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Why Sezzle Stock Tumbled 39% in August

Sezzle delivered strong Q2 results, but investors were disappointed with its guidance.

Sezzle (SEZL -1.34%) saw its monster surge hit a wall last month as the breakout BNPL (buy now, pay later) company posted strong results in its second-quarter earnings report, but its guidance wasn’t quite enough to keep up the stock’s momentum. Management still expects a substantial deceleration in the second half of the year.

There was little else in the way of company-specific news last month, and the stock traded flat after the earnings plunge, finishing the month down 39%, according to S&P Global Market Intelligence.

You can see the stock’s performance over the course of the month below.

SEZL Chart

SEZL data by YCharts

Is the Sezzle breakout over?

Sezzle continued to deliver blistering growth in the second quarter with revenue up 76.4% to $98.7 million, which topped estimates at $94.9 million. That was driven by strong on-demand growth, meaning consumers who use the BNPL product without a subscription, as well as its partnership with WebBank, which agreed to be its exclusive banking partner last year.

User growth was strong as well with monthly on-demand and subscribers (MODS) reaching 748,000, up from 658,000 in the first quarter, and it delivered impressive margin expansion as operating income jumped 116.1% to $36.1 million, and adjusted earnings per share was up 97% to $0.69, which beat the consensus at $0.58.

Sezzle’s growth seems to be driven by a combination of new products, its focus on subscribers, and broader adoption of BNPL, which has seen strong growth as consumer confidence has fallen over fears around tariffs and now a weakening job market.

A Buy now, pay later banner on a smartphone.

Image source: Getty Images.

What’s next for Sezzle

Sezzle sees strong growth for the full year, but it may have been below investor expectations given the strong Q2 results. It also did not update its guidance from the first quarter, which was likely a disappointment to investors.

For the full year, the company sees revenue growth of 60% to 65%, though that implies a sharp slowdown after revenue essentially doubled in the first half of the year. It also called for adjusted earnings per share of $3.25, which is slightly below the consensus at $3.27.

Sezzle has delivered a remarkable performance over the past couple of years. The stock was trading at under $2 a share (split-adjusted) at the end of 2023.

While the company’s differentiated model has helped it build momentum, it’s understandable for the stock to cool off in response to slowing growth. Still, the valuation looks attractive now at a forward P/E under 30.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Sezzle. The Motley Fool has a disclosure policy.

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eGain Q4 Revenue Up With JPMorgan Win

eGain(EGAN 6.00%) reported fourth quarter 2025 results on Sept. 4, 2025, with total revenue (GAAP) rising 11% sequentially and 3% year over year to $23.2 million, and a record non-GAAP Software-as-a-Service (SaaS) gross margin of 80%. The company announced a marquee design partnership with JPMorgan Chase (NYSE:JPM) in April, outlined the sunset of its legacy messaging product, and guided for a return to full-year revenue growth in fiscal 2026 (period ending June 30, 2026), with annual recurring revenue (ARR) in its core AI knowledge business expected to grow 20% or more.

AI knowledge ARR accelerates as legacy messaging sunsets

ARR from AI knowledge customers increased 25% year over year, reaching nearly 60% of total company ARR as of September 2025. Net dollar-based SaaS retention for these customers improved to 115% for the last twelve months, up from 98% a year earlier. Management guided for approximately $4.7 million in current ARR from the legacy messaging product to run off throughout fiscal 2026, beginning in the second quarter.

“SaaS ARR from knowledge customers increased 25% year over year or 22% in constant currency, while SaaS ARR for all customers increased 11% year over year or 9% in constant currency. Turning to our net retention rates, LTM dollar-based SaaS net retention for knowledge customers was 115% or 112% in constant currency, up from 98% a year ago, while net retention for all customers was 105% or 103% in constant currency, up from 88% a year ago.”
— Eric Smith, CFO

This rapid growth in AI knowledge ARR and improved retention rates (now at 115%) highlights the company’s successful transition away from legacy products and its ability to drive higher-value, recurring revenue streams.

JPMorgan Chase partnership expands eGain’s strategic reach

The partnership with JPMorgan Chase represents one of the largest deals in company history, expanding eGain’s footprint from discrete business units to a company-wide AI knowledge hub. The agreement included collaborative product development, warrant grants to JPMorgan Chase in August, and the addition of a JPMorgan Chase board observer to inform next-generation product direction for the broader market.

“Our AI Knowledge Hub will now serve all bank employees in their U.S. Chase business. What is exciting for us is that we are now actively partnering with JPMorgan Chase to improve customer experience and drive AI efficiencies across the business. To strengthen this partnership, we issued warrants to JPMC in August, and they agreed to nominate a senior executive to join our eGain board as an observer.”
— Ashu Roy, CEO

This strategic relationship positions eGain to benefit from JPMorgan Chase’s scale and expertise, while also accelerating product innovation and enhancing credibility with other large enterprise customers.

Gross margin expands as cloud migration and automation drive efficiency

Total gross margin rose to 73% in the fourth quarter, up from 71% a year ago, with non-GAAP SaaS gross margin reaching 80%, up from 76%. Non-GAAP operating costs declined 2% year over year, even as research and development (R&D) spending increased 15% for the full year. The migration of all customers to a new cloud architecture and increased AI-driven automation have resulted in sustained improvements to the company’s cost structure.

“We completed our migration of all clients over to the new architecture, the new cloud platform that we have been working on for a few couple of years now. So we had mentioned that in the past. So that is one place where we are seeing benefits, which now will continue to be there. Right? So, that’s one. But the second one is, with not just AI, but also our ability to develop new product and capabilities faster, we are automating the process of supporting and operating our cloud and being much more efficient on the cloud resources that we are using. All three of those. And so that is another big chunk of improvement if we are able to create on a sustainable basis.”
— Ashu Roy, CEO

These operational improvements are expected to support further gross margin expansion and enable continued investment in product development without increasing the overall cost base.

Looking Ahead

Management guides for total revenue of $90.5 million to $92 million in fiscal 2026 (ending June 30, 2026), GAAP net income of $3.5 million to $5 million, adjusted EBITDA of $10.4 million to $11.9 million, and non-GAAP net income of $8.3 million to $9.8 million. Gross margin is forecasted to expand to 74% to 75%, and core AI knowledge ARR is expected to grow 20% or more year over year, partially offset by the full-year wind-down of approximately $4.7 million ARR from legacy messaging. R&D investment will increase by about 6% year over year, while adjusted EBITDA is targeted to rise by 20% to 40% year over year.

JPMorgan Chase is an advertising partner of Motley Fool Money. Motley Fool Markets Team is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. The Motley Fool takes ultimate responsibility for the content of these articles. Motley Fool Markets Team cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

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Is It Time to Buy Salesforce Stock?

Salesforce isn’t just an AI story. It’s an underrated cash cow funding huge buybacks and a growing dividend.

Salesforce‘s (CRM -4.85%) latest quarter delivered a powerful combination of triple-digit growth in artificial intelligence (AI) and robust financials. The customer relationship management software company posted steady top-line growth, expanding margins, and incredible momentum in its newer AI offerings — all while returning a meaningful chunk of cash to shareholders.

On Sept. 3, the company reported fiscal Q2 results for the period ended July 31. A few days removed from the headline noise, the investment case looks stronger, not weaker. Sure, the Street’s knee-jerk reaction to the report seemed centered on short-term noise. Management guided to worst-than-expected sequential growth for fiscal Q3, and shares took a hit in after-hours trading. But a slight miss on guidance is just a small detour in the company’s promising growth story. The underlying engine here is throwing off cash, and the AI layer is starting to scale.

A digital-looking cloud.

Image source: Getty Images.

The big picture

For its fiscal second quarter, Salesforce delivered strong results on the metrics that matter. Revenue rose 10% year over year to $10.2 billion. Operating margin reached 22.8%, with non-GAAP operating margin at 34.3% — both an improvement from the same quarter last year. Current remaining performance obligation (cRPO), a leading indicator for revenue growth, rose 11% year over year to $29.4 billion.

Meanwhile, Salesforce’s AI story is moving from nascent to substantial. The company’s data cloud and AI annual recurring revenue topped $1.2 billion, up 120% year over year. On this note, AI agents are turning out to be a big hit as companies transform into agentic enterprises. Management highlighted broad-based adoption of Angentforce — Salesforce’s platform for creating and deploying autonomous AI agents. There have been over 12,500 Agentforce deals since launch, of which more than 6,000 are paid. These are still early days for AI agents, but the interest is clearly high.

And Salesforce is managing to do all of this while turning out big profits and having excess cash left over to return to shareholders. In Q2, Salesforce returned $2.6 billion to shareholders, including $2.2 billion in repurchases and $399 million in dividends. The board also lifted the buyback authorization by $20 billion, bringing total capacity to $50 billion.

Results and outlook

Q2’s mix of double-digit revenue growth and margin expansion points to a business that’s getting more efficient as it scales. Subscription and support revenue — a recurring revenue stream that Salesforce arguably pioneered — grew 11% and remains the bedrock of the model.

