Motley Fool Hidden Gems Investing - Nike’s Victory Lap & Alibaba’s Exit

Episode Date: June 26, 2015

Nike shares hit an all-time high after strong Q4 results. Alibaba sells its U.S. business. IAC prepares to spin off Match.com, Tinder and OKCupid. Is it time to invest in online dating? We analyze those stories, dip into the Fool Mailbag and share a few stocks on our radar. Plus, Tim Hanson discusses the latest drama between Greece and the EU, investing in China, and what he’s watching in the 2nd half of 2015. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. Chris Hill. It's the Motley Fool Money radio show. I'm Chris Hill. Joining me in studio this week, from Million Dollar Portfolio, Matt Argersinger. From MDP and Motley Fool Rule Breaker, Simon Erikson, and for Motley Fool Funds, Brian Hinman. Good to see you as always, gentlemen. Yo, yo, Chris. We've got the latest on tech stocks, the Eurozone, and the business of online dating. We will

dip into the Fool mailbag, and as always, we'll give you an inside look at the stocks on our radar. But we begin this week with online retail. The biggest IPO of 2014 was Alibaba, the Chinese e-commerce giant that has quickly become one of the largest public companies in the world. Part of the optimism for the business was the belief that Alibaba would take on e-commerce companies based here in the U.S. But this week, the company announced it is selling its American subsidiary, Eleven Maine, having reportedly failed to gain traction in the market. Matty, I'll start with you. This is kind of surprising, isn't it, when you consider the deep pockets that this company has, that after basically a year, they pulled

the plug? I am glad we're leading with this story, Because to me, it's a big story, but it didn't really get a lot of play in the mainstream media. I think it was on page three of one of the inside sections of the Wall Street Journal over the week. But yeah, a year ago, Alibaba becomes public. The world's all Twitter about how this company is going to, that's my new word, all of Twitter. They're going to punch Amazon in the gut, elbow eBay in the head, and really kind of bite into U.S. e-commerce. But here we are, less than a year later, and they're closing down or selling their U.S. business-to-consumer retail operation. And so, it was surprising to me, and I think you saw Amazon-Ebay rally this week, and I think for good reason.

This is a good sign, and I don't think any of us around the table really thought that Alibaba was going to come in and push Amazon around. I think we were all pretty solid on that point, and that's what's proven out. it's that certainly, at least in the U.S. consumer business, Alibaba is probably not going to be a real big player very soon. And I think that's what's happened here. Yeah, Brian, to Matty's point, I don't think any of us actually thought they'd really push Amazon around. But by the same token, I don't think any of us thought they would pull the plug this quickly. No, definitely not. I mean, most Chinese companies that I follow, profits are really secondary, tertiary, even further down the

list than that. They just don't care about making money all that much right away. To pull the plug this early on and not play the let's get bigger, grow, grow, grow game is a real shocker from a Chinese company. When you look at Alibaba, Matty, is it a stock that interests you now that they are, arguably, more focused on their own markets? You can't ignore a company that controls 80% of e-commerce in China, in the world's biggest future online market by many leaps and bounds. I'm not so excited about it because they have a lot of things going on. They're making a lot of investments in the entertainment space and B2B businesses, and so it's kind

of hard to get a handle on the business. I would say the one I'm most excited about is also a company that rallied this week is MercadoLibre, the leading e-commerce company in Latin America. They also rallied this week on the idea that Alibaba wasn't going to come into their turf. So, again, I'm much more excited about those companies that are really dominating their markets. So, Amazon, MercadoLibre, I get a lot more excited about them before Alibaba. And to put an even finer point on it, it's not like Alibaba shares tanked this week on this news, but they did fall. And as you said, Amazon, eBay, MercadoLibre, all

jumping on the fact that a very big competitor has decided to pick up stakes. That's right. Ambarella makes semiconductor chips for cameras, and the stock has more than tripled over the past year. But shares got whacked on Monday after Citron Research issued a report entitled, and I'm quoting here, the ridiculousness of Ambarella. Simon, this is a company that you know a little bit. Does Citron have a point? I don't think so, Chris. I'm not too phased by this report, even though we saw a lot of volatility in the stock this week. We've seen Citron go after a couple of rule breakers

