Motley Fool Hidden Gems Investing - Netflix & The Business of Comic-Con

Episode Date: July 21, 2017

Netflix shares hit a new high. Microsoft’s cloud business continues to grow. Visa and American Express ring the cash register for investors. Pepsi revives an old brand while Chipotle deals with another health crisis. Plus, Forbes contributor Rob Salkowitz calls in from San Diego to provide analysis of this year’s Comic-Con and the business of pop culture. Thanks to Slack for supporting The Motley Fool. Learn more at slack.com. Thanks also to Harry’s for supporting The Motley Fool. Get your Free Trial Set – go to Harrys.com/Fool. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Go to harrys.com slash fool. 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. It's the Motley Fool Money Radio Show. I'm Chris Hill, and joining me in studio this week,

from Million Dollar Portfolio, Jason Moser, from Supernova, David Cressman, and from Motley Fool Pro and Options, Jeff Fisher. Good to see you as always, gentlemen. Hey, Chris. We will dig into the latest earnings from Wall Street. Later in the show, we'll head out to San Diego for a report on Comic-Con. And as always, we'll give you an inside look at the stocks on our radar.

But we begin this week with Mr. Softee. Microsoft's fourth quarter profits came in 42% higher than a year ago. And overall sales were just under $25 billion, Jason, with a B. $25 billion. The cloud. It's all about the cloud now. I wish we could get that Mr. Softee music to play. You know what? When you do $25 billion in sales, you can play any music you want.

Sure, why not? This is certainly nothing to sneer at. I mean, I have one word for you, and you already said it, it's cloud. Satya Nadella has done a great job, I think, in pivoting this business to where the bigger opportunity really lies. I mean, for the longest time, we've known Microsoft as sort of the enterprise software platform, right? It's what's powering so many desktops and laptops and even mobile devices now, all throughout businesses, not only in the country, but around the world. The cloud, I think, was the big question mark. And we're certainly seeing a lot of traction there.

The commercial cloud business grew 56% over the same quarter last year. Gross margin actually expanded 10 percentage points. There's just tremendous operating leverage in that line of work. And we're seeing Amazon, obviously, do a lot of the same stuff. I think the big question mark I've always had with Microsoft, and I continue to have, is how meaningful the LinkedIn acquisition will be for the company. It's admittedly one where you have to take the longer view, and it seems the strategy, at least, is to use it as a way to bring more people into their network and upsell them to more enterprise

and cloud-related devices or services. You know, at $26 billion, I think we're probably going to see a write-down at some point on that deal. Is it going to matter? Probably not. I mean, they paid cash, I believe. They didn't dilute shareholders. And I think the case for Microsoft for most investors today is more in the capital return opportunity and share buybacks, dividends. And they continue to do very well on that front. Since Nadella took over in 2014, share accounts down about 6%. We can expect that to continue. Very cash flow rich business. So, all in all, things looking good for Microsoft. David?

Yeah, I have similar questions to Jason about LinkedIn. Obviously, a big acquisition, but since Microsoft is still generating over $30 billion a year in free cash flow, they can afford to take a write-down on that. But this quarter, they mentioned that LinkedIn generated $1.1 billion in revenue, which grew 18% year over year. But in the same quarter last year, LinkedIn grew over 30%. So you're seeing that ongoing deceleration of revenue growth there. So I just have questions about what LinkedIn looks like as a part of Microsoft going forward. It'll be something I'm watching. Well, when was the last time anyone around this table actually went to LinkedIn?

On purpose, okay? On purpose. I actually went this morning on purpose. What are you looking for, Chris? Everybody except for Chris. Do we need to tell us something? No, I just like to check in every once in a while. No, I think it's a valid question, though.

