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Yahoo
06-08-2025
- Business
- Yahoo
Coffee, Chips, and Credit Cards
In this podcast, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss: Tesla's chip deal with Samsung. Earnings reports from Spotify, Visa, Starbucks, and Booking Holdings. Are you bull or bear? To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Should you buy stock in Starbucks right now? The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $631,505!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,103,313!* Now, it's worth noting Stock Advisor's total average return is 1,039% — a market-crushing outperformance compared to 181% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 4, 2025 This podcast was recorded on July 30, 2025. Travis Hoium: Is earning season selling us a Bill of Goods. Motley Fool Money starts now. I'm Travis Hoium joined by longtime fools, Lou the Legend Whiteman, and from a vacation that never ends. Rachel Warren. Today we're going to get to earnings from Spotify and get a pulse on the consumer. Let's start with Tesla. We learned this week that Samsung's new fab in Texas is going to be making Tesla's AI six Chip. This follows AI 5, which is being fabbed by TSMC. AI 6 is going to be used for humanoid robots, cars, and even AI data centers. Tesla could spend over 16.5 billion dollar on these chips, and Elon Musk is going to get to walk the line, making sure it's efficient, something Samsung apparently can't do itself. Rachel, what does this say about Tesla and Samsung's chip ambitions? Rachel Warren: Well, what's interesting about this is that Samsung didn't name the counterparty in its filing. They cited a request from that second party to protect trade secrets. But they said the effective start date of the contract was July of this year. Its end date is in 2033, and then Elon Musk later confirmed in a reply to a post on X that Tesla was, in fact, the counterparty. But I think this deal is great news for both companies for different reasons. Samsung definitely needs this deal, in my view. The partnership provides a much needed anchor client for Samsung's new semiconductor fabrication facility in Taylor, Texas. That could also validate their investment in US based chip manufacturing and potentially attract other clients. Samsung has been facing serious challenges due to increased competition, particularly in the memory chip market, and they've really been struggling to keep up with the demand for advanced AI chips. Their logic chip business has also faced challenges and in foundry services, which is manufacturing chips for other companies, they are behind TSMC. Now, for Tesla's part, it's gaining greater control over a crucial element of its AI infrastructure. It's diversifying its supply chain, and it's reducing reliance on a single manufacturer. That could mitigate a range of potential future risks and ensure a more stable supply of critical components. And finally, it positions Tesla to maintain a competitive advantage in a rapidly evolving AI and automotive landscape. It suggests that they're planning for future generations of AI chips that could ensure a pipeline of advanced technology for years to come. Travis Hoium: Lou, I have lots of questions about how many chips Tesla is going to need going forward for vehicles, robots, and those AI data centers because a lot of those products just frankly, don't exist yet. But US chip manufacturing does seem to be booming. The TSMC plant in Arizona, going through another addition, their costs actually seem to be sort of under control there. It's not as expensive as they feared. Has the US chip tide shifted over the past couple of years? Lou Whiteman: Fun fact, lost in a narrative, but the US has more semiconductor plants than Taiwan. The US is second only to Japan in terms of semi production and that's been true for a while. Context matters, though? Taiwan, thanks to its national champion, Taiwan Semi, and their deals with Nvidia, all of these AI players, they have a strong share of the cutting edge chips used in AI. Obviously, that's the focus, so that's what we're looking at. I don't think we can say the tide has shifted. It's way too early to raise the mission accomplished banner. The US is making steady progress, and this deal is definitely part of that progress. But, look, we are still very reliant on Taiwan for those high powered AI chips, and that hasn't shifted. That's still true. Travis Hoium: If these chips do their job, hopefully one of these humanoid robots can do my laundry or mow the lawn for me sometime in the near future. Let's move on to earnings. You may be listening to this podcast on Spotify, so we should probably check in on their earnings. Revenue for the second quarter of 2025 was up 10% to 4.2 billion euros. Free cash flow was 700 million euros. That's a huge improvement from a few years ago, but the stock was down as much as 12% on Tuesday. Lou, was this really a disappointing quarter? Lou Whiteman: Relative to expectations, yes, but I think it is important to look at the big picture here. Yes, revenue missed estimates, and, yes, the company posted an unexpected loss. But if you look at it, the revenue miss was mostly due to about 100 million euros worth of currency fluctuation losses. Back that out, back out just the currency conversion noise and revenue is basically in line, which is much better. On the earning side, there were some higher personnel costs. There is some cost creep, but much of the loss was tied to what they call social charges, which is basically stock based compensation. Back all this out. It's worth noting that the underlying numbers how the business is doing looked a lot better. Free cash flow is up 43% to 700 million euros. The all important number of premium subscribers continues to grow up 12% to 276 million. There are no signs of distress here. There are no signs of worry. This is still a very, very good operating business. They just got caught up in some accounting things. Rachel Warren: Yeah. These results warrant the stock dropping and having its worst trading day in two years? I think that might be a bit of a market overreaction. But it does also fit in with the types of market movements we've seen in recent earning seasons. When a company misses on maybe a couple key metrics. Even if the overall picture remains positive, as it does, in my view, for Spotify. CEO Daniel Eche acknowledged that the company's ad supported revenue growth. It's been slower than anticipated. And he attributed that to execution challenges rather than actual strategic issues. It's worth noting that their ad supported revenue declined by about 1% year over year in the quarter. But revenue from premium subscribers actually rose 12% from one year ago. It's also worth noting monthly active users grew 11% year over year to 696 million. That means that Spotify added 18 million monthly active users in Q2 versus the guidance they had previously given for 11 million. And they also achieved premium subscriber net additions of 8 million, which far exceeded their guidance of 3 million. You also saw gross margin rise to 31.5%, and a lot of that was attributable to premium revenue growth outpacing music costs, as well as improved contributions from areas like podcasts and music. Spotify is expecting continued strong user and subscriber growth. Going into Q3, they're looking to achieve as many as 710 million monthly active users and 281 million premium subscribers. They had about 8.4 billion euros of liquidity on hand, as well, at the end of the quarter. I still think this is a solid business. Travis Hoium: Yeah, they talked a lot about improving that ad business on the conference call. We'll see if they can do that in the future. For some context, Spotify stock is up 385% in the past three years, even after yesterday's drop. But the price of sales multiple is up 240%. A lot of multiple expansion there. When stocks go up, expectations rise, and sometimes even a good report isn't enough to impress investors. I think that's the big story. Next up, we're going to talk coffee and credit cards, get a glimpse of how the consumers doing. You're listening to Motley Fool Money. The biggest question this time of year is what is the consumer feeling? How healthy are they? Last week, banks said that consumers were doing fine. Late on Tuesday, we heard from visa Starbucks and Lou, let's start with visa because they have the widest view of the economy overall. What did we learn? Lou Whiteman: Visa topped expectations, grew adjusted earnings by 23%. But as you say, the big news, CEO Ryan McNern's comments about the consumer, that's what really stood out. He called the consumer spending resilient, even non discretionary, which I found interesting. He also said it has remained so past the end of the quarter into July. So, all as well, great news. But it is worth noting, Travis, that even with this perceived strength, Visa held guidance steady for the rest of the year. No beaten race here. It appears they're at least hedging their bets a bit or at least a little worried. Definitely not sounding the alarm, but I'm still curious about what's going on and what will go on in the months to come. Travis Hoium: Rachel, this one shocked me. Starbucks stock is down over the past six years. That's really a turnaround story right now. Brian Nichol has been brought in to change the direction of the business. Are we seeing progress from their recent results? Rachel Warren: This is definitely a period of transition for the business for Starbucks, and the turnaround is taking time. This is really evidenced by the fact that Starbucks reported that same store sales fell for a sixth straight quarter in their recent report. GAAP earnings per share of $0.49 actually declined 47% year over year. That's a couple of those facts, but we are seeing progress. For example, their net revenue of 9.5 billion dollar in their fiscal third quarter. That exceeded analyst expectations of 9.3 billion in the recent quarter. It was also up 4% year over year. Notably, Starbucks saw its first sales gain in China since 2023 with a 2% increase in comparable store sales, and that was driven by a 6% increase in transactions. Now, we've heard reports that Starbucks is weighing a sale of its China business. That remains to be seen. But this was also the third consecutive quarter of improvements in US transaction comp, although we're still seeing negative growth there. Now Barista turnover is at its lowest since the pandemic. Starbucks is investing an additional $500 million in labor hours for US stores over the next year. It's looking to really improve its customer service and store operations. Finally, Starbucks just announced that they're going to be introducing a new stand-alone store prototype in 2026 with a drive through and more seating. That could be interesting to watch, as well. Travis Hoium: Yeah. These numbers coming out from restaurants and fast food chains or coffee chains are all over the place. I'm really having a hard time. Chipotle's quarter was a little bit weak. The same store sales comps were down. It just seems very company specific right now. Let's go to our final one of the day. That's Fun fact, over the last 20 years, booking stock is up 22,407%. Just a phenomenal run. They reported last night after the market closed, results were solid, but outlook was weak. What's going on, Lou? Lou Whiteman: Yeah. Just an amazing company and a big winner over the years for Motley fool members, so really, really fun to watch. As you say, a really solid quarter came in ahead of estimates, but they did set profit guidance slightly below expectations. I'm going to emphasize slightly here because at the midpoint, they see revenue of 8.63 billion in the current quarter, which is maybe $60,000,000 short of consensus, which is funny that that could cause a sell off. But Travis, you mentioned it before with Spotify, I think the same is true of booking. Great company, great quarter holding up very well in what we thought maybe could be a tricky environment, but there were so much expectations baked into the stock it just had to let off a little steam post earnings. As a long term holder, I don't see much reason to worry about this quarter, even if the stock did sell off. Rachel Warren: Yeah. The company exceeded analyst estimates for Q2 revenue and earnings per share. But it's Q3 guidance for revenue as well as room night growth was lower than anticipated. The market probably also didn't love that double digit decline in earnings, but a lot of this goes back to near term investments the company's making in its platform that are putting pressure on the bottom line. This deceleration of growth, even from strong absolute levels, seems to be scaring some investors. Some might believe the travel boom following the pandemic could be reaching a plateau or perhaps are concerned about a weakening macro environment. This is still a fundamentally well financially bolstered business. Room nights in this recent quarter grew 8% compared to one year ago. Gross bookings were up 13% year over year. Revenue rose 16%. They also reached a major milestone with their connected trip transactions on the flagship platform. This is where customers choose to book more than one travel vertical, and that connected trip transactions cohort represented a low double digit share of total transactions. That was up 30% year over year. They also saw growth across other verticals, including flight tickets up 44%. Travel is a cyclical space, but booking does have a very solid and well run business, and I think they have the financial fortitude to withstand any near term shakiness in the overall sector. Travis Hoium: Yeah. It doesn't seem like any of these companies are reporting bad results. It's just a matter of what those expectations are. Now that we're far enough into earning seasons to get a feel for what the economy looks like or at least what we think it's going to look like over the next three months or so, and what the market is looking for. That's maybe even more important. I want to give you both a chance to put yourselves on a scale, 100% bull, 100% bear. Where are you on the economy and the market? Rachel Warren: I'd say it probably falls somewhere in the middle. I want to say that roughly 80% of S&P 500 companies that have reported Q2 earnings so far have exceeded earnings per share estimates. That's outperforming both the five year and the ten year averages of about 78% and 75% respectively. In the near term, you've got the impact of policy shifts like tariffs. You've got macro pressures that could stem from them, that could pose realistic challenges both for the economy and the market and I think it's important to recognize that. Could we see another bear market? Absolutely. As a long term investor, though, I do remain incredibly bullish about prospects for great