Wall Street Headlines, International Investing, and Stocks to Watch

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

• Tesla's challenge with margin pressure.
• Intuitive Surgical's strong first-quarter results and guidance.
• How American Express is continuing to catch on with millennials and Gen Z.
• Shares of D.R. Horton, America's largest homebuilder, hitting a new all-time high.
• The latest from Netflix, P&G, Johnson & Johnson, and Lululemon.
• The growing business of tiny snacks.
• Two stocks on our analysts' radar: Tractor Supply and Amazon.

Also, Motley Fool senior analyst Bill Mann discusses China's rise as an automotive exporter, Apple's growing presence in India, and why he's keeping an eye on mining companies in Brazil.

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 April 21, 2023.

Chris Hill: Earning season is heating up, so let's get to it. Motley Fool Money starts now.

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Chris Hill: It's the Motley Fool Money radio show. I'm Chris Hill. Joining me in studio, Motley Fool senior analyst Jason Moser, and Andy Cross. Good to see you as always, gentlemen.

Jason Moser: Hey.

Andy Cross: Hey Chris.

Chris Hill: We've got the latest headlines from Wall Street, we will talk international investing with Bill Mann, and as always, we've got a couple of stocks on our radar. But we begin with earnings season heating up. First up is Netflix. First-quarter results were mixed with profits a little higher than expected, overall revenue a little lower. The company also announced it is delaying the rollout of its plan to crack down on password sharing. Jason, lot of focus on Netflix this week, but for the first time in a long time, there wasn't really a lot of talk about something that we typically hear, which is their subscriber number. Do you think Netflix is moving into a new phase here?

Jason Moser: No question about it, I think. I mean, in the past, to your point there, the focus was always subscribers, subscribers, subscribers. That is absolutely taking a backseat now, and the real story for this quarter revolved around the paid sharing and advertising. But in regard to metrics that matter, the company is now encouraging us to focus on revenue growth and operating margin. That's going to be the indicator of success and profitability for the business. And subscribers, it's almost like a footnote in the release now.

To that point, they did bring in 1.8 million subscribers, so that's good news. Revenue when you exclude currency effects grew 8%, operating margin down a little bit, but they really based that on currency impacts as well. Now, to the paid sharing and the advertising, first, paid sharing, it is slow going. This seems to be deliberate on their part. 

They want to make sure they get it right and maintain a positive member experience. What that's going to do, it's going to push growth out a little bit. I think that is probably what has investors on edge right now, but they see that accelerating in the back half of the year. And the reason why is because they've already rolled this out in Canada and they're seeing positive signs, but it's like one of those things -- it got worse before it got better, but it did start to get better. So I think that gives them reasonably, that domestically here, that paid sharing will pay off.

On the advertising front, I was a little bit taken back by a point they made in the release there. In the U.S., the ads plan already has a total average revenue per member -- which is the subscription plus the ad component there -- it's greater than the standard plan that they offer. Now, that's $15.49 per month. I think that goes to show that while Netflix was a little bit late to the ad game, clearly the consumer has got some tolerance for advertising, because I think most other streaming services have that dynamic, or at least that offering. So while that initial target of 40 million ad subscribers might've seemed a little bit glass-half-full when they stated that, now it seems like maybe they could probably get there by the end of quarter three or maybe by the end of the year.

Andy Cross: Jason, that really caught me well too, and I was very surprised by that, and encouraged as a Netflix owner and a follower of the stock. Their target for their free cash flow -- this is becoming what Netflix [is]. It is becoming a free-cash-flow growth story. They're being more disciplined on the movie launches and the creation of that content and on the cost structure, I think. So understanding that this is a real free-cash-flow generating business, and maybe not like what it was over the past few years. And I think that's what investors are now starting to realize. This is what the power is of Netflix and that free cash flow, I think, is what's going to drive the stock higher.

Jason Moser: Yeah, you're right there. I think something to note there, too, is that they pulled back a little bit on content spend this year, and that impacted the financials positive. Like, cash flow was a little bit better than I think what we were anticipating. Now, the flip side of that is they anticipate getting back to that normalized budget in 2024, budgeting for around $17 billion in content spend. That'll probably play out on those cash flow numbers a little bit next year, but I think that they can counter that with the accelerating performance there in paid sharing as they continue to roll that out.

