Investors have seen stocks setting records (both good and bad) as volatility seems like it's becoming the norm. It's important to remember how much better investing can be when we focus on the long term. Motley Fool analysts Jason Moser and Emily Flippen share some perspective on their approach to investing and discuss:
- Amazon's (AMZN -1.45%) digital ad business and raising the annual cost of Prime to $139.
- Alphabet (GOOG -1.55%) (GOOGL -1.45%) splitting its stock (20 for 1) and posting huge fourth-quarter results.
- Meta Platforms (META -0.59%) battling "an unprecedented level of competition."
- Snap's (SNAP -1.88%) first-ever quarterly net profit.
- PayPal (PYPL -1.45%) continuing to struggle with its transition away from eBay (EBAY -1.57%).
- Pinterest (PINS -1.20%) increasing revenue while losing global users.
- The latest from Qualcomm (QCOM -0.81%), Spotify (SPOT -0.33%), AMD (AMD 0.10%), and Starbucks (SBUX 0.43%).
- Two stocks on their radar: Chipotle (CMG -1.12%) and Tenable Holdings (TENB -3.02%).
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on Feb. 4, 2022.
Chris Hill: This is one of those weeks when stocks were setting records for rising and falling. Which is why we're glad we're not short-term traders. We're investors. Motley Fool Money starts now.
It's the Motley Fool Money radio show. I'm Chris Hill, and I am joined by Motley Fool Senior Analyst Emily Flippen and Jason Moser. Good to see you both.
Jason Moser: Hey.
Emily Flippen: Chris.
Chris Hill: It's earnings-palooza, we have so much to talk about. We don't even have time for guest this week, but we do have a couple of stocks on our radar. Before we get to the earnings, I think we should start with just how bonkers the market has been lately. By that I mean, some of the whipsaw movements of well-known businesses. A few examples, last week Netflix had its biggest drop in a decade. This week, Snap had its biggest gain ever. PayPal and Facebook had their biggest drops ever, and we will get to Amazon's huge day in a minute. But Jason, we also had a huge jobs report for December that came with a big revision upwards for November. I am so glad I'm a long-term investor because the short-term can just be really confusing at times like this.
Jason Moser: Yeah, I think that's probably the best word confusing. It's a lot of information at once and it seems very contradictory at times. I think to me these are the strategies that really reiterate why we invest the way that we do here. We live in a world of headline-driven markets. They move on the daily and predicting what's going to happen it's flipping a coin I think. If you want to gamble, that's great. Open a FanDuel account and have at it. At least you go in there with the understanding that you're gambling. We are investors obviously, and the stock market is the greatest wealth-generating machine in the world. Now with that said, it rarely, and I mean rarely operates on our desired individual timelines. I think the longer you do it, the more apparent that becomes. For me, it takes me back to this is why we invest the way we do.
Emily Flippen: It really is just volatility being the name of the game right now. I wanted to circle back around to that jobs report because not that I can do any better, but this was such a large miss estimation that it reminds me just how much I dislike economic forecasting, [laughs] at least weather forecasting. I know there's barometers or Doppler radars behind what they predict. But sometimes I feel like economists are just doing the weather person equivalent of licking their fingers and holding it up to the air and it feels like that's what we saw this month. [laughs]
Chris Hill: Let's get it to Amazon's 4th quarter profits being driven by AWS. No surprise there Jason. The advertising division is now so big that Amazon is actually disclosing the number. As we talked about on this show two weeks ago, Amazon announced it will increase the price of its Prime membership to $139, and all of that combined to a big day on Friday for the stock.