businesses to generate excellent returns for faithful shareholders and for the market's ability to rise with the passage of time. That's what I'm focusing on. Lou Whiteman: For the market, I'm probably 55, 45 in favor of bullishness. Stocks, generally speaking, yeah, they're on the pricey side, if you look at the indexes, and I think that might limit upside for the second half of the year. But I don't see the elements of a crash building. I think the market can grind at these levels, maybe slowly raise. I don't think it's going to be a dramatic up or a dramatic down. The economy, Travis, that side worries me a bit more. I still think that the tariffs are just beginning to hit Main Street, and they're going to hit it a lot worse in the months to come. I don't think that deflates the markets, though, because I think, A, investors are aware of it and, B, if you look back to Sam Adams last week, I think in some cases, we have now estimated such an effect that the tariffs, if they net out at 15% or whatever, I think we might have actually overstated some of the impact in the quarters to com in our estimates. I do think the market can grind higher from here, even if it gets worse on Main Street, but it does feel like it's just going to be a bit of a trudge from here. It's not going to be a rocket ship market or just crisis on the street market. It's just going to be onward. Travis Hoium: Lou, you brought up tariffs, and I want to get an idea for as we're ending the Q2 earnings season going into Q3, are you expecting more impact from tariffs, whether that's costs that impact company's margins or consumers just behaving differently? If something is more expensive, maybe you don't reduce the amount of money you're spending overall, but the volume goes down because that average sale price is going up for the items that you're buying. What sort of trends are you looking for there as we go to the second half of the year? Lou Whiteman: Here's my best guess. I do think that on both of those, it's a headwind, both for the companies and just the consumer habits. I think it might be manageable enough that we're talking about maybe estimates are in trouble or estimates have to come down a bit, but it's not going to derail a growth story. I think it's going to just be more than noise. It's going to be a headache, but it's not going to be to the extent that it really drives down the economy or drives down the market. Travis Hoium: A lot to watch in the second half of the year, and we'll be covering it all on Motley Fool Money. As always, people on the program may have interest in the stocks they talk about in the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Pool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check our show notes. For Lou Whitman, Rachel Warren and our production magician Bart Shannon and the entire Motley Fool team, I'm Travis Hoium. We'll see you tomorrow. Lou Whiteman has positions in Booking Holdings and Shopify. Rachel Warren has positions in Shopify. Travis Hoium has positions in Shopify and Spotify Technology. The Motley Fool has positions in and recommends Booking Holdings, Chipotle Mexican Grill, Nvidia, Shopify, Spotify Technology, Starbucks, Tesla, and Visa. The Motley Fool recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy. Coffee, Chips, and Credit Cards was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
06-08-2025
- Business
- Yahoo
Block Party and Big Swings
In this podcast, Motley Fool analysts Emily Flippen and Sanmeet Deo and contributor Jason Hall discuss: Whether it makes sense to "buy the add" when a stock is added to an index. Figma's drive to enter public markets and its current valuation. (Note: This podcast was recorded before Figma started trading.) Contrarian investment ideas for beaten-down Rule Breakers. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Should you buy stock in Block right now? Before you buy stock in Block, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Block wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $631,505!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,103,313!* Now, it's worth noting Stock Advisor's total average return is 1,039% — a market-crushing outperformance compared to 181% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 4, 2025 This podcast was recorded on July 22, 2025. Emily Flippen: Block's crashing the S&P Party, Figmas flashing it's S-1, and we're hunting upside where others flee today on Motley Fool Money. I'm Emily Flippen and today, I'm joined by analysts Sanmeet Deo, and Jason Hall to talk about some quintessential rule-breaking stocks, I think some of which are having better days today than others. It will also cover the IPO market and its newest entrance, as well as some beaten down out of favor businesses. But first, of course, we have to talk about Block, who, effective tomorrow, will be replacing Hess and the S&P 500 after its merger with Chevron. Sanmeet it is never a bad thing to see a business added to an index. It provides some institutional credibility. It forces buying. But it's all of that buying the ad still really work in today's day and age. If it doesn't, should we just not care about this at all? Sanmeet Deo: I think buying the ad does help in the short term, you can get that short term bounce. But you should only really care if it's a company you're interested in investing in for the long term. I'm not very familiar with Block. It's not a company I would buy myself. While this is great news for Block and their investors, it's not something I would jump into. Jason Hall: I think it can be a bit of a mixed bag. I pulled some data on recent additions to the S&P this year, and here's what I found. Back on March 7, S&P Dow Jones Indices announced that it was adding four companies to the S&P 500. Of that four, only shares of Williams Sonoma actually gained the day of the announcement. The other three TKO Group, Expand Energy, and DoorDash, their shares all fell. The index was up, too, so it wasn't affected by what the market was doing that day. Now, here's the thing. The effective date of the change was March 24, and that matters because that's when you see institutional investors and ETFs and other funds that track that index. That's when they have to add to the index. What did we see from the date of the announcement through the 24th when the shares were added? Expand Energy was up 14%, DoorDash was up 11%, TKO Group up 5%. They were all up. But Williams Sonoma, that was the big gainer, if you remember the day of the announced change, actually fell 7%. Now, what happened? It's the only one that reported any major news in between those dates. Lackluster earnings on March 9 brought it stock down. Here's another quick one, May 12, Coinbase was announced to be replacing Discover Financial, which is, of course, required by Capital One. Coinbase shares have almost doubled. They jumped a little bit the day of the announcement. What's the takeaway? There's a decent chance of a little pop like Sanmeet was talking about. You stretch it out longer term. Business results and the potential for bigger profits matters more to your returns. Block has some things in its favor, but it's really going to be whether it can monetize those things that helps investors make money or not over the long term. Emily Flippen: Yeah, actually, I'm a little surprised here, Jason, because some of those returns are better than I expected. It's true, I think, when a stock is added to an index, there's a certain amount of forced buying that happens when the index does go out depending on its rebalancing schedule and has to purchase shares, of course. But it's also true that when indexes add stocks to their index, they have to announce it in advance when that change is being made. There's a certain amount of front-running that happens from institutional buyers that I think largely has reduced the size of the price movement for stocks after the announcement. But even some of those companies, like you just mentioned, Jason, I think there is just a level of credibility that happens when you see an index adding to a business. In the case of the S&P 500, there's certain hoops that companies like Block have to jump through in order to even be eligible. Interestingly, for Block, one of those elements is a certain level of profitability. You have to have posted GAAP profits not only in our most recent quarter, but over the trailing four quarters as well, the trailing year. In the case of Block, I think if you weren't already a shareholder, this is actually a reason to maybe continue to sit on the sidelines if you weren't already interested. Like you mentioned, Jason, this is a company that while performing well, does have a lot of exposure to things like Bitcoin. They have exposure to that on their books that can impact their GAAP earnings, as well as exposure through their cash app, which is driving a lot of their revenue growth, although a smaller portion of gross profit. All of those things, I think, make me just a little bit more cautious here as an investor to say, it's great to see some institutional buying for Block. But again, I'm not already a shareholder. If I wasn't, then I would not be using this as an opportunity to think, either in the short term or in the long term, this is providing some reason for me to go out and buy today. We'll be back with some thoughts on our newest potential addition to the public markets right after this break. Jason, I'm not sure if you're much of a creative type, but something tells me you're at least familiar with Adobe and the work that this business has done among design professionals. I think we'd all have to be living under a rock if we weren't. Today we got news that Figma, which is one of Adobe's largest competitors, and the business that Adobe tried to acquire more than three years ago for $20 billion, has priced its IPO and is targeting valuation that only goes upwards of around $16 billion. What do you think? What should investors be making up this pricing? Because to be frank, to me, this makes me excited for Adobe, but really skeptical here for Figma. Jason Hall: I did some professional photography work for about a decade. I'm really familiar with Adobe's products. I'm also a content creator for The Motley Fool, so I spent a lot of time working with many of the latest tools. For those of us following these businesses and investors, I think the consensus was back when Adobe announced the Figma deal. It was expensive, and they were just clearly trying to take a competitive product that they had lost ground to out of the market and add it to their suite of products. I think the outcome, frankly, the deal falling apart and Adobe having to give its biggest competitor Figma $1 billion and then figure out how to innovate and compete, I think it's certainly healthier for Adobe's business in the long run. On the other hand, I'm a little bit less willing to view the down round $14 billion valuation for Figma is really necessarily being bullish for Adobe, but more than just a reminder this is still a really dynamic, highly competitive space. Since the announcement of the acquisition back in mid September of 2022, Adobe shares are up about 19%. Over that same period, the S&P 500 gained almost 70% in total returns. The tech heavy NASDAQ-100 has basically doubled. Investors see a legacy software giant that still has a lot of work to do to retain its edge. For instance, I almost exclusively use Canva for graphics and products like descript and Riverside for video editing. I think the lesson there is that the good enough but a lot cheaper products are winning out for more casual professional users. They don't need that full suite of tools. They just need an ultralight plane, they don't need a 747. I think Adobe's success, though, is going to be tied to keeping the real professionals empowered with the best suite of tools and unlocking their productivity and creativity with artificial intelligence. Adobe's way ahead of everybody else taking really big steps there. Thinking that through, if I were picking between Figma and Adobe as an investor right now, I think Adobe's still likely to be the winner in no small part because the valuation gives a lot more margin of safety to future profits for investors. Sanmeet Deo: I would add that while Figma could definitely be a much more rapidly growing company, it definitely has something that Adobe values because they look to acquire it. But Adobe's been in this business for a very long time. The biggest thing for me is that they just generate steady and healthy amounts of free cash flow on a consistent basis. It does have competitive threats from Figma, Canva, and others. Adobe's primarily been desktop oriented versus now there's more Cloud based online services like Figma and Canva. Adobe is shifting toward that, so they're already making their moves. Their AI features have been very good. Their case could be made for Figma as a great growth oriented, higher growth, higher risk investment, the safer, more solid bet would be Adobe, and you're still getting plenty of growth out of that. Emily Flippen: I will say it, even the low range of this IPO price, Figma still valued at nearly 17 times sales, and the business barely generates profits. When you talk about the amount of money that is likely going to be invested in things like sales growth and even AI, it might be challenging here for Figma, but interested to see where this ultimately leads us and leads investors, and if Adobe is still threatened by this company a year or five years from now. But we're still in the middle of earning season here, and as much as I think that it's important to talk about earnings, I also think that we shouldn't use it as an opportunity to overshadow maybe a contrarian or highlight a stock idea that some of the quintessential qualities that define rule breaking stocks look for, which includes being a top Dog, led by a visionary founder and Jason, I have to talk to you about Roku here because as self-indulgent as this is, I will say, Roku has been a little bit of a bust for most investors. Shares are down more than 80% from its 2021 highs. I would argue that I think we've seen a little bit of a turnaround in Roku's business here. I've been on record saying that I think Roku is like Shopify in 2023. But I think I am a little bit of the contrarian. I'm the outside investor who is looking at Roku and getting excited. Most people have been running for the hills. Jason, from your opinion, is Roku potentially a viable stock for contrarian investors, or is this really more like digging through the trash as opposed to the bargain bin? Jason Hall: I think it's a good business. The core business is really good. I think that's important to acknowledge. The trends are certainly very favorable with programmatic advertising, and when you have a supply of inventory of ads to