Motley Fool Hidden Gems Investing - Motley Fool Money: 05.20.2011

Episode Date: May 19, 2011

LinkedIn has a big debut on Wall Street. Abercrombie & Fitch, Deere & Company, Dell, and Limited Brands report strong earnings. General Mills loads up on yogurt. And McDonald's responds to critics calling for Ronald McDonald to retire. Our analysts discuss those stories and share some stocks on their radar. Plus, we talk about the business of competition and the business of Jersey Boys with Todd Buchholz, author of Rush: Why You Need and Love the Rat Race. Learn more about your ad choices. Visit megaphone.fm/adchoices

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BetMGM operates pursuant to an operating agreement with iGamingOntario. early, and Ron Gross. Guys, good to see you, as always. Good to see you, Chris. We've got earnings from Dell, HP, limited brands, and more. We've got the economics of a hit Broadway show, and as always, we've got a few stocks on our radar. But guys, tonight we're going to party like it's 1999. On Thursday, LinkedIn, the business social networking site, went public. The stock was priced at $45 a share and had more than doubled before noon. Ron Gross, I will start with you. Is LinkedIn's business that promising, or are we seeing

a repeat of the famous dot-com bubble of 1999? Well, my friend, I'm going to ... Much to your surprise, I am going to present a balanced view for a moment. O' Okay. The positives. O' Boring. First mover advantage, really first in this business. Three sources of revenue, growing very fast, Q1 revenue is up 110%, 100 million members, profitable in 2010, $15

million of profit on $243 million in revenue, cash flow positive. O' Okay. Not so bad, right? O' Not so bad. Now the bad. Went public at $4.5 billion. $45 a share. That was approximately 15 times sales, 42 times cash flow. O' So double all that. Not cheap in and of itself, okay?

Now, we're at, what, $100 a share, $110 a share, depending on where the stock is. So, we're at 36 times sales, 100 times cash flow. Prospectus says the company's not going to be profitable in 2011. Profit schmuffet. Okay, right. Who cares about profit? It's an exciting company. That's what I care about.

We're just talking about valuation. We're in the infancy. We're in the infancy of professional networking in the social media context, right? We have a lot of potential competitors out there. This company has to achieve growth rates that are very significant for years to come to grow into that valuation. It was one thing at $4.5 billion, at $10, $11 billion. You're saying in order to support that valuation, clearly if all you do is hope to make some money off the rubes, you just get in now and then get out the door first.

Isn't that how investing always works? Not here at The Motley Fool. James, what do you think? LinkedIn has, what, 100 million users now? So I wonder how fast a competitor could actually come in and take that share. That, to me, means a lot. And Facebook obviously has, what, $600 million. So they could launch some sort of a business version of this.

All they have to do is take out the nude picture side. Well, that's the thing. I don't want somebody seeing me at the bikini party as I'm applying to a job. What is a bikini party? I don't even know. I just made that up. It sounded like something I'd be fun to go to. I'll tell you guys about that off the air later.

You mentioned Facebook. What do you think the people at Facebook were thinking as they watched shares of LinkedIn? I'm rubbing my hands together greedily. First, they're thinking cha-ching. Second, they're thinking it's pretty easy for us to make a protected version where the junk doesn't go in and do the same thing as this. If you're LinkedIn, are you just excited about how your IPO has gone? Or are you, on some level, bummed because with the share prices shooting up that much, you left a lot of money on the table, Ron?

CNBC asked the CEO that question today on TV, and he handled it pretty beautifully, saying, you know, we can't worry about the stock. We've got to execute on our business plan. You know, we went public. Great. Now we've got to get down to business and execute on our plan. That's the right answer. Behind closed doors? He's swearing up a storm.

