Motley Fool Hidden Gems Investing - More Jobs for Americans, More Confusion for Investors

Episode Date: December 2, 2022

If you're an investor trying to make sense of the conflicting signals from macroeconomic data, you're not alone. (0:21) Matt Argersinger and Jason Moser discuss:  - A strong jobs report, latest housing data, and contrary indications from the retail industry - Ulta Beauty continuing a standout year - VICI Properties increasing its share of properties on the Las Vegas Strip - Signs of life from Okta - The latest from Salesforce, Five Below, and Crowdstrike (19:11) Deidre Woollard talks with Ben Miller, CEO of crowdfunding investment platform Fundrise, about commercial real estate and the trends he's watching for homebuilders and office space. Stocks discussed: ULTA, CRM, VICI, BX, OKTA, FIVE, CRWD, APRN, EXR, CRNC Host: Chris Hill Guests: Matt Argersinger, Jason Moser, Deidre Woollard, Ben Miller Producer: Ricky Mulvey Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

Don't you wish you could just hit skip on the worst parts of your life? You know, the same way you can skip an ad? I get it. I'm Siaya and I live in Ice Cove. I've made some questionable decisions that didn't end up the way I planned. And today I'm still figuring it out. Somehow things usually get worse before they get better. Apparently, that's how I roll.

So bundle up and come along for the bumpy ride. Stream a new episode of North of North Tuesdays on CBC Gem. We've got retail, real estate, software, cybersecurity, and a limited-edition holiday item we can't wait to get our hands on. Motley Fool Money starts now. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill. Joining me in studio, Motley Fool Senior Analyst Jason Moser and Matt Argesinger. Good to see you both.

Hey! We got the latest headlines from Wall Street. We will take a closer look at the commercial real estate market. As always, we got a couple of stocks on our radar. But we begin with the big macro. The U.S. added 263,000 jobs in November, much higher than economists were expecting. We also got housing data that pending home sales in the U.S. fell more than 35% year over year, the largest decline on record. And earlier in the week, Fed Chairman Jay Powell made comments indicating future interest rate hikes might be lower. Matt, where do you want to start? I'll start by being confused. I will join you.

All right. I say that facetiously, because we are always confused as investors when it comes to macro, because it's stuff that's out of our control. We'd much rather talk about earnings and companies. I will say this, though. I think the reason the market was a little concerned on Friday was not really about the jobs number being so much higher, because we know more jobs tends to be the Fed's going to keep on its inflation hunt. but I think it was more about the average hourly earnings number, which was up 0.6%. That was double the estimate. It's also 5% from a year ago. That, I think, is the number that's keeping inflation stubborn or is going to keep it high for longer. My other concern, though,

with the jobs report specifically, if you look at where the jobs were added, the sectors like leisure hospitality, which is rebounding from the pandemic, healthcare, government, those are places where you probably would expect jobs to keep being added. Where it's concerning is that you lost 30,000 retail jobs and 15,000 jobs in transportation and warehousing. Those are not places normally, if we're going into a holiday season, where you see job losses. Right. Remember, this macro stuff is confusing, but I think that tells me a bigger story about the economy going forward than all the other things you mentioned. Well, and the growth that we saw, Jason,

those sectors that Matt mentioned. We need that. They're basically at or around where they were pre-pandemic. It's not like they're way above where they were in 2019. No. I feel very conflicted. Confused? Conflicted? On the way to Oregon, you see the jobs report, you're like, uh-oh, market's going to tank on that news, because unemployment's in a great place. As investors, I guess, are are we rooting for unemployment? We want that to take back up, I guess, because that seems to be the only catalyst that will turn this market around. Obviously, it's much more nuanced than that. But yeah, to Matty's point, those areas of job loss, that doesn't seem like

where you want that data to exist, particularly at this time of year. Just a unique time right now with so much going on in the world. Yeah. I think the whole idea of, we're fighting the Fed. We're fighting the Fed on the way up, we're fighting the Fed on the way down, so don't fight the Fed. Unfortunately, that's our trigger point. Every piece of data we look at, even at the micro level, is, what is the Fed going to do with this data? I think it's going to transition really quickly. Once inflation even rolls over, We're going to start talking about earnings. Again, good. But also, the idea that if we are in a recession, a lot of the earnings estimates for 2023 are likely to come down.

