Motley Fool Hidden Gems Investing - Disney/Fox: What Investors Need To Know

Episode Date: December 15, 2017

Disney buys a big part of 21st Century Fox. Costco delivers surprising online numbers. And Waste Management once again proves that trash is treasure. Plus, CNBC’s Carl Quintanilla talks bitcoin, business, and what to watch in 2018. To get a limited-edition holiday shave set while supplies last, go to Harrys.com/Fool.   Learn more about your ad choices. Visit megaphone.fm/adchoices

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To get a limited-edition holiday shave set while supplies last, go to harrys.com slash fool right now. Everybody needs money. That's why they call it money. The best things in life are free. But you can give them to the birds and bees. 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

from Million Dollar Portfolio, Jason Moser and Matt Argersinger, and from Total Income, Ron Gross. Good to see you, as always, gentlemen. Hey! We've got the latest headlines from Wall Street. CNBC host Carl Quintanilla is our guest this week, and as always, we'll give you an inside look at the stocks on our radar. But we begin with the deal that is remaking the entertainment industry. The Walt Disney Company is buying the bulk of 21st Century Fox's business for $52 billion and change. Here's what Disney's getting.

The movie studios, TV networks like FX and National Geographic, Fox's regional sports networks, and majority control of Hulu. That's all? There is a lot to unpack here, guys. Ron, let me start with this. Do you like this deal for Disney at this price? I do like this deal. I've been a Disney shareholder for 15 years, and quite frankly, I was waning a bit. ESPN, struggling, sports streaming, Iger leaving.

This has reinvigorated me. I like the injection of these assets. I like that Iger is staying longer. I think this bodes well. He's not just staying longer, Jason. He's staying several years longer, through 2021. Yeah, I think that may be the key part to this deal. It probably has everybody feeling pretty good.

And just knowing that his track record there with these three big acquisitions before Marvel and Pixar and Lucasfilm, and now maybe this is the grand slam here to kind of bring it all home, because this is a big deal. It was funny, I was talking to my daughters last night about this. I said, did you guys hear about this in the news? I said, Disney is buying all of these properties. And they kind of had a little bit of a blank look on their faces. And they said, Disney's going to own The Simpsons.

And they were like, what? No way! So that really kind of drove it home for them at this point. So, I mean, to me, look, Bob Iger is trying to figure out how to build this business in such a way where it develops a long-lasting, sustainable sort of relationship with the customer, direct-to-consumer relationship. And so, that's the whole point behind all of these acquisitions, right? He's trying to figure out how to sort of be part of this over-the-top distribution, take this company to the next level, sort of where the media

space is headed here in the 21st century. And I know that a lot of people like to make this sort of a Netflix vs. Disney thing. I don't think this is a shot across the bow at Netflix. I mean, yeah, they're going to be competing directly with them, but I don't think this is a deal intended to try to sink Netflix. It's simply intended to really participate in this tremendous opportunity that's going to unfold over the next 10, 20 years. Totally agree with that. And I like, Chris, in your opening that you ended with the last bullet point was the Hulu, getting the majority stake in Hulu, because I think the headline to me here is that the whole idea that Iger was rolling with last summer

about rolling out the separate ESPN app, the separate Disney app, I think that's out the door now. I don't think that's going to happen. I think the majority stake of Hulu, I think that's going to be, or it should be in my mind, the destination where all this new content is going to go. That becomes the home now, and it positions Hulu against Netflix and Amazon, it kind of gives you what I view as the three main streaming video apps. Rolling out a separate ESPN app and a Disney app, it's just going to clutter an already cluttered landscape for this entertainment, and I think Hulu is now positioned to be the third player. Well, Iger has signaled that he does want three distinct streaming platforms,

and we'll see how it shakes out. One which is family-oriented, which is Disney, Marvel, Lucas, Pixar, sports, and then something more adult-themed, which is kind of a weird way to phrase it, but the Hulu, the Hulu streaming. So, it'll be interesting to see how that shakes out. Now, there are some restrictions on the Hulu, especially because Comcast still owns a 30% chug on it. You can't make many changes to that until after September 2018. When that rolls around, then I think it's up for grabs what changes get made, and we'll see what happens to the Comcast stake. But I do want to mention that I saw one really interesting quote that says, this isn't an entertainment deal, this is a sports deal. And we can argue

that probably to the cows come home. But once you add the Fox Sports regional networks into this mix to help bolster ESPN, I think that's where it kind of gets interesting. Let's come back to the sports in just a second, because there was a lot of great coverage of this story, and there are a lot of different angles to it. The only thing that I saw in terms of the coverage of Disney and Fox that sort of made me raise an eyebrow was some people asking the question with regards to Hulu, well, what about the minority stakeholders? They may not like what Disney is going to do. And I just thought, then they should have figured out a way to be the majority shareholder. Because, to Ron's point, Matty, if they own

