Earnings Recap: Big Tech and More

Alphabet (GOOGL 0.35%), Amazon (AMZN -1.14%), and Apple (AAPL -0.57%) report record earnings. Microsoft (MSFT -1.84%) reports its biggest revenue growth in three years. Shopify (SHOP 0.14%) rises on a strong quarter. Shares of Crocs (CROX 1.47%), Facebook (META 1.54%), and Waste Management (WM -0.52%) hit all-time highs. Pinterest (PINS 0.43%) and Teladoc (TDOC 0.30%) tumble, and Domino's (DPZ -0.08%) reports double-digit growth.

In this episode of Motley Fool Money, host Chris Hill and Motley Fool analysts Ron Gross and Jason Moser discuss those stories and dig into earnings news from Starbucks (SBUX 1.09%), McDonald's (MCD 0.38%), and Visa (V -0.48%). Plus, our analysts share a couple of stocks on their radar.

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 30, 2021.

Chris Hill: There's so many big earnings stories to get to, we don't even have time for a guest [laughs] this week. But as always, we've got a couple of stocks on our radar. Let's start with the behemoths of big tech. Alphabet's first-quarter revenue came in north of $55 billion. Profits were much higher than expected for Google's parent company, and YouTube's revenue is starting to look a lot like Netflix's revenue. Jason Moser, where do you want to start with Alphabet?

Jason Moser: I will say, I watch a lot more YouTube than I do Netflix. It's nice to see that they're really capitalizing on that opportunity. It was hard to imagine this not being a strong quarter given the signs that we've seen in ad spending. Personally, I was really surprised by this report. Very impressed, not surprised. Because when you look at the global digital ad market, spending is forecast to grow from around $265 billion in 2020 to around $425 billion in 2024. You're talking 12.5% annualized growth projected here over the next several years, and clearly Alphabet and Google, they're going to be a part of capturing that. As to the numbers, revenue of $55.3 billion, it was up 32% in constant currency. That outpaced the total cost of revenue growth of 27%. Operating income, $16.4 billion, was up 106%. Operating margin for this company was 30%. To your point on YouTube, advertising revenues there with YouTube, $6 billion, up 49%. 

They noted an exceptional performance there, a direct response, which was a challenge. That was a headwind they had been dealing with over the last year. Brand advertising along with the right responses, it really hit them with that one-two punch there. Cloud segment continues to perform well, revenue $4 billion for the quarter, up 46%. Other bets, no surprise. Big money loser [laughs], loss of $1.1 billion. But you could just sweep that under the rug when you have that Google engine at play here. They will continue to repurchase more shares. They announced the repurchase of up to in addition to $50 billion in stock. In these businesses, they're a believer in getting back to work. They are investing here in 2021. In the U.S. alone, they are going to invest $7 billion in offices and datacenters and create at least 10,000 new full-time jobs. These guys, they seem like they're really ready to get back to work. When you're recording numbers like they just did, I certainly understand why.

Hill: Shares of Amazon hitting an all-time high on Friday. Overall sales in the second quarter were $108 billion. Profits destroyed expectations and Amazon has got 200 million members in Prime. Ron, for all of Amazon's success, every now and then they put up a disappointing quarter. This was not one of them.

Ron Gross: I was wondering where you are going to go with that. I'm going to call it a blowout quarter, and I just did. The numbers are awesome. Net sales up 44%, obviously benefiting from a surge in online shopping during the pandemic. They did get a $2 billion boost from favorable foreign exchange rate fluctuations. But even if you strip that out, net sales were still up an impressive 41%. As Bezos mentioned in the release, Prime Video turned 10 years old, streaming hours were up more than 70% year over year again, aided by the pandemic. Amazon Web Services turned 15 years old, 32% growth year over year from that segment, now at a $54 billion annual run rate for AWS. As you said, more than 200 million paid Prime members worldwide. Then ad and other sales was up 77%, not too shabby also. That all translated into an operating increase of 123% and earnings per share increase of over 200%, producing cash flow of $26 billion. These are really incredible numbers. The guidance was strong, net sales expected to grow between 24% and 30% for the second quarter. Prime day will take place in the second quarter this year. That should help their spring results. This should be the final full period for Amazon with founder Jeff Bezos at the helm. AWS CEO, Andy Jassy will take over that lead role. That obviously has been expected with Bezos kicking himself up to the Executive Chairman role. But a blowout quarter, really impressive.

