Motley Fool Money - Improving Market, Attractive Stocks

Episode Date: March 26, 2022

The S&P 500 rose for the 2nd week in a row, giving investors more reasons for optimism. Are we the only ones who believe the narrative for investors is shifting away from fear and towards increasing confidence? (0:45) Jason Moser and Andy Cross discuss investor sentiment, as well as: - Google striking an app-store deal with Spotify - Uber teaming up with New York City taxis - Reports that Apple is developing a hardware subscription service - Darden Restaurants seeing improvement in its fine dining segment - The latest from Berkshire-Hathaway, Adobe, and Nike (19:00) Corporate governance expert Nell Minow analyzes how public companies are doing with their communications related to Russia, and why she's unimpressed with how Starbucks' board of directors handled the latest CEO change. Then she puts on her film critic hat to offer a preview of the Academy Awards and share who will win (and should win) Best Actor, Best Actress, and Best Picture. (32:00) Jason and Andy discuss Pepsi's latest limited-run flavor and share two stocks on their radar: McCormick and KB Home. Got a stock or topic you want us to discuss? Post a review on Apple and include your pitch! Stocks discussed: SPOT, GOOG, GOOGL, MTCH, BMBL, UBER, BRK, AAPL, NKE, DRI, SBUX, DIS, PEP, MKC, KBH Host: Chris Hill Guests: Jason Moser, Andy Cross, Nell Minow Engineer: Steve Broido Learn more about your ad choices. Visit megaphone.fm/adchoices

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From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Full Money Radio Show. I'm Chris Hill and I'm joined by Motley Fool Senior Analyst, Jason Moser, and Andy Cross. Good to see you both. Hey, Chris. Hey. We got the latest headlines from Wall Street. Mel Minow is our guest, and as always, we've got a couple of stocks on our radar.

But we begin with the market in general for the second week in a row, the S&P 500 and NASDAQ. We're poised to finish higher. Andy, it seems like the narrative for investors is starting to shift to the positive. You go back a month, six weeks, a lot of fear out there. Now, part of what we're hearing from members at the Motley Fool, part of what I'm seeing out there in the financial media, seems to be a lot more investors taking the attitude of, it seems like we've weathered the worst of the storm that we saw earlier in the year. And now we're looking for stocks to buy.

You know, Chris, I think actually it's the individual investor actually weathered it quite well. If you look at some of the fund flow data and look at some of the trading activity, individual investors were actually in there. And if they weren't buying, they were kind of hanging out there. I think it was mostly institutions that were really, jumping the gun and looking to kind of, as they often are, trying to time the ins and outs. And they got out when the news was really pessimistic around the Russian invasion of Ukraine and some of the inflation numbers. And now with the Federal Reserve's announcement that they are going to increase

the interest rates by a quarter basis point, not a 50 basis increase that was perhaps feared a little bit, also understanding that we're in a wild, We do have some of the very strains of Omokane creeping out there. The COVID situation has really, we've passed the two-year mark now since the pandemic really started. And there's just a little bit more optimism, I think you're seeing in the markets, and that's reflecting in the stock price. But I think the individual investor out there to credit to all of those who are individual investors, I think mostly we were holding the course.

And I think there's a lot of institutions that were jumping around. And now they're looking at the U.S. market, Chris, and saying, And listen, look at global markets. They're really an even more disarray than what's in the U.S. market. And we saw valuations come back down in the U.S. market in stocks is a place to be. And finally, Chris, because we know bonds is not really the place to be, although bonds are far less volatile than U.S. stocks, with interest rates increasing, the value of those bonds, it's going to be a really tough, tough sled for the rest of the year.

So I think looking at the U.S. stocks, they look to be the most reasonably valued with the drop this year. Let's get to some of the companies that are making news this week. Spotify has reached an agreement with Google that says an updated version of Spotify's app will allow users to pay Spotify directly for a subscription. It's a big concession from the Google Play Store and the news sent shares of Spotify hire. And Jason, a nice ripple effect as well for companies like Match Group and Bumble. Yeah, this really does feel like the big platform operators are starting to maybe try to see around that corner, so to speak, regarding their stranglehold on their respective app stores and sort of showing a willingness

to work together because maybe they see that sort of where things are headed anyway. Developers like Spotify have just, you know, they didn't complain for years. You have Google Play, Apple's App Store, they don't allow direct payments, they require those payments to go through those app stores, they take a hefty processing fee from it all. It really, for the developers, it seems to be all in the name of choice, right? I'm sure there's probably a little financial incentive there as well, Chris. So let's not just think Spotify is doing this out of the goodness of its heart.

