Motley Fool Hidden Gems Investing - Surprising Earnings and Summer Movies

Episode Date: May 25, 2018

Lowe’s gets some love. Footlocker jumps higher. Tiffany sparkles. And what the heck is GDPR??? Aaron Bush, David Kretzmann, and Jason Moser talk earnings news, analyze what a new set of privacy rules means for investors, and offer book recommendations for your summer reading list. Plus, corporate governance expert and film critic Nell Minow talks Facebook, Disney, and summer movies. Thanks to Harry’s for supporting The Motley Fool. Get your Trial Set – go to Harrys.com/Fool Learn more about your ad choices. Visit megaphone.fm/adchoices

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It's the Motley Fool Money Radio Show. I'm Chris Hill, and joining me in studio this week, senior analysts Jason Moser, David Kretzmann, and Aaron Bush. Good to see you, as always, gentlemen. Aaron Bush. Hello, hello. We'll dig into restaurants, retail, and the sexy world of data regulation. We'll talk boardrooms and box office with Nell Minow. And as always, we'll give you an inside look at the stocks on our radar. But we begin with some surprising news from the home improvement industry.

Lowe's first quarter report took a backseat to the news that JCPenney CEO Marvin Ellison is leaving JCPenney to take the top spot at Lowe's. Jason shares of Lowe's up more than 10% this week. And when I look at Marvin Ellison's resume, I understand why there's optimism. That guy's grinning so wide, it's like he's got a coat hanger in his mouth. I mean, you've got to believe he's happy to kind of leave JCPenney behind. I don't know that there's anything that fixes that, to be frank. But when we look at Lowe's in this market, the home repair, home renovation market, I've been more of a Home Depot guy, I guess, for the longest time.

But I think, actually, that looking out over the next three to five years, Lowe's may represent the better opportunity for investors. There are a couple of really important catalysts that are coming into play here. One is Mr. Ellison taking that CEO role. And the other one is an aging home market here in the United States. And we talked about this last week with Home Depot's earnings. But when we look at 1995, 33% of the U.S. homes were greater than 40 years old. That number is tracking to hit 54% by 2020.

And, you know, I don't need to connect the dots for you, Chris. You know that aging homes require more work. Oh, yeah. More upgrading, more maintenance, all sorts of stuff like that. That's good for Home Depot and for Lowe's. Lowe's has always played sort of that Pepsi to Home Depot's Coke. But I think there's a great opportunity to capture some additional share there with Mr. Ellison taking the role. Yeah, it'll be interesting to see where this goes. I think over the past five to 10 years,

Home Depot has regularly traded at a slight premium to Lowe's, and that's because they've been a better operator. I mean, Lowe's is a quality operator. For instance, their return on invested capital is around 17%. Home Depot's, though, is almost twice that at 32%. So, Home Depot has that leg up as an operator, but it'll be interesting to see if this new CEO maybe can help spur Lowe's to catch up to Home Depot and, yeah, potentially earn a little bit more of a premium valuation in the process. And before he got hired to be JCPenney's CEO, Ellison spent more than a decade in the executive ranks at Home Depot. I have to believe he's going to be bringing some of those best practices to Lowe's.

Well, I'm certain he will. And he has a reputation for being very service-oriented. So, two primary points of focus for him will be on that customer service side, as well as digital sales. Right Right now, Lowe's digital sales don't represent a whole heck of a lot of the business, only about 5%. So, he has a great opportunity to grow that piece of the pie in the coming years. Foot Locker's same-store sales fell nearly 3% in the first quarter, and Wall Street stood up and cheered. Shares of Foot Locker up 15% on Friday. Alright, David, the comps weren't good, but there have to have been some bright spots in this quarter. Low expectations are a beautiful thing, Chris. And Foot Locker had guided four-week

first quarter results. But they continue to expect those comps to become flat and eventually positive through the remainder of the year. And you've got to give the company credit. They have nearly 3,400 stores worldwide. Most of those are company-owned. But the balance sheet is still strong, $900 million in net cash, producing about $600 million in free cash flow a year. So, they have some flexibility to reinvest in the stores, try to bring more experiences to those retail stores, invest in digital, try to make sure they're bringing in the latest and greatest sneaker trends and apparel trends. I think a lot of people had assumed that Amazon would eat Foot Locker's lunch, Zappos would eat their lunch, but so

