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In this episode of Rule Breaker Investing, Motley Fool senior analyst Emily Flippen is here as we review these two five-stock samplers: “5 Stocks That Will Press On” and “5 Stocks for Conscious Capitalism.”

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David Gardner: Thirty separate times, about every 10 weeks on this podcast, over six years, I picked five stocks. I chose a theme that made sense to me at the time — sometimes sublime, sometimes silly. Then I thought to myself, what are the five best recommendations that I can come up with for stocks that fit that theme? Aiming, of course, always to beat the market, the S&P 500 — otherwise, hey, why are we bothering? Then, one year later, we review the picks. And then another year passes: the two-year review. Two years later, we never forget, we hope you wouldn’t. Also, we score everything transparently and accountably, because we’re Fools. You should expect that of us.

And then the three-year review, which is going to be the most telling. Why? Well, first because three years have passed since I picked the five stocks. We really can be smarter about what has happened, and why, and what we can learn. That’s the smarter part, but if I’ve done my job well, then we’ll also be happier and richer, too.

Now, that three-year review is also telling because most of the time, we end the game right there. We’re going to keep holding those stocks in real life, mind you. You should, too, if you own them. But if I kept reviewing all 30 of my samplers in years four and five and six, well, we wouldn’t have time to do much else on this podcast.

Thirty separate times, I’ve picked five stocks what I’ve also called my five-stock samplers. We’re going to review two of those samplers today: “Five Stocks That Will Press On,” and “Five Stocks for Conscious Capitalism.” Review them we will, with my guest star, Emily Flippen, only on this week’s Rule Breaker Investing. 

Welcome back to Rule Breaker Investing. Excited about our review-a-palooza episode — two past five stock samplers, “Five Stocks That Will Press On.” Let’s see if they are. They still have an opportunity to press on further. That one’s two years old now, the game being played for three. The second — “Five Stocks for Conscious Capitalism” — and when the market closed on a pretty strong Friday last week, that ended the game, the five-stock sampler for “Five Stocks for Conscious Capitalism.” Fool guest star Emily Flippen will be joining me very shortly and we’ll talk through, the tens stocks, actually really, the eight stocks, because a couple of them repeat, which is its own point, which maybe I’ll speak to later in just a little bit.

It’s been a fun month to this podcast, kicking it off with “Mental Tips, Tricks, and Life Hacks.” Last week, of course, being joined by Kara Chambers and Lee Burbage, talking through their 10 greatest company culture tips of all time. I hope you enjoyed that, and it’s a reminder that we have a mailbag episode later this month. In fact, there are five Wednesdays in November, check it. The fifth and final one, Nov. 30, will be this month’s mailbag. If you already find yourself with a question, it would be good to send that in now — [email protected] is our email address, @RBIPodcast on Twitter — because we will be recording our mailbag the Monday before that Wednesday because, well, Thanksgiving and travel, and so it’s a little bit of a shorter week for us this time. So get your mailbag questions in — [email protected]

Emily, how are you doing?

Emily Flippen: I’m doing well. Thanks for having me on today.

David Gardner: You’re welcome, and thanks by the way, for being one of our employees who tends to come to the office more so than some others, me included. But I’m just delighted, you and I are in original Fool HQ here in Alexandria, Virginia, in our studios for this one, that’s why the sound quality is a little bit up and perhaps the conversational quality will be a little bit elevated as well since we’re in person.

Emily Flippen: I like to think so. I will say, this is an excuse for me to leave my 700-square-foot apartment. So really, you’re indulging me by taping us in person.

David Gardner: Well, we had a lot of fun last night because you and I and many other Fools were at the Hawk and Griffin in Vienna, Virginia, where we had a member meet-up. We taped Motley Fool Money, and Emily, you were interviewed on it and I was as well, and that will appear, I think, this coming weekend for Motley Fool Money fans. But did you have a fun time last night?

Emily Flippen: It was a blast. Again, a reason to get out of my apartment, not something I do very often these days. More importantly, an opportunity to meet some of the faces behind the names that I see behind screens. I think any Motley Fool subscriber in a 50-mile radius was invited. So it was such a treat to see how many people actually took time out of their days in their lives to come join us, talk to us. Always a really enlightening and fun experience.

David Gardner: One of my favorites was a woman who said, “First of all, my name is Nancy Gardner. I’m not related to David or Tom.” We wish we were related to you, Nancy, but her family, I think it was from Oklahoma, and she talked about the importance of buying. She said her question was basically, should you ever not be buying? She was definitely, in a sense, preaching to the choir because I think a lot of us in the pub last night believed that you should be persistently buying throughout the course of your life. Rather than just ask the question, she mentioned the story of her mom, her mom who lived to be…

Emily Flippen: 109 years old. Can you imagine?

David Gardner: I can’t. I was delighted just to think that her mom’s last name might’ve been Gardner as well. I’m not sure. Maybe we have those genes. But 109! And what was great about that story is Nancy said she kept buying through her hundreds. The last stock she bought was when she was 106. It’s a reminder that a lot of us, if you make a commitment to invest for your whole life, I hope you do well enough that you’ll have something left for others. So you really are, at whatever elevated age any of us makes it, you really are, in a sense, investing for what comes after you. It was great to see. I think she definitely won the Best Gardner in the Room award last night.

Emily Flippen: Certainly.

David Gardner: Emily, you did a good job talking about an interview you conducted recently that will be featured, I think, for our Foolapalooza all-hands, all-company event which occurs later this week. I assume that will eventually make it out to our members as well.

Emily Flippen: Yes. Employees will be hearing it this Thursday, but for listeners who are, I guess, Motley Fool Money listeners — they’ll be hearing it over the course of the next couple of weeks, segments from that interview that I believe Chris and the team will be sharing.

David Gardner: Who was the CEO you spoke to?

Emily Flippen: Yes, the CEO of Chewy, Sumit Singh. He’s not the founder of the business, but he’s been the CEO for a number of years and he led the company through its IPO just a couple of years ago. The business, in my opinion, is an incredible one. I say that mostly because I’m a pet parent, and I do use Chewy services way more than I care to admit with a very picky cat. But the business itself has gone through a really incredible transformation. The investments they’ve made in transportation and logistics, competing against some of the largest organizations in the world by putting a focus on culture and a deep understanding of their customer — I think that’s where Chewy truly shines.

