Motley Fool Hidden Gems Investing - The Hidden Logic of Motivation

Episode Date: November 18, 2016

Best Buy surprises. Salesforce.com rises. And Berkshire Hathaway takes to the skies. Our analysts discuss those stories and behavioral economist Dan Ariely talks about his new book, Payoff: The Hidden Logic That Shapes Our Motivations.  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, from Million Dollar Portfolio, Jason Moser. From Rule Breakers and Supernova, David Kretzmann. And from Motley Fool One, Ron Gross. Good to see you, as always, gentlemen. Hey, hey! We've got the latest results from Wall Street. Best-selling author Dan Ariely is our guest this week. And as always, we'll give you an inside look at the stocks on our radar. But we begin this week with big retail. Walmart, Target, and Best Buy, all out with their third quarter reports. All three came in with profits higher than expected. Walmart's

overall sales, a little light, Ron. That hurt the stock this week. Obviously, a lot to cover here. First, tell me what stood out to you. Well, Chris, much to my chagrin, I've got to give it up for Best Buy, a company that I had left for dead, quite frankly. You're not the only one. Correct. But that's small comfort. They're doing a nice job. Profit's up 50%. That's That's a big jump. The headline there, to me, was the online sales jump at 24%. That's a nice increase. Off a small base, but they're doing what they need to get done. You see that carry through, actually, to Target and Walmart, who all had similar numbers, which

makes sense, because as we saw with the October retail sales numbers that came out earlier in the week, online sales was the big number there as well. But Best Buy, they're doing it. And I'm surprised. Ron mentioned those October retail numbers, which were better than I think a lot of people expected. And I'm going to be watching restaurants, because we've seen traffic to restaurants drop for more than a year now. And a lot of restaurants this quarter lowered guidance for the rest of 2016 and even into 2017. So I'm trying to see how these things match together. That'll be something I'm paying attention to. Yeah, Jason, the U.S. Commerce Department out this week with the retail spending numbers

for the month, and the biggest increase in retail spending that we've seen in two and a half years on back-to-back months. Among other things, if you're a retailer this holiday season, it's not looking like you have that as an excuse. You can't really say, well, consumers just aren't spending money. No, it actually seems like they are. It seems like they are, for good reason. I think we have a better employment picture than perhaps we did a year ago. And I think we come into the holiday season, and I think people just tend to loosen those purse strings a little bit more. I think, to Ron's point about Best Buy, probably all four of us around this table would have given it a thumbs down

maybe a year and a half. We probably all did. I still might. And I think for good reason. I'm not saying I would actually jump in and buy this stock. I think the market is probably reacting a little bit to the fact that it's better than expected, but it's not like it's great. And I think it's also worth remembering that Best Buy is certainly benefiting from HH Gregg's demise. I mean, HH Gregg was a very similar competitor that has run into really tough times. I mean, the share price is getting ready to crack the $1 barrier, so I think that company's on the way out. Certainly,

Best Buy has picked up a little of that incremental traffic. It's not to take away what they've done. They've done a good job, and they certainly are winning on the online space as well. But let's be sure to separate a business that's performing well versus a business that maybe is just surpassing mediocre expectations. One of the things that we have all said for years about Best Buy, among the challenges that they had as a business, was on the customer service side. Hubert Joly, the CEO who's been there for a couple of years now, he's clearly made that a focus. That was something they talked about on the call. Certainly, going into the holidays, Ron, that is their whole theme. Gifting made easy. They're clearly

doubling down on Best Buy as a place with great customer service. Which is crucial, right? So, they can't compete on price, they can't compete on breadth of product. The only thing they have is a good customer service experience, which they never did have, which is one of the main reasons I was so sour on the company. The fact that they're improving that more power to them. They identified a problem and they went at it. We'll see if they can carry through. The holiday season is looking pretty good. We're hearing positive comments from pretty much across the board from these retailers, which probably means it's going to be a disaster. But we're seeing guidance, either increased or reaffirmed, and positive anecdotal comments as

well. So, we'll keep an eye. Well, and Jason, something we've talked about before, a month or two ago, when Target came out with their seasonal hiring, it's basically flat year-over-year. Now, on the back of this third quarter, they are one of the big retailers out there that's talking pretty optimistically about the holidays. I'm wondering if, at some point in the next four to six weeks, they may all of a sudden realize that they need to up the number of seasonal workers that they're hiring. Those are at odds with one another. If they basically think, it's going to be the same as last year, but now they're thinking, actually, we're feeling pretty good going into the holidays.

