Motley Fool Money - Mag Seven or Lag Seven?

Episode Date: January 5, 2024

Big tech had a monster 2023, but companies have some big expectations and valuations to live up to in the new year. (00:21) Jason and Matt Argersinger discuss: - The premium 2023’s Magnificent Seven are currently trading at and why some other areas look a bit more attractive now for new money. - Holiday e-commerce and retail numbers, and what they say about the shopping season. - Why Walgreen’s status as a Dividend Aristocrat is over. (19:11) David Gardner shares some timeless investing advice and some inspiration to kick off 2024. (34:20) Jason and Matt break down two stocks on their radar: UiPath and Pebblebrook Hotel Trust. Stocks discussed: AAPL, NVDA, GOOG, GOOGL, TSLA, META, WBA, NFLX, NET, MTN Host: Dylan Lewis Guests: Matt Argersinger, Jason Moser, David Gardner Engineers: Dan Boyd, Rick Engdahl Learn more about your ad choices. Visit megaphone.fm/adchoices

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New Year, same crew bringing you the weekly stock market news. Motley Fool Money starts now. That's why they call it money. The best thing. Global headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Dylan Lewis, joining me over the Airwaves, Motley Fool senior analysts, Matt Argersinger, and Jason Moser. Gentlemen, great to have you both here for the new year.

Hey, hey. Happy New Year. We've got a big name cutting its dividend, some inspiration for folks getting back on top of their in the new year, and of course, stocks on our radar. But we're going to kick off today, carrying forward one of the big themes of 2023. Matt, the magnificent seven companies did a lot of the heavy lifting in 2023, leading to a lot of the big gains, especially in the major indices. Where do some of those companies sit now? Yes, they certainly did their share last year, Dylan. I mean, look at the seven companies. Let's start with Alphabet. 2023 returns, 58%.

Amazon, 81%, Apple, the laggard, 49%. Meta, one of the big winners, 194%. Microsoft, 58%, Nvidia, the big winner, 239%. And Tesla, with a pedestrian 101%, or a double last year. You average all that together, and the Magnificent Seven more than doubled. And remember, these are the biggest companies in the S&P 500, in the market. Apple with 3 trillion market cap, Microsoft and meta well over trillion. What I think is interesting, looking at the Magnificent 7 coming into this year, though,

and after these huge returns they had last year, if you look at the forward earnings multiple for these businesses, let's go through the list again. Alphabet, 21 times forward earnings, not terribly expensive, just a little bit above market. Amazon more expensive at 43 times earnings. Apple at 29 times earnings. Meta, the cheapest one, 20 times earnings.

Microsoft, 33 times earnings. Invita, as you might expect, 40 times earnings, pretty expensive there. And Tesla, the most expensive at 63 times forward earnings. Average all that out, and you end up with a forward earnings multiple for the group of 35. That's well above market. If you look at the S&P 500, about 19 times forward earnings. The equal weight S&P 500, it's 16 times earnings. And then if you go to small caps, a place where I'm spending a lot of time these days,

you're at a 14 earnings multiple. So these companies are expensive. Now, I would also argue, though, these are among the best businesses out there. They deserve a premium valuation. I think the question is how much of a premium? And given the run that these companies have had, given where they stand in terms of their valuation, I can understand why some of these might be getting a little sold off here to begin in 2024.

Is this bull market kind of broadens out a little more? People look to invest elsewhere, and maybe these will tend to lag, or certainly not do as well as they did last year. That would be crazy. So, Jason, I've seen a couple downgrades come in this week, particularly for Apple. Do you feel like some of that analyst pessimism is just a reflection on, hey, this company had a tremendous year, or is there a little bit more to that? I think that's partly yet.

I mean, there's no question. I mean, Apple had a tremendous year. But as Maddie noted, I mean, it was the laggard of the seven, right? I mean, just modest 49% gains, right? I think we were all very happy with that over the course of any year. But I think what's interesting, when you look at Apple, and I think, by the way, it's important to know with all of these companies. There's a difference between owning and buying, right? Maybe it's not the opportunity to buy right now, but we're not saying that these things are a point where you need to be selling. I mean, these are businesses that you want to own, right? Just might not be the best opportunity to buy them or add to your positions.

