Motley Fool Money - 4 Tech Titans Boost Stocks

Episode Date: July 29, 2022

Apple, Microsoft, Alphabet, and Amazon provide a welcome lift to the market. (0:30) Andy Cross and Ron Gross discuss: - The Fed raising interest rates and GDP contracting - Apple and Amazon surprising to the upside - Microsoft's cloud division delivering again - Shopify's relative attractiveness as a stock - Meta Platforms warning investors (19:45) Andy and Ron discuss Chipotle's impressive ability to raise prices, as well as: - McDonald's stock closing in on a new high - The war on cash with Visa and Mastercard - Diageo wrapping up a strong year - The latest from Etsy and Roku - Unilever shutting down the Choco Taco - Two stocks on their radar: Masimo and NextEra Energy Sign up for Stock Advisor at http://fool.com/foolfest and you’ll get a complimentary digital pass to our biggest member event of the year! (If you're already a Motley Fool member looking for details on this year's FoolFest investing conference, go here - foolfest.fool.com) Stocks discussed on the show: AAPL, AMZN, MSFT, GOOG, GOOGL, SHOP, META, CMG, MCD, ETSY, ROKU, V, MA, DEO, UL, MASI, NEE Host: Chris Hill Guests: Andy Cross, Ron Gross Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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We've got big tech, the big macro, and a whole lot more. Motley Fool Money starts now. That's why they call it money. From Fool Global headquarters, this is Motley Fool Money. It's the Motley Full Money Radio show. I'm Chris Hill, joining me in studio. Motleyful Senior Analyst, Andy Cross, and Ron Gross. Good to be in the studio with you, Jets.

How is you doing, Chris? Good to see you. It is Earnings Paloza. We will dig into some of the biggest companies in the market. And as always, we've got a couple of stocks on our radar. But we begin with the big macro. On Thursday, the Bureau of Economic Analysis reported that the U.S. economy contracted for the second quarter in a row, which meets the classic definition of a recession.

On Wednesday, the Federal Reserve hiked interest rates by three quarters of a percent. Ron, which one is the bigger deal for investors? Well, Chris, thanks for asking. The markets, I think, reacted very favorably to the rate hike, and especially the comments by Fed Chairman Powell, that there will come a point when the Fed needs to slow the pace of increases. I think that's a rather obvious statement, but still the market likes to hear it. He said on Wednesday he does not believe the U.S. economy is in a recession. Fast forward 18 hours, Chris.

And as you correctly pointed out, data came in that the U.S. economy did shrink for the second quarter in a row. And as you pointed out, common definition. But it's really the National Bureau of Economic Research that decides, if a recession has occurred, and they take into account a number of factors, and actually they won't decide that for quite a while. So we don't actually know for sure. But it is semantics, in my opinion, because we do have indications that the economy is slowing, which is actually a good thing, because that's what the Fed is attempting to do. The trick will be for the decline to not be so severe as to really throw us into a prolonged problem. Now, inflation is.

It's still very high. You saw it during the week with lots of earnings reports. You saw it Friday with Exxon and Chevron actually benefiting from higher commodity prices. You also saw on Friday a report that the personal consumption expenditure price index rose 6.8 percent, the highest level since January, 1982. So the Fed does still have some work to do. Higher interest rates still have to flow through the system, but we will eventually be able to, I think, have a short and shallow recession. At least that's what I hope. And then we'll resume with the business cycle, with reasonable interest rates, slower but positive growth, and stock valuations that are once again attractive. And I think we can live with all three of those.

