Motley Fool Money - Apple, Amazon, and 2 New All-Time Highs

Episode Date: October 28, 2022

The biggest tech companies reported this week, but it was Apple that shined the brightest. (0:30) Jason Moser and Matt Argersinger discuss: - The diversity and strength of Apple's business lines - Slowing growth in Amazon Web Services - Meta Platforms hitting its lowest point in 6 years - Ford Motor's demonstration of fiscal discipline - The latest from Alphabet, Microsoft, and Visa (19:15) Jason and Matt continue the earnings analysis and discuss: - ExxonMobil and McDonald's hitting new highs - Chipotle's plans for growth - Surprisingly strong weeks for Teladoc Health and Intel - Overrated and underrated Halloween candy - Two stocks on their radar: SiTime Corp. and Lennox International Got a question about investing? Email [e-mail] Stocks mentioned: AAPL, AMZN, META, GOOG, GOOGL, V, MSFT, F, XOM, TDOC, INTC, CMG, MCD, LII, SITM, TSM Host: Chris Hill Guests: Matt Argersinger, Jason Moser Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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If you're 45 or older and at average risk, ask your health care provider about the Coligard test. Colagard is available by prescription only. Learn more or request a prescription today at colagard.com slash screen. The biggest names in tech reported this week, and tis the season for hot takes on Halloween candy. We've got thoughts on all that and a lot more. Motley Fool Money starts now. That's why they call it money.

Cool global headquarters. This is Motley Fool Money Radio show. I'm Chris Hill, joining me in studio. Motley Fool Senior analyst Jason Moser and Matt Argusinger. Good to see you, as always, gentlemen. It's Earnings Paloza. We've got the latest on some of the most widely held companies. And as always, we've got a couple of stocks on our radar. But we begin with Apple.

The biggest tech companies in the world reported earnings this week, but the reaction to Apple's report was different than the rest. Shares up more than 7% on Friday after fourth quarter profits in revenue came in higher than expected. Jason, a little surprising when you consider how important the iPhone is to Apple's business. And iPhone revenue was more than half a billion dollars lower than expected. Yeah, but Apple's kind of like pizza, right? I mean, even when it's bad or it's not that great, I mean, it's still pizza, right? Same thing with Apple. It's still Apple. Did they blow the doors off the quarter? Nope. But it was still a pretty Apple-like quarter. So even if they underperformed anywhere in regard to expectations, I mean, you know, it was still a respectable quarter, right?

Phones, services, yeah, they could have done a little bit better. But it's not like these were bad results. And they point to a company that ultimately remains pretty darn resilient, even in the face of a tough economic climate like we're in now. So, if you look at the numbers, revenue $90.1 billion was up 8% from a year ago. And that includes 600 basis points of currency impact. To put some numbers around the fiscal year, fiscal 2022, $394 billion in revenue, 8% annual growth. Services performed well, but probably not well enough in some eyes. $19.2 billion versus $18.3 billion a year ago. So 5% growth. And for a company, we've been talking about, you know, this is becoming a services company.

That's not all that inspiring, but the flip side of that is they've got more than 900 million paid subscriptions across the services on their platform. That's up more than 155 million over the last 12 months alone to double what they had three years ago. So they are pulling it off. I think they're just going to have to execute a little bit on the pricing side. And we're seeing that with music and streaming, right? They're going to raise prices in music. That's primarily due to licensing costs. They're going to raise prices on streaming because they feel like it's a better offering now, and they can do it. Mac sales up 25%. iPad revenue was down 13%. Nothing terribly surprising.

They're wearables slash home slash accessories. That was up 10%. So, you know, I think all things considered, again, didn't blow the doors off the quarter, but a very respectable quarter, particularly when you compare it to the other big tech names that we'll talk about. I wonder if, I think Apple's always going to benefit from the power users of Apple, the people that will buy the new iPhone, the new Mac, at least every two years. And I'm just wondering, to get your thought, if we do enter a slowdown of recession, consumer-driven or not, will their sales fall off just because people might delay buying that next iPhone or the next iPad?

I feel it may be it does to an extent, but I think what we're seeing, I think a pretty common theme we're seeing this earning season thus far as at least. that current economic conditions and any potential recession that comes down the pike here, it seems to be impacting the lower income earners as opposed to the higher-end income earners. Apple certainly benefits from that higher spender, right? That higher earner. So it may delay, but I think ultimately that's a timing thing. If it does that, then you probably look at that as an opportunity to buy the stock.

