Motley Fool Hidden Gems Investing - Motley Fool Money: 07.08.2011

Episode Date: July 8, 2011

Stocks fall on a bad jobs report.  Warren Buffett bets on the U.S. economy. Target brings home the groceries.  Facebook launches video chat. And Hulu entertains suitors.  Our analysts discuss those stories and share some stocks on their radar.  Plus, CNBC anchor Carl Quintanilla talks about the business of BMW and shares his ultimate driving experience. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill. And joining me in studio this week, for Motley Fool Hidden Gems, Charlie Travers. For Million Dollar portfolio, Ron Gross. And back from France, from Motley Fool Hidden Gems, Seth Jason. Welcome back. I'm from France now. Bonjour. So to heck with the rest of you. We've got the latest retail numbers. We've got the growing battle between Google and Facebook. And we've got CNBC's Carl Quintanilla with an inside look at the world of BMW. Plus, as always, an inside look at the stocks on our radar. But guys, we will begin with the big macro.

The jobs report for June is in, and the numbers are not pretty. Just 18,000 net new jobs added. Unemployment is now up to 9.2%. Charlie, earlier in the week, we were talking on our daily podcast about Warren Buffett, how he went on CNBC, and among the things he said on CNBC was that he has a bet with Peter Orsag, the economist and former budget director at the White House, about where unemployment is going to be in a year. And Buffett said he thinks he's betting that it's going to be under 8%.

And I backed him. You backed him. Do you want to revisit that bet right now? Be bold, Charlie. I know. No, I'm actually going to stand on Warren's side and not bet against him because after looking into the numbers, which look bad on the surface, they're actually not that bad. Really? Yeah.

I need more than a headline? They seem pretty bad. What a world. Right. So the headline number is 18,000 non-farm payroll increase, which is the weakest since September, and unemployment at 9.2% is a six-month high. So why am I saying things are not that bad? Well, if you look into what's going on, the private sector is actually up 57,000 when the government was down 39,000. So the companies we know and love are still doing fine. It's your state and

local governments that are laying people off left and right. Ron? So the problem with Warren's prediction though, and of course he may be right, is that you need to add 125,000 to 150,000 jobs each month just to absorb the new entrance to the workforce. And so that's to keep everything static, flat. So we're going to need to go significantly more than that to get unemployment down to Warren's goal. And Charlie's goal. Charlie's on his side goal. And our economy is not that robust at the moment. So we've got a ways to go. Right. So he's actually more aggressive than 8% next year. He said 6% a few years out. So he's very, very bullish on the U.S. economy. And I think the data kind of backs him up. Year over year, the private sector's added

a million point seven jobs, and it's only because of the government shedding 600,000 that things look weak. So if things turn around and stick with what the private sector is doing, he's going to come out right once again. Finally, on the other side of that coin is a lot of the strength was in motor vehicle production. I don't know if that's necessarily sustainable going forward. We're going to have to look elsewhere to make up for that because I don't think that continues. So, again, we have ways to go here. We can always count on you to just bring the pessimism.

You want realism? What do you want? So what is, as an investor, what is the big question that you have about jobs looking out for the next year? The biggest question I have, I mean, it's going to all be based on are companies willing to spend the money that they do have? Companies not only have a ton of cash in the bank, but they're quite profitable. Are they going to be willing to loosen the purse strings and increase their employment roles? And what's going on with entrepreneurship in this country? Are the incentives there to create new companies and hire and grow business? Seth, what about you? It all goes back to confidence. If consumers aren't out there buying stuff, then none of this happens.

And so a lot of this at this point is a psychological game because you get a virtuous cycle when consumers feel more confident. We're going to talk about some of those numbers in a second, but I think one of the things Warren Buffett is doing, knowing that the press is watching him, is trying to project some confidence and help out. Guys, things are looking a little brighter in the retail industry. This week, Target, Costco, and limited brands all posted monthly results that beat Wall Street estimates. Luxury retailers like Nordstrom and Saks also posting some strong results. Seth, even The Gap had a good month. What's going on in retail?

