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Banks, Tacos, and How Successful People See the World

Prices rise as inflation concerns grow. Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), JPMorgan (NYSE: JPM), and Wells Fargo (NYSE: WFC) reported earnings. Delta (NYSE: DAL) reported its first profit since 2019, and McCormick (NYSE: MKC) hired a taco czar. In this episode of Motley Fool Money, Motley Fool analysts Andy Cross and Jason Moser discuss those stories and weigh in on the latest from Disney (NYSE: DIS), Netflix (NASDAQ: NFLX), Pepsi (NASDAQ: PEP), and UnitedHealthcare (NYSE: UNH). Also, our analysts share two stocks on their radar.

Plus, we revisit our interview with NYU Professor of Psychology Emily Balcetis, author of Clearer, Closer, Better: How Successful People See the World.

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 July 16, 2021.

Ron Gross: Earnings season just started to heat up. Today we're going to talk about big banks, airlines, and video games. But we begin with everybody's favorite macroeconomic metric; inflation. Andy, you can't turn on the news without hearing about inflation, and whether it's transitory or more permanent PPI, CPI, there's a lot of macroeconomics out there so my question to you is, what should investors be thinking about here and should they be concerned?

Andy Cross: Well, Ron, from the expectations for the investor side, I think inflation matters the most when I start seeing it really creep up in employee costs salaries, because employee costs now are somewhere; gosh, it continues to increase 20%, 40%, 50% or so, depending on the company of revenues and it gets to be a very sizable amount if we start seeing increases in employee costs. Now the CPI, the consumer price index, the core which strips out the volatile food and energy prices, has been running very hot as it has been reported. It was up 5.4% in June year-over-year. That's the fastest in 13 years. You're starting to see uptake in expected inflation from consumers, so people are starting to feel this as well. But that's the stuff at J. Powell was talking about; being a little bit more transitory, a little more temporary, things that go into like used auto cars, are a big part of this increase of up to a third of the increase we're seeing recently.

We see a lot of that conversation, but what I personally think investors need to continue to focus on is how companies manage their employee costs. We know hiring is very tight right now, and we know there's a lot of job openings out there that are not getting filled. We're starting to see companies having to start increasing their salaries and they actually offer bonuses to recruit people into the workforce. As that starts to work, that could actually hit a little bit of the margin side for companies, so I think investors should be focused on that. What we're hearing right now, I think that is for the most part, will ebb and flow with the reopening of the economy, but longer-term is that it's more of that focus on the employee costs that I'm looking at.

Gross: Jason, before the show, you were talking about inflation like we do about some of other macroeconomic indicators, and that it's maybe sometimes best to just ignore them and just stick to your knitting. Is that your thinking here, your guidance for investors?

Jason Moser: Well, yes and no. I think that ultimately the way we look at it and obviously we take a much longer term perspective here at The Fool than perhaps the traditional Wall Street banks, I think that affords us the ability to be patient and to not worry so much about the ebb and flow of things like inflation. I often compare it to foreign currency effects. We'll see foreign currency effect adjustments in earnings releases quarter-in and quarter-out. That doesn't necessarily mean that they matter all that much, because over the longer period of time, they tend to net out, they tend to be washed over longer periods of time. That doesn't mean to ignore inflation, because those things do matter because they can impact the types of businesses that you might invest in, but I wouldn't let it be something that necessarily dictates your investment strategy in the short run. Still stay long-term focused so it shouldn't be too much of a concern.

Cross: I will say, Ron, that usually in rising inflation markets is a really good time to be a stock investor or at least better than a lot of other assets because those companies have flexibility to raise prices, they have scalability, so don't let the inflation bogeyman scare you out-of-stocks.

Moser: I'll also add here just one more thing, I really like the way Buffett approaches this inflation thing. Just invest in good businesses, in good times and bad times, inflationary times, non-inflationary times, good businesses are good businesses and they're going to do well over long stretches regardless of the economic climate.

Gross: Spoken like a true Fool. This week a plethora of big banks reported earnings every one from Wells Fargo to Goldman Sachs. Jason, what stood out here to you? Any themes emerge?