I don't even have the app on my phone. I can't remember the last time I visited it. now, I admittedly am not looking for work, and I hope I'm not anytime soon. That's the thing, Jason. But when you are, I hear it is the place to go. Yeah, and I can imagine that's the case. How about the job Nadella has done? Because, I mean, Jason mentioned the sort of the capital allocation, sort of bringing the share count down, all that sort of thing. When he took over in February of 2014, I don't think there was anyone who thought just the stock appreciation

that we've seen in the last three years was going to happen, Jeff. Well, what's interesting, too, Chris, is in the last five years, the price-to-earnings multiple that the market has given the stock has gone from the low teens, like 13, to more than double that, to 27, 28. So a lot of the market has been re-rated, as Wall Street likes to say, to a higher value multiple. But this has been a very generous doubling of the valuation that Microsoft has given to its earnings. Shares of Netflix hitting a new high this week after subscriber growth in the second quarter was higher than, frankly, David, anyone was expecting. Yeah, I mean, this massive investment the company is making into original content, like 13 Reasons Why and Season 5 of House of Cards this latest quarter, it's really paying off. They added over 5 million new users, net new users, this quarter. They had guided for 3.2 million, so essentially 2 million more than they had guided for.

Now they have 104 million streaming subscribers worldwide. And now the company is actually valued close to $80 billion. And for the first time ever, it now exceeds the valuation of Time Warner. So kind of an interesting, notable milestone there. But the general financial picture for the company generally looks pretty good. It's understandable why the stock is hitting new highs. Revenue for the quarter grew 32%. Operating margins are still relatively low, but they are increasing.

And the one negative side, though, if I was going to find any red flag here, is that they continue to say that they expect to be free cash flow negative for many years. And this year they're expecting to burn anywhere between $2 and $2.5 billion in cash. As long as those investments in that original content pays off and they continue to bring in new subscribers, that's great. But, boy, that could cause some volatility down the road. Well, now you think about who else is in this business. you look at Amazon, you look at Alphabet with YouTube, you can even look at Disney. Those are three companies that don't really have a problem with free cash flow.

No, not at all. So, the space is only going to get more competitive. You have HBO, which continues to grow. Amazon is investing $4.5 billion into content this year compared to Netflix at $6 billion. So, there's a lot of competition. So, at some point down the road, I think Wall Street and investors will want to see that free cash flow number turn positive. A tale of two credit cards. Visa's second quarter profits rose 26%, while American Express's second quarter profits fell 33% due to losing Costco's business last year. Jeff, let's start with Visa, which you look at the stock hitting another all-time high on Friday. And there might be a lot more to go, Chris, in the long term. I own shares. I would still

buy them today for the long haul. As you said, they grew earnings per share and revenue about 26 percent. They expect 20 percent growth in revenue and earnings overall this year. So despite being a giant company, it's growing at a very nice rate. And that's with the economy still being tepid. But they point to a $17 trillion opportunity ahead, and that is just basically replacing the cash with – The war on cash that we talked about on last week's show? Exactly. And they're putting a bigger number on it now, $17 trillion. So if you get even a fraction of that, obviously, are doing very well. And I love this quote, Chris, that when

you get into e-commerce and mobile commerce, we neutralize our largest competitor, cash. I think neutralize is a weak word. Cash just doesn't work in the digital world. You look at American Express, you know, the headline isn't great, but you look at the performance of the stock. It has actually outperformed Visa shares over the past year. American Express has rebounded a lot. It got punished too far. And this happens even with blue chips. The news cycle gets negative. The stock gets hit too far. American Express has bounced back a lot. But while Visa is talking about opportunities in China and India and doing very well in Europe and growing even in the United States about 10%, American Express leads their conference call by saying, as you know, we operate in a challenging environment. That's like night and day, and that really speaks to the differences in the two business models, where Visa is serving everybody, basically, and the banks are very happy to work with Visa.

