Motley Fool Hidden Gems Investing - Retail Surprises and the Future of Video Games

Episode Date: November 20, 2020

Walmart delivers big online sales. Target and Williams-Sonoma hit all-time highs. Home Depot and Lowe’s fall on earnings. Amazon gets into the pharmacy business. And Radio Shack returns! Motley Fool analysts Andy Cross and Jason Moser discuss those stories and weigh in on the latest from Intuit, Workday, Goldman Sachs, and Zaxby’s. Plus, Andy and Jason share two investment ideas on their radar: Cerence and Roblox. And Loup Ventures managing partners Gene Munster and Doug Clinton take stock in the future of video games and talk Apple, Google, and Microsoft. To get 40% off our Everlasting Portfolio service, go to Fool.com/EP Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill. 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 this week, senior analysts Andy Cross and Jason Moser. Good to see you as always, gentlemen. Hey, Chris. Hey. We've got the latest headlines from Wall Street. We're going to dig into the video gaming industry. Of course, we have a couple of stocks on our radar, but we begin with some of the biggest retailers in America. We'll start with Walmart, which heads into

the holiday season with momentum. Digital sales in the third quarter rose 79%. Jason, shares of Walmart hitting a new high this week. Jason Moser. It's no target, but hey, They did okay. They did okay. I mean, really, hats off to Doug McMillan and the team there at Walmart for, I think, continuing to invest in Walmart's digital business and not just sitting still, right? I mean, they really are moving. And I think we're seeing a lot of great results because of that. And I think another thing that we're seeing today, we've always talked about the Amazon threat and e-commerce, but really, I think what we're seeing, it's all about being omnichannel. I mean, we see that word bandied about a good

bit. But really, I think it matters. If you're that retailer that can have the physical presence along with the digital expertise, you can do so much more. We're certainly seeing that with Walmart. It's been revived a little bit here. The numbers aren't tech company numbers, but still impressive. Topline was up 5.2%, 6.1% if you exclude currency effects. U.S. comps were up 6.4%. As you mentioned, the e-commerce sales grew 79%. And I think the interesting thing is there, given the state of things today, it's understandable why e-commerce is doing so well. But even last year, the same quarter, those e-commerce sales grew 41%. So, we're seeing some nice acceleration there. And it's something that's been performing well for a

while. Costs are coming under control. And interestingly, in the U.S., you're seeing trip consolidation. So, folks are going to the store less, but they're buying more. So, we saw an average ticket increase of around 24%, but transaction decrease of about 14%. So, fewer transactions, but they're buying more. And that's kind of that pantry stuffing we've been hearing so much about. It seems like that's becoming a little bit more of a thing here as we go into the end of the year. Inventory levels are very healthy. They are enthusiastic about the Walmart Plus offering. I mean, they're not really giving a whole lot of insight there yet because it's still so new, but they continue to do a lot of really good things and the market is, I think,

rewarding them for that. Speaking of Target, Target shares also hitting a new high this week after a blowout third quarter. Same store sales up 20%. And Andy, as Jason sort of hinted at, their digital sales went through the roof. Yeah, Chris, digital sales are up 155%. That was a deceleration from a really strong second quarter of 195% growth. But that digital sales growth now equals half of their comp growth. And our comp stores, as you mentioned, Chris, up more than 20%. Really accelerated throughout the quarter. The store comps itself, in the stores, was up 10%. That's a 4.5% increase in traffic growth. So, a little bit different than what we're seeing in Walmart. And then average ticket size up 15%. So for Walmart, it was up more than

24%. So Target a little bit less, but they're seeing still more traffic into their stores. Same day services like order pickup, drive up, and ship tea up 217%. 95% of all their orders now are fulfilled by the store. So they're really leveraging to that omni-channel experience that Jason mentioned, for Walmart, Target really leveraging that. They're seeing gained market share in all five of their core merchandise categories. Sales per square foot was up 19% so far this year. They're gaining market share. They've gained the equivalent of $6 billion, Chris, in market share this year. So, really strong category growth in decor and kitchen, essentials, beauty, food comps. Seeing a lot of strength in adult beverages, which I know,

While I have not bought any at Target, I certainly have indulged in a little bit more this year. Earnings per share from their operating business is up 46%. Really nice, strong gross margins. They're seeing exceptionally low markdown rates, Chris. So, they're not marking down their products nearly as much as maybe they have in the past. And that's really been a boost for their business. Their operating margins expanded to 8.5% versus 5.3% last year. So, they're going to resume their share buyback that they suspended earlier this year, and they have $4.5 billion of that.

