Motley Fool Hidden Gems Investing - Software, Retail, and Trex CEO Bryan Fairbanks

Episode Date: March 3, 2023

When the overwhelming majority of your business is in the United States, you have to have a plan for growing internationally. Trex CEO Bryan Fairbanks and his team have just such a plan.  (0:21) Jason Moser and Ron Gross discuss: - Whether Costco is ready to increase membership fees - Salesforce focusing more on profitability - Seeing light at the end of Okta's tunnel - How "it's all ball bearings" for C3.AI - The latest from Target, Lowe's, Best Buy, and Zoom Video (19:11) Trex CEO Bryan Fairbanks discusses his company's opportunities to expand outside the U.S., the housing market, and what informs the guidance Trex offers to Wall Street.  (35:00) Jason and Ron return to share two stocks on their radar: Samsara and T. Rowe Price. Get a copy of our new free report, Top Stocks For Rising Interest Rates, by going to fool.com/interest! Stocks discussed: COST, CRM, TGT, LOW, OKTA, AI, BBY, ZM, TREX, IOT, TROW Host: Chris Hill Guests: Ron Gross, Jason Moser, Bryan Fairbanks Engineer: Rick Engdahl Learn more about your ad choices. Visit megaphone.fm/adchoices

If you like your investing analysis with just a side of movie references, you're in the right place. Motley Fool Money starts now. Everybody needs money. That's why they call it money. Chris Hill. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill. Joining me on the show, Motley Fool Senior Analysts, Jason Moser and Ron Gross. Good to see you as always, gentlemen. Jason Moser. How are you doing, Chris? Ron Gross. We've got the latest headlines from Wall Street.

TREX CEO Brian Fairbanks is our guest. As always, we've got a couple of stocks on our radar, but we begin with a big week for big retail. The holidays were decidedly mixed for Costco, second quarter profits were a little bit higher than expected, overall revenue a little bit lower. Shares of Costco down about 3% or 4% this week, Ron, which is not a lot, but this did seem like a good quarter for them. The quarter itself was pretty solid, but as you noted, revenue and comp sales were a bit lower than hoped for. When you're priced at more than 30 times earnings for a retailer, you're going to get smacked a little if you don't put up numbers that at least meet expectations, and that's what's happening here. But in a vacuum, the quarter remained perfectly

fine with net sales up 6.5%, comp sales up 5.2% with 5.7% in the U.S., so pretty good. Traffic was up 5% worldwide, 3.7% in the U.S., and the average transaction was up slightly worldwide and even better in the U.S., up almost 2%. So not too bad there. Membership fees are very important to this company because most of that falls right to the bottom line. That's how they make a significant portion of their operating profits. Membership fees up 6.2%. One of the troubling areas was e-commerce, which was down almost 10%. That's reflecting softening demand for big ticket discretionary items, things like TVs, which account for over half of those online sales. We need to keep an eye on that. Renewal rates,

Costco continues to offer a great value proposition for members. People renew time and time again, 92.6 percent renewal rates, very, very important, net income up 13 percent. All pretty good. No guidance offered as usual, but they did say that they saw inflation coming down as the quarter went on, even more so towards the end of the quarter. That's some positive indications, not just for Costco, but perhaps for inflation watchers in general. They're going to raise the membership fee this year, aren't they? I mean, if history is any guide, this is the year for them to do that. Yeah. The company has averaged five years and seven months between membership price increases,

and that puts us at last January, just a month and a half ago or so. Yeah, I would expect that sometime in the near future. Shares of Salesforce up nearly 15 percent this week after the cloud software company's revenue was solidly higher than expected in the fourth quarter. Salesforce CEO, Mark Benioff. Jason, he sounds like someone who is increasingly focused on the company being profitable. I think that's fair to say. This was a much-needed quarter for Salesforce and probably even more so for Mark Benioff. I think it's less about the actual quarter, which was good though, and more really about the guide

