readers of newspapers. now it's actually dangerous to your health. that's it for us this week. be sure to follow me on twitter, facebook and instagram, and i'll be back next week with more in-depth interviews right here on "the wall street journal at large." thank you for joining us. ♪ ♪ ♪ jack: welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. i'm jack otter. coming up, brian nichol on how chipotle increased sales during the pan demic and what's next. and later, barron's top five most sustainable companies, which businesses made the list and why. but we begin, as always, with what we think are the three most important things investors ought to be thinking about right now. small stocks continue to outperform the rest of the market, and investors focused on hopes for a faster covid-19

vaccine rollout. the upstart drug companies have rapidly developed covid-19 vaccines and now poised to challenge the big four vaccine makers for years to come. what the industry will look like post-covid. and pot stocks on a high, how the shifting political landscape could lead to favorable changes in the law. on the round table, my colleagues, ben levisohn, carlton english and jack howe. happy valentine's, guys, i see that carlton and jack got the memo, ben and i not so much. but maybe later finish. >> we're all wearing red, jack. what happened? jack: yeah, sorry about that. ben was too busy preparing the menu he's going to cook for his wife. i'll use that excuse too. [laughter] let's talk stocks. the market keeps on chugging higher, but then under the surface is where it gets a little more interesting. small stocks had lagged for years and years, but they've been on a tear recently, and that continued this past week. >> that's right, jack. they outpaced everything again,

gaining another 2%, closing at all-time highs, all the major indexes did. but the russell 2000 is up 15% so far in this year, more than 15%, and the s&p's not even 5%, and that's fueled concerns about froth. there's just too much money sloshing around out there and what not. but i wanted to point out something that this actually came from citigroup which is really interesting. the small cap earnings have been fantastic. we've had companies like irobot not only beating, but they're beating by these massive margins. and the numbers have been so good that analysts have been having to i revise up their 20 the 21 earnings estimates and that means what's happened is you've had an index start at 18 times pe at the beginning of the year, it's still there even though it's gone up so much because the earnings are going up as well. it's really impressive, and i it's the thing i think investors should focus on. as long as earnings keep getting

revised up, it's really not froth quite yet. jack: small caps are often seen as an indicator for what the economy's got ahead. there are other things, diesel prices have gone up, gas prices are creeping up, not something you normally want to see, but in this case it's good news because it means the economy is strengthening. bond yields keep on going up, and one of the justifications for very high stock valuations has been, well, bond prices are so low, it's okay. could that dynamic change? >> it could. we had yield close on the 10-year at 1.2%, and that's the highest level since march of 2020. so far though it hasn't been a problem. bonds and stocks, bond yields and stocks are going in the same direction. and so as long as that keeps happening, as long as yields and stocks remain correlated, the financial jargon, that's great. if that starts to change, that's when we have to worry. jack: yeah. it's amazing that we're saying bond yields on the 10-year rose

to 1.2%. so,, carlton, let's talk about vaccines. we saw pace of the vaccine rollout increase a bit over the past few weeks which pleased investors, and, meanwhile, barron's has a story that says the way vaccines are rolling out will change the pharmaceutical landscape for years to come. >> absolutely. what we knew before was the big four vaccine makers, pfizer, merck, but now we're seeing the moderna vaccine, novavax, biontech partner with pfizer, and that's really kind of changing the game here. and what we're also seeing, you know, it's great that we're getting vaccines in arms, it's great that the pace is accelerating, but we are seeing new variations of the virus which may mean it's not going to be kind of one round and done, it's going to be booster shots or maybe the covid-19 vaccine is going to be something similar to the flu shot which means that those companies like moderna and novavax will continue to be

