Motley Fool Hidden Gems Investing - Pokemon Rules the World

Episode Date: July 15, 2016

Nintendo scores a huge hit with Pokemon Go. Amazon hits a new high. And Starbucks serves up some appetizing news. Plus, CNBC host Kayla Tausche talks about the business of big banks. Learn more about your ad choices. Visit megaphone.fm/adchoices

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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 MDP and Supernova, Simon Erickson, and from Motley Fool Deep Value, Ron Gross. Good to see you, as always, gentlemen. Hello! We have got the latest headlines from Wall Street. Kayla Tausche from CNBC is our guest, and as always, we'll give you an inside look at the stocks on our radar. On Friday morning, the New York Stock Exchange opened with a moment of silence for the victims

of the terrorist attack in Nice, France. Our hearts go out to all of them, as well as their families and friends. But guys, as this is a business show, we will move on and get to the business news of the week. And we will start with the surprising success for Nintendo. Shares of Nintendo are up more than 80% since last Friday, thanks to Pokemon Go, a new game for mobile phones that is staggeringly popular. Simon Erickson, there are a lot of pieces to this story. Let's start with the game itself. Why is this thing such a transcended hit? When you look at the data in terms of how many people have downloaded it, how many people are playing it, it is off the charts.

OK, so 15 million downloads in less than two weeks. That's amazing, right, Chris? And now they're going to the UK. So you know that number is going to be going farther and farther up. The game is free to download. The appeal of this really is that it is the first really big cast into the augmented reality pond, where you're actually blending a game that's a colossal waste of time on your smartphone with the actual real world around you. That's a value judgment. I really appreciate the fact that you got that out there immediately. I had to throw that out there early on. With the real world, you actually have to go out and follow a Google Maps program

to actually catch the Pokemon. It's no surprise that the game was developed by the company Niantic, which was spun out of Google. So, that's the appeal of this. And, Jason, you look at the market cap that has been added to Nintendo in just over a week, north of $10 billion. Really? For a free game? I get that it's popular, but I'm having a hard time wrapping my head around whether or not this might possibly be overvalued. That's a very, very good question, really. And I think I tend to agree with you with that sentiment. No, I don't think that this game alone justifies that type of a bump

in market cap, but we see this type of behavior in the market all the time. There is a tremendous impact that this game has made in a very short period of time, and that's terrific. Nintendo should benefit from that to some degree, but we often see a lot of that optimism reflected in stock prices where the stock price is really supposed to be reflecting what's coming next. I think, really, that's probably what we're seeing to a degree here, is not only the optimism of the success that this game has seen in such a short period of time, but also perhaps this assumption that maybe Nintendo's got another ace up their sleeve, maybe something else is to come here, maybe they'll do something else with this. I would counter that by saying,

Listen, I think to Simon's point, we sort of stepped into this new paradigm with augmented reality games and whatnot. This really opens the box, I think, for a lot of other companies out there that do this type of thing to try it as well. So, I would expect more competition to come to the market from this, and that might not necessarily bode so well for Nintendo. Yeah, I would agree with a lot of that. We tend to be somewhat cynical when we see big pops like this, but I think we do have to give them credit for really, in a big way, forcing what appears to be a new way to game. We had virtual reality in the Oculus Rift, which is a much deeper technology, let's face it. But I think we have to give them credit

for what I see as the most raptured adoption of a game, or really anything, that I can remember maybe ever. I don't remember anything hitting the marketplace so fast and so widespread. And so, I do think we have to give them credit for that. And Simon, the game itself is free, but within the game, you can spend money, you can make purchases within the app. Nintendo gets a cut of that. Apple also gets a cut of that. They get a bigger cut than Nintendo does, actually. The fundamental change in the whole industry, right, Chris? So, this is the right move by Nintendo. It used to be all about selling the consoles. You paid up front for those. You paid

for the games on a per-game basis. But really, the world is changing to mobile gaming. Candy Crush, Huge success. Like, Ron, you're talking about what's the last big success? Candy Crush and even Candy Crush Soda were two of the top-selling games in America. It's all about mobile. It's all about these in-app purchases. And I think that this is the correct move of Nintendo to get involved with that. The only thing that I'm dubious about, Chris, is that when you just look at this by the numbers, Nintendo's now selling for 100 times trailing earnings and 200 times forward-based earnings. They're going to have to need to get a really big hit out of this, even if they're only pulling 10% of the revenue from the in-game purchases to make it worth their while.

