Motley Fool Hidden Gems Investing - U.S. Hits AA+ and the iPhone Slumps

Episode Date: August 4, 2023

Apple’s having the bad kind of “iPhone moment” and one restaurant chain is showing great growth without raising prices.  (00:35) Jason Moser and Bill Mann discuss: - Fitch downgrading U.S. credit and why it shouldn’t worry investors. - How slowing iPhone sales are weighing on Apple, and how AWS keeps cruising for Amazon.  - Surprise profits from Uber, impressive traffic from Wingstop, E.l.f’s epic quarter, and how PayPal might not go anywhere until they announce a new CEO. (19:05) Motley Fool analyst Rick Munarriz weighs in on the state of Disney’s Marvel and whether they can re-capture the box office magic any time soon..   (32:00) Jason and Bill break down two stocks on their radar: Calloway TopGolf and Outset Medical. Stocks discussed: AMZN, AAPL, UBER, ELF, PYPL, WING, MODG, OM Host: Dylan Lewis Guests: Bill Mann, Jason Moser, Rick Munarriz Engineers: Rick Engdahl Learn more about your ad choices. Visit megaphone.fm/adchoices

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That's why they call it money. The best thing in life are trees. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Dylan Lewis. Joining me in studio, Motley Fool Senior Analyst Jason Moser and Bill Mann. Guys, great to have you here. Hey, hey. Hey, Dylan. We've got updates from the biggest companies in the world and a breakdown on what's happening at the box office.

But we are going to start today looking at the big macro. and a headline that I have to admit was a bit of a surprise for me. Credit rating agency Fitch downgraded U.S. debt to AA+, from its previous sterling rating of AAA bill. I have a layman's understanding of credit rating and, to be honest, U.S. debt. Can you walk me through what's happening here? Well, it's big in one certain way. The U.S. Treasury notes and bills are the baseline for the entire credit market. And a lot of people don't really realize it, but this is a much bigger market than the equity market. So, what we're talking about here is an amount of debt for the U.S. government that costs about

a trillion dollars a year just for us to surface. So, the stock market didn't take this news very well. The U.S. credit was downgraded from AAA, which means that there's almost no chance under any circumstances that there would be a default to AA+, which is still summa cum laude. That means there is maybe a tiny bit more chance that it's going to default. It's symbolic. It is a meaningful symbol simply because it is such a large part of the global economy as the underpinning of the reserve currency. But it's not that big of a deal. We are several steps above almost every country in the world i mean we're behind like switzerland and singapore now i believe there's eight that currently have triple a ratings maybe eight or nine yeah exactly like luxembourg you know

countries that you're like yeah their money is good so our money is basically good we're we're tied with canada now and you know we like that's a great place to be i think jamie diamond was calling out that canada cop there in his interview here earlier this week right i mean he was like listen this is no big deal i mean in the grand scheme of things the market determines rates, not these ratings agencies. But it kind of felt like it was more for optics. You kind of seemed like you were hinting towards that. It seems like it just felt like this was more for optics. Well, I did say a trillion dollars, and that's in debt servicing that the U.S. government has to pay each year at this point. And that, I don't know if you guys know this, but that's quite

a lot of money. That's a big figure. That is a big figure. But, you know, Warren Buffett came out and he said, look, we bought $10 billion at Berkshire in treasuries last week. This next week, we're going to buy $10 billion again in treasuries. So, it's a little strange being below Singapore and Sweden and Johnson & Johnson, but it's really, really not that huge of a deal. I side with Warren Buffett on this one. I don't know if you know this, that's always a pretty safe place to sit. Yeah, that's a good side of things to be on. That was, I think, in a lot of ways, the macro story of the week. But I also want to zoom in on one that either people missed, or if you saw it, might have been a little frightening. And that's that Kansas Heartland

Tri-State Bank was closed by the FDIC, marking another bank failure for 2023. I think we all have a little bit of bank failure trauma going on, and we're thinking a little bit about this. It seems, though, Bill, like this one maybe is different than some of the past ones. It's funny because a lot of different media organizations came out and said, banking crisis continues. Now, I have to say, we're talking about a tiny bank. And if you look at where it is on the map, it is basically where Oklahoma and Kansas and Colorado come together. This bank is not on the way. Say more about that. So I think a lot of people were looking at this because they were worried so much after the failure of Silicon Valley Bank that there was going to be a crisis amongst these community banks.

