Motley Fool Hidden Gems Investing - Starbucks’ Venti Change

Episode Date: December 2, 2016

Unemployment drops to its lowest rate since 2007. Starbucks announces a change at the top. Guess reports some unfashionable earnings. And Taco Bell unveils a Cheeto-filled quesadilla. Plus, corporate governance expert and film critic Nell Minow talks Trump, Target, and holiday movies. To check out The Motley Fool's new skill for Amazon's Echo just go to www.fool.com/alexa.         Learn more about your ad choices. Visit megaphone.fm/adchoices

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to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Simon Erickson, from Rule Breakers and Supernova, David Kretzmann, and from Motley Fool Hidden Gems, Seth Jason. Good to see you, as always, gentlemen. Hey, hey! We've got the latest results from Wall Street. We will go inside the White House with our guest, Nell Minow. And as always, we'll give you an inside look at the stocks on our radar. But we begin this week with the big macro. The U.S. economy added 178,000

jobs in November. The unemployment rate fell to 4.6%. That is a nine-year low. And oil stocks got a boost this week after OPEC agreed to cut production ever so slightly. Seth, Jason, I'll start with you. Everything's awesome. Yeah. It's amazing how quickly America got great again. You could almost be forgiven for thinking maybe America didn't suck. Maybe. Yeah, that was interesting news. The OPEC thing, I've been watching for a while. Over at Hidden Gems, we had a fracking sand producer on the scorecard for quite a while. And of

course, they did a real roller coaster ride. And I'll give you the story on OPEC and where oil prices are going is we don't know, which is why a while ago I sold this Fraxan provider, because it seemed to me that stock prices in the space had kind of become uncoupled from the reality. And I would say that they still are. Nobody really knows where the price of oil is going to shake out. Will there be cheating on this OPEC deal? Will people providing services to the oil businesses in the United States, end up having to continue selling that stuff for less because the oil producers, the drillers, et cetera, have cut costs a lot. And some of that was squeezing your suppliers and your service providers. So I wouldn't say rush back into the

oil patch right now because you need to see what happens first. Yeah, I guess, Chris, the metric that caught my eye that was not on the front page was the labor force participation rate. These are the people that actually want to get a job divided by the American population itself. And that's now at a 10-year low. It's only at about 62.7%. So, a lot of people are just saying, hey, I'm good. I'm going to retire. I'm going to take myself out of the pool, which is the denominator for that unemployment rate. So, you've got less people that are actually looking for jobs out there. So, it's not too surprising to me that the employment rate is so low.

It kind of seems like, and I don't want to put pressure on the good people at the, you know, is it the Commerce Department or the Labor Department? It's the Commerce Department. It's the government, so don't trust anything, right? I don't want to put pressure on them, but it feels like they've got to get a little bit better at the data part of this report, because one of the things, I mean, Simon, when you talk about the labor participation rate, one of the things that's not really factored in there is when people leave the workforce, we're not sure what percent of those people are leaving it, because they're retiring. And we've got thousands of people

retiring every week. And there are a lot of reasons people might leave. Some people may have been in the labor force just because they needed health insurance, things like that. So, these numbers are going to move around a lot. Labor participation, I think, is an interesting thing to look at, but to presume that a low participation number or a dropping participation number somehow bodes ill for the economy, I think, is far too simple. Realistically, as investors, I know, at least in my case, I don't pay a huge amount of attention to the unemployment rate any given month or quarter or even year. Whether

the unemployment rate's at 4.6% or 5% probably isn't going to impact what companies I'm looking at. So, I don't know. I take all this with a grain of salt. It's not the first thing I look at each month when these new statistics come out. Yeah, it depends a little bit on where you're invested. If you get a tight employment market, then if you're invested in some industrials that need to do some hiring, they may need to pay a little bit more. But again, you'll find out the numbers that matter when you're reading those earnings reports, not really from this stuff. Howard Schultz, the longtime CEO of Starbucks, announced he is stepping down

