Motley Fool Hidden Gems Investing - Danone's Next Wave

Episode Date: July 8, 2016

The government reports surprising jobs numbers. Danone makes a big buy. Pepsi hits a new high. And Chipotle faces new problems. Plus, Motley Fool Asset Management portfolio manager Bill Mann talks Brexit, Tootsie Roll, and investing overseas.     Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode of Motley Fool Money is supported by Wonder Capital, an investing service that allows individuals to invest in solar projects across the U.S. Earn up to 11% annually while diversifying your portfolio, curbing pollution, and combating global climate change. Create an account for free at wondercapital.com slash fool. Wonder Capital, do well and do good. everybody needs money that's why they call it money from fool global headquarters this is motley fool money it's the motley fool money radio show i'm chris hill and joining me in studio this week for million dollar portfolio jason moser from mdp and supernova Simon Erickson, and from Motley Fool Pro and Options, Jeff Fischer. Good to

see you, as always, gentlemen. Hey there, Chris. We have got the latest headlines from Wall Street. We'll talk international investing with portfolio manager Bill Mann. And as always, we'll give you an inside look at the stocks on our radar. But we begin this week with the big macro, the jobs report surprising Wall Street with 287,000 jobs in the month of June, much higher than the consensus, Jeff. and nice to see after that report we had in May, which was disappointing, to say the least. Always good to see more people working, Chris. It means more money in their pockets,

more money to spend on retail, which has been suffering for months on end, more cars being purchased and whatnot. And the confluence of more employment with really low interest rates and really cheap money to buy your car, for example, should help the economy at least maintain this very slow rate of growth that we have seen the past couple of years here in the States. Now, for many people who are thinking, well, it doesn't feel like a recovery, part of the reason may be the U-6 unemployment rate, which Ron Gross frequently references. Ron Gross Thank you for stepping in for him on that one. David Gardner Of course. That remains stubbornly around,

or actually above, pre-recession levels, so above 2008 levels, around almost 10%. So that that means about 10% of people are disengaged, not looking for work, or underemployed, or only employed in less-than-ideal work for their skill set. So, you can't say our economy is still serving everyone well. I think Jeff makes a lot of good points there. The question I always come back to with any of these job reports, I think the adjustments to the previously announced numbers are always interesting to catch, but it seems like for all of the improvement we've seen in the employment sector, it doesn't feel like it's all that much better. We look at

things like our monetary policy still extremely accommodating, interest rates all-time lows. There is no real sign that we're going to see that much action there. It seems like every time there's a light at the end of the tunnel, something like Brexit comes up to then throw things back into chaos a little bit. Certainly, Yellen has made the statement before that they're going to take this very slow. But, savings rates are at an all-time low or close to them. It seems like wages are still relatively stagnant. So, while the unemployment picture looks better, it doesn't feel all that much better. I can't help but wonder how that's playing out with just the general consumer today.

I guess I'll add to that, too, that there's some cyclicality in the jobs market, We just saw Goldman a couple of days ago issue a report that they thought that 100,000 jobs would be coming back to the energy industry, which is, as oil prices are actually starting to recover, you're going to start seeing some more hiring in that. Maybe that could be a little bit of a tailwind for better reports coming up, too. Yeah, but as we've talked about before, the energy industry has been one of the leaders over the last probably 18 months or so in terms of cutting jobs. Absolutely.

