Motley Fool Hidden Gems Investing - Motley Fool Money: 06.28.2013

Episode Date: June 28, 2013

Our analysts talk GDP growth, Barnes & Noble, and robot roaches.   And we talk about the early business of baseball with Edward Achorn, author of The Summer of Beer and Whiskey.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill. Joining me in studio this week from Motley Fool income investor, James Early, and for Million Dollar Portfolio, Charlie Travers and Ron Gross. Good to see you, gentlemen. Good to see you, Chris. We're going to talk Microsoft, Monsanto, McCormick, and companies that start with letters other than M. As the first half of 2013 comes to a close, we'll give you a preview of the earnings season that's about to kick off. And as always, we'll give you a look at the stocks on our radar.

But we begin with the big macro. A whole lot of data coming out this week. Let me just spot you up with a few of them, Ron. GDP growth for the first quarter came in at 1.8%. single-family home prices saw their biggest annual gain in seven years. Consumer spending slightly last month. What leaps out at you as an investor? So, it's a little bit of everything, and they're all wrapped up, I think, in the GDP number. So, less than 2% we're at now, 1.8. All categories revised downward except home construction. But remember, this is not a forward-looking number, it's a backward-looking number. And

this is before the rise in mortgage rates, I heard. So whether that follows through remains to be seen. Consumer spending, less than expected. Consumers are still spending, but not as much as economists hope. So what do we got? It's a little bit more of the same. We're growing. We're not growing very well. It's so interesting. It's all counterintuitive. The market likes that because it may mean the gravy train of economic stimulus continues. So the stock sometimes rallies on bad news. Uncle Ben is not going to turn off the money spigot. So, I mean, we're kind of more of the same, at least for the time being. James? Yeah, I think the housing is most

interesting to me, Chris. House prices rose quite a bit, which is great, but can they sustain that now that interest rates are climbing back up? Can we still hit home runs off the steroids? I mean, that's going to be the big question. Yeah, Charlie, we were talking earlier, and gosh, you look at the spike in mortgage rates. I realize they've been very low for a very long time. But boy, when they go up, they go up quickly. Sure did. This was the largest one-week jump since 1987. Brought rates up to 4.5%. Three, four years ago, you'd kill to borrow at that rate for 30 years. It's still a very good rate, especially when you factor in the mortgage interest deduction. And it is below the 10-year average of 5.3%. So I don't think it's time to

panic yet. But I think you are seeing a slowdown in refis. If you're going to refi, you probably we already did it. And you are seeing pending home sales at a six-year high. I think there's a fear that rates are going to keep going higher. And so there's an incentive to do a deal now if you're going to do it. But I don't think it's time to be worried about the breaks coming on, unless you see a creep over five and six percent. As a realtor, is your wife worried about this or happy now? I think the prevailing wisdom is that the higher rates will hurt business. It's too soon to see that happening yet. And as Charlie said, they're still historically quite low, so you can still afford a nice amount of home with a 4.5% interest rate. Once you get higher,

I think the number is 7%, you start to ... the medium income person is no longer able to afford the median priced home. And that's where you start to see things go off the rails a bit. Boy, you were really struggling there. For a second, I just wished we had your wife in here. That's all me. That doesn't come from her. We may need to have her as a guest at some point in the future. From the big macro to big agri, Monsanto's third quarter profit fell 3%. The world's largest seed company saw weaker sales and higher input costs.

What do you think, Charlie, when you look at this? Is this a blip? It would seem for all the joking we do about companies blaming the weather, it seems like, you know, if you're Monsanto, you actually do have good cause to blame the weather. Yeah, droughts and floods do affect them for real. They're not selling hoodies. This will be the third straight year of 20% growth for them. And they say that momentum will carry through to the next fiscal year based largely on record corn volumes. If you eat any corn products or soybean products, hate to tell you, Monsanto's traits are in that vegetable. And a large part of the benefit for them is not just in America, but down in South America, specifically Argentina and Brazil.