in early 2017. He will stay on as Chairman of the Board, and he is handing the reins to current President and Chief Operating Officer, Kevin Johnson. Simon, what do we know about this guy? Well, he was the point guard for the Phoenix Suns, right, Chris? That's the Kevin Johnson. I'm just making sure I had my story right on that one. I grew up in Minnesota. I probably knew 43 Kevin Johnsons. Kevin Johnson was a tech guy previously. He was the VP of Sales at Microsoft for

several years. And then, of course, he was CEO of Juniper Networks. So, he was the first guy that really set up all the Wi-Fi in Starbucks locations, if you remember that from a couple of years ago. Starbucks was a vendor of theirs when he was working for that. So, it's going to be really interesting. I think one of his focuses, probably, Chris, is how do you get these 12 million loyalty rewards members in the United States that Starbucks has to place even more orders or keep coming back more to increase that recurring revenue while Howard Schultz is going out and trying to premium-ify the Starbucks brand? Yeah, I mean, for anyone who thought that Starbucks had already done that, and that

it was this amazing accomplishment that Howard Schultz and his team got people to pay $4 for a fancy cup of coffee, that's, in some ways, the most surprising part of this news, David, is that Howard Schultz, he's going to stay on as chairman. He's also going to be focusing on some super high-end experience, where now I can pay $12 for a cup of coffee? Yeah, why not? Let's just double or triple the prices. Why not? Yeah, Starbucks has actually been working on these roastery and reserve concepts for a couple of years now. But Howard Schultz, now that he's transitioning from CEO to Executive Chairman, he's really going to be focusing exclusively on developing these premium brands. So, with the roastery,

they're bringing in small batches of rare and specialty coffees. The reserve program has a subscription program where people can sign up and get these special batches delivered to their front door. They're looking at rolling out reserve bars or even reserve stores across the U.S. where people can go in and get these specialty coffees. It'll be interesting to see, but I see this as a nice way for Starbucks to differentiate itself from increased competition from the likes of Dunkin' Donuts and McDonald's, which continue to step up their game with coffee. This is one way Starbucks can set itself apart. We have some innovators dilemma issues there. You've got Dunk's and McDonald's

coming up at the low end and Starbucks retreating further and further into the high end, which is supposed to be the death knell of the company, right? The high-end coffee, the very high-end coffee thing sounds so ridiculous to me that I'm sure it must be going to work. Because anytime something seems so crazy to me, it has to work out. But you can see, it's interesting to try and imagine, are they going to expand the tent for people who want some really special coffee that costs that much, or are there already that many coffee, I'll use the word snob, trying not to use it pejoratively, but you know what I mean, connoisseurs, let's call them instead, enthusiasts that just don't have the ability to get what they want.

I mean, you look at what craft beers have done, and large brewing conglomerates buying some of the smaller brewers, I don't know that a lot of people say, oof, Budweiser bought them, so I don't want that beer anymore, as long as Budweiser doesn't screw up what that beer, people may continue to buy it. There's a market for these kinds of experiences. I don't know if the coffee one is as big as the one for booze, but we'll probably find out. Yeah. Restaurants, which I would consider Starbucks to be in the restaurant group, the sales are a function of price and traffic. They've got the traffic already from all these existing stores that they have. They're going after the price with these premium brands.

Since Howard Schultz took Starbucks public in 1992, the stock has increased over 170 times in value. Not bad. Just in case you were wondering how long-term buy-and-hold investing works. And you can guess how much of that we all hold, because we're sitting in here working like slobs. Third quarter profits for Ulta Salon Cosmetics and Fragrance came in higher than expected. Their guidance looked good, too, David. This stock seems like, if it is not in the perfect range right now, they're getting close. And by that, I mean, they seem like they are in a spot where they need to deliver blowout earnings, perfect earnings, every quarter,

