Three Non-AI Stocks to Buy: MRK, UPS, CVX

Summary

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Motley Fool Money Summary

Episode: Three Non-AI Stocks to Buy: MRK, UPS, CVX
Date: November 17, 2025
Host: Tim Byers
Guests: Carl Thiel, Anthony Chavon

Main Theme

The episode centers on stock investing opportunities outside the hot AI sector. With AI dominating headlines, the hosts dive into three significant non-AI stocks—Merck (MRK), UPS, and Chevron (CVX)—analyzing recent events, evaluating business trends, and delivering actionable buy/sell/hold recommendations. Later in the episode, the team plays “Back it or Bin it,” focusing on the outlook for dividend growth at three additional companies.

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Key Discussion Points and Insights

1. Merck’s Strategic Move: The Sadara Deal

Segment: [00:39–05:26]

• Deal Overview:
  Merck (MRK) is acquiring Sadara (CDTX) in a ~$10B deal, primarily to obtain an innovative influenza treatment.
• Deal Premium:
  Merck is paying a premium of 109% over Sadara’s prior close ($221.50/share), indicating conviction in the drug’s value.

  “This was initially looked at as something just for very high risk influenza patients. FDA has actually kind of come back…to make it...potentially a slightly broader drug.” — Carl Thiel [03:51]

• Sector Context:
  Recent pharma M&A usually targets oncology, but Merck’s move into infectious diseases (flu, fungal) signals sector diversification.
• Patent Cliff Motivation:
  Merck faces a looming patent expiration on Keytruda, its blockbuster oncology drug. The Sadara acquisition is seen as a way to offset this risk.
• Pricing Justification:
  “I don’t think that Merck is paying an outrageous amount…this could be…a broader drug.” — Carl Thiel [03:53]

Recommendation:

• Buy on Merck.

  “I’m a buy on Merck just because I think Merck is attractively priced relative to the rest of the market…The data has looked good for this approach…modestly bullish.” — Carl Thiel [04:55]

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2. UPS: Turnaround and Strategic Refocus

Segment: [05:26–08:19]

• Performance:
  Revenue fell nearly 4% YoY, “primarily driven by the planned decrease in Amazon package volumes…and some business divestitures.” — Anthony Chavon [05:53]
• Positive Signs:
  • Despite 12% volume decline in domestic shipments, revenue per piece grew 10%—fastest in three years.
  • Operating margin expanded; management’s “better, not bigger strategy is progressing.” [06:38]
  • Significant cost cutting: “expects to reduce expenses by 3.5 billion this year.”
  • Shift toward higher-margin healthcare, B2B, and international packages.
• Profitability Focus:

  “All these decisions are aimed towards becoming a smaller, more efficient UPS. And I really think this quarter was a big step in the right direction for the company.” — Anthony Chavon [07:15]

Recommendation:

• Buy on UPS.

  “…7% dividend yield…not currently covered by free cash flow, but I do think it’s sustainable…might be enough to beat the market over a five to ten year period.” — Anthony Chavon [10:36]

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3. Chevron: Strong Returns Despite Volatility

Segment: [08:19–11:22]

• Earnings Recap:
  • “Production…was a record quarter…21% higher than last year.”
  • “Adjusted free cash flow at $7 billion,” and $6B returned to shareholders via dividends and buybacks.
• Shareholder Focus:
  • “…returned $78 billion through dividends and buybacks over just the last three years…that’s really kind of the thesis for traditional energy companies now.” — Anthony Chavon [09:25]
  • Management plans to return $10–$20 billion per year through 2030.
  • Strong 4.3% dividend yield; targeting 10% annual free cash flow growth.
• Industry Trend:
  Oil & gas shifting from aggressive growth to focus on capital discipline and consistent shareholder returns.

  “Now they're much more focused on returns on capital and returns of capital through dividends and buybacks.” — Anthony Chavon [09:32]

Recommendation:

• Buy on Chevron.

  “Roughly 4.3% dividend yield today…free cash flow at a 10% annual rate through 2030…double-digit expected return over the next five years.” — Anthony Chavon [11:07]

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4. “Back it or Bin it?”: Dividend Growth Prospects

Segment: [12:49–18:19]

A quick-fire round assessing whether three companies are likely to bump their dividends in 2026.

