Motley Fool Hidden Gems Investing - Motley Fool Money: 12.21.2012

Episode Date: December 21, 2012

We preview 2013 for investors by discussing CEOs on the hot seat, which stocks should go on their watchlists and which stocks to avoid. Plus, our analysts weigh in with Reckless Business Predictions for 2013. Learn more about your ad choices. Visit megaphone.fm/adchoices

Everybody needs money. That's why they call it money. The best things in life are free. But you can give them to the birds and bees. From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill. Joining me in studio this week from Motley Fool Inside Value, Joe Mager. From Motley Fool Asset Management, Tim Hanson. and for Million Dollar Portfolio, Ron Gross. Gentlemen, good to see you.

It is our year-end special. It is our look back at 2012, our look ahead to 2013. We're going to be doing it all hour. Let's start just by looking back at 2012. And, Ron, I'll just start with you. Obviously, the Facebook IPO sort of looms large when you're looking at individual businesses and individual business stories. But when you step back and you look at the year, what stands out to you?

Housing jumps out at me. certainly had a nice run there. The rise and fall potential at falls may be a big word of Apple jumps out at me, at least from a stock perspective, although I think the business remains quite strong. It was an interesting year for me. You wouldn't expect that the market would be up 17%. It really actually doesn't feel like that to me. It feels like a more difficult year than that. Well, I think part of that probably has to do, Joe, with some of the macro stories that have just loomed over Wall Street. Now it's the fiscal cliff, but whether it's-

Europe, Apple, fiscal cliff. What voice is that? That's my zombie voice. Mindless discussion. What stands out to you? Those are the three big themes. Thankfully, I think fiscal cliff is doomed. I do think in the sense that it'll go away.

We're going to keep talking about Apple in a robust way for a long time. And, yeah, I think this was the year of Apple's boom and I don't want to say bust, but it was kind of when Apple came back down to earth. And I think that that, along with, you know, Euro crisis year three, what people are going to remember from this one. Yeah, Tim, if the year ends on September 15th, then obviously it's an amazing year for Apple. But the last few months have definitely been a ride down. Yeah, absolutely. You know, this is a company of people I think thought was pretty untouchable, but they've definitely showed themselves to be human with the maps. debacle and some turnover in the executive ranks and it'll be interesting to see what the next

chapter what the next chapter holds for them and for europe but i think you know i think ron was right to point out the the housing data which is which has been really really strong and which i think people are still discounting to some degree and you know the fact is housing data looks good employment numbers are getting better the stock market is up 17 and you wouldn't i mean you know generally speaking put those three things together and there'd be a lot of bullish media reports but people tend at least from my perspective it seems like people are still really bearish but the data may be pointing in a contrary direction. Yeah. What's unfortunate about that is that most small or retail investors tend to wait

until things have already gotten better before they come in and invest. And this is something we've talked about on the show for a long time, is that you should not be a rearview mirror investor. And unfortunately, I think there will be a lot of those people. But you talk to people on the street, and they still think, to Ron's point, that the stock market's not having a good year. And it's like, actually, it's having a very good year. Yeah. And obviously, much of the year we spent talking about the election. And when that got behind us, the stock market looked like perhaps it was going to be in a bit of trouble. But the Fed steps in with QE3, 4, 9, 11.

Free money forever. Free money forever. So that stands out in my mind as well. How much do you guys think – I mean, when you think about individual investors, how much do you think things like the Facebook IPO, which was a little bit of a debacle of its own right, But also just sort of these – it seems like some of the headlines, which if you're an individual investor, it's easy to just sort of only focus on those. It seems like a lot of the headlines lately have been about either something going wrong or some sort of illegal activity, the London whale situation, high-level executives getting charged with insider trading or anything like that. It seems like the water cooler stuff, I guess I'm saying I understand why people feel like it hasn't been a good market.

I mean, is that something that people just need to push past? Yeah, I think so. And, you know, in news, barriers to entry keep falling. So it's easier for people to get in the game. And the way that they compete is with salacious headlines. And it's sexy sells, fierce sells. And that's why you're seeing so many of these headlines. People do that in order to stand out.

