Motley Fool Hidden Gems Investing - Motley Fool Money: 12.30.2011

Episode Date: December 27, 2011

What's the big question for investors in 2012?  Which industries have the most upside?  Which stocks should investors put on their watchlist?  On this week's show, our analysts preview the year ahead. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hillenbrook. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. I'm Chris Hillen. Joining me in studio from Motley Fool hidden gem, Seth Jason. From Motley Fool income investor, James Early. And from Million Dollar Portfolio, Ron Gross. Gentlemen, it is our year-end special. It is our 2012 preview. All show long, we're previewing 2012. After this, we don't need to do any more shows for 2012. How much does this show cost?

Is this free? This show is free. At least a $7.99 value. Can you believe it? So we are going to talk stocks. We're going to talk about the big company battles heading into 2012. But we are going to start with what long-time listeners know I have identified as the business story of 2011, and that is, of course, Tang. The In fact, the Tang became a billion-dollar brand. And once again, we got some Tang sent to us from one of our listeners.

It's like a billion and ten dollars thanks to listeners buying it. Yeah, exactly. We're part of the Tang economy. Thank you to Brenda Edwards, a longtime listener who lives in Brazil. She sent us some passion fruit Tang and some cashew Tang, which is the – Which color is the cashew? Mine is like an oily film on the surface. I'm guessing the cashew is the lighter one.

So the light yellow one is the cashew one. Let's just go ahead. Here we go. Let's take a little sip here. Do we swirl? Thank you, Brenda. No one has a nut allergy, I hope. I hope not.

So many jokes. That's definitely not a nutty flavor. It's no lemon pepper, let's just say that. Yeah, the lemon pepper tang was nice. You know what? I don't know that it tastes like cashew, but if somebody handed it to you, I mean, I'll keep drinking it. If you were really thirsty on a hot day, yeah, you'd keep drinking it. It's not bad.

It's like 80% good, 20% bad. On balance, I'll keep drinking it, but I don't know what it tastes like. What registers on your face, James, is the 20% bad. But moving on to the passion fruit, which is sort of an orangey, kind of a tangerine. O' It has a smell that speaks for itself. Whoa! O' It smells like dirty nylons. I'm sorry.

O' A little vodka. You got yourself a drink. Exactly. Vodka makes everything better. Alright, let's move on. O' It tastes much better than dirty nylons. Thank you to Brenda. O' Thank you, Brenda.

For sending the tang. Let's move on. Ron, I'm going to start with you. As we head into 2012, what is the big investing, stock-centric question that you have as you look ahead? For me, it's really about what the heck is going to happen in Europe and if one or more countries are going to default and what happens there. It's just the wild card for me. I think we're going to be okay here in the U.S. I'm feeling more optimistic than

I have in quite some time. I just have no idea how it shakes out in Europe and how that ends up affecting us here and affects the markets here. We've got to watch it. I don't know how to protect against it. I'm just going to be watching. I was going to say, how, if at all, is this affecting your investing strategy when you're looking at stocks? I'm choosing not to be a market timer. I mean, you can move to cash and say, I'm going to wait it out. I'm choosing not to do that. I'm investing in good, strong companies that I'm happy to own for five and 10-year periods of time.

Nothing about North Korea? I thought that would be on your radar somehow. It's just not my top story. Did you hear the question? I did hear the question. Well, sort of heard the question. James, what about you? I actually have to go with Ron and Europe. I could pretend it's something else, but Europe clearly is the big story. For me, I'm interested in how England's role in particular shapes up, because they're taking a different path.

So what is this going to mean for the EU, for the euro currency? Seth, what about you? Big investing question of 2012. I've written down, is the world going to end? And I guess I'm talking about Europe and not North Korea. Or the Mayan calendar. Or the Mayan calendar. Oh, really? Are we on there?

Yeah. Wow. I didn't know that, but I know it now. Well, it was supposed to have ended a couple of times, according to that guy out in Oakland. But anyway, I believe it's the whole European issue and whether or not that sinks the world economy. I don't think it does. The world seems to bounce back. But to Ron's point, do you feel like the U.S. is in better shape now with our economy than, say, a year ago?