Looking ahead, management reiterated confidence in cash generation, and full-year guidance calls for mid-teens operating cash flow growth — fuel for both product investment and capital returns. The message is consistent: profitable growth today, with a long runway to keep investing behind it.

Near term, management’s guidance indicated a modest deceleration in top-line growth. For Q3, Salesforce expects revenue of $10.24 billion to $10.29 billion, up 8 to 9% year over year. That outlook initially disappointed the market, but it keeps the company firmly on track for an all-time high in cash flow while protecting margins. With cRPO up double digits and AI annual recurring revenue inflecting, it wouldn’t be surprising to see revenue growth rates return to double-digit rates in the coming quarters. Of course, it’s always possible that Salesforce beats its fiscal Q3 guidance and top-line growth doesn’t drop to a single-digit rate after all.

Why buying the dip makes sense

Unlike some tech stocks, the bull case doesn’t hinge on AI hype alone. Salesforce already runs a large, profitable, recurring software franchise — now adding a high-growth AI and data cloud layer on top. That should support mid- to high-single-digit revenue growth, healthy margins, and significant excess cash. Management is signaling how that cash will be used: bigger buybacks and a steady dividend, with room to keep investing through cycles. If execution holds, shareholders can win two ways: through compounding cash flows and a gradually shrinking share count.

Of course, Salesforce does operate in an intensely competitive space. Enterprise spending can tighten, competitive intensity in AI is rising, and any stumble in large-deal timing could pressure growth for a quarter or two. But given the mix of durable subscription revenue, improving margins, and disciplined capital returns, I think the growth stock‘s risk-reward tilts positive, with shares trading at a price-to-earnings ratio in the thirties as of this writing. For investors looking past the next quarter, Salesforce looks like a buy.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Salesforce. The Motley Fool has a disclosure policy.

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The Best Growth ETF to Invest $1,000 in Right Now

If you have some appetite for risk, this exchange-traded fund could be a great choice.

It’s a great time to be in the market. After some downward pressure earlier in the year, the S&P 500 is back in growth mode, and it’s up nearly 11% year to date.

Concerns still abound. Is the market overvalued? Is inflation really moderating? Will tariffs cause more problems for manufacturers and retailers? Is the market due for a correction, or worse, a crash?

You can’t reliably time the market, and there’s no way to know what will happen next, or if a black swan event will arise and change things up unexpectedly. What you can do as a retail investor, if you want to give yourself the best shot at growing your wealth in a meaningful way, is stay in the market for the long term and add to your investments consistently.

If you have $1,000 that you’re ready to invest now and you’re looking for a way to profit from the market’s growth, consider the Vanguard Information Technology exchange-traded fund (ETF) (VGT 0.67%). It provides robust growth opportunities while offering diversification, which minimizes your risk.

A leading technology ETF

The Vanguard Information Technology ETF is a growth fund focused on the technology sector. It has 317 stocks in its portfolio, which isn’t super-large as far as ETFs go, but it still provides exposure to a lot of companies in the sector under the umbrella of a single investment. That minimizes some of the risk that you’ll face that any particular company will perform poorly while giving you access to some of the stocks with the highest potential, including some you might find too risky to invest in individually.

Since it’s a weighted index, the largest companies make up the biggest fractions of the portfolio. As you might have already guessed, the largest component is the world’s largest company, Nvidia — it accounts for 18% of the total portfolio. If you’ve been hesitant about investing in the chipmaker today, this is a great way to add it to your portfolio. Apple and Microsoft combine to make up another 28%.

A person putting money in a piggy bank.

Image source: Getty Images.

Most of the remaining stocks account for relatively minuscule fractions of the total, but you still get access to hot stocks like Palantir Technologies and the recently IPO’d Figma. These are stocks trading at astronomical valuations — artificial intelligence specialist Palantir trades at 185 times forward, 1-year earnings, while digital design tech company Figma trades at a ratio of 339.

Premiums that high might deter many investors. Here, you can get a small piece of such businesses wrapped up in a bigger and more secure investment. However, this ETF gets Vanguard’s highest risk rating. It has an average P/E ratio of 40, well over the S&P 500 average of 26, which is already expensive relative to its historic levels. This ETF is suitable only for the risk-tolerant investor.

However, some of the risk is mitigated in an ETF like this because many of its components are well-established industry leaders. Companies like HP and Adobe are more mature, and they both trade at a P/E ratio of 22.8.

Also, because it’s an index fund, stocks that aren’t performing well enough will be automatically traded out as soon as they don’t meet the index’s criteria. Another benefit of index funds is that they are passively managed and don’t come with high management fees. The Vanguard Information Technology ETF’s expense ratio is just 0.09%, in contrast with what Vanguard says is an average of 0.93% for similar ETFs.

One way to beat the market

Growth investors aim to beat the market. The risks they take in pursuit of that goal are usually in line with their potential for reward, and it works both ways. When the market is thriving, growth stocks are usually leading the way. When the market is sinking, growth stocks are typically tumbling the hardest.

Over time, though, that dynamic often ends up working in the growth investor’s favor, because historically, the market has spent more time in growth mode than not. Over the past 10 years, for example, the ETF’s annualized gains have more than doubled the S&P 500’s.

VGT Annualized 10 Year Total Returns (Monthly) Chart

VGT Annualized 10 Year Total Returns (Monthly) data by YCharts

In fact, the Vanguard Information Technology ETF’s average annualized 10-year gain of 22.4% is the highest of any Vanguard ETF. It’s also outperforming the market this year — unsurprisingly, since the market is up.

If you have some appetite for risk and a long time horizon for your investments, the Vanguard Information Technology ETF could be a great addition to your portfolio.

Jennifer Saibil has positions in Apple. The Motley Fool has positions in and recommends Adobe, Apple, HP, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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National 401(k) Day Is Here — 3 Quick Things to Check Right Now

Two big reasons to celebrate today: First, it’s Friday (and who doesn’t love Fridays?). And second, it’s National 401(k) Day! Woot woot!

OK, so it’s not exactly a party holiday, but if you’ve got a 401(k), today’s the perfect excuse to give it a quick once-over. Taking five minutes to check on your retirement account could save you thousands down the road. Tiny tweaks can add up big time.

Here are three quick things to look at right now (plus one bonus tip to go beyond your 401(k)).

1. Check your contribution rate

First things first: If you’re not contributing at least enough to snag any provided company match in full, you’re basically saying “no thanks” to free money.

If you’re not sure what your company offers (or you’re confused about 401(k) plans in general) ask HR to explain it to you. Don’t be shy — they love talking about benefits.

Next, consider bumping up your contributions a little higher.

Upping your savings by just 1% can make a huge difference over time. Most plans let you increase it in just a few clicks — and then you don’t have to think about it again.

For 2025, the contribution limit is $23,500 (or $31,000 if you’re 50+). No pressure to max it out, but knowing the target gives you something to shoot for.

Here’s what different contribution levels might look like on a $70,000 salary:

Contribution %

Annual Savings

Monthly Amount

5%

$3,500

$292

10%

$7,000

$583

15%

$10,500

$875

Data source: Author’s calculations.

Set it and forget it. One small change now can quietly grow into something huge later.

2. Review your investments

When was the last time you peeked under the hood?

Many 401(k) plans default you into a target-date fund based on your expected retirement year. That’s not necessarily bad, but sometimes it’s not always aligned with your risk tolerance or goals.

Ask yourself:

  • Are you too aggressive or too conservative for your age?
  • Are your fees higher than they should be?
  • Do your investments reflect how far off retirement really is?

I try to review my allocations at least once a year to make sure they’re still working for me. I’m only 40, so I’ve got another two decades before I can think about withdrawals. My focus is on long-term growth, not short-term profits.

3. Consolidate old 401(k) accounts

If you’ve switched jobs a few times, there’s a good chance you’ve got an old 401(k) (or two) just chillin’ somewhere out there.

This happens a lot, actually. Capitalize estimates there are over 29 million forgotten 401(k) accounts in the U.S., holding about $1.65 trillion in assets!

If you want to make life way easier, roll over those old 401(k)s into an IRA. It’s tidier, gives you more control over investments, and can also save you on fees.

And here’s a cool idea… Some brokers are offering 1% match incentives for 401(k) to IRA rollovers. You could snag a little bonus! I recommend checking out Robinhood’s current offer. Read our full Robinhood review here to see if it’s a fit for you.

Think beyond the 401(k)

Just because it’s National 401(k) Day doesn’t mean your retirement plan has to stop there.

401(k)s are great, but they’re only one piece of the puzzle. To give yourself more flexibility (and some potential tax-saving superpowers later), it’s smart to build a mix of account types.

Personally, I’m aiming to build a big portfolio across both pre-tax accounts (like a 401(k) or IRA) and post-tax options like a Roth IRA or a regular brokerage account. That way, when retirement comes, I’ve got options to pull from. And a lot more control over how and when I pay taxes.