And then when you add in the risks we see, so for every article you see talking about how amazing this is, there's another article talking about the risks of people walking around with their eyes down looking at their phone, people in their cars, there's even been a couple of robberies here and there. So somebody's going to get hurt, in fact people have, and this is not without a risk as it relates to kids walking around town. I'm going to be watching for you, Ron, when you download the game next week. Let's just take this to the next level, then, okay? We know that Activision Blizzard is the owner of a very popular game with kids out there, Skylanders. It's not a very big leap to think that Activision Blizzard could just pull a couple of strings and make a game

like this with Skylanders happen immediately. A lot of characters out there that I think the kids really like, as well. I mean, again, it's just all too ... Yeah, you're right, Ron. Hats off to Nintendo for really finding something here. But, again, investing's all about looking forward, and we have to really be thinking about, what is Nintendo going to do next with this? And on that note, Chris, I think that augmented reality, this does open the door for more games to come in the future. Shares of Herbalife up nearly 20% on Friday, as the Federal Trade Commission

announced it has determined that Herbalife is not, in fact, a pyramid scheme. Boy, that seems like damning with faint praise, Ron, but this does have real money implications. Yes, but it's not all peaches and cream for Herbalife. They do have to pay $200 billion fine, and they do have to agree to restructure their business. So, they weren't deemed to be completely, I don't want to use the word guilt, but without guilt. They are going to have to restructure their business so that distributors are rewarded for what they sell, not how many people they recruit. Now, that very much seems to me like what

Bill Ackman was calling the pyramid scheme part of this. And the FTC is saying, alright, you do have to make that switch there. So, they're not giving Bill Ackman his due, but they are insisting on changes. Stock reacted favorably to that, because being deemed a pyramid scheme would have been disastrous. Paying $200 million is not. Yeah. Jason, in terms of public heavyweight fights between big investors, this was maybe the biggest. You have Carl Icahn on one side, very much a backer of Herbalife. Bill Ackman, hedge fund manager, heading up Pershing Square. He's having another really bad day. Yeah, and I mean, I think, I hate to go out there and just pick on someone for picking

on them's sake. I mean, I fired off a tweet this morning kind of making fun of Ackman to a degree here. And I'm normally going to be very quick to not do that. But in this case, I think he totally deserved it, because he really put himself out there. I mean, I think he called Herbalife like this was the investment thesis of his life. I mean, he he has just never wavered. And I think that when you look at the way he has conducted himself here, I think the way that he's conducted himself with Valiant Pharmaceutical, it's not to say he's not a smart guy. He obviously has some investing prowess there. But I think one of the keys with investing is humility. It's being able to look back at yourself and

say, you know what, I got something wrong there, and jumping out there and admitting it and learning from it. I think that this is a lesson in hubris and what not to do as an investor. Agreed. He does take looks back. If you read his annual reports, he will take a look back at previous years and point out things he did wrong. But, he's coming off what looks like it's going to be two years in a row of very subpar performance, down around 20% last year. It looks like, through the first half of this year, around the same kind of negative performance. You don't survive that long in the hedge fund industry, especially

in this environment where hedge funds are coming under some scrutiny, unless you put up the right numbers. Shares of Amazon hitting another all-time high this week, and why not? The company says sales from its Prime Day promotion were the biggest ever, with orders in the U.S. up more than 50%, international orders up more than 60%. Jason, I'm guessing you were not surprised. Well, no, I'm not surprised. I mean, you know that I got something from Prime Day. You're a little trolling on Twitter. Notwithstanding, I'm feeling very good about my purchase. I think everybody in our house actually bought something, which is kind of fun. It's nice