sell, and they're growing that inventory on other platforms, as well, through the ad network that they're building. But what I've struggled with Roku for years is as much as I think there's value for user, I think it's potentially capped by what is probably a realistically smaller market for its product than a lot of bulls describe, despite all of those positive things there and the moves they made to get more inventory in front of more buyers, I think the reality is, I want to be very specific here. The Roku brand I think it's a lot like Peloton to me. What I mean by that is that there are plenty of loyal users that swear by it. But the majority of people who want to connect a TV or a piece of exercise equipment, if we were to continue with that analogy, they're just transactional, or maybe they're already in another ecosystem in the case of this. Things like Apple and Amazon, and people are part of those ecosystems for reasons that Roku can't really compete with, I think it's a good business. I think you're right that it's probably on the cusp of something big in terms of the power of adding scale. Again, in terms of scale, I really do think it's more Peloton than Shopify. Emily Flippen: This is going to turn into an episode of dueling Fools. Actually, I don't disagree with you, but I think it's a bit of the opposite of a situation with Peloton. Peloton was always a brand driven company who needed to drive pricing power and premium prices in order to make money off of its hardware, whereas Roku purposely is not a brand driven company. They don't want you to necessarily associate with the Roku brand. They sell their TVs and their operating systems at a loss just to get people into the ecosystem. I think most Americans don't really care what brand their TV is. They just want to buy whatever's the cheapest, most accessible product that suits their needs. In case of Roku, they're the largest operating system for TVs in North America. They're more than twice the size of their next largest competitor, and that has only gained market share since the company has been public. But you're right that ultimately, there's a highly competitive space. We have deals with some of their largest distributors, including Walmart of the world, who has an investment in physio. Very easy for other competitors to come in and say, Okay, you've been undercutting the Apples and Amazons of the world. I'm going to start undercutting you as well, and a decline in market share here for Roku could be absolutely devastating. Jason, I will want to hold you to your thoughts on Peloton. It's going to be a stock that I ask you about here in just a minute. But after the break, we'll be right back with some of those rapid fire thoughts and bold predictions for popular beaten down stocks, of which Peloton is, of course, one. To wrap up today, I love to take a rapid fire round of bold predictions for some of our favorite Rule Breaking style companies. They've been beaten down to the likes of Roku. Maybe we have some contrary opinions on them. But, Sanmeet, let's start with Peloton. Their shares have been left for dead, but a new management team and a growing subscription style for revenue could get some investors intrigued? Are you getting on or off this bike? Sanmeet Deo: I'm getting off. Fitness is a fantastically interesting yet fickle and challenging industry to invest in. You can take my word for it as I've invested in actual Brick-and-Mortar franchise. I've invested in Peloton and struck out. I've shot my shot, and I'm not made my shots with the fitness industry yet. Yet still am intrigued by fitness, health and wellness, and that whole industry. One day, I'm going to catch something. But with Peloton, I think its story is over. I had its run, it had its play. It's just I don't see anything sustainable that could last with this company. I would rather venture into something like a Planet Fitness, which is cheap gym has its niche, provides it, and provides it well, has been around for a long time and is gaining share and members. I would stick with something like that. Jason Hall: Yeah, I'll add a little nuance to that. I think there's plenty of sustainability here by refocusing on what's powerful about Peloton, and that's creating that platform that users like and keeping your engaged users engaged and monetizing those users and getting things like the operating costs of owning factories to build bikes off of their balance sheet and off of their operating costs. They made that move. They took the big shot, Sanmeet to try to take that next step to scale. Remember BowFlex? How about P90X? What about Jazzercise? Sanmeet Deo: I still use all of those, except Jazzercise. [laughs] Jason Hall: The point is, as you said, it's a very fickle industry. FADs come and go. I think that all of those things are still around, and they're going to be around for a while. I think Balton is going to be around for decades. But is it an investable area? Peter Lynch said it best guys, a great business and a mediocre industry is a mediocre business, and this is a tough mediocre industry, and value buyers, there's opportunities time for companies like this Maybe the stock goes up if they keep shrinking costs and get to a steady state. But it's a notoriously fickle industry, absolutely in my too hard pile, Emily? Emily Flippen: I have to agree here. If I saw subscription revenue from those loyal customers rising, it'd be one thing, but even that is declining. It's a hard industry to win in. But you know what else is a hard industry win in? Furniture. We have to talk about Wayfair. Their shares traded at less than one time, sales. I will say, though, the home market improves here. Maybe there's some near term demand for stocking up all of our houses with some new items. Jason, are you on board a turnaround in Wayfair? Jason Hall: It's just a furniture and other home goods store, and it's online. Congratulations. You're Montgomery Ward, but without the Internet. Now, in fairness, retail can be an excellent investment, but you have to be a really good operator and you have to do something better than your competitors with a value proposition that's actually a value. Just a cherry pick two primo examples, TJX Companies and Williams Sonoma on two different ends of the spectrum of what they're good at, they're both really good. They know why they exist, who they serve, and they're exceptional operators. Wayfair doesn't seem like it's really either of those. Frankly, I once had high hopes for it. Sanmeet Deo: I make it really quick with Wayfair. I think it has a fighter's chance. It has online a breath of products and services online. They're trying to make it personalize and customize to users, and they're very targeted with their ads to get the right type of customer into their business, but still still a tough, tough business. Emily Flippen: Last but not least, let's talk about Etsy, which is forced to face reality after its house of brand strategy failed. But new management's trying to turn around. I know I'm not fully sold here, but Jason, do you have any thoughts? Jason Hall: Full disclosure. I sold Etsy on March 6. Shares are up a third since then, so I don't really know if I've got much credibility here, but I can tell you why I sold. In short, all of the stronger business results that we've seen over the past year or so, higher revenue, profitability. That was coming at the expense of merchants. More recently, customer traffic and merchant counts, they're down. Gross merchandise sales. That's the volume of revenue across the platform falling. It's a solidly profitable business. If you adjust out the goodwill write down that they took related to reverb, generates plenty of cash flow. But if you can't bring more buyers and sellers together in a market where more people want to buy handmade and used items, what are we even doing? Emily Flippen: Sometimes contrarian investments are contrarian for a reason. We're just not seeing the business performance that we need to make them investable today. Sanmeet, Jason, thank you both so much for joining. As always, people in 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 or sell stocks based solely on what you hear. All personal finance content follows the Motley Fool editorial standards, and it's not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Jason Hall, Sanmeet Deo, and the entire Motley Fool Money team, I'm Emily Flippen. We'll see you tomorrow. Discover Financial Services is an advertising partner of Motley Fool Money. Emily Flippen, CFA has positions in Block, Peloton Interactive, Roku, and Shopify. Jason Hall has positions in Shopify and has the following options: short January 2026 $175 calls on Shopify. Sanmeet Deo has positions in Amazon, Shopify, and Walmart. The Motley Fool has positions in and recommends Adobe, Amazon, Apple, Block, Chevron, DoorDash, Etsy, Peloton Interactive, Planet Fitness, Roku, Shopify, TJX Companies, Walmart, and Williams-Sonoma. The Motley Fool recommends Capital One Financial, Coinbase Global, and TKO Group Holdings. The Motley Fool has a disclosure policy. Block Party and Big Swings was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
15-07-2025
- Business
- Yahoo
Taiwan Semi's $100 Billion Plan; Housing Is Hot
In this podcast, Motley Fool contributors Tyler Crowe and Matt Frankel discuss: Taiwan Semiconductor's most recent earnings report. The torrid pace of AI spending. Lower mortgage rates are taking the cork off existing home sales and refinancing. Insulation contractor TopBuild now does roofs. Ferrero will acquire WK Kellogg. Two stocks worth watching this earnings season To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Before you buy stock in Taiwan Semiconductor Manufacturing, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Taiwan Semiconductor Manufacturing wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $680,559!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,005,670!* Now, it's worth noting Stock Advisor's total average return is 1,053% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 This podcast was recorded on July 10, 2025. Tyler Crowe: Taiwan Semiconductor's earnings say full steam ahead for AI, and the housing market is getting some of its best news in a while. You're listening to Motley Fool Money. Welcome to Motley Fool Money. I'm Tyler Crowe, and joining me today is Motley Fool analyst Matt Frankel. Matt, thanks for being here. Matt Frankel: Thanks for having me. It's always fun to be on with you. Tyler Crowe: We do a lot of conversations. Offline and doing one here is going to be great. On today's show, the snacking industry is actually coming for the breakfast aisle. The housing market saw its first green shoots in a while. There's merger talk in the building supply industry, and Matt and I are going to give some earnings watches for the upcoming quarter. But we're going to start today's show with Taiwan Semiconductors because they just released their second quarter or June earnings earlier today. Taiwan Semiconductor manufacturing's revenues rose about 39% in the quarter, and TSMC CEO C.C. Wei said that AI chip demand still, they think is outstripping the current supply that they have, and the company has pledged to spend $100 billion ramping up manufacturing. Now, Matt, I'm probably not alone in being flabbergasted, every time I hear a projection about spending and CapEx related to AI. NVIDIA just passed the four trillion dollar market cap threshold a couple days ago, and it's still hard to wrap my head around. I think the easy question is, will AI spend, continue to grow? I think that's a little too easy. I want to ask you, do you see AI CapEx spending continuing at this rate? Matt Frankel: Well, a 40% year over year growth rate is only sustainable for so long. This is an acceleration. It's worth mentioning. Last year, in 2024, Taiwan Semi reported 30% year over year revenue growth. This is a pretty big acceleration after an already very strong year. I think over the past 30 years, Taiwan Semi's revenue's grown at about 18% annualized rate. It's really picked up in the past couple of years because of all this AI spending. This is a massive business, especially for one that doesn't make any of its own products. It makes products on behalf of other companies. All of their customers, just to mention some on their customer list, Apple is their biggest one. But they also make chips for NVIDIA, AMD, Broadcom, Tesla there are a lot of companies they make chips for on a third party basis, and these are deep pocketed companies that are all committing a lot of money to AI investment. When you ask will this continue if you're asking over the next five years, I could see that growth rate actually being sustained. But if you're asking beyond, at some point, we're going to hit a peak, but I don't think we're there just yet. Tyler Crowe: The interesting thing is a lot of the companies I follow are like in the construction industry related to AI, like all the electrical supply contractors and the builders and things like that. Their backlogs for AI data centers and all that stuff is still growing at really large rates. Their remaining performance obligations, their word for backlogs, have been growing at similar rates, which is also, to me, a leading indicator for a lot of this because you got to build the data center before you can put any chips in it. Beyond the same thing, beyond the five years, it starts to get really murky because we're 40% for five years straight is a lot, but certainly over the next 2-3 year window, it doesn't seem unrealistic to continue to keep doing this. Matt Frankel: One of the really good ways to get ahead of demand is to look at what the data center industry is doing, and I'm glad you brought up building for that reason because so many data centers are being built right now. There's a lot of if you look at, Digital Realty Trust or Equinix's, construction activity, there's a lot going on, and it creates like a forward looking projection, if you will, because, the company will order a new data center, start building it. At some point later, it's going to be filled with chips and things like that. That's a really good forward indicator of how demand is doing. Tyler Crowe: Let's put the rubber of the road here really quick regarding Taiwan Semi. It's a recommendation in the Hidden Gems dividend service and several other molecule services. After seeing these results and the current valuation that we're looking at for Taiwan Semi, do you still see the stock as a buy? Matt Frankel: Given how quickly its revenue is growing, it trades for about 24 times forward earnings, there's not a lot to dislike about this company. That 1.2 trillion dollar valuation sounds high, but it really isn't when you look at how the business is doing. Tyler Crowe: If we're looking at these numbers for 2, 3, 4 years, a company