Motley Fool Hidden Gems Investing - Motley Fool Money: 01.27.2012

Episode Date: January 27, 2012

The GDP grows at a 2.8% clip for the 4th quarter. President Obama announces new energy initiatives.  Apple reports huge earnings. And JC Penney undergoes a big makeover.   Our analysts discuss those stories and share a few stocks on their radar.  Plus, we talk with Alex Goldfayn, author of Evangelist Marketing: What Apple, Amazon, and Netflix Understand About Their Customers (That Your Company Probably Doesn't). Learn more about your ad choices. Visit megaphone.fm/adchoices

When WestJet first took flight in 1996, the vibes were a bit different. People thought denim on denim was peak fashion, inline skates were everywhere, and two out of three women rocked the Rachel. While those things stayed in the 90s, one thing that hasn't is that fuzzy feeling you get when WestJet welcomes you on board. Here's to WestJetting since 96. Travel back in time with us, and actually travel with us at westjet.com slash 30 years. Thanks for being here. I'm your host, Chris Hill, and joining me in studio this week for

Motley Fool Pro, Jeff Fisher, for Motley Fool Income Investor, James Early, and for Million dollar portfolio, Ron Gross. Gentlemen, good to see you as always. Good to see you, Chris. We have got earnings from Apple, Netflix, 3M, and more. We will look at Taco Bell's foray into the breakfast market. And as always, we've got a few stocks on our radar, but we begin with the big macro. On Friday, the government reported the economy grew at an annual rate of 2.8% in the fourth quarter. Ron Gross, that is the fastest pace in more than a year and a half, but it was below expectations.

That is true. Chris, I'm just happy to see it up. Positive territory is good. The expectations game is a difficult one to play. Look, companies were rebuilding inventories. That was really why this number looked pretty robust, although as you said, lower than expectations. That's probably not going to repeat, because inventories are now built up. So we might see a pullback, which we have to expect. But consumer spending was good, I like that. Inflation seems no sign of increasing. That's good. So, all in all, a pretty good report. Alright, let's move on to President Obama. During Tuesday's State of the Union address he outlined plans for the energy industry, and on Thursday he announced the sale of oil

and gas drilling leases for around 38 million acres in the Gulf Coast. And James, he also promoted the completion of a highway for vehicles that run on liquefied natural gas. There is a lot there in the energy industry. What's your takeaway from this? The highway sounds good because there'd probably only be like two cars on that road. Obama is very bullish on natural gas, which is wonderful because as great as renewables are, they're just not likely to be a major power source in our lifetime or maybe even our children's. But a shift to natural gas is a long-term thing. It's not, in terms of investing, it's not necessarily going to drive these stock prices up immediately.

The near-term issue is more we still have this gas oversupply, actually, that we have to deal with. Ron, obviously a lot for the energy industry, whether it's oil, natural gas. Is there an energy stock that, when you think about everything President Obama's talked about this week, is there an energy stock that's on your radar as a result? A company that I've spoken about recently as one on my radar, maybe even last week or the week before, is Range Resources, ticker symbol RRC, a low-cost provider of natural gas operating in the Appalachian, southwest areas of the U.S. It could be really interesting, has been very volatile this last week, has had more than one or two days of up or down 5%, 6%.

So I've got to dig in there, but it could be an interesting play. James, what about you? I like Spectra. The ticker there is SC. It does have some exploration. It has a lot of transportation, gathering, processing, distribution. Basically, it's a full-spectrum natural gas company. And I think that's prudent right now because the drillers often are mandated to keep drilling no matter what the price is.

So that's why you're not seeing the drillers just all pull back and let the price go up because they have these leases that make them drill. So I think we're going to see low prices for a while, so it's a good time to be in the midstream space here. Jeff? So Obama said he's going to open up some 75% of offshore for drilling. I like Bristow Group, BRS is the ticker. They own about 500 helicopters.