But interestingly, when you look at Apple and you consider these multiples, looking at where Apple is today, in the neighborhood of 30 times trailing earnings, you go back to 2000. to 19, it was like 15. I mean, we talk about multiple compression. Well, there's multiple expansion, too. And I think a lot of these companies, I mean, they've been very successful for a number of reasons. But we've seen a lot of multiple expansion when it comes to these magnificent seven, certainly Apple, to be sure, because we went from essentially 15 times earnings in 2019 to around 30 today. So that's something to keep in mind. And then when you couple that with just this general idea, sort of the, it's not a leap, right, to assume that maybe we're not going to be upgrading our iPhones as much. The phones are better. They last longer. I don't need to buy a

new one every two years. Maybe it's just every three years now. Maybe soon it'll be every other, you know, every four years. But you look at Foxcon, right? We just saw news today from Foxcon. They reported a revenue drop for the final quarter of 2023. They saw a decline in December. They're seeing year-of-year decline in sales for the first quarter of 2024. This matters because Foxcon is the leading iPhone assemble or a big supplier of Apple. So that's a good indicator. Maybe of some of the challenges on Apple's horizon as regards to hardware, as it relates to hardware, the one thing, sort of the question I think with Apple now is just regard to services, right? We talked about Apple being a services company. I mean, is that somewhere where Apple will be

able to make up for some mall's ground yet to be determined? But what we're seeing is even the services revenue, that's starting to slow down as well. So, again, not saying that Apple's a bad idea and not saying sell your Apple, but hey, I do get the pessimism there. Maybe this is a time to sort of sit back and let this thing come back to us a little bit. Matt, knowing the cycle of financial news and the way that the media tends to work, I can anticipate six months from now after this great year that these seven companies had, maybe some tough results, maybe some tough comps. And those articles being out there saying, you know, the magnificent seven and not so much in 2024. Is the take on these companies right now, basically, if we see declines in

these prices, they're probably pretty attractive opportunities to hop in? Yeah, I think I heard on the airwaves somewhere this week. It was like the MAG 7 could become the lag 7 in 2024. No, I would say I own a few of these companies. And, you know, any kind of meaningful pullback, you're still buying best-of-breed businesses, right? These companies have pricing power. They're non-cyclical, recurring revenue. just beasts of businesses. And I think any kind of discount, especially if you got back to close to a market multiple, these companies deserve a premium. I would say that's when you step in and say, yeah, there's opportunity there for sure. When they hit lugubrious seven, that's when

you really start to be thinking about buying more shares. Logubrious seven. Don't, not lag seven. Let's be smart about this lugubrious. Someone has been studying the dictionary over the holiday break. I'm going to have to look that one up after we take the show. He's got a daughter that was taking the SAT test recently. All right. Gentlemen, it is that special time of the year when the wrapping paper and the wreckage of the holidays is out of the house. The new toys all have their batteries. And we've got some numbers to make sense of the past holiday shopping season. In addition to shopping, it seems like Jason's been doing a little bit of reeling. But I'm going to ask him to check in on the retail picture for the holiday season.

As you look back on what we've seen in some of the data we got out there, Jason, what do you think the headline is? Well, I mean, we saw a headline this week, Adobe Analytics called out online spending for this holiday season. It was up 5% to just over $22 billion for the months of November and December. So, modest growth there. I mean, I feel like my holiday spending was a little bit more than 5%. So maybe I'm adding a little bit to that. The big theme, though, across the board, though, it wasn't really more spending on more things. It was lower prices.

I mean, we saw discounts really coming to play this holiday season. I think 31%. We saw a peak discount, 31% of a listed price in electronics versus 25% from a year ago, 24% for apparel versus 19% from year ago. So ultimately, we saw shoppers really focusing on those discounts. They bought more things, but they weren't necessarily paying more for them. I think one of the concerns that kind of stands out, and, you know, talking a little bit about this in pre-production, in production, was just in regard to how people are spending, right? And we know the consumer is stretched. Buy, now, pay later. This is something