I remember many moons ago during one of the other economic slowdowns, Ron Gross turned to me and said, you know, this is before Jay Powell, Chris. There's a chance the Fed gets this all right. And right now, there's a chance that, yes, they were behind the curve, that 75 bases points was baked in, so that was pretty much a done deal. Don't forget, a month ago, we were talking 1%. So there's a lot of concerns that they're just slamming the brakes on this economy too fast. Now his comments said that, hey, maybe we won't have to raise quite as aggressively or at some point we won't have to. That's good news. And yes, and maybe a little bit of a daha moment, but great, it is baked now into the prices. So there's a chance that, you know, behind the curve,

now they're on top of it. Investors are expecting that. We're certainly seeing the inflation, and we'll talk about this today through so many earnings. We're seeing that impact the performance of our companies. Whether we're in a technical recession or not, doesn't frankly really matter, I don't think. We're not going to find out for months anyway. But the fact that our companies are seeing and making sure investors are understanding that how it impacts the companies and their portfolios and obviously being invested in the best companies to sustain that new kind of environment that Ron mentioned.

All right, let's get to earnings. And we're going to start with big tech. Apple CEO Tim Cook admitted macroeconomic. factors affected third quarter results, but profits and revenue came in higher than expected and shares up on Friday after the report. Andy, as you said, we're going to talk about a lot of companies on this show. Not all of them are persevering in a tough environment. Looks like Apple is. Yeah, it was a pretty good quarter, Chris, topped rather muted expectations, showed continuous strength, really in iPhone and services. Earnings fell a little bit. Revenues were up slightly.

Now, they have more than 860 million paid subscribers across their services as they get close to a billion at some point. They're looking for revenues to accelerate a little bit the next quarter when iPhone 14 launches this quarter revenues were up 2%. They did have some foreign exchange challenges. We'll talk a lot about that today. iPhone, obviously, the biggest part of their business, Chris, up 2.8%. That was a June record.

Wearables, homes, and accessories were actually down 8%. Mac was down 10%, iPad down 2%, services continue to be one of the bright spots for Apple, up 12% to another June record. EPS was down about 8%, but above expectations. The thing we continue to see with Apple is they continue to have one of the greatest brands out there, very much loyal customers, satisfaction rates that are well above 90%. You consider to continue to see them, continue to build a. out that ecosystem with their iPhone and their services. Looking ahead for the year, they expect

year-of-year revenue growth to accelerate a little bit next quarter. They still expect those supply chain constraints, Chris, that you had mentioned. Still expecting the strong dollar and gross margin to be a little bit weaker than they were this quarter. But overall, you know, you've got a $2.5 trillion company selling at 25 times earnings. Earnings growth is not going to be super high, probably in the high single digits. Nice little dividend. Apple continues to be a winner in the markets. Shares of Amazon were up more than 10% on Friday after second quarter revenue came in higher than expected.

Guidance for Amazon's current quarter was upbeat, which is pretty key, Ron, when you think about how important the second half of the calendar year is for this business. Yeah, very important to see a company like Amazon providing some upbeat guidance. You know, the stock is still down 27% from its 52-week high, even after this week's pop, just to give an indication about how really weak stocks have been. In this particular report, investors are clearly focused on the cloud segment, which grew faster than most were expecting. Amazon Web Services generated a 33% increase.

That's pretty strong. It continues to be strong as the number one provider of cloud services. Overall, net sales up 7%. That did beat estimates. Surprisingly, ad revenue climbed 18%. And that's better than others in the space have fared. And I think we'll hear more about that later in the show. They're actually the standout with respect to ad revenue.

So I thought that was interesting. Not surprisingly, they're seeing continued inflationary pressure and fuel, energy, transportation. That cuts into margins. Net loss was $2 billion for the quarter. But that did include a loss of $3.9 billion from its wonderful investment in Rivian automotive, which has been a complete disaster. They're still working through their too rapid expansion during COVID, left them with too much warehouse space, too many employees.

They cut headcount by 99,000 people recently. But as you said, third quarter guidance was solid. They're raising prices over in the UK. Operating income guidance was pretty good at between $0 and $3.5 billion. So, all in all, a pretty solid report, and the stock price is reflecting it. Microsoft's market cap is backed up over the $2 trillion mark. He shares up more than 6% this week. After Microsoft's fourth quarter results were highlighted, once again, Andy, by the Cloud Division.