can grow into a 26 times forward earnings valuation or forward earnings valuation pretty quick. It's hard to see it being an awful investment from here at current valuations. Next up, mortgage rates are on the decline, and the housing market is responding quick. FEMALE_1: Ready to launch your business get started with the commerce platform made for entrepreneurs. Shopify is specially designed to help you start, run, and grow your business with easy, customizable themes that let you build your brand, marketing tools that get your products out there, integrated shipping solutions that actually save you time from start-ups to scale ups, online, in person, and on the go. Shopify's made for entrepreneurs like you. Sign up for your one dollar a month trial at Tyler Crowe: The housing market has been looking for something, anything resembling good news lately. Finally, it got a little bit. The average rate for a 30 year mortgage in the United States has declined five weeks in a row, and it's now down to 6.77%. Now, that certainly isn't the sub 3% mortgages that we saw in the 2021 period, but it is a nice improvement from the greater than 7% mortgage rates we've seen so far this year, and I know I have been like mortgage rate shopping for quite some time. Matt, the housing market appears to be taking advantage of this situation much faster than we've seen other mortgage rate movements lately, and something you've been following is like housing volume is really picking up because of this. Matt Frankel: You mentioned the other mortgage rate moves. This isn't the first time we've seen mortgage rates cool off from the highs, which is why this move is a surprise to a lot of people. Mortgage rates peaked at about 8% when inflation was really high. But even they've come down a little bit, then they go up, then they come down, they go up, and they have oscillated between 7.5% and like six and three quarters in recent times. All the other times it's happened, this is a key difference. All the other times it's happened, there hasn't been a lot of housing inventory. Now that's changed. There's a lot more inventory on the market with this decline. People who want to buy houses are taking advantage, just to name some of the statistics just last week alone, week over week, application volume was up more than 9%. Refinancing is 56% higher than it was a year ago. People who got mortgages in the 8% range are finding it valuable to refinance right now. Purchase applications are up 25% year over year on a seasonally adjusted basis. The numbers really look surprisingly strong, given that, you know, over the past week, the average mortgage rates down two basis points. It's not like it's been a sharp decline in the past week, but now buyers are suddenly coming into the market. Tyler Crowe: Following the housing move for the past couple of years, it's been trying to poke somebody a stick and say, Come on, do something and it's funny to actually see it finally happening. Part of me wonders if it's a little bit mortgage and also our mortgage rates, excuse me, and a little bit of just like the people have been putting it off and using this as that time to start taking the lid off, especially with the buying season here in the spring and summer. Now, you and I and a couple other people, longtime Motley Fool contributors, analysts. We spend way too much time talking about housing, investing in housing, investing in real estate. There's some side channels that get a little unhinged. But with mortgage rates are declining, the probability of a rate cut actually looks to be in sight something that I have been hesitant to say for quite some time. There is pent up demand for homes. Matt, with this backdrop, what stocks in this particular market look interesting to you? Matt Frankel: I've been saying the Home Builders forever, and so have you, but it's really tough to gauge the dynamics of Home Builders when existing homes are becoming more appealing than they had been for a long time. I won't say that. I'm really looking at rocket right now, RKT the largest lender. They're a very profitable company. I think refinancing in particular is a big opportunity. I mentioned refinancings up 56% year over year, and that's because rates fell to 6.77%. Imagine if rates fall to 6% or 5% in the next couple of years, Americans are sitting on $35 trillion in home equity that's the most ever, and a lot of it's just waiting to be tapped. A lot of people want to do big projects, but won't because it's expensive. Tyler Crowe: Actually, the Refi number was the one that really stood out to me, as well. I didn't go to the mortgage originators, like Rocket. I actually went to the home repair and remodel industry because, again, this is everyone stared at their walls in 2020, 2021, did all those projects, and now it's been like three or four years. Everyone's starting to get that itch to do projects again and lower mortgage rates. A refinancing is a good opportunity to that. I've been looking at companies like Home Depot that have underperformed just about the time the interest rates started to climb a few years ago, we had that big pull forward in remodel activity and things like that. Home Depot and a lot of other building supply companies, and one company in particular is TopBuild. It's an insulation distribution and installation contractor specifically for insulation. That company just so happens to be the company we're going to be talking about next. Continuing on our theme of the housing market, home repair, building products, there's a company Top bill. They just mentioned it as a distribution installation contractor. They recently announced it's going to acquire Progressive Roofing. Matt, can you just give a quick breakdown of what this deal looks like? Matt Frankel: Progressive Roofing, as the name implies, they're one of the largest commercial roofing installers in the United States. They make about 70% of their money from what's called reroofing, which is people like me needing a new roof and maintenance and 30% from new construction homes, both of which can get pretty nice tailwinds, if the real estate market keeps going as it's going. The deal is it's $810 million in cash. It looks like a great deal for TopBuild if if the market heads in the right direction. That's about nine times progressives EBITA over the past 12 months. They expect there to be some synergies, like whenever you acquire two businesses that have some overlap, you can usually combine some operations and things like that and get some cost savings. It looks like a strong acquisition. They're going to have to take on debt to do it. TopBuild has about 300 million in cash right now. Another roughly half a billion dollars will need to come up with through debt, but they have a really healthy balance sheet, about 1.4 billion in debt with $11 billion market cap business and highly profitable. I like this deal. I think this is not the last consolidation we're going to see in the industry in 2025. Tyler Crowe: We've seen some more splashy things when it comes to acquisitions here. Brad Jacobs of XPO Logistics and United Rentals and a bunch of other we'll call it the boring economy guy who rolls up companies is getting into building supplies with QXO. It seems to be a hot activity lately as mergers acquisitions roll ups in this industry. TopBuild as I said, installation of insulation the real dirty work. Anybody that's done contracting work knows that insulation stinks as a job to do. But it's been a spectacular investment after it got spun out of Masco Corporation in 2015, several Motley Fool recommendation services. You and I have been following this company in this industry for quite a while. For TopBuild, much of its success has come from rolling up those small distributors and installation contractors across North America. It's been their calling card is going and buying out mom and pops who are maybe coming to the end of their time of wanting to run a business or some small regionals that success story of Bolt-on acquisitions. Now, roofing isn't insulation. Honestly, I'm a little anxious when a company makes an acquisition that is slightly tangential to what they're doing. Am I being a little too apprehensive here, because, I do tend to be a little bit more nervous than you. Matt Frankel: Well, insulation and roofing are related parts of the building process. It's not like they're an insulation company, and they're acquiring a concrete manufacturer or something like that. It's a very related part of the business. But I do get your point. Some of the synergies I mentioned come from the fact that there's a lot of overlap in the processes. You generally don't put in a new roof without checking your insulation at the same time. There is a lot of overlap here. But no, I definitely get your point when companies start to step outside of their wheelhouse a little bit. It'll be worth watching, but it looks like the price is right, so they have some wiggle room to have a learning curve in there, if you will. Tyler Crowe: I'm probably a little too nervous by nature, but I do have to admit, as I've looked at this deal, I think overall, we can talk about the business stuff. But more importantly, for me, I think management has developed enough of a track record that I'm willing to give them the benefit of the doubt right now or tie goes to the base runner, I guess, if you will. With the refinance market picking up so could activity in the roofing business along with installation. It might be a good time to be making this acquisition. Speaking of M&A, we're going to move on to our next store here, which is going from roofing to the breakfast aisle because that seems to be getting a hot market that also just happens to be getting a little bit sweeter. Earlier today, Ferrero Rocher or Ferrero International, the Italian private company has agreed to acquire WK Kellogg for about an enterprise value of 3.1 billion. WK Kellogg, of course, was the cereal business that was split out of Kellanova I believe it was either last year or a couple of years ago. It was a relatively recent split for the two companies where Kellanova wanted to focus on the snacking industry. WK Kellogg was going to take the cereals. But Ferrero Rocher is very much a candy company, and it's interesting to see them going in this direction. It's about $23 per share for WK Kellogg in cash. About 31% premium Keeling's closing price today. Matt, what did you actually think about this deal? I know it's hard to really put a pin on private companies, especially an Italian one. We don't seem to have a lot of information on private Italian companies here in the US public markets. But we've seen tons of M&A activity and flirting with M&A activity. We saw Mondelez and Hershey talking about getting together early or late last year. Do you have any insights as to why you think there's so much talk and commotion in particular in the package food industry lately? Matt Frankel: Well, in this particular case, there's a couple key takeaways. One is that Ferrero has been building out its US portfolio for some time. They acquired all of Nestle's US candy business a couple of years back, for example. You might have some of their products in your house right now and not know it. It's summertime. A lot of people keep those bomb popsicles in their fridge. That's a Ferrero product. They have a lot of brands that are very well known to Americans. Second, and this goes more to the broad package food industry that you were talking about. The definite trend is to not only diversify your product portfolio, but diversify it in a way toward healthier products. Now, I know a lot of Kellogg cereals, frosted flakes are not health food, but things like Kashi and raisin bran and rice krispies. We've seen a lot of the companies that specialize in sweets, like Coca-Cola, Pepsi, really diversifying to not necessarily health foods, but to more healthy brands that are that consumers seem to want more nowadays than their traditional products. I think it's a diversification maybe anticipate some changing tastes in the market to insulate themselves from being just a sweets company. That's a common trend that we've been seeing throughout the packaged food industry. Tyler Crowe: Seems like it's an industry that has been struggling with debt, with trying to figure out a lot of what they're doing with their maybe some brands that are getting a little stale, trying to do some refreshes at the same time. For a lot of these snacking companies, really high cocoa prices haven't exactly helped them along the way when it comes to trying to make a lot of this work. A lot of dividend stalwarts have been really, I would say struggling to really grow the business, and we've seen it in their valuations of late. Honestly, with the package food company industry, I don't know if I'm that interested in any stocks right now, but it's certainly much more fascinating to watch with a lot of these portfolio reshufflings. Is there anyone in particular that is on your radar? Matt Frankel: I honestly think Pepsi and Coca-Cola are the two standouts in the industry still and have done the best job of adapting to changing tastes over time out of all the package food companies. I'd probably give it to Pepsi because they have a lot more food than beverage. Tyler Crowe: On our way out here, let's take a quick 30 seconds. Second quarter earnings is coming up. What are you watching? Matt Frankel: Well, banks are the obvious answer just because they're reporting first, but they're also a really good proxy for just general consumer health. By looking at things like loan defaults, by looking at, trading volume trends, how volatile things have been there. There's a lot you can tell from bank earnings that have implications on pretty much every other company in the United States. That's really what I'm watching next week. Prologis is another company that reports early that we've talked about that is on my radar. They say they're nearing an inflection point. I want to see if we're there yet. Tyler Crowe: This quarter, I'm actually going to be watching Home Depot for a lot of the reasons that we mentioned when we're talking about mortgage rates. Less for the actual earnings, but I really want to dive into the earnings transcript and see if some of this activity that we just talked about with Refi is translating into increased demand. If management thinks that this is a continuing trend or a little bit of a short term blip that we've been hoping would actually last longer than a couple of quarters here with the mortgage market. Matt, thank you so much for joining me today on Motley Fool Money. As always, people on the program have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and are not approved by advertisers. Advertisements or sponsored content are provided for informational purposes only. See our Fool advertising disclosure. Please check out our show notes. I'm Tyler Crowe. Thanks for listening. We'll see you tomorrow. Matt Frankel has positions in Advanced Micro Devices, Digital Realty Trust, Prologis, and Shopify and has the following options: short January 2026 $135 calls on Shopify. Tyler Crowe has positions in Prologis. The Motley Fool has positions in and recommends Advanced Micro Devices, Digital Realty Trust, Equinix, Hershey, Home Depot, Nvidia, Prologis, Shopify, Taiwan Semiconductor Manufacturing, Tesla, and TopBuild. The Motley Fool recommends Broadcom, Nestlé, WK Kellogg, and XPO and recommends the following options: long January 2026 $90 calls on Prologis. The Motley Fool has a disclosure policy. Taiwan Semi's $100 Billion Plan; Housing Is Hot was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