What's a good month for The Gap? I think anything in positive territory is a good thing. The Gap. You know, The Gap was pretty much giving stuff away, from what I read. And that is actually the case at a lot of retailers, a lot of struggling retailers. So the question is going to be, can they make decent profits on what they sold later? But what is interesting about this report to me is that in the past few months, we've seen a situation where only the luxury stores have been doing well

and the lower-priced stores haven't been doing so well. And we've got, you know, a little bit better performance across the lower range, so Target doing well again, and some others. JCPenney, which we've talked about a bit recently, not doing so well. So, they really better hope that whole hiring the guy from Apple thing works out for them. But this is a pretty, this is a decent report. It's not what I expected. It's much better than I expected.

And let's hope that that continues. Seth, how do you reconcile weak economy, high unemployment with strong consumer sales? People just love to buy stuff. Fair enough. Do you have a favorite retail stock in this industry, Ron? I'm assuming it's Costco. Yes, it is. Am I that transparent? Your love for Costco and CEO Jim Sinegal is that transparent.

One of the finest-run companies in the United States of America with one of the best business models. We've all seen the Sinegal tattoo on his hip. I kind of like Target right now. You get a PE of 12 with a 2.5% dividend, and it's a very well-run company. They said that groceries are their strongest category. I mean, is that really the way that Target is going to succeed in the future by really blowing out the groceries? I believe it. I gave it a test drive in the past week and just happened to be in there to pick up some, you know,

normal household stuff and just grab my groceries while I was there. And they actually had most of what I needed. Sands? I'm keeping mine a secret until stock's on the radar. All right. Well, we'll stay tuned for that. Guys, this week, Facebook announced it is integrating Skype video chat into its social network, enabling users to chat one-on-one with their Facebook friends.

Ron, you're on Facebook. How excited are you? I think it's a good add-up for Facebook. I don't think you'll see me Skyping personally any time in the future. I sure hope not. I think the interesting thing here is Google is the enemy of both Microsoft and Facebook. And humankind. And so the teaming up of Microsoft and Facebook,

and remember Microsoft does own a small stake, is really an attempt. And pending approval, they own Skype. And they earned an $8.5 billion acquisition. So it's really them teaming up to go after the enemy. And I think that makes sense. In a bigger picture, it's really interesting to see 15, 20 years from now what all this video chatting does to the typical public telephone network and where that goes.

That'll be very interesting to watch. And it will take that long because the bandwidth needs are huge and they're not being met yet. Guys, also in the last couple of weeks, we've seen Google launch Google+, which is their latest attempt at social networking. They're basically trying to redo what Facebook has done, but do it in a better way.

How do you think that battle shakes out? Certainly one of our colleagues here at The Motley Fool, Joe Mager, is one of the early people on Google+. He loves it. He's been raving about it. But how do you think that battle shakes out, Seth? Not very well for Google, I don't think, because if it's popular, Facebook can replicate it inside of, you know, a month. And it all gets back to user base. The reason Facebook is a power is that it kind of lucked out and then rolled up this huge user base and you sort of have to be there now.

Google Plus, they had, you know, there's 200 some million Gmail users. Those people aren't visiting that for a social networking experience, whereas Facebook has this 750 million member base. Now they've got Skype integrated, and they're close partners with Microsoft, and Hotmail has some 300, 400 million users or something. There's some overlap in there, but that is a huge audience, and that is a huge barrier to Google trying to make headway in this space. Ron? People are raving about the Google Plus interface. Who's raving about this? I hear that people say people are raving.

It's much easier to use. It's much more intuitive. And so Facebook, I think, over time needs to improve that because some of it can be kind of cumbersome. It's kind of the same as it was in the beginning. And if they can just improve it a little bit, it kind of takes the sale out of Google+. What is one product that Facebook needs to launch or should launch in the next couple of years that's really going to help them drive revenue? Charlie? I would like them to continue the efforts in the video streaming area and with, you know,

in kind of my world and my hobbies is streaming UFC fights for free before the pay-per-view starts later. You know, they've got this captive audience willing to tell them what kind of content they're interested in. And I think that's an untapped market for them. Ron? If they could move into e-commerce in any kind of meaningful way, you know, 750 million users are there already. And if you didn't have to leave Facebook in order to go to amazon or wherever you go to do some shopping that that could be you know tremendous because it's so cumbersome to click over from listen seth what do you think i'm with charlie but i think that

the killer app for facebook is something probably nobody here has imagined and probably nobody at facebook has imagined oh oh okay so i thought there was good i thought there was a big reveal coming i thought it was going to be like confusion by facebook i'm saying that if it were that easy to think of, it would be thought of already. Coming up, Google, Microsoft, and Yahoo are all bidding for Hulu, but which one needs it the most? Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with Charlie Travers, Ron Gross, and Seth Jason as we hit some of the big headlines of the week. Disney CEO Bob Iger said that he and the other owners of the online video site

