Which two stocks need a win this earnings season? What trends should investors be watching? Why are Roku (ROKU -4.02%) and Zoom Video (ZM -3.98%) suddenly looking more attractive? And which CEOs are under more scrutiny?
In this episode of Motley Fool Money, Motley Fool analysts Jason Moser and Ron Gross, with host Chris Hill, answer those questions and more, analyze the latest with Facebook (META -1.19%), Constellation Brands (STZ -0.70%), Pepsi (PEP -0.50%), Levi Strauss (LEVI -0.42%), and Delta Air Lines (DAL -0.80%), and share two stocks on their radar: Matterport (MTTR -4.69%)and Voyager Therapeutics (VYGR -8.78%).
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 Oct. 8, 2021.
Chris Hill: It's a Motley Fool Money radio show. I'm Chris Hill. Joining me this week, senior analyst Jason Moser and Ron Gross. Good to see you as always gentlemen.
Jason Moser: Hey.
Ron Gross: How are you doing Chris?
Chris Hill: We've got the latest headlines from Wall Street, we'll preview earning season and some growing rivalries to keep an eye on. As always, we've got a couple of stocks on our radar but we begin with the big macro. Unemployment rate fell to 4.8 percent but the US economy added just 194,000 jobs in September, well below estimates. Ron, at a time when companies are starting to ramp up seasonal hiring, this jobs report indicates that most every industry is in fact having trouble hiring.
Ron Gross: Yes, you nailed it. By all accounts, a worse-than-expected report, I think and I'll get into some of those details. I think the main takeaway is that the weakness may give some cover to the Fed and allow them to continue their bond-buying stimulus program and put off the tapering of that program that so many investors are worried about for just a bit longer. The markets on Friday, they were up and down trying to digest the information as investors try to figure out if the bad news outweighed the good news of potential continued stimulus. I think we're going to have to see how that plays out over time. Some details speaking to what you said about the weakness. The payrolls increased a 194,000 in September. That was compared to a $500,000 estimate and down from 366,000 in August. So very weak. You mentioned the unemployment rate did drop to 4.8 percent from 5.1 but this was largely due to a reduction in the labor participation rate as people permanently left the workforce. Don't let the better unemployment rate fool you. Things are not that great. Leisure and hospitality growth, much slower than people had hoped for bringing in less than 75,000 jobs. As the economy reopens, I think we're hoping to see that number really bump up. We saw a sharp decline in government jobs. Now I will say the one bright spot for workers was an increase in wages, which is good, but a stagnant workforce with rising labor costs does create some concern about both productivity and the potential for increased inflation. We'll keep an eye on it next month and see what happens.
Chris Hill: Safe to assume that and we're going to talk about earnings season coming up later in the show but safe to assume that a lot of companies should expect questions about their ability to hire?
Ron Gross: Absolutely. I think besides increased pricing, where you're going to see the phrase labor shortage in boast earnings releases.
Chris Hill: Not a great week for Facebook. On Sunday, 60 minutes aired an interview with Francis Haugen, a former product manager at Facebook, who provided damaging internal documents to the Wall Street Journal for their reports entitled The Facebook Files. On Monday, shares fell 5 percent. It's Facebook, Instagram, and WhatsApp all suffered outages for about six hours. Jason, Facebook has weathered these storms in the past, so I'm not sure I want to bet against them. Even though this is another bad look for Mark Zuckerberg and his executive team.
Jason Moser: It is a bad look but I think the big question and then to your point is this time going to be different? My first inclination, unfortunately, I guess is to say no. I think we just see a lot of signs here for that reason too. I mean, people are clearly hooked on these platforms. I'm not entirely convinced our regulators even have a clue as to where to start with this either. Clearly, customers, those spending on the ads that are on the platform. They're not going to pull back. I mean, it seems like this just happens over and over again. I mean, when you look at the cause of this outage, I mean, its root cause was a faulty configuration change on our end is what Facebook says. Ultimately, I think you can see some headwinds there in Facebook's future that could pose some issues. Look at Apple's new tracking rules for example, they are already under regulatory scrutiny in Europe as well. There are just more and more wake-up calls for businesses, I think, to try to diversify and not place all of their eggs in one basket, so to speak in building their business profiles on Facebook and its properties. But we are where we are and I think that is one of the main reasons why it's very difficult for me to believe it will be different this time because so many people and businesses are so entrenched already own their platforms. It's very difficult to unwind that. Even if that does happen, it's going to take a while to do.