One of my favorite things to do is to have the opportunity to remind people that this isn’t Pets.com. This isn’t trying to disrupt Amazon, this isn’t trying to convince you that you never need to shop in person again, but that niche online e-commerce operation that really understands its customers and what they need can succeed in this world.

David Gardner: Ticker symbol is CHWY. It’s fun to talk stocks in this podcast, no matter what. It’s not in either of my five-stock samplers. In some senses, it might be good that it wasn’t, because just looking back over the stock, well, this is really the tale of the tape of the last three years, but I’m seeing right now, Emily, three years ago on this day, Chewy was trading around $22 a share. Today, by the way, $43, so a double over three years. I think all of us would take a double every three years all the time. If we could do that with our portfolios, the compounding would be amazing. But the stock did rock from $22 three years ago to $120 somewhere around the start of 2021. For it to be down from $120 to $43, this does feel like a lot of stocks that you and I are interested in and have recommended. We’ll see some of that with the sampler coming up. But it’s been very volatile.

Emily Flippen: Extremely. A lot of that is, I hate to talk about the pandemic when we talk about the performance of businesses. Everybody knows what happened over the past couple of years, and it’s way more important how a business has run their internal operations, in my opinion, than what has happened in the environment around them. But very much that rocketing was an explosion of not only e-commerce shopping during the pandemic, but also pet ownership as people moved back home and got animals to keep them company. Chewy definitely benefited from that, but they’ve done an amazing job of creating really loyal and engaged customers.

If you’re looking at that stock chart and you’re thinking that this company is dead in the water, that’s definitely not what’s happening, but you’re also looking at it and thinking it’s too late to get in on this. I still don’t think that’s the case. Disclaimer: I could, of course, be wrong about Chewy, but as a shareholder and as a user of the product, I can say I’ve been consistently impressed with the business.

David Gardner: Two fun facts. The first is that Chewy’s market cap — we’re not playing the Market Cap Game Show this week, so no quizzes for you this week, Emily — but Chewy’s market cap — larger than I was thinking: $17 billion today. This is no fly-by-night micro-cap operation here. It’s a brand that a lot of people, and I know you’re one of them, Emily, love, but it’s not just you. That’s fun fact No. 1.

Fun fact No. 2: This stock is actually up from a low of right around $22 to $43 in just the last six months. This stock has doubled in the last six months. Very impressive. I’ll throw in a bonus fun fact No. 3, because I’m just noticing this as well. The company came public in either May or June of 2019, so early summer. The first day it traded up basically to the price where it is as we speak, right around $43 a share on that first big IPO day. Still early days for this business, but I will say, Emily, it’s much bigger than I was realizing.

Emily Flippen: Yes. I look forward to those segments at the interview because you’ll hear Sumit Singh talk about the long-term potential for that business. He’s always thought in years, not months or quarters. I promise you if you asked him, “What’s the market cap of Chewy today? or “Where is the share price today versus when the company went public?” I would imagine he’s the type of person who can’t answer that question too accurately. But he is a person who is hyper-focused on how they can continue to maintain Chewy’s dominance. To your point, it’s the largest pet e-commerce operation in North America right now. They’re expanding internationally or have plans to expand internationally. Again, execution is going to be key for this business, but it’s one that I think should be on investors’ radars. Maybe eventually it’ll make it on yours, David.

David Gardner: Well, let’s get to the first of the two five-stock samplers we’re going to do most recent to oldest, as is the tradition for review-a-paloozas. Two years ago, it was Nov. 11, 2020 — just checking it — as I picked “Five Stocks That Will Press On.” Emily, I’m going to ask you in a sec, do you remember what you were doing the week of Nov. 11th-ish, 2020? But before I do, I want to make sure that I re-quote the great Calvin Coolidge quote from which “Press On” was extracted. It’s definitely one of my favorite quotes when it comes to “just keep swimming.”

Here it was. Coolidge said: “Nothing in the world can take the place of persistence. Talent will not. Nothing is more common than unsuccessful men” — we can say here people, it was an age where they said men — “than unsuccessful men with talent. Genius will not. Unrewarded genius,” Coolidge said, “is almost a proverb. Education will not. The world is full of educated derelicts” — that’s a little harsh. But here’s the great line. “Persistence and determination alone are omnipotent. The slogan ‘press on’ has solved and always will solve the problems of the human race.” Press on. “Five Stocks That Will Press On.” Emily, do you remember what you were doing, ish, Nov. 11, 2020?

Emily Flippen: My calendar will not let me forget, unfortunately, because that week, I remember, and the weeks following it, where normally I’d be on my way to an in-person Foolapalooza event or headed somewhere for Thanksgiving. But with the pandemic, I was sheltering in place, I suppose, in my apartment, and I had three mock exams for my Level 2 CFA exam in that week. I had one at the beginning, one in the middle, and then one at the end, in preparation for taking that test later in the year. Not a particularly fun week for me, it seemed.

David Gardner: I think obviously a lot of us want to make sure you did pass, ultimately.

Emily Flippen: I did pass. I passed the Level 2 exam and then I went on to pass my Level 3 exam.

David Gardner: That is incredible.

Emily Flippen: I’m very happy to be done with it. Actually, I think I just passed my one-year anniversary, my one-year CFA anniversary, if I can call it that. I’ll tell you what, I have blacked out in many of those memories. I’m very happy to have my social life back and a bit more free time.

David Gardner: Wow, congratulations, Emily Flippen, CFA.

Emily Flippen: That is something that I suppose I can say now. Although I don’t often.

David Gardner: In rather extreme contrast, I myself was celebrating that week the release of Assassin’s Creed Valhalla, which is an excellent video game. Like so many video games, I still haven’t actually finished it, but it is a remarkably good game of the Assassin’s Creed series that many of us probably won’t know, because not everybody is nearly as geeky as I am. It’s maybe still my favorite. But anyway, Assassin’s Creed Valhalla, I do see I had a happy hour that Friday with my friend Bobby. But now, as I look back, I realize that was just a Zoom happy hour. We weren’t actually together because that’s how things were in November of 2020. And five stocks were picked that would press on. That was certainly the hope.

