Motley Fool Hidden Gems Investing - CES: Top Tech Trends

Episode Date: January 6, 2017

Automakers rev up sales. Retailers report some not-so-happy holiday numbers. Apple reports some big numbers for its apps. And Sears unloads its toolbox. Plus, Motley Fool analyst David Kretzmann reports from Las Vegas about some of the hot tech trends at CES 2017. Learn more about your ad choices. Visit megaphone.fm/adchoices

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It's the Motley Fool Money radio show. I'm Chris Hill, and joining me in studio this week from Million Dollar Portfolio, Jason Moser. From Motley Fool Pro and Options, Jeff Fischer. And from Motley Fool One, Ron Gross. Good to see you, as always, gentlemen. Happy New Year! How you doing? Happy New Year! We've got the latest on automotive, tech, retail, and more. We will head to Las Vegas for the Consumer Electronics Show. And as always, we'll give you an inside look at the stocks on our radar. But we begin with the big macro. Two big numbers for December out

this week. Automotive sales were surprisingly strong. And the jobs report out on Friday wasn't amazing in and of itself, Ron, but it was the 75th consecutive month of job growth. That's a nice streak. That's a fair categorization. Not amazing, but wraps up a pretty good year with unemployment at 4.7%, up a bit from 4.6%. But there's a good reason for that if you take into account that some people are re-entering the workforce, so it's nice to see that. The bigger number of unemployment that we like to look at, 9.2, also pretty good, but nowhere near where we were before the Great Recession started, which was about 8%. So, we still have some work

to do to get back to that, but certainly a strong year of job creation. Yeah, I think Ron was talking about U6 there being 9.2%. It's certainly encouraging when you think about the fact that the last time it was below 9.2% was back in March of 2008. So, it has been a long time coming. And I think, really, what I was encouraged by was the wage growth. I think wages grew 2.9%, if I recall correctly, which we've been seeing a relatively flat performance from wages here over the past couple of years, it seems at least. So, it certainly seems like it's playing out a little bit in consumer confidence and some spending in retail, as we'll talk about in a little bit.

Yeah, wage growth is key, and we have those minimum wage increases coming through in a lot of states this year. The other thing to keep in mind, though, is a lot of people are still only part-time employed and looking for full-time work. It will be interesting to see, though. I do think the workforce is a bit constrained right now. If we put forth big packages like Trump wants to in infrastructure or other areas. We're going to need people to go back to work and work on those projects. And right now, we don't seem to actually have those people, because we're almost at full employment. So, that's going to be interesting to see if the economy as a whole gets constrained

because of the demographics. A lot of people say we're no longer a 3% economy, we're more of a 2% economy, just because of the way our demographics work out, because the labor force just isn't there. Can we go back to the automotive sales for a second? Because I was really surprised that after the huge year that we saw in 2015, that 2016 was as strong as it was for the automotive industry. It's the seventh straight year of sales growth. Pretty much every automaker in December sold more vehicles than was expected. But we don't really see that translating into their stock performance, at least not across the board.

Well, I think sales were strong because of things like steady job growth and low gas prices. Consumer confidence is pretty good. So, you see sales being relatively strong also on the heels of incentives. And incentives lower the profitability of each car sale, which therefore affects profitability and speaks to stock price and valuations. So, sales are pretty strong, and they're even predicted to be pretty solid for this year. You think the shoe has to drop at some point, but the big three are saying it still looks pretty good for 2017. At some point, those incentives are going to dry up. Interest rates are going to tick higher. Financing is going to be tougher. We're seeing some defaults

on some of these subprime-type loans rearing their ugly head. This can't last forever, but we might be in it for okay for at least maybe another year. There are a lot of ways to invest in the automotive industry. Obviously, there are the automakers, but there's parts, there's companies like AutoZone, that sort of thing. Jeff, is that an industry that you look to ever for investment ideas? Well, in pro, we've owned for several years O'Reilly Automotive, which has been a great investment, great, well-run company. And as Ron was speaking to, car sales and car parts sales go right in line with employment. As people get work, they need a car, they need to drive.