I was going to say, it's very similar story. It wasn't a great quarter with the slowest earnings growth in two years, but Microsoft pretty much turned the markets around this week earlier when they announced this quarter, and especially in their guidance. I'll get to that a little bit going forward with double-digit sales and operating income growth for the year going forward. But the cloud continues to be the winner when Satchie and Della talks about best of sweet value and having every layer of the tech stack covered. Microsoft really does, driven by the cloud. Their total cloud business was up 28% to 25 billion, driven by their Azure business,

which was up 40%. Productivity and business processing was up 13%. That's driven by like office, off at 365, Chris, was a big driver. LinkedIn actually was a pretty good quarter, even though the advertising business was a little bit weak. So their ad market, like Ron had mentioned on the advertising side, a little bit on the weak side, the dynamics, analytics business up 19%. The big weakness, Chris, was in the personal computing. That was up only 2% with Windows, down 2%. Search and advertising was lower than expected on that slower spend, still up a little bit, but lower than expected. And gaming was down. That was a pretty big weak spot, down 7%. Overall, their commercial cloud business really doing well.

Their bookings are up 25%. So what they're going to hopefully get in later of the year. Their remaining performance obligations up 34%. Big deals, big clients signing on for more cloud service. That's driving that. And so their guidance is for this double-digit growth. And that got people excited about the tech spend. Again, that it's not so dire that companies are looking to continue to spend.

and that really turned the markets around. So now you have that $2 trillion company, earnings per share growth over the next couple of years, growing like in the kind of mid-teens level. You're paying for 27 times earning Microsoft a syllabi. More big tech after the break, including alphabet and meta-platforms, or as I like to call them, Google and Facebook.

Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Full Money. Chris Hill here in studio with Andy Cross and Ron Gross. Before we get back to earnings paloza, I want to say a quick word about Foolfest. It is our annual investing conference. It's a two-day event on August 29th and 30th, featuring breakout sessions on different investing strategies. We've got a great lineup of speakers,

including Motley Fool, co-founder, David Gardner, Trex CEO, Brian Fairbanks, venture capitalist Jenny Abramson, just to name a few. Foolfest is free for members of Motley Fool services. And if you're not yet a member, you can sign up for our Stock Advisor service, get a complimentary digital pass to the event. Just go to fool.com slash foolfest for all the details. That's fool.com slash foolfest. I'll be there. Ron, Andy. They'll be there. Did you say free? Free for members of Motleyful Services. All right. On to earnings paloza. Alphabet's second quarter profits and revenue came in lower than expected, but shares up a bit this week despite that. Ron, you look at the different divisions, YouTube, Google, etc. Not better than expected, but

certainly better than feared. Yeah, that's exactly. Expectations were so low following Snap and then Twitter's disappointing results that we actually saw a bit of a relief rally with Alphabet or Google, as we like to say. Now, growth did slow pretty significantly from last year. Revenue up 13%. Compare that to 62% growth a year earlier. So 13% is the slowest rate of growth since the second quarter of 2020, when the pandemic took a whack out of demand, if you'll recall, for advertising in a lot of areas, especially travel. So we're kind of revisiting some of that slower growth. Currency fluctuations, as we'll see, across global companies, also took about a 4% whack out of revenue growth.

So advertising revenue was up, but only 12%. YouTube advertising rose only 5%, and that's in comparison to 84%. percent during the year earlier period. Competition from TikTok, I think, being one of the culprits here. Google Cloud fell short of expectations, lost $8.58 million. I think it's important to keep an eye on this segment. It's very important to future valuation. When that flips and goes positive, I think that will be very important. Operating margins down to 28 percent from 31 percent, and earnings fell 11 percent. But as we said, expectations were so low that the stock has rallied on this new. is the company is doing just fine. We're just seeing some slower growth.

