Motley Fool Hidden Gems Investing - Motley Fool Money: 09.14.2012

Episode Date: September 14, 2012

Apple unveils the iPhone 5.  McDonald's adds calories to its menu.  And Facebook's CEO says it's time to double down.   Our analysts discuss those stories and share some stocks on their radar.  Plus, Guardian technology editor Charles author talks about his book, Digital Wars:  Apple, Google, Microsoft and the Battle for the Internet. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill. 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, inside value, Joe Mager. For Motley full pro, Jeff Fischer, and for Million Dollar Portfolio, Ron Gross. Gentlemen, good to see you. How are you doing, Gross? We have got the latest on iPhone 5, McDonald's menu, and the newest member of the Dow Jones Industrial Average. We will dip into the full mailbag, and as always, we've got a few stocks on our radar,

but we begin with the big macro. On Thursday, the Federal Reserve announced it is extending its plan to keep interest rates low until at least the middle of 2015. And, Ron, the Fed also announced a plan to buy $40 billion worth of mortgage bonds a month, basically for the rest of time. Well, Chris, this is like a doctor telling a sick patient, you're not doing so well, but we're going to try another round of antibiotics, and we really feel good about this one. Right. Right. How long do I take it?

If you're the patient, you're certainly happy to see the antibiotics coming. I mean, the markets are loving this. The markets are really rallying on this news. But let's be realistic and let's not lose sight that the Fed, so far, has not been as effective as they would like to be. Unemployment is still high. Interestingly, the Fed talked more about unemployment and labor here than they have in a long time. This is clearly designed to target that unemployment rate and get the economy moving. O' And to keep your job. But, you know, the market loves it, but I'm cautious.

O' Jeff, what do you think? Yeah, it's a sea change. It's a remarkable change we've seen from the European Central Bank and now the U.S. Fed, both saying this is an indefinite program. That's the first time in history that any sort of stimulus has been open-ended, and I find that remarkable. The Fed is also promising to keep interest rates very low even once the economy starts to recover. They're not going to let their foot off the gas even once numbers start to get better. They want to be assured that things are running very well before they take away the stimulus. That means lower rates well into 2015. This could be a very good environment for home prices, clearly, and for stocks the

next two to three years. The question is, what finally happens, as Ron hinted at, when the punch bowl is drained and taken away? Let's not forget, they're printing money basically to make this happen. There's consequences to printing money indefinitely, whether it's a weak dollar, or inflation down the road, or a combination of things. So I understand you have to do what you have to do to keep the patient alive, but there's always consequences to it. O' The patient isn't dying, that's the thing. No.

It's a little anemic. O' Yeah, and when you think back a little bit, in the last four or five years we've had TARP, and now we're on QE3, or QE infinity, as you could call it. And when you think about it, practically speaking, do we really need a massive physical stimulus plan every year, it just doesn't seem practical when you try and step back a little bit. To me, it's too much. And so maybe that's why it's indefinite. I think there's some fatigue with trying to roll these out every year, and they just want

to put enough confidence in the economy indefinitely, and that's why they announced it. I agree. They should have just pulled an apple and named it the new QE and just left it at that. Are we done in terms of the levers that can be pulled? because we've talked about that in the past, that Ben Bernanke, he can pull different levers. It seems like all the levers are pulled now. If this is open-ended— Congress aside, and that's what Ben says, I'm doing this, I'm doing all I can,

but we need Congress to step up and write some good laws and address the fiscal cliff and start to move the budget in the right direction. I mean, he's pulled a lot of levers, but remember, he can pull the lever as far as he wants, essentially, when you can print as much money as you need. Sweet. Shares of Apple. The infinite lever. Shares of Apple hit an all-time high on Friday.

On Wednesday, CEO Tim Cook unveiled the iPhone 5, and by Friday, it was already sold out of Apple's online store. Ah, I didn't know that. Yeah. Ah, man. Bad news, Jeff. Sorry. I'm sure you'll have a chance to buy it.

