Motley Fool Hidden Gems Investing - Motley Fool Money: 12.05.2014

Episode Date: December 5, 2014

The market hits new highs.  Disney hikes its dividend.  Abercrombie & Fitch reports unfashionable earnings.   And Burger King brings back the Yumbo.   On this week’s Motley Fool Money Radio Show, our analysts discuss those stories and share three stocks on their radar.  Plus, CNBC’s Carl Quintanilla weighs in on some big stories for the year ahead. 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 pro and options, Jeff Fischer, and for Million Dollar Portfolio, Ron Gross. Good to see you, gentlemen, as always. We've got the latest from retail, restaurants, and industries that start with something other than the letter R. Carl Quintanilla from CNBC and HBO Sports is our guest this week. And as always, we'll give you an inside look at the stocks on our radar. But we begin this week with the big macro. November's jobs report out Friday morning, Ron, and the The numbers are looking pretty good. 321,000 jobs added for the month. Unemployment stays at 5.8%.

Really strong. 2.65 million jobs created this year. Best growth in 15 years. Economy continues to pick up steam. I would say the one maybe not so great thing is the wage growth numbers. There are some reports saying that this looks a little bit interesting because they ticked up a bit. I think inflation adjusted, though. We're looking pretty much at flat wage growth, which can you have flat growth? Basically, that means no growth. So that's the one non-silver lining. But all in all, I think these numbers are really strong. It's great to see that U6 number continue to tick down, the bigger, broader gauge of employment. So things on the uptick. Jeff Fischer, what stands out to you when you look at the big macro?

So the other thing is they revised numbers for prior months, too. So more people are working, and that's always ultimately a good thing. Now, give those people some time to get back on their feet, save some money, and then they may spend more, and we may see it in the economy. Meanwhile, Europe should really take a page from our book and get off their doofuses and do something. So, the ECB has now, since September, October, promised to do something to stimulate the economy. I was going to say, a couple of weeks ago, we talked on this show about European Central

Bank saying, yeah, we're going to expand our QE program. Saying they would do that, and everyone thought they may, or most people thought they would in this month's meeting, and they did nothing. They said really the same thing that they said in October and November, which is, they're thinking about it. They'll do everything they can to stick to their mandate, which is, their mandate is 2% inflation on average each year. It hasn't been. Europe has not had 2% inflation for nearly two years. It's drifted all the way down to almost 0% inflation, which, of course, gets to be dangerous. You do not want deflation. So, we don't know what they're

waiting for. Hopefully, by January, they'll have some stimulus to share. But they didn't even say they would by January, possibly. They just said sometime next year. So, what you have here is a marriage of, really, nine couples, 18 different countries that used to be, historically, are at each other's necks, now trying to work together. And it's commendable that they're trying, and it just takes a lot of time. It takes them time to make decisions. Jason? Yeah, I mean, speaking of revisions, I mean, there are signs that there is some spending going on there. Along with unemployment numbers being revised, revisions to the personal savings

rate, it appeared that the savings rate was growing over the past few months. Those numbers have been revised down towards closer to 5%, which is pretty low when you look at it in the historical context. But it presents an interesting dilemma for, I think economists really like to noodle this one around, because on the one hand, if you have a low savings rate, that means that people are out there spending. And that's a short-term plus. The problem there is that the low savings rate sort of indicates that people aren't really preparing for the future, which is then a long-term risk. And so, I think, you know, watching that personal savings rate is an interesting indicator of the spending behavior out there. And right now,

it appears that people are spending. Yeah, and that counterintuitive move we sometimes see, despite all this good news, the markets were kind of muted. And that's mostly because now people turn their attention to worrying about the Fed raising interest rates perhaps sooner than they would have if things weren't so rosy. So, every silver lining has a black cloud or whatever you want to do there, but the markets didn't really react like I thought they would. Let's get to earnings, and we'll start with a tale of two fashion retailers. Abercrombie & Fitch had previously warned that third quarter results would not be that great, and Jason, this week they made it official. Sales down

in the U.S. and abroad, the stock down for the week. Meanwhile, the Gap's third quarter profits came in higher than expected, growing same-store sales. It really seems like they're turning things around. Yeah, Abercrombie & Fitch is just a perpetual disappointment. I mean, you just don't want to invest in this company ever because it's really got two big strikes against it. No. 1, leadership. I think Mike Jeffries is just not fit to run a company. And then No. 2, it's teen retail. And teen retail is It's just notoriously fickle. They live short lives, and teens are always going somewhere else

when that line or that brand becomes a little bit more popular than it's cool to be. And so, I mean, you look at the financial health of the company. I mean, the margins are getting squeezed over time. They just don't have any pricing power there, really. Conversely, you look at something like The Gap, and The Gap is much more diversified, right? It's not just The Gap. It's Old Navy. It's Banana Republic.