That could be another thing the market starts worrying about as we get into the new year. Further adding to my confusion, Jason, is what we're seeing in holiday retail. We had record sales on Black Friday and on Cyber Monday. Most years, that's a recipe for a relatively strong retail season across the board. You look at all of the inventory glut that we've been talking about for the past six months, and I'm just not as optimistic as those headlines would have me. I think that's a fair point of view. I mean, when you look at the numbers, tell a story of a very healthy holiday season, right?

Record number of holiday shoppers, 196.7 million went back to stores and shopped online. Shoppers spent an average of $325 this year on holiday-related purchases over Cyber Weekend, which is up from last year's $301. More than 122.7 million people visited brick-and-mortar stores over the weekend. That was up 17% from a year ago. That's all great news. Let me counter that, though, with some facts here. You look at where the consumer is today, and going back to conflict and confusion, you saw over this past earnings season, a lot of the big bank CEOs talked about the consumer being in this great state, the health of the consumer, the consumer's in a good place. I don't understand exactly where

that's coming from. Maybe it's a bit backward-looking, because when you look at the as a matter of the personal saving rate right now, 2.3%. It is low as low can get. Credit card balances are set to hit $1 trillion, not adjusted for inflation, going to hit $1 trillion for the first time ever. Cyber Week buy now, pay later orders grew 85% from the previous week. And 60% of Americans now are living paycheck to paycheck. That's up from 56% from a year ago. So, while maybe the backward-looking view is that the consumer has generally been in a pretty good place, and maybe they're pegging that more to employment, maybe they're pegging that to the employment situation right now because everybody's working and you have a

paycheck coming in, the consumer certainly doesn't seem like we're in a much better spot than we were last year. In fact, it seems like it's starting to see some of those clouds on the horizon. Right. By the way, this is all these credit card balances at records at a time when interest rates are at multi-year highs. If there's any, I think you hit it, right, it's the employment. As long as employment stays strong, OK, consumers can probably get by. If that changes at all, and people actually can't pay their credit card balance every month, a lot of Americans don't, and they're paying these high interest rates, that's a downward spiral that can come pretty quickly.

When the credit card balance starts going up and you start running out of that limit, what do you turn to? Well, it sounds like a lot of people are turning to buy now, pay later, which is being seen as that lifeline of last resort. Maybe it can help you get your holiday shopping done. But it puts consumers and it puts the retailers at risk. We're seeing concepts like Target. Obviously, they ratcheted down guidance recently. They've seen a lot of benefit from that buy now, pay later space recently. Just going to be a very, very interesting holiday season to see how this retail picture shakes out. Let's zoom in on some individual companies. Ulta Beauty continued its gravity-defying ways.

Strong third quarter results pushed shares of Ulta Beauty up 5% this week, and up nearly 15% for 2022. Matt, we've seen so many stocks in negative territory this year, it's all the more impressive to see Ulta perform like this. I am no cosmetic expert, but man, these were impressive numbers, Chris. Net sales up 17%. Most impressive to me, me, if you look at their comp sales, up almost 15% compared to a year ago. But in the year ago quarter, third quarter 2021, they were up 26%. Ulta is doing something a lot of retailers aren't doing. They're building on that huge growth from a year ago. By the way, the comps, if you look at where it's coming from, 10.7% increase in transactions, 3.5% increase in

average ticket. The average ticket, we've seen that because a lot of retailers, price increases are flowing through. But we're not seeing the increase in transactions. Here's Ulta with double-digit growth in transactions. It's incredible. They also don't have the inventory problems. I was looking at their inventory levels, only up about 10% from a year ago, not the same inventory problems a lot of retailers are having. And then finally, if you look at the 27% growth in operating profits, the company's operating margins are actually up 110 basis points from a year ago. When companies are grappling with higher costs, labor, wages, it's so impressive. Strong third quarter results from