60% of Hulu, then guess what? It's kind of game over. Yeah, that's a controlling stake in my view. At least, I think 60% is. If we're doing the math right. I'm no mathematician, but ... Yeah, I'm going to push back on the idea of rolling out those apps, because I just think customers want less subscriptions to worry about. And I don't know if that necessarily it means that Disney's going to kick off Comcast or other content or allow other partners to get on there. I just think it can be the go-to destination if you want Disney or ESPN content.

Hulu can be the platform for that. It doesn't mean it's exclusively Disney or ESPN. Ron, to go back to the sports, because the entertainment piece of this got the big headlines, and probably rightfully so, but as you indicated, the regional sports networks that Fox owns really could be the hidden gem of this deal, because these are sports networks that are spread out across Major League Baseball, the NBA, and the NHL, across 44 teams, including little markets like Los Angeles and New York City. Right. So I think this might have, that's not a little deal. That's a big deal. And I think it may just be what ESPN needed to stem the tide and make this a real offering. Before, when we talked months ago about the

streaming service that they were going to offer, I was just unsure about how successful it was going to be. So, adding this content, I think, might get them over the top. Jason, right before we started taping, we were talking about featured games in the NFL and how, if you're the casual fan, if your team isn't playing, you're probably not going to watch. but to the regional sports network, this is all about capturing those local fans. And if they really can do this across the country and take some of that content and serve it up to people wherever they are, it really could be huge for them. Oh, I think it definitely will be huge.

And I think it's just a matter of sort of looking at it from two different timelines, right? I mean, we can look at it in the short run and admit there are plenty of challenges as sort of all of these sports rights shake out. and we've witnessed here over the past couple of decades, how access to all of these leagues and their games, I mean, that dollar figure just continues to go up. And at some point, the economics don't make a lot of sense. And we're already seeing where broadcast TV, they're having troublemaking ends meet. So, then it goes to cable and now cable's having troublemaking ends meet. And so, where do you go from there? Well, I think where you go from there is as soon as these deals

start expiring and you have to start renegotiating, you make it to where the economics made more sense. And so, I think that the company that holds the majority of these properties, or most of these properties, which now it seems like Disney is really going to be the company that does hold them, well, they're going to have sort of a little bit of an upper hand there in those negotiations and how they play out. So, I think if you can look at it from the perspective of 10 years down the line, I think it becomes a bit more attractive. And when we talk about regional sports and more local markets, well, I think we're also seeing in the form of social media companies, whether it's Twitter or Facebook or even Amazon Prime, to an extent, they're

serving distribution now for all of these sporting leagues as well. So, they're taking part in bidding for access. And I wouldn't be surprised to see Disney look at those channels as potential points of distribution down the line as they start sort of renegotiating these deals as well. So, Bob Iger was going to step down in 2018. Then it got pushed back to the middle of 2019. Now it's the end of 2021. So among other things, that means he has even more time to figure out who his successor is going to be, which in my mind makes it all the more crucial that that person is the choice. But assuming that the Murdoch family gets their 5% of the company and their

seats on the board, it's quite possible that one of Rupert Murdoch's sons is at least going to be on the short list. Maybe, but I've got a proposition. Now, just hear me out, okay? You know, the United States Postal Service, they've introduced that forever stamp, where it doesn't matter how the price of the stamp goes up, you can use it. I think Iger needs to go on the next forever stamp, because really, we are talking about Bob Iger forever, right? Just an idea. Yeah, I mean, he was already going into the Hall of Fame, whatever Hall of Fame exists for CEOs, but this obviously cements the deal. But am I wrong about the successor? Because it

seems like the bar is even higher now for whoever that next person is. There's no question that bar is higher. I think also, in all honesty, we've got to look back at Bob Iger here and recognize the fact that for all of the success he's had to this point, this is likely going to be what we remember about him for the years to come. So, when he retires, we're going to be looking at this deal to really kind of judge him, at least in the near term. Granted, he's had a lot of success leading up to this point, but he needs to make sure he kind of goes out in a blaze of glory here, because this is going to be, I think, the toughest deal to date, because there's so many moving parts involved. There are two public companies involved in this

