Motley Fool Money - Big Buys, New Highs, and Hot Holiday Toys

Episode Date: December 4, 2020

Wall Street shrugs off disappointing jobs numbers. Salesforce buys Slack and squares off against Microsoft. Docusign beats on the top and bottom lines. Crowdstrike, Five Below, and Zscaler all hit all-time highs. Zoom Video reports strong earnings but slips on slowing revenue growth. Ulta Beauty slips on slowing sales. Okta rises on earnings. WarnerMedia disrupts the movie business. And Oreos go Gaga! Motley Fool analysts Andy Cross and Ron Gross weigh in on those stories and share two stocks on their radar: Fulgent Genetics and Lemonade. Plus, toy industry analyst Jackie Breyer talks holiday toys, scented Play Doh, and the state of the toy business.     Learn more about your ad choices. Visit megaphone.fm/adchoices

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But we begin with the big macro. The U.S. economy ads. added just 245,000 jobs in November. The unemployment rate falls to 6.7%. But Ron Gross, this is the fifth month in a row of slowing job growth. Yeah, concern that the recovery is stalling as we enter what will be a really tough winter despite the anticipation of a vaccine. I think most definitively, we're seeing a K-shaped economic recovery here. And if you picture a graph, the top leg of the K goes up into the right. And that's what you're seeing if you're a high wage earner or if you have investments in the stock market, S&P 500 up 14%, for example.

But if you're a gig worker without investments in the stock market, then you're feeling more like the lower leg of that K. And it's a very, very difficult time for these folks. Interesting statistic, the employment rate for people making more than $60,000 a year is up compared to January 2020, while low-wage jobs are down nearly 20%. So we have a really big bifurcation of our economy right here. Some folks doing really well. Other folks really hurting. Gosh, we see the food lines. It's a scary time for many. My hope is that we get another stimulus package that can bridge the gap to the vaccine. And then once we have the vaccine, we can get more to a V-shaped or even a U-shaped, which is a slower V, if you will.

We get to that type of recovery for more Americans. Andy, what do you think? Yeah, I think Ron's right. Clearly, the stimulus package, I think, and the vaccine is what has been so exciting to the two investors in the stock market, especially for the stocks that have really dragged of the last year or so that are not part of the state-at-home COVID movement. So you're starting to see this little bit of a rotation into that as people get excited about perhaps a vaccine coming out early next year. and having some beneficial impacts. But really, I think the stimulus package, we do see so many small businesses continuing to really struggle and suffer, and that's impacting some of those low-wage employees like that Ron mentioned. And so Congress really has to do something here maybe before the end of the year,

but I think certainly before the change in the administration. And even though this report showed growth, albeit the slowest month of growth since the recovery began, you're seeing decreases in the gig economy. So, for example, retail jobs were down 35,000, bars, restaurants, other food service establishments, down 17,000. You're seeing this show up in the numbers. If you're making good money, if you have a 401K, an IRA, you're not feeling that same kind of pain. And I think it really behooves all of us to understand that your experience may not be your neighbor's experience.

The deal of the week is also one of the biggest deals ever in the software industry. Salesforce.com is buying Slack and a deal worth more than $27 billion. Salesforce is financing the deal with both cash and stock. And Andy, if anything is clear, it is that Salesforce is now in a battle with Microsoft. Well, they've been in a battle with Microsoft pretty much since their origination, I think, Chris, in general. But yeah, this, from a, from our, from our, customer perspective, one who uses Slack, I'm actually, I think this is a good thing for Slack, the software, and the tool. If I was a shareholder of Salesforce, I'm still not quite sure how

that ultimately benefits. Sales Force is a $200 billion organization. They're buying Slack for about $20 billion. Most of that in cash and some in the stock. It's by far their largest acquisition, twice as large as a tableau acquisition. They're adding a little bit of more debt to the balance sheet, but Salesforce continues to rely on those acquisitions to continue to grow, and it has integrated those acquisitions over the years very well. And Mark Bennyoff, the founder and CEO, a loan CEO now of Salesforce, continues to find acquisition targets, and Slack fit that bill. The stock really had struggled since its IPO. The IPO price of Slack was $38, and the deal now will take Slack out at about $44 a share. So a little bit higher than the IPO price, but not that great over the last

couple of years. And I think he saw a real asset when you think about the Slack software and all those customers that you have more than 140,000 page Slack users, endpoints, like the Slack endpoints as you make communication was up more than 240% year over year. So they're really looking to integrate Slack. Slack will be the real face of customers. 360, which is Salesforce's CRM face, and it'll expand Slack Connect, which is the software part of Slack that allows you to connect outside of your organization. So I think from a user perspective, it's really interesting. But, you know, as a Slack shareholder and someone who might have to own Salesforce stock, I don't know if I'm super excited about that. Yeah, it's interesting because

