Motley Fool Hidden Gems Investing - Motley Fool Money: 11.14.2014

Episode Date: November 14, 2014

Wal-mart surprises investors.  Buffett loads up on batteries.  Hasbro eyes DreamWorks.  And Twitter has a heart-to-heart with Wall Street analysts.   Our analysts discuss those stories and explain why the battle for mobile payment may already be over.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill, joining me in studio this week for Motley Fool One, Jason Moser, for Motley Fool Pro and Options, Jeff Fischer, and for Motley Fool Supernova, Matt Argersinger. Good to see you, gents. We've got billion-dollar deals and a high-flying IPO. We will dip into the Fool mailbag, and as always, we'll give you an inside look at the stocks on our radar. But with just two weeks to go before Black Friday, let's start with retail. Shares of Walmart hitting a new all-time high this week after third quarter profits came in higher than expected, and same-store sales rose for the first time in nearly two years. Jeff Fisher, This was a big quarter for them.

It was, and the shares gained 4.7% on the news, which was their biggest one-day gain since 2008. I was going to say, for a company the size of Walmart, that is a massive move. It's pretty big. How many billions is that? It does tell you what an exciting stock it may or may not be to own. But it's not all happy in Walmart world still. You're right, Chris. The same-store sales in the U.S. did increase for the first time in seven quarters, but

only by 0.5%, and traffic still actually went down. Traffic dipped 0.7%. The average ticket size was a little larger, and that's what helped. Walmart is still struggling to reorganize itself. The new CEO is opening smaller footprint stores and trying to drum up new traffic that way. But overall, they have their work cut out for them as the lowest-cost retailer. alert. They're hoping that falling gas prices will help them, lower unemployment will help them. But it's been a market laggard the last five years and 10 years, and it's hard to see it becoming an exceptional investment again anytime soon. At what point does the gargantuan size of those stores really become, instead of

the competitive advantage I think they've touted for so long, really a headwind? Not thought I'd ever really go into Walmarts, but on occasion, when I have stepped into one, I mean, the stores are so overwhelmingly large, I have no idea where to go to find what I want. It's just so much easier to type it in a search bar on Amazon or something like that. Boom! Do you ever find that? You walk into a store, even that happened to me at Best Buy lately. I walk in there and my mind is saying, alright, enter your search. I'm like, I don't know how to do that. Well, along those lines, though,

online sales for Walmart up 21% this quarter. I mean, they haven't forgotten the cyber shoppers. They haven't forgotten the internet quite yet. They had to lower their guidance for the year on top of everything else. Again, for the second time this year, they lowered their earnings guidance because, one, they're closing underperforming stores, mainly in Japan. But they're also investing a lot in e-commerce, where they're trying to really grow finally. Walmart's been a public company for 44 years. Online retailer Wayfair has been a public company for exactly 44 days. Its first quarterly report as a public company. It was kind of a disappointment, Jason. The

loss was bigger than expected. They're spending a lot of money on marketing. Well, well, wait a minute now. I think, actually, the quarter was better than most of us expected. They actually bested expectations on both the sales side and the earnings side, when you're looking at it from a non-GAAP perspective, at least, which is what we have to do with these non-IPOs. And is that why the stock fell more than 10%? Well, I can tell you why the stock fell more than 10%. I mean, the stock did get hammered, but I'd say, on the whole, it a good quarter. They reported better than $330 million in sales, and now 2.9 million

active customers. If you just go back to the first quarter of 2013, sales were a bit more than $150 million, and they had about 1.5 million active customers. So, they're growing very quickly. But as you astutely noted, they are not yet profitable. And when you combine that along with the fact that they mentioned the word moderated in the call, along with gross margins that were, I think, a little bit lower than some were targeting, I think the market, rightly so, sold the stock off. It was, I think, overvalued. It was a little bit of enthusiasm maybe in there from the IPO. But you've got the stock now trading at around 1.5x sales. When you look at something like Amazon, that is 1.7x sales, at least

