Motley Fool Hidden Gems Investing - Motley Fool Money: 11.12.2010

Episode Date: November 12, 2010

Asian market tumble.  Gold hits a new high.  Cisco and Disney report earnings.  And Walmart makes a big move for the holidays.  On this week's show, we'll discuss those stories, share some stocks on our radar, and talk with television critic Tim Goodman. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Because we have your number. everybody needs money that's why they call it money from fool global headquarters this is motley fool money welcome to motley fool money thanks for being here i'm your host chris hill and i'm joined by motley fool senior analyst seth jason james early and ron gross guys good to see you good to see you chris we've got the latest on on Disney, Walmart, Cisco, and more. We've got Tim Goodman from The Hollywood Reporter to talk about the business of television. Plus, we'll give you an inside look at the stocks on our radar. But this week, we begin overseas. On Friday, the Shanghai Composite

Index dropped 5.2%, a rough end to the week, Ron Gross. And U.S. stocks opened lower on Friday. How much of a ripple effect does that kind of thing have? Well, it does seem to be having somewhat of a ripple effect. What we're dealing with here, Chris, is that the Chinese inflation rate came in higher than expected. So that led investors to fear that the Chinese government would tighten monetary policy, come in and raise interest rates. Which they've been doing along the way already. Exactly. So people rushed in to lock in profits, driving stocks down. That spilled over to the Asian markets, and it appears to have spilled over to the U.S. markets as well,

because if the Chinese economy slows, that has implications around the world. I kind to think that's somewhat of a natural consolidation. This happens, you know, we have, the market's been on a tear in China for the last three months. It's still up 15% over the last three months. So, it's not that much of a concern to me. Shouldn't get too worried about it. Not, I think that's right. James? It just goes to show for all the China fanboys out there, I mean, the growth is not as robust

as people might think. I mean, it's, or at least the valuations, they're very easy to knock down, easy come, easy go, basically. And more worrisome, I think, for investors out there than simply where the market is going from one day or one week to the next is the idea that is still continually clung to, I think, among certain people that China is the economic engine that somehow is going to save the world and that Chinese consumers are going to be the main engine moving forward. And I don't know that I buy that story. Sticking overseas, the G20 meeting wrapped up in Seoul. James Early, it seems like one of the themes of this G20 meeting was everybody's mad about money and, like, not in a good way. People are angry. What was the most interesting part of the week for you?

It's very interesting. You know, it's like I've seen more party at a Mormon bar, I think. And I'm somebody who doesn't drink, so I can say that. I mean, everybody comes together to do some kind of deal, but nobody wants to budge an inch. So it's like nothing happens. It's like crickets chirping. I think, to me, the Korean import-export situation is most interesting. I mean, there's this deal that would have entailed the U.S. lowering tariffs on Korean cars and electronics

in exchange for Korea lowering tariffs on U.S. beef and maybe some semiconductors. But they don't want to do that, so it's just in limbo. Ron, what was the— I would say it was nice of these leaders to pause for a moment to hold an emergency meeting to deal with the sovereign debt crisis that will destroy Europe one day. You're talking about Ireland? You're talking bad things about Ireland? Those are my people over there.

Unfortunately, it's not just Ireland, but sovereign risk has risen sharply over the recent past, and there are some real concerns once again about the debt situation over there. Seth? Well, let's de-nerdify, if we can, what Ron just said there. The news this week was that all of a sudden everybody realized, big shocker, that Irish debt might not be great. The banks in Ireland were in terrible shape. There was a bubble, a real estate bubble in Ireland that dwarfed most real estate bubbles in terms of national scale.

And so what has happened again is that the rest of the European countries have had to say, oh, don't worry. We've got Ireland's back. But that causes problems for all of the rest of them because while Irish debt may be trading at levels that would have high yields because of the perceived risk, if Germany and some of the others in the European Union say, hey, don't worry, we'll guarantee it, well, then they essentially kind of shoot themselves in the foot because why would you buy safe German debt with a low yield when you can buy crummy Greek or Irish debt, which has a German guarantee behind it anyway? So this is a real problem. Whenever this keeps coming back, it rears its head, the euro kind of takes a beating. It's just so ironic because just a few years ago, Ireland was like the big hero of Europe with this fast-growing economy and everybody wanted to be a part. The Irish tiger. Yeah, exactly. Allied Irish banks were such a popular investment. And now it's just the opposite. It's like the redheaded stepchild. Yeah, PIMCO came out today. It's the real fundamental problem that can't be helped by a bailout is their real lack of competitiveness.

