Earnings Roundup: Block, PayPal, Etsy, and Much More

In this podcast, Motley Fool Chief Investment Officer Andy Cross and Motley Fool senior analyst Jason Moser discuss:

• How two "war on cash" stocks are doing.
• Etsy's cautious optimism heading into the holidays.
• North American same-store sales fueling the rise of Starbucks.
• The latest from Qualcomm, Atlassian, and Uber.
• Hershey's latest quarter.
• Investing strategy for a college student.
• Two stocks on their radar: Ulta Beauty and The Trade Desk.

Motley Fool contributor Rachel Warren talks with Jon Maier, chief investment officer at Global X ETFs, about how to protect your portfolio during an economic downturn and trends he's watching over the next three, five, and 10 years.

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 Nov. 04, 2022.

Chris Hill: We've got the Fed chief, a caffeine boost from Starbucks and the latest in the war on cash. Motley Fool Money starts now.

It's the Motley Fool Money radio show. I'm Chris Hill. Joining me on the show, Motley Fool senior analysts, Jason Moser and Andy Cross. Good to see you both.

Andy Cross: Hi, Chris.

Jason Moser: Hey, hey.

Chris Hill: We've got the latest headlines from Wall Street. Jon Maier from Global X ETFs is our guest. As always, we've got a couple of stocks on our radar. But we begin with the big macro. The US economy added 261,000 jobs in October. The report comes just two days after the Federal Reserve announced as expected another interest rate hike of three quarters of a percent. Andy, it went like we all thought it was going to go. I mean, we're expecting this interest rate hike and the jobs report was a Goldilocks report.

Andy Cross: Well, it's interesting, Chris. The job was actually much higher than expectations. Remember, we had the Hurricane Ian coming through in late September. I think into October, there's a lot of concern maybe what that would do to the jobs numbers but I think you mentioned 261,000 jobs down from 315,000 in September and 292,000 in August. The Fed wants to see these numbers softening. I think we've talked about that enough. They want to see a slowdown in the economy. Unemployment rate ticked up a little bit to 3.7 percent, so a growth in healthcare and manufacturing drive a lot of the growth. Wage increases. Interesting, Chris, increased 4.7 percent year-over-year that was trending down but still fairly elevated compared to what the Fed wants to see and Jay Powell talked about this in wages and prices still running very hot.

We saw the jobs openings this week at 10.7 million in September versus 10.3 million in August, so down from the March peak. Those trends are starting to see in move in the direction that the Fed wants to. But still, as you mentioned, the Fed increase the Fed funds rate by 0.75 percent to a target of 3.75-4 percent. That's back to the levels of 2009. He said it's premature to be thinking about pausing and Jay Powell said we think we have ways to go and that sent the markets a little bit spirally on that day. Interesting, the two-year rate on the note is now at 4.755 percent up from just like 0.4 percent a year ago. You're seeing the rates really increase and that's going to affect all borrowing costs going ahead and that might start to get the Fed where they want to go.

Chris Hill: Yeah. Andy, like we see during earnings season that a stock will react not on the earnings results themselves but on the guidance a company gives. We're seeing that with the Federal Reserve. It's not about the announcement, it's about the press conference that Jay Powell gives afterwards.

Andy Cross: Oh, my God. Remember, I mean, just trying to digest what Jay says and what Chairman Powell says and the questions that are asked, and just reporters, analysts, and macro analysts trying to gauge what the Fed will do. That's why it's a very difficult job. Obviously, we're going to see a terminal rate go closer to that high four or five percent's where it will peak out. But it's going to be a little bit longer than higher and longer than I think a lot of analysts and investors maybe were expecting which really choose to market in October.

Chris Hill: Let's get to some earnings and our opening category is the war on cash. Shares of Block up more than 15 percent on Friday. The company formerly known as Square posted third-quarter results that were better than Wall Street was expecting. You tell me, Jason. Was Block that good or were expectations that low?