before. They went after Bank of the Internet last year, and then also GoPro earlier. So, this is not our first rodeo with them putting out a bearish report. But, you know, Ambarola is kind of a company that is kind of the perfect selection for them to go after. The reason I say that is there's a couple of reasons. First of all, its market cap is still relatively small, about $3 billion market cap right now. The shares had been on fire before the report up about 300% over the last 12 months. So, it's been, you know, a lot of bullish sentiment in this company. But then also, it's about 44% of the shares are held in the public market. They're not institutionally are held by insiders. So, you put all of those together, that's kind of the perfect storm

for volatility to come from a public-facing report like Citron released. When you think about the fact that they are, in some ways, tied to GoPro, because they make chips for GoPro, is there a danger that they are commoditized a little bit? I don't think so. The reason I say that is, these high-definition codecs, they're making the systems on a chip that go into high-definition video, which the first flavor of that that we've seen a win from has been action sports cameras. These guys base-jumping and putting videos up of all the crazy, gnarly stuff they're doing out there. But there's even bigger markets than that that I don't even think we've scratched the

surface of. The first smart drones are taking off that actually have amber-less chips in there. And then there's also a really big market in automotive as well. I think that Right now, the story is about GoPro, but there's a lot more to it than that. Yeah, I want to be the guy who stands up for Citron in this situation, because I'm the guy at the table who actually does short stocks. And so, I pay attention when someone is waving the red flags at any company, be it a Rule Breaker or a more staid, steady company. I pay attention to what they say, because oftentimes they're smart.

But I've got to agree with Simon on this one. The report put out by Citron was thin. There was not a lot of meat on the bones. and I think it is pointing investors in the right directions of some risks that they need to get their hands around. But the report itself was a bit more sensational than substantial. And in this case, I think there's more work to be done. Well, anytime you can throw the word ridiculousness into the headline, you're going to raise some eyebrows. Netflix in the news this week, not because of new programming or the next season of House of Cards, the company announced a

7-for-1 stock split. And Brian, shares jumped when the market opened on Wednesday, but they have since settled back down, which tells me that maybe, possibly, there's some sanity around the idea of stock splits? No. I'm being ridiculous. Don't be silly. What's incredible to me about this one is, shares already jumped on the idea of a share split back when they had their board meeting and put into action what they needed to sort of present to the board in order to do this. So, shares reacted positively

once already. Then the news came out that it was actually happening, and they jumped again. I think the reason shares fell back to earth was because news came out that Carl Icahn was selling out and had sold out of his Netflix stake. So, given how great he was at timing on his entry point, about less than $100, I think it was around $80, when he sort of started banging the table. Him saying, see you, thank you, and taking my victory lap at $600 or so, I think that investors were listening to that. Yeah, Matty, whatever you think of Carl Icahn, you've got to give it up for him on this one, because he absolutely called this right.

Right, something like a $1.6 or $1.7 billion profit he made on Netflix. And I have to, you know, Carl Icahn was always the guy, I mean, if you go back five or six years ago, he was the agitator guy. The stocks really didn't move on news. Now, he'll tweet something out and the stock will move. It's amazing the amount of gravitas the guy has now. O'Reilly. Nike wrapped up its fiscal year in style. Fourth quarter profits came in higher than expected, and sales for the quarter came in at $7.8 billion. Matty, that is a whole lot of swoosh. Sure is. I went through the report, and there's just nothing that you don't like about what