So this was a bank that failed, and it failed in a very spectacular way, $139 million portfolio, and they ended up with an insured loss of $54 million, which should tell you something very specific. that this was event-driven and not macro-driven. And in fact, they got hit by a scam. Oh, really? Yeah. So we don't really know the details of the scam yet, but it's really important to note for anybody who paid attention to this story at all,

and everyone did for about five minutes and they did their run around the room with their hair on fire and then got onto the next thing. But this is not another node of a banking crisis. It is simply a small bank that got incredibly unlucky. So, basically, big picture for both of these two macro headlines we just talked about, don't worry too, too much about them.

I think you can kind of maintain your sense of calm here. Did you just shorten the five minutes I used down into a sentence? I think you did. I tried to. I mean, that is my job, Bill. It's the Bobby McFerrin. Don't worry, be happy. I mean, that's truly the case in this issue with the tiny bank.

It's not a portend to hundreds of other banks failing, but it does speak to a little bit a vulnerability in the U.S. We have more than 4,800 banks in this country, and some of the small banks, I think that they may be vulnerable to scams and to the increasingly sophisticated criminal scams that are out there. This week, we also got updates from, I think, two of the biggest companies that moved the U.S. economy. We got Apple and Amazon earnings. Jason, Apple did something that it has not done since 2016, this earnings season. It posted its third consecutive quarter of revenue

declines. The story seven years ago was struggling iPhone sales. History has a habit of repeating itself. We're in the same spot again here. Sure. Yeah, I think the big focus is on the slowing revenue, as you said, I mean, a third straight quarter of declining year-over-year revenue. I think that's just part of the ebb and flow of this business, right? It's gotten so big through the years, thanks to that lightning in a bottle that is the iPhone. And remember, too, there are some currency impacts that play into this, so you can fiddle with the numbers however you really want. But I do think it behooves investors to remember that Apple does a lot of things well. I think that it's greater than the sum of its many impressive

parts. When you look at the numbers, they're leading up to this release of this new iPhone toward the end of the year. Overall revenue down just 1%, but that included 4 percentage points of currency headwinds. iPhone revenue, as you mentioned, down 2%. Mac revenue down 7%. iPads down 20%. Wearables, home accessories up 2%. I think the real story here, we've been talking about Apple as a services business, and this quarter that really panned out well for them. services revenue up 10%. They've passed $1 billion total paid subscriptions now. They added $150 million from a year ago. I think that's a big part of the story here, is they're really doing a good job of monetizing that massive installed base. That massive installed base isn't going

anywhere. At least part of it for me is that for the first quarter and a long time, I didn't have to replace a pair of AirPods. Unlike you, I never bought into it. Thank you for boosting their I never bought into the AirPods because I was trying to minimize the amount of charging in my life. But, hey, listen, you talk about wearables and things like that, right? Probably everybody wants to know about the Vision Pro. You have to really look farther down the road in regard to the Vision Pro. That's not going to be anything meaningful for this business for quite some time. They're just shipping it out to developers now. So, it's just getting started. Jason, I mentioned that seven-year look

before and how we are in a period that looks awfully similar to 2016. Back then, Apple did not have this incredibly strong services business, and it's benefited from that growth over the last seven years. Stock's up over 500% since 2016. Where does the growth come from in the future to offset some of the reliance that this business has on the iPhone segment? I think you look at two things. Number one, you look at the way they continue to return capital to shareholders. Those share repurchases do have an impact over the longer haul. Share count down 17.5% since 2018 alone. Also, look towards India. Like we've been talking about China over the last decade as the opportunity for Apple, and that's worked out very well.