Chris Hill: Tesla has been cutting prices on some of its vehicles, and that price cutting showed up in the company's first-quarter results. Earnings per share, net income, and lower margins combined to send shares of Tesla down more than 10% this week, Andy.

Andy Cross: Chris, like any business, it's coming down for Tesla, down to pricing and to volumes and making sure that mix is right, and clearly Tesla this quarter is leading with the volume game. As Elon Musk said, "We've taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin. However, we expect our vehicles over time will be able to generate significant profit through the autonomy business."

So they delivered 423,000 vehicles this year, that was up 36%, but the Model 3 and the Model Y drove most of that growth. The higher-margin Model S and Model Y made up less than 11,000 of the deliveries, Chris, and that was down 27%. Revenue is up 23%. Three out of the last four quarters though, we've seen slowing revenue growth. They've lowered prices several times, somewhere between 15% to 25% or so just this year. Although just interestingly, I think they just increased them right after the earnings call to boost them up back a little bit.

Operating margin, which is really the metric that I think so many investors are following both on the car side and overall -- the total company operating margin fell to 11.2% versus 19.2%. And the automotive gross margin fell to that 20%-ish range, and that's where investors, I think, are getting a little bit nervous, because that's the one they want to see higher. Interesting though on that: They still remain, on the operating margin, well the highest in the industry and more than double the other major car makers. So they have the profit room and the business model, and this is really now a land grab. They are being very aggressive in the market, very aggressive on pricing to drive the volumes, to be able to continue to drive toward 1.8 million cars delivered this year, which would be up about 37%.

Finally, Chris, interesting -- the storage and the energy business continues to gain momentum. The energy storage deployed was up 360% to 3.9 gigawatt hours now versus less than 1 gigawatt hours a year ago. They expect the storage deployment growth to really exceed the volume growth in the vehicles over time. So we can't forget about that energy business. It is a growing part of the Tesla story. But overall, I think, this is what we started to expect when we saw the aggressiveness that Tesla was being in the market price on their prices or their cars.

Chris Hill: Shares of Intuitive Surgical up more than 10% this week after first-quarter results were highlighted by more procedures. Jason, Intuitive Surgical management forecasts that they expect that trend to continue throughout the year.

Jason Moser: Yeah, good news indeed. It's been a bit of a bumpy ride over the last three years, but Intuitive Surgical is absolutely benefiting from this return to normal. If you look at the numbers, it certainly bears that out. Excluding currency impacts, they saw revenue for the quarter up 17%. Modest earnings-per-share growth as well. You mentioned procedures. Worldwide procedural growth, 26% -- that came in well above management's own expectations there. Ultimately, when you look at -- a lot of this company's money is made on instruments and accessories because of those procedures. That revenue grew 22%, and so really, they are seeing more and more being done with their equipment, which is great. Average selling prices remain stable, and that's good.

Intuitive's really well known for the da Vinci system. The other system they have, the Ion system, which is focused on bronchoscopy, they placed 55 systems for the quarter versus 34 one year ago. And back to the procedures thing -- with Ion, procedures were up 159%. Clearly, physicians are finding use in that platform there.

One of the neat things about this company, one of the reasons why I recommended it in our immersive technology service, is the virtual reality angle there. They saw simulation subscriptions grow 36% as the virtual reality training continues to gain traction. I think one thing to keep an eye on with this company -- I'm going to ding them a little bit here, A.C. -- we like to see companies buying back their shares because they feel like there's value there. To be clear, Intuitive Surgical's bought back a lot of shares. From the beginning of 2022 to the end of the first quarter of this year, they repurchased 12.6 million shares. The problem is you go all the way back to 2018, share count is actually up 2%. That's not what you like to see.

Chris Hill: It's tough to pull off.

Jason Moser: Yeah. Well, it's easy if you know how to issue shares.

Andy Cross: Exactly.

Jason Moser: But I think all in all, that does not outweigh all of the good that this company is doing. I'd love to see those repurchases ultimately bring that share count down. That'd be one thing I'll pay attention to.

Chris Hill: The hits keep on coming for Procter & Gamble. Third-quarter profits and revenue came in higher than expected for the consumer products giant. Company also raised sales guidance for the full fiscal year. Andy, the pricing power that we've seen from P&G over the last year or so is starting to show up in the form of higher gross margins.