Salesforce were overshadowed by the news that co-CEO Brett Taylor is leaving the company. This comes one year to the day after Taylor was promoted to co-CEO by Marc Benioff. Jason, it's the second time in less than three years that Benioff has had a co-CEO leave. Yeah, I think you hit it. The big story really is Brett Taylor stepping away as co-CEO and leaving the company altogether. If you saw any of the interviews with Marc Benioff, if you heard his demeanor on the call. For a guy who was so jovial, so class-outful. Deflated. Completely deflated. Deflated is just unbelievable. I think he's really bummed out about it. I think he feels like he's watching his preferred

succession plan walk out the door. It's not to say this was around the corner. Benioff is still a fairly young guy. But I do feel like he viewed Brett as potentially that future CEO of the company at some point. Maybe not, but regardless, it did overshadow what was a strong quarter. Revenue of $7.8 billion was up 19% from a year ago, excluding currency effects and non-GAAP earnings per share of $1.40, well exceeded management's guidance that they set from a quarter ago. They're calling for about $900 million in currency headwinds for the year, something that they haven't had to deal with in some time. Speaking of operating margins, operating margin, 22.7% up from 19.8% a year ago. They

continue to really focus on cost controls, understanding there are going to be some headwinds to that top-line growth, but really working on bringing things back down to the bottom-line. Sales cloud up 17%, service cloud up 16%, the marketing and commerce up 18%. The Slack Business continues to perform well, up 46% from a year ago. If you remember, they just recently announced a $10 billion share repurchase authorization, the first one ever. They got that ball rolling, repurchased some $1.7 billion in repurchases for the quarter. Guiding for non-GAAP earnings per share, $4.93 at the midpoint. That puts shares today at around 30X full-year estimates. I think a pretty reasonable price for a well-positioned business,

but obviously one in transition now. The biggest property owner on the Las Vegas Strip just got bigger. Details after the break, so stay right here. This is Motley Fool Money. Chris Hill here in studio with Jason Moser and Matt Argersinger. Vici Properties, a real estate investment trust, is the largest property owner on the Las Vegas Strip, and that ownership stake just got bigger. Investment firm Blackstone is selling its stake in the MGM Grand and Mandalay Bay to Vici Properties. Shares of Vici up on the deal, while shares of Blackstone fell. And Matty, I am just basing this on the share prices, but it kind of seems like Vici won this deal. I think, yeah, if I had to pick a winner here,

I think Vici is the winner. And I'm sure a lot of listeners probably have never heard of Vici, but it is now, well, it was before this deal, but now certainly the biggest gaming REIT and entertainment REIT in the world. Just to give you an idea of what they own on the Las Vegas Strip, Caesars Palace, Luxor, MGM Grand, Mandalay Bay, The Venetian, and there are many more, Harrah's Properties, Excalibur. They also own the Bregada in Atlantic City, so it's not just Las Vegas. MGM National Harbor, which is 10 miles from where we're sitting right here. It is a big bet on Vegas that Vici's taking. They've already taken a big bet. It's a bigger bet now in Vegas. But they see a Vegas that's seen a 20% increase in

revenue from a year ago. Harry Reid International Airport had record passengers this fall. The convention calendar for 2023 is absolutely packed, more so than it's ever been since COVID, of course. The key advantage for the deal for Vici is that while they're acquiring these properties, which come with great cash yields, they're assuming the Blackstone debt on these deals. It's only a 3.5%, 6% rate through 2032. If they had to acquire these properties today, rates would probably be a lot higher. That's why I think Vici is getting a little bit of benefit where Blackstone is selling off a bit on the deal. Signs of life at Okta. The identity management software company broke even in the third quarter,

which isn't great on the surface, but Wall Street was expecting a big loss and shares of Okta up 30% this week, Jason. Yeah, well, you go back to the report at the end of August. Remember, the stock fell from $91 and change to $60 and change over what seemed like slowing growth concerns. Remember our preview episode, that's one where I said, don't let it fool you, even after that sell-off, the stock still looked expensive. I think based on what management is saying now and based on the business performance in regard to the profitability goals, maybe the market's starting to view this one a little bit differently now. The quarter itself was very encouraging. Revenue $481 million, up