far the company has been resilient and looks like it'll improve the rest of the year. Yeah, in my opinion, this was not a great quarter at all. I don't think closing stores and falling foot traffic make for much excitement. I mean, they can say they'll do better, but in my opinion, they sort of have to prove it before I get excited. I agree that they might become more Amazon-proof than others think, but I think their largest threat isn't Amazon, it's Nike, it's Adidas. It's them going more direct-to-consumer and really accelerating that effort. Because the more Foot Locker and stores like Foot Locker continue to suffer, the more it just motivates those big brands to push even harder to get

those customer relationships directly. Am I the only one who actually likes to buy footwear in person? Because in all honesty, that's one of the mental leaps I'm trying to make here. Because I buy a few pair of sneakers every year. I'm never buying them online. I haven't bought shoes in stores in probably like six or seven years. I was going to say, man, I mean, once you stop growing, you know what your size is. I mean, I don't understand what your hang-up is, Chris. Maybe Chris is still growing.

Zappos for the win, right? I'm trying out different brands, all that sort of thing. I don't know how much experience you can really bring to buying shoes. I mean, at the end of the day, you're still going into the store to buy shoes. So I think their focus has been really trying to be at the forefront of any new and emerging trends within the shoe category. so maybe that helps attract people into the stores. But I think they do have an uphill battle compared to some other concepts when it comes to creating compelling experiences. Let me go back to Nike for a second, Aaron, because when Sports Authority went under,

I mean, one of the things we saw was Nike was on the hook for a lot of inventory. I mean, it's a little bit of a balancing act that Nike and Adidas and Under Armour have to pull off here, because they're in some ways rooting for Foot Locker to do well until that tipping point where they really get their e-commerce operations going. Yeah, at the end of the day, they just want to sell shoes. And it's more, wherever the consumers are going to go to buy those shoes is where those companies need to be. So, it's just playing that dance of, where are the customers going? Are they going to stores less? Are they going online more? Therefore, how do you position your business for that?

Yeah, and I think Foot Locker is certainly pulling for Nike to do well. Nike was mentioned 17 times in this earnings call. So, they obviously are hoping that Nike sticks around. I think you're probably looking at a situation where Foot Locker needs Nike more than the other way around. And that goes back to your point about that direct-to-consumer model, and Nike and Under Armour and even Adidas are growing out those capabilities. Chances are, if you're listening to us right now, that you've received more than a few update-to-our-privacy-policy emails this week. And that is because May 25th was GDPR Day. GDPR, which stands for General Data Protection Regulation. This is the EU's new data privacy

law that went into effect. Aaron, there are a couple of different threads we can pull here. I mean, first and foremost, this seems like a small win for us as individuals. I think so. So, what this is, it's a new law that lets EU citizens gain more control of their data, and it forces companies who operate, serve those EU citizens to be more responsible with that data. So, that's the biggest picture of what that means. And so, all of these companies that have worked with EU citizens, whether they're European companies or North American, U.S.-based companies, they've had to work incredibly hard to improve their data processes, update them,

and invest in the teams to make that happen. But I do think it is ultimately a good thing for individuals. A couple of things that it gives new rights to users for. It gives rights to access what data companies have on you. You can see what all these companies have tracked for you. You can ask to rectify data, or delete data, or withdraw consent from different things. It is one step closer towards individuals truly owning their data. It's not all the way there yet, but starting in the EU, it's a big step. Yeah, and I don't know if Aaron mentioned this, but the fine for companies that don't

comply with these new regulations would be up to 4% of your annual global revenue. Not profit, but revenue. So, this is clearly going after the tech incumbents who have been skirting over ways to pay taxes in Europe. But at the same time, that means a lot of smaller companies are really, it's going to be even more challenging and expensive to comply with regulations in the EU. I mean, just speaking for our teams here at The Motley Fool, I mean, we're a company with several hundred employees, but we've had a pretty big team spending months working on getting compliant with these new rules. And you even have some companies that basically suspended their websites in Europe until they can figure this out, whether it's viable for