relevant beyond this pan pandem. and something that's also really interesting on this, jack, looking at how the dynamics are going to play, when you look at a vaccine, unlike a traditional medicine negotiated between patient and doctor, vaccines are typically bought with large contracts, so any company that can prove efficacy, a good price and easy storage can quickly gain market share by having a big contract. jack: yes, storage obviously an interesting aspect of this when one of the vaccines requires pretty low temperatures. jack, you and i have been talking about meme stocks recently. the new market darlings this past week were the pot stocks. they flew higher, they crack crashed, where are they going from here in. >> they all got smoked on thursday, but they're still up a lot. canopy more than doubled over the past six months, tilray was down 50%, but it's still more than quad with ruppeled in suggestion months. -- quadrupled

in six months. actually, if you look at the usage of ticker symbols on wall street, one of the pot stocks called sundial growers, that took over for gamestop on the number of mentions there. it really has become a meme stock. there's a lot of reasons for cannabis investors to be excited. four more states voted to legalize recreational pot. there's a possibility of federal legislation this year that could allow pot companies to have access to banking and the regular tax breaks that all companies get. i spoke with dan aarons this past week, he manages the adviser shares pure cannabis etf, he's up over 148%. he says if you want to roll your own in terms of stock selection right now, you should focus on what he calls the four horsemen of the u.s. industry, companies with cash flows, strong balance sheets, true leaf, green thumb and cisco, he tells me trading in pot stocks this year has gotten nuts.

the worst company, companies with the worst fundamentals are rising the most. he thinks that that situation will reverse soon, and investors are go back to favoring the quality sticky-icky, jack, and leave the questionable swag alone. those are my words, not his. i'm pretty sure i'm not using all of them correctly. jack: just for the record, that is not a pot plant behind grow, is it? >> i haven't tried smoking it yet, but i don't think so. [laughter] jack: thanks, jack. coming up, while so many restaurants around the country were decimated by covid-19, chipotle actually increased sales. the ceo, brian nichol, on how the company pulled it off. the company pulled it off. maybe we'll get his

the company pulled it off. maybe we'll get his ♪ ♪ ♪ ♪ ♪ ♪ ♪♪

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♪ jack: restaurants are amotsng ae rdtittitusesussessss b b vi19 a,,hile my many m hav cledclosed dnowowowow o a a a sl otchleipotip mican ganll gan g s tead iad a i a a w w that actua eacrdeaeaesalurguring t ndicnd gineg n, now,eo criri olni yyifniifs fs jni jngoinioinisroo i>>st'st'ics tic t be be ber b. ckja i i nd t t tsk asksk you,,, aurestntaure iaus iavss iss issb devastedstyeded cidid, a and y t ur6ur $6 $6onlinn ren for foror 020 w act allyllyll up --020, ws allyalalal 7%. 7%. 7%. m gssing the hugeugug ske in line slial partarf it,ut i alsoal to kw kw k whathaoe e post-coosd burto markett like? do youdo you think online orderg stays the same even as people come back into the stores? >> yeah. we pithed to our -- pivoted to our digital system during the covid crisis, and fortunately for us, we had invested quite a bit into that whole digital

system prior. and, you know, going into covid, 80% of our business was done on premise, and 20 president was done digitally. at the peak of the pandemic, we had no dining room business, and now we're literally 50-50, and our digital business is at $2.8 billionment so it represents 50% of our sales and huge driver of the growth in 2020. to answer your question going forward, i think it's going to continue to be a big piece of our business going forward. i think people will still want to do those off-premise occasions, and think we're going to get our dining room businesses back as people start to get back to their normal routine whether it's going tonight office or taking kids to school or going to sports, whatever it may be. jack: sure. so this disruption that you faced in the pandemic is kind of a warp speed version of what businesses all across the nation have been facing for years. what advice can you give to

other businesses to pivot quickly when they're reacting to disruption, and what should investors look for in a company to think, yeah, they can survive? >> yeah, look, i mean, where we first started when the pandemic hit was the strength of our balance sheet, and luckily we have no debt, we add a really strong cash position. and so we knew we were in good shape financially to weather the storm. and then the next place we went to was making sure that our people and our culture were going to be protected throughout this. and, you know, we could not have pivoted to digital, we could not have pivoted to wearing masks and the social distancing and the additional sanitization if we didn't have the right people, the right leaders with the right culture. so i always tell everybody, look, you've got to start first with the people and the culture. if that looks good, then look at the health of the business. can they invest in today, can they invest in the future, and that's the type of company we are. that's why we're able to invest in digital before the pandemic