because the stock has gone up so much recently. Oh, yeah. Expectations are very high for the company, and for good reason. Ulta Beauty is really the crown jewel of specialty retail. Sales were up 24%, same-store sales up 14%, online sales or e-commerce business up 59%, earnings are growing along with that, and they raised guidance for the year. So, these are just stellar results, especially when you consider the struggling retail environment overall. A lot of the company's success has been driven by their in-store services, stuff like eyebrow care, hair, skin, things like that. And then, also, a loyalty program. Simon mentioned Starbucks' loyalty program, which

has 12 million members. Ulta Salon has almost 22 million members right now, and that grew 28% in the latest quarter. O' 22 million? 22 million. So, they're doing okay. And by the looks of us, people can't see us through the microphones. We probably could use some of that. You can tell we need to get over there. Yeah, if we ever amp up video, we'll have to visit Ulta first. I can't tell if I'm supremely impressed by what Ulta Salon is doing, or depressed by

Starbucks only having 12 million people in a coffee loyalty program. Well, the bright side to this is that Ulta's CEO, Mary Dillon, actually joined the board of directors of Starbucks earlier this year. there. So, maybe she'll help Starbucks amp that up. Shares of Guess falling more than 15% this week after the apparel retailer missed on third-quarter earnings and revenue. And, Seth, same-store sales, such a key metric, down nearly 5% in North America. Well, it's pretty easy to figure out why. If you spend all your money at Ulta, you don't have anything left for clothes.

But seriously, North America, this is an interesting result, because results in Europe were actually fairly decent, growing pretty strongly across the board. Typically, we'd guess you have a few European countries doing well, some doing not so well. Actually, doing well across the board there, Asia doing fairly well, too, outside of Hong Kong and Macau, which are just having their tourist-based and they're having reduced tourism. In North America, volumes were the same. So the sales drop in North America is entirely attributable to two things. One is that there was warmer weather so the mix of products changed people were buying less expensive stuff because warmer weather stuff's apparently less expensive and also having to have everything on sale

management said you know pretty much the north american apparel environment is all sale all the time and that's not the case in europe it's just seasonal sales and if you kind of survey uh retail in the u.s as many of us do following stock you kind of this sounds awfully familiar unless you're like Under Armour or Lululemon, you're not selling anything to anybody. They're waiting around for a sale. And, I mean, that's a challenge for guests. It's a challenge for every company. And kind of going along with this is that guests is having growth with its concept G-Buy Gas,

which is the B- and C-Mall concept, lower price, doing better. So it's really a function of what do American consumers need to see before they're buying clothes for the most part. And at most stores, it's they need to see a sale. Well, and we saw signs of this earlier in the fall when, I believe it was Macy's came out and was talking about how their sort of autumnal clothing wasn't really moving because of the warmer weather. So, not a surprise that there's that ripple effect throughout the entire apparel retail industry. Yeah, I mean, you'll see it there. I expected to be more disappointed with the guest results than I was once I read about, you know, a guest sells 60% of its stuff overseas now.

and they're moving more in that direction. They're also putting their investment in that direction. So they know what's going on, and they're obviously trying to fix the North America results. But things weren't as bad as that 11% to 12% drop on the day of earnings to the day after earnings would indicate. Coming up, it's not the worst-named public company, but it's probably on the short list.

Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Seth Jason, Simon Erikson and David Kretzmann. Third quarter revenue for Splunk grew 40%. Splunk is the cloud-based business intelligence platform company with a really unfortunate name. I love the name. And it comes from where? Only one in the room that I think loves this name.

Maybe the only one on the East Coast who loves this name. To Spelunk, Chris, is to go cave diving. Splunk named their company, Splunk, because they are data diving. Yeah, but removing most of the vowels from an already bad word doesn't improve it. This quarter, I keep reading stories about how great the quarter was, which makes me wonder why the stock fell nearly 10% this week. Unexplainable to me. I love the quarter results. We saw 34% in license revenue, and we saw 3X growth in the cloud, which is, of course, Amazon Web Services. They're building the codes for that. This is a company that understands what its customers want to look at.