them to be there, including Tronc, the publisher of the LA Times and New York Daily News. So, Tronc, at this point, you cannot access it in Europe. But this is obviously going after are the tech incumbents, but at the same time, they're the companies that have the resources and the time to make sure they are compliant. Yeah. So, in terms of Facebook and Google and sort of the advertising business, I mean, as David said, they have the resources to deal with it. I'm not necessarily worried about their ability to make more money, but I'm wondering if long-term, the ripple effect here is that if there's a lowered ability to target ads, then those ads, in theory, become less effective, marketing becomes more

of a challenge, and maybe the ROI isn't as great. I think that's probably directionally accurate. I also think there could be regional differences in how you target people in different regions. So, if I'm starting a newspaper in the U.S., for example, I don't know if I would want to open access to EU citizens, because It could completely change the way I have to build my team, work with the data. I don't know enough about it to say that's true, but I know a lot of companies right now are going through issues like that. So it definitely is like, how well can you target?

But it's also just, how well can you keep on doing what you're doing? Coming up, if you're putting together your summer reading list, we've got a few suggestions. Stay right here. You're listening to Motley Fool Money. Hey, are you buying a home? Are you refinancing your existing home loan? because if you're doing either one of those things, you should check out Rocket Mortgage.

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America. And that number may be going down soon. Shares of Zoe's Kitchen fell more than 35% on Friday after a first quarter report that, David, it was just a train wreck. They lost money. They cut guidance. Yeah, this was a really ugly quarter. Same-store sales were down 2.3%. Margins are being pressured. Expenses are going up. And I get the feeling here that management is just throwing a lot of stuff against the wall at this point and hoping, praying that something sticks. They're reducing their future store opening plans. They're looking at letting some existing leases expire with their current locations. They're increasing the amount of money they're spending on marketing. They're looking at franchising. And the board of directors

even formed a committee to consider strategic alternatives. So presumably looking to sell a company or find some sort of saving grace. But Zoe's has really put themselves and backed themselves into a corner here. For a long time, they've relied on debt to open new locations. So, at this point, they only have a few million dollars of cash on the balance sheet, over $45 million in debt, and they're still losing free cash flow, or generating negative free cash flow. So, they need to find something quick to turn the ship around. O'Reilly. This is sounding more like Zoe's Kitchenette. O'Reilly. There you go. Yeah, something.

O'Reilly. So, I've never been to one of these. This is Fast Casual Mediterranean Cuisine. seems like something I would like, I should probably go soon. When you hear about a restaurant stock dropping this much in a single day, absent any other news, my mind immediately goes to some sort of outbreak of some sort. So, I guess the good news is, this is not an outbreak of some sort. The bad news is, they are mismanaging this business to the point where it can drop this much in a single day. Yeah. And I think the other challenge for Zoe's is that the restaurant category as a whole has actually been improving so far this year. So, when you're generating such poor results when the rest of the restaurant landscape is improving,

that's just extra cause for concern. Yeah, the yellow flag investors should have seen coming years ago at this point was just the fact that they couldn't fund expansion out of their operations, out of their cash flows, and they had to rely on debt. And that's really risky, because when they're going from a regional to a national play, a lot of companies don't make that leap. And so, if you end up struggling while doing that, and you have a ton of debt, and you can't really fund out of your operations, you're in a really tough spot to maneuver. So, I'm not surprised by all of this. In recent troubles notwithstanding, I mean, that's something that Chipotle did very well early on, is when they needed to make that

leap, they had the balance sheet and the business model that enabled them to do it without having any real obligations hanging out there. And even today, I mean, still a pristine balance sheet, plenty of cash flow. So, if they can sort of rebrand and create more interest, I think there's still a chance for them to grow. Yeah, whenever you're looking at smaller restaurants that are potentially trying to expand nationally, I think the primary thing you want to look for is, is this company capable of expanding out of the cash they're generating from the business, as Aaron and Jason highlighted? Because if not, if you're relying on debt or issuing stock to fund that expansion, that just really dramatically increases the amount of risk