I don't know. If your banker comes into you and says, we want to take you public at 15 times sales, that's one thing. If he comes in and says 30 times sales, there's got to be some semblance here. They've got to come in with a model that at least looks reasonable, otherwise they get laughed out of the room. And remember, they're selling the stock to some of their clients as well, so they can't leave their clients holding the bag, or that has repercussions as well. That's the whole thing. It's their job. Their job isn't to figure out what the company is worth, right? Let's be honest. Their job is to figure out what the rubes are going to

pay for the company. Theoretically, the supply and demand for a stock should be based on what the company is worth, but as we know, it doesn't always work that way. I wish I was one of those rubes who got in. So, to bring it back around to the great business leader, Prince, who once famously said, life is just a party and parties weren't meant to last, Ron, it sounds like you're saying LinkedIn's party is not going to last. It's so crazy to say that $45 seems perfectly reasonable now, but that's only in the context

of $110 stock, right? I think $110 seems a little bit high to me. But I did read an article this morning that said LinkedIn will be worth $25 billion five years down the road. All right, let's move on to a tale of two tech giants, Dell and Hewlett-Packard. We'll start with Dell. Shares of Dell rose when the company reported better than expected earnings this week. Dell's profit nearly tripled in its latest quarter. James Early, how is Dell turning things around? Well, Chris, Dell had pretty decent operating margins, partly from cost savings, partly from business sales, which are just very profitable. But I will, just as somebody who's seen the glass half-empty, the elephant in the room, or the elephant that's no longer in the room, I could say, is the PC. PCs have evolved these days, my Dell laptop notwithstanding.

Oh, God. Let's not talk about how bad their computers are. Exactly. I mean, these days you either have to be cool or cheap, or both, like Ron. I'm just kidding. We're all pretty cheap here. So the in-betweens like Dell and HP are suffering. Last time you come to one of my bikini parties. PC end. You know, ironic that Dell got started as sort of the no-name IBM clone company, and now it's being sort of out-Dell'd by other companies as well as just facing laptop,

excuse me, netbook demand, iPad demand, and just weak demand in PCs. I'd love to believe that this was a better story, but Dell has not managed to compete in any of the slicker consumer devices. I know that they made one Windows phone, which was well-liked by the business reviewers, kind of a business-oriented one, but I don't think it has sold squat. I just don't see them competing in tablets or anywhere else. And that is where the sort of wild growth potential is. And that's a toss-up for Android, for, I think, cheaper Android tablets,

and then it's Apple's game to lose. On the flip side, shares of Hewlett-Packard fell after the company reduced its outlook for the year and warned of weaker results in the current quarter. Things are really pretty shaky over at HP, James. Yeah, the same sort of stuff applies with HP. As you know, to some extent, the weaker PC sales, the Japan earthquake they cited as the big thing. But HP is forecasting lower on the business front. And that, to me, is interesting because that's sort of where Dell is increasingly starting to put its chips.

So we'll see who's right. The thing to remember is that maybe nine months ago or sooner or more recently than that, we were saying exactly the opposite. HP was eating Dell's lunch. And one of the broader lessons to draw from this is that, you know, last week, people were looking at the Cisco earnings and trying to call these big companies bellwethers just by judging the entire climate of the industry based on one company's results. And you can't do that. Sometimes you can, but not all the time. And the other sort of bit of palace intrigue with HP was the fact that they moved up their earnings conference call by two days because an email that the CEO had sent internally got leaked out to the public. As an investor, is that as troubling, more troubling? That's the sort of thing where I just – It's a giant company.

People are going to leak. Yeah, but I don't know. That just strikes me as you don't have your own house in order. And if you don't do that, then how can you be managing your business well? I don't see a pattern of that. If there was a pattern, perhaps, a one-off type thing, it doesn't concern me too much. And finally, the big macro this week, guys, there are two stories that are getting a lot of attention, and I want to talk about them in the context of what they really mean for

investors. One, which was earlier in the week, the U.S. government officially hit the $14.3 trillion debt ceiling. Seth, how much does that matter to investors? It's a story we've certainly heard about a lot at the beginning of the week. We're going to continue to hear about it through the summer. Well, to judge by bond prices, it doesn't matter at all to investors. And investors pretty much believe that the clowns in Congress are using this to further their political aims.