A. Wabtec (WAB)

• Financials: 6.6% projected revenue growth; 12% payout ratio—"at the low end of management's target."
• Outlook: Stated goal to increase dividends; recent acceleration in dividend growth rate.
• Verdict: Back it

  “That dividend growth rate is accelerating over the last two years, so yeah, I think a dividend increase…is probable.” — Anthony Chavon [14:47]

B. Hasbro (HAS)

• Financials: 75% of FCF dedicated to dividend.
• Challenges: In multi-year turnaround; substantial debt.
• Verdict: Bin it

  “I kind of hope they don’t honestly increase the dividend…they already pay something like a 3.6% yield…they’ve got a number of challenges…” — Carl Thiel [15:51]

C. CF Industries (CF)

• Financials: Huge cash generator; payout ratio averaged 24–35%.
• Trend: Prefers buybacks; last big dividend bump was 2022/2023.
• Volatility: Dependent on commodity prices.
• Verdict: Bin it

  “Management seems to prefer share buybacks right now…I think a dividend increase is largely going to depend on commodity prices…” — Anthony Chavon [17:43]

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Notable Quotes & Memorable Moments

• On pharma M&A premiums:

  “You expect an M&A deal to come at some premium. But that's a pretty big one…” — Carl Thiel [02:54]

• Turnaround optimism:

  “All these decisions are aimed towards becoming a smaller, more efficient UPS. And I really think this quarter was a big step in the right direction…” — Anthony Chavon [07:15]

• Chevron’s capital returns:

  “Chevron mentioned that they have returned 78 billion through dividends and buybacks over just the last three years. That’s a massive amount of capital…” — Anthony Chavon [09:29]

• Dividend sweepstakes:

  “If you want dividend growth, the old Westinghouse Airbrake Technologies Corporation, that's your one to go with.” — Tim Byers [18:38]

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Timestamps for Key Segments

• [00:39] — Intro to Non-AI stock picks
• [01:25] — Merck’s Sadara acquisition explained
• [04:55] — Buy/Sell/Hold on Merck
• [05:41] — UPS earnings and business model shift
• [07:52] — Evaluating UPS’s profitability prospects
• [08:38] — Chevron’s results and shareholder returns
• [10:36] — Buy/Sell/Hold on UPS
• [11:07] — Buy/Sell/Hold on Chevron
• [12:49] — “Back it or Bin it” dividend game
  • Wabtec (WAB) [14:24]
  • Hasbro (HAS) [15:51]
  • CF Industries (CF) [17:43]

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Summary Table: Buy/Sell/Hold Ratings

| Stock | Ticker | Analyst | Recommendation | Key Reasoning | |------------|--------|-------------------|----------------|------------------------------------------------------| | Merck | MRK | Carl Thiel | Buy | Attractive value, pipeline diversification | | UPS | UPS | Anthony Chavon | Buy | Turnaround, efficiency, high dividend yield | | Chevron | CVX | Anthony Chavon | Buy | Strong shareholder returns, capital discipline |

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Tone

The hosts maintain the friendly, engaging, and slightly irreverent “Foolish” tone fans expect, mixing clear-eyed business analysis (“I think Merck was attractively priced...”) with informal banter (“Did you know that Hasbro is the home of Play Doh?”). They are candid about risks and benefits, focusing on long-term fundamentals rather than short-term hype.

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For listeners seeking non-AI stock ideas and thoughtful dividend analysis, this episode delivers timely, actionable perspectives with Foolish flair.

Transcript

[A]

Foreign.

[B]

What are the opportunities outside the world of AI? You're listening to Motley Fool Money. Welcome fools. I'm your host Tim Byers and with me are longtime fools Carl Thiel and first time Monday podcast Anthony Chavon Ant. How, how you feeling fellas? We doing well? Fully caffeinated I hope.

[A]

Fully caffeinated, Tim.

[C]

Feeling good?

[B]

Excellent. Excellent. This is good.

[A]

All right.

[B]

Today we're talking about non AI stocks and seriously, we are being serious about this. Non AI stocks. Did you even know that there was such a thing as non AI stocks? We'll be digging into reports from four stocks, really three stocks that we don't often talk about and give a buy, sell or hold rating on each as we do. Let's get into it starting with Carl. This close to $10 billion deal I'm rounding up, but it's not quite 10 billion, but a $10 billion deal between Sadara, that is ticker CDTX and Merck, the pharmaceutical giant. Mark, what's going on here? This is a strategic purchase I assume here. It's a lot of money. So what are we getting here?