Nike did the past quarter, the past fiscal year. Q4 revenue was up 13% on a currency neutral basis. Earnings per share up 26%. Helped a little bit about a lot of buybacks they've been doing. But gross margin was up. Their basketball business was up 21% revenue-wise in fiscal 2015 to $4 billion. And of course, we know they just signed a new long-term deal with the NBA that starts next year. I mean, the NBA's obviously just had a great championship series. That league's really taken off. Their women's business was up 20% to $6 billion. I think Nike's been spending a lot there over the past few years, and that seems like it's really been paying off. The only dark spot I could see in the report was their emerging

market segment. Revenue was actually down there in the quarter. And they say, well, it's because last year we had the Men's World Cup build up, and so year-over-year gets a little dicey. But I just think that is one area where I was surprised to see some weakness. I think there's going to be strength there. The stock has been an absolute monster. The business is wonderful. I just think now, with 30X earnings with a company like Nike, which is probably going to grow in the high single digits, maybe low double digits long-term, to get a little pricey for me, but love the business. It does, and overall, it's closing in on a market cap of $100 billion. It's not

quite there. As you said, an amazing run. And yet, when you look at their growth in China, which is not spectacular, but has been relatively solid, that tells me that, no, it's not going to double overnight from here, but it does seem like this is one that still has some runway. Oh, I believe so. Basketball in particular is very, very popular in China, and that's where Nike is spending a lot of their money, going to pay off. Chris, I think more so than the market cap size, what would scare me is if they didn't manage their brand well and they overextended their brand. And you just don't get the sense that Nike is doing that. They're just so smart about how they've grown their product lines. They've

shrunk individual product lines down to create artificial demand and just launched more products. I mean, so they've been so smart about how they've grown into that near $100 billion market cap valuation, but they're doing it right. Coming up, we've got another wardrobe malfunction, and this one could get expensive. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Matt Argersinger, Simon Erickson, and Brian Hinman. You may not be familiar with Interactive Court, but chances are you have contributed to this company's revenue stream without even realizing it. That is because IAC is the parent company of more than 150 websites, brands, and products,

including Dictionary.com, College Humor, and the Princeton Review. Shares of IAC hit an all-time high this week on the news that it is spinning off its online dating business, The Match Group, which consists of Match.com, Tinder, and OkCupid. Simon, all of us around the table are married, so probably just as well we don't have experience with these businesses. But how bullish should we be about online dating? Because you look at what happened with IAC stock, people are pretty excited for this IPO coming later this year. Look, Chris, it's a hot market. Okay, what can we say? This is a hot market for hooking up online. Like you said, this is what Interactive does. They have been around

for about 20 years, and they've created now seven different publicly traded companies with a combined market cap between those of $44 billion. So, they just kind of went and did a land grab of the internet and then spun a lot of these companies off. Not too shocking to see them doing it again. With regards to your question, I don't know a whole lot about this space, but I am a little bit hesitant about the staying power of something like a Tender or an OKCupid or a Matchlock. Now, as you said, married guy, this is not my forte, but it seems like there's a little bit of hype in a hot IPO market for these right now. I think they're going out and they're getting cash at the right time.

I agree with that. I would say there's something wrong with the business model where your most successful customers are the ones that don't come back. I look at Match.com and other sites like that, and I just wonder, who are they appealing to? The people on the low end who never get any matches, they get depressed and don't come back. And the people that are really successful and find their true love never come back. So it's like the mid-tier people who constantly are dating and falling in and out with people and keep coming back. But it's bizarre. I do think it's interesting, also, they're keeping the Princeton Review part of

the Match sub-segment within the company. They're just spinning off these three sites that I've seen. So, I think that they're really just trying to raise money on the online dating part of this, while keeping those that have more staying power, perhaps. Well, to this point, it's been successful. Despite the number of brands they have under the parent company, about 30% of their revenue comes from those three. So, it may just be a matter of time. Matty, we were talking before about Carl Icahn, kind of got to give it up to Barry Diller, as well, who's the chairman at IAC, because his track record over the last 20 years, he's done this kind of thing before and done it well.

