In this episode of Motley Fool Money, host Chris Hill and Motley Fool analysts Ron Gross and Jason Moser discuss GameStop‘s (NYSE:GME) volatility in the wake of earnings. Also, Adobe (NASDAQ:ADBE) has a strong start to the fiscal year, Restoration Hardware (NYSE:RH) hits an all-time high, and laser equipment maker Coherent (NASDAQ:COHR) settles on a suitor. Darden Restaurants (NYSE:DRI) serves up a stronger than expected quarter, and Pepsi (NASDAQ:PEP) teams up with Peeps on a marshmallow-flavored cola.
Plus, Domino’s (NYSE:DPZ) CEO Ritch Allison talks about the rise of delivery services and the changing competitive landscape.
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 March 26, 2021.
Chris Hill: We’ve got the latest headlines from Wall Street. Domino’s CEO Ritch Allison is our guest, and as always, we’ve got a couple of stocks on our radar. But we begin with the stock of the year so far, and that’s GameStop. The meme stock of 2021 issued its fourth quarter report on Wednesday, and it was not pretty. Profits and revenue were lower than expected, and GameStop’s management refused to take any questions on its conference call. At one point this week, shares of GameStop had fallen 40%, they rebounded to finish the week down only about 10%. Ron, we’ve got the underlying business, the management, the stock itself. Where do you want to start?
Ron Gross: You nailed it, Chris. The volatility in this stock this week is laughable. It shouldn’t work this way. [laughs] The stock market is more efficient than this stock would have you believe. As you said, shares sold off sharply on worse than expected quarterly results, rebounded by the end of the week. If we look at that quarter, and I’m going to try not to mention the word Reddit more than once, that was the one time. I’m going to do this story without that as a factor. Let’s look at the business, and that sales is down 3%. That’s on the 12% decrease in their store base and a reduction of about 27% of European store operating days. There are about 1,000 stores and the 5,000 that are overseas, most folks might not realize that. This was offset by some strong demand for a new generation of game consoles that were recently introduced. This game console refresh that people were looking for did show some strong demand, but this is its 12th straight quarter of declining sales. The bright spot e-commerce up 175%, representing 34% of net sales for the quarter, which was up significantly from previous quarters.
You saw gross margins take a hit, lower margin consoles, they’re not as high priced, the margin in them is not great, they had some higher expenses as well. Now, they were profitable, adjusted net income of about $90 million compared with about $84 million last year. We can talk about GameStop all day long and about how this is potentially a dying business, and it is, [laughs] but they still are profitable as of now. They said there’s a strong start to 2021 as February comp sales increased 23%. Now we move to this reorg that’s going on with the Chewy co-founder and two other folks coming in, getting bored seeds, wanting them to go all digital, become the Amazon of gaming, easier said than done. But I find strategy versus the current one. The company hired three new executives recently, including a new COO and a new regulatory filing, as if there wasn’t enough going on, indicating that each member of the board is expected to leave the company.
Hill: Jason, we were talking about this earlier. I really was surprised they didn’t take any questions on the conference call because it’s fine if you want to go by the Berkshire Hathaway strategy of saying, “We’re issuing our report, we’re not having a conference call. Therefore, we will not be taking questions.” But to have the call to not take questions, they had to have known that this call was going to be in the spotlight.
Jason Moser: I would imagine too, they figured that if they did open it up for questions, then that would have been hijacked pretty quickly. It would have gone in one direction. I think in one direction only really, that would have taken the narrative out of their control. So I do understand at least that decision that they made, whether I agree or not, I don’t know, I’m torn. I do actually like calls with no questions [laughs] because oftentimes more often than not, the questions are really useless to me, at least. Listen, the business itself, Ron said it’s a dying business. I don’t disagree really, it feels like there’s a lot of J.C. Penney vibes going on here. Bringing in new executive talent, these fancy titles and growth and innovation, tech. I appreciate the fact they say they’re continuing the work to expand their addressable market, they’re trying to grow the company’s product catalog beyond just gaming. It’s gaming, it’s computers, monitors, game tables, mobile gaming, gaming TVs.