[C]

This is a good old fashioned product slash platform deal in the sector. And what Sadara does is they're making a, you know, most directly what, what Merck is buying right now is a influenza drug that is not really, it shouldn't be subject to year to year variation. So it's a different way of going after influenza and you could see why that would be a relatively big deal. There's a lot of flu shots given out every year.

[B]

Seems timely. Yeah, yeah, yeah.

[C]

So you know, I think it's interesting on a number of levels. I mean one is just that, you know, usually M and A in the pharma sector is just dominated by oncology and it still is. But you know, we've seen a lot more start going to these broader health issues around obesity and around in this case infectious disease. So influenza. The other reason I think it's super interesting is just that, you know, it came at a huge premium. So I'll say yeah, $9.2 billion all cash deal, 109% premium to where Sadara was trading before that. And I just think that that gets at the sort of, you know, continuing, I think some, some mispricing in the sector. I mean you expect an M and A deal to come at some premium. But that's, that's a, that's a pretty big one to one of the things.

[B]

I saw here, Carl. So again, $221.50 in cash that is more than double the prior closing price. Huge premium here. I want to ask whether or not that is a premium that Merck feels it must pay in order to get an active drug that fills a pipeline. Because one of the things I saw in the notes, and bear in mind, I rely on you for 100% of my insights as it relates to pharmaceuticals and biotech. But there is apparently a patent cliff upcoming for Merck in, in the form of a blockbuster cancer cancer drug called Keytruda. Does this help fill the gap and is that the reason the premium is so big?

[C]

Yes, it helps fill the gap. I mean, the Keytruda patent cliff is a major, major deal for Merck, and it's no mystery to anybody who invests in the stock. Is it the reason the premium is so big? Not necessarily. I actually don't think that Merck is paying an outrageous amount for the company, given that this could be not only a broader drug than, you know, this was initially looked at as something that's just for very high risk influenza patients. FDA has actually kind of come back and given them sort of the green light to make it a slightly, potentially a slightly broader drug. And then you could turn around and use this same platform and plug it into other infectious disease agents like fungal disease and things like that. So I, I don't think it's. They're paying an outrageous amount. Actually, it's a little different than say, another $10 billion deal that just closed last week, which is Pfizer Met Sarah, where I think they paid a huge premium.

[B]

Okay, so then let me get your, your take on this then, and then we're going to keep moving. Buy, sell, or hold Merc on the basis of this deal. Like, is this one that you expect to see compounding value at Merck or where, where are you at?

[C]

I think I'm okay. I'm, I think I'm a buy on Merck just because I think Merck was, you know, is attractively priced relative to the rest of the market. As to whether this deal comes out a winner. I mean, obviously that depends on a lot of things, but, you know, the data has looked good for this approach. And so I'm, I'm, you know, modestly bullish on this. It is possible that this specific deal will end up being a disappointment, but I still think it's not an unreasonable move by Merck looking to shore things up.

[B]

Fair enough. All right, let's move on. Ant we're going to move on to some earnings, starting with ups. Apparently, people want to be delivering packages again. So talk to me about what we saw from the UPS earnings report.

[A]

Yeah, Tim, I think it's fair to say that UPS is firmly in a turnaround. But this quarter I think investors finally received some hope that this turnaround is in the early stages of turning. So revenue declined nearly 4% year over year. And admittedly that does not sound great. But to put some context around that, the decline was primarily driven by the planned decrease in Amazon package volume that it delivers, as well as some business divestitures. Just looking at UPS's domestic business in the US and I think this is really interesting. Revenue declined nearly 3%, but volumes declined by 12%. So that tells me that UPS is shedding lower margin Amazon E Commerce volume and instead focusing on higher margin volumes in healthcare business to business and international markets. And the result of that is that the revenue per piece, which is a key metric that they track, grew 10%. And that's the fastest growth rate they've had in three years. Their domestic operating margin actually expanded slightly even though the volumes fell 12%. So I think that's a really good sign that management's better, not bigger strategy is, is, is progressing. And on the expense side, with the glide down of those Amazon volumes, UPS expects to reduce expenses by 3.5 billion this year. And with that lower volume, you know, UPS needs fewer trailers, they need fewer trucks, fewer aircraft, doesn't need as many buildings. And unfortunately it also means they need fewer employees too. But all these decisions are aimed towards becoming a smaller, more efficient ups. And I really think this quarter was a big step in the, in the right direction for the company.

