In this episode of Motley Fool Money, host Chris Hill chats with Motley Fool analysts Jason Moser, Emily Flippen, and Andy Cross about this week's news in the market. Ford Motor (NYSE:F) and Volkswagen hop on the autonomous and electric vehicle train in a big way. Slack (NYSE:WORK) falls after Microsoft (NASDAQ:MSFT) increases the competitive pressure. Shares of Pepsi (NASDAQ:PEP) hit new highs after this quarter's report. Lululemon (NASDAQ:LULU) unveils a weird, tasty idea. And, as always, the analysts share some stocks on their radar. Plus, Chris interviews CNBC's Carl Quintanilla about his new documentary, Vaporized: America's E-Cigarette Addiction. Find out how vaping is so different from traditional cigarettes, and what a post-vape world looks like.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

This video was recorded on July 12, 2019. 

Chris Hill: It's the Motley Fool Money radio show! I'm Chris Hill. Joining me in studio this week, senior analysts Jason Moser, Emily Flippen, and Andy Cross. Good to see everyone! We've got the latest headlines from Wall Street. CNBC's Carl Quintanilla is our guest. And as always, we'll give you an inside look at the stocks on our radar. 

But we begin with the market in general. Both the S&P 500 and the Dow Jones Industrial Average hit record highs this week. This comes as earnings season is set to kick into gear later this month. Jason Moser, I will start with you. Does this temper your expectations at all for earnings season? I feel like we shouldn't expect stocks, even if they report great results, to pop 10%, 15%.

Jason Moser: I always try to keep my expectations somewhat tempered. I don't want to go in feeling overly optimistic or pessimistic. I think we're in the face of a very good performing market right now. Enjoy it because it won't last forever. It does appear that many companies are setting us up for perhaps a little bit of a stumble this earnings season. When you look at the FactSet data, they're projecting a 2.6% decline in S&P 500 index earnings. That's down from a decline of just 0.5% predicted at the end of March. And then when you look at the actual companies, you've get 88 companies thus far issuing negative EPS guidance vs. 26 that have issued positive guidance. At some point, things have to pull back a little bit. 

As a parent, one of the toughest things is letting your child fail, watching them fail and understanding that it's for the greater good, it will help them be successful later on. It feels like we're living in a market right now where the powers that be are just not able to let this thing fail. If something bad comes up, even a scent of a problem, they're getting in there to adjust interest rates or do whatever they can to keep the market chugging upwards. I kind of wish they'd pull back and let things play out. But it doesn't seem like that's going to happen. 

Andy Cross: What I'm paying attention to is the revenue growth. Thinking about so much of the companies that we're focused on, mostly around technology, which are growing their revenues at like, 20%-35% or more. Look at Zoom Video, revenue's up more than 100%. Just seeing how much the market, how much leeway investors, traders, really, a lot of them driven by algorithms, will give if these companies give weak guidance looking forward on the revenue side, because so much of the market performance has been driven by the revenue growth and the expectations that hey, this revenue growth will eventually turn into profits. But we're going to give a lot of room for these companies to show their growth before they even have to show the profits. So I'm really focused on how revenue growth expectations are going to shape up.

Emily Flippen: I couldn't agree more. It kind of feels like price to sales now is the new P/E. Right? I mean, everybody cares a lot more about revenue growth than net income. The fact that people are projecting negative earnings doesn't concern me much as lowered guidance for revenue growth, because that's a general indicator of the strength of the economy. But I do think the market's hot mostly because the potential for a Fed rate cut. Coming into earnings season, I don't think it's impossible that we'll see a stock pop maybe 10%, or possibly drop maybe 10%. I don't think that's out of the question.

Hill: The automotive industry just got more interesting. On Friday morning, Ford Motor and Volkswagen announced they are adding autonomous vehicles to the list of projects they will be working on together. Andy, I don't know if this is a match made in heaven, but it certainly shifts the landscape in the automotive industry. 