They say that this opportunity ultimately increases their overall market opportunity by five times. Now, I don’t know if that’s the case. Maybe it is, maybe it isn’t. But I am willing to venture a guess that there are other companies already selling that stuff as well. Again, this is a business very much on the defensive, very much on the turnaround. Whether they pull it off or not, it remains to be seen, but I personally would not be putting my chips in the category; yes, they will pull it off. [laughs]
Gross: Two quick things to note. Their only guidance was that there’ll be no guidance and specifically, they will not be reporting same store sales in fiscal 2021. Things are too hard to predict and they don’t want to get bogged down with that metric. This is potentially smart. With a market cap of now $14.5 billion, thanks to that social media community, they are considering selling $100 million worth of stock and firming up the balance sheet a bit, which you couldn’t fault them for.
Hill: Shares of Adobe went up slightly this week, the software giant got a little bit gianter after first quarter profits came in higher than expected. Adobe’s management sounded pretty bullish with their fiscal year guidance, Jason.
Moser: Yeah. It was a good quarter, good call, outlook looks good. I recommended this company back in November of 2019. It’s been a wonderful performer to date. I recommended it based on this idea that in times of higher valuations when the market seems like it’s a little bit stretched, you really want to focus on quality companies. Not only companies pursuing big market opportunity, but companies with established, reliable business models that are leaders in the space, and Adobe, to me, is just a prime example of one of those types of companies. It’s a digital media company utilizing a subscription model. That’s a big deal. Subscription revenue is basically 90% of the business, gross margins, essentially 90%, revenue for the quarter, $3.91 billion, it was up 26%. Non-GAAP earnings per share of $3,000.14, that was up 38%. I think, to me, with everything they do very well in the digital media side, I do think the Document Cloud opportunity is a fascinating one. It’s becoming a more important part of the business that Document Clouds segment revenue grew to $480 million. It was up 37%.
For context there, if you look at DocuSign (NASDAQ: DOCU), their total business, that revenue, their most recent quarter, $431 million, and that grew 57% from a year ago. When you look at DocuSign’s assessment of this total market opportunity of around $50 billion, I like that both of these companies are pursuing it. I think there’s a lot of opportunity there. They’re really just getting started. Balance sheet is in tremendous position, around $5 billion in cash and equivalents down a little bit based on work-front acquisition that they made for $1.5 billion. They did note that CFO John Murphy will be retiring at the end of the year, but again, this is a company that is just right at the forefront of this digital economy that’s forming. So I suspect there are plenty, plenty of good days to come.
Hill: What a year for Restoration Hardware, fourth quarter profits and revenue came in higher than expected. Shares of RH up 10% this week and hitting an all-time high on Friday. Ron, if guidance from the RH management team is to be believed, the demand for high-end furniture just continues to be strong.
Gross: Really unbelievably strong. Let me give you some context here. This stock is up 1,200% over the last five years and up 125% from pre-COVID levels. Folks are clearly fixing up their homes and buying furniture, and management thinks that is going to continue and it’s not just a COVID related bump. The quarter was really, really strong, revenues up 22%, demand for their core RH store, it was 36% in the fourth quarter, overall demand up 29%, you saw both gross margins and operating margins widen significantly, you see that pricing power of some luxury furniture, adjusted net income of 57%. Return on invested capital, we don’t talk about that a lot, but a return on invested capital was 53% in 2020. That’s probably, if I had to say, double what a typical furniture store would look like. These are incredible numbers.
For the current quarter that we’re in now, demand continues to accelerate, in February up 73%, first two weeks of March up 96%. The goodness continues, the guidance, they expect first quarter revenue to grow at least 50%, and project 2021 revenue growth of 15%-20%. Just one comment on what management said. They said they ended 2020 with just less than $3 billion in net revenue, but they believe the data supports the RH brand can reach $5 billion-$6 billion in North America and $20 billion-$25 billion globally. If they’re right, if they have a good handle on this business and the future of this business, stock still has room to run if these growth numbers continue, because it’s not that cheap for a furniture company at 25 times, but also, it’s not priced like it’s a technology company, so this could still have room.
Hill: Coherent, the laser company that had three other businesses trying to outbid each other to buy it, has picked a winner. Lumentum increased its bid, but Coherent ended up choosing II-VI. You tell me, Jason, Lumentum says their bid was higher [laughs] while Coherent goes, “With less money.”