you're taking as an investor. I'm glad you mentioned Chipotle, Jason, because last year, executives at Chipotle said that they were going to be testing a drive-through concept. And they've begun to do that in a few locations. But it's not drive-through in the sense that you can pull up to the window and order. It's something they are calling mobile drive-through pickup. So, you actually have to order ahead of time, then go and pick it up. Anytime I've been in a Chipotle, it's been a pretty fast experience. Why wouldn't they just go for straight drive-through? Baby steps, Chris. Baby steps. I mean, it's just, you've got to try something and iterate,

right? I think one of the problems maybe with the Chipotle right now is that entire business model or the restaurant model has been built without any consideration to a drive-thru. So, even when I think about some of the Chipotles in our area that I visit, I mean, I don't know where you would put a drive-thru. And so, I think Starbucks kind of ran into that position or that situation as well. And so, part of it is just trying to figure out the actual logistics. Because I have a feeling if you throw a drive-thru in a restaurant, it's going to bring some traffic in. And that's really what Chipotle needs right now. I think this actually makes sense for Chipotle. A traditional drive-thru, I think, would be very clunky with Chipotle because they don't have a Big Mac or

seven-layer burrito. You have to really build your own each time you go to the store and order that way. So I think the traditional drive-thru would just get clunky and held up if you're rolling that out to Chipotle because they don't have any predefined menu items. But this mobile drive-thru, I think it's interesting, because it's really just pushing people to use the app or the online experience. So, that's just a way to increase the volume or the throughput going through the restaurant. So, for Chipotle, I think this actually makes sense. You know who's mastered the drive-thru? I'll tell you, our Chick-fil-A by our house. Oh, my God! They've got two windows for two lines, and that line will continually back

up out of the parking lot. So, then they get two employees from the store, they're out there on iPads with payment swipes. I mean, they're taking orders by hand to keep the traffic moving, and it works. It's unbelievable how they've got that down. But, man, it's a nice problem to have, I guess. They just can't keep the customers away. Shares of Tiffany up nearly 25% this week. Tiffany's first quarter profits came in higher than expected. Jason, did you help with that? I like to think maybe I did. I got my lovely wife a bracelet for her birthday. Unfortunately, the bracelet was purchased in the current quarter, so I didn't play out

on first quarter results. But maybe the sentiment is there. Listen, I think Tiffany is a good business. And I think the most important thing that management can do is to protect their brand. Because Tiffany is actual luxury. It's not affordable luxury like we would talk about with something like Coach or Michael Kors. And so, there's sort of this sense of accomplishment almost with getting something from Tiffany. But, I mean, the company has done a very good job in sort of growing at a measured pace. They have 314 stores now versus around 250 about five years ago. Gross margin is ticking up a little bit as prices on wholesale diamonds are coming back to reality and store traffic is growing. So, they just do a very good job of managing this brand

and not resorting to fire sales to try to move products. And as long as they can do that, They have a new CEO in the chair there, Alessandro Bugliolo. I hope I'm pronouncing that correctly. But his first year with the company, and I think he's feeling very good about things. They just raised the dividend, continuing to buy back shares. So, it's working out. Alright, we've got about a minute left as we kick off the summer, and people are looking to unwind with a book at the beach. Let's just go around the table. Aaron Bush, what do you got for a book recommendation? I think that the best genre for investors is actually really good sci-fi. And so, Story

of Your Life and Others by Ted Chiang. It's a good collection of sci-fi short stories. Nice. Jason? I'm not even done with the book yet, but I really do like it. The Space Barons, Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos by Christian Davenport. Very fun read. David? I'm looking at Hitmakers by Derek Thompson, someone that you interviewed last year, actually, and looking at the science of how things become popular and go viral. Really enjoyed it. I haven't gotten it yet, but the new book about Theranos from John Carreyrou

at The Wall Street Journal, Bad Blood, Secrets and Lies in a Silicon Valley Startup, that is definitely on my list. New Stephen King book out, The Outsider. I just bought it, I need to start it. Alright, guys, we'll see you later in the show. Up next, Nell Minow on the drama in the CBS boardroom, and what to expect from the summer box office. Stay right here, you're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill.