to be a part of it. But I think, obviously, Amazon is on to something very big here. It's no surprise that Prime Day continues to do very well. I think the biggest mistake that probably most investors that like to take the bear side with Amazon make is when they start focusing on Amazon and the fact that maybe it's not necessarily always the low-price provider. That really is just one part of the equation for Amazon. I think there was a time ago when the big leap was being made in regard to e-commerce, that people would actually have the patience to wait for something to be shipped. But then again, what if it was the wrong thing? What if they had to return it? There was a customer service aspect that

was still very much up for debate there. And Amazon, I think, saw a big opportunity there and has really, I think, blown all of those notions out of the water in showing that it's not all necessarily just about being the low-cost provider. It's about convenience. It's about a great customer experience. It's right in line with Amazon's stated mission of becoming the most customer-centric company on the face of the Earth. Again, I think that we've talked about this before, you look back 10 years, we would have never really given Amazon the credit for being a device company, so to speak. That was never really what we invested in the company, not why we invested in the company to begin with. But you fast-forward to today,

beyond just the Kindle. I mean, with the tablets, with the Echo, with everything that they've done to date here in the device and the hardware side of things. And then, the beauty of that is that the hardware just enables the consumer to make Amazon a part of their lives almost on a daily basis, if not on a daily basis. So, this is something that I suspect we will see more and more of. It's nice to know they can kind of pull this lever on a yearly basis and juice that top line, bring more Prime members in. And that's really what it's all about for them is continuing to grow that Prime member base. From a customer perspective, what I didn't realize is, there's an urgency that

they create. Once you put something in your cart, you have 15 minutes, I think it is, to execute on that, which I didn't realize, and they don't need my advice, but they actually would have gotten quite a bit more money out of me if I didn't have to rush and I could take my time there. I ended up just not executing on a lot of buys there because of that urgency. I've got to agree with Jason that the name of the game for Amazon right now is getting the number of Prime members as high as possible, as quickly as possible. We've seen some research that they increased Prime numbers in the U.S. alone, from $44 million last year to $63 million this year. And the average Prime member spends about $1,200 a

year on Amazon, compared to the non-Prime member at $500. So, this is expanding your best customers in the right way. It sounds like Jason's an above-average Prime member. I think so. More than likely. More than likely, but that's okay. A power user. I think also, we took a look here just recently in Million Dollar Portfolio at Costco. It's been a holding in the portfolio for a long time.

And we had to make the tough decision of actually selling our position at Costco. But part of the reason why we did that, number one, it was a great performer. But again, looking forward five years down the road, we felt like there were some very optimistic sort of assumptions there in how they were going to be able to grow their revenue in the face of what is plainly becoming a more competitive space for warehouse clubs, thanks to e-commerce and companies like Amazon. So, while we love that membership side of the business with Costco, we also had to acknowledge the fact that Amazon's got that very same dynamic going with a membership that arguably provides consumers with far more value than anything else out there. I'll just close with this stat,

because we did get retail stats for the first half of 2016 this week. Department store sales down nearly 4% in the first six months of this year. Non-store retail sales up more than 10%. So, if you're wondering why we talk about Amazon as much as we do, it's because of stats like that. You know what they need? Pokemon. Coming up, if you're waiting for the sports bubble to pop, you're going to have to wait a little bit longer. Details next. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser,

Simon Erickson, and Ron Gross. 15 years ago, Lorenzo and Frank Fertitta bought UFC, the mixed martial arts franchise, for $2 million. This week, they sold it to a combination of investor groups for $4 billion. It is the single largest franchise sale in sports history. That is a nice return on investment, Ron. Boy, boy, oh boy, this is hot. It's an incredible deal. William Morris, probably a lot of people know, is the agency ... IMG, the big global sports conglomerate. So it was a combination of William Morris and IMG. They have partners in this. Michael