There's plenty to be optimistic about. I think in the wake of the disastrous headlines of the recession, which I still think everyone remembers pretty palpably, if that's a word, which I don't think it is. Palpably? Yeah, the whale kind of pales in comparison to major investment banks and commercial banks potentially going out of business and high unemployment. And coming off of that, things are still relatively good. Well, you know, it's funny. I saw a survey recently that showed that popular opinion of the stock market, whether it's trustworthy, a good place for money, is pretty much at an all-time low. And some of the reasons for that are distrust of the major players, like J.P. Morgan, Goldman Sachs, and also the fact that they think the game is rigged against them. Which, you know, if you've been following all the insider trading allegations, which are now sort of turning into a pattern at SAC Capital, I mean, this was generally regarded as being one of the most successful trading hedge funds in the world.

and it looks like a lot of their gains may allegedly be ill-gotten. That's interesting, probably because I don't think that should result so much in people becoming pessimistic about the stock market. It means that, look, these pros don't really know what they're doing. So as an individual investor, you can do just as well. I mean, they're basically making it up. Before we start looking ahead to 2013, some CEOs in the news this week, President Obama was named Time Magazine's Person of the Year, But one of the runners-up was Tim Cook, the CEO at Apple.

Not very bold choices. Yeah, I'm just saying. Is it typical to give it to the winner of the election every four years? Pretty much, yeah. I mean, so, you know, sorry that Time magazine let you down, Joe. But on the other side of the coin, you've got Bloomberg giving out their awards for sort of the worst CEOs of the year. Brian Dunn at Best Buy just eking out a win over Aubrey McClendon at Chesapeake Energy. When you think about business leaders, Ron, who stands out to you at either end of the spectrum in 2012?

I think Andrew Mason over at Groupon has some splaying in to do. Not one of our finer CEOs, I don't think, whether it's his fault or the business model he created. But I think those two are probably one and the same. Sorry, did you call it a business model? I think Steve Ballmer's got some work to do also over at Microsoft. And I don't know how much longer the board will give, how much time they'll give him to get that done. Tim, what do you think? Who stands out to you?

From the bad perspective or the good? Both. I think Tim Cook has actually done a really good job at Apple. I was bearish on his prospects at the end of 2011, but he seems to have really done a good job keeping the momentum going there while making some bold moves and not just sort of steering the ship. I think someone else who's done a good job, obviously it's a short time period of data to look at,

but Marissa Meyer at now Yahoo coming over from Google, You know, obviously people got excited about bringing some of that Google foo over to Yahoo, but she's done a good job in terms of both navigating the relationship with their investment in Alibaba and also, you know, maybe some luck here, but releasing a Flickr everybody really likes just as Instagram creates a huge public relations disaster with their new terms of service. So to the extent they can pick up some of that user base, I mean, that's a really interesting move going into 2013. And it'll be interesting to see if she can keep that success going. She's definitely got momentum. Joe, who stands out to you for CEOs in 2012? Oh, I think Steve Ballmer is definitely the most on the hot seat here. I mean, what is going well for Microsoft right now?

It's really tough to play something. Windows 8 is off to a bad start. Windows Mobile is choking. The Surface sounds like a total flop. The only people I know that own Windows devices happen to be shareholders. I don't think that's just a coincidence, and I realize there are plenty of listeners who own them, and a lot of people like it. But it's definitely a struggling enterprise, and I think this is going to be the make or break for Balmer one way or the other. Nobody you want to give a tip of the hat to in terms of a good performance, or you're just all about the negative?

I'm all about the negative. No, Bob Ben-Moshe at AIG. This is a company that a year ago was 93% owned by the federal government. He's come in, cleaned it up, got it independent, sold off a lot of non-core units, and actually resuscitated this business with the help of $160 billion from the federal government. But ultimately, you're paying them and making a small profit on it. Our 2013 preview will continue right after this. Stay right here.

You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Joe Mager, Tim Hanson, and Ron Gross as we continue with our look back at 2012 and our look ahead to 2013. Ron, any big questions you have as an investor sort of heading into the next year? I mean, obviously, this time last year, one of the big questions was sort of, hey, we're heading into a presidential election? What kind of effect is that going to have on the economy? Because, you know, like it or not, politics does play a role in business. But now that that's behind us, what do you wonder about as we head into 2013?

