Motley Fool Money - Retail, Tech Earnings, and Berkshire’s Surprising Buys

Episode Date: February 19, 2021

Walmart shares slip on earnings. The Trade Desk surges on record revenue. Roku rises on an unexpected profit. Fastly falls on growth concerns. Shopify slips. CVS Health treads water. Berkshire-Hathaway makes some big investments. And Marriott suffers a big loss with the death of its CEO, Arne Sorenson. Motley Fool analysts Ron Gross and Jason Moser discuss those stories and weigh in on autonomous driving, big tech break-ups, and the streaming wars. Plus, Ron and Jason share two stocks on their radar: Bluebird Bio and RadNet. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Hit any look for every occasion at Men's Warehouse. Love the way you look. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money Radio Show. I'm Chris Hill, joining me this week's senior analyst Jason Moser and Ron Gross. Good to see you, as always, gentlemen. Hey, how are you doing, Chris? We've got the latest headlines from Wall Street. We got something special planned because it is our 12th anniversary, if you can believe it. And as always, we've got a couple of stocks on our radar. But we begin with big retail. Walmart's fourth quarter was full of highlights. E-commerce sales up nearly 70%.

Same store sales in the U.S. up more than 8%. But despite that, Ron, shares of Walmart fell 6.5% on Thursday. That seems like a big drop for a business like Walmart. Yeah, you know, earnings disappointed, as did guidance. And the report was perfectly fine, but this is not a high-flying tech company. So we can't expect those kind of numbers out of it, especially once we get back to normal post-COVID. But the numbers are great. Walmart comp sales up almost 9%. E-commerce, 69%. Sam's Club. I'm a Costco guy, but hey, Sam's Club does a nice job as well. Sales increased to almost 11% there, and international was up 5. So you kind of boil that all together, and you get revenue up 7%, which is a perfectly respectable number for

a business, a retail business, the size of Walmart. And you even saw gross margins increase, says there was strength really across all categories. Now, we had some higher expenses. Operating margins took a hit that we see consistently across the board, partly as a result of COVID. In this case, it was $1.1 billion of COVID-related expenses. And they had another one-time expense where they decided to repay some property tax relief in the UK, which we don't need to get into. So operating income, it all boils down to being up 5.5 percent, perfectly respectable. But investors were focused on the guidance, where the companies came out and said, said, sales, operating income and earnings are expected to decline in fiscal 22, primarily due

to the impact of anticipated divestitures. Now, they're exiting Argentina, UK, Japan. They're doing that willfully on purpose to focus the business. If you take away the impact of the divestitures, EPS is expected to be flat to slightly up. That also is not exciting to investors. So you get the stock selling off a bit. Love what they're doing with wages. They're going to raise the average wage to above $15 per hour. They're still investing $14 billion in the supply chain and an additional technology.

And finally, they increase their dividend for the 48th consecutive year. Impressive stuff. Shares of the Trade Desk up 5% this week after the programmatic ad platform wrapped up a strong fiscal year. Ad spending on the trade desk in the fourth quarter. Do I have this right, Jason? It was up 60% in the fourth quarter? Yeah, approximately for the quarter, yes, it was. Remember, we talked about how the strong companies coming out of the other side of this mess. They're going to come out of this even stronger. I present to you Exhibit A, the Trade Desk. A lot of this, I think, has to do with connected TV. It's those internet and television worlds colliding. Trade Desk is turning out to be a prime benefactor,

and beneficiary rather. And so I think, you see shares up 200% over the last year. Connected TV was the largest growth segment of the global advertising market last year. And to try to put all of that into context here, you're talking about ad spend on their platform. Ad spend on the platform for the year for 2020 was $4.2 billion. It was up 34% from a year ago. Spend in the fourth quarter alone, yeah, 1.6 billion versus 1 billion a year ago. Now, according to e-marketer, total global ad spending declined 4.5% in 2020. So, you put all that together.

You can see, I mean, the Trade Desk is gaining share at a nice, rapid clip. And it sounds like what they're doing is really working. Customer retention remains high at 95%. I mean, revenue has grown at a 50% compounded annual growth rate of the last five years. So, I mean, we're at this point now where more U.S. households are without a cable subscription than those that have one. That trend's not going to change. And then finally, I think it's worth noting on the call.