If you want to round out your retirement plan, check out:

  • Roth IRAs for tax-free growth and withdrawals
  • Traditional IRAs for more pre-tax savings
  • Brokerage accounts for total flexibility, no age limits or early withdrawal penalties

No matter where you’re starting from, a few small moves now can make a massive difference later.

So give your 401(k) a quick check, tidy things up, and take one step closer to that dream retirement — whatever it looks like for you.

Explore all the top brokers for beginners and start building a more flexible retirement strategy today.

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Is Advanced Micro Devices Stock a Deal Compared to Nvidia?

AMD’s $260 billion market cap means it’s just a fraction of the size of its much larger rival.

Advanced Micro Devices (AMD -0.14%) and Nvidia (NVDA 0.57%) are rival companies, but the former is well behind the latter when it comes to market cap. While Nvidia’s valuation is north of $4 trillion, AMD’s valuation is closer to $263 billion.

AMD is nowhere near the size of the larger chipmaker, but it does possess some incredible potential because of its association with artificial intelligence (AI). The key test is whether its latest chips will provide formidable competition and be able to take market share from Nvidia.

Is the market mispricing AMD’s stock, and could it be a steal of a deal? Or is Nvidia really worth that much more than its smaller rival?

A person interacting with artificial intelligence.

Image source: Getty Images.

How the stocks compare with respect to earnings

Although Nvidia is the more valuable company overall, it’s also much more profitable than AMD. That’s why comparing stocks based on their respective price-to-earnings (P/E) multiples is a much more effective way to gauge how cheap or expensive one stock is in relation to another. And the chart below shows what their forward P/E multiples are, which are based on analysts’ expectations of their future profits.

AMD PE Ratio (Forward) Chart

Data by YCharts.

While their valuations are significantly different in terms of market cap, based on their forward P/E multiples, they are similarly valued, and AMD is in fact the more expensive stock when looking at this metric.

Why AMD may be a bit underrated

Nvidia is bigger, more profitable, and the safer-looking stock when compared to AMD. But a case can be made for why AMD could still be an underrated investment. It recently rolled out its new Instinct MI400 chip, which will be available next year. And CEO Lisa Su recently told analysts that for its current version, the MI350, “seven of the top 10 model builders and AI companies” already use it.

If the MI350 is already attracting top AI companies, then the more advanced MI400 chip may be able to benefit from that and drive even more growth for the business. AMD’s growth rate has been climbing in recent quarters while Nvidia’s has been going in the opposite direction.

AMD Revenue (Quarterly YoY Growth) Chart

Data by YCharts.

Should these patterns continue, then it may not be difficult to envision a scenario in which analysts hike their forecasts for AMD, which may make it appear to be a cheaper buy down the road. As a bit of a laggard in the AI chip market, AMD hasn’t been nearly as exciting a growth stock as Nvidia, but that could soon change.

Which stock should you buy?

Although these two stocks are similarly valued based on their projected earnings multiples, AMD still looks like it may have more upside in the long run, simply because its results haven’t been as impressive as Nvidia’s thus far. However, if its growth rate continues to improve as Nvidia’s slows down, it may be due for a big rally. So far this year, AMD’s stock is up over 34% while Nvidia’s has risen by 27%, as investors are starting to feel a bit more bullish on AMD.

Nvidia remains the safer stock to go with in the long run, given its dominance in the AI chip market. But if you’re looking for a bit more upside and don’t mind taking on some risk and a bit more uncertainty, then AMD could be the better option at this stage. Even though it may not be a bargain buy and still has to deliver some stronger financials to show that it can offer significant competition to Nvidia, I think it’s on the right path and has the potential to be the better AI stock to buy at this point.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.

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Prediction: Dutch Bros Will Help Make You Richer by 2030

Dutch Bros stock might’ve doubled in the last year, but I think it’ll keep rising through 2030 and beyond.

While no one can be certain what stocks may or may not “pop” in any five-year window, investors can tilt the odds in their favor by looking for businesses with a long list of potential market-beating catalysts.

I believe the upstart handcrafted beverages chain Dutch Bros (BROS -0.53%) perfectly exemplifies this notion.

Dutch Bros is home to several promising catalysts that could drive its stock price higher between now and 2030.

Although I’m willing to predict that the up-and-coming company could help make investors richer by 2030, Dutch Bros’ current business developments paint an even brighter picture beyond that point.

Two vehicles wait in the drive-thru lane at a Dutch Bros location, which is painted blue and gray and adorned with a Dutch Bros logo.

Image source: Dutch Bros.

Dutch Bros’ numerous catalysts

Dutch Bros’ share price has more than doubled in just the last year alone.

Despite this run, I believe there are five specific reasons why the company has ample room to rise and help make investors richer by 2030.

Dutch Bros is more than just coffee

Far from a traditional hot coffee chain, Dutch Bros generates 87% of its sales from ice or blended drinks. It also receives roughly one-quarter of its sales from its Rebel energy drinks.

This is a powerful differentiator for Dutch Bros, as it caters directly to its youngest and most important (for the long term) customers — Gen Z — who strongly prefer iced, blended, and energy drinks over hot coffee.

Industry experts project the coffee industry to grow 7% by 2030, whereas the energy drink category should grow more than 40% by 2032. This shift toward energy drinks should keep the company front and center on the beverage scene, thanks to its outsized allocation to energy drinks.

Immense store count expansion potential

Dutch Bros has 1,043 locations, but recently announced its stretch goal of 2,029 stores by 2029. While doubling its store count in four years may sound like a reach, the company is on pace to open around 160 in 2025 and plans to grow its new shop count by a mid-teens percentage annually for the next few years.

If management meets this bold goal and maintains its steady cash generation, I would feel terrific about my prediction being accurate.

Best yet, the Dutch Bros growth story doesn’t stop here. Over the long term, the company believes it can reach more than 7,000 locations. Currently operating in just 18 states (but entering five new ones in 2025), Dutch Bros’ growth story should persist well beyond 2030.

With its newest 2024 shops delivering annual unit volumes similar to those built in 2022 or earlier, I’m confident in management’s ability to continue expanding geographically in a profitable manner.

Cash flows are now positive

Perhaps the biggest reason I’m optimistic about Dutch Bros’ ability to enrich our portfolios is that it recently reached breakeven on a free cash flow (FCF) basis.

BROS Cash from Operations (TTM) Chart

BROS Free Cash Flow = Cash From Operations-Capital Expenditures data by YCharts

Despite the company’s rapid store count growth (which creates heavy capital expenditures), Dutch Bros has reached positive FCF. Said another way, management can now fund its growth ambitions in-house rather than through debt or shareholder dilution from issuing new shares.

Additionally, if Dutch Bros wasn’t spending heavily on capex (just a thought experiment), it would already be a bona fide cash machine, generating 18 cents of cash from operations for every $1 in sales.

Mobile ordering is still young

While the company’s expansion plans may take center stage in its growth story, Dutch Bros’ recent rollout of mobile ordering at all locations could prove to be a promising growth catalyst on its own.

Customers are rapidly adopting mobile orders, but these orders still only account for 11.5% of the company’s total transactions. Every additional order that switches from being placed in the drive-thru lane to mobile offers throughput improvement for Dutch Bros.

During the company’s second-quarter earnings call, Chief Executive Officer Christine Barone explained that mobile ordering has already delivered an order frequency lift, while also being a popular option in the morning.

Whereas customers may have previously gone without a beverage if their time was limited, the grab-and-go feasibility provided by mobile ordering could help add a number of once-missed sales.

Food options

Dutch Bros currently generates less than 2% of its sales from food. While Starbucks has shown that adding food to a beverages-focused business isn’t the easiest feat to pull off, the fact remains that leading coffee chains generate one-fourth of their sales from food.

Currently, Dutch Bros is piloting a food program that could be fully rolled out by 2026 and is already seeing incremental growth in its morning orders. If the company inches anywhere closer to the industry average of 25% of sales from food, it could be a boon for Dutch Bros’s same-store sales.

Dutch Bros’ valuation

While there is a lot to like about Dutch Bros, its price-to-earnings (P/E) ratio of 199 undoubtedly scares many investors away.

However, this may not be the best valuation to assess the company with. Revisiting the cash from operations figures examined earlier, and comparing them to the company’s market capitalization, Dutch Bros stock trades at 47 times CFO.

Yes, this is still a premium valuation, but for a company with a reasonable chance to double its store count over the next four years, it isn’t excessive in my opinion.

Although the company still has to execute, numerous catalysts indicate that Dutch Bros can help make investors rich by (and more importantly, beyond) 2030.

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‘NCIS: Tony & Ziva’ review: Suspend your disbelief for a good time

In “NCIS: Tony & Ziva,” premiering Thursday on Paramount+, two popular characters from the CBS military procedural “NCIS,” have been brought back after several years and given a series of their own. Michael Weatherly and Cote de Pablo, as special agents Anthony “Tony” DiNozzo and Ziva David, so occupied the romantic fantasies of viewers that their names were portmanteaued into “Tiva.” (You can find thousands of instances of Tiva-themed fan fiction online.) As to the will-they, won’t-they of the relationship, they finally did, before they didn’t, and now they have a 12-year-old daughter, Tali (Isla Gie), whom they’re amicably co-parenting.

