Motley Fool Money - Stocks (and Investing Books) We're Bullish On

Episode Date: October 21, 2022

Snap fell 30% and took other social media and advertising stocks down with it. (0:30) Emily Flippen and Ron Gross discuss: - Pinterest, Meta Platforms, and Alphabet getting dragged down by Snap's bad news - American Express shares falling despite increased full-year guidance - Boston Beer's strong 3rd-quarter report - The latest from Microsoft, Netflix, Tesla, and Tractor Supply (19:15) Emily and Ron dip into the Fool Mailbag and discuss: - Medical device pure-plays - Investing books they recommend - Surprising economics of pumpkin spice - The latest from McDonald's and Keurig Dr. Pepper - Stocks they're more bullish on - Two stocks on their radar: ASML Holding and Blackstone Got a question about investing? Email [e-mail] Stocks mentioned: SNAP, PINS, META, GOOG, GOOGL, CAT, DE, AXP, NFLX, MSFT, TSLA, TSCO, SAM, MCD, DNUT, SYK, MDT, ZBH, JNJ, RMD, SG, FNCL, JPM, SBUX, PEP, KO, KDP, BX, ASML Host: Chris Hill Guests: Emily Flippen, Ron Gross Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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We've got stocks we're feeling more bullish on and investing books for your reading list. Motley Fool Money starts now. That's why they call it money. Cool Global headquarters. This is Motley Fool Money Radio show. I'm Chris Hill joining me, Motley Fool Senior Analyst, Emily Flippin and Ron Gross. Good to see you both. How you doing, Chris?

We've got the latest headlines from Wall Street. We will dip into the Fool mailbag, and as always, we've got a couple of stocks on our radar. But we begin with a ripple effect in social media. advertising. Snap, the parent company of Snapchat, posted third quarter results that included a slight miss on expected revenue. But the company said it expects revenue to slide further in the fourth quarter, and shares of Snap fell 30% on Friday. The ripple effect is that shares of Pinterest, meta-platforms, and even Alphabet fell on Friday on concerns of a pullback in marketing spends. Emily, where do you want to start? Well, let's start with Snapchat's quarter, because at face

value, this quarter wasn't all that bad, right? They posted adjusted profitability, revenue only barely missed expectations, and the daily average users actually blew it out of the water. They grew 19% in the quarter. So that's what Snapchat wants investors to focus on. However, even despite the strong performance in the platform itself, revenue growth of only 6% is a reminder about just how challenging the ad market is, in particular how Snapchat is monetizing their users. But I will say, as much as this is an influx of the ad market and budgets being cut across the board, some of this is still Snapchat specific, right? Management knows that they have more than 75% of all 13 to 34-year-olds in 20 countries across the world on their platform,

and they say that group represents 50% of all advertising spend. If that's the truth, which I expected is, Why are they having such a hard time monetizing those users? Because the market is there, the users are there, but their revenue growth is not. And their guidance for continued deceleration in revenue growth is indicative of that. But to your point, Chris, it comes down to the question of, okay, well, this ripple effect. There are times when a ripple effect makes sense, but you have to in order to kind of figure that out, figure out whether or not those problems are company-specific or broader. So the ripple effects happening right now because so much of the impact of the ad market,

is because of privacy changes that Apple instituted last year. And it's made it harder for companies to justify ad spend in terms of a return on investment. Those metrics they were using to justify getting that ad spend on their platform, they're just not there anymore. But also, let's use some common sense, right? Snapchat, it's not the same as Facebook or meta and Pinterest. And this is only partially impacted by Apple's ad spend. Snapchat has been struggling to monetize its users for a really long time now. For instance, in February 2021, before Apple made these changes, Snapchat's average revenue per user was around $3.44 per user. Snapchat or Pinterest at the same time was $4.26. Facebook was over $11. Fast forward to today, Snapchat's ARPU has fallen to $3.11 cents versus nearly $6 for