Yeah. To be clear, I think smart leadership isn't going to go into these holiday seasons thinking everything is just going to suck. They want to paint a picture of optimism. In the face of Amazon, which for example is hiring somewhere in the neighborhood of 20% above what they hired last year, there is reason to assume that consumers are out there spending a little bit more. And when it comes to these brick-and-mortar retailers, like Ron was saying, it's not like they're really competing on price as much as they're competing on what they have to offer in really high service levels. I mean, nothing is more frustrating than going into a Walmart that is the size of South Carolina and not being able to figure

out what you want and where to get it, where you can just type it in on a search bar and find it and have it sent to your house. And final point, seasonal temporary workers and solid customer service don't always jive. You get someone who just came in there, and you ask them a question, and he ends up reading the box to tell you what the TV has, and you're like, I could have read the box, thanks. So, that could backfire. Yeah, look, it says it's a 55-inch screen. Why am I at that? Shares of Dick's Sporting Goods falling a bit this week, despite a pretty strong

third quarter, Jason. Same-store sales were up more than 5%. I know the stock has had a good run over the past year, but this was a pretty good quarter. Yeah, it wasn't a bad quarter. They raised guidance a little bit on the earning side for the full year. And I think that Dick's Sporting Goods is certainly the beneficiary of some consolidation in the space that keeps on going on. We've talked a lot about Sports Authority here and their recent liquidation. Golfsmith, another example there. They're picking up some of the IP and some of the inventory in stores from Golfsmith, which is going under as well. So, you're seeing it's very difficult to maintain a presence

in this market. So, it's nice to see, on the one hand, that Dick's Sporting Goods is really becoming sort of the big name in the space, but by the same token, it's a difficult space still. I think that they're focusing on the right things. E-commerce sales grew 33% for the quarter, now represent almost 10% of total sales versus about 8% a year ago. And it's one of their three main priorities. They're focusing on e-commerce, this U.S. Olympic Committee partnership in order to create more brand awareness, and actually going into full-service footwear decks in all of their stores, realizing that footwear really does drive a lot of traffic, and making sure that they can accommodate for all of the people that are going in there to see what kind of

footwear they have, what size, what they might need, making sure they're fit correctly. So, I think those are good moves. Again, I think this is a business that, you know, today it's trading around 20 times full-year guidance, and that's fine. It's historically still pretty expensive for a business like this. I think this is one where you need to buy at a more opportunistic valuation and get ready to cut loose when the time is right. I just don't think that time is now. I get that they are operating in a tough space, but I also think it's fair, if you're an analyst looking at this industry, to look at Dick's Sporting Good and say, hey, one of your biggest bricks-and-mortar competitors

is now gone. Therefore, we expect more out of you. I think that's a reasonable expectation. And to be clear, I think this is a well-managed company. I think they're delivering on that front. Again, I think we have to recognize retail, generally speaking, you need to really focus on the valuation side for these stock prices, because it's not typically a stock you want to buy and just hold blindly. It's one where you want to buy more opportunistically and then be okay with parting with when the time comes. Better-than-expected third quarter report for Salesforce.com. The cloud computing company also offered some pretty optimistic guidance,

not just for next year, David, but for 2018. Yeah, they're expecting to hit that coveted $10 billion annual sales number by January 2018, which is the number that founder and CEO, Mark Benioff, has been going after for a long time, trying to be the first cloud software as a service company to hit that number. And they're expecting to hit it within the next couple of years. They're expecting annual sales to grow above 20% in 2017 and 2018. So those are good numbers. I think the question becomes, how is Salesforce going to navigate increased competition from the likes of Microsoft and Oracle? The company, I think, really jolted Wall Street and investors by going after LinkedIn and possibly Twitter

this summer, which could be an indication that management saw organic sales growth maybe declining. But this guidance suggests, no, sales above 20%, nothing to cough at. So that's something I'm watching. The company's still plowing a lot into operating expenses. We're talking about sales, marketing, product development. But there's a large market opportunity. Oracle alone has $37 billion in annual sales. So, there's still a lot of room for Salesforce to capture market share. Yeah. You think back to earlier this year when Salesforce was kicking the tires on LinkedIn, there were people who were making the case for how that could work. I think when they were at one point possibly in the

mix for Twitter, that raised a few more eyebrows. And it has me wondering if Mark Benioff just has, we talk about Warren Buffett and his elephant gun. I just wonder if Mark Benioff also is starting to get an itchy trigger finger and he just wants to buy something. That, or he's just trying to peeve competitors. He's trying to throw off Microsoft and make them maybe pay a little bit higher for LinkedIn than they otherwise would have. It's hard to say. People can make the case, I think, especially for LinkedIn, maybe fitting into what Salesforce is doing. Twitter, I see both of them as a stretch, but especially Twitter. And it's not like Salesforce has a ton of cash on the balance sheet just waiting to deploy for a massive $20 billion plus acquisition.

