Motley Fool Hidden Gems Investing - Amazon's Speed, GoPro's Drones, and the Colonel's Comeback

Episode Date: May 29, 2015

Amazon launches same-day delivery. GoPro gets into the drone business. Michael Kors reports some unfashionable numbers. And Yum! Brands brings back Colonel Sanders. Our analysts discuss those stories and share some stocks on their radar. And Motley Fool Asset Management portfolio manager Bill Mann talks investing and China.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill, joining me in studio this week from Million Dollar Portfolio, Jason Moser, from Motley Fool Pro and Options, Jeff Fischer, and from Motley Fool Deep Value, Ron Gross. Good to see you, gentlemen. We've got stocks hitting multi-year highs and stocks hitting multi-year lows. We will talk international investing with portfolio manager Bill Mann. And as always, we'll give you an inside look at the stocks on our radar. Guys, a lot going on this week, but there's not a single business story really dominating the news. So let's just go around the table. Ron Gross, I'll start with you. What's your headline for the week?

I think I'm going to do some big macro. Can you handle some big macro? some recent data pointing to a slowing economy. Government data showed corporate profits fell 8.7% in the first quarter. Not something we want to see. On the heels of that, GDP contracted 0.7%, actually a little bit better than expected, which is interesting. But still, we have two pieces of data that show a slowing economy, a bunch of different things going on here that I think can explain it. One, we had, if you recall, the problem in the West Coast ports, which slowed, hurt retail businesses quite a bit. We have lower spending in the energy sector, oil prices down. And then finally, and I think this is important, the stronger dollar has really

hurt companies who sell, who make some of their revenue overseas. The translation, the currency translation hurts businesses, and that affects profits. My feeling is that a lot of this is temporary. And there's also some question about the model the government uses for first quarter GDP, about whether it accounts for seasonality enough, and they're actually taking a look at that. So, I think we'll start to see things pick up as the year goes on. If we don't, then we're going to be sitting here having a different conversation. Well, you talk about profits being down, and yet the market up around 8% year-to-date. That sounds like the sort of thing that people who are pounding the table, Jason, saying,

there's a bubble in the stock market. It sounds like fodder for people like that. Certainly. However long this weakness goes on, the one thing that's kind of scary is really the option to lower interest rates isn't really on the table, because they're essentially as low as they can go. That, in part, is what makes the stock market look so much more attractive. That's where the returns are. At some point, we will see interest rates start to tick back up, albeit very slowly. I don't think that's going to be something that really throws the market into a state of shock, because it will be so incremental and so slow. But yeah, to Ron's point there, it certainly raises a lot of questions. What

exactly does that slow down? It's actually the second quarter in a row where we saw a decline in corporate profits, and that hasn't happened since the middle of the recession. So that's not something I really want to go back and revisit, if we can at all help that. I'd also say, you see a lot of these doom and gloom kinds of headlines in regard to profitability. But when you can account for the decline in that profitability as due partly at least to currency effects, we tend to look at currency effects from a very long-term perspective as long-term investors. And I think a lot of times that can actually represent

opportunities. If a company misses the Wall Street's expectations based on currency effects, that's a pretty short-sighted sort of reaction there. But it can open up windows of opportunity to add on that weakness to really good businesses. Yeah, the euro has fallen more against the dollar in the last six months than I think it ever has historically, that quickly. It's down some 15%-ish, I want to say. And that companies are doing as well as they are despite that is telling that companies aren't doing things wrong, but the dollar in some cases is taking away 15-20% of their growth rate. That's a sizable hit. So yeah, Chris, as you said, the market, the NASDAQ is up about 8% this year,

year-to-date, and the S&P is of about 3% year-to-date. So the S&P is fairly flat. It's so full of international companies. I'm happy for the NASDAQ, given that it kind of sat out 2014 for the most part. Jason, what's your headline for the week? Yeah, I thought Amazon's announcement for free same-day shipping for Prime members was a good one. They've been doing same-day shipping for a little while now, and it was a minimal charge for Prime members. I think it was $5.99. And in many cases, I had used it because it was actually a great trade-off there. My time, I feel like in many cases, is well worth that $6. And so

now, it's going to be something that you can actually get for free, orders over $35. You order it by noon, you can get it by 9 p.m. that evening. It's going to be in 14 metropolitan areas to start. That includes D.C. Now, while we are not technically in D.C. here, I did check to see the zip codes where it would qualify. And so where I live in Fairfax County, for example, does qualify. So you can get it in places it looks like in those metropolitan areas and in surrounding areas. So this is right in line with what Amazon's been doing all along. They've been building out this business, trying to shorten that distance between them and the consumer. And if you look at the way they've invested ever since Prime started in 2005, they had 13 fulfillment centers in 2005.