Third quarter results showed slowing growth in the AWS division, and the company lowered guidance for the all-important holiday quarter. Shares of Amazon down 10 percent on Friday. You tell me, man, how bad was this? Well, not great. I think you hit the two main things. It comes down to AWS and guidance. I want to know if I could tell a quick story really quickly, though, before we get to that, which is July 2020, I've owned Amazon for 10. plus years, I had to sell shares first time because I was making a real estate investment, had some other things going on. I had to sell a bunch of things, and I sold half my Amazon

stake. And I remember I trembled, you know, clicking the button to sell those shares because it's just, I didn't want to do it. And of course, at that point, the stock had kind of just gone over $3,000 a share pre-split, so but $150 post-split today. And I was like, you know, I'm going to regret this. I know I am. And of course, over the next year, I watched the stock go up to, I I think 180, 185, almost 4,000 pre-split. And I just, I was depressed about that. Watching the stock come on. I never thought I would see the stock down on a post-spil basis below $100 a share,

which it briefly did this week after earnings. I'm excited about that, but I'm also realizing, you know, there is something too why it's down, and you hit it, which is, there is this, the Amazon Web Services as part of this business has such been, it's been the crutch. though the retail business has held up. And if you look at the retail numbers, they were fine. I think it was up 13% overall, which, you know, given the maturity of the business, that e-commerce business, pretty strong. But you see the slowdown in AWS, which is slower growing now than Google and Microsoft's competitors. I think the bigger thing might be that the operating margins

of that business have come down quite a bit. And so if that is the profit engine that is no longer there, or at least it's diminishing to a certain extent, that I think had a lot investors worried. And then, of course, you said the guidance, looking at growth between two and eight percent, I believe, on their guidance range of the fourth quarter, that is probably a lot sharper than investors were expecting. Again, this is the holiday quarter. This is when people expect, not just Amazon, but all retailers to really make their bones. Did the range of the guidance surprise you? Because it struck me as wider than typically we hear from Amazon. And I just thought,

and not that I fault them for this, but I thought on the low side, they might be a little sandbagging. Probably a little bit, and I think Amazon is known for this. I mean, and they even said that their income projections would be between their operating income would between zero and four billion. That's a tremendous range. I would not be surprised at all. I think what you're getting at is if they come in the high end of those ranges when they actually report. Shares of meta platforms fell to their lowest level since 2016 this week after the company's third quarter report revealed just how much the company is investing in its metaverse division. Jason, we like it when CEOs communicate clearly.

Mark Zuckerberg is being very clear about what he wants the future of meta platforms to be. He is indeed, and we're going to see how that plays out. It's not a surprise that there are challenges on the advertising front. At the end of the day, it is cyclical, and it goes as the economy goes. So when those purse strings tighten, ad budgets tighten with them. But you said it. I mean, they're basically doubling down on this metaverse, which right now, is still just a very squishy concept. I mean, you have Google with their moonshots, right?

Those other bets, as they call them. I mean, for meta, for Facebook, this Metaverse bet is an all-in Pluto shot. I mean, it's so far out there that most people just can't see it. And that's understandable. So, you know, I'm not saying that it's a waste of investment dollars. This probably works out in some capacity, but I think it's going to take a while. And there are understandable concerns that he's overdoing it, particularly when you look at the core business itself. Revenue was down. If you exclude currency effects, it was up 2%. So I think he'd take that. Bottom line, earnings down 49% from a year ago, which is obviously not good. User growth, 4% was a positive. Daily active is up 3%. But back to the ad market, while impressions were

up 17%, price per ad continues to fall, down 18%. They are spending a ton of money, though. Capital expenditures, $9.5 billion, almost double from a year ago. And guidance, across the board, not painting a very encouraging picture in the near term. As expenses continue to go up and revenue continues to come down, they repurchase about 32 million shares for the quarter at an average of about $203 per share. And given where Facebook's price is today, or meta, I'm sorry, clearly that wasn't the wisest use of those dollars. I'm not the biggest fan of this company. I mean, I think most people know that. That said, honestly, from here, The stock is probably an opportunity for those who are able to take that long review.