Ron Gross: A quick comment. Listening to our senators talk about social media is painful. They need to get better educated and for six hours, I couldn't tell what my high school friends were up to and that will not stand my friend.
Chris Hill: Jason, you also have to wonder; look, Facebook, it's a very large company. At the moment they have, according to their website, about 3,500 jobs that are open. One potential small ripple effect could be, this might make it a little bit harder to recruit top talent.
Jason Moser: It feels like it would. I mean, I don't know that I would ever really want to work there. You probably have to go around in public not really admitting that that's where you work at least during times like these. I mean, it certainly is a brand that is not impenetrable. I mean, these things happen and there is a lasting effect. We do have short memories when it comes to this stuff but the more of this stuff happens, the more of that brand suffers, the less people and businesses trust them. I think trust is just, it's an imperative for this business to succeed. So they're going to have to figure out a way to really earn that trust back in sustainably maintain that trust.
Chris Hill: Pepsi's third-quarter profits in revenue came in higher than expected. The company also raised revenue guidance for the full fiscal year. Ron, I know nine percent growth for the quarter might not seem like a lot, but this is not a software company, this is consumer goods.
Ron Gross: [laughs] Very well said. A solid quarter despite those dreaded supply chain issues, organic growth in all of its segments. Doritos 3D crunch, I'm going to get everyone hungry. Cheetos, crunch, pop mix, Mountain Dew, Flaming Hot helped drive sales growth in the quarter, Frito-Lay a seven percent increase. PepsiCo beverages seven percent increase, double-digit growth overseas, which is interesting. Overall profits did decline by about three percent on higher operating expenses. The company is seeing supply chain challenges that include everything from a shortage of Gatorade bottles to a lack of truck drivers but as you mentioned, they did raise full-year organic revenue growth guidance to eight percent from six percent due to an expected increase in volumes as well as planned price increases. Pepsi being one of those companies that does have some pricing power, which in this environment is extremely important. Management expects constant currency earnings growth of at least 11 percent. They're confident in their ability to pass along price increases, give guidance for next year, which they typically don't do this early which makes me believe that they have some solid visibility into their business. Mid-single-digit revenue growth and high-single-digit core constant currency earnings growth. So pretty good as you said, not a high-tech company, but they're doing well, selling at 24 times, right in line with Coke at 23 times, very similar companies at this point. Coke a little bit bigger market cap, a little higher dividend. Obviously Pepsi with the Frito-Lay business, which we like the diversification that that provides.
Chris Hill: I'm glad you mentioned the dividend because barring something unforeseen next year will be the 50th year in a row that Pepsi managers to raise its dividend. That's incredible.
Ron Gross: That is incredible, and that's a testament to the consistency and the quality of their earnings. I want to say 2.7, 2.8 percent perhaps dividend yield, that's a pretty nice yield.
Chris Hill: Shares of Constellation Brands up a bit this week after a mixed second-quarter report, profits were lower than expected, but revenue was higher and Constellation raised revenue guidance for the full fiscal year. Jason, you look across their portfolio of alcohol brands, it was actually the beer segment that was getting it done. That was a little bit of a surprise to me.
Jason Moser: Yeah. I mean, I think you can sum up this quarter in the immortal words of Homer Simpson, Good old, trustworthy beer, my love for you will never die. [laughs] I mean, this was a good quarter, I think all the way around, but beer certainly stood out in the face of a difficult seltzer market, but beer sales were up 14 percent. They've seemed strong on-premise growth as well. That's coming back. On-premise represented 11 percent of total beer depletions. Now that compares to 15 percent pre-COVID. So we're getting back to the days of yore, so to speak there. But Modelo Especial and Corona Extra are the stars of the portfolio these days. Worth noting, costs are going up though, beer margins were down 5.3 percentage points. Again, clearly sluggish performance in seltzer, it's not just a Boston Beer problem. The wine and spirits division performed well when you exclude the divestitures, those organic net sales grew 15 percent. I think they have set appropriate expectations for the coming quarters with some tough comps coming up. But this is a good business with an attractive portfolio of brands. It hasn't performed all that great over the past several years but perhaps this is a turning point.
Chris Hill: Bill Newlands has been CEO for just over two years and obviously for most of that time, he's been trying to get this business through the pandemic. It will be interesting to see though, I mean, this is historically a business that's made acquisitions, they've added to that portfolio of alcohol brands. Going to be interesting to see if sometime in 2022, they dive deeper into the hard seltzer.