I hate to get too macro because we like to focus on stocks here. But I think my biggest concern or question is, are we going to stall and head backwards or are we going to continue on a recovery path that only gets better. I happen to be optimistic, which I'm typically pessimistic. I was going to say, what? I don't know. Maybe it's the holiday season. I feel like the fiscal cliff will be resolved.

We'll get that behind us. And slowly, as 2013 gets going, unemployment will come down. Businesses will start to spend again. I think capital spending will increase. I think M&A activity will increase. I think we're going to have a good year. But, you know, the macro economy is a difficult thing to predict. Tim, to that point, certainly on the housing front, it seems like the groundwork is being laid for a strong 2013.

But what's your big question as we head into the next year? I'm pretty fascinated to see what happens in China in 2013. You know, there are a couple of key events happening there. You know, one is obviously the transition of power to a new ruling regime and who have signaled that they'd like to be a little bit more ethical, transparent and have a lot less corruption in the country, which is obviously very good for the long term. Be interesting to see if they actually pull that off. Obviously, there's a lot of there's a lot of embedded corruption, latent corruption that will be hard to weed out. And, you know, obviously the data coming out of China tends to be untrustworthy. and that economy is definitely slowing

as the year ends but the government has signaled sort of some additional you know I guess monetary easing measures it'll be interesting to see if they're able to pull themselves out of what's been a steady decline and whether that gets worse or gets better

and you know what happens in China I think the United States can obviously do well even if China does poorly next year because there's enough that can recover in the United States even if the whole world isn't sort of hitting on all cylinders But it would certainly be more beneficial for countries in Southeast Asia and Latin America.

They'd be better off if China had a better year. But I really don't know which side I'm on on that debate right now. So it'll be an interesting one to watch. How concerned are you about the new SEC kind of trying to regulate the audit situation over in China? I mean, I think that's just like a – for me, it's a curiosity more than anything else. I mean, you know – Wait a minute. Our SEC? Our SEC is trying to say we need to see the books of auditors who audit Chinese companies or divisions of American companies that are in China.

And the Chinese government is saying, sorry, no, you're not allowed to show books. Well, you know, part of that is because a lot of the listed companies that the SEC wants Purview to look at are state owned. And so they consider those to be state secrets. And so, obviously, if you let them look at something like Baidu, well, then by the transit of property, they'd also be able to look at China Mobile, which the Chinese government doesn't want to have happen. Well, they shouldn't take private money if they don't want to open up. Well, that's a potential solution is that the government takes all the SOEs private or delists them from the United States. They probably don't need capital and then does have a negotiation and an eventual compromise, which I think things are heading in that direction. I mean, there's already been a lot of progress over the last six months.

To have all these companies delist and list elsewhere would be a disaster for our markets. It's a headache for our markets. In China, for their part, they'd like Shanghai to be a financial capital. And if they're going to be secretive and combative, I mean, frankly, that's not going to happen. And it's not like there aren't other places that can't have that business. I mean, you've got Hong Kong. You've got Singapore. You've got Taipei.

I mean, lots of places would happily snap up anybody who doesn't want to play around in China. So I think a compromise gets there. I think having the new regime come in, you know, in China, there's a lot of institutional sort of paralysis. And so getting new people in there, they can start fresh and maybe make some things happen. And I think it's in everyone's best interest around the world for China to ultimately be more open. And I think we'll get there. I like how in America, when we're talking about politics, it's a new administration. But in China, it's a new ruling regime.

That's just so much more boss to be. Yeah, we're the new ruling regime. We'll get to stocks for 2013 in a minute. But Joe, what's your big question when you're thinking about the new year? How much longer we can keep running massive deficits and with the Fed also pumping so much money into the economy, at what point that comes home to roost, either in higher rates or inflation? Let's move to the stocks.

And you can broaden it to industries if you want. But Ron, when you think about the new year, are there stocks you are watching or stocks that you are watching because you think they're about to crater? Either side. Continuing with my bullish stance and thinking that things are going to look pretty good from an economic perspective, I'd be looking at some energy companies, exploration and production companies, EMPs. I'm looking at some commodities. I think it would be interesting to watch the steel cycle.