The summer movie season officially kicks off this weekend, so of course we turn to Nell Minow. She is an expert in corporate governance. She is also the film critic known as the movie mom. Always good to talk to you, Nell. Well, thank you. I'm glad to be back on the show. We'll get to the movies in a second, but there are some fun stuff happening in the world of corporate governance, and it's not often we get to say that. And we'll get to the CBS drama in a minute because that's amazing to me.

But let's start with Facebook because Mark Zuckerberg spent some time this week apologizing to lawmakers in the EU for the massive data breach. And there's also this California pensions fund, which is criticizing Facebook's dual-class structure and even compared Facebook to a dictatorship. When you look at Facebook through the lens of corporate governance, what do you see? Well, I get a big fat I told you so on this one, going back to the IPO. And what I said then applies now, which is that a company that goes public with dual classes of stock with the founder maintaining control is a company that wants to have the access to capital of a public company and the control of a private company. And that's a win-win for them. It's a lose-lose for shareholders.

I'm all in favor of making that available, I believe, in the free market, but I recommend that shareholders have a great deal of skepticism. I think there should be a big discount, as there often is, when you have the limited voting stock. And this is just a really good example of that. So on the one hand, I feel that those who bought into it really don't have the standing to say, what? What? What was that again? They knew what they were getting into. On the other hand, I do like the idea proposed by the Council of Institutional Investors a couple of weeks ago

that companies that go public would do a class, should have a sunset provision, that it should be seen as a transitional period, and I think that would be a very good thing here. So ideally, what I would like to see Facebook do is add some more independent directors to their board right now and make a pledge to wind down the dual-class structure over the next few years. So in the retail industry this week, one of the big stories was Marvin Ellison, the CEO of JCPenney, announcing that he's leaving JCPenney and he's going to go be the CEO at Lowe's, And he has a lot of experience from all his years at Home Depot. But I thought of you when I read that story because one of the things Lowe's has decided to do is to separate out the CEO and chairmanship.

And so Ellison will be the CEO. He will not be the chairman of the company. Is that, as a blanket statement, you always prefer to see that? No, because there's a reason that there's never been an academic study showing that there's any particular benefit from that in the United States, even though it's been very successful in the UK. And the reason is that we don't have any kind of consistent idea of what that means in the US. Sometimes it's just titles only. Sometimes it's the next CEO in waiting. Sometimes it's the former CEO. And so we really don't know. So when somebody comes to me and says, here's what we're going to do, we're going to

separate the chairman and CEO, then what I say to them is, okay, is this new independent chairman, is that somebody who has no other connection to the company, either in the past or now? Is that somebody who is going to be determining the agendas for the board meetings and the committee and chair assignments? And is that someone who is going to be deciding what information goes to the directors as well? Those are the key things that you look at to try to determine whether this is a meaningful separation of those two jobs or not.

So I'm not really in favor of it all the time, but it certainly is something for companies to look at. And I recently wrote something about this, recommending it at GE, when the company's not doing well. It would be my go-to as a first step. Harley-Davidson just had its annual meeting and made the decision to ban media from the annual meeting, including the local newspaper. I always feel like that is just never a good look for any public company. What is going on at Harley-Davidson? Yeah, I kind of feel like Joe Louis.