They talked about reference to the CES and Mark Pritchard, who's the chief brand officer of Procter and Gamble, he was talking about this move towards digital, programmatic, data-driven, automatic advertising. I mean, that's not going away. That's where this ball is rolling, so to speak. And when you hear that from the chief brand officer of Procter & Gamble, I mean, that's the world's largest advertiser. You can see there is a lot of reason to believe that the future looks very bright for the trade

desk. Roku turned a profit in the fourth quarter. They added more subscribers. Shares Roku flat this week, Ron. But given that it's up more than 250 percent over the past year, I really don't want to hear any complaining from shareholders. You'll hear from me because this is another high flyer that I completely missed out on. But they are doing impressive work here.

In 2020, 38 percent of all smart TV sold in the U.S. were Roco TV models. That's some nice share that they're accumulating, and it's showing up in the numbers. They surpassed 50 million active accounts in Q4. Video advertising impressions more than doubled, and that translated into just great income statement numbers. Total revenue up 58 percent, broken down by platform revenue of an 81 percent increase and player revenue of 18. Gross margins widened significantly. Gross profit was up 63 percent. Streaming hours increased 20 billion hours to a record, almost 59 billion. And ARPOO, which we love to talk about.

Average revenue per user increased 24% now to $28.76 per user. So the numbers are really impressive. Investors were not expecting a profitable quarter, so it took them by surprise in a good way. They reported $65 million in operating profit versus a loss in last year's fourth quarter. Ibet have 113 million, respectable and growing. Guidance was not impressive when you look at it sequentially from quarter to quarter, but year over year, it's going to be an increase of around 50 percent in revenue.

So that growth continues. And management does expect a small loss of around 20 million for the coming quarter. Let's see if maybe they surprise again and turn a small profit. Roku is also looking like a company that is going to get even deeper into original programming. We had talked previously about them paying pennies on the dollar for Quibi's library of content. As they should. Is that a good move for Roku to invest heavily in original content? Because that puts them right up against the Netflix and Amazon Primes of the world.

It worries me, but everything worries me, Chris. It's expensive to get in programming. I mean, my job as an analyst is to worry about these things and making sure that they are spending appropriately. They've got a good balance sheet, but gosh, as you said, the competition and original programming is steep, and there's so much good stuff out there right now. I don't love the idea. Shares of Fastly down 20% this week. Fourth quarter revenue for the Edge Cloud platform grew 40%, but guidance for the current quarter sent some investors heading for the exits. How bad was the guidance, Jason?

Well, I mean, let's try to keep everything in context. I mean, guidance for 34% revenue growth in the current quarter. I mean, that's not all that bad. But when you compare it to the way this company's been growing, then you start to understand some of the concerns. And we talk about it often. When a company has a history of growing at really impressive rates, the stock price reflects that. And when that growth starts to slow, then you see a repricing. And I feel like that is what we're seeing here to a degree with Fastly. And it's not to say that Fastly can't be a good investment from here. But we have some questions. And I think that we're seeing, and I think, I think that on the 40% number that you lobbed up there, it's worth noting to organic

growth, I think, is starting to become the bigger question because that 40% also included an acquisition that the company made. So organic revenue growth was really closer to around 30%. And then you couple that with that guidance. You start to ask some questions. It was interesting in the call. It really took a lot of work to get that actual organic number as well. wasn't really, I would say, as upfront with it as they probably could have been. Again,

kind of makes you wonder about the growth prospects going forward. But gross margin expanded better than six percentage points for the quarter. I think that is, that's the benefit of their usage-based model. You see some puts and takes with that model, and that clearly is a benefit there. Dollar-based net expansion rate was 143 percent. That was down from 140 percent, 147 percent a quarter ago. I think a big concern with Fassley, though, is their ability to enterprise customers, big customers that spend at least $100,000 per year. And if you look at that, sequentially, Fastly saw 3.5% growth in those enterprise customers. They saw 12.5% growth from a year ago. Now, compare that to something like a cloud flare. Cloudflare

saw sequential growth of 8% and 50% growth from a year ago. And so, again, it's not to say Fastly can't be a good investment from here, but it does seem like there might be some better options in the space. Given the guidance there, it feels like the selling is at least understandable. Coming up, Warren Buffett and his colleagues went shopping. We'll talk about what they bought and try to figure out why. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Ron Gross. Marriott posted mixed results in the fourth quarter, but that news was overshadowed this week by the sudden death of Marriott CEO Arnie Sorensen on Monday. For nearly a decade, Sorensen guided Marriott

into becoming the largest hotel chain in the world. The board of directors expects to name a new CEO before the end of the month. But Jason, safe to say, big shoes to fill. Big shoes to fill. Yeah, absolutely. And the Arnings call was a real tribute to him. They told stories. They held them in the highest regard. I mean, it really was, it was very thoughtful and clearly very big loss. for the company and in the general business world, really. I know the conversation is all about Airbnb and the gig economy and sharing economy. One other way the travel space is changing. And that makes sense to agree. I actually think that Marriott is a business that can handle this shift in the travel industry pretty well. I think that it still has a big role to play.