We own a zinc company called Horset Holdings that I think will look really interesting. And I like industrials, and I think a bet on the U.S. infrastructure wouldn't be a bad idea either. When you say infrastructure, are you literally talking about roads and bridges and that kind of thing? Yeah, like a Fleur or a Jacobs Engineering. I don't know if they'll pop this coming year, but I think that's an interesting bet for a multi-year play. Tim, industries you're watching? I've been really intrigued by community banks, and there are a couple reasons for that. The first is that the Fed has signaled that they're going to have low interest rates.

It means cost of funding for these banks will probably remain low. But as Ron pointed out, the housing market is getting better in a lot of places, both for new bills and existing home sales. And so the likelihood that mortgage origination activity goes up in the residential sector is pretty good. And that's where community banks sort of have their bread and butter. So you can look at a potentially expanding net interest margin there. And then the kicker on top of all that is that, you know, recent federal regulations have made it a lot more expensive for community banks to operate. And so there's been a consolidation in the banking sector with big banks coming in to buy up these banks.

And these banks are willing sellers because they're less profitable now that the regulatory cost has increased. And the big banks are really willing buyers because most community banks have a really loyal deposit base, which means they have a really low cost of funds and a really sticky, really high tier, tier one capital base that can be used by the bigger banks to shore up some of their more aggressive bets elsewhere to comply with the various federal banking requirements. So you've got the opportunity to buy good businesses, good, pretty, you know, easy to understand banks with sort of tailwinds, business tailwinds behind them with a potential takeout, you know, premium or kicker built in to the extent that there is more consolidation in that sector. So I think it's really fascinating and everybody can go out and look up, you know, the vitals on their local community bank and see what, you know, if they do have a loyal deposit base and if their mortgage activity is getting better. And a lot of these banks, because they were so plain vanilla, I was recently looking at one that operated in Vermont and New Hampshire. The housing downturn, there weren't any bad loans to speak of because they were really just only doing plain vanilla 30-year fixed mortgages

on $250,000 farmhouses. Joe, what about you? I agree with banking, and I think that's true up and down the scale. A lot of the bigger banks, I think, are very cheap right now. A lot of them are below tangible book value, and some of those are actually profitable businesses, And it's a pretty unique situation where you've got profitable companies selling below tangible book. I think real estate's firming up.

Interest rates will eventually perk up, just like Tim was saying. I think something like a Wells Fargo, which isn't hairy by any means, is pretty well positioned to come out of this recession. To trash something, I think big box retail is going to keep getting hurt. You look at something like Bed Bath & Beyond reported this past week, just absolutely terrible numbers. comps slowed down. Gross margins are compressing really badly. And it's still selling at about 10 times 2013 earnings, which seems aggressive to me, given the backdrop. Like Ron Gross-level optimistic? Hey, how are you? Joe, this time next year, Apple higher or lower than it is now?

Lower. I'll take the other side of the trade, and we'll come back and revisit this 12 months from now. We've got just a few seconds left. One reckless business prediction for 2013. Ron, what do you got? Let's see. My reckless business prediction. I think GDP is going to be consistently revised upward as the year goes on, ending north of 3% by the time we finish the year. Sexy. Tim?

I think Walmart is going to terrify its blue-chip shareholder base. Joe Mager? I'm going to roll my vampire Lego short. From a year ago when you said the Lego market would do it. I think zombies are going to peak when World War Z comes out. Joe Mager, Tim Henson, Ron Gross. guys thanks for being here thank you if you got it you don't need it if you need it you don't got it you don't get it shame on you funny funny funny what money can do spend the habit get more of it

our 2013 preview rolls on stay right here this is motley fool money welcome back to motley fool money i'm chris sell and i'm back with a brand new panel Maybe we are new. The previous guys are gone. Joining me in studio now, Jeff Fisher from Motley Fool Pro, Jason Moser from Motley Fool One, and from Million Dollar Portfolio, Charlie Travers. Guys, good to see you. Hello. We are going to roll on with our end of 2012, our look ahead to 2013.