Emily, I listened to last year’s episode where we did the one-year review for this group, and the stock market was up something like 32% that year. I’m now reporting two years after these stocks were picked and the S&P 500 is now up 11.5%, so significantly lower. Of course, we’ve all seen the S&P lose about a fifth of its value here in 2022, so I guess it’s not surprising, but those halcyon days when we could look back and say, wow, the market in one year was up 32%, a third of its value.

Emily Flippen: We talk about the long-term performance of markets, 9% to 10% annualized. Very rarely does the market ever return 9% to 10% in any single year. Generally, you’ll have crazy years like we were experiencing back in 2020 when the market’s up more than 30% and then years like 2022 when we’re seeing draw-downs of 25% to 30%, even in some of the broader indexes, so it’s just part of being an investor.

David Gardner: Well, the bogey that we are competing against here is the return to the S&P 500 after two years, 11.5%. We’re going to look over these five stocks. Always like to start with the worst performer, and unfortunately, it’s nearly a tie for the two worst performers, both down pretty substantially. It hasn’t been a great two years for both Ecolab, ticker symbol ECL and Zebra Technologies, ticker symbol ZBRA. Both of these stocks basically round to being down 27%. Technically, Ecolab has done worse, minus 27.4%. But Emily, that puts them both basically 38 percentage points or so down to the market averages. Let’s start with Ecolab. What do you see when you look back over the last two years at this company?

Emily Flippen: Well, like with everything, as I was saying earlier, it’s really hard to give a description of the performance of companies that were picked during — I don’t want to say the peak — but during this crazy unusual year we were having in the pandemic. The pandemic did dictate much of Ecolab’s subsequent performance.

But I’d like to focus on the business itself for this analysis. I think this is where the market has maybe punished this business in comparison to some of its peers. And that’s because this management team has made some really interesting heavy investments in a way that has been unusual for the historical performance of this company.

For investors who are unaware, Ecolab is a business that sells products related to water, hygiene, chemicals, sanitization — selling mainly to industrial enterprises, retail space, food service establishments. Any place that needs to clean, there’s a good chance that Ecolab has a relationship and can sell products to those needs. At the same time that they’re experiencing this really choppy sales cycle as a result of the pandemic, the company was massively increasing its expenses in order to obtain product innovation.

Now they have the flexibility to do that. To your point, this is a business that will press on. It’s not going anywhere. But those investments and the technology upgrades they made to their sales team, the infrastructure, it really hurt the margin picture of this company. For what is normally perceived to be a really stable performer, those slow margins decreasing, a little eat-aways at its financial performance has certainly been punished by the market. It’s also worth noting that their longtime CEO, Doug Baker, did step down as CEO to retire, and brought in a new management team. They’ve been executing well, but the market doesn’t like that instability.

David Gardner: Well, the stock was at $210 two years ago this week, now around $150. I have many stocks that are down well more than that. So down 27% after two years — frustrating certainly. Never like to lose any capital. But this is a bigger cap company and it’s a little bit more of an unsinkable Molly Brown. I don’t think this company is going to go away anytime soon. It was founded in 1923. By the way, just checking back on this, I think I spoke to this in the first episode two years ago, but the name was Economics Laboratory. It wasn’t ecology or anything related to the environment or cleanup. It was actually Economics Laboratory in 1923 by Meredith Osborne. This company is headquartered in St. Paul, Minnesota.

So Ecolab, a disappointing couple of years. It’s a company that we’re going to hear about again. Emily, don’t share everything about Ecolab because it’s picked [in] the second five-stock sampler we’ll be speaking to in a sec. But I like a lot of things about this business. It certainly has held up better than many of my real rule breakers out there, but always disappointing of course, to see it underperform.

Let’s talk a little bit about Zebra Technologies. This is the barcode company. This is a company that does barcode readers. I still see barcodes everywhere. It seems an important part still of our society. It is a stock that I hope will press on. I do regret to say though, it was $356 two years ago. It’s around $260 today, so also down 27%. Again, the market up 11%. What’s happening in Zebra-ville?

Emily Flippen: Well, I want to say in the year after your pick, Zebra was actually on an absolute tear. From November 2020 to November 2021, in that first year, the stock increased more than 75%.

David Gardner: Don’t remind me.

Emily Flippen: Yes. That was outperforming the market. We talked about what an incredible year that was for the market. That was still 40 percentage points or so above the market performance. Virtually all of its underperformance now has come since November 2021, which many investors know was the peak of the market for many of these investments. The reasons I think it struggled so much is there’s just so many questions about the forward-looking investments that this business is going to benefit from. There was obviously a lot of pull-forward in terms of large enterprise demand for Zebra’s products. A lot of companies were investing really heavily in upgrading their supply chains, their logistics, their infrastructure.

All of those investments dramatically benefited Zebra. But it did pull forward a lot of sales, and the company is now looking at declining — very slowly declining, but declining — net sales growth over a year-over-year period, which is certainly being punished by the market today. They also had a little bit of a patent dispute with Honeywell, which cost them upwards of $360 million. Degraded their bottom line just a little bit. All of these things, though, we’re talking about temporary challenges. I expect this company will experience that pull-forward, experience a couple of quarters of lackluster growth of which we’re seeing the market pretty heavily punish them, before returning to growth long term.

David Gardner: This company has been around a long time. Emily quick quiz. This is unfair, it’s a pop quiz, but that’s the nature of pop quizzes. Which has a larger market cap: Chewy or Zebra?

Emily Flippen: Chewy.

David Gardner: You’re right. I wouldn’t have guessed that before this episode, but since we just talked about Chewy and then we’ve talked about it having a $17 billion market cap. Yeah, Zebra’s $12.5 billion today. The stock, as you mentioned, was at $250 a share when I picked it two years ago. It went to $600 after one year. That’s where it started this year, by the way, topped just at the start of this year. Today, from $600 down to $260 or so as we speak. It has been a really tough year.

