhaps, is the fact that they're getting a very positive response from the veterinarian community in regard to this effort as well. And that's a very difficult market to enter there in veterinary medicine. And so corporate medicine can certainly make it a little bit more attractive from a time perspective. It's, you know, maybe not going to pay as much, but it definitely has a lot of potential there for the business, something to keep an eye on. All right. Not such a great report from Dollar General. Bill, pick a metric

and they missed. Top and bottom line were below expectations. Comps and foliar guidance also below expectations. What's biting the retailer here? Well, this is the opposite situation of what we were talking about earlier with NVIDIA. This at one point in time was a $250 stock and now it is sub 90. And it's a reminder that sometimes companies make missteps and Dollar General has made a huge one. Like late in COVID, they started shifting from being a staple company into a consumer discretionary company. And so when you think about a Dollar General, their biggest advantage is the fact that they have broad coverage in rural areas where you just don't have access to a Costco. You don't necessarily have access to a Walmart, but you can see exactly

where they are misstepping in their earnings report because their net sales went up, but their sales of home products went down 7%. And that was their higher margin part of their business that they really tried to move into. And it has been a failure for them. I'm guessing at least partially because of Timu, the company that's owned by Pinduoduo. But certainly, you would think that Dollar General would be a trade-down business in a time of high inflation, and it just has not worked out for them at all. I don't want to say this is a company in trouble, but this is a company where all of the shine has gone away from the business right now. They have big problems to solve. As you noted, we are looking at a business that's worth quite a bit less than it used to be,

company hitting a new five-year low after the earnings report, down over 50% from highs, and shares are historically cheap. They're about 13 times earnings at this point. You noted that there's some difficulties here, but is it at all interesting to you, given the value here? You always want to look into things that are not being said. The things that I've described right now should be obvious to management right now, and they do have advantage as a staples providing business, but it would require them to give up moving into home products and higher margin goods. So there's a path, but a management that has misstepped this badly, they really need to shift. All right. Wrapping us up here with the

earnings look, we've got the lowdown on Salesforce. Jason, you dug into the results. What'd you see? Yeah, that's just the company that we all know it. And yet it's difficult to pinpoint exactly what they do, right? CRM, right? Customer Relationship Management. It's just that system for managing all of your company's interactions with current and potential customers. That is Salesforce's specialty. It's what they do so well. And they've built, you know, a big suite of tools to help their customers ultimately manage those relationships. I would call this an okay quarter. There's nothing crazy either way. It was just right in that meaty part of the curve, right? Not showing off, not falling behind. But it's also clear that growth has slowed down materially for this business. And I think a big, perhaps the biggest question over the next several quarters is whether that growth will reaccelerate or not. Now getting to the numbers, the revenue of $9.33 billion for the quarter, that was up 8% in earnings per share beat expectations there, $2.56 adjusted versus $2.36 expected.

And again, it's a theme that's been very consistent with this show and I think with earnings season in general, management there, they're assuming that the conditions they've been experiencing over the past few years, they see these conditions persisting in the form of longer sales cycles and greater scrutiny of budget. So I don't know as investors if it's reasonable to expect that top line to re-accelerate anytime soon based on what we're hearing from leadership there. But I thought it was really interesting in the call and in interviews. I mean, AI has obviously been a big point of focus for all of big tech and Salesforce certainly as well. Benioff actually calling out Microsoft there on the quarter. And he's talking about these new

innovations, these new products and services that Salesforce is introducing like Einstein AI that they're going to be testing out. They've got agent force AI offerings on the call. And he was comparing those to Microsoft and talking about Microsoft and feedback they're getting from their customers and saying that, you know, so many customers are disappointed in what they're buying from Microsoft. Now, I haven't heard that personally, but, you know, listen, AI and these language models, this is all still very new. But to sit there and really point right at Microsoft off and call them out. One of the companies that has been so fundamental to this AI narrative over the last several quarters, I just find it interesting. And ultimately, that's going to