It's funny, part of the reason the stock market reacted positively to more jobs is the hope that that will lead to an increase in interest rates, which then drives financial stocks higher, and financials are more than 20% of the S&P 500. But the likelihood of us sustaining much higher interest rates anytime soon, and I mean within years, is very low. You have negative rates in Japan, you have negative rates in many European countries now, and the U.S., with its piddly 1.3% 10-year rate on the 10-year Treasury, is drawing money from around the world to capture that yield, and that drives the rate down lower. So, even if we increase rates, as we did last year, that's going to draw more money in and knock

the rates back down. So, it's kind of a catch-22, a low interest rate future. We talk about this monetary policy, we've talked a lot here in the past few years, I think, about how when interest rates started inching back up, it becomes more attractive for fixed income instruments like savings accounts, CDs, and whatnot. But we can see plainly that this is going to be a very slow trek upward. I think that one, two, three years from now, I just don't really see much of a return, or at least an attractive return for investors in those fixed income instruments. I think that bodes well generally for the stock market, certainly for those dividend-paying stocks out there. I don't know that we would

see really a lot of money flooding back out of the market here anytime soon. Alright. From the jobs report to the deal of the week, Dannon, the French conglomerate, is buying White Wave Foods, the maker of soy and almond milk, in a deal worth $10 billion. That is a lot of milk they're buying, Simon. Almond milk. Almond milk. A lot of milk substitutes, maybe, Chris. A lot of these brands are actually for lactose intolerant people. Look at things like Silk Almond Milk, So Delicious Dairy-Free Ice Cream, a lot of the organic brands. These are going for the two-thirds of the world's

population that the National Institute of Health thinks are technically lactose intolerant out there. For instance, this is going to be doubling the market for Danone in the United States. It's going to be doubling their footprint that they have out there. The deal is interesting because it's fully financed by debt. This is basically paying about 20 times an EV to EBITDA ratio, which is kind of expensive in my mind for a food company like this. But you also see that there is a lot of demand out there for organics. This is a market that has been pretty hot lately. I think that they're seeing that there's a lot of predictability in food companies, and that's why they're not afraid to make

this kind of deal. Jason, we saw in this deal, Danon paying a premium for WhiteWave. They paid about a 19% premium. That's nice, but that's not the premium that we've seen with other deals in other industries recently. I'm guessing that's because, if you just look at WhiteWave and the performance that stock has had over the last five years. That's a pretty spicy meatball. Well, the stock has performed well, but let's be clear, this thing spun out from Dean Foods somewhere, I think, mid-2013. And I think, to Simon's point, you said it was what, around 23 times EB to EBITDA. You look at a comparable there with Haynes Celestial

that today is trading somewhere in $15, $16. It is pricey from that perspective. White Wave is a company that I looked at for the Million Dollar Portfolio Watch List more than once and kind of came back to the conclusion that I like the business, the price was never attractive enough. But what you like about this for, I think, Danone, who's acquiring the company, it's going to give them the North American exposure that they don't have otherwise, and that's primarily White Wave Foods' market today. Chipotle making headlines this week. Mark Crumpacker, the company's chief creative and development officer, surrendered to face a New York Supreme Court judge. He's alleged

to have been part of a cocaine ring, apparently ordering $3,000 worth of cocaine, being delivered to his home on more than a dozen occasions. If you're wondering, ladies and gentlemen, how he was able to afford that, it's because he's been paid more than $15 million over the past three years when you look at his total compensation. We've talked about this before, Jason. Right now, Chipotle has a brand problem, and the person in charge of their brand is now on administrative leave. Yeah, I would assume that Crumpacker is the brains behind the recent Love Story video that they just came out with. Perhaps the creative mind behind Chiptopia, their

rewards program. If he was working long nights and this was helping him get by, I think he failed on both of these fronts. This video, to me, I actually hated. I'm a Chipotle lover, hey, I love the food, I own the stock, and I really do think this is a company that will do well over the long haul. And perhaps they're having kind of a Quickster, Netflix-style moment here, where they're just really hitting the bottom. But I feel like when they get out there with these cartoons, this Love Story thing, for example, what they need to do is get back to the business of doing what they do best, which is serving food that people like. I mean, it's clear that people eat there because they like the food. Now, fresh ingredients,