Look further down the road, 10 years down the road here, at the opportunity that I think is bubbling up here in India, because I think that will be material as time goes on. Apple's at 33 times sales, where in the last time it had three consecutive quarters of negative growth, which is a weird term, but there we go, I'm rolling with it. It was at 16 times sales. So one of those things really needs to happen because those two elements don't make sense in common. A bit of a different story when we look at results from Amazon. Shares up 10% after the company reported earnings well ahead of expectations and built 11% revenue growth. Incredible for a company this size. Who's had a good day today? Amazon shareholders. Jeff Bezos

is up $12 billion today. So that's not half bad. Some of the numbers from Amazon almost truly defy understanding. $134 billion in revenue, $7.7 billion in operating income. They've also dramatically lowered their costs through something that they've called regionalization. I don't know if they made up the word, but that's the one they're rolling with. And it was a 1,000 basis point gain. Almost 76% of the packages that they deliver were fulfilled in the region from which they were ordered. So, they're doing an incredible job at lowering their overall cost structure. For a company that, if you looked at them five years ago, you would have said, they're efficient. And they've gotten more and more efficient as time has gone by.

One of the things I wanted to zoom in on with Amazon results is the AWS segment, their cloud segment. I believe responsible for about 70% of their operating profits. AWS revenue up 12% in the quarter, down from 16% previous quarter. AWS is the leader in enterprise cloud. I believe they have like 40% market share, something crazy like that, Bill. Do we see more applications and usage coming, or is this the amount of market that they're going to be able to grab here? Well, I would say that they're probably at the level that you will see in terms of market share. But one of the other things that they were talking about is that every component of the business, Andy Jassy said the words artificial intelligence or

AI, something on the order of 5,000 times during the conference call. Rough rounding, yeah. Rough rounding, exactly. I may be exaggerating, I may not be. And AWS plus those AI initiatives inside of the company and outside of the company, it almost doesn't matter what their share is because that pie is just almost guaranteed to grow exponentially over the next decade. All right. Coming up after the break, we've got surprising profitability from one company and another that's posting great growth without leaning on price increases. Stay right here. This is Motley Fool Money.

Welcome back to Motley Fool Money! I'm Bill Lewis, joined in studio by Jason Moser and Bill Mann. We have some updates from a couple other companies with some surprising storylines. We're going to start with Uber. Bill, this is a business that has been notoriously unprofitable for most of its operating history, but it reported its first-ever operating profit in the second quarter. What pushed the company into the black? Did you not love Dara Khashoggi's Nobody Believes in Us post? It seemed like a movie moment, almost. I believe, I believe.

He actually said it. Many observers boldly claimed we would never make any money. Yeah. Scoreboard. Don't pay attention to the $31 billion in cumulative operating losses since 2014. We're making money now. It's all about looking forward. Yeah, and it was a good quarter for them.

If there is follow-through from this moment, it's a big moment for them. They show robust demand. They've got some good growth initiatives. You know, Domino's is allowing Uber Eats to start delivering pizzas. That's actually a big deal. Their gross bookings were up 16%. All of that was good, and they did, in fact, make an operating profit. Fantastic.

I don't want to sound too cynical. Yeah, but you're going to. I have appreciated all of the venture capitalist-funded rides that I've had from Uber over the last decade. And this positive cash flow comes at the cost of some massive share-based compensation. But all in all, it's a good job for them. I, in fact, did not believe, and now, apparently, I have to eat my words. I've noticed recently, without that venture capital funding, my Uber rides have gotten a little bit more expensive, Bill. I think it's one of the consequences we're seeing here. One place that I think consumers are not seeing

prices go up is at Wingstop, a very well-known wing restaurant chain. That's a great segue! Jason, I do what I can! I didn't even have that one in the notes. But so far, Jason, the story with restaurants has been pricing power, and that we've seen a lot of impressive results on the pricing side, not so much on the traffic side. Different story with Wingstop. Yeah, I love that. We were discussing this in production about how Wingstop has held off raising prices for the sake of maintaining value? And how does that play out versus companies that have been leaning more into pricing? Obviously, Chipotle stands out as one that

has been. I think you can argue that with Wingstop, it's working out very well for them. I mean, system-wide sales were up 27.8%. Domestic same-store sales up 16.8%. Let's just put that together. If your same-store sales are up that much, and it's not because you're raising prices. Why is it? It's because people are going there and buying stuff. It's traffic. Clearly, leaning into that value offering has worked out very well for Wingstop. Domestic restaurant volumes have exceeded $1.7 million. That's up from just under $1.6 million a year ago. This is a digital company. Digital sales increased to 65.2% of total sales. You just look at what this company is doing. And then at the end of the day, stock is up like 230%