And American Express has always served high-end customers that now Visa and MasterCard are actively attacking. So American Express is on the defensive in a challenging environment and just working to get back into a position to grow again after losing some giant deals, including Costco. The good news about American Express is they expect earnings per share to start growing again in 2018. And right now, the stock trades at 14 times estimated earnings for one year out, so it's cheap. And only 9 times, 9.9 times estimates, they're just estimates, for 2020 earnings. So the stock looks very cheap if management delivers on that earnings growth. It seems like, based on everything you just said, that obviously, whether you're Visa, MasterCard,

PayPal, Square, American Express, take your pick. Part of your business is focused on customer acquisition. Am I correct in assuming that customer acquisition for American Express is, if not harder than it is for Visa, it's more expensive? It's definitely more difficult, and they charge merchants a higher fee. People already complain about MasterCard, Visa, interchange fees. Well, Amex is even higher, so that's another headwind. And in the past, they could point to, well, we have lucrative customers who enjoy the big perks that we give them for using Amex, but MasterCard and Visa deals have stepped up to match those perks.

Last month, Sherwin-Williams completed a $9 billion acquisition of one of its competitors. And this week, that purchase put a damper on the paint company's second quarter report. Jason, Sherwin-Williams stock falling a little bit this week, but it seems like it's kind of a speed bump. Yeah, speaking of big acquisitions. I mean, this was another one. I don't know that we will necessarily see a write-off there, though I think the Valspar acquisition is going to prove to be valuable for them, not only expanding their offerings, but really their global market share. And Sherwin-Williams

really is the behemoth in the space. It was a decent enough quarter. Certainly some short-term concerns regarding the Valspar deal. The guidance for 2017 was ratcheted back a little bit. Part of that was due to the acquisition. Part of that is due to a little bit of a slowdown in the consumer segment part of the business. Now, the good news is that the real moneymaker for Sherwin-Williams is their paint stores group, overwhelmingly, on the revenue side and the profitability side. And generally speaking, the more – and I can speak from experience, Chris – the more painting that you do, inside and outside, the more you actually recognize the fact that quality matters. And Sherwin-Williams does have a very high-quality

product and a good line of offerings. So, they are able to maintain a modicum of pricing power, which can help offset when input costs rise a little bit. And I think that's one of the bigger risks with them, is as input costs rise, how much are margins going to get dinged there? All in all, it's a stock that we had on the watch list on MDP for a while. Love the business. We could never really make the valuation work. I mean, that is really the big question there. Maybe we'll see some skepticism here over the coming year that'll give us the opportunity. But for now, I think you have to kind of just sit pat and see if there's maybe not a little bit of a pullback to open a window of opportunity. And Jason, I'd add that the quality of the paint

matters and the talent of the painter matters as well. When I've tried to paint. No, what are you trying to? Oh, OK. No matter how good the paint is. When Jason was teeing up the point about the big moneymaker for Sherwin-Williams, I was kind of hoping you were going to say the big moneymaker for Sherwin-Williams is beige. Coming up, we've got more earnings and the final curtain call for one iconic beverage. Stay right here. You're listening to Motley Fool Money. Thanks to Slack for supporting this week's edition of Motley Fool Money.

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David, on last week's show, you mentioned all the locations that T-Mobile has added this year. I'm wondering if that added to the expectations, if it sort of weighed them down, because they're clearly spending money to open up these locations. But regardless, they crushed this quarter. Yeah, the expectations are high for T-Mobile, but I think the company continues to do everything it needs to be doing. And talk about an entertaining company. You have the CEO, John Ledger, who calls Verizon and AT&T dumb and dumber.

On the conference calls, which you can watch on YouTube, the CFO actually wears a pink cowboy hat while he's going through the conference call. So this is just a very entertaining company to follow. And I think a lot of consumers and investors alike are rooting for them. But this was another great quarter. They added 1.3 million total net new subscribers. That's 17 straight quarters of 1 million or more new subscribers added. They also have a record low churn rate. So as a subscription business, when you have subscribers going up and the churn rate going down, that's a great combination.