08-07-2025
- Business
- Yahoo
Motley Fool Investors Look Back at the First Half of 2025
In this podcast, Motley Fool senior analyst Anthony Schiavone and Motley Fool Asset Management's Chief Investment Strategist Bill Mann join host Ricky Mulvey to discuss: American equity markets reaching all-time highs. The surprising performance of dollar stores. What the passage of Donald Trump's "big, beautiful bill" means for EV makers and the federal deficit. Two stocks worth watching: Alphabet and Target Then, Motley Fool Canada's Jim Gillies joins Ricky to discuss speculation in the market and to shine a light on five stocks to keep an eye on. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Before you buy stock in Target, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Target wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $695,481!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $969,935!* Now, it's worth noting Stock Advisor's total average return is 1,053% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 7, 2025 This podcast was recorded on July 04, 2025. Ricky Mulvey: The market keeps roaring and you're listening to Motley Fool Money. It's the Motley Fool Money radio show. I'm Ricky Mulvey joined today by Motley Fool senior analysts Bill Mann and Anthony Schiavone. Fools, good to have you both here. Bill Mann: Ricky, how are you doing, man? Anthony Schiavone: How is it going, Ricky? Ricky Mulvey: Doing pretty well. We are airing this show on July 4, and we're recording a few days early. We're going to look back on the first part of the year. Bill, I can give you plenty of reasons to be negative about maybe a trade war coming up. We had some softer jobs data, but it really seems like investors want to buy American equities. How about that? American exceptionalism? We have some of the best companies in the world located on our shores. As you look back on the first half of the year, any broad reflections on stocks and the market reaching record highs. Bill Mann: I would say that one of the most interesting things that's happened in 2025 is that all of the asset classes within, the biggest asset classes in the US have sort of congregated. I saw something really interesting the other day that showed that the highest and lowest yield among the five major US asset classes is now less than 1%. US corporates are yielding about 5.2% all the way down to three month treasury bills that are about 4.3%. I don't I don't want to dwell too much on things that have never happened before, but this has not happened before. It really speaks to the fact that all of the asset classes in the US seem to be focusing on what is going to happen with the state craft in this country, that they are staying at a single point and wondering what's going to happen. Yeah, the market is up a little bit. It's up a lot from where it was in the lowest points of April and yet, the US stock market has under performed most stock markets around the world for the first half of 2025. Ricky Mulvey: You're not saying that this time is different, but merely that this has never happened before, really clean way of couching that there, Bill. Anthony, how about you? Anything you want to add? Broad reflections on the market in the first half of the year? Anthony Schiavone: Yeah, for me, coming into this year, we knew that the SP 500 returned roughly 25% each of the last two years, and that the SP 500 was valued at roughly 23 times forward earnings coming into the year, which is well above its long term average about 17 times. Now, at the beginning of the year, if I told you that during the first six months of 2025, we'd have global trade policy that would change dramatically. Geopolitical tensions would increase. The SP 500 would experience a roughly 20% drawdown, and gold would be up more than 20%. I don't think you would have predicted that the market would have returned roughly 6% in the first half of the year. I think the key takeaway for investors is to embrace the limits of your knowledge and to be comfortable knowing what you don't know because even with a perfect understanding of future events, the direction of the market is still going to be unpredictable. Ricky Mulvey: How about embracing this for the limits of your knowledge? Wall Street Journal has an article about the best performing stocks, what's driving the market, specifically from the previous high in February of this year. Take a second and think of what that stock could be the best performer since February of this year. Maybe you're thinking of a big tech company? Or how about Palantir which has a frothy valuation right now, but it is not and it's Dollar General, up by 50%. To be clear, long term holders of this stock are still down quite a bit, but those who've picked up shares on this value play have done quite well this year. Dollar stores, these are the opposite of a growth story, but why are investors warming up to them? What's going on here? Anthony Schiavone: Yeah, this is probably one of the rare times in the last few years that so called value is outperforming growth. So coming in of the year, Dollar General was hated by the market. I think shares are down more than 70% off their all time high earlier this year. I think investors started warming up to Dollar General earlier this year when there were growing concerns about the health of the consumer and the economy. Dollar General is a bit of a counter cyclical business where middle and higher income consumers tend to trade down during challenging market environments. And if we go back to 2008 to the great financial crisis, Dollar General actually grew their same store sales by 9%, which is a large number during one of the biggest financial catastrophes we've ever seen. Then you factor that in, and you think about on a recent earnings call, Dollar General's CEO said that they're actually seeing the highest percentage of trade down customers they've seen in the last four years. And the Dollar General's been an outlier in retail space because they actually raised their guidance in the first quarter at a time when many of their competitors and other companies were pooling guidance. I think the combination of a beaten down valuation and improving business fundamentals is why Dollar General is suddenly loved again by the market. Ricky Mulvey: Don't pay attention to the bond market, pay attention to the dollar stores. That's exactly what you just said, Anthony, just kidding. You can pay attention to the bond market, as well. Bill Mann, the MAG Seven this year really hasn't done a whole lot. This is from James McIntosh in the Wall Street Journal, and this is a sentence I did not think I would say this year. Big tech isn't dominating the market's returns like it used to. Big tech used to dominate the market returns. What's going on here? Bill Mann: It's all we ever talked about for several years. When you look at the MAG Seven, just looking at their price earnings ratio, which is not a perfect way of measuring how expensive a stock is or what the expectations are, but it's good enough. Tesla is about 180 times earnings, and Netflix and Nvidia are 60 and 48. Microsoft is at 38? These are still far beyond the price to earnings ratio of the S&P 500 in general, which is about 28 times. When you have situations like this, Things that can't go on forever won't go on forever. The MAG Seven is now, each one of them is well over a trillion dollars. I think Tesla actually has fallen back below that level. The fact is that these have become massive amounts of the percentage of the overall valuation of the stock market and huge as comparison to the size of both the US economy and the global economy. It is natural to see some reversion to the main. Ricky Mulvey: Not only are these valuations loftier than the market average, and higher valuations can make sense for exceptional companies. One can think of Amazon and why an investor would pay a higher price to earnings multiple for Amazon than let's say, I'm going to make fun of Target for a moment than Target. However, the other piece of this story, Bill, is concentration and the MAG Seven while it hasn't been driving returns, it still makes up more than one 1/3 of the S&P 500 market cap a decade ago, it was closer to 12%. I know that's a boring story, market concentration, but is that something investors should be paying attention to? Bill Mann: It is definitely a risk factor. It's a risk factor that comes with a nice shine on it because these companies have absolutely fantastic business models. These are cash flow generating machines of the likes we have never seen in our lifetimes and probably will not see again, the companies outside of this group. Yes, it is very much the case that having such a large overall percentage of the S&P 500, which is in some ways the overall stock market of the US, it's a risk factor for sure, because if anything happens to these companies, for example, some of them are actually, in some ways, being upended by AI. And that's something that would cause the market to take a look at these companies. And if they fall, I don't know, just a little bit, being that large of a percentage of the overall market, it has an outsized impact on the market itself. Ricky Mulvey: The other big macro story I want to hit is that the United States Senate has narrowly passed The Big Beautiful bill with a vote of 51 to 50. To my constituents, I would like to tell them I did not read the entire bill, but one thing I did notice is that this bill takes away the EV tax credits that I think it was 7,500 for a new car, and then about 4,000 for used vehicles. I should have put that in my show notes. Anyway, this tax credit is a direct attack on my lease where I was able to get a brand new EV for 1,500 down and 100 a month for 24 months. This was at the taxpayer's expense, but it was a great deal for me. Besides my personal feelings on this, what does this removal of the tax credit mean for the electric vehicle industry? Anthony Schiavone: Yeah, well, Ricky, I don't think it's a great development for the EV industry as a whole. If the bill passes, it would eliminate the $7,500 tax credit for purchasing or releasing a new EV. That's problematic because according to Kelly Blue Book, new EVs cost roughly $10,000 more than new combustible engine cars before subsidies. At a time when consumer budgets are already stretched. Now EVs look like they're going to be even more expensive compared to the gas powered cars within the next few months. That's probably not a good development for EV manufacturers, but it might be a good development for some of the legacy automakers like GM and Ford. But I'm really having trouble seeing how this could be positive for the EV makers, at least, you know, in the long term, maybe they get some pull forward over the next few months for people looking to purchase EVs ahead of that tax credit expiration. But yeah, definitely not a good sign for the EV makers. It's difficult to tell what's impacting Test law on any given day, whether it's President Donald Trump threatening to deport Elon Musk or the removal of the EV tax credit. Actually, it's the removal of the EV tax credit that means more for the business. Anyway, Bill Mann, the bigger story here is that we have moved from the austerity of DOGE to adding potentially $3 trillion to the deficit, according to CBO estimates. What is that deficit spending for people like me, and is that important for investors to pay attention to? Bill Mann: It's been important for investors to pay attention to for the last 30 years, and yet we really haven't because ultimately a government, you know, a government deficit is something that the country that has the reserve currency should be able to handle. Now, we are at about $37 trillion in accumulated government deficit in the United States of America. According to the scoring, The Big Beautiful Bill will add three trillion to that deficit. What's a trillion or two on top on top of 37 trillion at some point? It will start to matter. It has to start to matter. It is a massive burden. It's a claw forward. It does perhaps lead toward, you know, a reasonable argument that you should hold as stores of value like gold. It also speaks to holding companies that have the capacity to withstand inflationary pressures, companies that have pricing power, it's the same thing. That's actually where I would be more focused. Ricky Mulvey: After the break, we're taking a look at the biggest economic story lines for the second half of the year. Stay right here. You're listening to Motley Fool money. Welcome back to Motley Fool Money. I'm Ricky Mulvey, joined again by Motley Fool Asset Management's Bill Mann, Motley Fool Senior Analyst Anthony Schiavone. Before we get back into the show, we do have two pieces of housekeeping. First, Bill, you've got a new disclosure you got to read. Bill Mann: I do. I serve as chief investment strategist at Motley Fool Asset Management, an affiliate of the Motley Fool. While affiliated, Motley Fool Asset Management is a separate and independently regulated entity. None of the investment decisions made at Motley Fool Asset Management involve individuals from the Molly Fool's media or business operations. As you know, Ricky, all of Motley Fool Asset Management operates independently in this way. Ricky Mulvey: Thank you, Bill. For those who may not have listened to the show last week, this is my final time hosting Motley Fool Money and wanted to tell the listeners. About four years ago, I applied for a job as an associate producer at an Internet company I had heard of, and discovered the Fool, a place that would become an important and good part of my life. Chris Hill and Dylan Lewis, they took a chance on me, and few places would allow someone in their mid 20s to host a top investing podcast. But the Motley Fool lets people learn by doing and gives employees the chance to do work that other places reserve for much more senior people. I'm lucky that I got the chance to work with Chris and Dylan and luckier that I can call them mentors today. For those who don't