Jason Moser: Yeah. It was a big day, it seems for a long time on this show, every earnings season we just say, "Well, nothing to see here. It's the same old, great Amazon." I will say, I think we can actually call this quarter a mixed bag. I think mostly it was really good. There are some things I think to keep an eye on though now, we've looked at the numbers, you will get the actual sales numbers there. This was a bit of an attention-getter. Sales up excluding currency, sales grew just 10 percent. For a business that's just routinely chalking up 20-plus percent growth. That to me, it's a little bit curious, I guess. Granted we're operating in unique times, but operating income got cut in half to three-and-a-half billion dollars for the quarter. Net income of $14.3 billion sounds like a really great number, but it is worth remembering that includes a pre-tax valuation gain of $11.8 billion from their investment in Rivian Automotive. Rivian, we know, just went public. This is an electric vehicle company that makes no money. Literally, they are just starting to generate revenues. You've got to take that with a grain of salt, I think as well. When you look at the retail operations, really the core Amazon business retail operations across the board both chalked up. They chalked up operating losses, the US and international. International sales were actually down a tick. Back to your point on AWS, clearly a bright spot. Sales grew 40 percent, operating income, 49 percent. A nice little $31 billion advertising business now, right Chris? Twitter, what? Snap who? Raising the price of Prime to $139 per year, the monthly costs will go up two dollars a month. I don't know why you'd pay for the monthly cost. Anyway, that equates to $180 a year. Just up for the full year, Chris, come on. Everybody just up for the full year, do us a favor. Mix bag, I think, but all-in-all more good than bad.
Chris Hill: Let's get to the timing of the increase. Because I said two weeks ago on the show, they're going to raise the price of Prime this year. I'm actually surprised they raised it this quarter and I'm wondering if you think they might have pulled the trigger now as opposed to later in the year because of the revenue softness that you referred to.
Jason Moser: Perhaps. I think also it's probably a good time to bump that price up now because everybody is bumping prices up. Inflation is top-of-mind for everyone. If they wait 6-9 months, perhaps 12-months to do this when inflation isn't necessarily the forefront of the conversation, maybe that's something that consumers push back on a little bit. But I think right now it's something that people can understand a little bit more because prices are being pushed up everywhere we look.
Chris Hill: Alphabet announced a 20-for-1 stock split, which somehow overshadowed the fact that Alphabet's 4th quarter results were strong across the board. Not surprisingly, Emily, Google Search leading the way.
Emily Flippen: A really amazing quarter for Alphabet, they handedly beat expectations on their bottom line by over 10 percent. Revenue also beat expectations. But all anybody wants to talk about is this stock split. [laughs] At 20-for-1 stock split, which effectively decreases the average price per share to buy a single share of Alphabet. As we all hopefully know, this fundamentally changes nothing for investors in Alphabet. A stock split does nothing except for makes the average price of the share lower. In practice, we see a lot of retail investors often associate the price of a share with valuation, which is to say they see a lower-priced stock to be perceived as cheaper. There may be increased buying from retail investors as a result of this split, we saw this happen with other businesses like Tesla, although there's lots of other factors and play with Tesla as well. Stock split aside, this was an amazing quarter for Alphabet. The weird downside here was actually YouTube ad revenue. This is interesting because as Jason just mentioned, we're looking at Amazon come out with this $31 billion a year at business, while Alphabet has a $61 billion a year ad business. Around doubled what Amazon is experiencing, so smaller I think when you compare it than expectations with something like Amazon. Seeing the weakness come from YouTube ad revenue just makes us all realize how much competition there is for our eyes and entertainment space right now.
Chris Hill: As I mentioned at the top, Facebook, sorry, Meta platforms had its worst day ever. Shares fell 25 percent on Thursday after the company's 4th quarter results reflected what CEO Mark Zuckerberg called an unprecedented level of competition. Part of that Jason is Apple's change to its operating systems, privacy settings that is clearly taking its toll on Facebook's advertising revenue.
Jason Moser: I think you called it Facebook on-purpose, Chris, I don't think that was a slip. [laughs]
Chris Hill: Look, I'm still getting used to it. It took me a full year, if not longer, to get used to Alphabet instead of referring to it as Google. Apologies to the dozens of listeners and I beg for their patience.