They're kind of focusing on unstructured data analytics, which is something that the Microsofts and the IBMs and the Oracles of the world have not addressed and been able to crack that code in the past. And you've got a CEO in there now at Splunk that is just a sales-driven guy that's on a plane 200 days a year. And the result of that is he knows what customers want. And you see 70% of bookings, again, from existing customers, very, very high retention rates, and the orders are getting larger. That, to me, is an equation for success for a company that's subscription-based like this. So, in terms of the stock, is part of what we're seeing this week a valuation reaction,

or is this not a pricey stock? Yeah. Anything that's software-as-a-service or operating in the cloud is always going to be getting a premium valuation. So, you'll see a lot of volatility in names like this one and Viva Systems, you know, are the kind of companies that we follow a lot of those in Rule Breakers. I think that you're going to have to just kind of get used to seeing that up and down of the stock price, but the performance for me, which is what I was looking at, was very good. Sticking with the theme, cloud storage company Box raised guidance for the fiscal

year. This was after a third quarter report that came in better than expected. I'm not rooting against these guys, David, but I did notice that they're competing with the likes of IBM and Microsoft. Yeah, it makes it a tricky space. This is one of many cloud companies, so they're enabling file sharing and collaboration with enterprises. It seems like there's a dozen companies doing this, including IBM and Microsoft. Except it's two dozen, maybe? Right, probably. Yeah, this is really a subscription business, so Box needs to

gain new customers and retain those customers. And they're doing a pretty good job with that. They have 69,000 paying customers now. Sales were up 31% for the quarter, but their sales growth is decelerating. In the meantime, they're still not making money, they're losing money, they're burning cash. They've burned $50 million in cash over the past year. When sales are decelerating and stock-based compensation is causing the diluted share count to increase, I struggle to see where investors will win in the end here. Yeah, cloud storage, that's sort of your only gig. Unless you're doing something like Splonk over there, where you have a service attached to your cloud-based activity. I don't

understand what you get if you're competing with Google Drive, which is free. Microsoft gives a ton of space to anybody who's got Microsoft Office, and so it's really hard to imagine what the differentiator is for a company like Box, except for people already have it. It's riskier in the meantime, because they are still unprofitable, they're still burning cash, so you can expect the stock to be volatile. The company has a good amount of roadblocks in front of it to reach profitability. Lastly, Seth, do you like the company name? Box?

Yes. Yeah, I do. I love it. It's kind of a throwback. I've got a startup, I'm going to give you guys the elevator pitch after this, but it's just going to be called Table. Actually, that probably exists already. How about Lens? Both of these actually sound like they are acquisition targets for different reasons. because of their financial situation, Splunk actually sounds like, if they're doing something that well that the Microsofts and Oracles of the world are not doing, it sounds like

Microsoft or Oracle might want to have a conversation. Yeah, it's interesting, because it's a disruptive company. And I say that because they're looking at machine data, which is not the structured data that's in rows and columns that the Microsofts and the Oracles of the world have gotten used to. So, it's kind of changing the business of those companies that made billions of dollars off of. They don't want to mess that up if they can keep the cash cow running. Yum! Brands and Pepsi are teaming up once again in the best possible way. Yum! is the parent company of Taco Bell. Pepsi is the parent company of Frito-Lay. And this

week, Taco Bell unveiled the Cheetos Quesadilla. That's right, guys. A quesadilla stuffed with jalapeno Cheetos, which give it that satisfying crunch. Ooh, jalapeno Cheetos. That's an upgrade. I'm not a Cheeto fan, but you make them so hot that I can't taste them and I might be interested. It's only available in the Philippines, so either we're going to do a road trip or we're going to need a listener in the Philippines to send us some information. We've got to have somebody there. Email us, radioatfool.com, and let us know how this is.

I will just point out- Facebook Live that for us. Might have to. I will just point out that people made fun of the Doritos Locos Tacos. Not me. Taco Bell sold 100 million of those things- Those are pretty good. In the first 10 weeks.

