Motley Fool Hidden Gems Investing - Motley Fool Money: 06.13.2014

Episode Date: June 13, 2014

Intel rises.  Priceline buys OpenTable. Twitter's COO resigns.  Lululemon stumbles.  And GM issues another recall.  Our analysts talk about those stories and Motley Fool Singapore Director David Kuo shares his thoughts on the slowdown in China. Learn more about your ad choices. Visit megaphone.fm/adchoices

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From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Chris Hill, and joining me in studio this week from Motley Fool Pro and Options, Jeff Fisher. From Motley Fool Income Investor, James Early. and from Motley Fool Hidden Gems, Chief Investment Officer Andy Cross. Good to see you, gents. Good to see you, Chris. Gentlemen. We will break down the latest news in retail, automotive, the tech industry, and more.

We will head to Singapore for perspective on the biggest international markets. And as always, we'll give you an inside look at the stocks on our radar. But we begin this week with big tech. Intel does not report earnings until mid-July, but the world's largest chipmaker raised guidance for the current quarter and the full fiscal year on stronger-than-expected demand for corporate PCs. Stock was up pretty big on Friday, Jeff. I thought the PC was dead.

What's going on here? Surprise, surprise. It is a surprise that more corporations are buying PCs than expected. Mostly they're upgrading, or our analysis suggests, they're upgrading from Microsoft XP, which Microsoft is no longer supporting, to the latest software.

So the question is, how long will this upgrade cycle carry PC sales? Because IDC research still expects PC sales as a whole to decline 6% unit volume, 6% lower this year. And that's on the back of eight straight quarters of declines, two years of declines for PC sales. Andy, Intel, for the longest time, was considered to be a bellwether stock,

but hearing everything that Jeff said, it seems like maybe not so much anymore. Well, I tell you, the news that came out, I think it was quite shocking because like the rest of us, I was like PCs. I mean I think that industry was just totally dying by the vine. So the news at least I think is encouraging and not just for Intel or it's really for the industry writ large. Like I was thinking we follow Dolby and Stock Advisor. And for Dolby, that could be a really good sign that the PC market is actually showing some signs of life.

But now for Intel's perspective though, the PC is not going to be enough to keep this thing compelling. I mean, we still need either success in mobile or maybe Internet of Things, you know, to get these chips out there. I mean, this is great for now for, what is it, a 7% bump, but it's not going to be enough to get the job done long term. Yeah, this buys Intel a bit more time as they try to work their way into mobile in a profitable way and Internet of Things. And basically, their goal is to anything that computes, they want to sell the chipset for it, the processor for it. And they've got a long way to go still. Jeff, when you look at the stock, though, even with the bump on Friday, how is this stock looking on a valuation basis? You know, Chris, it remains pretty reasonably priced.

It yields 3%. It trades at a multiple of around 15x earnings, so around a market average. Stop me if you've heard this before, guys. On Friday, General Motors announced a recall on 500,000 Chevy Camaros due to, wait for it, a faulty ignition switch. James, this is GM's 38th recall of this year. And last year, for all of 2013, they only had about 23. Chris, if you're at a party and you give a drunk guy the keys and he goes out and he crashes, he hits somebody or he drives into a pond or something, can you really complain? Especially if he's done it 37 other times.

I mean, this company should never have been bailed out. I mean, this is the U.S. government's fault. Well, we've been waiting for GM to fix itself in a year now, and apparently this is not that year. GM is now literally recalling 10% of all cars on U.S. roads. I mean, and maybe there's some credit to be given for them taking less than 11 years to announce this particular recall, but that's vastly overridden by the fact that this is another ignition switch problem, and you think somebody would have actually caught on to the fact that this might not be their specialty. Yeah, I mean, there are some people who are looking at this and saying, look, they're being cautious, they're being safe,

They're learning from their mistakes. And yet, when I look at the aggregate numbers, 38th recall so far in 2014, totaling somewhere in the neighborhood of 16 million cars. I don't know. This GM, years ago, GM should have been allowed to fail. The money that was put towards resuscitating GM should have been given as some kind of a payout to whoever. The parts could have been sold to Japanese or Korean automaker or European automaker, someone who would have known what they were doing and run this company competently. But instead, we kept this thing alive, and now we pay the price, right? You disagree, Jeff?