So, really, innovations. They have a new partnership with Beauty Ulta. They have a new partnership with FAO Schwartz. They're going to offer 70 pieces of different toys for each of the under $20, and they're making loads of investment in their technology. So, you have a business that is not priced all that expensively at 22 times earnings and 10 times operating profits, $85 billion in market cap. so you get a nice little dividend to go and it's growing at 10%, Chris. Overall, Target looks to be in a really good shape right now. One minor quibble on my part, and maybe this was too much to hope for, but Brian Cornell, CEO of Target, Doug McMillan at Walmart, we didn't really get a lot of color from either one of them in terms of what they're expecting this holiday season. Like I said, that might have been a little too much to hope for,

given how guidance has gone away for a lot of these companies, but I was looking for that. Yeah, they're expanding. Chris, one thing like many retailers, they are expanding that Black Friday timeout. Target will be closed on Thursdays. They're going to open regular hours on Black Friday, but they are extending all of those deals and whatever deals they are offering. Like I said, they're not really doing a lot of markdowns throughout the month of November into December. So really spreading that out to be able to benefit from the omni-channel operations. From general retail to home improvement, Home Depot and Lowe's both out with third quarter reports this week. Similar stories, Jason. Profits look good, same-store sales

up. Both are investing in customer and employee safety. And one more similarity, shares of both falling this week. Yeah, fell a little bit this week, but still doing well overall for the year. Both companies' shares are outperforming the market and really tracking each other pretty nicely. In regard to Home Depot, it really does feel like shorter than unforced error on the part of management. I just don't know what stops this train. I mean, this is a really, really good business that participates in one of the most attractive market opportunities out there, to my mind. But if you look at the numbers, sales of $33.5 billion for the quarter, that was up 23.2% from a year ago.

Comp sales for the quarter were positive 24%. Comp sales in the U.S. were positive 24.6%. Earnings per share, obviously, the growth they're tracking with that performance. And comes to these businesses, oftentimes we're looking again at the tickets and the transactions. The comp average ticket for Home Depot grew 10%, comp transactions grew 13%. But the one point that really stood out to me was during the third quarter, big ticket comp transactions, those that are over $1,000, there was 23% growth there, which is just really impressive. You go to Home Depot, you know you need something, even if you don't know specifically what you need, but you you know you're going in there, you're preparing yourself to spend some serious money. And that

shows through in that metric there. And with Lowe's, I mean, a lot of similarities there. Total comps up just over 30%. They saw strength in DIY, the do-it-yourself, and the pro customers. Lumber has been a big driver this fall. I think with the warmer weather, we've seen a lot of activity out there. The pro business was up 20% for Lowe's, they're making a lot of investments in there. But they've seen, I think, how big of a driver it can be for Home Depot, and they're wanting to participate in that opportunity as well. So, 106% growth on Lowe's.com business. And when we talk about transactions and tickets, they saw transaction growth of 16.4% and ticket growth of 13.7%. So, very similar stories, very understandable why they're

succeeding. And I don't see that really changing anytime soon. Real quick, Jason, before they came out with earnings, Home Depot announced they're buying HD Supply for $8 billion. They had spun that out a dozen years ago or so. You like this move? Yeah, I do. I think with something like a Home Depot, you're owning that stock primarily for the dividend. It's not something where the capital gains are just going to be massive because it's already so big. Although it is a big market opportunity, this, I think, adds to that market opportunity. It's a $55 billion marketplace as they see it. The maintenance and repair and operations, that MRO business, it's a really attractive one. We've seen a lot of success stories come out of that market in the

past. Bringing that into Home Depot's physical infrastructure, giving them that distribution and that capability, I think only helps them in the long run. I think it's a pretty good deal. Shares of Williams-Sonoma hitting an all-time high on Friday, after digital sales in the third quarter rose a record 49%. Andy, we've been talking omni-channel strategy on the show so far. William Sonoma has been doing this for a while now. Even with that experience, you look at this quarter, it's impressive. Yeah, Chris, they started this a few years ago as they started to push, but it was very slow because so much of their business is still in their stores. I think pre-COVID, 80% of their business basically came from their stores.