Oh, I think definitely. But whether it's in great shape or not is arguable. By comparison, we look great. That's why I surround myself with these guys, you could say. So you look more handsome? Yeah. Let's move to industries. If there's an industry that you think has big potential, what is that industry, what are the players in it, and what are the stocks you're looking

at? Ron? Well, I think building on my theme that I think things are looking up here domestically, I'm going to put Europe to the side, because I can't predict that, and I'm going to think about industrial stocks and manufacturing stocks here in the U.S. that will benefit from a resurgence in the economy. And that's where I'll be focusing at least some of my time. Every stock. Every stock.

No, you can look at companies like Caterpillar, or Fluor. Illinois Toolworks. Illinois Toolworks, I have it written down right here. Oh, you have that written down? Oh, wow. Even 3M, which is a nice bellwether of the industrial economy as a whole, would be an interesting thing to look at. You mentioned a bunch of stocks there. Is there one that you're leaning towards?

And if not, what is going to tip the balance for you? Does it ultimately come down to the valuation? For me, it typically does come down to valuation. I just put 3M on MDP's watch list because I wanted to take a further look at it, and that's a good place to start. You use a lot of Post-it notes, too. I do use a lot of Post-it notes, yeah. James, what about you? What's the industry? With sort of the geography slash industry, I think a lot of the European utility blue

chip type stocks are beaten down, specifically names like Veolia, which is a sewage company and water company in France, France Telecom. These are both income investor recommendations. France Telecom has a huge yield. There's a certain je ne sais quoi about it that I just don't like, but it's still a good company. I thought the Je Ne Sais Quoi was the thing you liked. Is this show really free? Yeah. It's bilingual and free?

Only for now. Only for now. Seth, what about you? I typically don't like to try to play the, which industry is going to be doing better next year game? You don't want to compete with James and the French sewage company? No, so I'm going to go with one that I think is just inevitable for the long term, and that is energy but I think you have to pick carefully what you want to own within the energy

well I guess that's an entire sector really so if you're interested in dividends and and sort of giant companies there are many to choose from there I am uh I'm looking more probably in small caps and small cap uh equipment providers and service providers those of course uh that's more of a cutthroat uh world down there and so you get much more volatility on that end of the food chain Why is that? Why is it more cutthroat? Well, because you have a lot of small companies who are not only trying to cut out the other small guy and take his business, but they often don't have pricing power over the very large oil companies that are ordering these materials and services from them.

But some of them, they do very, very well. You have to watch out, check their capital expenditures. Some of these companies in this space tend to make a lot of money during good times and then just blow it all during the bad times. You got a couple you like? Uh, you know, there's a couple out there. Drillquip is one that I like. We have to watch the prices recently. The price was up a little higher than I liked, and so we let it go at Hidden Gems. But that's one that you should always keep on your radar, I think. They're

sort of a premium provider of all that stuff that sits on the sea bottom that lets us... The stuff that broke for BP? That stuff, exactly. Coming up, company battles and stocks to watch in 2012. Stay right here. You're listening to Motley Fool Money. Chris Hill here in the studio with Seth Jason, James Early, and Ron Gross as we continue our 2012 preview. Guys, let's look ahead to some of the big company battles that are shaping up for the new year. Ron Gross, what do you got? What are you watching?

I think the battle intensifies in 2012 with Apple and Amazon. Both have their front-end devices, iPad, Kindle Fire, Kindle in general, and then they have these great back office products, the apps, the media, the entertainment, and they're both going after that same model, and it's going to be really interesting to see who wins the wallet and who consumers really want to buy, which one's the cheaper one, the more robust one. Who is the soul of your being rooting for in this battle? I own many more Apple products than I do Amazon products, but I love the Amazon experience from the discount retailer perspective, that part of their business.

This sounds like a vague answer, but a little bit towards Amazon? Come on, admit it. You want to see Apple get slapped in the face. It would be pretty cool to see what Amazon does. Smug little Cupertino buggers. I can't let Ron get away without asking you about the stocks, the respective stocks of Apple and Amazon. Because as a valuation guy, the valuation on those two stocks is probably more than you can take. No, Apple I think is okay. Really?

Apple maybe with $380 right now or so, I think it could potentially be worth about $500. Where Amazon I think, because I can't predict the future and I don't know which avenues they're going to go and where the next big revenue stream is from, I can't really accurately predict the value about that one, so I would stay away just for that reason. It's more unpredictable. It is more. More unpredictable-er.