I will eat any kind of Dorito all day long. Let's go to our gourmet behind-the-glass, Steve Brodo. Steve, if I guaranteed you passage to the Philippines and a place to stay, are you in on the Cheetos quesadilla? Most certainly not. It sounds disgusting. Really? Not for me, no. I'm going to make one of those tonight. Well, it does actually sound like the kind of thing you could make at home.

That gets me out of work early if I'm going to do that, right? It's research. You know what? Do a little research. Visualize my finger quotes. And then let's get you back in the studio, and you can report back. All right. I have to get out of the hospital. Seth Jason, David Kretzmann, Simon Erickson, guys, we'll see you a little bit later in the show. Up next, Nell Minow takes us to 1600 Pennsylvania Avenue. Stay right here. This is Motley Fool Money.

Welcome back to Motley Fool Money. I'm Chris Hill. Nell Minow is a corporate governance expert. She's vice chair of Value Edge Advisors. She's also the film critic known as the movie mom, and she joins me now. Always good to talk to you, Nell. Well, thank you. I'm always glad to be on the show.

We have had you on this show more than any other guest, and there are times when the big thing we want to talk to you about is in the corporate world. There are times when it's in the movie world. I think this is the first time where the big thing we want to talk to you about is neither of those. And it's something we mentioned a couple of weeks ago on the show. And that is the fact that your father, Newton Minow, was just awarded the Presidential Medal of Freedom in a ceremony at the White House. This is the highest civilian honor in our nation. Let me start with this. How'd you find out he was going to get it? It's a little strange. I was at a party at the White House. I was actually representing my parents who were invited. And I had never met

the president. And I met him for the first time in September. And he took me aside and he said, hey, listen, we've got something really exciting. And he told me that my dad was going to be in the Medal of Freedom and maybe promised not to tell anyone in my family. So for about six or seven weeks, I knew about it, and I couldn't say anything to anybody, and it was killing me. I was going to say, that's exciting, and then a terrible burden. It was a terrible burden. If I was not just a patriotic American, I would definitely have told them. And so when my father called to say, I've got a big surprise for you, I said, well, I've got a big surprise for you. I knew about it already.

So you went to the White House for the ceremony. Yeah. What was it like? Well, it was surreal. You sort of have to be from Washington to appreciate this part, because my parents are both 90, and I was allowed to drive them an hour and a half before the ceremony for the rehearsal, and they had me park five feet from the door of the White House. You know how many checkpoints you have to go through to be able to do that? That is about as nice a perk as you're going to find in Washington, D.C. That is the best perk on earth. I think I was

parking like the Obama's car and then my car. And so I parked my little Honda, and I got out of the car and I'm, you know, just reflexively going to lock it. And I'm like, you know what? I think I'm good. I don't really need to worry about that. So I went into the White House right behind Robert De Niro and all of the awardees were in one room together. And that means Ellen DeGeneres, Kareem Abdul-Jabbar, Michael Jordan, Bill and Melinda Gates, Tom Hanks, Frank Gehry, the architect, and about three people there that you might not know the names of, but you know, who were just incredibly impressive people. And we're all just sort of hanging out there while they're getting everything set up for the rehearsal. And so Ellen DeGeneres decided that we should do a

mannequin challenge video. And I stood where I thought I was as out of the way as possible so that I could also film a little bit about what they were doing and ended up in Ellen DeGeneres' video, which has been now shown all over the world. So there's like Diana Ross, Tom Hanks, Robert De Niro, the Bill and Melinda Gates, the two basketball players, Bruce Springsteen, and my mom and me. Now, all the people you just mentioned, you're in the same room with them. You can't talk to all of them. I can't imagine you had time to talk to all of them. So who did you spend time with and how did you choose?

um i just tried to be friendly to you know it was like being in a any kind of a situation stuck in an elevator with somebody where you know you wouldn't normally be talking to them but there you all are and so it was a lot of you know i would love to talk to robert de niro and tom hanks about their careers but that was not the place so it was a lot of isn't it exciting to be in the white house and congratulations on this wonderful honor um for me i was very excited to I talked to Diana Ross's daughter, Tracy Ellis Ross. I'm a big fan of her TV show, Black-ish. I talked to her.