They have 109 now, and if you look at capital expenditures as a percentage of sales over the course of that decade, you could see it goes from 2% up to 6%. So they're just investing in this prime relationship at a breakneck pace, and I think that's the right thing to do. Yeah, I would think that margins on something that you deliver same day must be pretty thin. Retail margins stand in the first place. I imagine they would be. But also, you remember back in November, they mentioned that they were actually working with Uber, partnering up with Uber to use Uber drivers as actual delivery guys. So there are ways to get around that. And you're seeing a lot of these sort of sharing economy businesses that are starting to play different roles, roles beyond just disrupting the taxi industry, right? I mean, Uber potentially could become some sort of delivery model as well.

And Amazon delivers so many packages, they should start putting advertisements on them from other companies. That's not a bad idea. Very, very good point. Jeff, what's your headline of the week? Biggest technology merger ever, actually, shockingly, is the Avago purchase of Broadcom. $37 billion buyout, about $17 billion in cash

and $20 billion in stock. Avago is a Singapore-based semiconductor maker and they're buying Broadcom to broaden their connectivity semiconductor portfolio. What's happening overall in the chip industry where there are a lot of mergers and merger talks is complexity is growing in smartphones, in

connected devices in general and where it used to be someone like Apple could take one little part, say the antenna from one company and the attenuator from another company and voltage moderator from another company, those are all going into a module, into one

piece. They all have to work together so they're all shipping together. So there's a lot of consolidation in the industry as companies realize they need to make modules and fulfill all this complexity, or they're going to get squeezed out. Yeah, if you think back to the beginning of the year, one of the things we talked about was how 2015 was kind of being set up for a lot of mergers and acquisitions in the energy industry, particularly oil and gas.

But we've seen recently reports of Intel looking at possibly acquiring Altera for somewhere in the neighborhood of $15 billion. Not to say that the oil and gas mergers won't play out for the rest of the year, but certainly the first half of the year, we're seeing a lot more in tech. It's true, and there will probably be more. Now, this merger makes Avago, which it'll now be called Broadcom, it makes it the third largest semiconductor company in the world after Intel and Qualcomm. It's a fairly distant third, and there are a bunch of semiconductor companies right behind it.

So I expect more of those to merge. Are we seeing big premiums that these mergers are going out at? This was a big premium, Ron. It was, I want to say, around 30%, 40% when all was said and done. Not too shabby. It started creeping up since rumors. And it looks fairly expensive, too, that they're paying 18-ish times EBITDA, a pricey buy. But they say it should add to earnings right away, and it gives them a stronger portfolio overall.

Speaking of earnings, let's get to some of the company earnings this week. Costco's third quarter profits up 9% from a year ago, but same-store sales down 1%. It's the first drop in six years, Ron. That's a nice run they had there. It is, and in the large part, it is not their fault. this is things beyond what they can control, largely actually what we spoke about earlier, gas prices and currency translation. If you remove those, you actually see comp sales increase 6%. So, the company still continues to do a great job. Unfortunately, they can't

control everything. It's not all in their power. But their operating margins widened, and their membership rate retention continues to be strong. And you recall that they really make the bulk of their money on these membership. It's a membership model where they retain 88%, 89%, 90% of their members in a given year, and that really flows to the bottom line. Maybe about 80% of their operating income is driven by those membership fees. So, as you said, profits up 9%. The company's still doing a great job. I think the stock's not as cheap as it used to be at $142, but I really think Costco's the kind of stock or you can put it in your portfolio as a core holding and probably hold it forever. Certainly

on a risk-adjusted basis, I think you're going to do well. Shares of Michael Kors down 25% this week after fourth quarter results. Jason, sales are still growing, but this was the slowest sales growth they had in a quarter in more than two years. Yeah, it's not like these guys are lobbing up negative 20% comps a la Coach. So, not a broken business by any means. The number down 1.7%. I think that was really the first quarter they witnessed that. And it was a stock with a lot of expectations baked into it before that announcement. As you see, shares trading at around 10 times full-year expectations now. I mean, I don't know that that's all that