over the last five years. Bill, is this another Buffalo Wild Wings in the making? The American eater is undefeated, I think, is where we need to take this. It really may well be. You're talking about a part of the industry where it is mostly mom-and-pop type restaurants, one or two in a chain. And Wingstop, they've got a formula that is working very well. Important to note, they posted these results, and it's not even football season. Hall of Fame game was this week. Football season's starting up. Could get even better for them as we head into the part of the year where people are thinking about Wings. I had to double-check the results looking at a company, ELF, Bill, because companies up 10%

post-earnings. The company posted 75% top-line growth. I wasn't sure that that number was accurate. Yeah. And thank you for not calling it ELF this time. I feel outed. ELF stands for Eyes, Lips, and Face. And it is the third largest of what they'd call the mass market cosmetics industry player in the United States. One of my favorite interviews of the last couple of years was from 2020 when I interviewed their CFO, Mandy Fields, and she just talked about their program, and it is working fantastically. They're in stores like Target is a big place for them. And their stock's been an eight-bagger since then. So, it's not as if they are a turnaround. This is a company that is firing on all cylinders. Is that Ron Gross on the show?

It sounded like Ron Gross there for a second. Bill, I want to ask, I mean, this company is at a PE of over 70. We're obviously seeing some incredibly impressive results in the top line. Does it feel like that's warranted? I get a little nervous whenever I see a company that is that expensive versus what it's doing right now. They still have a rather small segment or market share of the cosmetics market in this country, and they are mostly in the United States. So, They have a fantastic opportunity in front of them. Now, cosmetics, incredibly competitive sector. Absolutely, it's a knife fight. Slightly different reaction to the results that we saw from PayPal. Shares down 12% after earnings came out, despite top and bottom line

coming in roughly where the market was expecting them. Jason, the market did not like the company's update on margins and the outlook for the rest of the year, though. Yeah. Well, I will say, it does feel like this company could have just taken the entire year off of reporting earnings and just pick back up when they announce a new CEO, because I think that is something that is really being held against them, and rightly so. This is one of the biggest storylines, I think. It's a well-established business, they serve obviously a lot of people and businesses around the world, but it's going through some growing pains and at the same time it's waiting for a new leader to take the reins. Then we'll

kind of understand the focus and the priorities going forward. But the results, they fell in line with management's guidance, total payment volume $376.5 billion, up 11%. You look at the metrics that matter, $6.1 billion payment transactions, that was up 10%. 54.7 payment transactions per active account on a trailing 12-month basis, that was up 12%. 431 million active accounts now, up from 429 million a year ago. I mean, they're doing the right things and they view buy now, pay later as this big opportunity going forward. But a lot of investments in the business pressuring those margins, and certainly that is a focus for investors. All right, Jason Moser, Bill Mann. Fellas, we'll see you a little bit later in the show.

Up next, we've got a look at whether one of the big screen's biggest brands can get back its mojo. Stay right here, you're listening to Motley Fool Money. Welcome back to Motley Fool Money, I'm Dylan Lewis. This weekend, Greta Gerwig's Barbie will likely pass $1 billion in global box office. Joining the Super Mario Bros. movie, it's become the second film this year to pass the milestone. Marvel Studios and Disney are used to pushing out box office darlings. They've had many since the creation of the Marvel Cinematic Universe. But success for the MCU has been a bit harder to find recently.

Motley Fool analyst Rick Munarez has been a longtime fan of Disney stock and Disney intellectual property. He joined me to check in on the state of Marvel and whether they'll have another hit anytime soon. Let's dive right in here. What exactly is the state of Marvel and Disney's IP library right now? Because I look at the box office rankings and I look at some of the reception for their latest launches, and it seems like some of the shine has come off of their releases. Yeah, it is not good. And the recent results are not encouraging. And I'm bringing receipts. I have box office receipts. A lot of Disney different franchises aren't working well. But specifically to Marvel, the last Disney Marvel movie, it fared pretty well at first glance. This was Guardians of the Galaxy Vol. 3. Came out in early May. Fun movie. I enjoyed it. Generated $359 million in domestic ticket sales and $845 million globally. So that's worldwide. It was very profitable. But then we go back to Volume 2, the second installment in the franchise, 2017, six years earlier. It was $390 million at the U.S. and $864 million worldwide.