I'm sure don't hurt that cause. But instead of putting yourself up on a pedestal like that, just go ahead and get back to the business at hand. Like you said, they have a brand problem. They really need to focus on fixing that. And cartoons like this don't do that. I see a cartoon like this come out, to me there's no upside whatsoever. You only have downside. And I think we're talking about that downside right now. And Simon, Jason mentioned the Chiptopia Rewards program. I don't understand this from a business standpoint, because it has a shelf life of just three months. They're ending it at the end of September. Why wouldn't you go the route that a lot of other fast

casual places like Panera have done, where you've got an ongoing loyalty program? Why think short-term like that? Well, I would completely agree with that statement. You do want to have a long-term loyalty program, because as Jason was saying, brand is very important for these companies out there. Chris, you mentioned Panera. Panera has got 22 million MyPanera Rewards members. an ongoing program that you can continually come back, get free stuff for the more that you're spending there. But Panera has actually done a really, really good job with showing the power of those recurring customers coming back into your restaurant over time. Stocks

up about 40% in the last two years because of this Panera 2.0 concept, which is, you go in, you go to the kiosk, you don't just stand around, you don't wait at the register. getting the traffic through those stores, and that's why we've seen comps at Panera My 2.0 stores 8% vs. 2% comps nationwide. So, this actually does work with their loyalty programs. Yeah, Panera has done a good job, and we've talked about it the past few years, because it was, as you said, Simon, a pretty long-term investment that they started a couple of years ago, at least. In the case of Chipotle, I agree with both of you guys that they're in no place right now to set up their marketing

as an us versus them, as good versus evil, and we're good. They just need to convince people again that it's safe to eat there, period. They still don't have the traffic that they used to have, or anything near to it. So, to put yourself up on a pedestal seems the exact wrong move to make. And the loyalty program, hopefully this is a test, a pilot program, and then they'll keep it indefinitely. Because I agree, why just try it for three months unless that's what they're doing? I think that's it. We're getting into of semantics here, perhaps, but I see this rewards vs. loyalty. I see one in rewards being extremely short-term, and then loyalty being something that you're trying to promote

long-term behavior there. The thing that Chipotle has done so well, and I think Starbucks has done really well here too, is they've developed a wonderful mobile presence. Chipotle's app is excellent. You can order food, you can find out where the stores are, you can pay for it there. They've done so well on that front, it seems to me implementing a loyalty program via that app only makes sense. It takes the thinking out of it. Now, perhaps they thought they were having a little bit of fun here with this rewards program, but there's no question, from an investing perspective, I mean, I know I look at it this way, to me, this just reeks of trying to juice those sales numbers here for a good quarter or two without

really getting back to the basics of what they do so well in working on fixing that brand. So, I really wish we would see some more long-term-style thinking there. Chris, we've seen these loyalty programs work for the airlines and the hotels now. You're starting to see a lot more focus on even just fast, casual dining. You mentioned Starbucks. Starbucks, somewhat quietly, for the third July in a row, raising prices. The fact that you said that, and I didn't even know it, is all you have to say. They have really, really just executed on all fronts. Now, granted, the product that

they sell helps. When you have an addictive product, it's generally ... Do you sell a legally addictive product? Is that what you mean? It's generally seen as being OK for you. I mean, you're really, really putting yourself in a good spot. But I mean, I think that's a testament to how attractive pricing power is for an investment. Coming up, some news that just might have you packing your bags for Havana. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Simon Erickson,

and Jeff Fischer. You can check out past episodes of Motley Fool Money and all of our podcasts here at The Motley Fool, just go to podcast.fool.com. Also, we've got two new stations to join the Fool family this week. In New Hampshire, 99.1 News in Concord, and WTSN 1270 in Dover and Portsmouth. Let's get back to some of the week's headlines. Tesla Motors was supposed to deliver 17,000 vehicles in the second quarter, but the company fell short by 15%. Simon, They missed on deliveries, they missed on production, and I hasten to point out, these were their targets. This is not Wall Street's targets. They missed their own targets. Well, Chris, this is a classic Tesla move, though. This is one of the reasons