[B]

So is this, this does seem to be a real play on, forget about growth, focus on profitability. And this is. So are we at the beginning of a surge in profitability for ups, do you think? Is that too bold a statement or are we on the beginnings at the beginnings of a real profitability improvement at this company?

[A]

Yeah, well, I was hoping the beginning, the profitability improvement would have occurred like two years ago because this plan has been in place for a while now and there's been a lot of volatility around UPS's quarterly earnings with like their labor contract tariffs and all that. So there's a lot of noise in their quarterly results. But this does seem to be that first step towards eventually proving free cash flow, improving operating margins and improving return on invested capital and just becoming more efficient.

[B]

I like all of those things. But let's move on to Chevron. That was up slightly on earnings, so ticker CVX here, this is a very, very big company and up about 1.5% for the week. What did the results look like here and do we like them? Where, where are you at on this one?

[A]

As a shareholder, I liked them. I thought it's a strong quarter for Chevron despite lower commodity prices. Production of 4.1 million barrels of oil equivalent per day was a record quarter for the company and 21% higher than last year. Adjusted free cash flow came in at 7 billion. And Chevron returned 6 billion to shareholders in the quarter through dividends and buybacks. And I thought this was pretty cool. So Chevron mentioned that they have returned 78 billion through dividends and buybacks over just the last three years. That's a massive amount of capital relative to what is roughly a $300 billion company today. And I think that's really kind of the thesis for traditional energy companies. You know, whereas in the past oil and gas companies just wanted to, you know, drill and produce as much as possible, now they're much more focused on returns on capital and returns of capital through dividends and buybacks. And, you know, Chevron's really been at the forefront of the industry shift in capital allocation, that standpoint.

[B]

I want to make sure I got this right. So, $300 billion company, seven, did you say? 78 billion returns over. Is that three years?

[A]

Three years, yep.

[B]

So over three years. So over 20 billion a year. Really? Over 25 billion a year. So roughly 25% of its market value returned in terms of cash used for repurchases and dividends.

[A]

Yeah, and I think that should continue too. They actually just held their analyst day, I think last week, and they plan to return between 10, I believe the number is between 10 and $20 billion annually through 2030. So that is, they're still returning a lot of cash to shareholders even as commodity prices have come down.

[B]

That's extraordinary. All right, fair enough. Well, let's get your buy, sell and hold on each of these quickly so on ups. A more profitable ups. Are you buying this?

[A]

I am buying it. So if you look at the dividend Yield, it's about 7% today. Now, that dividend payout is not currently covered by free cash flow, but I do think it's sustainable considering their balance sheet and the investments it's making today to support that higher free cash flow in the future. So I think that 7% dividend yield alone might be enough to beat the market over a five to ten year period, considering where market valuations are today. So I think it's a buy. Okay.

[B]

All right. And how about Chevron? Same question. Buy, sell or hold?

[A]

Also going with the buy. So roughly 4.3% dividend yield today. Management expects to grow free cash flow at a 10% annual rate through 2030. So that kind of, you know, represents a double digit expected return over the next five years. And I think that beats market.

[B]

Fair enough. All right. Well, there you go. There is your non AI stocks overview. Up next, we're going to do a variation on our faker or breaker game. We're going to give it a little dividend twist. We're calling it back it or bin it. You're listening to Motley fool money between.

[D]

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[B]

All right, fools, it's time for Back it or Bennett. And apologies for the name change here, but we wanted to try something a little bit different. We're going to go with a dividend bent here. Three companies, three companies that haven't necessarily been, let's say, very aggressive in raising their dividends over the past few years. And I want your takes. Do you back it or bin it? To increase the dividend in 2026. And we're going to start with Wabtech, which is the former Westinghouse Air Brakes Technology Corporation. This is essentially making equipment systems, maybe some digital software for rail transportation, including freight rail. Transit rail. They've been around for, for quite some time. They make train control systems. So ant, let me start with you here. I'll give you some stats for 2025. They are forecasting 6.6% revenue growth. This is definitely a free cash, free cash flow generator. They have been converting a huge amount of their operating cash as free cash flow. So they have a free cash flow margin of well over 12% here. But they only have a dividend payout ratio of 12%. So why is this dividend not higher? Do you expect it to go up in 2026? Back it or Bennett, what do you say?