Moser: Yeah. We had a lot of interesting threads going into these banks' earnings season from interest rates, to inflation, the state of the consumer, even investment banking, and so I don't think there were really many surprises. There were some interesting points to note. I think when we look at Bank of America as really the market leader on the consumer deposit side, they saw revenue down modestly 3.5% from a year ago. Investment banking fees played a little bit of a role in that, which was a little bit odd given the state of the market and all of these IPOs, but that's worth noting. That pullback was from a record first quarter, so it's a bit relative. Net interest income was down 6% due to those low rates. Loan growth is still tepid. They see signs that that is coming back, and they saw deposits rise 14% up. Again, one of the themes there they released $2.2 billion of credit reserves that were established over the first half of last year given the situation with COVID-19 and net charge-offs fell to a 25-year low. Credit quality out there is really good and that's great for Bank of America. You look at the other end of the spectrum; a bank that's been in the headlines a lot lately, Wells Fargo, seems like things are maybe starting to turn around. Revenue up almost 11%, they were able to release $1.6 billion of this credit reserves. They too are seeing some challenges on the loan side, but deposits were up 17%, and then they were able to repurchase 35.3 million shares of $1.6 billion worth of stock for the quarter. The efficiency ratio is starting to come around. Remember, this is a bank that has been hindered by this asset cap. Regulators enforce this asset. They've basically been told they can't grow. Now that hasn't been lifted yet, but we're getting closer because we're seeing signs that the bank is getting its books in order. I think that we could be seeing a period of time when Wells Fargo starts to really change the conversation and become a little bit more of one of those opportunities in the banking space.

Gross: On Wednesday, Delta Air Lines reported its first profitable quarter since the fourth quarter of 2019 as travelers once again felt comfortable taking to the air. Investors seem to initially get excited about the report by the end of the week. It seems, Andy, like, much to do about nothing stock really not doing much. The report looked encouraging to me. What's your take?

Cross: Some of the airlines are off their highs of the year, but air travel has come back. U.S. vacation travel was recovered according to Delta, just about fully compared to a couple of years ago. International travel remains pressured from some of the travel restrictions, but corporate and cargo are really showing some signs of life. Looking at just some of the financial numbers for Delta revenues were down almost 50% from a year ago, but they are up 76% from the first quarter this year. Better than the company guidance, they saw average daily net cash sales doubled relative to the quarter ago. June travel accelerated, so as they went through the quarter, they continued to see more and more travel increase. Obviously transatlantic and transpacific travel were weak spots down; gosh, 85% and 87% from two years ago pre-pandemic, they still have not seen that trans-business really come back, but a bright spot in cargo shipments and revenue is up 35% from two years ago, domestic corporate travel grew from 20% base levels pre pandemic in the first quarter to now 40%, and they expect in the next quarter that will be back to 55% or 60%. You are seeing, Ron, this corporate travel, which is so important for Delta starting to come back. From the surveys they've done, they see more and more interest in their corporate partners signing up to travel again. Now, they expect those corporate partners to travel again. That's up to 95% of those corporate partners expected to travel in the coming quarters. That's all very good sign for Delta, but still obviously challenges ahead. They did have that profitability. They are seeing more and more profits starting to show up, but they're not out of the woods yet. There's still a lot of challenges for the airline companies and for Delta, especially internationally.

Gross: Corona beer had to deal with the coronavirus and Delta is now dealing with the Delta variant, which they're refusing to call the Delta variant, simply choosing to call it the variant. Does this have any real impact here or they're just being extra cautious?

Cross: Yeah. I think being extra cautious and some marketing in there too. But hey, take the advantage. Never look a challenge in the face and take advantage of it that you can get, especially when you're an airline business in this market, you need every little inch you can get.

Gross: For sure. Earlier in the week, reports emerged that Netflix was considering adding video games to its service at no extra cost to the consumer. Jason, streaming services are constantly looking for ways to distinguish themselves from the competition, content is king. Do video games move the needle here and will others simply follow suit?