37% from a year ago, well above their internal guidance. International now makes up 22% of the biz. They added 650 new customers, that's up 22%. And they added 215 customers with annualized contract value of $100,000 or greater. That now stands at over $3,700. Dollar-based net retention steady at 122%. And they raised their full-year outlook a tad. I think what maybe has the market even more excited was the language in the call, we expect to flip to positive non-GAAP net income for the quarter. That is just a next logical step for a business like this. It's not the finish line by any means, but again, it goes back to, I think the market

starts viewing this company a little bit differently now because they provide a very important and valuable service. We all use it. It's just a matter of time, I think, for these guys, and it seems like they've got this business on the right path. I just like the idea that Wall Street collectors are like, you know what, I think they might actually turn a profit someday. Yeah. Shares of discount retailer Five Below up nearly 15% this week after third quarter

profits and revenue came in higher than expected. Optimistic guidance for the holiday quarter from Five Below's management team also helping there, Matt. It did. If you look at the results themselves, I didn't think the results were all that great for Five Below. Comp sales were down 2.7%. Operating profits down 50%. But it was really really just beating expectations. If you looked at the high end of management sales guidance for the quarter, it was $619 million. They came in at $645 million. They had this wide range for earnings expectations of between $4 and $11 million. They came in at $16 million. I think this is Wall Street playing catch-up here, saying, hey, the story here is not as bad or below as we

thought. We're going to ratchet up our price targets and our expectations for the stock and the good guidance. But I would say I'd worry about this one a little bit, just given all the growth really here is coming from new stores. There's inventory issues. And also, part of this rise was short covering. If you look coming into the report, about 7% of their shares outstanding were sold short. So, I think this is more of a technical move. The business fundamentals themselves don't actually look that great. Third quarter profits and revenue for CrowdStrike came in higher than expected, but shares of the cybersecurity company fell more than 12% this week due to lower subscription numbers. I don't know, Jason, is that an overreaction

to a single metric, or is there more afoot here? It's hard to say. I guess it depends on what your timeline is. The longer your timeline, I think the less you need to be concerned with something like this. I think this is a perfect example of what we mean when we say the market is forward-looking and investing is all about the future. This was a good quarter by virtually every metric, but the path forward is simply less certain in regard to macroeconomic conditions. And so, ultimately, it led management to pull back a little bit on net new annualized recurring revenue guidance. I'll get to that in a sec. But in regard to the quarter itself, revenue was up 53% from a year ago to $581 million. They added 1,460 net new subscription customers.

That gives them a total of better than 21,000 subscription customers as of the end of October. That's up 44% from a year ago. They maintained full-year revenue guidance, actually raised bottom-line guidance a little bit as a lot of these companies continue to focus on maximizing efficiencies and cutting the fat, so to speak. But they did talk about elongated sales cycles due to macroeconomic concerns and net new annualized recurring revenue. They guided down a little bit on that based on that length and elongated sales cycle. I think that's what has the market a little concerned today. But, this is a company with a reputation for best-in-class solutions. They're still working toward GAAP profitability, still around 15X sales,

45X free cash flow. That's before you even account for stock-based compensation, which they have a lot of as well. It never looks cheap. The sell-off is understandable. But I think this is still a very good business. It's positioning itself for a bright future. Is cybersecurity one of those industries that you look at as an investor and think maybe the basket approach works best for investors? Personally, for me, yes. I know what I don't know, and I am no cybersecurity expert. I love the way these companies sell themselves and telling you they're the best at what they do. I can't really explain why that is the case. But for me, yeah, either a basket approach or perhaps

even an ETF might be the optimal solution for those looking for exposure to the space. All right, guys, we'll see you a little bit later in the show, but up next, a closer look at commercial real estate. Stay right here, you're listening to Motley Fool Money. Welcome back to Motley Fool Money, I'm Chris Hill. Commercial real estate loans are different from the loans for residential real estate because the debt restructures every few years. Ben Miller is the CEO of Fundrise, a crowdfunding investment platform, and he believes we have not seen the full effects of higher interest rates on that commercial debt. Deidre Woollard caught up with Miller to talk about the trends he's watching with homebuilders,

offices, and more. I don't see the future, but I believe or have a strong opinion about what's coming. So I believe we're headed for another financial crisis. It's not like 2008 or even like 2001. Maybe it's like 1987. And so the last financial crisis in 2008 was called the great financial crisis. I think this one will be called the great deleveraging. Define that for us, please. Yeah. I mean, so basically in the last 12 months, real estate borrowing, the cost of borrowing has doubled. Interest rates have doubled. interest rates may end up tripling by the end of this hiking cycle. That means that most real estate companies, most companies, any borrower who has a loan that comes due during the next