It is really difficult to disrupt networks of that scale. I think that he will start to moderate those metaverse investments a little bit, but investors should be very prepared for a bumpy ride. Speaking of a slowdown in ad spending, Alphabet's third quarter profits and revenue were lower than expected. And really, with the exception of Google Cloud, it was kind of across the board, Matt, shares of Alphabet down 7% this week. It's important to remember that, I think, for a lot of these companies, in the ad space, the comparables from a year ago were hard.

They were going to be hard. If you look at Google's revenue, for example, in a year ago, third quarter, up 41%. So the fact that they have any kind of growth at all over those numbers is pretty impressive. But you're right. There's definitely a slowdown here. I think the biggest thing that stood out to me was just that the YouTube, the advertising revenue for YouTube, was down. And maybe that was, I didn't follow the guidance, I don't know if that was expected, but that felt like a little bit of a shock to me. I think that's been such a sticky platform that's always gaining popularity in my mind.

But it looks like, and I don't use it, so I don't know, but it looks like TikTok is actually finally making some inroads, taking some market share from that, you know, that short form, medium-term video. So I feel like the ad slowdown is comparable. The tough comparables for last year are explainable. I think the YouTube slowdown is the thing to watch here. And gosh, I wish Alphabet, just pay a dividend. I mean, you've got all these other things, and I know there's other bets. The one thing I'll say about comparing meta to Alphabet is that the thing I like about Google's approach is that these other bets are spread around a lot of different areas. Where I feel like Mark Zuckerberg and Facebook meta is an all – it feels like an all-in bet where it's not the case for Alphabet at the same time.

I'd rather they clamp down a little bit on that spending. and maybe focus on dividends or other things. Let me go back to YouTube for a second, because I think that part of the reaction we saw was not just to the results themselves, but to the fact that earlier this year, Alphabet already pulled the lever with YouTube in terms of original programming, where they said, you know what, we tried this, it's not working, we're just going to pull this. And so the results we saw from YouTube become slightly more concerning when it's against the backdrop of like, oh, they've already cut the original programming.

That's right. That's a really good point. Visa, Microsoft, and a lot more after the break. So stay right here. You're listening to Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in studio with Jason Moser and Matt Argusinger. Visa's fourth quarter profits and revenue came in higher than expected. And Visa must have some extra cash laying around, Jason, because they increased their dividend and announced a $12 billion share buyback plan. Well, I mean, I'm not complaining as a shareholder. I'll take it, right? I mean, this was another very strong quarter and a good example of why it's a good example of why it's a $12 billion. I think Visa is worthy as a core fintech holding, right?

I mean, it was interesting in the call, right? There was a lot of recession talk in management, clearly. They're not planning for a recession in the coming year. So maybe take that optimism with a grain of salt, right? If a recession does hit, we likely see them reassess the outlook. But I think counter to that is, this is such a valuable network that leverages so many capabilities across the world. Given the tailwinds and the electronic movement of money, maybe they're a little bit more immune

than others. But to the numbers, I mean, the numbers were really strong. Fourth quarter net revenue up 19% from a year ago. Non-gap earnings per share, $1.93 cents, up 19%. Total payments for the quarter. Total payments volume was up 10% from a year ago, up 135% versus three years ago. Cross border, which is an investment that Visa and MasterCard in particular continue to make. Those volumes were very encouraging, up 49% from a year ago. 130% versus three years ago. And then new flows, which is, ultimately, it's beyond that consumer to business payments that they've always focused on, right? Broader movement of money around individuals, businesses, governments. That was up over 20% for the quarter. And as you

said, right, they're going to continue buying back stock. They bought back for the year, $11.6 billion in shares at an average price of just over $205. The share counts down 9% since 2000. And that's really, that's the MO with owning this stock, right? They're going to continue to buy back those shares, pay a modest dividend. I mean, it's a stock that has offered investors some real stability here this year, just down 3.5% versus the S&Ps around 20. So, it's been a good one to own. How much should we read into the fact that Visa doesn't think there's going to be a recession next year?