Moser: Move the needle, that remains to be seen. I do think it's always encouraging to see a business work to leverage this core competency, and in Netflix's case, its core competency is streaming. Now that's streaming video, not games, but they are fairly similar. So I think it's something that makes sense for them to at least try. I think the big question really is exactly how they plan to approach this. It sounds like the intention is for this feature to be additive, not something that is a separate charge or another core offering from the Netflix brand, at least early on. I think these are just early on investments that we are seeing Reed Hastings and Ted Sarandos make. It's really all about taking Netflix to the next level, becoming a full-on media company. Investments in video have clearly paid off. They can try these investments in gaming. They're making some investments in podcasts. It all adds up, they're all very complementary. When you look at the market opportunity out there, just mobile gaming alone brought in $77 billion in revenue in 2020, so even capturing a small portion of a large market opportunity could be good for business, and so I would not hold this against them for trying. In fact, I think I would hold against them if they didn't try.

Gross: On Thursday, UnitedHealthcare reported results that were well above expectations despite lower profits resulting from people seeking medical care that they had delayed during the pandemic. Jason, the post-pandemic impact was bound to happen, so putting that aside, how did these results look to you?

Moser: Well, I know that UnitedHealth can be a bit of a polarizing idea given the ongoing debate regarding healthcare in general, but that said, this company is just so impressive at it's scale and has such a tremendous advantage in relation to their core business, which is essentially providing healthcare policies. Consequently, what we saw was another very strong quarter with revenue up 15%, $71.3 billion for the quarter, and Optum led the way with revenue of $38.3 billion and growth of 17.2%, operating earnings up 29% on the Optum side, which is really impressive. Medical care ratio normalized back to 82.8% for the quarter, that was compared to 70.2% from a year-ago. Very abnormal given the situation we were going through all 2020, so that was good to see. They did raise full-year guidance to a range of $18.30 to $18.80 per share, so that puts the stock around 22 times full-year estimates today, fairly reasonable, I think for such a dominant company in its space. Hearing them talk a lot more about using digital channels and investing a lot into their virtual care offerings, seeing extremely high patient satisfaction numbers from it all. They quoted 98% on the behavioral side. The behavioral care market has seen 98% customer satisfaction so I suspect we will continue to see more investments in virtual healthcare coming from this stalwart in the healthcare space.

Gross: PepsiCo reported very strong results earlier in the week and raised full-year guidance, sending the stock to an all-time high. Andy, fastest sales growth in at least a decade. What's driving that growth?

Cross: It's really the away-from-home consumption that's starting to show signs of life again, Ron, as we all have been stuck behind our computers and at home and ordering Frito-Lay boxes, as our family does. We're now starting to see the away-from-home market starting to kick back up. So total sales up 20.5%, that was ahead of forecast organic sales up almost 13%, earnings-per-share were up 27%. If you back out some of the currency effects better than forecast. Overall volumes, Ron, up 8% across all their categories. They held or gained shares across many of the key global snacks and beverage markets they look at. Strong performance and execution really in the U.S, convenience store, food service. Again, away-from-home markets are starting to show some real excitement here. For Pepsi, Frito-Lay were strong, Pepsi North America was strong, Quaker a little bit softer, Ron, because again, not stocking the pantry like we may have done a year ago when we're in the middle of the pandemic. Overall, you know you have a company that sells at 25 times earnings, you get almost a 3% dividend yield, very profitable, steady earnings growth, you're going to make some money in Pepsi, I own it myself but I don't think that's going to really shoot the lights out over the next five years but it should do OK.

Gross: I want to pivot a second to Coke [Coca-Cola]. Seemingly not learning from history, Coke is changing the look and taste of one of their most popular soft drinks, Coke Zero. I feel like we've been through this before. It seems like Pepsi is better at sticking to their gun, sticking to their knitting rather than tweaking what works. I know Jason is a Coke fan, specifically, a diet Coke fan. I don't know if you are a soda drinker, but if you are, Coke or Pepsi?

Cross: Gosh. Well, I drink Coke even though I own Pepsi, I own Coca-Cola through my Berkshire Hathaway holdings too, so yeah, I get them both, but I'll pick Coke out of the two.

Gross: Why does Coke keep messing around with what works? It's very popular and is literally one of their most popular beverages, they can't seem to rest on their laurels.