Dell is a partner, Kohlberg, Kravis, Silver Lake, all partners. The owners, the brothers, had an 80% stake. They'll maintain a minority stake. And Dana White was another 10% owner of this. He's going to stay as the president going forward. But obviously, UFC, very, very popular. 40 live events a year, 156 countries. They've got 46 million social media followers, which is an important avenue for them to get out their content. Obviously, for $4 billion, they're expecting big things here. Fox has the TV rights, but that will come up for renewal in 2018. So, look forward to that. Yeah, they're getting $100 million a year from Fox. And as you said, in two years,

that comes up. I'm guessing that the bidding is going to start at $200 million. It's going to be big, absolutely. And don't be surprised if you see William Morris, WME, come out with an IPO in the next year or two, because it looks like they're raring to go with that. Shares of Yum! Brands up this week after second quarter profits came in slightly higher than expected. The parent company of KFC, Taco Bell and Pizza Hut reported same-store sales in China that were flat, but that's certainly better than what we've seen out of China in the past, Jason. Yeah, historically weak quarter and tough comps. It was a decent quarter. I think

the story with Yum! Brands, really, though, it's a really interesting situation here for investors where there's clearly a near-term catalyst in the shares and this recapitalization program that management's implementing. Levered up the balance sheet a little bit, starting to buy back a lot of shares in advance of this China spinoff, which is going to happen by October. But from there, then it becomes a bit more of a question mark. If you look at the history of Yum! Brands, you go back to 2011, they had a really hard time actually growing their top line. Revenue has been relatively flat here for the past four or five years. That's got to be a concern, particularly domestically here. You see the success of McDonald's with

their all-day breakfast rolling that out even more. So, your Taco Bells and KFCs here, domestically speaking, are a little bit more challenged than perhaps before. But again, I think the The near-term catalyst is obvious. Since 2011, management brought the share account down about 10%. That's going to continue, and I think that's a way that shareholders can see some value there, some capital gains in the share price. But beyond that, once the spinoff happens, I think investors need to take another look here and really assess if there's really as bright of a future for either entity. Starbucks is taking yet another run at trying to improve their food offerings.

company is teaming up with Rocco Prinzi, a highly regarded Italian baker, to bring artisan bakery items into the stores starting in 2017. Simon, you look at La Boulange, I'm not saying it was a flop, but it certainly didn't work out as well as they were hoping. Yeah, and you said yet another. La Boulange, obviously, Starbucks last year, if investors remember, they closed down the 23 standalone stores that were offering pastries also that Starbucks had an interest in as well. The interesting thing to me, Chris, is that there's still selling those pastries in the existing Starbucks locations. So, I think that whether or not Princey continues as a standalone location in the future, or it doesn't, the more important

part of this is, are they going to continue to sell those foods in Starbucks locations? Keep in mind, food still accounts for about 20% of sales within all of Starbucks' restaurants, and we saw a 7% increase in comps last year. So, it's still doing very, very well. It'll be interesting to see what happens to Throughput as well, because this is the first time that they're actually going to be baking stuff on the premises. And if that has a negative effect on throughput, then I think they might need to rethink it. Well, and Starbucks has always been the third place, right? It's where you go outside of home and work. And the third place is getting a lot more awesome. They're opening now roasteries

and reserve-only locations, which are multiple times larger than the traditional ones. But they've got things like in-store baked goods and different types of coffee from areas of the world, you wouldn't get a typical location. I think they're adding a premium to their brand. I think it's a good move for the company. Let's bring in our man, Steve Broido, in from the other side of the glass. Steve, real quick, your favorite baked good item, if we can arrange that for you at Starbucks? If they could do a honey bun, that would work for me. I don't think they will, but that's what I would like.

Bear claw? We'll see. All right, guys, we'll see you later in the show. Up next, we'll talk big banks and more with CNBC's Kayla Tausche. This is Motley Fool Month. This episode of Motley Fool Money is sponsored by Harry's. I love Harry's products. I've been using them for years, and there are a lot of things I love about them. They ship right to your doorstep, so you don't have to wait in line at the store. You don't have to wait for some employee of the store to unlock that plexiglass safe.