But certainly giving consumers more choice, giving Spotify a little bit more in the way of control over their app experience and data of what their users are actually doing. They've certainly been advocating for this for a long time. So we don't really have an idea as far as the commission that it will pay to Google as a part of this test. but they'll clearly be paying something. And again, it's worth noting this is a test. It's going to roll out slowly.

Ultimately, though, I think they'll glean enough from it to kind of help this ball keep moving in this direction. Do you think this puts pressure on Apple's App Store? I think it certainly keeps the conversation going, right? I mean, I think it does. I mean, you need just more and more developers to keep on pushing this narrative. and over time, I think that could ultimately have an impact on a company like Apple, but that remains to be seen. Uber is a business that was born out of the idea that it's difficult to hail a taxi, which is why heads were being scratched on Thursday when Uber announced it has reached an agreement to list every taxi in New York City on its app.

Andy, is this a smart move or a desperate move? Because I honestly can't tell. You know, Chris, I guess if you can't beat him, join them, or maybe a partner with them, You know, actually, Uber has not been shy about their interest in building out more taxi relationships. Uber taxi exists in 27 countries. They have a goal to get all of the taxis around the globe onto the wrap at some point. Uber already has 400 million in taxi bookings last year and sees that growth they announced in the last investor day going up to as much as $3 billion in 2024. So considering New York taxis is the biggest market, if not in the, certainly in the U.S., if not here in the world, putting the partnering with the taxis and putting them onto the app.

It's a continuing push, I think, to make the Uber app one of those super apps. If you look at what they have already, it's ride and food, vaccine, reservations, Chris, rentals, groceries, a real quest to make that app, really one of those super apps. This will help ease some of the driver's shortage, although Uber did say that their New York City drivers are back up to the highest levels since the pandemic. There's just this need to be able to partner and look at markets that are really key. New York being one of them and just the supply shortage of drivers overall and the demand to be able to continue to drive their business in a way that is healthy for not just their clients who need. I'm actually kind of excited about

this because it puts it all one spot when I am back. in New York as opposed to using the curb mobility or the Arrow app. You can actually just use the Uber app. Lyft does not announce that they're doing this yet. So I think overall it's a pretty good move by Uber, Chris. Can we get some sort of universal parking app as well? Because I was up in Boston earlier this week and went to park somewhere. And I thought, oh, wait, do I have to download a whole new app just so I can park?

And so I did what I think is the responsible thing. I just parked it legally. This week after six years, Warren Buffett finally found a business. He wanted to buy at a price that he liked. Berkshire Hathaway is buying insurance company Allegheny for just over $11.5 billion. It is an all-cash deal, and Jason, Berkshire made it very clear in the announcement. Yes, even though we have all this cash on the balance sheet, we are not overpaying. This is a fair price.

No, you're right. It is a fair price, and we'll get to that in a second. And this is, to my mind, it's a very safe acquisition. It fits very nicely with Berkshire's overall business. It's not one that really lights the world on fire. It's not that elephant gun acquisition. But if you take Buffett at his word, and I mean, I don't see why we wouldn't, he's acquired a business and a leadership team that he's admired for a while.

And if you look at the connection, there's the CEO of Allegheny, Joseph Branden, actually led general reinsurance from 2001 to 2008 and was considered a possible Buffett's successor at one point. Buffett describes him as a longtime friend. So it makes sense from that perspective. And Allegheny is geared mostly towards reinsurance of all of their premiums written in 2021. 75% of that was dedicated to reinsurance, 25% to insurance. And in regard to the valuation for a company that historically has traded around one-time book value or in that range, he's getting this company for 1.25 times book value.

So a little bit of a premium there, certainly a fair price. I'm sure they'll be very well as a member of the Berkshire family. Any indication of whether they're going to rebrand it under the Berkshire named? Because they've done that with some of the businesses in their portfolio, although maybe Allegheny's got a strong enough brand that they just keep it on their own. My understanding is that they're going to be able to operate as they always have been, just under the Berkshire Hathaway umbrella. But you never know.