I talked to Ellen DeGeneres' wife, Portia. And I talked to Tom Hanks' wife, Rita Wilson, because it was important to me not to rush by people on the way to their other people, the people who are getting the awards. I talked to Bill and Melinda Gates, who just were absolutely lovely. I talked to Michael Jordan. Everybody could not have been nicer. Oh, Lorne Michaels was another one who was getting an award.

And there's just, you know, chatted a little bit, said, I love your work. I tried to be very specific about what I liked about their work. And it was very nice. And a couple of people said I was the only person ever to compliment them on the things that I complimented them on. So that was nice. Did you talk to Kareem Abdul-Jabbar, or was the height differential just a non-starter? I didn't have a step to get up there. One of the highlights of the event was certainly seeing President Obama, who is not a short guy.

he's a very tall guy, try to put the metal over the head of Kareem Abdul-Jabbar. We had to kind of bend all the way down. And then the hair of Diana Ross was the other big obstacle. All right. We have to move on to, you know, business as usual, corporate governance and movies. Let's start with corporate governance. As you're well aware, we've had a presidential election. We have a president-elect. And presumably, starting in 2017, there will be changes coming for the banking industry, the financial services industry, and therefore for individual investors. So from a corporate governance perspective, what are a couple of things that individual investors should be watching out for?

Well, one thing you should watch out for is who's coming into the SEC, since Mary Jo White has announced that she's leaving. The SEC, of course, is an independent agency, meaning that if she wanted to stay, she could. So that means that the shift at the SEC is coming sooner than it otherwise might. And that means that we may see some of the implementation of the shareholder protections that came in Sarbanes-Oxley and Dodd-Frank rolled back a little bit. It's going to be hard to predict because during the campaign, Donald Trump, famously on all sides of every issue, was both very, very critical of Wall Street, which really resonated with a lot of voters, but also very critical of the post-meltdown reforms.

And so I think the general thought is that, they talked about possibly Paul Atkins coming in. Paul Atkins, in my opinion, is very much the spokesperson for the corporate executive point of view, not the corporation point of view, but basically the executives at the top. And I think if Atkins comes in, you can look to see the rollback of a lot of reforms. For example, Sheryl has been trying for quite a long time to get better disclosure of political contributions. The SEC received many, many times more comments on that issue than anything that they've ever done before. I think that's a dead duck if Trump proceeds as expected.

A lot has been written about the potential conflicts of interest in Donald Trump's business ventures. He's going to be holding an event, possibly a press conference, later in December. where do you see this going? Because on the one hand, it does seem like we've had a couple of centuries worth of systems put in place for presidents to set aside their business interests. So in theory, it should be pretty cut and dry. But on the other hand, this is an unprecedented election we've just gone through. So I sort of feel like nothing would surprise me. It's unprecedented in every way. I think the closest parallels that we've seen to the particular situation he's in are Jimmy Carter, who had the family peanut business, and maybe Penny Pritzker, the Secretary of Commerce. And both of those people had businesses that were not

super liquid. It was not like a stock portfolio where you could easily put it into a blind trust, turn it all over, and then you're pretty much set. When you've got real property, when you've got the real estate and other properties like that and properties that are specifically tied to your name, like licensing, which is a big part of the Trump empire. It's almost impossible to figure out how to unscramble that egg, and it's a real challenge for the Ethics Council, who's probably got the toughest job in the Trump administration.