James Early, what is the battle you're watching? I'm going with Intel versus ARM. ARM Holdings, for those who don't know, ARM is sort of the Intel of the smartphone and the tablet business. In other words, they dominate the chip market. Intel is trying to make headway into this, so they're doing it a little bit. They have a lot of money.

We'll see how it shapes up in 2012. It's the little chip market. Little chips are the future, everyone thinks. It is growing quickly, though. I mean, we've talked about Intel before. It seems like, to the extent that a company is dominant within its own industry, I would put Intel on the short list of sort of the most dominant in its own industry. I mean, I guess what I'm getting at is, how fair a fight is this?

What are the odds on this fight? The back story is this. Intel owns the PC business, no doubt about that. But the PC business is also growing faster than people think thanks to emerging markets, basically. People can afford these. But tablets are growing very, very rapidly also. So the question is, is that going to sort of eclipse PC sales? And so Intel needs to kind of jump over there quickly, too.

I'm kind of on Intel's side here, but we'll see what happens. I don't know much about it, but isn't there kind of a commodity-based chip market, and then there's a part of the chip market that is more differentiated? Depends on the product. Yeah, it depends on the product. There is. For now, I'd say it's mainly a land grab in the smaller device segment. All right, Seth, what's the battle you're watching? I would love to see some blood in this one. Amazon.

Wow. Amazon versus Best Buy, and I'm really hoping to just see Best Buy get reefed on here. Wow. I find Best Buy, every time I give them a chance to be a decent business, it just gets more horrible. I was there this weekend looking at the netbooks, and one of their salespeople just came up and started spouting outright lies to me. These tablet computers over here could do everything a regular computer can do, including run Excel. I mean, it was garbage, but that to me is the essence of what Best Buy has become. They have a lot of salespeople who don't really know the technology.

Amazon used to be the place you could buy stuff, but you were out of luck if you didn't know the technology, and I think that's changed. I think if you go to Best Buy, you get less information than you do on Amazon. On Amazon, you're going to find reviewers who know this stuff, and you're going to make a more informed decision than if you go to Best Buy. So I think Best Buy really has become Amazon's showroom. People look at the stuff, decide if they like how it looks, they go home, they buy it off Amazon. What's the star crowded? Not too much, no.

This was the one out in Fairfax. And while we're on the topic, do we have any thoughts on a CEO cage match? Like who would win? Lloyd Blank, I don't see faring well in that type of fight. Oh, he fights dirty, though. All those Goldman Sachs guys fight dirty. They have all got like a roll of nickels in their waistbands. I think Bezos would be pretty good.

Bezos, really? I think he's tenacious. See, as a longtime Amazon shareholder, I love Jeff Bezos. I love the way he's run the company. I don't know how well he would fare in a fight. He doesn't strike me as particularly big or tenacious. I don't know. I could be wrong about that.

I want to circle back on Amazon, because once again, I think you've got a fight that is not all that fair. I mean, I think, again, if we're treating this like an actual fight and you can bet on either side, I think most people are betting on Amazon to take out Best Buy. I don't know. I think Best Buy could try this crazy thing called decent customer service. But I think they'd have to be courageous in order to do it. They would have to pay their sales staff a little more. Their training would have to be better. And I think they could make a go of it. They might have to shrink.

But I think they're going to shrink anyway right now. So they might as well go down trying to win on customer service because they're going to lose on the commoditization of the price information. I think there has to be a place for brick-and-mortar electronics purchasing. Whether somebody like Walmart comes in and acts as that instead of Best Buy, it's hard to say. Best Buy absolutely over the next year or two will have to shrink itself, become something other than what it is, or I think it actually would be destined to spiral out of control and even go out of business. May I use The Office, the TV show, as an actual point there? What's his name? The new guy, the new manager, Robert California.

James Spader. Yeah, James Spader talks about how they have a chance because everybody can get the lowest price. That's no problem for anyone anymore. So if you can actually compete on service, he tells his troops, that you can actually have a business. And there was a while when I think that that was sort of tenuous. I think that that's the place we are right now. But I think that in order to compete on customer service, you really have to focus on it. And I think Best Buy has just done a horrible job of that.