Jason Moser: Yeah. That's really hard to say I mean, you have to ask the question. I mean, have we hit peak seltzer? Is seltzer just a one-and-done fad. I just don't know there. I'm not a seltzer guy, but it certainly seems like again, it's not just a Boston Beer problem, it is widespread. Whether it comes back yet remains to be seen.
Chris Hill: Coming up after the break, we've got the business partnership that America has been waiting for. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Ron Gross. Shares of Levi Strauss up nearly 10 percent on Thursday after third quarter profits and revenue came in higher than expected. Ron, nice to see Levi is doing well in the all important back to school season.
Ron Gross: That's exactly right. Strong report as demand increased for that back to school season and people refresh their wardrobes in a post pandemic world. We're all getting out there a little bit we need to buy some clothes. Sales up 41 percent year-over-year. Now that's anniversary and pandemic levels so they're nice enough to give us 2019 data as well. We're up three percent from third quarter of 2019. Having supply chain issues along with everyone else but it's fared relatively well due to its diversified manufacturing. Less than four percent of its global volume comes from Vietnam which has been a major problem for other manufacturers. Management remains optimistic about it's outlook as it pushes to price increases in the face of rising costs for some raw materials specifically cotton which impacts this business pretty significantly. They're expanding a major retailers target Nordstrom. They're increasing their direct to consumer business, wholesale up 45 percent direct to consumer up 34 percent and finally earnings grew 570 percent again from pandemic levels but if we go back to 2019 up 57 percent. Those are really strong numbers allowed them to increase guidance to put a 200 million dollar share repurchase plan on the books,18 times current year guidance. Not too shabby maybe worth the work
Chris Hill: Two quick things. First CEO Chip Bergh almost seem like he went out of his way to talk about how they were diversifying in their manufacturing and I don't blame him for doing this, but really trying to signal the Wall Street our supply chain problems are not as bad as everyone else's. On the stock buyback, I know that's not an enormous pile of money, but I was a little surprised by that, I don't know, it seems like that could be money maybe better spend going further into their DTC channels.
Ron Gross: It might be a talk in program to just signal confidence in the company and they can be selective how they put the money to work. It's at $10 billion company which is a lot of money but it's not huge, 10 billion is not a huge company, to 200 million is sizable. Let's see if they actually execute.
Chris Hill: Last month Delta Air Lines lowered revenue guidance for their upcoming third quarter earnings report. This week the company reversed course and reinstated their original guidance saying that ticket sales are improving. Jason, the thing we said last month ignore that we're going back to the original numbers.
Jason Moser: I appreciate that they're keeping us updated with the most current information. I think what we're seeing relates a confluence of factors of play. Delta's CEO, Ed Bastian noted that business travel is growing year domestically again you just take a look around on any weekend sporting events are packed, people are thrilled to be there, transatlantic travels coming by. If you listen Airbnb is noting that third quarter is going to be their strongest revenue quarter ever. You're seeing even in person events coming back online, you get the Augmented World Expo of all things. The Expo World Augmented reality and virtual reality takes center stage. Going to be in person this year Chris along with CES in January. You do a boots on the ground view of things, it's very easy to see that more consumers are bringing more and more, they're getting more comfortable with the risk reward scenario of getting back to life. The Airlines are still going to be losing a ton of money for sure that's forecast to be around $12 billion in 2022 but it's a far better situation than 2021 which is obviously a very good thing so it looks like a step in the right direction.
Chris Hill: We also got news late in the week United Airlines sharing the hiring that they're attempting to do and seeing more applicants than they were getting pre pandemic. You don't want to extrapolate too much of one or two data points but it seems like things are moving in the right direction for this entire industry.
Jason Moser: It does and I think for most industries and I think a lot of that is we have the tools now that we didn't have a year ago to deal with this situation and I think that speaks to more people feeling more comfortable about getting out there. I think that only will continue to grow particularly it seems like we get the green light from Scott Gottlieb this week and he said there's really nothing that stops us from getting to see our families and having a normal holiday season. Clearly, it's a fluid situation, some people aren't going to be at that comfort level yet but it absolutely a step in the right direction like you said.