That's almost now completely reversed. As you mentioned, revenue is up 22.4% to $1.8 billion. That was far ahead of the analyst estimates at $1.6 billion. Looking at their comparable brands, that was up 24%. And that was an acceleration from 10.5% in the second quarter. So you saw growth in Williams-Sonoma up more than 30%. Pottery Barn up more than 24%. Pottery Barn kids and teens up to the same, about 24%. And West Elm, their furniture business up about 22%. So, as you mentioned, the e-commerce business up almost 50% and an acceleration from the second quarter. So, a lot of excitement going into that e-commerce business. Their store comps were down 11%, but they actually saw acceleration throughout the quarter, Chris. So, it started worse and

ended at about a negative 11%. But what was really impressive is what this means for the profitability. Their gross margin saw four percentage points increase, benefiting from lower occupancy costs, offset by shipping and fulfillment costs as they continue to move more and more to that e-commerce. Their operating margin expanded to 15.6%. That's a record high and a double from last year. Their EPS was up 22% in crushed estimates. The number was at $2.56 versus $1.56 estimate. So, really, a lot of initiatives that they put forth are starting to come into play. And they've been benefiting, obviously, as more and more of us have been at home and looking to beautify our houses, improve our decor, and that's benefiting for

West Elm. Interesting, Chris, they also have been investing in the business-to-business market, which they see as a billion-dollar sales opportunity for them. Right now, that's at about $300 billion. So, while most of their business is on the consumer side, they really are starting to push a little bit more into the business-to-business. Right now, things are looking good for Williams-Sonoma. $8 billion market cap, sells at six times operating profits and a 15 times earnings, so really not that expensive. You can't expect really high, super high growth, but you get a little 2% yield deal with it. Coming up, we go together like peas and carrots, like peanut butter and jelly, like

investment banking and fried chicken. We'll explain that last one after the break, so stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Andy Cross. Intuit started its fiscal year off with a bang. First quarter profits for the financial software company tripled. Shares of Intuit basically flat this week, Andy, but it has been a good year. Yeah, revenue is up 14%, Chris. Earnings on the adjusted side more than doubled in crushed estimates. The guidance was pretty good at 8% to 10% for the fiscal year. Earnings per share at $8.48. At the midpoint, that's ahead of estimates. They continue to see some nice growth in their small business and self-employed.

Revenues there were up 13%. QuickBooks accounting was up 28%. Their QuickBooks online business was up 17%. International up 50%. That ecosystem, they continue to talk about the strength with that. And the small business was up 24%, a little bit of a slowdown from Q4 with some lower retention. That's something I'm watching. Continue to make these big bets in AI and connect people and really become the center of small business for accounting and financial matters. And they have the credit karma acquisition coming up, and it's going to be interesting how they play along with that. So yeah, pretty good quarter for Intuit, but nothing that really lit it on fire was a really massive surprise. It was a bad week for pharmacy stocks.

Shares of CVS Health, Walgreens, Rite Aid, and GoodRx all falling on the official launch of Amazon Pharmacy. Yes, Amazon's newest service enables people to order prescription drugs, have them delivered to their home. Jason, this is just one more thing built into Amazon's prime service. Yeah. This is likely an overreaction to an extent. You look back to when Amazon made the Whole Foods acquisition, for example, and grocery stores writ large, shares plummeted. They recovered. It took a little time. This is probably going to be somewhat similar to that. CVS and Walgreens, companies like that, they're a bit more protected. They're big, obviously have a very large presence within this industry, and they rely a lot on those

pharmaceutical sales. Now, it's interesting with GoodRx, though. I think the selling in GoodRx was a bit more rational. At least, I understand it more. When you look at GoodRx and the way it makes its money from its core business, from pharmacy benefit managers, it's a free product for consumers. Why does that matter? Well, it matters because ultimately, Amazon is looking at least to potentially cut pharmacy benefit managers out of the equation, out of the value chain here and work directly with health plans and employers. If something like that happens, it could certainly threaten GoodRx's revenue stream. And so, I understand the trepidation there. Clearly, GoodRx's CEO feels like that's less of a competitive threat and more of a