And Ireland also leads Europe in per capita drinking, I will say. I don't think it's related, but just FYI. All right, let's bring it back to American Shores. Guys, let's get into some of the earnings news this week. And we'll start with Cisco Systems. Solid earnings for the quarter, but a disappointing forecast for the next quarter. And the stock fell 15% in a single day. James Early, was that an overreaction?

You know, Chris, I don't know. I think it's as much a statement about the general economy as about Cisco. itself. I mean, yeah, I think analysts wanted 13% revenue growth, and Cisco said it's going to be more like 3% to 5%, which is still not bad. Apparently, the slow set-top box sales for TV boxes were partly to blame. I don't know. I think it was probably an overreaction, but in a sense, reactions these days create economy. It's not just psychology, so we can't ignore it. Well, and on the other hand, Intel came out this week and announced that they raised their

dividend 15%. You're our dividend guy. You had to be doing handsprings over that. I like it. Intel said they had their best year ever. But in fairness, that was kind of a rearward looking statement, whereas Cisco is looking forward. I think Cisco is still more gloomy than Intel. I think the issue is companies have a lot of cash, so certainly the potential to grow is there. Will they spend it? We don't know. Ron, we were talking before the show, you used the word bellwether in reference to Cisco, and that certainly makes sense. So as an investor looking at the tech sector, should I be more discouraged by Cisco's news, or should I be more encouraged by Intel's news? I think James hit it right when he spoke about forward-looking.

Some of these stocks have really increased in value quite significantly over the last 12 months, and some of them have some really nice growth priced in to those valuations. So, when we get a comment that leads us to believe that the growth might have been exaggerated, then the stocks just naturally pull back. And that tends to happen. Disney reported their latest earnings for the quarter. But Ron Gross, the earnings seem to be taking a backseat for some in the media to the news that the earnings leaked out early. Right. What happened?

So it seems to be very innocent. An employee literally made a mistake and released earnings before the market closed, which is something that is not typical. And the stock just happened to drop suddenly. So the stock drops suddenly because- It wasn't even very much. It was 4% or something, wasn't it? Correct. Come on.

The headline at first blush was that they missed earnings expectations. Actually, the quarter was kind of messy, and if you take the time to strip out all the one-time occurrences, the company actually beat expectations, and the stock has now rebounded and is trading significantly higher as a result. The company's kind of firing on all cylinders at the moment. ABC is strong. Toy Story was huge for them. Marvel is developing, the recently acquired Marvel is developing two movies for next summer, two TV series.

About superheroes? What else would Marvel do? Sweet. That's what Marvel does. The world needs more dudes in leotards. The company generated $4.5 billion in free cash flow last year, so things are on track. Now, you said they're firing on all cylinders. Not all.

Maybe I exaggerated. Theme parks, really? The theme parks are, at least for the last quarter, even last year, not great. However, they have said for the current quarter that bookings are up 5%. Just to put you on the spot, Ron, do you have a favorite Marvel superhero? So I'm a DC guy, as you may or may not know. I am a Superman collector. Really?

But Spider-Man, the movie franchise at least, is pretty good. You're a Superman collector? I am. Over by your desk, you don't have a lot of Superman stuff. Yes, I do, actually. Do you really? Come stop by. How come you never invite me to come by your desk?

You're always welcome. Coming up, for the past year, Facebook has been working on something they call Project Titan. They are reportedly unveiling it on Monday, but we'll talk about it next. Stick around. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with Seth Jason, James Early, and Ron Gross as we dig into some more earnings news from the week. J.C. Penney reported strong sales and the company's third straight quarter of same-store sales growth. Seth Jason, you're our retail guru. How are they doing it?