going forward because we're getting signs that Benioff here is paying attention to the activists rumbling that have been going on over the past month or so. But when you look at the numbers, the quarter was a good one, revenue of $8.38 billion that was up 17% from a year ago, excluding currency impacts. Non-GAAP earnings per share, $1.68. There was a mark-to-market write-down in some of the company's strategic investments that knocked about $0.25 off that number. But really going back to that guide, I think that's what has the market really excited about the future here. Revenue itself guiding for $34.5 billion to $34.7 billion in revenue for the year up around 10%. But when you start getting down to that bottom line, that's when it gets

more exciting. I think for investors, non-GAAP operating margin guidance around 27%, that would be a 4.5 percentage point improvement from this past year. Further, they ramped up the repurchase program from $10 billion to $20 billion. Benioff came across much more as an operator this time around than what we're used to. I think the focus on operational efficiencies, cutting the fat, boosting margins and ultimately shareholder value through things like share repurchases, refined stock-based compensation goals. Those are all being received very well. These are good signs. Granted, it likely took some of that activist pressure really to get the ball rolling, but it is the right thing to do and it's good to see that he knows this. I think the thing that

investors want to keep an eye on is that sense of urgency. There is this sense of urgency in the call where he's putting the cart before the horse, wants to become the biggest, most profitable software company. They're trying to accelerate this plan two years ahead of schedule. That's great. I love the enthusiasm, but sometimes that can force you to make some short-term decisions that drive the numbers, which can have dire unintended longer-term consequences. Just keep an eye on that, but absolutely a good quarter for the company and what Wall Street wanted to see. Let's go back to retail. Target celebrated the holidays by selling a lot of non-holiday stuff. Fourth quarter profits were higher than expected, driven by household items,

health and beauty, and groceries, Ron. Shares flat for the week in part because of the conservative guidance for the year ahead. Yeah. As you say, better than expected results, but still somewhat weak on cautious spending from consumers. The story here remains that they're still working through their excess inventory from the buildup during the pandemic and the discounting that's necessary to move that merchandise, especially bigger ticket items like televisions. They're making their way through that, but it doesn't happen overnight. Here revenue is only up about 1.3 percent, so somewhat lackluster. Comp sales up even less than that, 0.7 percent for the quarter. Increase in guest traffic offset by a decline in digital

sales. Their same-day services that they offer, in-store pickup, drive-up, the shipped offering, that represents more than 10 percent of sales. That was up about 4.3 percent, not too bad there. As you mentioned, strength in several of the categories including beauty and essentials. sales. Operating margins were weak, lots of costs in there, inflationary costs, higher merchandise costs, higher wages, even higher inventory shrink, which is either shoplifting related or merchandise that for some reason or another can't be sold to the consumer. To overall adjusted EPS down 41%. Again, it's expected, but it's weak at the same time. aren't expecting a steep improvement in the business anytime soon. Returning to pre-pandemic

profitability could take nearly two years is what they're saying. I remain a fan of this company, but it's going to take some time for this to work out. Nineteen times earnings, 2.6% yields, it might pay to wait around and see how they do. Continuing the theme that we've been hearing from major retailers. Lowe's also issued cautious guidance for the year ahead. This is on top of fourth quarter revenue being lower than Wall Street analysts were expecting. Though, when you consider how much lumber factors into Lowe's business, Jason, I'm not sure why anyone was particularly surprised by this. Yeah. The home improvement companies play into a very large and long-term market opportunity, obviously. Lowe's is certainly

going to get its piece of the pie. I wouldn't call this a great quarter by any stretch, it wasn't bad given the current state of things. The numbers revenue, $22.4 billion, it was up 5% from a year ago. Comps down 1.5% with U.S. comps actually down 0.7%. Though it's worth noting that management did see these comp trends start to improve meaningfully in January after the holidays. Maybe people got that holiday spending out and then reprioritized the home stuff at the beginning of the new year, but ultimately adjusted earnings per share of $2.28. That was adjusting for some costs in the sale of their Canadian business. So long Canada, we hardly knew you. No more lows there for Lowe's. But hey, listen, moving