complimentary offering. I appreciate where he's coming from. It'll all depend really on if Amazon is successful with this initiative. And given everything that they've done and their expertise, companies, I would not bet against them. Workday's third quarter results were better than expected, but the software company's guidance for the fourth quarter caused shares of Workday to fall a little bit on Friday. Help me make sense of this, Andy. Revenues were up 18% for the quarter, Chris. That's a little slowdown from a 20% growth last quarter. Their subscription revenue, which is the bulk of their business, almost 90% of revenues, was up 21%. Again, a little

bit of a slowdown, but like you mentioned, Chris, the kind of guidance for the fourth quarter of their fiscal year was for subscription revenue growth of 18%. That's a deceleration from before and the revenue growth of 22%. So I think some of the concern though, Chris, was more on like not giving the guidance for fiscal year 2022. And a lot of that is just because they're seeing this uncertainty around COVID and around expenditures and they provide the human capital resource management software and with companies just looking to be very careful in how they're spending that and clients that are signing up right now and how much we'll continue to spend next quarter. A little bit of concern from Workday on how much growth they will see

next year. I think that's weighing on the stock, especially as they continue to talk more and more on the conference call about that issue. Based in Georgia and specializing in fried chicken, Zaxby's is one of the fastest growing restaurant chains in America. That growth will probably continue in 2021 now that Zaxby's has teamed up with Goldman Sachs. The investment bank is buying a significant stake in Zaxby's. For more on this, we turn to the Georgia native in the group, Jason Moser. Is this investment warranted? Listen, I think yes. I know that this show, the conversation when it comes to chicken is always focused on Chick-fil-A or The Jangler. Mac, listen, as good as The Jangler can be,

Zaxby's doesn't get enough attention. I think as someone who's been to Zaxby's enough times, man, it's really good. I dare say, I think I actually might even put it above The Jangler. I know that sounds crazy coming from me, but it's certainly possible. I can understand Goldman's attraction there. The biggest challenge is going to be trying to take this brand and grow it beyond its Southeastern roots. That was the big challenge for Bojangles when that company went public and they weren't really able to pull that off. Zaxby's is a bit more modern. It's a bit more of a modern flair to it. I think they probably could stand a better chance at it becoming a national brand. Goldman has a lot of money and a lot of levers to pull. This is definitely a good thing for

Zaxby's, and hey, it very well could turn out to be an IPO at some point here. Hey, listen, I would be interested. I was going to say, real quick, Andy, you got to figure if Goldman Sachs is involved, Zaxby's is probably going public, maybe 2022? Well, it's been a huge hot IPO market this year, Chris, so maybe they hope to continue with that and maybe it could bring some of that spice over to the IPO market too. All right, guys, we will see you later in the show, but coming up next, video gaming is not just for kids, it's for investors. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Gene Munster and Doug Clinton are

the co-founders and managing partners of Loop Ventures, a venture capital firm that invests in frontier tech companies. Motley Fool analyst John Rotonti recently talked with the two of them about some of the video game companies they like best, as well as what they think of how tech giants like Apple and Amazon are investing in this space. But we'll start with Doug Clinton's bold case for investing in video gaming. Obviously, we broadly have three components to our thesis. The first is that games are becoming much more like SaaS software than they had been in the past. You know, you don't just go into a GameStop and, you know, buy GTA 5 anymore. And that's sort of the end of your relationship from a paid standpoint with the

publisher. People now, there's in-game content that you buy. There are often season-long subscriptions that you buy and there are multiple seasons. One game really can become this recurring revenue mechanism that really wasn't the case in the past. We think about gaming five, six years ago. If you think about the multiples of gaming stocks versus SaaS stocks, SaaS stocks trade at about a 2X higher multiple right now than gaming stocks. I think if that corrects over time, obviously, that gives tremendous upside to gaming stocks. We do think it should correct, just like Apple historically was given a hardware multiple. I think investors, and to Gene's credit, he was the one who really noticed the rift there and said that, hey,