Joe, what do you think? Well, it's everything everyone expected. It's taller. It's leaner. It's faster. It's sleeker. It looks like a wonderful phone. I'll probably end up buying one myself.

That said, I think there is a little bit of concern if you're thinking about this over a long time horizon where some of the biggest improvements around a bigger screen, turn-by-turn navigation, those are LTE, those are staples of Samsung phones that have been around for more than a year in the U.S. And it's funny that we just rolled off this big court case where Apple wins and everyone makes Samsung out to be this huge follow-on copycat when just now Apple is rolling with LTE 19 months after Samsung hit the U.S. with an LTE phone. I'm not saying Apple isn't an innovative company, but it's something to think about. Ron, I mentioned the shares hit an all-time high. and analysts are estimating that by the end of the year, Apple is going to sell somewhere in the neighborhood of $58 million of the iPhone 5. It's wild kind of numbers. Yeah, even at, where are we, almost $700 a share, I think, we still think there's room to run, probably 20% plus. I mean, the future is a hard thing

to predict, but we think $850 is a perfectly reasonable valuation here. And if you're going to be critical about the phone, which there's really no need to be, but hey, we've got some time. There's nothing earth-shattering here to this phone. It was improvements of existing technologies. There's no brand big new thing. And Apple, when they do come up with something big and new, that's when you're really going to see some interest picking up in the stock even more. So, we think there's room to run. And yet, Jeff, when you look at Nokia, which earlier this month rolled out new versions of the Lumia smartphone, and oh, by the way, at that time, they didn't include a price point, they didn't include a shipment date.

It seems like, even though there was no huge wow factor with Apple with the iPhone 5, there was no big surprise, no one more thing, as Steve Jobs famously used to do. When I hear things like, they're already sold out, it seems like Apple's advantage is not just on the design side, but also on just the fulfillment, on the logistics, the shipping side. It really seems like they have a huge advantage there, too. Definitely, and that's a big part of this story. This phone is shipping in greater quantity to more countries more rapidly than any other phone in Apple's history, and I think that's why the stock is up so much. People are realizing, maybe with Cook at the

helm, who was the operational genius at Apple, there's even more focus on operations, logistics, and that could effectively bolster Apple's margins, even. I don't want to say that's the direction they're going to go, but the more efficient you are, obviously, that's a possibility. As for the phone, I find myself that I'm as interested in the operating system as anything else, so the small improvements there are potentially big improvements in your life and how you use the phone. The design, meanwhile, our colleague Nick Crowe likened to a Porsche 911, which has been around for 30-some years, and they just make little tweaks as it goes, because it's a great classic design. This phone may be such a strong design that

that's what it is. Joe, what's going to have a greater impact on the economy, the iPhone 5 or this open-ended bond-buying program, the QE Infinity? Well, neither of them are really driving society forward. I'll leave it at that. Fair enough. For the first time in three years, there's going to be a change in the Dow Jones Industrial Average. Kraft Foods will be dropped from the index, and UnitedHealth Group will become the newest member of the Dow 30. Jeff, I suppose we could have seen this coming, because on October 1st, Kraft is going to split into two companies, so it's going to be smaller. That was the reason the folks at Dow gave for this. Were you surprised,

though, that UnitedHealth was the company chosen to replace it? So, what is Dow Jones saying? They're saying that healthcare is more important than macaroni and cheese. And on some level, that makes sense. That's obviously wrong. But what they said as well is that they're adding UnitedHealth because healthcare is such a large part of our economy and a a growing part. According to the World Health Organization, healthcare as a percentage of our GDP is around 15%, the greatest amount of any country in the world. And the Dow Jones already has Pfizer, J&J, and Merck on it, but the three combined account for less than