The fact of the matter is this debt ceiling is crazy anyway because the members of Congress and the Senate, they've already voted to spend this money. So then to turn around and say we voted to spend it but we're not going to borrow what it takes to get the money, it makes absolutely no sense. And so both sides are kind of using it, posturing, they're trying to appeal to their bases. But when, you know, when the real deadline comes, they're going to have to lift the debt ceiling or we're going to be in some serious trouble. Ron? Yeah, I completely agree with that. We've raised the debt ceiling 74 times since 1962, 10 times since 2001. It's going to be raised again.

It's just a bunch of posturing. It's a waste of time. We, unfortunately for this country, have no choice. The alternatives to not raising the ceiling are pretty devastating. And so let's just get it done. And let's point out that other countries don't even have such a thing as a debt ceiling. The amount of debt that the country takes out is determined by the amount of spending that is passed in the legislative process.

We're one of the only ones, maybe the only one that I can think of, the only civilized country that does this twice. The other big story in terms of global finance is about Dominique Strauss-Kahn, the head of the IMF. He's been accused of sexual assault. he has stepped down from that position. Ron, a lot of hyperbole this week. Frankly, you hear some commentators out there saying, this is going to have a huge ripple effect in terms of global finance, in terms of the potential bailout for Greece. This could be the death

of the Euro. In your opinion, how much does it matter to investors who the head of the IMF even is? I don't think a lot. I've read some articles that says he's really been the glue that has helped to strike some deals. I don't really think that matters. As my colleague Tim Hanson mentioned earlier in the week, the IMF is a very bureaucratic organization filled with just that, bureaucrats. And who really is at the head, I don't see it as being a big deal. Coming up, there was a public outcry this week for a world-famous business icon to retire. I'm talking, of course, about Ronald McDonald. Details coming up. This is Motley Fool Money.

Welcome back to Motley Fool Money. Chris Hill here in the studio with Seth Jason, James Early, and Ron Gross. Guys, a lot of companies reporting earnings this week. Let's start with Limited Brands. First quarter earnings grew nearly 50%, and the company raised its guidance for the rest of the year. Limited Brands is the parent company of Victoria's Secret. Seth, this was your stock for mom, for Mother's Day. What did you think of the latest quarter? Still so creepy. hey they are doing things the old-fashioned way at limited brands they are selling lots of dirty underwear and a lot of lotion and soap for people to wear uh and use the those two bath and body

works and the uh victoria's secret are just continue to knock it out of the park the comp sales are amazing and that's how you drive profit increases like that in this business the rest of their the rest of their limited number of brands actually had a comp sales decline not so great but But they pretty much only need those two cash cows, and they keep going. Second quarter profits for Deere and company were up 65%, and the company predicted strong sales growth for the rest of its fiscal year. Ron Gross, you buying lots of farm equipment lately? What's going on? They're knocking it out of the park. Not as sexy as limited brands, for sure.

Definitely not. You've never seen the truckers have. As we've discussed on the show, actually, quite a bit, they're benefiting from higher crop prices around the world. world. Farmers are increasing their purchases of tractors and harvesting equipment, and the company is definitely the beneficiary of that. Margins were a little weak, actually. Stock actually went down slightly on this great news. One, because margins were a little weak. Two, because people wanted great, not just good. But, as are a lot of companies now, prices, their costs are higher from things like steel, and a lot of their raw material

costs are higher. And they had a product mix that kind of brought margins down a little bit less than expected, but the company's doing a fantastic job. Could you ever be a farmer, Ron? I could so not be a farmer. I can't picture you on a tractor, but I'm trying to. Such an outdoor guy. I prefer to be in a restaurant at all times. Take some overalls, no shirt maybe?

