In this episode of Industry Focus, Dylan Lewis and Motley Fool contributor Brian Feroldi break down three great tech businesses. Learn about their operations and balance sheets, and how these businesses are innovating to keep competition at bay and preparing themselves for future growth. They also discuss insider buying and selling and how to approach it. Finally, they talk about smoking meats, and Austin Morgan has some tips to share.
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This video was recorded on April 24, 2020.
Dylan Lewis: It's Friday, April 24, and we are talking about some of the fastest-growing big tech stocks. I'm your host Dylan Lewis, and I'm joined by Fool.com's Brian Feroldi; not just "OK Brian Feroldi," Brian Feroldi. Brian, how's it going?
Brian Feroldi: Did I just get a raise; did I get an upgrade? This is amazing. And, Dylan, I have to start the show off by telling you something really quick. Jason Moser changed my life forever yesterday, when he recommended putting oregano on top of your pizza. I don't know if you've ever tried this, I tried it today; I'm sold for life, It's oregano on my pizza from here on out.
Lewis: [laughs] That doesn't shock me. I mean, Jason Moser is the biggest McCormick homer I know, he pounds for that stock and absolutely loves the company, pounds the table. And it doesn't surprise me that he's coming up with fun ways to make food better; especially, if it's remotely seasoning related, so. [laughs]
Feroldi: There you go, there is your tip for the day. I think we're done here. [laughs]
Lewis: [laughs] We'll actually have some other food-related tips on the back half of the show. We teased it on Twitter, but we'll be talking a little bit about smoking meats, something that Austin Morgan and I are both very fond of. But before we do that, Brian, we're going to talk about some stocks, and specifically, we're talking -- this is an idea that you sent my way -- we're talking about the three fastest growing big tech stocks out there. And before we get into the companies we're going to talk about, why don't we break down exactly how we're going to define that, just so we're clear?
Feroldi: Yeah. So, we use screens sometimes to look for companies that meet criteria that we are interested in. One of the things that I like to look at is sales growth. To me, fast sales growth is an indicator that the company is doing something right. And I like to see companies that are growing their top line very quickly. So, in this case, we're going to look at 10 tech companies that have already reached a market valuation of at least $10 billion, so those are large businesses. And we simply are talking about three companies that are absolutely -- have produced enormous sales growth over the past five years, huge numbers. So, yeah, let's get into it.
Lewis: Yeah, we could go from third to first and really build up the drama, but, you know, we're just going to go with No. 1, right off the bat. With a five-year sales CAGR of 95%, Brian, our first company is Uber. That is outrageous.
Feroldi: That is nearly doubling your revenue every year for five years; jaw-dropping, just simply jaw-dropping growth. And for a sense of scale here, Uber is about a $49 billion business, I'm sure our listeners are super familiar with it, but just in case you don't know, it's the leading rideshare platform in the world. It has 5 million drivers on its platform. Last year it did 7 billion trips; that was up 32%. So, as you can see, growth is starting to slow pretty substantially. But the company actually has five different operating segments: rides, which is the lions share of revenue, 76% of revenue, and that's what you and I take whenever we use our app to call an Uber. They also have Eats, which is their food delivery service, which is still growing very quickly. Eats is 22% of revenue. So, this is still a rides and eats company, pretty much.
They also have Freight, which is the delivery of goods, the last-mile delivery of goods. Another one that holds lots of potential, but it's just 1% of sales. And then two other, basically negligible ones for them now, would be their Other Bets market. I love that they're stealing one out of Google's [Alphabet] playbook, right? Calling it "Other Bets." And that's what they consider to be scooters, e-bikes, other mobility products. And then finally is their autonomous vehicle pilot program. They've been trying to get autonomous vehicles to go mainstream for years and that is obviously not a big financial contributor now.
But that's a quick gist on Uber.
Lewis: I like that breakdown there, Brian, because I think that we know it so well as the ride-hailing company, but the reality is, if this business is going to survive and thrive, it's probably going to look quite different in five or 10 years than it does right now. And you're getting that hint with the investments in Freight, the investments in the Other Bets, other mobility concepts that might prove more profitable than ride-hailing. And of course, the autonomous driving, which is such a large part of the long-term thesis for this company.