And what they do is bring the— It's a helicopter place. That's cool. Yeah, they bring the crews out to the oil rigs and back. So, it's a very stable, recurring business where they sign two- to five-year contracts for revenue, and they get paid whether they fly or not. So, BRS, interesting stock, especially around 40. It's in the high 40s right now. Also, in the big macro, the Fed this week said it expects to keep interest rates, quote, exceptionally low until late 2014, at least. Ron, two things. One, what does

that mean for investors? And two, is it just me, or is that a pretty long time frame? I mean, to basically project out for two and a half years, we're going to keep these rates exceptionally low. What does that say to you? A, it's a long time frame, yes. And I think he reserves the right to probably adjust his estimates. But what it says to me is that the Fed is concerned about our economy. Things are not strong. They need to keep rates low. Typically, that would be good for stocks. But if economic growth is anemic, we have to make sure we build those slow growth rates into our valuation models. James? I'm going to come out and say this is kind of ridiculous. This is the

cart leading the horse here. The Fed is supposed to be reacting to the economy and helping to guide it, not to make some declaration of what it's going to do for years in advance, regardless of whether that action is still necessary. I mean, why not announce you're going to do it to 2017 or 2020? How do they know? 2014, they don't. They're just making it up. Yeah, I agree with James. And there was some dissent within the Fed. Not everyone agreed to this statement this time for that very reason. Why are you saying what you're going to do for almost three years when no one really knows what's going to happen in that time? And I don't see how supply and demand, just the way markets function, actually,

this will work. Sometime in 2013, market forces would dictate that interest rates would start to rise in advance of when the Fed says they will, just by people naturally buying and then selling in anticipation of that rise. So, I don't really see how it works in reality. Right. And that may be why they moved it back to 2014, to keep it from rising sooner. Could be. Keep rates from rising. And just keep pushing it down the road. A lot of earnings to get to this week. We're going to start with Apple, obviously

a huge quarter. We've all seen the media reports, just a few of the record numbers. Revenue of $46 billion, profit of $13 billion. Apple sold more than 37 million iPhones, 15 million iPads, 5 million Macs. Apple now has $97 billion in cash. Jeff Fischer, what are they going to do with that? What a problem to have. Okay, this is like Warren Buffett's problem. He has so much cash and he doesn't know what to buy with it. He has to buy only very large companies. Now, Buffett has the benefit, he can buy a railroad or he can buy a candy maker or a shoemaker. Apple, the most successful tech company in the world and the most profitable, has to

buy something complementary to its business, obviously. What do you buy when you own your operating system. You have detailed say in everything you produce. You don't want to let other products interfere with what you produce. What do you buy to complement such a strong business already? Do you have an idea? Portugal? I think that they have a tiger by the tail, obviously. Apple TV is still a rumor, but very likely. And once you have Apple TV, you're locking up all these multimedia, TV, video, audio music everything but ebooks but that's a young a young and niche still so what what i

would do with some of that cash is start to squeeze out netflix netflix and amazon and start to buy sign multimedia deals to get movies to get shows that these other companies are don't have the money netflix does not have the money to buy these things so not so much spending it on an acquisition but more along the lines of just uh massive content deals yeah i guess on on ip in a or content. James, what would you do with the cash? I do like the idea of, well, first of all, I'm a dividend guy. So I would pay it out. I would pay $104 special dividend per share. I mean, that's how big they could make the special dividend. That's just massive. But barring that, if they insisted on redeploying, I do like the idea of sort of becoming the iTunes for videos,

except that the video, the movie industry economics is not as good as the music industry economics. So I would expect that these deals are going to be too expensive. It wouldn't be a space I would want to compete in myself if I were in Tim Cook's shoes. Ron? One thing I think investors need to just be aware of is that a lot of the cash is overseas. So for Apple to repatriate that would require them to pay a hefty tax on it. So for those running valuation models or counting that cash dollar for dollar, I wouldn't necessarily do that. You've got to take a haircut to that Ron, when you look at shares of Apple, do you think they are fairly valued? Do you think they're overvalued? I mean, they had this record monster quarter, and the stock,

there are people out there who say, wow, this stock is a real value. The stock really only moved about 5% or 6% up on the news. I would think if it was really such a steal and they had that blowout quarter, it would have shot up even more. Well, we own Apple and MDP. We owned it at about $380. Up until this latest release, thought it was worth about $500. I would say that these results kind of make us revisit that valuation model, and we're in the process of doing that now. So, I don't know where we'll end up. It certainly won't be below the $500. So, it is not overvalued at this point, and in fact, it is most likely undervalued. Are you a Mac user yourself at home?