10% of the index. So, if you add on UnitedHealth, you're still around 13%, I estimate, which is still less than its share of GDP. So, it makes sense to add more healthcare to the index. Ron, what do you think? I think the Dow Jones Industrial Average is a troubled index in the first place. It's not really used anywhere but in the media. It's certainly not used by professional investors and even retail investors think about the S&P 500 more than the Dow. That's because the Dow is price-weighted, not market cap. It's really not representative of the market as a whole like the S&P 500 is. It doesn't include dividends, which is actually a large

part of the returns of stocks over time. So, I really actually don't pay much attention to it. Is getting added to the index, obviously, that's going to mean a slight bump for UnitedHealth, for shareholders, because you've got mutual funds out there that are buying the Dow 30. That's got to help a little bit, but is that, in and of itself, a reason to buy shares of UnitedHealth? I would certainly say no. Recently, Dow Jones added Hewlett-Packard and Cisco Systems to the index, and both have really ... Well, there you go.

Whoops! Case closed. Coming up, if you thought Disney was done blowing huge amounts of money on movies, we've got some bad news. Stay tuned, you're listening to Motley Fool Money. If you've got the money, honey, I've got the time. Welcome back to Motley Fool Money. Chris Hill here in the studio with Joe Mager, Jeff Fischer and Ron Gross. Before we continue with the news, I've got to mention a couple of housekeeping things. The Hulbert Financial Digest tracks the performance of investment newsletters, and this week, Hulbert released information on the performance of those newsletters

over the past five years. I'm happy to say that there were three Motley Fool services in the top 10. Motley Fool Stock Advisor, Rule Breakers, and Inside Value with our own Joe Maeger, congrats, my friend. Joe Maeger, very, very impressive. Other housekeeping, circle your calendar. September 25th is Worldwide Invest Better Day. You can learn more at investbetterday.com. Here at The Motley Fool, we're launching a new free service. We're going to be doing live video streaming all day. Our MarketFoolery podcast will be live streamed video, so check it out. And we're going to be doing meetups around the country. Joe, you're going to be in Chicago, right?

Yes, that morning. So, any listeners in the Chicago area, September 25th. Mark it on your calendar. Good week for Facebook. Shares up more than 12%, due in large part to CEO Mark Zuckerberg's appearance at the TechCrunch conference in Silicon Valley. Joe Zuckerberg said that they'd made mistakes on mobile. They were working to correct them. It seems like, at least from the standpoint of when you look at the shares and what they're doing this week, he did well, and it was a real vote of confidence. Yeah, there was a lot of lost confidence heading into this, and I think people put a lot of stock and how he would respond. He was energetic, smart, articulate, had a long-term vision for the

business, and definitely someone that, even though he's young, he clearly has a good head on his shoulders and a good business plan. And honestly, I have a lot more respect for him than I do a lot of the CEOs that we track. Am I throwing money at Facebook today? No. I didn't love a lack of detail around the mobile strategy. In fairness, I understand why they can't out and out show all their cards, but that's something they're going to need to improve. But overall, it was a good show in on his part, and I was impressed. Ron, is the clock ticking in terms of their mobile strategy, or do they have enough cash on hand where they're going to be fine? Yeah, I think with $10 billion in cash

and almost a billion users, they're fine. I think the biggest problem here is that the company went public and is now under constant scrutiny, and it's exacerbated by the fact that the IPO was such a mess. But, I mean, from a company perspective, they raised as much money as they possibly could, and that's kind of what they're supposed to do, and now everyone's peeking at them through the fishbowl, watching every move, and that can be different for a company that's used to doing things on their own. One thing I do wonder about, it's kind of a talent retention question, if you went to Facebook hoping to cash in quickly on some options for the stock, and you were a smart

guy who probably got courted by Google and Apple too, maybe Amazon, you were suddenly wondering, am I at the right place if my options are now deeply underwater? I think that's something you may end up seeing some creative moves around. Back during the financial crisis, Google basically repriced all their options to keep their talent, which outside shareholders weren't too wild about. I love what Zuckerberg said when talked about how they would be going after Google perhaps in the future. He said, we're doing one billion search queries a day and we're not even trying. And he had to back that down off a little bit later and say he was just being facetious about the not trying