It's Athleta. All of these things combined to offer a broader consumer base, and the company's obviously far better led than something like Abercrombie & Fitch. And I think really the standout with the gap this November was Old Navy, and they're just really doing a wonderful job in marketing, getting customers in the store, using sort of that omni-channel presence to sell online as well. you know, Old Navy is more affordable as well. So, I think it's attractive for a lot of families looking to buy clothes for them or their kids. And so, yeah, definitely the tale of two retailers there. And I certainly see more light at the end of the tunnel for something like Gap versus something like Abercrombie & Fitch. O'Reilly. Abercrombie & Fitch's stock has lost to the market for 10 years running. What does it take for Mike Jeffries to get booted out?

They better get off their doofuses. O'Reilly. I mean, that's a good point, though. It's going to take activist investors, right? I mean, he's not going to step down on to own a court, I don't think. So, it's going to take activist investors. And I don't even know that activist investors would really be interested in this thing, either. Alta Salon Cosmetics and Fragrance hitting a new all-time high this week after third quarter profits came in higher than expected. And, Ron, Mary Dillon has been CEO for about a year and a half. She's really getting it done over there. Are you rubbing salt because you know I sold the stock at $91, and it's now $130? Is that

what you're doing? That was not my intention, but I consider it an added benefit. I tell you, we sold at 91. It was a small position, and we couldn't get comfortable with the growth rates the company was going to need to put up to work into that valuation. But boy, oh boy, are they doing it. And were we wrong. 10% comp sales, 20% overall sales, EPS growth of 30%. They opened up 50 new stores, margins widened. I mean, they're just knocking the cover off the ball. Still plenty of growth runway ahead of them. They've got about 765-ish stores. They could probably get to 1,200, maybe even more over time. They are getting it done.

Historically, when you look at their store count, is that something that they've been conservative? Because we certainly see that with companies like Chipotle, obviously a very different industry, but they're very conservative about how they grow their store count. They're doing a good job. They are raising their projections as they see how opportunities present themselves and how the company is doing. They originally had a goal of about 1,000 stores, then they upped it to 1,200 stores. If things continue to go this well, I could see them even upping that, especially if they go outside of the United States in a bigger way. Shares of the Walt Disney Company hitting an all-time high this week after the company

announced it is raising its quarterly dividend 34%. And Jeff, I think many people watching this company were expecting a raise in the dividend. I don't think anyone was expecting it to be this high it is it's a sizable increase 34 but it's still dividend their dividend payout still only runs around 20 of disney's revenue chris so there's room for this to grow i mean some people some companies pay out 40 of earnings uh once they're a kind of a mature business but you said 20 of revenue did you mean 20 of earnings 20 of net income income got it thank you thank you ron uh so yeah it's a it's a nice increase but disney has room to keep increasing it still and and the company is just, it's hitting on all cylinders to pay homage to Ronda Rousey.

Oh, I haven't said that in a while. I think you haven't. The royalty check is in the mail. I mean, Disney is a franchise powerhouse, from ESPN to Pixar, which they acquired, to Marvel characters, which they acquired, to Star Wars now, which they acquired. And they do not hit a false note with these characters that they acquire and then re-monetize. And they're going to have a really good year ahead of them, I believe, next year as well. Their parks are doing extremely well. Their movies are doing well. They have Star Wars next December. But the long-term story is even more promising. Since 2004, so the last 10 years, Disney has

basically doubled its profitability, its return on capital, return on assets, return on equity. All those measures that we care about have nearly doubled in the last 10 years. Meanwhile, revenue has grown about 6% annually the last five years, which isn't great, but it's good for a company this large, and cash from operations is growing 13% annualized. So, it's still a growth story. We've got just a couple of weeks to go in 2014. This is already one of the best-performing Dow stocks out there, up more than 20% this year. I don't think the average investor looks at Disney and thinks, oh yeah, this is a growth-y type of stock, but that's the kind of year it's had.