We have Macs, iPads, iPhones, and one PC to do some things that Macs just can't seem to do. I agree with Ron. It looks undervalued. And part of the reason, I think, we all know, is the product cycle in electronics is so quick and so vicious that if they don't hit a home run every year or two, they could stumble. That said, if they do start a dividend, that could help. That sends a signal to the market, we think our cash flow is stable, strong, going to keep growing. Whereas without a dividend, they're kind of playing by the market's rules of, we're this tech company that's always on the edge. And it will create this artificial, for lack of a better word, demand from dividend investors who only buy stocks that have dividends.

They'll come rushing into the market and create demand for the stock. Counterbalanced by the tech people, though, who will get out of the stock. Coming up, it was a huge week for one struggling retailer, but can they keep the momentum? More after this. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with Jeff Fisher, James Early, and Ron Gross. Guys, more earnings, better than expected earnings for two of the big Dow stocks. 3M's quarterly profits up 3%. Caterpillar's quarterly profits up 60%. James, these are also two dividend players. What do you make of the results?

It's interesting, Chris. There have always been must-have products. Elmo, Power Rangers, recently heavy equipment seems to be the must-have product. Caterpillar is just killing it. It's just amazing. People just couldn't wait any longer to buy heavy machinery. Double-digit volume growth. What is interesting to me is that the U.S. actually did pretty well. China did not do quite as well in terms of Caterpillar sales. They are very bullish in their outlooks.

But you would just think that people wouldn't be shelling out big money for this, but they are, which is great. Ron, 3M, what do you think? Yeah, 3M looks good. They've strengthened their industrial and transportation segments. The display and graphics business continues to struggle. One thing the market doesn't like is that they haven't put a succession plan in place for the CEO whose retirement is imminent. And that uncertainty is creating some frustration among investors. But the company seems to be doing well.

That whole plan seems scotch-shaped together, if you ask me. I got to say, the one thing I loved about Caterpillar's results, and I'm going to read it so I don't get it wrong, is they said they believe global recession can be avoided and they expect the threat of recession in Europe to ease by the middle of the year. So, people that are worried out there, Caterpillar is seeing something else. We talked on last week's show about Intel's earnings and IBM's earnings. Those are two companies that can be seen as bellwethers. Caterpillar and 3M doing well, does that generally bode well for the U.S. economy, you think, Ron? It does. 3M is definitely an industrial bellwether, and Caterpillar, my gosh, in terms of industrial production. Shares of Netflix up more than 20% on Thursday after the company's latest earnings.

More than 600,000 U.S. subscribers added last quarter. Jeff, is Netflix back? Well, it was a step in the right direction, but they still have a long way to go. The good news is they added 600,000 subscribers, and they're back to above 24 million again. Plus, they've made some great content deals, like bringing Arrested Development back to life in 2013. But these deals are expensive, and they're expected to still lose money all year. And my concern is, in the years to follow, they'll become less relevant. Why do you say that?

Why? Because, like AOL back in the day, they are now competing with the internet, bit by bit. There's no reason you cannot surf the internet for the media you want. And the content producers, NBC, ABC, they all house it on their own sites because they can then run advertising, too. There's no reason most content producers are not going to set up their own stations, as you will. And you can aggregate them all online however you want. But the point being, you don't need a single host like Netflix in the long run is my concern. Clearly, they, at least for now, have a first mover advantage and have a nice subscriber base. We should disclose this to Motley Fool.

There are multiple recommendations in Motley Fool services and continue to like it very much. But there's a lot of competition. We're at the very infancy of the streaming business here. Earlier this week, Google announced it is changing its privacy policy. Starting March 1st, Google will track users across almost all of its sites, including YouTube, Gmail, and its search engine. Consumers will not be able to opt out. So, Ron, privacy concerns aside, what does this mean for Google's business?

Well, I think it's probably good for the business, since they can obviously target more specifically to everyone's personal tastes. I know people are afraid of Big Brother, if you will, and don't like being tracked. It's not that much different than what's going on now. It's just across multiple Google services. And they still will not sell your personal data to third parties. Your information stays within Google. It might be annoying, but it's annoying now.