Feroldi: Yeah, autonomous is a massive opportunity as well as a huge threat. The first company that really gets to level four or level five and deploys an autonomous taxi network globally, that's going to be an unbelievable competitive advantage. So, no surprise to see that Uber sees that threat and has invested heavily to make sure that it is a player in the space.
Lewis: For the most part, when you're looking at the numbers for Uber, especially over the last five years, you're seeing that hockey-stick growth [laughs] that everyone really likes to see. And of course, as the denominator gets larger and larger, coming by that growth gets harder and harder. But business is still putting up some pretty interesting numbers. Over 65 billion in gross bookings last year. We can't anchor too heavily to that number because that's basically the economic value that they're facilitating, not what they're actually pulling in. On that, they did about $14 billion in revenue, up 26%, which might sound like a steep deceleration from that CAGR that we're talking about before, but like I said, I mean, the bigger that denominator gets, the harder the growth is to come by.
Feroldi: Yeah. And this is common, you see hypergrowth. Sadly, Uber was basically all that hypergrowth went into private investors' pockets as opposed to public investors, that's just a sad fact about when this company chose to go public. So, as you pointed out, $14 billion in revenue, up 26%, not exactly chump change, but not as fast as you might expect for somebody that's changing the world like Uber is, especially compared to its five-year revenue CAGR.
But the more important number to me there is its expenses. [laughs] This is a company that produced $22.2 billion of expenses last year. So, you subtract those numbers and you're looking at a $6.6 billion net loss. So, quite a sizable number.
Lewis: Yeah, and you hinted at it before, but so much of the growth, so much of the market share capture for this company happened while it was still a venture-backed company and it was not a public company. And so, for a good chunk of the time that it has been public, you know, over the last just over a year or just under a year or so, it's been kind of a disappointing stock.
I think shares debuted somewhere in the $40s, they're currently trading in the high $20s, and a lot of folks have, kind of, struggled to know what to do with Uber, because on the one hand, it is this market-leading company. By basically every metric in every market, they are the leader when it comes to ride-hailing and most mobility services. However, there's this long-term question mark with autonomy with them, specifically because they're going up against some pretty deep-pocketed competitors who are also investing really heavily in autonomous driving.
Feroldi: Yeah. I see their current business model as basically a bridge between what we have today and autonomous driving. So, that's a big question mark for this company. On the flipside, I really like the optionality of this business. I love that they start out as Rides and have added in Freight and Eats and Other Bets on top of that. That's something that grabs my attention as an investor.
And the other thing that's worth pointing out here is, Uber has actually taken some pretty substantial positions in other leading delivery platforms, ride-hailing platforms in countries where it's not the No. 1 or a No. 2 position. Those investments actually total $11.8 billion, which is a very sizable number. Again, this is a company that's currently worth about $50 billion. So, 20% of its market value is in its ownership positions in other companies, such as Yandex, Didi -- Didi is the big one; that's China's leading ride hailing company.
The other thing to note here is the company has a pretty decent cash position, $11.3 billion in cash on its books versus debt of $5.7 billion. Those are pretty good numbers in their own right, but again, when you're comparing that to a net loss of $8 billion, that number is going to sink like a stone pretty quickly.
Lewis: [laughs] Yeah. And I think the hard thing is, when you look at the businesses that they're in right now, you know, they do their breakouts for adjusted EBITDA and they have those five different segments, the only one that is posting positive adjusted EBITDA right now is the ride segment, and you know, it is the largest portion of their business, so that's a good thing. But it's not a profitable business right now, and we're talking about adjusted EBITDA, we're not [laughs] really getting into, you know, the core GAAP financials.
So, the ride-hailing business, where most of the money is coming from, is not profitable. A lot of the other spaces where they're making investments -- Eats, Freights and then the Other Bets and autonomous stuff as well -- not profitable at the moment.
And I know, longer term, the company is targeting, I think, an adjusted EBITDA margin of 25%. I'm not exactly sure how they're going to get there, because so much of what they're doing right now doesn't seem to track to that.
Feroldi: Yeah, I'm with you. They've made some pretty [...] promises out there about getting to profitability, at least on an adjusted basis, shall we say, but I'm not completely sold on their potential to do so. But no matter what, it's going to be a fascinating company to follow.