So, I hope the company focuses on its organic growth opportunity. There's still a lot of room in that market for them to grow into. So, I think that should be where their focus is. And maybe some smaller acquisitions along the way, but they don't need a LinkedIn or a Twitter. Speaking of Warren Buffett, you won't believe what industry he just bought into. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser,

David Kretzmann, and Ron Gross. According to SEC filings and various media reports this week, Berkshire Hathaway has bought stakes in American Airlines, Delta Airlines, United Continental, and Southwest Airlines. Ron? Warren Buffett has not just avoided airline stocks over the last 25 years, he has publicly ridiculed the business model of airlines. What is going on here? year after year after year following his U.S. Air debacle. He said, the worst sort of businesses, ones that's growing, require significant capital to engender that growth that earns little or no money. And he was talking about the airline industry. So, right, what's going on here? It's probably either Ted or Todd, his portfolio managers that he's

brought on to diversify the investing of Berkshire. I doubt it's Buffett himself. And to give the airlines credit, they've flipped that model a little bit. They're actually generating free cash flow at this point, some more than others, and the valuations are not expensive. I'm not following Buffett or Berkshire into this trade, however. Yeah, I think there was just a lot of investment in the space where it sounded like there was plenty of supply, and the airlines were not able to sell all of those seats. So, you had planes that were flying half-full, pricing was pretty bad, and we've gotten to another point here, like Ron was saying, where they're not investing in that presence of the airports

as much. They've consolidated the industry. So, supply is a little bit more limited, so to speak. The planes are more full. Pricing is a little bit better. And perhaps that's OK in the short run. But again, give credit to them. We say in investing, you want to zig when other people are zagging. But make sure you have a good reason why you're zigging in the first place. I don't know that this is one where I would just step in on blind faith and say that I'd follow along just because they're doing it. David, that's part of what's surprising here, right? It isn't that Berkshire Hathaway bought one airline. They bought into four.

Hell froze over. Yeah. O' That's quadrupling down, Chris. That's not doubling down. That's a statement. The thing I wonder about here is, what happens if and when oil prices go back up? Because obviously right now, when you have relatively low oil prices to where they were five, 10 years ago, that's a huge cost for airlines. So, of course, they're able to keep prices relatively low, fill up the planes maybe a little bit more easily. But once those oil prices go back up, they have to make up for that somewhere. So, I

wonder how that plays out exactly. I don't know if airlines are nearly as attractive once oil prices go back up. O' I feel a little bad for JetBlue. I just feel bad for JetBlue. JetBlue actually is trading at a higher valuation than the other folks. These guys are trading four or five times EBITDA, pretty much. To buy a profitable free cash flow generating business at four or five times is hard to do in this market, so there you might have an opportunistic investment. This week, it became official, Tesla Motors shareholders formally approved the acquisition of SolarCity. David, Elon Musk is Tesla's largest shareholder. Pretty interesting

that he sat out the vote, and it still passed overwhelmingly. Yeah, 85% approval, which Elon Musk, let's give him credit, he's a great salesman and a very visionary leader, and I think he rallied people around that. So, now, with Tesla, we'll have two very capital-intensive businesses under one umbrella. Oh, great! Oh, awesome! What could go wrong? But, in this case, I think the Tesla brand could really benefit what SolarCity is doing, especially with this solar roof product that the company's kind of joined forces on and unveiled within the past few weeks. This solar roof is supposed

to be better looking. And from the demo that they had a couple of weeks ago, they do look pretty nice. They're supposed to be twice as durable as your typical roof. And you get all that at the same or lower cost as a regular roof, plus it generates electricity. If they really can hit all that, and Elon Musk is optimistic that they can, I don't know why you wouldn't install a solar roof. So if they can do that and do it profitably, which is a big question with SolarCity right now. I could see that Tesla brand really playing to SolarCity's advantage of what the company is trying to do deploying solar energy across the country. But Elon Musk is expecting SolarCity to add $500 million in cash through 2018. I don't know if that's going