know, Chris is laser focused on valuing listeners time, and Dylan's keen editorial sense made the show better for you. Both of them are managers who care deeply for the people around them. Their good work ripples through today's program. I'm optimistic about the future, and the difficult part is saying goodbye to the hardworking, kind people. Mary Long, Dan Boyd, Rick Engdahl, and Tim Sparks, to name a few. The analysts you hear every day and a special shout out to the Denver Fools who showed up from time to time in person, it made it a better place. The good, decent people here are what made my choice to leave the organization difficult. For you listening, thank you for spending time with the show. I don't take that time for granted. What comes next? It's a little unclear, to be honest. I'm still figuring out what the paths could be, having coffee, posting more on the Internet, but I'm pretty sure about one thing. I'm not done podcasting. I'm not done making things. If you want to keep in touch, I'll invite you to connect with me on LinkedIn, where I'll be posting from time to time. Now back to the show. It's good working with you, Bill and Anthony. Glad to have you on my final episode of Motley Fool Money. Bill Mann: It's been a pleasure working with you as well. And one thing I would say, although you are going to be very much missed, you are someone who brings curiosity every day into everything that you do. I can speak for Chris and for Dylan in saying, very strongly, taking a chance on you was not the risk that you think it was. We knew from the outset that you were going to be a star, and that is something that you have been. I thank you as well for having the opportunity to work with you. Anthony Schiavone: I'll just echo what Bill said. It's been a pleasure work with you the last three or four years. I have learned a ton from you, listening to you on this show, and yeah, just wish you nothing but the best on your next adventure. Ricky Mulvey: We don't have a ton of time left in this segment. For the first half of the show, we looked back on the storylines that drove the market to all time highs. Let's look forward to the biggest economic storylines that you all are paying attention to. Bill, we'll start with you. What is a business economic storyline that you're watching as we end the year or not end the year. We still have six months more in the second half of the year. Bill Mann: It's over. There's a really interesting story in the Wall Street Journal about the housing market in the US, and when we say housing market in the United States, it's really important to make the point that there are thousands of little housing markets that only kind of barely interact with each other. Housing prices across the country are down and no place more so than Cape Coral, Florida, which has seen a decline in average housing price of 11%. This is really interesting because ever since COVID started, Florida has been the obvious winner. It's had a huge amount of population influx. I think maybe now we may be seeing the beginning I don't know if I would call it buyers remorse, but we are beginning to see a recognition of the things that make the Florida market special and maybe not in a great way. Ricky Mulvey: Special because it's really hard to buy homeowner's insurance there, Bill. Ant, I'll ask you very quickly, one thing in 15 seconds that you're going to be watching in the second half of the year. Anthony Schiavone: From a market perspective, I'm looking at small caps. They've under performed large caps each of the last four calendar years, and that's according to JPMorgan's most recent guide to the Markets report they put out every quarter. What I found interesting is that the first half of this year, small caps are the only asset class with a negative return. Every other asset class JP Morgan lists has a positive return. I'm looking for a bounce back in the second year. Maybe they can turn positive. Obviously, they struggled a lot over the past four years, but I'd be interesting to see if that tide eventually turns later this year. Ricky Mulvey: I really hope so. I own some small cap index funds, and previously on the show, I had a lot of fun talking about small cap companies with Mr. Bill Mann. Up next, Motley Fool Canada's Jim Gillies joins me to shine a light on some less discussed stocks that you may want to know. Stay right here. You're listening to Motley Fool Money. [MUSIC] Welcome back to Motley Fool Money. I'm Ricky Mulvey. More people are excited about investing right now. What's that mean for you? Earlier this week, I checked in with Motley Fool Canada's Jim Gillies to talk about speculation in the market and get some stock ideas that may represent growth at a reasonable price. Jim, I'm starting to get some feelings like it's 2021 again. While we're celebrating all time highs for the market, I feel that there's some easy money coming back in and wild returns happening. Ricky Mulvey: You like throwing cold water on people having a good time because you're a realist, not a curmudgeon. Don't say you're a curmudgeon. But I wanted to ask you, do you think speculative mania is back in the market? Jim Gillies: I'm a fan of people having a good time, so I'll put that out there. I think speculative mania is always in some form in a market. It's just how broad is it? In 1999, it's pretty broad. 2001, hard to find. Early 2020, very hard to find. 2021. Quite easy to find. I do think after a couple of really good years in the market, 2023, 2024, of course, 2022 was the pain that a lot of investors had to endure for the pleasure of 2021. But after a couple of really good years in the market in 2023, 2024, yeah, I think there's a few things that are getting a little frothy out there. Doesn't mean I think there's an imminent correction or crash or anything. It's just more of a be thoughtful of where you're going. Be thoughtful of what you're purchasing. Be thoughtful of the position size. There's nothing wrong with a lottery type pick or two but if you make them 10% of your investable capital, that might not be terribly smart. But yeah, I think that the longer we go and the rebound from the tariff Schmazel earlier this year I think a lot of people are very excited about investing right now. I somewhat counterintuitively pair back a little bit when I see that. Ricky Mulvey: My concern is precisely that my lottery ticket positions are the ones that are doing really well. I'm like, Oh, no, this seems to be a time to get a little less excited about those. We're also seeing can't miss stocks coming back. I don't remember seeing these in late 2022, early 2023. But one of them right now is his and hers, and we were talking about that before the recording. Why should investors beware when they see a can't miss opportunity like that? Jim Gillies: Well, I'm certainly not calling it Can't Miss. I do believe in the principle. If something is denoted as Can't Miss, you should probably be quite wary of it. You should probably step away slowly so as to not disturb it. Most Canadians, I have to do this, Ricky for nostalgia's sake. Most Canadians remember our biggest example of Can't Miss. That would be Nortel Networks in the great tech bubble. I went to zero, but it was for a time in the late 90s considered the most Can't Miss stock in certainly the Canadian market. There's inherently nothing wrong with the idea of a stock that could be cans. I'm going to call that a growth stock because we tend to really no one gets terribly excited about and they should, but they don't about stocks that are, say, growing at 1%-3% a year, but are improving their operations by, say, 5% a year, and they're run by good people who are excellent capital allocators, who are buying back 5%-10% of the stock per year, and they're also increasing the dividends. People don't get terribly excited about that, but something with the promise of 20, 30, 50% annualized growth. People get real excited about that. When they work, Amazon from the late 90s, Shopify from the mid 20 teens, for example, when they MercadoLibre for the past 15 years, Chipotle since about 2007, when they work, they're beautiful things. You just got to make sure you size them appropriately. You got to go into. One thing I really like that I think the speculative excess misses is everyone claims to be a long term investor all the time. It's remarkable to me that in 2022, what happened in 2022, a lot of people in 2021, were claiming they were long term investors about everything they ever bought got real silent in 2022. I'm just here to point that out. When you are moving into a stock and you want to be that long term holder, make sure you're buying companies that are worthy of a long term hold, and make sure you're being brutal and honest with yourself as you assess things. Because it's your money, no one cares about it more than you do. Don't worry about what other people think. go through your own process and assess, do I think this is reasonable? You talked a little bit about his and hers, and that's an interesting one. It's certainly one that's in the market right now. Go and look at it. Ask yourself, why do I own this? What do I expect out of it? How are they making money? What do I think is going to happen growth wise? One tool that I love because I am a valuation guy, and I like to say, all valuations are wrong at all times. Every DCF that's ever been done has been wrong because you do not have perfect foresight. You don't know what's actually going to happen. A tool that I like is what's called the reverse discounted cash flow or reverse DCF. That done reasonably well should give you an estimate of what growth a company needs to generate to justify today's price. Then you ask yourself, well, is this reasonable? Do I think this is reasonable? I actually did a quick little reverse DCF of his and hers, if you'd like me to opine on that. I got time. Oh, brilliant. Again, all DCFs are wrong. It's more a question of, is are my assumptions reasonable. For this real brief it took me five minutes, this is not this is just a sample. It's not you would do a lot more work. I would hope. But as I looked at his and hers, can I don't really know anything about the company, but I've seen them in the news a lot recently. I know they're tied to the GPT or the. Ricky Mulvey: GPT GLP 1 Jim. Jim Gillies: I was going to say all these acronyms, yeah I see, this is again, I'm the guy over in the corner who's looking at other things. Exactly. It's tied to I think a pretty good, reasonably long tailed, broad societal trend. I think that's. Ricky Mulvey: That is personalized healthcare and also the ability to get medical treatment on your computer versus going into a doctor's office. Please continue. Jim Gillies: Exactly. Yeah, I think that's reasonable. I went through and I looked at the Well, how much cash is this company generated? Because when you look at a company, like we talk about doing discounted cash flow analysis, which, of course, we have to then estimate what the cash flows are. The important thing is what they do with it, by the way. It's nice to estimate it, but if it all gets frittered away on new Jet for the CEO, it's maybe not the greatest use of capital. This capital allocation story. But I look at hymns. I'm like, Okay, I estimated the free cash flow they've done in the past year, last four quarters. Looked at their balance sheet. They got a bunch of cash. They got no debt. I went through, I said, Okay, I think most of my DCFs, I use an 11% discount rate. I don't go through all of the corporate finance stuff and Beta and whatever in CAP M because it's just like, You know what? If I could get 11% on the market, that's my opportunity cost what the S&P 500 has given us for 80 plus years. I like to use my opportunity cost, my perceived opportunity costs, 11% as my discount rate. I said, You know what? It's going to grow at whatever rate for the next decade and then tail off to about a 3% growth rate in what's called the terminal period. It's ten years out. From a discounted cash flow perspective, it doesn't really matter. Add the cash, deduct the debt. There's no debt. That's fine. At today's valuation, today's valuation, Hims and Hers has to grow at about 20% annualized for the next decade. I don't actually find that terribly unreasonable, given the broad trend we talk about. However, so I'm like, Yeah, there's now, OK, that employs a few assumptions, both good and bad. Again, the likelihood of it going from 20% annualized growth to 3% annualized growth and precisely in 10 years, the likelihood of that is zero. It's just a mental construct or a model construct. They've got a lot of dilution, a lot of options, a lot of equity cookies. I haven't taken any of that into account because, again, this was a five minute DCF. But you would probably want to get an understanding of how much of this company is going to be hosed out to insiders in the future, because shares in their name dilute your holding. It probably would be more than zero, which is what I have it. But you can work through this and go, Okay, 20% for 10 years annualized. It's probably not that unreasonable, but I can tell you, Ricky, if I were to look at a few other story stocks out there right now. Actually, I'll even go back to the story stocks of the recent past. I looked at a couple Well, OK. We are currently conducting this interview via Zoom. Zoom was a darling in 2021. I think it nearly topped out at $700 a share. Today, it's about it's below 100. What happened? Well, because at that time, and I remember saying this on various other foolish shows and probably being ignored by most, the growth was rapidly slowing what they were delivering. As people piled into the stock that was down 10, 20, 30% from what's all time high, because oh, well people were looking in the rear view, and Investing is about looking in the forward view. It's like, their growth is rolling over. I'm not sure how much more they're going to have. Even if they have a great business and they're run by a great founder with a meaningful stake in the company, the growth is rolling over, and people were buying it with implicit growth rates for the next decade of 40, 50, 60%. That's not going to happen, guys. In fact, it didn't happen, and a lot of people got whacked on that. It's about being mindful. It's about being thoughtful about what assumptions are based on the stocks that you own. Again, you can own lottery ticket type stocks. I own a bunch myself. But just understand what goes into it and understand what the actual payoff for most lottery ticket type stocks is. Most lottery tickets go to zero. We're not going to say. We're not going to speculate Him is going to zero, but you might not get the easy money you think you're getting in it. Ricky Mulvey: One of the great pleasures of doing this show for a few years, Jim, has been getting to talk to