Yeah, Brian was saying before, it's the idea of, you latch onto these brands early on, you repackage them, rebrand them, and spin them out, or expand their marketplaces. The value created by Barry Diller has been sensational. Yeah, I think we need to remember, too, that this is a global business. I mean, we follow a company in asset management called Genuine, and they were just taken private. And they had to raise the buyout price considerably from what was originally offered because this is a pretty good business. And while Matt was making the point that, hey, if they're successful, you lose your customers, let's be honest. most you know relationships fail and fail miserably often go down in a blaze of glory

there you go and so you want that you want that immediate redemption so you're gonna get right back up on the horse so we're around this table we're like the lucky ones we're just i don't know we're not the normal yeah i mean if there is a business that rivals coffee uh i think in terms of like addiction and repeat business this is the one this is the one i want to sign up for not that i want to sign up for sorry honey what i meant was what i want to stand behind with an investment. Let's move along before we really get in trouble with our respective wives. The last time Lululemon Athletica had a major recall, it was because their signature yoga pants were made of materials so sheer that

you could see through them. Now, Lululemon is recalling more than 300,000 women's tops because the elastic drawstrings have a hard tip that have snapped back and caused facial injuries on at least several people. Did you get that from The Onion? You know, it's a funny story. Until you start looking at the numbers, these tops retail for anywhere from $75 to $250. This is going to cost Lululemon. Apparently, seven people in North America have been injured. I don't even know what that means. Is that a bruise? Or is that like, my eye got poked out? But I guess you pull too hard on these drawstrings and it snaps back, hits you in the neck, hits you

in the face. To me, that's just a bad day. But apparently, Lulu's taking this seriously, as they should after two years ago when they had the other incident. So, yeah, it's a big recall. Apparently, if you own one of these, if you bought between 2008 and 2014, you can go to any Lululemon store, they'll replace the draw cord for you. And, you know, kudos to the company, I guess, to getting really in front of this business. The stock price wasn't really affected at all this past week, and I think that's a sign that management realizes this apparel matters, and if something's wrong with it, they're going to fix it right away.

Lululemon's an interesting one right now, because they're trying to diversify their product line. Outside of the black yoga pants they made a name for themselves with, they've got this ANGO line, you've got the sundress line, you've got the men's line with the ABC shorts out there, which is great, but there's some supply challenges with doing stuff like that. You've got inventory concerns, you've got product quality concerns of snapping elastic bands injuring people and stuff. You've got the delays in the West Coast ports. Delays in the West Coast. I mean, it's an interesting company right now, because

I can see where they're trying to go with this, but we're seeing some of those growing pain headaches with a company that's trying to expand its product line. But the weird thing is, we were talking about Nike earlier, and Nike, Under Armour, they've been selling apparel for decades. And you never really hear about wardrobe malfunctions with athletic wear, except when it comes to Lululemon. I don't know why that is, but it's just interesting. I hear this story, and I think Lululemon is out of toes. Here's what I mean by that. This company has shot itself in the foot so many times, and they just keep on trucking. So, that says something about brand resiliency.

Resiliency, that's a good point. When you look at the stock up around 65% over the last year, they had a nice run, so maybe it was inevitable that they were going to have one of these snafus again. Radioatfool.com is our email address. That's radioatfool.com. Question from Troy Adamson in Vancouver, who writes, what part should high-yield stocks play in someone's portfolio? On every episode of your show, you say, don't buy or sell stocks based solely on what you hear. But I did the opposite, and I bought shares of Apollo Investment Group based solely on what I heard on an episode of your MarketFoolery podcast. I've been enjoying a 10% yield,

which is paid out in the form of additional shares, which is good for me as a Canadian, as there are no currency conversion issues. But I also know that companies could cut their dividend at any time. Brian, I'm curious what you think regarding the role that high-yield stocks should play in anyone's portfolio. But first, I got to say, Troy, what are you doing? I mean, we love that you listen. Keep listening, tell your friends to listen, but do not buy or sell stocks based solely on what you hear on this show. Okay, Brian? Tsk, tsk, Troy, come on. Alright, so here's the academics and theory behind all of this. Broadly speaking, returns come from three sources. They come from dividend yield,

they come from earnings growth, and they come from changes in valuation. And we don't really care where in those three buckets we get our return, so long as we get the return. A high-yield stock is going to get its return primarily from that dividend piece. And so, as long as the dividend is safe, that can play a decent role in your portfolio. But the bigger picture is, you shouldn't care. You should be caring about how certain that payment is. O'Reilly. Radio at fool.com is our email address. Sorry, Troy. We had to just- We still love you, Troy. O'Reilly. We still love you. We just had to admonish you. All right, guys,