Pinterest and still over $11 for Facebook. So this is a Snapchat specific issue. Yeah, I agree with what Emily said about the ripple effect or the bleed over to other. other companies. Sometimes it makes sense, but you have to be careful. I think, for example, if you think CapEx is going to slow or industrial spending is going to be weak, and Caterpillar comes out and lowers its guidance, well, then you might want to take a look at Deer as well. But Cat and Deer don't have exactly the same business models by any means, so they may not be impacted in the same way, and you need to understand that. The same if Macy's says the holiday season looks weak, then it will likely be weak across most retailers, but not necessarily

necessarily all of them. You want to look at the dollar stores or TJX to see if you believe the same thing would happen. I will say that truly long-term investors that invest across cycles probably can ignore a lot of this, as long as there is nothing going on that signals a permanent impairment or a paradigm shift that will impact and sink all the boats. So you have to kind of differentiate between cyclicality and permanent shifts. Yeah, Emily, just to wrap up on this topic, obviously we've been hearing for months now, major consumer brands talking about pulling back on the marketing spend. That's a lever that they can control to a much greater degree. We saw that this week with Procter & Gamble, which is one of

the biggest advertisers out there. Second quarter in a row, they're pulling back in terms of their spend on radio. But I look at alphabet falling, even just a little bit. And I think, really, people are going to pull back on the digital spend with a company that's been doing it so long and so well as Google? No company is insulated from a pullback in advertising spend, but the companies that will gain market share and do the best are the ones that can show that they have the best return on investment on advertising dollars. Snapchat for a long time now has proven that's not the case versus, to your point,

companies like Alphabet, even companies like Meta, they have a long history of providing good returns on investments and capital that has been allocated to their advertising spent on those platforms. I don't expect for that to change. Third quarter profits and revenue for American Express came in higher than expected. The financial service company also raised guidance for the full fiscal year, saying that consumer's spending remains strong. And despite all that good stuff, Ron, shares of American Express fell 7% on Friday. What gives? It was a solid report and it did beat expectations, but I think the sell-off is because I'm

is building up their loss provisions to prepare for potential defaults in a weakening economy. And that's what investors appear to be focused on. But the quarter was very solid. Revenue is up 24 percent, with total volume up 19 percent. They added 3.3 million proprietary cards. So acquisitions of U.S. consumer platinum and consumer gold cards and business platinum cards each hit record highs. Millennials and Gen Z customers are the fast and growth. growing demographic. They comprise more than 60 percent of the acquisitions this year. But they're seeing the strength in the economy impact their business in a positive way. Demand for leisure travel has stayed resilient despite sky-high airfare prices, which I know,

I mean, if you've traveled any time recently, my gosh, it seems crazy. Business travel has started to increase as people, someone start to move away from the 100 percent Zoom experience. They also saw growth in travel and entertainment in international markets. Expenses were also up as they spent on customer awards, compensation, marketing, but net income was up 3% when you boil that all down. But earnings per share was actually up 9% because there were lower shares outstanding from share buybacks. As you mentioned, they did raise full year guidance, even in building in those bigger provisions,

which are now at $778 million for the third quarter, and that was higher than what analysts were expecting. That was around 600 million the expectations. So a decent amount higher because they're concerned, and that's why the stock is selling off. Shares of Netflix up 20% this week after third quarter profits and revenue came in higher than expected. On top of that, Emily, Netflix's new ad tier starts on November 3rd, and management is projecting a lot of optimism for their ad business. A lot of optimism and not much else there, Chris, because they're saying they're We're not expecting a material contribution next quarter from the launch of their ad network

here. I'd caution against too much optimism for Netflix as a result of this quarter because the changes that management is proposing didn't show up in the financial results of this quarter. In fact, even if the ad tier, the changes they have to monetization of existing users, if those never were proposed, they would probably still have a strong quarter this quarter. A lot of what the market is responding to here is actually a growth in the number of subscribers versus a in the previous two quarters. It surprised the market. I think they added nearly two and a half million subscribers in the quarter, which is pretty significant. Most of them non-US or North American customers, which are monetized at a lower rate. But it did show that there's still interest

in the content that Netflix is putting out. What I will say, though, is that growth does need to be re-accelerated. This quarter showed a 6% increase in revenue growth. Next quarter, they're guiding for around a 1% increase in revenue growth. And there's really only two things that Netflix can do to reaffirm that this company can be a growth company, right? And its valuation can reflect that potential future. One is to get new subscribers on the ad tier, they need to be really careful with this because they don't want existing subscribers to downgrade. That's not a good thing for Netflix. They want to get new customers on a lower price tier that they wouldn't have otherwise achieved.