part. But that's a pretty incredible number. And if they ever do go after the search market, that's an interesting battle. Well, what about that, Joe? You follow Google closely. How worried should Google be about that? Well, Google does about a billion searches a day themselves, but the difference is that the Facebook searches aren't primarily around products or transactions. They're around people and maybe brands. So if I'm searching on Google, odds are I'm going to be a lot closer to looking for a product that's going to bring me close to a point of sale online. Whereas on

Facebook, you are many degrees away from actually buying something. So all things equal, those billion clicks at Facebook aren't worth quite as much as those at Google. The Walt Disney Company is going to write down $50 million in costs in the fourth quarter, and the charge is for a stop-motion animation film that was in the works, but production was halted. Ron, I know this is not a huge amount of money in the grand scheme of Disney's balance sheet, but $50 million for a stop-motion animation? Really? It seems like, clearly, it was a misstep. But as you say, I think perspective is necessary. This is 0.001% of Disney's market cap or equity value, book value.

Either way, they're both similar. It's like, so you would probably take 0.001 of your net worth and give something a shot. It wouldn't even really be on your radar, that kind of an investment. Well, what were they doing with the money? This is a movie that isn't even finished. Well, they had a director. They obviously had started going down the storyline, the graphics. They said, you know what, this isn't working.

I actually respect them for pulling it back when it's only $50 million in. Now I want to see it. I want to see the movie that they pulled after $50 million. A $200 million John Carter debacle, we certainly wouldn't want that to happen. Okay, so as a shareholder, I should feel good about the fact that they didn't waste even more money on marketing. It still begs the question, could they make this a little cheaper, this creative, destructive process? Because when you're creating content, whether it's a book or a movie, two times out of three, it's going to be a loss. But can't you keep it under $50 million before you're even in pre-production?

Not at Disney. Not at Disney. Starting next week, McDonald's will start posting calorie information on menus across the United States. Jeff, McDonald's says this is going to help educate customers. It almost certainly will. Is it going to hurt sales? I don't think it'll hurt sales. I like the move. Everything in life has multiple prices and hopefully multiple benefits. But everything costs money, time, or energy. And in this case, everything you eat has a cost beyond what you pay for. It's the number of calories.

And if you eat just 100 extra calories a day, that can add up to more than you should, I mean. That can add up to 30 to 50 pounds over 20 to 30 years, making you overweight. Why are you looking at me when you say that? I wasn't at all looking at you. So it is a problem in this country. Everybody knows that. And I like seeing the calorie count on there. It moves me towards a healthier choice two times out of three, and that's a good habit to form.

How crazy am I that I didn't think the calorie count was that high? I was expecting a Big Mac to be way more than 550 calories, especially when they show some comparisons of some other typical kind of fast food product. It's really not that bad, dare I say. Don't write me. They might as well just take half a stick of butter and just slather it onto your stomach. To Ron's point, though, I was surprised. So, the No. 1 calorie item on the menu is a breakfast that includes hotcakes and a biscuit, and it's over 1,100 calories.

That's a good breakfast! It's probably a tasty breakfast. But to Ron's point, yeah, I was surprised at things that sort of sound like a mango-pineapple smoothie. Well, that's probably healthy. No, it's loaded with calories. I had one, too. I threw it away. It was 300-some calories when I saw that. If you look at Taco Bell or even a Starbucks, one of the chocolate chip, whatever, frappuccino-ish type things, those are crazy calories as well. So, if you're going to be eating 2,000 calories a day, $550 Big Mac for lunch, maybe not ridiculous. Except, I'm sure the fat content is probably bad for you.