And a lot of that, I think, is thanks to what Mr. Sorensen did for this business over the past basically decade. I mean, since March 31st and 2012, 12 when he took over. The stock is up 283% versus the markets 180%. He's more than double the top line over his tenure going into this 2020, which was obviously a very difficult year for everyone. If you look at the quarterly results, I mean, it was bad, but we expected it to be bad. Rev PAR, that revenue per available room, declined 64.1% worldwide, adjusted earnings of 12 cents. That compared to $1.51 from a year ago. But there are some notes of encouragement on the call.

There are reasons to believe, at least, that demand will come back rather quickly. They noted some key markets in China, or demand jumped from around 20 percent to over 60 percent in just two weeks after local governments had removed travel restrictions. And then it's also very encouraging to see what the traction that they're getting and the engagement that they're getting from their Marriott Bond Boy program. loyalty, a card, at benefits. All this thing rolled into one. They have 147 million members now. They noted that global credit card spending on their Marriott branded cards was only down 16%. You compare that to that RevPAR decline. Clearly, you can see people are still using that card.

And I think that that's going to be important. I think that's something this company can really benefit from is generating that engagement, their own little world, from that Bonvoy program. I mean, e-marketer pegs at 90% of our growing mobile time is spent in apps. So, I mean, if you are a consumer-facing brand, regardless of market, I mean, you've got to bring a strong app game at the table. And they're really working on that. It seems like it's paying off. So, yeah, I see a world where Marriott still has a role to play. And we'll be interested to see who does fill Mr. Sorensen's shoes.

Chairs have Shopify down a bit this week, despite the fact that fourth quarter profits and revenue came in higher than expensive. And Ron, I get the valuation on Shopify, but it seems like the business is doing so many things that you would want to see if you were a shareholder. You get the valuation. You will explain it to me after the show. These are really strong results, but I just think investors were less impressed with the guidance. And when you're trading the way you do, you need to really fire on all cylinders, as I like to say. But for the quarter, very impressive. Revenue up 94 percent, adjusted net income, up almost 200 percent, subscription solutions. solutions up 53 percent. Now that monthly recurring revenue, the MER was $83 million. That's up 53 percent, which is a strong number. And the big number here, really, out of all of these great numbers, are the Merchant Solutions revenue, which is their bread and butter, and

that was up 117 percent. So, you know, certainly benefiting from the fact that everything moved online during the COVID pandemic and the quarantine. But the numbers are really impressive. operating margins widened. They had adjusted net income of around 200 million. That compares with only about 50 million this time last year. So we're not extremely profitable here, right? We've got this high-flying, unbelievable stock up 160% over the last year and even more before that, but we're still kind of in the infancy of profitability. That's where people look to the guidance, and I think investors really were worried here. Management said they expect to grow revenue rapidly in 2021, but at a lower rate than in 2020.

as the economy opens up and people are returned to brick and border stores. So if you own a high-flying growth stock, you do not want to hear anything about lower growth rates. And they're also going to continue to invest aggressively to fuel growth, which you want them to theoretically, but there's obviously a cost to spending all that money. Fourth quarter profits for CVS health came in higher than expected, but shares still down a bit this week. Jason, if you're looking for signs of encouragement at CVS, pharmacy sales are up. Anyway, yeah, yeah. Well, I mean, there's a little bit of a little bit of stuff to look forward to here with this business. I mean, it's not been the greatest investment over the past

several years, but I do wonder if we won't see some goodwill and brand equity come from everything that we've witnessed with the pandemic. CBS is, I think, now being seen as a part of the overall solution. They are one of the national partners for the Federal Pharmacy Partnership Program, which is central to the plan to vaccinate 300 million Americans by the end of the summer. As far as the numbers, revenue growth, 4% to just under $70 billion. Not bad. I mean, given everything that's going on, adjusted earnings per share of $1.30. Operating income was down over 20%. A lot of that was due to pandemic-related expenses, reimbursement pressure in general, just business environment concerns there. But pharmacy

