Motley Fool Hidden Gems Investing - Motley Fool Money: 05.23.2014

Episode Date: May 23, 2014

AT&T announces plans to buy DirecTV.  AstraZeneca rebuffs Pfizer.  And Urban Outfitters hits a 52-week low.  Our analysts discuss those stories and share three stocks on their radar.  Plus, corporate governance expert and film critic Nell Minow talks CEO pay and summer movies.   Learn more about your ad choices. Visit megaphone.fm/adchoices

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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. Joining me in studio this week for Motley Fool One, Jason Moser. For Motley Fool Income Investor, James Early.

and for Million Dollar Portfolio, Ron Gross. Good to see you, gents. Ron Gross. How you doing, Chris? It is our Memorial Day weekend special. We're taping a little early this week, but we've got headlines. We will dip into the Fool mailbag, and we'll talk CEO pay and get a summer movie preview from Nell Minow. And as always, of course, we will give you an inside look at the stocks on our radar. But we begin with the big deal of the week. AT&T is buying DirecTV for $49 billion. If approved by regulators, it would make AT&T the second-largest pay TV service in America. Help me out, Ron, because the buyout price for DirecTV was $95 a share,

but the stock is trading in the mid-to-low 80s. Why is this stock not being bid up? That says to me that maybe people think this ain't going to happen. There's two things going on. One, there's some real concern about competitive issues, antitrust issues. There are definitely some public interest groups that will lobby to not have this go through, the same as they're doing with Comcast's Time Warner. But the bigger thing, the more interesting thing, I think, is all about the NFL. And AT&T really has the right to pull out of this deal if the DirecTV NFL ticket deal doesn't get renewed. And that's a big part of this transaction, and I think investors are waiting and seeing

will happen there. I think it's likely that that gets renewed. I think they've used words like highly probable. But it is an interesting provision in the deal that it can go away if NFL goes away. Getting into statistics here, it's highly probable. Exactly. Well, Jason, we were talking earlier. I don't know anyone who has DirecTV that didn't get it for the sole purpose of having the NFL Sunday ticket package. If that's the case, why isn't AT&T just, I don't know, why aren't they, because they do have their own video service, why aren't they just throwing all this money at the NFL?

Well, I mean, I think this is probably really the cherry on top, right? But it's just a really, really big cherry. I mean, it's amazing the power that the NFL holds. But, you know, we had talked about this, I guess, a couple of weeks ago. We had Bill Barker in here. We're just talking about sort of the relationship that we're getting with some of these companies, how they're bringing more customers into their environment and providing more services. I think Verizon was the example we used with the video and the high-speed internet and your wireless. And so AT&T, I think, sees an opportunity here, really. They know that wireless is obviously the wave of the future.

Content, obviously, is a big part of that. And the NFL, I mean, wow, after these draft ratings this year, this is a year-long league now, really. So it's going to be a tremendous moneymaker. No wonder it's really pulling the levers here. What amazing leverage NFL has going into these negotiations. If you knew that you kind of were the linchpin in a $49 billion, really a $67 billion deal, if you count the debt, that's a great place to be. I'll tell you what this does, though. I mean, this really gives the players, I think, a little bit more power in their negotiations going forward.

Because, you know, that's always sort of been the question there is sort of that collective bargaining side of that equation. This content really is the king there. I think the players are going to have a little bit more say-so here. Ron, if you're Comcast, I have to feel that you're pretty excited about the fact that the spotlight has been taken off the deal with Time Warner. And if you're Comcast, you get to say, hey, look, this is a competitive space. Look at the deal that AT&T is trying to pull off. Probably, yes. These two companies will be so powerful as No. 1 and No. 2 that it probably isn't the best thing for the consumer

from a pricing perspective, because they will have so much power, and that's obviously the argument that the public interest groups will make. So, yes, it's nice to have the spotlight off, but it's not going away. For the third time this year, Pfizer made a bid to buy British drug maker AstraZeneca, and for the third time, AstraZeneca rejected the deal. James, Pfizer just kept upping the offer. The latest one was somewhere in the neighborhood of just under $120 billion. How How much more is AstraZeneca looking to get out of this? You know, Chris, the first thing I thought of was actually a hillbilly T-shirt that I saw once.