There's a lot of value in that Berkshire brand as well. So maybe that changes. Is Apple about to get into a new line of business? We'll discuss that right after the break, so stay right here. You're listening to Motley Fool Money. Welcome back to Motley Full Money. Chris Hill here with Jason Moser and Andy Krosk. Bloomberg News is reporting that Apple is working on a subscription service

that would allow people to buy iPhones and other hardware products for a monthly fee. The project is reportedly still in development and has yet to be confirmed by Apple itself. But, Andy, for the sake of this conversation, let's go with this. I'm an Apple shareholder. Should I be excited about this? Well, I think, Chris, if you think about your iPhones, many Apple devices are probably the most used advice we carry around with us or use every day. I mean, far more than probably our cable subscription or our Netflix subscription.

So when you think about trying to make the iPhone, which is fairly expensive, more accessible, and by the way, it could be iPhone. It could also be other Apple hardware products. And the real determination for Apple to be able to, continue to drive their services business, which has been so successful, the things like, you know, music, Apple TV Plus, Apple Fitness, News, those kind of subscription offerings. It kind of makes sense that Apple is starting to think about this just because of different ways to make more and more people accessible to the iPhone.

So, Chris, I'm kind of thinking it's like a maybe like an auto leasing or maybe like even like renting your modem or your router from Comcast if you do that. They're still trying to figure out what this looks like. It wouldn't be just a payment plan spread out 24 months, but with a monthly fee for access to the hardware. Considering that iPhone is much more, is more than half of Apple sales, again, to be able to continue to make them more accessible, I think it makes sense. It also ties it together, would tie it together, I guess, with the Apple ID, your Apple ID. So it would all be in one spot so you can see it all, just like you see all of your other, like if you're AppleCare, Apple One subscriptions. And so just the interest to be able to continue to drive their subscription

business, which has been a growing part of the Apple ecosystem, is kind of interesting. Although, presumably, they would have to navigate the relationship that they have with the major phone carriers. But maybe they look at that and say, look, we're Apple, we're going to do what we want. I think so, too. And they've certainly navigated a lot of these areas. areas before as it continues to see ongoing as Apple continues to expand their business. But for a $3 trillion company with, gosh, almost $400 billion in sales, they're obviously a very large gorilla to be able to make a move like this. From hardware to software, Adobe's first quarter profits in revenue came in higher than expected, but shares down a little bit this week,

in part because Adobe's expecting a hit to its existing business in Russia and Belarus. Jason, And this probably isn't going to be the only company we hear this from. No, I would imagine not. I would think geopolitical concerns aside, I mean, to me, Adobe feels like a very easy one to justify owning in today's economy. When you think of everything moving digital, and Adobe's capabilities from content to document management, it's just so powerful. And it's just such a really strong business, particularly in this volatile environment there. So, you know, their earnings calls always remind me of Amazon's press releases, earnings releases, and that they just list off this litany of new offerings and services.

You just can't keep track with everything that they're doing. It's just very impressive. So it translates into very strong numbers, revenue $4.26 billion. That was up 9% from a year ago, and it's actually 17% accounting for an extra week in the quarter of a year ago in currency effects. But ultimately, non-gap operating income. of just under $2 billion in earnings per share of $3.37. The digital media business continues to just really, as Ron would say, fire on all cylinders.

You saw the Creative Cloud and Document Cloud businesses together bring in $3.11 billion in revenue. The Document Cloud side of the business continues to perform now $562 million in revenue for the quarter. And as you noted, the impact from the war in Ukraine, it's going to be fairly minimal in regard to Adobe's business. It bumps down their annualized recurring revenue by around $87 million for the year. And we'll have an expected revenue impact of $75 million for the full year. So in the context of the entire business, it's not anything for investors to be concerned about. But like you said, I think that's going to be a point we're going to continue to see in Ernie's calls as long as this conflict plays out. Nike's third quarter results were fueled by sales in North America.

Shares up a bit this week, even though Nike suspended guidance due to ongoing supply chain issues, Russia's invasion of Ukraine, and uncertainty around inflation, Andy. Well, Nike celebrates its 50th birthday this May, so if I can, well, I guess I am over 50, I was going to say, if I looked this good when I was 50, continues to do really well. Revenues were up 5% and up 8%, Chris, on a currency neutral basis, both that. beat estimates. Their EPS beat estimates as well, too, up 87 cents versus 71 cents for the at 87 cents versus 71 cents for the analyst estimates. That was down a little bit from the prior quarter. But overall, the Nike brand continues to thrive in really positive ways.