I have looked in on the franchise now and again, professionally, as new iterations have extended the length and breadth of the brand, which technically reaches back into “JAG,” from which it was spun off. But I’m not even going to attempt to pretend to have any real expertise in the adventures of a large rotating cast over 22 seasons. (It’s been renewed for a 23rd.) But I respect the institution — the original of which has been and may be now America’s most watched series — and its longevity, as I will salute your long marriage.

At the same time, once you know the basic premise of the show — it’s an elite military police procedural — it’s not hard to figure out where you are, wherever you drop in. The characters may be heroic or eccentric, but they’re heroic or eccentric within a recognized mold, with enough individual personality to make them lovable over a long run, and you can pick up on the interpersonal vibes pretty quickly.

Unlike earlier “NCIS” series, all based on broadcast television, “Tony & Ziva” is platformed on Paramount+, which means that characters utter a bad word now and again — it doesn’t get much edgier than that, and despite the sexual heat it’s hardly racy — and that there’s a budget which allows for foreign locations and big action scenes. And where the earlier shows, notwithstanding soap operatic long arcs, are fundamentally episodic, “Tony & Ziva” is a serial story, stretched over 10 episodes. Whether it’s stretched to breaking, we’ll have to wait and see; only four episodes out of 10 were offered for review.

The crime-fighting combo of a roguish guy and a no-nonsense gal is familiar from “Moonlighting” and “Castle.” Even the fact that the title joins Tony and Ziva with an ampersand and not an “and” indicates a certain lightness of tone, and when Tony, speaking of his company, says, “We try to walk that fine line between techno thriller and workplace comedy,” he is, of course, describing the very series he’s in. A strain of comedy is common to team-based procedurals, and it’s certainly part of what’s kept “NCIS” going strong all these years.

Given that the American brand hasn’t been as toxic, internationally and domestically, since the Vietnam era, possibly, and that “NCIS” series show around the world, it’s just as well that the presumed villains are (apparently) not the anti-American, freedom-hating terrorists one often finds in these things, but Bond-type stateless actors merely seeking power and money.

Additionally, the series — whose earlier iterations have been based in Washington, Los Angeles, New Orleans, Hawaii, Sydney and, in last year’s prequel, “NCIS: Origins,” exotic Oceanside, Calif. — is set in Paris, where, having gone civilian, Ziva has opened a fancy language school and Tony runs a high-end security service. (Among his clients: Interpol. You can’t get more European than that.) Along with easy access to croissants and café au lait, our heroes have the benefit of not having to wax patriotic about a country in which they no longer live. It feels very 2025.

The series’ MacGuffin is a magical thumb drive that, when plugged into a computer system, can seemingly do anything at all; possessing it, therefore, is an issue for both the good guys and the bad, into whose respective hands it goes in and out. When villains use it to frame Tony for extorting money from a hospital and threaten Tali’s life, Tony and Ziva are dragged back into a life of running, shooting, reckless driving and fisticuffs. “Two words,” says Tony, observing Ziva take apart a thug endangering her daughter. “Jewish mother.”

Most important, it puts the pair on the run together — the opening episodes find them (ostensibly and/or actually) in France, Italy, Switzerland and Hungary — and into constant close quarters, where old tender feelings simmer and the question of sharing a bed arises, as in “The 39 Steps,” the greatest of all innocent-and-on-the-run romances.

Ziva, whose pre-NCIS employment was as an assassin for the Israeli secret service — perhaps not the best job for a TV heroine to have on her resume nowadays, but it’s not an issue here — has hung on to an arsenal and plural safe houses. (“Have I ever told you how deeply I appreciate your paranoia?” Tony tells her.) And they’ve both kept their old NCIS badges, which they will flash to dazzle security guards and the like.

Along the way they pick up Boris (Maximilian Osinski), a non-aligned Russian hacker who made the MacGuffin in the first place, and his chirpy fiancee Fruzsi (Anne-Marie Waldeck), who provide both comedy and the image of a healthy, all-in romantic relationship to contrast with that of our hesitating heroes. Filling out the ranks are Tali’s capable nanny, Sophie (Lara Rossi), and Tony’s resident tech whiz, Claudette (Amita Suman), because you apparently can’t plot a thriller anymore without computers at the center of things. By virtue of being Tony’s friend and Tali’s godfather, Interpol exec Henry (James D’Arcy) is the sort of character you expect to turn out to be bad, though it’s up in the air. I’ll say no more about Martine (Nassima Benchicou), other than that Benchicou is very good at being very bad.

Created by John McNamara (“The Magicians”), not previously part of the “NCIS” world, “Tony & Ziva” can be quite absurd, depending heavily on suspensions of disbelief, or a viewer just not thinking too hard. This does not set it apart from a great many such screenplays, and the series does not shy away from genre tropes — the car chase through a marketplace, a fight with a seemingly unbeatable big bald bruiser. Indeed, it embraces them.

But what makes the show worth watching are Weatherly and De Pablo, two extremely attractive middle-aged people with genuine chemistry; he’s superheroically unflappable without ever seeming anything but a regular Joe. She’s sad and serious and not to be messed with. They’ve been around; they have worn edges, and when they intersect, it generates something authentically sweet, as real as the rest of the series is improbable. There’s a reason for all that fan fiction.

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Costco Just Made a Big Change to Its Perks, and It Affects Many of Its 79.6 Million Paying Members

A newly implemented policy allows executive level cardholders to enjoy an exclusive perk.

If you thought artificial intelligence (AI) has a sizable addressable market, take a gander at the retail industry. Based on estimates from Mordor Intelligence, the global retail industry will grow from an estimated $27.3 trillion this year to about $36.9 trillion by the turn of the decade.

With an addressable market this massive, it should come as no surprise that retail is one of the most competitive industries on the planet. However, there are a handful of retail standouts, including e-commerce giant Amazon, superstore chain Walmart, and of course warehouse club Costco Wholesale (COST 0.64%).

While Amazon and Walmart have (mostly) grown their respective businesses traditionally, Costco is the oddball of the bunch. It’s known for its quirky deals, such as the $1.50 hot-dog combo for members, generous return policy, and its penchant for selling one-of-a-kind and unexpected items, such as gold bars and luxury jewelry.

The facade of a Costco Wholesale warehouse viewed from the parking lot.

Image source: Costco.

Costco’s 79.6 million paying members, as of the end of the fiscal third quarter (May 11, 2025), have come to expect these perks and surprises. But a new rule is a complete game-changer for many of its paying cardholders.

Costco’s executive members just earned a lucrative new perk

To shop in one of Costco’s more than 900 warehouse locations, you’ll need a membership. Approximately 42 million of its paid membership are gold star and business level, which each carry a $65 annual cost. The remaining 37.6 million are executive level, which carries twice the annual cost ($130), but also lays on the perks.

According to Costco, its executive members can earn up to 2% back on most purchases totaling up to $1,250 annually, as well as receive a monthly credit of $10 for eligible delivery orders topping $150. Executive cardholders may also qualify for discounts on Costco travel packages.

The reason the company caters to this group is because they’re responsible for the bulk of net sales. Despite accounting for “just” 47% of total memberships, executive cardholders were responsible for approximately 73% of sales during the fiscal third quarter. Keeping these folks happy and sustaining annual renewal rates above 90% is key to Costco’s success.

But a newly announced perk for executive members, which was unveiled in June but only fully implemented earlier this week, is bound to turn heads.

On June 11, Costco revealed plans to allow its executive cardholders exclusive shopping hours seven days a week in its more than 600 U.S. warehouses. On weekdays and Sundays, only executive members will be allowed to enter its warehouses from 9 a.m. to 10 a.m., with this exclusive shopping window narrowed to 30 minutes (9 a.m. to 9:30 a.m.) on Saturdays. Though this policy technically went into effect at the end of June, there had been a two-month grace period where gold star and business members were allowed in. This isn’t the case any longer.

While some non-executive members have expressed frustration with this new policy, it’s a smart move by Costco to put the proverbial carrot at the end of the stick and encourage existing gold star and business members to upgrade.

A parent pushing a small child in a shopping cart while inside of a warehouse club.

Image source: Getty Images.

Membership fees are a key ingredient to Costco’s competitive edge

Though membership fees aren’t the only factor responsible for making Costco such a successful growth stock and phenomenal multidecade investment, they play an undeniably important role.

Groceries act as the primary lure responsible for getting people into Costco’s warehouses. However, food and beverages traditionally sport razor-thin margins. Since membership fees flow almost entirely to Costco’s bottom line, they can be used as something of a buffer to offset the minuscule margins tied to groceries.

Arguably even more important, membership fees afford Costco a pricing buffer. Management understands fully that members of all levels expect various perks, including prices on most groceries that’ll undercut traditional mom and pop shops and national grocery chains. The membership fees Costco receives are one of the reasons it can keep prices on basic need goods so comparatively low. It’s something of a repeating cycle that works in the company’s favor.