two to three years or has a floating rate loan is going to have to pay down their loan to size it to twice the interest rate. If you were paying $100,000 in interest in 2021, won and now you're going to pay $200,000 of interest, right? Your debt to income ratio is too high. So you have to de-lever the loan and the amount of de-leveraging or pay downs that's going to happen across the country is going to be, you know, I think trillions. So what does that mean for individuals? And you're seeing that both on the, on the residential side and the commercial side? I think individuals are going to be much better off. Most of the people who buy homes, buy homes with long-term fixed rate loans. And so that's basically going to spare most of the

consumer part of the market. It's really going to be the commercial or business part of the market that doesn't borrow long-term like that. The only reason people can borrow 30-year fixed is because the federal government guarantees that. It's a subsidized part of the market or non-market driven term. So anyways, most companies and most borrowers, I think their average maturity for real estate is about three years. 700, 900 days is the average maturity of a bank loan. So you're talking about a lot of loans maturing into an interest rate environment that's nothing like what we saw the last 15 years. So with Fundrise, you're still in acquisition mode. You're still adding new projects. You're adding some rental townhouses. You're adding

some build to rent. You're doing some interesting things. What do you see as opportunities from the real estate perspective here? Yeah. I mean, the biggest opportunity is providing this rescue money or I call it gap funding. So if you think if a property, I'm just going to use round numbers her property had 10 million dollars of value before and there was six million dollars of debt or seven million dollars of debt and two or three million dollars of equity now the lender is going to say you have to pay me down you have to pay down this loan by two to three million by 20 to 30 percent i think on average and the person who owns that property and say well i don't have two or three million dollars lying around i need to go get it and so then people who are willing

to provide that rescue money, it may come in the form of mezzanine debt or a second trust, or preferred equity, but it comes in basically senior to their equity. What you're seeing in markets right now is that's getting 14% yields, much, much higher yields, where last year that would have been 8% or less, depending on exactly what kind of asset you're talking about. And then some people can't get it. It doesn't matter what price. That's going to be office. Office will be unfinanceable by next year. Wow. Bold statement. Office is unfinanceable. What about potential office conversion? Obviously, we know that companies are getting rid of

office space at this very rapid rate. What about the real estate, the intrinsic value itself? How does that change as our situations are changing here? Yeah. So I've been in real estate for almost 25 years now, and I've invested in office. And that's why I fundraise at Boyd's office. That's why we don't have office exposure, because i have experience with office and so there's let's just talk about first like the context before we talk about the consequences so two factors are driving office everybody is seeing in the headlines that work from home remote work are keeping people out of office space and so the physical occupancy of a building used to be 80 you know 80 people would be in a building

at any point in time. Now, it's 40%, 42%. People are not in the building. People are saying, well, the amount of leasing is going to fall because there's work from homes, reduced office demand. Everybody's been talking about that. That's not news. But the things that people seem to have forgotten is that office is a pro-cyclical investment. When the economy is growing. Companies hire more people. People start new companies. For the last 15 years, office has been in expansion. But during a downturn, companies cut expenses, they let people go, they shutter companies, and so office space contracts. So basically, you're going to have a period where you have this secular or permanent shift to work from home and also a cyclical

downturn in office, and then this is where the problems really start to come together like a vicious cycle. When office prices come down, two really dangerous things will happen. One is that a lender or an investor is not going to know, is this problem temporary or is this problem permanent? I see a lot of problems. I don't know if this is a cyclical problem or a secular problem so then it's very difficult to price it that's problem one and problem two it's as offices get foreclosed on and that's happening real time i could name i could tell you a bunch of stories about office buildings getting foreclosed on it like the lenders losing 50 of their of the loan on the foreclosure i mean a property that's worth 700 a square foot

it's getting foreclosed on at 200 a square foot that's that's how big a loss you're talking about in terms of intrinsic value but so as basically those comps those like comparable prices hit the market the appraiser is going to say i got to incorporate all these other sale prices as part of my comparable as part of my comps and so then the lender is not going to even know how to value they're going to say i don't even i can't even value i can't get through credit committee and they just will wholesale walk away from from office they're just gonna be unfinanceable they They won't lend during a period of high uncertainty and high stress. And then, in that circumstance, what happens is things don't price based on intrinsic value.