Hill: Apple had their own blowout results in the first quarter, and yet shares were flat this week. Overall sales were up 54%. Apple increased its dividend and announced a $90 billion stock buyback program. Jason, the stock is flat. Are we not entertained?

Moser: We're plenty entertained. But this has also been a story of multiple expansion for several years now. You have to keep that in mind. We were certainly looking for a bit of a bounce-back for Apple from a year ago. Boy, we certainly got it. Revenue reached a record $89.6 billion. That was 54% growth from a year ago. That was thanks, Chris, to strengthen everything. Literally everything Apple did, they brought it. They really brought their A-game. That was the second quarter in a row with double-digit growth in all product categories. iPhone revenue up 65.5% from last year, services revenue, just under $17 billion. That was up almost 27% from a year ago. I was really impressed to see the gross margin number they recorded, 42.5% companywide gross margin. That was 38.4% a year ago. They're able to realize some pricing on their products and whatnot, but it's also the more of that services revenue that makes up the overall revenue. That's higher-margin revenue. That's going to help Apple's margin picture down the line. I think that watching them pursue that service opportunity makes a lot of sense. When I think about what the big question for Apple going forward, and we've seen some news out just here at the end of this week, it's how they're going to navigate this App Store debate because it's a phenomenal tollbooth model that they've benefited from for so long. But it is under some scrutiny now, and I don't know that there's really a way for them to walk that back. There's going to be some negotiation here. That could be something in the near term that creates some questions. But again, we're talking about a $2+ trillion business. It is that big for very good reasons. This quarter was just another good example.

Hill: Microsoft's third quarter featured the company's biggest revenue growth in three years. But Cloud revenue was flat and shares of Microsoft down 4% this week. Ron, I get that even with the drop, shares of Microsoft are up 40% over the past year. Maybe this was some profit-taking, but I really can't imagine owning Microsoft looking at these results and saying, "No, I'm going to invest money elsewhere." 

Gross: Exactly. They actually beat expectations, but it appears that investors wanted an even stronger beat, which is funny. But I guess when you're a $1.9 trillion company, you've got a lot of expectations to live up to. But listen, results were strong, total revenue up 19%. Revenue in that productivity and business process segment, which is the Microsoft Office and LinkedIn, was up 15%. Intelligent Cloud up 23% driven by Azure, which was up 50%. More personal computing segment, which I always hated that name, more personal computing. That's terrible. That's the Windows and the Xbox segment. Those sales were up 19%. Operating margins widened, so you've got an operating income of 31%, an increase there, and adjusted net income of 38% growth. Those are very strong numbers for a company of this size. They returned $10 billion to shareholders in the form of share repurchases and dividends in the third quarter. I expect that will continue. Guidance was solid, and you see the stock trading at around 32 times forward earnings. That's not too bad for a company that is growing beyond 30%, 35%, 40%, that's reasonable. If you don't own Microsoft yet, I still think you can actually own it at a $1.9 trillion market cap.

Hill: Jason, along those lines, we've just talked about these four behemoths. The smallest of these four companies is Alphabet, and it's a $1.6 trillion company. What do you say to someone who looks at these and says, "Well, I get these are good businesses. But I feel like the salad days are over for investors."

Moser: It's a very reasonable thought to have. I would just encourage you to think about the direction the world's headed, the tools that we're going to need to be able to do the things that we want to do, recognize the fact that big tech, these are the companies that are really providing most of those tools, both explicitly and the ones that we use implausibly in the Cloud infrastructure and stuff that we don't see day to day. Then just don't look at the market cap, look at the numbers, look at the revenue that these companies continue to chalk up. Look at the earnings that these companies continue to chalk up. Because once you look at those numbers, then the valuations start to make a lot more sense. When you see the opportunity that's out in front of them, that really seals the deal for me.