services, which is about 55% of overall revenue, that was down slightly for the quarter offset a little bit by some growth in retail, 6.6%. That was driven mostly by prescription volume and COVID testing. The healthcare benefits segment grew close to 10 percent. That's encouraging. And they're guiding, I think, for some fairly reasonable targets here, guiding for earnings around $7.45 per share so far, a top line growth around 4 percent or so. So I think, you know, all things considered, this is a company that is still doing good things, but they definitely have some challenges as the economy starts opening back up. Berkshire Hathaway's latest earnings report comes out next week, but this week we found out

what Warren Buffett and his team have been buying. Berkshire has taken a $4 billion stake in Chevron and $8.5 billion stake in Verizon. Ron, is one of those better than the other because both seem a little uninspiring? Yeah. So Chevron is clearly, energy is an economic rebound play. And we've seen other investors, I think David Tepper, over at Appaloosa has recently entered the energy space as well. I don't know if Chevron's the best way to play that. I think there are better companies out there to maybe play it,

but they obviously see something impressive in that company. Verizon, I would assume, is a 5G play. Interestingly, I myself did the same thing maybe a year or more ago. But in hindsight, I actually think there are better ways to play 5G than the service providers. Jason would certainly know more than that than I do. But these are interesting moves. They lowered their stake in Apple by 6%. And Verizon is out 3% of the portfolio. So that's a big bet they're making. Yeah, it just, it seems like they're bored. I know there's serious people doing serious things, but these seem like, as I said, uninspired purchases, but we'll see what we get out of their next quarterly report. All right. Which big tech CEO will step down next?

How close are we really getting to self-driving cars? We're going to answer those questions and more with a round of buy-seller hold. That's next. So stay right here. You're listening to Motley Fool Money. When I'm a walking, I strap my stuff, and I'm so strong out to check you out. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Ron Gross.

As I said at the top of the show, guys, it is our 12th anniversary. to believe 12 years ago this week, Motley Fool Money started as a humble little podcast. Eleven months later, we make the leap to broadcast radio. The first podcast to do so, we don't get anything for that. We don't get a plaque or a bag of money, but we get the honor of being first. Something that we used to do more often on the show, but I haven't done for a while, is buy-seller hold. And for those unfamiliar, I'm going to spot Jason and Ron up with a topic and have them weigh in as though if this thing were a stock, would they buy, sell, or hold it? Jason, I'll go to you first on this one because there's more and more talk every

year about autonomous driving. So buy seller hold the likelihood that a child born this year will need a driver's license in, let's call it 2040. I'm going to say the likelihood that they'll need a license. I'm going to say, the likelihood that they'll need a license, I'm going to say, I think that while we are making terrific progress in regard to transportation as a service, there are going to be all sorts of leaps and bounds here in the next several years. I still think that's probably a little bit early to look at self-driving for the masses. I think we'll see pockets where it's available, but I think generally speaking, I think that kids born today, most of them will still need a driver's license by the time they're of age.

What about you, Ron? In much the same way as a pilot needs to know how to fly. when he flips off the autopilot switch, thank God. I think people will also need to know how to drive in case they need to switch off their autopilot on the autonomous vehicle. So while we might not use it very often and those skills may not be necessary and may atrophy over time, I still think it will be a law that will have to be versed in how to drive a car. Ron, lawmakers continue to speak out about the monopoly of big tech.

So buy, seller, hold, Apple, Amazon, Alphabet, or Facebook getting broken up in the next five years. And I'll just add on to that. You can even go the root of a self-breakup in the next five years. Well, the heat is certainly on. And so I'm going to buy that one of them does get broken up either by the Department of Justice or on its own. And if I had to guess, I would say it was alphabet because it feels, Google feels to me, more like the biggest monopoly of them. They all have competition, but Google search is pretty up there in terms of market share. And if anyone really has to go down, that would be my guess.

Jason? Well, I think I'm going to run counter to run here, and I'm going to sell the notion that we will see any of these companies broken up in the next five years. I think that perhaps some lawmakers would like to do that. I also think that there are bigger fish to fry, and I think that they probably are better served looking at what has happened with these four businesses in Apple, Amazon, Alphabet, and Facebook in trying to ascertain exactly how they could prevent potential antitrust concerns in the future. I mean, there's some acquisitions you could argue that should not have been made.