Benioff has done a great job growing this company, in part through acquisitions, the Tableau 1 you mentioned. I feel like the bar is going to be higher for this one, in part, because I don't think they were bidding against anyone. It was basically a deal that the two companies struck. It wasn't like there was this big rush in the open market of large tech companies looking to buy Slack. Yeah. If you think about who might come in with another bid, of course, it still has to be approved by Slack shareholders, but if you look at who might come into the deal, you know, maybe a Facebook, maybe a Zoom. I mean, there are some out there, but I just don't

I don't really expect to see it. They expect a deal to close in the second quarter of next year. So before then, I don't really expect to see someone come in. Salesforce, they do have this model of making these acquisitions. This is a big one, and it is their big one. So it gets harder and harder to digest these big acquisitions. So we'll have to see how Salesforce manages that. But so far, their track record is pretty good. Shares of DocuSign, the electronic document company on the rise this week. Third quarter profits were solidly higher than Wall Street was expecting. and docket signs full year guidance is looking pretty good too, Ron.

This stock is up 230 percent this year. Just amazing. Strong results, as you said, beat expectations as businesses continue to migrate to cloud-based solutions, even more so, obviously, because of the pandemic. And it's showing up in the numbers. Total revenue up 53% subscription revenue, which is most of their revenue, up 54%. Billings up 63%. And that's different than revenue because of the way subscriptions have to

to be accounted for from an accounting perspective. But a 63% increase in billings is very, very impressive. They added 73,000 new customers during the quarter, bringing the total to about 822,000 worldwide. Really, really strong. Now, interestingly, still not making money, which I like money. I like profits. And that's because of their large stock compensation expense that they have on their income statement. If we adjust for that to get a sense of how this company is actually doing from an operating perspective, earnings per share doubled. It's really impressive. But I will caution, you can't just sweep stock compensation expense under the rug. It's a true expense. It does count. And to just say adjusted earnings per share is X, I think is doing yourself and other investors

in injustice. Guidance was solid. They're introducing new products, continuing to be innovative. I like what they're doing. And the stock certainly reflects the strength. You do realize, though, if they just cut that stock-based compensation to zero, that's going to cause a problem with the employees, though. Yeah, I do. There's the conundrum. Third quarter results for Zoom video were better than expected, but guidance for the fourth quarter indicated that their growth is slowing down a little bit,

and shares of Zoom falling more than 10% this week, Andy. Yeah, I mean, just look at the numbers, Chris. So sales were almost 370% to 77%. million versus a little less than 600 million of the estimates in the company's own guidance. They saw an acceleration of that growth from 355 percent in the last quarter. They're now at a $3 billion annual run rate. Their new subscription numbers are accounted for 8 more than 80 percent of that growth. So their performance obligations, though, Chris, when you look at the revenue going forward,

was up only 215 percent. I mean, that's still a massive number, but it does show that they rely on this continued growth that the market now thinks, oh, wow, maybe it's not quite as high as it has been in the past. Customers with greater than 10 employees were up 485 percent, and they added almost 64,000 of those clients and customers with more than $100,000 of annual revenue was up 136%. The dollar-based net retention rate continues to be very strong at 130%. So you look at the history of Zoom, and no one doubts just the massive amounts of growth and value they've added. But as they see to add more and more clients like educational institutions at the free level,