Which, by the way, the reason they have that plexiglass safe for razors is because razors are so expensive. Well, Harry's is going to give you $5 off your first purchase with the promo code FOOL. It's really easy to get started. It just takes less than 30 seconds to place an order. And that's one of the reasons over a million guys have made the switch to Harry's. So go to harrys.com right now. That's harrys.com and enter the promo code FOOL when you check out. Welcome back to Motley Fool Money. I'm Chris Hill. A stock market hitting record highs this week, but shares of the biggest banks on Wall Street are still lagging. Here to help us make sense of it all is Kayla Tausche. She covers banking, finance, and dealmaking for CNBC. She's also one

of the hosts of Squawk Alley. And she joins me now from New York. Kayla, thanks for coming back on the show. Thanks for having me. Always a pleasure. So, Bank of America, Goldman Sachs, Morgan Stanley, Citigroup, these are not troubled businesses. And yet, when you look at their stocks, every single one of them is more than 25% off their high for the past year. What do you think is going on here? Well, I think that the economy, while it is very strong here in the U.S., the data have been largely showing us that the global economy has remained so weak. And these are global businesses. They don't operate in a vacuum. And they want to be making their money from doing deals, from interest rates going up, being able to lend money at

higher prices. But unfortunately, almost every central bank, except for the United States, is lowering interest rates instead of raising them. Global economies are weakening. And so the business that these banks are counting on just isn't there. And we're expecting to see a little bit more of the same in the second quarter, which is what will be reported starting on Thursday. So any bright spot that these executives are able to talk about, you can imagine they're going to want to grasp onto. Yeah. When you and I spoke last fall, we were looking ahead to 2016 and very much on the table was not just an interest rate hike in the U.S., but possibly more than one. And now when we look at the second half of this year,

an interest rate hike, I mean, that's basically off the table, isn't it? It's basically off the table for the near future. Some in the market are still betting maybe December is a remote possibility. But as each day goes by and as we see the actions of other central banks outside the U.S., it just seems like December is going to be a really tough call, even though that is still, at this point, five months away. It seems like so long ago that we were talking about the fact that maybe this could have been a year that we saw not only one but many hikes but it feels like deja vu because we talked about that in 2013 in 2014 and 15 and 16 not necessarily that the fed would hike rates but that interest rates as a whole would go up that

10-year treasury yields would go up that's what your mortgage is priced off of and that the banks would be able to be making a little bit more money off of their bread and butter these businesses that everyday americans participate in and while it is good news for a lot of consumers who are taking out new mortgages, taking out new loans, they'll get the benefit of lower rates for longer. But for some of these businesses whose stocks are in a lot of people's 401ks, unfortunately, they are suffering because of it. The biggest investing story of the summer so far is the Brexit vote and the ripple effects of that. You were over in London. We saw a sell-off that we have since bounced back from, but

it kind of seems like it could have been a lot worse. How big a bullet did we dodge here? Well, it's tough to say. If I had a nickel for every time that I heard the word uncertainty in just the last two, three weeks, I'd probably have enough to quit my job right now, because that's what everyone is talking about. There's so much uncertainty. A little bit of that went away when the new UK prime minister came into office on Wednesday, Theresa May, of course, taking over for David Cameron, who resigned. That does solve a little bit, but people don't really know. Is she going to actually effectuate the UK leaving the EU? And if she does that, when is that going to happen? That's what the market really needs to know to be able to understand how those decisions

are really going to affect a lot of these companies and a lot of their stock prices. I think that while the US economy might have dodged a bullet because we have more than made up for the ground that the stock market lost in the wake of the utter shock after that vote. Markets around the world are still down. Yields are still much lower. The pound has still taken a beating, even though it is off of its very lows. And so it's easy to look at, you know, your own house and say, oh, I fixed it up. It looks pretty good. But the rest of the neighborhood following Brexit doesn't look quite as strong as it does in the U.S. What was the mood of people that you talked to in London? Were you able to discern how they were feeling, or was there such a sense of shock, first initially just from the vote, the way that it went, but then, and I'm sorry to use this word again, the amount of uncertainty that just persisted with whether or not…