you really can't put a guy like Elon Musk under the microscope every quarter. He's going to have some times, he's going to miss forecasts like this. He's going to have others, he's going to over-promise, and he's going to miss a deadline, he's going to miss the product launch. And he's also going to say stupid things on Twitter every now and then, too. not a real touchy-feely kind of guy. I think the bigger question for Tesla is, are they going to be able to deliver 500,000 cars by the year 2018? They've moved that two years ahead of schedule. They've got the Gigafactory about a fifth complete right now. That's the looming deadline that really is going to matter for the future of Tesla, I think.

Well, and that's the thing. If three months from now or six months from now, we're looking at how they did in terms of deliveries, in terms of production, and they beat by 15%, 20%. Well, there's going to be a lot of champagne being popped on Wall Street, but it seems like we're seeing this play out quarter after quarter. And you've got already hundreds of thousands of pre-orders for the Model 3 that are already in place, that people have paid $1,000 to get the deposit upfront for. That's already putting in the conversation of one of North America's best-selling vehicles on an annual basis. I think as long as Tesla can stick to their long-term forecast, they're

probably going to be looking OK. I'm guessing, it's only a guess, though, that this is partly Elon Musk driving his employees to try for a higher goal. You know, they may be saying, we can do this many cars, and he's saying, no, I want us to do this many, and that's what I'm going to say we're going to do. He's setting the bar really high, just hoping they get close and eventually pass it. Pepsi's second quarter profits and revenue both came in higher than expected, and the company raised guidance for the full fiscal year. So, maybe not a surprise, Jeff

Fisher shares of Pepsi hitting an all-time high this week. All-time high, and the growth is really coming from emerging markets. Emerging markets like China, Mexico, Turkey, where sales were all up double digits. Overall, in developing markets, revenue grew 7%, which is giant for a company Pepsi's size. In the U.S., revenue was up 2%, kind of standard slow growth for Pepsi or Coca-Cola or any large food consumer packaged goods company at this point. Frito-Lay is driving most of that growth. But Pepsi is doing well in beverages, too. They own five of the top 10 beverage trademarks in the world based on dollar sales, and I bet you guys couldn't name more than

a couple of them, if you want to try. O' I'm ... Pepsi. Pepsi's one. O' Diet Pepsi. No. O' No, really? Mountain Dew. Mountain Dew, very good. Pepsi, Mountain Dew, Gatorade, Lipton, and Starbucks. Their

partnership with Starbucks is one of their biggest sellers now. So, the stock trades at 21 times forward earnings, yields nearly 3%. It's done well the past five years in line with the S&P, but much better than the S&P the past 10 years. So, the trend that we've seen for more than a decade now in North America of soda consumption steadily declining. That's not a concern for them, as long as they've got the growth in emerging markets? As with Coca-Cola, it's such a concern that they're well aware of, and in many ways well ahead of, in that they've diversified the beverages they sell. And yes, they're

moving into emerging markets, where I would bet in 20, 30 years, they'll have to go through the same thing again, move away from the unhealthy drinks in emerging markets. But yeah, they're ahead of that curve, and they're able to grow, albeit slowly, despite that headwind. Shares of JetBlue, Delta, and American Airlines all up this week in the wake of those airlines getting tentative approval to operate daily flights to Havana, Cuba. The final decision from federal regulators will come later this summer, but right now it's looking like a brave new world, Jason. Sure, and I think this works out really well for us consumers. We have, probably, the inclination to go to Cuba at some point

or another. It seems like a pretty neat place to visit. Now we're going to have that opportunity. As far as airlines go, this doesn't really make me view them as any more of an attractive type of investment. I think airlines, generally speaking, have a pretty patchy track record as it goes. But again, I think that from your Jet Blues to your American Airlines, it's nice to see them all getting a little piece of the action. Let's bring in our man Steve Brodo from the other side of the glass. Steve, I know you like to travel. I know you've been to Mexico a few times. Havana, Cuba, is that something I can interest you in? I don't think so.