[A]

I'm going to back it. So you mentioned the dividend payout ratio is only about 12%. That, that's at the low end of management's targeted payout ratio of about 10 to 15%. And they have a stated goal to increase dividends and that, that dividend growth rate is accelerating over the last two years. So yeah, I think a dividend increase this year or even next year is, is probable.

[B]

All right, so ticker wab. That is, that is wabtech. So we back it for, for some dividend growth here. Carl, I'm going to go to you on stock that you own. We're talking toys, Hasbro. And by the way, I had forgotten, did you know this, that Hasbro is the home of Play doh. I didn't know that. I mean, I knew they were the home of like Monopoly and D D. I didn't know they were the home of Play doh.

[C]

No Play doh. It's been a thing for a long time.

[B]

All right, well, the total, total revenue up 7% for the first nine months of 2025. They have a significant free cash flow margin. 75. 75% of free cash flow is what they dedicate to the dividend today. So where are you at, Carl? Here, 75% of free cash flow for the dividend is. That's not a small amount. Do you back it or bin it to grow that dividend for you as a shareholder?

[C]

I'm going to say Bennett for 2026. I kind of hope they don't honestly increase the dividend. And this company, I mean they are, they already pay something like a 3.6% yield. It's not a terrible yield on this stock. And they've got a number of challenges. I mean, I think if you just think of a company that's making things going into the consumer market that a lot of them are manufactured in China, you can sort of like fill in the blanks on what some of the challenges might be.

[A]

So.

[C]

And they've got a fair bit of debt. They've been focused on that. They're kind of in a multi year turnaround plan. And Doing okay. I mean, I do think that they're starting to sort of come up out of it. So I think they're doing reasonably well. And I don't think this is a bad time to come to investors and say, look, you know the capital, we don't need to increase the dividend right now. We've got better uses for the capital.

[B]

Fair enough. All right, Ant, let's come to you on our final one. Hasbro's Ticker has. This one is pretty simple. Ticker CF Industries. Ticker cf talking about fertilizer here. And this is fertilizer, hydrogen and nitrogen. This is a big supplier to the agricultural sector. A lot of ammonia based ammonium nitrate fertilizer and so forth. So this is an interesting company. They generate a huge amount of free cash flow. For the trailing twelve months. Free cash flow according to Alpha Sense was 1.7 billion. That's through September 30th. The payout ratio on the dividend is pretty low. It is averaged between 24% and 35%. And for a company that doesn't generate a, I mean they generate decent revenue growth, they generate a ton of cash. Do you back CF to increase the dividend to raise that payout ratio or is it Bennett, what do you say?

[A]

So I think this is a company that has the ability to raise its dividend and probably will, looking over like a five plus year time horizon. But will it increase in 2026? I'm not so sure. Management seems to prefer share buybacks right now and they did just increase the dividend considerably in 2022 and 2023. So I think looking at 2026, I think a dividend increase is largely going to depend on, on commodity prices. And trying to predict what commodity prices are going to do in a one year window is pretty difficult. So I think I'm going to bin it with CF Industries.

[B]

Fair enough. Binning it. All right, so there are your, there's your three stocks, dividend growth over the next year. Wabtech. Ant says back it. Hasbro, Carl says Bennett and, and CF Industries. Ants has been it. So if you want dividend growth, the old Westinghouse Airbrake Technologies Corporation, that's your one to go with. Maybe we can't give you personalized advice on this podcast.

[D]

Sorry.

[B]

Up next, we're going to preview tomorrow. Looks like a Chinese stock showdown. You're listening to MLE Fool Money.

[E]

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[B]

All right. Welcome back to Motley Fool Money. For Tuesday's show, Emily will have on Jason hall and Toby Bordelon and they're doing some role changes here. Jason's going to play host for a Chinese stock showdown between Emily and Toby and they're going to be covering a few names. I'm going to let them tell you what names they're going to be looking at, but a few different Chinese stocks, four of them in particular. So look for Emily, Emily Flippin, Jason hall and Toby Bordelon for tomorrow's Motley Fool Money for a Chinese stock showdown. 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. All personal finance content follows Motley Cool Oral Standard standards and is not approved by advertisers. Advertisements or sponsored content provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Thanks so much for being here for both Carl Thiel and Anthony Chavon. Our engineer is Dan Boyd and our producer is Anon Chakavalu. Thank you for listening to Mott with Full Money. I am your host and buyers. We'll see you again tomorrow. Full on everyone.