And the second way is through better monetization of existing users, which can be achieved through more likely to be achieved through better monetization of people using password sharing techniques. So finding a way to get those people who aren't paying right now to pay for those services. Both of those will take a lot of quarters to start to show up on Netflix's financial results. And until we have clarity on those initiatives, I think it's too early to be saying that this is a complete turnaround. You mentioned the revenue growth that they're projecting for the next quarter coming in at just 1% higher. This also comes at a time where the management of Netflix was very clear on the most recent call saying, don't focus on our subscribers. We're not going to be providing guidance on that anymore.

We want you to focus on our revenue and our profit. Yeah, unfortunately, I don't think this is one of the things that management knows, right? They're probably saying, hey, we can't guide for subscribers because they're aware of the fact of just how saturated they are in the market right now. And the past two quarters have taught them anything. It's that giving poor guidance for subscriber growth is going to hurt the company and its perception. So they do want to focus on monetization because that's where they have a bit more control versus the net quarterly subscriber editions. Microsoft is one of the biggest companies in the world, but that doesn't mean it's immune

to economic challenges. This week, the software giant started laying off some employees, though the total number is reportedly less than 1% of the overall workforce. So I know it's not a significant number, Ron, but it is a bit sobering to see such a profitable business making cuts like this. Yeah. And it's a lot of people. when they have over 200,000 employees, so 1% is still a fair amount of people. But you're right. A lot of people think Microsoft is immune to economic downturns or is perhaps recession-proof, but no company is truly safe from slowdowns and weaknesses.

At the time, CFO, Amy Hood, said they would slow the rate of hiring in addition to letting about 1% of the workforce go. And they said it was part of their regular adjustment at the start of its fiscal year. And that might be true. And again, as you mentioned, it is only 1%. But Microsoft did show some weakness in its latest quarter. Slow down in the cloud business, declining video game sales, effects of a strong dollar definitely impacted them. And then all the usual suspects. Supply chain disruptions in China, effects of Russia invading Ukraine, upheaval in the digital advertising market. So a lot of things that showed a little bit of a chink in the armor of Microsoft,

But at the time, the company did give an upbeat guidance saying double-digit percentage increases in operating income when you adjust for currency. Still was in the works. They report next week, October 25th. It's going to be a really interesting report to watch out for. It seems weird to say about a company this big and this dominant, but 2023 is shaping up to be kind of an important year from Microsoft when you think about, as you pointed out, the cloud revenue coming down and can they reverse that? And also, that 2023 is when everyone is expecting a decision on the Activision Blizzard acquisition, and what, if anything, that does to reinvigorate Microsoft's gaming segment? Yeah. I mean, Microsoft will remain a major player in cloud behind Amazon. It's just a matter

of does cloud in general of slowing growth. Certainly, it will be around for the foreseeable decades. It's just a matter of what kind of growth. And then they are hanging their head a little bit on the revival of their video game business. So it'll be interesting to see if we get any guidance on that next week. We probably maybe will get a sentence or two, but I think they'll focus more on cloud and maybe the PC business. And then we'll see where we go from here. More earnings after the break. So stay right here. You're listening to Motley Full Money. Welcome back to Motley Full Money. Chris Hill here with Emily Flippen and Ron Gross. Shares of Tesla down a bit this week after third quarter revenue came in lower than expected,