Ouch. Well, you have to wonder if the pendulum has just swung to the other side. They weren't doing recalls when they should have, and now they realize, holy cow, any little thing, we better recall it and get it fixed. But weren't these Camaros made as recently as this year that are being recalled? Yeah, these are Camaros. This is not a legacy problem. This is a recent problem, too. Who's still buying Camaros?

That was my first question, too. At least 500,000 people. Priceline is buying OpenTable, the online restaurant reservations company, for $2.6 billion. Andy, that's a premium of 46% for OpenTable. First and foremost, are they worth it? That's a really good question, Chris, because it really depends on how Priceline is going to integrate the OpenTable, both the platform and also the business. Priceline has been shopping around for these little acquisitions. They bought Kayak.

I don't think shareholders, of which I am one, I'm actually one of OpenTable as well, too. They haven't seen the full benefit of the Kayak acquisition to integrate that platform. So they're going to try to do the same thing with OpenTable. So I think it could be a very nice tuck-in acquisition. But the big picture for Priceline, it's actually a very small part of their overall market capitalization. I was going to say, they can absolutely afford this acquisition. But I think people were surprised by how much they were willing to pay. And we even saw on Friday shares of Yelp up 10%, 15% just because people are now looking at Yelp and thinking, well, maybe they're next.

Yeah, I mean the price is far higher than the 52-week high, which usually that's kind of the guidance of acquisitions and rich on an EBITDA level and a PE level for the growth prospects of what you would traditionally think of a company like this. But OpenTable has a lot going for it even though the price is rather – was higher than the 52-week high and higher than what I would have thought Priceline would have paid for. What's confusing to me, and I don't follow these companies, but I just read an article or two about this, and they said that Priceline typically does not make much of an effort to actually integrate these companies. It lets them operate independently, which seems strange. Why would they pay such a high price if they're not going to try to integrate and get some kind of synergies? Are they collecting it like an old lady hoarding cats? What are they doing? Well, it's also – I think it's customers and technology.

I mean you could just think how maybe they would think about OpenTable because so much of Priceline's business is tied to the Booking.com. OpenTable has all this access into these restaurants. Maybe there's some bed and breakfast kind of synergies there too. Maybe it's the technology to use the actual OpenTable platform. They want to actually use that in some of their Booking.com business. So they may still run it as a separate unit, but they may be able to integrate some of the systems. And Priceline is more – OpenTable is pretty much domestic, and Priceline is actually very international. Well, yeah, they paid more than $80,000 per restaurant.

OpenTable has 31,000 restaurants. So the price point, like I said before, does seem a little bit rich just on the surface, but I like Priceline's strategy for making these little acquisitions. Here's the thing, Chris, though. I would think that Priceline actually is going to make a much larger acquisition over the next year or so. You know, we've talked about how hot the IPO market has been for the last 18 months, but it really seems like the M&A activity is picking up to the point where I'm wondering if now when investors are thinking about buying a stock, James, should they also be thinking about

if that company is a potential takeout candidate, if that alone is a good thesis for buying a stock? Generally, no, because takeout is very, very hard to predict, and then they happen, and then they can be announced and they can be canceled. It's a tough thing. It's something to take. It's better for a bad stock. For a good stock, a good company, and this is actually something most investors probably don't think about in the right way, I would say, for a really good company that you think is going to be a long-term winner,

you actually don't want it to be bought out because you get a small premium and that's your whole gain, right? But for a lousy company, you actually want that. So it depends on your type of company. The other thing about OpenTable, it's a huge mobile platform. Priceline still is not outside of their kayak. It's really not a huge mobile platform play yet. OpenTable certainly is. So it's a play further in the mobile growth.

You're really into this, man. You're thinking about it. Yeah, we're talking about something else. You're still thinking about it. Yeah, that's right. He's having a good week. Yeah, I like that. He's on a roll.

Well, I think the price really tells us OpenTable was not eager to sell. I think they really held out because they're a young company. They think they're great. Great. Shares of Twitter up 3.5% on Thursday on the news that Chief Operating Officer Ali Roghani was resigning effective immediately. He will remain with Twitter as a strategic advisor to CEO Dick Costolo. Help me out here, Jeff. This is a guy, two months ago, the Wall Street Journal had a story about him calling him Mr. Fix-It, and now he's effectively out the door. Out the door. His fixes didn't work.

And really, that's the story here. The user-based growth at Twitter is close to stalling. And it only grew 5% last quarter, quarter over quarter. For a young company that just went public, you need faster growth than that. Really, at least double digits. So Twitter now has 255 million users, but only about 20% or so visit the site once a month. Facebook is closer to 75%. So there's an engagement problem, too.