from that perspective, it's interesting to note. I don't think the market's going to cut this company the same kind of slack that it's cut Jeff Bezos and Amazon. on. So, focusing on getting profitable as quickly as possible is going to be a priority for these guys. But they've done an amazing job building this company to where it is today, topping out at more than a billion in sales now. I do like what they're doing and where they're headed. I think it's interesting to watch Wayfair for one reason, and that is, can they prove the big, bulk online shopping model? In other words, are people really going to start embracing the idea of not just buying small consumables

or small or digital things, but actually pieces of furniture. That's the question. They really do focus on the home furnishings. And I'm wondering, how is this different from, say, Pier 1 imports, other than the fact that it is online and presumably they have lower costs? So, I think one thing you look at is that with Pier 1 imports, you go to one Pier 1, you've probably been to them all. They all basically have the same kind of thing. And the point that management continues to make is, with this market, a lot of times, there isn't really a brand power associated with home furnishings. And a lot of times, the shoppers, which predominantly are female in this case, they don't quite know what they're

looking for. And so, having this massive web presence allows the shopper to go through and find all sorts of different things and sort of locate what they may be looking for, because they don't know exactly what they're looking for. So, yeah, I mean, then you have to make that leap into saying, well, I feel comfortable buying this couch online, never having laid eyes on it other other than the internet. But people are buying houses now, sight unseen, other than maybe internet tours. I know that we've bought a couple of houses that way. It's worked out well so far, Chris. Warren Buffett must be expecting a big storm, because he just bought a whole heck

of a lot of batteries. This week, Procter & Gamble sold its Duracell battery division to Berkshire Hathaway. Matty, pretty creative way they pulled this off, because Berkshire already owned a lot of shares of Procter & Gamble, and they basically swapped those shares for Duracell and some cash. Right. A lot of people are focusing on that, the aspect of the tax-free exchange nature of this. Buffett, his stake in Procter & Gamble was worth about $4.7 billion. He's exchanging that plus about $1.8 billion in cash for Duracell, and thereby avoiding about $1.5 billion in taxes. Now, that's not nothing new. This happens all the time in corporate

America, and Buffett is no exception. He exited, for example, his Washington Post stake last year, I believe, to Graham Holdings in an exchange very similar, and avoided a lot of capital gains there. The interesting thing to me about the story here is that he's getting Duracell, which is such a Berkshire Hathaway-type company. Known brand, very stable business, very cash flow heavy. He's paying about roughly 10-11 times free cash flow for Duracell, at the same time exiting Procter & Gamble, which which, great company, great brands, one of the stalwarts, certainly, of the stock market. But trading for about 24X earnings, which for a company of that size and that business,

growing maybe slightly faster than GDP, is a pretty high multiple. So, I think Buffett might be making a little statement here, hey, this is a chance for me to exit Procter & Gamble, pretty expensive, get into a cheaper Duracell business, which I like, it's cash flow heavy, and I can avoid paying taxes. Yeah, and plus, of course, we know Buffett loves to own any company outright that he can own. He'd prefer to own it and have his own management in there and collect all the cash flow himself. So, it's a win-win. On Wednesday, Twitter held an analyst day, and the analysts must have liked what they heard, because by the end of the day, Twitter's stock was up more than 7%. Over the next couple

of days, Jason, they basically gave back those gains. You've gone through the presentation. What's the headline for you? All 111 pages. I finally finished. I think the 50,000-foot view is that this is a company that is being run with a very long time frame in mind. And I think that while we love to see that, we also know that Wall Street doesn't typically like to see that. But that doesn't necessarily make Wall Street right, Chris. I think that they did a great job in communicating the company's reach, Twitter's reach, beyond just that core monthly active user metric that a lot of us focus on. And they're making a lot of investments in the business today that have

a great opportunity to pay off many years down the road as the move to mobile continues. I mean, mobile is still a very new market. And so, Fabric, the company's software development kit, is something that I think, if successful, this is going to broaden Twitter's reach into the entire mobile universe, apps everywhere, so that it will take that Twitter presence and really extend it beyond just Twitter. You're going to see new products coming up, like the instant timeline for new users, which will get them involved more quickly, new video capabilities, timeline highlights, which I think will help extend the conversation for those who are away from Twitter for any extended period of time. They're doing a lot of things