All right. Just a few minutes left. We'll do sort of an expanded version of the stocks on our radar that we do every week. Give me a couple of stocks that are on your watch list for 2012. Ron? Well, I'm building on my industrial and manufacturing theme, and I'm looking at a company called Simpson Manufacturing, which is a supplier of structural building products. Could be very interesting if our industrial economy picks up. 3M, I said, we just added to our watch list. I'm digging into that one as well. And Illinois Toolwork is actually one that we'll be searching, we'll be digging into as well.

Does the fact that you're looking at these companies, does that really just sort of reinforce your belief that America's economy is getting stronger? One will inform the other. If I believe that the economy is getting stronger, then that will impact what I look at in terms of growth rates and build out a valuation model. If I thought the opposite, then I'd have to build in weak earnings over the next couple of years, and that would impact valuation. James, what about you? Chris, McDonald's, for one, is a company that's been on a tear, a 52-week high. We've been

talking about it on this show a lot. Can it maintain what it's been doing? That's one thing that's on my radar. Walmart is another one. Stock has actually done well since I recommended an income investor, but they've had negative same-store sales forever, basically. They're getting less negative, which is sort of the new positive. That's just in the U.S., though, right? Just in the U.S., yeah. It's an interesting story internationally for different reasons as well. But what's going to go on with Walmart? And I guess for a third, just for fun, is Abercrombie. My wife is actually making me take her to the mall for a shopping spree for Christmas. Apparently, Abercrombie has hot guys tonight.

So we'll see what that looks like. So wait a minute. Just to be clear, the shopping spree- Are you allowed to rub the hot guys with oil? Because I'm going to warn them that James is on the way. You should come. It sounds like the shopping spree is less about the clothes and more about the sales staff. She already had proposed the idea before she found out about the hot guys.

Okay. I think. Never a dull minute at the early home. Wow. Never. James, you need to hit the gym. Spray tanning. Seth, a couple of stocks on your watch list for the evening?

I had so many here. I'm going to go with Microsoft on the end of the big kind of stalwarts because I think they've got a winner, I think, in the phone operating system. We're going to find out in the coming year whether or not the partnership with Nokia and other link-ins with the Xbox and other things will help them sell that or not. And I think that's important for future growth, although it won't matter much in the short term. We're also going to see Windows 8 coming up after that, and that has great promise if it works out for them.

The other is Zipcar, which is, you know, the car sharing service. It's not really sharing because you're paying, but you're kind of sharing the cars. And it's had phenomenal growth in membership, I guess. And the reason it's interesting to me is that the customers who use it do kind of seem to consider themselves members. They call themselves Zipsters. It seems very convenient. Wow, really? Well, that's what the company calls them.

Any worry about Hertz there coming in? You know, I think you have to watch out for that. But I think the idea that these horrible old car rental companies can somehow become cool is overblown. Hertzsters? Yeah, the Hertzsters. That would probably be better. Hertz renamed its car sharing service halfway through. So the other day, a bunch of us spent five minutes trying to figure out what it was called now. And at the end, I said, you know what, this exercise has already proven all we need to know. If we can't figure out what it's actually called, then they're probably not going to be successful at this unless they're willing to really accept low margins. I don't know that they are. So that's one to watch. But it's definitely not one to roll all your money into.

All right. Just a few seconds left. Give me one reckless business prediction for 2012. Giving you a lot of leeway, Ron. You ready? You can be reckless. You ready? Netflix will be acquired in late 2012.

Really? Yes. Do you have a candidate for who's going to acquire it? It could be Apple, Amazon. Microsoft, Verizon, one of the four. Wow, putting Verizon in that short list. At what price? I'm not sure.

It's a $3.8 billion company now, $4.2 billion. Okay, a little bit of a markup there. It'd be bad if it were 1.2. Ron might like this. I think more people in the U.S. will have jobs. Nice. Wow. Let's hope that's true.

Let's hope that's true. Yeah, drink a little Tang for that. We didn't need this sound effect. Sorry, I just wanted to prove it. That was like a space age sound effect. Seth, reckless business prediction? Oh, well, predictions will continue to be useless, especially those made by experts. That happens every year.