with. So, I think Ron's right that car sales could remain healthy, as long as employment remains healthy. But yeah, the auto manufacturers themselves, tough business. I haven't looked for a while about what sort of long-term total returns they've given shareholders. Have they been market-beating in the past 20, 30 years? I don't know. But I know things like O'Reilly Automotive and AutoNation. O' Carmax has had a great year. Yeah. There are many great ways to make money on the auto industry. Results are starting to come in for holiday retail, and so far, it's not pretty. Macy's is closing dozens of stores, Kohl's cut their earnings guidance, and JCPenney

reporting falling same-store sales over the holidays. And Jason, not surprisingly, all three stocks taking a pretty sizable hit this week. Yeah, they all got hammered, for lack of a better word. I think the good news here is that retail is growing. According to the National Retail Federation, they expect retail sales to have increased 3.6% versus the 3% last year. The bad news is, this growth is coming at the cost of a lot of the bricks-and-mortar retailers out there, and we're seeing that with Kohl's and with Macy's revised guidance. It's amazing to look at Amazon as a percentage of total online revenue during the holiday season. This isn't even close. It's 38% versus

Best Buy at 3.9%, versus Kohl's at 1.6%, Macy's 2.4%. So, Amazon basically rules the online retail space, like Netflix rules the streaming traffic space, right? I mean, everybody's just playing for second, and I don't even know that second really matters all that much in this case. So, no question you're seeing this play out, this big trend towards e-commerce. Macy's, it was fascinating. Back in November, we were looking at Macy's, they were having a decent year, they had reaffirmed their annual guidance, seemed like they were bringing on some additional staff and expecting a good holiday season that really did not work out for them. Conversely, you see something like Wayfair. Wayfair was experiencing record traffic

numbers with tremendous growth there. So, it is really about more than just low prices and selection, it's about that convenience factor, it's about great customer service, about easy returns. I feel like we need to figure out a way to incorporate some sort of personal time savings dynamic in valuing these firms, because that really is one of the big advantages they have today. I think in the age of the old economy, we just accumulated too many department stores, both too many companies and then too many actual doors, too many stores themselves. And now, in the new economy, we're seeing that that's not sustainable, and we need to

pair back, whether it's Macy's or Sears or so many of them, closing underperforming stores. So many of the underperforming is almost the norm nowadays. They're just not that strong. The other thing that I won't be fooled again, I say this probably 10 years in, is the guidance for the holiday seasons is just so bad. They're optimistic, they think things are going to be good. O' Guidance from the companies themselves? From the companies themselves. They never really turn out to be that way. Shame on me for being fooled 10 years in, but not again. I think it's also fair to note, there are ways to play that brick-and-mortar space

that can work out. You just need to find something that is unique, differentiated. I look at something like Ulta Cosmetics, for example. They have really exploited that brick-and-mortar space, because the nature of the product, the consumers like to go, touch the makeup, try the makeup, see what the offerings are. O' I don't think you're allowed to touch the makeup unless you buy them. Well, unless you're trying. O' The samples. The samples.

Something like Dick's Sporting Goods, another good example, where you see these types of brick-and-mortar retailers still prospering, doing OK in the face of this massive move to e-commerce. If you're in a top-tier location and have a good customer service experience like you talked to Jason, then you can still thrive. What's fascinating, too, is Amazon, as we know, is building out retail locations now. They're opening a giant bookstore in Manhattan to just sell books. They're calling it Barnes & Noble.

