2020 Stock Market Review

In this episode of Motley Fool Money: Year in Review Special, Chris Hill chats with Motley Fool analysts Jason Moser and Ron Gross to look back at some top business headlines and trends from 2020. They've got some big merger deals and blockbuster IPOs. They talk about how some CEOs and companies went above and beyond during these difficult times. Discover which stocks surprised them and who are the best CEOs in their books, and also some dumb investments and new investment discoveries. They also share some stocks to put on your watch list and much more.

Also, Motley Fool CEO Tom Gardner chats with Appian (APPN -3.09%) CEO Matt Calkins about the business of low-code software, its benefits, and its future.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on December 18, 2020.

Chris Hill: It is our Year in Review Special. In two weeks, we're going to have our Investing Preview for 2021, but this week we're going to tie a bow on 2020. And when I say, "tie a bow on 2020," I mean, kick it out the door. Jason Moser ...

Ron Gross: [laughs] So, there'll be no gift forthcoming?

Hill: [laughs] I don't think so.

Jason Moser: Double-knot this bow; I don't want this thing coming back over, Chris. [laughs]

Hill: Exactly. Jason, let me start with you. A lot of what we're going to talk about this week ties into the pandemic, but let's kick things off with your non-pandemic investing or business headline for 2020.

Moser: Well, you know, I was mulling this over breakfast taco. And as I was sprinkling some Cholula on that breakfast taco -- maybe McCormick buying Cholula really is the headline of the year, but nope, it's not, Chris, I'm actually going to go with something else, a much bigger deal. The Teladoc Health and Livongo merger to me, that was a massive, massive deal. I mean, that was an $18.5 billion "acquisition" -- really more like a merger of equals. But just a really, really big deal. And you know what, I bet most people even forgot that all the way back to January, Teladoc announced that they were going to acquire another company, called InTouch Health, to give them more presence in the enterprise telehealth space. And that was about a $550 million deal right there, which was really big in its own right. So, easy to even forget that that happened after this Teladoc-Livongo merger.

The deal is closed, it's done. I know there are probably some skeptics out there, and I tend to want the company making the acquisition to prove that it makes sense; the burden of proof is on them. I think that when you look at the direction the healthcare space is headed -- and we talk a lot about the Internet of Things, I don't know if you all are familiar, there is also an Internet of Medical Things out there. I mean, this is ultimately the connected infrastructure of medical devices, software and health systems and services, that's what this acquisition really plays into, that's what this merger really plays into.

And when you look at the state of chronic conditions, not only domestically, but globally, this just makes a lot of sense, these two very complementary businesses coming together. So, I think it's a tremendous market opportunity. Management still clearly has to execute. But just by virtue of the size of the deal and the size of the opportunity, that's what stood out to me.

Hill: Ron Gross, what about you?

Gross: I got to go with the return of the blockbuster IPO market. More than 450 IPOs this year; doubling those in 2019. More than 80% of the money raised falls into three buckets: healthcare, as Jason was just talking about; technology; and let us not forget the newly popular SPAC, or Special-Purpose Acquisition Company, often called a blank check company, which is all the rage nowadays.

Some recent examples of how hot this IPO market has been, DoorDash up 86% on its first day; Airbnb doubled in its debut; Snowflake, which went public in September, also doubled on its debut day. The valuations of recent IPOs at their highest levels since the dot-com bubble; I am not calling this a dot-com bubble, but valuations appear to be stretched in the IPO market. Companies have raised a record $149 billion through IPOs in the U.S. this year, but they've also left a ton of money on the table, because these companies' prices are skyrocketing, as we just said, the day of the investment. Investment bankers not properly taking into account the demand, the appetite for these companies.

Hill: I love both of your answers because it reminds me of how wrong I was this past Spring when the pandemic hit, when the country was being shut down, and one of the things I said on the show was, forget about M&A activity, forget about IPOs, neither of those are going to happen for the rest of this year.

Jason, something new for our year-end review, a sportsmanship award, if you will. We saw a lot of businesses, a lot of CEOs really going above and beyond the call during these difficult months in 2020. Who you're giving a sportsmanship award to?