We'll see a little bit later in the show. What is happening in the European Union and what does it mean for investors here in the U.S.? We will go around the world of investing with Tim Hansen. That's next. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. The biggest story for international investing this week is the fact that, once again, Greece is on the brink of leaving the EU. So here to help us make sense of what it means for investors is Tim Hansen. For most of the past decade, he has analyzed international markets for The Motley Fool, and he joins me in studio now. Thanks for being here. Tim Hansen. My pleasure, Chris.

Let me timestamp this, because I think that's important, because this is one of those situations that is constantly evolving. We are taping this on Thursday afternoon, so that by the time this airs on radio stations this weekend. Who knows what will have changed? But at this moment in time, where are we now? You know, the funny thing is you try to timestamp this, but arguably we could just not timestamp it and say, hey, Greece is in flux. They're probably not going to arrive at a solution. And that would have been true commentary at any time over what, the past five plus years? Four or five years. So, you know, where are we? Greece has a payment to make to the IMF on June 30th. They currently don't seem to be able to make the payment, so they're

asking the EU to release some more of the bailout funds so they can make that payment and therefore not go into default on their debt obligations. Given how long this has drawn out, there are some European member countries who are reluctant to release any additional funds without the Greece government making concessions in terms of how they're going to right-size their balance sheet over the long term, though, if they could ever actually do that. Who knows? You know, and this is just a drawn-out process. I think they retired the most recent round of meetings

saying they continue to hammer on negotiations. I don't know. I don't know. Ultimately, who knows what's going to happen. I think what will happen is what's been happening the last five years, which is they will put a Band-Aid on it and kick the can down the road without actually solving anything. So Greece will somehow manage to make that payment,

but there will be no certainty. And depending on who you listen to, there are some analysts out there saying, look, if they end up leaving the EU, this is the first brick in the wall to fall, and the ripple effect is going to be terrible for U.S. investors. And then you also have analysts saying, you know what, this is a self-contained issue, and unless you happen to be a U.S. investor who owns Greek debt or something like that, then, you know, you're going to be fine. To what extent, if any, do you think what's going on right now affects the average investor in the United States? You know, probably not very much in the

sense that what's driving, you know, this has been one of many uncertainties in the world over the past five years. And, you know, I think we're in the midst of one of the longest running bull markets of history, or certainly of recent history. The market is willing to look the other way on this. And I think it's willing to do so as long as interest rates stay low. And interest rates are probably going to stay low as long as there remains uncertainty in the world. You end up in a situation where the market probably just continues its climb, but there are real structural weaknesses in the global economy, certainly, that are just being overlooked for whatever reason or another.

Do you think when interest rates rise, as they will at some point, and we can go back in time six months, and a lot of people were looking at June as the time when the Fed would raise rates in the U.S., or was likely to, and here we are in June, and that's not happening. But when the interest rates eventually rise, what then? You know, I think that, I mean, that's an open question, but one that gets, has some particularly gnarly implications. You know, you look at the average multiple in the U.S., it's relatively high on an average basis. Gross stocks in particular, you know, Under Armour's multiple, I think, has expanded from like 40 to 80.

And one argument for why that's happened is earnings yield, which is just the opposite of PE. And when your earnings yield is higher than the interest rate, remains some amount higher than the interest rate you would earn on a risk-free security, you continue to bid the stock up. When interest rates were to go up, so the risk-free rate improves or just gets bigger, that would imply, if that logic has been what's driven multiple expansion over the past few years, that would imply some pretty rapid multiple contraction in the stock market,

which would lead to stocks falling regardless of the underlying performance of the business. That's where, you know, to what magnitude that happens, who knows. But that is certainly a risk given the way the market's been behaving over the past few years. Recently on the show, we've talked about the online travel space, not just here in the U.S., but Priceline's recent investment in Ctrip. Online travel is something that you've looked at in the past. Do you think that's a good move by Priceline? As a refresher for listeners who missed our show a few weeks ago, Priceline had made a $500 million investment in Ctrip, which is the largest online travel site in China. That was last year, then this

year following up with another $250 million. I know Priceline is not hurting for cash, but what do you think of that move? I think it goes back to the fact that Priceline is not hurting for cash, and they need to find something to do with it. I mean, China is ... That's a good problem to have, don't you think? As problems go, what am I going to do with all this cash? I'm just going to set this on fire. Do you think that's what this is?