And yet, that’s part of pressing on. The tough years will come, fellow humans, whether it’s in your own personal life, in your career, or with your stock market portfolio. I think it was former football coaching great Vince Lombardi who said, paraphrased, “It’s not whether you get knocked down, it’s whether you get back up.” We will hope the same for both Ecolab and Zebra, and your portfolio, and mine, and everybody listening, because part of pressing on is just keep swimming. By the way, the market has been perking up in recent weeks. Have you noticed?

Emily Flippen: I have. I noticed it last Friday in particular. Although I’m not getting my hopes up, I tend to ignore those day-to-day fluctuations.

David Gardner: Well, one fun fact I learned about you at our event last night, Emily, at the Hawk and Griffin in Vienna, Virginia, is that I’m exactly twice your age right now. That was not true until now and it won’t be true going forward, but I’m 56, Emily, you are 28. So I definitely don’t want you to be dispirited about what’s happening or too short-term because you’re going be around this planet for such a long time.

Emily Flippen: Yeah, I’ll tell you what? This is an amazing experience for me. This market pullback — obviously extremely painful and it’s hard. The pain that I experience is mainly seeing the impact it has on our members, other investors.

David Gardner: Well said.

Emily Flippen: But I didn’t quite know what to expect from myself entering into a protracted market pullback, and not to say that this is the end of that. We can go through another year where things get even worse. That wouldn’t be overly surprising. But I’m pleasantly surprised that I have not yet panicked. I think part of it is that I haven’t had the time to panic, and The Motley Fool keeps you pretty busy.

David Gardner: We keep you busy.

Emily Flippen: It’s been nice though. I can’t wait until I can talk about this time in retrospect, remembering how we felt, whether it be March 2020 as we’re talking about today, or how we felt throughout the course of 2022 when you’re seeing massive drawdowns in our portfolios. I think it’s going to be a learning experience for myself, one way or the other.

David Gardner: Thank you for speaking to these life and times, and again, talking to someone who is 28, who is already so well-versed, has a great mindset and such a positive outlook, and loves the stock market and helps our members every day. It just makes me happy to be a Fool. Emily, let’s move from the darkness of underperformance to the shining beacon of hope and light in this five-stock sampler so far: ticker symbol ODFL, the company is Old Dominion Freight Line. This company was at $198 a share two years ago. This week, today it’s gone from $198 to $317. Now, like some others, it was once higher than that, but given the underperformance we’re featuring this week I’m pretty happy about it. Stock’s moved up 60% over the last two years. What’s been happening right at Old Dominion Freight Line?

Emily Flippen: Yes. I will want to specifically say, if you’re thinking about this business as a less-than-truckload carrier, you’re probably saying to yourself, “Well of course that outperformed. I mean, everybody’s ordering stuff online now.” But I will say, this is not a macro story. This is not Old Dominion benefiting from a ton of people ordering goods online. This is, in my opinion, 100% an executional success by this company. The reason why it’s performed so well is because they’ve expanded their operating ratio so effectively. They’ve generated a lot of operating leverage. Management most recently reached a 75% operating ratio, which for I’d imagine most of us listening, we’re not truckload analysts, so you probably don’t know what that means. But it effectively means they generated a 25% operating margin, which is absolutely stellar in this industry, and management set up their long-term goals to increase that actually to 30% operating margins or an 80% operating ratio.

They’re doing this by just expanding the pricing power they have with customers with an incredibly resilient, transparent, and effective business model that has some of the best rates in terms of on-time delivery in the market today. So this is 100% Old Dominion’s management team seizing an opportunity as it existed and executing on it in an absolutely stellar fashion. So I’m not sure if they’re going to have quite the tear that they had over the next couple of years as they have over the past couple of years. It’ll be really interesting to think about this business a year from today. I know we think about it a lot in Stock Advisor, but I will say it has dramatically outperformed even other less-than-truckload carriers just based off execution alone, so I wouldn’t count this one out.

David Gardner: Really love this company. It was founded in 1934 by Earl and Lillian Congdon. A single truck that they drove back and forth between Richmond and Norfolk, Virginia. So from there and then to now, this company has a market cap more than the combined market caps of both Chewy and Zebra Technologies at $34 billion. A regular advertiser for major-league baseball I see these days it’s not really a brand that I still think most people would recognize, and we have heard about some of the slowdown of the supply chain, and how people are not necessarily ordering as much or aren’t getting as much stuff so ultimately, I don’t know, as a trucking industry non-analyst, I don’t know whether that’s good for less-than-truckload because you’re not filling up the whole cab, but you’re sending it seven different ways, and that’s part of the magic of this company is that they’re incredibly good at logistics.

I’ve often mocked the phrase “tech stock” because I don’t really know what is or isn’t a tech stock, no one’s really defined that for me. And so from my earliest days, I think, when Tom and I were first appearing on CNBC in the 1990s, I was like, “Please don’t use that phrase,  because Walmart is a tech stock.” The amazing amounts of technology that Walmart brings to make its business competitive every day is technology-driven. Well, that’s certainly true of Old Dominion Freight Line as well. Anyway 60% gain for this stock against the market’s 11.5%, so really happy to call that a plus 49 in the win column.

But I’m sorry to say at this moment two years in, the overall basket of stocks here and we’ll mention the other two in a sec, is up 3.8%, the market up 11.5%. So, presently, the good news is these stocks are pressing on, they’re actually up. As a group, they’re up 3.8%. The bad news is that doesn’t matter to me that much if we’re underperforming the S&P 500, so we’ll need more of the “press” and more of the “on” here [laughs] in the third and final year of this five-stock sampler.

Now, the other two stocks are not really much changed, in fact, Canadian National Railway is dead-on with the market, up 12% against the market’s 11.5%. Cirrus Logic, ticker symbol CRUS, up about 1%. Do you want to say anything about Canadian or Cirrus before we move on?

Emily Flippen: Yeah. I’d love to comment on Canadian National. This is an interesting relationship again, maybe you’re familiar with this relationship. This is the first time I’ve heard of it, but Motley Fool contributor John Bromels pointed out that if you look at the performance of Canadian National against their broader market over some more recent time periods — the 10-year, five-year, three-year time periods — the performance of Canadian National actually follows in pretty close lock-step with the performance of the market itself. I found it interesting when you look at the performance of your five-stock sampler that this holds true for this group of stocks as well.