Moser: Yeah, I like this award. I think there's a good positive feel to it. And you know, the CEO that stands out to me when it comes to this, Jack Dorsey, to me, I mean, he just has a track record of benevolence, of giving. And I think that when you look at just what he's done this year alone, he pledged $1 billion for the coronavirus fight, he donated $15 million toward a basic universal income project, ultimately trying to help figure out is this something that can work, let's get some money in there and see if that can work. $3 million more dollars to support experiments and free cash payments to Americans. I mean, there's all sorts of causes that he believes in. And he utilizes his position with Twitter and with Square to really help, I think, focus more on the things that matter most to him in life.

And so, this was not unusual for him, like I said, he has a track record of benevolence, and this year was no exception, so Jack Dorsey is my winner there.

Hill: What about you, Ron?

Gross: I love me some Jose Andres. World-renowned chef, CEO of ThinkFoodGroup and Founder of the not-for-profit World Central Kitchen. Not only an accomplished restaurateur, but he is a real humanitarian. World Central Kitchen functions as a first-responder to natural disasters, partnering with local chefs to get meals immediately to those in need. He's been there for natural disasters in places like Puerto Rico, Texas, the California wildfires. He's been nominated for a Nobel Peace Prize, he's the James Beard Foundation's Humanitarian of the Year award winner.

For COVID, he's decided to shut down his restaurants, convert them into community kitchens. He turned Washington Nationals baseball stadium into a massive community kitchen to serve DC residents. And along with him and his team, keeping restaurants and businesses pledging $50 million in meal purchases for those in need, distributing more than 30 million meals across the globe in its COVID-19 response efforts.

I love his restaurants, but he's a wonderful human being.

Hill: You know guys, we talk a lot about intellectual property, how important it is for companies. And I keep coming back to earlier this year in the Spring when Medtronic came out and shared the design specs on their ventilator, that's valuable IP, and Medtronic basically said, there's a global shortage of ventilators, and this is more important than our IP, so they just gave it to the world and said, here's our design, everybody go nuts, because this really matters right now.

Let's move on to stocks. Fill in the blank, Jason Moser, one stock or business performance that surprised me during the pandemic was ______?

Moser: Well, I'm going to take the glass half full approach here. Honestly, Chris, Disney. Walt Disney surprised me all along the way; very pleasantly I might add. If you look at the numbers today. I mean, the stock is up a little bit better than 20% year-to-date. And at the big [laughs] of the year, they have a CEO in Bob Chapek, who steps right in as this storm starts to hit earlier in the year, making this big pivot to a new digital strategy that hadn't really proven out at that point.

All of a sudden, the pandemic hits, you got parks closed, movie theaters closed. I mean, there was every reason to believe that the market should just lay the hammer down on Disney this year. And you fast forward to now, what they've been able to do in the face of adversity, I mean, it's not been easy, clearly, and a lot of folks are out of jobs, but I think that the company itself has done a very good job of keeping, not only their head above water, but figuring out a way to flourish and make a lot of progress. I mean, you've seen what they've done in just their Disney+ subscription growth and the forecast here in the coming years.

So, with the business that has so much tied to consumers being places and spending money in those places, I'm just very pleasantly surprised to see the market look at this as more of a long-term story. Because you mentioned it, with this intellectual property being so valuable, Disney sure has a whole heck of a lot of it, and I think they're going to continue to do a lot of great things with it.

Hill: Who surprised you, Ron?

Gross: A company I've recommended more than once that I was really worried about during this time is Rollins, Inc. They are the pest control company, acquires other companies in the industry, best-known perhaps for its Orkin and its Western brands. I would not have guessed a pest control company would thrive in the pandemic, especially because I would think its commercial business would have to take a hit, but they did a really nice job containing cost, they even benefited from lower fuel prices. Residential revenue growth has been really strong. And I don't know, maybe it's because we're all home and nobody wants rodents running around, but that helped to offset the weakness in the commercial business.

Shares are up 80% this year, a pest control business, shares are up 80% this year. They've had 18 years of increasing its dividend by 12% or more each year, before they actually did cut the dividend in April in advance of COVID disruptions that they were anticipating. Recently did a 3-for-2 stock split, announced a regular quarterly dividend, and a special cash dividend. So, the company is doing one wonderfully, I would not have expected it, but I'm very pleased that it's a multiple rec for us in Total Income.

Hill: When you think of how much disruption happened in the world of sports, the NCAA basketball tournaments being canceled, Major League Baseball basically playing a third of their season, the NBA in a bubble, I can't believe shares of DraftKings are up more than 400% year-to-date. That's bananas to me.