put a target on Benioff if he's not careful. They better deliver, I guess is what I'm saying. And so management raised guidance modestly for the year, still looking at 8% to 9% growth for the full year. Not bad. You look at earnings there, forecasted around $10 per share. Puts this stock at around 26 times full year forecast, which with that growth rate right now, I'm not sure it looks like such a steal, but if they can re-accelerate that top line, things will look better. I think it's safe to say Mark Benioff, ever the salesman, always there on stage, willing to bring a little bit of heat and get people excited, Jason. Just a tremendous advocate for this business. I mean, whether you love him or hate him, I think a lot of people love him. I

think he's a good guy. I like him. He's a tremendous advocate for this business, and he always has been his his enthusiasm and optimism are uh are are really really great to see all right bill jason we're gonna see you guys a little bit later in the show up next we're checking on results from the big screen and how the movie business has been this summer stay right here you're listening to molly full money It's been a summer box office full of surprises, from bankable names flopping to an unexpected name taking the title of top-grossing animated movie of all time.

To sort through the ticket stubs, this week I caught up with Nell Minow. She's a film critic and expert on corporate governance. She gave me the inside scoop on some overlooked movies from this summer's lineup and what to think about moves from Disney and Starbucks' board. So far this summer, we've had kind of an interesting slate of movies coming out and maybe some surprises with some of the box office figures. We've had Inside Out 2, we've had Deadpool and Wolverine, and Despicable Me, among others, on the silver screen.

How would you grade the summer movie slate so far? Well, let's talk about it in terms of box office rather than critical worthiness. the summer got off to a very slow start with a couple of big disappointments uh the fall guy which i loved and think everybody should see it's now on streaming of course uh did very surprisingly badly with an all-star cast and and wonderful action and furiosa which is another one that had a built-in audience everybody loves the mad max movies did not do well and everybody started to panic have people forgotten how to go to theaters and then all of a sudden act two was the gangbusters and you mentioned two of the biggest uh this is a record center for disney

the first studio ever to have back-to-back billion dollar movies with inside out 2 and deadpool and wolverine so that is a record that is hard to top yeah i feel like deadpool was pretty fresh in a lot of viewers minds uh we've seen some uh new releases from that franchise over the last couple of years. Inside Out 2 was a little bit of a surprise for me, especially with the global box office poll. $1.5 billion is not something that you see every day. And I remember watching the first one and thinking, great movie. I loved it as an adult. But it's a complicated story, especially for an animated movie. Did that one surprise you at all? It did surprise me a little bit because the first one was so perfect. It ended perfectly. How are

they possibly going to go beyond that? And yet they really knocked it out of the park. They made it earn its box office. My favorite moment in that movie, anyone who's ever been a teenager or who has raised teenagers, I've done both, will recognize that one of the hallmarks of adolescence is, of course, sarcasm. And in the movie, it's represented as an actual chasm so that people on one side of the chasm go hey you're doing a good job and the people on the other side hear it as well you're doing a good job it's you know the you would have to have years of therapy to get as much insight as you do in that movie as soon as anxiety shows up carrying literal baggage you know you're in very good hands it's just a wonderful wonderful movie and just great to see pixar back

on top of its game you mentioned that it was a pretty good summer for disney i think that they have struggled a little bit, particularly with some of their more superhero-oriented movies over the last couple of years. Do you feel like they've kind of found their footing now? Look, every movie is a new experience. William Goldman, the Oscar-winning screenwriter, famously said, the story of Hollywood is that no one knows anything. And I think you're familiar with the phrase, past performance is no guarantee of future performance. But I'm going to give you a quiz, okay? I'm going to look here. I'm going to read you the top grossing movies of the summer and see, you can tell me what they all have in common. Okay. All right. All right. Bad Boys Ride

or Die, Quiet Place, the prequel, Twisters, Despicable Me 4. What do they all have in common? They are all sequels or franchise extensions. Exactly. Which of course Furiosa was too. But But yeah, what I'm worried about is that this is going to lead to more sequels and franchise extensions because people are going to take the wrong lesson from that. Those are all very, very good movies. Of course, Twisters was how many decades after the original Twister? People probably think it's a new movie at this point. It's been that long, especially the younger generation. Exactly.

