Is Stagflation Creeping Into the Picture?

17:43Travis Hoium:Exactly. They were buying shares at a much higher price than they could have been buying them today.

17:46Jason Moser:And I think statistically, when you look at companies repurchasing shares, oftentimes they just aren't really nailing it. But, you know, that share price is also something that's beyond their control as well, right? I mean, there are other interests that may make that share price go up or down. But the fact of the matter is they see value in there and those repurchases have resulted in a meaningful reduction in that share account outstanding. So I think that the bet that you're making today, if you believe in Adobe as a long-term story is, you know, you're looking at this company and saying, well, this is a company that's utilizing AI to make its business stronger.

18:21Jason Moser:Time will tell whether that actually is the case. But, you know, like I said, Adobe's tools are still enmeshed in a lot of our workflows on a daily basis. And that's on a widespread scale. So I'm not willing to give up on them yet, but we certainly won't have to continue to follow the AI narrative.

18:41Travis Hoium:To put their growth into a little bit of perspective, because you would think at this point with Nano Banana and all these AI imaging apps, even all the applications, you know, Canva, things like that, their growth rate was higher in the most recent corner than it has been since any quarter since September 2022. Yeah. So it seems like they're doing okay. We've just got a minute left, but Lou, I'll start with you. is Adobe a value or a value trap for investors today?

19:07Lou Whiteman:I mean, guys, 11 times future earnings. I feel like even if they are doomed, it's going to take a while. I am growing more and more curious about this. I don't own this stock. I keep staring at it though as it keeps going down. I might bite eventually.

19:23Jason Moser:I've owned a handful of shares for a while. Some willing to hang in there and just sort of watch this play out. I mean, they're hiding for 13 % revenue growth again this quarter. I mean, that's not nothing. So I would probably lean into the value as opposed to value trap, but it may take a little while. They're going to have to figure out a way to really convince investors that they are utilizing AI for the betterment of their company as opposed to being disrupted by it.

19:49Travis Hoium:Definitely one that I'm putting on my watch list and watching very closely right now. When we come back, we're going to play Executive Free Agency. You're listening to Motley Fool Money.

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21:23Travis Hoium:Welcome back to Motley Fool Money. In this segment, we like to have a little bit of fun. And so I thought we with NFL free agency going on, we've got a bunch of executive changes at companies like Adobe. If we were going to have executive free agency, what would that look like? And here's the idea here, guys. I'm going to give you an executive, a founder, a CEO, somebody with a track record. And I'm going to give you a few options for them. Let's say that they got offers from all of these companies to become their next CEO. Some of these jobs are available. Some of them are not, but it might be fun to see who would be, which, which job would they take?

21:59Travis Hoium:What would it take? Let's say that the compensation is the same, except you're getting stock options, all that kind of stuff. All right, let's start with somebody who doesn't have a full-time job right now, technically. Daniel Eck, founder of Spotify. He's kind of stepped away from that company, you know, still on the board, still involved, but let's say some big whales come after Daniel Eck. Alphabet, Adobe, and Tesla. If you are Daniel Ack Liu, where are you going as a CEO?

22:26Lou Whiteman:I am so uncreative here. All I can think of as well, Adobe needs a CEO. So therefore, that's a natural. But, you know, I think it kind of works. I mean, Ack has done a pretty good job adjusting to the AI world or kind of using AI to his company's advantage. I think that that fits nicely into, you know, kind of what we need, what we were just talking about with Adobe. And also maybe, you know, the credibility to actually pull it off. You also, it's a turnaround story here at this point with the stock down, what, 40 % of the last year. So if you're getting paid in stock, it's a great opportunity.

23:00Lou Whiteman:Alphabet, I don't know. I love Alphabet's management. So maybe I'm struggling to see how even a very talented manager kind of takes that one to another level. And Tesla, you're going to have to show me the fine print about what Elon's role is going to be before I believe that any CEO is going to really make a mark. So how about Adobe?