deal. Let's talk about the second one for a moment here. Fox is a smaller company now. They are going to be more streamlined, more focused, with access to a lot of capital. Is it crazy to think that over the next five years, Ron, Fox is the stock you want to own instead of Disney? It's crazy. I don't know if you're right. It's an interesting business now. With Fox Broadcasting, basically the 28 Fox stations, Fox News, obviously well-known, and Fox Sports 1 and 2, and I believe the Big Ten Network as part of that as well. So, no longer a content producer, and really, actually, the only broadcast network that's not affiliated with the TV studio, which is interesting, which allows

them to go out and get content from others who are not affiliated, like Warner Brothers or Sony or Lionsgate. There is plenty of content out there, but it's interesting, they're freed up, they're independent, and it is a valuable collection of assets, and they probably will have a bright future. I'm going Disney, if you're asking between the two, but I still think this company looks interesting. Yeah, you're just playing the law of numbers here. Fox, once this deal happens, you're going to have basically a $12 billion, $13 billion company, versus Disney, which is now probably going to be around $200 billion. Trillion. I think there's credence to that.

I think it's worth looking at Fox and what they may have to offer. What I worry about, though, is that you can see clearly that Disney's got a plan. They've got a direct-to-consumer They're going after it hard. I don't know what that means for Fox News and Fox FS1 and things like that, because they are still in the same situation of the cord-cutting trend and things like that. Do they have a plan? I'm not sure. Coming up, big retail, big tech, and the sexy world of trash. Stay right here. You're listening to Motley Fool Money. Hey, it's the holiday season. I don't know if you're looking to buy a home or refinance your mortgage as a gift, which, you know, that'd be a pretty big gift. And if you're going to do that,

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NMLSconsumeraccess.org, number 3030. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Matt Argersinger, and Ron Gross. Verizon is renewing its contract with the NFL to live stream games to its subscribers. Verizon had paid $1 billion over the past four years, and now over the next five years, Jason, they're paying $2 billion on a percentage basis. That is quite a leap. That is a leap. And I think that when you look, I mean, it's a big deal. And I that number sort of begs the question, are they paying too much? And I tend to think that, yes, they are, for a few different reasons. No. 1, this isn't an exclusive deal.

I think it's going to span carriers. Which, I do understand that, because this is less about Verizon, per se, and more about the properties that they own in Yahoo and AOL and whatnot. And so, I understand at least having that sort of span carriers. But I think you have to look a little bit further out and think about the NFL and the pressures that we're seeing the league facing right now. It's not to say that the NFL is going away, but in line with the Disney discussion that we were having regarding the sporting properties that are getting there, I think the NFL is hitting a point here where I don't know that they can continue to command the same type of pricing power in the years to come. When we look at

the nature of the sport, the injuries that are taking place, there are a lot of people that have a lot of problems with what's going on right now. We have to think about the future of the game, and how many people really are saying, well, I don't want my kids to be a part of something like that. That doesn't matter now, but it's going to matter 20 years from now, unless they get their act together. So, Verizon, they're really good at delivering that information and data to us, providing the content. A little bit of a different story. I'm not sure this is really a deal that's going to make a whole heck of a lot of sense for them four or five years down the road. And again, I think we're probably hitting

the point where the NFL in particular has hit that point where they can't command much more in the way of pricing. Costco's same-store sales in the first quarter rose more than 10%. Ron, their e-commerce sales sure are heading in the right direction. For those that thought Costco's best days were behind them, maybe I was one of them. I was certainly one of them. We should scratch our heads, because these numbers indicate that that certainly may not be the case. As you said, the com-store sales numbers are really impressive. 14 straight months of com store sale increases. Overall net sales up

