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Why You Should Watch These Smaller Start-Ups

By Chris Hill – Jul 22, 2020 at 10:36AM

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These boring start-ups are doing pretty well during this environment.

In this episode of Motley Fool Money, host Chris Hill chats with analysts Ron Gross and Andy Cross about the latest headlines and news from Wall Street. They discuss the recent hack at Twitter (TWTR). They look at the earnings reports of a streaming giant, big banks, and a medical device and consumer goods company. And, as always, they share some stocks to put on your watch list.

Plus, Chris chats with CNBC reporter Kate Rooney about venture capital, start-ups, fintech, and more.

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.

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This video was recorded on July 17, 2020.

Chris Hill: We've got the latest headlines from Wall Street. CNBC reporter Kate Rooney is our guest, and as always, we've got a couple of stocks on our radar. But we begin this week with Twitter.

The FBI is investigating Wednesday's attack on Twitter's platform that involved hacking a number of high-profile accounts including Elon Musk, Bill Gates, Jeff Bezos and Joe Biden. The hack was a scam to promote a cryptocurrency, but it has raised serious concerns, Ron, national security. And, Ron, there are a lot of questions yet to be answered, including a report by Vice that alleges that one or more Twitter employees were involved in this, and just whether or not Twitter has a circuit-breaker to deal with this sort of thing, because this hack went on for hours.

Gross: Yeah, it looks like insiders of the company were potentially tricked into handing over access to internal systems, which is obviously a major internal flaw whether they were involved on purpose or not, either way, a really large weakness that absolutely has to be corrected. You know, there are broader implications to this and just a bitcoin scam, which is bad enough, it looks like maybe $120,000 or so were scammed from unsuspecting folks. But this is especially worrisome heading into the U.S. presidential election, given that Twitter is so important to the discourse, the political discussion that goes on. And no matter which side of the aisle you stand on, I think we can all agree that this is [laughs] the mother of all elections coming up here, and we need our information sources to be as pure as possible, free from hacking, free from manipulation, and right now it doesn't seem like that's the way it is.

Hill: Andy, what do you think?

Andy Cross: Yeah, I think the worry for me on this is the tactical approach they took. And it wasn't really widespread, it wasn't like we've seen a lot of the other hacks across to some of the credit card companies we've seen, Home Depot, Target the like, but it's much more specific and almost like a surgical strike against very specific targets.

And to Ron's point about the worries about the discourse in our country, Twitter is now becoming a platform, it's a major platform for communications across all board, whether you're a person, corporation, movie star, politician. So, the fact that the hackers, even though they just, I mean, essentially, it was just a small amount of the ransom, but it was much more than messages sent. So clearly, Jack Dorsey, who still is the heart and soul of Twitter and talked about this on his own feed, and he owns a good chunk of stock of this company, this has to be really one of the big concerns in the boardroom about going into election, but just in general, because Twitter now is becoming so ubiquitous as a platform of communication.

Ron Gross: You know, it feels to me like this was, kind of, a test run to be honest with you. I can't imagine they thought they would get dozens or hundreds or thousands of people sending in money in the hope that the money would be doubled and sent back, that seems a bit far fetched. Which is even scarier, to be honest with you, if this truly is a test case for something bigger, something more widespread.

FBI, I'm happy to see they are in there. We need to get our technology experts in there, the Twitter experts. We need to shore this up, these communication systems that we're all using every day; and obviously, going into the political season is even more important. Yeah, and you know, it does just continue to speak to the use of cybersecurity firms whether you're talking about CrowdStrike or the like, just as we think about where we are spending our time and the security around that, and what we're putting out there right now. And it gets more and more valuable and really speaks to more of the cybersecurity investment ideas and recommendations we've talked about numerous times and have recommendations at The Motley Fool.

Hill: Let's move on to some earnings news, second-quarter profits for Netflix (NFLX 2.08%) came in much lower than expected, that plus weak subscriber guidance in the third quarter sent shares of Netflix down more than 6% on Friday, although, Andy, shares of Netflix still up, even with this drop, 50% year to date.