Market failure. That's the definition of market failure, essentially. And that's where we're headed. An office is $2.5 trillion of total value. The average bank has 20% of their book in office buildings. So, office is like... And we haven't even talked about retail. which basically has been like walking dead for decade. So it's, it's really, there's going to

be parts of the market that are really ugly. So if we've got this problem with office and we've already seen a little bit of movement away from the urban core, it came back a little bit sort of post pandemic, but it seems to be the way you're talking about it more of a system-wide problem. Do you think that's going forward? What we're going to see is that movement away from cities since people won't be in the office as much. And is that you, you guys have invested in the Sun Belt. Are you still believing that that's the place to be right now? Yes. I mean, what happens in any downturn, there's a hurting mechanism that happens where people, institutions are hurts. They're really, they're not independent thinkers. That's the

definition, but one of the attributes of an institution generally. And so as office and retail become essentially unattractive and unfinanceable, they have these dollars they'll start allocating to other areas that are financeable, that are safer. They'll herd into the safer assets that are still performing. Then those are overcrowded, usually. That's basically rental, residential, and industrial. I think rental, residential probably gets the bulk of the dollars. On the ground, we own almost 20,000 residential units. We're still seeing rent growth. It was very high last year. It's come down. It's more normalized now. It's maybe 4% or 5% a year. We're seeing rent growth, and office is seeing collapsing everything.

So the dollars will seek safety and they'll then crowd to, I think, the asset classes that we're in. However, during the liquidity crisis, there probably will be some opportunistic transactions for people who are forced sellers or forced gap. They need MES to pay down their loans. And that's also pretty attractive. And so you guys have been also working with some homebuilders as well. Homebuilders are in a little bit of a pinch right now. I know that we've seen a lot of housing starts, or a lot of permits, but not a lot of starts. I feel like homebuilders are taking a pause there. What is your take on the homebuilders right now and what they're facing? Short-term, challenged. But long-term, not as bad as you might think.

So in the short-term, they had their pipelines. A homebuilder has to start their home taking the land down, start building homes. It's at least a six-month process. Their pipelines from six months ago are still coming to market. Their example of what I mean of an opportunistic buy, you could probably buy those at good prices because they can't move them. That's in the short-term, I think, some pain for the homebuilders. But in the mid-to-long-term, they really don't have the kind of uh risks they had in 2008 they got a lot of the assets and lands off their balance sheets so they'll they'll start to lay people off and they'll you'll see like you know the volume of new home construction just fall off a cliff

and that's basically we'll keep you know the home builders alive but then it'll basically create this sort of housing supply shortage it'll make it more more acute and there'll be even less housing. And there'll be this period of a few years where people aren't building enough housing and that's going to be great for people who own housing, right? But it's not so good if you down the road want to buy a house. Yeah. Especially since we never really recovered from the great financial crisis in terms of building the amount of housing we actually need. Right. I mean, that's exactly what happened last time, right? After 2008, they didn't build enough housing for 10 years because most of them laid everybody off or went

out of business. 50% of home builders went bankrupt in that period. So there was an under supply because the crisis had really sort of structurally dislocated the home building business. This time, they're much more prepared. Same thing with banks. They're much more prepared for this crisis. Dodd-Frank has made them much more conservative lenders. So usually, the people who were most punished in the last crisis are most protected in the next one. And so this time, I think you're not going to see the same systemic issues. It's going to be, I think, the non-bank lenders who are the ones who really get punished. Coming up after the break, Jason Moser and Matt Argesinger are coming back. They've got a couple of stocks on their radar, so stay right here.

You're listening to Motley Fool Money. As always, people on the program may have interests 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 with Jason Moser and Matt Argersinger. Shares of meal kit delivery company Blue Apron are down 85% this year, so maybe they need to take a page from a competitor's playbook. HelloFresh, a rival to Blue Apron, is selling a limited edition meal kit inspired by the classic Christmas film Elf. The Buddy the Elf Spaghetti Meal Kit contains everything you need to make

a pasta dinner, the way Will Ferrell eats it in the movie. Which is to say, Jason, that the kit comes with spaghetti, marshmallows, chocolate candies, and of course, maple syrup. They're going to sell this thing out, aren't they? Well, if you had told me about this without actually showing me the link, I would have said, you sit on a throne of lies, Chris. But no, this is absolutely ... I love this idea! I love it! It's a brand-building effort, obviously. Elf, I think, is quickly working its way to becoming one of the iconic holiday Christmas movies. We just watched it the other night in our house. It never fails to bring a smile to our face.