Lewis: [laughs] And the growth story is hard to argue with. That 95% number is just outrageous.
Alright, our second-fastest mega-growth tech giant; this is one that a lot of Fools are going to know, Shopify, Brian.
Feroldi: Yeah. Shopify, just an unbelievable homerun, beyond homerun investment. And unlike Uber, this is a company that has hugely benefited public investors. So, Shopify came public in 2014 at a market valuation of $1 billion, you fast-forward to today, $75 billion. So, public investors have enjoyed huge returns from this company.
For those that don't know it, Shopify is focused on creating tools that enable e-commerce to happen, specifically with a focus on small- and medium-sized businesses. So, you can use Shopify's platform to create a digital storefront, accept payments. And they're actually branching out into a number of other businesses.
But getting to the theme of our show, Shopify revenue growth over the last five years, 72% compound annual growth rate; simply stunning.
Lewis: And you threw out that market cap number, it is worth mentioning that if we had done this show at a different point [laughs] this month or, you know, possibly in March, the number would've been totally different. I think it could have been down in the $40s billion. And this stock has been on an absolute tear over the last five years, but it's been on an [laughs] absolute tear over the last three weeks too. I think we should probably give a quick recap, because I'm sure there are some people, who maybe are shareholders or have been watching this company and are wondering, "What the heck is going on?"
And so, if you go back to early April, they announced that they were going to be suspending some of their financial guidance. And, really, I mean, this was due to the uncertainty around COVID-19. And as is often the case, the market did not like that news. And I think Shopify is a case in point for why you shouldn't over-index to these types of announcements, especially when there's something that is systemwide going on, because two weeks later the company's Chief Technology Officer, Jean-Michel Lemieux tweeted, "As we help thousands of businesses to move online, our platform is now handling Black Friday-level traffic every day, it won't be long before traffic has doubled or more." And I think that that right there, [laughs] basically put any concerns to rest, Brian.
Feroldi: Yeah. That's just a stunning statistic to think about. And we've heard it from several companies, Target the other day came out and said that "We're seeing essentially Cyber Monday traffic on our site every single day." And for a sense, so Shopify's stock has basically doubled over the last month. Year-to-date, this company is up 64%, not bad given that we're in the middle of [laughs] global shutdown of economies. Shopify is still posting pretty good growth. Its growth rate has slowed down, but in 2019 revenue growth came in at 47%; a very respectable number given the scale that this company is operating at. Its gross margins are holding up pretty good, typically in the mid-40% range.
And as you pointed out, given their guidance, Shopify has a history of basically plowing every single dollar that they can back into the operations to create new tools, new products. One that I'm particularly excited about is the Shopify Fulfillment Network, which is kind of like an Amazon Prime-like feature where Shopify kind of does the warehousing of products for their merchants and handles, kind of, the fulfillment aspect of it. They actually acquired a company called 6 River Systems last year that provides them with some warehousing technology to make that a bit easier.
So, Shopify, in my opinion, is just doing everything right, right now.
Lewis: Yeah. [laughs] It's hard to argue with the results and, you know, it is awesome that we were able to participate in the growth story as retail investors. You know, this was a sleepy e-commerce company only a couple of years ago, and it has just absolutely exploded. I think what we're seeing in terms of website traffic is, kind of, a testament to the fact that this business not only has tailwinds going for it, with the rise of e-commerce, with more and more businesses going online, but in fact, given everything that we're dealing with, it's probably a business that's built to thrive as we're dealing with this pandemic.
Feroldi: Yeah. Another thing I want to throw out there, Shopify is a very conservative company on official front. They have done several common stock offerings over the years to take advantage of their soaring stock price. So, right now, even though they are operating at a loss, it is a pretty small loss and they have $2.4 billion in cash, zero debt. That gives them plenty of financial flexibility to continue doing what they're doing and plow everything they can into operations.
Lewis: We love to see that. If you don't owe anybody any money, you can be pretty nimble and you can be pretty opportunistic. Brian, you talked about that growth rate before, and we have seen that tick down over the last couple of years. I think it was at one point in the 70s, and then one point in the 60s and the 50s. And we are, kind of, in the high-40s now. This is the natural progression that you'd expect. I think, given the valuation for this business, if there are any serious decelerations in the growth rate, the stock is going to get punished.