that's going to be a tool that consumers use going forward. If it's something that helps sell or sell, and it helps consumers buy, then it mean, it's going to stick around, I think. But it really needs to find its place in sort of our financial landscape here. Because as we see Buy Now, Pay Later take a bigger role in how people are spending their money. And it's a bigger role. I mean, it was $16.6 billion in online spending year over the holiday season, up 14% from a year ago. We need to really make sure this is something that the credit ratings agency see, that merchant sees, so that we understand really where the consumers stand because I think the problem, what we're seeing right now is that consumers are using buy now, pay later in addition to credit cards,

right, tapping out those credit cards and then going to buy now pay later, which just puts you more in debt. And that can be a scary thing. In addition to the update from Adobe Analytics, we also saw some data from MasterCard showing U.S. retail sales up 3 percent e-commerce doing the heavy lifting there, but brick and mortar also playing a role at 2.2 percent growth year over year. Matt, are you like Jason? Are you contributing to the growth that we're seeing? I contribute plenty of growth this season for sure. And I'm glad you mentioned kind of the brick and mortar because I think that was an area that a lot of people have sort of given up for

dead. But lots of customer traffic, I know some of the malls I went to were just powerful. act. And so people were definitely getting out there in spending. All right. Coming up after the break, if you're thinking about canceling Netflix or Max, you're not alone. Is that a problem for streamers? Stay right here. You're listening. These days, I'm all about quality over quantity, especially in my closet. If it's not well made and versatile, it's just not worth it. That's honestly why I love Quince. The fabrics feel elevated, the cuts are thoughtful, and the pricing actually makes sense. Quince makes high-quality wardrobe staples using premium fabrics like 100% European linen, silk and organic cotton poplin.

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Q-I-N-C-E.com slash motley for free shipping and 365-day returns. Quince.com slash motley. To Motleyful money. Welcome back to Motley Full Money. I'm Dylan Lewis, joined over the airwaves by fool analyst Jason Moser and Matt Argersinger. If you're looking at your credit card statements and saying, do I really need to be subscribed for different streaming services? You are in growing company. Jason, to borrow a phrase from former Grubhubb Hub CEO, Matt Maloney, streaming customers are becoming more and more promiscuous

and willing to jump and join other services and cancel. We're seeing more rotation. That word's such an attention getter, right, promiscuous. It's like, nope, we're talking about streaming. Personally, it feels like to me we've hit the ceiling, right? This is unsustainable at this point, and consolidation is going to have to happen in order for some of these streamers to be able to stay in business. I mean, it's the beginning of the year. I like going through and doing a little bit of a checking account audit, credit card statement audit to seeing exactly what we're all subscribed to.

Because it really does add up. It does seem like we're headed for a world with like a big full. something like a Netflix, some sort of Hulu combo, maybe Amazon, and then Max. And then you've got all of the other sort of other niche players in there that are figuring out ways to be part of bigger packages, right? I mean, you have Verizon out there talking about offering a suite of Netflix and Warner Brothers discoveries, HBO Max, and then you've got possibility of Apple, saddling up with Paramount Plus.

I mean, to me, this is all stuff that's going to continue. you. It does, it feels like we're going back to the bundle, right? I mean, in simple terms, we're going back to some sort of a bundle, because honestly, that's where you see the most value. And so, I look at this just from our perspective. In our household, we have Hulu Live, but with that, of course, we get the ESPN Plus and all that, the Disney Plus. So, I mean, all of that together, yeah, it's a little bit of a more expensive bill than just your simple streaming service, but we're getting so much, right? It's like cable light almost, and so I suspect we're going to continue to see this, but I think this also really speaks to the value in having the ad-supported

option as well, and that's why we're seeing Netflix introduced. We saw Amazon just rolling this out. Clearly, it's part of Hulu's model all along, but that really, I think, enables these companies to keep, or at least potentially keep more subscribers without them necessarily defecting completely, Instead of cutting your subscription, maybe you just downgrade it to an ad-supported model until you decide to re-upgrade. And then you're seeing Netflix as an example there. They're trying to figure out ways to monetize gaming, right? So gaming being part of not only the engagement in keeping people in the universe, but also new sources of monetization. So it's a really interesting phase.