Moser: Well, Lumentum’s bid in fact was higher. Math is math and we can’t really argue that, but lest you think that money is everything, sometimes I guess it’s not. There were also some role players here in Silverlight Capital and Bain Capital on both sides of that equation as well. I’m sure it would have been eye-opening to be in those meetings and all those calls because I’d imagine those folks had something to say about it as well. But it was very fascinating, this was a situation where II-VI and Lumentum were both going to pay $220 per share in cash. II-VI had the edge based on share-based components. Then Lumentum came back and actually submitted an offer where it’d increase the cash to $230 per share along with that share-based component which was increased, and yet you have Coherent, ultimately going with II-VI. It seems like this, perhaps it’s a cultural thing, perhaps it’s a feeling where Coherent’s business in photonics and lasers marries up with II-VI is a little bit more so than the Lumentum. Lumentum being very much the leader in the VCSEL technology, that we talk about in regard to sensors and whatnot. It’s hard to say exactly why they would have gone with this, but ultimately they felt like it was a better fit. Coherent pays the breakup fee to the Lumentum, Lumentum walks away.
We often criticize acquisitions, we criticize deals, saying it’s not necessary. I’m not going to sit here and criticize Lumentum for not winning this deal, I think it was indifferent as to whether it actually happened or not because it was really about getting the technology. But at the end of the day, II-VI is paying a king’s ransom for a business that you could argue has been in a bit of a state of decline over the last five years. This is 60 times EV/EBITDA, not cheap at all. They’re going to need to prove this out. Based on the language in the call, it’s going to take at least a couple of years for this to even be accretive. Maybe this is a blessing in disguise to the Lumentum shareholders, either way, I think the company will be just fine.
Hill: Shares of Darden Restaurants hit an all-time high on Friday, the parent company of Olive Garden had strong results in the third quarter, and their guidance for Q4 looks good too, Ron.
Gross: Yeah. Guidance was solid, results better than expected, but they are still quite weak. Let’s be realistic, COVID had stores, obviously, restaurants closed for part of the quarter and things remain weak. Total sales down 27%, that’s due to a same-store sales decrease of 27%, offset by 10 net new restaurants which helped. But if you break down and look at the segments, weakness across all segments, Olive Garden down 26%, LongHorn Steak down 12%, fine dining including Capital Grille, my personal favorite by the way, down 45%. Still profitable though, net earnings from continuing operations, $120 million, $236 million of EBITDA. The company is still profitable even at these levels. But things certainly need to improve and I think they will as the economy opens up. The board has approved the $500 million share repurchase program, so let’s see if they go into the market and buy stock at $147 or around there where the stock is today. Some things I’d like to see is that they’re increasing their hourly wage for workers, they’re starting with $10 per hour, moving to $11 in 2022, then $12 in 2023. They spend quite a bit of money this year on bonuses to workers, which I love to see as well. You said Q4 guidance was solid, I completely agree. I like this one far as the company continues to reopen. In fact, I purchased it myself a few weeks ago as a result of that reopening investment and I think this one looks good.
Hill: Our email address is [email protected] We got a note from David in Fort Worth Texas. “You’re right, so I’ve been investing for my son since he was two weeks old and plan on educating him to be financially responsible or at least fiscally fluent. What is your biggest don’t when it comes to teaching your kids about good money habits and finance in general? What is the biggest mistake you’ve seen others make in an attempt to help their children?” I love this twist on a question, we get a lot, Jason.
Moser: Yeah. There are a lot of different ways you’d go with this. [laughs] Don’t overwhelm them when they’re too young. They’re like little frightened animals. [laughs] You don’t want to scare him off. You want to be gentle. I think the biggest mistake is going too far, one direction or the other. Either being unable to contain your excitement and wanting to teach them everything in nerding out or really not being quite open enough about your finances. It is trying to strike that happy medium. But I think going too far one way or the other can often be a mistake that many of us are guilty of.
Hill: Ron, what do you think?
Gross: Yeah. I would say if you’ve accumulated a nice amount of savings and investments, don’t necessarily reveal all of that to them right away at a younger age. You don’t want them to mistakenly think that they’ve got all this money behind them. You want them to stay hungry, for lack of a better word, and realize that they have to continue to work and save. For a kid, a few $1,000 seems like a lot, $20,000 seems like a lifetime of money. Be a little bit careful about complete transparency there. I just want to mention, don’t forget that once your children start to earn money, not babysitting money, but money where they get a 1099 from a summer job, you can open a Roth IRA for those children and put money away up to $6,000 a year or really up to the amount they earned in that given year. The compounding from age 15 to age 65, your money is going to double probably five or six times over that period of time. It’s an incredible way to build wealth. Don’t forget about the Roth IRA for children.
Hill: Good news for people who love Peeps and hate their own taste buds. Pepsi is teaming up with Peeps to create a marshmallow-flavored cola. It will come in a three-pack of 7.5 ounce cans. But guys, you can’t buy it in a store. You have to win them by posting photos on Twitter and Instagram with the hashtag #HangingWithMyPEEPS. [laughs] I do like the hashtag Jason, but this sounds frighteningly awful.