Feroldi: Yeah. $1.6 billion in revenue. Current market cap $76 billion. That is a generous [laughs] price-to-sales ratio, shall we say. So, yeah, Wall Street is basically saying Shopify is going to own this market. So far it does, but yeah, there's a lot of good things priced into Shopify's valuation right now.
Lewis: And of course, they are currently losing money when you go down to the bottom line and they're also losing money when it comes to operating income, and that's because they are making some pretty big investments in R&D and their SG&A is pretty high, not all that rare for a high growth business that is looking to scale as quickly as possible.
Feroldi: Yes. I will say that I do own this and I have no plans to sell, but the valuation does give me some pause at moments.
Lewis: Yeah, yeah, I'm 100% with you. And we'll recap, at the end, kind of, our takes on these three stocks, but it is a tough one to look at in terms of valuation and dive right in. I can understand how people might have some reservations about that.
Our last company, another highflyer, another one that Fools are probably pretty familiar with, and that's The Trade Desk, another pretty gaudy compound annual growth rate over the last five years, Brian.
Feroldi: Yeah, The Trade Desk -- I was actually a bit surprised to see this qualify as a large-cap status, but market cap of The Trade Desk right now is $12 billion, which is pretty sizable. And sticking with our theme, over the last five years we've seen The Trade Desk grow its top line 72%; a compound annual growth rate of 72%, that is just awesome.
Lewis: Yeah, it is, and you know, a lot of Fools own the stock, so kudos to them for coming aboard and picking out a great investment. I have seen some people, both in our emails and on Twitter asking this question: The Trade Desk seems almost like a company like Shopify, that is really well built to handle what we're dealing with in terms of the global pandemic and possibly even thrive. You know, they look at the likes of Netflix doing very well right now and say, "Well, The Trade Desk is also a streaming video play, how come Netflix is doing so well and The Trade Desk is still, kind of, slowed off a little bit?"
They have two fundamentally different business models. When you see a company like Netflix, that is a membership model, and people are paying, they are paying every month. And so, there aren't a lot of disruptions there unless there's a prolonged period where people are deciding to reduce their spending and then making those hard choices about where they're going to cut. But a company like Trade Desk, they are in the ad buying process, and the difference is, when we're seeing consumer spending go down, we're also seeing ad budgets get cut. And you can really notice this, it's not as pronounced as it used to be, but if you look at a company like Hulu and a platform like Hulu, you can see the ad spots and whether or not they're getting filled on the platform.
And I remember a couple of weeks ago, basically being able to watch shows straight through, you know, [laughs] 22 minutes in-and-out, because there weren't ads being bought and sold. And it seems like that's been remedied a little bit, but because The Trade Desk is essentially an ad middleman, they create the buy-side platform for advertisers, they are going to be hit whenever ad dollars start to shrink.
Feroldi: Yeah, that's a good point, we should probably just drill down a little bit on what The Trade Desk does, to your point. So, they provide a self-service cloud-based platform for ad agencies and brands that helps them to pick through massive amounts of data and optimize their ad placements. So, this is called programmatic ad buying. This is a very small market when compared to the overall size of the global ad market, but it's the fastest growing segment of the ad market. So, I'm particularly interested to see how this company does over the next couple of quarters, because to your point, I think there's no doubt we're going to see a massive contraction in the number of companies that are advertising and spending.
However, what I'm curious to know is, does that mean it's going to accelerate the shift of those dollars to programmatic? Because we've seen that very thing happen with other segments of the market, when there's periods of mass disruption, technological innovation and switching accelerates during periods like this. So, I'm definitely going to pick through everything The Trade Desk says with a fine-tooth comb and be really interested to see what they have to say.