They can run, but they can't hide. It's just stupid. But that's why I always advise the newspapers to buy a share of stock so that it's just never an issue. It seems to me that annual meetings are there for the one opportunity to ask questions of the board and the executives and that they should be open to the public, and that includes the press. And just like what goes on sometimes in the political world, leaving them out just makes them more curious. It's better to let them in. All right. Let's get to the drama at CBS. And I'm not talking about primetime fictional drama. I'm

talking about actual drama in the boardroom. For those who are unaware, on one side, we have CBS chairman and CEO Les Moonves, who voted with 10 other board members to strip parent company National Amusements, run by Sherry Redstone, of its control over CBS. And Moonves argues that Cherry Redstone has abused her power. You're a fan of strong independent boards. This seems like the move of a strong independent board. Who should we be rooting for in all of this? Well, first I have to say that I am not in any way objective about this. My sister is one of the board members who is very much involved in this initiative with Les Moonves, and it has been very, very difficult. But I hark back to my comments of a couple of minutes ago about the

challenges of a company where the insiders have voting control and not the shareholders. I believe in one share, one vote. And if we had that here, we would not have this mess. Sumner Redstone, before his daughter Sherry got involved, has been a governance nightmare waiting to happen for a long, long time. My father was once on the CBS board, and it was really how I learned about corporate governance decades ago when the directors got together and fired the CEO, and that was very unusual back then. It was Tom Wyman. And it's interesting that some of the same issues are coming up now in terms of the disagreements they have. That is a really, really tough one. With all of the caveats about my not being objective, I will say that I

side with the directors on this one. It is time to unscramble that egg, give voting control to the shareholders as represented by the independent board members. All right. Before we get to what's at the box office this summer, let's talk about the business of movies. And we have to start with what is really shaping up to be the year of Disney. It's an incredible run that Disney has had at the box office. Black Panther was number one. Then Avengers Infinity War was number one at the box office. Then it was Deadpool 2 and this weekend Solo opens

and it'll probably be number one. And these are all Disney properties and I'm wondering if... Deadpool is 20th Century Fox. True, but it's... Disney's got a little piece with the Marvel. Because of Marvel, but yes. But I feel like I have to mention that.

They've got a rooting interest in Deadpool 2 doing well at the box office. Is this what the... I'm not going to say long-term future, but certainly, is this what we should expect for the next couple of years? Just this kind of default dominance at the box office by the Walt Disney Corporation? Listen, nobody is doing it better right now. The reason these movies are doing so well is that they are absolutely terrific, especially Black Panther. And that was a sensational movie. And props to

Ryan Coogler, writer, director, only 34 years old. Anything he does in the future, I will be first in line so yeah disney has shown that it knows how to do one thing very very well it knows how to really cherish its brands it knows how to cherish and take care of the characters and whether it's we're talking about the muppets or whether we're talking about um uh marvel uh or star wars they know how to take characters that have come from someplace else and really make them shine we've got not only the movies you mentioned but coming up soon we have got uh incredibles 2 which looks fabulous. And we have Ant-Man and the Wasp, which also looks great. So yeah, this is definitely going to be a very Disney year and a Disney era, I would say. Does this, I mean, it really seems

like it sets Disney up for success with its streaming service that's due to launch in 2019. No question about it. You know, as a consumer, I'm kind of sorry. I feel like I already subscribed to Hulu, Amazon, and Netflix. I'm not thrilled about the idea of signing up for something else. But if that's what I have to do to get this content, you know I'm going to do it. And a lot of other people will feel the same way. Speaking of content, Disney made its $52 billion bid for most of 21st Century Fox. And I need to timestamp this because this is a story that is very much in flux. You and I are talking on Wednesday afternoon. On Tuesday, Comcast released a statement saying it plans to outbid Disney in an all-cash bid. And they didn't put

a number out there, but one of the numbers that's being reported is that Comcast could pay as much as $60 billion in cash for these assets. Where do you think this is going? And whether you're thinking about it as a movie fan or you're thinking about it as an investor, who should you be rooting for to win this battle? Well, I am a movie fan and I'm a Disney investor, so I'm definitely rooting for Disney on this. And just to make the point as clear as possible, what I just said about Disney's really unparalleled ability to take care of these absolutely iconic characters. You compare what Disney has done with Marvel to what Fox did with the Fantastic Four, with three terrible Fantastic Four movies. And I named one of my children after

one of the Fantastic Four. I take them very seriously. And I don't see any evidence that Comcast has the creative energy, the creative ability to deliver on that. So the idea of yet another bad Fantastic Four movie just makes my heart sink. Let's talk about the movie that opens this weekend, Solo, which, and we were talking during the break, already got a one-star review from the New York Post. You've seen it. How nervous or excited should Star Wars fans be? I know a lot of people are hating on this movie, and I think a lot of that has to do with something that has nothing to do with the movie, which was the struggles that they had in making it. The original directors were fired halfway through, and they brought in Ron Howard. Now, I have to say, I am not only a Star Wars fan, I'm a big Ron Howard fan, and I smiled all the way through this movie.