I mean, Facebook, I'm looking in your direction. It seems like the Instagram deal was really not about trying to make yourself stronger as much as it was trying to about, as much as it was about eliminating a competitor. So I think they probably look back on stuff like that and say, you know what, we probably should have caught that. I don't know that they're really going to have the political capital to fully make something like a breakup happen here. It could happen. I'm just selling the notion that it will. I think it definitely will reshape how tech is able to consolidate though in the future.

Let's stick with big tech, because Jeff Bezos, recently announced he is stepping down later this year as CEO of Amazon. So buy seller hold, Ron, buy seller hold Tim Cook being the next big tech CEO to step down. Not necessarily this year, just of that group, Apple, Alphabet, Microsoft, Facebook, Tim Cook is the next one to step down. I'm going to sell that notion. Now, yes, he is the oldest at 60 years old, but he's by no means old. And I still think he's energized by what he's. he's doing and he's got a lot to do. I'm going to call an Audible and tell you that it's Mark Zuckerberg at 38 years or 36 years old that is going to move on to executive chairman and do other things

either in the space or in the world of charity and he will be the next one. I like it. Bold call. What do you think, Jason? It is bold and I mean, man, Ron, you must have been cheating off of my notes or something because I was going in that same exact direction. I mean, I really don't think Tim Cook has any inclination to step down. I think that he's been a wonderful operator for Apple, and he really is, I think, enjoying the role that he's serving. To me, it really does feel like, even though Mark Zuckerberg is still so young, it really does feel like, after given what we've seen with Jeff Bezos, right, I feel like that probably maybe plants a seed in Mark's head. And he thinks, you know what, I don't have to do this forever. And I can still be

involved with the business and play an integral role in its development and growth without necessarily maintaining the CEO role. I absolutely could see Zuckerberg transitioning over to executive director at some point or another. And, you know, hey, perhaps letting an operator like Cheryl Sandberg go in there and take care of that day-to-day, be interesting to see. Yeah, wasn't Bill Gates in his late 30s or maybe like early 40s when he stepped down as CEO of Microsoft? Pretty young, yeah. It feels Yeah, it sounds right. The newest entry into the streaming wars launches on March 4th, $6 a month if you want to get it with ads, $10 a month if you want to get it ad-free. Jason, buy-seller hold, Paramount Plus.

Well, Chris, going into Peacock, I think we were all having a little bit of fun at Peacock's expense, right? Part of that probably was the name. Part of it was thinking you're a little bit late to the game. All of that is true. All of that. So, in hindsight, I mean, I've been very impressed to see what they've done with Peacock in such a short period of time. They've gotten some good content on that platform. You would think that Paramount Plus could do the same thing. It did seem like from the commercials they were entering during the Super Bowl that they do have some content out there that folks want. I just don't feel like it's a buy, though. I feel like maybe they're a little bit late to the game. game. And for me, it's just getting to be such a clutter streaming environment already. It kind of feels like Paramount Plus might be back of mind for a lot. What do you think, Ron? I think you come for Star Trek Picard, but you stay for SpongeBob Squarepants. What about Beez and Butter?

But I'm not staying for either. It's a sell for me. And that's because I have a $5 to $10 fatigue on my credit card. If I have one more $5 to $10 charge that shows up on on a monthly basis, it's going to be the strut that breaks the camel's back. So they do have some good programming for sure. Listen, we just can't do everything. There either has to be consolidation or maybe cheaper or I just can't put another one of these. I just can't commit.

But before we get into the consolidation, because I do want to talk about that, but doesn't it work to the benefit of these streaming services that they are not all, the bill is not arriving at the same time? It's not like for years and years with your cable. bill, which came once a month. It was a big number. You would look at all the charges and think, what am I paying for all this stuff? That was easier to look at. Instead, it's like, your bill for Netflix probably comes at a different time than your bill for Disney Plus, for Peacock, whatever. So I feel like it's in their best interest to at least make an attempt to go it alone as a standalone