But Elon Musk says the company has excellent demand for the fourth quarter. So Emily, maybe a strong end to the fiscal year? Yeah, the quarter was bad, but management's guidance was pretty upbeat. I shouldn't say the quarter is bad. I will say, well, earnings came in nearly half a billion less than expectation, so a pretty big miss on the top line. They still dramatically beat on the bottom line. So automotive revenue increased 55%, which more than outpaced an operating expense increase

of around 30%, which contributed. to earnings being pretty significant in the quarter. So that alone was strong. But to your point, Chris, management has been pretty aggressive, I think, with their targets. They continue to say that demand outstripped supply and that they're really confident that all of the production that they're putting out, even with the bottlenecks they're experiencing right now in terms of end-of-quarter deliveries, that those will ease up as the quarter goes on as we come in through the end of 2022 and that the production that they're putting out today will match the demand that they're seeing in the markets. What is interesting is that Musk did make a comment on the call,

as is par for the course with Elon Musk here. Yes, but his comment got a lot of markets attention, right? He said that he believes the market cap of Tesla will far exceed the market cap of Apple. In fact, he sees a path for it to be worth than Apple and A. Ramco, the two largest companies in the world combined. That's more than $4 trillion. But I will say, I think it's pretty outrageous to think about that today. But a lot of things are outrageous to think about. today. And there's no denying that in order for Tesla to justify its current valuation, they're going to need to be one of, if not the largest automaker in the world, with extremely efficient production. Every day, it seems like they're taking a step in that direction.

And there's a lot of untold optionality in their data services, so things like self-driving and batteries. So if you're a believer in this business, I don't see this quarter as changing course for anyone. Mixed third quarter results for tractor supply. Profits were higher than expected. Revenue It was a bit light. But tractor supply raised guidance for the full fiscal year, and that seemed to give the stock a little bit of a boost, Ron. Yeah, but you're completely right, a bit of a mixed quarter. Sales were up around 8% and comp store sales are up almost 6%. Now, that's down from 13% last year, but last year was quite strong coming out of COVID. Sales were driven by comparable average ticket growth of 7%, but

But we saw a decline in average transaction count by about 1.3%. So there's a little bit of a mix. You also had gross margins and operating margins fall a little bit on higher costs, transportation costs. They were able to offset some of that by higher prices, but they're raising compensation, hourly wages, benefits. So you did see a little bit of a hit to margins. Earnings for share were helped by a lower tax rate, lower share count, which actually led

to growth of almost 8%, so not bad. As you mentioned, management did raise guidance, mostly as a result of a recent acquisition that they completed. But they say they continue to gain market share, but did delay some store openings due to some external conditions in real estate and construction industries. But overall, I think the company remains pretty solid, 18 times earnings, 1.9% dividend yield. Shares of Boston Beer company up more than 12% on Friday. The parent company of Sam Adams Beer posted third quarter profits and revenue that were higher

than Wall Street was expecting. And Boston Beer also raised guidance, Emily. It's always funny to me to think about how short our memories are. Because, you know, Boston Beer has always been a very lumpy business. And it has this cycle to it, right? They hit on a trend, sales go crazy. And knowing that stops, the market's like, oh, I'm calling time of death on this business. The stock tanks. That's what they were doing around this time last year. But when the business performance reminds investors that they still have a pulse, it's like the Stock slowly gains until it hits on the next big thing and then it goes crazy again and we find ourselves in this repeating cycle. That's what we saw over the past year at the

move to Seltzer. But I will say, even though this quarter was a step in the right direction, growth was not stellar compared to years past. Depletions declined 6%, which again was better than expected, but net revenue rose only around 6% in the quarter. Gross margins have improved, so steps in the right direction. Depletion growth has been helped by brands like Twisted Tea and hard Mountain Dew, believe it or not, making up for the declines or somewhat making up for the declines and truly. But what is important for this business is just finding out what the next best thing is, which unfortunately, we don't know what it is today, but I'm a believer in Boston beer, and I think they'll get there. And they do have a pretty good track record in

terms of their acquisitions, right, of expanding outside of just the traditional beer category. Interestingly enough, we cite Dogfish Head as an example of one of those good acquisitions. They did have to write down that acquisition a little bit in this quarter, which is not unusual for a company who makes an acquisition of that size a number of years later. But they're still seeing a decent amount of depletions growth from that brand. So not all bad from Boston Beer. Up next, we're going to dip into the Fool Mailbag. So stay right here.