But that does make me very nervous. That is kind of the model we've been seeing in the industry, though. You talked about built-in audience before. It's bankable to go after something that already has a pretty decent track record at the box office. We've seen studios take a little bit more of a risk-averse approach and lean into the IP libraries they have. Yeah, we're especially seeing that, of course, for the big budgets. And what I'm hoping is that, you know, every summer what I look forward to are the little independent movies that will surprise you and introduce you to people. I mean, Glenn Powell was known. He was in Top Gun Maverick last year. But this is the year he really became a big star in three big movies. And he's got another one coming out before the end of the year. And he deserves it. He's absolutely wonderful. But he actually co-wrote Hitman with Richard Linklater. He produced Blue Angels documentary, which is outstanding. And of course, he was in Twisters.

And so I hope, you know, he came out of that world of the little independent films. And I hope we still get some creativity and some support for those and that they don't all go straight to streaming. Any other sleeper films you feel like people should be putting on their list to watch that maybe they would have missed? Yeah. You know, I really liked Fly Me to the Moon with Channing Tatum and Scarlett Johansson. I think that should have gotten more love. It's an absolutely knockout story. It works as a romantic comedy. It works as a slightly fantasized or heightened version of history of the first moon landing. And it also has some really interesting things to say about when we tell the truth and what kind of truth we tell. So I think Fly Me to the Moon is the one that I would say is overlooked. And I also want to mention that was correctly overlooked was Kevin Costner decided that he was going to leave Yellowstone, which was a goldmine for him, and put his own money into a five-part Western series and released two of them this summer. And the first one, Horizon, did so badly that they just pulled the second one from release, and we don't even know if they're going to film the third one.

So that's the good, the bad, and the ugly. I would say go to see Fly Me to the Moon and skip Horizon. Looking out for the rest of 2024 and also just kind of thinking about projects that are in development, maybe coming out in 2025, anything in particular you're really excited about and looking forward to? I am. Now, I'm not going to call this one an IP extension, even though we're reuniting the director and the stars of Forrest Gump. But their movie with Tom Hanks and Robin Wright and Robert Zemeckis looks very, very, very intriguing. I think it's called Home, and it's a multigenerational story. And they, you know, Robert Zemeckis does love his CGI tricks, and he youngified those two.

And, you know, I'm a little nervous about that. But that movie looks really, really good. And of course, we've got Wicked coming at the end of the year, too. So those are two big ones that I'm looking forward to. We turn to you to talk movies, but we also turn to you to talk a little bit about how companies are run. This next one is kind of a blend of the two. Recently, Disney's board put member James Gorman in charge of the company's succession

planning committee. These are the folks that are going to be selecting Bob Iger's replacement. And Disney has tried this a few different ways at this point, and it hasn't worked. What do you think about things this time around? I'm holding my breath as a Disney shareholder and as an advocate of Disney's content. I will say that succession is really difficult. This is literally why we pay the board the big bucks. That is their most important task and the one that they blow the most often.

And certainly Disney has done badly on it before. I hope they've learned their lesson, but it's really, really hard. You know, the people who are tremendously successful at that sub-CEO level, some of them are Clark Kent waiting to take off and put on their Superman outfit. Some of them are not. Some of them have reached their top and it's very hard to know which is which. so and disney my goodness is there a company that has a more varied number of of projects and divisions you know they're in the hotel business they're in the boat business they're in you know

and of course the movie business they do a little bit of everything and so it's going to be very very difficult for them to find a good successor and i hope they do better than last time is there anything in particular you're looking for as a trait in a successor for Bob Iger? I would look for somebody who is very, very familiar with sort of the new world of streaming and all the other alternatives that people have. Because I love Bob Iger. I think he did a great job. He did a great job the second time. But the world of content is changing so dramatically, particularly following the two strikes. And now we've got another strike going on. it's got to be somebody who is really thinking ahead. And that doesn't mean just AI. You can't