Shopify's second quarter results on Wednesday were overshadowed by the memo that CEO, Toby Lukie sent to employees on Tuesday. In it, Lukie said Shopify would be laying off 10% of the workforce, and he took responsibility for mistakes that he made in growth projections that fell short. Andy, for a stock that has fallen 75% year-to-date, this is still a $45 billion business. Well, and they have 10% of the e-commerce market when you add up all of the merchants who are doing business across the Shopify platform. But clearly a lot of pain for Toby who founded the business is still one of the largest shareholders. He gave a very poignant letter outlying and taking responsibility for the growth.

As Harley Ficklestein, the president said on the call, in short, we overshot our predictions. And they did, so they're laying off 10% of their staff, mostly in recruiting support and sales. And that's going to help manage their cost structure in the second half of the year. Now, Shopify is a slowing growth story. It's still growing, but it's a slowing growth story. Revenues were up 16%. About in line with estimates, gross merchandise volume, Chris, so all the volumes sold across Shopify platform was up 11% to almost $47 billion. Their offline business are tied to the offline point of sales kind of business was up almost 50%. That was a record. So that's a bright spot. but it's the big online business that continues to struggle a little bit. Their gross payment volume, so the payments across the platform that's very valuable

to the stickiness of the Shopify is now 53% of all of the merchandise volume up versus 48% a year ago. That was up 23%. So payment's a big driver. But the big story for Shopify now is what happens now? The stock's down 75% selling less than eight-time sales. It's a $45 billion company. When you look forward, they're going to continue to see kind of this market that will outperform the broader retail market, which is growing about 7% right now. So they're going to grow a little bit faster than that. Their merchant solutions, all those payments, network, fulfillment, that kind of stuff, will grow faster than the other business. That's a little lower margin. That will hurt the margin picture a little bit.

They're going to expect further losses. The next quarter is going to be ugly because they're going to have all the charges from their layoffs. And then that will slowly improve. They continue to make big investments in their fulfillment business, bought a company that's going to help with that. So they're making the investment. They still have a very attractive balance sheet. They are losing money. Hopefully they can turn that around, and this is the start of that turn that gets Shopify, a little bit of religion, and it's better for shareholders looking ahead. Over the past year, we've talked about a number of former high flyers that have lost 50% or more in their value. and when you look at the valuation, even if they've been cut in half, it's still an expensive stock. When you look at Shopify, down 75% year-to-date, how expensive is it now?

Well, it's much more in line. Anything less than 10-time sales, I think, gets to be a much more normal realized for these high-growth stories. But they've got to turn the growth in these innovations like the Twitter shopping channel, tap-to-pay on the iPhone, B-to-B functionality. Those are all big investments they need to make to stay competitive to continue to grow their market share. They can do that. They might be able to turn it around. Shares of meta platforms down a bit this week after a disappointing second quarter report, highlighted by the amount of money the company is investing in the metaverse.

Meanwhile, Ron, if the advertising businesses of Alphabet and Amazon are faring pretty well in this environment, it seems like Facebook is struggling. Things are not so rosy in the metaverse, Chris. Yeah, this is a week report. shares are down 60% from the 52-week high. Sales, overall sales, were actually down slightly. It's the first ever year-over-year decline in revenue. Online ad business, as you said, getting hit by a variety of factors. Marketers are spending less, obviously, due to economic pressures. Apple's iOS privacy update has clearly hurt Facebook. And then, again, there's competition, including from TikTok, also having an impact.

Facebook app had 1.97 billion average daily active users, up 3%. Ad impressions across all the family of apps increased 15%, but the average price per ad decreased by 14%. Now, the Reality Labs Business Unit, which is the whole Metaverse augmented reality, it brought in $452 million in sales, but as you noted, investments there, I mean, They ended up recording a $2.8 billion loss in the second quarter. That's a huge number. And of course, we're building for the future here, but it's hard to see that right now. We'll have to keep a really close eye on that.