I loved it. I thought it was a brilliant mix of great action, great heart, some great comedy, some wonderful new characters, and some great thoughtful insights about the old characters. And I think it's important to note that this movie was co-written by the guy who wrote the Star Wars movie that most people say is the best Star Wars movie of all, The Empire Strikes Back. Lawrence Kasdan wrote this with his son. And so it comes from a place of someone who really knows these characters inside out. And the more you know and love the Star Wars movies, the more you're going to feel satisfied from this

because it just brings home so many of the predecessors to what we've already seen. You're going, oh, that's where that comes from. So I thought it was extremely well done. I like Alden Ehrenreich very, very much, who plays Han Solo. If you haven't seen him in Beautiful Creatures or Hail Caesar, give him a look. And Phoebe Waller-Bridge as a kind of a cockeyed female C-3PO, that's the best way I can describe her, absolutely steals the show. All right. When you think about all the movies that are coming this summer, what are you looking forward to?

Well, I'm a sucker for a heist movie. I love heist movies. They're all about problem solving and risk assessment. And so I think Ocean's 8 looks absolutely choice. I'm very excited about that. I'm really looking forward to Crazy Rich Asians. I think that's going to be amazing. There are two very silly-looking, fun summer movies opening up,

Tag and The Spy Who Dumped Me, that both look great. And then I'm going to just do what I always do when we talk about summer movies. I'm going to recommend the one little independent film that I think is the little engine that could, the one that I think is going to really come to everybody's attention and be a favorite this summer. It's called Sorry to Bother You. It's coming out the week of the 4th of July. It stars one of my favorites, Lakeith Stanfield, and it is extremely political, provocative, and looks very, very funny. So I'm betting a lot on Sorry to Bother You.

That was another question I was going to ask is sort of like the blockbusters always get the attention, and rightfully so, when you think about how much money is behind them. But I'm always curious to hear any under-the-radar recommendations. Well, I was 100% wrong last year when we talked, so I have to own that. I said that Valerian was going to be a big hit, and it was a big flop. I still liked it, but it did not do well at all, and it lost a ton of money. But I think I'm going to still stick with Sorry to Bother You this year. I think that's going to be a good one. And not every blockbuster is a hit.

As we talked about this time last year when I asked you, what's one movie we should skip in the summer of 2017? And you immediately said The Mummy with Tom Cruise, which I went back and looked up the numbers. It actually did half the box office numbers that the original Mummy did with Brendan Fraser. Which was a great movie. I would watch that again in a minute. Anything out there this summer that you think, oh boy, steer clear of that? You know, it's hard for me to get excited about another Jurassic Park movie.

Jurassic World, I just think we've done everything that can be done. So that one I'm not too excited about. Last question and then I'll let you go. Which one of the Fantastic Four characters did you name one of your kids after? Ben Grimm. His name is Ben. One of the best reasons to be on Twitter is so that you can follow Nell Minow and get her thoughts on corporate governance, movies, and a lot more. Nell, have a great Memorial Day weekend and a great summer.

Bye-bye. Saturday night at the movies Who cares what picture you see? Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money. Hey, before we get to the stocks on our radar, got to say a quick thanks to Harry's. I've been a customer of Harry's for years, long before they started sponsoring Motley Fool Money. Harry's stands behind the quality of their blades, but they know that switching razors is not an easy decision.