It's something like, in search of woman, you know, must know how to cook, must have great personality, must have boat and motor. Please send picture of boat and motor. I mean, AstraZeneca is offended that Pfizer wants it for its tax savings and not for its true personality. Basically, what they want to do is buy this company and then merge into it in this U.K. tax structure. But they don't really care that much about AstraZeneca. It's like this afterthought. They're not really pushing for the hostile takeover. They're just using it for the tax savings.

So AstraZeneca is offended by this, and they're saying, oh, you know, you're significantly undervaluing our shares with this offer. That's a load of crap because the offers for 55 pounds a share. Can we say that? The company was saying they're trading at 40 pounds before this offer. If it were a load of crap, AstraZeneca would not have been – might have suspended its buyback program. In other words, if they really thought their shares were so cheap, they would be buying them back. How much further can AstraZeneca executives go with this? Because when you look at the rejection of this latest offer, the stock sold off about 12% in a single day.

Clearly, shareholders weren't happy about that. Somebody wants a takeover. Yeah, yeah. It's a good premium. It is a really good premium. We've got more retail earnings and more evidence that it's tough out there for retailers. Home Depot's first quarter profits came in lower than expected. Urban Outfitters hit a 52-week low this week after first quarter same-store sales fell 12% at their namesake stores. And shares of Staples down this week, which makes sense, Jason, because pretty much everything about their first quarter was down. Their revenue, their same-store sales, everything. Well, nothing says reliability like teen retail, right?

I mean, it's no wonder that Urban Outfitters is just lighting the world on fire. I mean, I think this is a space that we've all been very critical of, and it's a risk that really is out there. Kids get to an age, whether it's 7, 9, or 10, where brands just really start to matter more. And so, these teen retailers are just at a tremendous, they have this tremendous fashion risk. And that's why I feel like if you're an investor and you want to look at these types of companies, you really need to consider these teen retailers more of maybe a collective basket where you can mitigate that risk a little bit. Home Depot, I thought, was actually pretty interesting. I think this is a great example of really what the weather did. We've seen the

weather has been called out in virtually every call this quarter. And Home Depot was no exception. They did refer to May sales as robust. I think that makes a lot of sense. Genius. The stock literally popped when the word robust was used. It pulled a 180. I mean, robust was the word of the day. And so, I think that what you see here with Home Depot is, it's going to be a little bit of pent-up demand as the weather improves, people get out there. Whether you're renting or buying, there's always a home project to be done. And I tell you, Home Depot is an impressive company. I mean, they've done a great job over the past five years buying back share.

Share count's down 20%. They've paid over $10 billion in dividends. And their scale gives them just an inherent competitive advantage over Lowe's, which helps save costs. It keeps a higher margin line, makes them a more profitable business, and overall just a better-looking investment. So, I see really no reason for this company to not have a good summer. You like that better than Urban Outfitters? Do I like Home Depot? Oh, yeah, absolutely.

I'm always the oldest guy in the store whenever I go into Urban Outfitters. I don't know about you guys. Why are you in there? Why are you going to Urban Outfitters? I've got two daughters, and I've never been to Urban Outfitters. The amazing thing to me about the Urban Outfitters results, the namesake stores were terrible. They also own Anthropologie. Same-store sales up 8%.

Free People, same-store sales up 25%. They're clearly executing well, just not in their main stores. But that's why a lot of those retailers, it's important for them to have more than just one brand. I mean, you've seen the same thing with Gap. They have Athleta, they have Banana Republic, they have Gap, they have Old Navy. And, I mean, Urban Outfitters, to a lesser degree. But, yeah, I mean, you've got to really be careful with your Aeropostales, I think, which really are just, they rely on that one name, don't they, Ron? Aeromass, yeah.