Yeah, again, I think that it's just one of those things that plays into that broader trend of the electronic movement of money. I think they benefit from that. But I think they benefit from that. But I would not be surprised if we do hit that recessionary period. I mean, you'd likely see management maybe reassess their outlook a little bit. Microsoft brought in more than $50 billion in revenue in the first quarter, but shares of the software giant down a bit this week after guidance for the current quarter a little bit lower than Wall Street was hoping format.

Yeah, a lot lower. Maybe I'm surprised at the growth, they're guiding for growth of just 2% in the next quarter. That seems very low to me. This was also, by the way, Microsoft's lowest rate of revenue growth in five years. Good news is you still have the Azure Cloud business growing 35%. It's become, you know, it was sort of the one that was trailing Amazon for many years, but it's really, it's maintained its growth. It's now growing faster than Amazon's web services. Stand out to me was, does anyone use LinkedIn around here? Because LinkedIn's revenue was up 17%. I'm really surprised at that. The sessions to LinkedIn were up 24%.

I remember Jason, we were working on a million-dollar portfolio back in the day, and when Microsoft acquired LinkedIn, and I just thought, this just seems like a real stab in the dark for Microsoft. Who sort of missed the whole social networking? This was their chance to get in on that. I think they've done a tremendous job with LinkedIn, even though I don't use it very much. I don't really know many people that do. I'm with you. Every time I log into it, I wonder why did I I just log into this. You know, there has been a lot of job movement in 2022, so I think that's part of it.

But, you know, take solace in the fact that you weren't the only ones. There were plenty of people looking at that acquisition back. Was it $26 billion? That's my memory. That sounds about right. But, you know, I remember thinking at the time, are they just bored? Are they just like, are they just doing it to, you know, just to see? To your point, man, in all seriousness, the way they have consistently monitored.

It's really just been in, I think, the last couple of years that they've sort of broken that out and highlighted that. But yeah, it is kind of surprising when you look at the run rate on LinkedIn. Yeah, very impressive. Ford Motor posted a loss in the third quarter, but shares up 8% this week, in part because Ford executives said they are going to stop pouring money into their autonomous driving initiative, Jason. They were very clear about this.

We're not doing this anymore. Yeah. Well, I mean, certainly the future for now is more EV and less AV. I think shareholders have reason to celebrate there. I mean, they will continue to invest in the electric vehicle capability that they've developed. And they're the number two EV brand in the U.S. now, so I think that says a lot. I wouldn't say they've given up fully on autonomy, but management also recognizes it's a far more complex problem that some would have you believe. It requires more time, capital, capability that would take them away from

making sure that they focus on success in the near term with the things that they do, really well, right? Building cars, right? And EVs are a little bit of a more natural extension, I think, at this point. The company's in great fiscal shape with $50 billion in total liquidity. And as they noted in the call, they're going to impair this investment in Argo, which ultimately was that effort at L4 autonomy. And L4, right, if you remember, that's considered to be fully autonomous driving, although a human driver can still request control, and the car still has a cockpit. And so they are going to continue to invest in autonomy, but there's going to be more L2 and L3, which ultimately just brings more human judgment

into play there, right? And I think that makes a lot of sense, because I think most of us agree, and I've been very critical of this move towards AVs, because to me, it feels like the technology for the car, I think, is there. But we don't have the infrastructure. We don't have the road system that can handle that at this point. And Mattie, you said here earlier today in the production meeting, you got to kind of build a city that's geared for that specific technology.

So far in the future, I think it makes a little bit more sense, but I really do appreciate that they're going to focus more on EV, more on the automobile, ratchet back on the autonomy a little bit and move forward. Right. You can only innovate so much at the car level. You said it. If the infrastructure and the cities and the roads aren't meeting that technology investment, you're never going to be able to do that.

And I'd just say, kudos to Ford, by the way, a company, unlike other companies we talked about, that decides to cut bait on something that's just not working out. Instead of doubling down. Right. Well, yeah, and also saying, like, look, we're looking out over the next 10 years and over the next 10 years, this isn't going to pay off. Right. And maybe let someone else innovate it. And Ford can, of course, build vehicles into that eventually.

After the break, we've got restaurants, more tech, and two dividend aristocrats hitting new all-time highs. Stay right here. You're listening to Motley Full Money. Well, I left Kentucky back in 49 and went to Detroit working on assembly line. The first year, they had me putting wheels on Cadillacs. Every day I'd watch them beauties roll by, and sometimes I'd hang my head and cry because always wanted for one. Welcome back to Motley Full Money.