Cross: It really does. Now, to be fair, they've been talking about this. They structured a partnership in January that helps them build pickups and commercial vehicles. But this is the next evolution. And frankly, this is a big shot at Tesla, clearly. There are two arrangements here with partnering on EVs, electric vehicles, as well as autonomous partnership with this investment into Argo AI, which is a Pittsburgh based autonomous vehicle firm that now has a valuation north of $7 billion, this little firm that both Ford and VW have investments into. So, when you think about the landscape, Chris, that you mentioned and the developments and where car technology is moving, in the middle of cutting 7,000 jobs, they will basically finish that sometime this year. And yet they are making investments like this. Clearly they are putting down where they think the growth is going to be. And it's smart, because if they don't make these investments now, and they're looking at hundreds of thousands of vehicles over in Europe on the EV side, they have to make these investments to see the fruits of that labor play out over the next decade. If they don't, they'll be behind the curve.

Moser: Yeah, I'm really encouraged by the move. It's a market where you need all the resources you can get. To see companies collaborating like this is encouraging. It's nice to see that the lion's share of the money is going to be invested in EVs because to me, that's the greater near-term opportunity. The more we can get over to the EV side and less gas guzzlers, I think that's going to have a greater impact in a shorter time frame. Self-driving cars, we know that's coming, we know the technology exists. That's a bit of a longer timeline there. But to see them focusing on both is certainly encouraging.

Cross: Ford's going to put, they said, $11.5 billion over the next few years when it comes to these kinds of investments. They're not joking around. Again, they're trying to turn the tide of this massive organization that clearly -- has about the same market cap as Tesla right now, so they have to do something, or else they'll be behind the curve even further.

Hill: Well, and you look at Ford Motor and Volkswagen, both stocks up a little bit Friday morning after this announcement. Definitely a little bit of optimism on Wall Street. 

Cross: Absolutely!

Hill: Andy, you mentioned Zoom Video. Interesting week for Zoom. The newly public company hit a speed bump after reports surfaced that a flaw in Zoom's app on Mac computers could allow websites to take over the users' webcams. Emily, the stock dipped, it recovered pretty quickly. Investors don't seem worried, but this does seem like, if nothing else, a reminder that rarely is technology bug-free.

Flippen: Exactly. I feel like everybody relearned that technology is never going to be 100% secure. Big data corporations are a testament to that fact. While it's never good to discover a vulnerability, especially in a new IPO, there's a reason why cyber security is a billion-dollar industry. It's because humans are innately going to mess up. Companies run by humans are innately going to mess up. So, the fact that this vulnerability was discovered by a trained researcher before it was exploited, and it was responded to -- admittedly not as quickly as Zoom would like to have responded to it, but it was still responded to both by Zoom and Apple -- says a lot about the company. I think moving forward, this is not the first time we've had an issue -- it's the first time we had an issue with Zoom, it's not the first time we've had an issue with hacking, data protection, cyber security. It's not going to be the last. So, I think it's justifiable why investors quickly got over it. I don't think anybody in this market expects something to be completely error-free.

Hill: Well, and Jason, it reminds me of all the times we've talked about major retailers having announcements about credit card hacking, and how many tens of millions of customers get their data exposed.

Moser: Yeah, it's a matter of when, not if. This stuff is going to continue to happen. It's just a matter of how the company responds to it. I think that in Zoom's case, leadership there certainly seems to be very customer-centric. That is a sign at least that they're going to try to get out in front of this stuff, admit wrongdoings, and hopefully it makes them stronger.

Cross: It is interesting, the partnership with Apple and Zoom, because it was both who put out pushes of changes to their software and updates to the plan. It does give evidence that you do have to have good partnerships with technology providers as well as the carriers or the platform makers or the tool makers, to actually have solutions that meet the demands of their customers.

Moser: The tag line for Zoom is, it just works. And listen, it does. I love the product! I tell you, a reading through the steps in order to overcome this problem, it wasn't like delete Zoom from your laptop and then reload it. You had to basically go in there and do some stuff... I had to read it a few times to even get a grip. I don't think they'd want to be doing that on a consistent basis. 

Hill: In other recent IPO news, shares of Slack down a bit this week after Microsoft announced how many people are using Teams, which is Microsoft's competing platform to Slack. Slack has 10 million daily users, Jason. Microsoft says they've got 13 million using Teams.

Moser: Well, we can only go with what they're saying. We'll find out more with Slack as they report quarters. I do think that the headlines talking about Microsoft doing to Slack what Facebook has done to Snap are a bit hyperbolic. 

Hill: You're saying headline writers are engaging in hyperbole?