hit, because we knew we were investing in our future. and then when we had to deal with the pandemic, we could invest in the here and now which really was focused on all the things we needed to do around covid, wellness, safety as well as our people to keep them, you know, employed and running the chipotle business. jack: so i've got a people question for you. there's a debate raging in washington over the $15 minimum wage. when's your point of view on that? -- what's your point of view? >> look, we always want to pay a wage that at the end of the day attracts and retains the right people. whatever they end up with the minimum wage, you know, we'll handle accordingly. we already have a large percentage of our organization getting compensated at that wage and higher, and, frankly, one of the things i would say to everybody most people join companies not just for whatever the minimum wage is, they join the company because they believe in the culture, they believe in the growth. and that's the total proposition. so whatever that outcome is, obviously, we'll pay

accordingly, but what we stay focused on is we want to be attracting and retaining people that meet our company's purpose, our values and they actually grow with us. jack: so you've created an online tool called the food print. it's basically a calculator for the environmental impact of your food. what's the thinking behind that? do you see people changing their orders as a result? >> you know, look, we just thought it was really important to be very transparent with our approach to our food and the planet. and i don't know how well you know the chipotle story, but our purpose is all around cultivating a better world. and what this food print really demonstrates is we care about all aspects of how animals are raised and treated, the farming that takes place in order to get the produce and the great culinary experiences that you have. so this just shares with folks, look, even a burrito, that that has a lot of impacts, the way

it's farmed and those that then support our business. we think people want to know about it, and we thought it was important to share with people that we care about. we're going to figure out how we can continue to get better at it ongoing. jack: yeah. it's important to know where your food comes from. real quick, i've got to ask you, what is the secret to great guacamole? [laughter] >> you know, great avocados. [laughter] that's the way it works, and, luckily, we keep it really simple, and we make it fresh every day so, you know, it's great avocados and some onions, jalapenos, a little bit of salt, lime. it's terrific. jack: brian, thanks so much for coming on the show. appreciate it. >> thanks for having me. take care. jack: coming up,esg, environmental, social and governance practice, and it's becoming more important to companies and investors. barron's just released our list of top sustainable companies. we'll tell you who made the list and why. that's

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and free premium delivery when you add a base. ends monday. muck muck. ♪ jack: barron's just released its annual list of the 1300 most sustain -- 100 most sustainable companies. john, thank you so much for coming on the show. so -- >> pleasure. great to be here, thank you. jack: your company's data powered this week's cover story as it has for the past three years, and our top sustainable companies have beaten the market every year. can you explain why sustainable factors would enhance investor returns? >> well, sustainable factors help us understand how companies are likely to navigate change. and in 2020 in particular, there was a lot of change associated with a crisis. particularly valuable information, understanding how companies are dealing with risk,

managing through change and in particular how well managers are dealing with their people and preparing their teams for change. jack: so different companies, different analysts have different definitions of sustainability. can you give an example of an e, the s or a g, what would be good from a policy per specific but also good for a company's balance sheet? >> sure. well, on the e side, climate risk, carbon risk is a major theme across many, many sectors. so if we think about companies managing their exposure to carbon, managing their exposure to climate risk through strategies like energy efficiency, accessing renewable energy, these are companies that are reducing their risk. if the price of carbon goes up or if consumers continue to demand more and more products produced by renewable energy, companies that have managed that well reduce that risk, burnish

their brand and reduce their exposure to a potential carbon tax in the future. that's one example. on the social side, there's certainly a focus on diversity and inclusion. has the company been able to create a diverse workplace across people, demographics, gender, race and put the necessary environment, the necessary culture in place to manage that well. those are two good examples that really matter to financial results. jack: i think jack howe has a question. >> i've heard this term green washing for when companies make more of an effort to appear ethical than to be ethical. in sizing up companies on everything sg, have you seen -- esg, have you seen any evidence of green washing? how do you know it when you see it, and can you give us the names of the companies doing it so we can say bad things about them? [laughter] >> certainly, companies want to make themselves look good.

