In this segment of the Motley Fool Money podcast, host Chris Hill, Million Dollar Portfolio's Jason Moser, Jim Mueller of Stock Advisor and Motley Fool Options, and Total Income's Ron Gross talk first about the results for spice giant McCormick (NYSE: MKC), which were hard to beat. And for regular MFM listeners, the name may sound familiar, because Jason recommended it in the last podcast.
The guys dig into what drove those sales and profits, and where it's headed. Then they talk about Tesla (NASDAQ: TSLA), which news reports suggest is still having issues making batteries for its new Model 3s.
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A full transcript follows the video.
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This video was recorded on Jan. 26, 2018.
Chris Hill: Nice week for McCormick shareholders. The spice maker put up record profits in the fourth quarter. Jason, last week, this was the stock that you had on your radar, and it kind of looks like they nailed it.
Jason Moser: Feeling pretty good about things. And listen, Chris, one of my guilty pleasures at home is Diners, Drive-Ins, and Dives. I'm just a sucker for the show.
Hill: I'm in for that show.
Jim Mueller: I love that show.
Moser: I'm a cook for the family, and with all due respect to Guy Fieri, McCormick is really Flavortown. Come on, let's face facts here. I think the recent acquisition of RB Foods was really the big question mark hanging over the company, because they paid a lot of money for it, but they got some really solid brands there -- French's mustard, Frank's Red Hot Sauce, the list goes on and on. And they're really just building themselves out to be the flavor maker for the entire world. So, for me, typically, with a big acquisition like that, the burden of proof is on the buyer to show us investors that it was a sensible and smart acquisition. I think we're seeing the signs that it was. Organic revenue growth, 5%, but it was around 21% when you add in the acquisition of RB Foods and also Giotti. I think it's a pretty steady-eddy business. They're projecting for around 5% revenue growth in 2018, strength in both the consumer and industrial segments. They just raised their dividends for the 32nd consecutive year, so for me, this is just a very strong business model. They're able to accelerate paying down that debt for the acquisition, they have, I think, a lot of runway ahead to do really well for shareholders.
Hill: CNBC reporting this week that Ron Gross should not hold his breath waiting for his Tesla Model 3. Employees at Tesla's Gigafactory saying that battery production is slower than the company has let on, in part because of inexperienced workers and assembly challenges. Jim, we had Paul Lienert on last week's show talking about the Detroit Auto Show, the automotive industry. One of the things he said is, with Tesla, it's a story stock. And it is.
Mueller: It is.
Hill: But right now, this is a story that Tesla doesn't want to tell.
Mueller: Definitely not. When you're having batteries built by hand, at least in part, the reports that some components were being put in by hand, and that could possibly lead to misalignment of the cells, which might make it a safety issue, you don't want that story out there. But despite the news that's coming out, many analysts are still very bullish on it, and they're still buying into the story. And I understand that Elon Musk is a very charismatic leader, but the company has a tendency to overpromise and underdeliver, which is the exact opposite of what we here at the Fool like, which is underpromise and overdeliver. When you cut back your Model 3 delivery schedule and say, "We're going to be doing 5,000 cars by the end of the year," and you barely do, I don't even know how many, 2,500, 1,500, something like that in 2017, and now they're only going to get up to 2,500 per week, I think that's the metric, by the middle of the summer, when they were targeting 5,000 a week a while back -- that's not the way to run a car company.
Ron Gross: Well, despair not, because I just received an email yesterday that said they were delivering one Model 3 to the D.C. area, and if I would like, I could make an appointment to go sit in it. So I have that going for me, which is nice.
Hill: I thought maybe they were just going to make everyone in the D.C. area just share that one.
Chris Hill has no position in any of the stocks mentioned. Jason Moser has no position in any of the stocks mentioned. Jim Mueller, CFA owns shares of McCormick. Ron Gross has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool recommends McCormick. The Motley Fool has a disclosure policy.
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