23:22Jason Moser:Jason, what do you think? Yeah, I feel like there's a lot of baggage that comes with something like Tesla. So I'm going to take a pass on that one. Yeah, Lou's right. Adobe, I think, is a turnaround. And so from that perspective, it could be cool to go in there and actually turn things around or at least just reshape the narrative so the market is more convinced. I mean, I don't think Adobe is a business in peril, right? The numbers we talked about before are still quite impressive. But for me, I think, honestly, I'd send it to Alphabet. I think it's in line with kind of the business that he built at Spotify.

23:54Jason Moser:And there's a lot of that dynamic that comes with Alphabet. And Alphabet is just on fire right now. I think Alphabet has done a very good job of pushing back against that narrative that AI was going to ruin search or whatever it may be. So I think that Alphabet, that position comes with a lot of the skill set that he already possesses. And it would be neat to see how somebody takes Alphabet to the next level and he might be the one to do it. Yeah.

24:23Travis Hoium:One of the reasons I thought that was an interesting option is if you're Danielek, you're not taking over another$30 billion company. But if Alphabet comes calling, one of the biggest companies in the world, you at least take the call and see what they want to be doing. Let's go to the retail space. This is an area where there's been a lot of changes and a lot of challenges. One of the companies that's done extremely well over the past five or six years is Dix. Their CEO is Lauren Hobart. The stock's up about 240 % since she took over. So I got three options for you. Someone's going to try to poach her as CEO.

24:59So Target, you know, that would be another turnaround play.

25:04Travis Hoium:Costco, maybe more of a prestige play or Best Buy. Jason, if you're advising Lauren Hobart, where does she go?

25:13Jason Moser:I like the prestige angle that you took there with Costco. And that's where I'd be sending Lauren Hobart if that was the choice there. I think with Costco, you've got such a well-established and strong business. And really the main job there, I think, it's kind of member relations, right? I mean, you're just going in there, don't rock the boat. Make sure you keep on giving your customers the rock bottom lowest prices you can give them. Raise that membership fee every once in a while just to kind of keep in line with the cost of doing business. But it's such a well-established business already.

25:48Jason Moser:I think going into something like a Costco would be exciting just to be able to continue just wanting to give your customers exactly that value proposition that they've come to know and love over the years.

25:59Lou Whiteman:Yeah, I think that's probably right. So let's kind of have fun and go through the others, because I do think there's at least an interesting case we made. What's gone right at Dick's is realizing what you are and what Amazon is going to just commoditize from you and focusing on what they can't, right? That's very similar to what Best Buy has done right. So in a way, if Best Buy needed a new CEO, it's probably a pretty good fit here. Because again, I think just understanding your customer, understanding what you can give them that others can't, and leaning into that. So, you know, I guess like for like, Best Buy works, but really, if Target, I mean, this is what Target needs.

26:45Lou Whiteman:I don't know if they're going to be able to find it, but if there's an opportunity there, if we could pitch to the Target board, here's how I see doing what we did at Dick's at Target, that would probably be the most intriguing. My fear with Target is I don't know what that is, but maybe a good CEO who's been at Dick's and it was proven that you can do this. Maybe it's just the person they need to come up with an idea. I don't know. I think I'm dreamcasting here, but I thought I can at least make the argument for the others. I'd probably just go to Costco.

27:16Travis Hoium:That's the argument that I would have made. It reminds to be a little bit of Alan Mulally with Ford. Hey, this is going to be my last job. I'm going to take a big swing. Either it works or it doesn't. And if I turn the company around, I'm going to be a hero. I'm going to be a legend. But yeah, I think all of those would be such an interesting balance because Costco, you're not going to get buku bucks in stock-based compensation. Target, if you turn that business around, that stock could double, triple, quadruple.