Well, they're doing it the way a lot of retailers are doing it, cutting prices. And that is worrisome to analysts, which is why the stock responded a little bit negatively after the news. But I took a look at J.C. Penney's margins, and over the years, they've actually crept up. If you kind of get rid of the terrible financial panic year, they're a lot higher than they were a few years ago. So something's going right at JCPenney, although the trailing 12 months, I noticed their free cash flow had kind of fallen apart. But maybe they're revamping the stores as well. But I wouldn't count them out. It seems like they're kind of like, who actually shops there?

It's an intriguing story. I have to say. It's very strange. but they seem to be doing a good job of somehow bringing people in. Whether or not that makes it a decent investment for the longer term is a good question. It must shop when we're not looking, because around here you could operate a driving school in a JCPenney parking lot. I mean, there's nobody there. Activision smashed the one-day sales record for video games this week.

Call of Duty Black Ops was released and sold more than 5.6 million copies in a single day. Ron Gross, Activision is a company you follow closely. How happy are you this week? Good news, good news. So we own Activision in the service that I'm part of here, Million Dollar Portfolio. And their name again is? Million Dollar Portfolio. It's a 3% position for us.

We're very happy. So that's $360 million in one day. It's actually the biggest entertainment launch in history. Very exciting. That's way bigger than movies, remember, everybody. Way bigger than movies. On track to break last year's record, five-day record, where they took in $550 million. Breaking their own record.

Breaking their own record. I read an analyst report today that thinks they'll do a billion dollars over the holidays in just this one game. So this rivals, you know, we're talking Titanic, Michael Jackson's Thriller. This beats them all. It's pretty exciting. Is this Avatar big? Have you played this game yourself? I have not played it.

I've seen other people play it, but I haven't played it myself. If you like shooting people in a desert, I think this is the game for you. And I think, Ron, one of the people you need to thank is our own Steve Broido. Because, Steve, you bought one this week, didn't you? Yeah, last night at Best Buy. Picked it up. I'm also a shareholder, by the way. Thanks, Ron.

Sure. How many people have you killed? You know, I played a little bit last night. It was kind of late. And I don't know. This may be my last shooter game. You kind of get it. It's good.

And the graphics are pretty sweet. But it's just a lot of murder. You getting too old for this? I might be. I don't know. In non-shoot-'em-up game news, Viacom announced that they're selling its Harmonix division, actually, which is the Rock Band franchise.

As you probably know, Activision is the Guitar Hero franchise, so it'll be interesting to see if Activision has an interest in making a bid for Rock Band. Time will tell. Yeah, but so far I think it's pretty clear that shooting people is a whole lot more lucrative than playing a guitar. This week Walmart announced it will offer free shipping to online shoppers on nearly 60,000 items. Seth, how scared should Amazon and Target be? That, it'll be interesting to find out the answer. I don't think they should be very scared because, really, who goes to Walmart to shop online?

I mean, Amazon is far and away the leader for stuff. People might be now, though. Yeah, free shipping. And, well, one of the advantages Amazon has is that, you know, if you go to Amazon, there are going to be a lot, sometimes far too many, of reviews on the items you're interested in buying. And you're going to get, you get less of that if you shop at Home Depot or already or Walmart. So I really don't know. But if they can get word out in the press, they could actually pull some sales away. Of course, the other thing is Amazon can just turn around and duplicate this and mitigate the effect entirely.

According to numerous reports, Facebook is having a public event on Monday at which the company will unveil a new email. Some are calling this a Gmail killer. So, Seth, do you think Google is quaking in its boots? I don't think anyone is quaking in that, Bruce, because I'm doing the Macaulay Culkin hands on the side of my face shock thing. Oh, my God, an Internet company is going to offer free email? Who cares? This is 20-year-old technology. Facebook has an advantage if they want to sign a lot of people up and that they already have 500,000 or 500 million people signed up.

The question is for Facebook investors, which is none of us because it's still closely held, does this matter for the bottom line? and does it pull people away from Gmail or other systems that somehow provide any kind of revenue for Google or Yahoo or the others. I'm not sure how email fits into their operations in terms of profit going down the bottom line. Google just does everything in order to get information. So you could assume that it helps them get smarter, but I don't know that they make any money at all. It just drives more people to Facebook.