Jason Moser: Yeah, and don't even get me started on Block. Let's get back to Facebook, I mean Meta. This is a breathtaking sell-off. I think it took us all by surprise considering the scale of this business, but when you look at the numbers, I think it actually makes some sense. Much like PayPal, this is not a business that's been troubled. We'll talk about PayPal in a little bit, but they've got some work to do here and there's some material risks going forward given this pivot toward the metaverse. When we look at the actual numbers they recorded for the quarter, not all that bad. Revenue up 20 percent for the quarter you compare that to something like Alphabet, 33-34 percent growth. I think you can at least get a better idea of who is winning that race. It's something where Facebook is starting to witness some headwinds there in their model, operating margin fell nine percentage points. Expenses well-outpaced revenue growth at 38 percent. Earnings-per-share down five percent, but it's worth noting actually net income was down eight percent. There's a little bit of a share repurchase effect going on there. Favorable one-two punch there on guidance. I think you've got macro concerns. You got inflation impacting advertising budgets, the new iOS standards that you mentioned as well. They're going to impact the top line of this business to the tune of about $10 billion this year in 2022. The revenue guide of $27-$29 billion was just well below expectations. We know how that goes, the market is going to reprice based on that new set of expectations. But I think looking further out the bigger risk, I think for Meta, and this is going to be something that won't be apparent immediately, they're going to be spending a ton of money on this metaverse investment. Whatever the metaverse may be, Meta is aiming to play a big role in it. They are going to spend tens of billions of dollars on this. If this doesn't pay off the way they think it might, or they think it will, that's going to be a big problem for this business. The tough part for investors here is really understanding that these investments in the metaverse really that's not going to be like flipping a switch either, that's going to be something that just becomes more apparent over time. I think it's fair to say that as much successes Facebook has had, as Meta has had in the social media space, replicating that in the metaverse. I think it's going to be a tougher ask. I think investors are starting to take stuff like that into consideration.
Chris Hill: Coming up right after the break, we've got the poster child for this week's craziness. Stay right here. You're listening to Motley Fool Money.
Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Emily Flippen. We don't obsess over short term stock movements, but no business provides a better example of the whipsaw movements we discussed earlier in the show than Snap. A parent company of Snapchat saw its stock fall 25 percent on Thursday, then Snap reported its first ever quarterly net profit and shares on Friday rose 50 percent. Emily, please help me focus on the actual business here.
Emily Flippen: Well, who knew that a social media platform that I exclusively used to take photos of my cat and send it to my mom [laughs] was so monetizable. I say this a little sarcastically because I think part of what we're seeing here is a story of low expectations. The poor earnings reports from other platforms earlier in the week certainly set up expectations, as you mentioned, heading into this earnings reports that were extremely low. When Snapchat came out and said, "Hey, no we're actually doing pretty well," the market was just stunned, and that's a bit of what we're seeing here. But revenue was still up 64 percent year over year, which is incredible and the daily average users, I think is even more impressive, grew 20 percent, to almost 320 million globally. Now it's important to remember that Snapchat is really only monetizing those across North America and Europe, but they see an opportunity to expand monetization across the globe. Really was again, a power of those low expectations for this platform. We talked about Meta or Facebook, whatever you want to call it, they broke down these massive headwinds thanks to Apple's privacy changes and expectations were for Snapchat to say, "Hey, our guidance is also hit because of this." But adding into that, we're seeing Snapchat actually come out and say, no, our ad transitions are better because we handle privacy with our ad targeting products a bit more consciously. I think they said something along the lines of, "Our products are built with privacy in mind." So we'll see if those realities come to fruition when they continue to report in future quarters. But for the time being, Snapchat is doing pretty well for itself.
Chris Hill: The main story of PayPal's business for the past year has been the company's transition away from eBay as a payment platform. PayPal's 4th quarter results reflected how hard that transition has been. Jason, I think you and I both like the job that Dan Schulman has done in the eight years he's been running PayPal. But I also think, you and I agree, he really hasn't done a great job of communicating this.