they do start to have higher and higher cost where you don't see the revenue come in. And that really hurt the gross margin this quarter that fell to 68% from about 83% last quarter, and their sales and marketing continued to increase, but not nearly as fast as the growth in sales. So the investments they're making, the clients they're bringing on, still massive, how that turns into potential future revenue, I think is the outstanding question. And if the growth continues to perhaps soften going forward, I think that's what's hurt the sales price. But still, you have a stock now that sells at 35 times forward sales compared to, you know, where it was a couple months ago at, you know, north of probably 70 or 80s. So the stock price has pulled back and the valuation has dropped in along with it. Coming up, if you don't own shares of any cybersecurity companies, you might want to change

that. Details next, so stay right here. This is Motley Full Money. Welcome back to Motley Full Money. Chris Hill here with Andy Cross and Ron Gross. CrowdStrike and Z Scaler are both in the business of cybersecurity. Both companies out with quarterly reports this week, and both CrowdStrike and Z are up and hitting new highs this week, Andy. Yeah, it was a great week for cybersecurity companies. Z-Scaler and a $25 billion market cap now. One of the largest in line cloud security platforms are really focused on the cloud. Their solutions through more than 150 data centers. They have a great relationship and a partnership with Office 365. Really seeing lots of growth, Chris, and really sales efficiency. They talked a lot about this and I called J. Chondri,

who's the founder, owns a lot of stock in Z-Scaler, really seeing that their new sales staff has really having more and higher, becoming more efficient. The new sales reps are contributing at a faster pace, and that's really helped drive so much of their growth. Sales were up 52% and up 13% over last quarter. The remaining performance obligations is up 56%. So again, looking at what they're going to expect to make from clients going forward, up 56%. New clients, 50% and gross margin was 81%. That's a 200 basis point improvement. As clients continue to add more and more, the Z-scaler products. So, thinking about the Z-scaler platform and how they are continuing to expand that, it really did really nicely, with only operating expenses up 30 percent, Chris. So

the margin continues to grow for Z-scaler. And we saw similar with CrowdStrike, which is a little bit different cloud security company and really much more focused on the endpoints. Their revenue up 86 percent. Customers up 85 percent. They now serve more than 8,400 clients. So Z-scaler, CrowdStrike, both talk about the benefit of cybersecurity and really the need for more and more cloud-based cybersecurity across both these companies. And it's certainly showing up in the financial picture and obviously showing up in the stock prices as well this week. Third quarter same store sales for Alta Beauty fell nearly 10%. Revenue was a little light and shares of Alta beauty flat for the week and for the year, Ron. Yeah, not a great year for

Alta who had put up many, many quarters of really impressive results. This is largely a COVID story for the quarter. Results hurt by lower traffic and store closures. By July 20th, all stores had become operational once again. By October 31st, which is when the quarter actually ended, the salon services were back in business. So, you know, there was a lot of headwinds that they needed to deal with, as we've seen across the board with most retailers.

For the quarter, net sales down almost 8 percent. Comp sales down almost 9 percent. declined 15%. Interestingly, average ticket price was actually up 7.6% or so. So more spending per ticket, which is interesting. E-commerce up 90% as the company attempts to move to more of an omnichannel, multi-channel distribution, buy online, pick up and store, also strong. But they're still relatively in the infancy of their e-commerce strategy. 22% of total sales were e-commerce-related versus 12% last year. So, making good headwind, but still, I think they have some ways to go. Margins hurt by COVID-related expenses, store payroll and benefit costs. There was reduced marketing

expenses, which people pulled back on as a result of COVID. So that helped offset. Now, you've got lots of charges here going on, specifically about $16 million related to the suspension of the planned expansion to Canada that they've put on hold or just got rid of completely. So it all fell to the bottom line. Net income fell 42%. If we adjust for those one-time charges, not as bad earnings per share, down 26%, but certainly still weak. Company opened 17 new stores, but closed 19, and they ended with a very large footprint of 1262 stores. They're going to continue to open new stores. They expect 30 total for fiscal 2020. But this is a very large footprint business here that's going to rely on people getting back.

into the stores or an improvement in the multi-channel experience. AQTA is in the business of helping businesses provide secure identity management, and business is booming. Shares of Acta hitting a new all-time high this week, Andy. How good was this third quarter? It was really good on the profit line, Chris. So let's just talk quickly. Revenues were up 42% with 43% growth in subscription revenue,

which is 95% of their business, so mostly subscription business. their dollar-based net retention rate was at 123% an expansion from 117% a year ago and 121% last quarter. But Chris, it was on their expense line. Their operating expenses were up 30%. So again, revenue 42% expenses 30% that really helped boost their operating, their non-gap operating margin to 2.5% versus a loss a year ago. And they had a record free cash flow of $42 million, which was 19% of revenue for versus 6% of revenue the same quarter last year.