So CEO Dick Costello had to shake things up. And one of his moves was getting rid of COO and some other top executives. He's reorganizing the business, having more people report directly to him. And I think he's going to really try to oversee boosting growth at Twitter because they need it. Yeah, Andy, it's worth noting that they're not hiring a new chief operating officer. They've effectively eliminated the position. And I'm wondering if chief operating officers are not something that every company needs. Well, not to make a huge general statement, but chief operating officers probably don't come very cheaply either.

So as an opportunity to kind of continue to think about your margins and keep your personnel costs low, which for a tech company, for a tech consumer company, personnel costs are such a high part of your overall cost structure, a way to keep it on the downside and also for the CEO to consolidate power. Coming up, we've got some retail earnings news. And amazingly enough, not all of it is terrible. Stay right here. This is Motley Fool Money. As always, people on the program may have interests in the stocks they talk about,

and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here with Jeff Fisher, James Early, and Andy Cross. Lululemon Athletica down more than 15% this week. James, first quarter profits look pretty good, but they lowered guidance for the full fiscal year. CEO calls this, quote, a transitional year.

I'm assuming that is not transitional in a good way. Yeah, pretty soon they're going to have to change their name to just Lemon. I mean, this was a fast-growing company. It still is a fast-growing company, but there's a lot of competition now. And what's ironic is that Levi's recently complained that their jeans had poor sales because people were buying yoga pants instead, but apparently they're not buying yoga pants from Lululemon. And that's the issue.

This company was started as kind of a fad, a craze, and it's a one-trick pony. I mean, they're trying to be a two- or three- or four-trick pony, but it's still hard. And now kind of those birds are coming back to roost, so to speak. If there is a silver lining, it might be that they are buying back their stock, about half a billion dollars worth, and they're doing it at a pretty good time. Shares are down 36%. Stock's at a three-year low, so I'm wondering if that alone gets you interested in the stock. No.

There's still a lot of board infighting. The CEO is a very colorful character. He thought the issue with the translucency in the previous pants was the fault of overweight customers trying to put them on. And he's voted against the whole board. He owns 27% of the company, I think. So I think there's just too much infighting. There's too much of a fad risk for me to get interested. Shares of Radio Shack down 20% this week after its first quarter loss was bigger than Wall Street was expecting.

I'm not even sure how that's possible, Andy. And moreover, how is this company still standing? Yeah, well, full disclosure, we recommended this in Hidden Gems and still hold it. We put it in the penalty box a few months ago just given the continued worsening performance of their store base trying to close doors. Now the big risk is that they won't be able to fund the business, and they won't be able to pay the debt, and there's more than likely chance, more than maybe a 50% chance that they actually will have to file for bankruptcy. So the mobility curve has not worked out for them. The store base is just too large, and they need to continue to shrink that, and they just may be running out of time, Chris. Yeah.

One of the stories was how they were looking to raise more money. The CEO was trying to put on a brave face and say, look, we're in turnaround mode, but we're going to need money to fund that. But I just wonder who's going to lend them money at any rate that is not considered anything but prohibitive. Yeah, and that's the trick. I mean, a few years ago, this company's interest cover, when you look at their profits versus the interest expense, was somewhere in the eight to nine times. Now they're not even operating profits. So the fact that that's going to turn around at any reasonable time and someone's going to loan them money, that's the real risk. And that's why investors have sold the stock off so significantly.

My dad shocked me yesterday. He has been playing with my son and doing different experiments. And he actually came back. He said he went to Radio Shack and found some electrical circuitry toy kit. And that's the kind of thing you could only probably buy at a Radio Shack. So that's one out of three customers. Or Amazon. A quarter for them, yeah.

That's very true for those who want to kind of find what they want. But that's just a shrinking part of the sales base now. I don't want to get too personal, but did everything go okay with the electrical circuitry? It actually did. It saw into a lot of shaking, which we were not certain it would, but it actually did. So good job for the product. Restoration Hardware up 15% this week after a strong first quarter, and they raised guidance for the full fiscal year. It's looking good, Jeff.