No, that's not me. Bad week for Staples. The office superstore reported weak earnings and cut its outlook for the year. James Early, shares dropped 15% on Wednesday. $2 billion worth of market cap just gone? What is happening? That's a lot of market cap. The industry has been bloated. I mean, do we really need one or two, actually three office supply superstores? I don't know. It's sort of like how a punch hurts worse when you're expecting it, though, versus when it's a surprise. So the actual results were not that bad. Revenues were actually up 2%. Margin strength just like a little

bit. The company did lower its full year forecast just slightly, but you wouldn't think that these things would merit like a 15%, 16% correction unless the market is sort of expecting the beginning of a landslide here so to go back to your punch analogy investors were expecting to get punched i think investors were because this is like this industry was just you know it was just bloated and we're talking a while ago uh do people really buy this much office staples at all anymore i remember there was a time when i used to go there for stuff and pretty much everything i needed like pens and little notepads and all that stuff like a smartphone and a laptop takes care of all of that and i wonder if that's not the case for a lot of other potential customers

And this is all commodity stuff. I mean, do I need to go there to handle the merchandise when I buy paperclips or folders? And I just order it on the Internet if I need that. So do you think this isn't just about Staples? Do you think we're moving to a world where places like Staples and Office Depot and those types of companies are just less relevant? The market seems to think so. And I mean, over time, yeah. Abercrombie & Fitch had a fierce first quarter. Net income was $25 million. That's compared to a loss a year ago. So, Seth, Abercrombie's, they're getting it done overseas, aren't they?

They are. Their overseas sales are shooting up. Their online sales are doing well. But they're also just putting a good same-store sales growth together in pretty much each one of their concepts. And, you know, even I caved. I said I would never shop there. But I went there the other day for, you know, the first baby thong for my 2-year-old. I just had to do it.

I'm calling social services. No, because that was the whole thing where they were—we talked about that before, where they were selling their padded push-up bikini bra for girls 8 to 14. It's very strange. And booty shorts for boys. I wonder if that kind of bad press doesn't help them, because this is a strange situation. I've been talking for a while on the radio show now about what I see as the bifurcation of consumer behavior in the U.S., and I hope I'm using that word correctly and don't sound like an illiterate. But what I mean is there are people spending money on the high end and at the low end. Abercrombie is one of the more expensive brands, and they seem to be doing well.

But oddly enough, a lot of the lower-priced teen retailers I follow are not doing very well right now. And so we may be in the odd situation where we're at a point in the economy perhaps where the people without money just aren't spending at all, and the people with money are wasting it at Abercrombie. You're listening to Motley Fool Money. Chris Hill, Seth Jason, James Early, and Ron Gross as we hit some of the big business headlines of the week. Guys, this week, more than 550 health professionals and organizations signed an open letter to McDonald's asking the company to stop marketing junk food to kids and to retire Ronald McDonald. In response, the CEO defended the company's right to advertise to children

and said that parents are responsible for deciding what to feed their kids. Ron? Lighten up, that's what I say. Retire Ronald McDonald? Come on. I have kids. I have a 10-year-old and a 13-year-old. We haven't eaten at McDonald's in years.

You don't have to eat there if you don't want to. Ronald McDonald is an American icon. Leave the poor guy alone. I agree. Get rid of Ronald, but not because of the food he's selling. Get rid of him because he's the only guy out there with hair worse than Donald Trump. But otherwise, really, McDonald's, we go to McDonald's when we're on the road because it's fairly reliable. And you can get healthy food at McDonald's.

I don't think people have a lot to complain about. You can eat the fatty stuff or you can eat some of the healthy choices. Like the one salad they offer? No, they have a bunch of salads. Because they have a bunch of different stuff that is far less fat and a lot less sodium. I actually, I mean, I'm actually surprised that more people don't eat it when I'm there. But it is there. In other McDonald's news this week, guys, Don Gorski of Wisconsin hit a milestone by eating his 25,000th Big Mac.

McDonald's honored the 57-year-old Gorski who says he plans on eating Big Macs until he dies, which, you know. Could be soon if he keeps eating Big Macs. If you had to take a page out of the Don Gorski diet playbook and you're eating 25,000 of something, and it's got to be a prepared item from a restaurant, Ron, what are you going with? I've mentioned my love of this before on the show. I love Chick-fil-A sandwiches. You thought I was going to say banana cream pie. No, I thought you were going to say Cinnabon because I know you're a Cinnabon fan.

No, no. I think I could eat 25,000 Chick-fil-A sandwiches over 39 years, no problem. James, I know this is going to be tough for you. Yeah, I'm a healthy guy. I do like bean burritos, but I'm married, so I might say I like omelets also. All right. Any place in particular? Silver Diner.