But if you think about it, it's a lot easier to go from the e-commerce to the bricks and mortar versus the other way around. I mean, you have a lot of brick and mortar, you have to start closing stores down. Amazon can be very selective about any physical stores they open, and make sure they really only put something in a high-traffic area that's going to have the demand. Then they have all the data for what each region is interested in buying, and they can have it there for you, or get it to you in the same day. Certainly. You know who's not having trouble selling stuff? Apple's App Store. Apple announced

this week that New Year's Day was the single busiest day ever, with more than $240 million in sales. For 2016, the company earned over $8.5 billion. Jeff, I know this is a company that is not hurting for cash, but I have to believe that the revenue out of the App Store has got to be incredibly high margin for them. Yeah, of that $8 billion, I'd estimate they keep about 90% of it. So, it's almost all profit. That said, the company had $215 billion in sales last year, so this $8 billion even is very small compared to that. But still, the app ecosystem has shown its strength in spades. The app developers themselves have made some $60 billion since the ecosystem

started. Are we up to 10 years now, even? Just about. So, it's been an incredible job and revenue generator for a wide swath of people and businesses, not just Apple. But it's some nice pocket change for Apple every year to get $8 billion and growing. What's fascinating, too, is that the revenue grew this year as much as it has in prior years, even though iPhone sales have stalled a bit. So, that just speaks to people relying more and more on apps for day-to-day life, and they get the new apps when they need them. And also, strong sales in China of apps. Do you think they send a fruit basket to Pokemon Go for that? Because that had

to contribute just a little bit to the $8.6 billion. Yeah, you know, if Apple were some smaller, lesser company, they probably would be calling them up and saying thanks. But Apple probably barely noticed. Not so much. Shares of Sears up 10% this week after the company sold its craftsman tool business to Stanley Black and Decker. I'm sorry, Ron, I'm having a real tough time with this one. Up 10%. Is that fascinating? That's a lot of enthusiasm for a very struggling retail. And by the way, three, four months

ago, there were reports that craftsmen were going to sell it. It's a good brand. There there were reports they were going to sell it for as much as $2 billion. They sold it for $525 million. O' What are you saying? I'm saying, kudos to Stanley Black & Tecker. O' What are you going to do if you're Eddie Lampert and you're the majority owner of a failing retailer? You're going to try to monetize whatever you can. That's real estate, that's brands like Craftsman, that could be Kenmore Appliance or Die Hard Batteries. You're going to do whatever you can do. On his way, he still believes he's going to turn

this into a profitable company? I don't think so, my friend. But while he's trying to do that, he's ejecting capital, another $1 billion, some monetized by real estate, some in the form of debt. He's all in, let's say that. I don't blame him for doing that. I'm just wondering, who are these investors who are looking at all of this data and saying, oh yeah, I'm bidding this thing up? It's the kind of thing where, when we said JCPenney was dead, and it turns out JCPenney wasn't dead, it remains to be seen, or Best Buy. There are investors who can buy distressed equities and do well. For the average retail foolish investor, I think there's other

places to put your money and better ways to make money by investing in good solid companies and holding for the long term. If he pulls this off, kudos to him, but not with my money. He has got to sit around some night and just regret ever hearing the name Sears and ever getting involved. He should just think about how his life would be if he had never made this investment. Yeah, it's a mess. Just put the money in Amazon instead, however many years ago you did this. That's a good point. Or a money market account. And we should make clear, as Chris, you pointed out before the show, they didn't

really sell the Craftsman brand for $900 million. They sold it for $525 million now, $250 million after three years, and then annual payments over 15 years if the thing still exists. Right. So, the headlines are a bit misleading. Can we go ahead and everybody lay out their bet right now? I mean, does anybody at this table see Sears existing in 15 years? No, maybe as some kind of REIT spinoff or something like that, but not as a retailer. I have a hard time thinking it's going to be here in 15 years. Coming up, we'll dip into the Fool mailbag. Stay right here, you're listening to Motley Fool Money.

Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Fischer and Ron Gross. Our email address is radio at fool.com. Drop us a note from time to time, would you? Radio at fool.com. From Tobin Anthony here in Virginia, he writes, is the decline in publicly traded companies really a trend that should concern small investors? And he included a link to a Wall Street Journal story. The headline, Ron, is America's roster of public companies is shrinking before our eyes. You go back 20 years ago, more than 9,000 public companies. Right now, there's fewer than 6,000. There are a bunch of reasons for that, but I think his question is a good one. Should I be rooting for this trend to

continue? Well, I think it is a trend, clearly, but I don't feel it's something regular investors should worry about. There's thousands and thousands of great companies still out there to invest in. And as you said, there's many reasons why we've seen a decline. Part of that is mergers and acquisitions. Part of that, a big part, is the access to private capital is so extreme right now. A company like Uber, for example, doesn't need to go to the public markets to raise capital and grow the business. And why in the heck would you want to be public if you didn't need to be? Because it's a big pain, whether it's

a pain with the SEC or with investors or having to meet short-term targets or dealing with shareholders. So if you don't need the public markets to access capital, then most companies will probably say no thank you. Yeah, we have seen a lot fewer IPOs, certainly over the last couple of years. Yeah, and so, the even bigger thing I'd be concerned about is that the companies that do come public, the best of them anyway, come public at a much higher valuation than they historically did. Like, Microsoft, for example, came public at $500 million in valuation. Really?

Amazon at $400 million. Facebook came public at $68 billion. So, your return is minuscule compared to what you get buying those other companies in decades prior. So, there's much less money to be made in the public market, because what Ron just said, equity is getting it all. So, this is another case of big money getting more money in their own pockets at the expense of a wider public. The counter to that, I'll say, is private equity, venture capital, they do need exit strategies and liquidation events. So, we will see some of these companies still go public at some time, but when they're much bigger companies, probably, versus when they're

medium-sized and need capital. Yeah, and when they go public at those big valuations, let's look at something like Snap, for example, that's supposed to go public this year at some point, they're projecting somewhere in the neighborhood of $25 billion. Now, this is by all means an unproven business to this point. Very, very curious to see exactly how profitable it can be, particularly that they've changed their raison d'etre, so to speak, of being a camera company. I mean, I don't know. It seems like there's a pretty good track record of camera companies having a tough time making a go of it. So, yeah, just because it's going public,

I think there's fewer now, which means they get greater headlines, but that doesn't necessarily make them good investments. That's true. So, the high-profile companies that do go public, like last year, soared even more because there's so much demand. Buyer beware for these big valuations when they do hit the markets. It's really OK to go ahead and wait a little bit. Let some of these IPOs play out. Let them establish a bit of a track record. Give them a couple of quarters to report numbers, see how management's running the business. You don't have to rush in. You can certainly take your time and still make some good investments.

Hopefully, like Ron said, it is just a trend, and hopefully it will reverse, though it won't be pretty when it does. But when the market falls, crashes, and private equity dries up, assuming it does, then you'll see companies look into the public markets again for capital, hopefully. Quick question from Todd Nieman. Wanted to get your thoughts on Netflix. I know, in general, everyone likes the company, but in my mind, it appears to be overvalued. I'm wondering if it might be a viable short position. Any thoughts on the valuation of Netflix, Jeff? Here's how I would treat Netflix or Amazon or any high-profile company that

looks expensive. If you admire the company, I would own it. I would buy it. I wouldn't worry about the valuation. I'd look to own it for the long-term. I wouldn't want to short this type of company when they're succeeding on an operational basis. In most cases, I have shorted Shake Shack, for example, on a valuation. But in most cases, you want to short a company that's failing, not doing well, etc., etc., because it's so costly if you're wrong. You may think Netflix is overvalued, but if the market doesn't agree with you now or five years from now or however long, you can just obliterate your portfolio. It's not worth it. Instead, you want to own companies like this and not worry about the valuation.