certainty. But there really is sort of the ripple effect of, well, okay, does the UK leave the EU? What does that look like? What does it mean for investment in the UK? All of these, not just banks, but tech companies putting their plans on hold. Were people able to process that in London, or was it just shock? Well, I would say two things. First of all, this sentiment has been bubbling up for some time and i think a lot of people knew that it was there and knew that it presented the real possibility that it would be strong enough to tip the scales in favor of a leave vote which is what we saw i did talk to a lot of executives who weren't willing to go on the record about the fact that they supported the leave campaign because it wasn't

a popular line to take within the corporate sector but they said two to three years of uncertainty is worth it for us in the long run to know where we stand and not be a part of the European Union. If we were asked today to join the EU, the answer would be no. So let's put up with any near-term volatility or any aftershocks in the market that will be short-lived or perhaps only last for the medium term to have the posterity of this country back. That was an argument that I heard from a lot of people. So the fact that the pound went down, that stocks probably sold off, that people were asking questions about the health of the banks. That didn't take a lot of people by surprise. There were some people who voted leave simply

on an emotional vote. And then when they looked at their pension or they looked at the value of the currency they had in their wallet, they were pretty shocked to see that all of a sudden it was worth less. But I wouldn't say that across the board, people were necessarily shocked that that's how it played out. It will be interesting to see from here what form that sentiment takes, Whether it results in Britain fully leaving the EU, having no access to the free market in Europe, which people are largely saying is unlikely, or whether they will get to have their cake and eat it, too. They'll get the benefits of being part of the economic area, not have the euro, not have to pay as much as they were into the budget for, and not have some of the refugee issues, which is what people were trying to pull the country back from. So we'll see. We still have several months to see how some of these negotiations play out. But I wouldn't say that the shock necessarily was widely held or that people were even really that surprised that there was a broader effect of it.

You're listening to Motley Fool Money, talking with Kayla Tausche, one of the hosts of CNBC's Squawk Alley. Last time you were on the show, one of the companies we talked about was Square, the mobile payments company. This was right before Square was going public. Jack Dorsey is the CEO both of Square and Twitter. And both of those stocks have significantly trailed the market over the last 8 to 12 months. Is there any talk that you're hearing that Jack Dorsey needs to choose and prioritize one of these companies over the other? Well, that was the talk as soon as it was announced almost exactly a year ago that Jack Dorsey would be the permanent CEO of Twitter.

Of course, Square at the time hadn't gone public yet, so people thought maybe he would take the company public and then hand the reins over to his CFO or another person within the company or appoint someone from without, let someone else run Square and run Twitter as the CEO. None of those scenarios have been borne out at this point, and we're now a year in. Both of the stocks have underperformed. Square has been public for less than a year. And I think increasingly, less than talk about a potential deal for one of these companies

or a new CEO for one of these companies is just frustration, frustration that the board doesn't seem to be listening to investors, frustration that they both seem to be moving slowly from a product standpoint, and that there is a little bit of distraction when any person, any human is trying to be spread as thin as Jack Dorsey is, as talented as he is. So I think that at some point, the drumbeat is going to get loud enough that he might have to choose or he might have to hand the reins to someone else. We haven't seen that yet. Unclear whether we'll see that in the near future. When you look at the financial industry and some of the upstart fintech companies, whether it's Square or a company like Betterment or that

sort of thing. Where do you see these companies going? Because it seems like we're into year two and possibly even year three of stories in the media about how Company X is going to completely revolutionize banking or investing or that sort of thing. And it seems like while that still obviously remains a possibility, most people are still banking and investing the way they've been doing for a long time. Well, there are a lot of companies in different fragmented parts of the market, Chris. Some of these companies are robo-advisors and they manage your money at a cheaper rate than your financial advisor would. Some of them are simply transaction based companies. They let you send remittances to your family and other countries at a lower rate.