Chris Hill here in studio with Jason Moser and Matt Argusinger. ExxonMobil's third quarter profits were not just a record, but just shy of $20 billion, the energy giants profits were within shouting distance of Apple's quarterly profits, Matt. of Exxon Mobile hitting a new all-time high on Friday. Yeah, all good, right, when oil prices are multi-year highs. I mean, that is the business. But kudos to Exxon. Darren Woods, the CEO, was, I believe he was on CNBC on Friday.

And he said, you know, we use lean times. Like we had kind of beginning of early on in COVID and kind of the months after to really keep our KAPX programs going, keep exploring, to prepare ourselves for the eventual good times like we have today. And I think that's, if you look at ExxonMobil's history, you know, yeah, it's an energy giant, but it's also one of the most innovative companies out there. And they've always been really great capital allocators. And this is just proving the point that, you know, if you can survive the boom and bust cycles of the energy space,

which ExxonMumble has done very successfully for decades, you can do quite well as an investor. And I love this. I'm looking at this chart. We're beating too much on MET, I get it. But it was like a year ago, meta stock price, market capitalization was three times the size of Exxon's. Exxon is now on the verge of being twice the market cap of meta. And that happened in the space of about a year. So think about the turnaround there. But yeah, really impressive results.

I saw that they raised their dividend. Again, this is, of course, a longtime dividend payer, dividend aristocrat companies. So you have that as well. Teledoc health's loss in the third quarter was smaller than expected. Shares of Teledoc up more than 20 percent this. week, Jason? Is the worst of it over? Well, I don't want to make a call, but it does feel like we may be finally getting past this mess of an acquisition when they decided to buy Lavango a couple of years ago. The good news is there

was no further goodwill impairment this go around. So maybe we're on the other side of this thing and then get back to focusing on the core business. I think the results were very respectable. Revenue was up 17 percent from a year ago to $611 million. The biggest driver of that growth continues to be better help. They're direct-consum. or mental health brand. That grew over 35% compared to the previous year. I think on that note, too, as much as I hammered them on that Livongo deal, because I do, BetterHelp has grown and scaled so quickly and so effectively. It's working now at a run rate of $1 billion in revenue. Now, think about that for a second. They bought it for $4.5 million back in 2015. So, yeah, LaVongo

maybe not so great. I was going to say, so you're saying it's the opposite of the Lavango acquisition. The George Gistanda of Lavongas, right? And yeah, it's at least something to remember. They ended the quarter with total U.S. paid members, $57.8 million versus $52.5 million a year ago. Visit fee only $24.3 million versus $23.6 million a year ago. And average U.S. revenue per member per month was $2.61. That was up 9% from $2.40 a year ago. Utilization, 22.3 percent, up from 21 percent a year ago as well.

So we're seeing signs that the business is starting to normalize. They talked about pipeline development, really taking a turn for the better, and in a great position here for the remainder of year and going into 2023. Getting through some unforced errors in a difficult macro environment, but I still like what they're doing. I don't think any of us believe that a company being acquired is reason enough to buy shares of a company. That being said, when you look at where Teledoc health is today, do you think it is an acquisition

target? I'm sure there are folks out there that would like to own it, but I think that Teledoc management would much prefer to be able to forge their own paths. I don't suspect we'll see that, but it's an attractive asset. Shares of Intel up 10 percent on Friday, after third quarter profits came in higher than expected. The chipmaker also told investors it plans to reduce costs by up to $10 billion over the next three years, cost-cutting is often music to Wall Street's ears, Maddie.

It is, but to me, it's never the panacea to what looks like a pretty steady downtrend for Intel's business. I mean, I was looking at the results and trying to figure out where the good news is and why investors. Why is the stock up? Right. I mean, look, revenue, you know, revenue 15.3 billion down 15% year-over-year, adjusted net income down 60% from a year ago. And so I wonder if It's one of those situations where investors just were expecting much worse, and it wasn't as bad as they thought, so that the stock's up. And yeah, this is a business that probably could serve, could be more efficient. So I think that's a good story.