Jason Moser: Maybe a little bit of both. I mean, big picture, you have to admire how this businesses evolved over time. I mean, it was just this little device that could take your card at food trucks not all that long ago and they've really built it out into a nicely diversified financial services business that it eases a lot of friction in the movement of money. The results, I think were really respectable. The total net revenue was 4.52 billion. That was up 17 percent from a year ago. Now, if you exclude Bitcoin, it was 2.75 billion. Looks even better, up 36 percent. Gross payment volume of $54.4 billion that was up 20 percent from a year ago. They continue to push money through that network and that all resulted in gross profit of $1.57 billion. It was up 38 percent from a year ago. The business breaks out essentially into Cash App in the Square ecosystem and the Cash App continues to grow generated gross profit of 774 million that was up 51 percent from a year ago.

Then the Square ecosystem also up 29 percent from a year ago as well. We always go back to Cash App, I think because it's such a conduit for so many different things that really ultimately go through their network and they recorded more than 49 million transacting actives in September alone that was up 20 percent from year ago. They also continue to grow the share of Cash App cards in this network as well. They're at 35 percent penetration. Now, that's up from 25 percent back in September of 2020. I think probably the bigger question right now is just the Afterpay acquisition. I mean, clearly it's been a tough year for Block but it's been a tough year, I think for virtually every company out there. The investments they continue to make pay off. But I think the question right now is in regard to the Afterpay acquisition and it feels like they paid entirely too much for it. I mean, they've got a ton of goodwill on the balance sheet now because of it. But ultimately, time will tell. They did see some benefit from the BNPL space in a quarter and I suspect that will become more pronounced as time goes on.

Chris Hill: Sticking with the war on cash, it was a different story for PayPal. Third-quarter profits and revenue were higher than expected but the company lowered guidance, sending shares of PayPal to within just a couple of bucks of a five-year low, Andy.

Andy Cross: Well, yeah. It was actually a pretty good quarter I think, Chris. When you look at the revenue, it was up almost 11 percent to 6.85 billion payment volume, up nine percent, 14 percent if you back out of the strong dollar and the impacts of currency to 337 billion. Cross-border continues to be trending down and that hurt them a little bit down one percent. Those volumes down one percent on a neutral currency basis. Jason mentioned buy now, pay later that that space continues to be a bright spot for PayPal, did very well. Total active accounts to 432 million overall throughout the entire ecosystem with Venmo and PayPal, and others, up four percent, they added 2.9 million. Transactions up 15 percent and transactions per active account at 50 per year up 13 percent.

That's the highest they've seen in the last couple of years. Overall though, the EPS number was better. They managed to do some really nice job on some expense management on the non-transactional size. The non-transactional expenses were only up four percent versus transactional expenses that were up 18.5 percent. It's a little different position than the likes of Block. They bought back $3.2 billion of stock this year. So far, that's 78 percent of their free cash flow. They continue to make all the innovations, getting Venmo tied into Amazon, working with Apple to enhance the offerings with PayPal and Venmo. Those all will start to hit, I think over the next couple of years and next few months into the new year. You got a stock at 74, market cap 85 billion. Lots of cash, manageable on the balance sheet, price-earnings somewhere in the high teens like 15, 16, 17, 18 times. I think PayPal still looks attractive here.

Chris Hill: Shares of Etsy have been cut in half this year but up a bit this week after a strong third-quarter report. Jason, when you look at Etsy's business right now, what stands out to you?