Really? Why not? I don't know much about Cuba. It seemed like a forbidden country for Americans for so long, and I'd like to give it a little bit of time just to see how it goes for some other people before me. O' Doesn't the forbidden nature make you just a little bit curious, Steve? Not really, no. O' You want us to send a world traveler like Jeff Fischer ahead and have him report? Just stake it out, make sure it's good.

I'll go there, submit a bill, throw a couple of reviews up there on TripAdvisor, we'll steer you the right way. O' Alright, Jason Moser, Jeff Fischer, Simon Erickson, guys, we'll see you a little bit later in the show. Coming up next, we will go around the world of investing with Bill Mann from Motley Fool Funds. Stay right here, this is Motley Fool Monday. This episode of Motley Fool Money is brought to you by Wonder Capital. Wonder Capital is a tech-stars-backed company with headquarters in Boulder, Colorado. Wonder Capital allows you to invest in solar projects across the country via their crowd-investing platform.

Your investment goes directly to helping U.S. businesses install solar PV panels. As they repay their loans to Wonder, you receive monthly cash flows in the form of interest payments. Learn how you can begin earning up to 11% returns at wondercapital.com slash fool. Wonder Capital, do well and do good. Welcome back to Motley Fool Money. I'm Chris Hill. Bill Mann is the Portfolio Manager at Motley Fool Funds. and he joins me now in studio.

Good to see you. How are you? I'm good. I don't know if you remember, last time you were on the show, you were in Japan. Yeah, I don't remember much of that. I think I was, yeah. Sleep deprivation is a cruel, cruel thing. Let's start where we've been the last few weeks, which is the Brexit vote.

And now we have the benefit of a couple of weeks of hindsight. What is the most interesting part of what has transpired? To me, well, I mean, I think there are two interesting parts. One is we came out almost immediately after the vote, and it was a surprise. The result of the vote, to me, was a surprise. To everyone? Yeah. Even to the people who were promoting it. They're like, what do we do now? So, the equity markets dropped very quickly, and then immediately rebounded. And the thing that I would not have expected, and of course this is a little bit unfair because it doesn't look at currencies or anything like that, the best performing market over the two weeks

after Brexit was the British market, in the world. O' How does that even work? Well, I mean, when you build currencies in, it's a little bit different. But, literally, I think when people say, if this, then this, then this happens in the market, just forget that every time that's not how it works. You mentioned currency, so let's go there. This week, the pound fell to a 31-year low. Yeah, it was the pounded. Yeah. One of the funds you oversee is a global fund. When you look at international markets, is the U.K. more interesting to you

now? Is it less attractive? Where is the U.K. as an investable idea? It kind of depends. I would say that our exposure to Europe in general and the U.K. has been a little bit lighter than what our benchmark would suggest it ought to be. For companies that have staples, I don't think this is going to be that huge of a deal. We own a company in the UK that sells bicycles in the UK. That's what they do. So, some of their expenses are going to be different. Some of, you know, there's going to be a fair amount of fear, I think, in the market for a period of time until they know what's going to happen. But, yeah, I would say that we are more interested than we were. People are

pointing to the currency and saying that now British goods are going to be more attractive overseas. And I think that there's something to that. I think it's probably a little bit overstated, just simply because markets around the world, the Chinese market, the Indian market, a lot of markets are in, if not in recession, then they're pretty close to it. So, there's not a whole lot of global demand growth. But there is something to be said for the fact that British goods are going to be more competitive. Is there anything attractive about the banks in Europe? Or are they in such a state of flux that I couldn't pay you to invest? No, I think one of our analysts this last week basically said, yeah, I think free