If they can save $3 billion in cost reductions by 2023, maybe $8 to $10 billion in cost savings by the end of 2025 is what they're outlining. You also have a dividend, by the way, right now that's yielding over 5%. So if you're an investor, maybe right now at today's price, there's not a lot of the a lot that has to go right to really earn a nice return. If you have that dividend in place, which they seem like they're going to defend, and if they can bring some efficiencies out of the business, bring some costs out, and the cycle comes back, the semi-cycle comes back in a year or two, maybe that works out for Intel.

And not to be overly cynical, but this is one of those announcements that a company, any company, not just Intel, can go back to over the next three years. This is something they We can point you six, 12 months from now and say, hey, by the way, we made that announcement in late 2022, and so far this year, this is what we've done toward that goal. Right, right. It's equivalent to sometimes a new CEO comes in and decides, you know, just throw this kitchen sink out. We're cutting all these costs. Business is going to be lean, but guess what?

We can look back a year or two from now and say, hey, that's when we made the business more efficient. Look at our margins today. Businesses come back. That's probably what's happening with Intel. Chipotle's third quarter profits came in higher than expected, but customer visits fell and shares of the burrito company down a bit this week. Jason, I say this, not just as someone who hosts this show, but also as a shareholder. It is fascinating to watch CEO Brian Nicol

and his team continue to walk this line of managing inflation while also managing price increases they're passing along to customers. Yeah, they do a very effective job of it. And with around 3,100. stores today, I mean, the management sees an opportunity for this business to get to 7,000 stores in total. Now, if you think that's optimistic, which I do, right? So let's discount that 20%. That's still around 5,600 stores they could potentially get to, I think likely will. So to me, I mean, I think that helps make some sense of today's valuation. I mean, you get a burrito maker trading at like 44 times forward earnings. Sounds like a lot. But there's

a lot of growth to be had there. And, hey, man, they make good food. So, you know, what? When you look at the numbers, I think that really tells us a lot. Sales were up 14 percent for the quarter, $2.2 billion. That was driven by a 7.6 percent comp versus a year ago. The in-store sales grew by 22 percent. Digital sales represented 37 percent. If that sounds a little low, it kind of is, but that's a sign that people are getting back out there. I think that's a good thing, right? Restaurant level margin, 25.3 percent. That was up 180 basis points from year ago, and ultimately, Adjusted earnings, $9.51, up 35% from last year, opened 43 new restaurants, 30 of those with

Chipotle lanes. So, again, speaking to that convenience, digital ordering, trying to be wherever the consumer wants them to be. They now have 30 million rewards members, up from 24.5 million just a year ago. They continue with modest share repurchases, but ultimately, that just offsets dilution. The balance sheet remains in great shape, over $1.2 billion in cash and equivalence. To your point, they're managing the costs and inflation along with pricing. Yeah, it does continue to create headwinds, right? They've seen costs go up 20 percent over the last two years.

They just effectively and just methodically pass through little price increases here and there that customers continue to pay for. And then finally, Chipotle, the tech company, right? I mean, I'm really looking forward to seeing how this chippy thing plays out, right? Talk about your chipmakers. I mean, Chippy's autonomous chipmaking? Like, this thing is, it's a little It's a chip-making robot. I'm not talking about IT chips, Maddie. I'm talking about those dip emin salsa chips. I like those chips so much better.

Yeah, the important chips. I think it's just going to be fun to watch this kind of play out. This is a very innovative management team. They try new things. It's a lot of fun. I'm happy to continue owning these shares. There was a point in time when the growth story for Chipotle involved other cuisines, the shophouse concept. They were, I think, kicking around a burger concept, that kind of thing.

Do you get any sense from Brian Nicol that that is something, even on the back burner that they are considering, or is that completely off their radar? I don't get any sense that he has any interest in it at all. I mean, I say that as someone I loved those other efforts. I mean, I thought they made some really good food. There were tremendous offerings. But it's encouraging to see that he really is going to focus on the core concept here. Breakfast?

Where are we on breakfast? I'm asking that for years. I know. We're waiting for it for years. But unlike the other concepts where, you know, you could find people who would take a bearish outlook, and ultimately, the company just decided to put those things away. Who's bearish on breakfast? Feels like the biggest no-brainer in the history. No-brainers, Chris.