have a conversation in 2024 without talking about AI, but somebody who's going to really understand that industry. It's such an interesting industry. It's not a coincidence that it's the only industry in America where the unions play such an important role. And that's because everybody's a free agent. And so if they're going to have their healthcare, they're going to have their pensions. They're going to have, it's going to be with the unions. And so it's got to be somebody who really understands the creative community. And I think that's, those are the things I'd look for. Somebody who understands the technology, the distribution of the future and the creative community. Disney has struggled with succession. I would say Starbucks has also

struggled a little bit with succession. This past month, we had word that Chipotle CEO Brian Nichol is going to be stepping into the CEO role at Starbucks, replacing Laxman Narasimhan. And And from the reporting that I've been reading on this, it seems like this was largely board driven. I'm curious how you feel about the board kind of stepping in there and acting on behalf of shareholders and really seemingly pitching nickel on the opportunity to come aboard. I'm going to give the board a B plus with an asterisk on that. First of all, that is exactly what the board's job is.

And much too often with succession, we have seen them A, make a bad choice and B, stick with a bad choice too long. So good for them for noticing that they've made a bad choice. Good for them for acting on it. That's why they get the B plus. But the asterisk is on a couple of points. One, we don't know what the departure package is. It better be rational and not like, we feel really bad that we hurt your feelings, so we'll send some more money your way. Okay. So that's part one. Part two, I'm very concerned that they're allowing their new CEO to work remotely. That's a tremendously bad sign. I mean, we all know that there've been a lot of shifts and work from home and all of that. But we also know that there are communications that

you have with people by running into them, by just being with them that are absolutely essential. So I'm very concerned about that. I'm very concerned that they are overpaying with his arrival package and that that's going to impair his motivation and his incentives. So that's why there's an asterisk on my B plus. So B plus for acting quickly, question mark about whether they're making the right decisions. So Starbucks and Disney getting a lot of the headlines when it comes to these topics, but when it comes to the world of corporate governance, any stories or topics you feel like really investors ought to be paying a bit more attention to?

Yeah, definitely. I think that there are a few. One is that the Supreme Court made a couple of decisions in the late part of the term, so the early part of the summer, that I think are going to have a tremendously detrimental ripple effect on some industries. And investors need to be aware of that. By overturning the administrative law judges and by limiting some of the regulatory stuff that agencies can do, the way they interpret their own statutes, overturning what's called the Chevron Doctrine, that is going to create a lot of uncertainty, particularly in heavily regulated industries, as these challenges to these rules go forward based on these new cases. So I think that's something for investors to be concerned about. The other thing is that Delaware, which we all know is where most companies are incorporated, has pushed through very quickly, contrary to a lot of complaints from the academic community and even the business community, some changes to their laws trying to prevent people like Elon Musk from leaving for Texas. And they're very anti-shareholder.

So I would be very concerned about how companies are going to respond to that, whether they're going to take advantage of these new loopholes that Delaware has created. So those are some things to keep an eye on. Now, Minnow, thank you for coming on. Thank you for giving your thoughts on the film industry. And, of course, the investor takes we need to know. Appreciate it. My pleasure. Movies is magic.

Real life is tragic. Listeners, you can catch Nell's musings on film and everything else at nminno on X slash Twitter. Coming up after the break, Jason Moser and Bill Mann return with a couple stocks on their radar. Stay right here. You're listening to Motley Fool Money. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell anything based solely on what you hear. I'm Dylan Lewis, joined again by Jason Moser and Bill Mann.

Gents, we've got radar stocks coming up in just a minute, but before we get there and onto our Labor Day weekends, a bit of trivia for you. Labor Day weekend is a big one for travel. AAA estimating that bookings are up 9% this year, and according to the company, the most popular destination for that travel remains the same as 2023. What American city is the number one Labor Day weekend destination? Bill, what do you think? Now's where I protect myself maybe by using an absurd answer because I don't know. Actually, I'm going to go with Las Vegas. Las Vegas. I think that's a mix of both

there. You got a little bit of weird, but you got a popular destination there. Jason, what about you? I'm going to go with something just completely out there because I have no clue. My old stomping grounds, Charleston, South Carolina. Well, you're both wrong, but we're all going to learn something. And that's really the point of a good trivia round, if you ask me. Seattle, Washington is the number one Labor Day weekend destination according to AAA. Booking's up 30% last year. It retains its title as the place that most people are traveling this weekend.