Hill: Ron, when you and I were talking about Microsoft and I referred to their Cloud revenue being flat, I was referring quarter-over-quarter. Year-over-year Cloud revenue, looking pretty nice.

Gross: Exactly. Sequentially, not as impressive.

Hill: Facebook's revenue in the first quarter grew nearly 50%. Profits were higher than expected. Facebook says they're expecting headwinds from Apple's new operating system, but with the stock up 8% this week and hitting a new high, Jason, investors don't seem to be too worried. 

Moser: No, and I feel like they probably shouldn't be. I think they're doing the diplomatic thing and expressing the concern over that privacy issue and potential headwinds. To me, privacy makes for a great stance. People love to whine about it on social media, ironically. It's a complicated issue that is becoming more and more difficult for consumers to understand and navigate. When you compare that to convenience, convenience by its very nature is simple. I think the privacy thing is a bit overplayed. I think consumers, ultimately, at the end of the day are going to opt for convenience. You're probably not going to see many of them testing, I don't want my phone to track my behavior or whatever. Maybe that's something that plays out or not. We'll see. But when you look at the numbers that Facebook recorded for the quarter, it was just, again, really just amazing stuff. Pricing power with price per ad up 30%, the number of ads served up 12%. 

Their family average revenue per user rose 28.5%. They have almost 3.5 billion monthly users of their family of apps. We are talking about Facebook, Instagram, WhatsApp, and all that other stuff that they own. They're able to bring expenses down a little bit. Operating margin was up 10%. The business just scales so well. I guess the biggest question for most is in regard to privacy. I just think the privacy thing is a little bit overplayed to me. I'm a little bit more interested in what's next. This is still an advertising company. They're dealing with, I think, a lot of the pitfalls of social media. They are making a lot of investments in immersive technology, AR/VR, stuff like that. We're not really seeing a lot of the fruits of that labor yet. Over the coming decade, I'd love to learn more. I would love to see more of that stuff. But as it stands, again, like I said with Google [...] pursuing just this massive market opportunity that is forecast to still continue growing here over the next several years. Clearly, Facebook will be capturing some of that opportunity.

Hill: Shopify's first quarter was a dream come true for shareholders. Profits and revenue were higher than expected, gross margins were up, and shares of Shopify rose 10% this week. Ron, this company is on fire in the best possible way.

Gross: They might deserve the firing on all cylinders category. Really impressive results. Total revenue up 110%. Subscription Solutions up 71%, Merchant Solutions up 137%. That monthly recurring revenue metric, the MRR as I like to call it, up 62% as more merchants join the platform and their POS pro offering contributes its first full quarter of revenue. Gross merchandise volume up 114%. These numbers are really impressive. If you exclude a $1.3 billion gain on its equity investment in a firm, which resulted from the IPO in January of this year, their adjusted net income was $254 million compared with adjusted net income of only $22 million this time last year. $7.9 billion in cash bolstered by a follow-on offering they did in the first quarter. Guidance was unchanged. They do expect to grow revenue rapidly in 2021, but at a lower rate than in 2020 as the economy opens up and more people return to traditional offline brick-and-mortar retail. But an incredible quarter and the growth continues.

Hill: It means their second-quarter profits and revenue came in higher than expected, but shares of Visa were basically flat this week. Jason, they put up some good numbers, but Visa is not offering any guidance, and I think that is, among other things, a little unsettling.

Moser: Perhaps. They did note in the call they were upfronting [...] and it's just difficult to forecast at this point in time, and they're assuming that if trends relative to fiscal year 2019 continue, then they see revenue growth in this third quarter in the high teens. We'll wait and see. They gave us a little bit of guidance, Chris. Let's not get too worked up here.

Hill: [laughs] I wasn't worked up at all.

Moser: Seriously though, I think the argument for Visa today, it's a singular point of contact in the execution world where there seems to be a new fintech on the block every other day. It's becoming a very fragmented space and it's difficult to fully understand the value proposition they all bring. Having this massive global network already in place with Visa, oftentimes, it's seen as an essential partnership in many cases and I think it's helping us simplify what is becoming a very fragmented space. There's the value proposition there and I think as we see consumer spending come back, we're seeing Visa's numbers coming back. Payments volume grew 11%. That was up 7% from the previous quarter. Cross-border volume still has some headwinds there due to pandemic issues, of course, but that is improving. Processed transactions grew 8%, that was up 4% from the previous quarter. 