Ron Gross: I think is antivirals like the one that America recently announced start to come out. People are going to say, OK, and I'm not only protected from a vaccination perspective but if God forbid, I do get sick. I've got a remedy here, and I'm going to therefore live my life, I'm going to go out for the holidays, I'm going to get on an airplane, I'm going to go to hotels. I think that's really where the economy really starts to get kicked in the butt and we see a significant increases.
Chris Hill: We also saw Pfizer asking the FDA for emergency use, authorization for the vaccine for children, 5-11 possibly sinking up with Halloween. Speaking of Halloween, earlier in the show, we talked about Pepsi snack division and the company has found yet another way to leverage one of their hottest brands. Pepsi is teaming up with Spirit Halloween, the Halloween based retailer, to produce the first-ever officially licensed Cheetos Flamin' Hot Costumes. I'm not sure where to go with this, Jason, because on-balance, I've never been a huge fan of the food-based costumes. It just hasn't worked for me, but I don't blame Pepsi for doing this.
Jason Moser: I don't, I tend to agree with you. I'm not the biggest date of the food-based costume. It was interesting to look at these two side-by-side. The bag costume is clearly, obviously the Cheetos bag, but if you look at the actual Cheeto costume, it's not so apparent what it is until you actually see the branding and the very bottom-right corner that says Cheetos. It could be a Dorito, it could be just a bad piece of pizza, you just don't know.
Ron Gross: I think it's a red blood cell [LAUGHTER] or one of those hot Tamale candies in the movies.
Jason Moser: That's it, the next step is the Cheetos movie. It seems like there's just around the corner.
Chris Hill: I'm sure it'll be animated and I'm sure someone will happily jump on board that. Ron, you've made no secret of your feelings when it comes to certain Halloween candies, where are you on food-based costumes?
Ron Gross: Not necessary. There's plenty of real-life people costumes. We don't need to turn food into costumes. It's fine.
Chris Hill: Fair enough. What trends do investors need to watch this earnings season and which stocks are starting to look attractive at their current price? All that and a whole lot more after the break, just stay right here. You're listening to Motley Fool Money.
Motley Fool Money. Chris Hill here with Jason Moser and Ron Gross. Guys time for something we have not done in a while. A little thing we like to call fill in the blank the final earnings season of 2021 starts next week. Ron, blank shareholders are really hoping for good news.
Ron Gross: I'm going to go with Nike. Last quarter a bit brutal for Nike shares fell six percent on the earnings report. They're up about 13 percent from their 52 week high. As a result of our hurt by what global supply chain issues specifically forced temporary closures of Nike's manufacturing facilities in Vietnam and Indonesia, which was necessary to help slow the spread of COVID. Supply chain headwinds are impacting gross margins. The costs to move inventory between manufacturing facilities to hold wholesale partners and customers are increasing. Labor shortages at ports are delaying turnaround times for ships carrying large quantities of merchandise. I would imagine the next quarter report, we're going to see a lot of the same but perhaps guidance will show some signs of improvement. That's what I'll be listening for things. Is there any light at the end of the tunnel there? Otherwise, this is going to continue to impact earnings for at least a couple of few quarters, I would think. So we'll be watching.
Chris Hill: As an Under Armor shareholder, I really hope things go well for Nike [laughs] because if they don't, it really doesn't portend good things for Under Armor. Jason what about you who really need good news?
Jason Moser: Yes to me it feels like Alteryx is one of the more obvious suspects here. A data analytics company that has had a difficult stretch. Your stock has been cut in half over the last 12 months as the business has struggled a little bit. I will say I think a recent leadership change, hopefully as they step in the right direction. Mark Anderson, who is the former President of Palo Alto Networks, or who's responsible for sales and go to market strategy, customer satisfaction, all very important roles is also the former Chief Growth Officer of Anaplan. I think that was an important step. They have set out their strategic imperatives. I think they do make sense doubling down on customer successes, building new products and services with their long-standing partners, first and foremost, and then trying to roll that out to new customers. Bringing in a new Chief Product Officer I think helps to. These are all great steps. But what we ultimately need to see is a translate into the numbers. We talk often about how long do you give new leadership a chance to turn things around? What is the appropriate amount of time? Some bond to three-quarters. Typically I fall on that side of the argument that gives them about a year and Mr. Anderson has not been there for that long yet. But clearly, he's been there long enough to where we need to start seeing some signs of life here.
Chris Hill: Ron, the trend to watch this earnings season is blank.
