Motley Fool Money: "Your Portfolio Wrapped" – December 6, 2024

Hosted by Dylan Lewis, Ricky Mulvey, and Mary Long, the Motley Fool Money podcast episode "Your Portfolio Wrapped" delivers insightful analysis on recent earnings reports, stock movements, and investment strategies. This detailed summary encapsulates the key discussions, expert opinions, and actionable conclusions presented during the episode.

1. Introduction to the Episode

The episode kicks off with Dylan Lewis introducing the main topics: "We've got some musical stocks and musical numbers. This week's Motley Fool Money radio show starts now" (00:05). The hosts, including senior analyst Jason Moser and Asit Sharma, set the stage for an engaging discussion on portfolio updates and stocks on their radar.

2. Earnings Reports Analysis

Ulta Beauty's Performance

Dylan Lewis brings attention to Ulta Beauty's earnings, noting a challenging year but hinting at improvement. Asit Sharma provides a detailed breakdown:

• Net Sales and EPS: Ulta reported a modest net sales increase of 1.7% (01:06) with earnings per share at $5.14, surpassing analysts' expectations.

• Comparable Sales and Gross Profit: Comparable sales rose by 0.6%, reflecting cautious consumer spending. Gross profit saw a slight increase, attributed to effective inventory and overhead cost management.

• Store Expansion: The company opened 26 net new stores compared to 12 in the previous year, signaling strategic growth.

Notable Quote:

Dylan Lewis: "The stock is up today. I think this is partly because investors like what happened below that top line. I think Ulta managed the quarter pretty well." (02:49)

Warren Buffett's Berkshire Hathaway Exits Ulta Position

Jason Moser expresses surprise at Berkshire Hathaway's decision to sell the majority of its Ulta stake, a move unprecedented for Buffett:

Notable Quote:

Jason Moser: "Warren Buffet, you got to think long term, man. You can't be in and out on these things quarter to quarter." (04:35)

DocuSign's Earnings Surge

Shifting focus to DocuSign, Jason Moser highlights a significant uptick:

• Earnings Beat: DocuSign shares surged 20% post-earnings.

• Customer Growth: The number of large customers increased from 1,066 to 1,075 quarter-over-quarter.

• Revenue and Retention: Total revenue up 8%, subscription revenue up 8%, billings up 9%, and a net retention rate of 100%.

Notable Quote:

Asit Sharma: "I think they've got this business going back in the right direction, guiding for around $760 million in revenue at the midpoint here for this current quarter." (06:01)

Viva Systems' Positive Earnings

Viva Systems, a healthcare cloud company, also posted encouraging results:

• Subscription Growth: Increased by 17% year-over-year.

• Operating Income: Jumped 41% year-over-year.

• Technological Advancements: Successful transition to their own CRM solution, Vault CRM, and integration of generative AI tools for regulatory compliance.

Notable Quote:

Asit Sharma: "They've got a CRM bot, they've got overall gen AI assistant... pretty good. They've come very far away in a short amount of time." (08:50)

3. Portfolio Wrapped Segment

In a unique twist, the hosts open their brokerage accounts to share their portfolio highlights for the year.

Jason Moser's Picks

• Heavy Rotation: Axon Enterprise – A favorite within Motley Fool's universe, emphasizing its growth potential.

• Discovery Picks:

  • Prologis – Selected for its strong dividends and focus on warehouses and data centers.
  • Viva Systems – Recognizing its robust global demand in cloud-based life sciences solutions.

Notable Quote:

Jason Moser: "It's a good business. I continue to own it. I have no plans of unloading it." (07:09)

Asit Sharma's Picks

• Heavy Rotation: Upstart Holdings – An AI-based platform lender showing resilience amid interest rate fluctuations.

• Discovery Pick: GE Aerospace – Known for its advanced jet airplane engines and profitable parts and service segments.

Notable Quote:

Asit Sharma: "As the year wore on, they did announce some more things to shore up their capital base. I think they'll perform well as interest rates decrease." (17:18)

4. Spotlight on "Wicked" – Musical and Stock Insights

The hosts delve into the resurgence of the musical "Wicked," both on Broadway and as a film adaptation, analyzing its commercial success and associated stock opportunities.