It's like your finances. You shouldn't spend more than you take in. You shouldn't eat more calories than you need if you hope to be healthy. So, I think we should all focus on it. Last week's show, we discussed Smith & Wesson. Got an email from Jamin Andreessen in Brookfield, Missouri, writing us about Ruger, another gun maker. He writes, I'm a longtime shareholder. They have a great management team, generate lots of cash, no debt, and base their dividend on their quarterly results so they aren't caught in the continuously increasing our dividend trap that many companies are in. He goes on to write, a while back, you guys were talking about the best burgers. And one of my side businesses, since we moved out of the city and returned to the family farm, is raising Angus cattle. If you'd like to try out some beef, I'm sure we could work something out.

I've always wanted to check out full global headquarters. And if I were delivering beef, I could deduct the trip as a business expense. And the website is beefbytheside.com. I checked it out. We might have to place an order. Oh, yes, we may. All right. Coming up, technology writer Charles Arthur weighs in on the biggest threat to Apple and the biggest opportunity for Google.

Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. We are only halfway through September, and already we've had some of the biggest technology companies unveiling new products. And here to help us sort through it all is Charles Arthur. He's the technology editor of The Guardian newspaper. He's also the author of Digital Wars, Apple, Google, Microsoft, and the Battle for the Internet.

Charles, thanks for being here. Pleasure. I want to get to your book in just a minute, but first, let's talk about Apple's big event earlier this week. They unveiled the iPhone 5. What did you think? The interesting thing about it was that so much was known already. So I had been able to establish that it would have a larger screen, that it would have a nano SIM, and so it's a very much smaller little SIM card to activate it.

It would be thinner. Various details about it. Pretty much everything felt as though it was known already, and a lot of people were saying, well, so what's the surprise? What's the interesting thing? And for me, actually, because they had an event in London where they showed a live stream of the event from California, and then they had some samples to try out later.

And the really interesting thing is that it's a longer phone, but it's not wider, so the screen's a bit higher. The interesting thing is when you hold it, it's actually one of those phones that you have to hold, and then you sort of go, oh, okay, this is really interesting. It's actually very pleasant to hold. In my job, because I try out lots of smartphones, I've held a lot of smartphones,

and the phone which I think gives the most pleasure in the hand, in my experience, is the Nokia Lumia 800, the first one they did about a year ago, which is just a wonderful shape. The first time I took it out of the box, I thought, this is absolutely wonderful, simply as a thing that sits in your hand. And actually, the iPhone 5, I would say, is pretty much on a par with that. You're hardly aware that it's there, and it fits in your hand beautifully. What do you think is the biggest threat to Apple when it comes to smartphones?

The biggest threat to Apple is itself, to some extent. It's whether it can live up to the demand that it sees and whether actually the key threat is what happens in China. China is the fastest growing smartphone market, but in terms of the amount that people can and will pay, it's very much sort of split into two. There's a huge market for really cheap Android smartphones, which cost $100 or less. And then there's people who want high-end iPhones. The U.S. is growing really pretty slowly as a smartphone market. It's about a million new customers every month. And that's out of a total of 234 million people, according to Comscore.

About 110, 114 already have a smartphone. The U.S. is the richest smartphone market, though. Apple has that in lock, really, because of the carrier interest. You know, the carriers find that people want to have smartphones. So the threat to Apple is, can it make things happen in China? And what happens to subsidies in the U.S.? And there's a sort of side note as well, which is Europe, where, you know, the euro crisis, which is going on and on, is affecting countries like Spain and Ireland. And that makes a difference to whether they can grow the market in Europe as well.

So it's sort of a very regional thing. There's no single threat. The threat is actually a sort of economic and supply chain one. Let's talk about your book because you cover this fascinating period in business history starting in 1998 through the next really 12 to 14 years. And for people who don't remember, back in 1998, Microsoft was a gigantic company. It's on its way to becoming the most valuable public company in the world. Google is truly in its infancy. And Apple is just trying to rebuild itself.