you and look at companies I would not have otherwise looked at thinking of Winmark, Academy Sports and Outdoors, Orizia, even TKO Holdings, which I was like, oh, this looks expensive, and now it's a position I have. For my last show, just real quick, can you give me a stock or two that I should be looking at as I go into the Great Beyond? Jim Gillies: I believe, as we were talking about beforehand, we were talking very specifically about in the Garp bucket, growth at a reasonable price. I'm going to give you five, if that's OK. Real quick. Ricky Mulvey: Sure. Jim Gillies: Well, because I care, Ricky, and I've really enjoyed doing this show with you. I wish you all the best going forward. I would say, Well, my first one would be Medpace Holdings, which we've talked about many times. It's a particular favorite company of mine, I recommended it multiple times. It's a small contract research organization run by a very foolish leader, trading at a very reasonable price right now. Although it's gone up the last couple of days, so maybe we're getting a little bit less reasonable because the market is assuming that recent bad news will continue into the forever future. It won't. Med Pace really like them. Lululemon is interesting to me at this point. I really enjoyed the story from our record date. I came out yesterday that Lululemon is selling Costco for knock off yoga pants. It's always tough to see your children fighting. I will say that. I do, of course, like Costco a lot. But Lululemon is now trading. They make a lot of cash, great looking balance sheet. I've said before in multiple venues, they make clothing that makes people feel good about themselves. Do not dismiss that easily, trading at a decade low multiple. That's interesting to me. Simply Good Foods. It's a company I have been steadily wrong about. It's SMPL is their ticker. They are the company that owns the Atkins diet brand, as well as Quest and recently purchased something called Only What You Need which is a plant based protein shape style company. It's run by really good industry veterans who I think might be setting the company up to put it out for sale, too, in the near future. But they made the acquisition of only what you needed less than a year ago. All their numbers are going up, all their business numbers are going up, and the stock has been going down. Like I said, I have some evidence that suggests they might be priming it for a sale and the people running it have a history of selling companies. The fourth one is Adtalem Global Education. It's a for profit education space. ATGE is their ticker. You may know them and may be disdainful of them. Their prior name was DeVry University, or are they were the company that owned DeVry University? That's long gone. It's been hived off, run by good leadership, make a lot of cash. They focus on medical education. Doctors, nurses, nurse practitioners, and veterinarians, as my vet friend says, real doctors treat more than one species. It's good price, good valuation, run by smart people. The last ones one we've talked about before, Kontoor Brands, the parent company of Wrangler and Lee Jeans, and now of Helly Hansen. Run by SmartPo make a lot of cash. The Helly Hansen deal was done with all debt, which they have said, Hey, we're going to pay that off super fast. That's actually my favorite acquisition because as they pay off all that debt, the cash flows, the revenue, the earnings, the cash flows that came with Helly Hansen into the Greater Contour Empire, that goes across all of the pre existing shareholders once the debt's gone. Again, it's the opposite of when companies are doing dilutive actions that take away from you, this is a good thing. I hope those five find a way into your portfolio, and it's been a great pleasure, sir. Ricky Mulvey: As always, appreciate your time and your insight, Jim. Jim Gillies: Thank you. Ricky Mulvey: As always, people on the program may have interests in the stocks they talk about in the Motley Fool may have formal recommendations for or against EHM Bersal stocks based solely on what you hear all personal finance content follows Motley Fool editorial standards and are not approved by advertisers, advertisements for sponsored content, provided for informational purposes only, see our full advertising disclosure. Please check out our show notes. Up next, radar stocks, stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Ricky Mulvey, joined again by Motley Fool Asset Management's Bill Mann and Motley Fool senior analyst Anthony Schiavone. Each week, we close out the show with a couple of Radar stocks that our guests are keeping an eye on and our man behind the glass. Dan Boyd will throw them a question concern or backhanded compliment. Bill Mann, what you looking at this week? Bill Mann: My company is Alphabet, and there was a really interesting article that came out a few weeks ago in the Wall Street Journal, and it was talking about how generative AI is taking the place of Internet search, particularly those affiliate links and the things that make Google Search way less clean than it used to be. It's having a huge effect on the companies that use search engine optimization. But my question then became, well, if this is where Google makes most of its money, then how is this not something that is a massive risk to Google as well? Now, the Google folks are very smart and they are attempting to change their business fundamentally, but it is a fundamental change that they are going to have to try and stay ahead of. For that reason, Alphabet is the stock that I'm watching. Ricky Mulvey: As a reminder, radar stocks, it's not always a good reason that our guests are keeping a close eye on those stocks. Dan Boyd, a question about Alphabet, the letters or the company. Dan Boyd: Are we sure that Alphabet knows what they're doing? Because search in the past six months has really gone to the dogs, Bill. Bill Mann: I love that question simply because it belies the thing that people are so annoyed about when it comes to Google Search, you get these clickbait glurge, you get search engine optimization links that have nothing to do with what you have gone after that you were looking for to start with. I actually think that they are in a little bit of trouble here. Ricky Mulvey: Anthony Schiavone, what's the stock on your Radar? Anthony Schiavone: Yeah, I'm taking a look at Target. Ticker simple TGT. Everybody knows Target, one of the largest retailers in the US, but they're currently in one of their largest stock price drawdowns in their history. Ricky I like dividends, and Target pays out more than 4% dividend, and they've grown that dividend for more than 50 consecutive years. I think the key question that I'm asking myself is is Target in a cyclical or secular decline? To me, considering Target has done a good job of shifting toward e-commerce, which is the biggest threat facing many retailers, I think this might be a cyclical decline and potentially a good investment opportunity for the long term. I also wonder if Target is it right for maybe an activist investor to come on board at some point, which could be a catalyst for the stop. Ricky Mulvey: There's a lot going on there. Dan Boyd, which stock are you going to be putting on your watch list for this week? Dan Boyd: I can't say I like going to Target, Ricky, but I do like a nice dividend. Let's go Target. Ricky Mulvey: That's it for this week's Motley Fool Money radio show. I'm Ricky Mulvey. Thank you to Dan Boyd and thank you to our guests, Bill Mann and Anthony Shavon. For one final time, thanks for joining us, and the show will be back next time. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. JPMorgan Chase is an advertising partner of Motley Fool Money. Anthony Schiavone has positions in Academy Sports And Outdoors. Bill Mann has no position in any of the stocks mentioned. Dan Boyd has positions in Amazon, Chipotle Mexican Grill, and Costco Wholesale. Ricky Mulvey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Chipotle Mexican Grill, Costco Wholesale, JPMorgan Chase, Lululemon Athletica Inc., Medpace, MercadoLibre, Microsoft, Netflix, Nvidia, Palantir Technologies, Quest Diagnostics, Shopify, Target, Tesla, Winmark, and Zoom Communications. The Motley Fool recommends Academy Sports And Outdoors, Adtalem Global Education, Kontoor Brands, Simply Good Foods, and TKO Group Holdings and recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy. Motley Fool Investors Look Back at the First Half of 2025 was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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27-06-2025
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Carnival's Success, Circle Internet Group's Rise, and More
In this podcast, Motley Fool analyst Asit Sharma and host Mary Long discuss: The housing market slowdown, and where prices go from here. How Carnival rides the waves of uncertainty. Circle Internet Group's meteoric rise. Diworsification at a watch company. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Before you buy stock in Circle Internet Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Circle Internet Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $704,676!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $950,198!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 175% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 23, 2025 This podcast was recorded on June 25, 2025. Mary Long: Cruise stocks catch a wave. You're listening to Motley Fool Money. I'm Mary Long, joined today by Mr. Asit Sharma. Asit, great to see you. It is truly a pleasure to have you here today. Asit Sharma: Same, Mary, I am truly honored to be with you today. Mary Long: Here we go. Please honored all good vibes today. Before we dive into some deeper stories later on in the show, we're going to highlight some of today's headlines up top. So, Asit, we're going to start with some macro stories and then dive a bit deeper into some company specific news. First big thing that we're keeping an eye on is that the S&P and NASDAQ both closed at their highest points since February, leaving both indexes hovering around record highs, largely on the news of a ceasefire between Israel and Iran. There are reports that fighting continues, but investors seem to be betting on peace. You got oil futures falling on the Ceasefire announcement. Gold moved in a similar direction, dropping to a two week low. You also have another part of the economy that's moving in a different direction. The housing market is falling from its pandemic highs. Data from the latest S&P index reports that home prices rose just 2.7% in April. That's down from their 3.4% gain in March. Redfin says sellers outnumber buyers 3-1 in this market and predicts that prices could slip 1% by late 2025. Asit, I think you want to double click on the housing market story. Anything you want to add there, give us a little bit of color. Asit Sharma: Mary, this is an industry at the end of the day that is a supply and demand story. I think what we saw in the great financial crisis back in 2008, 2009, really put a stick in the story that house prices will always rise inexorably and be a great investment that's been challenged during the pandemic. We saw the reverse occur. Now here we are, where the economy is slowing down. There's a lot of uncertainty. Tariffs are a big story. Interest rates are still stubbornly high, people aren't earning as much. We see this outnumbering of sellers to buyers. What does this mean to me? Well, one thing it means is that lots of people have lots of equity tied up in their homes. On the other side of the coin, there aren't as many people now in this economy who are able and willing to buy those houses, so it becomes a little bit of a buyer's market when the sellers aggregate. I don't doubt that we could start to see prices slip by late this year. Historically, when you look at all the data we have that goes back, an enormously long period, it is unusual for house prices to fall, but we may be in that situation again, so keep an eye on that. Mary Long: Earnings are slowing down, but we did get news from Carnival cruise lines yesterday, and as a result of its results, the stock was up 7% yesterday after market close. The company tripled its net income and raised its guidance. It expects adjusted net income to be 40% higher than last year at the end of the fiscal year. Asit, what stuck out to you in these results? Asit Sharma: I think, for me, the thing that sticks out for Carnival in general over the last several quarters is the way that they have managed and boosted their yields. So all of their ships, they've decreased the ships supply in the past few years. They do a really good job of marketing, so they're getting more yield per marketing dollar. I think this whole strategy that Carnival has had of acquiring these small islands and making them destination places. The experience isn't all about the cruising has really resonated with cruisers out in the larger world. Many things they have done right. The other thing that really popped out at me this quarter is the amount that they're now spending on the interest that service their debt is less than it was just a few years ago. I think their long term debt peaked at around $32 billion, I think in 2023, and it's roughly $25 billion today. When you look at the commensurate effect of the interest expense on that debt, that's like half a billion dollars to the bottom line that they can add, and those over 12 month period. Those numbers really start to make the net income look a lot juicier if you're a long term shareholder. Paying down the debt, cutting the number of ships they have, having these destinations to drive interest and drive the yields, all these things together, just make a picture of a well run carnival cruise line. I think last point, CEO Josh Weinstein has done a tremendous job putting this company back on track. Mary Long: It's not news for me to say that the word of the year certainly seems to be uncertainty. That's in regard to the economy, to geopolitics, any field you name it. Because of that, a person could be forgiven for thinking, hey, in an uncertain environment, people aren't going to be going on vacation as much. They aren't going to be tightening their wallets. Carnival doesn't seem to be facing that issue. In fact, Josh Weinstein seemed very enthusiastic and excited that people are getting great value out of their cruises. Why do cruise stocks tend to rise even when consumers start tightening their wallets? Asit Sharma: Consumers tend to fool themselves in one sense, which is if you're looking at a vacation which is all inclusive, many of us trick ourselves into thinking, that's all that we're going to spend on that vacation. Cruise lines historically have enjoyed some periods where we've seen uncertainty in the economy, even a slight