So, really, OCTA continuing to serve more and more customers, almost 10,000 customers, up 27% year over year, but it was really on the operating line and really managing that expenses that really did really well for Octon that showed in the results. Shares of five below also hitting an all-time high this week. The discount retailer crushed its third quarter. You tell me, Ron, how good was the third quarter for five below? Pretty good. this COVID hit that we're seeing with most retailers. So that's really what stood out to me.

Very, very interesting. All stores were open for the entire quarter, although reduced hours, about 25% reduction in hours, which actually reduced their expenses. And as we'll discuss in a minute, really helped margins. Comp sales up almost 13% net sales up 26%. They opened 36 new stores, ended the quarter with just under 1,020 stores in 38 states, 14% increase in stores. So they're continuing to grow. Gross margins up as a result of them being the higher sales kind of leveraging those fixed costs. They're making more money when those fixed costs just stay where they are. That's why they're called fixed after all. And then you also saw an increase in operating margins as a result of the fixed cost leverage

as well as the 25% reduction in store hours led to lower operating expenses. That all led to a 91% increase in operating income. So net sales only up 26%, but operational income up 91% because of an increase in margins. That's really powerful. Then you layer in significantly lower taxes, and you had a doubling of earnings per share. So really great job. They're continuing to expand. They have some of their own brands now in stores, so they're not just reselling others. Management's doing a very fine job. We've got just about 30 seconds left. Ron, I've never been to a five below. Have you been to one? I have it. My son actually liked them quite a bit when when he was younger, and he would

walk in and you would say, do you mean I can get anything in this store for under $5? And I didn't actually believe it at first, but after a while, I was like, yes, you can. All right, guys, we'll see you later in the show. What are the hot toys for 2020? Our guest this week has the answers. So stay right here. You're listening to Motley Fool Money. Welcome back to Motley Full Money. I'm Chris Hill. Just in time for the holidays. We'll get the latest on the Toy Industry with Jackie Breyer, editorial director of the Toy Book and the Toy Insider. She joins me now from New York. Jackie, thanks for being here. Thanks so much for having me. I want to get to the hot toys in a minute, but I have to start with the ripple effects of the pandemic. What has

been the effect on the toy industry in particular this year? You know, it's been a real rollercoaster of a year for the toy industry. Early on in the pandemic, when we weren't really feeling the effects here in the U.S., the toy industry was because in China, all the factories shut down. No one was working. So, you know, in effect, toy production kind of ground to a halt. And everyone was very concerned about when will it open, when can we get toys out. But at retail here, toys were selling. We were just selling what was the stock that retailers had. They were selling. So new products weren't getting out at that time. But since then, you know, obviously China seemed to recover a lot. You know, they were ahead of us. So they recovered more quickly. Factories opened up. And at this point,

you know, production's been on schedule across the board for pretty much everyone. So at this point, it's really more about some bottlenecks at some of the ports getting out, getting product out onto the water. But, you know, for the most part, we're not hearing a whole lot of concern about that. Retailers seem very well stocked, and manufacturers seem, you know, pleased, relieved. Things are going okay. Well, we'll get to the retailers in a second, but what about the toys themselves? What are the hot toys for 2020? At the Toy Insider, we review toys all year round.

So, you know, we look at toys. What are the hottest toys of the year? What are the top STEM toys? We look for budget-friendly toys. And most importantly, we look for, you know, the best toys for kids. kids of all different ages. One of my personal favorite toys is called present pets. It's from a company called Spin Master.

And these toys, I've never seen anything like this. They're like plush interactive pets, but they unbox themselves. So they come in this packaging. And once you pull the little tag out, once you have it at home, the pet will start making little animal noises and they'll paw at the box and you can hear them trying to get out, and then you see little paws like break through the cardboard, and they're like, poke their way out of, they unbox themselves completely. And then kids have an interactive pet.