Not much, but bear with me. The movie before that, the last Marvel Cinematic Universe movie, was Ant-Man Quantumania, which sounds more like an album by The Who than a movie. But $250 million domestically and $476 million globally. And the second movie in the franchise that came out five years ago in 2018, $217 million stateside. but 623 million worldwide. So clearly lost a lot of juice overseas. And these figures, they're just 1% to 24% lower than the previous franchise installments. But it's worse than that because we're talking about ticket sales. We're talking about ticket revenue, the total revenue. Ticket prices in 2017 and 2018, they're about $9 per person in the US. Today, they're 15% to 20%

higher. So it's not just a 1% to 24% decline in attendance. We're talking about at least less than 20 percent fewer people saw these movies, the third installment of the Guardians of the Galaxy and the Ant-Man movie, than they did the second movie. And it's not just this. Last year, the top Marvel movie was Wakanda Forever. Again, a solid movie, well-liked by critics, but it fared substantially worse than the previous Black Panther movie that came out four years earlier. So clearly, the trend is not going in the right direction for Disney's Marvel universe and so many of their other franchises. Rick, you follow Disney as a stock. You also are a fan of the space and someone who enjoys entertainment, enjoys the parks. Can you talk

a little bit maybe from the fan perspective here on what's going on and why we're seeing some fade here? So it's not just marble fatigue. Did you see The Flash, Dylan? I did not. I didn't either. And I saw the previews. Oh, it's like time jump. And then I said, wait, Michael Keaton's coming back as Batman. I got to see this. The movie came into theaters two months ago and it went $108 million in ticket sales. So it's going to be a big charge for Warner Brothers Discovery, the one that owns to DC Comics. Spider-Man. So Spider-Man, that is the one franchise in Marvel that's doing well. Unfortunately, it's not put out by Disney. Sony's Columbia Pictures puts out the Spider-Man movie. So Spider-Man No Way Home, which was the top box office draw in this country in 2021.

The animated Across the Spider-Verse that came out earlier this year, which is the highest grossing superhero released domestically. Again, these are not Disney movies. So for Disney and for Marvel, it's time to recalibrate ourselves, our expectations of what's happening here. Disney also lost James Gunn. And if you're a comic book fan, you know James Gunn. He's this brilliant director and writer. He has controversies. He had some unfortunate tweets way back in the day.

But beyond that, he's the one that put Guardians of the Galaxy on the map. And now he's a big wig heading up DC Comics over Warner Brothers. So you're losing some of your key personnel. And you're also just losing steam with the audiences. They're just tired of what they're seeing before. It's getting too predictable. You mentioned adjusting expectations a little bit. When you take a step back and look at Disney the business, it's easy to kind of get lost in the Marvel, a Disney property.

But when we look at Disney the business, where does the Marvel IP library sit in terms of the thesis and just kind of your expectations? Marvel, just like Lucasfilm, were properties that Disney paid about $4 billion for each one and was able to milk a lot of money out of it. So they're obviously very successful looking back, great deals. But we're at the point now where while Marvel is very important, it is not as important since basically Endgame, Avengers Endgame in 2019. It's been in a lull. 2019 was that year when Disney had the six highest grossing U.S. films that year. It's nowhere close. It doesn't have any of the top three this year.

We're getting to the point where with Marvel specifically, the properties are there. Everyone knows the characters. If you go to the theme parks, well, not so much in Florida, but in California where they have Marvel's Avengers Campus there with a Spider-Man ride, with a Guardians of the Galaxy freefall ride, it is very important to them that the Marvel ecosystem is fresh and relevant to consumers because it would cost a lot to repurpose rides and lands, and the same thing that could keep milking it with consumer products. Disney's ecosystem is built for that, but they're at the point right now where they need to crack the code. They need to make the experience fresh, and I think that's what's happening. You're seeing the movies that have succeeded. You mentioned Barbie, you know, second only to Mario Brothers. Super Mario Brothers was this kind of like absence made the heart grow fonder kind of thing where we hadn't seen Mario on the big screen in so long. That didn't work for Indiana Jones for Disney this summer, but that's one way. And, of course, then there's the whole Barbie phenomenon, which is, as you pointed out, is basically them taking this property where your expectations are, oh, it's a Barbie movie, I know exactly what I'm going to see, and giving you something completely different, retelling the narrative in a whole different way, totally unexpected unless you knew what you're coming into with the Barbie movie. And I think they need to do that with their Marvel properties and all the other IPs that are going stale right now.