But let's start with 2012 because, as we talked about in the previous group, there are a lot of stories that got a lot of coverage. Obviously, the Facebook IPO. So certainly you can't go anywhere today with hearing about the fiscal cliff. But when all of that kind of noise is coming at investors, Charlie, it means that there are other stories that just aren't getting enough oxygen. And I'm curious, as an investor, when you look back on 2012, what's a story that you feel like was either underreported or just didn't get enough attention in general? I think the most exciting story that was underreported was the job situation in the United States. Unemployment was at its worst in 2009, and the number of people working has basically gone straight up ever since for three years running, and you never hear anything good about the jobs number. It's, oh, unemployment's hovering around 8% or 9%.

You don't really see a lot of improvement there. But pretty steadily, over 100,000 new people are going into work every month, and I think this is just finally starting to see a tide turn on our economy, and it's not really given enough credit. To be fair, the lack of credit is often coming, as longtime listeners know, from your colleague at Million Dollar Portfolio, Ron Gross, who's among the more pessimistic people when it comes to the job. Ron hates America. Jeff, what about you? What's an underreported story of 2012? So one phrase that is not used enough any longer is kicking the can down the road. That's exactly what we've been doing all year.

And now as we approach this fiscal cliff, let's not forget we've already extended the tax cuts in the past, you know, a year or so ago. And we're looking very likely that we're going to do that again. And Europe is doing the same thing. So we keep putting Band-Aids on the problems while we keep letting the problems, namely massive federal debt, grow and grow. We keep kicking the can down the road. So I wonder when will that really be addressed. So you're saying when we on this show and in other places sort of poke fun at Europe for their fiscal house not really having it in order, we probably shouldn't be doing that so much. Well, we're all in the same boat when you get down to it.

Jason, what about you? Earlier in the year, I had the good fortune to interview Arne Duncan, Secretary of Education, and it was for an article I was writing here for The Fool, actually, on financial literacy in our country. And so it just really blew my mind, these statistics I came up with, because I think one of the biggest problems we face today is that most of the kids don't really have much of a clue as to finance in regard to just how to function basically through our economy, our credit-driven economy. And so the numbers I found were pretty staggering. I mean, only 25 states require a high school course in economics to be offered. Only 22 states require a course in economics to be taken. Only 14 require a course in personal finance to be offered, and only 13 require that course in personal finance to be taken. And so I think that what we're seeing really are the effects of this is just we have a population of citizens who really are not financially aware. I feel like that led to much of what we felt here in the financial crisis. And I think that that opinion is shared among others. And so I got good responses from the article.

I just don't think it's something that really gets enough attention still. That's a lot of numbers, Jason. How many states are there in the country? Forty-nine? Wait, 50. That's right. That's right. Hawaii is just taking it in a different direction. But to that point, you know, I mean, people, I think, who know the Motley Fool know we don't really get involved in politics.

That's not our bread and butter. And for that matter, you know, getting involved in education policy is not really our bread and butter either. And yet this seems like this is totally in our sweet spot. I'm wondering if in 2013 and beyond, maybe we can help to sort of shine even a greater light on this, Because I just think back to when I was in high school and the classes that were mandatory, you know, in junior high and high school, home ec, shop, that kind of thing. I would have loved a course in personal finance. It really would have helped. Yeah, it's certainly core to The Motley Fool's goals, of course, to educate, amuse, and enrich. And we've done a lot of things, as you know, Chris, locally with schools around us in Virginia and D.C.

But to have some sort of campaign to branch out further would be great in the long run. I hope The Fool does. Before we start looking ahead to 2013, we also, among other things, like to look at management when we're examining companies. Charlie, who's the CEO who stands out for you in 2012, either for an amazing performance or a jaw-droppingly horrible performance? I'll go with the amazing performance with Marissa Meyer out of Yahoo. Yahoo is a laughingstock of the tech world for most of the year. They got rid of Carol Bartz, thought they had the answer with Scott Thompson. and then, whoops, he falsified his resume.