to happen. SolarCity right now is $3.3 billion in net debt and has burned $2.5 billion in cash over the past year. So, it's not going to be an easy task making that a cash-positive business. Home Depot and Lowe's both reporting third quarter earnings this week. Both stocks down around 2%, which is a little surprising, Jason, just because Home Depot's quarter was so much better than Lowe's. It was. First things first, if you put money in either one or both of these five years ago, then give yourself a little pat on the back, because you probably feel like you've got it all figured out. The stocks have performed very, very well, and it makes

sense. It is a huge market opportunity, they're very well-run businesses, and they're pretty darn Amazon proof at the end of the day, we've seen. It seems very simple in hindsight, but again, I guess hindsight is 20-20, and so it goes. But looking at the numbers, yeah, Home Depot seems like it is a better-performing business. Top line was up 6.1% vs. lows at 9.6%, but the comps numbers certainly were more in Home Depot's favor. I think an interesting point on these companies, when we get back to the service thing we were talking about earlier in the show, I was looking at the store bases vs. employees vs. sales. Now, they're pretty close to parity now in store base, but if you look at employees,

Home Depot has about 100,000 more employees than Lowe's. And if you look at sales per employee, Lowe's comes at about 219,000 per year versus Home Depot's 243,000 per year. I think there is something to investing in that service. It sounds like Home Depot has a bigger presence and better service, which certainly could play out in the long run. But both companies are making great investments in the e-commerce business, and that's working out well for both of them as well.

Yeah, you've always had this valuation gap where Lowe's was just a bit cheaper, always pretty much, than Home Depot. Maybe Lowe's is trading at 10X, Home Depot 12X. But in this particular case, I think it's worth to pay up a little bit. 12X is not really that expensive. It's better to pay up for quality and for a better business with better scale. Yeah, aside from the years where Bob Nardelli was CEO of Home Depot between 2000 and 2007, Home Depot has essentially always been a better operator than Lowe's, whether you're looking at inventory turnover, return on invested capital, return on equity, profitability.

So, it's worth paying a premium for Home Depot. And if I was a betting man, over the next five years, I would expect the gap between the performance of Home Depot shares and low shares to continue to widen in Home Depot's favor. Let's bring in our man Steve Broido in from the other side of the glass. Steve, are you loyal to one of these businesses over the other, or is it just whichever one is closer to your home, that's where you're going to do your home improvement stuff? There is a Home Depot near our home, which I think may be the worst parking lot in all of America. Because it's so filled?

It's so filled, and they store everything. They're storing all their supplies now in the parking garage, so there's nowhere to park. That being said, I prefer Lowe's, but Home Depot's closer. All right, Ron Gross, Jason Moser, David Kretzmann. Guys, we'll see you a little bit later in the show. Up next, a conversation about what motivates us with best-selling author Dan Ariely.

Stay right here. You're listening to Motley Fool Money. If I had a hammer, I'd hammer in the morning. All right, before we get to Dan Ariely, I've got to say a word about Rocket Mortgage by Quicken Loans, because if you've ever bought a home, you already know how frustrating and time-consuming getting a mortgage can be. 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, you can do it all on your tablet or phone. So if you're looking to buy a home or 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. Welcome back to Motley Fool Money. I'm Chris Hill. Dan Ariely is a professor of psychology and behavioral economics at Duke University. He is also the best-selling author of books including Predictably Irrational and The Truth About Dishonesty. His brand-new book is Payoff, The Hidden Logic That Shapes Our Motivations, and he joins me now.

Dan, thanks for being here. My pleasure. I don't want to try and sum up your book in one sentence, but in reading through your book, one of the takeaways for me was the phrase, not money. That when we think about what motivates people, that was one of my takeaways from your book was that for all the talk of salary and compensation and what it means in the world of business, it turns out that money in and of itself is not really the greatest motivator. It's not just that it's not the greatest motivator. Sometimes it actually takes motivation away. And what's interesting is that in our kind of arsenal about what we think will motivate people, money plays such a big role. But when we do experiments about it and we try to figure out what actually motivates people, you know, we should pay people and people should get paid well.