It's a local chain near here. All right. Seth? I think I've already eaten 25,000 Jimmy John's turkey sandwiches because it's about the only choice we have around here for lunch. Chipotle, please open a store here. All right. Seth Jason, James Early, Ron Gross.

Guys, we'll see you later in the show. Girl, you deserve the best in life. So tonight I'm going to treat you right. Girl, I hope you have an appetite. Because we're going to McDonald's, love. You deserve the best in life. Coming up, a conversation on why the rat race is better for you than you might think, and how you can learn a lot from a dead CEO. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Do you think that getting out of the rat race is the key to happiness? Our guest this week says you might want to think again. Todd Buchholz is a former White House Director of Economic Policy. He's also managed a $15 billion hedge fund and been an economics professor at Harvard.

He's the author of numerous books, and his latest is Rush, Why You Need and Love the Rat Race. Todd, welcome to Motley Fool Money. Oh, good to be with you. So why do we need the rat race? Because if we didn't have the rat race, we'd be even more stressed, more miserable, and we'd have a lower standard of living. So all in all, it's not a bad deal to live in the rat race. But don't we need to, you know, kick back and relax now and then,

and, you know, maybe take a page out of Europe's handbook and, you know, take an entire month off in the summer? I'd take a page out of Europe's handbook. Look, let me tell you, some fascinating studies have been done recently comparing 60-somethings across Europe and North America. Certain countries, for instance, France and Austria, people retire early because there are these vast social security schemes. And in the U.S. and Denmark and some other countries, people tend to work well into their 60s. Well, the researchers gave simple mental ability tests to these 60-somethings. They would name ten objects, an apple, a chair, a croissant.

And then they'd ask the participants to name those items, to repeat back. Well, what do you know? In those countries where people step out of the rat race and retire early, they lose the ability to perform those simple tasks. The French and Austrians think they'll spend their retirement years doing crossword puzzles at cafes, and they can't even find a cafe on the map anymore. You're listening to Motley Fool Money. Our guest is Todd Buchholz, author of the new book, Rush, Why You Need and Love the Rat Race.

All right, let me spot you up with a couple of the ideas in the book and have you elaborate on them. One of them is that competition within companies is actually great for morale. Look, no one would want to work for Alec Baldwin in David Mamet's movie, Glen Gary, Glen Ross. Remember Alec Baldwin's fans? Exactly. with glass balls, and what did he say? First prize, a Cadillac. Second prize, steak knives.

Third prize, you're fired. Third prize is you're fired. Yeah. Well, I mean, that's berating, that's emasculating, that's humiliating. That's not the kind of competition that can be constructive. But you do need competition within a group. In Rush, I talk about General Motors. General Motors was a great company once upon a time

when its individual divisions competed against each other. When the Pontiac dealer wanted to coax you over from the Oldsmobile lot, when the cars were distinctive. But what happened? During the 1970s, GM started falling apart. Why? Because the division stopped competing. Cadillac owners would open the hoods of their car and discover what? Oldsmobile engines, Pontiac engines inside.

And GM became more homogenized, and it lost the fighting spirit. So you need that. You need competition within an organization. And one of the other ideas is, I love this, never let the ninth place team take home a trophy. Yes, you know, I have three daughters, and when my middle daughter, Catherine, was in kindergarten, she was playing soccer in the local soccer league. And I'm not one of those fiendish, fanatical parents chasing my kids around to make sure they're the best on the team. And Catherine was a perfectly competent, fun player. She enjoyed the game. Well, one day my mother, Catherine's grandmother, came to the game and asked Catherine,

Catherine, what's the score? And little Catherine looks up and says, Grandma, we're not allowed to keep score. But it's three to two. You can't fool the kids. You can discourage them. You can make them feel that winning and losing doesn't matter. But, you know, how does that set them up for life? You're listening to Motley Fool Money, talking with Todd Buchholz.