You're listening to Motley Full Money. Welcome back to Motley Full Money. Chris Hill here with Emily Flippin and Ron Gross. Before we get to the full mailbag, this week, McDonald's announced it is going to test the sale of Krispy Cream Donuts at nine locations in Louisville, Kentucky. And Ron, I'm intrigued by this, not because I'm a shareholder of either McDonald's or Krispy Cream, and not just because I occasionally enjoy a Krispy Cream donut. But this is not the typical test by McDonald's. When they test things, it's usually on their own. It's not that often that they're bringing it a partner like this.

Yeah, and the way Krispy Cream works is they'll deliver the donuts from local Krispy Cream Bakeries in the area. And they're doing this with three flavors, by the way, original glazed, chocolate iced and raspberry filled. I'm not a fan of the Raspberry filled there, but do what you want. It's your business. And so they'll deliver them from local bakeries, which is all well and good. They already distribute goods to lots of third-party stores that delivered fresh daily program.

They call it DFT, reached more than 5,500 domestic doors in the second quarter. So that's quite a bit. But if this ends up working, I'm not convinced Krispy Kreme would be able to use their DFT system in a wide national rollout. That would add 13,000 doors overnight more than tripling that business for Krispy Kreme, which is awesome, but awesome could also create massive problems, and it could really break their system. So we'll see how it goes, and then they'll have to plan accordingly so they don't turn a potentially

great thing into a troubling one. I'm happy to hear you say that because that was one of my reactions when I saw this story. I thought, okay, they're going to test this. And if it works, does Krispy Cream have the capacity to go national with McDonald's on this? Or is it just going to be a regional thing? I think it would have to start out regional. If you go right to national, I think it breaks pretty quickly. Let's see if it's successful. I'm more focused on the adult happy meal right now. I don't know if you tried it. The little figurines, grimace, you know, all the guys are there. there and gals. But McDonald's, don't sleep on McDonald's. Only down 6% from their 52-week high with a 2.4% dividend yield. So, you know, not too shabby. Our email address is

Podcasts at Fool.com. That's Podcasts at Fool.com. We got a question from Ronald who writes, I was wondering about your thoughts on medical device companies. With a global aging population, people are going to need knees and hips replaced. During COVID, I took a look at Stryker, Medtronic and Zimmer Biomet. I opted out of Johnson and Johnson because it's such a conglomerate and I wanted more pureplays. Are there any medical device companies that you're interested in? Thank you for the question, Ronald. Thank you for listening. And some solid thinking on his part, Emily, because yeah, I mean, J&J does have that medical device division. But if you're thinking just pureplay, you know, as strong a business as J&J is, it's not the way to go.

Yeah, it's the medical device in med tech industry right now, I think is really intriguing for exactly the reasons that Ronald mentioned, right? We have an aging population, an increasingly unhealthy population, unfortunately, which does open up opportunity for companies to help treat some of these chronic diseases with new medical devices. And the one that's on my radar right now is actually ResMed, Tickr's RMD. For people who are familiar with this business, they help treat respiratory diseases like sleep apnea, which is the majority. of their business, which is to say they sell CPAP machines. These are machines that push air through somebody's system while they're sleeping to prevent their throats from closing up. It's actually a pretty

chronic disease, relatively underdiagnosed, not just in the United States, but across the world, at least if you have ResMed to believe. And if they're able to extend their lead as one of the largest CPAP makers while increasing the diagnoses of sleep apnea, it's easy to see a big opportunity here for the business. And I will say there, I have questions about the CPAP industry, but right now it is the first step in line for treatment of sleep apnea. The alternatives on the market right now are hard, right? Surgery, not a first line of defense. So they're affordable, accessible and reimbursable by insurance. To that point, Emily, I mean, I know a couple of people who have sleep apnea, have these machines. And, you know, to what you were saying,

the diagnosis really is the crucial part there. Is ResMet involved in sort of helping to get people to the point where they are going in for a diagnosis? Because otherwise, it's just you're just relying on, you know, if you sleep in the same bed as someone else, you're kind of relying on them to point out. My wife call you, Chris. I'm not saying that. But are they involved in the diagnosis front as well? So this is a good question, and one where I get a little bit questionable about the entire industry. So the majority of people who are diagnosed with sleep apnea experience other symptoms. Most of times, sleepiness during the day, right? They're not sleeping well. So they go to the doctor and they say, hey, I'm having these symptoms. And what doctors will often do is