forward, average ticket was up 4.8 percent. That was driven partly by product inflation in higher pro sales. That was offset by transaction declines, however, 5.5 percent. Very common see those two metrics play against each other in these types of environments. They did see some encouraging growth in the pro business, 10% growth there. They also noted that 70% of the pros surveyed are booked out as much or more so than they were in January a year ago. It does look like demand in this space is hanging in there. It's been a challenging 12 months for the company with the stock down around 16% or so. But Ellison has continued bring that share count down. It's down 27% now since he took over in 2018. That's going to

continue, so hopefully it'll be another avenue to return some value to shareholders. But this seems like something to watch, not just with Lowe's, but with Home Depot and other major retailers. This thing you touched on, Jason, about what is driving the comp sales, and so much lately for so many retailers, it has been inflation. It has been higher prices rather than a massive uptick in traffic. Yes. You mentioned lumber, and I think that's an important point to note there because when you see lumber inflation start pulling down, yes, that impacts their top line, which can be seen as bad, but the flip side of that, it actually helps margins. We pointed that out with Home Depot a week or two ago,

and that same dynamic is in play for Lowe's as well. After the break, we've got the latest in software, AI, and more, so stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Ron Gross. It was a good week for Okta shareholders. The Cloud Identity Software Company wrapped up its fiscal year with a strong fourth quarter report and nice guidance for 2023. Shares of Okta up 16% this week, Ron. Ron Grossman. Yet still 50% off from its 52-week high. It's been a rough ride for Okta over the last couple of years. We had a breach by a hacking group, integration problems with the acquisition of Auth0. Obviously, all this taking place during

a slowdown in technology spending. But I think we may be seeing some light at the end of the tunnel here. This was a solid quarter with revenue up 33%, subscription revenue up 34%, backlog up 12%. They recorded record operating cash flow of $76 million. That is a record, but it's not that much money for a company of this size, so just be aware of that. Free cash flow $72 million. They are bringing in cash, but of course, they need to continue to do that and grow that to support the stock. Seventeen percent growth in customers is a nice way to do that. Customer base stands at 17,600 right now, reducing headcount by 5%, trying to reduce costs. Guidance was solid, as you noted, 16% to 17% revenue growth. That puts them at around six times sales,

if that's the metric that floats your boat. But it's still a sales metric, not an earnings metric. C3 AI posted a loss in the third quarter, but it was much smaller than expected. C3 AI's revenue was also higher than expected and shares of the enterprise AI company up 25% on Friday. Jason, I know they come by this honestly, they are in the business of artificial intelligence, but I also think it's smart of them that their ticker symbol is AI. I mean, maybe it helps, doubt that it hurts. Oh, it goes in the plus column. For now. You remember in Fletch, I mean, we're dating ourselves here, of course. You remember in Fletch, it's all ball bearings

nowadays. Well, Chris, it's all AI nowadays. All you have to do is say it and the market just goes running right towards you. Clearly, they're benefiting from this narrative and I don't think there's any denying AI's opportunity in the coming years. This company should benefit from that. The performance for the quarter was encouraging. Revenue of $66.7 million exceeded their internal guidance. Of course, they're still chalking up losses, that's no surprise, but they do remain on track to hit their target of non-GAAP profitability by the end of fiscal 24. That's coming up soon. The customer count increased 8% for the quarter. I think it's really important for investors to note, you got to remember this is a business still in transition.