His new book is Rush, Why You Need and Love the Rat Race. Todd, one of the things we do here at The Motley Fool is we study companies, we study businesses and business leaders. I want to ask you about another book that you've written, which is entitled New Ideas from Dead CEOs. You profile a number of CEOs. I want to spot you off with a couple of names and sort of get your take on a business lesson that we can take away from that CEO. And I want to start with Sam Walton. Ah, yes. Well, you know, Sam Walton once was taken away by security.

From where? From the Price Club, which was the forerunner of Costco. because sam walton obviously he was a fierce competitor but he was fiercely interested in learning everything he could about the business so he would go into the price club and he would start interviewing the stock boy and say gee you know how do you decide how high to pile the shirts or the laundry detergent well after a while sol price the head of the price club later became a friend of sam walton so what the heck is this guy doing in my standard turned out you know sam walton was just ferociously interested uh... in doing his business ever better and he would go

anywhere and had this this uh... conviction that he could learn from anyone that he could learn from the lowly stock boy he hang out in the back the loading docks to interview the truck drivers you know he was less interested in interviewing the the harvard mba and more interested in talking to the guy who got his hands dirty to figure out how he could have a leaner inventory system. What about Estee Lauder? Brilliant woman, Estee Lauder. Look, Estee Lauder was a bit of a snob. She wanted to sell to the wealthy and the ultra-wealthy. She acted as if she herself were born of a patrician, noble Austrian lineage. In fact, the closest she came to being royalty was she was born in the new york borough of queens you know that that that's how royal she was

um but she knew how to target her audience uh and she fought to get into sax fifth avenue and finally when the managers relented and said all right you've been so uh you've been such a pest we will give you a little booth here and they said here's where your booth will be and she said no no no i don't want it over there i want it there and they said what do you mean she said, I've been walking into your store, stalking your customers, and marking down exactly which way they turn when they walk through those front doors, and I know they turn right, and that's where I need to be. So, you know, she was brilliant, and she was careful, and she was original.

One more CEO I want to ask you about, and that's Ray Kroc. Yes, Ray Kroc. Ray Kroc was not the first guy to come up with the idea of a national franchise for food. He wasn't the first guy to come up with the idea of hamburgers nationwide. He wasn't the first guy to come up with the idea of McDonald's. He bought the idea from the McDonald's brothers. And at that point, Ray Kroc was well into his 50s. But Ray Kroc succeeded where others didn't.

And it had to do with how he treated his partners. um competitors at the time um burger chef for instance which i believe was owned by general equipment they would bring in a new franchisee and they'd say all right first you're going to buy our ovens that'll cost you this now you're going to buy the the uniforms now the napkins now the mustard now the bread rolls and so before you knew it the franchisee was so deep into debt he'd never make back the money well ray crock turned this model on his head ray crock said literally he said you will become a millionaire before i become a millionaire and ray kroc sold the products or worked in partnerships so that these these folks were not indebted to him in

order to buy the ingredients ray kroc sold it at cost or accessed it for them at cost this by the way was a lesson that was lost on crispy cream donuts more recently i mean your your listeners are crispy cream donut fabulous ipo and then they fell apart like somebody stomped on a jelly donut. Why? It was because they lost the lesson of Ray Kroc. It was about how the central office treated the franchisees. You're listening to Motley Fool Money, talking with Todd Buchholz, author of the new book, Rush, Why You Need and Love the Rat Race. Before we wrap up, Todd, with a round of buy, sell, or hold, I want to ask you about one other business venture of yours, and that is you're the co-producer of one of the biggest

hits on Broadway. That's Jersey Boys. This is a big Tony Award winning show. How did you get involved with that? And, you know, without going into too much detail, because I don't want to delve into your pocketbook, but how profitable is a hit Broadway show? Well, that Broadway show is really phenomenal. I mean, from a business point of view, it's a relatively small cast and the scenery is not terribly expensive. You compare that to other amazingly successful shows, for instance, Wicked, you know, which is a fantastically successful show, but the running costs obviously are much more significant. I got involved because I grew up as a theater buff, and I've written one novel among my books, but I moved from