Operating margins pummeled. 29% now versus 43% a year ago. Profit down 32%. Guidance was also weak. FTC trying to block an acquisition of Within Unlimited, which is the supernatural fitness app. So a lot of things, not so great right now, your morality, your love of Zuckerberg aside, only 18 times forward earnings, if they get their act together, it's something you can kind of keep on your watch list and maybe take a nibble. Reasonable to expect, though, that the next quarter in terms of investment in the Metaverse is going to look kind of like this last quarter? I see no let up at this point. No, they will let up in things like employees and other expenses, but investments there will stay the same.

Coming up after the break, we've got retail, restaurants, and a lot more. So, stay right here. You're listening to Motley Full Money. Play that song again about to lose. The same one that's been played. Welcome back to Motley Full Money. were up 15% this week. Gotta be honest, Andy, I did not think this would continue to be the story with Chipotle. I didn't think they could continue to raise prices the way they have, and I was wrong.

I don't think they're done with that either. It's a very impressive quarter that ran into some headwinds on the sales side, as calm growth kind of slowed a little bit. It's still very attractive, up 10.1%. Margin's were solid with the in-store purchases coming back where people come in-store and they are much more likely to buy a soda, for example, or a drink than they are when they order from home. pricing, definitely helping and showcasing that pricing power and the brand power that Chipotle has. They're doubling down on these investments, Chris, to help push more and more people.

They talked a lot about this on the conference call, doing a lot of investments. Very similar to what they did, Brian Nichol did back in 2019 when they kind of got all the troops together and really tried to help them understand what makes the best throughput to really improve the amount of customers they can serve in any 15-minute span. They want to get that up north of 30, and they're not there yet. sales up 17%. I mentioned Coms up 10.1%. The trend through May was actually strong, and then it kind of weakened it a little bit with the economy slowing down a little bit, as we talked about. And that hurt on the comp side, but transactions up 3.5 to 4%. They opened 42 stores.

The restaurant operating margin was up 70 basis points to 25.2. They didn't have as much delivery, and that helped on the cost side. So overall, these new initiatives that are doing for Chipotle, they continue to get it done. They do have some struggles. as they kind of work through this new environment with more and more people now coming back into the store. But overall, you know, you have a business that is $43 billion market cap, selling at 40-ish-time forward earnings and growing, you know, that 25, 30 percent per year. So still very attractive in opportunities as they continue to grow from 3,000 stores, up to 7,000 stores.

And again, against the backdrop of higher inflation, higher food costs, and it's impressive to see them manage those food costs in such a way that they're not alienating customers. Yeah, and they are seeing higher costs when it comes to avocado and chicken and steak and all their input costs. They continue to raise their prices. Their comp growth is going to slow a little bit. They continue to think more in the mid-to-high single digits from 10%. So they have some things to kind of work through. But overall, still one of the more impressive operating stories that they've been able to manufacture during the COVID period.

McDonald's is also raising prices. For the first time, in 14 years, the price of a McDonald's cheeseburger is going up. But strong second quarter results push shares of the stock to within just a few bucks of an all-time high run. Yeah, maybe fast food and fast casual is the place to be during this year. Pretty impressive results. They solidly beat expectations despite an actual 3% decrease in revenue. If you look at their system-wide sales, now that's the sales generated by all the restaurants, which is different than the revenue McDonald's actually takes in, but it's an

indication of the health of the business. System-wide sales, it was actually up 4%. U.S. Same Star sales up also almost 4%. Global comps up almost 10%. As you say, driven by higher prices and that value menu that is very attractive to folks looking to save some money. sales of all types of meals, particularly breakfast or higher. If you break it down to franchise and company-owned, franchise was the strength here, up 7%. Company-owned stores were actually down 15% from a sales perspective. They're making a nice headway in digital sales,

exceeded $6 billion. That represents about one-third of total system-wide sales at this point. Operating income flat, results include 1.2 billion of charges related to Russia and some other charges as well. If you adjust all of that out, EPS, earnings per share was up about 8%. So they're being cautious, as you said, raising prices, especially in the UK, those Cheesburger prices are going up. Sorry, UK. But they really are executing very well. Chipotle at 40 times, McDonald's only 26 times.