Jason Moser: Yeah. A nice bright spot in a challenging earnings season for sure. It was interesting that they didn't do anything particularly special but the business just continues to perform, management continues to hit the targets that they said. I think that's really important. The performance for the quarter, it was respectable. I mean, it consolidated gross merchandise sales three billion dollars that was up 0.7 percent. Currency-neutral take rate continues to improve. Obviously, that pushes that revenue number for them. Consolidated take rate for the quarter was 19.8 percent. They ultimately recorded a big net loss, $963.1 million. But I want to make sure people understand that, that was primarily due to a massive impairment charge, a one billion dollar impairment charge in goodwill related to the Depop and the Elo7 acquisitions that they made just, I think about a year ago and that goes back to what I was talking about with Block. You get a lot of goodwill on the balance sheet. You do tend to see that written off in times like these.

Generally, I don't get a lot of value out of the Q&A portion of earnings calls. I just don't feel like the questions are always very long-term focus. They don't seem like they're very insightful but that question was brought up on the call. You wrote down this big impairment just one year after the acquisitions, what did you miss? What lessons have you learned? Josh Silverman, he took full responsibility. They like the businesses they acquired but they fully admitted that they got the timing and the valuation wrong. The world has certainly changed in a short period of time but they continue to invest in personalization, making it smarter and more catered to what each person is looking for. It's encouraging to see the Star Seller program really taking off that focuses on rewarding their sellers with the recognition when they deliver on being responsive, when they ship on time, and when they get great reviews.

That ultimately I think can speak to those fee increases that I think ruffled a few feathers early on when they decided to pass that through. Two categories that have been most pressured by reopening headwinds, the home and living and then also craft supplies. Those are showing signs of stabilization. They're entering the holiday season on a note of caution, just guiding for about three percent revenue growth for the core. But it's also worth noting that it would also represent growth of 174 percent from 2019, so take that with a grain of salt. I like that they're going into the holiday season with a little bit of caution because hey, listen, you underpromise and overdeliver. That's what we like to see.

Chris Hill: Starbucks ended its fiscal year with a double shot of espresso. Details after the break, so stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Andy Cross. Starbucks' fourth-quarter report was highlighted by strong profits and higher revenue, sending Shares of Starbucks up nearly 10 percent on Friday. Andy, same-store sales growth in the US was a really nice highlight.

Andy Cross: My God. Was it ever, Chris. It was up North American overall, up 11 percent, with a 10 percent increase in average ticket and a one percent increase in transaction. That's basically the story here. We're seeing some pricing that they have put forth and people continuing and wanting to spend more money, especially on drinks that are flavored. I'll note that pumpkin spice lattes, which I have not tried recently, but their sales were up 70 percent year-over-year. Traffic for the stores is almost back to 2019 levels and that's really starting to show up in the earnings and the revenues. Revenues were up 11 percent on a 13 week basis and that includes a three percent hit to FX. Pricing, as I mentioned, was up six percent in the US, but they're not really looking to do too much more on that. Comparable store growth was up seven percent. I mentioned the strong North American comp. International was a little bit weaker in China, of course, it was weaker with all of the COVID challenges they had there.

Mobile ordering is now contributing about 44 percent of the sales mix and delivery was up 35 percent and accounts for 24 percent of sales. That was higher than I expected to see and that was very attractive. They opened 763 new stores. Now they have more than 35,000 total. Their operating margins were a little bit lower and little bit down because of the investments that Howard Schultz, when he came back, he's making the stores and people. There was that sales deleveraging from China offset by a little bit of the pricing. The rewards membership was up five percent. Overall, the guidance is very strong, comp growth of 7-9 percent, probably at the higher range with China hurting earlier in the year for the fiscal year '23. Revenue up 10-12 percent. Global store count up seven percent. Add it all in, you get an earnings per share that could be up somewhere in the 15-20 percent for fiscal year '23. Very attractive for Starbucks.

Chris Hill: The struggles continue for chipmakers. Qualcomm's fourth-quarter results were overshadowed by lower guidance for the current quarter and a hiring freeze that the company has implemented. Jason, we were talking about this before the show. Qualcomm is not immune among chipmakers.