27:45Lou Whiteman:Here's the thing. The Mulally story, I know pretty well. He knew going in, like, we need to do A, B, and C really quickly, and that'll lead to D, E, and F. If Hobart could go tell that story, then yeah, that'd be great. My fear is, I don't know, maybe I'm not giving anyone enough credit, but it seems like a much harder story to come up with going in.

28:05Jason Moser:Can we just say, too, like, Alan Mulally, that is a story for the ages, I think. Like, what he did at Ford was just, I don't know, to my mind, it was unreal, given how on the ropes, not only for, but really all the automakers were at the time. And, you know, I just, I had the very good fortune to be able to interview him on the floor of the North American International Auto Show in Detroit several years back. And, uh, I mean, just what a nice guy. I mean, like just, he, he is as seen on TV, just super nice, really relatable, but man, rockstar CEO.

28:41Lou Whiteman:So Jay Moda is something from your world. He wasn't just shooting par there. I think that that's what it comes down to. Yeah, that was a lot better. Yeah, yeah.

28:50Travis Hoium:My favorite was that he kept his house in San Diego and he just flew to Detroit every week. That was a pretty long commute. All right, let's go a little bit deeper here. I don't even know if you knew who this person is. Jeff Dean is arguably the kind of the person who turned Google's and Alphabet's AI fortunes around over the past couple of years. He's been with the companies since the 90s, worked on search very early. One of the reasons that, you know, he comes to mind for me is he is also a Gopher alum, like I am here at the University of Minnesota. But you know, he's, he's one of the bigger names that's maybe doesn't get a lot of attention outside of Silicon Valley.

29:30Travis Hoium:But if Apple were looking for a new CEO, he would absolutely be on the list if they were looking external. Amazon, Nvidia, if you're Jeff Dean, and you have all three of those officers, Nvidia, we're going a little bit off the board. We're assuming that Jensen Wong has bought an island and decided that he's going to hang up running the Ferrari that he's built at NVIDIA, which is never going to happen. But let's say that those three jobs are available. Lou, which one are you taking if you're Jeff Dean?

29:59Lou Whiteman:So Apple is the knee jerk because the narrative is Apple has failed at AI and this is a smart AI person. I'm giving Apple a lot of credit for that though. I think Apple knows exactly what they're doing. When AI is all commoditized, they will just pick it up and go with what they want. I'm going to go with Amazon here. Amazon, I think, is more of a collection of always moving pieces where maybe not just AI, it's consumer-facing front, but just how does AI integrate into our business long-term. There's both opportunity there and risks. It's not the easy job that NVIDIA, although I'm very, very not giving and Jetson, long enough credit there.

30:40Lou Whiteman:But Amazon just feels like the middle for me. So I'll take that.

30:44Jason Moser:Jason? Yeah, I like, man, Apple seems like, I think Lou's right. I think they're just kind of biding their time. They're not terribly worried over there about the AI conversation. It's in line with that philosophy. They don't have any interest in being first. They just want to be best. They're watching everybody else kind of build this out and just sort of bring home the use cases and the real value that's going to be seen in AI. I think Apple, I would actually volunteer that is my recommendation. I think it's just because of that, right? I think that it's going to be really interesting to see kind of what they do with AI as the technology is built out, right?

31:24Jason Moser:Apple does a very good job of partnering up. And Alphabet, I think, is a great example, right? So I suspect we'll see more of that in the coming years. and with such a large installed user base. I mean, billions of devices active today in that Apple universe. It seems like they have a lot going for them.

31:42Travis Hoium:Yeah, given the things that he's done in AI and also the way that Google's products have gotten so much better in the AI space than I think a lot of us would have thought. I thought Apple would be interesting too. All right, let's do this one quickly. Mary Barra is actually a GM stock, has outperformed Tesla for quite a while here, really turned that business around. This was supposed to be a CEO who was getting disrupted left and right. So if she's going to go on to a bigger and better job, Jason, Boeing, 3M, and Tesla have all come calling. Where should she go? Man, post-its, huh?