Hear, hear. But I believe that the economy will continue to mend slowly and that we'll just see. I think we've got the gradual momentum out of this recession, but it's going to take a while. And it's not going to happen next year. All right. Seth Jason, James Early, Ron Gross. Guys, thanks for being here. Thank you, Chris. Coming up next, our 2012 investing preview continues with more stocks and predictions.

Stay right here. You're listening to Motley Fool Money. welcome back to motley fool money we're continuing with our 2012 preview we've got a whole new slate in the studio joining me now from motley fool inside value joe mager and from motley fool asset management tim hansen and bill man gentlemen good to see you we're a slate you're a whole slate we got we are foregoing an interview on this week's show and we are going with just you know Take that, B-list celebrity that we might have tried to book. Tim Hanson.

B-list celebrity who was not available anyway. Single-handedly killing our chances to book guests on this show. Well, but there is no one who thinks that they are themselves a B-list celebrity, right? Exactly. Exactly. So with that, B-list celebrity Bill Mann. That's generous. Looking ahead to 2012, what is your big investing question as we head into the new year? So, one of the things that I've watched over the last two years is the rapid rise in both gold prices and treasury prices. And both of these are really opposite bets on inflation.

Gold is inflationary, and the treasury market is essentially deflationary. They can't both be right. And so at some point, there's going to be a break. And one of these two massive trades is going to be really, really wrong. And it's going to be painful for somebody and probably funny for somebody else. So that's one of the things that I'm watching. Which one are you betting on when it comes to gold versus treasuries? But God, I'm betting on neither of them. I mean, they both actually can be wrong. I mean, that's the funny thing about the trade is that neither can be right, but they both can be wrong. And I say this both professionally and as an opinion, I'd bet on stocks between either of them.

I mean, that's the forgotten child in the middle is equities and income-producing securities. Tim, what's your big investing question for the new year? Well, I've been curious just about how commodity prices have remained somewhat stubbornly high despite what everyone thinks is a pretty weak global economy. One explanation for that has been that China has sort of been hoarding commodities in the hopes of being, you know, more independent, less reliant on world commodity markets to fuel their various development projects. So, you know, my question for 2012, you know, is about China, hard landing, soft landing. And if it gets pretty tough there, do they stop hoarding commodity prices? And what does that then do to things like the price of oil? And if they drop significantly, that has ramifications for all sorts of businesses and consumers.

If China stops buying commodities, I mean, is it first and foremost oil stocks that are going to be negatively affected by that? I think oil prices have been among the more stubbornly high of all the commodities. So, yeah, absolutely. And that'll be interesting because, you know, a lot of people have a lot of money invested in oil producing companies. But, you know, the benefit of oil prices dropping sharply would be that consumers start to feel a little bit richer. So you might start to see a bit of a consumer recovery in places like the U.S. and Europe. Yeah, subtlety there for investors is that they confuse oil and gas, or they lump them in together. But oil is priced more on a global level, and natural gas is regional. So, actually, natural gas prices in the U.S. are very low, and natural gas stocks are very low.

But you don't put natural gas in your car, and it's that gasoline price. Not safely. Right, yeah. You can try. You know, gas prices for a lot of people, A, there's the sticker shock part of it. Wow, $4 gas as you drive by the gas station. But also, that's a bill you pay, you know, probably four, five, six times a month that you may not be able to reliably budget for, too.

So it'll be an interesting dynamic. Where are you driving? You have to gas up six times a month. Some people commute quite far. I mean, we've got some in our office who try to drive down to Alexandria from Bethesda. I don't envy them. There's someone coming from Baltimore. Hey, look, I wasn't going to call them out publicly on the radio, but now that you've done it, they should probably move.