Box Office Performance

• Financials: "Wicked" the movie grossed approximately $373 million against a $150 million budget (19:42).

• Market Context: The release coincided with a record-breaking movie weekend, bolstered by titles like "Moana 2" and "Gladiator 2."

Commercial Success Factors

Ricky Mulvey attributes "Wicked's" success to:

1. Great Music: Every song is a hit, making it widely appealing.
2. Universal Storyline: A fresh perspective on the beloved "Wizard of Oz" narrative.
3. Target Demographic: Leveraging the "Taylor Swift effect" by engaging millennial women who are introducing the musical to new generations.

Notable Quote:

Ricky Mulvey: "Wicked was super early to that trend that, again, is now kind of like everywhere you turn in popular culture." (22:11)

Related Stock Opportunities

Mary Long and Ricky Mulvey discuss stocks tied to "Wicked" and the broader entertainment industry:

• Comcast (CMCSA): While "Wicked" is a minor segment within Comcast's vast portfolio, discussions touch upon the company's primary businesses like cable and internet services.

• Rocket Lab (RKLB): Highlighted for its role in the burgeoning space economy, drawing a creative connection to "Wicked's" themes.

Notable Quote:

Ricky Mulvey: "What real questions should investors be asking themselves?" (25:45)

5. Spotify Wrapped and Personal Music Tastes

The hosts share their favorite listening habits from Spotify Wrapped 2024, adding a personal touch to the episode.

• Jason Moser: Enthusiastic about Widespread Panic's concert releases.

• Asit Sharma: Enjoys Turkish singer Melis Fiess and Italian pop diva Nina Zilli's danceable covers.

Notable Quote:

Asit Sharma: "It's up to 80% less expensive than Estée Lauder and L'Oréal products." (31:07)

6. Technology Spotlight: OpenAI's "12 Days of Shipmas"

Dylan and Asit discuss OpenAI's latest initiative, "12 Days of Shipmas," which introduces new products and a $200 monthly subscription tier.

Key Points:

• Innovation vs. Pricing: While the continuous rollout of features is promising, the high subscription cost raises questions about value.

• Market Impact: Concerns about sustainability given the high operational costs associated with advanced AI development.

Notable Quote:

Asit Sharma: "Is it worth an extra 180 bucks a month still untested? I'm not so sure." (35:18)

7. Stocks on Their Radar

Jason Moser's Focus: Block (SQ)

• Reasons for Interest: Named Block's best idea for 2025 by Bernstein, significant growth in consumer transactions, and strategic business refocusing.

• Potential Downsides: Speculative rumors about rebranding to "Cube."

Notable Quote:

Jason Moser: "Better days ahead for Block." (36:07)

Asit Sharma's Focus: Wingstop (WING)

• Growth Drivers: Strong unit volume growth, exceptional franchisee returns, NBA partnership as the official wing provider.

• Investment Strategy: Viewing recent stock dips as buying opportunities amidst robust expansion plans.

Notable Quote:

Asit Sharma: "Wingstop is unstoppable in this regard and they're also teaming up with the NBA." (38:03)

8. Conclusion and Final Thoughts

The episode wraps up with a light-hearted exchange about favorite "Wicked" songs and a reminder to listeners to stay tuned for future insights.

Notable Quote:

Dylan Lewis: "You need them. I need one myself." (10:40)

Key Takeaways:

• Earnings Insights: Ulta Beauty shows signs of stabilization, while DocuSign and Viva Systems demonstrate strong recovery and growth.

• Investment Strategies: Diversification through heavy rotation and discovery picks can optimize portfolio performance.

• Market Trends: The resurgence of culturally significant brands like "Wicked" presents unique investment opportunities.

• Technology Evolution: Rapid advancements in AI and space technologies offer both opportunities and challenges for investors.

For investors seeking comprehensive analysis and actionable insights, this episode of Motley Fool Money provides a wealth of information to inform strategic decision-making in the ever-evolving financial landscape.