Motley Fool Hidden Gems Investing - Retail & Restaurants

Episode Date: December 9, 2016

Costco and Lululemon rise on earnings, while Restoration Hardware flunks its holiday test. Chipotle and Starbucks host investor days. Coca-Cola picks a new CEO, as warm weather hurts Vail Resorts. Plus, toy industry analyst Chris Byrne discusses the hot toys for the holidays and what Star Wars: Rogue One means for toymakers. Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode of Motley Fool Money is brought to you by Rocket Mortgage by Quicken Loans. Rocket Mortgage brings the mortgage process into the 21st century with a fast, easy, and completely online process. Check out Rocket Mortgage today at quickenloans.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. Chris Hill. 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, for Million Dollar Portfolio and Supernova, Simon Erickson. For Motley Fool Pro and Options, Jeff Fischer. And for Motley Fool Hidden Gems, Chief Investment Officer, Andy Cross. Good to see you, gentlemen, as always. Andy Cross. Hello, Chris. We've got the latest results from Wall Street. We will help your holiday shopping with toy industry expert, Chris Byrne. And as always, we'll give you an inside look at the stocks on our radar. But we begin with a bunch of retail earnings, and we'll start with one

of the biggest. Costco's first quarter report was not great, but same-store sales rose 2% on an adjusted basis. And, Andy, that's pretty good, considering they've had a string of disappointments in that one particular area. Yeah, and the stock hasn't done all that great this year. Their fee income was up 6%, Chris. But the really exciting news from Costco is their e-commerce initiative. So, I don't think any of us are thinking Costco is a huge e-commerce play. We normally think of Amazon, and we like those who have a Costco membership, shop at Costco, and love the experience, that treasure hunt experience. But their e-commerce business, which is only about 3% or 4% of their total sales,

was up 8% for the quarter. But more importantly, it was up in the low double digits around Black Friday. So they really are starting to push their e-commerce initiative so you can go to Costco and do some e-commerce shopping. And it's about time, because they've admitted they have been way behind the curve on that. So, e-commerce at Costco, I think that'll be a bigger driver of the business over the next few years. Sure, and especially because they've got over 85 million members now, too. So, you're getting a better discount if you've got that subscription basis. You've got that recurring revenue from them. Why not get some extra revenue?

Yeah, and they've got to really warm up the app, get the app experience. And they said that on the conference call, that they really want to start pushing the mobile experience, because so much business now, shopping online, is done through mobile applications. That's great to hear, Andy. They have a lot of things going for them, of course. What you want to watch for as a long-term investor is that they don't stagnate like Walmart did. Walmart wasn't very innovative. It was getting eaten at on all sides. And the stock was flat for about 10 years. You want to avoid that even as a long-term shareholder.

That's a lot of time to wait for some real returns. So, as long as Costco keeps innovating and can keep growing the bottom line overall, still may be worth owning. Well, in the case of Walmart, they tinkered with their own e-commerce platform, and then they just looked at Jet.com and said, you know what, we'll buy you. Yeah, but if you're one of those folks who has been looking for a dip in the stock price for Costco and a chance to buy it with a little bit of a catalyst on the horizon, now's your chance. Restoration Hardware's fourth quarter results looked pretty good, but guidance for

the holiday quarter sent investors running for the exits, and the stock down 15% on Friday, Jeff. Yeah, Chris, they already punted on the holiday. They admitted that they missed. They missed it. Their holiday offerings missed the mark. What they tried to do, partly, was sell a lot more through online, hoping that would generate higher margins, but that just didn't work. People seem to like to buy holiday things in person at the store, for some reason. The other problem that hit them is their books, their giant catalogs, went out later in November than they hoped. So, they really missed the mark on two points here. And they're still struggling. Next year, they think, well, we'll try a different strategy. It's still a very young

thinking company, which in some ways is good, but in other ways doesn't lend much certainty to the coming year. And it's still an expensive stock. It trades at about 15 times expected or estimated earnings for 2018. Meanwhile, the company has taken out a lot of debt the last couple of years. Net debt is up from $77 million in 2013 to more than half a billion right now, because they're spending to grow. But in retail, where your profit margins are slim, I still view this as a risky recent IPO the last couple of years. Well, and you and I were talking earlier today, they rolled out a membership program that didn't really make a lot of sense to us on the surface, and it sounds like, based