It doesn't creep you out, it sounds like. I Google Ron Gross before the show, but there are a lot of you. There are a lot. It's the future. I don't think we can avoid it. I mean, we can kick it down the road, but the internet is what it is, and our personal information is not so personal anymore. Shares of Google basically flat over the last two years. Is this move, I mean, this is a company that you own and you know

well, do you look at this move and think, okay, this is actually going to benefit the stock price? I don't think this specifically will benefit the stock price, no. The stock's been smacked around the latest week or so So after earnings, people are concerned about the cost per click number coming down, even though their paid clicks was up nicely, over 30%. And they're spending a lot of money right now for the future, and that has some people a little bit worried. At Million Dollar Portfolio, we're willing to give them the benefit of the doubt

and say that that spending will be put to good use and will show up in cash flow down the road. Big changes afoot at JCPenney. The new CEO, Ron Johnson, formerly of Apple, wants to simplify pricing and make it more predictable. So JCPenney is cutting prices permanently. What do we think? Is this a good strategy? Shares of JCPenney were up big this week, partly, I think, because of that, partly because they raised their guidance for the year. What do you think, James?

Really, what do you do if you're JCPenney? I mean, the name isn't that cool. The concept might be a little bit outdated, but no, there's still value there. And so what you want to do is maybe not invest a ton of money, but try to make the business as cool as possible. I like this idea. I think it's innovative. I think it does bring a little bit of that sort of Apple thinking in, in terms of not having a lot of price changes. So I think this is a good move.

Jeff, what do you think? It'll be much more efficient, too. Last year, they had more than 500 sales over the 12 months. So they are cranking out a lot of pamphlets, a lot of news. This is much more efficient. But they are trying to change their mindshare with the consumer, where they were a place where, we have semi-quality products at these- I like that you're struggling to be polite.

I'm sure they love that categorization. But look, they're 40% off now. Rush in, it was forced urgency. And now the mindshare is going to be, we're cheap all the time. And so you compete with other things like Target or Kohl's. I was going to say, because Kohl's and Macy's have really taken market share from JCPenney over the last few years. If you're them, you're probably a little worried about this. I applaud Ron Johnson's boldness. This is not kind of, you know, I'm going to come in and keep things as they were. He's making a big bet. And who am I to really second guess his expertise

in this area? It looks like he's got a nice plan. Some of the details are a little wacky, like the town center plan in the middle of the store where people will gather and congregate, and he'll give away free hot dogs and haircuts. Go hang out at JCPenney's. Every Friday there's a special sale, too. Every other Friday on Paycheck Day. So you can come in and spend your paycheck. That's actually interesting.

I like some of the treasure hunt concepts that Costco is famous for being brought in. The town center, specifically, sounds a little wacky to me. 500 sales per year is more than one. That's one and a half a day or something like that. That's crazy what they were doing before. And finally, on Thursday, Taco Bell introduced a breakfast menu at nearly 800 locations. If all goes well, breakfast burritos and hash browns will be available at $5,600 nationwide by 2014. Good move, Ron?

I like it. It makes sense. Who doesn't love a wrap, which is basically a burrito? It's a perfect breakfast food. They're teaming up with Cinnabon, Tropicana. It's a relatively inexpensive product. You can go in for $1.50, $2, get breakfast. I like it.

For what it's worth, a lot of the big breakfast story is international growth because the rest of the world doesn't necessarily have American breakfast consumption habits yet. But if these food companies can push these offerings, I think Yum! Brands is experimenting in China as well. That could be big business. All right, Jeff Fisher, James Early, Ron Gross. Guys, we'll see you a little bit later in the program. You know, you can always drop us an email, radioatfool.com. Ask us questions, weigh in on anything we've talked about this week. Just drop us a note.

That's radioatfool.com. It's money that I love. It's money that I love. Big consumer tech companies spend a lot of time and money marketing their products, so why are most of them so bad at it? Our guest this week has some thoughts on what the best tech companies can teach the rest of the tech companies. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. The iPhone has it, the Kindle has it, and Netflix streaming has it.

The it is consumer evangelist. But our guest this week says that these are the exceptions, and that most tech companies succeed in spite of their marketing, not because of it. Alex Goldfein is the author of Evangelist Marketing, what Apple, Amazon, and Netflix understand about their customers that your company probably doesn't. Alex, welcome to Motley Fool Money. Thank you for having me. I want to talk about these companies and some of the other individual companies that you write about in your book, but I want to start with sort of more of a big picture, because I said, you're saying that there are companies out there in the tech world that are succeeding in spite of their marketing.