Wow, you're really optimistic about Aeropostales. Aeromass. They have PS as well. But things are not going well over at Aeropostale. PS, they're having trouble. Yeah. Coming up, we'll answer your questions as we dip into the Fool mailbag. You're listening to Motley Fool Money.

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against. So, don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. I'm Chris Hill, joined by Jason Moser, James Early, and Ron Gross. GoPro, the action camera maker, has filed to go public and is looking to raise upwards of $100 million in its IPO. And, Jason, according to the S-1 filing, last year they took in almost a billion in revenue, profit of $60 million. Hey, they were profitable, right?

I mean, a billion dollars, they were profitable. I mean, this IPO has just every sign that it should flop, right? I'm not blaming them for going public. Like, this is a tremendous environment for companies to raise money. But I'm just wondering, first and foremost, how interested are you in this IPO? Well, I mean, I'm giving them credit for being profitable, right? We had a lot of social networks and, you know, wannabes that have gone public this year. They have, you know, a far cry from profitability.

I mean, at least GoPro is profitable. Who was, what was the last GoPro video you watched of somebody else? I don't know, man. I got to figure maybe there was a tweet out there where I caught, like, a six-second something. We were talking about this a minute ago. Yeah, there was the space jump the guy did. I feel like we're talking about Memorial Day. James is talking about going rock climbing.

I feel like we could probably load you up with a GoPro. Even if I did the most exciting rock climbing on GoPro, it's just not that cool compared to what else is out there. I don't know. I mean, hear me out here because, I mean, this is a company that in their S1, they actually say this. They say, we believe GoPro is well positioned to become the first media company whose content is captured exclusively using its own hardware. So they don't even view themselves as a device maker. I mean, I think they're looking further down the line and seeing themselves as more than a device maker. And maybe there's something there.

I mean, full of Palooza, right? We had the Oculus station there where we could see what that was all about. I mean, who knows what sort of implications there could be if there was a GoPro slash Oculus sort of relationship there where you're able to experience something that you might not be able to experience otherwise from the first person perspective. I want to know if insiders are selling into this IPO or not. That's what I want to know. The only GoPro that I watch, and I was starting to say this before, is the European bodysuit guys who have these roller suits. It's like they're a human skateboard, and they go down these windy mountain roads like 100 miles an hour with a GoPro.

I'm in. To me, that's entertainment. I sometimes think me and you live on different planets. I'm entertained by that. I'm not entertained by most GoPro. Worth noting that Best Buy last year was responsible for 17% of GoPro's sales. I'm just saying. What could go wrong there?

I'm just saying. So, factor that in if you're looking at the IPO. Just keep your eyes on it, folks. It's a little early, but let's go behind the other side of the glass, to our man, Steve Brodo, who knows a little something about video. Steve, you also know something about investing. The GoPro IPO, is that of interest to you, as someone who knows his way around a video camera? We've been able to shoot with one in the office. They're cool. They're neat cameras.

The files that they create can be massive. That's one thing I don't think people think about. These are not easily emailable video files. And secondly, unless something really extraordinary happens, a lot of that footage, I think, just probably sits on someone's desktop somewhere. A lot of the footage is James Early going rock climbing. With nothing interesting happening. I won. I succeeded. I clunked, you know, made it to the top. What if I link up a GoPro on my, you know, golf club this weekend

and kind of, you can see the perspective of the club. It'd be interesting for about 10 seconds, then I'm moving on. You can always drop us an email. Radioatfool.com is our email address. Got an email from Dr. Jack Trotter in Kimberley, Idaho, who writes, If you were trying to get your kids interested in investing and match their saved money from first jobs, birthdays, holidays, etc., what few shares of what companies, say $500 to $1,000 worth, would you consider? Since my home owns probably nine Apple products and my son buys iTunes cards with birthday money,

we own two shares each for the two kids of Apple. It's a great question and a topic that we touch on every now and then, the ability to get your kids interested in investing. It's not easy, Ron, but I'm curious whether it's stock ideas or just tips on getting your kids interested in investing. What do you think? Well, first, I think it's a great idea, the matching idea. And it even encourages them to save when they're older or earn money, and then you match that. Great idea. We always say it's a great idea also to invest in something you're interested in, because it makes it much more enjoyable. So, for children, sure, Apple's a great idea. The first stock I ever