right. I understand the market's trepidation there. There is more uncertainty. But again, these guys are running this business with a much longer timeframe in mind than I think people want to give them credit for. And it is more a tech company than I think people want to give them credit for. And I'll just add this. Last week's radio show, Chris was talking to Joshua Baer, who I thought was just exceptional. And his No. 1 idea, I'm asking him, was Twitter. He just thinks it's a business that's misunderstood by many and set to surprise in the years ahead. I would agree with that. I think going through that transcript, I think that it is misunderstood by a lot of people. I think

they just look at it and paint it with this broad brush of, it's an ad play, and it's way more than that. Yeah, I'll add that the depth of content that we consume online is not becoming longer and more lengthy. They're already in the right place as far as where attention spans are going. Coming up, Warren Buffett once called airline stocks a deathtrap for investors, that didn't stop Wall Street from making an airline stock the latest hot IPO. That story's next. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Jeff Fischer, and Matt Argesinger. Virgin America, the airline backed by billionaire

businessman Richard Branson, became the latest hot IPO. Shares rose more than 25% on Friday. What do you think, Matty? Are you buying? I am not buying. I mean, I would love to fly Virgin America because, I mean, as I was flying back from our Austin trip a week ago on American Airlines, and I was stuck in what I thought was maybe a two-square-foot space, and it was loud, and there was no Wi-Fi unless I paid for it. The thought of flying on Virgin America seemed really good.

And I do think there's room in the market for an airline that is really focused on the luxury and the experience, and I think deservedly gets premium plane tickets for that. At the same time, the airline business is in a good spot right now. Fuel prices, as we know, oil prices are roughly at a five-year low. Fuel prices are roughly 30% to 40% of the average airline's costs. And Virgin America actually has done a good job. They've only hedged about 38% of their fuel costs over the next year, so they're really benefiting from those lower prices right now. At the same time, airlines are just what they are. It's a horribly, capital-intensive business. You're susceptible to fuel prices. You're susceptible to the economy. It's cyclical

from so many different angles. It's something we should always probably look to avoid. Yeah. So, they're using the IPO proceeds, which are around $300 million, to pay down some debt, manage the airline, and pay for about 10 A320 aircraft. So, yeah, it's expensive. We only get 10 points out of that. How many times can you go public? Back in June, Hertz announced it would have to restate its financial results for 2011. And in the intervening months, the rental car company got even worse at math. Because on Friday, Hertz announced it would also have to restate earnings for 2012 and 2013. What is going on over there, Jeff? And that's the problem, Chris. When

you have problems like this creep up, it's rarely that it's only for one quarter or two two quarters. It can go back much longer. And in this case, unfortunately, it looks like investors and lenders to Hertz are going to have to wait at least another year or so for all this to shake out, to see where the numbers really are. So, it's a shaky situation. It's not something you want to rush into, that's for sure. What goes on at a company that they need to restate several years' worth of earnings? The only thing I can think, and I may be wrong here, is that some sort of creative accounting was going on ahead of time. Well, it's hard to say, but over the

2011-2013 period that's being investigated, they did have PricewaterhouseCoopers as their auditor the entire time. I mean, that's a high-ranked name. It's an $87 million mistake so far. It could be an error, it could be an honest mistake. Accounting has become so complex these days, you can make mistakes. But the board's audit committee at Hertz is looking into everything from the management at the top all the way through anyone who touched those numbers. So, it's still trying to be discovered what really happened. So, for someone who looks at shares of Hertz down more than 7% on Friday and thinks, hey, this might be a buying opportunity, do you embrace that or do you think, let's wait

and see if they can get better at math? Yeah, here's the thing, if you get a really solid business, a solid underlying business that becomes cheap, then you should do well in the long run. You might be able to buy it at a great discount, a fire sale. I don't know that we're there yet, though, so I would personally hold off. Or, if you're eager to buy some shares, buy a very small amount. Carl Icahn owns 8% of the company now. He's been buying shares, and he's obviously working to clean this up. I haven't seen any tweets from him about Hertz yet, though. Give it another day. He's not serious yet.