Moser: When I first saw this news, I thought, not sure I like it, but then I started thinking a little bit more, but you know what? It sounds like this could have a little cream soda vibe to it. If that’s the case, I’m at least going to keep an open mind.
Hill: In July of 2018, Ritch Allison took over for Patrick Doyle as the CEO of Domino’s. A CEO transition can be tricky and let’s face it, some of them just don’t work out. I asked Ritch how he and his former boss work together to ensure a smooth transfer of power.
Ritch Allison: I had a great working relationship with Patrick over the 7.5 years that I reported to him. The great thing was being a part of the executive leadership team, I had a good view across the entire business, even though my area of focus was specifically outside the U.S. Then, once Patrick decided to retire and I was announced as his successor, we had a really great opportunity over a period of months to work very closely together such that he could transition knowledge from the other areas of the business that I was acquainted with, but not deeply knowledgeable about. The way those things work where they work effectively is, by the final date, when the departing CEO leaves and the new one steps in, the new one should already basically be doing the job every day, and that’s really how Patrick, and I just applaud him and I’m so thankful to him. He really let me lean in over that period of months such that as we got into those final weeks and whatnot, the decisions that we were taking, I was very much involved in making those decisions ultimately, obviously with his blessing and oversight. But all in all, I couldn’t have asked for a better process that he helped me work through.
Hill: I’m guessing there’s not a typical week when you’re the CEO of a public company, the size of Domino’s, but I am curious how you spend your time. What are the major areas of the business that you are focused on?
Allison: Yeah, there really isn’t a typical week, Chris, and certainly [laughs] the last year has been far from typical. I’ll try to give you a bit of a sense for it in a normal operating environment. We’re a franchise business. We’ve got 17,000+ stores, but 98% of them are owned by franchisees around the world. A big part of my job is getting out there and spending time with our franchisees and in our stores. Over the course of a year, I’ll take a lot of trips here in the U.S. out to visit our markets, franchise stores, corporate stores, supply chain centers, etc., and then I always take several international trips each year. Well, I’ll typically combine a couple of countries in a week or two weeks outside the country. I really believe that a CEO in the restaurant industry has to spend a lot of time on the ground with the franchisees and in his stories to really know what’s going on in the business. That’s a high level of focus for me, most certainly. I have responsibilities also overseeing many other functions inside the business.
I spent a good bit of time with my leaders and my teams there in areas that range everything from technology to legal, to supply chain, you name it. In particular across those organizational elements, I spent a lot of my time focused on people and making sure that we are developing the leaders of tomorrow, that we got succession plans in place for folks, and folks are getting the training and development and the opportunities that they need. Then there’s another group of stakeholders that I spend a fair amount of time with, which are, as a publicly traded company, investors, and analysts, an important stakeholder group that I spend time with. Others would include folks like yourself in the media and with our PR functions. Then also I spent a little bit of time on the government relations side of things as well to make sure that folks do know how important this industry is for job creation and growth in the U.S. No week is a typical week, but over the course of a month or a period of months or a year, I got plenty of work to do across all of those things.
Hill: One of the ways the landscape has changed since you joined Domino’s is the rise of businesses like DoorDash and Uber Eats, and I know that Domino’s does not use third-party businesses like that for delivery, but I’m curious. Has the rise of delivery services like that changed the way that you think about competition?
Allison: Absolutely, it has. In the old world and it’s not that long ago, we looked at our competitive set as the pizza competition. The large global and national players, then also the regionals and the independents. Well, now it’s over. We still compete against those companies, but now you can get anything delivered from anywhere, virtually any time of day or night. We do look at those third-party aggregators absolutely as in many ways, the most important competitive set that we have today. We’re trying to understand what’s going on with consumer trends, what’s happening with technology, how we need to be thinking about our own investments and where we focus our energies. We are absolutely looking at both of those sets, the pizza competition and more broadly the brands that are enabled by these third-party delivery aggregators.