unattractive of a deal. But the flip side of that is that we've seen this story play out before. I mean, we saw it with Coach, plain and simple. And I think those who think that Coors is somehow immune to that or delusional. I mean, there's just no way in the world that they're immune to it. I think that the more people that get it, the more people that wear it, that show that brand, the more saturated it becomes, the less special it is, and then the consumers lose interest and they move elsewhere. So, I mean, this could be something worth looking at, I think, for your value-style investor who's maybe able to get in and get out. It's not one I'd want to hold on to a very long period of time. And I tell you, what was really

disappointing here is that you want to look at a textbook example of how not to pull off share repurchases. I mean, these guys are it. It seems like over the past couple of quarters, they spent close to $500 million of purchasing shares at an average of around $76 per share. Now, I'm the rocket scientist here. No, you are. I'm just a stock guy. But $76 is a lot more than $45, which is where that share price is now hovering uh so so yeah i would say on the sherry purchase front they get a big fat f in my book coming up can iconic characters increase sales two all-american restaurant chains are

about to find out stay right here this is motley fool money welcome back to motley fool money chris hill here in studio with jason moser jeff fisher and ron gross gopro the maker of Wearable Camera is announced this week. It is developing a virtual reality camera for sale later this year. And, Jeff, a flying drone camera is in the works that they're looking to sell. Don't cameras capture actual reality? What's a virtual reality? This is something where it has multiple cameras, and you can take that footage and, I guess, input it into an Oculus Rift-type virtual reality.

That's a reality you just can't quite attain, right? You want it, but you just can't quite get it. your dreams it's a spherical content they're calling it as well it has six hero four cameras mounted in such a way to create is there an attenuator in that i'm sure there is probably a flux capacitor as well uh that one won't be cheap and probably will not be so mainstream but they're hoping possibly that their quad copter drone will go mainstream it's a four rotor drone there are a lot of these drones out there on the market now so they have competition but gopro's advantages it'll have of course a way to hold gopro cameras and and tape your recordings of

whatever you want to record as you fly around can you smell the privacy being uh yes i can't i i will give them credit though when they first went public i i and maybe it's because i just don't really get technology all that much i just thought well you know i've got a camera on my phone everybody's got a camera on their phone what and they haven't for whatever else you want to say about GoPro. They haven't sat still. They've got a 16-camera device that they're working on for 3D footage. So, they're really pushing the envelope here. Yeah, it sounds cool. You just have to question, as always, how large is the market? The company is worth $7.7 billion right now. So, I think there's a fair amount of risk in owning shares

of this company. If you end up generating strong returns, you've earned it, because you're taking a lot of risk. Yeah, I mean, the strategy is to be a content provider, ultimately. And if they can figure out that audience and how to disseminate that content. I mean, there probably is a long life there, but it's a, yeah. It smells like an acquisition candidate to me. They won't be on their own forever. Shares of Ulta Salon hitting a new all-time high this week. First quarter results for the cosmetics retailer were, Ron, they were a thing of beauty.

Buoyant. Everything was up. Profits up, revenue, they increased their market share across the board. Com store sales up 11.4%. They continue to really put up just strong, strong numbers. And recently, they've been really focusing on their online business to get that up to be stronger. 50% growth in that business. As you said, margins were up, profits up 34%, up to about a little less than 800 stores right now.

Still plenty of room for growth. Stock's not cheap, but they do have plenty of growth ahead of them. So, you could maybe take a little nibble here. But they're going to have to continue to put up strong numbers like that to validate that valuation. Have you ever been there, Ron? I have, yes. We have one locally. Good haircuts? No, I've never done the beauty salon part of it. I've roused the shampoo.

On Thursday, Abercrombie & Fitch posted a loss for the first quarter that was nearly three times the size of the first quarter loss they posted a year ago. And yet, the stock was up 9% for the day, Jason. and do I need to start giving them the benefit of the doubt? No, I wouldn't give them the benefit of the doubt. Not yet. They haven't earned it. And I think it's worth noting, they did give back a decent chunk of that on Friday's trading as well. So, I mean, there was nothing really good about the quarter. I mean, I think probably the best part about the quarter is the management. You know, they've ripped the Band-Aid off.