[all laugh]

Moser: I wouldn't go so far as to say that. I also think that based on these numbers, Slack had better continue innovating at a very rapid pace. One lesson we've learned over these past several years is that you should not underestimate what Microsoft is capable of. This is not Steve Ballmer's company anymore, and Satya Nadella has a little bit of a different approach to things. Listen, it is really all about users. I think when it comes to Slack, Slack does one thing really well. We love it. It's a great productivity tool. The questions I've always said regarding it is, what do they do beyond that? I do understand that it's a very attractive product from the smaller company's perspective, particularly if costs are low, because when you have smaller companies that are keeping a close eye on the books, they want that low-cost provider. Microsoft is a far larger company, plenty of more resources, better capitalized. Microsoft can wait out the storm. They can offer things at a lower cost or free altogether. I've never used Teams. It does sound like it's an interesting product that combines some of Slack and Zoom, so probably both companies are taking a look at this thing and trying to figure out how to keep it at bay.

Flippen: Yeah. Microsoft has more resources, more resources that are being spread out across many dozens of different divisions, dozens of different priorities for Microsoft. I'm a huge Slack bull, and I see this and I see the pullback in Slack, and it doesn't concern me over the long term. We've seen Microsoft and other big corporations try to disrupt smaller innovators, and the vast majority of the time, they fail. Look at Microsoft and Tableau. Many people thought that Tableau was going to be destroyed by Microsoft's initiatives into that space. And it really wasn't because their product was far superior. So, just because organizations have lots of Microsoft products already, doesn't mean over the long term, they're going to settle for a less than superior way to communicate, because that's such a vital aspect of organizational management, and how people communicate is rapidly changing. When I see these reports, I see them focus on large companies. And of course, Microsoft's going to focus on large companies, which are slow to change, slow to innovate, quick to take the incumbent player. But I think over the long term, Slack's definitely going to win.

Cross: The thing that Microsoft has done so well, Jason mentioned Satya Nadella, is the push to the cloud and the tie-in with Office 365 and their other products. Teams integrates more with that, and they get better at those solutions. If they have this add-on solution, I think it's actually a nice benefit to those large organizations. Whether or not they totally disrupt Slack, we'll have to see how that plays out. Slack's certainly not going to sit still and watch this all happen.

Hill: Jason, I looked at this story, and I was reminded of the classic Jeff Bezos quote, "Your margin is my opportunity." It will be interesting to see how far Microsoft decides to push the monetary aspect of this platform. If they really want to get this out there, maybe they start offering it free to pretty much any company that's out there.

Moser: I think the perspective you have to approach if you're Slack or Zoom or any other small competitor in this space is, you'd better pack a lunch, because Microsoft can do this for a long, long time.

Hill: Our email address is radio@fool.com. Question from Matt, who writes, "When you look at a stock, what numbers do you look at first? What grabs your attention or immediately puts you off?" Emily, I'll start with you.

Flippen: I really think it comes down to what industry I'm looking at. If I'm looking at maybe a dividend paying stock in a mature industry, then I'm looking at dividend yield or price to earnings. If I'm looking at an unprofitable high growth stock, then I'll look at revenue. And if I'm looking at a cannabis stock, I'm probably not looking at numbers at all. 

[all laugh]

Flippen: Ultimately, I'm not sure if there's one thing that I look at. I do have to take it on an individual, case to case basis. 

Cross: Yeah, I think that's true. That's a great point, Emily. We care a lot about ownership and who is running the organization, and does that person have an ownership, does the team have ownership. I look at inside ownership a lot, and just in general, who is leading the organization, because ultimately, as long-term investors, you're giving your capital over to people to invest that on your behalf for a higher return going forward, and you want to make sure those people are invested alongside you.

Moser: Yeah, I put this to the test and clicked over to Cap IQ during the break here in the morning. I think most of the time I click over to the income statement, and look at revenue growth and then ultimately profitability of the company. When you look at revenue growth, you can get an idea of what kind of company you're looking at. And then, just going down the income statement to see operating profit, net income, seeing how the financials all work together, is this a profitable company or not. Income statement probably gets my attention first.

Hill: Nobody's looking at P/E. For all the attention the P/E ratio gets, nobody's looking at P/E first.

Cross: No, not to start!