13%. Retention rates, a big, big number here, because let's remember, Costco actually makes most of its money from its membership fees, so you've got to retain that customer. 90% in the U.S., 87% worldwide. Very impressive numbers. They're introducing new initiatives like Costco Grocery, Click and Collect, where you can buy laptops and jewelry online and and go into the store to pick them up, and hopefully spend some additional dollars while you look around. So, Costco is not sitting on their old model. They're moving into the e-commerce world, and so far, doing a nice job. I think the click and collect is going to be worth watching, because I've never

heard anyone who shops at Costco talk about how they went to Costco, and they bought absolutely everything on their list, and nothing more. I hear all the time, as soon as you go in, like, oh, well, I had my list, but I bought so much more. Fourth quarter results for Adobe Systems came in better than expected, and Adobe Systems Management also raised guidance for 2018. Things are looking pretty good over there, Matty. Looking real good. But several years ago, things didn't look good, because I think everyone, including me, to a certain extent, was worried about this transition from selling software as a standalone package, what they call perpetual licenses, to software as a

a subscription in the cloud. Adobe, like many companies, went through this transition, and the worries were, well, it's going to cannibalize revenue, it's going to hurt margins, you're not going to make enough money off upgrades, piracy risk. As it turns out, if you build great products, and by the way, if you're a standard bearer like Adobe is, yeah, people are going to pay for it and they're going to keep coming back. That's what's happened with Adobe. Sales were up 25% year over year, profit margins at an all-time high. You mentioned they raise guidance. There's a ton to like about Adobe, except maybe the stock price right now, which is about 40X forward earnings. But other than that, I think everything, and

if they continue to grow at 25%, it's not a high multiple. Shares of Waste Management hit an all-time high on Friday after the company announced it will increase its quarterly dividend nearly 10%. Jason, Waste Management is one of those companies that is easy to miss, because it really isn't in the sexiest business in the world. Oh, come on! Cue the sexy music, man! This is trash collection. There's nothing like getting that stuff out of the curb on a nice morning and coming back and knowing that it's not there anymore! At first glance, you look at this company and you look at the top-line growth they bring in, and you think, why would I consider investing? Five years,

it's about 1% annualized. But then you look at the bottom line, and they're obviously doing something right, because that's growing at about 10% annualized on the earnings per share number. I think it's because of a few things. It is a model that spits out a lot of cash, and that cash can be used to pay a dividend, which they do. It can be used to buy back shares, which they do. This is a very heavily regulated industry. There are tough barriers to entry, not only on the regulation side, but on the economic side as well. Shares are yielding $1.86 per share now, which is better than 2%. This is the 15th consecutive year of raising that dividend. I have a feeling they're gunning for $25. They want to be one

of those dividend aristocrats. Trash is an extremely reliable market. It's happening like the sun comes up. If you're looking for an income-style play, I think this is a stock you always have to have on your watch list. I completely agree from an income perspective. I wonder what a company like that can do, though, to increase those margins. As you say, top line, not so impressive. Bottom line, better, though. Fuel comes to mind, I could see, but that'll be a cyclical up-and-down thing. I wonder how else they can squeeze additional dollars on the bottom line from the top. Depending on the regulation side, it's a matter of how much pricing power they can

exert over time, but I don't know that's fully in their control. Is it safe to assume that if corporate taxes are cut, that that greatly increases the chances they keep their dividend streak going? Oh, I think that's for sure. I think that the tax cut probably is going to result in a lot of these companies buying back a lot of their shares, too, which probably won't be too bad of a thing, though. I'm sure some companies will figure out a way to screw it up. No, we'll see if Adobe does that with their stock at 40 times more earnings.

All right. Jason Moser, Ron Gross, Matt Argersinger. Guys, we'll see you later in the show. Up next, a conversation with CNBC host Carl Quintanilla. Don't go anywhere. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Carl Quintanilla has a front row seat when the opening bell rings at the New York Stock Exchange. He is the host of CNBC's Squawk on the Street, which you can catch each weekday morning at 9 a.m. Eastern. Carl, always good to talk to you. Happy holidays, Chris. And to you as well. Before we delve into the holidays and look ahead to 2018, let's take a moment and look back at 2017. What stands out to you in terms of business stories that are the big headlines of this year?

Well, I think to a large degree, it's the measure by which people were wrong about so many different things, namely the fear that the Trump White House would lead us into recession or that he would spook American business or that he would play favorites or disrupt markets on Twitter. I mean, all of which I guess arguably has happened to some degree, but obviously this White House has shown that they are committed to letting the economy run hot despite some early legislative stumbles. And the market has come around to that point of view, and there was never a dip that you could reliably buy because it was gone so quickly. So here we are in December, record highs. Hardly anyone cares. You know, money managers are having a great year, thanks to a few very famous names that were also the outperformers last year, namely Fang.