Jason Moser: No, it is not. This is a good lens, I think, into the broader challenges the whole space is facing right now. Results for the quarter, very respectful within guidance that management set a quarter ago. But clearly, there are headwinds on the horizon that are leading virtually everyone in the space to pull back on guidance in the near term. The numbers, again, nothing to write home about, but certainly very respectable. As I said, revenue was up 22 percent from a year ago. Earnings per share up 23 percent from a year ago. At the licensing division saw some contraction there, but segment-wise, it was good performance. Handsets were up 40 percent, automotive up 58 percent, Internet of Things up 24 percent. Some contraction there in radio frequency down 20 percent. But all in all, still very encouraging. It's just the forward-looking picture. They said in the release they're updating guidance for the calendar year 2022, calling for handset volumes.

Previously, Guidance was for mid single-digit percentage decline, now they're calling for a low double-digit percentage decline. They said in the release, I quote, "The rapid deterioration in demand and easing of supply constraints across the semiconductor industry have resulted in elevated channel inventory. Due to these elevated levels, our largest customers are now drawing on their inventory." We can expect that to play out, I think, for the next several quarters. One final point, Apple is always a big part of the conversation with Qualcomm. The relationship with Apple is in a good place right now. They expect to have the vast majority of 5G modems for 2023 iPhone launch. That was up from the previous 20 percent assumption. But going from there, it will be something that continues to phase out of their business as we work toward 2025.

Chris Hill: Shares of Atlassian fell 30 percent on Friday and hit a three-year low. The collaboration software company's first-quarter report came with disappointing guidance. Andy, is Atlassian really 30 percent worse than it was a week ago?

Andy Cross: I don't think so, Chris. But the commentary from the founder and the CEO in their letter was saying that, "We are seeing a decrease in the rate of free instances of software converting to paid plans." They've seen that this year it's elevated. That trend became more pronounced in the quarter and they're seeing the slowing. They're starting to see the slowing in the rate of paid user growth from existing customers as they slow down their hiring. As we're hearing about so many big tech companies slowing down their spending, if not putting forth layoffs, that impacts the amount of licenses and clients that use Atlassian's software. They are really seeing that, and that's starting to show up in the guidance when they are just looking toward the upcoming fiscal year, looking to slowdown for Atlassian. But I think the concern for investors is, is this just the start and will it get worse and worse going forward? Overall, it was a pretty nice quarter with revenues up 31 percent in lines. Subscription revenues up 50 percent. Cloud and data center revenues up close to almost North of 50 percent. Customer growth was a little bit on the soft side. So we're seeing that impact in the macro economy, starting to impact the likes of Atlassian.

Chris Hill: Uber's third-quarter revenue rose more than 70 percent compared to a year ago. The company still is not profitable, but strong guidance for the current quarter helped push Shares of Uber higher this week, Jason.

Jason Moser: Yeah, good week for the rideshare company. Criticisms on the financials today are fair. I do get it. But I think as time goes on, we'll see that change. I do view this as a company that more and more, the world would just feel the impact of it went away. It just has this ability to piece together multiple complimentary business lines, which ultimately make the whole business stronger. But it all really boils down to demand and the numbers really look good. Gross bookings up 32 percent constant-currency basis. Mobility gross bookings of $13.7 billion were up 45 percent. Delivery gross bookings up 13 percent. Trips during the quarter grew 19 percent from a year ago to 1.95 billion. Approximately, 21 million trips per day on average. I mean, this is just a beast of a company that it is really getting good at getting things and people from point A to point B. They reported $90 billion in gross bookings in 2021 and management is still targeting $170 billion at the midpoint for 2024. So if they get there, if they get even close to it, the financials will look meaningfully different then. It's just one where you have to stay patient if you believe in the story.

Chris Hill: It's interesting to me that Uber doesn't appear to spend a lot of money advertising its core business. The advertising and promotion is really for hiring new workers and for Uber Eats.

Jason Moser: Yeah. That's the beauty of becoming a verb, Chris. You just don't have to advertise as much.

