In this episode of MarketFoolery, host Chris Hill is joined by Motley Fool analyst Bill Barker to talk about PayPal (NASDAQ:PYPL) hitting a new high on strong fourth-quarter results and 2021 guidance. eBay's (NASDAQ:EBAY) story (in terms of results, guidance, and stock movement) is similar to PayPal's. GrubHub (NYSE:GRUB) falls on a disappointing fourth quarter, while shares of Canada Goose (NYSE:GOOS)  rise more than 25%. Bill Barker analyzes those stories and ponders the relative merits of a $125 face mask.

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This video was recorded on February 4, 2021.

Chris Hill: It's Thursday, February 4th. Welcome to MarketFoolery. I'm Chris Hill. With me today, the one and only, Bill Barker. Good to see you.

Bill Barker: Good to be here.

Hill: We've got delivery, apparel, e-commerce. We're going to start today with digital payments. Paypal closed out the best year in the company's history. Fourth quarter profits and revenue came in higher than expected. Their guidance for 2021 was strong. Shares of PayPal up around 5% and hitting a new high.

Barker: Pretty much 20%-ish growth year-over-year, and really, I think that more than anything, what is part of today's move is a reiteration that this is very much the middle of the game. This is not particularly pandemic related growth. It's the growth that you expect here. It's the growth that the guidance is continuing to provide. They've got an Investor Day, I think next week. PayPal and eBay, two great tastes that weren't so great together, but have been pretty good separated.

Hill: They have been good separately. We'll get to eBay in a second. But this is interesting because one of the things that has come up over the past few weeks on this show has been guidance. The degree to which some companies are comfortable sharing it for 2021, the degree to which others are saying, "No, we're not doing guidance right now." Part of what PayPal shared was for the first time in a few years, they're going to have an Investor Day a week from today. February 11th, I believe, is PayPal's Investor Day. One of the things they're expected to share is their outlook for the next three, five years. For anyone who looks at PayPal and wonders about the valuation, I think the counter to that is the confidence that management has to give guidance, not just for this year, but a week from now, they're going to be sharing it out to 2026.

Barker: That is something to take notice of, because it is a space that is while certainly, far more mature than it would have been five years ago, still so much going on. In the places where PayPal's operating, I'm impressed that they can go out on a limb that far into the future. With the percentage of the business that is coming from the new initiatives, the Crypto, and QR code reads, it's really a lot of pieces that have a lot that's going to happen in the next five years. I think it's going to be a fascinating Investor Day and certainly, one that is going to grab a lot of attention because of what the stock has done and what the company has done.

Hill: You mentioned eBay, share's also up, also hitting a new high. This is a different business, but similar story. eBay's fourth quarter results were better than expected. They offered some strong guidance for the new fiscal year. They are also increasing their dividend 13%.

Barker: I think you're going to find less people super interested in the eBay story than the PayPal story. If only because they're not outgrowing the competition, they're not growing faster in the online transaction space than say, Amazon is, which is continuing to take market share. I think that it was a good quarter, they've credited some of that to the current environment, pandemic, less mobility means more purchasing for them. I think they're probably getting a nice little boost from the various collectible markets that are certainly not a huge part of the business, but at the edges helping the transaction volumes. But it means you're seeing as much as you may see the stock market, you may see the bitcoin, you may see some things like GameStop and wonder how much of a bubble there is in certain equity and commodity markets, that's extended to a number of the collectible markets as well. I think that eBay benefits from that, at least in the short-term.

Hill: eBay is a sneakily rewarding stock. It's one of those businesses that to a degree is unfairly lumped in with let's just call it the past. It's like, eBay, well, that was great 20 years ago, that was a hot name but they missed the bow. They had PayPal and they spun it out, thank God for PayPal. If you look at a chart of eBay, it has been a steady performer over the last 20 years. For anyone who's held it for that amount of time, again, there are always more exciting names than eBay, but it has rewarded shareholders over the last 20 years.

Barker: Yes. I'll put some qualifications on that. The last 15 years have not been as good. It's up 6% annually over the last 15 years. Market's up 10%, Internet retail is up 24%. It's made a nice comeback in the last year being up 70% as a stock. That's done some work in making up the degree to which is trailing. But even eBay, 70%, Internet retail, the sector up 72% over the last year. It did a lot of great work early on. Stock price got a bit ahead of itself and maybe it's back on track now, certainly over the last year is showing that it's highly relevant. But one of the reasons why you might say it gets unfairly lumped in is the closest competition to it, which has been outperforming it over most time periods that you would measure over the last 15 years.

Hill: The stock of the day is Canada Goose Holdings. Global digital sales in the third quarter rose nearly 40%. Luxury parkas are in demand. Canada Goose mix them and shares of this stock are more than 25% today.

Barker: Did you get a chance to look at that link I sent you?

Hill: Very briefly. You sent me a link to the Canada Goose website where if I'm looking for luxury parkas, I could extensively do some shopping.

Barker: Yeah and not just luxury parkas. They've got masks. The mask that you wear outside these days for your health and the health of the others in your vicinity?

Hill: Yes.

Barker: What do you spend on that?

Hill: Not a lot of money.

Barker: Didn't go $125 for that mask?