Furthermore, Trump originally, even though he promised during the campaign that he was going to disassociate himself from many of his holdings, sort of backed off from that a little bit, which really riled everybody up. There's Professor Jennifer Taub, the author of the wonderful book about the financial meltdown of other people's houses, who really has made this a personal quest of hers with the hashtag DivestDonald. And so now it looks like he's listened to some of the lawyers, he's listened to some of the political advisors, and he understands that this would be at least a huge distraction and at most a constitutional violation of a clause that maybe we spent six

seconds on in law school, never come up before, but that does prevent an executive, the chief executive of the country from taking essentially bribes and gifts from foreign governments. And since he has these international operations, that's a real risk. How he's going to do it, that's, you know, the devil's in the details there. And it's going to be very, very, very difficult. In my opinion, the cleanest and easiest way to do it would be to appoint an independent trustee. They've talked about Ken Feinberg, who is well known for doing complicated transactions like this, oversaw the 9-11 fund and the BP funds, and just turned it over to him and let him do it. But it is certainly a huge, huge problem. And honestly, I don't think that the

Trump people thought they were going to win, and I don't think they gave it any thought. O'Reilly. Before we get to movies, I want to ask you about something. There's been a lot of coverage recently about the retail industry with Black Friday and Cyber Monday. And one story that's sort of gotten lost in all of that, a conservative organization called the American Family Association has been calling for a boycott of Target. And CEO Brian Cornell has essentially said, we're not backing down on our support of LGBTQ inclusive policies. And I'm curious as you watch this play out if you think that Target's business is going to be adversely impacted. I don't think so. I was thrilled with that announcement from Target. I think that

being a bigot is not good business. Target found that out itself some years ago when they've always been very, very good on the issues, but they did make a political contribution at one point to a candidate who was not good on LGBT issues. And they got a lot of very bad publicity and a lot of picketers for that. So I think that that is strictly a business decision on their part and a very good one. They will bring in more people with that policy than they will lose. And you never make a mistake by being inclusive. Turning to movies, I got to start with Moana, which is the Disney animated film. It's currently number one at the box office. On Rotten Tomatoes, it has a score of 98%. And I'm not trying to pick

on you now, but you gave it a B plus. And I'm just curious, with the wisdom of crowds giving it essentially an A plus, what's it take for you to give it an A? Now, you've got to look at the Rotten Tomatoes algorithm, because that is not what the wisdom of crowds gives it. The wisdom of crowds, my B-plus was included in that 98% rating. Anything over a B-minus and above is considered a positive for the purposes of it. I mean, that 98% of the people gave it a B-minus or better. Well, I was never good at algorithms. But yeah, it's a wonderful movie. It's not my first or second favorite animated film

of the year. I've just been doing my end-of-year list, and I would say that Disney's other films, Utopia was a better film, and Kubo and the Two Strings. I'm a big fan of Laika. Those are my two favorites of the year. Trolls is also very good, but I did love Moana. How are you not going to love Moana? It's a wonderful story, and the one crucial point I would make about the movie is this. You need to stay all the way to the end of the credits, all the way to the end, and then there's an extra scene that is definitely worth the wait. This is the time of year when the serious films that are making a run at a Best Picture nomination are starting to get some buzz. And maybe it's just the advertising, but it seems like all I'm seeing is promotions for Moana,

Fantastic Beasts, and Where to Find Them, Rogue One, the new Star Wars story that's coming out in a couple of weeks. For anyone who's looking for a more serious film, what should we be keeping our eyes out for? There are great choices. This is the time of year for it. Manchester by the Sea, which the National Board of Review just picked as their best film of the year, is a beautiful meditation on grief and loss. Great performances by Casey Affleck and Michelle Williams. Absolutely gorgeously done by one of the best writer-directors out there, Kenneth Lonergan. Fences just absolutely knocked me out. It's the August Wilson play directed by and starring Denzel Washington with Viola Davis. I thought it was a stunning piece of work, really a masterpiece.