And it's already the number one site. Exactly. And there's already some skepticism related to Facebook with regards to privacy issues. It's going to be interesting to see if users really are interested in using Facebook as another way to communicate with others when they're already somewhat skeptical. We've all got our Hotmail address, our Gmail address, and our Yahoo mail address. Do we all need a Facebook.com email address too? Well, and you were talking about privacy, Ron. The one significant snafu that Google has had related to privacy was around Gmail.

So, I mean, Facebook's already had several snafus with respect to privacy. Is this another potential landmine for them? You would think it could be. Hopefully, they've learned from previous mistakes and they can get it right. But I tend to think perhaps not. I doubt they have, and the stakes are much bigger because the stuff that people share on Facebook is generally not all that important. It might be horribly embarrassing to some people, but it's not that important. But if people start emailing documents and other things that are important to their work, if they're silly enough to do it in Facebook, at that point, privacy issues or screw-ups become huge.

Gold hit yet another all-time high this week. Silver hit a 30-year high. James Early, tell me why investors should keep ignoring these precious metals that just seem to keep going up. Well, there's actually a subplot here, Chris, which is Warren Buffett and M.C. Hammer are at odds again. M.C. Hammer, as we know, is a partner in Cash for Gold. And Warren Buffett is now saying that he thinks gold is overpriced. There's obviously no real official way to value gold in the first place. And he actually thinks people should get into dividend stocks instead, which, hey, I mean, that touches my heart.

as a dividend investor. The case for gold is not outrageous, though. We've got this massive bond purchasing that Ben Bernanke's been doing, hoping it's going to, I guess, trickle down to the rest of the economy. But so far, Ben Bernanke's the only one doing any trickling. So it's not helping yet, but I don't know how much higher gold's going to go. I would be a little scared. I've given up.

I'm on the side of the gold bugs now for no good reason other than I'm just exhausted with rationality. I say buy all the gold you can get. Spend all your money, mortgage your house again. Rates are low. I'm sticking to my guns. Can't value it. I have no use for it. James?

I was just researching this story, and I was reading a Ben Stein article who he interviewed Warren Buffett and sort of broke some of this gold news. I detected a little bit of gold, a little bit of bromance, excuse me. He starts his article saying, the first thing I noticed on my recent visit with Warren Buffett, who recently turned 80, is how incredible he looks. He would look terrific for 50. For 80, he looks like Charles Atlas on a waterbed.

I made up the last part. I will say one, even though I am not a fan of gold purchasing, I will say that on an inflation-adjusted basis, it is nowhere near its all-time high. So, folks that say it's time for a pullback because of how high it is, not sure that's a great argument. But since it's impossible to value, I stay away. And finally, Sara Lee became a bimbo this week, and all it took was about a billion dollars. Sara Lee sold its North American bread baking unit to Mexican baking giant Grupo Bimbo for just under $1 billion. Guys, Sarah Lee has a lot of brands under the Sarah Lee umbrella. I'm going to spot you up with four brands.

You tell me which one is not a Sarah Lee brand. Here we go. Brill Cream, hair products for men. Tidy Bowl, toilet cleaner. Kiwi Shoe Polish. Or Chemotex, a Hungarian insect spray. Ron Gross, which one of those is not a Sarah Lee brand? What was the third one?

Kiwi Shoe Polish. Yeah, I'm going with Kiwi. James? I'm going to say trick question. They're all Surly brands. Wow, James is going off the board. That's pretty good. I was going to also go with the third, the Shinola.

All right, Steve Broido? I'm going none of them are brands, are Surly brands. Wow. The winner is James Early. All four Surly brands. And yes, let's just repeat that last one one more time. Chemotex, a Hungarian insect spray. You know, you can sell any kind of insect spray you want in Hungary.

The rules are very lax. You can name anything you want, too. Drop us an email, radioatfool.com. Tell us what you think about Sarah Lee. Tell us what you think about anything. We're lonely, frankly, so just drop us an email, for the love of God. The guys will be back later in the show to talk about the stocks that are on their radar. But up next, Tim Goodman, the chief TV critic from The Hollywood Reporter,

will weigh in on the business of television and the future of online video. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Our guest this week is an award-winning TV critic and columnist. After spending much of his career writing for the San Francisco Chronicle, he recently joined The Hollywood Reporter as chief TV critic.