It has had that kind of year. The past five years, it's up more than 200%. Now, said, the past 10 years, it's also up only a bit more than 200%. It's really the recent years that it's taken off, because all these things are working for it. It's been a long-time Motley Fool recommendation. It remains one. It may sound amazing to say, but I think its best years are ahead of it. Iger's going to be there for a little bit longer now, right? A little bit longer, but God help whoever is the CEO after Bob Iger, with the track record he has amassed in his time in the corner office.

Yeah, you go from Mickey Mouse to Jack Sparrow to Han Solo, they have a franchise industry second to no one. Coming up, the return of a classic. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Jeff Fisher, and Ron Gross. Guys, before we get to some recent restaurant news, how are we feeling about holiday retail? We're a week

removed from Black Friday. And Ron, I think immediately in the wake of Black Friday, there was a little bit of doom and gloom because the numbers weren't quite as robust as last year. But Cyber Monday, we rang up $2 billion. Yeah. The numbers confuse me because Cyber Monday, the online did well. In-store did poorly. People are extending the amount of sales days. It's sometimes not apples to apples. I think we're continuing to see online do well. It's cannibalizing the brick-and-mortar sales, as you would expect. Overall, I think things look relatively strong, but the numbers say we're a little bit weak. How much of retail is Animal Spirits?

This year, it seems like Animal Spirits are just kind of mediocre. I don't hear about people excited to go out and shop. People don't seem to react to the urgent one-day sales anymore. Everyone's buried under email promotions and sales, and we don't need it. Jason, we were talking earlier in the week, it does seem like we are moving towards Black Friday as a singular 24-hour event being less and less relevant, whereas the entire season may just maintain its relevance. Right. It's losing its exclusivity, And so, it probably should be changed to something like Black November and Cyber December, because really, it's those two months in totality that we need to focus on.

And so, there's no urgency. I know I certainly have felt no urgency whatsoever, even as my inbox continues to get peppered with daily deals that I delete immediately, because at some point, we'll go do some shopping there. But these retailers are all racing to the bottom already, cutting prices. And, you know, I think Ron's point there of the bricks-and-mortar sort of cannibalization problem there is a good one to note, because your pure e-commerce plays, and I'm looking in your direction, Amazon, are really benefiting from that. But, yeah, I mean, we're going to see more spending as the month goes on, and we'll just check it all out in 2015. Next week, Burger King Worldwide will seek final approval from shareholders on the company's purchase of Tim Hortons.

Late this week, the Canadian government signed off on the $11 billion deal, and it coincided with the news that after a 40-year hiatus, Ron Gross, Burger King is bringing back the Yumbo. The ham and cheese sandwich that was discontinued in 1974 will be offered for a limited time. Are you with me? It ain't a McRib, Chris. It's a ham sandwich, am I right? And cheese and lettuce.

For like three bucks. On a hoagie roll. What could go wrong? Sounds amazing. Remember 1973? Let's bring that back. On Friday, Starbucks opened a new 15,000-square-foot location in Seattle, but it's not just any Starbucks location. This is dubbed, and I'm quoting here, Starbucks Reserve Roastery and Tasting Room. CEO Howard Schultz referred to it as the Willy Wonka of coffee.

So we must turn to our resident Willy Wonka expert, and that is Steve Broido, our man behind the glass. Steve, that's a pretty high bar Mr. Schultz is throwing out there, comparing his new coffee shop to Willy Wonka. I agree. Do you think they can hit that? Doubtful. I think that's going to be pretty challenging. Can we fly out today, this weekend? We need a little market research here. A little nonsense now and then is relished by the wisest men.

I think he needs to go full Willy Wonka and offer some golden tickets. Let's get to the stocks on our radar this week. And Steve Broido will hit you with a question. Ron Gross, what do you got? I'm going down swinging with Titan International. I'm going to keep bringing it up until we make money, my friend. TWI, maker of industrial tires and wheels, in a cyclical downturn. But the CEO just bought 82,000 shares this week for $800,000, typically a good sign.