Ron Gross: Our gross margins continuing to be hurt by inflation. I can answer the question. I think the interest going to be yes. We know what's happening. It came through in the last earnings season. We're going to start to get an indication if inflation is transitory or more long lasting, I think over the next couple of earnings seasons. Those with the ability to raise prices like Pepsi we mentioned earlier, Chipotle comes to mind, I think will be definitely be better able to weather the storm. But others are going to see their bottom lines get hit. I think the stock prices are likely to follow.
Chris Hill: Jason.
Jason Moser: You said Chipotle. Now I'm hungry Ron I think I just had different dinner, but I promise my daughter sushi, so maybe tomorrow. I want to focus on the perspective from leadership regarding holiday season supply chains. I mean, we're already seeing Amazon, for example hitting the Black Friday button, target doing something similar, I expect that trend will only increase. Clearly, we're seeing a lot of difficulty in all over the world and getting things from point A to point B. It doesn't look like that's going to abate anytime soon. A lot of people I think are getting out there shopping early this year. They're going to be plenty of bottleneck still. Focusing on those companies perspectives there and inventory levels, I think will provide some good insight.
Chris Hill: Ron the CEO whose seat is getting warmer is blank.
Ron Gross: I'm going to go with Disney's Bob Chapek and not because it is in danger of being fired, but because of the world is watching very intently as Bob Iger rides off into the sunset and Chapek takes full control of the company. They are very different executives are very different styles. Iger more of a people person, Chapek a data driven executive. There's a belief that Iger has already lost faith and Chapek and he has worn that Disney is veering off course. Investors are asking Chapek to lean hard into streaming even if it's frustrates talent. But as a great Hollywood reporter article noted I recommend it. He's got to balance that with managing talent and relationships, perhaps not as strong suit.
Chris Hill: Jason. We're not saying the seat is necessarily hot, but it's getting warmer for who?
Jason Moser: Yes I will preface this with the admission that I don't think this is going to happen, but certainly the seat is getting warmer for Mark Zuckerberg. To my mind, I don't know that there is a more distrusted CEO in the market today. I know those are probably pretty strong words, but we are where we are. Generally speaking I'm a personal responsibility guy. The masses have demonstrated that they can't live without Facebook and its property. That's on them. But there is some culpability. Your Facebook does have a responsibility here and just keeps on happening. He just seems completely tone deaf with all. That's the one consistency here. He just never seems to really be in touch with it time after time. I recognized as a monumental task and running such a company that has such a large network of users all over the world. But he has just let this entire experiments spin completely out of control. You have to start wondering if perhaps he is not the best phase for the company going forward. I mean, between the outage, between the Wall Street Journal articles, you really haven't heard much from management at all other than Zuckerberg to say it's highly a logical. Well listen Mr. Spock, it actually is logical. I mean, a lot of people put money over everything else in their life. It's very difficult to believe what he says. It's very difficult to believe that they can self regulate. It is going to be imperative that there is some type of regulation that helps bring this together and make Facebook a little bit more of a safe and palatable place to be for the masses. Because again, as I said, it's very clear. I mean the masses spoken. They want to use those platforms. But Facebook really needs to double down on figuring out how to make these safer experiences, particularly for the younger generation.
Chris Hill: Ron wants to keep track of is high school friends. That is clear. Ron one growing rivalry to keep an eye on is between blank and blank.
Ron Gross: Speaking of regulation that Jason just mentioned, I'm going to say SEC chairman Gary Gensler and cryptocurrencies. Gensler has been very vocal about his belief that crypto needs to be regulated. One main concern that we hear a lot about is the risk of cryptocurrencies being used to carry out fraud and money laundering. There's a very dark web aspect of cryptocurrencies. Gensler told Congress earlier in the week that he wanted crypto platforms to be registered with the SEC. Many believe on the other side of the coin that he's overstepping his authority since these assets are currencies and not securities. It'll be interesting to see down the road what the definition shakes out as. Some believe that regulation will have a negative impact on retail investors and entrepreneurs in this space. It really is the whole regulation versus free market argument. But now it's playing out in the 21st century with digital assets. Keep an eye on the FCC Chairman Gensler has any authority here and that's going to largely depend on what cryptocurrencies actually end up being determined to be security or currency.
Chris Hill: Although based on Jamie Dimon's comments this week it seems like Dimon supports the direction Gensler is headed.
Ron Gross: It does. He seem to offer a little support there, but again, he's got to have the authority to do what he wants to do. The SEC doesn't have wide overarching authority in all cases, so we'll have to keep an eye on it.