Global same-store sales for McDonald's rose 9.5% in the third quarter, helping to push shares to a new all-time high. Matt, unlike a lot of restaurant chains, including Chipotle, McDonald's seeing an increase in customer traffic. Yeah, great results for McDonald's. I mean, the, we're just, the one of the disadvantage that McDonald's has by being such a global company versus a Chipotle, which is still, as far as I know, mostly a North American story. Even though their global comp sales are up 9.5% and U.S. comp sales were up 6%. Overall revenue was actually down 5%. Because you got the stronger dollar, lower traffic in a lot of the international stores.

So that was affecting them a little bit. And operating profits were actually down 4%. But again, in constant currencies, up 4%. So McDonald's is sort of the growing pains of being a very, very large company that scales across the globe is affecting a little bit. But those things are outside of management's control, and I'd say, you know, can control currencies or what happens in the macroeconomy. So the results are fantastic from an operating basis. Also raised their dividend 10%. So a company, a restaurant chain is mature, a brand is mature as McDonald's doing this well. It's really impressive. What about these comments that CEO Chris Kim Chimski made on the call about the McRib, where he

referred to it as the goat of sandwiches and compared it to Michael Jordan and Tom Brady. Yeah, a little, maybe a stretch, a tad stretch. I mean, I've actually never had the McRibbs, so I can't speak to its, you know, its religious qualities. Well, beyond just sort of, you know, to me, there's the question of like, really, this is the greatest sandwich of all time? Also, McDonald's is not in the McRib business. They're in the burger business. So on another level, I just found it odd that he was essentially just pushing aside all the burgers and just saying, no, this limited-time offer sandwich we roll out once in a great while, that's the greatest of all time. I was like, really? That seems like a bad

message to send. It might be. It might be. But I can't argue with the results so far. Just like stocks, some Halloween candies are overvalued, while others are flat out undervalued. After the break, we've got our picks for overrated and underrated Halloween candies, as well as a couple of stocks on our radar. So stay right here. You're listening to Motley Full Money. 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 ourselves stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here in studio with Jason Moser and Matt Argersinger. Tis the season, guys. Halloween, just hours away, actually.

And as we do every year, let's talk about some overrated and underrated candies because they're not all fairly rated. Matt, I'll start with you. What is an overrated Halloween candy in your opinion? Gotta be jolly ranchers, right? They're small, they're cheap. People throw them in your bag. They take forever to consume. They make your mouth and turn green and blue for hours.

And I just... And they're not chocolate. No, they're not chocolate. And I have to sit there and suck on one for an hour before I get to my next piece of candy, which is kind of inconvenient. You know what, man? I understand where you're coming from because it's a very polarizing candy, but it's a true story.

I actually made a New Year's resolution one year, several years back to my wife to stop eating Jolly Ranchers because I couldn't stop. I had like a bowl of those things. I just, I throw 20 of in there during a day because they're so fruity and delightful. Yeah, but unsatisfying, so you have to keep eating. You're right. And that's why ultimately I made that resolution. And I will say, I fulfilled that resolution. And now my hankering for Jolly Ranchers is almost non-existence. On some level, were you telling yourself you were eating fruit? You were eating something healthy? Well, there's vitamin C maybe. No, I think I was just in denial that I had a problem.

What do you think is overrated? Oh, I mean, for me, this one came right to top of mind, Twizzlers. I mean, when I see the commercial even, I'm like, what the heck? I don't get it. It's like chewing on a shoe. I mean, I don't care what flavor, whether it's licorice or strawberry or cherry or whatever. I don't get the attraction to Twizzlers. I mean, you know, you find them in those variety bags.

You're just thrown away. They're no good. My parents-in-law love Twizzlers. They accidentally left a bag of the long Twizzlers open. I don't know if it was on the floor or something, but their dog. consumed, this was like a week ago, consumed an entire bag of large twizzlers. At least one chocolate. He's still alive. The dog is still alive.

Let's go to the other side, Matt. What do you think is an underrated candy? Rollos, right? I mean, I'm not even a caramel fan, but Rollos, I love the taste. They come in the little gold, you know, wrapping, which always feels great. But I just feel like they, I don't know where they've gone. I don't see Rollos that much anymore. I will say this about Rolos, and I'm blanking on who makes them, but they clearly hit on something good. And they just decided, no, we don't need to innovate. It's not like Mondalese with Oreos, where it's like, let's just try a new flavor. It's like, no, no, no.