This stock is at $10. It should be worth $22. Steve? Does a name like Titan just give you just a lack of inspiration in some regard at all? No, the opposite. It makes me want to go, yeah! It's like that guy driving a really expensive sports car, he's making up for something. Jeff Fischer, what's on your radar this week?

Five Below, a pre-teen and teen retailer that we are short shares of in Motley Fool Pro, although it's a recommendation in Motley Fool Hidden Gems, so long and short. And I think that's appropriate. It's a pretty fast-growing young retailer with 366 stores by the end of this year, but it's also expensively priced and hitting some headwinds. So, do you go longer or do you go short? Steve, what do you think? How do you base a company based on the whims of teenagers? You short it. Nice. Jason Moser, what do you got this week? Yeah, I'm going to dig into Jeff's well here. He'll be familiar with this. Skyworks Solutions,

ticker is SWKS. It's a semiconductor company. It makes semiconductors for all sorts of devices out there. Phones, for example, they are in Apple's iPhones. They were recently introduced into GoPro devices, which we know there is a growing market there for GoPro's devices. As the internet of things becomes the internet of more things, companies like Skyworks will continue to benefit. This is a company, it's a bigger tech company, so it's sort of past that hurdle where they're not going to be, I think, as subject to the volatility. Something like InvenSense brings in a lot of cash every year. And I think this is certainly an interesting one with some growth prospects. Steve, question about Skyworks?

Do you think you want to be on the hardware end of things or on the bigger picture idea front as a business? Typically, I see hardware as more or less a race to the bottom. But when you're looking at the things that help make up the hardware, the technology that makes that hardware work, I do find that interesting. And that's what Skyworks is. Steve, Skyworks, Five Below, Titan International. Do you have one that you like there? Skyworks. I might have to go with Skyworks.

All right. Good man. That's consistent. Good man. Steve did that a couple weeks ago, too. You're a good investor, Steve. Going with Jason's pick, what does that mean for the likes of Ron Gross and Jeff Fisher? So you get nothing.

You lose. Good day, sir. Love him. And that, my friends, is why Steve Broido is not just our technical wizard, our man behind the glass. He is our resident Willy Wonka expert. Agreed. You get nothing.

Steve, no matter what that tweet said, you ain't slipping. By the way, the fact that they get nothing, that doesn't mean that Jason wins some kind of prize. Definitely not. Jeff's got to get an honorable mention here, right? You can have all the fizzy lifting drinks you can find, how about that? All right, Jason Moser, Jeff Fisher, Ron Gross. Guys, thanks for being here. Thanks, Chris.

I've got a golden ticket. I've got a golden ticket. I've got a golden chance to make my way. And with a golden ticket, it's a golden day. Before we go to break, I want to mention Motley Fool Supernova, our service that is open for a limited time. You can learn more just by going to supernova2015.fool.com. You get a guided tour of the service, all of David Gardner's personal stock picks together in one place. That's Motley Fool Supernova. And the URL, again, is supernova2015.fool.com. Coming up next, a conversation with Carl Quintanilla of CNBC. Stay right here. You're listening to Motley Fool Money.

Welcome back to Motley Fool Money. I'm Chris Hill. when the opening bell rings at the New York Stock Exchange. My guest this week has a front row seat because that's where he works. Carl Quintanilla is the host of CNBC's Squawk on the Street, which you can catch each weekday morning at 9 a.m. Eastern. Carl, thanks as always for being here. Happy holidays, Chris.

Happy holidays to you as well. We are just a few weeks away from the end of 2014. when you look back over the year we've had so far in business are there any stories that sort of stand out to you in terms of oh this is this is one i think we're going to remember 2014 for certainly you look over the last few months and increasingly the price of gas dropping um is is in that conversation absolutely um gasoline and oil um what a punch in the gut for a lot of hedge funds. It's been extraordinarily painful for a lot of people who were in that debt. But what a boon for the consumer. And I'll be interested to see over the next few weeks whether or not