When you look at companies like Microsoft, Dell, AT&T, Hewlett Packard, what is the problem? What is the problem with their marketing? The problem is that they're leaving billions on the table. Literally, if they stopped marketing today, those companies, if they stopped all outgoing marketing today, sales would not be affected very much at all. We'd see a slight dip. And the problem with their marketing is they're simply not connecting with consumers. It's too technical. It's not compelling.

It is what their executives from a conference room think will be interesting to consumers. But what they haven't done is actually we had a conversation with human beings, one-on-one qualitatively, which I write about in the book, to understand what language and messaging is compelling to real people. And so what they're spitting out there is long model numbers, complicated messages. It's too technical. The public relations is horrendous. It's really upside down and backwards if that's possible. um and and so you know they're they're succeeding based on the um name of their brand on on the the wide range of their distribution and on these two factors that consumers follow

technology like uh fans follow sports right so there is no industry that has such a passionate and interested following like technology does right not appliances not autos not fashion nothing and the fact that there is a media world that is built to report on what this industry does, right, yourself included. And because of the media and because of the consumers that are so automatically interested in what this industry does, the industry gets by and the industry succeeds rather well, but boy, the industry could be doing so much better. Well, and one of the early surprises in the book for me, when I think about companies like Apple and Netflix, I associate them with people who are sort of on the cutting edge of technology, the early adopters, that sort of thing. But one of the things you establish early on in the book is that evangelists are, when you're talking about evangelists,

you're talking about mainstream consumers. These are just everyday people. You don't want early adopter evangelists. You want mainstream evangelists. You want mom-and-dad evangelists. You know, Jeffrey Moore, who wrote Crossing the Chasm, was the last book to look at technology marketing before mine, before evangelist marketing. And he called it a chasm.

The chasm was the space between early adopters and mainstream consumers. And I don't think it's a chasm anymore. That book came out in the early 90s. As time has gone on and technology has matured and the industry has developed, the chasm has actually become a solar system, I believe. And early adopters and mainstream consumers are on different planets. They're so not on the same bell curve.

And so when you master early adopters, what happens is it's almost physically impossible to then make the transition to mainstream consumers. And so I argue in the book, start with mainstream consumers. Start with mom and dad. Bypass the early adopters because they're only 2% to 3% of your market. Don't even start with them, because if you do, you master habits and language and communication and techniques that work for them. But they won't work with mainstream consumers because they speak different languages. Let's dig into the first company, and that's Apple.

um yeah obviously earlier this week apple had a record quarter in terms of the number of iphones they're selling in terms of their profits um what what is the secret to apple's marketing the two secrets that they had were unbelievably good products better than anybody else's and simply an unparalleled instinct that was corporate because it started with steve jobs it was company They had an unparalleled instinct to understand precisely what would make consumers go crazy, what marketing and what product features would make consumers wildly excited and passionate. So when you look at the competitive landscape for Apple, it's clear from your answer that you don't see any legitimate competitors in terms of some of the products that they are churning out. But one of the other things you hit on in the book is that, you know, essentially the notion that there are no annuities when it comes to tech companies and their success.

So all that being said, what do you think is Apple's biggest challenge over the next year or two? Well, I think you're beginning to see their biggest challenge in very recent headlines. And that is the uproar that's sort of coalescing around their manufacturing standards in China. And somebody said very recently that if you knew how your iPhone was made, then you wouldn't want to have it. You wouldn't want to be putting it up to your ear. and you know it's a i'm guessing this is not a unique uh issue that that only apple is going to deal with but in regards to business challenges uh yeah you can look at android phones as posing a challenge but they're so splintered and there's so many companies making

them you know you could look at other tablets coming up and yeah they'll push apple but again And there's 10 to 20 companies competing with Apple, and Apple's got, you know, all the rest by itself. So I think its biggest challenge is going to be these manufacturing issues that are going to energize protesters probably, you know. I think they're going to motivate anti-Apple people, and there's a lot of those people, people who simply don't like Apple because it's so big and successful, and people who are Windows people. um so that's what i think it's going to be do you think that that issue is going to resonate with a high enough percentage of mainstream consumers to make a meaningful impact on apple's bottom line no and this is why uh because apple's consumers uh in very large part are

evangelists and we talk about this in the book and when you have evangelists they are uh trusting of you so they assume that you have their best interests in heart they're also forgiving so that if you make a mistake they're going to assume it was relatively innocent and that you didn't mean it and they're going to give you a chance to make it better and if you need an example of this look at apple's antenna gate you know about a year ago or so a year and a half ago where um you couldn't hold the phone in your hand for goodness sake and not have the call drop out That's a problem. Yeah, it's a small problem.