Nike direct sales were up 15% and 17% if you back out some of the currency effects. The Nike brand digital increased 19% or 22% if you back out some of those currencies with 33% growth in North America. The Nike mobile app, Chris, I found this really interesting, was up 50%. And it's now larger than Nike.com sales on mobile devices. The Nike owned digital is now more than a quarter of Nike total brand sales. The gross margin increased 100 basis points at 46%. That was mostly direct to Nike directs business. They paid $484 million in dividends, Chris, and bought back $1.2 billion worth of stock. So again, the financial picture of Nike continues to be strong. China continues to be a struggle, Chris. It was down again. It's improving, but it was

down. Ukraine and Russia, they announced it is less than 1% of sales. So that's not a huge impact and wasn't a big part of the business. The guidance for the rest of the year sales up. mid to mid single digits, gross margins up a little bit. Supply constraints, as you mentioned, continue to be the big challenge that they kind of trying to navigate through this, especially over in China. But overall, a really positive estimate beating by their own expectations, quarter for Nike. Not a great third quarter for Darden restaurants. The parent company of Olive Garden and Longhorn Steakhouse lowered guidance after profits came in lower than expected. Fine dining segment was the lone bright spot. But, Jason, that is a small part of their business. Yeah, it's a small part. You're right.

I mean, it's a bit of a tough start to the year for Darden. But, I mean, all things considered, it really wasn't a bad quarter. I think it's just really challenging for a company like this with such a heavy focus on dining in. But here's a fun fact for you. On Valentine's Day, Olive Garden served more than 1 million guests with approximately 35% off-sales or off-premise sales. So even though this is a company that's very focused on that dine-in population, they're still figuring out ways to get it done. It was interesting. The language in the call management noted it was a quarter of stark contrast. And this was a reference to January and how Amicron hurt traffic there. They saw the trends coming back in February and March.

Ultimately, sales up 41.3% from a year ago to $2.45 billion. That was driven primarily by same store restaurant sales growth of 38.1%. They did open a handful of new stores. There are 33 new restaurants. The earnings per share, $1.93, that was up considerably from a year ago, but basically flat when you compare to 2020. As you mentioned, Olive Garden really is the biggest footprint versus something like a fine dining. They've got just under 900 stores with Olive Garden. Longhorn being a relatively distant second, but making up a large portion of the base there as well. But they're dealing with all of the challenges that every restaurant out there is dealing with. Staffing, inflation, supply chain concerns. you know, it's not the most compelling investment idea, but hats off the management for operating in a very difficult environment.

Guys, we'll see you later in the show. How are companies doing with their operations in Russia? We'll get a report card from Nell Minow after the break. Stay right here. This is Motley Fool of Money. Welcome back to Motley Fool Money. I'm Chris Hill. By day, Nell Minow is the vice chair of Value Edge Advisors. By night, she is a film critic, so essentially she's back. Batman, and she joins me now. Thanks for being here. Thank you. Maybe Catwoman. There you go. Before we get to the movie industry, I want to get your thoughts on what's happening between Russia and Ukraine. Value Edge Advisors works with institutional investors to help them engage with the companies in their portfolios. And lately, a lot of public companies have had to

make decisions about their operations in Russia, how they communicate their decisions. to investors, all that sort of thing. What are you seeing, what have you been observing over the past month as these events unfold? Well, my go-to on this is the amazing updated daily database put together by Professor Jeffrey Sondonfeld at Yale, where he's got four categories. So investors know which companies have gotten out completely, which have suspended operations and which are ignoring it. And he's done a great job with that.

and that in and of itself has put a lot of pressure on companies, I think more effectively even than the investors have. It's tricky, though. I think I like what McDonald's did. They are continuing to pay all their employees, even though they acted very quickly and shut down their operations there. So you want to be careful about the employees. As for the pharma companies, I think it's important for them

and some of the other providers of essential services to be very clear with their investors. We are doing humanitarian work. We are cutting down anything that, is not in that category. But certainly every company has to respond. And if you want to see a bad response, the worst one I've seen so far has come from Corn Ferry just over the last weekend,

which was basically kumbaya. And I think they said, we're just going to have a lot of empathy. That's not what shareholders want to hear. How likely is it that companies with a global footprint, when this whole situation is resolved, are going to say either, we're not going back to Russia or we're going to take our time.