One of the biggest winners on the NASDAQ this week is DreamWorks Animation, the studio behind hit franchise movies like Shrek and Madagascar is reportedly in merger talks with toy maker Hasbro. Shares of DreamWorks up more than 17% this week. And Matty, if all of this sounds familiar, it's because it was about two months ago that Japan's SoftBank was looking to acquire DreamWorks Animation. That fell through. Do you think this is a good move for Hasbro? I think it's a great move for DreamWorks to sell itself to someone. I'm not sure on the Hasbro front. For DreamWorks, you mentioned some of the franchises. This is the Shrek, this is How to Train Your Dragon, Kung Fu

Panda. They've had some successful films, but this is a business that ... DreamWorks is a pure play movie studio, and they come out with maybe two to three movies per year. The stock price and the value of the company ebbs and flows with the success of those very few movies. I feel like if DreamWorks can become part of a larger studio or a larger more diversified company, they can focus on making movies without worrying about the public markets all the time. And that might be a good move. For Hasbro, though, I'm not sure. I mean, we know Hasbro hasn't had a lot of success with movies. I mean, the early Transformer movies were good, but there's also G.I. Joe and Battleship, which I don't know if any

of you guys saw, but I heard it was horrible. And so, this is a chance for them to bring in a movie studio and also gain a lot of interesting brands that they can merchandise elsewhere and with toys, but it also potentially muddles the water with some of their other toy relationships. It gets them into more of the creative content side, and again, it's a riskier up-and-down business as we've seen with Dreamworks. Yeah, and remember, Hasbro just got that huge deal from Disney to take on all the princess toys and dolls and whatnot that Mattel had held for so long. That's going to be hundreds of millions of dollars that'll be flowing through Hasbro's income statement now, which will be interesting to see the

dynamic between Disney and DreamWorks, because they've been competitors for so long. But, yeah, I think Matty's right. I think that the big winner here is DreamWorks and DreamWorks shareholders. Just end this thing. I mean, it's just not a business that's really conducive to long-term investing. Hasbro maybe is more so. And DreamWorks has done a good job diversifying their distribution, building out the awesomeness TV acquisition that gives them access to a lot of younger YouTube subscribers. We'll see. Yeah, but you guys, you've got to love the How to Train Your Dragon. The first movie was great.

Oh, I love it. Megamind? Remember Megamind? And I think DreamWorks, it sounds like, needs help to then make their movies into franchises the way Disney is just king at that. And then you can milk a franchise for years. And I think that Hasbro will give them, I think, that added dynamic. They could make this a little bit more of an attractive joining of forces. Radio at Fool.com is our email address.

Got an email from Sean McKenzie in Palm Desert, California. I've only been investing for about three years, but in that time, I've gravitated mostly toward tech stocks because I'm a geek. It's what I know and what I'm most comfortable assessing. I'd like to diversify, and I think it would be worthwhile if I was pulled out of my comfort zone a little bit and be encouraged to stay abreast of a wider range of industries. For a portfolio that consists primarily of tech stocks, what industries would you recommend that I explore? Jeff Fischer, what do you think? Great. I'll start. So, tech. The thing about tech, of course, changes quickly. It's evolving all the time. So, you can't look far out and

really predict the future. Consumer staples are the opposite. Look at something very basic the way Buffett does. Now, it's boring, but you know, as we've said on the show many times before, P&G or Clorox, the product will not change over the course of the next 30, 40 years. So, that's a great thing. O'Reilly. I think cyclical businesses are not usually the great place to look to invest, but I think if you look at energy, for example, right now, or even some basic materials, those companies. These companies are trading really beaten down valuations. One place to look. Jay?