identify the signs of sleep apnea and then ask if they go to a sleep clinic. So this is a place where they're staying overnight and having experts watch their blood oxygen and other critical metrics over time to see if they have sleep apnea. Now, ResMed and other CPAP producers do help fund these sleep clinics. So this is where it gets a little bit questionable. So you can say they have a hand in helping increase the number of diagnoses. I may or may not have done one of these sleep tests before, but I was able to do it at home, which was not as controlled, but it was certainly better than having to go to a clinic. And if I can expand on that, 90% of ResMed's revenue comes from CPAP machines and the

things that need to be replaced in the machines, like masks, filters, tubes. that sort of thing. But another 10% of their revenue actually comes from software that people in clinics will use to do remote testing of things like sleep apnea. And that's an increasing part of their business. Never ask your barber if you need a haircut. I hear what you're saying. Exactly. A question from Cole who writes, can the Motley Fool Money team recommend some investing related books? I trust the team's preferences. I appreciate the confidence, Cole. Thank you for that. Ron, what do you got? We could do a whole show on great investing books. And I won't do that, but I will mention a bunch.

So I would start off with the essays of Warren Buffett. Just give yourself some grounding in the Oracle of Omaha's sage words. It's really important to go back and read what he's written over time. Then I would move on to what are called the Little Books, which are literally little books on a wide variety of topics. I especially like the Little Book of Common Sense Investing, the little book that beats the market, and the little book on valuation. A few more. One up on Wall Street by Peter Lynch is a classic. I'll set you up for a lifetime

investing. Intelligent investor, a little more tricky to get through, but that's the viable for value investors. I think you should flip through that. And finally, a plug for the psychology of money written by full contributor, Morgan Housel, with the audio book narrated by our very own Mr. Chris Hill. You didn't have to say that, but I appreciate it. It's a great book. It is a great book. I'm going to slip you 20 bucks after the show. But yes, having read it several times myself. I agree. Emily, what do you think? Well, I like my books big. No, I'm just joking. But the one that's been on my radar recently is Ken Fisher's of Fisher investments. The markets don't forget, but people do, the title of one of his books. And it really highlights some of the

really dangerous tendencies of retail investors to believe that this time is different. And I think it's topical right now because with the global crisis, we're having crazy inflation, hiking interest rates, the pandemic. It's easy to think, well, we're not going to come out of this. Or we're We do come out of this, things are going to be different, right? This time in the market is different than all the other times in the past. That mentality can lead investors to make big mistakes, like selling when the market's down, failing to buy when the market starts increasing. It's a testament to long-term investing.

So if you're feeling yourself maybe a bit more afraid because of whatever's going around us on, around us in the world right now, I definitely recommend it. This past Monday night, I had the pleasure of speaking to the Boston College Investment Club, a very impressive group of young investment. investors. And I want to say a quick thanks to the student leaders of the club, Jack, Nick, and Annabel. They were great to work with. And this was a question I got. And I mentioned the Big Short by Michael Lewis, because the movie is great. I love the movie. Michael Lewis is such a great writer. And the Big Short, I think for investors, does such a wonderful job of

illustrating both how pervasive group think is on Wall Street and how this, you know, you interesting group of investors sort of cut through the groupthink and were able to see the crash that was coming in the housing market. One more question from Dana and Massachusetts to write, what is something you are more bullish on now than you used to be? Emily, I'll start with you. Yeah, so mine is actually a company and that company is sweet green. The Tigger is SG. I've talked about it on the show before, but when this company went public, I was extremely skeptical of it, bearish, I can say, on Sweet Green because I didn't believe in the concept of $15 salads and their ability to succeed in these lofty goals of having more than a thousand