So just a lot of people eating humble pie, I think, as the year comes down to a close. And then next year, maybe, we'll see, will be about how you cool the economy down. But we're not quite there yet. One person who probably had maybe one bite of humble pie, not that I know that he's necessarily admitted it publicly, is Jamie Dimon, who is probably the most prominent person in the public markets to be bearish on Bitcoin, which just continues its meteoric rise. Where is this going?

I mean, I realize that's a crystal ball type of question, but that's yet another thing that seems to do nothing but go up yeah you know we've had a lot of guests on uh bulls and bears on this thing that really nobody understands yet and uh to me that the the the formative guest on the topic for us for me was alan greenspan who made the following point and that was when the continental currency was brand new during the revolutionary years uh it you know for a while went sword and value to such a degree that george washington was able to finance military services and goods for a long time before it before it fell in on itself so i you know i don't discount some of these targets i mean they sound crazy now but could it be a hundred k uh in a couple of years it's just

because there is no intrinsic value i think to discount that is just the same as discounting a trip back to zero so um i i think uh it would be dangerous to play it i don't own any i don't know about you but i also certainly would be afraid to short it because um because the learning curve here is just starting also and one last point on bitcoin we think it's a u.s story it's really an international story so much of the trading is coming out of asia uh countries like South Africa and the Netherlands are searching for it on Google more than the U.S. So we need to remember that the whole planet is playing it. And we may think of it as an American innovation, but it's truly global. When I think back on 2017, one of the endurable images for me

took place on your network when Panera Bread announced that it was being taken private. And Ron Shaik, the CEO of Panera Bread, could not have looked happier. He could not have been more thrilled at the prospect that he was now going to be running a private company. And add to that, since then, Buffalo Wild Wings being taken private, layer in the continuing struggles at Chipotle. And I'm wondering if restaurants are, at least for the foreseeable future, an industry that investors would be better off to just avoid altogether. You know, I think your point's a good one. And I remember Sheik Giddey, I mean, you could just see him doing cartwheels, you know, saying farewell to Wall Street and analysts and the SEC and all, you know, just the things that go along with public life.

I do think we're in a period with restaurants now where kind of where we were with retail two years ago. And that is there are a lot of restaurants. There are just too many restaurants, just like we were saying there were too many department stores in 2015. And you layer on top of that the growth in delivery via Amazon or anyone else, the growth in at-home kits, whether you believe Blue Apron or Martha Stewart. So we're just not going to dine out, I mean, Chris, like we used to. And that's going to crunch margins, especially if commodities take off with inflation. So, yeah, the private game in restaurants I don't think is over. I think people – I even saw something today about be prepared for more bankruptcies in retail and restaurants in the first quarter because that's a structural dynamic that it may go up and down a little bit, but we know where the general trend is.

Well, I think you just tipped your hand on your answer for my next question, which was going to be about retail, because all indications over the past few weeks seem to point towards a pretty good retail environment heading into the holidays. But it sounds like, based on what you just said, that may be a short-term bump if, structurally, a lot of these retailers are just not in a position to be sustainable. Yeah, I mean, I think definitely whether it was the cold weather that helped apparel, whether it was pretty decent inventory management going into the season, who knows what. But, I mean, it was a nice gust of tailwind this holiday season, and we'll see how it ends up. But it looks pretty good. But the overall story, I mean, I think it basically put a dent in the long-term story of retail. But we're not – I mean, come on. We all know that a lot of these sea-level malls are going to turn into data farms or server farms or something, amusement parks. There's all this retail space that will have to be repurposed, and that's going to affect vacancy rates and rent.

And I just don't – that story didn't end on Black Friday, no way. You're listening to Motley Fool Money, talking with Carl Quintanilla, host of CNBC's Squawk on the Street. He also hosts Binge, the online interview series with stars and creators of binge-worthy television. And you just sat down with the star of one of my favorite shows on television, Better Call Saul. How is Bob Odenkirk, and what did you two talk about? You know, there's always a moment, as you know, where you're about to interview, in this case, someone pretty famous, right? He's been in the public life comedy world for years. and when you're

micing up and you're sitting down and your camera people are tweaking the lights and they ask about you not just like how's it going but where'd you go to school

and then where were you after that and then that's Bob Odenkirk I was I was so impressed with his curiosity about so many things