on the most recent news that it's working about as badly as we thought it would. Yeah, it sounds pretty small, which is surprising, because there's no reason not to join. An example is, a table might be $2,500, but if you pay $99 for an annual membership, the table will be $1,500. I mean, the differences are enormous. So, everyone who's buying something of note there is basically joining the membership ranks at $99 a year. The company does expect increased membership revenue by about $20 million year-over-year the next year. And they do expect, they don't have the data yet, but they expect most people to automatically renew. It's an auto-recurring charge. Something tells me that Costco's membership

business is not really worried about Restoration Hardware's membership business. Different audience. I'm guessing they don't feel threatened by that. Shares of Lululemon Athletica up more than 20% this week after third quarter profits came in much higher than expected. This was a monster quarter for them, Simon. It really was, Chris. There's two things that I took away from this report. The first was that people are buying higher margin stuff from this company. So, those $128 ABC pants that we were talking about before the show, flying off the racks. That's a great sign for Lululemon. Gross profit margin was up 420 basis points year over year. Four percentage points, really, up to about

51% this year from 47% last year. So, that's great. They're buying higher margin stuff. The other thing that really stuck out to me is that online sales are very strong. Recurring theme we've all talked about here, of the internet and the impact on retail. We saw with Lululemon, the direct-to-consumer net revenue increased by 16%. It's now a fifth of sales, and the margins are so much higher if you're buying online. Lululemon's capturing a 42% operating margin from stuff that's selling on the internet, versus 23% in-store. So, this is a very, very good trend for the business to see. Yeah, so 20% of sales. I wonder how high that can go. Can that go up for a store

like Lululemon that does really pride itself on having a local culture. Each of the stores are a little bit different. They sponsor clubs, they have little dog parties, they have yoga parties, all that kind of stuff. How much can their online sales grow as a percentage of total sales? Because it is so much more profitable, and that's the direction the future is heading. First of all, they haven't captured the dog market yet. Dog yoga is a natural fit, I think. I think the interesting thing, to your point, Andy, is that people are still coming to these stores, and they give them a reason to go in for those classes or whatever

the reason to go to the Bricks and Mortar location is. But after they get the fit and they find the style that they like, they're buying them online, too, and they trust Lululemon. And that's exactly what you want your business to do. Lauren Potdaven, the CEO, he talked about the growth initiatives that they have for 2017 and beyond. He talked about the digital sales growing the men's business as well, but also international growth. This really does seem like a brand that would be able to translate pretty well internationally. I'm wondering what you think, Simon, of those opportunities. I get how important digital sales is, but it seems like, in some ways,

international growth over the next five years may be the biggest driver for them. Which they really haven't capitalized on that much lately. They've got a couple store concepts that are typically of a smaller format internationally. But again, the concept, at least in the early stages, does seem to be catching on. I agree with you, Chris. We've got three very different retailers that we've just talked about. When you step back and look at retail in general, Jeff, I'll just start with you. It seems like we're at one of those points where there are no excuses for companies in terms of macroeconomics with unemployment down in the U.S., with wages up. I think the cold reality is that some

of these retailers are getting it done and some of them just aren't. That's true, Chris. Thinking about it a bit more, my first initial reaction to your question is, if unemployment is so low, you might be losing some employees and it might be harder to replace them with quality employees. Sure, wages are up, but that means you're also paying your workers more. Bottom line is, the industry still remains extremely competitive. It's being attacked from all sides by loyalty programs and digital sales and better ways to do business. Our tastes are changing all the time. Retail is an enormous industry, obviously. It's two-thirds of the economy, and yet it's such a tricky one.