Shares at an all-time high this week. It's looking good, and it's a fun story, fun company to watch, because in the midst of the Great Recession in 2008-2009, they had a whole kind of reorganization plan that they're now laying out and putting into place, which includes closing about 30% of stores, making the remaining stores showcase destinations, and selling. And they sell nearly half of their revenue comes online or through what they now call their source books. And have any of you received – Oh, my gosh. Yeah, did you? Did it put a hole through your floor? I was going to say it broke my back trying to pick it up.

Wait, what is a source book? It just arrived last week or so at our house. Yeah, same with us. It's, I think, 16-pound, 18-pound, 13 catalogs, though they don't want to call them that. They call them resource books or source books. Okay, but they're catalogs. All in one bundle, yes. And they're only sending them once a year.

This is once a year you get it, and they say that's much more ecologically friendly. And then you have them all year for when you want new lighting or new furniture. Each one is categorized. So it's an interesting concept, and it kind of reminds me of the Sears catalog. You get everything at once, once a year. And we know how well that worked out for Sears. It worked well for a long time, and then it didn't. So we'll see how well this works.

Well, it's also worked out well for Williams-Sonoma, which plays in the same space as Restoration Hardware does. And this is the difference between a company like Restoration Hardware or Williams-Sonoma is they can use their stores as showcases to go buy the product online. You can't do that at Radio Shack. That's a big difference, and that's the value of having something like Williams-Sonoma or Restoration Hardware compared to something like Radio Shack. Restoration Hardware still sell all those junky, like, pseudo-1950s trinkets, you know, the fake x-ray glasses or, you know. I think they're streamlined a little bit. I think they've moved on from that. That is not always their brand now.

You're right, that wasn't part of the store. The store, though, I agree, is important because a lot of what they sell is furniture, and I am very reluctant to buy a chair without trying it first. A fun thing I learned recently, too, is that they plan to provide espresso drinks and food and child care in their stores as well. So they're really going all out. What would child care look like at a Restoration Hardware? I know, daycare.

Hey, can I then go out for the day? Is Restoration Hardware your look, Jeff? Just out of curiosity, in terms of your interior design taste, are you kind of a restoration hardware kind of guy or more like a modern guy? We live in a house built in 1934, so we try to match that time period. Kind of curious. Yeah. Finally, guys, the World Cup has begun, but with literally billions of people expected

to tune in. What is it going to mean for office productivity? According to one survey in the Middle East, where games will be aired between 7 p.m. and 4 a.m., nearly 90% of professionals said they plan to watch at least some of the games. A third of them plan to just get less sleep. Ten percent said they will go into work late in order to catch up on their sleep. Another ten percent said that they would take annual leave. Let's bring in our man Steve Broido from the other side of the glass.

Steve, you're a big soccer fan. How are you going to maintain your productivity during the World Cup? Well, since I don't follow hockey, I think it should be just fine. I'm not asking you to pick a winner, Steve, but can you at least give me two teams you think are good candidates to meet up in the finals? Canada and Angola. Keep those emails coming. Radio at Fool.com to show your support for our man Steve Broido.

Thanks, guys. Up next, we're going to head to Singapore to check in with our man David Kuo. Don't go anywhere. I sat back down with a smiling face while she went down to the powder place. With my green back, green back dollar bill. Just a little piece of paper coated with chlorophyll You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill.

China is the world's second largest economy, and it is an economy that is slowing down. Here to help us make sense of what's happening in China and other international markets is David Kuo. He is a regular financial commentator for the BBC, and he is the director of Motley Fool Singapore, which is where he joins me from. David, always good to talk to you. Thanks for being here. And you, Chris. Oh, by the way, just one small correction. According to some people, China has already overtaken America as the largest economy in the world. This is through some kind of jiggery-pokery. I think they call it purchasing power parity. And on that basis, they reckon that China has already overtaken America.

But I accept your point. Yes, China is the second largest according to most traditional measures, yes. I'm getting that information from the BBC, so that's what we're going with for now. Yes, you can always trust the BBC, yes. Always, particularly when you're on it. You look at the latest quarter for China's economy. It grew almost 7.5% in the first quarter of 2014. Most people, I think, would look at that and happily take that kind of growth.

And yet, it is slowing down. And now we see the central bank in China starting to take some steps to boost some growth. From where you sit in Singapore, what stands out to you when you look at China's economy right now? Okay, you know, that's a wonderful question, Chris. And I think we have to try and understand what is going on in China. I think in the past, China was perceived as being a developing economy. Some people say it is still a developing economy. But what China really wants is growth of quality rather than just simply growth for the sake of growth.