Andy Cross: Well gosh, this is kind of the anti-Tesla here. They are all about pricing increases, and another boost -- they've increased prices 10% this quarter. I think that was on top of a 10% increase last quarter, and like you said Chris, throughout the year. The revenue is up about 3.5%, earnings up about 3% to $1.37. Operating margins, this continues to be a very profitable company, at 21.2% -- that's about flat from a year ago. The volume growth, not all that impressive, really. When you look across it, it is basically in fabric and home care, which is like Tide and Downy and Swiffer, down 5%, but they were up 13% in pricing. Baby and family care, which is like Luvs and Pampers down 4%, but up 8% in pricing. That's the story we saw. That increase on that, that helped really drive a lot of the gross margin growth of 150 basis points. They are spending more on marketing, Chris. Sales and marketing expenses as a percentage of sales was up 100 basis points.

So here you go with Procter & Gamble: Sells at 25 times earnings, earnings growth of about 4%, you get a little 2.5% dividend yield. They generate more than $3 billion in free cash flow, [they] buy back stock, and so you have a very low volatile stock that is probably, I think, going to grow in the mid-single digits, and if that's what you're looking for, that's probably going to be fine for the Procter & Gamble story, but don't expect too many fireworks.

Chris Hill: They've got to pay close attention to the pricing though, because if consumer spending starts to dip, if we fall into a recession, they've got to ratchet that back.

Andy Cross: I think so, but they do have some levers on this side, Chris, and they count whether the expense management or basically, hopefully, drive volumes because the pricing now is not nearly what it was when they are increasing pricing.

Chris Hill: After the break, we've got the latest in healthcare, housing, and the war on cash. Stay right here. This is Motley Fool Money.

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Chris Hill: Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser and Andy Cross. American Express posted record revenue in the first quarter, but higher costs kept the profit line lower than Wall Street was hoping for. Andy, this is yet another quarter where we see the trend of Amex gaining popularity with millennials and Gen Z.

Andy Cross: Yeah. Chris, travel and entertainment spending overall up 39%. But what was interesting from the results is millennial and Gen Z makes up 60% of all new consumer growth. And the millennial and Gen Z spending on the platform was up 28%. That was the highest-growing group of all the groups, all the cohorts that Amex tracks. Revenue's up 32%, international spending up 29%, costs up 22%, so that kept a little bit of a lid on the profit margin. They're seeing higher customer engagement and an increase on the usage of travel benefits. I know I've been using them for that personally, but that's actually starting to impact a little bit of the profit picture. The biggest news is the increased loans and card receivables -- that was up 19%. Now that was the slowest growth we've seen in five quarters. But they're starting to see more and more provisions for some of those losses as the economy starts to go into a point of a little bit more uncertainty. They continued to affirm the guidance of 15% to 17% revenue growth -- a little bit less on their earnings-per-share growth, but still pretty attractive. You're paying 15 times for a business, for a dividend yield of 1.5%, for American Express. Probably you won't get the same growth you're going to see this year. But overall, that's not a bad price for a business that buys back a lot of stock and returns a lot of cash back to shareholders.

Jason Moser: Do you think that's a demonstration of the power of that brand? Like Amex is almost like an aspirational brand in some ways. So with younger generations seeing that -- I don't know, it just strikes me that maybe that's an aspirational brand. It seems to demonstrate the power that American Express has.

Andy Cross: Yeah, and 70% of their new card growth was from fee-based cards. It wasn't like they're just taking a whole bunch of no-fee cards.

Chris Hill: Johnson & Johnson's first-quarter profits and revenue came in higher than expected. They raised guidance for the full fiscal year and boosted the dividend, and despite all that goodness, Jason, shares of J&J still down a bit this week.

Jason Moser: Now that's OK. They have a little bit of a spinoff coming up here soon, Chris. But it was a very encouraging quarter for the company. Adjusted operational sales, which is ultimately just revenue excluding currency effects, were up across all three segments. Consumer health up 11.3%, pharmaceutical up 7.2%, med-tech up 6.4%. That all translated to adjusted earnings of $2.68. If you remember, they acquired Abiomed, which closed in December. That gives the med-tech segment now 12 platforms that generate over $1 billion in sales every year. This is as steady a business as it gets. Again, management approved a 5.3% increase in the dividend. That makes it the 61st consecutive year of dividend increases, and that ensures their Dividend King status remains in place.