Well, the other issue is that in this country, the per square foot amount of retail is like four times what we have in Europe. I mean, it's enormous. So, you're going to have stores. I just think you're going to have a lot of real estate that's going to hit the market over the next few years, especially if you're in the malls. I mean, if you're like a department store, I think that's a really dangerous spot to be in. I agree. We always keep an eye on inventory levels, too, Chris. This is one with Under Armour that people that are skeptics of the stock keep pointing out that it keeps building inventory,

but it keeps selling that inventory too. So it's kind of difficult to figure out how different do you want to be? How much do you want to stockpile inventory? But then if you can show that you can sell that, you're in a great place too. Part of what Simon was saying before taping was it seems harder and harder for a smaller company to become large. And I think that's happening in retail. The giants are becoming more and more successful and so many companies fall away before you even know of them. Shares of Coca-Cola up on Friday on the news that CEO Muhtar Kent is stepping down in the spring of 2017. Chief Operating Officer James Quincy is moving into the corner office.

He's been there a couple of decades, Andy, so the smart money was always on Quincy. Yeah, he's only 51 years old. He's been there for more than 20 years. He's made almost his entire career, really, on the international front, which is where Coke is spent. 70% of Their sales are tied to soda, and so much of their profits are tied overseas. I mean, I think this is a good move. I mean, you see this with Starbucks, with Howard Schultz kind of shifting his role, Muthar Kent now staying the chairman role with the CEO now, with James Quincy. Kochs need some pizzazz, some bubbling into the business and into the stock price,

and I'd like to see what James is going to bring. And Warren Buffett is supportive of it. He's the largest shareholder. Coming up, if there's one company that can blame the weather for a bad earnings report, we think we found it. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jeff Fischer, Simon Erickson, and Andy Cross. Smartwatch sales fell by more than 50% over the summer, but that did not stop Fitbit from buying Pebble, a startup competitor, for nearly $40 million this week. Simon, this is a question we often ask about companies announcing stock buybacks.

Is this the best use of Fitbit's cash? To be determined in my book. Hard to tell, Chris. I mean, keep in mind that one year ago, Pebble was reportedly thinking of selling itself to Citizen, the watchmaker, for $740 million. So, they got it at a bargain. Maybe. To be determined. It was a fire sale. I think that the bigger picture is that the sexiness of the wearable market is wearing off pretty quickly. And every consumer in the United States isn't actually going to have one

of these, which is why you see a $40 million offer instead of one that has a couple more zeros after that. But the question remains for Fitbit of where is this business headed? I think it's very difficult to market this directly to consumers, especially because it's not a refresh cycle. If you buy a Fitbit one year, you're not buying another one the year after that and the year after that. The one that's interesting to me for this business, though, is whether or not the insurance plans come on board. We heard last year that Target was going to offer 335,000 employees a free Fitbit because they wanted them to lead healthier lifestyles. We haven't really seen any big announcements since that happened last September. Even though this is an insurance

system, there is something to that. And you're starting to see it kind of get into the healthcare space, but not full throttle yet. A couple of high-profile companies holding investor days this week. We'll start with Chipotle, where company founder and co-CEO Steve Ells held nothing back, saying, we took our eye off the ball on customer service and said that the experience for more than half of their restaurants for customers is substandard. Andy, I was thinking about this, and it reminded me a little bit of a couple of years back where Ron Shaik, the founder of Panera Bread, compared the ordering system at his restaurants to a mosh pit. This was, in some ways, kind of surprising that Ells was this forthcoming.

Well, very honest, which you love to see. It's refreshing from a CEO perspective, but obviously it's a little disheartening. They've had so much trouble recently with the healthcare issues with salmonella and norovirus and E. coli in the stores and what they've done for that. Then to hear him say that customer service now, which they really prided themselves on for so many years, has fallen below par with what they want. Now they're nervous about the guidance for 2017, which means the rebound in this Chipotle story is really not coming nearly as fast as investors thought. You see it showing up in the stock price.