Costco Wholesale’s size shouldn’t be overlooked, either. When a company has deep pockets, it’s often able to buy products in bulk, which reduces the per-unit cost for each item. These lower costs can then be passed along to its members as a key perk to shopping in its warehouses.

Even though cardholders are likely heading to Costco for groceries and other household necessities, it only takes a handful of higher-margin discretionary purchases for the company to benefit. It also doesn’t hurt when members buy Costco’s private-label brand, Kirkland Signature, which tends to boast premium margins, relative to comparable products.

There’s no denying this formula works. Just over 90% of its worldwide customers renewed their memberships, based on fiscal third-quarter data, with an even higher 92.7% renewal rate in the U.S. and Canada. It also boasts exceptional membership pricing power, with the number of paid memberships growing following a fee increase on Sept. 1, 2024.

There’s a reason investors have been paying a traditionally head-scratching (for a retail company) forward-year earnings multiple of 47 to buy shares of Costco stock. Given its array of competitive advantages, and the exceptional loyalty of its shoppers, there’s a good likelihood this new perk is going to mint even more executive level cardholders in the quarters that lie ahead.

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Why September tends to spook European equity markets


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September has long carried an unfavourable reputation for global equity markets, and European stocks are no exception.

Historical data reveals that the month consistently delivers weak performances for major continental indices, echoing the negative seasonal pattern seen on Wall Street.

Over the past 30 years, the Euro Stoxx 50 index, Europe’s leading blue-chip benchmark, has posted an average September loss of 1.56%, narrowly trailing August’s 1.59% decline, which ranks as the worst month of the year. In 15 of those 30 years, the index closed the month in the red, underscoring a near-coin toss probability of a negative outcome.

The negative seasonality remains intact even when narrowing the lens to the past decade. Since 2014, the Euro Stoxx 50 has recorded an average 1% drop in September, with six out of ten instances ending in losses.

And it’s not just the Euro Stoxx 50 feeling the September slump. The broader Euro Stoxx 600, which captures a wider slice of the market, has also stumbled during this month, with an average loss of 0.96% since its launch in 2002.

That mirrors the S&P 500’s performance, which has lost about 1% on average during the same month over recent decades, the worst return of any month for US equities.

The September seasonal weakness in equity markets may be linked to a confluence of factors: post-summer rebalancing by institutional investors, renewed macroeconomic uncertainty heading into the year-end, and traditionally lower trading volumes following the holiday period.

National indices not spared

Across Europe’s major country indices, the September effect is equally pronounced.

Germany’s DAX index has delivered an average return of -1.62% in September, second only to August in terms of weakness, with a winning rate of just 47%.

France’s CAC 40 fares similarly, averaging a 1.49% decline in September, its poorest month of the year, although it manages a slightly better 53% winning rate.

Italy’s FTSE MIB index, while averaging a flat 0% return in September over the long term, is currently on a streak of four consecutive negative Septembers.

10 European stocks suffer steepest September setbacks

At the individual stock level, several of Europe’s heavyweight names have demonstrated a persistent pattern of September underperformance, with average losses outpacing their monthly norms and, in many cases, marking September as the worst-performing month of the year.

Infineon (Germany): The semiconductor group has an average September loss of 6.13%, its weakest month historically. The stock has closed lower in four consecutive Septembers, with its worst drop of 52.34% occurring in 2001.

Vivendi (France): With a dismal 33% winning rate in September and an average loss of 4.07%, the French media firm experienced a record monthly drop of 66% in 2021.

Airbus (Netherlands/France): The aerospace giant has fallen in six straight Septembers, averaging a 4.01% decline. Its worst September came in 2001, with shares plunging 37.04%.

LVMH (France): Europe’s largest luxury group averages a 3.42% September drop, despite a marginally better 53% win rate. The worst September loss came in 2001, at -34.71%.

Société Générale (France): The French bank posts an average September return of -3.11%, with a 47% win rate. Its most severe drop was -40.38% in 1998.

Schneider Electric (France): The electrical equipment firm has an average September return of -2.16%, with its steepest fall of 34.43% occurring in 2001.

E.ON (Germany): The utility company averages a 2.18% September loss with a 43% winning rate. Its worst drop came in 2015, at -24.03%.

Deutsche Post AG (Germany): The logistics and courier group averages a 1.97% loss in September. It saw its sharpest monthly decline of -22.41% in 2002.

Kering (France): Another luxury player, Kering averages a 1.76% drop in September with a 43% win rate. The worst September came in 2002 (-23.35%), and the stock is currently on a four-year losing streak.

SAP (Germany): Europe’s largest software company averages a 1.6% September decline. A six-year streak of negative Septembers ended in 2024, though the stock once dropped 40.98% in the month back in 2002.

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Judge orders Trump administration to release billions in foreign aid approved by Congress

The Trump administration must release billions of dollars in foreign aid approved by Congress, including money that President Trump said last week he would not spend, a federal judge has ordered.

U.S. District Judge Amir Ali in Washington ruled Wednesday that the Republican administration’s decision to withhold the funding was likely illegal. He issued a preliminary injunction ordering the release of $11.5 billion that is set to expire at the end of the month.

“To be clear, no one disputes that Defendants have significant discretion in how to spend the funds at issue, and the Court is not directing Defendants to make payments to any particular recipients,” wrote Ali, who was nominated by Democratic President Biden. “But Defendants do not have any discretion as to whether to spend the funds.”

The administration filed a notice of appeal Thursday.

“President Trump has the executive authority to ensure that all foreign aid is accountable to taxpayers and aligns with the America First priorities people voted for,” White House spokesperson Anna Kelly said in a statement.

Elisha Dunn-Georgiou, president and chief executive of Global Health Council, one of the groups in the case, said in a statement the decision was a victory for “the rule of law” and reaffirmed that “only Congress controls the power of the purse.”

Trump told House Speaker Mike Johnson (R-La.) in a letter on Aug. 28 that he would not spend $4.9 billion in congressionally approved foreign aid, effectively cutting the budget without going through the legislative branch.

He used what’s known as a pocket rescission, in which a president submits a request to Congress toward the end of the budget year to not spend the approved money. The late notice means Congress cannot act on the request in the required 45-day window and the money goes unspent. It’s the first time in nearly 50 years that a president has used the tactic. The fiscal year draws to a close at the end of September.

Ali said Congress would have to approve the rescission proposal for the administration to withhold the money.

The law is “explicit that it is congressional action — not the President’s transmission of a special message — that triggers rescission of the earlier appropriations,” he wrote.

The money at issue includes nearly $4 billion for the U.S. Agency for International Development, or USAID, to spend on global health programs and more than $6 billion for HIV and AIDS programs. Trump has portrayed the funding as wasteful spending that does not align with his foreign policy goals, and in January, he issued an executive order directing the State Department and USAID to freeze spending on foreign aid.

Nonprofit organizations that sued the government said the freeze shut down funding for urgent lifesaving programs abroad.

A divided panel of appeals court judges ruled last month that the administration could suspend the money. The judges later revised that opinion, reviving the lawsuit before Ali.

In his ruling, Ali said he understood that his decision would not be the last word in the case, adding that “definitive higher court guidance now will be instructive.”

“This case raises questions of immense legal and practical importance, including whether there is any avenue to test the executive branch’s decision not to spend congressionally appropriated funds,” he wrote.

Thanawala writes for the Associated Press. AP writer Thalia Beaty in New York contributed to this report.

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Torrid Holdings Closes 57 Stores in Q2

Torrid Holdings(CURV 0.21%) reported second quarter 2025 results on Aug. 4, 2025, with net sales of $262.8 million and adjusted EBITDA of $21.5 million, in line with internal expectations but reflecting a 6.9% year-over-year comparable sales decline. Management highlighted a strategic pivot toward digital-led growth, accelerated store closures, increased marketing investment, and rapid expansion of higher-margin sub-brands, while navigating tariff headwinds and maintaining liquidity for capital returns. The following insights detail the most significant strategic and financial developments from the call.

Store closures accelerate Torrid Holdings’ digital transition

During the second quarter, the company closed 57 underperforming stores and remains on track to close approximately 180 locations in fiscal 2025, with digital sales now nearing 70% of total demand. This store rationalization is designed to concentrate resources on more profitable digital and omni-channel operations, while a revamped retention strategy aims to preserve customer relationships as the physical footprint shrinks.

“With digital sales approaching 70% of total demand, we are executing a comprehensive realignment that capitalizes on this fundamental shift while strengthening customer relationships across all touch points. To that end, we have been closely tracking customer retention throughout the course of our store closures, and the results remain in line with our objectives. Our target is to retain at least 60% of customers, consistent with historical performance following closures. Encouragingly, retention trends from the 2025 closures are outperforming fiscal 2024 with a greater share of customers migrating to our online platform.”
— Lisa Harper, Chief Executive Officer

This digital migration, coupled with stable customer retention, demonstrates the company’s ability to adapt its business model and maintain engagement despite a shrinking store base.