would be a good price for the European banks, for the big banks. Think about this. Deutsche Bank, which a decade ago had goals of being one of the largest, most important banks in the world is currently valued less than snapchat that's quite a fall yeah it's not good yeah yeah that's not good so a you know an app where your pictures disappear after 10 seconds um is worth more than torture bank so i i would just say that i i never make you know i never suggest that the market is perfectly clear and you know and forecast perfectly well but that would suggest that something is up. And that up is certainly not good. At some point, I want to talk to you about this upcoming earnings season. But

before we get to that, when you look around the world, what are one or two markets that are looking interesting to you? Oddly enough, we're finding some things in Japan now. Japan in 2013 and 2014, going into 2015, was one of the best performing certainly the best-performing developed market economy, or developed market market, which is hard to say, in the world. It's been crushed over the last year, down almost 30%. And so, we're finding some things there. But just, again, we're not really looking on a market-by-market basis. So, for example, thinking about Brexit, and one of the companies that we had that got hit was a company that has all of its operations in Indonesia, and what they do in Indonesia is make

bread. I really am having a hard time figuring out how it is that they are impacted by an island country on the other side of Eurasia deciding that it wants to go its own way. So, things like that but we're definitely looking at places where the global structure of finance, they really have no exposure to it. Do you think that's why we're starting to see some of these stalwart businesses, the so-called defensive stocks, get bid up as they have been over the past, say, six months or so? Is that because there is some economic uncertainty, and as we talked about earlier, certainly the Brexit vote took everyone by surprise. Maybe a little bit more than usual, investors are looking around and saying,

you know what, no matter what happens, we're going to keep buying bread, we're going to keep buying these staples. I think that that has something to do with it. And also, I think that the other thing that recommends these types of companies is being bid up is the fact that they are now the proxy for, or the replacement for, treasuries. I mean, you cannot get any yield off of a savings account. You cannot get any yield off of treasuries. I saw that this week, 50-year bonds in Japan now yield negative. 50-year bonds? Excuse me, not Japan, Switzerland. 50 years from now, we're paying to lend the Swiss government

money. And the U.S. is positive yield, but not by much. I mean, it's a 240-year low for yield. So, anybody who is looking at any type of income has to look at those types of companies, but they don't want to take a huge amount of risk on their principles. So, that's why you see bread companies getting bid up in the United States. You're listening to Motley Fool Money, talking with Bill Mann, the portfolio manager at Motley Fool Funds. Let's talk about management. You and I were talking the other day about Michael Eisner, the former chairman and CEO at the Walt Disney Company. One of the things in this interview I just recently listened to with him, he admitted that at the end of

his 20 years heading up that company, he realized it was time for him to go. Yeah, he had a great 17-year career, didn't he? That he was fighting with everybody. He was fighting with Steve Jobs. He was fighting with Roy Disney. And he just realized, it's time for me to go. We talk about management and how important that is when we are evaluating investment opportunities. Do you ever find yourself working with your investment team, looking at a company and saying to yourselves, themselves, boy, you know what? I'd like this business a little bit more if that guy or gal who's been running it for the past 20 years was going to be leaving.

All the time. Really? Yeah, all the time. It's one of the core things that we look at. And usually, those types of things will be expressed in what we think the company is going to look like over a 10-year period. And you can see in the returns on capital if you've got an idiot in charge, basically, and the idiot is entrenched, you really have very little hope that there's going to be a change. I'm trying to figure out how to transition from that without suggesting that I'm calling someone an idiot. But a really good example is Tootsie Roll. Tootsie Roll has been run by a husband and wife team for 50 years now. And they just do the things the way that they

want to do it. They don't want to hear from shareholders. They just simply have a very simple business model, but it's not particularly successful, and they are entrenched. Well, and as we were talking about with Eisner, I mean, you look at the full breadth of his career running Disney. Overall, he did a fantastic job. It was just at the very end. So, I mean, it doesn't even have to be an idiot running a company. It just has to be someone who stayed too long. Even if they've had a lot of success, there are plenty of business leaders who just stay too long. Absolutely. You know, it's funny. One of the things that we think about and one of the things that really, really makes me upset about corporate governance in the U.S. is how