I'm going to go with insurance. I think it's a pretty easy business to understand. You can learn a lot about investing through the course of learning about insurance. Companies like Markel and even Berkshire Hathaway give you access to great management teams that are utilizing that insurance float to make great investments and earn a lot of money. Up next, we'll talk big banks, mobile payment and more with our man, Matt Kopenheffer. Stay right here, this is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill, and I am joined in studio by Matt Koppenheffer, the Managing Director of Germany. Thanks for being here.

Thanks for having me, Chris. You are on your way to Germany. You're going to be our first full-time employee in Germany, and we will get to that. We will talk investing in Germany. But first, before we talk about where you're going, let's talk about where you've just been. You were at a mobile payment conference in Las Vegas, and the battle for the wallet has very quickly become one of the most, I think, interesting battles going on in the business world. So many companies competing in this space. First and foremost, what was your main takeaway from the conference? Actually, what's interesting is my main takeaway came just shortly after the conference when I

walked into a Whole Foods in Las Vegas, and I was looking at the POS payment terminal there, the swipe terminal, and there's the Apple Pay sticker on it. And I turned to my wife and I said, Apple just won this. You're saying game over already. Well, you hear about all these, there's a lot of good technology out there. That's why this has been so exciting to me. And I'm glad to hear you call this interesting, because I was at another payment technology conference just back in April. And even back then, and I think, again, this is the difference that Apple makes. Between then and now, that's the big difference. But back then, I was at a payment technology conference and people said, that's boring. That sounds like

major nerd stuff. And so now I'm at this one and I got people saying to me, oh, well, I want you to come back and tell me what they said about Apple Pay. So that was, I think that was a really big theme. Interestingly, Bitcoin, I know I mentioned this to you and you said, so that's still a thing. People are still talking about this. That was a big theme here. They had a whole group of sessions around Bitcoin. There's still a lot of money being invested, I should say, around Bitcoin. It's not necessarily in Bitcoin itself, though the Winklevoss twins did give a keynote address. Of course they did. But there's a lot of money being invested around Bitcoin. And I think that's smart,

given that digital currency, I think, has legs, whether it's Bitcoin or not. So you get these VCs investing in these companies that can succeed, whether it's Bitcoin or whether it's something else that succeeds in the digital currency realm. I would be remiss if I did not invoke the name of PayPal, which is, if not the far and away leader when it comes to the mobile payment space, certainly has an installed base, as of right now, much larger than Apple's. In 2015, it will be a standalone company. Presumably, they will have some cash to throw around.

You're still calling the fight for Apple already? I'm usually not an Apple guy, but it was just so striking. And granted, there are payment terminals that you'll walk into some places and they'll have the PayPal on them. I think Home Depot does the PayPal thing. But it was, I don't know, there was something about it that just made it seem so easy and simple. And I'll actually, let me draw the distinction here. And this is between Bitcoin, although we don't have to talk about this, but I'm a little bit more bullish on Bitcoin. We were in a bagel place in Las Vegas, and it had the, we accept Bitcoin sticker. And I said to the guy, Oh, how does, how does that work?

And he said, I have no idea. He said, we don't, we don't turn it on very often because it's a real pain to use. And I said, has any, so, so has anybody ever paid with Bitcoin here? And he said, no, nobody ever has. And so I asked the woman at Whole Foods, I said, how does this, uh, how does the Apple thing work? Do people like it? Thinking that maybe I'd get the same response, like, Oh, I don't know. Nobody's really used it yet. She was very excited about it. She's like, this is really cool. It's so easy. People just, I don't know exactly how it works, but they just turn on their phone and boom, they're paid. So I don't know. It's looking pretty good for Apple on that one. If you are Visa and MasterCard, are you nervous or are you just sitting back watching

all of this unfold thinking no matter what happens, we're going to be good? It's interesting because they're not necessarily the financial companies, right? They're the back-end technology networks that make sure that the right messages are getting sent around who's paying for what and what account that's coming for. So as long as they stay on good terms with the people that are doing the front end and keep their technology where it needs to be, keep those networks fast, and be competitive where they need to be on the prices that they're charging, because there are a lot of complaints that the network charges that Visa and MasterCard and American Express, maybe even more so. They just need to watch that.