Jason Moser: Chris, how the tables have turned, instead of the war on cash, it looks like we've got a war on PayPal instead. I say this as a PayPal shareholder of many years, PayPal 100 percent deserve the butt kicking it got this week. No, the businesses isn't in trouble but we heard three words in the call that we don't like to hear, transformation, investment, and pivot. I think this all goes back to what you said at the top there, leadership really dropped the ball on communicating here. Now, it's not all bad. Let's focus on the good news here because the quarterly numbers were good. If you look at the total payment volume, $340 billion, that was up 23 percent from a year ago and they push through $3.2 billion of buy now pay later total payment volume as well. That's now operating on a $13 billion run rate. So not bad for essentially what is a homegrown offering for them. Venmo processed $60.6 billion in total payment volume up 29 percent. Venmo is now actually helping drive a sequential increase in the overall take rates so total take rate for the quarter was 2.04 percent. That was up from 1.99 percent a quarter ago. But we get to what caused the sell off, what led investors to flee and you've got guidance there for revenue growth of 15-17 percent for the year that was versus an expected 17.9 percent. It's ultimately going to result though, in essentially flat earnings growth, which is a problem and I think that really boils down to the user base. PayPal pulled a lot of success forward, they added a lot of users in a short period of time over the past couple of years for obvious reasons. That's starting to normalize a bit. Management now expects to add 15-20 million net new customers in 2022. Further, they no longer believe that the 750 million user target that they set here over the medium term is even really achievable. It'll probably take a little bit longer to get there. For context, they have 426 million actives today. Nothing to sneeze at, but you can see that the forecasting does matter. So they are focusing more on the quality of the users, they are going to be relying less on incentive programs to bring new users in. This matters because the quality of the user matters for PayPal. Of their massive user base really, the majority of the volume comes from about 1/3 of that user base. They put a lot of information out here that should have been put out long ago and that's frustrating. They have put themselves in a little bit of a position here. We're going for these next few quarters. We're just going to need to pay very close attention to what they say and really hold them accountable.
Chris Hill: Pinterest 4th quarter results showed a small drop in global users, but average revenue per user was up 23 percent. Shares of Pinterest bouncing up nicely on Friday, Emily, but like Snap, it seems like there were some low expectations going into this one.
Emily Flippen: I think the words I'd use to describe myself as a Pinterest shareholder after this earnings report is cautiously optimistic. I've said this before but Pinterest has always been a story about monetization, not user growth. As you just mentioned, we saw monetization this quarter up 23 percent, which is what they need. International monetization, international average revenue per user was even better rising 62 percent in the quarter. It lead to helping the business beat on both the top and the bottom lines here. But management is also realizing their backs are against the wall. They can keep users steady, they can lose a bit of users when they have over 430 million monthly active users. That's OK, but they can't hemorrhage users and this is what you saw this quarter. Users declined globally six percent, in the US by 12 percent. Now they blamed some changes in Google's algorithm as a result of this big decline. But they can't be monetizing at an increasing rate while also decreasing engagement. So finding the way to balance both is going to be critical for Pinterest to perform well from here on out.
Chris Hill: With just a few months remove from PayPal reportedly looking to buy Pinterest, how confident are you Pinterest will still be a stand alone company two years from now?
Emily Flippen: I'd say fairly confident. I think Pinterest is underrated as a social media platform. It's become so integral especially in young American females' lives that I think it's being underappreciated in terms of its market opportunity. But the question mark is right now is what is Pinterest going to do to drive engagement from that audience? They already have this massive user base signed up, but now we're having to compete for the time and there's eyes. So making sure that people are routinely coming back to that Pinterest tab is going to be critical. But I think if they're able to do that then Pinterest in my opinion is better as a stand-alone company than as a potential acquisition.
Chris Hill: Up next, we've got the latest on chips, not the tasty kind, the semiconductor kind. Stay right here. This is Motley Fool Money.
Welcome back to Motley Fool Money. Chris Hill here with Emily Flippen, and Jason Moser. Qualcomm posted strong profits in the first quarter and gave upbeat guidance. Jason, I'm not a shareholder, but for a variety of reasons I would like the semiconductor chip shortage to end and I know that Qualcomm is one of the companies that can help make that happen.