These are huge markets for them. They're starting to catch up on the seed technology that's been in use in the U.S. And so the story for Monsanto is really more seed volume along with 5% to 10% annual price increases. That's a nice combination for them. and their profits are soaring. You know, most of our tomatoes have a flounder gene spliced into them. What? Flounders can live in freezing cold water without freezing to death,

so that's a useful trait to put into a tomato so it doesn't freeze during a frost. So if you get like a late frost after the planting started or something, it's a little protected. You're all set, yeah, thanks to the flounder gene, yeah. Oh, that's lovely. I'm going to hit the interwebs as soon as the show is over to try and verify that. Just to close out on Monsanto, Charlie, the last couple of years, this is a stock that's done really well.

it really has reflected that sort of growth you were talking about. Is it now at the point where it's a little pricey? For my taste, it's a little pricey. I missed on it about 50% ago, so I'm not coming in now, just out of spite. Spicemaker McCormick down after second quarter earnings were kind of a mixed bag. The company also tempered expectations for Q3. James, what did you make of the quarter? You know, for bad results, these were actually pretty good.

I don't know what kind of a wuss would freak out over this. I mean, the stock is down a few percent. Sales still rose 1.9%. Basically, they took a charge for a Chinese bullion company that they bought recently, and they bumped down by a few points. People don't know that the flounder gene is in bullion. Interesting. These guys have been up. The stock is up 100% in the past three years or so. This has actually been a very safe stock. People are still spicing their food, even during a recession.

It's priced just a couple of bucks. And these guys have like 50% market share in generics, too. They're going to get you either way. Ron, I turn to you because you're the most accomplished griller at the table. I don't know. Charlie is pretty good. But, you know, it's barbecuing season, summertime. Give me something beyond salt and pepper that I can, like, throw on my chicken, my steak, just to impress the people.

I do recommend mixing your own spice rub or mix. But if you need to buy something off the rack, I think the Montreal steak seasoning or Montreal seasoning is kind of your all-purpose. It has salt, pepper, garlic powder, I think some- But if I don't want to do that, how do I mix a good spice rub? You could take individual, grind your own pepper, get a nice kosher salt, some other things, and mix whatever you like. Gotcha. Charlie, I should throw you under the bus. Give me a spice.

You're never eating at my house. Kyanne. Kyanne's the secret ingredient on a good pork rub. Barnes & Noble. Up until this week, shares of Barnes & Noble were up around 25% year-to-date. That's significantly better than shares of Amazon. But that was up until this week. This week, fourth-quarter losses were more than double third-quarter losses. And the Nook division, down 34%. Ron, if it's not time to call the fight with respect to Barnes & Noble, is it at least

time to call it with respect to the Nook? They are firing on no cylinders. Nothing is working for Barnes & Noble. Retail is not working. I think comp store sales were down somewhere like 9%, 8.8%. The Nook business is a mess. They're going to no longer make the color tablet. They're going to outsource it to third parties. Nothing is going right for them. It's really tough. I think what's going to end up happening here, if I could make a prediction, and can I? Sure. Thank you.

I think the chairman, Leonard Riggio, who owns 25% of the stock or so, he's going to try, as he has been, to take the retail part of the business private. And I think Microsoft is going to come in. They own almost 7% of the Nook business, and they're going to come in and try and buy that. And the Barnes & Noble we know today will no longer exist. And as a Microsoft shareholder, how do you feel about that potential? Not super. At least it's not a lot of money. That's the best thing I could say.

Coming up, earnings season is right around the corner. We've got your preview. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with James Early, Charlie Travers, and Ron Gross. The first half of 2013 is drawing to a close. Earnings season officially kicks off a week from Monday. And I think it's fair to say, guys, that expectations for this quarter are much lower than they were a year ago this quarter. So whether it is a company, an industry, an investing theme or thesis that you're watching, I'm just curious, as we head into this next earnings season, what are you watching closely? James, I'll start with you. Chris, as a dividend stock guy, I'm going to say high dividend stocks, not just because I'm a dividend stock guy,

but also because they've been beaten down a little bit with this anticipation about the Fed. But I think it's largely unjust. So as some of the REITs and master limited partnerships, I believe, perform better than expectations are set now, they'll do well. Rob, what about you? What are you watching? I'm going to keep an eye on the industrial equipment manufacturers, the caterpillars and the deers of the world. Not just because I'm interested in those companies, but I have some investments or some stocks on my radar that are affected by that industry. and even more so because they are bellwethers, and they'll tell me a lot about what's going on in mining and agriculture and construction around the world, which will inform me

really about almost everything I own. Charlie? Yeah, it's a good segue to what I'm looking at is the miners. These stocks have been crushed over the last six months, and I always like to find a good bargain in out-of-favor industries. Companies like Rio Tinto and BHP Billiton are not going anywhere, even though Chinese demand for iron ore and copper may be slowing down a little bit. It's not like small upstart competitors can come in and replicate what they're doing. So, it might be a good time to buy. There's a lot of overspending, overcapacity in the last couple of years, but in the long run, this could be an opportunity. And what you just said and what Ron just said, valuation obviously plays a huge part of that.