Ron Gross, the best CEO of 2020 in your book is who?

Gross: Consistently ranked as one of the best CEOs in the U.S., I think it's Salesforce CEO Marc Benioff. In 2019, for the sixth year in a row, Harvard Business Review recognized him on its Best-Performing CEOs in the World list. He was ranked No. 2. Interestingly, HBR discontinued that ranking in 2020 as a result of lack of diversity; I found that interesting that they stopped doing that list. But Benioff is a wonderful leader, a strong proponent of conscious capitalism, as are we at The Motley Fool. And that's the idea that business leaders should focus not only on their shareholders, but also on other stakeholders, including employees, customers, communities, and the planet.

He's been an outspoken leader during COVID, often speaking about the best ways that people can protect themselves. He helped coordinate a one million mask donation in Hawaii, for example. He got together with other companies, like Alibaba, FedEx, Walmart, to source medical gear for U.S. healthcare providers. Salesforce spent north of $25 million to source more than 50 million pieces of protective equipment. And you know, if you want to measure him by how the stock price has done, you can go ahead and do that too, because it's a five-year increase of 190%, more than double the S&P 500.

Hill: Jason, who you're giving it to?

Moser: Yeah. You know, I'm going to go with Zoom Video's Eric Yuan. It's not because the stock is up close to 500% this year; at least not just because of that. I mean, thankfully investors have really won from holding on to these shares. But when you go back to the beginning of the year, these guys were thrown [laughs] into the deep in short, or I'm pretty sure they were not thinking that 2020 was going to shape up the way it did. But obviously it did, and Zoom has become not only an integral part of our day-to-day and many folk's day-to-day lives, it's become a verb, right. I mean, when you talk about Netflix-ing or googling, well, now we're talking about Zooming. And I think that's here to stay.

They've dealt with some challenges early on in that mass influx of business, the FTC had some issues there in regard to security. I felt like the company themselves took a lot of great steps there. They were transparent, they formed a council of Chief Information Security Officers from outside of the company to get feedback and collaborate on ideas. Eric Yuan set up weekly "ask me anything" webinars. The company put a 90-day stop to all development and unless it was related to a feature or functionality that will actually make the platform more secure. So, to me, they responded to that FTC concern absolutely the right way.

And then you look at the actual numbers to demonstrate what I mean when I say they were thrown into the deep end. A year ago, they had approximately 74,100 customers with more than 10 employees. You fast forward to this year, they reported 433,700 customers with more than 10 employees, up almost 500% from the same quarter a year ago. And so, all of this just tells you that they had a mass influx of business, I'm sure they weren't expecting it. Clearly, they weren't fully prepared for it, but they were pretty darn prepared and they responded to any adversity, any challenges, I think, in just wonderful ways. I think this is a business that's really set up to succeed for a long time to come.

Hill: I'll just say, 2020 was the year Kevin Johnson stopped being the CEO of Starbucks and became one of the most important business leaders in America. There were a lot of dumb investments in 2020, some of them were made by individual, some were made by companies.

Ron, what's your dumbest investment of 2020?

Gross: I'm not throwing myself on the sword, I'm going with a company. And I'm going to tell you, I am not a fan of Lululemon's $500 million acquisition of home fitness start-up Mirror. Mirror sells a $1,500 wall-mounted machine for streaming workout classes. Offers a $39 monthly subscription. This was Lulu's first acquisition. Brings back memories of Under Armour's acquisition of MyFitnessPal for $475 million, which they later sold for $345 million [laughs] five years later. There's a lot of competition out there, with Peloton being the main one. And you don't need to even buy anything if you're a Peloton subscriber, you can get all the workouts digitally. So, let's watch this. But for now, Mirror is selling probably because we're all home, but let's keep an eye on this one.

Hill: Jason?

Moser: Well, Chris, I'm glad you brought up Starbucks. And Ron, I am going to jump on this sword, and I've got no shame, I'm ready to throw myself under the bus because, you know, this is twofold. First of all, I bought Starbucks for the first time this year during the bear market. So, immediately right there, why was that the first time, how did I not buy Starbucks years and years ago given the mass, mass amounts of quantity of product that I consume from them? [laughs] I just don't understand why I didn't own these shares earlier.