Washington, D.C. to San Diego some years ago. My wife had been the general counsel at the Kennedy Center for the Performing Arts, and then she took a job managing La Jolla Playhouse, which incubated that show. So the Broadway hit, now worldwide hit, started in La Jolla, California. So I got involved early on as an angel investor, and my wife, of course, was the manager of the theater that originally produced it. And we couldn't be prouder or more excited about how successful it's been. Has that been your best investment?

i think in terms of rate of return it probably has been the best investment i can think of off hand and by the way i refer to it in rush because uh in that in that show towards the end frankie valley uh says that he says they ask you what was the high point the hall of fame selling all those records pulling sherry out of the hat uh that's the song sherry it was all great he said, but what was the greatest? It was the four guys under a street lamp when it was all still ahead of us. That was the sweetest moment. And likewise, my point in Rush is that it is not the final accomplishment. You know, it's not the plaque you get or the big retirement IRA or 401k you've amassed. What gives you the excitement and the pleasure is the anticipation. And that's

what our brains are involved to do, to take on new risks, to take on new projects. And that's How, amid this complicated thing called human life, we can grab some slivers of happiness. All right, time to wrap up with a round of Buy, Sell, or Hold. Let's start with Buy, Sell, or Hold, the leadership style of Steve Jobs. Buy. You're a fan. Of course I'm a fan. Steve Jobs has remade my life. I never kept my calendar on my phone when I had some of his competitors.

Look, think about this. Steve Jobs in competition. Obviously, he's a very competitive kind of guy. But imagine when Steve Jobs is deciding which features should be on the next iPad, what kind of video or what kind of new audio or what sort of other functions it should have. He has teams of people reporting to him who are vying, who are battling to get their idea and their function into that iPad. that. So he's created a system so successful, not simply because of his judgment in what might work best or be most popular or most slick, but his judgment in terms of how to have teams of people who have a competitive spark in them. All right, this has had all sorts of problems,

and the early reviews have not been kind. Buy, sell, or hold the future of Spider-Man the musical. Spider-Man the musical is an awfully expensive venture. And so even if it's successful, you have to ask how many theaters would be able to house Spider-Man. So I think Bono should be donning ever darker glasses as he considers the future of that production. And finally, buy, sell, or hold the movie version of Jersey Boys? Oh, you got to buy your tickets now. You know, the original screenwriting team, or the team, Rick Ellis and Marshall Brickman,

who wrote the script are working on the screenplay. Look, why was Jersey Boys so successful when a musical about the Beach Boys was not, and there was also another Beatles musical that fell? Why did Jersey Boys triumph? It wasn't simply because Frankie Valli wrote great music, because the Beach Boys wrote wonderful, wonderful music. It's that there was a great story, and the story was told brilliantly.

Marshall Brickman, in fact, had been Woody Allen's co-writer for Annie Hall in Manhattan. So it's not simply about the music. It's also about telling a story. Because you know what? For human beings, there are a few things more alluring that if someone steps to you and says, let me tell you a story, and then our ears perk up and we want to hear,

and that show delivered. Do you have a star in mind already? No, but every time I see a sort of short, dark-haired guy at Starbucks, I think, you know, instead of a barista, maybe you need to be Frankie Valli. I hope you're going to get a cameo. I mean, something, a walk-on, like an Albert Hitchcock, Just sort of Todd Buchholz just walking by the camera kind of thing?

You know what? I grew up on the Jersey Shore, and I think that's as close as I'll be getting to being in the movie. The new book is Rush, Why You Need and Love the Rat Race. Todd, thanks so much for being here. My pleasure. Thank you. Sherry, Sherry baby, Sherry, Sherry baby, Sherry, Sherry baby. Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money.

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill, and back in the studio with me, our trio of senior analysts, Seth Jason, James Early, and Ron Gross. Guys, it is that time once again, time to talk about the stocks that are on our radar. Ron, I will start with you, and I will just preface this by saying we will be bringing in our man, Steve Broido, from the other side of the glass.

A little twist. Just a question, because this isn't just about you spouting your stock ideas. You sure? Yeah. Alright, I'll hit you with a little company called Microsoft, ticker symbol MSFT, and despite the questionable $8.5 billion acquisition of Skype recently ... You're going to love it. The company is just too profitable and too cheap to pass up.