A lot of customer service goes all the way back to the upper management. If the mood and the energy is good there, that goes down and affects everyone. You see it at a a Happy Whole Foods store as compared to a beaten down other grocery store in my neighborhood that I won't mention. Chipotle has been so beaten up, it's not surprising to hear the quality of the service, and even the food and the experience has gone down sharply in a lot of locations. A different tone. At Starbucks' investor conference, the company announced it plans to open 12,000 new locations by the or 2021, Jeff, they have 25,000 worldwide right now. They're going to grow their store

count by nearly 50% in the next five years? And maybe even as surprising is that about half those stores are expected to be in the U.S. and China. So, China, that's not so surprising. There's a lot of growth still to remain there, but that they still see so much potential in the U.S. says a lot. So, I think the bottom line here, Chris, is there's a lot more growth potential at Starbucks than maybe many of us, myself included, would have factored in this late in the game. And it's not even late in the game, according to Howard Schultz, CEO and now moving on to chairman. He says if Starbucks were a 20 chapter book, we're only in chapter four or five. They aim to grow revenue about 10% annualized the

next five years, which is tremendous for a company of this size, and have same store sales growth in the mid-single digits, 5%-ish. But they hope to grow earnings per share 15-20% per year the next five years, which is outstanding. Even today, with the shares at 27x next year's estimates, they look reasonable given the stability of the business and the growth. Chris Hill And Chris, there is still plenty of space available for Starbucks to open new locations within their existing locations. Chris Hill Exactly. Chris Hill What's so fascinating with me with Starbucks

is just the amount of business lines they are going into, Howard Schultz doing the grocery business, just the consumer business in the grocery store. They are just really making a huge push to really own the entire space they're tied to. It's really impressive, and it's going to lead to those growth levels. That's true, Andy. They said that's key. The food business, the cold coffee business, and the higher-end Starbucks Reserve business are all going to be key to this growth. Well, that's what I wanted to ask you about, and I may have this number wrong, but I thought I saw that of these 12,000 new locations, 1,000 would be those high-end Starbucks reserves, which, I mean, we were talking earlier

before the show, I never would have pegged it at that high a number. I just figured that that kind of expensive concept would work in certain locations, but I never figured it would be 1,000. I was really surprised by that, Chris. The number I have here in front of me was about one-fifth of outlets by 2021 will be this reserve roastery or tasting room outlet that will offer coffee at up to ten dollars a cup so those will be centralized in urban locations yeah the show is a showcase really for the starboard starbucks brand and what they're trying to do which is just it's a really and the fact that howard schultz is so involved in that going forward is just really

impressive for that concept which i didn't necessarily see but you start thinking about what it means for their brand and you can see how it plays out yep one thing i'll throw in there is the biggest risk as i see it is probably china at this point starbucks says china could be bigger than the u.s soon and up to 300 million new consumers in china could be middle income within the next six years there's already almost that much the last six years so that's a whole another united states coming online in the next six years they're amazing but if china u.s relations goes sour, who knows how China may retaliate. You'd never know for certain over there. O'Reilly. Vale Resorts reported a loss for the first quarter and put part of the blame

on the unseasonably warm weather in November. They're in the ski business, Andy, so I feel like they get a pass. Yeah, the warm weather not helping them. But the big news with Vale is that they bought Whistler Resort for a billion dollars earlier this year, just a few months ago. That's on The balance sheet, obviously, has yet to really work its way through the financials. They've upped their cash flow guidance for the year. So, things are humming along the way that you want to. And their passes are up 20% on dollar sales and 16% on units.

So, yeah, the quarter at this time of year for Vail is almost a wash. It's like you just kind of see what they're talking about for the really important winter months. And for Vail, that news is pretty positive. Yeah, and just one thing to add to that, too. regardless of the weather, they get about 40% of their ski revenue from those season passes, which are typically annual anyway. So, nice to keep that around. Have any of you guys ever been to a Vail Resorts property? I have, yeah, in Vail. In Vail property. Vail proper. Yeah, it's very nice.

Is there, like, I don't know, for the average ski consumer, are you choosing a Vail Resorts property over something else? Is there some sort of brand differential? Or is it just like, nope, I just like the slopes? If you're a good skier, I think that's probably what it comes down to, and all the accoutrements you get with the Vail experience. Yeah, I think Vail has the cachet even above Breckenridge and other places around there. Alright, Andy Cross, Simon Erikson, Jeff Fischer, guys, we will see you a little bit later in the show. If you are making a list and checking it twice, good news, toy industry expert Chris Byrne is next. You're