Cross: Yeah, it's been a wonderful year for viewers of Netflix, for customers of Netflix, and also for shareholders. The two big pieces of news, Chris; you mentioned the earnings, but the other one was Ted Sarandos' announcement that he is now going to be the co-CEO with founder Reed Hastings. So, two big pieces of news across the earnings stream, but just looking at the earnings or the earnings report, looking at the earnings. They added 10 million paid members during the quarter; it's a record, that was versus 2.7 million last year; down a little bit, down from the 15.8 million monster quarter they did in the first quarter. So, they talk a lot about the earnings, that, hey, this is a pull-forward, when you think about what we've done over the last two quarters, essentially they did 26 million new adds during the quarter, that was compared to 28 million of all of 2019, so they pulled that a lot forward. They talked about some of the growth slowing, but really a monster continuation of gaining members because of the platform the Netflix has, the content they are continuing to produce, and the winning content, the customer reaction to that, and then obviously, with the COVID-19 quarantine, and we're all stuck inside viewing things on television, on our streaming platforms and the fact that the competition for those eyeballs with sports gone, live-action sports now starting to come back, but vanished the past couple of quarters has been a big advantage for Netflix.

So, revenue up 25%, average revenue per user up 5%. When you back out some foreign effects this quarter, obviously a great quarter, but the concern a little bit going forward is that the growth just won't continue into the year.

Hill: They did get a little bit more competition this week, though, as Comcast rolled out its Peacock streaming app.

Cross: Yeah, it did. And that's great for Comcast; they've been testing this now, I think, since April. I've actually had it on my own Xfinity system, so I started using it a little bit over the past couple of weeks. I got to say, they still have some kinks to work out, it doesn't operate nearly as smoothly as Netflix or some of the other ones, so there's some things I'm noticing that they don't quite have down. But clearly, it's a competitor into the space.

In the U.S., the market continues to be really ramping up in competition. International, well, Netflix really has an advantage, Chris, I think, and continues to build out that member base, not quite as profitable as the U.S., but they're going to build that out. That's a real advantage for them globally, when you look at Netflix the company and Netflix the stock. But the Peacock announcement and the release this year is nice, it's a free app. So, users can access all the content on the Peacock network.

Gross: It's funny. I think a lot of the buzz is focused on making fun of some of the content that is free, it's like, you know, you come for Battlestar Galactica, but you stay for Colombo. I'm not sure [laughs] how that is exciting viewers that are older than, let's say, 30. Of course, there's a lot more than that, but I've already seen a lot of back-and-forth about making fun of, you know, whether it's Royal Pains, or Monk; SNL looks good, 30 Rock looks good. So, there's some good content, but a lot of others that make me chuckle.

Cross: Yeah, I've been using them to watch Yellowstone, the Kevin Costner kind of western movie, just catching up on that. But yeah, there's a lot of other things out there that are a little bit speaking more to the '80s and '90s.

Hill: The big banks on Wall Street are out with their latest quarterly reports this week. JPMorgan Chase and Morgan Stanley both posting record revenue. And, Ron, at the other end of the spectrum, Wells Fargo just continues to struggle.

Gross: Yeah, better-than-expected results for those banks with strong trading departments, like a JPMorgan or a Goldman Sachs. For example, JPMorgan trading revenue was up 79%. Goldman's was up 93%. Now, profits are still weak because all the banks increase their provision for loan losses just to be careful. Some of that was probably more conservative than necessary, but that's fine. JPMorgan set aside $8.9 billion; Goldman $1.6 billion. But then, as you said, we pivot to Wells Fargo, they've been struggling for years to get out from under their 2016 fake accounts scandal. Regulators have stepped in, put some curbs on them, which make it even tougher for them to do business. Wells does not have a large trading division, they're more focused on retail clients, so it was just a weak quarter. Revenue is down 18%. They took an $8.4 billion loan loss provision. They cut their dividend. So, Wells continues to struggle.