But here's where it really -- this is where I get a little bit bitter here. I just decided, well, you know what, I'm going to buy -- it was, like, March or April was the bear market that hit. And I thought, OK, I'm going to buy a starter position, because I'm thinking I've got a year to, kind of, build this thing up. So, I just bought a starter position, thinking I'd have more time. But I knew in my gut, my gut was telling me, back up the truck, at $50/share this is just an obvious, it's a no-brainer. And of course, just stupid head me, I went with the starter position, and never looked back, it's just a clean double in my portfolio now. And I'm just really disappointed ...

Gross: So sad for that clean double ...

Moser: ... that I didn't back up the truck. Now with that said, that will not stop me from adding to this position, Chris, because I do enjoy adding to winners. But I wish I had been a little bit more greedy when the opportunity was there.

Hill: Well, take solace, Jason, because early in 2020, Viagogo bought StubHub, which is in the business of selling tickets to live events. They bought StubHub from eBay for more than $4 billion, so ...

Moser: ... ouch!

Gross: ... my goodness!

Hill: We got about a minute-and-a-half. Ron, real quick, what is your investing discovery of 2020? It can be a stock you bought for the first time, a book you read, something in the world of investing you discovered this year?

Gross: For me, and maybe you too, Chris, it's Bed Bath & Beyond, bought in February 2020, it seemed to be left for dead, I thought that was premature and actually potentially totally wrong. Mark Tritton came in from Target, started shaking things up, new executives, curbside pickup, online presence, sold off $500 million of non-core assets; I like how this is going.

We're up on our investment. We're still in the early innings though; we'll see how it plays out.

Hill: Jason?

Moser: Yeah. You guys know a big fan of Cloudflare. And CEO and Co-Founder, Matthew Prince, has -- what I found -- he calls it the Bezos' rule. And essentially this means that Cloudflare engineers what they build for themselves, needs to be built using their Workers edge computing platform. And then also, any APIs, the Application Programming Interface that they build for themselves should then be made available for third-party developers that use their Workers platform. So, it just creates this really interesting virtuous cycle that I think ensures they're building out, not only a platform that serves their developers well, but them as well. And just a really cool Bezos' rule, I thought that was neat.

Hill: Earlier this week, Motley Fool CEO, Tom Gardner, talked with Appian CEO, Matt Calkins, who kicked things off by explaining low-code software.

[...]

Matt Calkins: Low-code is a technology that is recently becoming a lot more popular, that allows you to build an application without writing as much code. The obvious first implication of this is that it's faster, it's easier to build an application if you don't have to write all that code. If you can draw a flowchart, a picture and configure with a mouse instead of a keyboard, you're going to accelerate your ability to create and to change new applications. And that's all true.

But since we are creating low-code and we're making applications with low-code, we realized that we're up against the same problems that organizations have always faced when they built their own applications, specifically, the fact that applications are isolated, right, they are silos, and the fact that they accumulate technical debt.

And so, we're a leader in low-code, we're the first in low-code, and we're pioneering new problems with it, we're trying to figure out how to be sure that your next application doesn't have technical debt or how can it be integrated with the assets that already exist in your organization.

So, we're low-code, we're trying to take a step beyond.

Tom Gardner: And who are the other low-code providers? You know, how large is the market and what do you view as an Appian sustainable advantage in the category?

Calkins: Right. What we've got here is a collision between spaces. We bill ourselves as a low-code automation, and by saying that we mean to suggest that there is a convergence between low-code, the technology that allows to build an application real quickly, and automation, the technology that allows you to bring dispersed assets together to bear on a problem. The assets could be, maybe robotic process automation bots and artificial intelligence processes, and human workers, all together coordinating and collaborating. That's automation.

And so, low-code automation is an amalgamation of existing and changing markets. So, we have competitors who specialize in processes, like, Pegasystems, for example, specializes in building powerful processes. They are our longest running and closest competitor. But you've also got organizations that specialize in RPA maybe or automation, and maybe that will be another interesting direction from which competition could come. Or take Salesforce and ServiceNow, the two of those organizations are trying to create, kind of, a low-code offering, not as powerful, but something. Microsoft Power Apps, for example, coming to the market with a low-end offering that would be a rival for the most simplistic applications. So, we're up against a lot of different organizations, because the markets are converging. And some of these are fantastic organizations, by the way, great companies with terrific reach and good marketing. And in order for us to stay relevant, we have to stick to our strategy, which is to be the best pure play pioneer in this space.