listening to Motley Fool Money. Alright, before we get to Chris Byrne, got to say a word about Rocket Mortgage by Quicken Loans. If you've ever bought a home, you already know how frustrating and time-consuming getting a mortgage can be. Well, Rocket Mortgage brings the whole process into the 21st century by taking all of the complicated, time-consuming parts of applying for a mortgage out of the equation. You can easily share your bank statements and pay stubs at the touch of a button and get approved in minutes for a custom mortgage solution that's been tailored to your own financial situation. And best of all, with Rocket Mortgage, you can just do it all on your phone or your tablet. So, if you're in the market for a home, if you're

looking to refinance your mortgage? Check out Rocket Mortgage today at quickenloans.com slash fool. Equal housing lender, licensed in all 50 states, NMLS, consumeraccess.org, number 3030. Now, it's time to talk toys with Chris Byrne. He's the man with all the toys. Welcome back to Motley Fool Money. I'm Chris Hill. Black Friday and Cyber Monday are behind us, but there's still a lot of holiday shopping left in front of us. So what is the hot toy for 2016? To answer that question and more, we turn to Chris Byrne.

He is the Executive Vice President and Director at TTPM, a product review site for toys, tots, pets, and more. And he joins me now from New York City. Chris, always good to talk to you. Thank you. Nice to talk to you as well. All right, don't keep me in suspense. What is the hot toy for 2016? Well, certainly the one that everyone's buzzing about

are these things called the Hatchimals from Spin Master. It's an egg that you have to care for for several hours until it pecks its way out. And then you've got basically a virtual pet that you can train up to three different levels. I'm not going to lie, Chris. I just learned about this a few days ago. I saw it, and it was a little terrifying. It looked like a modern-day Furby with the huge eyes and the ears and just – is this – what is making this so exciting? What is making this such a hot toy?

Because it can't be the parents. It can't be people like me looking at this saying, oh, I want this in my house. Well, I think there's a couple of things. First of all, there's the novelty of actually hatching the egg. Because once you hatch the egg, it's a fairly similar virtual pet to Tamagotchi from 20 years ago in a different form. You have to interact with the character that comes out in order to get it to the next level. But I also think that scarcity always plays a role. Certainly in our culture, sometimes it's not about necessarily the quality of the toy.

It's about having it and being able to tell your neighbors you have it or your colleagues at work that we were able to get a Hatchimals, you know, as if that conferred some kind of status. A year ago, when you and I were talking, one of the things we talked about was the new Star Wars movie, The Force Awakens, and the ripple effect that that movie had on the toy industry. Here we are a year later, and it seems like we're kind of in the same situation. Rogue One is going to be opening shortly. Are we seeing the same sort of ripple effect in the toy industry in terms of a single movie driving toy sales? Well, I certainly think that the movie is driving toy sales. But the interesting thing about the toy industry, certainly in the last 10 to 15 years,

is how fragmented it's become. Because just as Rogue One is engaging people, Moana is really is really targeting kids. The toys are doing very well. And funnily enough, they're both from Disney. So, you know, as well as the Marvel movies, which are doing really well. I do not think that Rogue One, as good as the toys are, is going to have the same kind of cultural impact as it did last year because it's the second movie. But I, you know, everybody's going to make a lot of money on the toys. You've studied this industry for a long time. So you have seen the growing popularity of not just video game consoles, but also iPads, tablets, et cetera. What has that meant for the toy industry?

It's really interesting when you think about how today's 10-year-olds have never lived in a world without a smartphone. So that means the smartphone is not necessarily a wow just on its own to them. And I think that that's partially driven things like the maker movement and making jewelry and a thing called StickBot, where kids are using the technology to create stop-motion animation and then sharing it on YouTube. So really we're back to, on some level, not just being in awe of technology, but using it to facilitate traditional types of play, which is creativity and sharing and social interaction.

So if I'm hearing you correctly, it sounds like, yes, for toy makers, there is the push into video games and just devices, But it also sounds like there are businesses that are saying, you know what, we can, as long as we tie into a device, we can create toys and games for kids to play and interact with other people rather than just machines. Absolutely. And I think that that's one of the things we've seen a lot of the growth in the board game area, thanks to things like Wet Head, which is a water roulette game. You wear a helmet and you pull straws out of a chamber. If you pull the wrong one, you get wet. Or pie face, where if you're not fast on the trigger, you're going to get smacked in the face with a pie, which is really just a dollop of whipped cream.