Details, details. Details, details. The board of directors was in turmoil. They're under attack from activist investors. And then they bring in Marissa Meyer, who brought in a much-needed stabilizing force, made Yahoo a good place to work, improved employee morale. And that puts the company in a position to finally capitalize on some of the valuable web properties they do have. And as a result, Yahoo's stock is at its highest point since 2008.

So I think there's reason to be optimism, whereas going into the year, that was not the case. Jeff, what about you? I'm going high profile as well with Jeff Bezos at Amazon. He's a Teflon CEO. Even though the company turned to a loss at points this year, and that's 14 years after promising profits eventually, the stock has held up and the company keeps chugging along. Wall Street and investors just really believe in him and his long-term vision, and therefore they give him a pass again and again when he has losses. Why do you think that is? Because certainly we've seen CEOs take different tacks in dealing with Wall Street, in dealing with the media. You've got people like Jim Senegal at Costco, who is no longer the CEO, but for years he was famous for, among other things, just keeping Wall Street analysts, you know, keeping them at a distance.

You've got others like Jamie Dimon, who's sort of this force of nature by virtue of his intellect, his enthusiasm, et cetera, and his hair. Let's not kid ourselves. He's got a great head of hair. But I'm wondering, where do you put Bezos on that spectrum? Well, he has a great smooth head. He looks good. I actually honestly think it's because Amazon has no peer. They're so powerful, and they have such a long runway ahead as they keep taking more retail share away from offline.

Online retail is still very small compared to the whole market. And I think everyone just sees, rightly so, that Amazon is going to get more and more revenue from the whole market over the years to come. So, Amazon's price actually makes sense if you are thinking ahead 10, 15 years. Jason, who's the CEO? I like those calls right there. I'm going to go on the other side of the coin here and play the pessimist and put Steve Ballmer on the hot seat. I think he's held the CEO position, I think, since 2000. And I think that over that course of time, shareholders have certainly lost during his tenure.

I feel like Microsoft has too much to offer to be in the position where it's in today with Google and Apple more or less just passing it right by. I think that he's – truthfully, I think he'll be replaced in 2013, but he's certainly going to be on the hot seat. I just don't think he's really taking that company in the direction it needs to go. I wouldn't be surprised to see possibly Bill Gates step in there and try to make something happen. I love this. That's two big predictions already from Jason. I was going to say, Bomber strikes me as the kind of CEO who has a constituency of one, and it's Bill Gates. And as long as Bill Gates is okay with him being in the CEO office, then he's going to be there as long as he wants.

So I'm assuming you talked to Bill Gates yesterday, and he told you he was okay with it? No, but I just feel like – Like, Ballmer is, like, that's his constituency. It's just Bill Gates, and everything else is just noise. Now, I don't know what it's going to take for Bill Gates to look at Steve Ballmer and say, buddy, it's time for you to go, and we've got to figure out an exit strategy. So I think if they do not get traction in tablets and phones with Windows 8, that is it for Steve Ballmer, and they won't have a choice.

Do you think, what is the timeline that you're putting on that? The next year, the next six months? Within the year. coming up our preview of 2013 will continue with a look at some of the stocks that we're watching in the new year stay right here you're listening to motley fool money welcome back to motley fool money chris hill here in studio with jeff fisher jason moser and charlie travers as we finish up our 2013 preview uh charlie we'll get to stocks in a minute but first When you look at 2013 and you think about whether it's industries or trends, what are you watching?

I think we're going to see a big battle over the home living room entertainment situation, Chris. New consoles from Sony and Microsoft are supposedly coming out, and they're changing these not just from gaming platforms but from home entertainment platforms. We could also see the long-rumored Apple TV product as well. There's the opportunity for any number of these companies to really revolutionize how we get our content from Hulu and Netflix and broadcast TV. I think Microsoft's out in the lead with the Xbox Live system and the apps they've got through Comcast and Verizon and Hulu. They're in a strong position, but it's curious to see what these other companies are going to do there as well. It seems like Apple TV has replaced Windows 8 as the big-name technology that we are waiting for. It seems like for a long time it was like, well, Windows 8, it's coming.