Hulu are committed to selling it. The other owners include News Corp and Comcast Corp's NBC Universal. Seth, Jason, among the potential buyers, you've got Google, Microsoft, Yahoo, and a rumored price tag of around $2 billion. So who are you betting on? It makes the most sense for Microsoft, really, because Microsoft is already one of the heavy Hulu users via the Xbox 360, where I get Hulu. And I'm going to also mention quickly that I'm in Hulu Plus. I have been for a while. And the library has recently gotten much, much, much better. And so I think this is actually a good property for one of them to pick up. To me, it makes the most sense for Microsoft, especially given the tie-in with Facebook and the possibility

of streaming that way and getting information that way. One of the alleged competitive advantages of Netflix has always been how much they know about users. I think if Microsoft talks to Facebook, they'll know a lot more about what users are interested in watching than Netflix ever did. Ron? Google has YouTube. I think if they get Hulu also, they kind of try to lock up this end of the market. And I think that's what they're interested in doing. But do you think Google needs it in the way that maybe... It sounds a little bit, Seth, like Microsoft might need this more than Google does. I don't know if any of them need it so much. I don't think Google is actually interested. Remember, Google TV, the whole idea of Google TV was to avoid having to pay for

something like Hulu. What they tried to do with Google TV was to stream onto people's televisions the otherwise free internet video that cable and TV providers were providing on the internet. They all locked them out. I don't think that any of the people in that industry want to do a deal with Google because Google has really tried to game the system in the past, and I don't think they trust Google. In March, Amazon launched its own app store. Apple filed a lawsuit against Amazon, saying that the term infringes on its own app store. This week, a federal judge denied Apple's request for an injunction to stop Amazon from using the term. Ron, I'm not a lawyer, but this really doesn't seem like it was a tough decision.

Yeah, I don't think the judge had too much trouble figuring this one out. What she said was that Apple really failed to convince that the app store name would confuse customers, it didn't infringe on Apple, and that it didn't dilute Apple's brand. I've got to say, it looks like they pretty clearly ripped it off, to be honest. I mean, it doesn't confuse anybody, and nobody's going to mistake Apple for Amazon. But they did call it App Store with a double P, and they just took out the space. They're not dumb. I've got to say, I'm liking this judge who, in her decision, kind of twisted the knife in Apple a little bit.

And I'm quoting from the decision here. Apple did have substantially exclusive use of the term App Store when it launched its service a little over three years ago. But the term appears to have been more widely used by other companies as time has passed. That's really kind of sticking the knife in there and twisting it a little bit. Basically, it's just saying you could have protected it if you wanted to. You dropped the ball. Deal with it. Now you've got something called Kleenex.

Just call it iApp Store and get over yourself. If I was Apple, I think I'd launch an e-book reader called the Kindle and spell it with a Q. Take that, Bezos. The World Series of Poker is kicking off in Las Vegas. And this week, Wynn Resorts accepted wagers on the World Series of Poker, making it the first time a Vegas casino is taking bets on a non-sporting event. Charlie, you're the best poker player in the room. What do you think of this? It's pretty interesting. At casinos around the world, you can bet on things from the events of political outcomes to the weather. Nevada is much more tightly regulated on what it'll allow people to bet on in a casino.

They want to avoid events with predictable outcomes or places where individuals can influence the outcome, such as in a poker tournament, because if the stakes got high enough, you could imagine a case where the participants might throw the tourney. No. Yeah. Has that ever happened? You know, Black Sox-type scandals and the like. But this is pretty interesting, and it could open the door to betting in Vegas casinos on other types of events. How much do you think, assuming it goes that route, how much do you think this could positively impact the bottom line of Wynn Resorts and other casino stocks? I think it could very well have a material impact on the number of visitors who come and stay at the resorts. They were talking, and it didn't go through this year, but one casino that was unnamed tried to get betting opened up on last season's American Idol.

and they expect that come next Oscar season, that would be one type of event that you could come gamble on. And as somebody who's had Oscar parties where we do gamble on the Oscars, I would be kind of interested in that. Ron, have you ever bet on a non-sporting event like golf? I'm still reeling over the use of the word tourney. Why? It's a word.