Chris Hill: Jason you've got a growing rivalry you're watching.
Jason Moser: Yes I think you have to keep an eye on Amazon versus Cloudflare. This really fascinating situation brewing here as CEO of Cloudflare and Matthew Prince is known for saying, to never trust Amazon. Let me repeat that. Never trust Amazon. We think about how powerful those words are. I think he's referring specifically to the AWS side of the business, but I could be wrong. But he is calling out their pricing and their tactics on that side of the business. He is very clearly Cloudflare is looking at building services beyond storage. He sees Cloudflare ultimately competing with the other big three cloud vendors and AWS, and Google and Microsoft. He think they're going to be the fourth major public cloud. To me those are grand aspirations, of course. I mean, we know how successful AWS has been, an enemy, Cloudflare is still a small business compared to AWS, but Cloudflare is a very good business. To me, it feels like this is getting ready to get good and as a shareholder of both, I'm going to stay tuned into it to watch. I really do feel like Cloudflare is onto something there. Amazon has been known to price and use some strategic tactics there that lock customers in and don't really give them a lot of choice at times. Matthew Prince may be onto something there, but that'll be a fun rivalry I think that's building.
Chris Hill: Two more guys, the S&P 500 has hit new highs more than 50 times this year but a large number of stocks are currently trading more than 40 percent below their own highs. Ron, one stock that's starting to look interesting at its current price is blank.
Ron Gross: There's a bunch as you noted. I'm going to go with Roku, which I do not own, but I think it looks interesting here. We're clearly moving, we're in a cord-cutting world. Pay TV subscribers have declined by more than 23 million since peaking in early 2012. The Roku platform has more than 10,000 streaming channels on its platform, that includes both paid and ad-supported channels. The Roku operating system, which it developed, has become the number one selling connected TV operating system in North America. 38 percent market share in the US, 31 percent share in Canada. Roku is the leading streaming platform worldwide, taking the lead over Amazon's Fire last year. To close out 2020, Roku had 51 million active accounts. That's up 39 percent year-over-year. Amazon had 50 million, up 25 percent at that time. Roku, also a powerhouse in the digital advertising space. Company makes most of its profits from digital ads that appear on its platform. But slowing growth in streaming hours and active accounts of some investors spooked stock may have been ahead of itself at $490, I can't say it wasn't, but after falling about 35 percent, starting to look interesting to me again. Still a high-priced tech company but not as high-priced as it once was, certainly worth keeping an eye on.
Chris Hill: 320 is a lot lower than 490.
Ron Gross: Yeah, agreed.
Chris Hill: Jason, what about you?
Jason Moser: Well, another popular name in our Foolish universe of Zoom Video Communications. I think that looking at Zoom today, this is more than just a video conferencing company. I mean, they are building out a communication platforms. I think you have to think bigger. I think you have to think longer with this business. They just hit their first $1 billion quarter and they have launched Zoom Apps recently that has brought over 50 apps into the Zoom meeting experience, ultimately giving folks using that Zoom Meetings product all different tools, which is really neat. They've launched Zoom Events, they've got Zoom Phone. They've really got their foot on the gas here in developing new products and services and they are calling for better than $4 billion in revenue for the full year now, and around $4.75 per share in earnings for the full year. The stock is down 24 percent year-to-date, but almost 50 percent over the past year. Given its brand awareness, given its reach, you look at a business like this trading now at around 54 times full-year guidance, valued at around 54 times full-year guidance, that doesn't seem too crazy to me. I mean, if you're not a Zoom owner today, I think now this is absolutely worth a look because it seems to be a business with some staying power.
Ron Gross: It's interesting to note perhaps why a lot of these high-tech growth companies are off 35, 40 percent from their highs, and there's a variety of reasons, but one of the main ones is that we're seeing interest rates tick up, specifically the 10-year treasury. It's really a math problem when you get down to it. Future earnings are worth less on a present value basis the higher interest rates get, and if interest rates at around 1.5 percent right now are going to continue to tick up, that makes the present value stream of growth worth less. Some of these innovative growth companies, the valuation is wholly reliable on the out years, many years out really continued strong growth in free cash flow. Some not even free cash-flow positive yet but the growth potential expected is enormous and interest rates will have a very big impact on what that stream of cash-flows are worth.