Cross: Yeah, I guess so. I really wonder what Pepsi is doing with some of their acquisitions, Rockstar Energy, and they bought SodaStream too, which is a purpose-driven direction they are trying to go to eliminate single plastic usage. I like that direction as well for Pepsi.

Gross: Yeah, innovation rather than tweaking with what already works, makes sense to me. McCormick is looking for a taco czar, that's right? McCormick is hiring a Director of Taco Relations to sign a four-month contract which pays $100,000. Jason, I know we're all fans of McCormick here, especially you're a fan of McCormick's here, having recommended it several times. Is this real, is this a joke? Where is this going?

Moser: It seems to be real. To me, at the end of the day, this really seems like a very clever investment in marketing, but yeah, you got it. A Director of Taco Relations, one of the cooler job titles I've seen out there and, Ron, I'm not going to lie to you, for a split second, I really did actually think about applying for this gig, but then I remembered, I do have a full-time job and some responsibilities at home so my time is limited, but man, oh man, I love tacos and this seems right up my alley. Listen to this: daily responsibilities include keeping up to date on taco trends, Ron, they're taco trend, trolling TikTok for content, developing content for a Taco Tuesday social media series, taste tests, traveling the country. This really does sound like a dream gig in a lot of ways. Ultimately, again, I think it is a very clever investment in marketing. $100,000, at the end of the day, for this company, very easy to justify given its scale and presence in the flavor and spice market.

Gross: You mentioned that you have a full-time job so you're not going to go for it. I would imagine the only person that could go for it is someone that is unemployed or do you quit your job, go for a four month, $100,000 gig, and then worry about the consequences later?

Moser: I don't know, it seems like it's a temporary gig so you got to think longer term, I think, right?

Cross: There are a lot of freelancers out there and may jump on something like this.

Gross: That's a good idea. My last question on this topic, if we're making you the czar of one food, Jason, what's it going to be?

Moser: It's funny, I think I have one daughter who would argue I should be the czar of spaghetti and meatballs because I got a pretty wicked recipe there but I think honestly, I would be the czar of breakfast tacos, believe it or not. Breakfast tacos are terrific, we got a couple of different ways to do them here, and you know what goes well on breakfast tacos, Ron? McCormick owned Cholula Sauce.

Gross: Nice. Andy, how about you?

Cross: I think I am going to go with Oreo cookies. If I had to taste test one, believe it or not, we've been going through a lot of Oreos. They have a new Olympic flavor here. They have s'mores, brookie brownie, chocolate, hazelnut, lemon, birthday cake, and so many different flavors. If we just had to do some testing and evaluation, I think I'm going with Oreo cookies.

Gross: In March 2020, Chris Hill interviewed NYU professor of psychology Emily Balcetis. Professor Balcetis had just written her first book entitled Clearer, Closer, Better: How Successful People See The World. Chris began this conversation by asking how out of all the disciplines in psychology, she chose this as the topic she wanted to tackle.

Emily Balcetis: I think what really got me was that I've been spending 20 years studying the science of motivation and uncovering those obstacles that get in the way of us meeting our goals. But also the surprising tactics that we have available to ourselves that we don't realize that help us overcome those challenges. That's the science that I've been studying for 20 years. Then this book, at this point in my life, was really because I needed to figure out for myself what would work for me and what wouldn't. I had just given birth to my first child. Life was crazy. For a reason that I talk about in the book, I decided this is the moment when my son was four months old, that I needed to learn to play drums, which was a very odd decision, I admit from the outside. But there's just so much going on my own plate that I wanted to apply the tactics that I'd been studying in the lab to myself and see what stuck.

Chris Hill: I'm definitely interested in the drums, but let me come back to that because some of the examples that you highlight in the book are pretty interesting to me as someone who looks at businesses. Obviously, when we're looking to be more successful, goal setting is involved and one of the things that struck me was the way that a company like 3M, which is one of those businesses that people have their products in their home and office, whether they realize it or not. But the way 3M goes about goal setting was a little surprising to me.