32:17Jason Moser:Let me see here.

32:18Travis Hoium:Well, manufacturing. That's the angle here. She's running a manufacturing company. They could use a little invigoration. Going off the board.

32:26Jason Moser:Yeah, 3M is one of those sneaky businesses. is like, you don't really ever think about it, but it's everywhere, right? Again, Tesla, too much baggage. Don't want to go there. Boeing, eh, maybe. I actually kind of like 3M. I think it lines up with their skill set. And it could be an opportunity to sort of reinvigorate the brand, at least kind of create the awareness to the consumer of all of the different things that that company does, because it does a lot. And it does a lot of stuff very well.

32:53Lou Whiteman:Yeah, again, I'm not going to Tesla until I get, I don't know, some reassurance about, you know, you won't have Howard Schultz leaning over your shoulder. So that one's out for me. I like the 3M idea, but you know what Barr has really done well at GM is kind of just focus on what they do well and getting it to, they do everything well again. And Boeing, so much of it is just toe stubbing and self-inflicted wounds. I do think just a no-nonsense, let's get this right CEO. Hopefully, they finally found that. And to their credit, they have a CEO I think is much better than the last two predecessors.

33:31Lou Whiteman:So maybe they're already there, but I think Barra fits the mold, if not, of someone who can just kind of, let's clean this up and make it work.

33:38Travis Hoium:Yeah, it'll be interesting. She has done such a good job at GM. I think those of us who watch really respect her. There's a lot of companies that could use that similar skill set. When we come back, we're going to get to stocks on our radar. You're listening to Motley Fool Money.

33:54Jason Moser:Leading a life without question. I have in your back home conception. No worries at hand when it's part of the plan and you beg me to see your perception.

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35:05that.

35:05Travis Hoium: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 The Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show knows. Let's get to one of the strange stories of the week. That is Netflix. Lou, they got a couple billion dollars. I know they probably don't have the cash yet from the Warner Brothers Discovery acquisition that fell through what Paramount is now buying.

35:42Travis Hoium:And they're using some of that money to buy Ben Affleck's AI company. Is this them just wanting to do something? Is this technology that they really need in-house? This is kind of a production AI tool. It's not, you know, like a nano banana kind of a competitor. What in the world is going on here?

36:01Lou Whiteman:Good question. And, you know, I'll be honest, this might be a me problem, but it's weird to me. And it just feels like we're seeing, it's like, I don't know, maybe I'm looking at the celebrity and underestimating the product, but look, this is, like you say, a post-production tool. It doesn't replace acting. It's for editing the scenes after they're shot. Maybe, you know, it's just the best undisputed tool out there, although it's in stealth and Netflix just had to have it. But is it really worth$600 million to bring it in-house? I don't want to be cynical, but yeah, it feels like, you know, they were in acquisition mode.

36:36Lou Whiteman:Maybe it's worth the money just to come off as creator-friendly to signal to the community that, you know, we're doing post-production stuff. Maybe they just want a big deal with Ben Affleck and it's the way to do it. I don't know what's going on here, but yeah, it's weird.

36:50Travis Hoium:Yeah, Jason, this reminded me of when Apple bought Beats by Dre, just so that Tim Cook could hang out with Dr. Dre and Jimmy Iovine a few times. I'm sure there was more to it than that, but that was a big check for some headphones.

37:05Jason Moser:It was like Dorsey buying Tidal, right? It just was the weirdest acquisition, and I'm convinced it just because he wanted to saddle up with Jay-Z, but whatever. Yeah, I'm with Lou. This just seems like they were in acquisition mode and they needed to do something, right? And I'm not a Netflix shareholder. I wish I was, but I am glad that that deal did not go through. I think that would have been just a, that would have been a troublesome acquisition. I don't think it would have really resulted in the creation of a lot of shareholder value for Netflix. I think Netflix is going to be just fine on its own, but it does feel like, hey, this has found money from the breakup.