Total revenue up 10%, free cash flow up 15%. And they are, as you mentioned, Chris, they're expanding their coverage across the U.S., both with the number of stores and the amount of spectrum. So more people can access that T-Mobile network. So they've already opened new stores and kiosks in 400 new towns and cities this year alone in the U.S. So they're in full-on expansion mode, and there's no reason they should stop now. It's really been interesting to watch the CEO, John Legere, over the last few years, because when T-Mobile was a smaller company than it is today, you could just sort of look at him, and particularly if you're AT&T and Verizon, and think, well, he's annoying, but we're not

worried about him. As that company grows and he continues to succeed, well, I guess he's even more annoying. Yeah, and T-Mobile has really taken a rule-breaker approach to this industry, and I think they're getting to the point where if you're Verizon and AT&T, yeah, you need to take them more seriously now. Apple chip supplier Skyworks Solutions with a strong third quarter report. Skyworks beating on the top and bottom line. And Jeff, this is the third straight quarter of accelerating earnings growth. They're really ramping up for the new iPhone, which I will point out, they said that they're

seeing a predictable cycle of build to that. So everyone says, oh, the iPhone's going to be late. Well, Skyworks doesn't suggest as much. But Skyworks, you may not know it by name but you probably have it in your pocket or in your purse or on your desk they they supply connectivity to the amazon echo to the iphone to samsung to virtually every phone maker in the world they're doing very well in china you name it all around the world they're doing very well chris and about 27 of revenue is now outside of phones it's in the internet of things so they're going into cars and home assistance as previously mentioned and everything's going going well for them, their margins are going higher and they expect them to go even higher because they provide

personalized solutions that are robust enough to keep competitors at bay. So I own Skyworks. I would still buy shares today to own for the long term. It's interesting because as we get into the fall, we're expecting an event from Apple. They haven't given a date yet. But this is one of those situations where you can look to the suppliers to get clues of when Apple's finally going to unveil this iPhone 8 because, as you said, there have been rumors that it's going to be late. And part of those rumors have been fueled by the fact that Apple reportedly put an enormous blackout period for their staff members in terms of, like, you can't take any vacation basically September through Thanksgiving. So hopefully Skyworks and other

suppliers will drop more hints of when this is actually going to happen. Yeah, it was good to read that. And I'll point out, this is the iPhone 8, right, to celebrate the 10th year of the iPhone. That's eight models. Some are small modifications, but still, that's a lot of innovation in 10 years, and Apple still gets a lot of flack for that. Bad week for Chipotle and bad week for Chipotle shareholders. The stock hit a 52-week low after Chipotle closed a location in Sterling, Virginia, after more than 50 people reported being sick. And if that wasn't bad enough, customers at a Chipotle in Dallas, Texas, posted video of rats in the kitchen. The company said that this was, quote, an extremely isolated incident,

but of course, it's not anything we'd ever want our guests to encounter. Jason, we were talking about this before we started taping. And I say this as a Chipotle shareholder and as someone who has spent his adult life in the communications business, I don't think they're doing a good enough job on how they are handling this from a messaging standpoint. No, and I actually agree with that 100%. I mean, we agree with that sentiment over million dollar portfolio as well. And they are just not getting it done. I mean, we view things like this as inevitable in the restaurant business. It's just part and parcel of the business, right? I mean, there are foodborne illnesses, pest control, whatever it may be.

But Chipotle has done a very good job, for better and for worse, sort of putting themselves up on that pedestal with the Food with Integrity mission. And it's worked out very well for them up to this point because it differentiated them. They sort of spearheaded some innovation in the industry. Fast forward to today, a lot of imitators out there, a lot of great options, a lot of great alternatives. And when that message starts working against you, it makes the target on your back very, very big. And that's really what's playing out with Chipotle. We're very disappointed in management's response to this. And honestly, I think at this point, you have to question whether Chipotle will ever actually garner that premium multiple that it once

garnered as an innovator in the space. So, is it time to buy shares? No. Is it time to sell shares? No. These guys have a lot of work to do, but we're going to have to pay very close attention to management, and we really want to see them get control of this narrative, because right now, it has escaped them completely. Yeah, and anecdotally, the power of a brand is subconscious and is very meaningful. I haven't been to Chipotle since the E. coli breakout, what, almost two years ago? I was just getting close to going back, because I do enjoy it when I go, and now this will probably set me back again. I know I'm not alone, but your brand counts, and the experience