The big question, though, does really remain in the spinoff of the consumer business, which will happen by the end of the year. That will ultimately be called Kenvue -- not really sure the impetus there -- but we can look forward to Dec. 5, where they will have an investor day where we'll get a lot more information on how these two new companies will function.

Chris Hill: D.R. Horton's first-quarter profits came in higher than expected. Couple that with encouraging guidance, and shares of D.R. Horton up more than 8% this week and hitting a new all-time high.

Andy Cross: It was that guidance, Chris. The net sale orders was up 73% from the first quarter. This is their fiscal second quarter, from their first quarter. The trend is continuing to be very healthy looking ahead, I guess, some very uncertain environment, even though the stock's up 44% for the past year. Homes closed was just shy of 20,000, down 1%, still very attractive in this kind of a market. Homebuilding revenue at $7.5 billion, flat to last year. Net income at $942 million. Pre-tax margin fell to 15.6% from 23.5% a year ago, driven by lower home sales margins because they've had to offer some incentives, and they've had to lower home prices on average. Lot costs are up 5%. So overall, cancellation rate up a little bit, but still within a very respectful manner. They wrote down some of their inventory and impairments, but overall, D.R. Horton continuing to get it done, and you have a stock that sells at less than 10 times earnings with a little bit of a 1% yield. So it's a pretty good stock when I look at the opportunity for a homebuilding leader.

Chris Hill: This is the biggest homebuilder in America. Am I wrong to be encouraged by what that means for housing in general?

Andy Cross: I think you are not wrong. I think it is encouraging when you think about the amount of home building that we need to see in this country to handle the demand, I think it's very attractive for the market, overall. The stocks have all run from their very bottom low, but still, long term, probably an attractive place to put some capital.

Chris Hill: In 2020, Lululemon bought Mirror, the at-home fitness company, for $500 million -- an acquisition that has gone so badly, Lululemon has had to write down almost the entire cost. This week, multiple outlets reported that Lululemon is now looking to sell Mirror to Hydrow, a private start-up company that sells connected rowing machines. Jason, how much do you think Hydrow is willing to pay for this thing that they had to write down?

Jason Moser: One of the things I love about Chris, he's just not afraid to mince words. [laughs] I mean, in the words of Ron Burgundy, "That escalated quickly." I mean, this was something that happened, I think, very quickly now. I don't know how optimistic we all were with this acquisition in the first place. It happened in a very abnormal time. In hindsight, it's not that big of a surprise seeing that they're doing this, given how the rest of the fitness home thesis has played out. I mean, we've seen Peloton with very much the same trouble. The flip side of that, we're seeing companies like Apple really doubling down on the digital fitness experience. That ultimately looks like what Lululemon is trying to do as well. This reminded me a lot of Under Armour's acquisition of MyFitnessPal and Endomondo back in the day, which they ultimately sold to an investment firm for $345 million. They acquired it for about $500 million, sold it for $345 million. It wasn't a total loss. I'm not so sure that Lululemon is going to be able to get away with this one because they've already written off close to $450 million of this deal. They're clearly a desperate seller here. It's something that doesn't really jive with their business. They're more of a desperate seller. I'd be very interested to see what they fetch for this.

Chris Hill: Jason Moser, Andy Cross. Guys, we will see you a little bit later in the show, but up next, we're going to take a closer look at Apple CEO Tim Cook's trip to India with our guest Bill Mann. Stay right here. You're listening to Motley Fool Money.

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Chris Hill: Welcome back to Motley Fool Money. I'm Chris Hill. Bill Mann is the director of Small Cap Research at The Motley Fool. He joins me now. Thanks for being here.

Bill Mann: Hey Chris, how're you?

Chris Hill: I'm doing well, and the reason I wanted to talk with you is because it's earnings season, my favorite time of year. But one of the things I do recognize about earnings season is, particularly as we are starting to ramp it up, we get so focused -- it's easy to get focused on the companies that are reporting, particularly the larger companies here in the U.S. Because of that, we are inevitably, as investors, missing things, particularly outside the United States. You're always the first person I think of on the investing team when I want to talk about investing opportunities outside the U.S., so let's start with China for any number of reasons. But you mentioned something to me that surprised me, maybe I shouldn't be surprised that China has somewhat quietly become the No. 2 exporter of automobiles in the world.