I know it's a word. It's just he's so in that world that he just shortens up that word tournament. Bang, tourney. You don't want to play poker against Charlie. No, I don't. Seth, what do you think? I'm not playing poker with Charlie. Even if you win, you lose.

He can kill you. Look at him. He's a lot bigger than I am. And finally, it was nearly 20 years ago that Sony unveiled the Mini Disc Player, which was supposed to be the next big thing after the Walkman. But on Friday, Sony announced it is killing the Mini Disc Player. And before you panic, though, Sony will still continue to produce the actual Mini Discs. Not exactly sure why, but let's bring in our man Steve Roida,

because, Steve, you actually have a mini-disc player, don't you? I do, too. We do. Yeah, we used to do recordings back in the day on mini-discs, portable mini-discs, yeah. How emotional is this announcement to you? You know, we don't use it much anymore, so it's not terribly emotional, but it's nice to know that they are still supporting the media, even though you may say, oh, if no one's buying them,

but I guarantee you there's people that still use those things. So it sounds like you're just pushing your sadness way down inside. It sounds like you're blocking. Exactly. Something like that. Hey, they were good little recorders. They were cheap. I mean, you could afford one as a student, as a journalism student. That's what I got mine for.

Getting the sound out was kind of a pain, and it was soon surpassed by MP3-type recorders. But for five years or so, it was the best thing you could get. Do you have a favorite obsolete technology, Charlie? As a gamer, I am partial to the original Nintendo Entertainment System. You know, you've got Mike Tyson's Punch-Out!, Castlevania. It's good stuff. Castlevania? Oh, yeah.

What is Castlevania? It's like this game where you go through this Romanian castle and you go fight a vampire at the end. Wow. Seth, do you have a favorite obsolete technology? I do. You can still get it. It's using the old view camera, the old 4x5 view camera with the sort of accordion side, and you put the black blanket over your head to focus.

You take pictures on a big negative. I've still got my view camera. You can still get all the stuff. There was just kind of— But I can't get one at Target. You can't get one at Target, and digital photography is so good now that that's all I use, and it's just preferable in so many ways. But sometimes I just miss working with that really old, really poisonous medium.

All right. Seth Jason, Ron Gross, Charlie Travers. Guys, we'll see you later in the show. Hey, on next week's show, we're going to be dipping into the Fool mailbag. So drop us a note, radio at fool.com. Tell us your favorite obsolete technology. Hey, tell us about a technology you think is going to be obsolete. And yeah, you can send us your investing questions, too.

That's radio at fool.com. Up next, Carl Quintanilla from CNBC takes us inside the world of BMW. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Carl Quintanilla is one of the hosts of CNBC's Squawk Box, and he's the host of a new CNBC documentary, BMW, A Driving Obsession.

It premieres on Wednesday, July 13th at 9 p.m. Eastern, and he joins me now. Carl, welcome back. Always good to talk to you, Chris. The last time you and I talked, you had just finished a documentary on the garbage industry. Was doing this documentary on BMW a way for your bosses at CNBC to make it up to you for having to pick through landfills in Asia? I think they definitely owed me one. And and this was definitely the currency that I had in mind. Yeah, you're right on the trash thing. We were we were in Beijing for days sorting through these illegal dumps, 100 percent humidity, 100 degrees. This was in a very dry, mild Munich climate on the Audubon, taking a Z4 to 240 kilometers an hour.

So, yeah, I mean, I think we're probably back to neutral after trash. This got me back to neutral. Now, I want to get into some of the things in the documentary in just a second. But first, the Wall Street Journal reported this week that luxury car sales surged in the first half of 2011, and leading the way is BMW. What is fueling their growth? Well, I think, I mean, look, one of the realities of the recovery, whether you like it or not, has been the resurgence. And in some ways you could argue that they never went away, just in terms of luxury, the high-end consumer around the world. Those with money came out of this crisis in virtually as strong a position and in some cases better.