Sub-brands drive margin expansion and growth for Torrid Holdings

Sub-brand penetration is expected to double in the third quarter and reach 25%-30% of the assortment in fiscal 2026, already delivering “hundreds of basis points” higher product margins than legacy categories. Large-scale refixturing—135 stores year to date—has enabled expanded in-store sub-brand presence, and launches have shown positive halo effects on core denim and intimates.

“we’re still very happy with the margin profile that we’re seeing in sub-brands. And it’s delivering hundreds of basis points higher in product margins than the bulk of the business. And we’re seeing that consistently perform as we roll out more and more deliveries of these. I think there are a few ways that we contemplate expansion past 2026 in this business, whether there are — and we’ll test some of these ideas next year, whether there are stores that we convert to more of a focus on sub-brands.”
— Lisa Harper, Chief Executive Officer

The incremental margin from sub-brands enables reinvestment in scale initiatives and supports the company’s goal of 150-250 basis points of adjusted EBITDA margin expansion in fiscal 2026, even as marketing spend rises.

Capital allocation shifts prioritize shareholder returns and debt reduction

The company repurchased approximately 6 million shares at $3.50 per share using $20 million in cash as part of its $100 million buyback authorization, reducing the remaining authorization to approximately $45 million. Total liquidity, including available borrowing, stood at $111.7 million, and the company proactively extended its asset-based loan (ABL) maturity to 2030.

“We currently have an active $100 million authorization for share repurchase, of which we have approximately $45 million remaining. We also intend to deploy free cash flow to further reduce our debt, fortifying our balance sheet for long-term financial flexibility. At the same time, we remain committed to investing selectively in initiatives that drive profitable growth and improve customer retention, ensuring that our capital decisions not only provide immediate returns, but also strengthen the foundation for future growth.”
— Lisa Harper, Chief Executive Officer

Simultaneous share buybacks and debt reduction, even during a period of EBITDA and net income compression, signal management’s confidence in future cash generation and intrinsic equity value.

Looking Ahead

Management revised fiscal 2025 guidance to net sales of $1.015 billion to $1.030 billion and adjusted EBITDA of $80 million to $90 million, reflecting increased tariffs and a $5 million boost in digital marketing spend, now forecast at 6% of sales. The company is targeting 150-250 basis points of adjusted EBITDA margin expansion and substantial free cash flow uplift in fiscal 2026, driven primarily by store closures and sub-brand growth. Capital allocation priorities for 2026 are focused on further share repurchases and debt reduction, supported by ongoing inventory discipline, with year-end comparable inventories expected to decline by mid-to-high single digits year-over-year.

This article was created using Large Language Models (LLMs) based on The Motley Fool’s insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Why Meta Platforms Stock Outpaced the Market Today

Fears are receding of regulators breaking up tech giants into smaller businesses.

Investor sentiment on Meta Platforms (META 1.52%) stock, in addition to other big tech industry titles, was rather positive on Thursday. Many of these companies were basking in the glow of what was perceived to be Alphabet’s big victory in an antitrust case brought by the federal government.

Additionally, a prominent researcher flagged Meta as one of the sector’s stocks best positioned to take advantage of the artificial intelligence (AI) revolution. With this winds at its back, Meta’s stock booked a 1.6% gain on the day, almost exactly double the percentage rate increase of the S&P 500 index.

Favorable ruling

U.S. District Court for the District of Columbia Judge Amit Mehta ruled that Google, Alphabet‘s core business, need not break itself up with the sale of its Chrome web browser. Although the ruling mandates that the company share some of its data with certain peers, among other minor punitive measures, it falls well short of the business split the government was seeking in the antitrust suit.

Person using a laptop and tablet simultaneously.

Image source: Getty Images.

That came as a relief not only to Alphabet and its many shareholders, but to other tech giants that have also felt the hot gaze of federal regulators. Meta, the owner of foundational social media site Facebook, photo-sharing incumbent Instagram, and popular messaging service WhatsApp, felt to many as if it presented a juicy target.

While there’s no guarantee that regulators will abruptly halt their scrutiny and pursuit of Big Tech, the Alphabet ruling makes this prospect significantly more unlikely. It’s no wonder investors continued to breath a large, collective, sigh of relief on this latest development.

A side play on AI

Meanwhile, one of the more closely followed tech industry researchers named Meta a top pick to take advantage of a sweeping trend.

Thursday morning, Wedbush Securities released a new analysis, broken down into categories, on what it feels are the No. 1 stocks that will benefit from the feverish adoption of artificial intelligence (AI) functionalities. Meta was named as the “Consumer AI name set to dominate the landscape.”

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Meta Platforms. The Motley Fool has a disclosure policy.

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Quest Diagnostics: A Solid Investment or a Risky Bet?

Explore the exciting world of Quest Diagnostics (NYSE: DGX) with our contributing expert analysts in this Motley Fool Scoreboard episode. Check out the video below to gain valuable insights into market trends and potential investment opportunities!
*Stock prices used were the prices of Aug. 6, 2025. The video was published on Sep. 4, 2025.

Should you invest $1,000 in Quest Diagnostics right now?

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Anand Chokkavelu, CFA has no position in any of the stocks mentioned. Karl Thiel has no position in any of the stocks mentioned. Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Quest Diagnostics. The Motley Fool has a disclosure policy.

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Pro-Dex Revenue Jumps 16% in Fiscal Q4

Pro-Dex (PDEX -1.03%), a developer and manufacturer of powered surgical instruments for medical device OEMs, released its Q4 FY2025 earnings on Sept. 4, 2025. The company reported GAAP revenue of $17.5 million, up from $15.0 million a year earlier, but faces margin pressure as gross margin contracted to 20%. Net income (GAAP) fell to $1.2 million, with diluted earnings per share at $0.36. These results showed top-line growth in line with recent management emphasis, but also highlighted new cost and margin risks facing the business.

Overall, the quarter demonstrated growth momentum, with caution signals on profitability and working capital.

Metric Q4 2025 Q4 2024 Y/Y Change
EPS $0.36 $0.46 (21.7%)
Revenue $17.5 million $15.0 million 16.7%
Gross margin 20% 27% (7.0 pp)
Operating income $1.3 million $2.3 million (43.5%)
Net income $1.2 million $1.6 million (25%)

Source: Pro-Dex. Note: Fiscal 2025’s fourth quarter ended June 30, 2025. Fiscal 2024’s Q4 ended June 30, 2024.

Business Overview and Focus Areas

Pro-Dex specializes in designing and manufacturing powered surgical devices, with a core focus on products that rely on its patented adaptive torque-limiting technology. These tools are primarily marketed to original equipment manufacturers (OEMs), especially for orthopedic, cranio-maxillofacial (CMF), and thoracic surgery applications.

The company’s recent strategic objectives emphasize deepening customer penetration, especially among its top accounts. Investment in R&D continues to be a priority, seeking to expand its torque-limiting technology into broader surgical markets. Success depends on continued product innovation, managing customer concentration risk, and maintaining robust regulatory compliance for quality and safety.

Quarterly Performance Details: Key Metrics and Drivers

Revenue (GAAP) grew sharply in Q4 FY2025, led by increased shipments to a small group of existing customers. In the company’s words, “revenue to our top three customers” accounted for the majority of the gain. Sales of a next-generation powered surgical handpiece to its largest customer contributed meaningfully during FY2025, driving both quarterly and full-year growth. While higher sales indicate progress in leveraging existing relationships, the narrow customer base remains a structural risk. The largest customer accounted for 75% of FY2025 revenue, while the top three comprised 94% of sales.

Gross margin, which measures profit after production costs, contracted significantly from 27% to 20% in Q4 FY2025 compared to the prior year. Management attributed the drop in Q4 FY2025 to a less favorable product mix — a shift back toward legacy device shipments rather than newer, higher-margin models — and to new tariff costs that increased indirect manufacturing expenses. Despite this quarterly pressure, full-year gross margin (GAAP) improved to 29% in FY2025, thanks to gains earlier in the year and stronger sales of newly launched products. However, margin weakness in Q4 FY2025 highlights vulnerability to production mix and external cost headwinds.

Operating expenses increased by $409,000 from a year ago, reaching $2.1 million in Q4 FY2025, due to higher personnel costs across selling, general and administrative, and engineering functions. These investments support future growth and product development, but add to cost pressure when gross profit is under strain. This rise in ongoing expenses contributed to a 43% drop in operating income in Q4 FY2025.

Net income (GAAP) decreased from $1.6 million in the prior-year quarter to $1.2 million, influenced by both lower gross profit and higher operating costs. On a diluted per-share basis, earnings (GAAP) fell to $0.36 from $0.46. Management notes that full-year net income (GAAP) for FY2025 rose more sharply, aided in part by unrealized gains from investments, but warns that such non-operating swings can add volatility and do not reflect ongoing core business trends.