Hill: Shares of Johnson & Johnson (JNJ 1.02%) are up this week despite the fact that second-quarter profits came in 35% lower than a year ago. Andy, the medical device division is kind of taking a hit this quarter, but their consumer division is still looking good.

Cross: Yeah, overall, the consumer business wasn't too bad, it really was the medical device sales were down 33%. They did see a little bit of an improvement in the month of June though, Chris. So, really, the first part of the quarter, the medical devices continues to get hit badly. We saw a little bit of an improvement in June. Interesting, they actually raised their guidance a little bit, $7.75 to $7.95 for the earnings per share for the year. That was a little bit of an increase from last quarter, increased in sales as well, too. So, consumer health, strength in the over-the-counter, oral care; little weakness in health and beauty. Medical devices was pretty weak across the board as people have postponed or pushed off elective surgeries and some pretty nice results on the pharmaceutical business. They continue to work on some of the COVID-19 vaccinations and putting those into trial, and putting a lot of effort and a lot of focus in there as well, too. So, Johnson & Johnson, overall, a massive company, nice dividend yield, not really a hugely expensive stock, but you can't expect too many gangbusters if you're owning the stock at this point.

Hill: And I might have buried the lede; I'm glad you mentioned the fact that they raised full-year guidance at a time [laughs] when most other companies out there are withdrawing guidance across the board.

Cross: Yeah, I think so too, Chris. I think it caught maybe a little bit by surprise, but again, because it wasn't such a great first half of the year in the medical devices business, which is an important part of the Johnson & Johnson revenue picture, was so weak, they expect that to kind of start to ramp back up in the second half and that'll help their profit picture.

Hill: Shares of UnitedHealth (UNH 0.54%) are up 5% this week after second-quarter profits came in much higher than expected. And, Andy, UnitedHealth also maintains guidance for the full year.

Cross: Boy! Much higher than -- that's an understatement, Chris. It was their biggest profitable quarter pretty much ever. They generated $6.6 billion in profits versus $3.3 billion last year, and $1.6 billion five years ago in the quarter. So, that's a massive growth.

Now, we have to be careful though, because that growth has really; on the profit side, revenues were up a little bit, but nothing like the profit side, and most of that was because, unlike -- or like, with Johnson & Johnson we saw, with people holding back on some of their medical spending, that's benefited UnitedHealth -- that hurt Johnson & Johnson, is actually benefiting UnitedHealth. So, their medical loss ratio, which is the claims they payout as a percentage of premium was 70.2% versus 83.1%; the lower means it's much more profitable for UnitedHealth, and that's one reason, the key reason why their profits were so high in the quarter.

So, really, a massive quarter. You mentioned the guidance, Chris, they expect that to kind of more normalize throughout the year. Guidance is still in the $15, $15.5/share EPS for the year, still forecasting long-term growth of 13% to 16% in the earnings over time. So, it's a profitable company, a growing company, and has been a wonderful stock over the years, very well-run. And I continue to see that continuing for the next five to 10 years.

Hill: Second-quarter profits and revenue for Domino's Pizza (DPZ 0.68%) came in higher than expected, same-store sales rose 16%. And, yet, Ron Gross, shares of Domino's are flat this week. Are we not entertained?

Gross: [laughs] You know, at $400/share, it's not the cheapest stock in the world. I think it's around 33 times earnings. So, you've got to impress to keep the momentum going. But I am impressed. I think U.S. same-store sales up 16% is great.

The weak spot, which maybe folks are focusing on, was international. The same-store sales were up just 1.3%, rather anemic, perhaps not surprising though, because at the peak, or maybe I should say the trough, about 2,400 of the company's international locations were closed. That's improved to about 600 now that are still closed. So, perhaps not surprising that there was weakness. But still, 106th consecutive quarter of international same-store sales growth and 37th consecutive quarter of U.S. same-store sales growth, really impressive. Net income was up 28%, maybe 30 times, 33 times earnings isn't that bad for a company that's putting up those numbers. Perhaps they're artificially inflated somewhat because of, obviously, we're all home and getting food delivered, but they're continuing to be innovative, their new contactless, car-side delivery option was introduced, they're rolling out new-and-improved chicken wing -- who doesn't love a good new-and-improved chicken wing? [laughs] So, they're continuing to improve their menu, which I love to see.