Don't worry, it's coming, you know, six months, nine months, whatever. And now it feels like Apple TV is in that position. Do we really expect it to come out in 2013, or are they going to push it off even further? I think they would like to. And as a Comcast user, it looks like their interface dates back to the 1990s. It's completely unfriendly to use. And there's an opportunity for someone like Apple who really nails the experience to come in and innovate and do something nice. But we'll see if they can get the cable companies to come along.

But does the recent debacle with Apple Maps put even more pressure on them to get Apple TV right? I think they need a big follow-up, and if it comes out, it's going to be a home run. Jeff, what are you watching in terms of industries or trends? Well, I like Charlie's answer. The battle for the living room is definitely around the corner. I am watching, again, 3D printing. The leaders in that industry had a great year, and those are 3D Systems and Stratasys are two leaders that are still mid-cap, smaller companies. But each stock was up 200%, 300% this year, more or less.

And so 3D printing, for listeners who don't know, is where you can actually print a physical object, whether it's a car dashboard or a medical device. Don't we now have one of these in our office here at the Motley Fool? And they're printing little rocket ships, which would make for a good toy. Not real ones that you can use. Right. So you can print pretty much anything. You can design jewelry. You can design shoes and print them.

Now, the printers for consumers at home are going down in cost. They're $1,000-ish. And then the materials are coming down in cost as well. But I'm more interested in the business side of this industry and giant manufacturers using on-site printing. And that also leads to more and more people saying, well, we're going to make a lot more things back at home now once we can do it efficiently and quickly. Jason, what about you? Yeah, I really actually do like Charlie's answer there. I was going to go with the battle for the living room as well because I think it is something that's just around the corner here.

I think 2013 is going to bring a lot of innovation to the living room. And I think the battle is going to really play out between Apple and Google in this capacity. At this point, we have just one of the Apple TV devices at home, just a little black box. It gives you the interface on the TV and the internet connectivity and access to all the apps like Hulu and Netflix and whatnot. I'll be interested to see how they take that to the next degree and how Google tries to become a part of that space as well with Google TV. I've heard experiences from folks who have used Google TV. I know that I certainly enjoy using a little Apple TV device. And I think that really, you know, we've gone smartphone.

We've got tablets. I think smart TV is next. And it's going to be just the sort of next logical link in the chain there. I think what's interesting there is it might be the place where Google doesn't win. I mean, they've been rampaging through smartphones and tablets with no stopping them, not even Apple. But they might not win in TV. And I was just making a note of this last night with my wife because we have iPhones, we have iPads. And, I mean, we are really fully committed.

Like, if this TV battle starts brewing, we will go Apple because we're so familiar with that interface. They've done such a good job making it simple and easy to understand. And I think they will do a good job of working with the cable providers to provide something. I think it's just the next logical step that's really going to be something fascinating to watch and to use. They could probably come out with a basic TV and just slap the Apple on it, and many of us would be happy to buy it because it would match our other products. And I think that's one way they're going to try to address this is at least make it so that you're not committed to have to buy this iPad Mega to go on your wall. I mean, you might just have the option to buy a device similar to what we have now that maybe is a little bit more functional, or you can go all out and buy the 55-inch screen with everything integrated into the system. We'll get to your reckless predictions at the end of the show.

But last year on this show, Ron Gross' reckless prediction was that Netflix would be acquired at the end of 2012. Obviously, that has not happened, although we have a few days left. But I'm curious, when you guys think about the battle for the living room, does Netflix get through 2013 as a standalone company, or do they become part of someone else's empire? What do you think? It's a good question. I tend to think that they will be acquired at some point. I just think we have so many competitors in that streaming field that they would be better off being part of something bigger with a bigger capital base there. It's hard to say, honestly, but I wouldn't be surprised to see them be acquired at some point here in the next year.

I expect them to remain independent for a longer time. I think they have some competitors that have so much money that they could try to bleed Netflix dry. And Netflix is paying so much for its content that it's still up in the air how well they'll make out in the end. Let's move to the stocks that you're watching for 2013. And Charlie, I'm just curious. You can think in terms of stocks that you think are poised to pop in 2013 or just fall off a cliff. You can take it in both directions if you want. I'll go in the optimist direction with a stock we don't actually talk a lot about here, which would be Dole Food.