that really moved the needle on the holiday shopping season and retail. You know, I think more than stories, it's more about general narratives and dynamics this year. A market that nobody really trusted to go up because it already had gone up so much continued to make some gains. Employment has held in there. The rise of what we are now calling, I guess, disruptors, right? I mean, Uber just raised a billion more dollars this week. I think those are the kinds of things we'll be talking about at least into the middle of 2015. Those are not going away anytime soon. Yeah, you mentioned the market this year. I got to say, and again, we're a few weeks away from the end of the year. So certainly, I could jinx things here. But

as of this moment, the market's up around 11% for the year. I don't know a lot of people who are expecting that on the heels of 2013, when the market was up 30%. Right. And remember, a few months ago, the whole narrative or the whole notion was, well, when the Fed stops increasing quantitative easing, and the taper comes and blah, blah, blah, Boy, are the markets going to roll over. Hasn't happened. Now, that doesn't mean it won't. Clearly, even the most sophisticated money managers will admit it will respond when interest rates start to go up, as they usually do.

But I think what people underestimated this year was companies' ability to find ways to cut costs. Certainly, we know wages have not done anything for middle class and lower class Americans. That's been a disappointment politically, I think, for the president and obviously for anyone in those income brackets. But our companies, like it or not, are Olympic athletes. And their level of conditioning, certainly relative to the rest of the world, it's just amazing. You mentioned the price of gasoline and the impact that it potentially has on general retail. it really does seem like general retail is stronger heading into this holiday season than one or even two years ago, particularly when you look at the latest quarterly earnings results we

got from Walmart, Target, Best Buy. Some of that was expectations, but am I wrong, or is general retail healthier? I think it's better, yeah. I mean, you know, whether or not it turns out to be up four percent like the nrf believes we don't know a trader i was talking to today said the bottom line for the holiday season is if it has a battery buy it that's what consumers are demonstrating they're willing to do whether it's you look at apple or smartphones or televisions um so i there's been a real resilience in the consumer um gas prices will probably move that even further along i think you're seeing more activity in restaurants you know we're watching names like mcdonald's and starbucks because a lot of these places are leveraged to employment

meaning if you have a job to go to you might actually stop and get a cup of coffee but if you have a job to go to and your gas bills down 40 or 50 dollars a month that that brings in a marginal customer and uh i think that's going to impress people who think the economy is unable to get out of this sort of medium level of strength. I want to ask you about one industry in particular, and that industry's performance in 2014, and that's airlines, which Warren Buffett is famous for a number of things, one of which is hating airlines as an investment. And historically, he's been right on that. But wow, so far in 2014, you look at Delta and United and their stocks up more than 60 percent. American Airlines almost doubling. Southwest more than doubling. Is this

simply a reflection of what we're seeing with the cost of fuel and greater profit margins? Or is this something that is, dare I say it, sustainable heading into 2015? That's a tough one. I mean, And Buffett learned his lesson the hard way, as you point out, with U.S. Air. I mean, that was hugely embarrassing for him. But that was a different time. That was a time where you and I could go to the desert, you know, the Chris and Carl airline company. We could go to the desert, rent a cheap plane, start putting in capacity on, you know, noncompetitive routes, slash our fare structure, and steal some share.

That just doesn't happen anymore. We don't have startup airlines cropping up every other day. JetBlue was originally one, and there's a couple others out there. But there's been a lot of consolidation. The unions have surprisingly played along. Fares have gone up, as I'm sure you've noticed if you've tried to book any holiday travel. Oh, yeah. And then you get oil coming down 30%.

It's just a dream environment for these companies. And Delta, especially, was so prescient. They started going vertical, essentially creating their own refinery structure. Just a brilliant play ahead of what's happened here. So I don't know if I'd buy them into 2015. They've had such an amazing run. But this is clearly not your Warren Buffett's airline environment. Totally different.

The first employee, just so I'm clear, the first employee you and I hire would be an actual pilot, though, right, for our startup airline? Okay, sure. I'll go along with you on that. We had some big-name CEOs riding off into the sunset this year. Obviously, Steve Ballmer leaving early in the year from Microsoft, Alan Mulally from Ford Motor. Those were pretty widely telegraphed. But we also had Frank Blake with a tremendous run at Home Depot.

And Larry Ellison leaving Oracle. And I don't know about you, but I was genuinely surprised by Larry Ellison leaving Oracle, despite the fact that he's 70 years old. he just seemed to relish the role of leading that company. Was that at all a surprise to you? You know, I think we have to be careful with our definition of leave, right? Clearly, from an operations standpoint, yeah, he's probably not making day-to-day decisions, but he just owns so much of the company and has had historically such a heavy hand. And I have to believe his influence is not going to just disappear.