It's not necessarily setting it on fire, but in the near term, it has the prospects to not deliver very much return. And the reason for that is that you look at the Chinese online travel market, the Chinese online marketplace in general. It's a huge addressable market. You've got 1.3 billion people. More and more are coming online every day. They're leapfrogging in terms of mobile technology and some things of that nature. They have pretty good connectivity. particularly in the online commerce space people are more predisposed to shop online in china it

seems and so you see this total addressable market that's enormous and you say oh if we can just get a little piece of that um it's going to be great the flip side of that is that there there are some very savvy competitors trying to get a piece of it and so the competition is is very is borderline irrational in that space so you have chunar which was a subsidiary of baidu you have elong which was invested in by Expedia, which is also a very cash-rich company. Baidu is a cash-rich company. And then Ctrip, which is being backed by Priceline, which is throwing cash at them. And where is all that cash going? It's going into basically price cutting. None of these companies are as profitable. Ctrip has a modest profit margin, but they are dramatically less profitable

than they were a few years ago when their business model was more predicated on being a call center. Chunar is not profitable and has no plans to be in the near term as they just slash and burn on take rates to try to get Ctrip to capitulate. And Yilong is struggling as well from the same problem. They're the number three player, so they probably have the grimmest situation of all. And ultimately, to me, it doesn't matter how many customers you sign up if your take rates are so low that you can't make money on any of them. The interesting rumor in the space was that Chunar and Ctrip were contemplating some sort of partnership or merger. Now that, all of a sudden, you go from a place of irrational competition to a place where you almost got a borderline monopoly. Then that potentially gets interesting very fast for the companies.

But it remains to be seen how that competitive landscape plays out in China. And from my eye, having met all three of those companies, I think Chinar in particular thinks that over the long run, they can win because they have the best technology and the best people, and they're willing to go after Ctrip's profit pool until Ctrip doesn't have anything left to stand on. But if Ctrip continues to raise capital from Priceline, that's going to be a very long and bloody fight. Let's bring it closer to home.

Last week on the show, we played the interview that Tom Gardner, our CEO, did with Amy Batinsky, the chief marketing officer at Zillow. That was at our Motley Fool 1 event in Seattle. You were out there, had the chance to not only observe the events in the main hall, but talk to a lot of our members. I'm curious, as a longtime investor, what stood out to you, whether it was something that emerged in terms of a theme of comments or questions from your conversations with members or just something that you observed in terms of one of the presentations? Yeah. My colleague Morgan Housel, I thought, gave a wonderful presentation, which he called You Are Here. And it was just showing where we are in the context of the history of the stock

market. And we are at an all-time high, at a point where the bull market has been running for many years now. But if you ask about general sentiment about the economy, it's a little bit more mixed so there's a strange disconnect between the stock market and um and the economy and he further went on to point out just that you know from points like this in the stock market generally speaking you your likelihood going forward of earning higher than average returns problem probability standpoint is lower than it would be than if you were buying at a relative bottom um that sort of is a truism but it's it's it's good context for where we are now Now, what he showed was that if you extrapolate over very, very long periods of time, it doesn't really matter if you buy at a high-ish point or a low-ish point because you'll get the market return.