Balcetis: Yeah, it's really incredible because they set what might seem like unmeetable expectations for where sources of revenue should come from. That they hold the expectation that 25% of their revenue should come from products that didn't exist five years ago. Since they set that goal, they've hit that market and exceeded it every year so they are constantly innovating. That's what people have really been interested in, is how do they do that? How from one year to the next year are they reinventing 30% of their business? That's the mark that they've actually hit exceeding their goals and part of it comes down to the culture that they create. Perhaps surprisingly, is that they have a real openness and acceptance of the possibility of failure.

The idea here is that if we just put on the table that some of our approaches are going to be missteps that something that we might have invested in may not have legs or may not bear out that if we were open about that, we can accept the possibility of defeat sooner so call it faster. We can call in backup, asking for help or bringing in a team for consultation faster without a stigma or without a feeling of embarrassment and that really is part of the key to coming up with something that literally hasn't existed before.

Hill: Well, speaking of embracing failure. One of the people you write about is Charlie Munger, not as famous as Warren Buffett, but the famous two investors, Vice Chairman of Berkshire Hathaway. Munger always struck me as a smart guy. I don't think that's particularly a groundbreaking observation. But what was interesting to me was the amount of time that Charlie Munger focuses on failure and in particular, his own failures. His own I don't want to say self doubt, but it's almost like he comes up with an idea and then spends more time trying to shoot down the idea he just came up with.

Balcetis: Yeah, exactly. What I didn't know before really diving into his personal story is that Charlie Munger is a college dropout. He went to school to study math. He switched to physics. He left the university before he completed his degree, and then went on to become a meteorologist in the U.S. Army in World War II. When his military career was over, he went onto study law at Harvard Law School and he graduated magna cum laude. But none of that education is what he and Warren Buffett have built their business on, of course, it's finance and business and economics. When he explains, where did that knowledge come from, he never took a class in accounting or in economics so how did he learn what he needed to build this empire? He said it really is about his independent studies. That he would set aside time every day from the beginning of career to just read as widely as he could. Reading the founding principles that our forefathers of America used to create the constitution, for example. The principles that served as the founding force for Alcoholics Anonymous. He was just reading like a crazy wide library. What he was doing was trying to understand the principles of human decision-making, before that field even existed.

What he recognized was that there are a wealth of ways that our decisions can be made in error and he himself believes that he contributed to a lot of those errors and decision-making. He was trying to come up with what are some principles that he could take from one decision to the next or across different issues and business that he might be facing and what are those principles that might lead his decision-making astray and he spent decades formulating what he ultimately came up with as a list of 24 issues or problems with decision-making that could cloud his own and others ability to come up with the right answer. He's distilled that down into 10 principles that he put into his book, Poor Charlie's Almanack. He uses that list to cross-reference his own decisions before we rule them out, recognizing that principle No. 1 is that his own ability to assess whether the decision is a good one or a bad one, that his ability to assess that is circumspect and so he should have some external source of accountability, this checklist that he references.

Hill: One of the things you write about is visual framing. I'm not going to try and explain what visual framing is, but the way it applies to the business struck me because you end up writing about Walmart and their very deliberate strategy of keeping their shelves cluttered, which goes against some other examples that we've seen in business over the past decade where I'm thinking of a company like Best Buy, where part of Best Buy's turnaround involved a strategy of completely remaking their stores so that there was less clutter, they were more visually appealing. But Walmart appears to have had great success doing the opposite.

Balcetis: Walmart did have a period where it tried that slim down visual appearance. What they found was that tactic totally backfired for them. They saw that sales decreased during that period of time when they tried out that new visual strategy and so they went back to what they'd always been doing before, to great financial ends and the idea here with the visual frame is that what falls within our line of sight, nudges our choices, it maybe with our awareness and often without our awareness. What we see is what we act on. The same goes with Walmart strategy, which is if it's in sight then people will be interested, it'll catch their eye and it might catch a bit of their wallet too. When they took those items off of the end caps when they took them off of the pallets in the middle of the aisles. There was less to catch people's eye, less that fell in their visual frame and as a result, they purchased less.

Hill: Your book adds to the growing body of evidence regarding the drawbacks of multitasking. Why do you think a lot of employers continue to state that's the quality they're looking for when they are seeking to hire?