I think 204 is where we're going to see a real shake out here. A lot of consolidation. It's not going to surprise me at all. All right. In addition to the new year kicking off, we have earning season. kicking off as the calendar page turns. Some of the earlier reporters got the party started this week. And Matt, we saw a bit of a shock from Walgreens, not so much in the earnings headline numbers, but in the company's plans for its cash. Right. Not so much a party over there at Walgreens lately,

but they, yeah, they slashed their dividend from 48 cents to 25 cents. It's the first dividend cut, by the way, in 45 years for Walgreens. You know, it is, or I should say it was a dividend aristocrat. meaning it was a member of this really elite group of S&P 500 companies that have raised their dividend for 25 consecutive years, as defined by S&P Global. This was a monumental move because, you know, Walgreens CEO can say, all right, we're doing this because we want to turn around the business. We want to shore up the balance sheet. We want to reinvest. And the dividend is costing about $800 million in annual cash flow. We can save that money.

It'll enable us to pay down debt, et cetera. But history is not on Walgreens side here. Ned Davis Research and Hartford Funds did a really neat long-term study of the S&P 500, covering 50 years from 1973 to the end of 2022. The average stock in the S&P 500 returned 7.7% annually. The average dividend-paying company returned 9.2% annually. The average company that cut its dividend returned a negative 0.6% annually. That's over 50 years.

So you can believe Walgreens is making the right. business decision. But historically, if you look at most companies, a dividend cut is almost always a signal of poor performance ahead. And here's a bad comp for Walgreens. VF Corp, bigger apparel brand owner. They had raised their dividend 50 consecutive years going into last year. They finally cut their dividend about a year ago. The stock is down some 70% since the cut. So if I'm a Walgreens shareholder, I might think they're making the right business decision. It might not be the best long-term decision for the stock. It could be a really bad signal. Yeah. And, and, Anytime we see any adjustments to those dividend policies, we know how sacred those dividends can be

and just how important they are to investors. So it's not a decision that management teams take lightly. We are going to see more earnings reports pick up over the course of the month. And I want to get a little preview. Jason, as we see more businesses report over the coming weeks, what are you paying attention to? Is there any business in particular that you're watching? Yeah, you know, I'm actually looking forward to Cloudflare's report here.

I think that'll come out later in February. But you go back to just April of 2023, right? They reported their first quarter earnings where the stock just got pummeled. I mean, it was sub-40 dollars per share. And that was based essentially on, I mean, what we then heard for the rest of the year, it was all of these enterprise customers, you know, pinching the purse strings, really watching that spending. Cloudflare, which has always been valued at a premium, still working its way towards

sustainable profitability, yada, yada, yada. But, I mean, they guided down just slightly, right? I mean, they guided down somewhere in their neighborhood of 4% on the top line. At that point, they said they still were going to grow that top line 31.5%. And the market still just punish the stock. But you fast forward to today, clearly there's been a strong recovery in the business. And if you look at just the most recent quarter's results, I mean, the key performance indicators remain impressive. Large customers are growing and spending more money.

And they're still guiding for what they expect to see 32% topline growth for the full year, around 28 to 29% for this quarter that they're getting ready to report. So that's going to be a company I'm keeping my eye on. Matt, what about you? What's a name that you're watching this earnings season? I'm looking at Vail resorts here. Now, they don't report until early March. They're kind of one of those off-cycle reporters. But this is a critical quarter for Vail because it encompasses the results through January. So that first big month of the ski season. And Vail had a really tough 2022-2020-2020-2003 ski season. They had tough weather conditions in the West, they had very little snow in the east. They took on a lot of debt recently. They made a lot

of big acquisitions and some big capital investments in their resorts. So this kind of has to be a really good ski season, I think to support continued investment, keep the dividend growing. I'm a shareholder, so that's both of those things are important to me. But also, I think Vales Resorts will tell us a little bit about the state of consumer spending, particularly at the high end. If there's weakness in their resort revenues, in their ancillary businesses, in the traffic they're seeing to their mountains, into their resorts, into their restaurants, that might be a signal that we're finally seeing a consumer pull back a little bit.