Through all of your interviews, I know you talked with people at the different companies and just all of your research. When you look over this period of time and the shifting landscapes and fortunes for each one of these companies, what surprised you the most? The thing that surprised me the most was probably the way that Microsoft was unable to reorganize itself and to really rediscover its focus. So in 1999, it had the big U.S. Department of Justice antitrust case, which would have, if it had been carried through, if the verdict had been carried through, would have split Microsoft into two companies, an operating systems company and an applications company. That was actually the verdict that the judge delivered. Because of some impropriety, I think, that would sort of describe it in the way that he'd conducted his deliberations, that was overturned on appeal. But Microsoft had to work very hard to get itself organized, and it had to stay under an antitrust monitoring for a number of years, which has only just ended. So it's actually the fact that Microsoft, despite being an incredibly powerful company and despite having incredibly smart people, wasn't able to be managed well enough to take advantage of all the opportunities that came its way.

And by contrast, Apple, which was a guttering candle back in 1998, Steve Jobs hired Tim Cook, and Tim Cook took the supply chain that Apple had then, shook it by the neck, got all the loose bits out, turned it into something that rivaled Dell's. And at that time, you know, Dell was really the premier company in terms of supply chain management. Apple rivaled Dell in terms of the short-term inventory, and it turned it into a real machine. And that's what Tim Cook has really done with Apple, is he's turned it into a company which, when they announce an iPhone 5 on Monday, they can start selling millions of devices in lots of countries within a couple of weeks. You're listening to Motley Fool Money, talking with Charles Arthur. He's the author of the book Digital Wars, Apple, Google, Microsoft, and the Battle for the Internet. As investors,

we often look at companies in terms of their opportunities and the threats that they face. When you look at a company like Google, having done the research you've done, where do you think it stands now in terms of the biggest opportunity it has in front of it and the biggest threat it faces? The biggest opportunity, I think, for Google actually lies in places where we are not looking. We tend to think of Android, but actually Android is not really a money spinner.

The figures that came out from the Oracle Google trial earlier this year show that Android really does not generate very much in the way of money for Google. It's basically a defensive move which keeps Microsoft away from the search market on mobile because otherwise Microsoft might have bought its way onto every browser on every mobile phone on the planet. I think that actually the really interesting potential for Google lies in things like self-driving cars.

If you have Google software driving self-driving cars and if automakers take that up, that's a huge amount of money for them. The licensing, the technology, I think that there's gigantic potential there. I suspect that other things, like I mentioned Google Glass earlier, I think that there's very interesting possibilities there. I suspect that we're actually focusing too hard on what Google does now and that we're not seeing what Google thinks about in the round. And Larry Page and Sergey Brin, if they walk out of the room,

the average IQ goes pretty much down to the freezing point. Those two guys are really incredibly smart. They think years ahead, so they could see in 2003 that mobile was going to be the future. That was why they bought Andy Rubin's Android company in 2005. They didn't tell Eric Schmidt. They just did it because they knew that was the right thing to do. I think that they've got ideas in Google X, which is this project by Sebastian Thrun, who's the guy who came up with the self-driving car idea, the Google Glass idea, the Udacity

idea, which is people learning courses online rather than having to go to university. I think the opportunities are gigantic, but they're in places that we simply aren't looking. But funding all of those opportunities is the cash cow that is search for Google. That's really the money, as you say, that's the money spinner for Google. In terms of search, is there a big threat out there? Or is Google in the position that Microsoft was when you started your book, where essentially the biggest threat to Google is itself because it can't allow itself to become so dominant

that the U.S. Justice Department decides it's time to break it up because they are so dominant in search? I don't see any particular threats to its dominance in search. I think actually the threat to Google is a much more legislative one and is particularly keen in Europe where they're talking right now to the antitrust commissioner York and Armenia about quite how they're going to organize their search results and whether they're going to change them and how significantly they're going to change them.