It is a wonderful city in its own right. But the reason that it is so popular for Labor Day weekend, it is the launch destination for Alaskan cruises. And that apparently drives a tremendous number of people there. Some of the other top cities, Orlando, Anchorage, New York, New York, and Boston, Massachusetts, where I'll actually be heading this weekend. Anchorage, the other end of the cruise. Yeah, they're just passing each other in the sea. The folks that flew into Seattle and the folks that flew into Anchorage. It's also the sunny month in Seattle, so that's good.

You've got to take advantage of it. There's probably a bit of that influencing things. See, I was going to cheat and say Atlanta because you've got to figure everybody's going through Atlanta. But I guess that's not the final destination, is it? Look, I'm a purist. You have to leave the airport for it to count. That's my rule. I appreciate that.

All right, let's get over to stocks on our radar. Our man behind the glass, Steve Broido, is going to hit you with a question. Bill, you're up first. What are you looking at this week? Probably a company that's never been mentioned on the show, if for one, because nobody here knows how to pronounce it. but it's a Canadian company called Alimentacion Couchetard, which you may have never heard of, but you've definitely heard of at least one of their brands, which is Circle K. They are one of the largest convenience store owning companies in the world. And the reason why they are

interesting to me is that they have made a $38 billion hostile takeover bid for 7 and I Holdings, which is the Japanese company that owns the 7-Eleven convenience store chain. Yes, that's That's right. 7-Eleven is a Japanese company. We all thought it was from Wichita. It is not. So a Canadian company is trying to take over a Japanese company, which owns an American icon. Steve, a question about Alimentation Couchetard. I'm brushing off some seventh grade French there. Familiarly known as ANCTF over the counter. You bet. My question is, with a business like Circle K or 7-Eleven, where is the big profit here? They're everywhere. Sheets, what's the differentiator? How do I make more money? Really, the differentiator for all of these companies is how much they make inside of the store. The gasoline tends to be a pass-through. And the important thing about Circle K is that

there's a much higher mix of convenience store only and less, you know, and, and less in terms of pump sales. All right, Jason, what's on your radar this week? Yeah, it's one we've talked about a couple of times, uh, this year, new IPO, uh, Birkenstock ticker B I R K. They just reported earnings, uh, this week as well. Yeah. I can't help, but find this company interesting to follow. I mean, everybody needs shoes, right? You look at that Crocs chart of the last five years. I mean, that's winner, winner, chicken dinner. So I have to wonder if maybe Birkenstock isn't an opportunity, even though it's not the Birkenstock that many of us Gen Xers and beyond likely identify with today. A much broader offering with something for everyone. And I think that's

ultimately a big part of the story. But revenue growth of 19% for the quarter. They recorded their highest quarterly revenue ever. Strong double-digit revenue growth across all geographic segments. They saw 15% in the Americas, 19% in Europe, 41% in Asia Pacific, Middle East, in Africa. Continued strength at direct-to-consumer, growing the relationship with their wholesale customers. Over 90% of wholesale growth came from within existing doors

as retail partners continue to expand their offerings there. And they confirmed guidance for the year. So it's one I'll keep an eye on. Steve, a question about Birkenstock. Where should I not wear Birkenstock? The one place I shouldn't. I think

class. I think when you're done walking across campus and then you go sit in class for a two-hour seminar, those feet get a little stinky, Steve. I think class is a problem. But weddings and funerals or whatever, that's fine. Just not in class. No problem whatsoever. Steve, which one's going on your watch list this week? I'm going with the Circle K1 that I can't pronounce because it just makes more sense. Bill, one more time for the audience. Alimentacion Custard. There you have it. Alright, Bill, Jason, Steve,

thanks for being here. That's going to do it for this week's Mountain Full Money Radio Show. We'll see you next week. We'll be right back.