Apple should trade more like a SaaS company, now it does today over 30X forward earnings. We think the same thing should happen in gaming. The second thing is that gaming is largely under-monetized. We looked at actually the cost per hour of entertainment for consumers, and Netflix costs about $0.37 per hour for the average user, Spotify about $0.33 per hour, and Fortnite, League of Legends, the games that are free to play for the most part, they cost less than $0.16 per hour right now. They're about half of what we see for Netflix. we think that that means they're very under-monetized because people are actually more engaged with those games than they are with Spotify, than they are with Netflix. We think over time

those pricing risks should correct themselves. Then finally, our last piece is that games are the future of social networking. If you think about Fortnite, I think that they are starting to show that future already. For millennials, for Gen Z, they have really three places they spend time, it's home, it's school, and it's Fortnite, and now they probably don't even spend time at school, it's just home and Fortnite. I think as gaming becomes more accepted amongst the younger generation, they expect to have more interactive experiences in their social world and to connect with their friends. We think the next Facebook, whatever that ultimately looks like, will be very game-like. It won't be this scroll and look at pictures and just like things

like we see today. Sticking with you for a second, Doug, Loop Ventures was a private market investor in Unity Software before it came public and had its IPO. You've had a while to think about that business. What is your investment thesis in Unity? We love Unity. I just gave you our thesis on gaming. I would say that is piece one, is bullishness on gaming as an industry. Unity has, we think, something like 50% market share amongst non-AAA in-house developed 3D software for game developers. Point two is that that type of software creating these virtual environments, these 3D worlds that are movable and have motion and physics, we think that's very relevant for other industries like

architecture, like manufacturing. And so, we're starting to see these other types of customers, industrial customers, come in and use Unity software. And we think it's a huge market opportunity. If you sort of comp it against Autodesk, Autodesk has somewhere around four or five million annual subscribers to its software. We think that same size market opportunity exists for Unity in this sort of industrial opportunity that they're just starting. Go back to our curves. This is a new curve for them that they're just starting. and then our third piece of the thesis is augmented and virtual reality something we've been bullish on for a long time i think ar and vr has taken longer than a lot of investors have hoped

but we're still optimistic for the future we don't know how long it's going to take until those technologies really have an inflection point could be five years but when they do unity is really the tool to develop in ar and vr and so we see that as actually a third curve if we keep using our growth curve model that sits out after they start to penetrate this industrial curve. We see three consecutive curves for Unity and that's why we're still bullish. Three curves, better than two. I love that. Gene, do you see a path to profitability, GAAP profitability? If so, what is your rough ballpark of what you think Unity's operating margins or cash flow margins or whatever margin you want to give us could be?

The path to profitability is obviously dependent upon how big of a market these can be, these different curves and where they take off. In terms of how to get there and how long it'll take to get there, it's probably a year to a year and a half out of sustained profitability. That's just simply those revenue growth rate numbers and the amount that they'll have to to invest in the business. I don't think that that doesn't change our optimism, that negative piece around profitability. Because ultimately, this should be a higher margin business. I think this should have margins that are 30%, 40% type plus margins. And ultimately, if we can get to Microsoft Plus type margins, I think that the story will be rewarded. The key for us is less

about what that margin target is. It really comes back to some of those growth curves that Doug talked about earlier, is that if we are right on getting that growth number right, this is something that we have observed for a long time, is that we get that right on the top line right. I think that the bottom line will eventually take care of itself. In the case of Amazon, it's gotten the top line right. The bottom line has never taken care of itself, but investors are confident that that will eventually happen because the top line is so strong. When we think about unity, we think it's a similar type of a curve where it's just such an open-ended opportunity. We're comfortable in this gray area around profitability, lack of profitability in the

near term because we believe strongly in the future. If I would just want to emphasize something that Doug had said earlier, too, about Unity, that his third and final piece, you mentioned it too, John, about AR and VR, is that we're believers that this is fundamentally going to change how humans communicate and interact. And it feels maybe distant from reality right now, given that tech is still nascent. But if you're going to benchmark us, and let's say we come back in two years and we have a conversation about AR in particular, I think that the consensus will be that this is moving in a direction more of the fabric of how consumers are using tech, and I think that Unity will continue to appreciate as