But your near-term experience can be very rocky, and what you do during those rocky times can have a big implication on your long-term return. So just to prepare people for the idea that, hey, this is where we are in the market, nobody rings a bell at the top. you know, the headlines before Black Friday didn't tell you that that was coming, and so on and so forth. That was maybe my favorite part of his presentation, was showing the headlines before Black Friday, before the market crash of 29, where there's no indication whatsoever that this is coming. And in fact, it was usually the opposite was the case. There were rosy forecasts. Everything's great. Yeah. So, but just to know that that's the case and be prepared for what happens next, know, how are you going to act when that happens? You know, know thyself. I think that's an

important lesson. You know, we can make a lot of observations, but no one can predict if, you know, if anyone could predict when the market was going to go down, you would not tell anybody and you would lever up and make your bet. But, you know, the stability begets instability. It's been a very stable period with some unstable things there in the world. So we'll see. We'll see. I thought that was an interesting vibe because a lot of people, I think, obviously were very positive about the last few years and made a lot of money. But what happens next and how do you react to what happens next, I think, is a key question and a key theme. One of our guests at the event was Jim Sinegal, the co-founder of Costco. I would argue one of the great, if not the great, retail

leaders of the last 50 years or so. I know that specialty retail is something that you look at. We've talked before about Williams-Sonoma and sort of the job that that company has done, not just in its stores, but through its catalog business as well as online. Do you put restoration hardware in that same category? It's a good question. I think it's a good time for home retailing. As long as you have a decent set of SKUs and an online presence, You know, home numbers are getting better, home ownership rates are getting a little bit better, you know, new home construction is picking up, interest rates are still low.

I think that's an interesting space to be in. I don't think Restoration Hardware is quite the operator that Williams-Sonoma is, and obviously Williams-Sonoma has more of a multi-brand approach, which allows them to go after different price points. And they also do a very bang-up job of inventory management, which is very hard to do in the sort of durable goods space. So I think that's still my favorite name in that sort of sector. But it's a promising hunting ground to be looking in, I think, given the demographic data that's coming out. All right, last thing, and then I'll let you go. We're now at the halfway point of 2015. When you think about the second half of the year, whether it's an industry, a company, or a stock, who do you think needs a hit?

Who needs a strong second half of 2015? Wow. I mean, I think people are aware of what happened in the Chinese stock market, the mainland Chinese stock market this year. It was running up 100%, 200%. It's since started to correct. I mean, that's an economy where the fundamentals and the performance of the stock market have really gotten out of whack. They could probably stand some good news. Australia is something interesting to watch. It's a very levered economy with the mining boom ending and commodity prices coming down. you know, they could probably stay in some good news

lest their stock market begin to, and their banks begin to feel a little bit hit in that regard. You know, and like I said, interest rates, what happens to interest rates over the next six to 12 months? I think it's going to be a big determinant of near-term returns.

You know, for the long-term investor, it's really not a question of playing that, but rather just preparing for it and so that you react the right way when it inevitably happens. Have a jar of antacid on hand? Yeah, but I mean, I think, you know, I was going back and looking at my records, and I think I made a note to myself that people should be,

or I should be, a potential idea was to be shorting treasuries back in 2010 or 11. I don't think, I never actually went through with that bet, but if I had, it'd be an enormous losing position. So, you know, these things can persist, but, you know, So, I don't think it's been a losing position to have been prepared for that since 2010 or 11. One of the reasons to be on Twitter is so that you can follow this guy, Tim Hanson. Thanks so much for being here. Thank you, sir.

Coming up, we'll give you an inside look at the stocks on our radar. Stay right here. This is Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. I'm Chris Hill. Once again, joining me in studio, Matt Argersinger, Simon Erickson, and Brian Hinman. Guys, before we get to the stocks on our radar, last week we talked in honor of Father's Day. We shared

some good advice that we got from our dads, asked the listeners to weigh in, and the emails came pouring in. Radio at Fool.com is our email address. The best advice that you got from your father. We got one from Anne Harris in California. When I was heading off to college, my dad said, if you don't know what to major in, then go for engineering. You can always change to something else later, and you won't have to start over. You can't go the other way. My dad was so right, and I am now a flight test engineer at Edwards Air Force Base. From Tobin Anthony in Virginia, punch a bully in the nose, his eyes will tear up. You'll be able to punch him again harder. From Jeff Corcoran in Pennsylvania,

you. My dad's advice, you should date that new girl next door. Forty years and three kids later, I have to say that worked out all right, although I was already plotting my strategy anyway. O'Reilly. Didn't have to use Match.com, see? O'Reilly. Exactly. That's the old school way. O'Reilly. That's right. O'Reilly. And finally, from Carol in Hawaii, my father's a doctor. His best advice to me, his only daughter, was always urinate after sex.