David Gardner: You’re absolutely right. In fact, there it is, it’s up 11.9% with the market up 11.5% over the last two years, but my golly, I’m looking at the 10-year chart, Emily, and you and John are exactly right. The S&P 500 is up about 180% from November of 2012. The stock is up about 180% from November 2012. If you dial it back longer, Canadian National Railway has been a major market outperformer. This is a company that I like a lot because it wins over the only term that counts, the long term. But even if you’re just matching the market’s pace over a long period of time, first of all, as a shareholder, you’re just sitting there without having to pay any capital gains from one year to the next — pure compounding.

Second, the stock today pays a dividend of about 1.8% as the dividend yield — $2.15 per share. So I’m not including dividends in these returns. You’re getting paid above and beyond the S&P 500’s returns. This has been kind of like the industry itself. Just think about railroads, think about the long term, think about the importance of this business in the 19th century, in the 20th century, and surprisingly or not, still in the 21st century. What a substantial and important business this is. As long as we’re turning this into a slight Market Cap Game Show of a review-a-palooza podcast, Canadian National has a larger market cap than the following companies combined: Old Dominion Freight Line, Zebra Technologies, and Chewy. If you add those all up, something just below the $83 billion market cap of Canadian National Railway.

Well enough fun with market caps. I’ve already delivered the punchline before this moment when I was supposed to deliver the punch line, but this group of five stocks Emily is pressing on, but presently behind the market. If we looked where they were a year ago, we felt great and I’m sure hoping a year from this week we’ll feel great again. Along with Coolidge, to these companies, to all listening, and to all other stocks, especially the ones that you and I own I say: “Press on has solved and always will solve the problems of the human race.”

Now on to our second and final five-stock sampler we’ll be reviewing this review-a-palooza podcast, Emily — that is “Five Stocks for Conscious Capitalism.” Now, the date was Nov. 13, 2019. Again, the same week of November, three years ago. Got to ask you, do you remember what you/we were doing that week?

Emily Flippen: I unfortunately do, and I say “unfortunately” because on the 13th, which was the day before our annual company retreat.

David Gardner: Right. The Wednesday when stocks were picked and Foolapalooza started on Thursday.

Emily Flippen: Foolapalooza, on Thursday. I did go out with my friend to celebrate her birthday that Wednesday night and stayed out much later than I had intended to, and then had to wake up very early the next morning to drive out to Lansdowne Resort, I think that’s where it was, to come for the company retreat. I will say we had hotel rooms for that retreat. I took a little nap before we got into the events, and I felt much better later in the day. 

David Gardner: Yes. I’m seeing on my calendar with golf clubs, I wrote, drive to Lansdowne, which is a resort in the state of Virginia, and I think … was that the last time I played golf? Maybe so. I realized for some, golf was a great pandemic sport. I guess I was just too locked down, or I’m just not good enough at golf to go play on a regular basis. So I did at least have my golf clubs along for that particular week three years ago, this same time of year.

And on that Wednesday, pretty much exactly three years ago this week, I picked Five Stocks for Conscious Capitalism. Now, conscious capitalism is a phrase I’ve used many times in this podcast. For some newer listeners, I will briefly break it down for you in case you’re not familiar, but you should know that I’m on the National Board of Conscious Capitalism.

I’m very proud to serve on the board of directors for many years now, and I’m a huge fan of the concepts that underlie conscious capitalism, which in short … or first of all, we believe that business is a very powerful force to elevate humanity. Not everybody necessarily thinks of business that way, and indeed, not every business has acted that way over time. But we don’t have to invest in every business over time. We have the opportunity to pick the best businesses of our time, and in my time (and yours too, I hope, dear listener), you’ll recognize that there are some companies that do a beautiful job winning for all of their stakeholders.

Typically, employees love working at these companies, customers love buying from them over long periods of time, partners and suppliers are retained and cherished relationships. And by the way, these often end up being the stocks that outperform the other stocks because underneath these stocks are businesses run by real people, and some people flat out just think better and act better than some other people, and those are the people that I like to invest in. So conscious capitalism, which believes that serving a higher purpose — and that’s something The Motley Fool does. We don’t tell our employees … Emily, I don’t think when you onboarded, what year was it for you?

Emily Flippen: I want to say 2018.

David Gardner: Yeah. Now, you are a summer intern?

Emily Flippen: I was a 2016 intern, I left the Fool for about a year to go finish my education, and then came right back.

David Gardner: Now, you don’t remember our CEO, Tom Gardner, ever saying the reason we’re here today is to just maximize shareholder value?

Emily Flippen: It’s never happened.

David Gardner: The purpose of our business, well, I mean, we would love to make a profit, and ironically perhaps the businesses that serve a higher purpose often, in their industries, do have the highest share of profit. That’s something to pay attention to as an investor. But the purpose of The Motley Fool is to make the world smarter, happier, and richer. We’re a purpose-driven enterprise. This is not just true of for-profit businesses. How many not-for-profits are also purpose-driven enterprises? How many people are purpose-driven people? These are generally the people that I want to be invested in and with. That’s a really unfair quick short course on conscious capitalism.

But when it came time to pick this sampler I had just been at the Conscious Capitalism CEO Summit in Austin, Texas the month before. It happens every year in October, so three years ago I probably had that on the mind as I sat down to pick five stocks for Conscious Capitalism. Now, once again, how has the stock market done? How’s the S&P 500 done since Nov. 13, 2019, closing out last Friday? The answer is, it was up 28.9% over those three years. If you think about that and you think about a 9% or so annualized return and you multiply that by three and add a little bit of compounding, it’s almost an exact straight-up market expected return, 28.9% is like 9% annualized over three years or so. So it was a very average three-year market.

Emily Flippen: It’s an interesting takeaway. I didn’t look at that and make that same judgment, but I think part of the reason why I have a skewed perspective on this three-year time perspective is because that 29% was very different at various points over the past couple of years.

David Gardner: You bet. Whipsawing way up and then way, way down. But when you take it all in all, and this is true over long periods of time, not necessarily three-year periods, it averages out to about this. So it is interesting to note that this three-year period was about average as unaverage as it felt.