he was such a giant in the world of comedy sketch writing he created Chris Farley's Matt Foley character and

and through some happenstance he ends up becoming a performer himself not his aspiration but it happened and i he's now playing with house money everything that happens from here on out is just uh upside for him and whether the great thing about him is that one day he's writing mr show for netflix the next he's in an alexander payne indie movie now he's doing spielberg tent poles. And the guy, you never know which way he's going or which way he could go from here. So I just think he's a joy to watch. How do you think new television shows get oxygen these days? Because the Golden Globe nominations just came out, and I honestly did not recognize some of the names of the nominees, whether it was the programs or the stars in

certain programs. Are we at a point now where the volume of television programming, not just broadcast producers, but cable television and Netflix and Amazon Prime, are critics now more powerful than ever before because they can help people sort out what are the best shows to be watching? Because there's just so many of them. Odenkirk makes this point almost exactly like you did we went through this migration where content creators were they migrated from old style media companies right tv networks movie studios whatever to these new players uh these new marginal buyers of content like netflix and amazon but what's happened is as you know when you fire up netflix it is a sea of many of of of boxes right i mean curation is now our biggest

enemy i don't know what to watch my wife and i can't decide so we spend 15 minutes just waiting through previews and trailers and um odin kirk's point is it's that pendulum may now be coming back where if you and i had the hill quinceanera show it'd be we could go to netflix and probably get paid but maybe we'd rather go to a nat geo to an amc where it may not be the biggest pool but we know we're going to be loved. And they're going to make the biggest effort to make sure people know about the Hill-Quintanilla show through advertising, through a sustained campaign of advertising. And that's going to be a really interesting shift in 18 if, in fact, that continues to play out. Let's move to football, even though I realize as a graduate of the

University of Colorado and a fan of the Denver Broncos, both of which have losing records, I know this is probably a sensitive topic, but in terms of the business of the NFL, do you think it is starting to show some cracks? Because I realize that ratings are down, but then so are television ratings in general. So it's not like NFL ratings are dramatically underperforming total television ratings. By the same token, the health issues continue to get more and more coverage, and it just becomes harder to ignore. Yeah, I was talking to a banker last night at this event who specializes in sports, and I think I'm reading between the lines, but I think the lesson that he thinks this year brought us was that at the very least, Thursday night was maybe a bridge too far, right? You saw players getting hurt. You saw players complaining about sloppy play because they'd only had three, four days rest. It does spread the league viewership a little thin after, what, 36 hours, 48 hours after Monday night or whatever that is. I mean, so I don't envy Roger Goodell. I don't envy him having to manage this incredible evolution in viewership habits, but they've played it probably as well as they could, and they're not done. They got a new deal with Verizon, and I'm sure there's more on the way, but there's only so much football that you can watch in the course of a given week.

And then when you add the Neal issue, and when you add the disciplinary issue, and you add the officiating penalty issue, they've definitely loaded this car down with some weight. And I think that's one reason why you don't sense the enthusiasm we saw a few years ago. But with companies like Verizon ponying up $1.5, $2 billion for streaming rights, if the NFL were a stock, you're still holding onto your shares. Oh, yeah, I agree. And there's always people, you know, the bulls on sports are like, just wait until Google, Amazon, Facebook really dip into the purse and start bidding big for rights. The big question there is, will the leagues say, sure,

or will they remain a bit incalcitrant and argue that broadband penetration in this country is not what it is for television yet? So how broad of an audience do they insist upon, or are these paychecks going to be so big they can't look the other way? As we look ahead to 2018, is there something in particular you're going to be watching? It can be an industry or it could be an economic indicator. But what's piquing your curiosity as we turn the calendar? well you know inflation uh is is going to be i think on everyone's uh radar especially going into the new year if we get if whether it's a new tax platform uh infrastructure i mean how hot can

this engine run before you start seeing those those uh metric spike uh gasoline you're on years up 16 you know nobody talks about it but that's like that'll get your attention um so do we start to pile onto that? And then, of course, you know, kind of like what's happened with Bitcoin, do we finally see retail investors? I mean, does your cab driver, doorman, bar buddy start talking about stocks again the way we saw in 2000? You're right, another warning sign of the average Joe being the last marginal buyer who's left holding the bag before a correction. I mean, nobody wants to see that happen, but we're conditioned to watch for it. So I think those are going to be the two things to watch.