Moser: P/E is for suckers!

Hill Shares of Pepsi hit a new all-time high this week after second quarter profits in revenue came in higher than expected. Jason, important to remember that Pepsi owns Frito-Lay. The snack side of the business is doing well.

Moser: I was going to say, very important to remember they own that. It's worth remembering that diversity is this business' strength. The efforts to branch out beyond soda certainly are paying off. The North American Frito-Lay segment of the business performed very well for the quarter. This was the strongest quarter of organic revenue growth for the Quaker division in three years. And their beverage business continues to do OK. A big question mark, they spent a pretty penny on SodaStream about a year ago, to the tune of about $3.5 billion. There's still not a lot of clarity as to how that's going to play out in the strategy overall, but it definitely plays into the resource strategy, trying to eliminate waste from the planet, plastic models and whatnot. This is a slow and steady wins the race type of company. It's not going to be something that doubles overnight. But Pepsi is a dividend aristocrat, yielding about 3%. That dividend's a priority. They're going to continue to pay it and grow it, buy back a few shares along the way. Much like we talk about Coca-Cola with that distribution network all over the world, Pepsi has a very similar dynamic at play. But as you mentioned, the snacks division, the Quaker division, give you a little added bonus.

Hill: Yeah, you look at how these two companies have performed over the last five years in terms of the stock, Pepsi has basically doubled Coca-Cola's returns in the last five years.

Moser: It has. They've had a number of levers to pull over Coca-Cola. It is worth noting that management called the back half of this year a bit more challenging, some headwinds in the form of tough comparables from a year ago. Income investors ought to keep that in mind. We may see a point where this stock looks a little bit more attractive than it does today.

Cross: We also have a new CEO leading the way at Pepsi, which is nice. It gives a little catalyst to try to mix things up and grow the business in a different way.

Hill: Lululemon Athletica has made its mark in the apparel business. Now, the company is moving into a new industry -- food and beverage. This week, Lululemon opened a restaurant called Fuel on the second floor of its new flagship store in Chicago. Fuel serves smoothies, salads and protein boxes, but they also have a beef burger on the menu, as well as draft beers. Am I the only one in this room who thinks this might actually work? 

Moser: Draft beers? Man... I feel compelled to go try it!

Hill: This to me is not like when Urban Outfitters said, "Yeah, we're opening a pizza restaurant." This actually seems like it might be a little additive.

Cross: It's interesting, this entire complex is going to be north of 20,000 square feet. That's four or five times larger than a typical Lululemon store, and Lululemon has a goal of growing their square footage in the low like 10%, 12% per year. This certainly will help them get there. But actually I'm with you, Chris. I started looking on Southwest to see if we can get a research trip over to Chicago for this. It's in Lincoln Park, very wealthy part of Chicago. It's in a good spot. They have a lot of offerings in there. It's a test concept. I'm not putting anything behind Lululemon here, criticizing them at all for this. If you just look at the stock performance and the way that company's performed over the last three, five years, pretty impressive.

Flippen: Yeah. I feel like it plays well into their brand, which is going, buying myself some nice athletic clothes, eating acai bowls, and at no point going to the gym.

Hill: Steve Broido, our man behind the glass. You're a man of Chicago. Are you excited about this?

Steve Broido: Life gives you lemons. Thank you, I'm here all week!

__

Hill: Electronic cigarettes, vaping, Juuling, call it what you want, but the popularity has gotten to the point that by the end of this year, the market for e-cigarettes will be approaching $10 billion. This rapidly growing and controversial industry is the focus of a new CNBC documentary, Vaporized: America's E-Cigarette Addiction. It premieres Monday, July 15th, at 10:00 PM Eastern and Pacific. It's reported and hosted by Carl Quintanilla. He joins me now from New York City. Carl, thanks for being here!

Carl Quintanilla: Always good to talk to you, Chris!

Hill: I'm curious why this was a topic you found interesting enough to explore on this level.

Quintanilla: I don't know if this has happened to you, but if you mention e-cigarettes to any parent -- Lord knows you and I have occasion to hang out with a bunch of parents all the time -- this has suddenly bubbled up top of mind. I've been astounded, even after we began working on it, the number of people who had personal stories, personal experiences. My own kid, I busted him three times, from his room. Couple that with the amount of money that's been plowed into it by some large players, you couple it with the fact that it's a big tech story -- two Stanford guys figuring out how to make this work at scale -- it had all the ingredients for the kinds of stories that we try to do. The intersection of culture and money on tech. It seemed like a natural.