Signs of life from Etsy. Second quarter profits and revenue came in high. than expected. Shares of Etsy up more than 35% over the past month, although that means it's still down only about 50% year-to-date, Andy. They did add 6 million buyers during the quarter. Yeah, that was actually nice. It was the lowest they've seen in a couple years, though, really since COVID started. Chris, again, in context. And again, the expectations are pretty muted at their gross merchandise sales were actually flat a little bit, up a little bit. if you bake in some of those foreign exchange challenges with the strong dollar. They talked about how they are impacted by the macro headwinds, the reopenings, consumer discretionary.

So there's headwinds that Etsy is facing for those people who are using their platform. The advertising business, so the ads on the platform that allows people to connect more of the buyers and sellers, is actually a pretty nice strength this quarter. They saw a lot of strength in that business. Overall, their operating income, their EBITDA was up 16.7% with an adjusted margin of about 28%. I'll get to that, why that's important a little bit later. You mentioned, Chris, added 6.4 million new buyers. Revenues were up 10.6%. Their guidance looking forward, fellows, was a little bit, I think, kind of meh, maybe not so inspiring with merchandise sales of 2.8 to 3 billion,

again, versus 3 billion last quarter. Revenues growth about 5%. So a little slowdown from with this last quarter and a little tick down in the operating margins. So while it was nice to see that rebound and what they're trying to do with their marketplace, they are in this new environment with some inflationary pressures, with the cost, they made a couple big acquisitions that they're kind of bringing into the family. There are some struggles with Etsy, but you're paying 25 times forward earnings for some gross stories that could probably grow long term through the cycle more than 10% per year. They are still trying to manage that balance of how do we please customers?

How do we please the sellers? Because in that sense, and this is a company with a market cap of $13 billion, they're essentially competing with Amazon. Going to third-party sellers and saying, we want you on our platform. We're going to treat you better than Amazon is going to treat you. You would think that would be easy in some ways, not necessarily competing with Amazon, but sort of making that case. it still seems like it's a bit of a challenge.

Yeah, I think it is, and they raise their transaction fee. They charge sellers at 6.5% versus 5%. There was a lot of Hubbellu about that and the cost. You add up all the other costs, and there's more costs into the whole Etsy story. That transaction fee increase was a big part of their revenue growth and their profit growth, frankly. They won't have that going forward. They do have to manage that experience and the selling side. They have a lot of initiatives for that, Chris.

This ad business is kind of interesting because it does allow, people connect more closely with what they're looking for on Etsy. Hopefully, that will be able to drive some of that real connection with the sellers. Weak revenue and a big loss in the second quarter since shares of Roku down 25% on Friday, hitting its lowest point in more than three years. You tell me, Ron, how bad is it for Roku right now? It doesn't look good. Down 85% from its 52-week high. It's a real shame. It is a favorite of many investors at The Fool, I myself thought it looked really interesting the last time it got a whack

taken out of the price. But shares are really being hurt by that slowdown in advertising spending, which we keep referencing, and weak guidance, which we can get to. Total revenue was up 18%. But that was a significant miss versus what investors Wall Street was looking for. Now, platform segment revenue, that's the advertising business, up 26%. That also was less than expected as marketers cut back or even paused advertising spend. So we're not negative or anything, but we're just nowhere near where we need to be for a company that is still priced relatively high. Player revenue, which is the hardware and software business, was actually down 19%. So we're definitely seeing some softness there. They did add 1.8 million active users in the second quarter.

That's 63.1 million total right now. Average revenue per user rose 21%, again below analyst expectations, and they lost $112 million for the quarter. But guidance is really, really what shook this stock. They expect revenue in the third quarter to only grow 3%. They expect anticipated Ibetta to be negative $75 million, and they withdrew full-year guidance. They're dreaded withdrawing of full-year guidance. Investors, especially institutional investors, do not like to see that they will sell your stock off if they don't have any guidance to go by.