Let's go to our man behind the glass, Steve Broido. Steve, whether it's Netflix or some other streaming service, quick viewing recommendation? I saw part of The Hangover over Christmas break, and it was tremendous. It's a very funny movie. I forgot how well, you know, it's just tremendous. He was hungover. Guys, we'll see you a little bit later in the show. Up next, we're heading to Sin City for a report on CES. Stay right here. This is Motley Fool Month. Viva Las Vegas. Viva Las Vegas. Viva Las Vegas with your neon flashing and your warm

back. All right, before we head to Las Vegas to talk about CES, got to say a word about Green Chef. You know New Year's resolutions, two of the most popular, are taking better care of your money and getting healthier. And you can do that with Green Chef. Their USDA-certified organic meal kits make it easy to cook healthy and feel great about where your food comes from. Green Chef delivers everything you need to cook amazing dinners right to your door. Organic, non-GMO ingredients, pre-chopped and pre-measured. I did this. I made a fantastic lemon herb salmon orzo that I got to say, the best part, besides the fact that it was easy to make and it was delicious,

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David Kretzmann is a senior analyst with our Motley Fool Supernova Investing Service, and he joins me now from Vegas. David, good to talk to you. Hey, Chris. Good to talk with you. What is your headline for CES so far? I would say that this is the year of the realistic self-driving car. Obviously, there's been a lot of buzz about self-driving cars last year at CES and over the past year, but this year I think companies are taking a step back and the public as a whole taking a step back and saying, okay, maybe we're not going to get to full autonomy right away, but let's focus on

the incremental innovations where cars will become increasingly capable of being self-driving, at least in certain circumstances, like on the freeway or certain areas like that. cars that are fully autonomous, where you just get in, you don't have to touch the steering wheel at all, you don't need any human control, that's further down the road. But these incremental improvements, that seems to be more of a focus this year at CES. How do you think something like this will play out for investors? Because I think it's natural, anytime we talk about the automotive industry, I think as investors, it's natural to just gravitate right towards the automakers themselves, as opposed to who's making the parts, who's maintaining these cars,

who's producing the technology behind it. When you think about this space as an investor, where do you think the opportunities are going to be? Yeah, it's interesting. I mean, you can look at pretty much all of the automakers now are investing in these self-driving components in some shape or form. Then you also have the hardware makers like NVIDIA or Mobileye and many others. I'm personally more attracted to the software side of the equation. I just think that's something that's a little bit easier to scale in a profitable way. It's harder for competitors to replicate. So if you're a company like Baidu, which is the leading mapping company in China for autonomous vehicles, so Baidu understands the roads in China better than

any other company, literally, that's a huge advantage for a company to have. So any companies that can get that software advantage. I think that's one of the more attractive areas for investors to benefit over the long run. You mentioned NVIDIA, the graphics company with a stock, by the way, that's up more than 200% over the past year. One of the keynote speeches at CES this year was the CEO of NVIDIA. You had a chance to check it out. What were your takeaways? NVIDIA is in a powerful position. I wish I had invested last year after we saw them at CES, But the company is really in a wonderful position. They're essentially powering the computers behind key trends like gaming, autonomous vehicles, artificial intelligence, big data.

So this really started as a company that made graphic processing units or GPUs for PC gaming. And that was more of a niche for the company. The company has really dominated that niche over the long term. The company was founded in 1993, so it's grown quite a bit over the past two decades. But they found other use cases, very valuable use cases for their technology, for those GPUs with those areas I just mentioned. So the company is in a very powerful position to be powering the computers behind all of these key trends that everyone's talking about. And I think the difference is NVIDIA is walking the walk compared to some other companies that maybe are loosely tied to these categories and they really tried to hype that up. Nvidia is making hard cash already from these different categories, so that's a position

you'd love to be in. I mean, the company now has $3.7 billion in cash, free cash flow is growing, margins are growing, sales are accelerating. So it's not surprising that the stock was more than tripled over the past year, and I think there's still room for the business to grow in 2017 and beyond. It does sound like they are in a good position. It also sounds like they are moving into competitive spaces where they will face new, very large competitors in the public markets. When you say that they're going to be working on the