I think that's really cool. That's pretty amazing. An innovative way to do packaging, yeah. This from the company that brought us Hatchamolz a couple of years ago, so they're not new to innovative ways to reveal products. Yeah, but this sounds like next level unboxing. Yeah, I agree. How is inventory at this point in time?

Because, look, anytime you're shopping for toys for kids around the holidays, you don't want to wait till the last minute. But it really seems like more than ever before 2020 years a year where you really don't want to wait till the last minute. You definitely don't. And that's really our advice every year, as you said. If you know that your kids have their heart set on something, you're going to want to pick that up immediately.

And honestly, now we're in the last three weeks leading up to the, leading up to Christmas. So if you haven't bought it, you should buy it now. But on the other hand, I'm hearing that a lot of retailers, if you go in store, shelves are really well stocked. I think a lot of people, I know a lot of people are shopping online more so than ever before, which would have been the case without a pandemic, but in the situation wherein everyone's shopping online. So if you need something and you can't get it online, try actually going to the store because the shelves, you know, they've got some product there. But, you know, there are products that are selling out and you don't want to be caught,

you know, trying to buy something off of eBay or like from a third party seller on Amazon or Walmart because you can end up paying, you know, many times the price that you should be paying. So you just have to be careful about where you're getting your products from. In terms of the retailers themselves, when you and I spoke a year ago, one of the things you had mentioned was that looking at Walmart, Amazon, and Target, the target was really winning the toy battle between the major retailers. Is that still your impression for this year as well?

You know, I really would have to say that Amazon is probably the leader this year. I think literally everyone is shopping on Amazon. And, you know, that just seems to be the case. If you go to a Target store, yes, I love that they have a great mix of products. Their toy department still looks fantastic. They redesigned them last year. I love that. You know, their online sales, I think, have risen almost 200%.

So Target's doing well. And Walmart, I think, had almost 100% increase in their digital. sales as well, but I think the go-to for a lot of people seems to be Amazon this year. In terms of the toy makers themselves, certainly from a stock perspective, Hasbro has been the better performer than Mattel. From your standpoint, just in terms of toy creation and execution, what is the current state of Hasbro and Mattel? They're actually both in really good positions right now. They're not seeing much trouble in in terms of, you know, the whole supply chain seems to be going fine for both of them.

They both have, what's important, especially this year, is they both have a really solid collection and archives of really classic brands. You know, Hasbro's got Plato, they have Nerf, they have Monopoly, Connect Four, Magic and Gathering, these are all things that have been booming and they always sell. But in a pandemic, people seem to be turning to, you know, brands that are comforting, brands that they're familiar with. And Mattel also, same thing. They have Jurassic World, which is doing really well. But Barbie and Hot Wheels, they always do well, especially for the holidays. I think the Barbie Dreamhouse is one of the number one sellers every single year.

So this year won't be an exception. And then both companies have some of the child product, you know, from the Mandalorian, the Baby Yoda. So where Hasbro has the interactive figures, which are so cool, Mattel has the plush, which also, anything with the Baby Yoda license is really going to sell out this year. So if you need that and you haven't got it yet, I would definitely check that out. Go look for it. It was sort of a double-edged sword for Disney last year.

They had the great reveal of Baby Yoda in the Mandalorian series. but because they wanted to keep a lid on it, there were no toys in 2019, even though there was huge demand for it. So it's nice to see that that demand has been filled this year. In terms of sort of under the radar, I mean, you mentioned the Barbie Dreamhouse being sort of this classic toy that is a top seller every year. What are some under the radar things for parents who are looking for toys for their kids? Sure.

one of my favorite lines this year that I did not know about before. Again, it's pretty new. It's called Blockaroo. And their construction toys for preschoolers, they are soft foam magnetic blocks that click together, like magic. They rotate 360 degrees while they're connected. They're always attracted to each other. So kids aren't going to get frustrated. They get this whole multi-sensory experience.

When you turn them, they make clicking noises. they make it so easy for kids to build and use their imagination, which is so important. And they float. So you can put them in the bathtub. And during a pandemic, you can easily sanitize these blocks. They go right in the dishwasher. So there's really no going wrong with these. I absolutely love them.