37:39Jason Moser:They got to spend a little bit of it on an acquisition here with some post-production stuff. and maybe they feel like they're a little bit cooler because they can call Ben Affleck a partner.

37:47Travis Hoium:I don't know, but we'll see. Yeah, be interesting to see how often he's in the Netflix office.

37:53Lou Whiteman:For the record, I think I'd rather hang with Dr. Dre, but no offense, Ben.

38:00Travis Hoium:We like to end the show with stocks on our radar. We'll bring in Dan Boyd from behind the glass to get some thoughts. Jason, you're up first. What's on your radar this week?

38:09Jason Moser:Yes, well, Dan, did you know that there are more than 150 different diseases and conditions that can impair our musculoskeletal system, say that five times fast, resulting in pain, limited movement, and even worse. My radar stock this week, Globus Medical, ticker G-M-E-D, is a company dedicated to fighting those diseases and conditions. And it's a company that I've recommended in our services before, done very well through the years, but they are ultimately, they're devoted to developing the solutions for musculoskeletal disorders through the devices and surgical equipment, monitoring and technologies.

38:49Jason Moser:They are on the cutting edge when it comes to immersive technology, utilizing things like augmented reality and even virtual reality to train physicians on how to use their solutions. And it's a company just wrapped up a very strong 2025 revenue growth is better than 16 % looks poised to continue here for the year to come. And it's a big market opportunity out there. This is a$50 billion or so market opportunity for a company that's still really just in the early innings. So I think a lot of market share to capture and that's what I'm watching.

39:21Travis Hoium:Dan, can you say musculoskeletal five times fast? I cannot, Travis. Not even going to try. You know, Jason, you made a good pitch, but what really is selling me is it seems like your dogs are really excited about it too.

39:36Jason Moser:Well, they're excited every week just to have the opportunity to make an appearance on this show. And it seems like they nailed it again this week.

39:44Lou Whiteman:Lou, what's on your radar this week? I don't want to downplay my chances, but if Dan is really just leaning into going with the dogs, you could do a lot worse than that, right? Okay. So I'll say that at the front. Dan, this week, I'm looking at AeroVironment, ticker AVAV. And frankly, I'll be honest, I'm not sure I like what I'm seeing. AeroVironment is the maker of mostly military drones. Its products have been a key part of the Ukrainian war effort. The company has gotten a lot of attention and a real boost to the stock price because of it. Basically, it showed that the products are just as good as what the PowerPoint slide projected they'd be.

40:19Lou Whiteman:But this week, AeroVironment reported quarterly results that missed expectations. They lowered full-year guidance too. Issue is a lost space contract. It was a significant part of AeroVironment's backlog of future business. This was something they bought last year. It was most of the existing business of a company they bought last year. I do think this can just be a temporary setback. I don't think it's thesis busting. But to be honest, it removes a lot of the reasons for investors to be excited about air environment, at least in the short term. Stock is down 13 % for the month, Dan. I fear it could be hard to get airborne again for now.

40:55Lou Whiteman:I'm watching this one, but not for the good reasons.

40:59Travis Hoium:Dan, what do you think about the military drone business? Yeah, well, you know, I love it when somebody comes onto the show and brings us a stock that they're not excited about. That's not a cop out whatsoever, Lou. And I just want to say it stinks to hear that a company headquartered in Arlington, Virginia is not doing well at the

41:16Lou Whiteman:moment. Dan, I can only bring you the news. I can't make the news all good.

41:20Travis Hoium:That's fair. All right, Dan, what caught your attention? Globus Medical or AeroVironment? Well, I'm curious as to who let the dogs out. Maybe somebody should put them back in, but I'm going to go with Clovis Medical this time around. All right. Congratulations, Jason. That's all the time we have for this week. Thanks for listening to Motley Fool Money. We'll see you here tomorrow.