You're listening to Motley Fool Money, talking with Matt Koppenheffer, Managing Director for Motley Fool Germany. A lot of talk recently about Alibaba, how quickly the e-commerce giant has grown. You wrote something recently about a company I've never heard of, but you made a pretty bullish case for arguably a competitor to both Amazon.com and Alibaba. me about Rocket Internet. Great name, by the way. Yeah. Rocket Internet is a German company, a homegrown German company. It was founded by the Samuar brothers, very well-known brothers in Germany. And Rocket's an interesting story because there have been a lot of people that have taken potshots at it. Because essentially what the Samuars did is they said, we're going to take

these successful internet business models that worked in large markets like the U.S., like China, and we're going to copy them and we're going to bring them to the markets outside the U.S. and outside of China. And they've done that and they've been so far pretty successful at doing that. Now, granted, when you look at the Rocket Internet prospectus, it's this whole big group of companies. I think there's 71 companies or 80 companies in total that Rocket has an interest in. They call 11 of those companies there. I think they're proven winners is what they deem them. but even the proven winners, they have significant revenue, no profit. So it remains to be seen of all of these companies.

That sounds like Amazon. Right. Well, yeah, it sounds a lot like Amazon. So it remains to be seen whether all of these companies, and it is along the Amazon and Alibaba lines, but it's also along food internet, food internet services, that sort of thing. So it's a lot of different areas. Zalando was a company that the Samuels were into, and that recently was a big IPO in Germany. That's been a very successful company. I believe it is the largest online fashion retailer in

Europe. I think that's true. Don't hold me to that. But that was a very successful company. So Rocket Internet, I thought, was going to be a much bigger splash in the German market, but it was kind of a dud of an IPO. But I think it's definitely one to watch. How much of the advantage for investors who are looking to maybe make a play in an Amazon-like business outside the United States, how much of it for you gets down to, look, this is a German company, and from a legal standpoint, as an investor, and from a shareholder rights standpoint, you're in much better standing than you are with Alibaba, which, I remind people, if you own shares of Alibaba, you actually technically own shares of a holding

company in the Cayman Islands. Yeah. The Chinese stock issue, I try to be careful of where I'm not being PC, but there has just been ... For me, we've just been burned one too many times. Alibaba, by what I've seen, appears to be an extraordinarily successful company. There's no reason for me to think otherwise of that. But you're right. You don't actually hold shares in Alibaba proper, as you might say. And there have just been so many examples of Chinese companies coming to American investors as basically a way of saying, you're stupid. You've got a lot of money. We'll have some of that.

Now, before you got tapped to be managing director of Motley Fool Germany, you were the bureau chief for our banking and financial services coverage. When you look at the banks in Germany and across Europe, how do they compare favorably or unfavorably to, in particular, the big Wall Street banks? A lot of the issues that you're seeing are similar. What's not similar is that I think the economy in Europe in general has had a tougher time recovering and even now is looking fairly sickly. And when you think about the bigger bank stocks in particular, so in Germany, those big bank stocks, you're going to be thinking about Commerce Bank and Deutsche Bank. Those are often just basically a play on the economy of that

country. So you need a strong economy for the big European banks. You need a strong European economy for these to move forward. I think from that perspective, the U.S. banks still have an advantage. Unfortunately, to build on top of that, just like the U.S. banks, the European banks and also the German banks in particular have had a lot of legal ramifications still years out from the financial crisis that they're cleaning up and that they're paying for. So there's been a lot of pain. There's been a lot of pain. There may still be some pain. On the other hand, a giant bank like Deutsche Bank in particular, you've still got investors avoiding these banks. So to the extent that you are not convinced that the future doesn't look like the past, and when I say that,

what the past looked like is we've essentially gone through these peaks and troughs of bankers get really stupid. They make a lot of bad loans. They do a lot of dumb things. They lose a lot of money. But in that process, the run-up to losing all that money, everybody really likes them. They think these bankers are really smart. They're doing all these great things. They're never going to stop earning money. And then everybody gets really anti-banker. And then bankers are really dumb. We hate bankers. Bankers, all they do is lose money, right? So you go through this again and again. And so we've just gone through one of these periods of bankers are really dumb we should put them all in jail

