In this episode of MarketFoolery, Chris Hill chats with Motley Fool analyst Bill Barker about the latest headlines and earnings reports from Wall Street. They dig into the earnings report from Zoom (NASDAQ:ZM). They've got news on a new partnership in the retail space. They also answer a listener's question about creating a new basket of stocks. Finally, Bill is pitching a Christmas movie idea to Chris, and much more.

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This video was recorded on December 1, 2020.

Chris Hill: It's Tuesday, December 1st. Welcome to MarketFoolery. I'm Chris Hill, with me today, Mr. Bill Barker. Good to see you.

Bill Barker: Good to be here.

Hill: We've got retail news, we've got a question about the next potential war on something, and I'm not talking about, you know, global wars, I'm talking about, you know, like the War on Cash, that kind of thing. Bill has a Christmas movie to pitch me. Let me say upfront, that's going to be in the second half of the show, we're going to try and keep tangents to the second half of the show.

So, let's jump right in with Zoom Video. Third quarter results for Zoom Video were better than expected. Guidance for the fourth quarter was not what Wall Street wanted to hear. And maybe Wall Street is getting a little greedy, because if I'm not mistaken, [laughs] Zoom Video projected revenue growth for the fourth quarter at north of 320%. And that's a little, you know, that's the slowing growth that is, at least for the day, well, not a death knell for Zoom Video, but the stock has sold off about 13% today.

Barker: Yeah, far from a death knell, I would say. So, the 52-week low for the stock, which you can imagine was roughly, 12 months ago, $62; high, $588. So, back to $412, it's really about the same level it was right after the fiscal second quarter report that it gave three months ago, and the stock moved way up to this level, today it's moving down a bit back to the level. I think it's basically confirmation that the floor underneath this stock is very, very, very secure or the floor under the company. The ceiling gets reduced as, you know, the vaccine news comes in better. There's been a lot of that lately. And that puts a little bit of a cap on the very near-term story of Zoom. And if people get to go back to their old lives, either eventually or sooner than eventually, that takes a little bit of the helium out of the Zoom stock, but, you know, [laughs] it's still a pretty richly valued stock.

Hill: It is a richly valued stock, but this is one of those days where if this is a stock that's been on your watchlist, you're probably pretty happy [laughs] that you've got the opportunity today to buy it when it's close to 15% lower than it was yesterday.

Barker: Yeah, revenue up 367% year-over-year, and continued growth next year. Now, some of the guidance is a little bit cautious for 2021, because Zoom, like the rest of us, doesn't really know what's going to happen. And so, the massive, rapid, profitable adoption of Zoom across so many industries and so many people is great, but will everybody stick around when they have the option not to. And Zoom doesn't yet know, it's optimistic that it's providing a service that's going to be entrenched in people's and businesses' lives to a great degree, but it can't make those promises. I think that the company is known for exceeding expectations, and the guidance that it provides. As you point out, the guidance is more conservative than Wall Street was maybe hoping for. Again, you know, you're looking at the 13% off today and little bit that preceded this off in the last couple of weeks, it's still 6X, 7X what it was 52 weeks ago, the stock.

And then, so, 6X, 7X what it was as a stock, the revenues are up 300%. So really, there is some inflated, you know, price earnings multiple on top of the really unbelievable growth. But, you know, it could get cut-in-half again from here, sure, but it would still quadruple, triple what it was last year.

Hill: Shares of Kohl's (NYSE:KSS) are up 14% this morning after the retailer announced a 10-year partnership with Sephora. This is similar to the recent partnership between Target and Ulta Beauty. Sephora is going to open hundreds of small beauty shops inside Kohl's stores. They're aiming for 200 by next Fall and more than 800 by 2023. That's ambitious, but this also seems like a smart move by Kohl's.

Barker: This is a smart move by Kohl's. Sephora is getting out of J.C. Penney. And I would say what this does is, we talk sometimes floors-and-ceilings, I mean, Kohl's was exploring what the floor was for its business back in March. And as a stock, OK, everything had its lows back in March/April, especially things with the physical retail presence that Kohl's and others had. Down around $10/share, $11/share back then, now it's $36/share. So, it still had a bad year as a stock, even though it's more than tripled in that time period. And if Sephora were the cure-all for a retailer's woes then J.C. Penney would still be thriving, right? It's leaving intelligently, as far as picking up and taking its business away from J.C. Penney and going into Kohl's, but Sephora is not on its own going to be any more able to make Kohl's a hot retail opportunity than it was able to do so for J.C. Penney. Nevertheless, Kohl's is a better operation than J.C. Penney, certainly hasn't gone through quite the disruptions that J.C. Penney has, but you know, keep in mind, this is more shoring up the floor than exploring the ceiling.