much executives are paid. It is in almost every case completely indefensible how much executives are paid. But there are situations where you look at it and say, well, that guy or that woman earned the money that they're being paid. And Michael Eisner, who became a billionaire basically by being the CEO of Disney, just by himself, not by himself, that's not the right way to put it, but turned a company that was foundering into a juggernaut in a bunch of different areas that it wasn't involved in when he started. And it really was not even any good at its main business when he took over the reins. We're about to kick off a new round of earnings. What are you and the team at Motley Fool Funds looking at? It can be in terms of a particular

industry, a particular company, or just, as we talk about from time to time, a company that really needs a hit really needs a hit so and i think i said this the last time i was on and you asked me this question but uh i'm interested to see what's going to happen with chipotle i mean i think that there there are a few tesla would be another one that it's you know that it's going to be fascinating although they'll probably once again tell us that you know like 11 p.m at you know on a saturday if there's there are problems but chipotle i'm getting a lot of I'm getting a lot of stories that some of their new menu items are really getting some traction. And just going out and doing some of our channel checks, the restaurants are more full than they have been,

but they have done so by discounting and by creating a loyalty program that could be pretty expensive for them. But it'll be really interesting to see what's going on with them. I think more broadly, a lot of the retailers are going to be interesting to see. I'm pretty sure, in fact, we should probably come up with the bet now of how many blame Brexit. Right? That's right. Well. There's no winter weather to blame.

No winter weather to blame. The Pope's not here, I think that was one one. Yes. But Brexit. And yeah, I wonder what the most bizarre company to blame Brexit is. I was just going to say, and they wouldn't do this because my experience, and I'm not a Home Depot shareholder, but my observation of Home Depot is that they are very clear-eyed with their guidance, very straight-laced in terms of, this is what we feel like we ... Yeah, we screwed up here. I think I've heard them say those words. Yeah, we messed this up, we thought this went pretty well. I mean, that to me would

be the classic example, because they've got nothing going on in the U.K. Or like Chewy's, right? The regional Mexican chain. Well, Brexit really messed us up. How? Not that Chewy's did this, I'm projecting, but I'm trying to think of the company that would be the most absurd to blame Brexit. You know what would be fun? Let's just take a restaurant company like Bojangles. It comes out, has a phenomenal quarter, and yet, just for fun, they decide to invoke Brexit in there. like, well, we were worried about Breck, you know, and just try and play it off straight laced. Wouldn't that be great? Last thing, and then I'll let you get back to work. You

are a fan of many sports, but you are one of the biggest soccer fans that I know. Between Copa America and Euro 2016, how much fun are you having this summer? Oh, it's been a great summer. It's been a great summer, despite the fact that the team that i love the most uh newcastle united has been relegated uh so they will play in the not highest division in the uk by the way i think that american sports should have relegation i think it would be the greatest and it would solve it would solve so many things like in the nba the team's tanking at the end of the year well you know if you tank too much you're playing in league two you're playing in the development league 76ers which you know is they'd probably still

lose a lot of games it has been it has been a phenomenal summer and it hasn't just been the fact that there's a lot of soccer on television I mean just some of the stories like Wales and Iceland you know these countries that never make these big tournaments have come in and just beaten some of the big guys and done it not even playing like small ball soccer I mean Iceland came out and punched the England team squarely in the face. I mean, they went out and they were aggressive and they beat them. And it was beautiful to watch. I say that apologizing to anyone who is England fans. I'm sure they would agree on some levels that that was ... On some level, but coming right around the same time as the Brexit vote. It's been