Ten times earnings, less than ten times earnings, less than six times cash flow. It's a value investment at this point. We owned it in MDP. I own it personally, and I think it's too good to pass. You're going to get so much in dividends out of them over the years. It's going to be worth it just for that. Agreed. James Early?

Chris, my stock on my radar is General Mills. The ticker is GIS. As we all know, this makes wretched sugar-loaded breakfast cereals. I think you mean delicious sugar-loaded cereals. They tried unsuccessfully to get people to call them the Big G. I remember that. You can't make your own nickname. You don't get to make your own nickname.

We've explained it. But what's interesting is they are buying more than half of Yoplait. And as we talked about on the Market Foolery podcast earlier this week, this gives them a huge entree into foreign markets across the globe, which has really been what they've been lacking. So it's not a buy endorsement per se, but I'm looking into it. And as we did discuss earlier in the week, the global sales for Yoplait is $65 billion. Wow. Compared to 15 billion sales for General Mills. And if you don't think that people in other countries like overly sweet breakfast food, you haven't paid enough attention to Nutella.

Exactly. All right, Seth Jason, your stock this week. Did you ever get sick of listening to these geezers pitch these value stocks next to me? I was going to say Ron. I dare you. I dare. I dare. Listen, I'm going with the capitulation momentum pick of the week, baby.

LinkedIn? Just buy some LinkedIn. Just give up and buy some LinkedIn, and it's just going to keep going up. Maybe not right away, but probably right away. There, my friends, is the sign of the market top. No, I actually think it's conceivable it could be worth a lot more down the road. In the meantime, I think it's just so exciting to people that it'll probably continue to drift upwards. Everyone said the same bad things about Google back in the day, and look where it is now.

You own it, for crying out loud, an MDP. We do. So you're serious. This isn't your voice dripping with sarcasm. No. Wow. I'm going out on a limb here. Steve Broido, one question for the group. One question for the group.

Which company will benefit the most from technological advancements over the next decade? Of these? Yes, of these three. Wow. I think it has to be Microsoft because of the different areas in operating systems, networking, video conferencing, IMs, emails. I think so too, actually. That's probably true. I don't think LinkedIn needs any technological advances to get better.

But with a company like General Mills, for example, doesn't, you know, when technology improves, doesn't distribution become better, delivery, all sorts of things? It does, it does. Their costs go down, yeah, and that can make a big difference because they've got such an efficient ship already. Just a few margin points can make a difference, but Microsoft is the bigger fish there. Steve, do you have a go-to favorite cereal? We've been eating a lot of Golden Grahams, which is— Really? Wow.

Good stuff, yeah. Steve, are you old enough that you actually remember when cereals had the word sugar in them, like honey smacks were sugar smacks? Because at some point, the cereal companies switched. I don't think you're old enough to remember. I may not be. I mean, there was always a lot of sugar, and I believe there remains to be a tremendous amount of sugar. That's why it's so glorious. They just took the word out, though.

Yeah. They call them sugar, but they're gluten-free. All the sugar you can eat, but no gluten, right? Exactly. My fructose corn syrup smacks. But, Ron, you remember sugar corn pops. Oh, do I. And now they're just corn pops.

I actually can't stomach the sugared cereals that make me- Really? Paul Newman has a new line of cereal called Just Sweet Enough, and you know what? It actually is Just Sweet Enough. Yeah, it's pretty good. Is he inventing cereal from beyond the grave now? Maybe I should have said the Paul Newman Company. Yeah, I was going to say-

Which gives its profits to charity, by the way. Exactly. We're not thinking Paul actually is doing that from beyond the grave. Okay, Seth Jason, James Hurley, Ron Gross. Guys, thanks for being here. Thank you, Chris. Thanks to our special guest this week, Todd Buchholz. His new book is Rush, Why You Need and Love the Rat Race.

For commentary and analysis each day throughout the week, check out The Motley Fool's website, fool.com. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening, and we'll see you next week.