powering behind everything that they've already produced, anytime I hear cloud computing, I immediately go to behemoths like Microsoft and Amazon with their web services and Oracle, that sort of thing. Is that a concern for NVIDIA? Certainly, the company might be expanding out of its core competency. I think that is a risk to watch. But one thing that NVIDIA did during the keynote was that they announced about 100 new partnerships, whether it's companies like Google or auto suppliers or automakers like Audi. the company really seems to be focused on establishing partnerships with companies in all these different fields partnering with these companies so they can integrate their technology

into all these various trends so again I think the company is doing more than just talking about it they're already doing it they're already on the ground working with these companies very closely whether it's Baidu, Google, automakers, auto suppliers you name it or even in the case of video game streaming, Facebook Live or Twitch. So, the company has formed these partnerships, and I think that puts them in a pretty good position, even as they're expanding into markets beyond PC gaming. Let's get to some of the other technologies on display, because certainly anyone who has seen anything about CES knows that a big attraction is the trade show floor. So, I'm curious, as you're walking around, what have you seen in terms of, and I'll just spot you up

with a couple of different categories and tell me what your impressions have been. And let's go towards health and fitness. What have you seen that has impressed you in terms of connected fitness? Really, it's been more of the same. We've only spent a little bit of time on the trade show floor so far, but whether you're looking at Fitbit, Under Armour, even traditional watchmakers like Fossil, which is branching into wearables like a smartwatch, it's hard to distinguish between all of these different companies. So I think this is a space that's getting very crowded. And I think if you're a consumer electronics company

in the connective fitness space, you need to find some way to distinguish yourself. And I'm not sure if I really see that. There might be some superficial differences between say a Fitbit product versus a Fossil smartwatch or anything that Under Armour is coming out with. So I don't know, my initial impression sort of confirms what I've already kind of suspected

with the space is that this is a very crowded market. It's going to be hard for these companies to maintain pricing power, maintain their margins, maintain their competitive position over the long term because there's so many competitors like any consumer electronics company. And consumer electronics tends to be a graveyard of companies that don't rhyme with Schnapple. So I don't know. That's my initial takeaway. There's obviously a lot going on with the connected fitness space. Under Armour is giving a keynote later today, actually. so we'll see if the company has more announcements about that connective fitness category but

at first glance it just seems like this is a very competitive space and i if i'm an investor i would be a little bit cautious before treading into this category so you haven't had a lot of time to be on the trade show floor but i know one thing you've had time to do because i saw a pretty awesome video of this is test out uh some virtual reality software uh where you were being a fireman do i have that right because that's what it looked like it looked like you're in your headset you're in your gear and then the camera shifts over and in the virtual world you're putting out a fire yeah talk about a use case that i never would have uh thought about with virtual reality yeah so you actually we we put on a jacket so it looks like a fireman or first responder jacket

and then you have this controller that that it that looks like a fire hose and you put on the headset and you're basically in a kitchen and there's just a fire starting in the kitchen and as the the fire grows and as the flames get bigger the the jacket that you're wearing actually starts to heat up and then you get more smoke in the room so it becomes harder to see and you're you're trying to to power the hose but you feel the the water pressure from the hose and becomes harder and more strenuous to to keep the hose and guide the hose uh and guide the water to to put out the fire. I actually didn't put out the fire. So if anything, it confirmed that I should not be a first responder. But this is an interesting demonstration of possible use cases with

virtual reality. Because obviously, if you're a first responder, training in a scenario like that is very difficult or dangerous or even impossible. So virtual reality could open up the door for more use cases like that. So, that definitely opened my eyes to other potential possibilities with virtual reality. And I think there are thousands more that we're not even thinking of today. Well, and I'm curious if other people that you're talking with at CES are speaking to that. Because I think for a lot of investors, it's easy to think about virtual reality and the applications that go along with gaming. But I think, naturally, there are a lot of people, and I'll put myself in that category, who don't really think beyond that, when there probably are very significant applications