Now, you could argue they might have lost some money here or there in stocks or what have you. But on a net basis, this has not hurt the rich around the world. You couple that with growth in China and the increase in income there, and it's right into BMW's sweet spot. They have made a choice that they are not going to try to be a mass market carmaker. They are going to stick with premium, and that's the BMW line, it's MINI, it's Rolls-Royce. They're three big brands. And as a result, they are in the sweet spot.

It's a fascinating thing to watch. Now, one of the things that you do in this documentary is you take viewers inside the tech center. What is it like inside BMW's research facility? Well, it's huge for one thing. That's the thing. It's 80 acres. That holds a lot of engineers and designers. It's highly secretive.

It looks nondescript from the outside, but in order to get in, I always tell people, remember the opening sequence to Get Smart? Sure. When Don Adams has to go through the multiple, he goes in the elder phone booth, and then there's doors, and it's just like that. A series of concentric circles of security that they amazingly let our cameras in. When we walked in with our cameras, heads turned like, how in the world did you get in here? Who is that guy? Yeah, because we don't let press in here.

And then you have, in this very almost church-like environment, these designers working on Macs, drawing, illustrating, molding clay models of cars, and just engineering the hell out of these BMWs that you and I will maybe one day drive in three or four years. they are kind of in their own german way kind of mad i think in a mad scientist kind of way because they will take something an element of a car and engineer it and and try to perfect it until you think until it's almost reached the level of absurdity that that's how thorough and scientific they are you're listening to motley fool money i guess is carl cantania host of the new CNBC documentary, BMW, A Driving Obsession. One of the things that comes across in the documentary is BMW's obsession with every detail, as you said, sort of testing things to the nth degree, including sounds, every possible sound combination for inside the car. What is that

process like? Yeah, we interviewed these sound designers who, basically, they engineer the sounds that that you and i would hear if we say we don't buckle our seat belt and take off right or um if there's a an engine light that goes off it's accompanied by a little toot right well that sound that toot is worked on and refined by a guy somewhere um who has to sculpt it i guess he he compares it to working on a tiny jewel uh making sure each cut is clear and and and distinct so he will listen to that millisecond of sound 2,000 times in a day, and then again the next day before they decide, okay, this matches the character of the car. So a mini sound in a mini is kind of playful and whimsical, whereas a Rolls-Royce beep

might be very elegant and classical and lush. Our question was, why? Why spend the money? Why spend the time? their argument is it's those intangibles that create the emotional connection between the consumer and the product. And I guess their judgment is better than ours because their sales figures don't lie. We were talking earlier about the global sales of BMW. They've obviously seen growth in China, but in percentage terms, the luxury market in China is very small.

I think a lot of companies would settle for a small percentage of the market in China. But how much potential is there for BMW when it comes to China? Well, it depends on what your thesis is about China. I mean, if you believe that wealth is going to continue to grow in that country, you look at the number of millionaires and billionaires that they're minting every day, not to mention the 2,000 cars that are added to the road in Beijing every day. There's a lot of fuel there to work with if you're a carmaker. They have, obviously, a lot of domestic competition.

Chinese are trying to make cars as well. But for BMW's purposes, it's about staying number one in premiums. So they're worried mostly about Audi, and they're worried about Mercedes-Benz. But if you're in China, and your income is growing, and you have aspirations to elevate your lifestyle, your standard of living, chances are, you know, okay, you may not be in the market for a Rolls-Royce, but it's highly likely that you might spring for a 3 Series or a 7 Series. And that small marginal number of additional cars is all BMW needs to put up a good percentage growth number.

You mentioned Audi and Mercedes. What is the primary way that BMW differentiates itself from those two companies? I think BMW's take would be you love driving, the sheer experience of driving. You like when you turn a corner, having the car and the steering wheel kind of grapple with the road and feeling that in your forearm and your elbow. That's our car. You want a passive driving experience where the road is smooth and just comfortable. maybe you do want an Infiniti, or maybe you want an Audi,

although the relationship with Audi is not healthy at all, and they don't like to talk about Audi. So they want someone who either really loves driving or who wants to look like he really loves driving. And I think there's a high percentage of consumers who buy a BMW who buy it because, hey, I drive a Beamer. And what that says about you is important to them. You're listening to Motley Fool Money?