bought my children was Disney. I think it's great for both the Disney content, as well as the ESPN ownership, if his son is interested in sports. So, that's definitely one place I would look. James? My son is now all about watching these brain surgeries on YouTube. So, I would try to play of that, but unfortunately, there's not really a pure play brain surgery company. O' GoPro! That sounds like a GoPro right there, right? Maybe an oil company. Everybody needs oil, right? You can't get away from it. I

get the idea of a toy company or something that he likes to get into, but it's also nice to see that you're exploiting the needs of other people. That's a bad word to use, but there's societal needs that you have to play to when you're an investor, and oil does that very well. Jason? I like what Ron was saying there, something that you're interested in. I think something that they can understand. I mean, my girls are seven and nine. They own six socks now.

They own an Apple, Disney, Under Armour, Nike. So I think things that they just encounter on an everyday basis, if they can just get a basic grasp of how the company makes its money, I think that really, if they can just master those few little things there, how does it make money? Do they understand it? Are they interested in it? I think you've got a recipe for something.

Fossil fuels. Altria? Anybody? Altria? No, but I mean, to Jason's point, I mean, you think about what is the classic business for a kid to start, the lemonade stand, being able to teach your kid, this is how the money works. The quicker they can grasp that, I think the better they're going to do. Also got a question from Zach Lubarsky in Seattle.

He writes, if you could only invest in companies whose headquarters are in one city, which city would you choose? I would choose Seattle. Yes, I'm biased, but we have Boeing, Amazon, Microsoft, Zillow, and Costco. What about you guys? Interesting way to think about it. He threw out a bunch of companies, but just if you're thinking like maybe three companies, Ron, is there a city that you would gravitate towards? What kind of a New Yorker would I be if I didn't say New York, New York? What kind indeed? Which is home to 45 of the Forbes 500, the Fortune 500, excuse me. So whether you're

looking at Goldman Sachs or J.P. Morgan or Citigroup or Hess or Bristol-Myers, New York City is where you want to be. Really? You're just going to go all big banks on me? You're just going to say... I said Hess. I said Bristol-Myers. James, what about you? I'm not the risk taker that Ron is. I'm going with Houston, which is the second biggest home to Fortune 500 companies behind New York. And these are the more stable, steady, dividend-paying companies that I know and love in my income investor newsletter. Companies like Spectra Energy, Marathon Oil, Apache, Cisco, ConocoPhillips, Enterprise Products Partners. These are all the nice, stable bread-and-butter companies that serve me well.

Is your appearance on Motley Fool Money this week brought to us by the oil industry? Yeah, yeah. Jason Moser? You know, I think I'll go back home for a little bit here. Atlanta, you know, you have Home Depot, UPS, Coca-Cola, and you can throw a little Carter's Baby Clothes in there for good measure, a little growth opportunity there. And the nice thing there is that with Carter's, you don't run the fashion risk there,

because the kids aren't, they're not the ones pulling the trigger. The parents are the ones buying the clothes. Is it publicly traded? Yeah. See, in my home state of Maine, not a lot of publicly traded companies. We've got the toothpaste, Tom's of Maine, which is now part of some conglomerate, Colgate, or, yeah, I think it's Colgate, Palmolive. But two companies that are perennially on my wish list of private companies

that I would very quickly buy shares of if they went public. Ella Bean, and the specialty food company Stonewall Kitchen. Steve Broido, is there a particular city? It doesn't have to be in America. It can be anywhere around this great big world of ours. Any city that you would gravitate towards? I would think Palo Alto would be a pretty good place. A lot of big companies out of there, right?

Any in particular you want to bet on? I've heard of a few. I just like the idea that you're just going to bet it all on Cupertino. You're just going to say, I'm all in on Apple. I don't even know. Are there other public companies in Cupertino? Palo Alto is Google, right? We've got LinkedIn there. We've got a whole bunch. Palo Alto Network is actually in Palo Alto.