that reality starts to unfold. Doug, do you have another gaming company that really excites you right now in addition to Unity? If so, what is it and why do you like it? We do. I'll give you two things. is, thematically, we love the e-sports space. Now, there's not really an easy public way to play that. I think the companies that we're most interested in e-sports are still private. But the public company that we have been tracking very closely is Take-Two. If I tie that back to our comment around gaming and social networking being the future of gaming, we actually think Take-Two has the best chance at being the publisher that ultimately delivers

that network. The reason is simple. They are, in my opinion, the best developer of digital worlds of any game publisher. Look at GTA V and just the GTA, I think, franchise in general. It is as close to a real world as anyone's ever created. World of Warcraft, that's a different kind of world. Fortnite's a different kind of world. I think that this social world that we ultimately want to spend more time in in the future probably resembles something closer to the real world than something that's more cartoonish. And so that's our bet on Take-Two is whether they see it yet or not, we don't know. But I think over the next five, 10 years, they have a real opportunity to turn GTA into not just a game, but a place where people hang out, they interact almost like in real

world. There's this fun little kind of social media thing that happened in GTA 5, which is, by the way, a seven-year-old game, which is incredible. During the pandemic, it was called Purple Gang, Green Gang. There were these makeshift street gangs, essentially, of kids that you chose a side, you were purple or green, and you would go and you would rumble in the streets and you would do things together. Not promoting gangs in any way, but the idea of going into a digital world and doing something with your friends akin to something that would be happening in the real world, I think it's really powerful. There's something there that I think is worth digging into more as it comes to Take-Two. Gene, Microsoft is really leaning

into gaming. It has Xbox, Minecraft, Flight Simulator, and it recently launched Xbox All Access, which I believe gives users the Xbox hardware plus access to over 100 games for somewhere around $25 per month. Then it recently spent $7.5 billion to acquire Zenimax, which is the parent of Bethesda, which is one of the largest private game publishers in the world. My question is, which of the other game offerings from the other mega cap tech companies excite you the most? Is it Amazon with Twitch and Luna? Is it Google with Stadia? Is it Facebook's new gaming offering for mobile, or is it Apple Arcade? Twitch is my simple answer.

And part of the reason is that they're doing something that those other companies are not doing. I mean, they're ultimately trying to create titles, and that's good. And we talked about Take-Two and why we love Take-Two and their content, their titles. But I think what's unique about Twitch is just that idea of being kind of a venue, a platform, an engagement piece. all the right buzzwords around this. And I still believe that as we fast forward over the next decade, it's hard to predict which titles are going to be the hits. It's easier to predict that the theme itself, gaming as a core case for anyone under the age of 25 for entertainment, you know, that is an easier path to predict. And I think Twitch is probably the best

suited to capitalize on that. And then they could get in their own games too, but just that the ability to bring everyone together, I think is a massive opportunity. So if I had to pick one, it would be Twitch. Yeah. Doug's take on that too. We haven't discussed it. What do you think, Doug? I'd rank it quick. Amazon, Google, Facebook, Apple, actually the order you gave it in in my opinion same reason i think twitch is such a powerful platform people want to stream kids want to stream and get attention that way i think that tie-in is really powerful google to me has uh you know the ability to deliver incredible streaming for stadia and then facebook i think has the optionality around pulling in your social network since it's already

built out i think that's their value add we'll see how it plays out but i would put amazon at the top This is a rare chance when Apple's at the bottom of the list of something, and I agree and I'm okay with that. Does it matter that Arcade is not a big deal yet? In itself, it doesn't matter. If they continue to advance services and other services that don't matter, I think another one that doesn't matter is Apple News. I think they need to collectively add these up. The simple takeaway is it really doesn't matter. What matters most, I don't want to get off the gaming topic, matters most is their ability to build reoccurring revenue within their

hardware. This doesn't have anything to do with Arcade or Apple News. If you want to learn more about what Gene Munster, Doug Clinton, and their entire team are up to, just go to loopventures.com. Up next, Andy Cross and Jason Moser return with a couple of stocks for your watch list. Stay right here. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here once again with Jason Moser and Andy Cross. Guys, the shack is back.