Hill: The stock-of-the-week award goes to nCino, a company in North Carolina that provides cloud-based software for financial institutions. On Tuesday, nCino went public at $31/share and got as high as $91 on its first day. Andy, this has me thinking of last year when shares of Beyond Meat went crazy on its first day of trading.

Cross: Yeah, Chris, it's more evidence that the IPO market, which really just froze during the past two quarters, is now coming back. So, according to Nasdaq, they said that this nCino IPO is the biggest one-day pop in a U.S. tech stock since 2000, and the only one that beat it was Baidu back in 2015. So, it was actually looking pretty good, because they continued to raise the range. They actually issued more shares than they expected. It's actually a pretty nice business, it involves, like you mentioned, banking cloud systems, banking stocks helping banks and financial institutions manage their customer relationship, onboarding, workflow, account opening, processing, all that kind of stuff, that is a pretty big need when you think about all of the institutions out there that could benefit from this. But, again, more evidence that the IPO market, which has done very well this year, according to the Renaissance IPO Index which is up 37% for the year, versus 1% for the S&P and 17% for the Nasdaq. So, more evidence that the IPO market is warming up here.

Gross: Yeah, and I think that's further evidence that investors, certainly institutional investors, may think this market is a bit frothy, and they're looking for alternative investments, something new, the newness creates a flood of cash, a flood of demand for that stock, and we see the pops that really shouldn't be happening if investment bankers are doing their jobs appropriately. So, perhaps a sign of a little frothiness in the stock market.

Cross: Yeah. [...] Bank of America and Barclays were the lead on it, and so I just wonder, if you're the founder of nCino and you're saying, oh! Did we leave some money on the table? I appreciate the pop, but we could've raised a little bit more capital there.

Hill: Pepsi's (PEP 0.81%) overall revenue fell 3% in the second quarter. But, Ron, we saw the snack division, once again, being a bright spot. And Quaker Foods is putting up some solid growth numbers, too.

Gross: Yeah, for sure, Snacks saved the day. The beverage unit was down 7%. Biggest decline in Latin America. Interestingly, Asia-Pacific was the one bright spot, up 10%. Restaurants and other point-of-sales remain closed, hurting the beverage unit quite a bit -- 11% volume decline, helped a bit by 3% higher prices but still overall very weak. Frito-Lay is up 7%. We're all home eating chips; that's just the way it goes. Quaker Food, we're all getting up eating our oatmeal; up 23%. Operating income in the Quaker Oats division is up 55%. So, that's very strong as well. COVID-related costs, as we've seen pretty much across the board, did eat into margins, so EPS was down about 18%. And as is typical, no guidance was offered.

Hill: Am I the only one of the three of us who's actually gone to, which is their relatively new direct-to-consumer e-commerce site, and bought some stuff there? I could tell, by the look on your face, yeah, I am.

Gross: [laughs] But you're not the only one, because those numbers are really strong, especially in June.

Cross: We've had big boxes of snacks, like, chips and snacks delivered to our house. And when I see those on my doorstep, I get a little bit excited to kind of dig in, even though they're meant for the kids.

Hill: Well, and you know, in all seriousness, Andy, to go back to the point you were making about Peacock, you've tried out the Peacock streaming service, it's a little clunky, the interface isn't great. That to me is, all kidding aside, that's one of the great things about, it's just a very [laughs] clean site. Clearly, it's designed with the economics for the Pepsi corporation in mind. They're not offering everything under the sun. It really wouldn't surprise me if those numbers start to get a lot bigger.