Low-code is not equal, low-code is not the same across different vendors. In fact, if you were to graph all of the low-code vendors, you'd see that there's a big clump and then one outlier. That outlier is us and we are different in that the applications you build on our low-code platform can be serious applications, mission critical, high scalability, high security, the most important applications in an enterprise can be built on the Appian platform, and so it's a far cry from a lot of the somewhat simplistic applications and platforms that are offered under the name "low-code" by other vendors.

Gardner: Could you give us a single case study -- I think we have the concepts now, kind of, the theory of what you're building. And you're taking a systems level approach to this and you are growing organically, not through rollup acquisitions, not through marketing and sales as the lead horse out in front of the business, but trying to build a disciplined system that scales over a long period of time. But now could you give us a recent case study, what is an example of a company that realized maybe it was being bogged down by its software or realized that in 2020 it needed to change for reasons that it wasn't expecting it, or any -- to remind us of the large enterprise customer base that you have ...

Calkins: ... all right. At a number of recent customers, we found ourselves running many applications in parallel, in a coordinated fashion, and perhaps consolidating down for what otherwise had been a universe of acquired systems. Many organizations build themselves by systems. And so, I'm thinking of three customers right now, and what I'll say applies to all three of them. They've grown through acquisition, maybe a lot of acquisitions, maybe dozens of companies. And as a result, they have hundreds of systems. These systems are not well-integrated, and when a customer calls to make a change -- and by the way all three of the organizations that I'm thinking of right now are leading financial institutions, they're all European, just by coincidence, they're all banks or insurers, and they've grown through acquisition. And if somebody calls in to make a change, there's so many applications you've got to touch, which means your response time is slow, the frustration of the customer builds up, and it's expensive maintaining all those systems. And so, all three of these customers have turned to Appian to consolidate their systems, to rationalize, to streamline, to cut the cost, and to improve customer service.

So, we bring in Appian, and we turn off all those other systems. You have one unified system that's new and it's agile, that can change quickly when you want to change your systems, and also, it can be altered in real-time when a customer calls. And so, now instead of multiple calls, it's one, instead of, let's say, $100 million to run data centers, it's $10 million. Like, the savings in time and money are extreme. And on top of that, the customer satisfaction goes up. Now, that's one kind of use case that I've repeatedly seen lately. But if you'd give me a moment, let me tell you about another kind of use case that we've also seen.

This was a weird year; this is the year when change was needed. A lot of customers needed a new application they had never imagined they needed before, and that is a workforce safety application. This is an application to keep your workers safe in a pandemic, to regulate and stop outbreaks and be sure that the right people don't come to work today and instead they get a COVID test, and that sort of thing. Well, we wrote an application to do that right away, at the very beginning of the pandemic, because we knew that our platform could create an application faster than any other way of creating one. So, we immediately put one together and we offered it for free, and later we came up with a better version which we started charging for, but we had an enormous number of takers on this, and some that I'm really proud of having used our software. Like, one of the largest universities in the U.S. used this in order to maintain the safety of their students and administrators. They've been a longtime user of ours; and I can't disclose their name right now, but they used it widely, they rolled out to all the students and it was so successful they were profiled later by a major American morning news show about their success and how they had, kind of, solved the problem at the moment of the outbreak. They did a great job.

Gardner: Rank these three in order, if you're game to play game No. 2? Total growth rate in new cloud subscribers; that's one. Total revenue growth rate -- cloud subscribers. And in a way this third one bundles the two, but I'll separate it out, dollar-based net expansion rate for Appian. What do you think about prioritization of those?

Calkins: All right. I think about customers first and I want happy customers. So, to me, the coefficient that drives our growth is not a function of net customers, but of happy customers. I think we're very early on in this market and the most important thing we could have is customers who see our value proposition, knowledge and believe our value proposition. If there's one metric that I could maximize, it would be the number of firms in the world who understand and believe Appian's value proposition assertion, which is, of course, that we can be the fastest way to build a new application in your business.

And of course, there are some follow-ons to that, but generally, if we can get a customer to believe that we got a beautiful future together, and they're going to be influencing many other customers. And so, that more than revenue, more than revenue growth, more than count of customers, that would be the metric I'd prioritize.

Gardner: Now we go to the hotseat rapid fire lightning round. You can give one or two sentence responses just to get through as many of these as possible, so maybe one-sentence, one-sentence explanation as to why that's your answer. What's your time horizon for evaluating the success of Appian from here, for you as a CEO?