But those kinds of social interactions, I think, have become really, really important. And we've seen less stuff with the virtual reality and the augmented reality because that's fairly isolating. I think that kids love that stuff. But really for traditional toys, it's become largely about the interaction and sharing and community building that sometimes happens in person or via YouTube or other online interactions. I want to ask you a question, and this is geared specifically towards parents, because this is a show about money. Are there toys or sort of category of toys that you look at and you think, you know what, that's a really good value? Because certainly there are any number of toys that cost a lot of money. But are there toys that are coming out in 2016 that you think, you know what, for that price tag, that is a great value for parents?

Yeah, and I think the criterion that we mostly use is repeat play. Is a child going to come back to it again and again, certain board games? They're going to come back to a doll that they can nurture or play with or dress. They're going to come back to some of the drones out there. Now, some of the drones out there are kind of like a little iffy, but there's certain ones out there like Spin Master, their Sentinel drone. That's something that I think kids are going to play with for a long time because it engages them. So the amount of time versus the dollars spent I think is really an important consideration.

You mentioned the Hatchimals and how those are playing into the scarcity effect and how that can certainly help add to the buzz factor for one particular toy. Are there other sort of under-the-radar toys that you've seen this year that you've either reviewed on your website or you just think, you know what, not a lot of people know about this, but more people should? Well, I think when you look at things that are really selling, of course Shopkins is in its third or fourth year. that's in their sixth group season that they've come out with.

That's doing really well. If you know the show, BattleBots has Hexbugs has come out with a set. And pretty much anything based on the series, the children's series, Paw Patrol, is selling out. It's really hard to get. And all of these, you know, one of the things that makes all of these sort of I'm happy that they're selling out is not just because they're popular, but because they really are good play experiences. And we're seeing kids really engage with them on a fairly sophisticated level. Maybe it's the age of my children, but I'm completely unfamiliar with the show Paw Patrol.

Is this a detective show for animals? It's about pups who live in Rescue Bay, and they are pups who are constantly doing Adventure Bay. Sorry, oh my gosh. They live in Adventure Bay, and they're constantly going on rescue missions. And it's designed for probably three, four, five-year-olds would be the sweet spot of it. Again, I just, you know, it's the age of my kids. One question, because one of the things we look at at The Motley Fool is individual businesses. And so, of course, for your industry, we're looking at the likes of Hasbro and Mattel.

We're also looking at the Disneys of the world and the companies that are licensing these out. When you look at how the toy industry works, what is the relationship like between retailers and toy makers? Is it adversarial at all? Or if you're a toy maker, you just want to be everywhere and you want to make nice with as many retailers as possible? Well, it's a great question. I think that right now the growth of online, which will be 15% or more of the toy industry this year,

is really impacting things. You've got Amazon.com and you've got relative newcomer Jet.com, which was acquired by Walmart earlier this year. These are destinations for shopping. But I think you've also got a trend towards exclusives, which is retailers wanting something exclusively. Walmart has some games exclusively. Target has some exclusives.

Toys R Us has exclusives. And it sort of changes the equation a little bit because if a manufacturer is willing to grant an exclusive to a retailer, they expect something in return, whether it's more advertising support or better merchandising or some way to showcase the product a little bit more dramatically than they might be if it was just one of many toys at many retailers. All right, last question, and then I'll let you go

because I know this is your busy time of year. Most people, when they are done with their workday, are looking to relax in some way, shape, or form. And a lot of people use games, whether it's board games or video games, something like that. You're a toy industry expert. what do you do to relax? Oh, that's great. Well, I go to the theater, I work out, and I sit in the room quietly and hum to myself. I'm just kidding about that. But sometimes that's

what it feels like. But that's pretty much it. And you know what? Sometimes I do. I love to play games. I do enjoy that because the thing about a good game is it's different every time you play it based on who you're playing it with and it should be fun and it's a great social lubricant so people can actually interact around the game no pressure no talking about politics or business it's just a way to relax and sort of change your outlook you got a board game or two you'd recommend well i definitely i'm a i'm a classic monopoly and scrabble player love both of those um if you're an adult there are new new versions of the classic game taboo and outburst that are definitely designed for the 18 and up because of the topics that they bring up, which are pretty

funny. And then there's a great company called Wonder Forge that does terrific games, especially for preschoolers, but they have one for older players called Stick Stack, which is a skill and action game. You're trying to stack these different colored sticks in a different way and not knock the whole thing over. A little bit of concentration, a little bit of fun, and definitely a lot of hilarity. So I think that those are all, you know, depending on what you're into.