Kate Rooney covers fintech, VCs, and more from CNBC's bureau in Silicon Valley. She joins me now from San Francisco. Kate, thanks for being here.

Kate Rooney: Hi, Chris, happy to be here; thanks for having me.

Hill: So, normally in these situations, I go big picture and then go small, I actually want to do the reverse and start with a specific company, because we've seen an increase in individual investing over the past few months. All the major online brokerages, but really leading the charge is Robinhood; it's popular with younger investors. And Robinhood just raised another $600 million, putting its private market valuation somewhere in the neighborhood of $8.5 billion. What do you see as Robinhood's advantage right now? Because a year ago it seemed like their advantage was they had zero trading commissions and all the big players followed them, and that's no longer an empirical advantage for Robinhood.

Rooney: That's been so interesting to watch. So, when the rest of the industry slashed commissions, analysts were saying, this really puts pressure on Robinhood, and predicting they would potentially see some attrition for customers, a slowdown in growth, they've seen the exact opposite. They've seen record new accounts, this year especially. I think their advantage is the interface and the way that it looks, and they sort of gamify stock trading. So, for somebody who's new to the market, who wants to buy a couple of shares and just, sort of, dip their toe into trading in stocks, it seems to be more approachable, it seems to be more fun, but that's also been sort of the criticism with them that they make it too lighthearted, people don't take it seriously, there is big potential for people to lose money trading in options and things like that. But like you said, the fundraising has been unbelievable.

So, during the pandemic they raised an initial, about $300 million, and then on top of that, this week announced $320 million; it was part of that Series F funding round. And so, the companies like Robinhood, that are still able to raise money during the pandemic, have done really well. I mean, you see the other side of VC in Silicon Valley that is sort of drying up when it comes to venture capital, but a ton of investor interest, a ton of growth, and they really have to sort of cornered the millennial, first-time trader market.

Hill: It is going to be interesting to see if they can expand beyond that as people who start with Robinhood get older, get more money, maybe they want a more robust platform, more research, that sort of thing. So, being able to hold on to those people as they age, that'll be interesting to see. Where do you think this company is in three years? Do you think they are looking to go public? At one point, they would seem like an acquisition target, but now they're bigger than ever.

Rooney: Right. They have said, let me see, they have co-CEOs, and have both said that an IPO is the, sort of, endgame for them. They want to be a public company. And you think of someone like Robinhood, whose goal publicly is to democratize finance, and yet, people that are trading on their platform can't buy into the value of the company. So, you think, if any company would want to go public as part of their mission, it would be Robinhood. So, I would not be surprised if they went public in the next couple of years.

Also, people were predicting that they would go public this year. Obviously, the pandemic happened and they've still been able to raise money privately. The question, when they do come public, is their valuation. When you compare them to public comps, they are obviously, Charles Schwab and some of these brokerage firms. They are valued more like a tech company, so it would be interesting to see if that valuation holds up when they do go public.

Hill: Let's stick with millennials for a second. How is the pandemic affecting the ways that millennials and Gen Z are thinking about money?

Rooney: It's been interesting. Deloitte had an annual survey and they spoke to about 20,000 millennials and Gen Z in December and were ready to publish this report and then the pandemic hit, they did sort of a follow-up to that and were able to see that key period, March through the end of April, and based on that millennials and Gen Z are seeing higher job losses, less financial optimism, and changing views of the workplace.

So, on the job losses, that Gen Z -- we think of millennials, and there is sort of that stereotype of avocado toast and them being younger, but the millennials now make up the largest portion of the workforce, the oldest of that cohort are about 40. So, those are sort of the VP, key levels, and it's concerning that they're seeing higher job losses. And then you also have a sort of entry-level Gen Z cohort, who is also suffering at a higher level than the rest of the overall population.

And then in terms of financial optimism, it's one of the top causes of stress and some of the shutdowns have obviously played people on some sort of leave, so that was part of their study.