Hill: [laughs] I did not spend $125 on a mask though.

Barker: Well, if you wanted to become the kind of person that spends $125 on a mask, you can be that person by shopping at Canada Goose. A great quarter for them. As they point out in their press release, they've still got a quarter of their retail stores closed right now, but they are doing a better job on the online direct-to-consumer sales. They are doing a great job in China. If you can get people to buy a $2,000 parka, a $125 mask, $200 toque, then you've got a heck of a business, and this quarter shows that they do have a brand and a quality of material. It's sort of a required wear on some college campuses. I think people will probably right now find, "Hey, they want to spend more time outside." They are able to spend more on good, comfortable, warm winter clothing because they're not spending it in other places. It's a great quarter for them, but I look at these prices and I wonder just how long they can sell how many of these things at these prices.

Hill: In their defense, they do also offer face masks for $75.

Barker: They do.

Hill: For people looking for more of a bargain option. Now, it is interesting to see, because we've certainly talked over the years about businesses that are going after the luxury market, Tiffany being the classic example, and how some businesses have gone astray because they had a luxury brand or somewhere on the luxury half of the spectrum. Then they started doing some discounting or going the route of outlet malls to boost sales, that sort of thing, and it hurt them in the end. If Canada Goose can keep this up, it's a big rise in the stock today. It's not close to where the all-time high of this stock is. But if they can get their fulfillment right, get their shipping right, then they become a global luxury brand.

Barker: Well, what about the $150 baseball cap? Can I interest you in that?

Hill: Only if it also comes with, I get an appearance, like on that documentary Will Ferrell, did where he was part of spring training. $150, does it give me like, "Yeah. You get this inning, you get to play right field," something like that?

Barker: No, no. It gets you a hat.

Hill: No. I don't have that kind of coin. No.

Barker: Well, that's what they're doing. That's what they're achieving. They've got great margins on their sales and I think it's an upper 60% gross margin. They're a brand that is loved by a lot of people and the people who have the money to afford the brand were buying it last quarter. That's the news for Canada Goose. They can't get into all the stores they want to go to, but they are finding them online and particularly in China, I think they've got plenty of story left to play out there.

Hill: Quick programming note on this weekend's Motley Fool Money radio show, Chad Millman is our guest. He is the Chief Content Officer at The Action Network. We're talking about the state of sports betting in America, and Chad also has a few things to say on prop bets for the Super Bowl. Check that out on Motley Fool Money this weekend.

We'll wrap up with Grubhub. Fourth-quarter loss was bigger than expected. Grubhub is spending more on marketing, that explains part of it. The shares are only down about 3% and I'm assuming that's because this is not a stock that has shot to the moon over the last 12 months.

Barker: No. Well, they're being acquired and that was announced over the summer by a European entity, getting a foot into the U.S. So Just Eat Takeaway, which is a Netherlands based company with operations there, taking over Grubhub. Basically, there is a pretty solid floor because of the acquisition price for Grubhub, but it's all stock. So it's not a solid cash price. It looks like, Just Eat Takeaway's stock is also down about 3% on the basis of this report, in part. Grubhub has been losing market share to Uber Eats, losing market share to DoorDash, and you would have thought they were in the right place at the right time for this. The DoorDash competition has really been one of the things that has really, really hurt Grubhub over the last two years.

Hill: This week we also saw Uber Eats acquiring Drizly, which is the alcohol delivery service. So Uber is spending just over $1 billion to get Drizly and we'll see if the new parent company for Grubhub can right the ship in the United States. But this is not a close contest right now in terms of who is winning when it comes to either getting people from point A to point B or getting food from point A to point B. Grubhub is just getting lapped by the likes of DoorDash and as Uber makes more investments into this space, it only gets harder for them.

Barker: Yeah. The investments that they're making into advertisements are ones, I don't know if you've been seeing as many of these Uber Eats ads lately as I have, I think they've got Super Bowl ads coming up. Maybe with Wayne's World or is that the one that is campaigning for the Super Bowl?

Hill: Some food delivery, yeah, I think whether it's Grubhub or someone is doing Mike Myers and Dana Carvey. That should appeal to younger folks. Let's bring back the sketch comedy from Saturday Night Live of the early 1990s, that should resonate.

Barker: It's going to resonate with us because we are the ones who are lazier than the youth of today and ordering food more and have more money to spend on that. So yeah, I think that the market is more us than your children for that.

Hill: Good luck with that.

Barker: The Mark Hamill and Patrick Stewart ones?

Hill: Those are enjoyable.

Barker: Well, that's also aimed at us. I think Mark Hamill travels a little bit more into the youth with his appearances in the most recent Star Wars movies and the Mandalorian for that matter, spoiler alert. But I think that, at all levels, Uber Eats is major competition, well-funded, making a move to be more ubiquitous in people's minds, and I don't know what Grubhub and their new owners plan of counter attack is going to be, but it's not playing out very well just yet.

Hill: Bill Barker, always good talking to you. Thanks for being here.

Barker: Thanks for having me.

Hill: As always, people on the program may have interest 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 addition of MarketFoolery. This show is mixed by Dan Boyd. I'm Chris Hill, thanks for listening, we'll see you on Monday.

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.