Bill Mann: Isn't that something?

Chris Hill: You tell me, because you can look at it and say, wait a minute -- you look at the population, the manufacturing capability. On the other hand, yeah, it is surprising, particularly when we think about cars outside the United States, we think of Japan, we think of Germany. We don't necessarily think of China.

Bill Mann: Yeah, in fact, Japan, Germany, and the U.S. is kind of the list in terms of car manufacturers. There's Swedish cars that we know about, and English cars, and French, but it really does seem like it is those three. It is overstating to say that it came out of nowhere. But earlier this year, Elon Musk came out and said he expected that the biggest competition that Tesla would face in electric vehicles was going to be a Chinese company. People who are in the industry have probably recognized that there is a threat coming from China, or a competitive threat. Because it's actually OK because a lot of the cars that are being exported from China, for example, are Teslas and Volkswagens and nameplates like that you would not necessarily recognize as being Chinese. But China's capacity has grown about 60% over the last year in terms of number of cars, and it had never exported more than a million cars in a year. It's just grown so quickly that I don't think that it is too much to say that it is something that snuck up on a lot of people.

Chris Hill: What do you think that means in terms of messaging from automakers like Ford and General Motors? "Made in America" is a tagline that works for a lot of businesses. You made the point about Tesla and Volkswagen -- a U.S. automaker and a German automaker producing cars in China. Do you think that's going to matter in the automotive business here in the U.S.? Do you think where the vehicle originated is going to matter?

Bill Mann: I would have to say that it probably doesn't. You don't really know. I mean, it's clear to you, they will tell you on the manufacturer statement. But if you buy a BMW in this country, it is not abundantly clear whether it has been built in the U.S. or in Germany or even in a third country. I'm not sure that it matters all that much. The thing that's interesting about the Chinese manufacturing push that we've seen is that it has also come in a period of time in which for the first time, I don't know, let's call it in a century, that the type of manufacturing -- because of the type of fuel stock that's being used -- has shifted. China has had car manufacturers for a bunch of years. But what they have not been able to really get past was the fact that they didn't have a whole lot of credibility in internal combustion engine automobiles. But since everything seems to be moving to electric vehicles, and the majority of their exports are in EVs, that there isn't really a country that they are competing with anymore. You don't have an enormous amount of German EV credibility. You don't have a whole lot of U.S.-based credibility except for this massive thing called Tesla, which is not to say that the manufacturers aren't doing it and that they aren't good at it. But it's not what they're known for. So China in some respects is coming into a little bit of a vacuum for the first time in this industry in decades.

Chris Hill: When you think about EVs, how concerned should people be with regard to the number of charging stations here in the United States? Because you hear anecdotally, "Well, it's a lot easier to fill up your car with gas than it is to charge your car from 5% all the way up to 100%," that sort of thing. It doesn't seem to be problematic now. But doesn't the number of charging stations have to keep pace with the number of EVs that are on the road, because at the moment that does not appear to be the case?

Bill Mann: No, we haven't hit a point in time in which you have a huge amount of stress. Now, it bears reminding that several companies, primarily Tesla, have their own charging network, and that goes back to a point in time when EVs were first really coming out onto the road in a large way, and Tesla had offered to share its technology and the other even potential manufacturers said no. That's why there [are] in this country, networks that are kind of overlapping each other. Rivian is in the process of building its own charging network. It kind of depends on what you mean. For long-haul driving -- which is for most people in individual passenger cars a minority of what they do -- yeah, there is going to come a period of time in which a network will have to continue to grow, and there are going to be all sorts of transmission and distribution challenges that come to the utilities. But it bears remembering that with electric vehicles, unlike I.C.E.s, you can actually refuel them at home. So in a lot of ways, the network that is required is entirely different from the network of gas stations that were required out there, because I don't know if you know anybody who has a gas station at their house. I don't.

Chris Hill: I don't, but now I'm thinking that might be a nice little feature.