And then, of course, there's always bridge, but I have a hard time finding people to play with me. But that's all right. If you want to shake up your workplace a little, you can check out Chris Byrne's book entitled Funny Business, Harnessing the Power of Play to Give Your Company a Competitive Advantage. Chris Byrne, always good to talk to you. Thank you so much. Merry Christmas, Merry Christmas, funny business, fun to share. Merry Christmas, Merry Christmas, funny business, fun to share.

Coming up, 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 Jeff Fischer, Simon Erickson, and Andy Cross. You can check out past episodes of Motley Fool Money and all of our podcasts

just by going to podcast.fool.com. You can also find us on iTunes, Stitcher, Spotify, Google Play, all the places you find podcasts. And guys, I know it's December, but we are already looking for summer interns. So if you are interested, or you know someone who might be interested in interning here at Fool Global Headquarters in Alexandria, Virginia in the summer of 2017, just go to careers.fool.com, and you can see which internships we have available. They're all posted right now at careers.fool.com. Before we get to the stocks on our radar and before we dip into the Fool mailbag, we don't talk about casinos all that often, guys, but on Friday, shares of MGM Resorts, Wynn, Las Vegas Sands, and Melco Entertainment all rose

after officials in Macau announced that they have not shrunk the daily cash withdrawal limit for people in their casinos. Do I understand this right, Jeff, that it's basically say, you know what? Go ahead and hit that ATM all you want. I did laugh at that. When I saw all the casinos were down, I looked up why. Oh, because ATM limits are ... that's funny. But my other question was, when will we move to digital currency in these casinos? Where you just put your fingerprint on there and it has access to your entire account, maybe your mortgage, maybe everything? Maybe your mortgage?

That's Apple's next purchase. They're going to buy a casino. I'm ready for the Bitcoin ATMs. Skip the cash altogether, let's start trading Bitcoins at the casinos. Do you think there are any casinos that actually take Bitcoin? I don't think so, yet. Yeah, I think that might be one more sign that maybe don't go all in on the Bitcoin. Where is Bitcoin at these days? Who knows? $200? $750. $750 of Bitcoin. It's tripled in a year and a half. $7.50 or $750? Nope.

It's doing so well, it's accepted at precisely zero casinos around the world. Our email address is radioatfool.com. From Steve Skinner, who writes, I've never invested before in my life other than my 401k. I must be stupid because I can't even figure out how to buy stock. Any advice for a stock virgin? Also, I have very little to invest and want to go long-term with whatever I buy. First of all, Steve, you are not stupid, and you are awesome for asking that question. This is a question we get all the time, Jeff. of, how do I get started? And I guess, first and foremost, you want to start with opening an account. Exactly. And I'll say, you have invested,

your 401 certainly counts, and I imagine you must be invested in the market in stocks, in your 401 , in an index, which does better than most professionals, so you're probably doing better than most mutual funds, and that's to be celebrated. You could continue down that path, open a discount brokerage account, any of the big names out there should do the trick for you, and it's very easy to open an account, do a search online, get the application, open it. O' It's like opening a bank account. Yeah, it is. And then maybe you just want to start with an index like the S&P 500. You didn't say you want to buy individual stocks per se, so buy an SPY. It gets you

all the S&P 500, gets you the dividends that it pays, and gets you a better return than 90% of pros out there historically. And it's very simple and low-cost. Andy, I don't know about you, but for me, the stocks that I tend to do the best with are the businesses that I understand the most. Yeah, I think Steve, when you think about buying stocks, first of all, you have to understand that he is not alone. About half of Americans now, only half of Americans own stocks. That's the lowest on record, according to the Gallup Poll. Unfortunately, that's been trending for long-term, business-focused investors like us, that's been trending the

wrong way. Steve's part of that, and hopefully we can correct that. But, yeah, certainly, Chris, when you think about buying and investing in stocks, you want to be really thinking about the businesses that you're interested in, that you think are going to do well over the next few years, and you really want to limit your trading as much as you possibly can and maintain your long-term perspective, especially in the volatile markets that we may be seeing when stocks are just moving all over the place.