You can find him every weekday morning on CNBC. You can find him on NBC when the Winter Olympics start up in a few weeks. Carl Cantania, have a great holiday. Chris, thanks so much. Up next, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money. Thanks to Harry's for supporting this week's episode of Motley Fool Money. I love Harry's products.

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take advantage of the free shipping to get a limited edition holiday shave set. While supplies last, go to harrys.com slash fool right now. That's harrys.com slash fool. As always, people on the program may have interests 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, Matt Argersinger, and Ron Gross. Our Twitter handle is at MotleyFoolMoney.

You can hit us up on Twitter with questions. Question from Cam in London, England, who writes, Amazon, Flipkart, MercadoLibre, and Alibaba. Who do you like the most? And who do you think is going to do best in the developing world? Great question, Cam. Thanks for hitting us up. Matt Argersinger, what do you think? Well, I guess I have two answers then, because you kind of had two questions there. I think MercadoLibre is probably the best investment. I feel it has the most upside given the size and given the dominance it has in the region of Latin America versus the other companies

mentioned. But if you ask me who's going to do best in the developing world, I got to go with Amazon. And I think one of the reasons is, if you look at the share that they've already taken in India, which is probably, even better than China, I think the most interesting and exciting e-commerce market, they've already taken so much share from Flipkart and are growing exponentially in that country. So, I'd have to give that to Amazon. You agree with that, Jason? Because Alibaba is doing pretty well on their own. Yeah, I would answer MercadoLibre. Amazon, for sure, is investing in India like no other. I think Amazon really is going to take more share in India than probably anyone

else stands to. I do like what Alibaba is doing. Corporate structure notwithstanding, it is not the most transparent business in the world. Personally, I'm not going to buy shares of it, just because I don't need to. But I do think that what Jack Ma is doing is he's opening up China to becoming more of an importer. That's kind of the goal there, is to make China more of an importing country, bringing goods in from the U.S. and from Brazil and from Russia, wherever. So, I like that. I think he's opening up China, the Chinese consumer, to certainly a decade and beyond of some great products and services. So, I think that all three, you probably can't go wrong.

Alright, let's get to the stocks on our radar. Ron Gross, what are you looking at this week? I am going to go with Carnival Cruise, CCL. They've got a 48% market share, and it's really an oligopoly-type industry. Really, only a few major players, because there's such high barriers to entry. Royal Caribbean and Norwegian being really the other two folks. There's some favorable demographics going on here. We have an aging population that should bode well for cruises. They have a solid balance sheet, improving financials and rates of return, 2.7% dividend yield, which we like over at total income, and I think the stock has some nice upside potential.

All right, Jason Moser, what about you? Sure. You know, I think healthcare is a phenomenal long-term opportunity there from a number of perspectives. And listeners have heard me talk about Teladoc a lot here over the past couple of years. Now, I'm not pitching Teladoc today, Chris. It's something else entirely. It's UnitedHealth Group, UNH, going the other direction there. Instead of a smaller player, this is basically the biggest dog in the space. And this is a big national healthcare insurer that runs the business in the UnitedHealthcare segment and the Optum segment for benefits and services. I think that regardless of how healthcare legislation shakes out,

UnitedHealthcare is going to be a part of the process there. They have vast amounts of data and information already on file. They're calling for earnings per share around $10.15 in 2018, which puts the stock around 21 times full of your estimates. I don't think that's unreasonable for a company that clearly is going to take part in dictating this space for many years to come. O'Reilly. Matt Argersinger, what are you looking at? Alright, let's see if I can get through this. The stock on my radar is a little company called Riot Blockchain, ticker R-I-O-T. Up until about a year ago, this was a penny

stock biotech company. They actually had to undergo a 1-8 reverse stock split in 2016 to prevent themselves from being delisted. Fortunately, earlier this year, in addition to changing their name to Riot Blockchain, they announced that they were giving up on biotech failure. Instead, we're going to, quote, gain exposure to the blockchain ecosystem through targeted investments in the sector with a primary focus on the Bitcoin and Ethereum blockchains. So, since that announcement, and it's based about four months, stock is up from about $3 to $28. Just got one thing to say. Folks, be careful out there. Happy holidays.

Will end there. Matt Argersinger, Jason Moser, Ron Gross. Guys, thanks for being here. Thanks, Chris. That's going to do it for this week's show. Our engineers, Steve Broido and Henry, helping out behind the glass this week. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.