And then changing views of the workplace. I mean I think this is probably true across the board, but it's definitely changed the way a lot of us think about work-from-home and the potential to work remotely and where you'd want to live versus live in a big city, for example, to get a certain type of job. So, that was -- I think Deloitte has probably the best handle on that that I've seen so far, but pretty interesting.

Hill: I want to get to office space in just a second, but first in terms of the VCs that you talk with in Silicon Valley, obviously not every company is Robinhood raising another $600 million. I mean, you look at the economy over the past few months, some of the start-ups out there are struggling to varying degrees, some of them are very much in cost-cutting mode, how big an impact is that having on the overall environment in Silicon Valley?

Rooney: So, around March when this really was becoming an issue in the U.S. to the level that people probably didn't predict earlier in the year. VCs that I spoke to said that they were in triage mode, they were focusing on existing portfolio companies, they wanted to make sure they survived, they were able to get access to PPP money and that they could thrive and just figure out how to get through it, and that did involve a ton of layoffs in most cases. Fast-forward to a couple months later, once they sort of figured out their existing portfolios, VCs that I talk to, now have followed up with say, that they're now seeing this as an opportunity, there's a ton of money for them to spend, they've got record dry powder, so they're looking for opportunities. But it does seem that they've called it, sort of, feast or famine.

The famine side of it is, the start-ups that focus on hospitality, for example, or travel, have not been able to raise money because of the uncertainty and the new environment, whereas fintech, you look at a name like Robinhood or Stripe is another one that's now the most valuable private company in Silicon Valley, those that do anything related to e-commerce or the new economy, online shopping, online banking, have done really well. And it seems like investors can't get enough of those companies. So, you see, sort of, both sides of that. But it has -- we've seen, there's a layoff tracker that we've been using, that shows about 25,000 layoffs in the Bay Area for start-ups, and 70,000 globally. So, it's definitely hitting these fast-growing companies.

And a lot of folks and VCs that I talk to, point to companies that have made it through recessions and that have grown up in recession that have actually done pretty well. So, if you think about companies that came out of 2008-2009, they were sort of forced to be more disciplined on their finances. So, that is a potential silver lining that sort of separates the wheat from the chaff, if you ask a VC about it.

Hill: So, you've got layoffs that are being tracked, you've also got huge companies like Facebook and Twitter that are increasingly allowing their employees to work remotely. What is the situation with office space in Silicon Valley? Because I have to believe, if I owned a lot of commercial real estate in Silicon Valley, I think I'd be nervous right now.

Rooney: Yeah, it's starting to show up in the data. CBRE Group, one of the bigger commercial real estate firms, has shown that the volume of tenants looking for space has fallen by about half in San Francisco, which is what folks predicted when this first started happening. You have, like you mentioned, the big names, like, Twitter and Square, and Stitch Fix and others saying that they are either moving employees out of the Bay Area or they're offering the option to work remotely. So, going forward, I would think, it's either people are working fewer days a week in an office, you have the option to work remotely. And based on some of these reports that have come out, it's kind of already showing up. So, it does seem like it's taking a toll on the commercial real estate side.

And then San Francisco, in particular, is interesting on the residential side. A lot of leases, after one year, are month-to-month. So, whereas most cities, people would think about breaking their leases, I lived in New York for many years before I moved to San Francisco and I was signing 18 month leases, versus the thought of going month-to-month, and say, OK, maybe I can pick up and leave even if it's for a few months. And anecdotally, there's a couple I know right here that have said, OK, well, I'm not going back to the office until January, I'm going to sublet or break my lease and move up to Tahoe or move home for a few months until this is figured out. So, I think there's two sides of it, we're seeing it show up already.

Hill: Whether it is in the realm of fintech or just some other industry, what is a start-up that we should keep our eyes on, that maybe is flying under the radar right now. I mean, Robinhood, with their recent valuation, is probably starting to make those lists that pop up of, you know, not just the largest private companies, but sort of the companies we're looking forward to going public. What is a smaller start-up on your radar that you think is worth watching?