Balcetis: We live in a very busy world, any one of us has probably far more on our to-do list and we're going to be able to get done in a day. When we couple that with these really ambitious goals that we set for ourselves, for our teams, or for our organizations, there's just a lot to get done and we think that multitasking is going to be the solution to that, where our needs may exceed our resources of time or personnel. It seems like it's an appealing solution to this dilemma. In fact, when people multitask, they report enjoying the experience, they feel like they are productive. But actually the science says that for the most part they're not, they are less effective when they're multitasking than if they're able to maintain a single focus.

Now, that makes multitasking sound like a bad idea and that's not the take home message that I want to put out there. Instead, multitasking is a tool that we should use wisely. It's a two-edged sword here, that sometimes multitasking can be effective. For instance, when we're feeling under-stimulated, or it's an area we have great expertise in and it's something we've done time and time again, you might feel burnt out or under-stimulated, in that case, multitasking is effective. The more that we can give our mind to juggle, it can actually be exciting and invigorating. Multitasking can actually help us to focus up, get more done, become more effective and more efficient and engage our brain in a way that perhaps it didn't feel like it was before. We can do that up until a point.

There are benefits of multitasking in this space where we have expertise, or the task demands aren't as great as we can handle, but then there is a point where it starts to dip down again and where multitasking is actually ineffective and that's the space that we might find ourselves in a lot at work. There was a really cool study done actually, of emergency room doctors. They were looking at how effective our doctors are as their caseload changes across the evening or across their shift. What they found was that, doctors of course, do a really good job of handling their patients, but they can do an even better job as the patient caseload grows from one, to two, to three. There's downtime when they're working with any patients, you are waiting for a consultation from another doctor, or you're waiting for lab results to come back in. When their caseload increased, the doctors were actually more effective at figuring out how to take advantage of that downtime. It's not just emergency room doctors that have downtime, so this is an analogy that we can take to any space that we might be in. When we're waiting for somebody to report back, or are waiting for new information to come in, what do we do with that downtime? When we have a little bit more on our plate, we figure out ways to be creative about how to use that downtime. But as I was saying, with the rest of us, these emergency room doctors had a tipping point. When they're caseload got to about five or six patients, now that was just too much. There wasn't a way to become more efficient with downtime, there just wasn't any more time.

What they found, what these researchers found, was that around patient five or six, now, each patient was waiting a lot longer than the ones that had been there when the case slot was smaller. The patients were also returning to the emergency room within 24 hours at a higher rate, indicating that the doctors perhaps were misdiagnosing or not prescribing a course of treatment that would be sufficient to remedy the symptoms and so the patients had to return. Those were clear markers of declines in performance and efficiency. Multitasking helped them ramp up and do their job better until they reached that tipping point and then there was a decline and multitasking wasn't effective.

Hill: The tools that you read about in the books, how helpful were they when you were trying to learn how to play the drums?

Balcetis: Well, I'd like to say that as a social psychologist, I have the science at my disposal, I know what the problems are, I know what some solutions are. But just like MD doesn't protect the doctor from getting the sniffles, having that knowledge didn't protect me from making the same mistakes that I was investigating with the people who come through my lab.

Hill: Last thing and then I'll let you go. At The Motley Fool, we spend a lot of time focused on the importance of long-term investing, which is a little bit more challenging to do on days when, for example, the Dow Jones average drops 1,000 points. What is the best way to help people focus on long-term success?

Balcetis: I'm going to offer two pieces of advice and they might sound contradictory. They're two of the tools that I talked about in the book. One, is narrowed focus and when should we really keep our eyes on the prize and what will that benefit be. Then the second is a wide bracket, almost the opposite. When do we take in the big picture? When we see blips like this, like this drop in the Dow Jones is a blip, it's going to remedy itself, this isn't going to last for months or for years. There is a tendency for us to overreact to those momentary blips. These blips will write themselves, but if we are just focused on what happened today and we react to that, then we might make a decision that we could regret in a week or a month from now when we see this trend shift. By narrowly focusing on today's market, we might make a mistake, we might make a choice that we regret.