Hill: No. But it's absolutely something they need to do. And it reminded me a little bit of the partnership they struck with Amazon, I'm talking about Kohl's, of course, to provide returns within Kohl's locations. This gives people one more reason to actually go into a Kohl's. Kohl's does curbside pickup, I don't see them promoting it in the same way that we've seen Target and Walmart, but those two businesses have certainly provided a blueprint for what Kohl's could be in the future. I don't know. I'm not buying shares of Kohl's, but I don't think it's unreasonable that the stock is up today in the way that it is.

Barker: No, it's not unreasonable, it's definitely still trading at [laughs] more attractive multiples to what might be the earning story, it was a pretty consistent earnings story of about $4/share, $4,50/share, somewhere in that range over the last eight, nine years. Lost $1.50/share this year; obviously, this year is an outlier, but it was pretty consistent, about $19 billion in revenue almost every year, really not moving up or down from that, buying back some shares. So, even though it was losing on the margins, it was buying back shares and keeping that earnings per share story reasonably consistent.

At this point, they're not going to come close to that high $18 billion, low $19 billion annual revenue that they've been hitting, but you know, 2021 is going to be a better year for stores like this. It's not going to suffer quite as much as your J.C. Penney, Sears, highly mall-based stores like this, but it's still an uphill battle against Amazon. It's improved the online experience, but it's got a long way to go.

Hill: Our email address is Question from Sean Bryan in Harrisville, Utah, who writes, "I think there may come a time when people will look back and wonder how we justified eating animal meat, at least in the amounts that we do now? If the War on Cash is followed by a "War on Meat," what are the first three stocks you would put in that basket?"

It's an interesting thought exercise, the obvious first stock is probably Beyond Meat, and if Impossible Foods goes public, they're in there as well.

Barker: Yeah, I guess it would depend, you know, if the war is being waged against the meat processors, right. You want to stay pretty far away from Smithfield, for instance, which is now owned by China. But I think, obviously the Beyond Meats of the world are where you would, kind of, start with that. Is poultry being taken out too in this example? By the way, I'm totally willing to entertain the notion that meat consumption is going to suffer as people become, one, they've got more opportunities to get a meat-like taste from the Beyond Meats, but, you know, an increased exposure to the story of factory farms and things like that, I could certainly see society turning its back and looking back on our generation and how much meat we eat and how we produce it as being something that is fairly horrifying to the future generations.

Hill: Well, to answer your question, Sean writes "eating animal meat," chickens are animals, so, yeah, I guess [laughs] poultry is part of that as well.

Barker: Yeah. Whereas poultry often, and has picked up from peoples moving away for purely health reasons, away from red meat, boy! if all those chickens are freed, we've got quite a situation on our hands.

Hill: Yeah, I mean, it just speeds up the animal revolution probably.

Barker: Yeah, I do think these are trends that need to be considered. And I think Tyson Foods is one of those things that I wouldn't put all of my money into or Hormel or any of those.

Hill: I also think it's a trend that needs to be considered, I don't think, for investors, this is as lucrative a trend, both, in the near-term or even in the long-term, as the War on Cash.

Barker: Yeah. And likely to be a much bloodier war too. I mean, beef and the production of it are about as central to the iconography of the American experience as you can get. If you're like me, the fact that you have never driven a herd of cattle to the slaughterhouse, it's probably something that you consider a failure at a certain level, as an American man. Don't you feel at some level, like, you're supposed to have done that by now? It may not be a level you could even put words into; I see you struggling, but you know what I'm talking about.

Hill: I think you're talking about the movie City Slickers, which is the only passing thought I ever had of like, I wonder what that would be like. And then by the end of the movie, I thought, well, that was a fun movie, but, no, I'm not interested in doing that.

Barker: No, no, no, not as a vacation, as a, you know, you've got to do this or the ranch is going to have to be sold, like this level of being tied to the land and the animals and the production of your own food and all that, in a way that -- look, you're a big movie fan, you've watched your fair share of westerns, I mean, I'm not talking City Slickers level.

Hill: Yeah, my fair share of westerns is probably smaller than other people's fair share of westerns. [laughs]

Barker: But you know, that this is laced into the American psyche. And if you're going to take beef away, boy! I'd... you know, you look at the way that wearing a mask is a partisan issue, I think you take people's beef away, you wage a war on it, yeah, there's going to be more blood than you'd like.

Hill: Well! And to go back to the War on Cash, how much resistance is cash putting up? Is the U.S. Treasury [laughs] really... is that a fair fight between Visa, MasterCard, PayPal, Square, and all these other companies, is that a fair fight, all of them against the U.S. Treasury Department? I'm going to say, no. Whereas to your point, yeah, the beef industry, the poultry industry, yeah, they're going to put up a fight.

Barker: So, we were watching the old Beef. It's What's for Dinner commercials.

Hill: Great commercial. Iconic. And the fact that you have them voiced by people like Sam Elliott and Robert Mitchum, I mean, two of the all-time great voices. So, yeah, those are -- you know, again, [laughs] the U.S. Treasury Department is not running 30-second commercials on television or 15-second pre-roll ads on YouTube to be, like, "Cash. It's What's In Your Wallet" like, no, they're not doing that.