And then if you just want kind of a feel-good movie, Hidden Figures, the true story of three African-American mathematicians who were crucial to the early days of NASA. It is just wonderfully done. Moonlight is another great one based on a true story of a young boy growing up in the projects in Miami with a drug-addicted mother. where it takes place in three acts, his child as a teen, as an adult, played by three different actors, and it's just extremely well done, a beautiful film. So, yeah, there are a lot of great things. Oh, and Loving, Loving, the true story of the couple whose name was actually Loving,

and she was part black, part Native American. He was white when they got married in 1958 in Virginia. That was illegal, and they took it to the Supreme Court, and it was not until 1967 that the Supreme Court ruled. that you could not restrict marriage based on race. And so, yeah, those are all terrific films. Last question, then I'll let you go. I'm already circling the dates for the holiday movies to watch with my kids,

the classics like Elf and that sort of thing. What's one other holiday movie that you think is special? My all-time favorite is still A Christmas Carol, in just about any version, but I really love the Alistair Simm British version from the 50s, the MGM version, the Mr. Magoo version. And of course, every family has to watch A Christmas Story. Well, yeah, that's also in the list of classics. And when you're talking about A Christmas Carol, my favorite is the Bill Murray version, Scrooge. That's a good one, too. And the Muppet version is good. And the George C. Scott version and the Patrick Stewart version,

they're all good. I watch them all. Corporate governance, movies, and so much more. Nell Mano. Thank you, as always. My pleasure. Bye-bye. Coming 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, 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 once again with Seth Jason, David Kretzmann, and Simon Erickson. Before we get to the stocks on our radar, guys, we've talked before about the Amazon Echo and the flash briefing, the

news briefing that we do on a daily basis here at The Motley Fool. Now I'm happy to announce the brand new skill from The Motley Fool, which you can get on your Amazon Echo. you can get stock quotes, create a watch list, ask Alexa how your portfolio is doing. For all the details, and this is free, by the way, for all the details, go to fool.com slash Alexa and check it out. Alright, David Kretzmann, you're up first. What are you looking at this week? David Kretzmann I'm looking at National Beverage, ticker FIZZ. This is the beverage company behind soft drink brands like Shasta and Faygo, little offbeat brands. They're also rapidly growing in the sparkling water category with

its LaCroix brand. So, sales were up 14%, and net income up over 60% in the latest quarter. The company has really bizarre press releases. So, the CEO, Nick Caparella, in the latest press release, he says, the company is in the cockpit of innovation with the yolk in our hands. So, that's National Beverage. O' I'm speechless. Steve Broido? He wants everybody to know that he's a hobby pilot, doesn't he? O' Right. I guess.

Steve, question about National Beverage? What is the difference between Crush and Fanta? O' Man, that's over my pay grade, Steve. You have to go somewhere else. A spoon of sugar. So, Jason, what are you looking at this week? Geez, almost everything in the RV business, it looks like. We have Thor Industries reported recently that their sales were, well, they were up huge, but they had just purchased Jayco.

But they're still growing trailer and RV sales in the neighborhood of somewhere in the low 20% range, high teens, and they're getting huge bookings. And a lot of this was lower-priced, smaller RVs. so the margins are changing a little bit. On the other hand, people seem to be buying a ton of RVs, and I think they're going to keep buying a ton of RVs for the next couple few years. And the ticker? Thor Industries is T-H-O.

Steve, where does recurring revenue come from with an RV company? Recurring revenue is harder to come by for somebody who makes the RVs themselves. If you want recurring revenue in the RV industry, you need to look at Drew Industries, which makes aftermarket parts as well as original equipment parts. Simon Erickson, what are you looking at? Chris, I'm going with Idex Laboratories. Ticker is IDXX. They are the world's largest manufacturer of tests and services for the veterinarian market.

So, needless to say, I think this is the top dog in the space. They control nearly 40% market share. Sorry about that, everyone. In the companion animal market, and because they've got these established relationships with vets already, about 87% of revenue is recurring in nature. I'd really like to see that for business. Steve? Who really pays for this?

Is it the consumer? Is it the vet? Who's paying for this stuff? Largely for the consumer right now, Steve, but we are starting to see veterinary insurance picking up as a trend in recent years. Steve, you got a stock you like? I want to go RVing with Seth Jason. I want a video of your adventure.

That would be a great trip. Road trip. Steve, let's ditch the kids and do this. All right, that's going to do it for this week's edition of Motley Fool Money. Thanks for listening. We'll see you next week.