so now and this isn't i'm not talking like a three to five year thing this is like a 10 year 15 year kind of thing so these next years look nothing like we we have in the past where bankers start doing things that people are really smart again um then you don't want to be anywhere near the banks but if it is similar to the past in some respect you can buy a bank like deutsche bank i think it's still at about half of its trading about half of its book value today i don't know why. Maybe it's because I don't own any of the big Wall Street banks. I don't own any of those stocks. But I find it oddly comforting that there's the same, in general, the same sentiment that the average investor has in Europe towards the big banks that the average investor in the

U.S. has towards the big banks here. Where the money is, is the podcast that you and David Hanson started doing a year ago. And New Year's Eve, last year, you made a prediction of where the S&P 500 was going to be at the end of 2014. Do you remember what you said? I know how close it is to where we are today. You said 2033. That's where the S&P 500 would be at the end of 2014. As of this taping, it is at 2037 so if it doesn't really move all that much one way or the other you are right on the money which compels me to ask what's one financial prediction you're going to make for 2015 i know i'm calling this early for you but given your track record i'd be remiss if i didn't

ask one financial prediction that i'll make for 2015 um let's go with total global ipo volume And I have to make the prediction now? Yeah. I thought I had a chance to think about this. No. Higher or lower than what we've seen in 2014? I'm going to go with 75% of 2014 IPO volume globally. That seems like a good thing, because this year seems, to use a Joe Maker word, seems a little frothy.

Yeah. There's a lot. There's a lot. I mean, when you start to see exciting internet companies doing IPOs in Germany, you got to... You're saying that's a sign? Germany is a great market, and I think Rocket Internet and Zalando are companies that investors should take a hard look at. But that is not the market where you're thinking, and maybe it's turning around, and maybe I'm going over to Germany at just the right time when this is going to be the exciting internet market.

But to date, it hasn't been. Well, we will follow your coverage on The Motley Fool's website in Germany, which is just fool.de. Before I let you go, we will wrap up with something we have not done for a while, that is a round of buy, sell, or hold. Are you ready? I think so. One of your favorite musical artists, Taylor Swift, is trying to revive this medium.

Buy, sell, or hold the CD. Well, if Taylor Swift is down with it, I guess I've got to sell hard on that one. Brazil hosted it earlier this year. Russia will host it in 2018. Buy, sell, or hold Germany, repeating as World Cup champions. Oh, I've got to be a strong buy on that.

You watched it this year, right? It was amazing. It was amazing. One of your favorite foods was developed here in North America, buy, sell, or hold peanut butter being available in most grocery stores in Europe. In Germany, from what I've heard, that's a sell. And that makes me really sad. But Nutella is everywhere.

So I could go from peanut butter and jelly to, I don't know, Nutella and Nutella on bread. Yeah. I've had Nutella. It's no peanut butter. Fair enough. And finally, on November 22nd, the Run for Shelter 10K race will be held here in Alexandria, Virginia. Last year, you won the race with a time of 36 minutes, 13 seconds. Unfortunately, you won't be here to defend your title, but The Motley Fool is one of the sponsors of this race,

so there'll be a bunch of our colleagues running. Buy, sell, or hold, one of our colleagues winning it again this year. I'm going strong buy on that. I have actually been working with a, he's in our analyst development program. He's on our options service, J.P. Bennett. He's super fast and I think has a good shot at winning it. If not, I'm going with you, Chris. That is a strong sell.

You are going to be pushing him right to the finish. I'll be pushing him into starting line, and that is the last time I will see him. You can read more from Matt. Go to our Fool Germany website, fool.de. That's www.fool.de. Thanks so much for being here. Thanks for having me, Chris. Coming up, we'll give you an inside look at the stocks on our radar.