Pied Piper, I think, for anyone watching Silicon Valley. Drop us an email. Radio at Fool.com is our email address. Radio at Fool.com. Let us know what city you would be doubling down on. And again, if you have ideas on investing, getting your kids investing, companies for your kids to invest in, drop us an email. Radio at Fool.com. Jason Moser, James Early, Ron Gross. Guys, we'll see you a little bit later in the show. Motley Fool Money comes to you every week on radio stations across America, around the world on the American Forces Radio Network, and of course, online at iTunes, Stitcher, TuneIn, and all your spoken word platforms. But if you're looking for us during the week, good news,

you can check out our daily podcast, Market Foolery. It's our take on the business and investing news of the day. That's market foolery. So check it out. Memorial Day means the summer movie season has officially arrived, which means it's time for us to check in with our most frequent guest. Nell Minow is next. Don't go anywhere. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. The summer movie season officially kicks off this weekend. We've also got some high-profile companies dealing with CEO pay issues. So, of course, we turn to Nell Minow. She's a corporate governance expert with Governance Metrics International. She's also the film critic known as the movie mom.

Thanks for being here, Nell. I'm always happy to be on the show. Let's start with Chipotle. Chipotle investors voted overwhelmingly against the company's executive compensation plans. It's the highest vote against any say on pay measure this year, and it is non-binding. And yet the reaction from the company seemed to be, we are taking this very seriously. First, were you surprised by the vote? I was a little surprised by the vote. That's a big jump from last year when they got, I think, a 27% vote against the pay plan. They've gone to about 75% this year. That's a pretty powerful statement. Now, the company did not get the message last year, which was not wise on their part. And I hope that they do more than, you know,

issue a statement. I hope that they sit down with the shareholders and find out what they can do to do better. Is there a blueprint for companies dealing with this type of thing? Because on the one hand, as you said, you'll kind of have to respect that kind of a vote when three out of four investors are shooting down your plan. On the other hand, there may be some people who just are against any kind of significant pay whatsoever, regardless of what... Oh, no, that's crazy. You're completely wrong. If that were true, we would be seeing a lot more over 50 percent votes against. It's still a tiny fraction of a percent that get any kind of a significant vote against the pay plan. So shareholders are perfectly happy to vote in

favor of excessive plans. It's just the ones that are completely out of control that they vote no on. Are you encouraged by what happened, though? I'll be encouraged when I see how Chipotle responds. Now I know why they don't want guns in Chipotle. Yeah. Let's move over to Target. Greg Steinhoffel, now the former CEO of Target, he's not going away empty-handed, though. He's going to get about $16 million in severance. That's actually lower than when he initially stepped down from the job, and the early reports were he could get upwards of $50 to $55 million in severance. That's still a pretty nice walking-away package for someone who didn't really do that well

in his six years in the corner office, first, should anyone be encouraged by the fact that the severance package is lower than originally thought? Sure. I think that that is a very encouraging step, a very encouraging message. But I hope what the board takes away from that is that, and all boards, is that you should not write contracts with your CEOs saying that there's no such thing as termination for cause. It makes it a lot harder to negotiate these severance packages when things go south. And so, you know, I've read through hundreds of CEO contracts and almost invariably they say that termination for cause means basically hand in the cookie jar and sometimes not even then. So, you know, in any other job that you have, if you do a bad job or if