My guest is Carl Cantania, host of the new CNBC documentary, BMW, A Driving Obsession. What surprised you the most when you were working on this documentary? I think, well, what surprised me the most would be the difference between German and American culture, business culture. You know, we do a lot of documentaries here at CNBC. We have not done a true profile, hour-long profile of a non-American company. We've done Coke, McDonald's, GM, Ford. um it's different over there i mean if you spend more than three or four days uh in a german corporate headquarter building it is the way they do business is different the relationships between

executives are different there's not a lot of back slapping office chatter they are serious i would argue their sense of humor maybe is uh you know it kept in check um And I think that part of that goes to German culture in general, but they are – I don't want to call them obsessive, but it is – there's not a lot of joking around. And you come from America, and especially at some of the big companies here, there's more of a buddy system at work within the ranks. i think they view americans a little cynically you know they know we're an important market but um i think they think of us a lot of times as as driver in at least in the car market as drivers who want you know we're more interested in cup holders than rear wheel drive suspension um so and that explains a lot of what sells in this country right i mean yep bmw is a niche

market in the u.s because most of us you know we will drive our tourists uh it gets us to work back. What was the strangest thing you observed when you were working on this documentary? And it could be anything. It could be it could be a test. It could be something about the corporate culture. A couple different things. They put a car in a wind tunnel that blows snow. They used to take their cars to Sweden and test in frigid weather up there. But they will blow snow on it at high wind speeds for an hour. And then they will measure the thickness of snow buildup on certain parts of the rearview mirror or the grill

to make sure that the intake gets enough oxygen so it doesn't suffocate the engine. That was a little strange. I mean, I guess somewhere there must be an engineer who says that's important, But it looked a little excessive to us. Watching some of the designers draw by hand, we actually pulled a couple aside, and I would say, draw me a kidney grill right now. You know, the classic BMW kidney grill we all see in our rearview mirror.

And it just sort of bled out of his hand. He put the paper down, and it's as if he was drawing. It's the way you and I would draw a stick figure. It happened in five seconds. And I think that's when I knew that the repetition of what they do enhances their skill. I mean, this guy knew how to draw a car, and from that, he can envision what tomorrow's car might look like. That was amazing. You're listening to Motley Fool Money.

Our guest is Carl Quintanilla, host of the new CNBC documentary, BMW, A Driving Obsession. And, Carl, before we wrap up with a round of buy, sell, or hold, BMW's tagline is the ultimate driving experience. So I have to ask, what has been your ultimate driving experience? I, very few of us at least, have driven a Rolls Royce. So even though it wasn't the most fun I've ever had in a car, driving a half-million-dollar car, especially in England, where the steering wheel is on the right, was a little intimidating. I kept thinking, and the roads there are like cowpads, so narrow.

And I kept thinking, if I clip a mirror on this car, I'm dead, I'm done. um and uh it's a very heavy driving experience it's a v12 engine i mean you feel like you're driving a u-boat on the ground um but a really nice u-boat yeah yes and it's i i just remember thinking this is a car i think i'd rather be driven around in than driving myself but it was uh something not a lot of people get to do and your worst driving experience that would be my daily commute in Manhattan. I think a lot of our listeners probably can identify with that. All right, time to wrap up with a round of buy, sell, or hold. Let's start with something that is a skill that not every driver has. Buy, sell, or hold driving stick instead of automatic.

Oh, stick, definite, long-term buy. Buy, buy, buy, as Kramer would say. These are personal statements that probably do not help with resale value. Buy, sell, or hold bumper stickers. Oh, I'm short. I'm definitely short bumper stickers. Why anyone would deface their car like that, I've never understood. A bunch of internet companies have IPO'd this year, and this music service is one of them. Buy, sell, or hold the business of Pandora.