Radio Shack has been bought by Retail Ecommerce Ventures. They plan to relaunch Radio Shack as an online business next year. Andy, just in time for Radio Shack's 100th anniversary. I don't know which I'm more gobsmacked by, that RadioShack is coming back or that RadioShack started in 1921? Yeah, it started in your backyard, Chris. It started in Boston when I think maybe a couple of brothers started an electronics store. So, yeah, it's almost 100 years old. Actually, if you Google RadioShack, you'll see it pops up like a site that you can look at. But I think generally, it's, again, more and more of this push like we saw with Williams-Sonoma. They're move, more and more retail companies are going to move online. And that's a huge advantage for

their cost structure and allows them to be able to provide very quick service without the overhead. So, it'll be interesting to see how this plays out. RadioShack, they are some kind of brand. There's some brand value in there. I'm not sure how much this firm paid for that, but there is some brand value and what they can do with it is to be determined. And obviously, there's a lot of competition out there. We get so much of our stuff shipped directly from Amazon and other players. It's not a not competitive space, but if you're going to do it with that brand, this is the way to go. All right. Two quick announcements before we get to the stocks on our radar. First, next week, a tradition unlike any other,

it's our annual Thanksgiving special, so please stay tuned for that. It's the one show during the year where we actually have a sound effect. Second, if you've ever wondered which stocks Motley Fool CEO Tom Gardner owns. Good news, you can invest right alongside him in our Everlasting Portfolio service. It is backed by more than $10 million of The Motley Fool's own investment capital. Again, these are the stocks that Tom holds in his own portfolio. You can get more details on the Everlasting Portfolio service by going to fool.com slash EP, E for Everlasting and and P for portfolio. And listeners to this show get more than 40% off the regular price of this service. Again, go to fool.com slash EP. 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 Moser, you are up first. What are you looking at this week? Sure. Yeah, it was a good week for Cerenc, ticker C-R-E-N-C. And listeners may remember, I've talked about this company before. it's the one that split off from Nuance last year. They focus on conversational and visual-based AI, artificial intelligence for the automobile. Reported another very strong quarter, record bookings backlog is now greater than $1.8 billion, grew revenue 21% from the previous quarter. One of the things that I've been keeping an eye on with this company was its ability to develop more recurring revenue streams. They do a great job of getting the technology

in the cars, then it really becomes a matter of going from that one-time transaction and developing more of a recurring revenue stream. They're showing that they're able to do that through their Sarens Connected services. They're signing some more deals with suppliers or providers there. It's just another encouraging quarter. It's been a tremendous performer for us in both of the services that I run here at The Motley Fool. Very excited to see what the future holds for Sarens. Dan, question about Sarens? Absolutely, Chris. Jason, when it comes to automated driving, are you ever going to get in a fully automated car and let it drive you somewhere?

I don't like to ever say never. I would assume probably so, but I actually enjoy the act of driving. Maybe that's an unpopular opinion, but I enjoy driving. The more I can drive, I feel a little bit better about that. Andy Cross, what are you looking at? Dan and Chris, a true radar stock because it's not yet public, but it did file its paperwork. Roblox, R-O-B-L-O-X, has filed its S-1 this week. I'm really interested in learning more about this business. It operates that free-to-play gaming and developer platform with more than 30 million daily active users. So many 9- to 12-year-olds. They say two-thirds of 9- to 12-year-olds are on their platform. They have 18 million different experiences that you can join. 31 million daily

active users. That was up 80% from a year ago, Chris. And hours played this year increased by more than 100% to 22.2 billion, 2.6 hours per day, Dan. So I think Roblox, when it goes public with a symbol of RBLX, will be one to keep on your radar. Dan? Yeah, Andy, you're a dad. Any Roblox users in your house? Oh, yes. I've tried to cut it out at one hour per day, but it's really that social platform, Dan. And so far, I'm good. They're not up to 2.6, and I hope it stays below that. What do you want to add to your watch list, Dan? Chris, you know I'm a big fan of those IPOs. I'm going with Roblox. All right. Andy Cross, Jason Moser, guys, thanks for being here.

Thanks, Chris. That's going to do it for this week's Motley Fool Money. The show is mixed by Dan Boyd. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.