And I want to go back to what we were talking about earlier in the show regarding housing, because housing overall has had a very good run over the last couple of years. homes. But based on our conversation about the housing market, about mortgage rates, that sort of thing, it seems to me that at the opposite end of the spectrum, maybe, is the home builders. The Toll Brothers, KB Homes, Lennar, that sort of thing. It would seem like they're the ones who are under the gun. Am I wrong about that, Ron? It seems like, if you're looking to play housing, not that housing is going away, but in terms of new home construction and being able to move those homes, that really seems like a long putt

today. Today, yeah. But there's two sides to every trade. The homebuilders have had a great run, but they're actually down about 25% or so from their highs based on what's going on right now. So, down the road, if we had a crystal ball and we could project an economy growing at 3% or 4%, where unemployment is 6.5% or 6% or lower, and things look good and everyone is working and making money, I could see those home builders looking relatively inexpensive at current levels.

They don't look that way now, and that's why wouldn't it be great if we all had a crystal ball? And their next quarterly calls will be great to read because last quarter they were saying they could finally increase prices on houses without worrying about crimping demand. We'll see if that's true with where rates have headed.

One industry you guys didn't touch on, let me just bring up, is the big technology, technology, and I'm referring to the Apples, Googles, etc., that sort of thing. Apple is seemingly always in the headlines, but this week one of the headlines was that it was dipping under $400 a share. I'm just curious, when you look at those big technology companies, is there anything in particular that you're looking for out of this next round of earnings? Because it seems to me like people are already almost glossing over this next quarter. They're already looking ahead to the fall. And part of that has to do with, I think, the expectation

that nothing new is coming. You talked about how the home builder calls will be fun to listen to. It seems like, for a lot of people, nobody's looking forward to listening to Apple's conference call or Google or that sort of thing, because there's this expectation that the big announcements, devices, the exciting, sexy stuff, that's not coming until the fall. These stocks are looking perpetually cheap, and I think it depends what type of tech you're looking at. The Dells and the HPs don't have anything exciting going on, in my opinion. But there's other companies that do, like Google or Microsoft are certainly getting some consumer love and some enterprise spending going their way.

Let's stick with Microsoft, which is teaming up with Spanish telecom giant Telefonica in a one-year marketing deal to promote Windows Phone 8 in Europe and Latin America. This seems on the surface like this could be a pretty big deal for them. You watch the company closely, Charlie, how big a deal is this? Ron and I own Microsoft, a million-dollar portfolio. This is a very pleasant surprise we got this week. Telefonica is the fifth-largest telecom in the world with 315 million subscribers. For some context for our American listeners, AT&T and Verizon are both around 100 million each.

So Telefonica is a very big company. This is a big deal. And why they are teaming up with Microsoft is to fight the iPhone and Android duopoly, which is not really favorable for the telecoms because it puts them in a disadvantageous position when they're negotiating all the behind-the-scenes terms around the handsets they're going to carry. And so for the next year, they're going to be pushing Windows Phone in a big way, and I'd love to see higher market share out of Windows Phone. I think that'd be great for Microsoft stock, and we'll see if the execution comes through on this. So this should move the

phone nicely. Is the Surface on the market, by the way? I haven't seen any around. they got those uh swanky commercials when do you think you'll have an indication uh obviously not in this next quarter but do you think somewhere you know i think by the holiday season you'll start to see the numbers come through if they're going to ron safe to say you're more excited about the telefonica deal than the prospect of microsoft being the sole owner of the nook franchise i think that is plenty fair to say um before we wrap up with our final story and we will get to stocks on our radar later in the show. But you can follow us on Twitter. At Motley Fool Money is our Twitter handle. We got a tweet from one of our dozens of listeners. Then I'm going