They've obviously changed management so that Jeffries is not really a part of the equation anymore. and on the conference call no mention of teenagers whatsoever they they really do seem to be aiming for a broader market they are and you know that's why i think they they are you know they're taking that logo down i mean they're basically eliminating the logo from from a lot of their clothing so you know to me i feel like when your logo becomes a liability i mean that's that's a problem for a retailer isn't it i mean uh you know your audience and cater to your audience Are you going to be able to convince people that you're not really a teen retailer anymore because you don't have the Abercrombie & Fitch logo?

I'm not so sure that's the case. It's not a retailer that I would have any interest in owning. They should combine with Aeropostale and just have one big disaster. Yeah, it would be of Hindenburg proportions. Earlier this month, McDonald's brought back the Hamburglar character to help promote the chain's new sirloin third-pound burgers. Now Yum! Brands is trying the same thing. The parent company of KFC is trying to boost sales with a $185 million campaign that includes remodeling some of the 4,300 locations they have here in the U.S.

And national TV ads featuring Colonel Sanders. They're bringing back the colonel, Ron. Is this going to work for them? It is not. The remodeling is fine, but the commercials, I think they're kind of creepy. I love Daryl Hammond, but I don't get it. Daryl Hammond, yes, from Saturday Night Live fame, is playing Colonel Sanders. And I don't know, I guess I question, Jason, whether any character can drive sales of a food product.

It's tricky to pull that off for any sustainable period of time. And I mean, I agree with Ron. These are creepy commercials. Check them out on YouTube. With Daryl Hammond, I'm waiting for the punchline, right? I mean, he's a Saturday Night Live guy, and I'm just waiting for the punchline. But the other thing I was thinking about here with McDonald's, if they're looking to change their sort of perception of the market as being a go-to burger joint, well, then why are these new sirloin burgers for a limited time only? Wouldn't you want to make that the new norm?

Maybe they will. Hey, McDonald's, think about it. Let's bring in our man from the other side of the glass. Steve Broido. Steve, any thoughts on either the Hamburglar or Colonel Sanders? I could just say it worked for Taco Bell with that little dog, that little Chiquita guy. Wasn't he the Taco Bell dog? Yeah, Yosquero Taco Bell.

He was huge. And it's Yum Brands. I think they know what they're doing. Yeah, I guess, you know what would be more interesting is if they brought the dog back to try and push KFC. Just to try and mix things up. Drop us an email, radio at fool.com. Weigh in on the Hamburglar, Colonel Sanders, or anything. We'll take your questions.

All right. Ron Gross, Jason Moser, Jeff Fisher, guys. We'll see you a little bit later in the show. Up next, we will go around the world of international investing with portfolio manager Bill Mann. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Bill Mann is the portfolio manager at Motley Fool Funds, and he joins me in studio now. Thanks for being here. Glad to be here, Chris. A bunch of things I want to get to, including your most recent trip, but let's start with something that we had talked about earlier in the year. The last time you were on the

show, we were talking about emerging markets, we were talking about China, and up until the middle of this week ... It was a rocket. Holy cow. For listeners who probably don't pay a lot of attention to international markets, What has been the story in China's stock market so far in 2015? Well, the major indices in China have more than doubled in the last six months, which is extraordinary. It's particularly extraordinary when you look at the earnings reports from the companies that are within these stock markets. And would you like to guess, on aggregate, down 2.5%?

Really? Yeah. And the markets have doubled. So China is very similar to a number of other countries in that the investors tend to be very momentum based. There's no shorting allowed. And literally people start getting excited about stocks because they go up and they plow into them in very, very large ways. I mean, it's yeah. But but when I hear a stat like that, I think bubble 100 percent. Yeah, 100 percent. So, yeah, it is because there is no reason to be on the other side of the trade. And you're in a you're in a country where there there are currency controls. People have nowhere else to put money. And the real estate market in China has dropped. You could call this an actual reason, and I would give about 67% validity to this. China is trying to turn the yen into a global currency, which will increase liquidity in China. So you could see that there are reasons why people would want to invest in China, but not in the Chinese real estate market. So that leaves the stock market. But the companies in China, by and large, we describe them as being mystery meat. You have no idea what's in them.

Well, and so maybe then, not a surprise to you, on Thursday, when the Shanghai market drops 6.5%, it's one of the biggest one-day drops this century, is that a small step towards sanity in the market? Yeah, but again, when you're talking about a market that's momentum-driven, that's gone up 100% on basically nothing, Yeah, those kinds of things are going to happen. You say those kinds of things are going to happen. It's only happened a couple times in a century. But neither has the second largest market in the world doubled in such a short period of time.