I swear to you, the thing about pasta that's interesting, pasta is kind of like tofu. It really takes on the flavor of what you cook it with. I know that it seems kind of gross in the movie, what he's doing, what he's doing. I would absolutely get this meal kit and at least give it a shot, man. I'm not scared. Well, I think it's such good timing, too, because if you think about the people who are doing HelloFresh at home, our generation, maybe a little younger, a little older, Elf was a quintessential movie, as you said. I have nostalgia just looking at that meal kit right now. I mean, you have kids, you get them this for Christmas, you've just made best friends for life.

Oh, yeah. They're loving that. And you're right, it absolutely looks disgusting in the movie. It's hilarious because of that. But looking at this, yeah, I'd give that a shot. We were talking during the break, obviously, it is the season for the Hallmark Channel. The stats around viewership for the Hallmark Channel this time of year never fail to amaze me in terms of the tens of millions of people who just, they're not watching it the rest of the year, but they've got all Christmas movies and a few Hanukkah movies thrown in there.

And the economics, Forbes did a story last year on the economics of the Hallmark Christmas movies. It's incredible. It's a cash machine for that network. They film them in Canada, they get tax breaks, it's less than $2 million per film. All the ad revenue just flows in. And you can't help but watch. You start watching one, and you know it's just, what am I sitting here for? But I have to see what happens. I have to see if Donna gets together with Bill. You have to get to the scene with the gazebo.

That's right! One script is good for 30 movies. All you have to do is just change the names and the location. Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Jason, you're up first. What are you looking at this week? One we've talked about before here, Cerenc, ticker C-R-E-N-C, had a great week. Shares up around 36% this week on earnings that came out earlier. It has matched the market over the last three years, but year to date has been brutal. That is because the The company has been subject to the supply chain concerns in the automotive market, and

they essentially go as auto production goes. The good news is, you see this company starting to benefit from things loosening up a little bit. They had a massive leadership shift here over the course of the year with a new CEO and CFO, among others. But Booking's growth was up 16% for the quarter. We're seeing encouraging partnerships, getting ready to integrate their conversational AI technology with the NVIDIA drive platform. Having NVIDIA as a partner, Matty, seems like a good thing. Not bad. Not bad. Dan, question about Serent. Leadership change, supply chain problems. Seems like a lot of headwinds for Serent these days. Well, that's 2022 in a nutshell for this company, Dan. Hopefully,

2023, we're going to see some tailwinds. Matt, what are you looking at this week? Chris, I'm looking at Extra Space Storage, ticker EXR. I've got to get a shout-out to Anthony Chavone, who's an analyst on our real estate winter service that I work with. He's done some great work on this. Currently owns and operates over 2,000 self-storage properties in more than 40 states. Not only is Extra Space Storage the best-performing self-storage REIT over the last 10 years, it's the single best-performing REIT over the last 10 years, returning almost 600%. Part of its success, it's got this really nice capital-light model. Rather than really develop and operate their own self-sourced

facilities, they like to do third-party management contracts, joint ventures. These activities really help pinpoint what markets and what assets they really want to go after. Currently pays a 3.75% dividend and has grown its dividend by almost 20% a year over the last 10 years. Dan, question about extra space storage? Those are some impressive numbers, Matty. But But what I want to know is, I used to play in bands, and a lot of times we would have all of our stuff in our practice room in storage spaces, including, at least once, an extra space storage facility. Is this something that other people, other storage companies can start doing, too? Let bands practice. I haven't heard about that, Dan,

but I think that's an absolutely awesome business model that they should definitely pursue. Dan, what do you want to add to your watch list? You know, much like practicing in a freezing cold storage unit in the middle of winter. I'm going to go extra space storage this time because, I don't know, man, something special. Something special about those memories. Right on. Tis the season. All right, Jason Moser, Matt Argersinger, guys, thanks so much for being here.

Thanks, Chris. Drop us an email, podcasts at fool.com. Hit us up with your year-end questions. That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening! We'll see you next time!