And everyone who's getting their hands on them is loving them too. So I would recommend checking that out. And, you know, one other thing that I think is really worth mentioning in, you know, in the under the radar category, I don't know if you've seen the Queen's Gambit on Netflix. It's on my list of shows that lots of people are telling me I need to watch. Yeah, yeah. So apparently sales of chess sets are up like 86 percent or something like that. While kids may not be watching the show, obviously a lot of parents are and bringing interest

back to chess, which has been around forever and ever. But there's this product called Storytime Chess, and it makes chess really fun and friendly for kids as young as three. It teaches them how to play chess through silly stories and interactive games. You don't, I mean, it's good for adults, too, if you need to brush up on your chest. No skills required. But it's such a great concept and bringing kids into something that hopefully becomes a lifelong kind of hobby. It's really good mental stimulation, I think. Before we wrap up, lest anyone think that toys and the things that we're talking about

are just for children, I feel like I have to point out something I saw on your website that caught my attention, which is, you mentioned Hasbro and Plato. Apparently Hasbro has a new line of plato, scented Play-Doh for adults, including scents like overpriced latte. My personal favorite, a smoky barbecue-scented one called Grill King. Have you actually tested this out? Because I got to be honest, I'm pretty tempted by this. Yeah, yeah.

They're pretty cool. Although, so yes, I think it's really fun, cute idea, definitely a fun novelty. Personally, I love the actual smell of classic Play-Doh. It's that sense memory. It takes you right back. Yes, yes. So for me, it's the classic. But yeah, it was a really fun idea for them to put that out.

And kids and adults love Play-Doh. If you want more information, you can go to the toy insider.com or toybook.com. Jackie Breyer, it's your busy season, you and Santa, so I appreciate the time. Thanks for being here. Thanks for having me. Coming up, Ron Gross and Andy Cross return with a couple of stocks on their radar. So stay right here. You're listening to Motley Fool Money.

Someone found a lighted house late one night, and he saw through the wind, go aside. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy ourselves stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here with Andy Cross and Ron Gross. Guys, before we get to the stocks on our radar, this week Warner Brothers announced it's going to release its entire slate of Theatort, theatrical films next year in theaters and on the HBO Max streaming service simultaneously.

I should point out that AT&T is the parent company of both Warner Brothers and HBO Max. So the exclusivity that movie theater chains have enjoyed basically forever is going to disappear at least for 2021. Not surprisingly Ron, movie theater stocks took a beating on this news. Where do you think this is going? Because there are absolutely people out there who say, this is going to be the death of movie theaters. Yeah, great for consumers. Obviously not great for movie theaters.

I don't think this model is necessarily sustainable in terms of flipping the whole paradigm of the movie industry. The economics, I don't think, will make sense. Movies are too expensive to make. And I think the distribution of streaming only, you would have to really change the type of movies. I think that get made and have to bring the cost down significantly. I think it's a bridge. I think it's a bridge to getting back to what will probably be a hybrid where there will be

movie theaters, maybe not as many movie theaters. Perhaps the kind of the model at a movie theater will be a combination of on-demand, and here's what we have to offer. You take it or leave it in any given week. So as with most things, there's a compromise or a hybrid that I think shakes out after we get through probably the next 12 months? I think that's probably right, Ron. I do think it is just a little bit of a shot across the bow.

I mean, you have to expect over the next five years or so, more and more of the distribution will be in our house in front of our living room. I don't think exclusively, and I think there will be certain types of movies, either at the huge box office, large release, you know, you want to go and you want to experience that, or maybe at the very much small independent side, where it's a really niche-based. I think it'll be much more of that bar bill going forward.

But I think it is just the sign of what over the next few years will be more and more distribution inside the house outside rather than inside the theater. But, Andy, this will have to be a reworking of the entire economic system of making movies. And that includes writers and directors and actors because they have vested interest in box office receipts. And if box office receipts go to zero, then they absolutely should be going to Netflix and everybody else and saying, all right, let's talk about the streaming money. Yeah, Chris, absolutely. And, you know, Ron pointed out to the theater economics. And those are, those will change. It really will disrupt as you think about the distribution, just like we saw in