It just hasn't happened. So it's wild. And we have looked and looked in our funds for investments in China. And it's really hard to find ones that even rise to the level where you think that they're beating their basic cost of capital, which is not even beating your cost of capital is to me like table stakes of even beginning to consider something to be a company and not a charity for somebody. You're not even talking about investable companies. You're talking about ones that aren't destroying money. So, for the average investor, is it a better route to look at consumer brands that are expanding in China? And you can think about big, all-American brands like Coca-Cola, but

also recently we saw Priceline add a $250 million stake into Ctrip. So, that's one way they're trying to get in. Yeah, for sure. I think that there are lots of ways that you can be involved in China, and one of the ways that we've done and the funds is by holding consumer companies. There again, I mean, you know, an interesting piece of background that has been a very tough trade because of the corruption crackdown in China. So you really it's really a market. A lot of people just say, I'm just not going to play in it. And that is a rational decision. I mean, it's not it's not one that we make. You know, we do believe in every market that there are companies that are investable, that are shareholder

friendly. I mean, I think Baidu is still a wonderful company. It's Chinese and almost all of its revenues are in China. But it's hard. I mean, it's really, really hard to invest in a country like that with such an information deficit, such regulatory shortfalls, and that are prone to such weird swings in momentum. I know you're a big soccer fan, so we got to talk about the big story of the week, and that is the U.S. Justice Department charging officials from FIFA, which is the international governing body for soccer,

as we call it here in the U.S. Football. Football, what the rest of the world refers to as. 47 counts of money laundering, wire fraud, et cetera. You were stunned by this news. Can you believe? I don't know how these idiots could possibly have screwed up the World Cup, and yet.

And yet, so, you know, we were joking, like, who amongst us was surprised when Qatar got the 2022 World Cup that there wasn't payola involved? We were joking about this earlier. Was on the merits, could you see, well, you know, there's U.S. and there's Qatar, and I can't really tell the difference. But Qatar says there's not going to be any rain, so let's go there. Right. There won't be any rain because the average temperature in August is about 115 degrees. Right. It's just it's such a it's such a terrible decision on its face.

You're talking about a country that has one city where the stadium's going to go. Well, I mean, I guess they've got a bunch of sand. They've got a bunch of other land where they can build stuff. But yes, FIFA headline is corrupt. And I just I the amazing thing to me is this is all in Switzerland and it's the U.S. Justice Department that got involved. I mean, how metal is that? Like, Europe, get out of the way. We don't even play soccer in America, and we're going to come clean up your mess.

We're terrible at it. Let's get to the business angle of this, because last year, FIFA took in more than $175 million in marketing sponsorships, and now these big global companies are looking at this, and I'm talking Visa, Adidas, Coca-Cola, McDonald's, Hyundai Motors, They have all come out this week and expressed varying levels of concern and have also expressed varying degrees of sentiment that says, you know what, maybe we won't be renewing our sponsorship. Do you think that's actually going to happen or is the marketing opportunity just too big to pass up because the World Cup final draws an estimated audience of somewhere in the neighborhood of a billion people? Yeah, so go find me the person that says, well, you know, Brazil is in the World Cup, but because FIFA is corrupt, I'm not going to watch.

That person doesn't exist. The World Cup, first of all, the World Cup is in 2018. It's a long time from now. This is almost, I don't want to say this is good news for FIFA, but from a timing perspective, we're really just coming off of the World Cup. We've got a long cycle and a long time for people to forget. I wouldn't worry about the sponsorships that much. But, you know, who knows how deep the rabbit hole goes. It could be deep.

You know, they're saying that one of the bids that they're looking at was South Africa. They're looking at the bid. I'll tell you where they actually have a little bit more exposure is for some reason the tournament that's usually played in South America will be played in the U.S. this year. And that's actually a primary part of the case is that these bribes happened in the United States. And that one may be at risk, but not the World Cup Finals. You're listening to Motley Fool Money, talking with Bill Mann, Portfolio Manager at Motley Fool Funds. Let's bring it a little closer to home. Your most recent trip, and we've talked before about trips you've made to Europe, to China.

Almost the same thing. And your most recent trip, you and your colleague Brian Hinman, Nebraska. Nebraska. Besides Berkshire Hathaway. And we didn't see Berkshire. What's, from a business perspective, what's in Nebraska that's of interest to you? There are wonderful companies in Nebraska. You know, Tom Gardner has often said, and this story will not quite come back to where you would hope it to because it's not quite there.