Stay right here. You're listening to Motley Fool Monday. 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. Welcome back to Motley Fool Money. I'm Chris Hill, joined in studio once again by Jason Moser, Jeff Fisher, and Matt Argesinger. Guys, before we get to the stocks on our radar, I want to mention a special offer we have on Motley Fool Stock Advisor. It's our flagship service,

and it's a great way to get started investing. And you can learn more, just text the word FOOL to 38470. That's 38470. Text the word FOOL. We'll send you a link. You get 75% off Motley Fool Stock Advisor, so check it out. Jeff Fisher, what's on your radar this week? Alright, I haven't talked about it for a few years, so it'll be fun. It's Tupperware, ticker is T-U-P, and whenever I mention it, that's the reaction I get, skepticism or mocking, even. I just bought some Tupperware stuff for my kids' lunchbox. And I love that. What most people don't realize is, it's really an emerging market story now. 70% of revenue comes from emerging markets, and that's growing generally 10% or more annualized.

And they have a long way to keep growing, a lot of room, because they're just entering these really dense urban markets in China and India and whatnot. Shares are down 30% this year on some weakness in some markets, some headwinds, and they now yield 4.2%, traded about 14 times earnings, so it's at a discount. Steve Broido, question about Tupperware? If I hosted a Tupperware party, would you attend? Anytime, Steve, anytime. I'll bring the cupcakes. Matt Argersinger, what's on your radar this week? Sure. I'm looking at AeroVironment, ticker AVAV.

It's a company we bought once for our Odyssey portfolio in Supernova. And this is the leader in unmanned air systems, also popularly known as drones. But drones, people have been excited about those, and we know Jeff Bezos is getting into Google as well. But really, the story with AVAV is that they're very defense-oriented. They're the leader in supplying the military with drones, surveillance, and security purposes, reconnaissance. And it's a beaten down company and one that I think is not getting the right premium for the competitive position that it has in the market. Steve, question about AV? What's the possibility that drones in consumer space is just totally overblown and not going anywhere?

No, I'm one of the guys who says that I think within five to ten years, we're going to have drones buzzing around pretty regularly. I just think the applications in all kinds of markets are just too big to ignore, and eventually I think the FAA is going to come around. Jason, what have you got this week? Actually, Jeff, I think the stuff I bought my kids was Rubbermaid, so ... Oh! I'm out of here!

So, this earnings season, I started learning a lot more about Alibaba, ticker B-A-B-A. I'm liking a lot of what I'm finding out about this company. Yes, China is still a black box, but that doesn't mean that stocks like these are necessarily off-limits either. They just got done with their Singles Day sale, which recorded more than $9 billion in gross merchandise volume. More than 40% of that came from mobile. They've just crossed the threshold. They have 307 million active buyers now, which represents half of China's internet population, but only a quarter of the overall population. So, you see this tremendous market opportunity out in front of a company that's already dominating the market to begin

with, maintains higher margins because of the business model, a little bit different than Amazon, and Jack Ma is certainly a go-getter, if nothing else. So, this is a business that I'm continuing to learn more about and liking what I'm learning. Steve, question about Alibaba? I always hear that investing in IPOs is a bad idea, so I never invest in IPOs, and then I regret not investing in IPOs. Give me some advice here. No, I tend to agree with you. I refrain from investing in IPOs as well, typically because, number one, I want to see the management team record a couple of quarters, understand how

they run the business, catch a couple of calls. China, you have the added dynamic there, or Alibaba, you have the added dynamic of China, really transparency issues that we have to get past. So, I still would probably hold off. I think the market is in love with Alibaba right now, and the stock price reflects that. But this is also a very powerful business, and there will be a buying opportunity that comes up in the near future. I'd be keeping my eyes on it. E-commerce, drones, Tupperware. What do you like, Steve?

I'm going Alibaba. Hey, now. Sounds good. All right. Jeff Fisher, Matt Argersinger, Jason Moser. Guys, thanks for being here. Thanks. Thank you.

That's going to do it for this week's edition of Motley Fool Money. The show is mixed by Rick Engdahl, our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.