So I think that's the threat. It's just the fact that it's got so big and it is so dominant in it. You're listening to Motley Fool Money, talking with Charles Arthur, technology editor at The Guardian newspaper and author of the book, Digital Wars, Apple, Google, Microsoft and the battle for the internet. I have to ask, because obviously here in America, we're focused mainly on our own company, our own country, I should say. But from where you sit, what is a technology that's really taken hold in Europe that you think has big potential here in the United states well i'd need notice of that

uh... i did there's a penalty that's really been overlooked uh... which which haven't gone on the state uh... it actually high fuel economy calls so fear to make the call of the fear five hundred does about the sixty-year-old so mpg miles per gallon

and that is pretty dramatic because over here in Europe, in the U.K. particularly, fuel prices are very much higher than in the States. And I think that although you've seen fuel prices go up there, you haven't seen anything until you've come up to the U.K. and tried to fill your tank up. The sticker shock there is pretty dramatic. So there's a great deal of interest in high-fuel economy cars, Hybrid cars, which use both electric and gasoline engines. And I think that that's the sort of thing where the fact that the U.S. has low fuel prices disadvantages it,

because it means that those sorts of cars don't get the advantage in sales that they could have. And actually, those cars will save you huge amounts of money in the long run. I saw an interview you gave a couple of months ago, and you said that the last piece of technology that made you say, wow, was Siri. And I'm wondering if that is still the case, or if you've seen anything in the last month or so, whether it's a gadget or an app, just is there any sort of emerging technology

that may not be on a lot of people's radar that you're particularly excited about? Okay, well, I have to say that I'm still extremely impressed by Siri. And for me, I find it gets better and better. I've been, you know, recently I've been using an iPhone. I use all sorts of different phones. I use Android. I use Windows Phone. I use BlackBerry.

I use iPhone. So recently I've been using an iPhone and, you know, discovering that with Siri you can do tell so-and-so this, and it will transcribe it, and it will send it as a text message. Or if they're on an iPhone as well, then it will send it as an iMessage, this sort of data thing, which means it doesn't count against your carrier cost as a text message. that actually is better and better it seems to me and also things like voice transcription i find

siri really impressive and more and more people said it was a bit blah last year i mean you know in october last year when it was announced people said oh come on voice recognition this is so boring but if you have a six pin six figure pin on your phone like i do uh then actually unlocking your phone popping out a text message sending it that's a pretty tedious process whereas being able to tell Siri to do it, that's a great process. The other technology I saw just a week or so ago comes from a British company called TTP. And I've been mentioning Google Glass in this as one of the technologies I think is interesting. They have done a sort of implementation a bit like Google Glass,

but rather than what Sergey Brin has been demonstrating where there's a little lens off to one side of the glasses where he looks down to see what's happening. And these, it projects it actually onto the frame. So you're looking ahead and you see, you know, what you're meant to be seeing. So I think that's a pretty impressive technology. I mean, in the long term, I think Google Glass is really where smartphones are heading. We're going to do something like that where we'll have stuff projected onto what we're looking at. We will wrap up with a round of Buy, Sell, or Hold.

Apple is reportedly planning on launching a new music service. So buy, sell, or hold the future of the online music service Pandora. Hold. Pandora is pretty interesting because they have a lot of things. They've got a lot of competition from people like Spotify, and if Apple gets in there, then it'll get even more crowded. But I think they've had a USP. They've got a loyal user base. So it just draws more attention to them, and I think that they remain a hold. You and I are both on Twitter, although I should point out for our listeners that Charles has about 80 times the number of followers I do, and that's appropriate, I think. Buy, sell, or hold the likelihood that Twitter will get acquired in the next two years?

So, Twitter is going to remain independent. I think Dick Costello, who's the chief executive, is really determined to monetize it, to make money out of it. And for the venture capitalists who put money into it, they wouldn't see the money returned, which would make it a bad sell. And they'd also find that, you know, which company would buy it? Why would Google want it? Why would Apple want it? Why would anyone want it, really? It sits alone on its own, and I think it's very happy on its own.