Calkins: Wow! I've been here two decades, and I've always said I don't have a horizon, and I think I still don't.

Gardner: Which has a greater future from this day forward for developers: the keyboard or the mouse?

Calkins: We still need the keyboard. The mouse is incredibly valuable, but the keyboard is higher bandwidth ...

Gardner: ... and why is the mouse relevant for somebody who's thinking, well, why is the mouse gaining consequence going forward?

Calkins: Because it's human, we want to speak to our computers as if they were a person in a human manner, and so the mouse is the best for anything we can use it for.

Gardner: What do you think of the recent hacks? Does it impact Appian at all or do you have an opinion about what's happening out there that there are so many large-scale concerning hacks?

Calkins: They're very disconcerting. Now, Appian wasn't mixed up in any of them. There have been no direct impacts, but it certainly impacts the way businesses look to Appian. They look for safety. They want low-code, but they want secure low-code, they want scalability, they don't want to compromise the safety of their data, and so it benefits us.

Gardner: What are two to three other applications companies that are public that you admire?

Calkins: I admire ServiceNow; really well-run. I like Atlassian, so innovative, right? And I have envy for how little they have to spend on sales and marketing. So, those two.

Gardner: What do you think about the U.S. and China and the potential conflict or separation between these markets?

Calkins: [laughs] You want this in one sentence?

Gardner: Yeah. Well, you know, I didn't say you couldn't use semicolons.

Calkins: All right. We don't sell in China, it's a very challenging market. We're just not there.

Gardner: Great. What are two of your favorite new games? Obviously, you're a very big board game aficionado and I think an accomplished player and competitor and a game designer. I'd love to hear recent games, the last two or three years that have shown up on the scene that you think people might have fun playing this holiday season.

Calkins: All right. I'm writing one right now, it's in the publishing stage, it's going to be released in about a year, called Charioteer. It's about racing chariots. And so, I've got to say that one. And other than that, I'm sorry that I haven't played more lately, where I got isolated and haven't played many games.

Gardner: Is Appian the greatest game you've ever played?

Calkins: Well, Appian is not a game. And the reason it's not, games are quick feedback loops, and Appian is anything but a quick feedback loop. And games have a contained set of instructions, and Appian is real-life and therefore it doesn't -- games are a great preparation for real life, but they're not the same thing. So, I'm going to say no.

Gardner: Perfect. But how has game playing helped you as a strategic thinker, entrepreneur, business leader? For somebody who has a 15-year-old daughter that loves games, how might they connect that love to the world of business and investing?

Calkins: Oh, games can absolutely help you to be a better decision maker, where you get feedback, and we should be looking for feedback loops in every aspect of our lives. Games are a good way to cultivate your appreciation and your instinct for feedback loops, but that's how to get forward, how to improve yourself, you always want that. And the other thing that's helped is designing games, because designing games means taking a very complicated system and reducing it to a set of rules and understanding the causal relationships between things. That's helped me a lot to, kind of, break down the systems that I encounter.

Gardner: You have about $250 million of cash on your balance sheet, which is a different place than Appian has been in, although you've always run a great balance sheet, you really didn't take very much venture capital money at all, you've had some follow-on offerings in the public markets. But that $250 million which is earning, let's say, a couple of percentage points. I don't know if you're familiar with what another Virginia-based company MicroStrategy did with their some-odd $450 million out of the $520 million or so on their balance sheet. They put it into bitcoin. They took about 75% of their cash and put it in bitcoin. So, do you have any plans for that capital or you think it's a very nice rainy-day ballast for the organization?

Calkins: It's rainy-day money. We took $10 million in outside money before we went public, $10 million in venture capital in all those years before our IPO. So, with $250 million, we feel like we're set for a long time. I don't have plans to do anything bold with that money, it is just a fallback, and we do invest every year, because we believe in the growth in this space, and so part of it we'll just use in the course of hiring and advertising and run-of-the-mill expenditures. I don't have anything surprising to announce though; that's just a backstop.

Gardner: Final two rapid fire, so you got 30 seconds for each of these, and the first one you're going to say, 30 seconds, ready? When you talk about the use of AI and automation, you talk generally about the ability to replace tedious tasks for humans, so that we can move to a higher level of strategic thinking and more complex problems than AI can face. But don't you think that's only temporary?