Tim Goodman, welcome to Motley Fool Money. Thanks, Chris. How are you? I'm well, thanks. So there's a lot going on in the TV business. Let's start with Conan O'Brien. His new show debuted this week on TBS. He's going head-to-head with Jon Stewart on The Daily Show. But he's also competing with the likes of Jay Leno and David Letterman.

First, what's your take on his new show? Well, I think it's pretty much everything what fans of his thought it would be. He's much looser. He kind of has that wacky, weird sense of humor, and I think that's really coming through. He had a great opening night. Conan O'Brien, I think, had over 4.1 million viewers. He beat Leno and Letterman.

Second night, his audience dropped to 2.8 million. So my question is, in terms of audience size, What does success need to look like for TBS and Conan O'Brien? Well, I think if he keeps those numbers up, the second night numbers, he'll do just fine. I think that his strength is in the key demographic, 18 to 49. He is just, you know, he's indexing right now at about 30 years old for the core audience, which is far younger than his competitors. And so he's doing a much better number in that key demo.

So that's what they sell to advertisers. So money matters, as you well know. So I think he's going to be just fine, and I think that TVS is pretty pleased by the performance so far. You're listening to Motley Fool Money. We're talking with Tim Goodman, the chief TV critic from The Hollywood Reporter. Tim, as investors at The Motley Fool, we're constantly focused on the future of various industries.

So in thinking about the future of television, Is it more appropriate to label it the future of video? Because with companies like Hulu and YouTube out there, is there going to be a mass convergence? You know, I actually, I know I may be in the minority here, but I don't believe it. I honestly don't. I think that, and I was just discussing this just the other day, the difference is that, well, YouTube is user-generated, but they've never been able to, nothing on the Internet has been able to generate a hit of any kind of quality hit

that you could sort of say, all right, this will be self-sustaining and ad-supported and it will make money. You have very popular videos, most of them running in a short period of time. You've had professionals like Ed Zwick and veterans in television try to do their own shows for the Internet and they haven't worked. And Hulu is just a conduit for somebody else's content.

My belief is that, you know, will we be watching content on these other screens? Sure, we will. I mean, that's a given, but the networks are never going to give up the content. They're the ones who are creating the content, and they make the best content, whether we think so or not. So as long as they control that, television is never going to die. I think the television is still going to remain dominant. You might watch it on different screens, but they're never going to, in Hollywood, they're never going to let go of the content that keeps them around.

And no other place has sprouted up. People say, oh, I can make a better show, and I'll do it. And then they get panned, you know, online. And they realize the audience is a very tough judge and leave it to the professionals. So when you think about the various pieces of the television industry, you've got cable providers, you've got broadcast networks, the online video piece. Who do you think stands to lose the most in the future? Which industry do you not want to be in? Well, you know, that's a good question.

I think when you look at who's going to be, I mean, it's almost in some ways the whole print thing, right? Is print dead and will newspapers be around? I really think television is still going to be around. I still think it's by far the most popular medium. And, you know, if you look at the numbers about how much people are spending online, time is failing. It just pales in comparison to television. So, you know, we may get to that point where this convergence and everything's blurred and people are spending equal amount of time watching on their phone or their TV or their computer.

But right now, I think television's dominant. And as long as they control the content, then I don't need to worry about it. You're listening to Motley Fool Money. We're talking with Tim Goodman, TV critic from The Hollywood Reporter. What's the best show that's on TV right now that not enough people are watching? Well, although it's not currently on right now, I'd say the two best shows are Mad Men and Breaking Bad. To me, those are the two best shows that are on television right now.

If you're talking about one that's probably airing right now, I would say Sons of Anarchy and probably Boardwalk Empire. What's the most overrated show on TV right now? Well, I would certainly say it's American Idol, which I actually think is going to head into a demise territory at some point, and probably quicker than anybody thinks. But, yeah, that's just, I think that's run its course, and it's still the most popular show on television, but I believe a turn is coming. What has surprised you the most?