Looking at what they have in terms of upcoming releases over the next couple of years, we get the benefit of that because they like to project these things out for us. There may be some reasons to be optimistic. They have the Marvels. They have another Deadpool movie coming out. They have another Captain America movie coming out. I think two more Avengers movies coming out. Of those, are there any that you're thinking this may be a title where they can recapture some of that magic? Earlier this year, I would have told you the Marvels because it comes out in November.

So it comes out just before the holidays, usually a good time to release a movie. It's when Black Panther, Wakanda Forever, was released in the original Black Panther. Movies can hit well then, but it's following the same stale formula that they've used a lot with Marvel. Let's just have one character, but put in all these other characters from other franchises in there to get people excited. And I think they need something more than that. So the Marvel's wall, you asked me maybe a year ago, and when I saw the first trailer, and it's like, oh, this cool character time jump and all these things are happening. it seems very interesting. I don't think it'll be the next billion-dollar release for Disney

to break it from that slump. Hopefully, I'm wrong, because the whole Captain Marvel thing is a valuable franchise. But to me, it seems like consumers are just sort of hesitant right now to go see a Marvel movie put out by Disney until they're proven that, hey, you're going to give me something that is not something that I know I can watch on Disney Plus two, three months later without missing anything. Let's talk a little bit about the streaming side of this, too. You just mentioned Disney Plus there, Rick. Do you think some of the fatigue is the combination of what we've seen in terms of just this incredible number of box office releases, but also all these streaming releases and just the complexity of these universes? I think it is. I think you

get to the point where there's always something good to see at home on TV. You know that there's always something streaming and Disney Plus, of course, since the release windows have narrowed. And I'll tell you, there's nothing like seeing a movie in a big screen. I saw Oppenheimer earlier this week in a 70 millimeter screen i saw barbie the week before that at a huge the largest disney screen at the amc 24 there and i went on a monday night after the opening weekend thinking okay it was hard to get tickets even for that in a very big theater and the moment where before we start to amc has a thing where uh nicole kidman starts walking down the stairs and we come here to be uh that whole thing the audience started applauding and i'm like i don't know if they're

clapping because they're nicole kidman fans or because they think the movie's about to start but there was excitement there. And I really haven't seen that kind of excitement for a Disney movie. Haunted Mansion, which opened last week, clearly not doing well. But as far as the Marvels go, I hope it does well. I mean, I don't think it's going to flop the way, let's say, an Indiana Jones did, because even the worst of the Marvel movies, they may not make back their production and their distribution costs initially, but at least they're not going to be $150 million in the U.S. like Indiana Jones and the Dial of Destiny was this summer. If the Marvels doesn't do it, I think we may be down to The Avengers at this point because we know that Guardians of the Galaxy with James Gunn moving on, that franchise is going to be hard to sustain.

You've used the word milked to talk about the relationship a couple of times while we've been talking here. And I think anyone with IP looks at Marvel and the Marvel Cinematic Universe and really sees a playbook for making money on things that they own the rights to. It also seems like consumers are increasingly aware of the game that's being played here. Do you think that this can be replicated by other people who own valuable IP like Barbie or like some of the other players out in entertainment? I think you can. I mean, obviously, with Barbie, Mattel is basically going through their whole toy line and saying, OK, Polly Pocket. And they're just going through everything, and they're going to try to basically catch this Aladdin genie in a bottle, so to speak, again. The problem is that Disney hasn't learned its biggest mistake, is that too much of a good thing can be a bad thing.