I do a bad job, we get terminated for cause. And that's pretty straightforward. But for some reason, they don't have that for CEOs. Do you think that when we wrap up 2014, Greg Steinhoffel will get some votes for worst CEO of the year, even though he was only CEO for four months of 2014? Sure. I mean, it was a pretty... He may get some votes for the century. Wow, you think he was that bad? I mean, the data breach was bad. The attempts to expand the business into Canada were pretty ham-handed. Yeah, and I think that that second category did not get enough credit when people talked about why he was thrown out. The data breach was bad. The way they handled it was bad. You know, mistakes happen. It's the way you handle

it that you get evaluated on. I didn't think they handled it at all well, and I don't think that they were clear with the customers about what to expect or about the remedial actions they were taking. As someone else who has been outspoken about excessive compensation for executives is Warren Buffett. And even though he owns 9% of Coca-Cola, he recently abstained from voting on a plan that many had been critical of, including him. Now, he called this plan excessive. What was your reaction first? Because like a lot of people here at The Motley Fool, I know you are generally a big fan of Warren Buffett's. What was your reaction when you saw that he abstained from voting? I am a big fan of Warren Buffett's, and I should also say I'm a

shareholder in Berkshire. So take that into account. When I tell you that, I thought that that was absolutely masterful. Now, if it was not Warren Buffett and he didn't have that amount of stock, then that would not have been a good approach. But because he is who he is, because he has the credibility he has, you know, I could complain about the pay at Coke. It would not get me on closing bell but he does go on and he has a real capacity to send a very strong message even with an abstain vote rather than an against vote you know warren you got to remember back in the annunziata days admitted that he voted in favor of pay that he thought was excessive at the time when he was on the board so he's come a long way in terms of being willing to speak out

on pay. And the fact that he abstained, the fact that he made a public statement about it, was enough to get the company to make some changes. So for him, what he did was the equivalent of what 75% of the shareholders did at Chipotle. Let's move over to McDonald's. McDonald's, for their annual meeting this year, they're not allowing any media to attend. The company is saying, well, there wasn't a lot of media interest last year. People in the media can listen to the webcast of the meeting, but they can't be there in person. And now when you factor in some of the workers at McDonald's are planning to protest the annual meeting, I guess my question is, why would a company even take this stance in this day and age when it's so easy to get information,

when it's so easy for people inside the meeting to just be live tweeting about the event? Why wouldn't a company like McDonald's operate from a position of strength and say, you know what warts and all sure the doors are open we're letting the media in well of course you're exactly right you know as joe lewis family said he can run but they can't hide and uh what i advise reporters who call me and say they're not letting me in what should i do i just say buy some stock and then you'll be able to go every year um it's worth it uh they don't let reporters in a lot of the time and i think that's extremely foolish mcdonald's is part of an industry that is particularly being targeted on issues of pay right now.

The comptroller of the city of New York had a conference call on the issue of pay in the fast food industry, in the fast food sector, because that is the sector with the sharpest disparity between the average worker, because the workers there get paid so little, and the CEOs. And I think they've got a very good case to make. A lot of shareholders are very angry about it, as they often say. if you can work full-time for a company and still qualify for federal assistance, the taxpayers are subsidizing the CEO, not the employees. And so I think that there's a real

vulnerability there that they're sensitive about. And a good way to address that would be to change, but they're trying to address it by sticking their fingers in their ears. You're listening to Motley Fool Money, talking with Nell Minow from Governance Metrics International. We got a question from one of our listeners who writes, I would really appreciate if you could ask Nell about her thoughts on the corporate governance standards of Chinese companies trading on the American stock exchanges. Well, once they decide to list on the exchanges in the U.S., they have to adhere to certain requirements in terms of transparency and independence on the board and all of that. But the fact is that the Chinese companies

have terrible corporate governance, and they're operating in a system where even the slight independent capitalistic overlay that they have can be undone at any time. You have something like PetroChina, where the state is the primary shareholder. That's a very vulnerable position for outside shareholders. And so I would sort of advise a lot of caution for Chinese companies that are trading on the U.S. exchanges. And I think that that's true of a lot of different international companies that are trading in the U.S. Some countries are really trying to be at the forefront on corporate governance, and I would think Brazil is a really good example. South Africa, I don't always agree with what they do on corporate governance, but there's some

stuff going on there. Italy, not so good. So you really have to know a little bit about what's going on in the country and not assume that just because it's trading in the U.S. that it's okay. Let's move over to your other job as a film critic. As you and I speak, the Cannes Film Festival is happening right now in France, and one of the movies getting its official premiere is a documentary about the late great film critic Roger Ebert. The film is called Life Itself, but there was a preview screening last month at Ebert Fest. Am I correct that you were there for the preview? I was indeed there. I wrote about it for Roger Ebert's website, and I was also a contributor to their Indiegogo campaign, so I was thrilled with it. The movie was made by one of