Rooney: That's a great question. There's a company called Marqeta, that according to a few reports -- I was out last week. So, [laughs] I was getting jealous I was there to cover it, but Marqeta, the credit card issuer, they work with DoorDash and Instacart and a couple other companies that you would know of, and they do sort of the backend credit card issuing, which some of them were seemingly boring start-ups in the fintech [laughs] space, seem to be doing really well. And they've raised money as well during the pandemic and doubled their valuation. So, that's a good example, I think probably one to watch, especially if they do end up tapping the public markets.

The other one I think would be the challenger banks. So, you have companies like, Chime, Vero, which is another challenger or start-up digital bank, it's also raised a ton of money, they also applied for a bank charter. So, I think some of these digital banks, who don't have branches and are able to attract a younger audience and potentially an underbanked or underserved audience that might not need to visit a bank branch. And those companies have also done pretty well in this environment. So, those I think would be the ones to keep an eye on.

Hill: Last thing, and then I'll let you get back to work. Before you were a working reporter, you were a student athlete in college. You played lacrosse at the Division I level. And more colleges and universities are going online this fall, more of them are postponing fall sports or outright canceling their seasons. In the case of the big Power Five conferences, there is a lot of money on the line in terms of TV contracts and more with college football. So, as someone who knows how hard college athletes work to compete at a high level, and as someone who studies business for a living, what is going through your mind as you are watching this story unfold with college sports?

Rooney: Oh, man! My heart goes out to these guys. Our Boston College women's lacrosse team that had their season canceled halfway through. And I can't imagine -- I mean, the amount of preparation that goes into a season, you start practicing probably nine months before, especially in ACC. You have fall practice, you have weightlifting, training, running and all of these things to prepare for a season, and just to have it cut short is unimaginable, especially some of these seniors have, sort of, their last chance to make it to a championship, so that is just heartbreaking.

And then the thought of any fall sports that we have coming up. Like I mentioned, you start preparing so early. So, the decisions about fall sports now in July, I mean, they theoretically should be training and preparing for their fall season. So, these decisions, sort of, have to be made early on, and I'm sure they're all preparing as if they're going to be playing. And so, I think on that side, yeah, you really only -- as a college athlete; unless you're going professionally -- really only get those four years. So, it's so key to have that time.

And the other question I've been talking to with former teammates about is, can you redshirt and can you come back and get a second chance at playing if this situation continues? And then from the economic side, can colleges and teams afford to bring back maybe, in the case of the lacrosse team, 10 or 15 people, but in the case of a football team it's probably 40 people per class, and the teams are just much larger. So, I think that will probably put pressure on some of those bigger programs and they'll be flooded with returning seniors. So, I think that will be something that teams have to work through.

And then, of course, the financial side of it. Some of these big D1 and ACC schools and the big football schools make so much money from their TV contracts, you've got hockey as well [...] whatever, so I can't imagine that they're not worried about the economic impact. And dear lord, should a new student -- part of the whole experience is, in a lot of bigger schools, going to football games and people are attracted to the athletic programs. So, a really, really tough situation for them, and obviously, they want to be safe and not rush getting back.

But you really -- the amount of time you spend with your teammates and the amount of time you spend on the road, and obviously contact sports are probably a huge risk, so it's a complicated one, but it's a huge bummer for especially sort of the older seniors and juniors going into their last couple of seasons.

Hill: If you want to know what's going on with VCs, fintech and more, you can follow her on Twitter, or better still follow her reporting on CNBC and


Pour one out for Chrysler, the company that was founded in 1925 has gone through different names over the years Daimler Chrysler, Fiat Chrysler, but now that Fiat Chrysler is merging with Peugeot, the powers that be have picked a new name for the company, Stellantis.

According to the press release, Stellantis is rooted in the Latin verb stello, meaning, to brighten the stars. The name's Latin origins pay tribute to the rich history of its founding companies, while the evocation of astronomy captures the true spirit of optimism, energy, and renewal driving this industry-changing merger.