and all companies work hard to present data that makes them look attractivement so i think the key -- attractive. so i think the key to understanding which companies are really doing it versus just ones are saying it is data. one of the things that's happened over the period of doing this work, certainly in this report, is more and more companies are providing reliable information about their climate exposure and about their workplace. and one of the big efforts that calvert has is to drive companies to produce more disclosure. so it's true, some companies do present themselves in a more favorable light than the reality shows, but we understand how to get the data, analyze it and determine who's really managing well versus who's just saying it and, no, i'm not going to give you specific names. thank you. [laughter] jack: carlton has a follow-up that i think might be related to this. >> yeah. one of the names that appears on the list, blackrock, kind of

the middle of the list, and there's other institutional investors as well. and they've all kind of been pushing for esg measures. is there anything they can do better to be more esg-friendly? >> you bet. so, first, why are they pushing for everything sg measures -- esg measures, why does it matter. esg, done well, about value creation. it's about helping companies drive enterprise value and improve their operations. again, this focus on financial materiality is very important. so cutting-edge investment managers want the companies that they've invested in to really do well in terms of addressing climate and people issues. drive long-term value. and, by the way, blackrock has also done a nice job pushing policy, helping the government understand that ast it's important -- that it's important to get companies to disclose this information. we're all involved in it, but

blackrock's done a nice leadership job there. jack: i think we're going to hear a lot about this in the coming years. thanks very much for coming on the show. >> thank you. jack: up next, round table members give their investment ideas for the coming week, so so stay right there. ♪ muck. ♪ research shows that people remember commercials with exciting stunts. so to help you remember that liberty mutual customizes your home insurance, here's something you shouldn't try at home... look, liberty mutual customizes home insurance so we only pay for what we need. it's pretty cool. that is cool! grandma! very cool. only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪ incomparable design makes it beautiful. state of the art technology, makes it brilliant. the visionary lexus nx. lease the 2021 nx 300 for $359 a month for thirty six months.

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♪ ♪ jack: jack, bitcoin was up again 25% this past week, elon musk and mastercard jumping onboard. >> bank of new york mellon, they joined visa, jpmorgan chase. i think they might be responding for competitive reasons to some of the uptick that swear and paypal have seen in bitcoin. the price hit $48,000. a year ago on valentine's day,

it was about $10,000. i just want to say to my wife, i'm sorry i didn't get us into bitcoin. please don't leave me, give me another chance. i've got my eye on cannabis cryptocurrency. one of these has to go to the moon. that's just modern portfolio theory, right? jack: it makes bitcoin sound like run of the mill stuff. anyway, let's get some more mundane ideas. i'll start with you, ben. >> i'm looking at coty, the parent company of covergirl, dropped 50 percent of the report, but it's a turn-around story. nothing's really changed. i think this is a pullback to be looking at. jack: carlton? >> xpo or logistic es, i liked what they said about guidance, but i don't think the market is fully appreciating the effects of the spin-off the company plans to do later this year. jack: logistics very exciting

these days. digital gets all the attention, but you need that logistics to get stuff around. thank you both. don't forget to follow us on twitter @barronsonline. that is all for us. happy ... dr. michael youssef: in the time of war, you are either an arrow or a target. if you are only passive, if you're only indifferent, if you're in a defensive posture only, you will keep on absorbing the enemy's arrows. but if you place yourself and those whom god entrusted you to go on the offensive, you will experience the unbelievable thrill of victory. male announcer: coming up next on "leading the way." ♪♪♪ ♪♪♪