Hill: I was struck watching a preview of the documentary by a number of things. First and foremost, by the experience of some of the kids that you interviewed, teenagers, talking about their first time vaping, and how it was great. And I couldn't help but hearken back to when I was 18 years old, tried a cigarette for the first time, and my lungs were on fire, and I was coughing. That's when I had the lightbulb moment of, "Oh, this is far more dangerous than I thought it was going to be." Cigarette smoking, when you start out, is rough. This is something that is so inviting to kids right off the bat.

Quintanilla: It's true. I think it's actually an excellent point. It's a big overlay to the story we're trying to tell, and that is, when you smoke a cigarette, you're lighting something on fire, it's 1,000 degrees, it doesn't feel good when you start. It hurts, it burns your throat, burns your lungs. This is cherry flavored. This is crème brûlée flavored. And as a result, the ease of that draw makes it easy for kids to take in a lot more nicotine than you and I ever could have smoking butts. You know what I'm saying? Because they don't burn out like a cigarette does after 10 or 20 drags, you can just keep ingesting nicotine, and it's that elevated nicotine delivery that scientists are grappling with, and the FDA. What does it mean when you can smoke the equivalent of two packs and you're 15 years old? We have never seen those kinds of studies on traditional cigarettes over the past 60 years.

Hill: I want to get to the FDA in a minute, but let's talk for a minute about Juul Labs, which is the market leader in e-cigarettes. For the life of me, I can't think of another brand that is the Pepsi to their Coke. With this documentary, you got to go inside Juul Labs. First time cameras are inside there. Just between you and me, were you surprised that they said yes. Watching the documentary, I was a little surprised that they said, "Sure, We'll let you bring your cameras in!"

Quintanilla: The answer is yes. It was not our expectation. Candidly, we thought they would play a little bit tougher in terms of access on a lot of this stuff. But I think they've evolved, and they realize they've got a real public image issue that they need to work on. This has been the case for a while, but I think they've come to the realization that it's not going to involve a planning up, it's not going to involve trying to distract or elude the way tobacco 1.0 did. I think the lessons of that have been made clear to the tobacco industry over the last quarter century. So, I think the playbook from this point is going to be, "We apologize for any actions in our past that have resulted in teen use. We need to solve that problem, because if this goes away," this is them talking, again, "if the category is jeopardized, you're going to be preventing millions of people around the world from ever getting a chance to quit traditional cigarettes." So, they're looking at the survival of the category, and that's going to involve a lot more communication than we saw in prior chapters.

Hill: You mentioned the flavors that all these e-cigarettes come in. Some of them are literally named after candies. Sour Patch, gummy worms, that sort of thing. 10 years ago, the FDA banned flavored cigarettes with the exception of menthol. Where is the FDA on this? This seems like... I won't say an easy fix, but it seems like an easy move for the FDA, given the ruling of 10 years ago.

Quintanilla: I agree. Part of the story, I think, is the degree to which the agency was, first off, caught off guard. They did not see this coming when the survey data came in on teen use. They clearly admit that. They've been very quizzical on some of these deadlines for the kinds of approvals that these companies need to file for. They've had a surprise resignation of the commissioner, Scott Gottlieb, of course, who is part of our story. We interviewed him about this very issue. He was engaged. It was a 45 minute interview when we played serious ball on this topic, and then, days later, he resigned. We were surprised by that. I think the industry was surprised. I think it's been a real curveball that public policy has not been able to grapple with. But, the reckoning is coming. I think that's a big part of why we're seeing the industry itself try to grow up, and grow up in a hurry.

Hill: You mentioned that big money is going into this industry. Probably the biggest, going into the biggest player, is Altria, which owns one-third of Juul Labs. If you're just going from the perspective of investing in stocks, you could do a whole lot worse over the last 30 years than owning shares of Altria. Where do you think Altria's mind is? Obviously, they went through this with big tobacco 1.0. This is now big tobacco 2.0, in a way. Are they helping Juul Labs steer this ship?