I'm wondering, both in terms of the Russian economy, but also in terms of Russia's attractiveness for companies with global footprints. Definitely. And certainly McDonald's has got a big footprint there and has been very successful there. So that was all the more impressive when they made their announcement. You know, a lot of it depends on how. it ends, not when it ends, but how it ends. If it ends with Putin out and a commitment to a new kind of blasphist and more respect for American companies, then I think you will see companies

come back. But anybody who's ever gone into business in Russia or in China or in many other countries has always known that there was some kind of a risk. I was thinking of you recently when the news broke about Starbucks that Kevin Johnson, the CEO was going to step down in early April. And depending on how you want to interpret what was said, it appears as though the board of directors knew about this a year ago and decided not to have someone in place. They decided to bring back Howard Schultz to be interim CEO.

It's his third go-round if you're scoring at home. And sometime this fall they expect to have a new CEO. As all of that was playing out, what was your reaction? Well, to go back to Jeffrey Sondonfeld, who's the world's leading expert on CEO succession planning, I mean, that is catastrophically bad. Every board has to have two envelopes at all times. One is, what if something happens tomorrow? What if our CEO gets named to be Secretary of State?

What are we going to do? And then the longer term, what are we looking for for the future? How are we cultivating insiders as possible successors? this board has failed terribly. And you just cannot keep going back to the same CEO as your safety net. So a very disappointing performance by that board. Let's go to the Academy Awards. The awards are later in the year than normal.

And every year the studio is behind the nominees campaign for the awards. Do you think the additional time helped some performance, get more attention? I think it did. The studios campaign very hard. They send out gift baskets. They make meet and greets available. But overall, I think it's a mistake because there's just awards exhaustion.

We now speak of awards season. We used to just speak of the Oscars. But now we've got this big buildup with the Golden Globes, the Critics Choice Awards, the SAG Awards, the DGA, the PGA. And so I think everybody is just tired of it all right. right now. And we're talking about movies that came out three months ago, five months ago, six months ago. I think it is contributed to a lack of interest in the Oscars. Although there is some interest in the broadcast this year because some changes have been made

in terms of which awards are going to be presented. I'm baffled at the fact that the award show apparently is not going to be streamed anywhere, which seems like a big mistake for a network that is allegedly attempting to bring in younger viewers, many of whom have cut the cord. Based on what you've heard, what are your expectations for the broadcast this year? I am terribly disappointed, and I know that the industry is as well. They're cutting out of the broadcast so many of the essential awards that we really only get to understand and see at the Oscars Telecast. And so for best editing. We want to see those people. Oftentimes, those are the most touching acceptance speeches. And I think it's a real industry. It's an insult to the industry to cut them out. I hope they will not make that mistake again.

I can guarantee we'll be hearing jokes about that from Amy Schumer and Wanda Sykes at the beginning of the broadcast. Before we get to the three biggest awards, you've voted for movie awards. in the past. What has been your approach? Because every year it seems like you hear about in a given category, sometimes someone's been nominated and they've never won in the past. This is, you know, their fifth nomination, that sort of thing. Does that...

You're speaking of Leonardo DiCaprio and The Revenant when he should have won for about four different performances before that. Is that something that factors into the mindset of a voter like you? Or do you try and sort of shut out? the past and just say, no, I'm taking this performance against the other performances. Well, the difference between a voter like me and the people who vote for the Oscars is they tend to only look at the movies that are being supported by the studios, whereas in the critics groups, like the ones I vote for, we actually have seen everything. And so I think we're

less susceptible to those kinds of concerns. With the Oscars, and we're going to talk about some of the predictions, sometimes they don't give the award for the best acting. They give it for the most acting. And so somebody who loses a lot of weight, gains a lot of weight, or does something very, very big, they will go for that. There's often a lot of sentimentality involved as well. I compare it often to a high school popularity contest. This is the industry voting for their own insiders. All right. Let's get to the three biggest awards. And as we do every year, you tell me who you think should win and who you think will win. Last year in the best actor, category. We had a bit of an upset. Many people were expecting Chadwick Bozeman to win posthumously.

Anthony Hopkins won. This year, Will Smith appears to be a heavy favorite for King Richard. Do you think he wins or is there going to be another upset? I would love to see him win. First of all, that's going to be a heck of an acceptance page. The movie, King Richard, was Labor of Love by Venus and Serena Williams and their sister, Aisha, about their father. And Will Smith gave a totally committed beautiful performance. We all know the Will Smith, who's got all kinds of energy and charisma. He really tamped that down. He did a great job. I think he should win, and I think he will win. The best actress category is completely stacked. I mean, just Jessica Chastain, Olivia Coleman, Penelope Cruz, Nicole Kidman, Kristen Stewart, this is such a strong group of actresses.