But zooming out, looking at the bigger picture, looking at the trajectory of our investments over time, I think we'll find that what we've invested in has some staying power and maybe we should just stick with it. Now, the other thing about the narrowed focus is that it can be helpful when we're talking about a goal that we have that might be in the far-off future, say a year from now, two years from now. Sometimes people have a hard time connecting today with that distant future, and what we can do is instead of focusing on the market today, we can focus on what our goals are for a year from now or two years from now and we can contract that space. Who is going to benefit in the future, who is going to benefit at that one-year out mark or that two-year out mark, and it can help us realize that the choices we make today will have consequences for that far-off future, by keeping our eyes on the prize.

Hill: Emily, I know you're busy. I really appreciate your time and congrats on the book.

Balcetis: Thank you so much. I appreciate the opportunity to have a conversation with you and your audience.

Gross: Okay, guys, time for some stocks on our radar and I'll bring in our man, Dan Boyd, for a quick question. Jason Moser, you are up first, what do you got?

Moser: Yeah, just looking at AppHarvest (NASDAQ: APPH), ticker APPH, remember is the AgTech company focused on building those controlled environment agriculture centers or smarter greenhouses, led by founder Jonathan Webb. Just some recent headlines the company recently joined the Russell 2000 index, which is encouraging, they get some additional exposure there. Recently broke ground on its fourth and fifth indoor farms on track to meet its goal of 12 of those indoor farms, thereby 2025 and that's going to be key. They continue to lock down financing to fuel this growth, which is encouraging. Lenders are seeing the bigger picture, investors are seeing the bigger picture. I liked that, Ron. You know why I like that? Because not only have I recommended the stock, Ron, but this week, I actually bought shares of AppHarvest myself.

Gross: Nice. Dan, you've got a question about AppHarvest?

Boyd: Yeah, you know I brought this the last time I think we had AppHarvest on the show. What is this name AppHarvest? What are they doing? It means nothing, AppHarvest, come on.

Moser: Well, I think it's just the merging of technology and agriculture. It's a play on words, so to speak, Dan, but it's AgTech, it's a thing. It really exists.

Gross: Andy, time is short, you're up, what are you looking at?

Cross: I'm looking at Intuitive Surgical (NASDAQ: ISRG), the maker of robotic surgery systems for minimally invasive surgery, a $113 billion company, almost $5 billion in cash on the balance sheet, Dan, known for its da Vinci systems, really got hit over the last say year or so, a little bit over the last 18 months, 24 months from the COVID pandemic as hospitals and surgery centers and doctors basically shutdown elective surgery. Da Vinci helps with things like bariatric, oncology, urology procedures, so those now have started to see some ramp back up. We're starting to see the procedures increased in this wonderful company, very profitable, exceptionally high operating margins, and generates a lot of cash. It does have a P/E of 70, Dan. It's a little bit more on the expensive side, stock is now at an all-time high. I'm looking to see what they are saying about the surgeries, we need to see that if volume continues to pick up.

Gross: Dan?

Boyd: The word "invasive" is not great to hear, however, the word "minimally" right in front of "invasive" makes me feel pretty good.

Cross: Yeah, that's the way you want to go, of the two you want to go minimally invasive, Dan.

Moser: Which one do you put on your watch list, Dan?

Boyd: You know what, this is the second time we've had AppHarvest on the show in recent memory, so I think I'm going to go with AppHarvest actually, because I want to learn more about it.

Moser: Nice.

Gross: That's all we have time for, guys. That's going to do it for this week's Motley Fool Money. Thanks for listening, we'll see you next week.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Andy Cross owns shares of Berkshire Hathaway (B shares), Netflix, and PepsiCo. Jason Moser owns shares of AppHarvest, Inc., McCormick, and Walt Disney. Ron Gross owns shares of Berkshire Hathaway (B shares) and Walt Disney. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares), Intuitive Surgical, Netflix, and Walt Disney. The Motley Fool recommends 3M, AppHarvest, Inc., Delta Air Lines, McCormick, and UnitedHealth Group and recommends the following options: long January 2022 $580 calls on Intuitive Surgical, long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2022 $600 calls on Intuitive Surgical, short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.


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