When you look at the actual size of this business, we're talking about a big tech, Visa is big in its own right. This is a $500 billion company. In the last two years alone, they've grown to 3.6 billion cards in the world in 70 million physical merchant locations. This is a massive business with a few different avenues of growth here given this shifting space, as we see more fintechs and more ways for money to move around. Again, yes, it's going to be a little bit difficult for them to forecast in the near term, not going to really hold that against them. The stock is underperforming so far this year, but again, at a $500 billion market cap today, still growing, convincing position in the value chain there, this seems like a business that still has some reasons to be optimistic.

Hill: Shares of Crocs rose more than 20% this week after a record first quarter in terms of sales. In case anyone thought this was just a great few months, Ron, management raised guidance for the full fiscal year. This is an amazing run for a company that sells rubber shoes.

Gross: I was going to say let's move away from tech and fintech and talk about ugly clogs for a minute; ugly clogs whose stock is up 1100% over the last five years. Really incredible. This was a great quarter, first-quarter revenue up 64%, direct-to-consumer up 93%, wholesale up 50%, digital represents 32% of revenue. Now, that's climbing slowly. It was 30% this time last year, but it's getting bigger. Asia was strong at double-digit growth with 26%. Sandals revenue increased 17% and represents 17% of footwear sales. They do sell other things other than sandals and clogs. There's many other offerings over at Crocs. Adjusted gross margins widened 720 basis points. Really strong results. Expected revenue growth of 40%-50% in 2021, selling it only 18 times. Not too late to get into Crocs as long as they put up these growth numbers in the future.

Hill: Second quarter profits for Starbucks came in higher than expected, but shares of the coffee giant down a bit this week over concerns about international sales. Jason, when you consider that more than half of their locations are outside the United States, I get the concern.

Moser: Well, Chris, maybe so, but let's just focus on domestic sales. I am not concerned because I am doing my part, let me assure you. Going back to something Ron was talking about Microsoft just a minute ago, that was reminded me a little bit of Starbucks and what I was thinking with this business, I think the most interesting thing about Starbucks today is that even at its $130 billion market cap, it's absolutely still a stock worth buying and holding onto, I think indefinitely. To me it's hard to imagine 10 years now looking back and seeing this one as a loser. It could happen, but as a shareholder myself, I'm definitely not betting on it. Looking at the numbers, consolidated net revenue, $6.7 billion, it was up 11% from the year ago. Global comps up 15%, that was driven by a strong ticket growth there, 19% increase in average ticket there that was offset by a small decline in transactions. But the U.S. comps up 9%, that was driven by a 21% increase in average ticket. There was a decline in comparable transactions there, a little bit more pronounced there at 10%, but this is just such a big wide-reaching business now basically looking at around 33,000 stores globally, a pretty nice split there between company-operated and licensed. Mobile orders represented 26% of U.S. company-operated transactions in the quarter, that was up 18% from a year ago. 

I think with every quarter, it seems like we're pretty critical of their rewards program and how it seems to be lagging on the member side. But I think they're starting to pick some ideas up there, 22.9 million members here domestically, now you're looking at 16.3 million in China, and speaking of China, 91% comp growth there, and let's talk about tech companies, they have an AI initiative, believe it or not, known as Deep Brew, I'm not kidding, their AI initiative is known as Deep Brew. This is taking customer data, it helps inform product development, inventory, order, suggestions, even predictive models to understand better what's going on around specific locations. I think all-in-all, given the nature of what they sell, clearly they are thinking about the future, I think the right way. This is just a business still poised to grow for a number of years to come.

Hill: Domino's Pizza keeps on rolling. First-quarter profits and revenue came in higher than expected. Global same-store sales rose nearly 17%, Ron, I guess we shouldn't be surprised.