Is the award itself up for grabs, or is there a favorite? I think the favorite looks like from all the preliminary. Awards, which are leading indicators to use your kind of language, the is, it looks like Jessica Chastain. And that's a classic example of the most acting, not necessarily the best acting. Also, Jessica Chastain falls into the other category. You just mentioned she's been nominated a lot of times. She certainly had deserved it.

This was a passion project for her. She put this movie together. So I think she's a very, very good bet. If we're me, I might go with Olivia Coleman, but she just won recently. So let's spread it around. 10 pictures nominated for Best Picture. It seems, however, like the two strongest contenders are very different films. One is Cota.

One is the power of the dog. You've got sort of this heartwarming family movie and this picturesque western. Is there a dark horse, or do you think it comes down to one of those two? I think it does come down to one of those two, and I would have said for sure, Power of the Dog, which I did not love, but I would have said that that's my bet until last weekend when the Producers Guild picked Coda, and that's a real, that really puts it up at the front again because that's a very good predictor. Coda of the 10 films nominated, Cota is the crowd pleaser. Cota is the one, your grandmother will love it, your grandchild will love it, everybody will love Coda, looking for, Troy Coatser from Coda to make history as the first deaf actor to win an Oscar. But I still think Power of the Dog is a likely win.

So that's still where I'm betting. If we're up to me, I would go for Belfast, I think. All right. Last thing. Please fill in the blank with respect to the Academy Awards. Don't be surprised if... Disney always takes Best Animated. This year, it just might go to the Mitchells versus the Machines.

One of the best reasons to be on Twitter is so you can follow Nell Minow. It's movies. It's corporate governance. It's a lot more. Now, always great talking to you. Enjoy the broadcast. Thank you. Saturday night and the movies.

Who cares what picture you see. When you're hugging with your baby, last rowing the bare glass, technical around the cinema school, a guest out of a holiday. 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 Jason Moser and Andy Cross.

Guys, a couple quick things. In keeping with the business of movies, we've got a fun episode of the Motley Full Money podcast coming on Saturday, where we take a closer look at the streaming wars, bitter rivalries in the entertainment business. and some of the unexpected business and investing lessons from the big screen. So you remember, you can always follow Motley Fool Money wherever you get your podcast, Apple, Spotify. And please leave us a review and include a pitch, as I mentioned last week.

Post a review of the show on Apple. Pitch us a stock you want to talk about. Pitch us a topic for the show. We love to get ideas. So go ahead and review and pitch us an idea. Speaking of pitching stocks, I mentioned earlier in the week, I was up in Boston, visiting family. I spoke to a class at Boston College.

And I also had the chance to meet up with some of the student leaders of the Boston College investment fund. These are students who are helping to manage more than $1 million of the school's endowment. And I got to say, guys, I was so impressed with these students who are learning about investing. They're smart. They're curious. I just want to say thank you to Luke and Jack and Annabelle for meeting up over coffee. Go Eagles. Jason, I know you've had the chance to speak at your alma mater. It's one of those things

that just gives me hope. I walk away from talking with students, and I just feel so much more optimistic about the investing future. Oh, I feel like the world is in way greater hands than when I was in school. There's no question there. It is exciting to see that. And as I'm sure we all see this as well. You see this in our kids, you know, our very own kids growing up. It's just, it's just amazing to see how far things have come along in such a short period of time. Last week, we told you about Walmart's launch of limited edition ice cream flavors. This week, Pepsi unveiled in collaboration with IHOP, Pepsi Maple Syrup Cola. Andy, this is not going to be in stores and it's not going to be sold at IHOP locations,

but it's a social media campaign. There'll be 2,000 winners. Maybe if I were more active on things like Instagram or even at all active on it, I don't even have an Instagram account. Maybe I would be doing this. But I don't know. Pepsi keeps doing this.

It must be working for them. Chris, you had me until you mentioned social media because now I probably will not get this. I'm sad to say. But it does go along with what Pepsi has been doing more recently. Pepsi apple pie, crackerjack flavor. I mean, obviously, from the business side, it's very cheap. I imagine it's very cheap to be able to add these flavors in and maybe use either promotional or drive sale. I mean, Pepsi is a business that, you know, over the long term probably grows in the four, five percent kind of revenue line.