Right. No one ever withdraws full-year guidance, because everything's amazing. That's why we're withdrawing the guidance. How much more of this can happen to Roku before they become a serious acquisition target? This is a company that is with this drop, it's an $8.5 billion dollar money. market cap on Roku, but to your point, Ron, they've got people who are on the platform, tens of millions of people who are spending money. At some point, someone starts to kick the tires, right? Well, for sure, there's a business here. That's for sure. They need to rationalize

their operating expenses, which they're doing. They need to probably reduce their headcount, which they've indicated that they will do. But you still have a stock trading at 40 times Dibata, 40 times cash flow, which most acquirers won't want to do in this environment until they kind of get their ducks in a row. Advertising will come back, for sure. And I think Roku has a long life ahead of it. It's just a matter of what would an acquire would be willing to pay. After the break, we've got the latest in the war on cash.

Plus, we've got a couple of stocks on our radar. So stay right here. You're listening to Motley Fool Money. As 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 ourselves stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here in studio with Andy Cross and Ron Gross. VizN MasterCard, both out with their latest quarterly results.

Ron, the stock movements were a little different, but it kind of looks like similar stories for V's and MasterCard in terms of spending patterns and profits. Very, very similar. Both solid reports, but they were both overshadowed by a report that Senate lawmakers are preparing a bill aimed at reducing credit card fees. The legislation would give merchants the ability to route Visa and MasterCard credit card transactions over alternate networks. The goal to inject competition into the credit card market. That would be bad, Chris. That's important to keep an eye on here. But the quarter was strong and very similar. Revenue up 20% basically

for both companies. Cross-border spending up strong for both companies as border restrictions continued to be relaxed, travel picks up steam, payment volumes up for both companies as well. Guidance was also similar. Visa sees revenue growth in the high teens to 20% range. MasterCard sees growth in the low 20% range. Interestingly, Visa CFO said we're seeing no evidence of a pullback in consumer spending. Let's see how this quarter plays out to see if it follows through. But overall, very good quarters, but let's keep. in eye on what the Senate has to say. Mixed fourth quarter results from Diageo. Revenue for the alcohol company came in higher than

expected while profits came in a bit light. Andy Diageo has beer, wine, and spirits in its portfolio. It kind of looks like spirits did the heavy lifting this quarter. Absolutely did. One of the largest spirits makers in the world. All their divisions were pretty much up. Beer actually was pretty good, up 25% for the year. With Guinness up 32% the The maker of Guinness, Scotch, was up 29%. Not to be outdone. You're welcome. Johnny Walker.

Ron was up 34%. Johnny Walker, Blue Fellows, was up 63%. Ron, there you go, in sales. 25% in volumes. Overall, the whole year was pretty impressive. Sales up 21.4%. Organic volume up 10%. They make these acquisitions, so organic is important.

Strong organic growth of double digits across all their regions. Very favorable trends for spirits, and they're taking share across those. those areas. On-premise, as people go more back to restaurants and bars, Chris, is really having an impact to the operating profit up 18.2%. And margin up 121 basis points. So overall, they continue to get it done. You're paying 23% for times earnings, a little bit of a yield about 2%. It's not going to be the fastest grow in the world. I own Diage. I'm content to just kind of sit on it and own it here. Sales in the mid-single digits and profits, a little bit of profit margin growth there with some of their acquisitions, too.

So overall, a very nice year, not going to have the same year again like this. I don't mean to anchor to one data point, but the Johnny Walker Blue number is pretty incredible when you consider that's really a premium brand. And those earned dollars, and all their premium brands really drove a lot of Diageo's growth that speaks to the brands and how they're kind of managing and operating them. Could be an early indication of the bifurcation of the markets that we sometimes see in terms of spending patterns. We'll keep an eye on that for sure.