Gross: This is a very strong quarter, but if you look at the stock, it appears that some were hoping for just a bit more. Those greedy folks that want even more out of their Dominos quarter. If you're running this business, you've got to be happy with these results. U.S. same-store sales up 13%, international up almost 12%. I always like to bring these metrics in 109th consecutive quarter of international same-store sales growth and the 40th consecutive quarter of U.S. same-store sales growth, so impressive. Total revenue up 12%, those are results of net store growth of 175 stores, as well as those strong same-store sale results we just mentioned. Operating margins widened just a bit, and operating income was up 14%. Now earnings per share were actually down 2%, that was the result of significantly lower tax benefits. I think it's better to focus on the operating income growth of 14% or you lose the correct picture of how this business is doing. Total remaining authorized amount for shares or purchases is $1 billion, I expect them to continue to buy back stock. Shares are trading at 31 times. I'm not going to call that cheap, it's not a cheap stock for a company that's putting up 14%, 15%, even 20% earnings growth. But I still think it's not grossly overvalued, certainly not compared to Papa John's at 44 times or Chipotle at 56 times. But not screaming really cheap here, so we'll keep an eye on the stock.

Hill: Ron, you mentioned some investors out there wanting a little bit more. Someday that streak of international same-store sales growth, someday that streak is going to end. When that happens, a few of those people are going to lose their minds. [laughs] McDonald's did not fare quite as well with international same-store sales growth in the first quarter but here in the U.S., comps were up more than 13% and shares of McDonald's hitting an all-time high on Friday, Jason.

Moser: Yeah, I think management put it well on the call talking about where they shine and talking about themselves as one of the world's most global corporations with this global reach but it's also very local. That's a benefit of that franchise model. They are franchises that are locally owned, locally managed systems, they're rooted in the communities where they operate, so they have a good understanding of what consumers are looking for wherever they may be around the world. That really is translating into just impressive numbers for the business. You look at the adjusted earnings per share, $1.92, that was up 27% excluding currency effects. You noted strength in the U.S.? Yes, absolutely. The U.S. is driving the results right now. International operated markets, treading water, developmental markets, markets like China, for example, those are coming back as well thankfully, as they continue to work their way through the pandemic as well. Less, "Do you think that Omnichannel is just about retail?" It is absolutely about restaurants. If you look at a company like McDonald's over the last four years, they went from just over 3,000 restaurants offering delivery to now more than 30,000 restaurants, which essentially is 75% on that global footprint, and they know that they're doubling down on what they refer to as the 3D's, digital, delivery, and drive through. In the first quarter, they had nearly $1.5 billion in digital sales, that includes apps, kiosks, and delivery. Again, you talk about one of the bigger global restaurants out there, McDonald's stands out. I like the promotions, things like the chicken sandwich, that hasn't really excited this new promotion with BTS, the Korean pop group. I'm not a member of the BTS army Chris, but apparently this thing is gaining some traction. I suspect it's going to help boost that top line here in the next few quarters as well.

Hill: Shares of Waste Management hitting a new high after a strong first-quarter report. Ron, we've talked a lot about Cloud computing, collaborative software, e-commerce, Waste Management provides a nice reminder that the business of trash is alive and well.

Gross: Alive and well and recovering as the economy recovers. This was a nice quarter, organic revenue up 2%. I'm not going to knock the cover off the ball, but we're building on something here. There's solid pricing, there were improved recycling results, but that had to overcome some small volume decline still. Organic revenue in the company's collection and disposal business fell $5 million, but they're continuing to improve sequentially as the economy opens. Acquisitions added $290 million of revenue, and that was from the 2020 acquisition of Advanced Disposal for $4.6 billion, not a small acquisition by any means, but the integration of that is going well. They were able to improve their operating margins as a result some real strict cost-cutting efforts, and the operating expenses as a percentage of sales improved 130 basis points, so that's pretty good for a company like Waste Management, and that resulted in adjusted operating EBITDA growth of about 14% and they produced $865 million of free cash flow. Management increased their financial guidance that was provided in February for both the revenue, adjusted operating EBITDA, and free cash flow, that's partly a result of the acquisition of Advanced Disposal going really well. They think they can bring some additional savings out of it more than originally was expected, and Management expects strong results as the commercial, industrial, and landfill business continues to recover over the remainder of the year as more businesses get back and the economy opens up. I think this business is looking good for Waste Management this quarter and I think we'll continue to see good things later in the year.