Bill Mann: [laughs] It turns out, you might not know this though, Chris, that the stuff that auto fuel is made from is a little bit flammable, so there are other considerations besides this might be nice.

Chris Hill: That's a good tip. Let's move on to Apple because this week, Apple opened a store in Mumbai. It is the company's first store in India. CEO Tim Cook was there, also meeting with the prime minister. Let's start with the opportunity for Apple. Because at the moment, when you look at the smartphone market in India, Apple has less than 5% of the market share. I saw one analyst compared the opportunity for Apple today in India to the opportunity they had 15, 20 years ago in China. Do you think that's a reasonable comparison?

Bill Mann: It's a little bit different because when they were going into China, it wasn't like they were going into a market in which smartphones already existed. So you're talking about an industry -- or a market, I should say -- in which they will have to displace existing smartphone manufacturers. Now, Apple is really, really good at doing that, and one of the things that it bears remembering about India is that it is 1.4 billion people, but it's got a middle class, by some estimates, of 300 million people, which is essentially the size of the United States. So we tend to think of India as being a developing economy, and it very much is. It has a massive, massive amount of people who have disposable income, so for whom the ticket price of an iPhone is not going to necessarily be something that they would not be willing to do.

Chris Hill: Part of this is marketing. Part of this is also manufacturing as Apple has increasingly made moves to diversify its manufacturing base, and Cook has made no real secret about the fact that he's looking to take some of what they have been doing in China for a long time and move it to India. What is a reasonable expectation for investors in terms of the timeline for making that happen, and what, if anything, it does to move the already impressive profitability needle at Apple?

Bill Mann: I don't think that there's any accident that Tim Cook also recently went to China, and he did it in a very visible way -- met with leaders, and he was given an incredibly warm welcome when he came to China. Apple to date has moved very little of its manufacturing out of China, and you might ask why it is that a company would be so careful. Because when they look at China, it is in a lot of ways, as we learned during the pandemic, a risk, because it became a single point of failure for them. But it's not like that logistics network and the supply network can just be lift-repeated into India right away, and if they manage to make the Chinese angry in the process, that's not good news either, because China does have the capacity to really, really mess with Apple. It's not like China is threatening Apple right now. They have a very good relationship with the company. I would not expect Apple in any way to get out of China. I think when people think that, they are not really thinking through the actual advantages of manufacturing in China. Might be that the needle that he is trying to thread is to say, "We need to have some of this manufacturing elsewhere, so it's not this or that, it's this and that," so that's why I think the China visit and the India visit were so closely tied together.

Chris Hill: Last thing and then I'll let you go. We've talked about India, we've talked about China. What's a really under-the-radar country that has gotten your attention over the last few weeks in terms of investment opportunities, whether it's an entire industry or just you found this little company in some little corner of the world?

Bill Mann: For me, it's hard, because when I talk about Brazil, one of the quips about Brazil is that it's the country of the future and it always will be. But Brazil has a couple of things going for it. The one thing that it has is it has incredibly sophisticated, incredibly healthy mining companies, and when you see a lot of people talking about zero emissions and a lot of the development that's going to have to happen, it's going to come with a huge amount of demands on mining companies and natural resource companies, and so I think people are underestimating just how powerful a position that Brazil is in right now.

Chris Hill: This is why I always love talking to him. Bill Mann, thanks so much for being here.

Bill Mann: Hey, thanks, Chris.

Chris Hill: Up next, Jason Moser and Andy Cross return with a couple of stocks on their radar. Stay right here. You're listening to Motley Fool Money.

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Chris Hill: As always, people on the program may have interests in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here in studio once again with Jason Moser and Andy Cross.

Guys, if you've been to the grocery store lately and you've wandered down the snack aisle or the breakfast cereal aisle, you might have noticed some of the offerings are getting smaller -- not the boxes, Jason, the food. Over the past few months, General Mills, Hostess Brands, and Pepsi's Frito-Lay division have been rolling out mini-versions of breakfast cereals, Twinkies, and Doritos, and it appears to be resonating with at least some consumers. One company executive was quoted in The Wall Street Journal as saying: "It's about the 'back seat of the minivan' test. If you're handing something back in the car seat, you want it eaten. You don't want it smeared and everywhere else." Andy, I think we can all associate with this. I like this move, I like that they're trying new things.