Jason Moser: Yes, I think you're right. It feels like we're already seeing leadership with these chip companies starting to use language that's putting this stuff in the rear view mirror, hopefully, Chris. Hopefully, 2022 shaping up to be better for you there. But you look at Qualcomm itself, this was a really, really strong quarter in a lead-off with just what CEO Cristiano Amon in the release he said, "We're at the beginning of one of the largest opportunities in our history with our addressable market expanding by more than seven times to approximately $700 billion in the next decade." Chris, to me, feels like there's an opportunity brewing here. [laughs] Qualcomm is just treading water here over the last year. But you pan further out, this has been a wonderful investment over the last three years up better than 250 percent. I'm starting to see why revenue growth of 30 percent from a year ago resulted in net income growth of 38 percent, and earnings-per-share growth of 41 percent. Again, a little bit of a share repurchase impact there. But it's nice to see that Qualcomm's repurchases are ultimately having an impact on that overall share count. They brought the share count down over 24 percent over the last five years. The QCT business, the chip side of the business, the other side of business is the licensing side. But the QCT business grew operating income by 62 percent on 35 percent revenue growth. They saw strong performance in handsets with revenues up 42 percent from a year ago, they saw strong performance in IoT revenue. That was up 41 percent from a year ago. All-in-all, it feels like this is a business that has a number of different ways to win, so to speak, because it's handsets, it's IoT, it's automotive, it's radiofrequency; it's all of that. Interestingly, and perhaps sadly, Chris, there was only one solitary mention of the word metaverse on the call. But it is something they're very excited about with partnerships with companies out there including Microsoft and Meta. For the second quarter here they are forecasting earnings to come in at $2.90 in the midpoint versus $1.90 a year ago. They're even so much as guiding it at 30 percent earnings-per-share growth for the 3rd quarter as well. It feels like the tailwinds for this business just continue to grow stronger.
Chris Hill: Spotify showed strong growth in the 4th quarter, but guidance for 2022, sent the stock down this week. Emily, let's face it, most companies are not getting the benefit of the doubt from investors right now and the drama surrounding Joe Rogan certainly does not go in the plus column.
Emily Flippen: I described this as a good earnings report that's really being overshadowed by negativity thanks to the way that this platform has become a beacon, I guess, for misinformation and almost like a political fighting ground in some sense. But looking at the quarter itself, it was all good things from Spotify. Revenue grew 24 percent monthly active users, which is a critical metric as we just discovered with Pinterest. That grew 18 percent to over 400 million, so tons of monthly users, and their adjusted net loss was less than half of what was expected this quarter. The actual earnings report itself was great. Now, the challenges around what has been portrayed in the media with Spotify recently, I think, is adding skepticism mostly because of, as you mentioned, controversy surrounding Joe Rogan and the $100 million relationship that Spotify has with Joe Rogan to be the exclusive distributor of that podcast. It's going to be interesting to see how CEO Dan Ek continues to navigate these challenging waters because being a company that is having to deal both with the impact from users, musicians, and even politicians, is not an easy position to be in.
Chris Hill: It's also a sign of just how big and influential a company Apple is, that, Apple isn't making headlines this week, yet all these companies we're talking about are dealing with Apple in one way or another. Facebook is impacted by the changes to the iOS privacy settings. Spotify has a couple of musical artists who say, hey, we don't want to be in your platform anymore. When I opened up iTunes earlier this week, there's Apple Music just promoting these artists. If you get to be big enough, eventually, you're going to have to deal with Apple one way or the other.
Emily Flippen: That's a fair criticism. But in Spotify's defense, they're so large now that they're ubiquitous. I doubt anyone or two departures from any specific artist is going to do a lot to take away those engaged monthly active users. When Spotify hasn't been able to get those exclusive rights to new albums in the past, it hasn't done anything to prevent users from engaging on the platform even when they've been available in other places. I doubt this will be any difference, but I hesitate to say that because we've seen the continued years-long fall out with Meta and its perception from consumers and the government about its relationship with information on its platform. Spotify certainly doesn't want to find itself in the same situation. Again, it all comes down to being proactive and managing it with tech.