Hill: I find that advertising and marketing can be an interesting window into a business because it’s unfiltered. It’s a business spending their own money saying this is who we are and these are our products and services. This is what we want you to know about us. I think that Domino’s, by and large has done a very good job of that by essentially playing it straight and not overcomplicating things. It probably helps that you sell pizza and you’re not like a Cloud computing business or software as a service where you have to spend part of your time explaining what you actually do. But I have to say a couple of years ago, I was intrigued by a national ad campaign that Domino’s had and it was about the rewards program, giving people rewards for eating pizza, but not for eating Domino’s pizza, for eating any pizza. Now, take a photo of the pizza, you get rewards points. I was really fascinated by that because yes, ideally you’re getting more people to download the app and engage in your service, but that’s a riskier move to go out and say, “We just want you eating pizza.” My hunch and I could be wrong, my hunch is that there were some people at Domino’s who took some convincing with that ad strategy. What was that conversation like with you and your team?
Allison: Yeah, it was a great, fun, spirited discussion Chris, because it is. On the surface, it sounds a little bit crazy. We’re in the business of selling pizza to our customers and we’re going to go out there and reward them for eating somewhere else. But as we thought about it, there are a couple of elements there around that campaign that made a lot of sense to us. No. 1, you can only do that if you’re the leader in the category because when you go out with a message like that, we’re promoting the pizza category. We couldn’t do that if we were the No. 2 or No. 3 or No. 4 player in the space. We recognize it by trying to build the pizza category, we’re going to get the largest benefit out of that ultimately over time. Then second is what it could do for us around driving customer engagement and the loyalty program that we have our piece of the pie rewards program, which now has 27 million active members. Active means that they purchased from us at least once in the last six months through that program. That is such a valuable asset for us. The data and the knowledge that we have around our customers, knowledge that we never sell to anyone outside. We only use it to better serve those customers over time to the extent that we can continue to build that, and this campaign was a great way to do that. That creates long term value for us because it’s not just about one transaction, it’s about the next one and the next one and the next one and the next one over time, as customers continue to concentrate more of their business with us.
Hill: Let me get to the food for a second here. One of the big trends, as you know, in restaurants and groceries over the last decade is it’s vegan. Sort of the rise of vegan options. How does Domino’s view that opportunity and/or challenge?
Allison: Sure. I’ll talk about it maybe through two lenses. One is there’s a lot of what you hear about out there, which is plant-based proteins in particular, and a lot of brands into your point, a lot of grocery, your going out, they’re big on plant-based proteins. We’ve certainly been looking at that in our business and when we identify an opportunity there that we think makes sense for our brand, then we would go after. Really for us, that means it would have to drive incremental profitability for our franchisees at the store level and we would need to be able to execute it operationally. Yes, such that it doesn’t bring significant added complexity to our stores. Because a big part of our success is being able to operate very efficiently and get food to people as soon as they want it.
But the other thing that’s interesting about the pizza business that’s maybe a little different from some of the other food categories is, we’ve got a wide range of vegetables on the menu already and in fact, for me personally, over half the time when I order, I order our Pacific veggie pizza. Do I love pepperoni and sausage? Absolutely. But I can’t eat it as much as I used to, and maintain the health and the weight that I’d like to have over time. As you get older, those things are going to happen. So that’s mostly what I eat. If you traveled to India where we’ve got 1,300+ Domino’s. You would see that we’ve got a vegetarian menu and a non vegetarian menu, and well over half of the pizzas we sell are vegetarian pizzas. That’s how our vegetarian customers choose to, and some who aren’t vegetarian like myself choose to eat their food from Domino’s. But we always have an eye on it, we’re always watching what these trends are and how they’re evolving over time.
Hill: From time to time, you’ll hear just the restaurant industry with a large company is testing a new concept, a new product in a given market with the eye toward rolling it out nationally. I know you have a massive test kitchen at Domino’s, but I’m curious when it comes to testing new things with consumers. What is the process of deciding what makes the cut and what doesn’t?
Allison: Sure. So we do an extensive amount of product testing with consumers. We don’t do it in test markets like some other brands do, because at least we’ve found over time that that doesn’t always give you the most accurate set of results. We’ve got a set of testing protocols that give us a much more accurate representation of what consumer demand will ultimately be. Then as we assess demand at Domino’s, it’s not just about will that product achieve a certain mix on the menu. In the restaurant industry, you’ll hear a lot, well, that product was successful because we got it to 10% mix. Yeah, that’s important, but that’s not what’s really important to us. What we’re looking for is incrementally.