to kick over to you, James, because Louis DeNicola writes on Twitter, I've been keeping an eye on BBEP since it was mentioned a while back. Why the huge down up with the acquisition recently. This BBEP is Breitbart Energy Partners. Breitbart Energy Partners, yeah. Breitbart. And that was a stock that was on your radar. Can you give us a little context? Correct. It's a Los Angeles-based MLP. It's a recommendation and income investor. These guys buy mature producing oil fields, basically, and just pipe the oil out. So they made a new acquisition. The market didn't like it at first. The stock went down a couple of points. Then they had a conference call to explain it a little bit more. And after that, the unit price started to

creep back up. So it's kind of simple as that. I don't know exactly what the detail was that the market liked, but something to do with how accretive it's going to be, I think, by 2015, something like that. So, you know, I'm still happy they paid what seemed like a high price, but it seemed like they got a good buy. Our final story, we talked about Microsoft teaming up with Telefonica. Apparently Microsoft is also, whether they know it or not, teaming up with some researchers at North Carolina State University who have taken the first step toward creating an army of unstoppable cyborg cockroaches. Yes, guys, scientists, and I'm just reading directly from the text in a scientific journal,

scientists seeking a way to turn cockroaches to the side of good have found a surprisingly simple method for doing so with Kinect, which is the Xbox system, right? Yes, it is. The researchers wired test cockroaches with a small circuit that could send electrical impulses, causing them to move forward and change direction by remote control, and then tied the whole thing into a Kinect

setup. Have they never seen a horror movie, Charlie? No. Slippery Slope. Isn't that always the way, though? No, that's not a good combination. That's always the way, isn't it? No, no, no. We're going to use this power for good. Until it turns on you and eats you.

Right. And then what happens when the machines and the insects and the animals rise up, and they basically form a team. Anarchy, that's what happens. It's harmless fun. Harmless fun. Let's bring in our man, Steve Broido, from the other side of the glass. Steve, do you have any thoughts on this?

It just seems like this is researchers run amok here. All I can say is, what could possibly go wrong? Who's funding this research anyways? I don't know. We should dig into that. If anyone knows, drop us an email, radio at fool.com. And if you're at North Carolina State University and you have any sway, I get why someone would want to just test this, like, hey, this would be sort of cool in the way that a kid thinks it would be cool to take an ant in a magnifying glass and try and burn it with the sun.

But to your point, Charlie, this sounds like actual dollars were spent, and there's some yet-to-be-revealed evil outcome. It's all part of some master plan. If you could control a cockroach, would you use that to your advantage in some way? Well, you would. I know you, and I know you would. The things they're talking about are kind of cool. You could send cockroaches into earthquake areas where people are hidden under rubble and they can get into places, and maybe with cameras, who knows.

It's a really cool idea. Do it with a harmless animal, like a ladybug. Scare off. Not a cockroach. A ladybug. All right, guys, we'll see you later in the show. Up next, a conversation about beer, baseball, and the man who saved America's pastime. Stay right here.

This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Baseball was on the verge of dying back in the summer of 83. I'm referring, of course, to the summer of 1883. Fortunately for lovers of our national pastime, one man came along and changed all that. And he's a big reason why baseball is what it is today. It is a story that is wonderfully captured by Edward Acorn in his new book, The Summer of Beer and Whiskey, How Brewers, Bar Keeps, Rowdies, Immigrants, and a Wild Pennant Fight Made Baseball America's Game. Ed, thanks for being here. Oh, thank you, Chris.

You had me at the summer of beer and whiskey. But take me back to 1883. Professional baseball had only been around for a few years, and already it was on the verge of dying. Why Why was baseball in such bad shape? Yeah, baseball was in bad shape for a couple reasons. One, it had been infested by corruption. There was a scandal every bit as big as the famous 1919 World Series where the Black Sox threw the World Series. In 1877, a team from Louisville threw the National League pennant.

And this sort of specter of corruption had settled over the game. People couldn't be sure whether what they watched on the field was legitimate or not. So that really hurt the game. And the second thing was, there was one major league, the National League, which is still going strong today, but their business model at the time wasn't particularly receptive to the public. They banned Sunday games. They had no Sunday games. They banned liquor at the ballparks. You couldn't buy beer. And they charged 50 cents admission, which doesn't sound like much, but was quite a lot for people in the 1880s. And along came Chris Vondere, a German immigrant who changed all that.