And I think that could signal that we might be headed to a bit of an economic downturn, especially if a lot of those buy-now, pay later people are going to those resorts. They booked all these vacations on there. I'm a little worried about that after some of the things Jason said. Well, Matt, I can personally speak to the conditions on the ground on the East Coast resorts. I spent New Year's in the Poconos and went to Blue Mountain. and all that was on the ground was blown snow. There was not a lake of snow,

just a thin vein of snow going down the mountain as you rolled up from a distance. So I don't know if that picture is going to change anytime soon, but I awfully hope it does. I sure hope it does too, because I'm flying out to Utah at the end of the month, so to do some skiing out near Park City. So hoping for snow.

We'll put the call out there for listeners as well. We'll appreciate the snow reports and the resort reports. If you're out there, podcast at fool.com is, where you can send them. Jason, Matt, we're going to see you guys a little bit later in the show. Up next, Motley Fool co-founder, David Gardner, explains why the future is so bright, you've got to wear shades. Stay right here. You're listening to Motley Fool Money. I study nuclear science. I love my classes. I got a crazy teacher. He wears dark glasses.

Things are going great, and they're only getting better. Getting good grades. The future's so bright. I've got to wear. Welcome back to Motley Fool Money. I'm Dylan Lewis. We're back in the studio for the first time in 2024, and the new year means a renewed interest in all topics, money and investing. So this week, I caught up with Motley Fool co-founder, Chief Rule Breaker, and host of the Rule Breaker Investing podcast, David Gardner. David walked me through some timeless investing advice and gave an optimistic look forward to kick off the new year. David, thanks so much for joining me. Happy New Year, Dylan. Happy New Year, everyone. Yeah, it's great to kick off

24, and it's great to do it with you here on the show. Every time the calendar page turns over into January, I know a lot of people, especially a lot of our listeners, check in on their finances, and they start to make some goals about their investing life and what they want to be doing with money over the year. You've been speaking to investors, new and old, for such a long time. I wanted to start out with you and some advice for two different groups. First off, some of the folks that are coming into investing and are maybe new to investing, maybe what your advice would be for them? It's longer term than you think. I truly believe that many people who come new to investing think that it's trading when it's not. It's investing. And there's a really

important difference. Trading is shorter term. It's practiced often by people down on floors, like futures, traders, bond traders, professional people. There are also people who buy their big PC with their trading station and day trade watching CNBC. Most of our foolish listeners, new and old, won't be like that. But just to understand that's such the temper of the times. That's how people often think. They watch CNBC and it's a minute-to-minute thing. So they start with such a short-term mentality. If you're an investor with us, Capital F, a foolish investor, you're thinking about it for the rest of your life. You should be invested all the way through, adding, adding, adding, rarely selling unless you don't believe in that thing anymore and you can change out that money to something else.

So I would say to the new investors, understand the proper mentality, the right mindset for what is investing, a beautiful word, the antithesis of trading. All right. And David, what about people that have been investing for a while and maybe have been investing the foolish way where they are long-term buyers and owners of businesses? Yeah, keep it up. Keep it up. Because you know what? There are a lot of countervailing forces that try to stop you from keeping it up. huge market gyrations. We've seen that over the last few years, a huge up, a huge down, and a pretty great year back up last year. I'm not all the way back, Dylan, to my 2021 highs. I don't know about you, friend, but a lot of us are probably not, if you've been with the Motley Fool for a while, you're probably not back to your all-time highs yet, but you shouldn't be that far. And I understand some of us started with a fool three years ago when the market was about to tank. Others started three

decades ago. We've seen this time and time again. And all that really matters is not, what happened last year, 2023, or 10 years ago, but what happens next? And for me, what happens next is usually good. I think the market's going up this year, two years in three. It does. So just understand that your own, what you tell yourself in your head during bad times often is the hardest thing you need to overcome as an investor, as a foolish investor. I would also just add as maybe an appendix to that, Dylan, take a look over the stocks in your portfolio. are these all companies that you esteem? Would you be proud if that company takes over the world in the next 10 years?