So let’s start with the worst performer of these five. Now, the worst performer of these “Five Stocks for Conscious Capitalism,” we’ve talked about a little bit already. I hope you have something new for us because Ecolab, also an underperformer over the two-year period — I guess I’d taken a shine to this company and I guess I now regret my timing, even though I still love the company, what it does — Ecolab down 18% over these three years. That’s a loss of capital when you compare it to a market that was up 29%. We’re talking about a minus 47 percentage-point alpha to start out this five-stock sampler conversation, minus 47 in the hole. What new perspective do you have for us about Ecolab?

Emily Flippen: Yes. Well, one of the points I want to make and I tried to avoid getting into this too much earlier because it applies much more to looking at the performance of this company from November 2019 to November 2020, and that’s the pandemic. Obviously, when you made this pick, you did not know that the world was going to experience what it did over the course of the following year, and investors may assume that because of the nature of Ecolab’s business that they benefited from the pandemic. Interestingly enough, the vast majority of their sales, in fact, go to things like food service and retail locations, and the slowdown with the economy and the early part of the pandemic actually resulted in a significant portion of their business being turned off.

Despite the fact that hospitals and all of these new establishments were investing in sanitation equipment and other cleaning supplies, it did not make up for the massive decrease in demand that existed in the hospitality industry. So Ecolab actually suffered greatly as a result of the pandemic, and more importantly, that was exacerbated by an inability to meet the demand that was there because of the supply chain constraints that existed across the world during this time period, as well as competition, as everybody started to get into Ecolab’s markets, at least on the smaller product, like hand sanitizers, sanitization equipment, stuff like that.

So suddenly, the world shifted for Ecolab overnight and that was very characteristic of what the business experienced over the course of 2019 to 2020. And also interesting note, pre-pandemic is an interesting, but maybe more controversial acquisition this company made was of a company called ChampionX. It was an energy business that sells products for drilling and fracking. They actually sold off that business after a period of underperformance in December 2019, and as we know today, that was likely poor timing. After underperformance in the industry for so many years, the energy industry has actually performed incredibly well since that period, so bad timing on a couple of notes here.

David Gardner: Do you know who Ecolab’s largest shareholder is?

Emily Flippen: I don’t.

David Gardner: It’s Bill Gates.

Emily Flippen: Whoa! I had no idea.

David Gardner: It’s true. He took a large ownership about 10 years ago and I’m just seeing a Barron’s article right now talking about him scooping up more shares this August. I will note largely because of the last year, he’s underperforming over the 10 years since he took a very large stake in 2012. But I think that he’s often thinking about the future of the planet and what’s going to work. So it makes me feel good about Ecolab, even though, unfortunately, this five-stock sampler closed out last Friday and Ecolab will be historically recorded as the biggest loser of this particular five-stock sampler, so thank you for some additional info in Ecolab.

I might as well mention now that there’s another stock, as I mentioned earlier, that was also picked in this five-stock sampler for conscious capitalism, that’s Old Dominion Freight Line, and while it’s not the top performer, Emily, I thought I’d give you an opportunity to say something more about Old Dominion Freight Line here. Good news, it’s up 142% over those three years against the 29% of the market. That’s more than 100 points of alpha above the market’s return, so thank you, ODFL. Any additional thoughts on Old Dominion?

Emily Flippen: Certainly, I liked the context of 2019 versus 2020 for this business because 2019 was actually a slowdown in trucking, and Old Dominion has made a name for itself by being very strategic with when it spends its capital, investing money to acquire assets at lower prices when there’s a slowdown in the industry. They have the capitalization to do that. So 2019 was a year of reinvestment for this business heading into 2020. Even with the slowdown, they invested heavily in expanding their capabilities.

So when the pandemic did happen, they were actually very well-positioned to handle the influx of demand, all because of the investments they made in 2019, and 2019 was a time when — not that this business ever really performed incredibly poorly — but there’s a bit more pessimism about their near term. I love businesses that see those near-term headwinds or the struggle, and make investments that allow them to better capitalize on opportunities in the future, and that’s exactly what ultimately it did, which is part of the reason why your recommendation in 2019 versus 2020, I think, is outperforming by something like 100 percentage points.

David Gardner: It is, and it’s delightful to note this, and I guess there’s a quick meta-point to insert here, which is that, for both of these distinct samplers, really toward different themes — one, long-term businesses that will press on, [and] another looking at, I would say, maybe a newer-age view of business, who’s really doing good out there — and two companies, at least in my mind, two and three years ago, qualified for both lists. And I think the meta-point is that sometimes your best new stock might be the one that you already own. And while it’s regrettable that Ecolab underperformed while Old Dominion outperformed, if you think about it, and we’ve now done the numbers for both samplers, counting performance above or below the market for the first one, Old Dominion was up 49 percentage points over the market, while Ecolab was minus 39. If you net that out, you’re happy, you beat the market.

For this one in particular, again, sad story, Ecolab, 47 percentage points behind, but Old Dominion plus 113 percentage points on top, so in both cases, even with a loser, we came out on top not by trying to always come up with new tricks, but by just going back to some companies that we get to know better over the course of time. So the meta-point here is consider adding to the stocks that you already have without always figuring you need to add new stocks. I love good diversity, but it’s also true, Emily, that over the course of time, if we’re invested in companies — for you, Chewy, would be an example — you get to know it better over the course of time. You’ve actually gotten to interview the CEO, many of us don’t get to do that. But you get to know your stocks and companies better the longer your association, and so your knowledge is deeper, your confidence is deeper. You probably feel less fear in times of, well, bear market, which we’ve all experienced here over the last year. Any further thoughts on the meta-point?

Emily Flippen: Well, just that as you were speaking, I was thinking of one company that I’ve gotten to know pretty well over the past couple of years who I feel like has broken my trust in recent quarters, and I was getting a chuckle from it, and it’s Roku. I mean, a business that I have been a fan of for so long, a big believer in Anthony Wood and the strategy that business has taken. But in the last couple of quarters, I started to wonder to myself: Do I actually know this business? The strategy has changed. I’m not trying to bring Roku through the coals here, but just to say that my understanding of the business was maybe not as strong as I initially thought it was.