Hill: It just occurred to me, we talk sometimes about specific industries and the leaders within those industries and say, "If you're looking at home improvement, you could do worse than to just buy shares of Home Depot and Lowe's or Visa and MasterCard." Between Waste Management and Republic Services, those are two businesses that collect roughly 50% of the trash in America. It seems like you could do worse than to just own a couple of shares of both of those.

Gross: Yes, they absolutely to a real extent control the markets.

Hill: A couple of high fliers losing altitude this week guys, Teladoc's revenue in the first quarter was 150% higher than a year ago. But guidance had the stock falling and Jason shares down about 5% this week, but Teladoc has more than 40% off of its high for the year.

Moser: Yeah. Well, I mean, it's been a crazy past year. I mean, this was one stock that really stood out among others a year ago, so it's not terribly surprising to see a little pullback. I think this is a great reminder for us to focus on the business and not the knee-jerk earnings or reactions. We can try to explain those away when the tour is at odds. But I care about what the business is doing, and really when I go through this report in the call, Teladoc's business is doing very well. I think you just have to remember there was a lot of growth pulled forward due to the pandemic. But to your point on the revenue, I mean, $454 million, that was up 151% from a year ago. Now, organic revenue that excludes acquisitions, of course, that growth was 69%, still very impressive. The end of the quarter with U.S. paid membership at 51.5 million members, that was up 20%. Visit fee-only access, they've 22 million members. 

I think with Teladoc, there are a lot of metrics that matter, but to me, one that slips under the radar for a lot is utilization that ultimately is telling us people are using the platform or not. Utilization was 19.6%. That was up 620 basis points from a year ago. In utilization, is simply total visits divided by paid U.S. membership represented on an annualized basis. We'd like to see that number going up. For the record, that number was 10.9% for the same quarter back in 2018. Clearly, we're seeing people going to this platform and the services that they offer. I think in regard to the sell-off, it might have had a little something to do with guidance. I mean, they did raise guidance technically, but I think there was something, it's really two things. I think there's some good old-fashioned profit-taking, not terribly surprising short-timers getting out while they can. But there was a statement they made in the call that I think led to it as well. They said that they expect increased spending over the course of the year as they invest in the growth of the business, particularly new product launches and expansions and new market, the integration of Livongo. They're developing an integrated data platform to let them do more with all of that data that they are bringing in. If you can take a step back and understand that the investments that they're making today are to ensure the sustainable long-term success of the business, then it seems a bit more reasonable to hang on to these shares and be excited about the future. But yeah, it seemed quite the pullback, but we also have to remember it had quite the tailwind over the past year or two.

Hill: Shares of Pinterest down more than 10% this week despite a strong first-quarter report. On our run, Pinterest is growing revenue monthly and active users are up. This seems a little bit like what we talked about with Domino's where it was a good quarter, but not amazing.

Gross: Yeah. That's fair growth just wasn't where investors wanted to be. To me, that's more about valuation than it is about operating results because you can't fault them for these operating results. They're quite strong. We will talk about valuation maybe after we cover some of those metrics. But listen, first-quarter revenue up 78%. Monthly active users rose by 30%. That was in contrast to 37% last quarter. I think they are in lies to what investors are focusing on that slowing in monthly active user growth, but still impressive at 30%. Management said starting in mid-March, the easing of pandemic restrictions slowed U.S. monthly active user growth and lowered engagement year-over-year as people spend less time online. I don't think that's necessarily been a surprise to anyone. I think we should know that things like that are coming as the economy opens up and as vaccines get into arms and people start going out again. The average revenue per user, ARPU we talked about increased 34%, that's a very impressive number. The company lost $21.6 million for the quarter, but if we adjust for non-cash items including stock-based compensation, which I'm actually not a fan of, I'm going to do it just for our listeners so we get a sense of how the business is doing, they actually did generate positive EBITDA of about $84 million. Guidance was strong, 105% revenue growth for the second quarter predicted stocks trading at 22 times revenue that was. Therein lies is priced to perfection. If you don't put up those growth numbers, your stock is going to get punished. That's just the way the game is played.