Is it a better world? It's so important to me as a conscious capitalist that each of us realizes the money that is in our portfolios is really shaping the future, truly, in its own small way, in aggregate in a huge way. So I would say make your portfolio reflect your best vision for our future. And from time to time, we need to just review and see if that's still true. David, it's as if you had my portfolio statement in front of you. I am off of all-time highs, but still well above where I was before the pandemic. And a big part of that is the success

of companies that I've owned for quite some time and have enjoyed owning will continue to own. One of those businesses for me is Axon. It's been an incredible performer, and certainly a business that I want to own as I see the future unfold, because I think it can play a very large and critical part in it. It's also a business I have learned so much from by following, and just kind of understanding where the world is gone. When I look at Axon, for example, I see the migration to cloud being such a large part of that story. That's huge and a really critical part of the fool ethos, learning from businesses that we invest in. I'm curious as we look out, you know, are there any names in your mind, maybe from the past year or from recent memory that you feel

like you've learned a lot from? Well, I think what I'd want to, first of all, I think every stock tells a story. And if you stuck with that stock, you lengthen the story and it became a more important deeper story that you learn more from. If you're just jumping in, jumping out, you're not going to learn too much. But we certainly love stories at the Motley Fool. And you're a wonderful storyteller. Dylan, you talk to other people who tell stories. And that's what I'm about to do is tell a story. The one I wanted to talk about here is Envidia, because Envidia has ended up becoming the greatest stock pick in Motley Fool Stock Advisor history as of now. And it's good to look at our exemplars. It's good to look at excellence and what really wins and understand and learn from that.

So, can I just tell a little bit of the story of NVIDIA? Of course. Let's do it. Settle down here, buy the campfire, I hope. Friends and family, maybe Hard Sider. And let's talk briefly this weekend about NVIDIA, which I first picked on. It was Tax Day, April 15, 2005. The stock was at $1.64.

These are all split-adjusted prices. So, you know, it's sort of a very successful graphics card company. So they're making, if you like computer games and I do, They're making cards that give you better graphics, graphic processing units, kind of what NVIDIA was bringing. That's what attracted me to them at the time. By October 2007, so two years later, it's gone from a buck 64 to 10. So six-bagger, feeling great. Now, those of us who remember market history know 2007, things are probably peaking somewhere right around now, but six-bagger two years later for all our stock advisor members couldn't be more excited about

invidia. By the end of 2008, it had dropped from 10 to below $1.50. So there we are with our six-bagger. Three years later, we're now underwater on the pick. But we stick with it. By the end of 2014, it's back to five. So half where it was seven years earlier, but still a three-bagger, nine years after we picked it. So it's back to five. 2016, two years later, big moment. It crosses 10. Yep, 10, where it had been in October 2007. We're back. By the end of that year, it is tripled from 7.5 to 22.5, 2016, it is the top performing stock on the S&P 500. So our cost basis is $1.64, and we're back to 22.5. We've held over a decade through just crazy times. I'm going to give myself a little bit props at this point, because as I thought about,

you know, what stock do I want to re-recommend at the start of 2017? There was a lot of reporting about how NVIDIA had been the top performer on the S&P 500, the previous year. And most people get afraid then. They think, well, you know, revert to the mean. What goes up must come down. But trying to be the foolish rule breaker that I am, I made that my new pick to start 2017. So yes, 12 years later, I'm picking it again to buy with fresh money. end just a month after it closed out the best year for the S&P 500 of any other of the 499 stocks. So, 2017 R-REC, it goes from 22-5 that year to 52-5. So it turns out you can be the top performer, and a year later, you can more than double again.

So 2018, it's gone from 52-5 to 70. I hope this isn't boring. But we're almost done this shaggy dog story. But in 2018, having just hit 70, it goes from 70 to 30. Whammo. I think some of us will remember crypto was like a big thing for Nvidia. Also, the idea of like AI and AI and cars and other things like that. And some of that slowed down and some of the crypto hype was subsiding.

That really hurt Nvidia stock. So it gets cut in half that year. But by early 2020, it crosses 70 again. and by the end of 2020, it's at $130 a share. Remember, our cost basis is $1.64. So really nice then when in 2021, it goes from $130 to over $300 a share. And as we hit the penultimate chapter of this long story of association 18 years and counting with NVIDIA, we learned that in 2022, the stock ends up dropping from just over 300 to just over 100. So you had a near trillion-dollar company, Dylan, and fellow fools everywhere,

that lost two-thirds of its value in a single year. Yeah, 2022, not so long ago. But today, we're back over 200, back over 300, back over 400. It recently touched 500, though it's around 475 or so as we close out this week. It's been a 295 bagger for Motley Fool Stock Advisor members, Vintage 2005, who are, I hope you are, still holding. All you had to do was just hold for 18 and a half years now and counting. So I think there's so much to have learned from that story. Many people don't have long associations with stocks, but when you can, A, invest for the long term, the only term that counts,

and B, find great companies. You just learn so much. Your eyes are opened to what investing truly is, but you have to let it take time. I would suggest the rest of your life. I love that story, David, because I think so many lessons there. And also because there are probably a lot of people that first started following Nvidia this past year as it entered the Magnificent Seven and became this massive, unavoidable success story. And I love that, yes, it has been a long march for this company.