So I'd say the idea is just a non-starter. They have their fans and their detractors, buy, sell or hold, cold play. Actually, after the Paralympics closing ceremony, I would say buy. They were absolutely fantastic. I haven't particularly liked the last couple of albums, but as a stadium band performing on that night, they were awesome. Fair enough. And finally, he just began a four-month tour of duty in Afghanistan as a gunner on an Apache helicopter. But prior to that, he stirred up a little controversy over his recent escapades in Las Vegas by seller hold Prince Harry.

Harry is a really interesting character. He's actually a hold because you should have already bought him long ago. So I would say hold on, Harry. You think Harry has a high valuation right now? He should have a high valuation. People have been watching. He's one of the wild family members to watch at any time. He is the technology editor of The Guardian newspaper,

and his book is Digital Wars, Apple, Google, Microsoft, and the Battle for the Internet. Charles, Arthur, thanks so much for being here. My pleasure. Thank you. Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money. Money, money, money, money, money, 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. I'm Chris Hill. Joining me in studio, once again, Joe Maeger, Jeff Fischer, and Ron Gross. Guys, that time, once again, time for the stocks that are on our radar. Ron Gross, you are up first. We're going to bring in our man, Steve, at the end to basically pick a winner. Keep us honest? Keep you honest. Which one he likes the best, you're up first. Sounds good. So, this is truly a radar stock, not a recommendation, but it's Chipotle, CMG. At $338 a share, it's off about 25% from its 52-week high. Unfortunately, it has bounced

off its bottom, but could be interesting. Fantastically run company, really profitable, balance sheet's great. Plenty of growth runway still with Chipotle, opening up only their second store soon of the new shop house concept, the Asian concept. So, if you believe in the growth of that, this could be a really interesting price to enter. And a tasty product. We're fans of the product. Jeff Fischer, what's your stock? We must be hungry. I'm going with Chipotle's father company, McDonald's. MCD is the ticker. 3% yield, trades at 15X forward earnings. And who would have thought, five, 10 years ago, McDonald's would put calories on their

menus or have salads or some healthy offerings? I think they're doing a lot of things right. Same-store sales are up more than 3% the recent month, and the market is unhappy about that. But that's still a good number. And shares have come down a bit this year due to Europe another softness, and I think it may be a good price. Keeping in mind, as we discussed earlier, the calories now being on the menu, how is that going to affect you personally when you go into McDonald's? Well, I almost never eat there, but I'm flexible-minded enough to see an investment opportunity here. Joe, what about you?

I love that line of thinking, Jeff. I'm going to go with Discover Financial Services. It's kind of the red-headed stepchild of credit cards, but it's come on strong in the last few years. You can now pay with Discover in 40% more places than you could five years ago, which is a huge leap forward. And they're getting more of the revenue from fees than they used to, which is nice, because the fees are higher margin and they're recurring, lower risk. I don't own it, but I think it's interesting. And the ticker symbol? DFS.

Steve Broido, what do you think? Three different stocks there. You got one that you're particularly intrigued by? Well, full disclosure, I do own Chipotle now. I think McDonald's sounds the most intriguing to me as a future investment. I think this calorie count thing is going to have a really big effect on the business, and I think in a positive way. Do you eat at McDonald's? I do. Do you meet at Chipotle?

I do. Which do you prefer? I think it depends on how late I'm running. All right. Ron Gross, Jeff Fisher, Joe Mager. Guys, thanks for being here. Thanks, Chris. And thanks to our special guest this week, Charles Arthur, technology editor at The Guardian

newspaper. That's it for this edition of Motley Fool Money. Be sure to check out Worldwide Invest Better Day. That's September 25th. More information online at investbetterday.com. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We will see you next week.