How did he do it? He, as you said, he comes to America, he owned the St. Louis Browns. How did he really get involved in baseball? Because he couldn't have grown up in Germany and thought to himself, oh, I'm going to move to America and get involved in that. No, he was a grocer. He came over here with essentially nothing, a classic immigrant story, worked hard, built up this grocery, had a saloon out back. And then he noticed this strange American sport taking place right down the street on Grand Avenue in St. Louis.

And several American-born people had tried to make a go of baseball, and it failed. He decided to give it a shot, and he had a great business plan. And it was, he was going to have Sunday baseball, he was going to have beer at the ballpark. In fact, he did it primarily to make money selling beer. And he was going to charge 25 cents admission, which was half the National League's fee. And what he discovered very quickly is there was a hunger and a passion for baseball that was untapped, so to speak. And he brought these people into the ballpark in huge numbers. What was the reaction from other people involved in baseball?

Obviously, the fans love it. Tickets are half price. They can get a beer at the game. But what was the reaction from other owners and even, to some extent, the players? Well, the players were happy because there were more professional jobs. But the National League was very unhappy because they were worried about the image of the game. It had gotten very dark, and there'd been rowdyism at the ballparks and so forth. So they thought this crazy new league was going to cause a lot of trouble. And their critics called it the Beer and Whiskey League, which is pretty much where I got the title of the book, The Summer of Beer and Whiskey.

You're listening to Motley Fool Money, talking with Ed Acorn. His new book is The Summer of Beer and Whiskey, How Brewers, Bar Keeps, Rowdies, Immigrants, and a Wild Pennant Fight Made Baseball America's Game. It wasn't just beer, though. It wasn't just tickets are cheaper. Chris Fonder really involved with a number of firsts, including, do I have this right? First one to serve hot dogs at a game? That's almost hard to imagine that that wasn't always the case. And the first player-for-player trade. I have to assume that at some point the other owners start to warm to this guy a little bit, if only because they look at what he's doing and think, oh, that's working for him. I'm going to try it at my ballpark. Yeah, well, he was one of the first to sell hot dogs.

Nobody's absolutely certain, but he was up there. He was very innovative. He did make deals for players. He did go out and buy players' contracts, which was a pretty novel thing. And the other owners quickly caught on to that. He also did things like have fireworks at his ballpark. I mean, they only had day games, so this wasn't during the game, but it was at night at the ballpark, and people could come out and see fireworks.

And he also made going to a ballgame sort of an event that's just beyond baseball. He put up rides at the ballpark and attractions, and that's sort of a model that now baseball is getting more and more into. I was going to say, it strikes me as something that certainly, if you've ever been to a minor league baseball game, and there are a few teams in the greater Washington, D.C. area. I know you're up in Providence. You've got the Pawtucket Red Sox up there. Certainly, it seems like minor league teams really embrace that whole notion of, hey, it's not just the game on the field. We're going to make this a fun experience, even if you're not all that interested in the game. And that's very much what he brought to it.

And what he did was all of a sudden people in those days worked 60 hours a week, six days a week. They could suddenly get out to the ballpark. immigrants could see what this American institution was all about and sort of feel more like Americans by going to ballgames. And it really transformed the economics of the game. It became much more popular and just spread all over the country. You're listening to Motley Fool Money, talking with Ed Acorn. His new book is The Summer of Beer and Whiskey.

You put a lot of research into this book because, again, this is something taking place in the 1880s. We were talking during the break, you mentioned how you would go to the Library of Congress and really dig into the archives of the newspapers. What surprised you the most when you were researching this book? Well, what really surprised me is that, yes, baseball was different, but the spirit of it has never changed. It's this wonderful game filled with all these great characters. It plays a lot like it does now. The fans react to it a lot

in similar ways. And it's just wonderful to see that even though this period has been completely forgotten, you've got to go back and dig into the original research to bring it back to life. Once you do,

it's just wonderful baseball stories. And I think there's nothing like baseball in any period you look at it. It tells you so much about the culture of America, What's going on at that time? And here it's an America that's very vibrant, it's changing, but it's very tough. You had to be a resilient individual to make it in America in the 1880s, and baseball was a lot like that.