David Gardner: Well, I’m glad you mentioned that just because that has been a longtime rule breaker, one I did pick for Motley Fool Rule Breakers, one that was a spectacular multibagger and yet has lost so much value over the course of last year, very regrettably, and it does appear in some of our five-stock samplers, including some that are still going so we’ll talk about Roku in other time. But it is true that as you get to know companies over time, sometimes A) you start to realize you don’t understand them that much for the world keeps changing, it’s hard to keep up, or B) sometimes you realize this isn’t as great companies as I thought, maybe I should sell it. So it’s not to say that you should always hold every stock your whole life long. The longer you get to know something, I hope, like a good spouse, the more you love it. But sometimes, breaking up is the right thing to do, at least with some stocks.

Emily Flippen: Well, this is just a rough patch for Roku and I — hopefully, we’ll get through this.

David Gardner: I hope so, too. Well, those were the two stocks that recurred, including the biggest loser, Ecolab, once again. Let’s now move to the best performer in Five Stocks for Conscious Capitalism. Etsy was at $40.68 in November 2019. Last Friday, it closed at $115.64. So good news, Etsy shareholders, you were up 184% over those three years, again, against the market’s 29%. That’s a plus 155. Spoiler alert! That’s enough to put this one into the win column as it prepares to ascend to Foolhalla, which we’ll do in a little while. But Emily, what’s been happening with Etsy?

Emily Flippen: Well, I will say, if you’re looking at the performance of Etsy today, you’re probably thinking to yourself, “Well, that’s a win.” But if you’re a shareholder of Etsy, there was a point during this five-stock sampler that you’re up more than 600%, and just over the past year alone, Etsy’s share price has lost nearly 60% of its value.

David Gardner: Astonishing.

Emily Flippen: In some sense, you are happy looking at that performance. But if you actually were along for the ride, I wouldn’t be surprised if there are listeners holding Etsy who are thinking to themselves, “Well, this was a bad investment,” purely based on how the business has performed over the past year.

David Gardner: I mentioned earlier, I listened to the podcast as we reviewed this one last year, Emily, and was I gloating? I hope I wasn’t gloating too much and I sure shouldn’t have been, the stock was a seven-bagger when we reviewed this one-year ago, this week, that means it’s up 600% or more, up seven times in value, so you’re right. A lot of people who own Etsy don’t like Etsy very much because starting at its peak in December of last year, it dropped from $300 to where it is today at $125. Think about that. You already put the numbers out there, but this is a company that’s lost almost two-thirds of its value in the last nine months, and yet it’s the No. 1 performer for three years having almost tripled for investors. I think implicit in the story of Etsy is rule breaker investing. It’s being willing to get aboard something that’s analogous, let’s say to catching a tiger by the tail. It’s going to be quite a ride.

If that tiger is fast and good and strong, it’s going to be a win over the course of time, but holding onto its tail wherever you are headed can be really volatile. So what we have here is over the only term that counts — the long term — this has been by every measure a huge winner ever since we started to feature it early days of the Market Cap Game Show and certainly before that for Rule Breaker members. This stock has been on our scorecard for a long time, and in a number of our portfolios and other services. Emily, you and I were speaking about that before we started the podcast today. But for a stock that has a market cap today of $14 billion, to think that that’s down two-thirds from where it was nine months ago. I feel a sense of promise and hope going forward, and my good pal, our producer Rick, talks about how he loves Reverb, which is part of Etsy’s business, having purchased a company that lets you buy and sell musical instruments and other musical accoutrements, which Rick really loves, right Rick?

Rick Engdahl: I love Reverb. I buy and sell guitar pedals and things like that all the time, and it’s basically become like a new hobby.

David Gardner: Is it the only real site of its kind, or experience of its kind, or just the best? Give us a little bit more about Reverb.

Rick Engdahl: There are a few other options out there. Sweetwater has a program. You can buy and sell things on eBay or Craigslist or things like that. But Reverb is really set up to make the transactions smooth and easy. I can contact a buyer or a seller, message them or whatever, but the transaction’s taken care of for me. I pay a little bit to have that done, but I’m happy to pay it. Just really makes the transaction easy and it makes the experience great.

David Gardner: Rick, were you using Reverb before it became cool because Etsy bought it?

Rick Engdahl: I think so. I’m actually not sure when Etsy bought it. I’ve been using it for a while and I was surprised to find that Etsy owned it and happy as an Etsy shareholder, it made me love the service even more.

David Gardner: Emily, positive notes about Reverb. Couple of recent acquisitions, though, dragging Etsy down?

Emily Flippen: Yes. I think when you’re looking at the performance of Etsy, it needs no explanation, no reexplanation about why it has performed so well. But I think a lot of investors are wondering, “OK, so what’s happened with that 60% drop?” Etsy did have a lot of success initially with the Reverb acquisition and they launched a strategy called their house of brands strategy, which is making good on the Etsy namesake marketplace, but also making investments into other niche marketplaces. Really creating a culture of execution that Etsy has created with their core platform into other avenues as well.

Their biggest acquisitions being Depop, which is an app at clothing, shopping, streetwear app aimed at Gen Z users, and then Elo7, which is a Brazilian-based e-commerce marketplace very similar to Etsy. Both of those investments have not gone according to plan. Now, a lot of that is the macro-environment, but the business doesn’t break out a lot of great information about their performance. I think it was good, they’d probably be telling us more about them. But we do know they have written down more than $1 billion in impairment charges on the goodwill that they acquired as part of making those acquisitions. So it’s fair to say those have not panned out the way that Etsy has plans. Granted, that doesn’t mean they can’t turn around in the future.

David Gardner: I think earnings were good earlier this month. We’re talking about volatility up and down in such a crazy manner here, just thinking about the last three years. Disclaimer, put out ahead of time. These are unusual times, but Etsy is up 40% this month. The stock was down at just below $90 on Nov. 2, and here you and I are talking basically less than two weeks later, and it’s up 40%.