Lewis: Yeah. And actually, that's a great point, Brian, because with ad buyers, these are things where there's some mutual exclusivity to where money goes. You know, if you have a budget of, let's say, $1 million and you can spend some of that with mass media, some of that with online advertising, digital media; unless your budget increases, every dollar you put in one place is going to be at the expense of another place. And what we've seen over the last five, 10 years is marketers increasingly realizing that places like Google and Facebook are great places to spend money in terms of return on investment for their marketing dollars. We're starting to see digital marketing go toward streaming video, and I think if The Trade Desk can show that those are ad dollars that are well spent, we will very quickly see a lot of that money shift from conventional media, your average commercial during a cable news slot, to the likes of Hulu or some of the other ad-supported video players out there. Because, at the end of the day, marketers are going to respond to wherever they are getting the best return on their investment.
Feroldi: Yeah. And right now, there's more pressure on them than ever before to make the most of their ad spending dollars. And to give you a sense of scale here, last year marketers spent about just over $3 billion on The Trade Desk platform. For comparison, the global digital ad marketing is $725 billion. So, even if that number falls by -- jeez! -- 50%, if even just a tiny fraction of that gets shifted over to programmatic ad buying, it is in the entire realm of possibility that The Trade Desk could grow this year, which would just be crazy, but that's a huge advantage of having a technology that is such a small part of the overall spending market.
Lewis: Yeah, and they're still in that lovely spot where they're not a massive, massive company, you know. They just make it over that $10 billion hurdle that we had set for the show. I think they're just about an $11 billion company right now. And so, yeah, it's a company of a certain size, but the reality is, everything that they're able to take away from conventional media advertising is going to be very accretive to their total addressable market, and certainly, their financials.
And speaking of, Brian, why don't we talk a little bit about what the story was for them in 2019?
Feroldi: So, basically, pick a number, it looks good. Revenue was up 39% to $661 million. The company produced net income, y s, net income, of $108 million. A $108 million of net income on $661 million. That's a very attractive profit margin already, and the company is still scaling. The numbers look even better when you look at a non-GAAP basis. So, very, very strong growth on the top and bottom lines.
This company also has a bulletproof balance sheet. $250 million in cash, no debt. So, completely understandable why this company has gotten so much attention from people that like growth.
Lewis: Yeah. We touched on some of the opportunities ahead of them and the ability to just take a little bit of that spend that's going elsewhere right now and bring it over to the digital ad market, specifically connected TV. Anything else on opportunities before we hit a listener question on The Trade Desk, Brian?
Feroldi: Yeah, I mean, the CEO of this company, again, points out that $725 billion is the global ad market today. While that's definitely going to take a hit in 2020, the trend is still upward when it comes to advertising. And he believes that the global ad market for digital sales will exceed $1 trillion sometime in the 2020s. So, The Trade Desk's market share of that number is infinitesimally small.
Lewis: [laughs] So, because we're talking Trade Desk, I wanted to loop in a listener question that we got on Twitter recently. Ro hit me up and said, "You guys bring up The Trade Desk a lot, I'd love to hear your thoughts on recent insider selling in the company, specifically, the CEO, CTO and CLO." And then he posted a screenshot of some insider sells over the past couple months.
Before we get into the specifics of The Trade Desk and some of these transactions, Brian, how do you generally think about insider buying and selling?
Feroldi: Yeah. I know some people really paid close attention to this stuff, and it makes sense. If people with more information than you, that know the business better than you are selling, shouldn't you be concerned? That's a very logical thing to say. I personally almost never pay attention to insider selling. I know from past experiences that insiders sell for a huge number of reasons. Maybe they want diversification, maybe they're buying a house, maybe they're sending a kid to college, maybe 99.9% of their net worth is tied to their employer stock and they literally see other opportunities for diversification.
So, insiders sell for so many reasons that, when I see somebody is selling shares, it doesn't really concern me at all. For example, we've seen that Mark Zuckerberg -- I saw a headline of the day, "Mark Zuckerberg sells $500 million worth of Facebook." And if that's all the information you had, you'd be like, "Oh, my God! I got to get out of Facebook." And then you realize, 100% of that was going to charity and that's basically 1% of his position in Facebook. So, context is really important.
Lewis: And I don't know why CEO Jeff Green decided to sell his shares, but it's important to then look at, OK, if this person is selling, what is the stake in the business? And while the other executives definitely matter, Jeff Green is really the person I'm following with this business. He's a visionary leader, someone who has a very good finger on the pulse for what's going on in this market, and he currently owns about 11% of the company, or based on that market cap I threw out there before, over $1 billion in Trade Desk stock.