roger's all-time favorite director steve james who did hoop dreams and roger the great champion of that film and the movie is uh absolutely outstanding and should be seen by everybody whether you know or care about movies at all whether you like documentaries at all because it's really not the story of a movie critic it's the story of a life and it's about three huge changes that occurred in the course of his life that are as gripping and as touching and inspiring and also very funny as any fictional movie character you would like to see. Really an excellent film. Did you learn anything new about your friend?

Were there any surprises for you? Well, I had read the book that it's based on, so I knew some of it. But I think what was the biggest surprise and the most fun was, you're not going to believe this, but you know, of course, Siskel and Ebert. You know about Gene Siskel and about the animosity between the two of them. They've got some outtakes from their TV show that are really shocking. That animosity was not fake. They really felt that toward each other, although they became close friends at the end.

And also, it turns out that Gene Siskel was a close friend of Hugh Hefner and was hanging out at the Playboy Mansion all the time. That was very funny. They had some footage of that as well. All right. Let's talk about the summer movie season as it kicks off. Of course, there are the big movie franchises, Amazing Spider-Man 2, the latest sequels from X-Men and Transformers. i'm wondering though now am i the only one who is already looking past these big movies and looking ahead to 2015 when we have the next star wars the next avengers movies or am i just not

giving the ones this summer their due i think this is my prediction i'm going to go out on a limb and say that i think all of those sequels and franchises will do well but i think the one that is really going to captivate everybody this summer is a one-off, a new one, and that is another comic book movie, but it's a comic book people don't know very well called Guardians of the Galaxy. I think that one has got just the right combination of absolutely slam-bang action and fascinating characters and a sense of humor about itself that it just looks like it's going to be tremendous. And I'm also looking forward to the Wachowski's new movie, which is called Jupiter Ascending. They're, of course, the people from The Matrix, and they are back.

You know, they kind of confuse everybody with Cloud Atlas, but Jupiter Ascending looks like it's a real mind-blower. And so I think those look really good, and I think those will probably be more, whether they make more money than the franchises, I don't know, but I think they'll be more zeitgeisty. They'll captivate people's imagination more. The Tenpole movies get a lot of attention, but it also seems like there are a lot of, maybe not a lot, but it's certainly a good number of smaller movies that are aimed at grown-ups. I'm thinking Jon Favreau's new movie Chef, God's Pocket by John Slattery, who people probably know best as Roger Sterling on Mad Men. Those look like well-made, almost personal films. They're probably not big moneymakers.

So my question is, is this possibly shaping up to be a better summer for the audience than it will be for the movie studios themselves? Oh, I think the movie studios, I wouldn't worry about them. They're going to do extremely well. And I think some of these little independent films will do well, too. Chef is absolutely gorgeous and fun and heartwarming. I saw a terrific grown-up romance. We don't get very many of those.

It will be opening up in a few weeks called Words and Pictures from the guy who directed the great Steve Martin, Daryl Hannah movie, Roxanne. And so I think we're going to get a lot of nice little independent films, and we're also going to get, you know, the big slam-bang films. What this tells us about the movie industry is that it's really in a state of flux right now. They're looking at their return on investment, and they are finding that that's more reliable on these big-budget movies. It's very hard to get a medium-budget, a $20 million movie made these days.