can be taken. Yeah, and earnings on next Tuesday, obviously this won't play out in those numbers, but it will play out in the remainder of the year, and obviously into next year. I think, Jeff, you made a great point there. I think this really, really sets them back on the brand side for some time to come. Get your cosplay ready. We're heading to San Diego for a report on this year's Comic-Con in the business of pop culture. Stay right here. This is Motley Fool Money. All right, before we head to San Diego, I want to say thanks to Harry's for supporting this

week's episode of Motley Fool Money. I love Harry's products. I've been a customer of theirs for years. It is flat out the smoothest shave I have ever had. And Harry's is so confident that you're going to love their blades. They're giving you their trial set for free. All you have to do is cover the $3 in shipping. You can get started shaving with a free trial set that includes a razor handle, a five-blade cartridge, and shave gel, a $13 value for free. All you do is cover the shipping, and come on, you got one face. Treat it right. Stop messing around with whatever you're doing with shaving. Treat your face right. Go to harrys.com slash fool. That's harrys.com slash fool. Welcome back to Motley Fool Money. I'm Chris Hill. Every summer, the eyes of the

entertainment industry aren't on Hollywood or New York City. They're on San Diego, where more than 150,000 people gather for Comic-Con. Here to help us make sense of it all is Rob Salkowitz. He's a contributor for Forbes. He is also the author of Comic-Con and the Business of Pop Culture. He joins me now from San Diego. Rob, thanks so much for being here. This has become an enormous event with hundreds and hundreds of breakout sessions and programs and movie screenings, and obviously a lot of stars of the entertainment industry. What is your headline for this year's Comic-Con? You're a veteran of this event.

What's your headline? For me, the headline is always, you know, are we past peak geek? You know, to see, can the momentum that has carried this whole thing forward for the last nearly 20 years, you know, continue to sustain itself? Will the audience still be there for these big entertainment blockbusters? and I think this year more than ever there are signs of trouble in the publishing side of the comic book business that's worth keeping an eye on but you know those are kind of clouds on the horizon that right now the sun is shining bright on all of this and I think it's just going to be

a great time for everybody that shows up I think for the average person who has never attended comic-con and probably never will attend comic-con to the extent that they are familiar with it that it comes into their Facebook feed or they see something on television about it. It's usually one of two things. And one is the cosplay, people dressing up in different costumes. And the other is what is referred to as Hall H. Hall H is the biggest venue at Comic-Con. It holds over 6,000 people. And if you look at the scheduling this year, if you're just sort of using, for lack of a better term, the Hall H Index, what is being placed in that venue, it kind of seems like TV and things that we'll put in the TV category, and that will include

Netflix, is TV bigger than movies? Because from a scheduling standpoint, at this year's Comic-Con, that's how it appears to be playing out. Well, I think it's numbers versus impact, that definitely Hollywood is less present in terms of number of programs. But I would say the anticipation around both the Marvel Studios panel and the Warner Brothers panel is as high as anything because both of those people here cannot wait to see the new Black Panther and Ms. Marvel footage. Those properties are both generating a lot of excitement to see some new characters in the Marvel universe. And then Warner Brothers is not only, you know, riding on the coattails of Wonder Woman, which is the breakout success superhero film of the year, I think,

you know, and so they're going to have Justice League and other things in the DC universe. I think they're also having, Steven Spielberg is coming with Ready Player One, which is a, you know, a widely anticipated event, I think. And then they're also going to have Blade Runner. So I think, you know, those two are bringing maximum star power and, you know, The Walking Dead, Game of Thrones, all those things are super popular properties and they're perennials and they're getting the same fans coming back, you know, year after year to see what's next for them. Honestly, the one that has vaulted to the top of the list, I think, in terms of buzz for Hall H is Sunday afternoon. BBC is having Doctor Who. And this was already going to be pretty spectacular because they're having Moffat and Peter Capaldi and the entire outgoing cast in his last go around as the doctor. But they just announced Jodie Whittaker the other day as the first woman doctor in 50 years.