Some of them are bank accounts light. They don't have the FDIC insurance, so they're a little bit higher risk, but they might pay you more in interest and they have fewer branches so they can afford to do that. But the one word that none of these companies want anything to do with is the word bank. Bank signifies that you're old line, you have a bulky business model, you're expensive, you have bad customer service. No new company wants to be associated with being a bank. But the irony is, because they haven't subjected themselves to be regulated like the banks, there are a lot of these businesses they just simply can't enter. It's going to be hard to see without being regulated how any one of these fintech startups can really say that they

will be the catch-all for all of your banking needs going forward, unless they choose to be bought by a bank. You're saying bank is a four-letter word. It is. It's the worst four-letter word for a lot of these companies. All right. Two more quick things, and then I'll let you go, because I know you're busy. As we are just kicking off this earnings season, what is on your radar? It can be in banking and financials. It can be in a completely different industry. What are you curious about for this next earning season? I'm curious to watch how so many of these high-growth companies in tech and outside of tech are wooing new employees by giving them very lucrative stock options.

But they don't count these stock options as earnings, and they are the single biggest expense for a lot of these companies next to their own real estate. Now, we're seeing that some of these stock options have gotten to the point where the company's issued so much of them, they really can't afford to keep them up. Twitter pays out a third of its revenue or the equivalent of a third of its revenue in stock to employees. That's how expensive it is to try and keep people in-house. One of the issues why LinkedIn sold itself to Microsoft is because they basically had a burden of stock-based compensation that they couldn't afford to keep up, among other things. And so as investors start paying closer attention to that line item, it will be interesting to see whether investors get frustrated about how much these companies are actually paying, but sort of hiding off balance sheet and pretending like it doesn't exist. The story of the week, and we talked about this earlier in the show, is just the explosion of Pokemon Go.

And I'm not asking you to name names, but I'm just curious if any of your on-air co-workers at CNBC, you're finding them engaging in Pokemon Go, whether it's on the air or during a commercial break or just in their off hours. So there are a lot of my colleagues who have been spotted playing Pokemon Go. I'm not going to name names, but I will say that 100% of them have claimed that it is in the name of research for segments on CNBC. and I'm almost positive that that is never the case. While we do want to play it so that we know what we're talking about in all these segments, I don't think you need to play it necessarily hours per day. Maybe you're doing hours of research.

I don't know. Personally, I don't have enough phone data to keep playing it. So I've gone over my phone data charges every single month for the last six months and I'm trying to keep a lid on it this time. So Pokemon's not going to get the best of me. You can catch her on CNBC's Squawk Alley every day. Kayla Tausche, thanks so much for being here.

Kayla Tausche Thank you, Chris. Up next, we'll give you an inside look at the stocks on our radar. 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, Chris Hill here in studio with Jason Moser, Simon Erickson, and Ron Gross. Radioatfool.com is our email address. That's radioatfool.com. You can send us your questions about stocks or weigh in on other topics, like this email we got from Sam Waterbury. He writes,

love the show. I've been listening for five years and appreciate the business analysis and good humor. Thank you for that, Sam. Recently, you asked your guests for overrated spices, especially in the context of grilling. One word, allspice. It's the go-to ingredient for when creativity falls short and the flavor it provides is the taste of bitter disappointment and lack of effort. As for underrated spices, look no further than cayenne pepper. Many grillmasters reach for ground chili powder when they want to add some heat,

but cayenne has much more character. Great in rubs and sauces. It can work well with meat and poultry. Keep up the good work. Keep grilling and fool on. That's a great answer. That's good stuff. Thank you for that. We've got to turn to our grill master in the room, Ron Gross. Do you concur with that? First, do you concur about allspice?