They recently made the move toward a more consumption-based revenue model in order to better align themselves with their customers' needs. This is going to play out on the financials in the coming quarters. It impacts growth, it impacts that annual recurring revenue, and it's all to be expected though. They've been very explicit with this. But they continue to execute on their partnership strategy, expanding relationships with the bigs like AWS, Google Cloud, and Azure, along with companies like Accenture and Booz Allen Hamilton, not to mention one of of the biggest customers on the planet, the USG, that's the U.S. government, Ron. Thomas Siebel said on the call, CEO and founder Thomas Siebel said, there's a genuine optimism in

the marketplace for our solutions and the overall business sentiment appears to be substantially improving. That's a market change from just a year ago when really they were talking about lots of headwinds. I think at the end of the day, once this company gets to profitability, sustainable, profitable. They're talking about steady-state operating margins in the 20% range. There's a lot of potential here, but I think one thing you got to keep an eye on here, it's a young company, keep an eye on stock-based compensation. It's a young business. These aren't unique concerns to just them, but history shows the market will only put up with it for so long. If you don't like it, you can always

put it on the underhills. Best Buy's results in the holiday quarter looked good, but they took a backseat to the fact that Best Buy's guidance for 2023 calls for a revenue drop in the low to mid-single digits. Where do you want to start, Ron? I wouldn't necessarily use the word good when describing these results, but they were better than expected. But you are right, the guidance was really hard to get excited about. Take you through some of the metrics, comp sales down 9%, percent. Largest drivers were declining computer, home theater, appliance, and mobile phones. That was partially offset by some growth in gaming and tablet categories,

but really weak for the most part. Domestic comp sales down 13 percent, adjusted operating margins down to 4.8 percent from 5.1, so also getting hit on the margin line. That's due to lower product margins, partially offset by favorable service margins. That's looking pretty good from a service perspective. But they had higher costs, they had higher profit sharing revenue from the company's private label and co-branded credit cards. That is actually favorable, good to see. But overall, we are seeing weakness in margins, which led to adjusted earnings being down 4.4%. Now, they did increase the quarterly dividend by 5%, and that gives you now a 4.3% yield. That's not too shabby if you believe in the total return potential of Best Buy,

because if you get the 4% yield, but you lose money on the stock, you haven't really gained that much. If you believe in the future of Best Buy, that 4% can be tempting. When discussing guidance management said, we believe the macro and industry backdrop will continue to be pressured in fiscal 24, and they did guide for sales to climb between 3% to 6%, so hard to get excited about that. Only trading at 14 times, 4% yield, could be interesting if you want to take a risk. Shares of Zoom video down a bit this week, despite the fact that fourth quarter profits and revenue came in higher than Wall Street was expecting. Though to be fair to Wall Street, Jason, revenue growth of 4% is a lot slower than what Zoom has produced in the past.

Boy, you said it, Chris. That's it in a nutshell. This is a good business, but the question for investors now is purely about growth and where it's going to come from for this company. Revenue, $1.1 billion. It was up 6% excluding currency impacts. Earnings per share, $1.22 down slightly from a year ago. You're starting to see this interplay between the enterprise and the online segments of the business. The enterprise is the gist of really the future of the business. That's where they involve their direct sales teams to work with those enterprise customers. That segment revenue was up 18 percent, customer growth was up 12 percent. The number of customers contributing more than $100,000 in trailing 12-month revenue,

that was up 27% from a year ago. Net dollar expansion rate down a little bit, 115% now. But again, back to that enterprise versus online customer. Online is the higher margin because it's basically automated. It doesn't require as much work. Enterprise still represents just a bit over half of revenue. So online clearly still matters. What we're seeing here is a trend in the online segment, it continues to decline. That was down 10% for the quarter. It starts to make you wonder is it's the top of the funnel for this company, and the top of that funnel might start running a little bit light, guiding for around $4.15 for the current fiscal year. That put shares around 17 times full-year estimates. That seems cheap, but I got to ask where that growth is

coming from, Chris. Guys, we'll see you a little bit later in the show. Up next, we'll talk home improvement, housing and more with TREX CEO, Brian Fairbanks. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Brian Fairbanks is the CEO of TREX, a leader in composite outdoor decking materials. Their products are made of 95% recycled materials, making Trex one of the largest plastic film recyclers in the country. I caught up with Fairbanks earlier this week to get his thoughts about the company's ability to expand outside the U.S., what keeps him up at night, and the art and science of offering guidance to Wall Street. But I started the conversation by asking him how the recent

slowdown in the housing market has affected Trex. We're not particularly tied to the new housing marketplace. We're much more tied to repair and remodel. Approximately 90-95% of our business is in that repair and remodel. We look at the new home spend as an economic indicator, but not directly correlated particularly well with repair and remodel products. When we got into the second half of this year, we did start to see some changes from an overall economic perspective, which I expect will carry out into 2023 as well, some of that driven by the new home market. One of the things we've been talking about at The Motley Fool this week is the home improvement industry, Home Depot and Lowe's out with their latest earnings results recently,