a rough few weeks for England. That's right. Like, can't we just have this one thing." But you know who understands exactly that whole thing? Iceland. You remember Iceland in 2008 probably had a harder time than anyone, so they are perhaps on the other side of going through the valley of the shadow of death, and they're coming out on the other side and now they've got a winning soccer team. If you want to learn more about what Bill Mann and his investment team are up to, you can go to foolfunds.com. That's foolfunds.com. He is the portfolio manager. Thank you for being here. Great to see you, Chris. Coming 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 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 with Jason Moser, Simon Erickson, and Jeff Fischer. It is that time once again, gentlemen, time for the stocks on our radar, and we'll bring in our man Steve Broido from the other side of the glass to hit you with a question. Jason Moser, you're up first. What are you looking at? Sure thing. Every summer, we are lucky to have interns here with us in the investing

group. I'm working with Jake, the intern, this summer. Jake Bedronski did a great job here pitching me on Ulta Salons. Ticker is ULTA. Often we say turnarounds typically never turn around. This is a case where a turnaround really turned around. I think we owe a lot of that success to Mary Dillon, the CEO of the company. Came in there mid-2013. Share price was around $95 or so. Stock has returned about 160% better than that since then. Makeup is just a really interesting market in that it's not going anywhere. As a father of daughters, I can testify to that. And I think there's something to the bricks-and-mortar nature of it that they're continuing to really take advantage of, and they're building out an

e-commerce business as well. The questions I have are in regard to the actual growth left and exactly how far they can take this e-commerce business. But all in all, it's been a remarkable turnaround. It's one that we have on the watch list at MDP. Steve, question about Ulta Salon? How do they do with, I've been in an Ulta salon, you can get haircuts and stuff like that. How does that business work? That's actually really interesting. I was speaking with Brian White, another member of our team there, who used to work in this business. Because they have the salon business,

it gives them the opportunity to sell and carry professional products that you can't get otherwise. That actually turns out to be a very big advantage for Ulta as a distributor. Simon Erickson, what are you looking at this week? Chris, I'm going with Baidu. Ticker is BIDU. This is China's largest search engine. Just as Google has come to dominate the United States, Baidu has come to dominate China. Stock has been selling off because of the investments that they've been putting into their online to offline platform. What this means is that advertisers are no longer just getting an interest in their products from users that are searching for that information on Baidu, but they're actually closing

the transactions themselves, too. We saw gross merchandising volume on Baidu up 268% year over year. That's going to be something I'm watching, because I really think that's going to be the future for this company. Steve, question about Baidu? How does internet usage compare from China to the U.S.? I'm assuming people in China consume the internet very differently than we do here. It's a big country, and it's often rural. That is true. It's more spread out, Steve. But still, one trend that is very similar is the use of mobile for searching the internet is increasing significantly. Baidu is now getting 60% of internet traffic from mobile devices, excuse me, internet revenue from

mobile devices. And I think that's a trend that we're definitely going to see going forward too. O' Jeff Fischer, what are you looking at? Skyworks Solutions, ticker SWKS. I've mentioned it before, but not for many months. It's had a rough year. It's down on concerns that Apple's smartphone sales are lower, and that the iPhone 7 coming out later this year may not be a giant hit, is the early concern. But the stock is inexpensive, and they're moving into Internet of Things. Sorry, they make semiconductors. They sell into almost all smartphone models out there, but also

into Internet of Things devices. Well-run company, increasing margins, highly profitable, and I think has a bright future from here. O' Steve? It seems like every company out there says, we're now in the iPhone. This is The leading selling, Amber, all these companies, is this worth something, really? It's so true, Steve. The iPhone creates its own economy. It really does.

And many companies are dependent on it. What I like about Skyworks is it's not so dependent. It is a large part of revenue, but they're moving away from that steadily. What do you like, Steve? I may go all to salons on you. Hey, now. All right. Jason Moser, Simon Erickson, Jeff Fisher.

Guys, thanks for being here. Thanks, Chris. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.