I mean, anyone can get a country to grow. All you need to do is get the government to throw lots of money into the country and building its infrastructure, and you will get some kind of growth. But what China wants is good growth, good quality growth, sustainable growth. So what it's trying to do is to try and move its economy to be more like the economies of the West, like America, like Europe. What it really wants to do is to say, can we get our consumers to drive the economy rather than the government continuing to keep on pumping money in? So that is going to be a very painful process, because for the last 20 years, it's been the government that's had the upper hand. The government has said, we will build hospitals, we will build airports, we will build towns, we will build roads, we will build railways.

But there comes a point, you know, when you can't really build anymore, because you've got all the airports and all the hospitals that you have. And so what China is trying to do now is to say, the government has done its part, now it's time for the consumers. And we know that Chinese consumers have been saving voraciously, you know, over the years. They have plenty of savings stashed away. And I think the government really wants the Chinese consumers to start spending some of that money so they can have quality growth rather than just government-inspired growth. They're also looking for the banks to start lending even more money. And the latest move from the central bank in China is to, among other things,

cut the requirements in terms of the amount of cash that banks need to keep in reserve. They're doing this for about two-thirds of the bank. How much concern is there, if any, that China may be moving to what we like to refer to here in America as free money forever? None whatsoever, Chris. And I'll tell you why. Because, I mean, any economy has four levers that it can pull. The first lever, as I mentioned earlier on, was consumer spending. In other words, getting consumers to spend their money, and then that will help an economy grow. The second one is what we call private sector spending. And this is when factories, businesses start to spend capital expenditure, and that will get an economy to grow. The third one is government spending,

and that is something that China has been doing for the last 20 years, and it wants to stop doing that. And the fourth one is net exports. In other words, if a country can produce plenty of goods and export it, then that will also drive economic growth. Now, those are the four levers that China can pull at any one time. And we have to remember that China is still a command economy. In other words, the government controls everything. And the government can pull on any of those four levers that it wants to in order to get the economy to grow. Now, earlier on, we talked about them trying to encourage the consumers to spend money. But unfortunately, the consumers aren't really at that sophisticated stage yet

where they will be able to spend money and drive the economy. So therefore, we come to the second lever, which is the private sector spending. And again, you know, we're talking about companies spending money. But in order to do that, they must have access to finance, access to capital. So this is really what the government is trying to encourage, saying to the banks, you don't really have to keep that much cash. and what you should really be doing is to lend out that cash to companies who want to borrow the money in order to spend it on capital expenditure.

And if it can do this successfully, that's the second lever that it can pull. So just keep on bearing in mind that there are four levers that China can pull. That first one is consumer spending, the second one is private sector spending, the third one is government spending, and the fourth one is net exports. And unlike many other countries around the world, China has got the ability to pull on those four levers. Some of the countries around the world would like to pull on those four levers. But, for instance, government spending is a no-no because the government has run out of cash. But China, as you well know, can print as much cash as it wants to because it is a law unto itself.

So, therefore, it can keep on producing this cash and get the economy to grow. You're listening to Motley Fool Money, talking with David Kuo, heads up operations at Motley Fool Singapore. Let's move to another country, and that's India, which now has a new leader in the wake of the recent election, Narendra Modi. And part of his platform was economic reform. How should investors feel about India's new leader? uh very positively i think you know simply because of a mandate that he's been given by the people of india itself i mean he has an overall majority and people in india are looking up to him and saying we need uh we need to change we need to compete with china i mean at one time

both india and china were both growing at around the same kind of rate around about sort of eight nine ten percent a year and then suddenly uh growth in india fell off a cliff whereas in in China, it hasn't exactly fallen off the cliff, but it's come down a few percentage points. But as far as India is concerned, it is still in the process of trying to restructure itself. And I think, you know, restructuring is really right at the top of Narendra Modi's agenda at the moment. What he's saying is that we need some structural reforms here. We have to remember that about one in four people in India are between the ages of 10 and 24. Now, just bear this number in mind.

I mean, one quarter of the people there are young people between the ages of 10 and 24. At the same time, one in 10 people between the ages of 20 and 24 are unemployed. Now, this is not good. We know that youth unemployment is pretty big all over the world. But in the case of India, because it's got such a large population of young people, and one in 10 of these young people are not employed, it is it is very problematic problematic for india so what narendra modi has to do is to try and structure that economy in such a way that it will get unemployment down uh bring down inflation

at the same time and then you know i think we would be able to see india uh growing at the same rate as china and it really needs to because otherwise there are going to be big social problems there. When you look at the return of emerging markets, just the basic emerging markets index over the last few years, it's really been terrible. And there was a good stretch of time, David, when not only were emerging markets a really great place to invest, but you could make investments in ETFs in China, in India, some of the countries that we're talking about here. But lately, emerging markets have been really bad investments. When you look around the world, do you find yourself gravitating as an investor towards any particular market?