And both companies being pretty cautious with their guidance. So, let me ask a cousin of the question I just asked you. How does the current environment of home improvement bode for Trex? So, Lowe's is just out today. I've not seen their numbers, but I am familiar with the Home Depot numbers the other day, where they talked about basically being flat for 2023. coming off of the pandemic gains along the way and some of the economic uncertainty that's out there. I feel as though that's pretty good performance in this marketplace. So overall,

I was actually quite encouraged when I saw what their expectations were. And I wouldn't be surprised if Lowe's is in the same place with it, that that repair and remodel consumer will be limited in their move-up capability from a new home perspective or just moving up to a larger home. Therefore, they will spend more money on their existing home that will drive the repair and remodel spend. I'm not going to ask you to speak on behalf of Home Depot and Lowe's. They've certainly got management teams that can do that. I am curious though, because it seems like part of the guidance, part of the story with Home Depot and Lowe's is the input costs that they are dealing with. When you look at the price of lumber coming down the way it has, it's obviously going

to affect businesses like Home Depot and Lowe's that deal with a lot of lumber. All of that is prelude to this question. When it comes to offering guidance, how much of it is formed by any level of uncertainty around input costs? Because it seems like the firmer the grip you have on what your input costs are going to be, maybe the greater the confidence for the guidance that you can give. Yeah, I only can really speak to how we do it here at Trex looking at guidance. We've got a pretty good capability within our supply chain organization to look forward and understand what's happening in the marketplace. The period of time we went through 2020 through 2021 was unprecedented increases in input prices. But as we get back to more of a normalized

economy, we see signals in the marketplace if we're going to see our input prices increase or decrease significantly along the way. And right now, we see signs that there will be continued moderation, not necessarily deflation of what's occurred over the past couple of years, but a moderation of where those overall costs are. One of the things that we've seen for businesses across the spectrum of industries over the past, let's just call it eight to 12 months, is a ratcheting down on marketing spend. Without getting too deep in the weeds, how do you and your team think about marketing spend when it comes to Trex? How much of it is aimed at the consumer and how much of it is aimed at

professionals? One of the key competitive advantages is the Trex brand itself. And we have talked in about in 2023 that we will go back to a full marketing load. And most of that marketing is directly aimed at the consumer. We want to build that relationship with the consumer So when they're deciding on their decking project, they're wanting to use the Trex product. They see us in the marketplace, the branding drives them in, they use our website, the various tools that we have there, and we make that a sticky relationship. Over the past couple of years, we've backed away from that full load of marketing, which tends to be about 5% to 5.5% of sales, because we didn't need to generate more demand. It was actually harmful to generate more demand when we were in a sold-out condition. But we're back to more of a normalized market now, and with the strength of the Trex brand,

it's important that we get back to that normalized marketing level and continue to develop that relationship with our consumers. In terms of your actual products, how are things in the supply chain these days? supply chain is i guess normalized is probably the best way to look at it from trek shipping out to our customers now the channel itself they went through a significant adjustment in 2022 first half of the year they had really all of the product they needed and if product was available to them they were going to take that product the last thing that anybody in the channel wanted to do was miss a sale. So they built excess product in the marketplace. We get

to the second half of the year, it was understood how much inventory was in the channel, and we had to have a fairly significant adjustment into the outlook that we had for the back half of the year. We needed to pull about $200 million of inventory out of the channel. The good news is we did that aggressively. Q3 and Q4, we completed that inventory reduction in our channel and finished the year with the optimum level of inventory ready to go into 2023. So there's been a significant adjustment from the pandemic boom to the other side of it of knowing they can get product when they need that product and knowing that we will be here for them. I want to sort of think outside of the United States and let's just start with this.