So any little thing they can do that drives both revenues and profits and gets a lot of scale in there, it can be a very profitable move. But, you know, in this case, I think, It's all brandy and I got to say, I like maple syrup. So I would be interested to give it a show, give it a go, Chris, but it just depends on how sweet it is. I can imagine it being a little too sweet. I feel like the Cracker Jack one might be a little bit better because I can actually imagine eating Cracker Jack and washing it down with the Pepsi. But I don't know. Let's go to our man behind the glass, Steve Brodo.

Before we get to the radar stocks, Steve, earlier we were talking about Darden restaurants. long-time listeners know of your affinity for Olive Garden. Did you happen to partake in the Valentine's Day promotion that Jason had mentioned? I cannot say that I did. And I will say this, that the pandemic has been a crushing blow for my relationship with Olive Garden. I have not been as often. I have eaten there a few times, but it's just not the same. I love being in that store.

The vibe there is really nice. The servers are great. It's a grand old time. And when there's a pandemic flying around, it's a whole lot less fun. All right. Let's get the stocks on our radar. Jason Mosier up first. What are you looking at this week? Well, hey, let's see. Talking about flavors. I mean, we've got one of my favorite companies out there, McCormick, ticker, MKC. They've got earnings coming up next week on March 29th. We'll get a better idea of what this coming year for them is going to look like. We talked a lot about pricing power lately, companies that can exercise it. McCormick seems to be a lot. able to do that to a degree. They're calling for sales growth at the midpoint of 5% for the coming year, and they are going to be exercising some price increases there. That would be the majority, the driver of that growth. But they are witnessing tremendous benefits from the recent acquisitions

of Chalula and Fona. They've exceeded all their expectations that they've noticed. And their focus for now is to digest, no pun intended, those deals. But they are always paying attention to new acquisitions, I would not be surprised to see them continue to make acquisitions in order to continue to grow. But guiding for around $3.20 in earnings per share for the year values these shares today at around 30 times full year estimates. I don't think that's out of bounds for a dividend aristocrat with a very proven track record. Steve, question about McCormick? Should they make a huge push to check the expiration date on your spices? Because I bet, I bet you, if that was an entire marketing movement, check the

expiration date. You'd be like, oh, my goodness, I have 68 spices that expired 10 years ago. It feels like that could prompt some new sales. And I would liken that to something like Netflix kind of clamping down on sharing passwords. But who knows? Maybe they're just trying to, you know, exercise some goodwill to those consumers in the face of those price hikes that are coming, Steve. Andy Cross, what are you looking at this week? You know, Chris, the U.S. housing market is one of the most unbalanced spots in just years. So I'm looking at KB. Home as part of just overall housing market, market, a $3 billion market cap company, 65-year-old U.S. home builder focuses in the built-to-order homes, not building them beforehand, so really ordering them. Focuses on new home buyers, more than 60% of their sales driven from new home buyers. They focus on the West Coast, Southwest, Colorado, Texas, Florida, North Carolina, average selling price about $450,000. So at that end,

almost all the revenues come from purely home building, has 10,000 homes in production. That was up 46% and a backlog value to 5.7 billion, Chris, but the interesting thing is you have a stock that's priced at five times earnings, three times this year earnings, now less than one times book value. So the valuation looks exceptionally cheap in a housing market that's just kind of a little disarray, yet we have interest rates moving higher, we have concerns about supply constraints and inflation. So will people continue to look to buy new homes as we come out of the pandemic with these costs increasing home prices and inflation, something to watch. So it's a radar stock for me in the market that looks very cheap valuation, but is that a value trap or not? That's what I'm

looking at. Steve, question about KB Home? So yes or no, should investors think about real estate as a regional investment? Do they be thinking about real estate regionally as opposed to nationally? They can, but for a home company like KB Home, not so much. But regional investing from the from the real estate side, sure. Yeah, you can do that. What do you want to add to your watch list, Steve? I'll go spices. Let's do it. All right, Andy Cross, Jason Moser, guys, thanks for being here.

Thanks, Chris. That's going to do it for this week's Motleyful Money Radio show. The show's mixed by Steve Roydo. I'm Chris Hill. Thanks for listening. We'll see you next time.