We've got a hit on our hands. We're just going to keep making this hit. No need to innovate. What about you, Jason? Chris, I get so sciced for Watchmanicholets. I can't understand how we don't see them in every variety bag everywhere. The big candy bars, I mean, I think in many form they would be even better. I mean, it takes me back to my childhood.

You remember the original Watcher Maca Macaulet that didn't have the caramel in it? Now that has the caramel in it, it's still delicious. I just don't understand how this is not a candy we see everywhere. Whenever I find those things in my kids' trick-or-treat baskets, they're junior and senior in high school, but they still somehow come home with candy, I'm looking for those things, and I'll sneak them. I'm not scared. And they're not listening to this show, so they don't know, probably, that you're sneaking

them. This weekend, we have an episode dedicated to the business of candy, because as any Hershey shareholder can tell you, it can be a very lucrative business for share-on- holders. And one of the things they're doing on that episode is power rankings of Halloween candy. Let's go to our man behind the glass, Dan Boyd, who's going to be on that episode with his power rankings of candy. But Dan, underrated, overrated? Any thoughts here either way? I just want to echo that both Jolly Ranchers and Twizzlers are completely trashed here, Dandies. Just throw them directly in the garbage, no need. I want to echo my sentiment from

previous years of this, Chris, and remind everybody that the Milky Way, is a joke of a product. Just completely awful. Just get a Snickers. It's 10 times better. And then as far as underrated candies, I want to go with the humble payday here. The peanut and caramel combination, I think, is extremely strong. Love it. Can't improve on that. All right. Let's get to the stocks on our radar. Dan will hit you with a question. Matt, you're up first. What are you looking at this day? Yeah, I'm going with one. I'm sure a lot of listeners haven't heard of. It's Lenox International, ticker L-I-I-I. It's actually been around since 1895. They were kind of pioneer in the business of forced air heating for homes, but they make and distribute HVAC and refrigeration products.

Record results in the third quarter. They are a dividend night, which means they have beaten the market over the last 10 years and raised their dividend by more than 10% annually over the last 10 years. And since their IPO in 1999, up 1,800 versus the market, which is up only about 350%. Big-time performer. Impressive stuff. Dan, question about Lenox International? I don't know about the company, but man, the dividend night label is quickly becoming my favorite way to look at stocks. Like, is this stock a dividend night?

That sounds pretty good to me. Jason Moser, what are you looking at this week? Yeah, a company called S-T-Time. Ticker is S-I-T-M. S-T-M-S-T-Temps specializes in designing precision-timing micro-electro-mechanical systems or mems for short. Not to be confused with some metrics we discussed earlier in the first. the week, like perhaps, you know, D-T-R-G or something like that. But regardless, this is a smaller, more efficient chips, essentially is what they are, right?

Rugged, accurate, durable, effective. It's really about moving away from quartz and towards silicon, which is a better timing-keeping mechanism. It's better than the legacy quartz-based system. So that's what Sightime focuses on. Their solutions are used for everything from data centers to communications, companies, to those personal devices that we have in our pocket, Chris, right? And so as the world moves towards more technology, faster means of communication, the more connected

we become, really the more MEMS timing systems are going to be required to make all of this happen, which just plays right into their wheelhouse. Earnings for Sightime out on Wednesday, November 2nd, given the challenges we've seen in the greater semiconductor space, it will be noteworthy to hear what they have to say. Dan, question about Sightime? Now, Jason, to say that this market is somewhat saturated is a little bit of an understatement. when it comes to chips and your various silicon processors and everything. What about Sightime makes it special and interesting for investing other than, I don't know,

a Taiwan semiconductor? Well, I mean, I think ultimately it's that specialization in moving away from quartz to silicon. And their thesis, and this is one that seems to be playing out, is it even more superior timing, timekeeping device. And so that's what they're playing into. and they sell their chips to big distributors who then sell to end customers. And it's worth noting that Apple really is one of their largest end customers, if not the largest end customer. What do you want to add to your watch list, Dan?

In no surprise. I'm going to go with the dividend night. I'll go with Lenox International. There you go, Dan. Matt Argusinger, Jason Mazza. Thanks for being here, guys. Thank you. Thanks, Chris. I'm Chris Hill. Thanks for listening. We'll see you next time.