Jason Moser: Yes, I think you're right. I mean, that's one of the reasons to me why Zoom stands out at this crowd, because the fundamentals are there. I mean, this is a profitable business. This is a business that makes actual money. We're not trying to figure out that path to profitability, they are there, and not only are they profitable, but they're just everywhere. I mean, these last 18 months, the business has taken off for obvious reasons and I suspect it's going to be around for some time to come.
Chris Hill: Finally, Jason, anyone looking to make the most of fall grilling season should try blank.
Jason Moser: Well, Chris, we are big fans of salmon in my household, whether it's grilled or whether it's broiled. I mean, we just enjoy a good piece of salmon every now and then. You've heard me talk before on this show about a company called Dizzy Pig. For all of my McCormick love, Dizzy Pig is just a little local spice rub maker here in Virginia that makes a lot of really delicious rubs. I would encourage folks, check out dizzypig.com and look up the spice mix they have called pineapple head. It is a pineapple-inspired, little bit of heat rub that's very good on seafood and it is an outstanding complement to salmon. Whether you broil it in the oven or grill it on the grill, try a little salmon with some Dizzy Pig pineapple head, and just the one key I will say to this is with about a minute to go, because you don't want to overcook salmon, with about a minute ago, throw and a nice pad butter on top on that piece of salmon. You let that butter melt all over the salmon, it gets in there with that pineapple head it really works.
Chris Hill: Ron, what about you?
Ron Gross: Stick with me, we're going to build a little menu here. We're going to start off with New York strip steaks coded in equal parts of chopped Rosemary, Sage, and thyme and generous amounts of salt and pepper. You're going to dab the steaks with a little olive oil after you put the herbs on to hold them in place, you're going to throw them on the grill for 10 minutes total. Now we need side dishes. You're going to throw some in-season vegetables tossed with olive oil on the grill for the side dish, I like phenol, eggplant, and either leaks or scallions for some onion flavor. Finally, slice some potatoes, toss them in olive oil, fresh Rosemary and chopped garlic, wrap them in aluminum foil, throw them on the grill for 30 minutes, you've got New York strip steaks with sides of vegetables and grilled potatoes. Enjoy, have a great fall everyone.
Jason Moser: Thanks for making my tip look like a bunch of copper noodles, Ron.
Ron Gross: You're not hearing that on Bloomberg. Guys, we'll see you after the break. radar stocks are next, so stay right here. You're listening to Motley Fool Money.
Chris Hill: As always, people on the program may have interest in the stocks, they talk about on the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here with Jason Moser and Ron Gross. Guys, time for radar stocks, our man behind-the-glass, Dan Boyd is going to hit you with a question. Ron, you're up first, what are you looking at this week?
Ron Gross: Voyager Therapeutics, VYGR, an early stage biotech company focused on gene therapy is in my personal nine stock biotech basket. Shares were up 55 percent on Wednesday and then again a bunch on Friday. But here's the thing with biotech, even after that 55 percent increase, shares around $4 a share, I own them at $20 a share, so be careful, always buy these types of stocks in a basket. Announced a really strong agreement with Pfizer that could mean up to 600 million in revenue for this company. Market cap is only 166 million, a potential 600 million revenue stream coming in. Looks interesting to me.
Chris Hill: Dan?
Dan Boyd: Generally, we see these radar stocks are gainers over the long term here and this is not the case with Voyager Therapeutics, Ron.
Ron Gross: I'm suggesting taking that shot perhaps at a $166 million stock with some exciting future potential behind it.
Chris Hill: Real quick, Jason, what do you got?
Jason Moser: Taking a look at Matterport ticker, MTTR, this is a digital imaging business focused on digitizing and indexing the built world, think digital twins for buildings, Chris. They just announced a deal this week with Cushman and Wakefield global commercial real estate company. Very exciting, is a business with really exciting prospects, but it's valued like one, two, so there will likely be better opportunities along the way.
Chris Hill: Dan?
Dan Boyd: If there's one thing I love, Chris, it's 3D rendering of the insides of buildings, so I'm very excited about this company.
Chris Hill: You're adding Matterport to your watch list there Dan?
Dan Boyd: Well, I'll tell you what, I'm not adding Voyager Therapeutics.
Ron Gross: How rude.
Chris Hill: Jason Moser, Ron Gross, guys, thanks for being here.
Ron Gross: Thanks Chris.
Chris Hill: That's going to do it for this week's Motley Fool Money. The show's mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next week. [MUSIC]