Chris Hill: All right. Andy Cross, Jason Moser, guys. We'll see you later in the show. Up next, we've got a conversation with the Chief Investment Officer of Global X ETFs. More investing on the way, so stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Global X ETFs is a fund management company that has more than $45 billion in assets under management. Rachel Warren caught up with Jon Maier, the Chief Investment Officer at Global X, to talk about how to protect your portfolio during an economic downturn, as well as trends to watch over the next 3, 5, and 10 years.

Rachel Warren: For investors that are looking to build out their recession playbook, if you will, what are some key elements to consider?

Jon Maier: Given that we expect a recession and a contraction while I guess we're in a tactical recession because the first two quarters of the year you saw negative GDP growth, I do expect positive GDP growth in the third-quarter. But I do believe for positioning, defensive and quality-focused positions remain really relevant in this environment. We all need to eat, we all need to go to the doctors, buy toothpaste and paper towels, so overweighting those type of sectors makes a lot of sense. We also believe there's diversification benefits and dipping into areas that have been hard hit in the current environment. At Global X we have thematic ETFs that focus on Cloud computing, robotics, cybersecurity. Those are all areas that are recurring revenue business models that have seen top-line growth. We know cybersecurity are areas that companies have to continue spending on. We do believe that a certain components of growth in this type of environment makes sense.

You never know exactly the timing of when to get into a particular area. Unexpected events could happen. The Fed could take their foot off the pedal. There could be potentially positive news in Europe about the Ukraine-Russian war. You never can predict this and it's hard to market time. It's always so hard to market time. If you think about investor psychology when the market is going up, everyone feels great and you want to invest. When the market is going down, you just don't want to touch the market. Although that's probably the best time to move into certain areas of course. That's why constant investments process makes a lot of sense and I do think that these areas are part of our future, whether it'll be robotics, whether it'd be cybersecurity or Cloud computing, they certainly are part of our future and you can't pick that exact time of when to get into the market.

Rachel Warren: It's interesting. We're in the thick of earnings season. We've heard talk of there being an impending earnings apocalypse. Obviously some companies have had strong reports and others we're still waiting for some major reports from big names we all follow, but it definitely hasn't been, I think the doom and gloom that some had forecast. For investors who are looking at the current market, who are looking at the volatility, seeing some of their favorite stocks trading down, maybe it's an opportunity to look at investing. How can one discern strong businesses that are continuing to perform, even if share prices remain depressed from the companies that maybe aren't the best long-term investments that are dealing with more durable headwinds?

Jon Maier: Sure. If you look at, as you mentioned, the third-quarter earnings for certain SOP sectors are coming in better than expected. Some companies reported positive revenue surprises, pointing to a very resilient consumer. I think that's important, the resilient consumer and where is the consumer? Can they continue to spend? Now, only roughly 20 percent of the S&P has reported so that we still have a lot of time for this earnings season to really understand what's going on. Seventy percent of the S&P 500 companies have reported above estimates, but those are based off a reduction in estimates. Those numbers are a little misleading. Communication services and healthcare companies contributed the most to overall earnings growth.

I think healthcare companies certainly make a lot of sense in this environment, and particularly in a recessionary environment we all have to spend on healthcare. Staples can be somewhat hurt by the strong dollar as well as some of the higher input cost from supply chain inflation issues. But we are hearing a lot about companies that are concerned with inflation, which has a negative impact on profits. Those companies that are more reliant on the capital markets, we're going to see profit margin shrink. Those companies are certainly their stock prices likely will go down. Coffees are less reliant on the capital markets, I think our better place to be. As I mentioned earlier, companies with strong cash flows, high cash balances, high dividends enabled to actually increase their dividends are companies that I think make a lot of sense to be included in a portfolio are more resilient type companies where margins will be compressed much last.