We knew he had to hang it up at some point. They've got real challenges, Oracle. The street in general, I would argue, is not constructive on the name because they have sort of this patchwork array of applications. And in the enterprise, information technology preferences are just changing so quickly. So we hear a lot of analysts arguing that they'd rather buy Microsoft over Oracle. But there was obviously a huge departure from a CEO standpoint, and there have been others, too. Procter & Gamble is just one that comes to mind.

The Ballmer thing is interesting because although he left, he still owns, what is it, 300 million shares? I asked today on the air, I said, how embarrassing is it that when you leave, the stock goes up 50 percent? But when you own that much stock, it's like, well, okay, I'm happy enough with that. Yeah, that probably smooths over any hurt feelings you may have. As we head into 2015, is there a particular industry that you're curious about? It seems like, as we talked about last year at this time, the lines between broadcast television, cable television, streaming, etc., just continue to get blurred. And in 2015, we'll have HBO launching their new streaming service. But is there anything in particular you're most interested in as we head into a new year?

Well, media is obviously one that hits close to home, and I'm employed by Comcast, which is a cable company. We have a big deal on the line getting the acquisition of Time Warner Cable approved. You know, you just saw the Nielsen numbers this week in the most recent quarter. Traditional television viewing is down 4%. Streaming is up 60%. So we all know this train is coming, But it's unclear who's going to be able to hop on board, who's going to get the best seat.

Obviously, we're all, as an industry, just investing in content like there's no tomorrow, because that is the one sure thing. You get good content, you will be able to monetize it no matter what the distribution channel is. So it's terribly exciting and frustrating, and I'm sure terrifying for executives whose job it is to figure that out. I also think cars are going to be interesting. We're going to do 17 million new cars this year. What's the upside from that? Do we start seeing auto loans getting a little more iffy, you know, more subprime loans, things like that?

If gas prices stay low, does that mean you and I can go out and get an SUV instead of a Prius? Prius sales were down 14% in November. What does that mean for Tesla? So those are going to be good questions for next year, too. Coming up, we'll dig into the business of sports. This is Motley Fool Money. Let's take a ride in an electric car to the west side and then... You're listening to Motley Fool Money, talking with Carl Cantania, host of CNBC's Squawk on the Street.

And when he's not doing that, he's guest anchoring the NBC Nightly News with Brian Williams or the Today Show. And apparently, my friend, you're not busy enough with all of that because since the last time you were on this show, you went out and got yet another job as the newest correspondent on the award-winning HBO series Real Sports with Brian Gumbel. I want to ask you about your most recent story in just a second. But first, your first story right out of the gate was about the business of fantasy football. I knew it was big. I didn't realize it was as big as it is. Was there anything about that that surprised you? Because one of my takeaways from watching these people who are engaged, not just in fantasy football, but fantasy sports,

and betting large amounts of money on just one night's worth of baseball games, that sort of thing. Is that a disruption to Las Vegas? Is that something that the sports leagues themselves are happy about because presumably people are more engaged, or do they think, oh, this is ultimately going to be our undoing? It's obviously hugely controversial. I was not prepared for some of these numbers in terms of the amount of money that's going to be won, a billion dollars next year, and that's just from the industry's number one player. um i think it reflects uh the fact that sports uh is they need to lock in market share these individual leagues um are looking at big demographic changes in this country they're looking at big changes in distribution like we were just talking about and i don't know i think

it's exactly why the commissioner of the nba said we ought to legalize gambling they need to give people a financial motive to watch. So they are backing this daily fantasy trend. I think they'll do whatever they can to make sure they don't end up becoming the next bowling or the next golf. That's going to be a hugely competitive issue in the next, I would say, five to ten years. I wrote on Twitter earlier this week that my favorite football team is the New England Patriots, but now my second favorite team is the Watts Bears. This is a youth football team that you profiled on the most recent episode of Real Sports with Brian Gumbel. For those who haven't seen it, can you share a little bit about sort of how this team came to be? Because I have to say,