But he's often said that a great exercise for investors is to think about a single criteria that you would invest in companies. Like if you couldn't see anything else, you couldn't see the name, couldn't see market cap, you had to choose one thing. And Tom, his thing is he wants to see insider ownership. A long time ago, I thought through this and I came up with something that, you know, that was that was probably not exactly what he was thinking is I wanted all the companies from Minnesota. If you just gave me the list of companies from Minnesota, you know, they've got this Midwestern, you know, this this this Midwestern work ethic. They tend to be very conservative. They tend to be you know, they don't take on that much debt. Nebraska is exactly the same way. There are a number of really, really great publicly traded companies in Nebraska, starting with Berkshire Hathaway. And, you know, we I'm sure Berkshire has gotten lots of coverage and, you know, in the time that you all have been on the air. And that's great. But it's almost like it takes the air out of the rest of the state. You know, TD Ameritrade is based there. Cabela is one of the great sports brands in in America is is based there. We went to go see a company called Valmont that makes, amongst other things, giant those rotating sprinklers that you see when you're flying across country, the giant crop sprinklers. and they make equipment for highways.

And these are great businesses. They really are. And I just think that there's so much power in getting out and going to go see companies where they are. And so it's a big part of our process. And, you know, even if it doesn't seem particularly romantic, it doesn't seem like a particularly awesome place to go. Nebraska is a wonderful state.

I mean, we really just, you know, we learned a lot. And, you know, really standing in Sydney, Nebraska, which is where Cabela's is, and wondering how it is that, you know, maybe the East Coast buys. She's like, how in the world do they get people to come relocate to Sydney? And you get there, and the people from Cabela's look at you like you're an idiot. They say, you could be from this parking lot to some of the best fishing in this country in nine minutes. So you tell me. Now I'm intrigued.

Right. If you like fishing, have I got a deal for you? Right. So, yeah. By the way, Nebraska, not necessarily where you think of when you think of great fishing. Yeah, but fly fishing. Right. You know, so it's available and they find people that they want to find. And the people who commit to coming to Sydney, Nebraska, are not leaving. Before I let you go. And since you mentioned Berkshire Hathaway, the most recent meeting took place. warren buffett seems as energized as ever yeah i think it's perhaps a sugar high but he is one of those people that you just sort of look at and think wow okay so so some of our health is just completely left up to whatever is in our dna and he's the keith richards of diets

Yeah. In the wake of the most recent meeting, any thoughts about Buffett, about the track record he has amassed, and anything that you think people are missing? Because it seems like he gets so much coverage, and you could spend a series of books on his investing acumen. Yeah. Well, first of all, I think that a lot of people, a lot of people either want to put him into one bucket or the other. People who love Warren Buffett want to put him into this avuncular character who looks people in the eyes and says, I see, you know, I see someone I can work with. And all of those things are, in fact, true. He's also ruthless. I mean, he is a ruthless businessman. And I don't know that people who are real Berkshire Berkshire holics. I don't know what you want to call them. Real Berkshire fans want to really think through some of the things that that that Buffett has done. And Buffett always talks about things like, you know, the fact that he doesn't pay enough taxes. Right. But he's not out there. Purposefully paying more taxes. He's going to take advantage of the rules as they exist, which, you know, as a shareholder, he should do. But I think that I think that people either think of him as, you know, as being more hypocritical than he comes across or they think of him as being a lot more genteel and polite than he actually is. You can read more from Bill Mann and his colleagues.

You can go to foolfunds.com and sign up for Declarations, which is the free monthly newsletter. Just go to foolfunds.com. Bill Mann, thanks for being here. Glad to be here, Chris. Thanks. Coming up, we'll give you an inside look at the stocks on our radar. Stay right here. This is Motley Fool Money. As always, people on the program may have interest in the stocks they talk about,

and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money, I'm Chris Hill. Joining me in studio once again, Jason Moser, Jeff Fischer, and Ron Gross. Guys, it is that time once again, time for the stocks on our radar, and our man Steve Broido behind the glass will hit you with a question. And you know what? Feel free to hit him right back with With a question, because there is the thick glass between us. Ron, you're up first. All right, Stevie, I've got a radar stock, not a recommendation, but it's a potential deep value opportunity. It's called Big Five Sporting Goods, BGFV, sporting goods retailer,

437 stores, only in the western U.S. Obviously, a lot of competition in this space, whether it's Sports Authority, DX, Online, Under Armour. Two activist investors involved, just got three board seats. My decision is, is this a value investment or a value trap? The stock looks awfully cheap, but this is a tough business. O' Steve, question about Big Five? What's a sporting good I would only go to a store to acquire? O' Wow. A bowling ball where you need to be fitted.