Everybody knows this. They're the number one company in bananas and lettuce, you know, a huge amount of strawberries. And what they just did was sell off their Asian operations and all their packaged food. Really? Like frozen juice cans or little pineapple cups you find. And what they did was keep the produce part of the business. And the reason they did was they had way too much debt on the balance sheet. So they sold all those parts of this business off, cleaned up the balance sheet.

The CEO of the company is like 80-something years old and owns 40% of the stock. But overnight, they went from a company in financial distress, even though they had a great brand, cleaned up the balance sheet. Now they're going to be rocking next year. You know, Dole is one of the best-known companies in the produce section, and I think they're going to have a good year next year. What do you suppose precipitated that? Because that's, I mean, when I hear a longtime CEO who owns 40% of the company, I mean, it just makes me think that at some point someone got to him and said, look, here's the path forward. Here's my guess, Chris. Given his age and ownership stake, they cleaned up the balance sheet, kept the great brand, and this is prepping the company to be sold off probably to a private equity buyer.

Jeff, what are you watching for stocks in 2013? So if I did not already own them, I would avoid utility stocks and basically anything where investors paid up for them this year to get the yield. So many people were chasing yield this year, this past year, that utility stocks are trading at multi-year lows with a multi-year low on yield, put it that way. So the share prices are basically multi-year highs to the dividend that they pay. So I would avoid what are so-called safe haven stocks like utilities this year. Jason, what about you? I, too, like Charlie, will play the food bent here as an optimist. And the company I am going to be keeping an eye on for, I don't know if we've ever talked about it here, is United Natural Foods.

And if you've not heard of that one, well, I'm sure you've heard of Whole Foods. And United Natural Foods is actually the primary supplier to Whole Foods. So they have a – Do they supply for the in-house brand at Whole Foods, the 365? I am not actually quite positive about that. But they do supply – I mean, they're the primary supplier of Whole Foods and just signed an agreement to extend that through 2020 as well. But they also supply other stores such as Wegmans up here. I think if you've ever been to a Wegmans, those are pretty big stores.

I was fascinated to find out that with 80 stores, Wegmans has about half the revenues that Whole Foods does. But Publix, also another one down in Georgia that we use. But it's just a tremendous distribution network. This is a company that's two and a half times as big as their nearest competitor. management's very, very in tune with the business and how to really grow the scope of it. They just acquired a new warehouse distribution center out in the western part of the country that used to be actually with Whole Foods. And so I think this is a company that's going to continue to benefit with Whole Foods' success. And I think the movement towards organic and natural foods is real.

I think we'll continue to see Whole Foods grow their store footprint and United Natural Foods will benefit from that. All right. We will wrap up this week with Reckless Business Predictions for 2013. Charlie Travers, what do you got? This might not be a huge leap, but I think the Fed raises rates for the first time in 2013 for a very long time. I would argue that given the past performance or the recent past performance of the Fed's actions, I would say that is a very huge leap to say that they're going to raise rates. Well, so they laid out the employment and the inflation targets, which would trigger a rate rise. Previously, they've committed to low rates for a very long period of time.

And I think as we get towards the end of the year with the employment picture ticking up, in my opinion, they are going to start raising rates. All right, Jeff Fisher, we've got about a minute left. So Apple has a ton of cash. I'm going to predict they're not going to use very much of it at all. Everyone wants them to make acquisitions, but I don't think they will. They will continue to focus on their own operating system

and putting out products that are designed in their one-of-a-kind way. There's no acquisition out there that I can see right now that really should appeal to them. No special one-time. Nothing big in any way. $1,000 dividend? Hope not. Jason?

I'm not betting against Legos, Chris, I can tell you that. Two words for you, Starbucks, vineyards. They've got coffee, they've got tea. I think that Howard Schultz is just not quite done yet. I think at some point in 2013, we're going to find out that Starbucks is going to be developing its own vintage. I like that one. You agree, Charlie? I would be first in line.

Charlie Travers, Jeff Fisher, Jason Moser. Guys, thanks for being here. Thank you. Thank you. 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. That's it for this week.

Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.