and the people that have followed it and held it for that entire time have been incredibly well rewarded for doing so. And it's not the only one. I could tell similar stories around stocks that we've recommended in Stock Advisor. Netflix, which was when I retired from stock picking in May of 2021, that was the big performer. That was the 200-plus bagger. Of course, having picked Amazon a long time ago back in our AOL day is still holding,

that's really been the best stock pick of my life. But these are all great stories. and what you learn, what you choose to learn from the stories, you take away. How many people, another great stock we've picked, Apple, how many people had Apple at some point? But maybe their money doubled and so they sold out or maybe it had a bad quarter and they thought, you know, people are saying Apple's too high right now. Whatever it is, you end up not learning and not prospering from some of the best instincts that you had. So returning to what I said a few minutes ago, Dylan, if we are making our portfolio,

reflect our best vision for our future. You just stay focused there. I bet your vision for the future isn't changing as often as stock prices do. I bet your best vision for our future is not changing as frequently as the pundits do, changing their minds on the so-called magnificent seven, a phrase I don't really use too often because it's the Johnny Come Lately, Fang stock, like group a bunch of companies, many of which we've held for years and years, that just did really well and create a cute label for them. And I'm not trying to demean it, but I'm just like it's so short-term. and it's missing the bigger picture. I hope I didn't offend you there, David.

Not at all. No, believe me, I have a long list of pet peeves. I do them on my podcast once a year, so I'll air out eight or ten more. That is a pet peeve that predates you, Dylan. And it's really as much about the fang stocks. Do you remember that phrase? Of course. A lot of these are the same companies just in different clothes, like Magnificent 7.

Most of those are the same stocks that were there. But when Jim Kramer especially was playing up fang stocks, my big point was, well, you know, it's great to have them or be aware of these companies. The Magnificent 7 or 7 are the great companies in the world today. So I'm not going to demean that. But the real question that I would have is for anybody who's talking about Magnificent 7, what is your Magnificent 7 score? And your Magnificent 7 score is you add up the number of years that you've held each of those stocks in the Magnificent 7. And that is much more important than that you had them at the end of this year, window dressing, your professional mutual fund port for

or telling your friends over eggnog that you own some Nvidia. To me, it's about the years, and that's the point that will rarely be made in popular media, and that is the point that matters more than anything else. You mentioned your Pet Peave series there with RBI. You have many series and many recurring volumes with RBI. One of my favorites is your quote series. You have your great quote volumes, and I'm curious. We always look for wisdom.

We always look for inspiration as we head into the new year. Are there any quotes that are really ringing in your head right now? I love great quotes. And obviously, having now done 17 episodes with a new group, five quotes every time, I guess I'm up to nearly 100 great quotes. So I am somebody, it sounds like you are too, Dylan. I'm somebody who loves finding the Mojus. It's across different cultures, across different time periods,

but finding those things and sticking with them in good times and bad is really helpful for all of us as investors, business. people and fellow livers of life. So let me close with one that somebody I know in his team, but didn't know he'd said it, but it's Frank Lloyd Wright, the American architect. And I love this line. The longer I live, the more beautiful life becomes. And I hope that's true for you, whoever's listening right now. I hope that's true. We have the ups and downs. Every day is not beautiful. Every market year is not beautiful. But I hope the longer you hold NVIDIA, the longer you do the thing that you do, whatever it is, the thing that you do, the people that you love,

the longer that you're here with us, I hope the more beautiful life becomes it. It did for Frank Lloyd Wright, apparently. And I would say it did for me. And I'm looking forward to several more decades on this planet. After we wrapped up taping, David Aspe, what's the cutoff for wishing someone a happy new year? I said January 12th, listeners, we want to know what you think. You can send your New Year's greeting cutoff date to podcasts at full.com. And of course, you can always send questions for our analysts and ideas for the show there too as well. Coming up after the break, Matt Argersinger and Jason Moser return, the couple stocks on their radar. Stay right here. You're listening to Motley Full Money.