streaming service. You may be right. And truth be told, I don't even remember exactly which ones of these things I subscribe to. Some are my kids like and some I like and I don't know how much money I'm spending in the aggregate. So if you don't know, it's kind of sticky. You tend to not do anything about it. Versus, like you said, the cable bill comes. It is a couple hundred bucks or whatever it is every month. And you're constantly calling them to see if you can lower that. And they're like, no, you can. And they're like, okay, thanks. I'll call you next month. Well, I mean, you're absolutely right. I think one of the things, though, further down the road, then you do have to ask yourself that question regarding pricing power. I mean, I think when we have that discussion

with Disney Plus, for example, and we say, wow, I mean, setting that service, I mean, what did they start it out, $4.99 or something like that, something absurd, where all of a sudden you see, okay, that's a brand, that's a platform, where that's a service where I could see over time, I understand the levers they can pull to raise those prices. You look at something like a Paramount Plus. And I mean, I'll lump Peacock in there, too. I think a lot of these streaming services are going to be faced with this challenge is, how do you raise prices in the coming years? Because that's going to be a battle that they're all going to be fighting on some front. And it's going to be easier for some, like a Netflix or maybe an HBO Max or something

like that. It's going to be easier for some, I think, than others. And that'll be really an interesting one to watch play out. I mean, we talked earlier in the show about Roku acquiring some of Quibi's content. I mean, there's, you know, we're all familiar with the big name streaming services. There are so many more niche streaming services out there. It seems hard to believe they can all survive. Do you think at some point in the next couple of years we're going to hear announcements of some of the bigger ones, whether it's Netflix or Disney or even Amazon, instead of saying,

here's how much money we're spending on content, maybe one of them comes out and says, So how much we're going to spend on acquiring these three niche content streaming services and incorporate all of their content into our system. I like that idea of some of the nichier ones combining. I don't know if the big boys will. They'll probably stay, go to load and compete, but some of the smaller ones, Discovery Plus or what have you, I could see them combining forces, combining balance sheets and producing content as one bigger company.

Yeah, and I mean, you look at the opportunity out there in Connected TV, and let's go back to the Trade Desk story that we were talking about earlier in the show. I mean, they quoted some really impressive numbers on their call there. In 2020, more than 1,000 brands spent at least $100,000 on Connected TV on the Trade Desks platforms. Those brands that spent more than $1 million on the platform in 2020, more than doubled from a year ago. And so it all goes back to this Connected TV opportunity is a huge one.

It's one where a lot of money is flowing. So I absolutely understand why these streaming services are opening up the way they are. If we look back to something like Peacock, and I imagine Paramount Plus is very much the same here, that's not a paid subscriber play. It's an ad play, right? That's how they generate most of their money is from advertising. And so I think when you look at those services, whether it's Discovery Plus, Paramount Plus, Peacock, whatever, advertising is the big opportunity, at least for now.

And those numbers that we saw on the trade desk's most recent quarter here that they just reported really bear that out. Up next, we will dip into the Fool mailbag and share a couple of stocks on our radar. Don't hit fast forward and don't touch that dial. If you're an investor, you are right where you want to be. You're listening to Motley Full Money. 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're here. Welcome back to Motley Full Money.

Chris Hill here with Jason Moser and Ron Gross. Before we dip into the full mailbag guys, back on our 2021 preview show, the show ended with a round of reckless predictions. And I want to go to our man behind the glass producer extraordinaire Dan Boyd. Dan, can you play the reckless prediction that Ron Gross went with weeks and weeks ago? The Tampa Bay Buccaneers under the leadership of Tom Brady will win Super Bowl 55 at Raymond James Stadium in Tampa Bay. Also, the stock market will be up 12% next year in honor of Tom Brady wearing the number 12. Ron, I hope you are as correct about the stock market being up 12% this year as you were. Just so people know, you made that prediction before the playoffs had even started. I feel fortunate. They had a great year. Tom Brady did a great

job, but he also had a great team behind him. Let's see about that 12% stock market thing. That would be something. We'll have to replay it again if that comes true. Our email address is Radio at Fool.com. Got a note from Matt Conrad in Los Angeles. He writes, when do you sell a stock that exceed your expectations? I'm 33 years old. I started investing five years ago. I bought Teledoc Health and Shopify in 2019, and both have exceeded my growth expectations. I still believe in both companies, but I question their continued growth after such accelerated gains, is there logical reasoning to take those gains and reinvest in other companies that I have the same 2019 growth enthusiasm for?