At the moment, what percent of Trex's business is here in the United States versus the rest of the world? So over 90% of our business is in the United States today. So it is by far the largest driver of our performance on an overall basis. International markets are important for us for long-term growth. We see great opportunity in countries where they have higher GDPs, generally higher family incomes, and an interest in outdoor living. That brings us into some of the largest economies into Europe, up into Scandinavia, as well as Australia. We ship to about 45 countries around the world, but those major countries I talked about are the largest driver of our international success. And is the interest in products similar

in European countries as it is here in the United States? Is what's popular for U.S. customers also equally popular in Europe? Where there's a desire for outdoor living, there's a desire for outdoor decking. And we have seen great success with our Transcend product when we took that to the European markets and Australia right around 2012. A key difference that Trex has between those markets and North America, we've been branding and people have seen our products in North America for over 30 years now, whereas in these newer markets, we've only been branding the company maybe for five to seven years along the way. So we're much newer to those countries, and we have a long way to go from a branding perspective to get the kind of same visibility

that we have here in North America. Yeah, I'm thinking now of a conversation I had with a college buddy of mine last fall. He's a homebuilder. And I just asked him, you know, unprompted, what percent of your customers are interested in Trex products? I didn't give him any context. I didn't tell him I'm a shareholder. I just asked him. And without hesitation, he said 100%. And I said, okay, so what was that number 10, 15 years ago? And he said it was much lower. It was less than 20%. So, that's obviously just one anecdote, but it does make me wonder, what is the education curve like? What are you and your team sort of building into your expectations? Because it does, you know, to the point you just made, you've had 30 years to build

up the reputation of Trex in the United States. In some of the countries you're looking to expand into, you're the new kid on the block. And I'm assuming there's both an education curve and maybe even a higher marketing spend to get the word out. If we look back 10 to 15 years ago, it was all about educating that consumer. And in many cases, they were making that decision when they went to the retailer or when they went to the contractor. Today, that consumer, in many cases, they're doing research ahead of time. These are large ticket purchases they're making. They're doing that online research. In a lot of cases, they already know of the Trex brand. But if they don't, when they go online to do that research, they are going to find Trex in the marketplace. And then we can

drive them to help them build a deck, help them find the contractor, do the designs for them, show them the various colors we have, offer samples so that they can show that up against the siding of their house. And our desire is to make it easy for that consumer to be able to get the Trex material and then build their Trex deck. So the education part of it has come a long way over the past 10 years, but also because that consumer is much more actively involved in deciding what products they're going to use on and in their home. Let me go to the other side of the supply chain for a minute, sort of the materials that you and your team use to build these products. To what extent has that evolved over the past few years? One of the very unique

things about Trex is we use 95% recycled and reclaimed material in our product. Our product is roughly speaking about half wood and half recycled polyethylene plastic. We've been doing that for over 30 years. Really, the only change that we've seen from that perspective is there's more companies that are interested in using these recycled plastics. When we started doing it on day one, it was a low-cost material stream that we could get our hands on and still deliver a great product. Today, there's a lot of ESG benefits, and it's something that the consumer is looking for in making sure that they are using products that have real green credentials. So what keeps you up at night these days in terms of your business? I don't want to get

into your personal life, Ryan, but in terms of your business, what's keeping you up at night? Yeah, from a business perspective, one of the key things is as we come through the pandemic where building products were sold out in a lot of places, getting the channels refilled again, getting ourselves back into new product development, which we've launched two new products over the past six months. Our Transcend Lineage we launched back in May, and then our signature decking product line, which really mimics the look of real wood, but delivers the green and performance characteristics of composite decking along the way. So making sure that those get brought into the marketplace, people are able to see that and understand that Trex