Chris Hill: Jason, stop me if you've heard this before. Another strong quarter for Advanced Micro Devices and strong guidance for the new year. [laughs] Lisa Su has been running AMD since 2014 and not only is she one of the best CEOs in America, she is also one of the most under the radar. She's just quietly going about her business. AMD is just, I don't want to say unstoppable, but this business and this stock has just been on fire for years.
Jason Moser: Well, I agree. I think Dr. Su has just been a tremendous asset for this business and shareholders have really benefited all along the way. You look at the five-year chart, stocks up almost 900 percent. I think that, really, things are poised to get better. I think on its own, there are plenty of reasons to like AMD. Over the coming years, as connectivity continues to proliferate, you see investments in Edge, Cloud, and data center, they're all becoming greater opportunities and they're helping AMD continue to branch out. I think the addition of Xilinx should even open up a few more windows of opportunity for the business. We'll talk about that shortly, but let's look at the quarterly numbers because there's a lot to like, like you said, revenue $4.8 billion grew 49 percent from a year ago. Interestingly, you look at non-GAAP alluded earnings-per-share; $0.92 per share. That was up 77 percent from a year ago. Just amazing, the growth this business continues to chalk up. Strengthened enterprise embedded in semi-custom and segment revenue, I think that was something that really stood out. That segment, the revenue of $2.2 billion is up 75 percent from a year ago and they recorded their sixth straight quarter of greater than 45 percent year-over-year revenue growth. You add to that five percentage point increase in the gross margin side as well, which is just, you got to love that. They continue to capitalize on the data center opportunity as we continue to move more toward the Edge and the Cloud. Then, really, I think the icing on the cake for a lot of folks, the Xilinx acquisition is finally cleared hurdles with Chinese regulators. That deal actually should close any day now. That's really going to catapult their overall opportunity even more. It brings in additional tailwinds and 5G, data center, automotive, industrial aerospace, and defense. Xilinx is a higher-margin business as well, so I think there are a lot of reasons why shareholders should be very optimistic about AMD's future.
Chris Hill: Jason, so many businesses depend on semiconductor chips. With the global shortage, rightly so, so many of them for the past year or so have been talking about that impact on their business. But at some point in the future, we're going to get to that place where the shortage does not exist any longer. Don't you think there's going to be at least one company that comes out in their earnings report instead of, "It was the shortage of chips that really hit us this quarter." Analysts will have to be like, "There is no shortage anymore." [laughs] Like Qualcomm, AMD, all these businesses at some point there's going to be no more shortage and therefore the excuse is gone.
Jason Moser: That's right. At some point you have to go with Alice In Chains' No Excuses and I think that time is still a ways away. The neat thing about the opportunity for these businesses is that as connectivity continues to grow, there are just so many things out there that really require this technology. Chris, I got a Traeger Grill for Christmas that's connected to the Internet, for crying out loud. The possibilities seem endless at this point. But I think you make a great point there too, as optimistic as this space looks right now because of obvious tailwinds, let's remember those tailwinds don't last forever. Just like we saw a lot of success pull forward here over the last couple of years with the pandemic impact, at some point that party ends and things start to normalize a bit, so there will be a point where these chip companies start to normalize a little bit and that'll be something investors need to pay attention to.
Chris Hill: Starbucks' 1st quarter report was a window into how many headwinds the company is facing. From higher costs to staffing challenges, to say nothing of its 2nd largest market, China. Emily, I'm a big fan of the CEO, Kevin Johnson. Even with the hits that the stock has taken recently, am I wrong to be optimistic about Starbucks?