Their tequila was up 55%. Unilever is the $120 billion consumer products company that is the parent of many brands, including Klondike frozen desserts. This week, Unilever announced it is discontinuing the Chaco Taco. The company said in a statement, quote, over the past two years, we have experienced an unprecedented spike in demand across our portfolio and have had to make very tough decisions to ensure availability of our full portfolio nationwide. So what does that mean, Ron? It's like, we're being punished because

we ate too many chaco tacos? That's what that sounds like to me. I think we're eating more of the other Klondike products, probably. I think a nice tie-in with Chipotle to increase their dessert menu would be really interesting. A nice chocolate taco, ice cream taco sounds pretty nice to me. I will say real quick, though, what upset me is they're also discontinuing the toasted almond bar, which is what my dad would always get when the ice cream man came around. So that's a little nostalgic for me. Mr. Gross, sorry about that. Let's go to our man behind the glass, Dan Boy.

Dan, before we get to the radar stocks, any reaction to the chaco taco news? So we get inflation, but we lose chaco tacos. Why can't we have nice things, Chris? It's a mystery, Dan. You want your chaco taco and eat it too. Let's get to the stocks on our radar. Dan, we'll hit you with a question. Ron Gross, you're up first.

What are you looking at this week? I'm going to circle back to Next Era Energy, N-E. She has down about 15% from the 52-week high, but it has rebounded nicely, about 20% off its low reached in March. They operate the largest electric utility in Florida, and they're also the largest wind and solar operator in the world. So you get both the traditional electric utility and a nice play on renewables. They've grown adjusted earnings per share at above-average 9% compound rate since 2005, raised. their dividend every year since 1995, qualifying it as a dividend aristocrat. Board recently approved a dividend policy where we should roughly see 10% increases in the dividend through 2024, currently a 2% yield. Not so cheap for utility at 30 times, but you get the renewable part of the business as well. It's now a dividend aristocrat?

26 years. Dan, question about next era energy? Sure, Chris. Now, Ron, just how next era is next era? I'm serious here, because how much of their portfolio is fossil fuels versus renewables? They are moving towards clean energy projects. They have investments to deliver battery storage, air merging emissions, free energy sources, hydrogen pilot projects that are very green, water infrastructure projects. Yes, they are the largest in Florida from a traditionally utility perspective,

but they are moving significantly into the greener area of the business. Andy Cross, what are you looking at this week? Dan and Chris, I'm looking at Massimo M-A-S-I, a global medical company that designs a range of monitoring devices for pulse oxymetry to measure like our blood-oxygen levels for more than 200 million patients. They also do other kinds of monitoring devices for brain monitoring, motion detection, cardiac monitoring. They do both wearables and stations and hospitals. They sell mostly to hospitals and doctors' offices.

But Dan, here's why this is interesting for those $8 billion company. Just this year, they announced an acquisition of Sound United, which sells premium audio and home entertainment systems like Polk Audio and Bowers and Wilkins, digital audio, a bunch of other things. They closed a deal in just two months. The day the deal was announced Chris, the stock fell 35%. Why is a medical company buying an audio company? It's very interesting. Joe Keani owns 7% of the business, founded the company back in the 80s, owns more than $550 million worth of shares. It's very interesting how he cobbles these all together, especially when it comes as Massimo pushes more towards wearables. They have a W-1 watch and is selling other kind of connected devices into the system. So I'm very interested to see

what Massimo does with this acquisition of Sound United. Dan, question about Massimo? Now, Andy, you didn't explain why they bought Sound United. That's the big question, my friend. That's the big question. How they linked this all together, they've talked about explaining this more and more over the months to come. So we'll have to see about this. As an audio professional, I wonder what a medical company would want with speakers and TVs. But, you know, whatever.

I think it's tied somehow to the wearables market. What do you want to add to your watch list, Dan? You know, I'm not really a utilities investor. I'm sorry, Ron. But I'm intrigued by the medical technology. technology company, buying a sound speaker company. I'm going to go with Massimo. I don't know if it's going to work out, Chris, but we'll keep an eye on it. Guys, thanks so much for being here. Thanks, Chris. That's going to do it for this week's

Molly full Money Radio show. I'm Chris Hill. We'll see you next time.