Rachel Warren: A couple of years ago, growth stocks, tech-oriented companies, these were Investor favorites and over the past year for sure, we've seen that a lot of companies in that space have been beaten down significantly, even those with core businesses that remain fairly strong. I'm curious what your thoughts are on the growth stock phenomenon. Do you think this is just cyclical action in the markets or is there more for investors to consider here?

Jon Maier: Growth tends to be a hard hit early on in the cycle relative to the broader equity market. But as investors shift focus from tidy liquidity toward slowing growth, segments of the economy that can grow faster become really attractive to investors. When the ship happens, it really varies. In 1980, the growth-oriented Nasdaq bottom relative to the S&P 500 61 days into the recession. In 1981, growth bottomed after 295 days. Insurance it's really tough to time while focusing on growth alone because that could be a vulnerability. But I think once you've seen these big drawdowns, that's what investors are looking for that growth in the market and that's when you will see that shipped back into growth-oriented, momentum-oriented stocks.

Rachel Warren: Outside of high inflation, interest rate activity, some of these really big factors that we're seeing influencing the markets at large, what are some other key factors that you think investors should be watching to track the health of the market moving forward?

Jon Maier: I think the market should be focused on stability. If the market feels like there's no systemic risk, I think that's a positive. The Fed right now is trying to fight inflation. They've moved up short-term rates aggressively. Some of the impact has not really been felt, but there's lagging indicators. Like if you look at what's going on in housing, you're starting to see housing come down in price. Mortgage applications have dropped meaningfully. Obviously, with seven percent mortgage rates, you would expect that. Then what are going to be the downstream implications from a slowdown in housing? Many different sectors will be impacted. Many different consumer-driven sectors will be impacted. But as long as there's stability in the market, that's a positive. Then you look toward what are you going to be some of the tailwinds in the market.

Now, what we're seeing with respect to tailwinds, and there's not a tremendous amount, but there's the Inflation Reduction Act and other legislation that is going to cause spending in certain areas, in the climate area. If you look at electric vehicles, that's an area that we think makes a lot of sense. Penetration is really low in the US, too much higher in other parts of the world. If you look at China, 53 percent of auto sales are electric vehicles. If you look at some of the Nordic countries, they are in the 85 percent range. You look at all the ancillary areas related to electric vehicles like lithium mining, there's a major shortage of lithium globally and it takes a long time to mine lithium. That's one area of the electric vehicle ecosystem that we believe has a lot of legs. We're looking for some of those tailwinds. Some of the tailwinds include suspending from the Inflation Reduction Act, which is going to occur over the next 10 years.

Rachel Warren: I love this idea of leaning into some of those tailwinds that are going to drive the market over the next decade. As investors here at The Motley Fool, we're always looking at companies that we would invest in for a minimum of 3-5 years if not longer. To close out our discussion today, I'd love to hear about what excites you the most as an investor right now and what are the trends, the themes that you're focusing on as we finish out the year, looking ahead into the new year and beyond?

Jon Maier: Going forward and as I mentioned earlier, I think we are looking for those tailwinds that could increase adoption in different areas. Electric vehicles certainly is one and the ecosystem surrounding electric vehicles is certainly an area that we think makes a lot of sense for inclusion of portfolio. I also believe that US infrastructure makes a lot of sense. Valuations in this area have really compressed. They've compressed from 22 times earnings to 15 times earnings in 2022. The companies are still expected to increase top-line growth by 16 percent through 2023. The market resilience has been fairly impressive in 2022, outperforming the S&P 500.

US infrastructure, which includes a lot of industrial material-type companies, is an area that we're suggesting also. Also long-term, the infrastructure bill from 2021 only accounted for $1.2 trillion of the estimated $2.6 trillion invested in infrastructure spending over the next 10 years. There's a lot of spending going to be going on in that area. Again, we're always looking for tailwinds. Tailwinds is the spending from that bill, as well as the more recent inflation Reduction Act, which will impact more climate areas like electric vehicles, solar and wind. Also, there's a lot of ancillary investing that goes on with that public spending. There's a lot of private spending that is going on that will go on over the next 10 years. We're looking to ride that wave.