Calkins: Hmm. No, no, I think it's more or less permanent. I think humans have nearly permanent advantages over AI. And if we consider AI intimidating or replacement for people, it's only because we're assuming that the rules don't change. As soon as the rules start having to change, AI is not the best.

And let me briefly try to explain why that's true. Humans are better than AI at reaching conclusions divided by data. AI is better if data can be assumed to be infinite or all data is still valid. So, if you have an enormous amount of time to gather data and bring it to bear, then AI is a great way to make a decision. But if the rules are constantly changing, then all prior data is invalid, and so you need a human, you need that ratio of good conclusions divided by data. Conclusions over data, humans are better at that, we're always going to be better than that. I see no trajectory that allows AI to be as good as a human at conclusions divided by data. So, no, I don't think it's temporary.

Gardner: Final question. We've recommended Appian multiple times in Stock Advisor and some of the Discovery services at The Motley Fool. We're long-term business-focused owners; it's been a great return for us. It's been quite volatile and kind of incredible; another time, another interview we'll talk about what this experience was like for you watching your stock move the way it did. And I know you'll say it's just a sideshow in the short-term. But what is something you are really most excited about that an investor who might think three to five years forward should be looking forward to as well when thinking about Appian.

Calkins: Yeah. Well, certainly not the stock. The stock has been volatile, but I don't think about it, I don't want to look at it, I try to stay away from getting wrapped up in it, because it's a false lead. But the thing that's exciting is this market.

The market of low-code automation has terrific potential, and being a leader there is a meaningful niche that an organization could thrive in.

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Hill: Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd is going to hit you with a question. Jason Moser, you're up first, what are you looking at this week?

Moser: Yeah, I got a local player here, Alarm.com (ALRM -0.67%). Ticker ALRM. Arguably one of the more underfollowed companies in our Foolish universe. And that's a shame, because it's been a really strong performer over the years. Had a great year-to-date, up around 118% I think right now. Just reported third quarter results a little while back and revenue was up 24.2% from a year ago. They've got a nice little SaaS business going there too. And that's the gist of the business, that's the crux of the business, which is encouraging, because that's that recurring subscription-style revenue.

They see strength in the professionally service smart home market that continues to do well, as connectivity proliferates this advent, this rollout of 5G. They now have 50 utility companies using its Mercury platform to manage distributed energy resource programs. And I think one of the bigger questions that's been kicked around here lately is Google's [Alphabet] recent $450 million investment in ADT. ADT is actually a customer of Alarm.com's. Interestingly, Alarm.com and ADT recently renewed their agreement and that actually extends their partnership for the coming years.

ADT is 15% of Alarm.com's revenue, and shrinking. So, it matters, but it's mattering less as time goes on. I think that sets this company up for a pretty strong future here. So, it's one I've enjoyed following.

Hill: Dan, question about Alarm.com?

Dan Boyd: Alarm.com's name is misleading. I thought it was a website that sold alarms.

Moser: [laughs] I can understand your concerns there, Dan. Absolutely. Maybe we'll send investor relations a note.

Hill: Ron Gross, what you're looking at?

Gross: Both the gist and the crux, hey, Jason. Okay. I'm going for -- earlier this week, I recklessly predicted that Editas (EDIT -4.10%), EDIT, could be a 100-bagger. So, I'm going to double up on that right here. They are a clinical stage biotech company focused on the CRISPR-Cas9 technology, gene editing technology. I've spoken about them before. They allow you to add/alter sections of the DNA sequence. I believe that is going to be the future of medicine.

Right now, they are focused on diseases of the eye and blood diseases, like sickle cell anemia. They've had some great results lately. Stock is up 135% over the last month, but don't let that scare you, it's still only a market cap of $4 billion, plenty of room for growth if they become the future of medicine.

Hill: Dan, question about Editas?

Boyd: Sure, a lot of questions, Chris, but let's go with one. Ron, if you're doubling down on a 100-bagger, does that mean you think it's going to be a 200-bagger?

Gross: No, it does not mean that. But you could make double your money if you put more capital into the investment.

Hill: What's your pick, Dan?

Boyd: Well, I'm going to go with Editas here, because Alarm.com, it just confuses me, Chris.

Hill: [laughs] All right. We're out of time, guys, thanks for being here, we'll see you next week.