Andy Cross: I can definitely empathize with that quote. I first really saw this when Oreo cookies came out with thinner versions of their cookies, and I was like, "This was made for me because now I can eat like a pack of it, but not feel like I'm all that guilty." Chris, you are seeing it. It's like the opposite of the supersized days. They're just continuing to shrink, not just the packaging and what's in the package, but actually the physical look and feel of the things that we're buying. So hey, it's a margin game, and they're playing the margin game.

Jason Moser: Yeah, it's a little weird to me that it took this long. I mean, clearly, the candy companies nailed this way back when with Halloween candy. I mean, Crystal nailed that with their little burgers. I mean, better late than never. I will say while I am very fascinated, I got to believe those little mini Cinnamon Toast Crunches are just sublime. I don't feel the same way in regard to Doritos, man. I mean, I just feel like the Doritos could be messier, but maybe that's just me.

Chris Hill: To bring it back to the margin game, I will just point it out: Shares of Pepsi, General Mills, and Hostess Brands -- all three of those over the past year are outpacing the S&P 500 by more than 10 percentage points. I'm just saying it's not a coincidence.

Jason Moser: Size is innovation.

Chris 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. Andy, you're up first. What are you looking at this week?

Andy Cross: Guys, I'm looking at Tractor Supply, symbol TSCO. Listen, I'm a fan of the hit show Yellowstone, which should be back this summer. I've just finished up season 5, and I'm putting on my rancher cowboy hat to look at Tractor Supply. Tractor Supply commonly calls itself the largest rural retailer in the U.S. targeting the needs of recreational farmers, ranchers, and all those who enjoy the rural lifestyle. It's a $27.3 billion company founded more than 85 years ago, operates more than 2,000 stores across 49 states. Most of those stores are in rural locations, and they have done just a fabulous job speaking to a lot of people who have fled the cities and moved to the rural country or outside the cities to get a different environment. They work remotely and they can embrace their rancher or embrace their farmer. They've been remodeling a lot of their stores under Project Fusion, which brings more of a contemporary and convenient experience to include more digital tools and an improved layout. They're building out a distribution network with three new distribution centers announced on top of the nine they already have in operation. They've grown for 30 consecutive years, so when I look at Tractor Supply, I think it's really interesting, attractive. The stock is a little bit pricey at 24 times 2023 estimates, but you get a little 1.6% dividend yield with it.

Chris Hill: Dan, question about Tractor Supply?

Dan Boyd: Absolutely, Chris. Andy, do you think Tractor Supply is ever going to rebrand? Because honestly, I was confused when I learned that Tractor Supply doesn't actually sell tractors, and it's more of a standard retail and almost lifestyle brand at this point. Do you think a rebranding is in their future?

Andy Cross: No, I do not think it's in the future.

Chris Hill: Jason Moser, what's on your radar?

Jason Moser: Paying attention to Amazon, ticker AMZN. They have earnings coming out this coming Thursday. Stock has had a strong start to the year, up around 25%. There's obviously been a lot of talk here lately as to whether Andy Jassy is really up for the task. Should we expect to see Jeff Bezos stepping back in? I think that's highly unlikely, and frankly, Jassy is cleaning up some of the mess that happened under Bezos' watch. But I think we're going to see a big focus on cost controls here in the call. And to put some context around that, they doubled their fulfillment center footprint that they built over the prior 25 years, and then they had to accelerate building the last-mile transportation network that's now the size of UPS. And if you look at the fulfillment costs, fulfillment was 16.8% of total operating expenses in 2022. You go back to 2017 and that number was just 14.5%, so I think that cost controls will be a big theme of the call.

Chris Hill: Dan, question about Amazon?

Dan Boyd: Not really a question, Chris. It's more of a comment. Jason Moser, breaking new ground with a little-known company, Amazon.com, here on Motley Fool Money.

Jason Moser: You know, I love Dan's comments. The questions, they can sometimes come out of left field. The comments are always entertaining. That's why we love you, Dan.

Chris Hill: What do you want to add to your watch list, Dan?

Dan Boyd: Oh, I love you too, Jason. I think I'm going to go Tractor Supply, though because again, Amazon, a little bit of a household name at this point.

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

Jason Moser: Thanks, Chris.

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