Emily Flippen: Not at all. In fact, I love the comparison here, against chip businesses for Starbucks, if you'll humor me. Because when you ask the average person, which do you think is more cyclical? Demand for which wanes more, is it something like chips or is it something like Starbucks? I think a lot of people will assume that when economic times get tough, businesses like Starbucks are the ones who face the brunt of that, whereas chips continue in demand. Reality, we see a lot more cyclicality with a business like AMD or Qualcomm than we do with Starbucks. It's become such a blue chip bellweather business. Even though they did miss this quarter in terms of earnings and revenue expectations, and really wasn't a complete surprise given the widely publicized challenges with labor, supply chains, and inflation. But even with the miss, Starbucks does what it does best. It had a great, really impressive quarter. Revenue rose nearly 20 percent. Importantly, same-store sales across the globe were up 13 percent. Domestically, those even higher at 18 percent. The demand for coffee here has not changed. Actually, if you look at the change in price for Starbucks' products since just October, Starbucks has risen prices three times, largely to keep up with all those challenges that I mentioned earlier. It really hasn't done a lot to change demand for its products. While they did update their guidance to be slightly more conservative, which is contributing to some of that skepticism we see today. When you look at the actual business performance itself, Starbucks is doing what it does best, which is sell coffee.
Chris Hill: Up next, we've got a business partnership just in time for Valentine's day. We've got a couple of stocks on our radar. Stay right here. You're listening to Motley Fool Money.
As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. Don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here with Emily Flippen and Jason Moser. A couple of things to get to before we get to the stocks on our radar. McCormick reported 4th quarter results last week, and maybe it took investors a few days to digest the results because on Friday, shares of the spice maker hit a new all-time high. Jason, I know this is one of your favorites.
Jason Moser: It is. I am an owner and I've been behind the stock for a long time for a lot of reasons I've stated before, but it was an impressive quarter. They grew sales nine percent organically for the 4th quarter. They are calling for five percent annual growth here for 2022. Again, very encouraging and I think they've made some acquisitions that have really paid off. They now hold the number 1 and 2 spots in the hot sauce market with Frank's and Cholula respectively. Chris, I'm going to tell you something here, over the holiday season, I was working on a recipe OK. I like to grill, I like to barbecue, I like to smoke stuff, but I was working on a recipe over the season and I perfected it. It utilizes a lot of McCormick's stuff too. I call it big daddy's boy howdy mustard sauce. Okay, this is a mustard barbecue sauce. I made it. It's my recipe I'm not going to tell you what it is. But McCormick give me a call because I got a feeling I've got your number 3 shareholder right there.
Chris Hill: Wow. You went in a direction I was not expecting there.
Jason Moser: You listen every week we're going to give you something new.
Chris Hill: Real quick before we move on. The dividend aristocrat status of this business does not appear to be threatened at all.
Jason Moser: I don't think so. It's just such a reliable business and that's why they really take a lot of pride in that. They raise their dividend again to maintain that status, so I suspect that it is a point of pride for leadership that they will not relinquish anytime soon I'd imagine.
Chris Hill: This week DoorDash and Shake Shack, partnered up to create a limited edition dating app called Eat Cute. From now through Valentine's Day, people can go to letseatcute.com, create a dating profile with a photo and share how spicy they like their food. Once they are matched up with a compatible person, they'll receive a promo code for Shake Shack's buffalo chicken sandwich delivered, of course, by DoorDash. Emily, I'm not saying it's cause and effect, but I will say that shares of both these stocks are up since the promotion started on February 3rd.
Emily Flippen: Let me be clear, I love a good gimmick, but there is no way that I could review this story without experiencing it myself and I apologize to my boyfriend, but I did have [laughs] to go make a profile obviously to get my free chicken sandwich. The experience was interesting. They made it very clear the app was not for chatting, it was only for sending sandwiches. I went through, I liked about 100 profiles and nobody liked me back so I don't get my chicken sandwich, I guess. [laughs]
Chris Hill: We just need to get the word out. Maybe once people hear this episode of Motley Fool Money, get some more people on the app. We'll check back with you next week see if you actually get the sandwich.
Emily Flippen: Dare to dream.