Emily Flippen: Volatility is the name of the gain with Etsy, and as you mentioned, they did have earnings that the market did appreciate. Granted, I think the market, to your point, was pricing in some dismal results that did not manifest for Etsy. They did have a price increase earlier this year. They increased their transaction take rate, which angered a lot of their sellers on the platform. Ultimately, it didn’t manifest into any attrition, not noticeable attrition at this point, but the transaction volume year over year on the Etsy platform has fallen while revenue is up because of the increase in take rates. I think it’s fair to say they can’t keep raising prices, the transactions are falling. But again, a lot of this is because of the macro environment. Circling out, thinking about the next three years for this business, it’s hard to imagine Etsy being a less relevant platform than it is today.

David Gardner: Have you ever sold anything on Etsy?

Emily Flippen: I have not sold anything, but I have bought more than my fair share, certainly.

David Gardner: You don’t have to pay the take rate when you’re the purchaser. The take rate is, of course, the amount that you have to give Etsy from your transaction as a seller.

Emily Flippen: Yes, and still below that increase in take rates, still below the competitors. For example, Amazon Handmade charges, I think nearly twice as much as Etsy in terms of their seller take rate. So it is still competitive, but nobody likes when prices are increased on them, so I understand the frustration.

David Gardner: Well, the other two companies that are somewhere in the middle here in-between the dramatic ups of Etsy and Old Dominion Freight Line and the dramatic down of Ecolab. Would you like to speak to either Salesforce, which is down 3% over these three years, or NextEra Energy, which is up 46% over these three years?

Emily Flippen: I’d love to comment on NextEra because yesterday at this member event that we were talking about earlier, I made a comment on stage that we don’t buy investments for any certain economic climate or any certain political climate. But in this case, NextEra has benefited from the political climate over the past couple of years. Very rarely do we see regulations have a tangible impact on businesses, especially ones that persist over long periods of time.

But NextEra has really benefited from the Biden administration’s investment in clean energy. They’re benefiting a lot from the tax breaks that they get, and given how much money this company has reinvested into building clean energy facilities, that is a massive win for this company. Should do good things in developing their pipeline long term and their ability to generate a lot of clean renewable energy. So that is a business that is still firing on all cylinders. I thought it was just interesting to see some of the potential business benefits as a result of the change in policy, but necessary disclaimer, and the reason why I say we don’t pick stocks depending on regulation, is that it doesn’t take much for those incentives to change. We see them change generally whenever the political climate changes. So I wouldn’t say that you should bake in those expectations to your investment thesis, but it is nice to see a little bit of benefit coming to NextEra.

David Gardner: Couple more notes about his five-stock sampler before we provide the final numbers. One is that NextEra Energy had a 4-for-1 stock split in October of 2020. It wasn’t the only stock that’s split over these three years. Old Dominion split 3-for-2 March of 2020. Emily, how excited do you get about stock splits?

Emily Flippen: I didn’t even know they split until you just let me know, David. 

David Gardner: We don’t really care that much about stock splits here at The Motley Fool. There are some people who get very excited about a 4-for-1 split or a 10-for-1 split. We’ve seen the Apples and Amazons do that in recent months. The analogy we’ve always used is, which pizza do you like more, the one that is four pieces or the one that’s the same size that is now eight pieces? And the answer is, it’s the same pizza.

Emily Flippen: I’m going to eat all of it regardless.

David Gardner: There you go. That’s one note, just a couple of stock splits for this sampler, and then the other note is that I actually had the pleasure of providing this sampler on television. When I appeared on WealthTrack with Consuelo Mack in various public television markets. She didn’t know that I would later be presenting this as my five-stock sampler two weeks later. But for anybody who wants to go back and watch me present this on TV was the Nov. 1, 2019, episode of WealthTrack. The only of my 35 stock samplers that I initially debuted on television before bringing it to this podcast. Anyway, let’s get to the final numbers here.

These five stocks taken together from Nov. 13, 2019, through Nov. 11, 2022, last Friday, were up as a group 75.7%. The market up 28.9%.

Therefore, we win, and that’s a special phrase to be able to deliver in 2022 when most of my review-a-paloozas have been close to depressing. But this particular one makes me feel great that despite the extreme volatility — and Emily, from ages 25 to 28 for you, you saw something that many people twice your age hadn’t really seen before — this kind of volatility. You’re right, it’s marking you and a generation, and I hope you recognize volatility happens, but winning does too. I’m delighted to note that this group of stocks, well really, each one if you average it out, was beating the market by 46.8%. We give a win for conscious capitalism.

Since I’m on the board, I was kind of putting it out there. It wouldn’t look great, it’s not a good look if I put out five stocks and I say “conscious capitalism works and it matters,” and then if they were to dramatically underperform, but I’m really glad that they dramatically outperformed, especially through these volatile times. So Rick Engdahl, thank you for your comments on Reverb, and Rick, we’re going back to you now because it’s time to send Five Stocks for Conscious Capitalism the way of all five-stock samplers. It ascends with a hard blue glow of victory haloed over its head to Foolhalla.

Well, that’s it for another review-a-palooza episode. If you found yourself moved in any way, shape, or form — did we make you smarter and happier and richer? Or did you get dumber, less happy? Did you lose money over the course of this podcast? We’d love to hear from you on this month’s mailbag, [email protected] is the email address.

Before I let you go, Emily — holidays coming up. Do you have any fun travel plans around Thanksgiving or the holidays?

Emily Flippen: Well, oddly similar to what I was doing in November 2019. My only plans are to drive down to South Carolina for Thanksgiving, which means that I’m going to stay late for the Casino Royale happy hour here on Friday night for Foolapalooza, and then get up at four in the morning on Saturday to make that 10-hour drive.

David Gardner: That sounds delightful. You are referencing our annual all-hands meeting here at the Fool. We talked about it earlier on this podcast. We call it Foolapalooza. Last year was purely virtual, understandably, I think the year before that as well, but this year, there’s some hybrid elements and we do have here in Alexandria, we do have a Casino Royale afternoon into the evening on Friday. I will see you over the craps table.

Emily Flippen: I’m looking forward to it.

David Gardner: Next week, it’ll be a week of gratitude. It’s something I try to do once a year on this podcast. I think I first started in 2020. I think I called it Gratitude 2020, did it last year. So Gratitude 2022 on next week’s Rule Breaker Investing. In the meantime, Fool on.