And if so, which ones and why? Well, I still like the emerging market story simply because there is plenty of growth there. I mean, if you have a look at the emerging markets here in Southeast Asia, we've got the Philippines, we've got Indonesia, we've got Malaysia. Singapore is no longer classified as an emerging market. We are now a developed market. But then you have China. So you have plenty of opportunities within the emerging markets. But just looking at the economy growing is not a good reason to invest in an exchange-traded fund.

It is one way to get some kind of exposure to these emerging markets. But I would much prefer to look at companies, specific companies, and say which are the ones that are able to take advantage of the growth in that economy. I mean, I'll give you one example. I mean, here in Singapore, we have a company called Jardine Cycle and Carriage. And this company, first of all, started off selling automobiles. But now it actually is one of the biggest investors in Indonesia, particularly in the automotive industry in Indonesia and also in palm oil production and also coal mines.

It does lots of things, even all the way up to providing finance for people to buy cars. Now, if you look at this company, it is here in Singapore, but it invests in Indonesia. And I just see this as being one way in which people can take advantage of developing economies, not by going in directly, but looking at a tangential way in which they can invest in those. And simply because in Singapore we have a much higher corporate governance, there is more transparency, the markets are more accessible, the information is more freely available. And I think, you know, that is a better way of investing in emerging markets rather than just going in and buying an exchange-traded fund. One country we haven't yet talked about is Japan.

And again, another example of a country that for a long time was the epitome of growth and economic success and has really stagnated over the last decade or so. What's your take on Japan's economy right now and whether it is a place investors should be looking or should be avoiding? Well, the thing about Japan is it's been a bit of a serial disappointer. I was invested in in japan many years ago uh and uh i hadn't made a great deal of money out of japan but now uh it is becoming well it is starting to come good again and this is simply because of um uh economics i mean the prime minister in japan understands also you know like many other countries in in asia that it has structural problems and what is saying to to the japanese corporations is that you now

need to start investing money i mean recently we saw some gdp figures some economic figures from from japan and people weren't particularly positive about that and then suddenly when the figures came out uh people's jaws began to drop people said my goodness we hadn't realized japan had this capability of growing and the reason for that is because japanese corporations have a mountain of cash and they're just sitting but they have been sitting on that cash not spending it and what Shinzo Abe, the Prime Minister, is saying to these companies is you have to spend this cash. I think there is close on to two trillion U.S. dollars sitting on corporate balance sheets in Japan. I mean, add that on to then another 1.2 trillion U.S. dollars worth of cash that the

government pension fund is sitting on, and you have, you know, quite an armory of available funds for Japanese companies and Japanese pension funds to drive that economy forward. I mean, in the past, I mean, Japan had deflation. In other words, people never really went out and bought things because they knew it was going to be cheaper tomorrow rather than today. So if you want to renew your TV set, why would you want to do it today when tomorrow is going to be cheaper? But I think, you know, Shinzo Abe with his three arrows, he's trying to instill some kind of inflation in Japan so that people's mentality will change. And then the Japanese consumers, and I love Japanese consumers, I know they like to spend money and they will spend money. And once

If they start spending that money, Japan's economy will grow. So if we go back right to the very top where we were talking about those four levers, again, Japan understands that there are four levers that it needs to pull. The first one is to get the consumers to spend money. The second one is to get the private sector to spend money. The government is also spending money. And if the Japanese yen can fall low enough, it will have net exports. So it's ticking all four boxes there.

So there is no reason why we shouldn't be excited about the prospects for Japan in the future. Coming up, more with David Kuo. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill, talking with David Kuo from Motley Fool Singapore. You're listening to Motley Fool Money, talking with David Kuo, heading up Motley Fool Singapore. I can't let you go without a question or two about the World Cup, because I know you're a fan. Do we have to talk about the World Cup?