So, he has sold, but I think it's pretty safe to say that his financial outcomes are directly tied to what happens to The Trade Desk as a company and that's pretty good for shareholders.
Feroldi: Yes. And we've also seen, it's also common for shareholders, for major shareholders, to sell now for tax reasons. These guys often have enormous tax bills that they have to pay, and one of the ways that they pay them is by liquidating some of their stock. So, that's one of the many reasons why I don't put too much stock in following what insiders do, with the sole exception being -- let's say, The Trade Desk stock fell 75%, and then CEO Green dumped 90% of his position, boy! Would I pay attention to that! But in this case, minor sales all along the way, don't bother me at all.
Lewis: Yeah. And very often, some of these are set on a schedule, where people are trying to wind down a very large position because they own 15% of a company and they want to own a significant chunk of the company, but they also want to have some liquidity just so that they can do a lot of things you're talking about, buy homes, possibly give charitable donations, what have you.
And so, I think, with a leader like Jeff Green clearly owning a large stake of the business, nothing to worry about there. If Jeff Green's ownership went from 11% to 2% overnight, I would be a little concerned. [laughs] The other thing, I think, to watch with this is, if you're seeing anything that seems a little unseemly with when management is selling shares. So, if there is information that is not yet public that is very damning for a business, it would be, I think, highly unethical and would probably lead to some investigations if management were to sell and act on that information beyond whatever they already had scheduled with some of those insider sales. So, anytime you see something like that too, that is another reason to be concerned. But with what I see with The Trade Desk, nothing to worry about.
Feroldi: Yeah. I think we're in agreement there.
Lewis: Alright, so Brian, three mega growth businesses. What do we make of them, how are you looking at these companies, do you own any, and if you don't own any, are any of them on your watchlist?
Feroldi: Well, I'm happy to say that I own Shopify and The Trade Desk. Shopify is the bigger portion of my portfolio, but that's because of its unstoppable stock market run. The Trade Desk I also own, I like The Trade Desk very much for the future, between the three would be the one that I would be the most interested in purchasing today if I didn't own it.
I'm not sold on Uber. I think there is a whole bunch of risk there. I don't like the financial statements. I'm really worried about the long-term threat of autonomous networks. Now, if Uber wins the race, that's going to create so much value that you could have ample opportunity to get in, but for me, for right now, I'm definitely staying away from Uber and I would be far more interested in Shopify and The Trade Desk. How about you, Dylan?
Lewis: So, I am in the same boat, you can tell because we spent a lot of time talking to each other. [laughs] I own Shopify and The Trade Desk. I think at this point, Shopify is about the position that I want it to be, mostly due to the insane share price appreciation that we've seen over the last couple of years. I might decide to add to it here and there, but it's, kind of, been built into, you know, the multiple buys that I like to do overtime to build to a full position. The Trade Desk is still a smaller position for me, likely one that I'll be adding to over the next couple of months and quarters.
I think if I were to buy one today, I'd probably go with The Trade Desk simply because it's a smaller company, a little bit earlier in the growth story [laughs] and the valuation isn't quite as insane as Shopify's, there might be some kind of come-back-down-to-earth moment there.
The struggle that I always have with Uber is, I'm just not sure how they're going to make money. And you know, I was actually thinking about it the other day, and I was like, well, I think the only way that Uber could have made it work was if there was exclusivity with their drivers. Because they did this amazing thing where they build out this network of all these people that are willing to take people places, but the second they did that, all of these other ride-hailing companies and transportation companies were able to take advantage of it, because they are contractors, they are not full-time employees, and there are a lot of other problems that come along with that. But I don't know what is uniquely Uber and what they're really going to be able to do to show any pricing power and really get a hold on their financials.
Feroldi: Yeah. I think we're in agreement there. It's a fascinating company. I love it as a consumer; I will continue to use it. But, just because a technology is disruptive and changes things, doesn't mean it's a good investment. I've seen this, if you want -- well, what do you mean? Just go ahead and pull up any solar stock over the last 10 years and see. I mean, solar has become unbelievably popular in so many place. Boy! -- is it hard to make money in solar and in investing in solar!