You want to maintain that long-term perspective. And average in over time. Yep, definitely start small. Don't feel like you need to jump all in when you're getting into individual stocks. It's okay to make some mistakes early on, especially if you're starting small. That's okay. No one bats 100% in this game. But if you're learning more and more as you're going along, you're becoming a better investor, and that's even better.

And also, try to commit to owning at least a few. We like to say in Stock Advisor, you own at least 15. Try to buy at least 15 stocks to help diversify your portfolio. And to everyone listening who's just starting, start as soon as you can, no matter how young or with how little money. Even if it's $50, even $25 a month, just do what you can to start to get in there. All right, let's get to the stocks on our radar this week, and we'll bring in our man Steve Broido from the other side of the glass to hit you with a question. Andy Cross, you're up first. What are you looking at this week?

I got a small cap on the radar as a small cap investor. Apogee Enterprises, they are the largest maker of architectural glass and glass framing systems. And Steve, they also make the glass that you see at museums when you go look at those fancy pictures. I don't know the last time you've been to a museum, but if you did, you most likely have seen some Apogee glass. And the ticker symbol? APOG. They report earnings next week. Steve, question about Apogee Enterprises? Is this an architecture play in terms of builders?

Yeah. Okay, so this is a builder chooses them over somebody else who makes a similar product. That's right. The big news I'll be looking for is the continued interest in building and construction, and the Architecture Billings Index, which has been moving higher, is a good sign for Apogee. Simon Erickson, what are you looking at? Well, Chris, with small cap expert Andy Cross in the room today, I also went with a small cap. I went with Ellie May, ticker is E-L-L-I. This is a company that's automating mortgage origination.

So they're making it easier for banks to make mortgage mortgages, to loan those out. But also they do a lot of the back-end kind of processing and checking to make sure that those are good mortgages. And a lot of people are worried about the deregulation and rates going up. Just people are thinking this is going to stifle the industry. We really don't think so. There's 1.3 million new construction starts that were just released. That's the highest level since 2007. And even if we see refinances decrease a little bit, we think that the construction purchase market is still very, very strong.

Steve, question about Ellie Mae? How long should I plan on staying in a house if I've got a mortgage? Is there a minimum, according to Simon Erickson? Well, a house is not an asset, Steve. So, I would say, as long as you are happy in that house, you should stay there. But should I plan on being there at least five years to have a mortgage? Given the transaction costs, I'd say probably. Unless you want to flip it.

No thank you. Some of those TV shows make flipping houses look really exciting. Come on, kids, we're moving again. It's only been a month. We've got about a minute left. What are you looking at? Duluth Holdings, I noticed on Friday, ending the week down about 23%. It's a $1 billion company. It came public a year ago. It's had a really good year, but it's down sharply this week on news that sales and earnings are coming in light.

they, as with, who did we mention earlier, Vale, cited the weather. The weather's been too warm. They sell, for people who don't know retail, a lot of winter clothing and underwear and stuff like that. So, I'm going to look at it as a short or a long. It's still very expensive. It trades at 50 times expected earnings for next year. As a small retailer with $300 million in revenue, that could be expensive, could be risky. I'm looking at it short first. And the ticker? Duluth. D-L-T-H.

Steve? Where am I going to make my first introduction to Duluth? Is it through the internet? Do I see it at a store? They do have locations in the Midwest, mainly, Steve, but online. They're doing a lot of sales online. What do you like, Steve? I'm going glass. Yes, Steve, you're my man. All right. Andy Cross, Simon Erickson, Jeff Fischer. Guys, thanks for being here. Thank you.

That's going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening, and we'll see you next week. We'll be right back.