stores, mainly suburban locations. I just thought, this isn't a chicken burrito. This can't succeed. And while the stock has certainly not succeeded, and they've had a medley of issues since going public, one of the things that has surprised me that I've become increasingly bullish on is the performance of their suburban location stores. They're actually outperforming their urban locations on a lot of critical metrics. It really surprised me. I have clearly underestimated the health consciousness of the suburban markets. And so for that, I apologize. But I do think if they can even get to a fraction of the expansion that they're expecting they could get, we could be looking potentially, and I say this cautiously, at a tiny little Chipotle here. As someone who had a sweet

green twice this week, I would wholeheartedly agree. It's, it's, it's, it's, it's, it's, it's, They put out a good product, and that's the start for any good business. Your pocketbooks might bleed, though. That's true. Ron, what about you? What's something you're more bullish on now than you used to be? I've become more bullish on financials in general and individual financials in particular. Listeners will know in the past, I've said the only way I play financials is through ETFs, like FNCL, for example.

I've mentioned that before in the show. But lately, because of rising interest rates and my desired. add some solid dividend stocks to my portfolio. I've dipped my toe into some individual stocks like J.P. Morgan and Blackstone. And I'm going to be careful because I'm not smart enough to really understand what some of those balance sheets could be hiding, especially for some of those larger banks. Community banks are a little bit easier, understand. So I'm going to be careful, but I've started to widen out my desire to put individual financial stocks into my portfolio. After the break, we've got two radar stocks for your watch list and one new beverage for pouring

down the drain. Stay right here. You're listening to Motley Fool Money. All these people in the Loosier's grow so mean. That lived a girl that I swear to the world made the alligators look. All these people in the program may have the 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 Emily Flippin and Ron Gross. Ever since Starbucks introduced the Pumpkin Spice Latte nearly 20 years ago, pumpkin spice has only grown in popularity, showing up in everything from breakfast cereal to seltzer. And with increased spice comes increased prices. A pumpkin spice latte at Starbucks costs 18% more than a regular latte. But, Emily, that is nothing compared to the markups that are happening at Trader Joe's, where pumpkin spice humus costs 50% more than regular hummus and tiny pretzels. The markup is 160%.

I mean, I love Trader Joe's, but holy cow, that's borderline price gouging. Hey, look, turkey also costs a lot more over Thanksgiving. But don't rob me of my little luxuries. Don't make me feel bad about the fact that I'm sorry. spending 50% more on pumpkin spice hummus. I mean, this is the price that we pay for the little luxuries. And this is the best part of my year. I would like to enjoy it guilt-free. I don't need to be reminded about the cost in my pocketbook. Chris, I don't appreciate this story at all. Pumpkin spice has never been something that appealed to me. I get that I'm in the minority here

because it seems to be taking the world by storm each year. Starbucks sold more than 500 million pumpkin flavored lattes since they introduced it. So, yes, I'm in the minority here, but I'm still going to stick to my guns and say, I just don't get it. And I'm not looking to guilt-trip you for your indulgences, Emily. But to that point, I mean, this is why we see these limited edition products, right? They can come in for a short amount of time. They can charge a little more. It gives a little bit of a boost. This is why we see all these tests, right? Oh, certainly. I mean, look, if you can get a little extra penny out of your consumers, then you definitely should do that. And I'll tell you what,

consumers love it for the most part. There are pumpkin spice halls from Trader Joe's on a pretty routine basis. So, it's working. When it comes to soft drink companies, the best performing stock over the past year is not Pepsi or Coca-Cola. It's Currig Dr. Pepper. And maybe that success has led to hubris because this week, Dr. Pepper unveiled a new limited edition soft drink, Dr. Pepper Bourbon-flavored Fansville Reserve. It is a promotion for the company's rewards program called Pepper Perks, and I get what they're doing in terms of trying to get more people into their rewards program, Ron, but I am still amazed that they decided to develop a non-alcoholic bourbon drink. Flavor that evokes sweet, savory, and woody notes with subtle

hints of cherry, vanilla, chocolate, and caramel. I don't buy it for a second. I've tasted these non-alcoholic purpose before. They just don't do it. Maybe it's okay if you mix it with Dr. Pepper, which is great, and Diet Dr. Pepper is great, too. This seems to be just kind of playful, and it will be short-lived for a small amount of people who have to log in and roll in their perks program, like you said. You have to scratch it off to win a can and some prize. It's playful, but I don't think it's going to last. Emily, if I'm a curing, Dr. Pepper shareholder, I think my question is, this is the idea that won?