Joe Mager, what's your big investing question for 2012? I'm thinking about correlations. What we've seen is that everyone has become so obsessed with the big picture. Five years ago, we were all bottom-up investors, and now everybody has a macro opinion. What the ECB is doing day-to-day, or how a bond auction is doing in some country, is determining what the stock market does, and bond markets do, every day. All these stocks are moving together, regardless of fundamentals, regardless of what's going on in their space. It's been interesting to watch that. At some point, I keep thinking that that's going to break apart, but over the past couple of years, it's only been moving

tighter together. I don't think it's unsustainable, but it's interesting to watch. As investors, we're always looking for the upside in companies. Let's look at different industries, ones that you think maybe have the most upside, or even just a lot of upside in 2012. Joe, I'll start with you. Yeah, I think one space that has a really long runway ahead of it is electronic payments. So, more and more transactions are shifting to cash and check to digital. And that's playing in the hands of your Visas of the World, your MasterCards, but also your PayPals, which is owned by eBay. And all these guys are very well-positioned to benefit from

that. Any chance that eBay spins off PayPal? Or is that just so much of a cash cow for them, they'd be crazy to do that? I think they will, but it's probably a couple of years away. At this point, there's still a really good strategic case for keeping the two together. There are a lot of people who use eBay and use PayPal because of it, and vice versa. But I think two, three years down the line, at some point, it does make sense to split them up and let PayPal go its own way.

Do you think the company's stock would go up if they renamed it PayPal? Maybe. I do think there is a bit of an overhang, where it's kind of like a Xerox situation, where people kind of missign the value here. And the real value is with PayPal, which is just growing like gangbusters. Bill Mann, industry with upside for 2012? I'm going to go with Islamic banking, actually. Islamic banking? Islamic banking.

That's pretty specific. Well, it's a trillion-dollar industry, so you have the part of the world with a really sustainable growth rate is the Middle East, and they have generally gotten most of their financing for construction from European banks, who, last time I checked the news, are not lending very much. I mean, they are heavily in distress. And so, the Islamic banking companies are the ones that are least correlated and least tied in with the remainder of the banking system. I mean, the American banks can't really step in because they're tied in with the European banks, but the Islamic banks are not.

One of the things we've talked about is just the challenge for the average investor looking at Bank of America, J.P. Morgan, etc., because there's a little bit of a black box going on there. when it comes to Islamic banks, do you feel like that's improved? Is it better for investors? Is it a little more transparent? It's much better because it's much better. I wouldn't say that they are as easy to analyze as, say, an industrial company or a retailer, but they are much more utility-like and they are limited in the types of things that they can do. And so they can't, because of their Islamic charters, they can't go out and speculate, for example, and they can't go out and have these various trades going various directions,

which have really impacted a lot of the U.S. and European banks. So 40 to 1 leverage is not necessarily a concern when it comes to- Yeah, they can't lend against anything other than physical assets. So that removes a whole lot of that nebulous- That really takes a lot of the risk out of your lending model. Tim Hanson, what about you? I'm going with aquaculture. Aquaculture.

Do you guys have any more ideas for extremely unactionable ideas? No, aquaculture is extraordinarily actionable. First, what is aquaculture? Aquaculture would be the growing of fish. Where Aquaman lives. The growing of fish to feed populations around the world. So most salmon is farmed, tilapia, that sort of thing. And basically what it comes down to is that the world is consuming more and more protein.

Beef and those sorts of things are very inefficient to grow because cows consume, you know, more food than they ultimately give out. Fish, on the other hand, are much more efficient. They're less sort of environmentally potent. And right now fish prices have cratered as a result of overcapacity for a variety of reasons. And, you know, a number of companies that are overleveraged and are suffering from this cratering fish price, particularly salmon, stand to either go out of business or sort of consolidate.

And then as fish prices start to rise again, you know, There are a number of aquaculture companies like Marine Harvest in Norway. They're a variety in Chile. They all would stand to do very well as that fish price rebounds and meets the world's sort of food needs. I think everybody's really familiar with talking about like Monsanto, Syngenta, you know, these food producing companies, farming companies as opportunities in this field. And I just feel like aquaculture has been overlooked. So it's not like the magazine that Aquaman reads because aquaculture kind of sounds like… It may be that too.

I think aquaculture is also the name of the nightclub on Spongebob, right? Yeah, it's not trademarked. Coming up, a few stocks to watch in 2012. Stay right here. You're listening to Motley Fool Money. I got my youth and health. What do I want with wealth? 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. I'm Chris Hill, joining me in studio once again, Joe Mager, Tim Hanson, Bill Mann. Guys, we were talking earlier about sort of the big investing story for 2012, but how about something under the radar, something that really isn't getting a lot of coverage in the financial media that maybe investors should be paying attention to in 2012? We'll just go down the line. Joe, I'll start with you.