And to say that speculation is rampant that she may make an appearance on Sunday is understating it considerably. People are really jazzed about that. All right, I want to go to TV in a second, but let's stick with movies for the moment. Right now, and you mentioned Wonder Woman, that's certainly been a huge hit, probably bigger than anyone was expecting, in part because the track record for the studio and sort of the DC Comics franchises hasn't been all that great. When you look at the health of the movie industry right now, how healthy does it look to you? On the superhero franchise side, if you would ask me this at the beginning of the year, I would have been extremely dubious about it.

But now we've had four big successes in different quadrants, I would say. So you've got Logan, which I think is, I wouldn't be surprised to see some Academy Award nominations in non-technical categories, which would be a first for a superhero genre film coming out for that one. We had Guardians of the Galaxy, which did good box office and was genuinely funny. I mean, I found that to be really an effective comedy in the superhero genre. We have Wonder Woman, which has been cleaning up at the box office and really surprised people with the quality. And then you had Spider-Man, which I thought was a terrific film and a great way to reboot the franchise um the numbers on that on the second week are looking weaker than i was

expecting and i'm not sure why that happened um but you know just in terms of the you know creative and artistic strength of that film it's looking pretty good and then i think we've got two more to go we've got you know thor and uh and justice league but already looks like a winning track record for superhero franchises and compared to other franchises like pirates of the caribbean and the would-be monster universe from Universal and Transformers and some of these other things that aren't doing as well. Superheroes are actually looking like a stronger horse in that race right now. We are a few years removed from when George Lucas and Steven Spielberg,

two of the most successful directors of all time in terms of box office and the money that they've generated there, were a few years removed from when they sat down together and said, basically, they predicted not the end of the movie industry, but movie going as a mainstream outing. And they talked about movies in the future are going to be much more expensive. It's not going to be the mainstream experience it is now. It's going to be more akin to going to a Broadway show, and the ticket price will reflect that. Is there any talk of that right now?

Because the further we get away from that interview, the more it looks like Spielberg and Lucas are great at making movies and bad at making predictions about the business of the movie industry. Yeah, I think that they were wrong for the right reasons. I mean, I think that the trends that they were watching probably indicated that they were going that way. But you got to remember, the future of box office is in Asia. And those are not, you know, audiences with Broadway ticket budgets. So, you know, you've got to make these movies that people can go and see in China and India in places where the, you know, where people turn up in the billions and not just the millions. And, you know, I think that the economics of the industry, you know, on one hand are pulling toward the premium end, but on the other hand really are anchored in this, you know, mass audience in the rest of the world that has to be served. Let's move over to television, and I'm going to skip what people my age consider

to be television in terms of the general traditional broadcast networks. I'm going to go right to Netflix, which we talked about earlier in the show and their latest quarterly results and the stock hitting an all-time high. When you think about the growth Netflix has had in terms of original programming, it's almost quaint to think back on the questions that arose when Netflix started to get into original programming, because it was seen as very much a risk, and particularly in the wake of the recent Emmy Award nominations, and the fact that some of the biggest events at Comic-Con this year are going to be around things like Stranger Things and the Marvel series, The Defenders, which is on Netflix.

I'm curious, within the entertainment industry, how is Netflix regarded? Because it seems like you hear a lot of people within the industry who are on the content creation side speak very favorably. They speak very highly about Netflix and the way that they deal with content creators. Well, I think if it's true that imitation is the sincerest form of flattery, then Netflix is extremely highly regarded. um you know their biggest challenge in my opinion is the proliferation of over-the-top services that have come after they've proved that you can succeed with this with original content because now you've got amazon you've got hulu you've got the cbs one that's coming out and they're all producing original premium content to get people onto their service when it's just netflix doing

it or Netflix and Amazon only or something like that, and you've got, you know, one or two choices, that's one thing. I think that when you've got all of these people fighting for the same time and same eyeballs and same dollars, you're going to run into a situation like you had, you know, about, you know, 10 or 12 years ago with the competing formats for high def home video. We had HD, DVD and Blu-ray. And because consumers were faced with this choice and they were afraid, well, if I go for one, I'll miss out on content on the other one. Until the industry agreed on one standard, I think that, you know, then it opened the floodgates for everybody.