You mentioned that Chris Vandere was really the classic immigrant story and in some ways personified the American dream. But in his particular case, it didn't really have a happy ending for him, did it? No, he had a problem with being very attracted to young ladies, and he got divorced two times, married three times, and he lost a lot of his property that way, and then he got overextended. He invested heavily in his ballpark, and there was a fire, and he eventually wound up essentially broke. He was working behind a bar in his old age and barely getting by. So it's not a particularly happy ending for him. But he did create the franchise that is now the St. Louis Cardinals, which is obviously one of the spectacular franchises in baseball. He also, just in skimming through the book, it seems like he was somewhat of a colorful character. We think about Yogi Berra and sort of the way he abused the English language with all of his various yogisms. And there's one part where Vendee describes his speedy third baseman by saying, man, he can run like a cantaloupe. I don't know exactly what that means, but I just love that phrase.

Oh, he's great. He's great. He used to go into the clubhouse after games and walk up to players and say, Why did you drop that ball? As if they dropped the ball on purpose. He would say things like, if he made a trade that didn't turn out well, he said, Why didn't I listen to my own advice? You know, that kind of stuff.

So he's just a wonderful character. And he commissioned a statue of himself. Sure, why not? Terrific. And now it's resting on his gravestone in St. Louis. And you can still see him striding there triumphantly in the graveyard there. And it's just wonderful stuff. One more question before I let you go.

I have to ask this about a book where the title is The Summer of Beer and Whiskey. How has the relationship between beer and baseball changed over the last 125 years? Or has it not changed at all? Well, I think it's become much more a corporate, embedded part of the game. But, you know, Vendere really made it part of the game way back in the 1880s. And it was obviously a marriage made in heaven. People just love watching a ball game and holding a beer and drinking it. And it's a great thing.

The Chicago Tribune says, For fans, each season's crop of baseball books is like a literary Christmas, and the summer of beer and whiskey is one of this year's treasures at Acorn. Thanks so much for being here. Thank you so much, Chris. Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Month. 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. Joining me in studio once again, Charlie Travers, Ron Gross and James Early. It was not too long ago that our colleague, our friend and colleague, Uncle Joe Mager, set off for Australia to work in the full Australia offices. And, Ron, I'm starting to think it was something we said, or maybe more specifically something you said, because our man James Early is heading not just out of town, not just out of town. Way out of town.

Way out of town. James, tell our dozens of listeners where you're off to. I am going to the Philippines to a city called Davao. And why are you going? My wife's parents live there. We're going to spend a little time with them. You know how our son can experience the culture. But you are not leaving the Fool.

I am not leaving the Fool, and I'm not leaving permanently either. It's just a leave of absence. A leave of absence. So you'll still be running Motley Fool Income Investor, still be all of that, the boards, everything like that. We will miss you here on Motley Fool Money. But I'm guessing they have phones there. We'll call you from time to time, and we'll see if we can pull you back here. Sure.

In the middle of the night, too. It's a great time to call. What is the time difference? It's 12 hours. 12 hours. Okay, so that's going to ... That works. That works.

I can wake up early, guys. We'll figure that out. We'll do it. But in preparation for your trip, our producer, Matt Greer, has prepared a little quiz about the Philippines that will test your collective knowledge, all three of you. See, Ron, you're looking like you're not involved in this quiz. I feel no pressure. I mean, James is the one going, but you're all going to take this.

Question one, the flag of the Philippines is the only flag in the entire world that A, is not rectangular, B, features both stars and the sun, C, is displayed differently in times of war and peace, or D, dates back to the 13th century. Four options there. Not rectangular, features both stars and the sun, displayed differently in times of war and peace, or dates back to the 13th century. Ron, what do you think? It's B, Chris. B, stars and suns. I'm going to go with B also. James?

I am no vexillologist, but I'll say dates back to the 13th century. All three of you are wrong. It actually is the only flag in the world that is displayed differently in times of war and peace. The red side of the flag is on top when the country is at war. The blue side is on top when it's at peace. But, you know, if you're looking to impress this weekend at a barbecue or something, Nepal is the only flag that is not rectangular, and Denmark dates back to the 13th century. In terms of consumer technology, the Philippines is considered to be which of the following?

A, the email capital of the world, B, the text capital of the world, text message, C, the YouTube capital of the world, or D, the mobile phone capital of the world? What do you think, Ron? Wow. Wow. YouTube, Chris. James? Text. Text.

Email. It's the text message capital of the world sending about 450 million every day, the citizens of the Philippines do. That is more than the United States and Europe combined. Wow. They have a professional basketball team called the Texters. Wow. So you had inside information. Yeah, I had inside information.