recessionary trend, where consumers will drop down from multi component vacation, so you're renting a car. You are staying in hotels, you're booking air flights to this one thing that if you book in the right time during booking season, you can get at a massive discount. Now, carnival is very savvy. Once you get there, they're really good at extracting your dollars anyway, but this is a lure for the general person out there in the economy who's starting to struggle a bit as a way to maybe make sure that they can stay within budget. Doesn't always happen. But this is part of the up and down momentum of this industry. Surprisingly, bad times can be good for the cruise line. Mary Long: Bad times can be good for the cruise line. Does that mean that you, Asit Sharma, plan to catch a ride with any cruise ship stocks? Why fall on that side of the coin? Asit Sharma: I am still trying to get some racks put on the top of my car for some kayaks we have that are sitting there very appealing. I want to get out on those kayaks at a local lake in Raleigh, North Carolina this summer. Mary Long: Well, that's very different than a cruise so yes to kayaks, but it sounds like no, you're not [inaudible] ships. Asit Sharma: Cruise you're not [inaudible] of Lake Johnson. Mary Long: It sounds like no, Asit is not a fan of adding cruise ship stocks to his portfolio. Already, with that, we're going to take a quick break. Later on in the show, we'll be talking stablecoins and the luxury watch market. Asit, Circle Internet Group has been on a tear since going public earlier this month. Circle is the company behind USDC. That's the second largest stable coin by market share. So a stable coin is a token that's backed by an equivalent dollar denominated asset. Before we get to Circle's rise, and in more recent days, it's slight fall, what is behind all of this interest recently in stablecoins? Asit Sharma: One of the things that stablecoins bring to the market is an avoidance of the fees that we pay to networks such as Visa and Mastercard when transactions are made. And most of the time, the merchant bears the brunt of those fees, but what do they usually do? Mary, they pass them on to you and me. And as time goes on, sometimes you even see that as broken out as a surcharge in certain service areas. The lure of the block chain didn't really pull a lot of retail interest in where transactions were concerned because of so many digital assets that came and went, there was fraud associated with some crypto assets over the last several years. But the idea of a stablecoin, which is backed in many cases by reserves of currency, pegged to a currency like the US dollar and perhaps regulated, as we see with the Genius Act, which has been the news lately, that's starting to pull in more interest. Also, I think the technology of stablecoins has improved over the last few years. We saw Circle announce a partnership with Fiserv which is a really large payment processing company. You see many strands of the story starting to come together that we could have a viable alternative to some of the established payment systems that have been around for decades. Hence, this explosion in retail stock interest, for those of you who follow circle on the stock market, a recent IPO, I'm sure you have seen how this stock has exponentially enjoyed SIM interest. I'll put it politely there. Whether it stays up in that stratospheric level is another question. Mary Long: To put some numbers behind those adjectives, Circle stock soared 168% on its first day of trading alone. It continued to rise in the weeks following. I think at its highest point, it was 700 and it had grown 750%. It's dipped a bit back down over the past few days. But, Asit, we're long term investors here, so let's zoom out and think not about what might happen over the next month, but maybe over the next five years. Where do you think Circle stock will be about five years from now? Asit Sharma: It's hard to say, of course, I'm going to hedge outright, Mary always do that. But I will take a bit of a stand here. I think this company has some potential because the market is so vast. When you think about transaction volumes for Visa and Mastercard, those are in the trillions every year, trillions of dollars crossing those platforms. Even getting a slice of that would be a substantial win for a business like this. What do they have to do to get there? They've got to have full transparency. To be this very easily defined and easily followed entity, they've got to comply with regulatory bodies around the world. They have to scale and be liquid at the same time, so they need a lot of capital to do this. They've got to seal a lot of deals with companies like Fiserv. In addition to sovereign body licenses, they have to wheel and deal out in the marketplace. But if you can do that, the market is there for an alternative to current payment systems. I should say, this is also an alternative to slower moving systems like ACH payments and some peer to peer payments. We've got a story which could emerge, but we're going to have to follow the execution on so many fronts that I just mentioned for that story to pan out where this becomes a really valuable company. But I'm seeing all this just for some investors who might dismiss this company out of hand, just seeing it's almost meme stock like movement since the IPO. That doesn't mean that this can't be a good business off the different networks. When you look around this landscape, this company, in particular, stands out for the effort it's put in to show it is compliance minded. It is reserve fund minded. It wants to be known as the most legit of these networks. It's got some potential over the long term. Mary Long: Thinking of the broader landscape of this space, a name that a lot of investors are probably pretty familiar with is Coinbase. How is what circles doing different than what Coinbase is, and maybe where do these crypto adjacent companies overlap? Asit Sharma: I think Coinbase is a company that's just benefiting from the general rise in digital assets. It's a trading platform. Mary, it is a company that rises when volumes of different coins rise. That's a really good place to be in this whole ecosystem. A company like Circle, may make it. It may not. It may be usurped by an even better competitor or regulations may change, or the demand for this may decrease. I'll give you one great example of how this could happen. Although it is blockchain based, we still don't have really great mechanisms for fraud prevention, the way that like Mastercard does or Visa or American Express. These companies that have been around for a long time and have made huge investments in their payment services. The rigidity and structure and backbone of these networks are yet to be proven. Whereas coinbase is over here just being a middleman, a broker. I always like those businesses because as long as there's trading, they'll find a way to make money, whether they're selling order flow, whether they're making it on the transaction, whether they are making it on the spread of holding assets and making interest off those assets. There's so many ways for a middleman like coinbase to make money. If you ask me, right now, which is going to be around in five or 10 years with a higher probability, I would say coinbase. Both can succeed in this environment, but they are different. They don't at this point, have a lot where they have confluence in the things they do. Mary Long: We'll close out with a story that I really wanted to be sure to hit on with you, Asit, because you and I have talked about the luxury goods market before, and I came across a fascinating story in the Walls troop Journal the other week that I thought you'd have some really interesting takes on. This one is about an American fund manager named Stephen Wood, who's taken a 0.5% stake in the Swiss watch company Swatch. He was gunning ultimately unsuccessfully, but he was gunning earlier this year for a board seat at the company, and Wood's hope is for Swatch to capitalize on its highest end brands to lean into its luxury offerings. I'm going to link to this article in the show notes because I think the listeners would be really fascinated at this just like this wild look at business strategy and family dynamics. There's a lot to unpack there. But we'll focus on Swatch, the company for now. Swatch currently owns 16 brands across various price points. You can get Brugue for almost $44,000, whereas a Swatch watch could run as low as $40. What do you think of this play, Asit? Do you like it, or do you see it more as an example of diversification? Asit Sharma: It might be dears vacation, Mary. It might be too little too late. I like that 0.5% stake. If he can get up to 1%, he might have some more say and maybe got a seat on the board. But Swatch is a business which was in currency years and years ago, decades ago actually was when I think it was at its brand peak. That would have been a great time to capitalize on that brand and to offer some super luxury items, attract the massively affluent who also loved the watches that were going for whatever it was at that time, probably $30. Inflation adjusted. But I'm not so sure that's a great strategy today because the brand doesn't have the cachet simply put, and this is a business which has stalled in its revenue growth. I do think that Swatch is making a little bit of a comeback. I notice some of the younger generation now are starting to wear Swatches you see them more in circulation than in the past, so that's good for the brand. Asit Sharma: But trying to do this barbell strategy with this type of brand, which has been around the block, I think that's difficult. I'm going to say it's a do worse idea than maybe others would have. We'll see. I never want to count an enterprising entrepreneur out, but I'm skeptical. Mary Long: You're not the only person that's skeptical. 27% of Swatch shares are short interest. Net profit fell 78% last year. I asked you the five year question on our last story. I'll ask you for this one, as well. Where do you see Swatch going in five years time? Asit Sharma: This is a business that can plod along, maybe meet the market or hang out with the market. The one thing to remember about Swatch is that it's got a really strong balance sheet. It doesn't have much in the way of long term liabilities, and it's got a really, great haul of current assets. It's something like 10 billion Swiss francs in current assets. Now about 7.6 billion of that is Swatch inventory, but the company turns its inventory over pretty regularly. This isn't a company that is just about to collapse. I think with a little bit of, brand revival, they will plod along. Do I see them outgunning the market and maybe suddenly catching fire? I don't know. I will say this, before we head out. I did actually buy a Swatch in an airport for my wife last year, simply because at one point in our illustrious career as a couple, we were too poor to afford what was then, Married probably that $30 Swatch price point. We happen to see this really beautiful store in the Istanbul airport. And I was very surprised at the number of Swatches that they have now. It's an explosion of color and lots of different styles. Maybe they'll catch fire with something, but I don't see this being an alternative to some other of the really higher end luxury companies you and I have talked about that make for better long term investments. Mary Long: I was going to say, you keep an eye on the luxury goods market. Is there a company that comes to mind that has already caught fire or that you think could continue to do so in the future that plays in the luxury space? Asit Sharma: Well, I've been talking up Ferrari for the last couple of weeks. I've been looking at symbol R-A-C-E. The thing that is really dawning on me over time is how well they sell into demand and how disciplined they are in restricting their output. I noticed just for fun, internally here at The Motley Fool, we have something called the Fool's errand, where we award randomly through a game that we play every month, some time off to valued Fool members. This month's theme was Ferrari, and our team did a great job of explaining that business model much better than I did on Motley Fool Money last week. But I will say that is catching my eye as a company that's going to benefit from the tailwinds of the F1 interest that's growing, and also just the amount that they spend in R&D research and development. They really love engineering. It's an engineering first company. Sometimes what propels a brand isn't really about status, but it's about the product itself, and they've always kept their eye close to that. Mary Long: That's about all the time that we've got for today. Asit, thanks so much for spending the morning with me here on Motley Fool Money. Always appreciate having you on. Asit Sharma: Always a pleasure, Mary. Thanks so much. Mary Long: Before we go, a quick programming note that this will be one of my last shows hosting Motley Fool Money. Working on this show each day for the past few years has truly been a highlight of my career. My favorite part of this job is that I get to read articles and books and go down rabbit holes every day and then have conversations that help me to better understand the world. I have learned so much, and it's my hope that by virtue of listening, you feel that you have too. I don't know exactly what comes next, but I do know that I plan to continue podcasting. If you want to see what I'm up to, LinkedIn is the best spot to find me. Until then, thank you. To each of you who have listened to Motley Fool Money for the gift of your time and your attention. I hope you feel that it was well spent and that you're a little smarter, happier, and richer because of it. I also can't go without giving a very special thank you to the Motley Fool Money team. That's Chris Hill, Dylan Lewis, Ricky Mulvey, Rick Engdahl, Dan Boyd, Tim Sparks, and all the wonderfully smart and kind and funny analysts that are regulars on the show. You all are the epitome of foolishness. What a gift it's been to work with each and every one of you. Until next time, Fool on. As always, people in the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. Don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards, and I'm not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Motley Fool Money, I'm Mary Long. Thanks for listening. We'll be back tomorrow. American Express is an advertising partner of Motley Fool Money. Asit Sharma has positions in Mastercard. Mary Long has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard and Visa. The Motley Fool recommends Carnival Corp., Coinbase Global, and Redfin. The Motley Fool has a disclosure policy. Carnival's Success, Circle Internet Group's Rise, and More was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