Really, Ron, Stellantis? Like, Peugeot is kind of a cool brand, so is Fiat, what are they doing?

Gross: [laughs] We love to take shots at these folks, which I'm sure, poured their heart and souls into the new names. But like Mondelez, we went after for weeks. This doesn't do it for me, it reminds me of Stellaris, which interestingly is the same root, it's a space exploration video game which some folks may know. It hits a little too close to home for that for me. It just, it doesn't ring true to me. I like the iconic old names, but maybe that's because I'm old.

Cross: We have to say, like, Stella antis. Stella antis.

Hill: All right. Our man, Dan Boyd, is here. He's going to hit you with a question. Ron Gross, what is on your radar this week?

Gross: I'm going with 3M (MMM 2.27%). MMM. Diversified manufacturer, Healthcare, industrial, transportation. Known for Post-it notes and Scotch tape, manufactures the N95 masks that we all heard so much about during the pandemic, a wide variety of products. They acquired Acelity for $7 billion to enter the healthcare sector in a bigger way. Just this week they announced that they're working with researchers from MIT to develop a rapid response COVID-19 test; that will be really interesting to see. They've increased their dividend for 62 consecutive years, and you can get a yield right now, one-time-only 3.7%.

Hill: Dan Boyd, question about 3M?

Dan Boyd: Well, not surprising that Ron picked the dividend aristocrat over here. 3M originally was Minnesota Mining and Manufacturing. So, Ron, do they still do any mining?

Gross: Oh, gosh! They don't do any mining as far as I know, certainly not in any big way that would impact the income statement. I'm trying to think about the income statement as I go down. Now, I don't think they do. I think they've moved on, Dan. Those are the old days.

Cross: They're all Post-its.

Hill: Andy Cross, we've got a minute left. What are you looking at?

Cross: I got Boston Beer. Symbol SAM. The beer, cider, and seltzer-maker reports earnings next week. I own the stock, it's been on a tear this year, going from $300 to $634. Dan, the seltzer brand has been driving the growth, I really want to hear what's going on with Sam Adams and the Angry Orchard, which hasn't done as well, but depletions from the seltzer brand, Twisted Tea, very well, very strong. It's now a $7.6 billion company. So, I want to hear what's going on with the beer business.

Hill: Dan, question about Boston Beer?

Boyd: Well, Andy, in about 4.5 hours, it'll be officially quitting time, the weekend will have begun. What are you drinking, what Boston Beer [laughs] product are you tapping into to start the weekend off?

Cross: I usually go for their autumn beer, the Oktoberfest, but I got to wait a few months for that, Dan.

Hill: Two stocks, Dan, what do you want to add to your watchlist?

Boyd: I got to tell you, Chris. Again, it's Friday, and I'm already feeling it, and I'm going with Boston Beer today.

Gross: Fixed.

Hill: All right. [laughs] Ron Gross, Andy Cross, guys, thanks for being here.

Cross: Thanks, Chris.

Gross: Thanks, Chris.

Hill: That's going to do it for this week's Motley Fool Money. Our Engineer is Dan Boyd, our Producer is Mac Greer, I'm Chris Hill, thanks for listening, we'll see you next week.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Andy Cross owns shares of Comcast, Facebook, Home Depot, Johnson & Johnson, Mondelez International, Netflix, PepsiCo, and Stitch Fix. Chris Hill owns shares of Johnson & Johnson. Ron Gross owns shares of Facebook, Square, and Target. The Motley Fool owns shares of and recommends Beyond Meat, Inc., CrowdStrike Holdings, Inc., Facebook, Home Depot, Netflix, Square, Stitch Fix, and Twitter. The Motley Fool recommends 3M, Charles Schwab, Comcast, Domino's Pizza, Johnson & Johnson, and UnitedHealth Group and recommends the following options: short September 2020 $70 puts on Square, long January 2021 $120 calls on Home Depot, and short January 2021 $210 calls on Home Depot. The Motley Fool has a disclosure policy.

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