for virtual reality software and hardware beyond that. And I'm just curious what people are saying in terms of how big VR could get. Certainly, it could get a lot bigger. I'd say, obviously, the immediate focus is on gaming and just making virtual reality more accessible to the wider public. So Samsung actually, they revealed that they've sold 5 million of their Gear VR headsets. So that shows that virtual reality is becoming more mainstream than it ever has been up to this point. But still, certainly the focus, it's kind of a battle of what comes first, the chicken or the egg. Does the content come first for these virtual reality devices? Or do you need a larger audience of people to be using those devices to attract the content makers? So it's kind of this

chicken and egg back and forth uh and initially that most of the use cases will center on games but i think as more people get their hands on these headsets get familiar with the technology and as more developers get familiar with the technology you're bound to see this expand into other fields like possibly real estate like you could tour around uh you know a home through your virtual reality headset different different use cases like that i'm sure will pop up just as the technology becomes more prevalent. But first things first, the bulk of the focus is on that video game category. How much, if any, blowback is Samsung dealing with at CES this year about one of, if not the biggest technology stories of 2016, and that is the Galaxy 7 phone catching on

fire and being banned from airplanes and Amtrak? Is that still an issue that people at Samsung are dealing with at CES? Well, people might be treading a little bit more cautiously around the Samsung booth at CES. But no, honestly, it hasn't been something that I've seen come up. But it's a huge trade show. So maybe other people are talking about it. But it seems like Samsung, they're obviously trying to refocus on the Gear VR and everything else that isn't exploding. All right. Two more questions, and then I'll let you get back to work. what is the strangest bit of technology that you have seen? Aaron Bush was on our Market Foolery podcast earlier this week, and he talked about an article he read where someone has

produced an internet-connected toaster. And we were really trying to figure out why we would need to buy an internet-connected toaster. I'm curious, what's the strangest thing you've seen? Yesterday, I saw a smart water bottle. So this is a water bottle that has Bluetooth and possibly wi-fi in it and it's supposed to measure your hydration levels and different things like that i don't know maybe maybe other people will will use that but that was something i looked at and i just thought to myself huh really do we need that but you know i'm sure there are other things then we also have edwin the smart duck that might go in the brilliant category it's essentially a smart duck that uh is connect bluetooth connected uh it glows so it's like a nightlight for kids

it can play music. I'm thinking, man, if I was a kid growing up, I would have wanted that Edwin SmartDuck. Wait a minute. I'm sorry. Let's back up. It's a duck that is a nightlight, but it also plays music and conceivably talks to my kid? That's the headline for CES 2017, Chris. Edwin the SmartDuck? Edwin the SmartDuck. What more do you need? So you have the SmartDuck, you have the smart water bottles. If I'm picking between one of the two, I'm definitely going with Edwin the Smart Duck. If I have to take one home with me, I'm actually going to take Edwin the Smart Duck home. Because the idea that I need Wi-Fi to tell me that I'm thirsty, I feel like human beings come equipped with their own thirst monitors. That's something that millions of years

of evolution handles pretty successfully, I would say. On a more serious side, have you seen a bit of technology that you thought, ooh, if they're giving those away for free, i'm absolutely taking one home with me something that was interesting and i don't know if this is necessarily something that i would put in my home right now but uh it it's essentially a composter from whirlpool and i just thought man this is pretty amazing so it's essentially looks like a trash can and you just stick it in your kitchen you put any like foods crabs or waste or compost into that bin and over a certain period of time it does all all the magical things and you can just pull out a little drawer at the bottom after a certain amount of time and it's turned into

fertilizer. I'm like well that's that's a pretty nifty thing. I don't know what happens if it breaks down if you just have to deal with these unbearable smells in your house or something but I thought that technology is interesting. I don't know yeah like I said I don't know if that's something I'd take home with me right away but down the road if I have a garden I might go with whirlpool composter trash can look alike. And if version 2.0 of Edwin the Smart Duck also has some nice scents that Edwin can emit, then you can pair those together. I mean, what more do you need? I think we have the perfect combination there. If you want to check out more highlights from David Kretzmann and the Supernova team that's