I'd like to buy the world a home and furnish it with love. Grow apple trees and honeybees and the white turtle duff. As always, people on the program may have have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell anything based solely on what you hear. I'm Dylan Lewis, joined again by Matt Argusinger and Jason Moser. We've got radar stocks in a minute, but first, gentlemen, it appears there is a limit to pricing power. European Grocer Care For is dropping Pepsi products from stores after the company's run of price

increases. Tough news if you're trying to get Doritos in Belgium, but maybe understandable, given the increases we've seen. Jason, what is a snack with unlimited pricing power in the Moser household? Well, my wife will tell you, I have the tooth of salt, not of sweet, so I can spend irrationally on some dots pretzels all flavors. I do not discriminate. And a staple that I'm always on board with is extra toasty cheeses. I love dots pretzels. That was a new snack for me in 2023 and one that is a staple of my pantry now. Matt, what about you? What has pricing power? Yeah, I'm a big fan of Sunchips. I think they're a Pepsi product, especially the garden salsa flavor. I think if my

grocery store didn't sell them anymore, I'd be sad. But generally, I'm a big fan of just roasted, salted, cashews, or almonds, or really any nuts. Can't get enough. And unfortunately, bags of those run like $10 these days, but I can't help myself. Wow. We got some salty palettes. All right, let's get over to stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Jason, you're up first. What are you looking at this week? Yeah, dig it a little bit more into a company called UiPath. is P-A-T-H. They build and manage automation and computer vision technology. They do this through their business automation platform that ultimately spans the full automation spectrum. Examples of

what this can be used for. Think of healthcare where they can actually help automate EMR, electronic medical record workflows, or claim systems, document management, and data transfer. They make money from the sale of their software licenses in their SaaS business subscriptions. They integrate with offerings from companies like Adobe, Elassian, Crowdstrike, Salesforce, and more. So this really does expand the audience and the use cases for the company. The co-founders and also co-CEOs, you've got Daniel Dines and Rob Enslin. They're still leading the way. And Dines, interestingly, owns more than 19% of the company still.

It's a very interesting business playing into a lot of the tail ones we talk about with AI and in automation and machine learning and whatnot. Still working its way to profitability, though, and valuation today is still a big risk. We'd go on the entire show without talking AI, and here Jason brings it up towards the end. Dan, a question about UiPath. Not going to lie, when I saw the name of this company, I thought there would be like some sort of med tech stock that did stuff with urinary tract infections. Terrible name for a company, regardless of what they do. So mostly a comment, it seems.

Kicking us off strong. Matt, what is on your radar this week? Pellberg Hotel Trust, ticker PEPB, can always count on me to find these small, obscure reeds that nobody cares about. But I think more investors should care about Pellberg. This is a reed that really suffered, obviously, in the aftermath of COVID-19. Business for their hotels and resorts basically shut down for several months, and it was very slow to bounce back. But here we are today. Hotel occupancy revenues are almost back to pre-pandemic levels.

The company has sold off some of its non-court assets, paid down a lot of debt, no major debt maturities now until October 2025. and management has been buying back a lot of stock. That's rare for a REIT. In fact, the CEO himself has personally acquired over 300,000 shares since 2020. And I expect a big dividend raised this year. Feels like a hidden gem to me in Reitland. Dan, a question about Pebblebrook Hotel Trust. Yeah, Maddie, you said this stock has suffered since the pandemic, but looking at their stock price, it seems like they've been suffering since about 2015. Any thoughts on that? Yeah, that's a good call, Dan. I think they extended themselves beyond their kind of core boutique resort asset in those years.

And so I think they've done a good job of kind of selling a lot of those off, getting their debt lower. So I think I expect better years ahead. Dan, which one's on your list? Bad name, good company, UiPath. Let's go. Love it. That's going to do it for this week's Motley Fool Money Radio Show.

Show is mixed by Dan Boyd. We'll see you next time.