You've been writing about television for the last couple of decades. What's surprised you the most about the television industry? Well, honestly, I think, seriously, and I'm not kidding about this, I think it's how much better it's gotten. One of the things that I always point out to people is you say, okay, if 80% of television is terrible, which I've been doing this for like 13 years or so, yeah, that is true. But the 20% that is really great has expanded so much over that time that you couldn't, a normal person couldn't even watch that great 20%. There's so much of it, you'd run out of time.

So it's all about picking. It's all about being savvy in your choices. And, you know, it's okay also to have a few things on the menu that are, you know, you're just coming home, you're kind of brain dead and you want to watch. There's a lot of that on there. And there's a lot of really educational stuff that's not just on PBS. There's great stuff. But I'm just impressed by the amount of quality there is as we approach this sort of hypothetical 500-channel universe. The content is amazing.

Worst show ever? Wow. You know what, I always say, Chris, that if you're going to be a critic, you have to be like a cornerback in football. You have to have a short-term memory. And I've seen such bad stuff through my years that I love the fact that I can't actually recall it. I don't really stay up late worrying about it. But I think every season I come up with something,

whether it's bleep my dad says on CBS or, you know, God knows what they're putting on the CW. You're going after Shatner? I mean, at The Motley Fool, Shatner is somewhat worshiped for all that he's done for Priceline. Yeah, but we haven't done much for that TV show, I'll tell you that. You're listening to Motley Fool Money. We're talking with Tim Goodman from The Hollywood Reporter. Before we move on to buy, sell, or hold, again, going back to the future of television, there's a very traditional business model when it comes to cable television.

And every couple of years, it seems like some noise is made in Washington, D.C. The Congress starts rattling some sabers about an a la carte pricing menu. Are we ever going to see a major change in how cable television is delivered? Well, I know the viewers would love that. I mean, that's one of their biggest complaints about trying to buy, you know, your package programming and buying it together. If that ever came apart, you know, if it came about, I think that obviously there's going to be a big fight on the cable side of it.

That would definitely damage cable. They're getting all their money for carriage fees. And I just, yeah, that would hurt, but it would be very good for the consumer because I think people would like to sort of pick and choose stuff. Because, Chris, one of the, I think, funniest and possibly saddest things is when I talk to people, they don't know what they're paying for. They don't know what channels they have because they're not really watching it. So I will write a review, and they'll say, what channel is that on?

And I'll tell them, you know, they've never been to AMC or something. I'm like, yes, you actually have it, or you do have BBC America. They just don't know what they're paying for, which I think is sad. So you're saying I'm stuck with the Lifetime Network. Yes, we all are. You're listening to Motley Fool Money. We're talking with Tim Goodman, chief TV critic from The Hollywood Reporter. All right, Tim, before we let you get away, we need to wrap up with a round of buy, sell, or hold.

Let's start with someone who just came back from suspension. Buy, sell, or hold the future of Keith Olbermann. Buy. Why is that? Well, I think, you know, his fan base is rabid. I think that he appeals to people, and they're not hearing that voice, obviously, somewhere else. You know, it's very obvious where he stands, just like the Fox people stand. But I think he is a magnet for people who are like-minded and thinking that way,

and there's just not that many people out there for him. And he's really smart. Don't underestimate that. He's gotten a lot of attention for his recent rally in D.C., but now he's going head-to-head with Conan O'Brien. Buy, sell, or hold John Stewart? Oh, I'll always buy on Jon Stewart. He's the funniest guy on the planet. Really?

He's the one? You're putting him number one on the TV list? I think he's the funniest guy that I've ever met. Consistently funny and smart. Although I do love Chris Rock, too. But still, there you go. Someone who's been off TV for a while, buy, sell, or hold a return to TV for Jerry Seinfeld? I think sell.

We're never seeing him on TV again? Well, he could be, but he's always going to be Jerry. And I think he damaged some stuff by isolating himself with Conan. I mean, sorry, with Leno. And what could he put him in? He's always going to be Jerry Seinfeld. He can't really act that well. His stand-up stuff is great,

but he'd be a very limited person for what he could do. And I don't think he could ever repeat Seinfeld. And in anticipation of the new network, buy, sell, or hold Oprah Winfrey wow, that's actually very good I'm going to say hold because I don't know yet on her

she's going to it just goes back to the people who don't know what they're getting when they find own on their channel and they turn out in droves then I'll believe it and she is quite the magnet she is a deity in her own right and very powerful

but you know what it's very hard to make your own network work even if you're on it and you're a diva. So I see a hold for a little bit. He is the chief TV critic for The Hollywood Reporter, Tim Goodman. Thanks so much for being here. You bet. Coming up, fast cars and stocks on our radar.