Barker: Right. And even if you saw that, even if they produced a great commercial, you probably wouldn't get misty-eyed for -- oh, God! remember when we used to just spend cash all the time, God! Those were the days. Just wouldn't happen. Whereas you watch that commercial and you're like, I'll tell you what I'm having for dinner, beef. [laughs]

Hill: [laughs] Because it's what's for dinner. It's December 1st, it is the beginning. If you had just started listening to MarketFoolery in the past six months or so, you're not aware of what we've been doing every year since 2015, which is, Producer Dan Boyd and I are on a mission to improve the menu of holiday music here in America as stations flip to all-holiday formats and play the same 50 songs. Starting in 2015, me and Dan Boyd, and it's mostly Dan because he's got the music expertise and depth of knowledge for all kinds of great holiday music that never makes it to the radio airwaves. So, that's what you're going to hear this month. In lieu of our normal closing music, you're going to hear a different holiday song every day.

Speaking of holidays, two quick things before we wrap up, one, Rudolph the Red-Nosed Reindeer on tonight eight o'clock on CBS. I'll probably be watching, I will not be live tweeting, because I feel like I've done that enough and there's no need to go down that road. But you had mentioned to me that you had an idea for a Christmas movie that you wanted to pitch me.

Barker: First of all, on the live tweeting, because you did it a few times, couldn't you just go back and get those tweets and sync to the airing of the show for those that didn't get to experience the live tweet with you back in the day? It was only, like, two years ago was your last one, or three, I think two.

Hill: Yeah, I don't know. I feel like it's just like, oh, here's this thing ... yeah, maybe I could just go back and just retweet everything. I don't know.

Barker: Yeah, people bump up tweets all the time. Yeah, I'm not pitching you a movie, it's more of a show. And you can point out here, whereas you won't be live tweeting it, you do every year in hopes that some Hollywood producers out there try to pitch your idea of the Yukon Cornelius backstory ...

Hill: Yeah, the origin story of Yukon Cornelius. He's young, fresh-faced, wide-eyed and it's a gritty live action series. Look, this is a beloved children's special and [laughs] Yukon Cornelius is brandishing multiple weapons in it. I mean, the guy is packing a gun, he's got a whip. He's got skills, he's got survival skills, he's got some kind of an axe, like, a hand axe. So, there is absolutely a Netflix -- I mean, you saw the money that Quibi was throwing at shows that were awful. Put some money behind this idea, people. Anyway. And, you know, I don't need the money, just take the idea and run with it, I just want to watch it.

But what's your idea for a series?

Barker: Who you got being that Yukon Cornelius; like, a young, sort of, David Caruso-type?

Hill: I don't know. He's redheaded, right?

Barker: He's redheaded, and he's a little bit dangerously violent at times. You could see him developing in the Yukon Cornelius.

Hill: Yeah, David Caruso is too old now, we need a younger person.

Barker: So, queuing of Rudolph, as you know, because you've studied it so much in the show, like, Santa is a little bit off his game in that one. He's kind of a mean Santa in Rudolph, I think he needs a break. And the fact is he's not working that hard the rest of the year. Obviously, Christmas Eve, maybe the week before, putting in the long hours, but he's got most of the year off, the elves are making all the toys, what's he doing? I think he should be out solving crimes in a buddy cop-type thing, a mismatched buddy cop-type thing.

Hill: Is he going to warmer climates to do this thing?

Barker: Sure, sure, he can survive in warmer climates unlike the elves.

Hill: No, I know he can survive.

Barker: He's, like, solving crimes at the North Pole. It's like utopia up there. And he's got his usual, sort of, set of powers, he can move around very fast, he can get up-and-down chimneys. But I mean, what makes him really good at this is he knows who's been naughty.

Hill: That's true. That's true. I mean, he's got the list going back, so I mean, he's got the database of every person on the planet. So, when someone's a suspect, he can instantly access the database and just be like, oh, yeah, I mean, look ...

Barker: I don't think he knows exactly what they've done, he's got, it's like a spider sense, he knows who's been naughty, right, so then he's got to, like, gather the evidence. But he's in a mismatched buddy cop thing.

Hill: Well, he's Santa Claus, so who's -- like all good buddy cop movies and series, there needs to be sort of an oil-and-water thing going on there, like, describe the other cop that he's matched up with?

Barker: Yeah, I think in the Apropos of Nothing episode that's when I describe who I see him mismatched with in this, and you'll have to come with something as well.

Hill: All right, we will get to that. Bill Barker, as always, thanks for being here.

Barker: Thank you.

Hill: As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.

That's going to do it for this edition of MarketFoolery. The show is mixed by DJ Dan Boyd, I'm Chris Hill, thanks for listening, we'll see you tomorrow.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.