is bringing real innovation to the composite decking marketplace. Obviously, decking is the bread and butter of the Trex business. But as you've alluded to, there's an increasing number of products that your company offers, including outdoor furniture. I'm not asking you to spill any trade secrets, but I am curious if you could pull back the curtain a little bit and share how the new product process works at Trex. What happens for something to go from an idea that maybe ends up on a whiteboard in a conference room somewhere to Trex deciding as a business, okay, this is actually going to be a new product line that we are going to invest in? Yeah, that's a great, great question. In the majority of the

cases, the new product ideation side of things is going to start with our marketing team, working with our contractors, working with our channel partners, but then also people who are intending to build a deck and people who have already built a deck. We've got a strong group of individuals that help us with market research to understand what those new trends are at the marketplace so we understand where we need to send our r&d and what they need to be looking at these generally are not things that we can do over a very short time period there's new technologies that are involved and with the performance that we've seen from the trex product anything new that we bring to the marketplace we understand the expectations are extremely high so we want to

make sure that we've got the right engineering in any new product that comes to the marketplace. So we blend that marketing team and the research with R&D and then finally into production so that once we're up and launched, we can be running that at good rates and yields and achieve a profitability. Coming up after the break, Jason Moser and Ron Gross return. They 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 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

with Ron Gross and Jason Moser. We have talked so much on this show about rising interest rates, and as investors, we know there are industries that thrive when interest rates rise. Our investing team has put together a special report highlighting five stocks they think are fit for this environment right now. The report is free just for trying out Motley Fool Stock Advisor, which comes with its own membership feedback guarantee, so you get 30 days to decide whether the service is a good fit for you. Even if you cancel, the special report is yours to keep. just go to fool.com slash interest to get your copy of the report, Top Stocks for Rising Interest Rates. Again, that's fool.com slash interest. Let's get to the stocks on our radar, our man

behind the glass, Rick Engdahl is going to hit you with a question. Moser, you're up first, what are you looking at this week? Yeah, Samsara, ticker is IOT. Remember, this was my radar stock from the beginning of February. The company helps its enterprise customers connect buildings, equipment, cars, and other facilities, which ultimately helps and work better, save money, be more efficient, enhance safety, all of that good stuff. Earnings came out Thursday after the market closed and the market's receiving those results very well. Ended the year with annualized recurring revenue of $795 million, up 42% from a year ago. Quarter four revenue, $187 million, up 48%. They now have $1,237, $100,000-plus annual recurring revenue

customers, that was up 53%. They also have $51.1 million plus ARR customers up 65% from a year ago. Guiding for current quarter revenue to be between $190 and $192 million, representing growth of 33% to 35%. Looks like we know where the growth really is, Chris, and it's with Samsara. Rick, question about Samsara? No, just a question for Jason. and the second time you pulled this stuff, are you just having commitment issues? Is that the thing? Why is this just on your radar? Well, because this isn't an Earnings Palooza episode proper, we have an interview, I wanted to include another earnings story, and so this one really stood out. Ron Gross, what are you looking at this week?

Courtesy of my friends over at our new dividend investor service, I'm looking at T. Rowe Price, T-R-O-W, Global Investment Management Company, roots back to 1937, $1.3 trillion of assets under management, mutual funds, advisory services, separately managed accounts, they do it all. Now, economic headwinds, the bear market certainly has weighed on the business, 2022 results were relatively weak. But we think once the market resumes upward trajectory, once it resumes the upward trajectory, I think investors will come back in, T-Row will resume its upward trajectory in terms of earnings. They've increased the dividend for 36 years, 4.4% yield. Rick, question about T-Row price?

Yeah, they're pulling the strings on my kids' 529 plan. Is there anything I can do to help them out? Just keep giving them money, please. Okay. What do you want to add to your watch list, Rick? I'm going to have to go with the 529 plan. Nice. Jason Moser, Ron Gross, guys, thanks for being here. Thanks, Chris. Thank you. That's going to do it for this week's Motley Fool Money radio show. The show is

mixed by Rick Engdahl. I'm Chris Hill. Thanks for listening. We'll see you next time.