I know you're a fan, but I also know you are a former bookmaker. So first and foremost, who should I be betting on in the World Cup? And is there, if maybe not a favorite out there, is there an interesting long shot where I could get some good odds? Okay, right. The favorite is bound to be Brazil because, I mean, they are playing at home. But I like the long shots because I do believe, you know, as far as the World Cup is concerned, it is a lottery because anything can happen. And as far as I'm concerned, one of the reasons why I was so disparaging right in the very beginning about the World Cup is that whilst it might be OK for you over in the United States and for those people in Europe, it isn't that sort of convenient for us to watch the football games over here.

It comes on at four o'clock in the morning, Chris. I mean, can you imagine either staying up until 4 o'clock in the morning or setting your alarm before 4 o'clock in the morning just to watch a football game? So I will be watching the reruns on television when I wake up. But as far as my favorite team is concerned, I think the dark horse is Belgium. I really do like the Belgium team. I hope they don't turn out to be another Netherlands team, which promises a lot but never quite delivers.

I think Belgium really could surprise a lot of people in this World Cup. every year in the united states when the super bowl is held obviously you can bet on either team but there are also always a lot of interesting prop bets that you can make which team will score first which team will kick the first field goal that sort of thing does that sort of thing go on with the world cup as well you bet it does i mean there are all kinds of side bets that people can make for instance how many corners there are going to be in a game which is the first player in a match to be sent off who is going to how many yellow cards they're going to be between each team there are lots of side bets that people can make but you know the thing about bookies is that

they love to have these side bets because they know that the more you bet the more they win uh i remember an old friend of mine in in the uk once said to me uh if you ever had to invest in any industry, invest in the bookmakers. Because if you go into a bookies in London or anywhere in the UK, you will find that there are three windows for you to pay in, one that pays out. I would also like that. I think bookies are a pretty good bet, don't you? Absolutely, especially when you put it that way. If you want insights into what is happening in Singapore's stock market, you can get David Kuo's free investing newsletter, Take Stock. You can sign up for it by going to our website in Singapore, which is just fool.sg.

That's the website for Motley Fool Singapore, fool.sg. And you can sign up for the free newsletter, Take Stock. David, always good to talk with you, my friend. Enjoy the World Cup. I will do, and you, Chris. I never managed to ask you, whose team are you supporting in the World Cup? Is it the U.S. of A? I will be supporting the U.S. of A.

and part of the reason is because I know that will not be a large commitment of my time because there is every expectation that they will not make it out of the group round. Okay. I'm glad that they're grateful for your small support, yes, even if it's only in the early stages. All right. I have to go make a bet on Belgium. I'll talk to you later.

Thanks, Chris. Bye-bye. Thanks, David. All right. Joining me in studio once again, Jeff Fisher, James Early, and Andy Cross. Guys, just a couple minutes to get to the stocks on our radar. Andy Cross, you're up first. What are you looking at?

Coach has an analyst day next week, Chris, and so we need to see some really good, exciting news coming from Coach when it comes to the North American business and their brand. They're really trying to turn things around. James and I both follow the stock. It's in both of our services. So I think it's really important that they make this message to the analyst investors. investors, they don't lower any of the guidance, and they talk about what they can do to grow the business in North America again. And the ticker symbol?

C-O-H. James Early, what are you looking at? Critch, Buckle, ticker B-K-E, is a stock on my income investor scorecard. This is a Midwestern U.S. jeans retailer that made a lot of money when jeans were popular and people had a lot of money from fracking in the area. But now with all the bad news about jeans, with the bad news about yoga pants i'm wondering about how viable this is long term it's a very well-run company no question about that but they are a little bit constant very concentrated in gene so i'm i'm curious about my own estimates on this one jeff fisher the market is the gift that keeps giving right and so panera bread is worth coming back to to consider uh the tickers p n r a now we

all many of us know panera uh but they're going through a kind of a reorg themselves if you will They're trying to make it more efficient for customers to go through the food process, and they're also trying to develop their online sales and catering and pickup. So they're looking at all these different ways to grow their revenue per store. The stock is as inexpensive on valuation multiples as it has been in years, and the business cycles through periods of investment, like now, and then earnings growth follows. That's its history, and I think the future looks better. Steve, Coach, Buckle, Panera Bread, you got a favorite among those three? I think Panera seems the most interesting. All right.

My weekend is complete now. All right. Jeff Fisher, James Early, Andy Cross. Guys, thanks for being here. Thank you, Chris. Thanks, Chris. That's going to do it for this week's show. The show is mixed by Gal Año Nuevo.

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