We've been doing this show for four and a half years. That's the one sports trivia that James has ever brought to the table. Japan is home to many great innovations, but one device that is often credited with being invented in Japan was actually invented in the Philippines. Which is it? A, karaoke, B, the pocket calculator, C, the electric rice cooker, or D, the VCR? The obvious answer, I think, is karaoke. So I'm going to say karaoke. James?

Karaoke, and video karaoke was also. Wow. Okay. Electric rice cooker. He said it like he knew it. You should have gone with the crowd. It's karaoke. Last question.

These are good questions, actually. According to the World Health Organization, the Philippines is the biggest supplier of what? A, catheters, B, surgical masks, C, gout, or D, expat nurses. What do you think, Ron? I'll bet you $10 it's expat nurses. James? Expat nurses. Expat nurses?

It's also the heart disease capital of Asia. Good move. Expat nurses. Yes. Of all employed Filipino registered nurses, roughly 85% are working overseas, and 25% of all overseas nurses are from the Philippines. That's a lot. There you go.

Excellent clue. Yeah. Thank you to our producer, Mac Greer. Well done, Mac. Let's bring in our man from the other side of the glass, Steve Broido, one more time for the stocks on our radar, and he'll hit you with a question. Uh-oh. Ron Gross, you're up first.

I'm not prepared for questions. Just drag it out, drag it out. Steve, are you a NASCAR fan? No. Okay, next. International Speedway, ISCA, company reports next week. They own and operate 13 racetracks, Daytona, Talladega, the biggies. They are reliant on NASCAR.

The big play here is when NASCAR will renew their media rights with the major broadcasters, broadcasters, their major networks, and this company gets a nice piece of that. So we're hoping they get renewed at much higher prices. We think the stock looks good. Steve, question? Do you feel the NASCAR popularity rising or waning? It is absolutely waning from an attendance perspective, which is quite frankly bad for this company. We need to see that firm up for the stock to look really interesting. Wow, great sales job there. James Earley. I'm an analyst, not a salesman. I'm going for my favorite Brazilian water and sewage

company, Cebespi. This is partly owned by the state of Sao Paulo. I think still almost 20% of the water in Brazil just leaks out of pipes based on faulty pipes or people illegally siphoning the pipes, just siphoning water out or presumably not siphoning sewage out. But anyhow, this company, I believe, has 17% upside. It has the protection of being- 17% upside? I know. It's not a lot, but it's- No, but that's pretty specific. Yeah, it was per my model. I mean, what do I know? But it's a dividend payer. It's done

very well for me, an income investor, and I believe it's got more room to run. And the ticker symbol? SBS. SBS. Steve, question? Do we have an equivalent awesome-sounding company in the U.S. somewhere? It sounds like a national sewer company. How amazing. Well, Aqua America, ours is mostly municipally owned, these little small, inefficient sewage companies. We have some pipes, Steve, that are wooden sewage pipes, like ancient Romans used to have in Washington State, I think in Pennsylvania.

So even the U.S., the idea of modernizing our sewage is a big trend, and Aqua America is a stock I like to do that. That's a very complete answer. That was impressive. Thank you, Ron. Charlie Travers, your stock? Telefonica, T-E-F. And I like it as a hidden dividend story. They cut their dividend last year.

So if you look at Yahoo Finance or Google Finance, it shows a yield of zero. In actuality, the yield is over 6%. And I don't really think that's recognized because of the data feed problems. And so once I think that starts to roll through next year, you're going to see a bump in the stock to put it more in line with other telecoms. So I think there's a little bit of upside here. Aren't these guys stuck trying to sell Windows phones now? Did you see James perk up a bit, though, when you said the word hidden dividends?

Steve, question about Telefonica? What's the next big wave in mobile? Wow, that's kind of a tough question. How much time do you have? Eight-inch phones? I don't know. Steve, any of those three stocks strike your fancy? I don't know.

I've got to go with James. He is heading to the Philippines, but a good, dividend-paying sewage company just warms the cockles of my heart. Radio at Fool.com is our email address if you have questions for us or if you just want to send some well wishes to James Early as he heads off in the next couple of weeks. Thank you, guys, for four and a half years of radio. It's been great fun. This is literally my favorite time of the week, everybody listening to you. Thank you.

James Early, Charlie Travers, Ron Gross, guys, thanks for being here. Thank you. That does it for this edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.