Quintanilla: I think it's a hedge, I do. Certainly, in developed economies, it's obvious what's happened to smoking incidence. It's gone down. You're talking a fraction of the population that smokes today vs. 40, 50 years ago. So, they see cigarettes becoming obsolete in the developed world. Now, internationally, it's a much different story. I think they're looking at these new technologies, Juul specifically, and saying, "All right, if our product is headed for the graveyard, what can replace it? We're not just going to let a billion smokers in India and China go without any nicotine delivery." We talk a lot about the domestic worries of parents and so for, but in the end, this is going to be about the rest of the world, where smoking rates are sky-high and remain so. That's where the growth is going to come from. I think getting past these issues with the FDA is just chapter one. We're going to be watching this story for decades.

Hill: One of the things that struck me in the documentary was the appeal. I say this as someone who is not a smoker, but I totally understand the appeal of this device, particularly for younger people. You ask a bunch of high school kids, "What's great about the Juul?" And one of the things they immediately say is, "It's easy to hide." That fits in perfectly with everything we know and expect from teen rebellion. Did anything surprise you, when you were doing all these interviews and learning about this industry?

Quintanilla: Among the kids?

Hill: Or the adults.

Quintanilla: When you're a kid -- you and I can relate to this -- kids are going to be bad. They're going to text and drive, they're going to sneak alcohol, and they're going to smoke. In this case, it just happens to be something that is, as you said, extremely concealable. If you and I were trying to sneak around school or our parents and smoke a cigarette, you're going to come back in and smell like smoke. That is clearly not the case here. These things look like flash drives. A lot of parents we talked to thought they were a flash drive, a zip drive. My surprise was the level of naivety, I guess, is the way to put it, among parents, who simply had no idea what this was, that the fad was endemic to the entire population at their kids' school. And, the degree to which their kid was willing to risk doing this literally in their house. Kids getting out of bed, getting ready for school, taking a drag. That explains why you're looking at the numbers that you are, looking at three-plus million high schoolers vaping in this country. Once you see how easy it is to do it, it's not a mystery.

Hill: A new law here in Virginia just went into effect. You have to be 21 years old to buy tobacco products. That was driven in no small part by concerns about young people vaping. What do you think is the next big thing to watch when it comes to the e-cigarette industry? Is it more states like Virginia? I believe we're up to 16 states now that have increased the age for tobacco products to 21. Is it something at the federal level? Or is it something within the industry that we should be watching for?

Quintanilla: San Francisco, where Juul is based, has voted to ban sales, period, which is raising some eyebrows about whether or not that is the harbinger of future bans, at least on the at the city level. I'm not getting the sense from the street, but they're very concerned about it, to be honest, A because, as I said earlier, a lot depends on international growth. But, a lot of these early bans that we've seen on various products -- soda, sugar, and salt -- tend to have limited appeal nationwide, and certainly at a federal level. So, I think the next big thing is to see, the FDA, how resolute they are in managing this on a national level. And then, seeing whether anybody can pose a real competitive threat to Juul. We have other players who have similar products, not quite exactly the same. But, could we end up with a little bit more of a duopoly than we have right now, where Juul just completely runs the sandbox?

Hill: A couple of more things before I let you go. Off this topic, the dominant story in investing, and I would say the economy this year, is the U.S.-China trade war. It's always natural to look at any conflict in terms of winners and losers. Based on some reporting you did last month, it seems like Vietnam could be one of the beneficiaries of the U.S.-China trade war. You were in Hanoi in June. It looks like they've got a manufacturing boom on their hands.

Quintanilla: If you believe we're in the midst of a real trade war that's going to last, Vietnam is probably the biggest beneficiary of all the Southeast Asian economies. You've got, especially in apparel, and to a lesser degree technology, supply chains that are like, "Let's get the heck out of China. This is getting crazy. These two sides are in for a 50-year Cold War. Let's see if we can move some production across the border, essentially, to Vietnam." So, the challenge for Vietnam is going to be, how much new orders can they handle? How much distribution capacity? Can their ports handle it? Can their railways handle it? It's interesting. 

Of course, we came back from Vietnam, and within days, the President again tweeting about unfair practices that he sees from Vietnam. This week, it was about potential unfair practices out of India. It's definitely, we're in the whack-a-mole phase now of trade disputes. You look at the Fed this past week, Powell talks about corporate uncertainty. That's what it is. People just do not know where the where the next shoe is going to drop. It's disconcerting when you've got to manage a global supply chain and plan two years ahead of time.