You had a pitch contest. You got a group of people together say, all right, we need a limited edition thing. And this is what they came up with? If I'm a curing, Dr. Pepper shareholder, the bar is low for me. Because here's my thought. This is, as you mentioned, a poorly veiled attempt to get people into their loyalty program, their Pepper Perks program. So here's what I did for our listeners.

I signed up for you. I'll tell you about this experience because let's say that you're interested in having this bourbon-flavored Dr. Pepper, of which I guess if I was given it, I would have a sip. So I signed up, which by the way, I did on my computer here in the office, signed right in, need my phone, email address, okay, name, put all that stuff in. And then I went in, signed off, scratched off my ticket. I didn't win. But I was curious.

You know, what if I go buy myself a Dr. Pepper? Can I get some loyalty points for this? I hiked my butt down to our local seven and purchased myself a Dr. Pepper and promptly left. And then I realized halfway on the walk back that I forgot my receipt, which I need to prove my purchase of my Dr. Pepper. I went back to 7-Eleven. They kindly printed me off a copy of my receipt. I came back. I uploaded it and I was told your perks points will be reviewed in the following day. So I wait for my perks point to come in. I look at what I can redeem them for. And I'll tell you what. This has to be the worst loyalty program I have ever seen.

The rewards, most of them, by the way, are completely sold out. You can't redeem for anything of any tangible value. The only thing that looked attractive was for 60 points or six Dr. Peppers. You could reward a $10 Uber-Aids gift card, but you can only reward it once. So there you go. Don't waste your time. Wow. Let's go to our man behind the glass, Dan, boy, Dan, before we get to radar stocks,

any thoughts on either of these stories? I have a problem with Dr. Pepper marketing, Chris. The whole Fansville idea where Dr. Pepper is some sort of a drink you drink at a tailgate is completely ridiculous. I've been to many, many tailgates in my life, Chris, and we're not drinking soda if you understand what I'm saying. I absolutely do. Let's get to the stocks on our radar real quick. Ron Gross, you up first. What are you looking at this week? As I mentioned earlier, a stock I recently bought a little of is Blackstone, BX, the world's leading investment manager focusing on alternative investments like real estate, private equity and credit and insurance products. They've got a great business model that has

reliable fee revenue. They have performance-based incentives that can dramatically increase profits. They pay a regular dividend that does fluctuate year after year. They recently announced that they were going to cut it somewhat, but it still stands at a healthy 4.3%. So for those that are looking to add some dividend exposure to their portfolio, one that will kind of do well in good times and bad times, I think. I would take a look at Blackstone. Dan, question about Blackstone? So what part of this is old economy run here, Ron? I'm kind of confused. It's not necessarily. It's early career run as well, being that I used to be in the hedge fund business and kind of like these businesses quite a bit. Emily Flippin, what are you looking at

this week? I'm looking at ASML. I think expectations were incredibly low heading into their third quarter earnings report, ASML sells these high-end lithography machines to chip makers, and one of their largest customers is Taiwan Semi. They actually had announced their intention to cut capital spinatures by around 10 percent amidst a weakening chip market, which lowered expectations for ASML's guidance. But ASML not only had a stellar quarter, but it showed a growing backlog of demand, highlighting the demand for their EUVE extreme ultraviolet lithography machines. So right now, ASML machines are still outstripping supply in terms of the demand. of their demand is outshipping supply, and management expects very little impact from the ban on China.

Dan, question about ASML? Seems like a wonderful company that I do not understand at all. You know, you don't need to understand it there, Dan. What do you want to add to your watch list, Dan? You know what? I'm going to go with ASML. I'm just sort of, you know, deer in the headlights looking at this company. Perfect. Emily Flipping Ron Gross, thanks for being here. That's going to do it for this week's, Motley Full Money Radio show. The show's mixed by Dan Boyd. I'm Chris Hill. We'll see you next time.