I'm not a big user of allspice, I've got to admit, and I do love cayenne pepper. I love blackening spice, which is a combination of cayenne pepper and several other things, and you can pretty much put it on anything, but you have to like spice, obviously. Jason, I know you follow McCormick, the spice company, very closely. Do they break out sales by spice? Because if the next quarter we see that all-spice sales have taken a dip, I think we know why. Well, I was just going to tell you about the merits of grilling pizzas on your grill, but as far as McCormick goes, they will call out in calls every once in a while where they've

maybe seen some stronger pockets vs. weaker pockets, but no real pinpoint of any one particular spice. I think you hop on the next analyst call, you just ask them directly. Walk me through the all-spice sales. Amen. Alright, let's get to the stocks on our radar, and we'll bring in our man Steve Reuter from the other side of the glass to hit you with a question. Ron Gross, you're up first. What are you looking at this week? I've got a deep value radar stock. Not a recommendation just yet. It's a $170 million

micro-cap company called Tilly's. They're a specialty retailer, West Coast-inspired apparel. I guess that means California-type clothing. 226 stores, 32 states. Founders control 83% of the company through a Class B stock, so be wary of that. But it's only two times EBITDA, one times tangible book value. Looks dirt cheap. Problem is, special retail is a terrible business. No competitive advantage. So, it may be cheap for a reason. I've got to figure that out. O' And the ticker symbol? T-L-Y-S. O' Steve, question about Tilly's? Give me some context. What does a $170 million market cap company look like compared

to somebody like Nike? It is literally a fraction. It's a blip on the radar. I don't have the market cap of Nike off the top of my head, but it's multi-multi-billions, tens of billions of dollars. It's just a flea compared to Nike. O'Reilly. Nike could probably shake their couches for pocket change and buy Tillys. O'Reilly. That's fair. O'Reilly. Simon Erickson, what are you looking at? Simon Erickson. Chris, I'm going with a company that is a great business with a very strong competitive advantage, Vail Resorts, ticker MTN. This is one of the best ski resorts.

They own a lot of ski locations, and it's pretty hard to replicate mountains, apparently. The company's been doing great. They've been increasing the number of ski visits and the price per daily ticket at the same time for several years. The interesting thing is, the companies always look pretty expensive, at least on my analysis. But they have opened up a thing called Epic Discovery, which is opening the mountains up in the summertime for things like hiking and ziplining. So, there could be some unlocked value in that. We're taking a closer look in the MDP portfolio. Steve, question about Vail Resorts?

Has something changed with skiing? It just seems like gravity plus slick things going down. What's the deal? Where's the innovation? Is that your question? What's the new thing? Well, Steve, it's a great question. You can do it now in the summertime on a zipline which is not actually grounded to the ground anymore. OK. There you go. Jason Moser, what are you looking at?

Sure. One I've got on the watch list in MDP that I'm kind of on the fence with right now, Buffalo Wild Wings. Ticker is BWLD. Threw it on the watch list back in November. Stock is a little bit down since then, but I felt like it was rich at the point we added it there. Management has been very conservative with guidance. This has been a very difficult year, and this positive same-store sales that we normally see will not be coming back until probably the end of this year, beginning of next year. I think these guys may actually run into a buzzsaw at some point, though, if they're not careful, as more sports take to more and more avenues of dissemination.

All of these streaming deals that are coming of social media now, That's really what has been Buffalo Wild Wings' bread and butter, so to speak. It's trying to become more things. They've offered this new fast-break lunch offering, which is just a faster lunch experience. I'm not sure people really want to go there, sit down, eat, and then just leave. I think it's more about the experience. Could be some problems there, but I'll be keeping an eye here on earnings in the next couple of weeks. Steve?

Do you find Buffalo Wild Wings comfortable? I've eaten there. It's loud. There's televisions everywhere. It's very frenetic. He's an old man. I am an old man. I don't disagree. I'm a codger myself, and, yeah, I go there probably once every blue moon. No, it's not comfortable.

It's loud. It smells, and, you know, they've got beer and wings, which is fine, but it's not a place where I would ever take my family. Steve, three stocks. You got one you want to add to your watch list? I'm going skiing. I'm going to Vail. All right, that's going to do it for this week's show.

Thanks for listening, and we'll see you next week.