Chris Hill: If you're a member of any Motley Fool service, you can catch Rachel Warren's full interview with Jon Maier in our Video Library online at fool.com. Coming up after the break, Andy Cross and Jason Moser return. They've got a couple of stocks on their radar, so stay right here. You're listening to Motley Fool Money. 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. Welcome back to Motley Fool Money. Chris Hill here once again with Jason Moser and Andy Cross. On Friday, Hershey announced that third-quarter revenue rose 13 percent and the candy maker raised guidance for the full fiscal year, and it's safe to assume that Hershey had a good Halloween.

Andy Cross: Oh my gosh, considering what I have in my hand with Hershey bars and Reese's. My wife and I went through my kid's Halloween bag, plenty of Hershey there. It continues to be a very impressive year for Hershey's. The stock is up 31 percent over the last year and now yields, well, gosh, 1.8 percent. The price-earnings ratio somewhere in the high 20s, which is high for a company. But look at the deliveries they've done with the sales up 15 percent, organic sales up 11.8 percent, North American confectionery up 10.4 percent.

That includes 7.7 percent in price and three percent on mix. North American salty snacks is up more than 21 percent on an organic basis. You look at the investments they're making, both in acquisitions, but just in the business to be able to continue to grow. The guidance for the remaining of the fiscal year is 14-15 percent versus 12-14 percent prior guidance on the revenue side and adjusted earnings per share at 820-827, that's up 14-15 percent expected versus up 12-14 percent. Overall, the demand for their products as we are looking for more and more value-based, reasonably priced enjoyments in our food, Hershey's continues to be one that's seen a lot of demand.

Chris Hill: Jason, would you agree that the number of listeners who were shocked to hear Andy admit he goes through his kid's Halloween candy after the holiday. That number of people is vastly outweighed by the number of parents who are listening and nodded along when Andy said that like, yeah, I totally do that.

Jason Moser: I think it's an overall parents. I mean, I think we get it right. For me, listen, I love Hershey's as much as the next guy. We gave out Kit Kats and Reese's this Halloween and it went over like gangbusters. I'm really interested to see though if this year, because I believe it was last year, it was Thanksgiving. I think last year they had that big old Reese's Peanut Butter Cup.

Chris Hill: Yes.

Jason Moser: I literally I tried to get on the list for that thing and it was sold out before I can even log in on the computer. I'm going to keep an eye out for that this year and if I can give it a world. But the pushback on that is it's all about texture. Maybe that thing is just too big for it to really work. I don't know, I'm really curious.

Andy Cross: Of course, I'll give this candy back. Not really.

Jason Moser: No, you won't.

Chris Hill: Our email address is [email protected]. Got a question from Justin Ericsson who writes, "I'm a college student that contributes to a Roth IRA every year. I'm curious about some long-term stock and mutual fund strategies that you'd suggest." Thank you for that, Justin. Thank you for listening. Andy, got to say, always love it when we get an email from a college student who is this into investing.

Andy Cross: Fantastic, congratulations. Keep investing, set a plan, try to do it every month if you can. Don't forget. Very cheap, reasonable ETFs that match the market can be a great way to invest over the very long term and you have the biggest advantage going for you, which is time. We all wish we had more of it, and to start as soon as you can what you have is fantastic. Congratulations. Stick to a plan, set it up, try to do it monthly or quarterly, and don't get swayed by the market.

Chris Hill: Jason, any thoughts for Justin?