O' How's that? That's good. That's good. O' I like that. That is good. O' Do you have a question for Steve? Steve, I was going to ask you, what's the last sporting good piece of equipment you've purchased?

You're asking the wrong guy. Probably a tennis racket at some point. Quick question before we move over to Jason. Do you have any sense of what the shopping experience is like in Big Five? Because the only store nearby like this I've been to is Sports Authority, and it is positively claustrophobic. Yes, I agree with that. It is a large store, so there's a big footprint there, and they do pride themselves on customer service, but you know what? So does Best Buy. I don't think they're getting it done. Alright, Jason, what do you got?

Yeah, taking a look at White Wave Foods, ticker is WWAV. This is one that, you know, I tapped it back in caps back in late 2013, and it's done quite nicely. We finally got it in the Foolish Universe here. I'm looking at it for MDP, perhaps. It's a consumer packaged food provider, plays into the whole healthier eating movement, a la Hain, Celestial, and other companies like that. Brands you might recognize would be something like Silk or Horizon Organic. They acquired a little company a little while back called Earthbound Farm, which makes organic salads, packaged fruits and vegetables. You'll find that stuff in Costco, Trader Joe's, and everywhere else in between.

And it's a leader in this space, along with something like Hain. I think that you have a lot of room to run there. I like food, man. People got to buy it and keep on buying more of it. And so, you got to love that. I think this is one we could probably even see be acquired at some point. Steve, question about White Wave Foods? I'm looking at a chart right now, and it appears to be a 45-degree angle going straight up.

Does that make you nervous? I look at a chart like this, and I go, goodness, this looks pretty encouraging. Yeah, no, I like that. I mean, I like adding to winners, to be quite honest with you. So I think when you see a business performing like that, there's a reason why it's performing like that, or the stock, you know, and it's because the business has performed so well. Do you have a question for Steve? I do. So when you go to the Olive Garden, what is your go-to dinner?

Like, what's the one you know that you're going to get this, it's going to make you leave with a smile? Chicken parm and an endless salad will do the trick. Simple man. O' Soft drink or wine? Oh, soft drink. Skip the wine. Not a good idea there. O' It's only in an Italian store. They don't know wine. Jeff Fischer, what are you looking at? I have to go mainstream. I'm talking about Intel, Steve, tickers INTC. I mention it only because, top of the show, we talked about chip industry. The rumor is back that

Intel is looking to buy Altera Corporation for $15 billion. Why would they do this? Altera specializes in making programmable chips, so chips that your customers, say it's Microsoft or Amazon, they can program the chip as they want for their server on the fly. So that's pretty cool technology. And servers are, of course, Intel's most profitable chip division, and it's a growing industry. So, it looks like a pretty smart acquisition for Intel. It would be a big premium from where Altera traded at as the year began. But Intel seems to know what they're doing. The company is reasonably priced as is. And so, I think with Altera, its future may even be a bit brighter.

Steve, question about Intel? Well, there's the famous thing that computer speeds are doubling every X number of years. I think it's three years. I don't feel like my computer is getting markedly faster every three years, and I think Intel is a huge part of that, and that makes me nervous about the company. Steve, are you buying a new computer every three years, or just hoping your existing one gets a new one? That is a good point.

I love that. Do you have a question for Steve, other than that one? Steve, what is your favorite novel? Oh my goodness, I don't think I have a favorite novel. I do not. I'm not a big reader. I'm not going to lie. No sports, no reading. In his defense, he has young children. Tough to settle down with a novel. That is true.

In your 20s? No, just not a huge reader. All right. Love movies. Intel, White Wave Foods, Big Five Sporting Goods. You got one you like there? I'm going White Wave Foods. It sounds pretty encouraging.

I know. All right. I think we knew he wasn't going to go with the sporting goods. Yeah, exactly. Sorry. All right. Ryan Gross, Jason Moser, Jeff Fisher. Guys, thanks for being here.

Thank you. Thanks. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.

We'll be right back.