I am a huge buyer of Pandora. I always think of all the things coming to market, It's the one IPO company to whom I've personally cut a check. So when people ask how do they monetize their clicks, I am a victim. I love Pandora. And finally, the creator of this Emmy-nominated children's television series said he was trying to capture the feeling of shows like those produced by Sid and Marty Kroft. So buy, sell, or hold the staying power of Yo Gabba Gabba. Since I watch an average of half an hour of Yo Gabba Gabba per day because of my twin two-year-olds,

not only am I going to buy Gabba, I'm going to buy more on margin. Wow. Wow. You're going to just lever up on Yo Gabba Gabba. I'm going 40 to 1. I'm going Lehman-style crazy on Gabba. You can catch him on Squawk Box every weekday morning on CNBC, The new CNBC documentary is BMW, A Driving Obsession. It premieres on Wednesday, July 13th at 9 p.m. Eastern. So catch it, set your DVRs. Carl Quintanilla, thanks so much for being here.

Always fun, Chris. Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill, and joining me in the studio once again, Seth Jason, Charlie Travers, and Ron Gross. Guys, it is that time once again to talk about the stocks that are on our radar.

Charlie Travers, you are up first. You may not know this, but July is National Ice Cream Month, and in honor of that, I am going with Dunkin' Brands, which is set to IPO any day now, along with Dunkin' Donuts. Dunkin' Brands also owns Baskin-Robbins. Nice. So there's no ticker yet, but keep your eyes out. Do you have a go-to flavor?

Anything with extra chocolate. So like double fudge brownie would be something I would go for. Nice. Let's bring in our man, Steve Broido. Steve, do you have a question for Charlie about his pick? Absolutely. When you've got a combined store, because I've seen a lot of the Dunkin' Donuts and Baskin-Robbins stores together, what does that do?

Does that end up helping people or confusing people? It's like, I'm actually getting breakfast here at my ice cream place. I can't imagine there's any synergy between donuts and ice cream, so I don't know how it helps them, except for maybe on the rent they get a better deal. I think the synergy is awesomeness. Yes. It seems confusing, you know? You're getting a bagel and a milkshake. It's weird.

That sounds great to me. Ron, what's your stock? I'm going to talk about this stock because I actually purchased more of it myself this week, and so I want listeners to know I put my money where my mouth is, and that's Berkshire Hathaway, which isn't typically that cheap. In my opinion, it's cheap right now. Especially, it's easier to buy, for most people, the B shares. BRKB is the symbol. And the stock is trading for about $76 now. I think it could be worth $100 at least. This week, Charlie Munger said, I think that people who own Berkshire stock at current prices will do quite alright just sitting on their patootes. And I agree

with him. Steve? How do you explain a company like Berkshire to someone who may not be familiar with it. I understand it as a holding company, but I don't even fully understand how holding companies work, so maybe help me with that. Sure. It's a collection of businesses, some that they own the whole entire business, and some they just own stock in the company through the stock market. But it's a collection of really great businesses that Warren Buffett has picked, and he lets the managers of those companies run them, and produces a tremendous

amount of cash flow, typically not that capital-intensive to run, and you get a nice collection of businesses. Do you have a favorite business within that conglomerate? Yeah, but I mean, it's a little cliche, but I think- It's got to be Nebraska Furniture Market. See's Candy is pretty darn good, and the Geico business model, you can't do much better than Geico, but that See's Candy is pretty tasty. I would have went with Dairy Queen, personally. Nobody ever says NetJets. Nobody.

Seth, what's your stock this week? I got a bunch. That retail news is pretty good. And some retailers out there like Abercrombie and Fitch look like they're trading pretty expensive. I'm going to avoid that one, but I'm going to suggest you take a look for some of the cheaper ones. Aeropostale, ARO, Guess, GES, and Buckle, BKE, all are trading at much cheaper multiples to earnings into what I think they'll do going forward. And so those are three that I think are worth looking forward. Steve? This commercial real estate and what's going on in the real estate environment right now

affecting these businesses. It seems like real estate seems unstable again. And commercially, it seems like I hear all the time about how poorly real estate is doing. How is that affecting these businesses? Is it helping them? Clothing retailers? Yes. Well, the best that, you know, when commercial real estate is horrible, these guys can negotiate better rents if the leases come up or if they're opening new stores. That can be good news for the savvy retailers if they pick the right spots and get good rents. All right. Seth Jason, Ron Gross, Charlie Travers. Guys, thanks for being here. Thanks, Chris.

Thanks to our special guest this week, Carl Quintanilla from CNBC. The new documentary, BMW, A Driving Obsession, premieres Wednesday, July 13th at 9 p.m. Eastern. That's it for this edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.