Lewis: Yeah, and then there are some smart people that are taking the other side of that one with Uber and saying, this is a disruptive company, this is where mobility is going. I think, if this is a stock that you're going to buy, you have to believe that they are going to win autonomy or certainly be really close to the leader, because that's going to be something that fundamentally changes their business and their financials, probably makes it a little bit easier for them to make money long-term. But if they can't pull that off and the likes of Google's Waymo or Tesla or Apple or, you know, [laughs] insert any car manufacturer that's investing in that space, GM Cruise, you know, they're going to have a hard time. And so, I think that that is the thing you have to be super convinced of if you're going to buy this stock.
Lewis: On a totally non-stock related note. NFL draft was last night, Brian, your Patriots traded out of the first round, how do you feel about that?
Feroldi: The Patriots are value investors, Dylan. I don't know if you know that. And that has worked out pretty well for us over the last, oh, I don't know, 25 years. So, I trust whatever they're doing, yeah, but my son is a huge football fan and he asked, he begged us to stay up last night so he could watch some of the draft, so we let him watch the first hour, looking forward to round two tonight. Did you watch?
Lewis: I did. Yeah, I was preparing notes for the show and had the draft up on my computer. And, you know, it was just nice to have some live sports again. [laughs] It felt, kind of, good to have something that reminded me that there was, you know, some distractions out there and that there was something fun to watch, so I was excited.
I have no idea what to make of the Jets pick Mekhi Becton. I like that we're shoring up the offensive line, that sounds great to me, but there's just a lot of holes to plug on that team right now. [laughs]
Feroldi: They got an offensive lineman; sounds good.
Lewis: Yeah, yeah. And I teased this on Twitter, but I wanted to chat a little bit with Austin about smoking some meat, because I did a little meat smoke, did some chicken legs, taking advantage of being home for the day yesterday. I did a buffalo sauce and a Sriracha lime over mesquite chips. And Austin's really the person who knows smoking a little bit better than me. So, I want to check in with him and see what he's been working on and how he's been handling stay-at-home?
Austin Morgan: That actually sounds pretty good, what you did, whatever it was, it looked good.
Lewis: Yeah, it turned out solid.
Morgan: I did ribs over the weekend. I did 3-2-1 ribs for the first time, which is three hours on the smoker, two hours in a wrap, and then one hour of saucing. So, I did hot barbecue rub, let it sit for an hour, three hours on, misting it with apple juice every hour, 45 minutes. In the wrap with butter and brown sugar, spicy barbecue sauce, good mix of sweet and spicy. Dust it with a little hot barbecue at the end. So, so good.
Lewis: [laughs] It's never been a better time to cook things that take a lot of time.
Morgan: Oh, no, it's great. You could do it every day if you wanted to.
Feroldi: Unless you have three kids that you're trying to homeschool at the same time, I will point out.
Lewis: [laughs] Yeah, can you tell, who does and doesn't have kids in this conversation? Austin, you've done a fair amount of meat smoking. Any tips for anyone that wants to get into it?
Morgan: Get a pellet smoker, it's so easy. [laughs] Set the temperature, make sure it doesn't run out of pellets and wait.
Lewis: Yeah, we're on different rigs. [laughs] I have, like, a coil setup with lava rocks and I don't have any control over the temperature, so there are times, where to expedite things, I need to pull it out after a couple of hours and finish it in the oven. But you know, I inherited it, so I didn't really have to, like, pay for it. So, I'll take it.
But yeah, I'd love to hear how our listeners at home are spending the time and whatever they've picked up. I know a lot of people are really into sourdough starters these days and that's become a really big thing. So, if you have anything fun that you're doing to pass the time, email us at IndustryFocus@Fool.com or you can tweet us @MFIndustryFocus, give us your food ideas, give us your show ideas; we love getting those too.
Brian, thanks so much for hopping on today's show. Austin, thanks for the barbecue tips and for all your help behind the glass, metaphorically; you're in your home office, there is no glass there.
As always, people on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against stocks mentioned, so don't buy or sell anything based solely on what you hear.
For Brian Feroldi, I'm Dylan Lewis, thanks for listening and Fool on!