Hill: Earnings season starts to heat up later this month. Anything in particular you're going to be watching?

Quintanilla: You know, if you look at how earnings estimates generally change within a quarter, analysts tend to bring down the numbers as the quarter gets closer to the end. This quarter, they've not brought it down as much as they normally do. Hopes are actually pretty high that although earnings may not be up year on year, they might not be down that much. I think it's going to be a real mix of winners and losers, as we always like to say, but in this case, I think to a heightened degree. If you miss without good reason, you're going to get punished on a price action basis with your stock. If you somehow show that you've managed to navigate well, money is just going to flow in. Investors have diminishing tolerance for misses, and an increasing appetite for winners.

Hill: Every Monday through Friday from 09:00 AM to noon, he's hosting Squawk on the Street and Squawk Alley. When he's not doing that, he's working on things like Vaporized: America's E-Cigarette Addiction. The new documentary premieres Monday, July 15th at 10:00 PM Eastern and Pacific on CNBC. From a business standpoint and a health standpoint, it is eye-opening stuff, so don't miss it! Carl Quintanilla, always good to talk to you, my friend!

Quintanilla: Until next time, Chris! Thanks!

__

Hill: Time to get to the stocks on our radar. Our man behind the glass will hit you with a question. Jason Moser, you're up first. What are you looking at this week?

Moser: I had fun teasing this out on Twitter yesterday. The company is answers ANSYS. ANSYS develops and markets engineering simulation software. They have a reputation for being the gold standard in the space. Customer base of around 45,000 worldwide with renewal rates clocking in at 95%. Three times as large as its nearest competitor in this space when we're talking about revenue. When you look at the overall market, simulation software is a market that is large and growing, slated to hit about $15 billion by 2023. Plenty of opportunity to capture some additional share out there for this company. 

Hill: Steve, question about ANSYS?

Broido: I would imagine their customers are very specific. How do they attract new ones?

Moser: It's very interesting. They actually have a very large presence in academia. They're getting a lot of their engineers and customers as they're going through school and learning about all of these different types of engineering projects. 

Hill: Emily Flippen, what are you looking at?

Flippen: About once a quarter, I get really excited about this company, and that's Domino's Pizza, DPZ, because they report on Tuesday, and whenever they report, I always crave myself a Domino's Pizza. But no, they're coming out a new strategy, it's a fortressing strategy. It's essentially building a ton of Domino's Pizzas, so you must order your pizza from Domino's to get it in 15 minutes. I'm looking forward to Tuesday, to say the least. 

Hill: And the ticker?

Flippen: DPZ.

Hill: Steve, question about Domino's?

Broido: I see them moving a lot beyond pizza. Is that a good thing?

Flippen: It's not a bad thing. But personally, I think Domino's Pizza, it's there in the name, it's vital for them to have good pizza.

Hill: Andy Cross, what are you looking at?

Cross: Netflix, NFLX, reports earnings next Wednesday. Stock's up 40% this year. It's had a nice little run after a good quarter, but it's stagnated a little bit, Chris. I'm really looking to see, again, it comes down to new member additions for Netflix, as they continue to grow around the globe. They added almost 10 million net new members last quarter. Looking to see how that is growing and will that be able to continue to get their revenue growth up north of 25% year over year. 

Hill: Steve?

Broido: What is one Netflix show every one of our listeners should be watching right now?

Cross: Everyone was watching, apparently, Friends and The Office a lot, but no longer on Netflix. I don't know.

Flippen: Stranger Things!

Cross: Stranger Things, yeah! I'm still not through all the seasons.

Hill: Three very different businesses. Steve, you got one you want to add your watch list?

Broido: I think I own Netflix, so let's take a look at ANSYS. I think ANSYS sounds pretty cool!

Moser: All right!

Hill: All right! Jason Moser, Emily Flippen, Andy Cross, thanks for being here! That's going to do it for this week's edition of Motley Fool Money! Our engineer is Steve Broido. Our producer, Mac Greer, is on vacation. So, if the show wasn't good, that's why. I'm Chris Hill. Thanks for listening! We'll see you next week!