Looking Ahead: Guidance and Watch Points

Management reported a record order backlog of $50.4 million as of June 30, 2025 (FY2025). Management described this backlog as supporting expectations for continued revenue and operating income growth in FY2026. The earnings release also mentioned plans to cooperate with customers on tariff cost sharing and intentions to further strengthen management and manufacturing processes. However, no specific financial guidance for revenue or earnings was provided for the next quarter or the coming fiscal year.

Investors should monitor several key areas in upcoming quarters. These include: trends in margin recovery or further erosion from cost or product mix effects; the pace at which inventory and accounts receivable return to more normal levels; and how quickly Pro-Dex can diversify its customer base to reduce dependency on a single large buyer. Close attention to working capital and liquidity will be important, given the sharp decrease in cash balances in Q4 FY2025 as funds were absorbed by increased inventory and accounts receivable.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Motley Fool Markets Team is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. The Motley Fool takes ultimate responsibility for the content of these articles. Motley Fool Markets Team cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Pro-Dex. The Motley Fool has a disclosure policy.

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Why Newegg Commerce (NEGG) Stock Is Soaring Again

What’s driving Newegg Commerce’s latest 26.7% surge? The answer might surprise you.

Newegg Commerce (NEGG 29.96%) is off to the races again. The online retailer posted incredible price gains in July and early August, followed by a sharp drawdown in the last three weeks. On Thursday, the stock was back to its old tricks with a 26.7% single-day gain as of 3 p.m. ET.

Meme stock action, with a twist

Like the momentous rise and fall in recent months, Newegg’s fresh surge looks like a meme stock rally — with some unique quirks.

The stock’s short-selling ratio is high, inspiring dreams of quick short-squeeze rallies when share prices start to move higher. I see no game-changing news in Newegg’s press center, or the company’s official blog. The only potentially market-moving news source would be Newegg’s financial filings, where I found independent investor Vladimir Galkin reporting another purchase of Newegg shares.

Galkin’s Newegg stake now consists of 3.6 million shares, up from 3.52 million on Aug. 19. He controls 17.6% of the stock’s shareholder votes at this point and should be considered a powerful voice in Newegg’s boardroom. Not that he holds a seat there, but large shareholders have ways to make their opinions known anyway.

That’s pretty much it. Scouring the usual online news media you often see in meme stock boosts, there hasn’t been much talk about Newegg on X or Reddit today.

So Newegg’s stock is soaring almost purely because Vladimir Galkin is boosting his ownership again. It’s a somewhat unusual angle on the classic meme stock idea, but the results are the same.

A pink rocket rises atop a pink stack chart.

Image source: Getty Images.

Vladimir Galkin’s strategy

It’s important to note that Galkin’s claim to fame (and wealth) comes from his lucrative investments in Gamestop during the video game retailer’s meme stock peak. He is also a top shareholder in airline operator JetBlue Airways, which has acted like a meme stock recently.

Meme stock investing is what Galkin does, pulling strings and pushing buttons to boost social media chatter around the stocks he’s buying. And at this point, his strategy is famous enough that the stock buys themselves have market-moving power.

That’s all Newegg is doing today. The struggling e-tailer did not sign an important contract, nor did it start low-priced sales of the Next Big Thing in gaming hardware. It’s just another meme stock surge.

Anders Bylund has positions in Newegg Commerce, unfortunately. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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This Country’s Stock Market Cannot Be Ignored

Germany’s stock market is outperforming the U.S. in 2025.

U.S. stocks are doing relatively well as of September 4, up by 10.6% year to date. That’s right in line with the average annual gain of about 10% for the S&P 500 index since that benchmark’s 1957 inception.

That’s not bad at all, considering that the index posted robust gains of more than 23% both last year and the year before. But this year, another nation’s stock market is outperforming the American market… by a lot.

I’m talking about Germany. The DAX index, the benchmark and barometer for that nation’s economy that tracks 40 German blue-chip companies trading on the Frankfurt Stock Exchange (analogous to the all-American S&P 500), is up about 17% this year, almost twice the gain of the S&P 500. And the broader MSCI Germany index, which tracks 54 large and mid-cap stocks, is up about 35% in 2025.

There may well be much more upside to come. German stocks look to move higher into next year, as profits for the nation’s companies in 2026 are forecast to rise 14%, slightly higher than the projected earnings growth for the S&P 500. Always remember that share prices ultimately follow earnings growth.

The German economy

Germany is an economic and industrial powerhouse. Its gross domestic product of about $4.4 billion makes it the largest economy in Europe and the third largest in the world behind the U.S. and China.

The German flag flies over the Reichstag building in Berlin.

The Reichstag building, seat of the lower house of Germany’s legislature. Image source: Getty Images.

So, what’s driving German stocks higher right now?

There are several factors. A major one is a recently enacted huge federal spending package of some 500 billion euros (about $582 billion) for infrastructure across the country, as well as legislation that removed the so-called “debt brake” on defense spending, which is driving an expansion of military and defense manufacturing and cybersecurity investment.

A less discussed factor is the growing popularity of investing among Germans. For decades after the hyperinflation of the 1920s, many people in the nation harbored a level of risk aversion that caused them to avoid the stock market. But that’s finally changing, and the number of Germans who own equities is up 44% over the past decade. So savings flowing into the stock market have given German equities an added lift.

And the European Central Bank, which controls the money supply for the European Union (which includes Germany), has been steadily cutting its key interest rate since June 2024, from 4% to 2%. That monetary stimulus is providing an extra boost to company revenue and profits across the E.U.

Investing in German stocks

One way to gain exposure to the German economy is through the iShares MSCI Germany ETF (EWG 0.47%), which tracks the MSCI Germany Index and covers about 85% of Germany’s total stock market. That exchange-traded fund rose almost 10% last year and more than 23% in 2023.

The fund’s assets under management are about $2.8 billion, and its top four holdings are:

  • SAP (SAP 0.46%), an information technology company, accounts for 14.5% of assets.
  • Siemens (SIEGY -0.19%), an industrial conglomerate, at 10.8%.
  • Allianz (ALIZ.Y 0.30%), a financial services provider, 8.4%.
  • Deutsche Telekom (DTEGY 2.01%), a telecommunications giant, 6.6%.

No other stock in the fund accounts for more than 5% of the assets, which makes it relatively diversified and a good proxy for the German economy.

The ETF is up 31% in 2025, and its expense ratio is 0.5%, which is considered about average for an ETF.

Generally speaking, investors need to diversify their portfolios. That means putting your money into a mixture of growth and value stocks, and ideally also includes a mix of U.S. and international stocks. Germany’s market is soaring, and the iShares MSCI Germany ETF is a great way to participate in that ascent.

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Why Salesforce Stock Fell 8.5% This Morning

Why did Salesforce stock drop after beating earnings estimates? Investors may have wanted something the company couldn’t deliver.

Shares of Salesforce (CRM -5.27%) took a significant hit on Thursday. Following the company’s release of second-quarter results, the stock fell as much as 8.5% in the morning session. By 11:30 a.m. ET today, Salesforce had recovered to a 5.7% overnight price drop.

A computer user frowns at their laptop screen.

Image source: Getty Images.

Another earnings beat for Salesforce, but wait — there’s more

Wall Street’s average analyst had expected second-quarter earnings to rise about 8.6% year over year, landing near $2.78 per share. Revenue was targeted at roughly $10.1 billion, reflecting an 8.7% increase. The enterprise software giant exceeded the consensus analyst targets across the board, posting earnings of $2.91 per share on sales of $10.2 billion.

Looking ahead, management set full-year guidance targets just above the current analyst projections. So it was a beat-and-raise performance, but the stock still took a tumble.

Why investors wanted more from Salesforce’s AI moves

Salesforce investors were probably looking for stronger guidance targets. After all, CEO Marc Benioff recently said that his company is removing roughly half of its customer support staff in favor of artificial intelligence (AI) tools. Specifically, deploying agentic AI systems to support human customer service specialists can deliver top-notch support outcomes at a faster pace and lower cost.

But this report highlights how the company isn’t exactly laying off that redundant support staff. Instead, the workers are being redeployed into sales and marketing operations, where the human touch makes a bigger difference these days. So, if you were hoping for a large cost-cutting effect from Salesforce’s agentic AI moves, the reported financials told a different story.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Salesforce. The Motley Fool has a disclosure policy.

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Toro Posts 5.7% Growth in Fiscal Q3

Toro (TTC -1.22%), a global leader in turf, landscape, and irrigation equipment, reported its fiscal 2025 third-quarter earnings on Sept. 4, 2025. The results highlighted a notable divide: the Professional segment posted robust growth and margin expansion, while the Residential unit experienced significant declines. Adjusted diluted earnings per share (EPS) reached $1.24, exceeding the analyst estimate of $1.22 (non-GAAP), and improving from $1.18 last year (adjusted, third quarter fiscal 2024). However, net sales were $1.13 billion, down 2% from $1.16 billion in the prior year, and slightly below previous guidance. An $81 million non-cash impairment tied to slower recovery in the Spartan business held reported diluted EPS to $0.54.