in Las Vegas, including, by the way, that video of David attempting to put out the virtual fire, you can go to ces.fool.com. That's ces.fool.com. David Kretzmann, I will let you get back to work, but remember, it's Las Vegas. Have a little bit of fun, too. David Kretzmann I'll do my best. Thanks a lot, Chris. Chris Hill Up next, we'll give you an inside look at the stocks on our radar. 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. Chris Hill here in studio once again with Jason Moser, Jeff Fischer, and Ron Gross. You can check out past episodes of Motley Fool Money and all of our podcasts by going to podcast.fool.com. You can subscribe on iTunes, Stitcher, Spotify, Google Play. Click the subscribe button. You've got Motley Fool podcasts on demand wherever you want, whenever you want. Wow. It's amazing. And the price is right, Ron. Let's get to the stocks on our radar. Steve Broido will hit you with a question. You're up first, Ron. What are you looking at this week?

A recent reg from our service income investor looks really interesting to me. It's Cedar Fair, ticker symbol FUN funds. What could be bad about that? The third largest amusement park operator. They own 11 parks. Big barriers to entry in this business. It costs a lot of money to construct a new park. Getting the land is difficult. They have a dividend yield of 5.6%. Income investor sees 20% upside to the stock. Steve, question about Cedar Fair? When people get stuck on those rides for 12 or 14 hours at a time, you'll always see that on the news. That's the only time I really see amusement parks on the news,

is when someone's been stuck on a ride for 22 hours. And the stocks dip, and you buy on the dip. Jason Moser, what are you looking at? Taking a closer look at Market Access, ticker is MKTX. This is a business, they operate an electronic trading platform, which enables the trading of corporate bonds, other types of fixed income instruments. So, very, very exciting business, as you can tell, Chris. Sounds sexy. This is one that I used to have on the watch list at MDP, and I hang my head

in shame for taking it off, because the stock has done very well since. I've always had trouble getting a grip around the valuation, but I'm starting to believe that the valuation is simply due to the nature of the competitive position of this company. Proprietary technology, they do what they do very well. It builds out network effects, there are switching costs, gives them a little pricing power there. So, operating in a very highly regulated industry like this, it's difficult for competitors to jump in there and really compete against them. So, good business. Bringing it back to the watch list, it's 50X earnings. I still can't get my head around that valuation, but it is a high-quality business. Maybe it deserves it.

Steve, question about market access? How can they become the dominant player in this space when it seems like everyone is involved in some sort of trading platform? Well, I think it really boils down to the technology and doing something that others aren't. Typically, bond trading and fixed income investments have been sort of fragmented, so to speak, and they're really consolidating this and bringing a consistent platform to it all. So, it's worked out for them so far. Jeff Fischer, what are you looking at?

So, it seems timely to bring up again Medtronic, ticker is MDP, and MDT, I'm so used to saying million-dollar portfolio, MDP. So, MDT, one of the largest medical device manufacturers in the world, everything from pacemakers to insulin pumps. The stock is down quite a bit since its earnings last month, but I think any issues that it did have, or has right now, are temporary. Shares now trade at less than 15 times expected earnings and yield about 2.4%. So, for a top-tier company like this, I think it's a good time for someone to consider taking some shares. Steve, question about Medtronic?

Does a new president help or hurt Medtronic's possibilities in the future? Great question, Steve. I'm kind of treating that as a neutral, because I just don't know. Medtronic, Market Access, Cedar Fair, very different types of businesses. Steve, you got one of these stocks you want to add to your watch list? I think Medtronic seems the most promising for me right now. As Ron Gross shakes his head in disappointment. Enjoy the ride, Ron.

All right, Ron Gross, Jason Moser, Jeff Fischer, guys, thanks for being here. Thanks, Chris. That is going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido, with a little help from our man Dan Boyd. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.

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