24 summers ago, I'm going to take you away from the Marvel world. I'm going to take you to Regis Philbin to who wants to be a millionaire. So summer of 1999, Disney had a, there was a UK hit game show who wants to be a millionaire. Anybody who's as old as me, uh, note remembers it. And it was a hit and it was such a big hit that they brought it back the following year. And then it played one night, then two nights, then three nights. And I believe it played four nights a week because ABC had nothing going on to the point that they just got who wants to be a millionaire fatigue and people just didn't want to do it anymore. And I think you're seeing that happened now not just with disney maybe they went to the toy story well one too many times with

light year based on last year's disappointment this this year did we need a 10th fast and the furious movie because it did worse than the ninth movie and that ninth movie came out in 2021 when a lot of people were afraid to go to movie theaters so i don't think it's just a disney marvel thing i think we're seeing dreamworks animation shrek 2 was their peak was financial peak of the shrek franchise and that thing just keeps going so i think it's hollywood not just disney uh that can keep a franchise on top consistently, sustainably. I just think it's important for all companies that once you get that first whiff of a dip, not that you have to throw in the towel, but you definitely need to pivot. You definitely need to try something new and something different, which is what the

Marvel Universe did when they said, let's just put all these characters in one movie to just raise the marquee value of this. But at the end of the day, it's a struggle. It's hard to keep even that going. They need a new trick. Yeah, I was going to say, it sounds exactly what it is. Maybe they'll be able to pull one out of their bag. It sounds like to me also, Rick, the lesson here is discipline and trying to be relatively careful in your release schedule and not oversaturating things. Any other advice for people that are looking at IP libraries and looking to do something similar to the MCU? Yeah. Again, they're doing that. And even Sony, even though Across the Spider-Verse was such a big hit this year, they released the next movie

in that franchise. So everyone's realizing that too much of this is an issue. But I do think specifically to Disney and Marvel, they're pushing out releases. And this was before the actors and the writer's strike sort of forced their hand that, hey, we really got to slow down the flow of content here, the pipeline here, because we have a production issue right now. Spacing things out will help. But again, I would have probably said the same thing when Indiana Jones, this was the fifth movie, and it came out well after, you know, more than a decade before the last movie. Disney didn't even own Lucasfilm the time that the fourth installment came in, and it did not do well despite harrison ford back so it's hard to tell time isn't always the thing spacing things

out isn't sometimes enough you need to come in with a fresh angle i think moviegoers right now they're very jaded we've been spoiled by the fact that we can watch quality television at home commercial free for several hours at the end of every day so we need stuff that's going to challenge us need stuff that is fresh and i think that's why barbie did so well that's why i think And Oppenheimer, despite not doing as well as Barbie, but clearly a successful release, is the kind of movie that comes in and says, this is something I have to see in a theater because it's three hours of kind of entertainment that I don't think I've seen through a streaming service. So for investors following these movies, look for the people that are being creative with the process. Right now, that's not Disney, unfortunately, but hopefully they'll get it back because they've always found a way back. we'll get a look at marvel's next swing this fall with the marvels and i plan on adding to

barbie's box office hall by heading to the theater this weekend if you've got thoughts on the summer blockbusters or a question you want us to tackle on the show we want to hear it shoot motley fool money a note at podcasts at fool.com coming up after the break jason moser and bill mann return with a couple stocks on their radar stay right here you're listening to Motley Fool Month. 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. I'm Dylan Lewis,

joined again by Jason Moser and Bill Mann. If you're at a barbecue this weekend, make sure to put some of the yellow stuff on your hot dog. Saturday, August 5th, is National Mustard Day. And to commemorate, gentlemen, French's is giving out mustard-flavored Skittles in New York City on Saturday, August 4th. Jason, if you were in New York, would you be trying those Skittles out? No. Emphatically no? Dylan, I mean, there are times in life where you can like a lot of things, but then you put them together and you're like, ooh, I don't like that. I mean, listen, Skittles are delightful. And I'm a mustard guy, okay? I'll never understand how someone puts ketchup on a hot dog putting those things together and i mean you know let's bring

mccormick into the conversation because they own french's i mean that's my obligatory but no i mean i i love the marketing idea i love the buzz it creates it's not something i'm terribly interested in in trying but uh you know i do consider myself a mustard guy i feel like you're giving this short shrift because i feel like honey mustard skittles no no no now honey mustard i can we're talking about the classic yellow stuff you've got a sweet dynamic now i'm starting to get what i'm saying what i'm saying is that that sweet slash mustard thing is something you're actually familiar with i think i 100 would try oh i mean what does it cost you it's it's it's a moment in time right there are plenty of things that cost nothing that i would not try okay now i have to try because i