I think we're seeing the reverse of that on the over-the-top stuff, that next year as the competition ramps up and consumers are forced to say, okay, am I going to subscribe to Netflix and get Stranger Things, or do I go with Hulu to get the new Lock and Key series or some of the other stuff that they're going to be putting out? That's going to make it a lot harder for anybody to make money, and it's going to leave room for, you know, there's going to need to be some kind of an aggregation model so that consumers are not having to choose a platform

in order to see the content that they want to see. You've been going to Comic-Con for 20 years. I have two questions about that. And the first is, what was the first one like that you went to back in the late 90s? Besides being a whole lot smaller than the one this year, what was that like for you? Well, I had been a fan when I was a kid, and then I had kind of gotten out of it for a while. And so that was the first time that I had sort of stepped back into fandom and gone to a big convention. And, you know, when I was a kid, you know, the big convention was five or six thousand people. And San Diego Comic Con was thirty five thousand people. That was the most comic fans and industry people I had ever seen in one place. And it was very, you know, I felt like, you know, I was home. I could start a conversation with anybody and they would all know the crazy stuff that I was talking about. And it's very it was very accepting and very welcoming.

And in those days, you know, I had just decided a few weeks before that I would go down and take a look at it. I booked a ticket. I found a hotel for about 80 bucks a night. I walked up to the ticket window and bought a four-day pass for $35. And, you know, it was all a lot of fun. You know, to say those days are gone is an understatement. I mean, every aspect of the convention requires, you know, serious strategic planning and a lot of luck and a lot of patience. To the extent that it's grown, that fundamental feeling that if you're a fan of this stuff, you're home, these are your people.

And the feeling that when the doors open and there's, you know, 150,000 people having the time of their lives is really hard to beat. And whether that's, you know, small scale or large scale or whatever, it's that's that that retains the same essence. So other than being bigger and more expensive, what's been the biggest change in the last 20 years? I mean, I do think that the huge amount of attention that it's gotten from the media, the fact that the term Comic-Con has become shorthand for, you know, big entertainment, pop culture festival and celebration is kind of interesting. In the show itself, there's a lot of new fans that, you know, when I was there, it was mostly, you know, guys and people, you know, 35 and older. and now the audience is much more diverse. There's a lot more families. There's a lot more younger people.

There's a lot more women. And all of that demonstrates that the appeal of the subject matter is getting broader. There's also, it seems like, a lot more cosplay going on. It seems like maybe a decade ago, only about 10% or so of the people would dress up in costume. And now I'm seeing reports that upwards of 30%, 40% are dressing up. And there are even do I have this right? There are even breakout sessions at Comic-Con that are essentially cosplay one on one. Oh, for sure. A cosplay is a big deal. And it's that's a partly a reflection of the growing gender diversity, because there's some research that I've done shows that women are much higher propensity for cosplay than guys are. um but that but yeah there's they're not only are the costumes getting more numerous they're

getting way better like there's professional quality stuff you know um even the you know the talented amateurs are doing really amazing work and and it's it's fun to get pictures with them there's a lot of curriculum i'm doing a panel in during the show called um pop culture shark tank where i'm talking to uh aspiring startups and entrepreneurs are pitching to our panel of of experts. And one of the companies that has signed up to pitch is, you know, a business that services cosplayers. And they have a apparently a pretty strong business plan and they're doing pretty well just dealing with that part of fandom. Now you're working, you're you're on these panels and that sort of thing. So I'm assuming you're not dressing up. But if you had to, what are you

going with as your costume? You know, I've always been a big Batman fan. So if I could if I could get fitted out in a nice Batman kit, that would be nice. I used to do it as a little kid. I'm just too, this is not my thing as a grown-up, but I love the other people that do it, and I love how into it they are. You can follow him on Twitter, and you can pick up a copy of his book, Comic-Con and the Business of Pop Culture. Rob Chalkowitz, thank you so much for being here. Thanks for having me. Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio once again with Jason Moser,