Sure. Everyone's talking about the pigs countries right now, but no one seems to be paying much attention to Japan. And I'm speaking specifically about their fiscal situation, which is terrible. About half of their revenue tax base is going towards paying off interest these days, which is a pretty big number to be dealing with. Imagine if you were dealing with that with credit cards on a personal level. The amazing thing is Japanese interest rates have stayed remarkably low. And the reason for that is because a lot of their funding comes from inside the country. So they have an installed base, essentially, of demand.

But how long that can go on for is questionable. I've actually got an estimate for you because Japan is also one of the most rapidly aging economies in the world. I mean, it is, you know, they have a birth rate that does not replace their, you know, the people that are dying. So it is rapidly aging. And so you're having a smaller and smaller working population that's supporting, you know, the elderly in Japan. And so, you know, there's something has to happen within the next 10 years or there will be just an incredible amount of pressure. Bill, what's your under the radar? So the thing that the thing that I would point to is the rapid proliferation of ETFs.

And this gets back to Joe's point about about the fact that that company fundamentals don't seem to matter very much, Because what ETFs have allowed on an increasingly leveraged basis is people the ability to make macroeconomic bets. So you say, I'm going to buy Germany or I'm going to sell Japan. And that gets done all at once. You're no longer choosing various companies within these markets. And because some of these bets are leveraged, you can do two or three times the move. It impacts the underlying securities. And at some point, that's going to cause some real systemic problems.

So is this another argument you were talking earlier about gold and treasuries is what you're saying now about ETFs, yet another argument in support of stocks, just looking to buy stocks in 2012? It is an argument. It's an argument in support of stock picking. But it's also an argument that says that stock picking, unfortunately, for a period of time doesn't matter very much. but it does create, in my opinion, real opportunity for stock pickers because you have opportunities that are created that people are just selling out thematically as opposed to going company by company. Tim Hanson, your under-the-radar story for 2012? There were some reports out of India in the past couple of weeks that they were finally going to open up the country to multi-brand

retailers to open their own businesses there. These are things like Walmart, Carrefour. And it was looking very good that this was going to go through, which would be great for India, where there's massive food inflation and they need infrastructure and they need better distribution. And then the Congress party there basically caved to some niche political pressure resulting from groups representing small retailers in India, the very same small retailers who can't control prices and can't get stuff in towns and marketplaces on time. They are bad at what They do. And they basically scuttled the plan.

And I think that's under the radar, not necessarily because on its own merits, this story deserves a headline billing, but because it just is evidence of the sort of illogical decisions emerging markets are taking on their path of development and why it's such a bumpy ride. I mean, not letting Walmart, Carrefour, or Tesco run their own stores and distribution in India when you've got 20% food inflation and crappy roads, just, I mean, good luck.

Yeah. There's something to be said for predictability in regulations. And a lot of third world countries, I'd say that India is the biggest of them, don't have it. I mean, you have a situation where in 2007, the company Tata Motors built a massive facility, putting in hundreds of millions of dollars in the eastern part of India and weren't allowed to open it and had to basically scuttle the facility. And I think, you know, Walmart was smart to be skeptical that, you know, they would not be allowed to earn a profit. But until those types of things get, you know, get solved and the efficiency of capital is really taken, you know, takes a front seat. It's just, you know, you're going to see things where, you know, there's massive food inflation and, you know, inefficiencies. But hunger. I mean, gosh. Yeah. Food inflation aside, there are people in India who can't get food.

Yeah. Let's talk stocks for 2012. Give me a few that are on your watch list. Joe Mager, I'll start with you. I'll go with Oracle. It got drubbed after its latest earnings report, missed for the first time in about a decade or so. Still great underlying earnings power, balance sheet, well-run, high insider ownership. There's a lot to like there. What else have you got? I got Baidu, which is a little on the saucy end, but the stock's pulled back quite

a bit. Saucy. I still think Baidu is going to do, not surprisingly, very well in China, but I think that it's going to be a lot longer before Google gets back into China in a meaningful way than people think, and that's going to allow Baidu to really run away with the market there. I mean, they're basically stealing the entire Google playbook, but they're doing it very well. All right.