We’re not only looking at us to understand if consumers like that product, we want to understand, would they buy that with a new occasion, or a new item added to their order? Or would that potentially cannibalize something that we already have on the menu? So that’s a big part of the analysis that we run to really understand would drive incremental sales and incremental profit for our franchisees at the store level. Then we do that assessment that was mentioned just a little bit earlier when we were talking about some of the vegetarian options, would it introduce significant added complexity to our operations because that’s another key element of how we think about new products. We don’t do limited time offers like a lot of folks in the restaurant industry do, because we think it infuses a lot of operational complexity. You spend a lot of advertising dollars and as soon as you get a customer who really loves that product, you pull it off the menu. It just doesn’t make any sense to us. Yes, that can drive some short-term same store sales growth. But what we’re really focused on are introducing product platforms that can build sales and consumer engagement over the long term.
Hill: So I shouldn’t expect you to partner up with McDonald’s for a limited time McRib pizza.
Allison: Unlikely. [laughs]
Hill: Last thing, and then I’ll let you go. Anyone who lives with other people knows the challenge of ordering pizza and the negotiation around toppings. You touched on this earlier, but just imagine health is not a concern you’re by yourself, your family is elsewhere. It’s just you Ritch. You’re ordering a pizza. What are you going with for toppings?
Allison: Yeah. So I will tell you, Chris, I don’t have one always go-to, but depending on what I’m feeling like they’re kind of three pizzas that are at the top of my list. One is that Pacific Veggie that I talked about, which is just great and I do it on a Brooklyn crust, which is our hand tossed dough but it’s stretched thinner. I like more toppings to dough ratio, typically.
A second one for me, that’s a pizza geek comment, by the way. The second thing I’ve been ordering a lot lately is our new chicken taco pizza. In fact, that’s what I had for dinner last night, and I always add jalapenos to that, to give it a little bit more of a zip. Then if I feel really indulgent, then it’s going to have to be one of our hand stretched pan pizzas with sausage and with onions and mushrooms on it, which is just awfully damn good. I just have to get myself a little bit on how often I do that.
Hill: I like that you’re not locked into just one. You’ve got sort of a portfolio and you choose depending on how you’re feeling.
Allison: Depends on the mood, you got it, and how many miles I ran that morning that may come into play also.
Hill: Got to get to the stocks on our radar. Jason Moser, you’re up first. What are you looking at this week?
Moser: Yeah. I’ll go on with Marvell Technology, ticker MRVL. Marvell is a semiconductor company with a focus on high performance data infrastructure products. Four key markets being automotive, carrier, data center and enterprise. Revenue growth for Marvell has been non-existent over the last several years. But I think that’s turning a corner with 5G. Management’s targeting 10%-15% annualized growth over the next several years thanks to key drivers there. They’ve invested a lot in preparation for this, this R&D as a percentage of revenue over the last several years since 2016 actually, has averaged 35% annually Dan, and then to top it all off, the Inphi acquisition, which will close later this year, will open up additional opportunities and data movement, one for investors to keep an eye on.
Hill: Dan Boyd, question about Marvell?
Dan Boyd: Yeah, Jason, last week you had Terradyne (NASDAQ: TER). You are high on these technology stocks right now, aren’t you?
Moser: I’m high on life, Dan. Better than being high on other things, right?
Hill: Ron Gross, What are you looking at?
Gross: I got Vulcan Materials, VMC, the nation’s largest producer of construction aggregate that’s crushed stone, sand and gravel also produces asphalt, ready mix concrete. I recently took a small position in the stock, so I’d have some incentive to learn more. My overall thesis is that this company would be good to own if any type of meaningful infrastructure plan gets passed. The fourth quarter management noted some positive signs like increases in construction employment and strengthened residential construction, growth in heavy industrial projects. So I think this is a good infrastructure plan. I’m going to learn more and dig in over the next couple of weeks.
Hill: Dan, question about Vulcan Materials?
Boyd: Yeah, Absolutely. Chris, last week it was Titan International, so wheels and now this week it’s stone. Ron, is there some sort of stone age basket that you’re putting together?
Gross: I have recently rotated into industrials and some economy reopening stocks and so you’re very observant.
Hill: Two very different businesses, Dan, you got one you want to add to your watch list?
Boyd: Of course, I have no idea. I’m just going to go [laughs] with Vulcan Materials because I’m tired of giving Ron losses week after week. [laughs]
Gross: Thanks, Dan.
Hill: Jason Moser and Ron Gross guys, thanks for being here.
Gross: Thanks, Chris.
Hill: That’s going to do it for this week’s edition of Motley Fool Money. This show is mixed by Dan Boyd. Our producer is Mac Greer. I’m Chris Hill. Thanks for listening. We’ll see you next week.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.