Hill: Our email address is [email protected]. You can send us questions or like long-time listeners, Stuart Watson and Jason Free. You can send us a business story and say, "Have you seen this?" [laughs] This is the story that both of these gentlemen sent to us. It's about Standard Life Aberdeen, which is a fund management firm based in the U.K., a market cap of $8 billion, so not a small business. They decided they wanted to come up with a new name. Instead of Standard Life Aberdeen, they came up with a single word which is spelled A-B-R-D-N. Again, Standard Life Aberdeen would now like you to call it Aberdeen. [laughs] They're telling us ABRDN is pronounced "aberdeen" and not as I first looked at it as "a burden." But I don't know, I feel truest and tronc and we talked recently about Kindrel. It's almost like, Ron, they're going out of their way to try and top one another.

Gross: This is getting out of control. I'm not giving them a pass on this. It's not acceptable, let's pull it back.

Moser: There's a shortage of ease out there. I mean, what's going on?

Gross: Like the via value place.

Moser: Yeah.

Hill: Fairly values are too expensive, but we're going to save money on letterhead. Let's get through the stocks on our radar. A man named by Nicholas Dan Boyd is going to hit you with the question. Jason Moser, you're up first, what are you looking at?

Moser: Yeah, one that I have been looking at for reality and beyond service over the last several months, Axon Enterprise (AXON -0.74%), ticker A-X-O-N. In a world where accountability matters now more than ever before in regard to law enforcement, this to me is the company that really can help change things. You probably know them best for the taser products that they produce and sell. They also have an interesting side of the business is the software and sensors side of the business, on officer body cameras, in-car cameras, Cloud-based digital evidence management software through its evidencedot.com platform. I feel there are a lot of opportunities for a company like this to help our policing system evolve, to help it to keep up with the times. Of the 69 largest metropolitan area police departments in the U.S., at least 47 are actually on the Axon network now. They've been around for a while to familiar name. What has been really interesting in this business from the immersive technology side, they offer a suite of virtual reality training services for public safety. Ultimately, as they mentioned in their 10-K, it's two obsolete bullets they intend to drive training and adoption of best practices in modern policing through this virtual reality platform. I just think this is a neat business of looking to the future for solutions. It's one that I'm going to keep an eye on next week as they have earnings coming out on May 6th.

Hill: Dan, question about Axon Enterprise?

Dan Boyf: Absolutely Chris. Jason, I'm looking at the all-time stock price chart on this company right now. Its start is a strong exponential curve around the beginning of 2019. I'm just curious, are we going to see growth for a company of this size like this in the near future? Or do you expect it to slow down?

Moser: Like this, maybe not. I mean, it could be something where it slows down given the market share that they already hold today, I think that really they've become more and more part of the conversation for obvious reasons given what they do and given the state of things today. There might be some enthusiasm from investors looking a little bit into the future that they have caused that ramp up. But I do suspect we still have a company here that should see plenty of growth in the coming years.

Hill: You got a minute left, Ron, what are you looking at?

Gross: I'm looking at Skillz (SKLZ 2.67%). That's SKLZ, came across my radar because it's a recent recommendation in our Stock Advisor service. They provide a mobile game platform. They offer tournaments and other competitor events to millions of players worldwide. Obviously, mobile video gaming is a huge growth industry. The CEO has a substantial ownership stake here. They went public via a spark in December 2020. They did a following on offering in March, stock has been real weak ever since that March offering, which is back down to around $17, $18 from the $24, where it did the follow-on, 25-type sales. Not profitable yet, but it's growing pretty down quickly and I think it deserves some attention.

Hill: Dan?

Boyd: Chris, am I asleep? Am I dreaming? Did Ron bring a video games stock? Stocks on our radar, not tires or minerals or trains, but video games. What is happening?

Gross: The answer to your question is yes, I did.

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

Boyd: You know what? I'm too plugged into the stock advisor pipeline here and I'm looking at Skillz, honestly, I think it's a very interesting company.

Hill: All right, Jason Moser, Ron Gross, guys, we're out of time." That's it for this week's show and we will see you next week.