I went in thinking, well, this will be a nice story about an inner city football team in a troubled area of the country. And it turned out to be so much more than I was expecting. Well, we know L.A. historically has had very poor relations between the African-American community and the police department. It goes back to Watts. Fifty years ago, Rodney King made things even worse. But in this very concentrated area of L.A. known as Watts, they got a grant to let cops start finding ways to build trust again with their neighbors. And a few of these cops said, let's coach Pop Warner football. Let's get kids from different projects, they call them developments, different developments,

to play together even though their parents might have been on rival gangs. They've brought crime way down, especially violent crime and homicides. You've got kids hanging out with cops who would have never even wanted to be seen near a cop before. It's been a huge success. They're very proud of it. The big question is whether or not there's the money and the will for other cities to try to replicate it. But certainly after the kind of week and fall that we've had with Ferguson and now the Eric Garner case in New York, I think you're going to find municipalities trying to find ways to build some bridges, because a lot of them are, I would argue, endangered. Let's stick with the business of sports for a second, because the NFL and the NCAA are cash machines.

And if they were stocks and you were holding them for the past 10 years, you're doing more than OK. But the NFL has a risk in terms of the health issues. The more we learn about concussions and their effect. And the NCAA has its own risk with this growing drumbeat of questions about the amateur status and should athletes be paid, particularly in football and men's basketball. First, of those two, which one do you think is at greater risk right now? Oh, I would argue if the question is which will tip, I think we'll see student athletes be compensated quicker than we see the NFL have some massive shift in policy.

I just think the NCAA story has a little more momentum, and they've had a head start. People have been grousing about this for a while. The NFL, you know what? But people have been calling for Roger Goodell's head for a long time. This Ray Rice story is troublesome. The Peterson story is troublesome. And they will make changes to their rule structure, I'm sure.

But in a fracturing media environment, football is where it's at. I mean, as I said to someone today, they will remain, even though ratings might have slipped over the past few years for football, they will remain the tallest, I was going to say midget, but I'll say little person, in the room. And if you want eyeballs, if you want scale for your advertising, that's where you'll go first. So I don't see the pressure on the NFL being as painful as it is right now for the NCAA. Well, and you mentioned earlier the Nielsen ratings for broadcast television, and just check any week this fall, and among the top five, certainly among the top ten,

most watched programs in a given week on broadcast television, Sunday night football on NBC, Thursday night football for CBS when it was on CBS, and if you want to throw ESPN in there for Monday night football, you get that as well. Yes, and tonight, I'm not sure when this is going to air, but tonight we have a showdown between Dish and CBS, and in Denver, Will they have their Bronco game this weekend? A game that got a 47 share in that local market last week. I mean, you just can't.

No one else delivers those kinds of households in scale, in that kind of scale. So it's going to be a fascinating public relations story and communication story for the league. But I just don't see wholesale change coming to it the way some expect. All right, before I let you go, we'll wrap up with a round of Buy, Sell, or Hold. That's my favorite part. The movie does not come out for another 54 weeks, but it's already got a lot of buzz. Buy, sell, or hold. Star Wars Episode VII, The Force Awakens.

I was a Star Wars fanboy from my early youth, but Phantom Menace was a big lesson. I'm going to go hold for now. In 2014, this business became the most valuable company in the world in its category, but it is still privately held. Buy, sell, or hold the Lego company going public in the next three years? Three years. I'll say sell. I don't see it happening. Why would you? They already have such mind share and market share. I've got five-year-old twins, and I'm literally standing knee-deep in Legos right now. An early nominee for the IPO of 2015 has taken some hits to its reputation recently. Buy, sell, or hold Uber?

Uber. I will buy Uber. Even though some of these valuations are crazy, they're being valued now at a bigger valuation than Delta Airlines. And when you think about how much capital Delta has, it's just mind-boggling. But I think there's room to grow. And finally, this team made it to the Super Bowl last year. Buy, sell, or hold a return trip to the Super Bowl on February 1st, 2015 for your Denver Broncos. That is a double leverage long buy, but I can't guarantee what happens once we get there. CNBC, HBO, NBC, Twitter, this man is everywhere and for good reason. Carl Cantania, have a wonderful holiday, my friend. Chris, it's good to talk to you again. That's going to do it for this week's show.

We'll see you next week.