O'Reilly. Oh. O'Reilly. There we go. And he's a doctor, so who are we to argue? O'Reilly. Boom. Quite the spread of responses there. O'Reilly. Yeah, great responses. Drop the mic. With that, let's get to the stocks that are on our radar this week. Our man behind the glass, Steve Broido, will hit you with a question. Simon Erickson, you're up first. What are you looking at these days?

Chris, disclaimer, this is a volatile small cap flyer that I'm throwing your way this week. The company I'm looking at is called the Rubicon Project, ticker is R-U-B-I. These guys are based out of California. They run a platform to automate the buying and selling of digital ads online. When you're loading a website, whether you know this or not, there's a ton of information exchanged about who you are, what your IP address is, what your demographic background is, what your search history is. This is all very valuable to advertisers. And in 80 milliseconds, the Rubicon company is able to match all that information to give you the best advertisement on the side of the website that you're looking at. So, it's the second

largest platform doing this behind Google. They've definitely got my attention right now. Steve, question about the Rubicon project? Is this a privacy time bomb waiting to explode? I've been tracking where I'm going. sounds a little creepy. I don't know about your case specifically out there, Steve, but I hope not. I just like that creepiness is now potentially going to be a factor that we screen for as investors. Matt Argersinger, what are you looking at this week? Sure. I've got Lionsgate Entertainment, ticker LGF. I've been really looking at entertainment companies lately, especially in the movie

studios. This is the studio behind shows like Mad Men, Orange is the New Black, movies like Twilight and Hunger Games series. John Malone just took a stake in them recently, and he's looking at a lot of potential consolidation in the space. Lionsgate's been trying to buy, among others, MGM for many years, and there's rumors that they might actually be going out and buying Starz. So, I just see a lot of consolidation in the entertainment space. Lionsgate, I think, is going to lead that. And, big week in the movie industry, when you look at Comcast's parent company of Universal and Jurassic World, and what that's raking in at the box office, and of

course, Disney with Pixar's latest film. Content is still king. Steve, question about Lionsgate? Seems like a big, complicated business. How can I follow this at home if I'm a shareholder? Good question. This is a company that, unlike other studios, has a pretty consistent profit stream. Just follow the profits, follow the cash flow. As long as they keep coming in for Lionsgate, it's doing pretty well. Brian Hinman, what's on your radar? I've got a simpler business for you guys. It's Cabela's, a retailer that you may

have heard of. Here's what they sell, Steve. Guns, bows, ammo, camo, tents, boats. It's outdoor living. Good, healthy, wholesome outdoor living. What do you got for me? Well, first, what's the ticker? CAB. Is this a Bass Pro Shop play? Bass Pro Shops is one of their primary competitors, except the good folks at Cabela's, I think, are cream of the crop and really know their customer, know the industry much better than Bass Pro Shops. O' Are you a Bass Pro Shop connoisseur, Steve? You know, I drive by them frequently. They're often on a freeway, and they are

amazing looking from the highway. O' They really do look amazing from the highway. They do. Looks amazing. O' Cabela's, Lionsgate Entertainment, the Rubicon Project, some pretty interesting ideas across the spectrum there, Steve. Any one of those catch your attention? I'd have to go with Lionsgate. I think it's the most compelling right now. O' Have you seen any of the Hunger Games movies? I have. Yes, I have. Not a fan, but you're like my answer. No. You're solid, though.

All right. Simon Erickson, Matt Argersinger, Brian Hinman. Guys, thanks for being here. Thanks, Chris. That is going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido. Producer Matt Greer is on a well-deserved vacation this week, so if the show is terrible, that's why we let Matt go on vacation. I'm Chris Hill. Thanks for listening. We'll see you next week.