People were in an uproar, and Apple fans were really angry. And Steve Jobs came out on stage with two of his high-level VPs, and he said, Look, we screwed up. Here's our solution. And we'll try to do better, and we're going to figure out the problem. And they did. And it was gone. Within 24 hours, it was gone from the news. And so I don't think they're going to lose customers because they have evangelists.

And this is exactly why you want evangelists. You want to do everything you can for this very reason, to develop as many evangelists as possible because they're trusting and forgiving. And best of all, they are hyper-repeat customers. Coming up, more with Alex Goldfein as we try to fix Microsoft and play a round of buy, sell, or hold. You're listening to Motley Fool Money. You're listening to Motley Fool Money, talking with Alex Goldfein, author of the new book, Evangelist Marketing, What Apple, Amazon, and Netflix Understand About Their Customers That Your Company Probably Doesn't. Let's move on to a company that's not on the cover of your book,

and that's Microsoft. Microsoft does have some good products. Windows Phone 7's gotten some positive reviews. When you hear people talking about when you read reviews of Xbox and the Kinect gaming system, I mean, it's really powerhouse stuff. And yet, there is not that buzz. There does not seem to be the type of evangelist marketing going on with Microsoft. Why is that? And what does Microsoft need to do to get it? So I'm a firm believer that consumer buzz and energy builds share price. And this might be an interesting topic for us to dive into. So Apple has buzz, and Amazon has buzz, and even Netflix has buzz.

And you saw what Apple stock has done and what their unbelievable earnings were recently. Microsoft does not have buzz. Feelings about Microsoft are pretty, you know, somewhere between zero and below zero, I would say, on the continuum. And so I believe that consumer energy translates directly into share price. You know, Microsoft simply isn't a good marketer. They're just not. And that begins with the CEO, right, both Bill Gates as well as Ballmer now. These are engineers.

These are people who like to create products and invest in product development. And for Microsoft, they've got some really good products that nobody gets really excited about because they don't market them. They're just not good marketers. I'm a longtime Microsoft shareholder. When I look at Microsoft, I was saying to our producer, Matt Greer, the other day that I look at Microsoft as a dad of teenagers who desperately wants to be cool. That the teenage kids are just like, Dad, you're not cool. And his response is, no, no, no, I'm really cool. And it's like, first of all, no, you're not cool.

Second of all, your teenagers don't actually need or want you to be cool. They want you to drive them places. They want you to be their wallet. I mean, does Microsoft, when it comes to their marketing, do they just need to essentially stop trying to be cool, to stop trying to compete with Apple on the cool level? Well, that's sort of a failing instinct, right? That competing on cool, which they've tried.

Right. And obviously with not a lot of success, what they need to do is really start talking to their customers, right? They need to decide, first of all, who is their customer, right? Is their customer the consumer or is their customer the business? And then they need to start talking to that customer. You know, at Research in Motion, it was widely known that the two CEOs, the former CEOs now, simply disagreed on who the customer was. One thought the customer was the business and the other thought the customer was the consumer. And if you don't know who the customer is, how are you going to market? You can't. It's impossible.

So for Microsoft, first of all, they need to decide who the customer is. Then they need to go have qualitative conversations with as many of them as they can. And they need to understand what these people think about Microsoft, what they love about Microsoft, if anything, what they do with their Microsoft products, how these Microsoft products improve their lives. That's the centerpiece to my system for creating evangelists. You need to get the language of your customers because that is the very best possible marketing language you can have.

You know that's going to be compelling because it comes from your market. And if it comes from your market, you simply take it, you slightly repackage it, and then you unleash it back onto your market. As we said in the beginning of this conversation, if you're not talking to your customers and getting your marketing language there, you're simply guessing from a conference room. When you look at Microsoft's recent campaign, I'm a PC, do you think that is a step in the right direction? Yes, I think it is probably the most effective marketing they've ever done, ever. And I think it's gained traction. I think they've been unnecessarily sort of sporadic with this. You know, they've made headways and then they've stopped at this launch, I believe, in 2010, or maybe even in 2009, where you have really happy people, you know, interacting with Microsoft products.