You can do better getting a $100 million movie. The other big sort of business story for the studios is how well the faith-based films have done this year. very low-budget films like God's Not Dead and Irreplaceable have done very, very well at the box office, and Hollywood is paying a lot of attention to that. We've already had, of course, you know, three Oscar winners in Noah, and we're going to have one on Moses coming out this year, too. Any movie in particular we should make sure we don't overlook, because it's easy to overlook movies in the summer? Well, the one that I think is going to get a lot of attention, we've got a lot of YA-based movies coming out. And A Fault in Our Stars looks like it's going to be an

outstanding film. The Giver looks like it's going to be very good. And as I said, Words and Pictures, I think, is one that everybody should try to see. And for parents like me who are looking for something of quality to bring their kids to? Well, don't go anywhere near that Disney film, Legends of Oz. It's absolutely terrible. This is the first year in memory where we haven't had a pixar film so that's a big hole in the summer so i'm hoping that another one of the films that premiered at con how to train your dragon 2 will fill that spot the first one was so good and i've seen about 20 minutes from the second one really got my fingers crossed that it's going to be as good how do you screw up the wizard of oz stories those i will tell you i screwed up well instead

of going from the what 12 books written by l frank bomb they got a story by his stockbroker grandson sure so there's part one uh and uh they really cheaped out on the animation even though they raised a hundred million dollars for the movie from individual investors they still cheaped out in the animation and it really is uh painful to look at one of the best reasons to be on twitter is so that you can follow nell minnow and get her thoughts on movies corporate governance and so much more now thanks as always for being here my pleasure Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money.

Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, James Early, and Ron Gross. Guys, before we get to the stocks on our radar, got an email from Reed Wilson in Greenville, South Carolina. As I was on the treadmill on May 16th and I heard it was the birthday edition, I felt like a special fool. Imagine how my stride shortened when you clarified it was in honor of Steve Broido's birthday, not mine. Regardless, two good fools were born on this day. Happy birthday, Steve. Steve, I feel like we, and by we I mean you, kind of let Reed Wilson down

by not really welcoming him to the birthday club. I couldn't believe that email came in. Incredibly flattering. Alright, let's get the stocks that are on our radar. Ron Gross, what do you have this week? I'm going back to my beloved Costco, C-O-S-T, a retailer that reports a little late. Typically, they report next week, later in the week. I'm interested to hear about the weather. Were they able to push through and how do sales look, specifically same-store sales, and what does growth potential look like? Because the stock doesn't really look that cheap any longer at $115. So, I'm interested

to hear what they say. Steve, you got a question about Costco? What's one area Costco shouldn't go into? Well, you know, they pretty much do everything from coffins to produce. No kidding around. So, let's just say they should stay away from... Consulting. What do you got? Yeah, consulting.

I like consulting. Consulting. James Early, what's on your radar this week? Female Health, Chris, is an income investor recommendation that has given me a nice beat down. This is a tiny company that makes female condoms. They lost money for 18 years, and now they're finally profitable. But the customers are big health organizations like World Health Organization, USAID, and these are lumpy purchasers.

So the stock is down, but these condoms save lives, save money, too. The Washington, D.C.'s health department has saved $20 for every dollar they spent on these female condoms. So people aren't buying them personally, but people are buying them to distribute to low-income people. So it's interesting stock. And the ticker symbol? F-H-C-O. Steve? As a married man, I have no comment on any of this.

Let's move right along then. Jason Moser, what's on your radar this week? Well, earnings season giveth and it taketh away. And for Dick's Sporting Goods, it taketh away this quarter. The stock got hammered. Weakness in hunting and golf were the main culprits there. But I think that, you know, this is still the market leader in the sporting goods world there. And when you look at the way the company's performing, I think glass half full here.

E-commerce accounted for 7% of the company's sales this quarter versus 5.8% a year ago. I still think there's plenty of room for this company to run. And now the stock is trading at around 15 times full, your estimate. So, it's one that's back on my radar. Ticker is DKS. Steve? Does the square footage of these stores concern you? They are massive, massive stores.

They are massive stores. I actually was looking at sales per square foot from 2012 on to 2014, and it really has not varied too terribly much. They've done a good job keeping up with their build-out. Steve, you got a stock you like of those three? No. He's honest. All right. Jason Moser, James Hurley, Ron Gross. Guys, thanks for being here. Thank you, Chris.

That's going to do it for this edition of Motley Fool Money. The show is mixed by Rick Engdahl. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week. We'll be right back.