Jason, a great question about asset allocation, and Matt has a good problem on his hands, which is, I've got these two stocks that have gone up way more than I thought they would. Yeah, Matt, when you sell, it's right about the time you click send on that email. because clearly something is concerning you now, and it's in the back of your mind, and maybe you're starting to lose a little bit of sleep over, over what ultimately is a nice problem to have. And I'm only half kidding when I say when you click that email, when you send that email, because it is a question you have. It clearly is a concern to a degree, and I think it's a fair concern.

It's something we all hope to have to deal with. And I think ultimately part of it is figuring out your risk tolerance, And that is going to be something that's different for everyone. Younger investors should be able to learn how to stomach a little bit more risk because you have more time in front of you. Part of it, I think, really does depend on the business itself. Is the business performing? Can you understand why the stock is performing so well?

Or is the stock price detached from the fundamentals? I know that's not always such an easy question to answer for sure, but it really is one of those things where you start losing sleep at night, you start asking your stuff, you start worrying about it. Then it's probably, maybe it's probably time to reallocate a little bit at a time. I wouldn't jump in full throttle there. I think it's okay to do it a little bit at a time and get yourself back down to a comfort level. But make sure, when you have those good businesses, make sure that you keep a position in those businesses. You want to give yourself a chance to let those winners keep on winning. Let's get to the stocks on our radar. Our man behind the

glass, Dan Boyd, is going to hit you with a question. Gross, you're up first. What are you looking at this week? How about Bluebird Bio? B-L-U-E? It's a biotech company. It's part of my personal biotech basket of stocks that I've spoken about before. They're engaged in researching and developing gene therapies for severe genetic disorders and cancer, strategic collaborations with Bristol Myers, Squib, Regeneron Pharmaceuticals, and many others. Now, the stock got crushed this week, falling 30 percent, and the company temporarily suspended all studies of their sickle cell disease. gene therapy on Tuesday. Now, what happened is a patient treated more than five years ago

with their gene therapy was recently diagnosed with leukemia. So Bluebird is investigating to see if there's any connection between the therapy and the leukemia obviously need to know that before we move forward. So I'm going to wait out the investigation, certainly not making any moves right now. This is still a very early stage company, nowhere near profitable yet, but a billion dollars on the balance sheet and have plenty of money to continue to execute. But let's see what happens with this investigation. Dan, question about Bluebird bio? I don't know, Chris.

This seems like kind of a disaster of a stock this week. I'm kind of curious, it's who, like, is Ron just like, oh, it's on stocks on a radar because it's doing really bad, and that's interesting. It's on my radar because it's one of the stocks I own as part of my basket. I owned a basket because this is bound to happen to one or more of those companies, so I need to diversify across the sector. And it's now really on my radar because I need to see what happens here going forward. Jason Moser, what are you looking at this week?

Yeah, in honor of 12 years, I'm going to throw a stock out here. I know I've never pitched here on Motleyful Money. I don't think it's ever made it on Motley Full Money before ever, but a company called Radnet, ticker is RDNT. And this is Tony Hawk's new internet company. Just kidding, it's not really, but it sounds like it is. Actually, Radnett is a provider of freestanding, fixed site, outpatient diagnostic imaging services. And so you translate that.

Basically, it means that they are offering services like MRIs, computed tomography, nuclear medicine, mammography, ultrasound, diagnostic radiology, et cetera, et cetera. I actually like the positioning of imaging being so far upstream in a healthcare transaction. It's one of the earlier things you do in making a diagnosis. So from that perspective, it's kind of an attractive market opportunity. And although it's a small effort of the business today, they are pursuing more artificial intelligence solutions in order to be able to aid radiologists and making better diagnoses, partnering with companies like Hullogic, for example, and they've grown revenue at a 10% annualized clip.

So, neat little business. Dan? Yeah. So I was reading about Redna. It seems like they have a big interest in strategic acquisitions. They've been around for 40 years, Jason, but are they growing too fast? Or is this a company that can have some really long-term growth? I think they definitely can have some real long-term growth, given the demand for the services and the growing need for their imaging services. So they'll make some acquisitions, but definitely not a growth opportunity.

What do you want to go with, Dan? This is an easy one, Chris. I'm going, Ratnet. Jason Mozer, Ron Gross, guys. Thanks for being here. Thanks, guys. That's going to do it for this week's show. It's produced by Mac Career and Mixed by Dan Boyd. I'm Chris Hill.

Thanks for listening. We'll see you next week.