And then they've sort of gone and made them nerdy and unnecessarily sort of engineering-focused. And then you don't see the ads for six months, and then suddenly they appear again. You know, and compare that to Apple's attacks on Microsoft, unrelenting for years with the I'm a Mac, I'm a PC ad. You know those? Yes. If you compare the two approaches, right, they were just unrelenting for years over and over again. All right, we will wrap up with a round of buy, sell, or hold. Let's start with this one. They were the hot product at this year's Consumer Electronics Show. Buy, sell, or hold Ultrabooks. I would probably hold on Ultrabooks just because of tablets. Tablets and smartphones,

That's what I think. This is someone who is known for his prodigious self-marketing. Buy, sell, or hold Donald Trump. Sell. Donald Trump doesn't have the support of the party that he represents. He has a television show that is getting up there in age and years and getting down in interest. So I would sell Donald Trump. And finally, buy, sell, or hold 3D television.

sell not going to catch on really not going to happen because i can buy a 51 inch tv for uh 499 dollars and uh a 51 inch 3d tv costs three or four thousand dollars uh not only that uh i hate those stupid glasses nobody wants to wear them right because what about all the people who i wear glasses right real glasses what am i going to do with those glasses to put over my head and aside from that personal feeling there just isn't enough content you know

this is a new revenue stream I believe that the industry is trying to create for itself this is a business move I don't think with the majority of mainstream consumers this is going to catch on The book is Evangelist Marketing What Apple, Amazon, and Netflix

Understand About Their Customers That Your Company Probably Doesn't Alex Goldfein, thank you so much for being here Thank you so much for having me. I really appreciate it. 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.

Joining me once again in the studio, Jeff Fischer, James Early, and Ron Gross. Guys, it is that time again, time for the Stock Center on our radar. We'll bring in our man Steve Broido from the other side of the glass to hit you with a question. Ron Gross, you're up first. Chris, I'm going to circle back around to a stock that I've always wanted to own but never have, and that's Johnson & Johnson, ticker JNJ. The valuation really was just never where I needed it to be, but the company is a market leader. It's one of only four companies that still has a AAA credit rating,

3.5% dividend yield. It's both a core stock and the best by now over our inside value service, so I'm going to circle back around. Steve? Sure. My question is, what is Johnson & Johnson? I know they make a ton of different things, but if I had to describe in one sentence, Johnson & Johnson is what? Healthcare-related consumer products. Is that fair? Does that work for you, Steve? I think so. I know that. I'm sure they make a ton of stuff. James Early? Chris, I looked at PIN Virginia. The ticker is PVR. It's a coal and midstream natural gas partnership, 7.5% yield, just a sixth of its revenue from coal, but coal makes three times the profit of gas. But I wouldn't touch this company, this partnership, because it leases

property for coal mining done via mountaintop removal, which is kind of a really nasty thing if you're into socially responsible investing. You clear cut, then you blast the mountaintop apart, and all these mercury and sulfur compounds leak into the water. So that's when I would avoid Darge Coal, Peabody Coal, or some others along these lines, too. Steve? My question is, will my son live in a world without coal? Coal is about half our electricity now. It comes from coal.

So I would say not likely. In a global sense, you know, maybe in 50 years we can phase out. He's three months old, so, you know, he's got a while to go. I hope. I hope he does. Jeff Fisher. CA Technologies. The ticker is CA.

This week, they increased their dividend five-fold, from $0.20 to $1. So, these shares now yield 4%, and they trade at nine times very steady, strong free cash flow. And it is an information technology software company. Steve? Who's its biggest competitor? I'd put BMC Software up there, and Oracle as well. There's a lot of initials here. BMC, CA. I like companies with initials.

Does that make you scared? It does a little bit. I don't know how to distinguish them. They have a mildly tainted past, right? That's part of the value play. Wait, what was that, James? I think the CA has a mildly tainted past. I think that's part of the value play. Mildly tainted.

Don't we all? So true. All right, Jeff Fisher, James Early, Ron Gross. Guys, thanks for being here. Thanks, Chris. Thank you, Chris. Thank you. Thank you to our special guest this week, Alex Goldfein.

For video highlights, you can go to FoolTV.com. You can also check out MarketFoolery, our daily podcast. We do it every day. You can check it out on iTunes and online at marketfoolery.com. That's it for this edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill.

Thanks for listening. We'll see you next week.