the journalist business, just like we saw in the newspaper business. We've seen it in the, in the music business, these really titanic shifts. And it's been, it's, for this business is really, been elevated with the COVID quarantines. I think going forward, that whole, the whole economics behind that business is going to have to change. And you've seen Netflix really be aggressive and bidding up the content and the people who come and join Netflix as producers, as writers and producers and to really focus their attention there. The rest of the industry is going to have to shift and change with it. This week, Oreos unveiled their latest limited edition version of the cookie. It's called Chromatica. It's inspired by

by Lady Gaga. The cookies are pink with bright green filling, and it's all part of the new Oreo marketing campaign. Sing It with Oreo, where fans are asked to record musical messages for a chance to win tickets to a Lady Gaga concert sometime in the future. And Rod, I will point out, shares of parent company, Mondalise, up this week. Well, I will preface this by saying I am a fan of Lady Gaga, especially after seeing her a couple times on Howard Stern. That really turned me around. But I do think it's kind of funny that a person who kind of has made her career as being anti-establishment, now has a deal with America's favorite sandwich cookie. So it's a little ironic to me.

As a monolese, a small, tiny, Mondalese shareholder that I've still had left over from years and years ago, I'm super excited to see this. As an Oreo fan in my family, two girls, really excited to see us. I actually think it's really interesting to see how they price these, how they promote them, how they talk about them. But I think Lady Gaga has a real, obviously has a huge following Not that they're all going to hop over to eat Oreos, but I think from a branding perspective, it's a great move from Andalese. And they're vanilla and pink. Yeah, totally.

Lots of different colors, I think, right? Yeah. That's so cool. Let's get to the stocks on our radar. Our man behind the glass stand, boy, it's going to hit you with a question. Ron Gross, you're up first. What are you looking at this week? Fulgent Genetics, FLGT, learned about this company from our Discovery ownership portfolio at the Fool,

thought it might fit nicely into my biotech gene therapy basket. not sure yet. They're a genetic testing company focused on making tests flexible, affordable. During the pandemic, they quickly pivoted to COVID-19 testing, which really drove their growth throughout 2020. Not surprisingly, stock took a hit when word of a vaccine or multiple vaccines came out, and it seems like perhaps testing was going to not be as important as it was. But the company still has all the positive it had before COVID. It offers tests from more than 18,000 single genes, more than 800 rare diseases, as well as hold genome sequencing, lots of good stuff. Founder and CEO owns 35% of the company. We like to see

that. Management estimates the opportunity from a market perspective is $10 billion, and right now they're only $135 million revenue company. Dan, question about Fulgent genetics? Absolutely, Chris. Is Fulgent genetics doing anything to make the COVID-19 tests less completely awful? Last time I had one, I sneezed. four times with that Q-tip thing all the way in the back of my nose. It was terrible. Come on, Fulgin. I believe they are. Andy, who is familiar with this company, might even know more than me, but I do believe they've worked on making the tests more accessible and easier. Andy Cross, what are you looking at?

I'm pivoting away from testing over to insurance with lemonade symbol LMND, a real innovative tech-focused insurance company trying to disrupt the property and casualty insurance, has thousands of thousands of clients, most of them, young millennials. They are trying to do insurance in a different way. They provide insurance for renter insurance, a little bit of home insurance, now pet insurance. And they do it an interesting way where of the premiums they bring in, Dan, they keep about 25% of it. And then they use the other 75% to help offset some of the reinsurance costs. If the cost structure is low enough, they'll kick off a little bit into charities of which are selected by the Lemonade clients, and then they'll keep a little bit of it

left over for shareholder profits as well. What's left over. They're growing very fast. They've doubled their premiums in force over the last year. It's a founder-run tech focus insurance company. I'm still learning a little bit more about it, but I do like it. Dan? Yeah, Andy, why lemonade? That doesn't say insurance to me. That's a delicious beverage that I drink in the summertime. You're right. It sounds more like a fashion company. I know. I actually don't know why they call it lemonade. I'll have to find that out, Dan. But yeah, it is a really funny name for an insurance company. But also evidence of what they're trying to disrupt. What do you want to add to your watch list, Dan? Listen, Chris, I hate getting poked and prodded. So anything that reduces that by any sort of means I'm all for. So I'm going fulgent genetics. Boom. All right. Guys, we're out of time. Thanks, everybody, for listening. We'll see you next week.