This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Joining me to talk about one of the week's big movers is Motley Fool Managing Editor Brian Richards. Brian, good to see you. Chris, thanks for having me. All right, so one of the stocks that was up big this week, Tesla Motors, up almost 20%.

Tesla Motors just reported a $35 million loss, didn't they? Yeah, so Tesla Motors is an automaker, which has generally not been a good business to be in in America in the last two decades or so. It's an automaker reporting a $35 million loss in its recent quarter. But Tesla is a little bit different than your Fords and your GMs. it is an electric vehicle manufacturer. Right now, they have the Roadster, which is a $100,000 sports car, popular among some of the Hollywood crew. And they're really ramping up for this Model S, which is a sedan car, more of a mass consumption kind of car. It can be offered around the $50,000 to $55,000 price point. Oh, so much cheaper.

Much cheaper. So what is driving the stock if they're reporting losses and selling really expensive cars? Well, as a sort of a green technology-based company, it's electronic vehicles. Their financials matter less than for an established company like Cisco, I know we talked about earlier in the show. Tesla's results this week, the 20% gain was really driven by its ability to ramp up mass production, which it showed some positive signs in the recent quarter. It has a new partnership with Toyota, which should help. And so those are the sorts of good news that investors were looking for and that have helped the stock rise.

All right. Brian Richards, thanks for joining us. To read more on the stock market's other big movers and for investing commentary analysis each day throughout the week, check out fool.com. As always, people on the program may have interest in the stocks they talk about. Don't buy or sell stocks based solely on what you hear. I'm Chris Hill, and back in the studio with me are a trio of senior analysts, Seth Jason, James Early, and Ron Gross. Guys, it's that time again time to talk about the stocks that are on our radar and we're gonna we got a little extra time here so we're gonna bring our man steve broido uh into the picture here uh with a question for you so you know i hope you're more prepared than usual ron we'll start with you so coming

off the heels of our sarah lee conversation i i think i'm going to talk about procter and gamble ticker symbol pg i think we all know about their unbelievable brands uh gillette crest duracell Tide, Bounty, I mean, on and on and on. Do they have any Hungarian insect sprays? They do. No, they don't. In fact, 23 of their brands each bring in $1 billion of revenue. It's really amazing.

Oh, my God. Company has a nice dividend yield of 3%, James, I'm sure you're well aware. They generate a ton of free cash flow. They repurchased $6 billion worth of stock in the last 12 months alone. Not the cheapest stock in the world right now. On a pullback, I'd get really interested. Right here, I'm sort of interested, but it's something I'm going to be watching closely. How's the international growth for them?

That's the direction for these companies, I think. How are they doing? I think it looks pretty good. It's been the main drive for them, for Kimberly-Clark, for Unilever. A lot of these guys are really hitting out of the park in the third world. It turns out these brands or brands they acquire out there do resonate in places that we wouldn't imagine. They're status symbols, actually. Yes, they are.

Steve Bruna, what's your question for Ron? Well, first off, Ron, I'm also a PG shareholder. Nice. Hooray. My question for you is, is there a lot of room for developments in these kind of basic home material products like laundry detergent? I mean, how does a company like P&G really grow when you're basically releasing products that have been around for 100, 200 years? Just kind of just as we said, you grow internationally, you grow overseas, and then you can continue to bring new brands into the fold, whether it's through acquisition or development. And that's why it's really not the cheapest stock because it's not a high-growth tech stock, for example.

But it's a really solid blue chip, 3% dividend yielder. But I got a question for you, Steve. You look like an Old Spice kind of guy, which is another brand of Procter & Gamble. Back in the day, would you consider yourself a heavy user of Old Spice or kind of just a light user? I would say a no user. I'm not an Old Spice guy. All right. But thank you for playing.