And it's not. I mean, do you remember when you started shaving? I mean, with me, I started shaving and I just was like, oh, okay, I guess this is the razor I use for the rest of my life. I'm just stuck with this brand. Harry's created a trial offer to make it easy. And you can claim yours by going to harrys.com slash fool. The trial set includes a weighted ergonomic razor handle, five precision engineered blades, and a lubricating strip and trimmer blade, rich lathering shave gel, and a travel blade cover. our dozens of listeners can redeem their trial set at harrys.com slash fool and when you go there

to redeem your offer let them know that we sent you it it helps support our show and we appreciate that again to get your trial set go to harrys.com slash fool that's harrys.com slash fool as always people on the program may have interest in the stocks they talk about in the motley fool make a 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, David Kretzmann, and Aaron Bush. Two quick announcements. You may have heard us talk about The Motley Fool's international businesses in Australia, Canada, Germany, Singapore, and the U.K., and now our brand-new home in Hong Kong. You can check out The Motley

Fool's Hong Kong website and everything we have to offer there online at www.fool.hk. Also, if you have an Amazon Echo or a Google Home Assistant, not only can you get all of The Motley Fool's podcasts, you can also get our daily news briefing. Just use your Amazon Echo or Google Home app to add The Motley Fool's Flash Briefing as a news source. It is just that simple. Let's get to the stocks on our radar. And our man behind the glass, Steve Broido, hit you with a question. David Kretzmann, what are you looking at? I'm going with Stitch Fix, ticker SFIX. This is a recent IPO, went public in November. and this is really a data-driven online apparel retailer.

So you sign up, you enter your preferences when it comes to clothing styles and brands, and one of their 3,500 stylists will work on it and really personalize an experience for you and send you a box with five different items. You pick what you want, you keep what you want, and then you send back everything else. You only get charged for the stuff you keep. I think this is a really interesting look at potentially the future of retail, and they have so much data compared to your brick-and-mortar retailers when it comes to consumer preferences. So, one that I'm keeping an eye on.

Steve, question about Stitch Fix? In five years, are more men or more women using Stitch Fix? Probably women. They started with women. I bet they'll be their dominant category for a while. Jason Moser, what are you looking at this week? Sure. Taking a look at PayPal, ticker is PYPL. I was thinking about this earlier today. I think that PayPal's acquisition of Braintree back in 2013, I don't think it's hyperbole to say that that is on par with Facebook's acquisition of Instagram. I think it's that important to the business. And I think we're starting to really see the results play out here.

And if you look at the most recent quarter, PayPal's total payments volume was $132 billion, up 27%. But Venmo now, which is part of PayPal, is on a run rate to generate over $50 billion in total payments volume in 2018. So, it is becoming a very important part of the business. And I do think that over the next 10 years, PayPal and Square are going to be the two companies that really help define this payment space. Steve, question about PayPal? I still struggle on how to use PayPal to get money from point A to point B. Is that just me? I do think that's just you, Steve. I mean, I figured it out, and if I can do it, then I think anybody can do it. We'll talk after the show.

Aaron Bush, what are you looking at this week? Sure, the company I'm looking at is SendGrid, ticker S-E-N-D. This is also another recent IPO, IPO about six months ago. They are a cloud-based email services platform. And as we all know, email is still a super relevant platform for advertising and reaching consumers, getting conversions, that type of thing. And their expertise as a platform is using algorithms to help target ads, get people to take action, and to work through spam filters. They sell an API to companies that they can work with in whatever development framework that they use, and they can help run marketing campaigns, that type of thing. This is still a pretty small

company, about a billion dollars, but they're growing super fast. They have a really strong culture, strong leadership team. I think it's pretty interesting. Steve, question about SendGrid? So is my email, do I have a SendGrid email address? Is that how this works? Or are they behind the scenes hosting other people's email addresses? So they work with companies to sort of help them use algorithms to better get through spam filters and to just ensure that when they send us an email, it's going to be more relevant to us so that we open it and take action. You got one you want to add to your watch list, Steve? I'm looking at Stitch Fix.

All right. Thank you, Steve. All right. David Kretzmann, Jason Moser, Aaron Bush. Guys, thanks for being here. Thanks, Chris. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Roido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week. We'll be right back.