didn't think of this before but that maybe there is the sweet dynamic tied in already because they're Skittles. So, if it's the sweetness of the Skittle with sort of that tartness of the mustard, I could see that actually working out. I'm so much more for this than I was mustard donuts. I mean, what was that? And I, by the way, I celebrate National Mustard. I'm in. He's a card-carrying member. I'm a card-carrying member. Well, listeners, if you want to get your taste buds a chance at this, you can go to French's.com slash Mustard Skittles through Saturday. They're also making some of those candy available online, if you're one of the lucky people they pick.

All right, let's get over to stocks on our radar. Our man behind the glass, Rick Engdahl, is going to hit you with a question. Bill, you're up first. What are you looking at this week? I am interested in the earnings of a company I don't know that we talk about very much, but it's Callaway Topgolf. So, Callaway, an old-line brand in the golf industry, purchased Topgolf a little while ago and I was not a fan of the acquisition and I am now interested to see how it's going. So it's on your watch list right now because you want to see how this acquisition winds up working out for the business and how they're able to absorb this brand. See, I'm glad you put it that way because so far I've been right.

But I'm wondering if there was something that I was missing by focusing too much on what this is going to bring Callaway as opposed to the fact that golf is moving away from being out on the links and being more entertainment driven and top golf is great entertainment well I can tell you what grinds his gears regarding this acquisition it boils down to one word and I'm gonna let him take it from here synergy synergy isn't that right we talked about this it's true yeah I just don't know that i mean i think from this quarter we're going to see what the synergies are and it's not to me what i really thought it was was they're going to sell more callaway gear i don't think that's the case i agree rick our man behind the glass i hope i didn't steal your question

you have a question or a comment for bill's suggestion here of callaway top golf yeah so we've had golf i've seen curling axe throwing what is the next uh happy hour pseudo sport that's going to blow up for us. It's going to be drinking, I think. I know. Well, Topgolf has something to do with that, right? I mean, they kind of have their hands in both those markets. Jason, what about you? What's on your watch list this week? Yeah, Outset Medical, ticker is OM, they reported earnings this week. And the bad news is the market's reaction to the release. The stock is down about 12%, 13% since that announcement. The good news is, though, this really was a good report in virtually every regard,

Save one little news item that I'll get to, but you look at revenue of $36 million for the quarter that was up 44% from a year ago. Product revenue up almost 50%. The service and the other revenue grew 23.4%. You know, I like this business because they install that base of those dialysis machines, and then they benefit from the ongoing sales of those consumables that really, you know, the consumables have to be outset medical produced. So, that really does give them sort of a very high switching costs as time goes on there. Gross margin continuing on that track to the target of 50% there. But back to that hiccup, the hiccup came from a news item that came out several weeks back. They received a warning letter from the FDA. And unfortunately,

this isn't the first warning letter. I was going to say, that sounds bad. But it is interesting to note, the letter stated that they need to file a Form 510-K, essentially for this Tableau cart product that they have. And ultimately, this was more or less a disagreement. Management didn't really think they needed to file this form. The FDA begs otherwise. So, management's going to go ahead and file this form. Until they get it filed, they're going to postpone the sales of that Tableau cart

until they get the approval, which I'm certain they will. And this led them to guide more down towards the lower end of the range of guidance they provided earlier before. And I think that's got investors a little bit up in arms. Rick, a question about Outset Medical. I mean, I get it. I hate filling out forms, but don't they have somebody to do that? Well, you would hope so.

But, hey, maybe there's an AI for that, Rick. All right, Rick, which company is going on your watch list? I fell asleep during Jason, so I'm going to have to go with Top Top. So did Jason. A mustard skittle will wake you up. With that said, Jason Moser, Bill Mann, thank you both for being here. That's going to do it for this week's Mountain Full Money radio show. The show is mixed by Rick Engdahl.

I'm Bill Muis. Thanks for listening. We'll catch you next time. We'll be right back.