Chris Hill: [laughs] Let's get to the stocks on our radar, our man behind the glass, Dan Boyd, is going to hit you with a question. Jason Moser, you're up first, what are you looking at this week?
Jason Moser: Yeah taking a look at Chipotle ticker, CMG, they've had earnings coming out Tuesday, February 8th, and I'm going to be very interested to see how they frame the state of the consumer and inflation. Last quarter, they talked a good bit about it from wage inflation to construction and everywhere in between. But management is exercising patience in regard to this. But there was an interesting quote from last quarter's call, I have to call this out. They said and I quote, "There is food inflation as we talked about, we don't know how much of this is temporary or transitional versus permanent. But what we do know is we've got what we believe is great value. Our customers continue to appreciate Chipotle. They love the convenience, they love the value." Here's the kicker Chris. "And so we believe we've got pricing power really better than almost anybody, if not everybody in the industry." I think this is going to be really fascinating to see how they frame this, this quarter particularly as an example, we saw Starbucks just start the past month price increases as well. I'm interested, is my burrito bowl getting more expensive, I want to know Chris because you know what, even if it does, I'll still pay it.
Chris Hill: Dan, question about Chipotle?
Dan Boyd: Yeah. Jason, did you know that I'm a Chipotle shareholder? [laughs]
Jason Moser: Well me too Dan, welcome to the club.
Dan Boyd: I bought in 2011 and I'm having a good time as a Chipotle shareholder. I don't know about you.
Jason Moser: You got to be, I've owned those shares for about that same time and you've got to be feeling really good about that call right now.
Dan Boyd: I am.
Chris Hill: I'm also a Chipotle shareholder. Am I the only one confused that they've got this marketing message out there about their plant-based chorizo that they refer to as this is the best chorizo we've ever made. I'm like wait, so it's better than actual chorizo?
Jason Moser: I'll tell you what, I will say my daughter tried that last week or so when we last had Chipotle and she gave me a bite of it. I will say it is very good.
Chris Hill: I'm still confused. Emily, what's on your radar this week?
Emily Flippen: Well, it's going to be hard for me to compete with plant-based chorizo [laughs] which is the best chorizo, but I have a decent cybersecurity company for you. The business name is Tenable the ticker is TENB. They are a cybersecurity firm, I think its underappreciated by the market. Had a really impressive quarter this past week, generated massive 30 percent free cash flow margins. They're getting more traction with enterprise customers with their Tenable IO and Tenable EP solutions. Now, I know that it's an extremely competitive space, but in some sense a rising tide really does lift all boats. When you compare it to the valuations of other cybersecurity firms in the market, I'm thinking mainly about CrowdStrike here, it is much cheaper. I could see it being added as a basket approach to tackling the cybersecurity industry.
Chris Hill: Dan, question about Tenable Holdings?
Dan Boyd: Yeah. Emily, what kind of plant-based meat [laughs] substitute products is Tenable introducing to the market this year?
Emily Flippen: Well they actually force all of their in-house employees to eat at least one plant-based meal a day. However, they do ensure that it's in salad form. So you can take with that what you will. It's not quite Chipotle, can't get your rice, but as long as you're eating your plant-based salad at Tenable you're OK.
Dan Boyd: Wait is that real?
Emily Flippen: No, I'm being 100 percent sarcastic. [laughs]
Chris Hill: I'll just add Dan, Chipotle is not doing anything to keep your network secure.
Dan Boyd: Yeah, I suppose. [laughs] All right. That makes it harder. Hey, I got one bumper sticker on my car and it says, I love Tacos so much. Here we go, I'm taking Chipotle to the moon baby.
Jason Moser: There we go. Hang on to those shares Dan.
Chris Hill: Emily Flippen, Jason Moser. Thanks so much for being here.
Jason Moser: Thank you.
Emily Flippen: Thanks, Chris.
Chris Hill: Drop us an email [email protected]. Send us your questions, your feedback, [email protected]. That's going to do it for this week's edition of the Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. See you next time.