Jason Moser: Yeah. I like the way Justin thinks. I mean, this is just phenomenal, so congratulations on taking the initiative. You really are getting started. It's such a great time. I like a lot of what Andy said there. I think you're young so you can take some risk. I like the idea of building from a foundation of diversification. I think owning an S&P Index Fund, something like the Vanguard S&P Index Fund, the ticker is VOO. I think you should immediate diversification and then you can really build from that foundation. From there, you're going to grow your wealth mode man for the next 30-40 years. So take a little risk, diversify. My daughters, for example. They're a little bit younger than you are right now, but they own a lot of the obvious suspects out there: Disney, Nike, Apple, Starbucks, stuff like that. Just keep on adding, keep on building, and you're going to really, really like where you are decades from now.

Chris Hill: Let's get to the stocks on our radar. Our man behind the glass, Rick Engdahl, is going to hit you with a question. Andy Cross, you're up first. What are you looking at this week?

Andy Cross: Chris, Ulta Beauty has been just a really wonderful business, the largest beauty retailer in United States with more than 1,300 stores selling 25,000 products across 600 brands. Mark cap of about $22 billion, stocks at 415, up 11 percent for the year versus an minus 20 percent for the S&P. Very well run, continues to be very profitable with net income margin North of 12 percent, return on equity of North of 50 percent, comparable brand growth of 14 percent versus 10 percent in the prior quarter for this last quarter, eight percent increase in transactions, almost six percent increase in price. When I look at the demand for beauty products as we all continue to, even though we are getting out as we all continue to use remote living and different ways to communicate, I think beauty is just going to be continuing demand. This is a business that I think has done very well and can continue to do very well.

Chris Hill: The ticker symbol?

Andy Cross: ULTA.

Chris Hill: Rick, a question about Ulta Beauty?

Rick Engdahl: Yes. My daughter is of the age where she's exploring cosmetics, and I'm just wondering if they happen to sell a product that helps a teenager put on makeup more quickly because they will own the future if they can. 

Andy Cross: A hundred percent, Rick. My daughter is just starting dabble too. If you find one at Ulta, when you go there this weekend, let me know.

Chris Hill: Jason Moser, what are you looking at?

Jason Moser: Guys, my daughters are knee-deep in it. It doesn't get any better. I hate to tell you. I'm taking a look at The Trade Desk. Ticker is TTD. Remember, The Trade Desk operates a demand-side platform, allows ad buyers to create, manage, and optimize data-driven digital ad campaigns across many different platforms. Given the challenges that we've seen in the advertising market this earnings season, with everything from Meta and [Alphabet's] Google to Snap and Roku, it's just going to be really interesting to me to see if The Trade Desk bucks the trend a little bit. They've got this huge focus right now on connected TV or CTV as this big opportunity and ad supported video on demand continues to grow.

There's a discussion in the recent Investor Day presentation that their relationship with Disney, which is moving right along, also noting that HBO and Netflix now moving fast to offer their ad supported offerings. That ultimately The Trade Desk, they're seeing the biggest surge in connected TV inventory that they've ever seen. I'm just going to be looking for more language in regard to connected TV in the call. I'd be less focused on the near term macro concerns with this business, more focused on the long-term opportunity that's developing for this company. Earnings out November 9th.

Chris Hill: Rick, question about The Trade Desk?

Rick Engdahl: Yeah. I actually bought The Trade Desk about a year ago. Just once more, can you just talk me off the ledge here?

Jason Moser: Well, listen. I own it right there with you, Rick. Again, I think this is one where you just don't worry so much about these near term headwinds because virtually every company is subject to them these days, but this is a company that's really pursuing a massive market opportunity. Hang in there. I'll hang in there with you.

Chris Hill: What do you want to add to your watchlist, Rick?

Rick Engdahl: I think with hoping my heart, I'm going to go with the beauty products here maybe. 

Chris Hill: Andy Cross, Jason Moser, guys. Thanks for being here.

Andy Cross: Thanks, Chris.

Jason Moser: Thank you.

Chris Hill: That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Rick Engdahl. I'm Chris Hill, thanks for listening. We'll see you next time.