All right, no problem. Old Spice was originally a women's scent, actually, that they remarketed. All right, James Hurley, your stock this week. Chris, I like academics. I like academic research. and three guys named Lekhanashak, Schlieffer, and Vishny, maybe 10, 15 years ago, found out that stocks with slow sales growth and low PEs actually beat the regular market, actually, excuse me, beat the reverse, beat growth stocks basically by 11 percentage points annually, which is huge.

So in the spirit of LSV, I'll call them, I've got a company from this screen. It's not a formal recommendation, but it does have low PE and low sales growth. The name is Safe Bulkers. SB is the ticker. It sounds like the kind of business Seth and I would start if we had a business together. I don't know why. I don't know what that means. It's a bulk shipper. Well, just wait around.

It's a bulk shipper headquartered in Greece, which a lot of them are, paying 7.2% in dividend and a little over $500 million in market cap. All these shippers are basically plays on the global economy, but they have a big headwind, which is there are a lot of Chinese vessels coming online now. So that's kind of the bad news. That's why arguably LSV as a group would say the stock is down. I don't know if it's a great buy, but it's definitely a potentially undervalued play at this point. Steve Bruno? How would anyone, my question is, how would anyone know to even buy this company? I mean, how would I be aware, besides obviously you've just told us, but barring that, how would I ever know about safe, what is it, safe buyers?

Safe bulkers, Steve. Safe bulkers. How would I even know to buy this thing? I actually had to screen for it myself. You come to fool.com. I was going to say, fool. That's what makes it cheap. Fool.com, where there are hundreds of articles every week being published.

So, Steve, I guess in Ron's spirit, I'll lob a question back to you. On a scale of 1 through 10, how convincing is my pitch for safe bulkers? I would say it's a 7 right now. Wow. That's pretty good. That's pretty good. I would have thought maybe a 2 or a 3. Seth, Jason.

James is, you know, whizzing all over my growth stocks, but I am going to go with it anyway. Fossil. They make the watches. You know about them. You've heard of them. You probably thought they were a joke maybe over in the 80s. Turned in another incredible quarter.

I own this stock personally. This has been a radar stock for you several times. Yeah, and it has to be again. You have a fossil watch that your wife gave you, right? Yeah, we own it at Hidden Gems. I have a Superman fossil watch. I actually have several. Of course you do.

Listen, quit interrupting me with color here. Come on. Net sales up 37%. Earnings up 93% last quarter. I checked. They're not stuffing the channel. The accounts receivable growth scales about the same as this. They're just selling a ton of stuff.

They don't sell just watches, although the watches have done very, very well and they get high margins on those, so that's part of what powered that. They also sell leather handbags. I'm looking at the website right here, $170, and they're selling a lot of this stuff. I have to step back and re-figure out what Fossil is worth, but I've kept it on buy for a long time now because they just keep doing this. Who else is out there growing at 40% a quarter right now? If you can find them, email them to us because we'd like to know about them.

Yeah, definitely drop us an email, radio at full.com. What's the ticker? Ticker is F-O-S-L. And Steve? Steve, what's your question? My only exposure to fossil is in the outlet mall thing where they're discount mall. That doesn't seem like a very encouraging sign. That's my only exposure to Fossil is, you know, you're at the beach and you drive by one of those outlets.

Anyway, that doesn't seem encouraging to me. Well, retailers, Fossil sells a lot to other retailers. And to get rid of stuff that they have extra, you know, they often farm it out to places like this. That's a problem for these companies. They have to manage how much they sell and they have to manage expectations of the retailers. But Fossil in general has done a very good job of that on their own. Do I get to ask Steve a question? Sure.

Is it my birthday? What's going on here? It is, yeah. What's your favorite leather product, Steve? Wow, that's awesome. I guess my wallet, of course. This is National Radio. Ah, nice.

Thank you for playing. All right, Seth Jason, James Early, Ron Gross. Guys, thanks for being here. Thanks, Chris. Thanks to our special guests this week, Tim Goodman, chief TV critic for The Hollywood Reporter, and Brian Richards, managing editor of Fool.com. For the latest analysis and investing commentary

each day throughout the week, go to Fool.com. Our engineer and leather lover is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.