David Kretzmann, and Jeff Fischer. You can check out past episodes of Motley Fool Money and all of our podcasts, just go to podcast.fool.com. You can subscribe on iTunes, Stitcher, Spotify, Google Play, anywhere you find podcasts, you can find The Motley Fool. One quick story before we get to the stocks on our radar. Proving once again that taste is in the taste buds of the beholder, next month, Pepsi is bringing back, wait for it, Jason, Crystal Pepsi. Yes, the clear-colored version of regular Pepsi that made its debut in the early 1990s before David Cressman was even born. It is back for a limited time. And I find this fascinating, guys. The quote from the company is, one final time. Apparently, Jeff, there was demand for this. I wasn't

demanding this. I remember it the first time around. I guess not too long ago, there was an online campaign to bring it back. So they did, and it sold out quickly. And so now they're bringing it back. I don't know why it would be one final time, but that's what they're saying. Well, this is like their Amazon Prime Day, right? I mean, it really just boils down to marketing, I think. Maybe it's not necessarily the loss leader, but a little nuance here I loved in this article was the reference to Tab Clear. I mean, anybody who remembers Tab, I mean, Tab Clear must have lived the shortest life of any soda ever in the history

of sodas, right? I'm not sure why they're bringing this back, because as we explained to David before we started taping today, I mean, this was not a hit. This was... Maybe the millennials will jump on board here. Really? I won't, but maybe some others will. Everybody loves some vintage cola, right? You know what?

I bet I know why they brought it back. Thinking about it right now, it's, look, we're talking about it. This makes you think about Pepsi. You may go look for it. You'll end up buying Pepsi if it's not there. So it might drive some sales one way or the other. Maybe they just had a little bit left over sitting in the warehouse. Their version of the-

Probably, yeah. Cola's probably pretty shelf-stable. Got to clear this out of here. Restamp that bottle and just sell it. What was it, the Unicorn Frappuccino that Starbucks did? Maybe this is Pepsi's version of that. All right, we've got just a couple minutes left. Real quick, Jason Moser, what's on your radar this week?

Well, all that Chipotle talk probably makes you want to cook at home. Chris, I've got the stock for you. McCormick, ticker MKC. The headline this week is that McCormick is buying the food division from Reckitt Ben Kieser. That is responsible for brands like French's Mustard, those French's fried onions you put on your green bean casserole at Thanksgiving, and Frank's Red Hot Hot Sauce. The Global Spice category, it is a very big one, $11 billion market. McCormick's owns it. I think there is some pessimism in the size of this acquisition. It's about a $4.2 billion deal. A lot of it's going to be funded with debt.

I think if you buy these shares today around 25 times earning, it typically garners a bigger multiple there. I think you own these shares five years later, you're going to feel pretty good about it. David Kretzmann, what are you looking at this week? I'm looking at Cheesecake Factory, ticker C-A-K-E, CAKE. This is a casual diner with about 200 restaurants in the U.S. Management thinks it can get that number up to 300. I think Cheesecake Factory is a quality operator.

They have 29 consistent quarters of same-store sales growth, $150 million in free cash flow. They've paid an increase of dividends since 2012. So I think they have a good chance of recovering once this restaurant recession winds down. So it's one I'm keeping an eye on. Jeff Fischer, what about you? currency shares euro trust tickers fxc is a way to invest in the euro against the dollar as the euro slowly now is recovering against the dollar uh for years it was well below the dollar's valuation and now as europe looks to reduce its stimulus uh the euro has been recovering but it's

still at a discount to the dollar so this is a way to invest in something that won't be very volatile but may appreciate as the dollar depreciates all right david kressman jeff Fisher, Jason Moser. Guys, thanks so much for being here. Thanks, Chris. Steve Broido and Matt Greer, both on vacation this week, but fortunately, Dan Boyd and Rick Engdahl producing this week's edition of Motley Fool Money. I'm Chris Hill. Thanks for listening. We'll see you next week.