Bill Mann, give me a couple of stocks that are on your radar. You know, I like the title insurers. The title insurance companies, the industry has been obliterated over the last couple of years, and there have been a couple of, you know, there've been a couple of financially distressed companies that have been, you know, have been in the mix. But Stuart Title, First American Financial, they've been, you know, they are, they're called insurance companies because they do provide, you know, it's basically insurance, but really all it is, is, you know, is an assessment that goes on to a real estate transaction, you know, that says that you actually

have, you know, that the title is clean and full, you know, and lean free. And the economics for these companies are wonderful. Maybe it's a 2012 story, maybe it's a 2013 story, but as transaction volume increases, they're going to do very, very well. I'd like to build ... I've given you two. There are some other title insurers, but that's an industry that I think is going to do quite well. O' Tim Hanson? O' PriceSmart is on my watch list. It's a big box discount retailer out of the Costco mold that's servicing Central America. They recently got into Colombia, which is a big market for them, but the real sort of interesting market would be Venezuela if Hugo

Chavez dies. Not that I'm rooting for that, but ... I was going to say, is that one you're predicting for 2012? Well, you know, when the rumors came out that he had cancer, Venezuela's bonds just rallied up 40% or something like that, which is kind of a kick in the teeth. Well, maybe not, because he probably doesn't care, but ... No, probably not. Here's what the bond investors think of you. Before we wrap up with reckless business predictions, give me one more stock for 2012.

This is an Indian company called Jubilant Foodworks, and they're the franchisee. Great name. Yeah, they're the franchisee in India for Domino's Pizza and your favorite, Dunkin' Donuts. Dunkin' Donuts, yes. So it's a little expensive right now, but as the rupee weakens against the dollar, the stock price has really been falling in dollar terms, and it's an interesting little business. All right, one reckless business prediction for 2012. Let's just go quickly down the line.

Joe, what do you got? Lego markets and vampires implode. I'm driving through rural Georgia, and I see- Vampires? Wait. Look, I could not be any more bearish on vampires. So I'm driving through rural Georgia. I want to see a vampire implosion is what I want to see.

It'd be messy. So I see this sign on the side of the road, and it's advertising, got used Legos. We buy them. And I'm like, what is going on here? Legos are the new gold. They just painted over the Beanie Babies. What accent was that? Their new gold!

New gold. Bill Mann, reckless business prediction? So the thing that I've noticed over the last couple of years is the rapid increase in gourmet burger places. And I think that we're going to hit saturation sometime soon. And I don't mean necessarily in fat. I mean, the number of gourmet burger places out there, they're not going to be able to continue to grow that market. I hope you're wrong. I hope I'm wrong, too.

But I fear that I'm not. So the people who earlier this year were saying there's a cupcake bubble, you're saying there's going to be a gourmet burger bubble. Yes. Tim Hansen. Aren't we already in the burger bubble? Yeah, I think he's talking about the burger bubble popping. Popping.

Burgers are going to be the new bacon. I don't know what that means. Tim Hansen, reckless business prediction? This isn't as much fun as those two, but I think it's going to be, you know, I think I'm in the minority in saying that. I think it's going to be a tough year for Apple. They've got some tough comps to roll over. They've got a new CEO.

You take that back. Hey, so I think a lot of people are touting Apple as a very cheap stock based on its P.E. right now, but I think they're going to have a tough year operationally, and I think Tim Cook is going to end up with some very negative press in the second half of the year, which is something Apple is very, very unaccustomed to. Is the number one thing Apple shareholders should be worried about the fact that the comps that they're going to have to roll out this year? I think they should be worried about the next product innovation. I mean, from a long-term perspective, that's what you're worried about.

But, you know, I think most Apple shareholders probably aren't that worried about quarter to quarter. They're more worried about innovation to innovation. And I think it's that, you know, you go on a tech crunch or wherever and people are leaking things about Apple. They're leaving their phones in bars for people to find. Again. It's been a very positive media cycle for Apple. So I think it will be interesting to see how the company and the management react to what happens in that media cycle. It changes a little bit.

All right. Tim Hanson, Bill Mann, Joe Mager. Guys, thanks for being here. Thanks, Chris. Thank you. That's it for this edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer.

I'm Chris Hill. Thanks for listening. We'll see you next week.