Management commented: “Our Professional segment continues to perform well, our innovation pipeline remains robust, and our strong cash generation supports our investments in continued growth as well as returning capital to shareholders. We are navigating today’s environment from a position of strength, supported by our market leadership, operational excellence, and the financial flexibility to create long-term value. This disciplined approach to managing through cycles while investing in our future is how we build enduring value for all stakeholders.”

Results broadly matched the lower end of revised expectations.

Metric Q3 2025 Q3 2024 Y/Y Change
Adjusted EPS $1.24 $1.18 5%
Net sales $1.13 billion $1.16 billion (2%)
Professional segment net sales $930.8 million $880.9 million 5.7%
Professional segment operating margin 21.3% 18.8% 2.5 pp
Residential segment net sales $192.8 million $267.5 million (27.9%)
Free cash flow (nine months YTD) $291.9 million $270.5 million 7.9%

Business Overview and Strategic Focus

Toro is best known for its power equipment and irrigation solutions targeting professionals and homeowners. Its product lineup spans mowers, irrigation systems, snow blowers, and construction tools, sold under brands tailored for golf courses, landscapers, sports fields, and everyday consumers.

Recent years have seen Toro prioritize its innovation pipeline, cost efficiency programs, and targeted acquisitions. The company’s growth relies heavily on bringing new products to market, advancing sustainability goals, and expanding its global dealer-distributor network. Success depends on staying ahead in product development, integrating acquisitions like Spartan, and navigating fluctuations in consumer and professional market demand.

Quarter in Detail: Segment Performance and Key Developments

The Professional segment, which includes equipment for golf courses, sports fields, underground construction, and commercial contractors, anchored the quarter’s results. Segment net sales increased 5.7%, while operating margin jumped 2.5 percentage points to 21.3%. This rise was due to higher shipments of underground construction equipment and golf/grounds products, along with gains from Toro’s ongoing AMP (Amplifying Maximum Productivity) cost savings initiative and reduced marketing costs. Management reported that productivity and net price gains in the Professional group offset some of the impact from prior-year asset sales.

Professional segment earnings were $198.5 million, up from $165.7 million in the same period last year. The segment’s growth is important because it accounted for 77.6% of company-wide revenue for fiscal 2024. It now accounts for roughly 82% of company-wide revenue, contributing to overall profitability even as other areas lagged. Demand remained steady for core Professional products, especially those related to infrastructure and turf care.

The Residential segment, focused on products for homeowners like mowers and snow throwers, continues to struggle. Residential segment net sales were $192.8 million, down 27.9% from $267.5 million in the same period last year, and operating margin shrank to just 1.9%. Management cited weak homeowner demand and a slow recovery for channel partners and dealers. Higher input costs, promotions, inventory adjustments, and disappointing battery-powered product adoption rates all contributed to the segment’s margin compression. This softness triggered an $81 million non-cash impairment charge tied to the Spartan trade name, acquired as part of Toro’s purchase of the Intimidator brand lineup.

The company’s gross margin slipped by 1.1 percentage points due to these pressures, but adjusted operating margin held steady at about 13.6%. Free cash flow improved year to date for the first nine months of fiscal 2025, helped by better working capital management. No major acquisitions were made during the period. In line with its shareholder return strategy, Toro paid $113.8 million in dividends in the first nine months of fiscal 2025 and repurchased $290 million in stock in the same period.

Toro continued to focus on product development and innovation across its core segments. Product and process innovation, especially connected and autonomous solutions, remained a strategic theme.

In Residential, the company’s push toward battery-powered lawn mowers and snow throwers saw limited traction, reaching only about 7% penetration versus a 20% internal target. This lag in battery adoption led to excess inventory and pricing pressure, impacting both margins and inventory valuation. The decrease in residential segment earnings was partly due to higher sales promotions and incentives, reflecting tougher channel conditions and efforts to reduce inventory of both gasoline and battery-powered equipment.

Total international net sales fell 8.7% year over year, suggesting that global demand trends were mixed. About half of the company-wide revenue decline is traced to non-core divestitures completed last year, an expected impact as the company backs away from low-priority product lines. Management acknowledged that alternative power products and sustainability priorities remain part of its long-term strategy, yet these did not materially influence current quarter results.

AMP productivity gains are on track, delivering $75 million in annualized cost savings, with a goal of at least $100 million in run rate savings by 2027. Key risks noted by Toro include the uncertain pace of recovery in U.S. residential demand, ongoing input cost inflation, and the need for continued improvements in channel inventory.

Outlook and Investor Watchpoints

Looking forward, Toro maintained its full-year fiscal 2025 outlook at the lower end of previous ranges. Management continues to expect flat to down 3% in net sales for fiscal 2025 compared to fiscal 2024, and adjusted diluted EPS of around $4.15. These forecasts account for continued softness in Residential demand, along with projected cost savings and expected Professional market resilience. Guidance also reflects anticipated tariff headwinds and persistent cost pressures for materials and logistics.

Toro gave no new specifics on revenue growth timing for Residential or on potential recovery in consumer spending. The company’s priorities remain on executing the AMP cost reduction program, monitoring battery-powered product adoption, and improving inventory efficiency. Investors should keep an eye on trends in Professional segment demand and any shifts in the channel as indicators of future performance. The company continued its dividend payments during the period.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Is It Finally Time to Buy Chipotle Stock?

Chipotle’s stock has plummeted nearly 40% since last summer’s stock split. It’s time to get hungry again.

When Chipotle Mexican Grill (CMG -1.15%) introduced its Adobe Ranch premium add-on sauce in June, the burrito roller claimed that it was its first new dip since its reformulated Queso Blanco rolled out five years ago. Investors know that this isn’t entirely true. There have been plenty of dips for the restaurant stock. All you have to do is check the five-year stock chart.

Chipotle may be a classic growth stock, but it’s up a modest 60% over the past five years. The haul over the last three years is half that. A big reason for the surprisingly pedestrian returns is that Chipotle shares have shed a quarter of their value over the past year. It gets worse. Draw the starting line at mid-June of last year — when the stock hit an all-time high just days before its 50-for-1 stock split was executed — and the fast casual chain has plummeted 40%.

There are some good reasons for the downticks, and I’ll get there. However, has Chipotle fallen far enough to make it too tasty to ignore? Forget Adobe Ranch, Queso Blanco, and even the famous guacamole. Is this the dip that you as an investor have been waiting for? One analyst seems to think so.

Putting the “up” in upgrade

Chris Luyckx at Rothschild & Co Redburn upgraded Chipotle on Wednesday. He’s sticking with his earlier $55 price target, but with the shares now lower he is bumping his rating from neutral to buy. This represents 32% of near-term upside from current levels, but don’t go calling this an upgrade based on convenience. He could have also just lowered his price target and kept a ho-hum rating on Chipotle if he felt the downticks were warranted.

Luyckx concedes that Chipotle is going through a rough patch. After years of positive comps, same-restaurant sales have been negative through the first half of this year. The analyst feels that the recent slump isn’t a sign that there are structural shortcomings to the Chipotle model. He feels that the store-level retreat is cyclical in nature. With a strong brand and loyal fan base, Chipotle is positioned well to regain traffic and market share once economic concerns being to ease.

Someone eating a tinfoil-wrapped burrito.

Image source: Getty Images.

Chipotle itself seems to agree that things will get better sooner rather than later. Speaking on CNBC’s Mad Money last week, CEO Scott Boatwright was confident that the chain can return to the mid-single-digit comps growth that it has historically averaged until the recent pullback. He argues that Chipotle’s marketing approach is already improving and that its overall strategy can use some fine-tuning to win in this challenging climate.

Thursday’s rollout of carne asada — bringing back the limited-time protein for the first time in two years — is a fair indicator that Chipotle isn’t standing still. If there’s one thing that the chain learned when Brian Niccol was at the helm until last summer, it’s that the founding team’s approach of menu rigidity doesn’t work in the new normal.

Chipotle may already be turning the corner. After starting the year with a 0.4% decline in comps for the first three months of the year followed by a head-turning 4% slide in the second quarter, guidance it issued this summer is encouraging. It sees comps for all of 2025 clocking in about flat, implying that store-level sales will be mildly positive in the second half to counterbalance the 2% slide through the first six months of this year.

Cheap is relative

A point raised by Redburn’s analyst is that Chipotle has settled itself in nicely as a cheaper meal option in the fast-casual space that has been overtaken by premium salad spinners and pricy Mediterranean concepts that Luyckx estimates charge 25% to 30% more. It’s against this backdrop that many fast-food chains have abandoned their dollar menus, pushing prices higher for signature offerings to the point where opting for Chipotle only comes at a modest premium.

It’s not just a meal at Chipotle that has become relatively cheaper. The stock itself is historically cheap. Chipotle is trading for 31 times forward earnings and less than 30 times next year’s profit target. It’s not a low multiple for value investors, but Luyckx points out Chipotle hasn’t traded this low on a forward basis for an entire year since 2015. The obvious counter to that is that future growth projections are lower for the more mature Chipotle now. However, the case for investing in Chipotle is more compelling right now with the stock moving lower as its comps are about to turn positive.

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

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