But money is just not the remedy for motivation. One of the things you demonstrate in the book is how motivating it can be to make something. even if what you're making is not necessarily all that significant even if what you're making doesn't even take all that much effort which i and i love this example one of the ways you illustrate this is with the history of cake mixes yes uh yeah so so cake mixes the story was that they made a cake mix that was basically just all powder and put it with water put it in the pan bake it you have a cake and these cake mixes were just not very popular and they thought it was maybe the flavor but no the flavor was great and what they ended up finding is that it was the

feeling of ownership that was the issue imagine you basically pour something into a pan and you bake it and you give it to a guest or your family and they say thank you for the cake how much can you take credit for this not that much so what did they do they took the milk powder and the egg powder out of the cake mix now you had to add something to it and all of a sudden people were able to take credit for it and they used it much much much more by the way it's kind of interesting to think about to think about credit because i when i when i kind of walk around in all kind of companies it is always shocking to me how stingy people are with giving credit to other people it seems like people have this notion that credit is a zero-sum game that if I give you credit I

somehow have less credit for myself and sometimes people seem like they're more stingy with credit than they are with with bonuses but but the reality is that credit is incredibly motivating if people feel that they are a part of something it's a very big deal and being able to claim some credit or connection and ownership is such a motivating force that by being stingy with credit, we're actually killing motivation. Well, that was one of the other takeaways I had from the book was that for anyone who runs a small business or is an executive or even a middle manager at a larger company, there are so many examples in this book of how to motivate people that have nothing to do with money. That in terms of, you know, just the whole notion of,

well, if we can just create the right financial incentives, then that's going to motivate employees. Whereas you have all these examples of motivation being much more about credit, verbal credit, recognition, and really things that fit into the culture of the workplace rather than the budget of the workplace. That's right. And, you know, in recognition, by the way, the study on recognition kind of surprised me in how intense it was. So in this study, we basically got people to fill some paperwork. And we paid them per sheet of paperwork that they filled. And we paid them more for the first and less for the second and less for the third. And we basically measured how long they will persist until they had enough. And in one condition,

they filled the first piece of paper they gave it to the research assistant the research assistant looked at it from top to bottom and said, uh-huh and put it on a big pile so there kind of was a recognition that they did something, and then he said, do you want to fill

another one for five cents less, and so on and so forth in the second condition they gave them the same sheet and he didn't look at it, and he didn't say uh-huh, he quickly put it on a pile of paper In the third condition, the moment he gave them the sheet, he took it and immediately put it through a shredder.

So what happened in these three conditions? How much did people persist? In the condition where people looked at it, acknowledged it, said, aha, looked at it from top to bottom, people worked much longer for much less money. They persisted in the task for much longer. In the shredder condition, people stopped much faster. But the question was, what about the condition in which you don't go ahead and destroy people's work in front of their eyes? You simply don't recognize them.

You simply treat them like they were not there. And that condition was very similar to the shredder condition. So the lesson, of course, is that if you really want to demotivate your employees, the right way to go is to shred their work in front of their eyes. But you get almost all the way there if you simply don't recognize, if you simply don't acknowledge that people have done effort. And it is rather shocking how often this actually happens, that we think that people should just do it and they should be happy that they're doing it and so on.

But how much a little recognition helps, it's really an amazing force that we don't utilize enough. do you ever design experiments simply for your own entertainment you've got all those students at duke university that you're teaching do every once in a while do you just say no i'm not trying to prove a point uh i'm just not particularly enamored with this group of students and so just just for my own fun i'm just gonna mess with them so so not not to mess not to mess with them But I gave a talk last night in Palo Alto, and two of my previous students showed up, and they reminded me that this was a big class. It was a class with 500 undergrads, and they reminded me that after I sent everybody their papers, they had a paper to submit at the end of the term,

And I emailed everybody, and I said, I lost the grading sheet. I lost all your grades. Can you please tell me what grade you got? And I got people to tell me back what grades they got. So this was not exactly to mess with them, but I was just curious to see what would people report. I didn't really lose the grading sheet, but I was just curious to see what they would report. So, yes, I do lots of experiments. I do experiments on myself.

I do experiments on other people. And, you know, it's a wonderful way to live, actually, to kind of question, you know, is what we're doing correct? Can we do something different? Could life be a bit more fun? So I like this. All right. Before I let you go, let me spot you up with a couple different scenarios. And if you could give me one bit of insight that you have on what would be helpful on the motivation front.

And these are things that I think a lot of people deal with in one way, shape, or form. When it comes to losing weight, are we better off trying to motivate ourselves towards exercise or a healthier diet? No question about it, healthier diet. And not just that, what we need to do is we need to create rules. So think about something like Alcoholic Anonymous. we have a rule that says no drinking right the rule is not you can have half a glass a day and and the reason is that when we have strict rules it is much easier for us to know where we are and to keep track and the same thing goes for dieting if dieting is always about the next fork

full it's really hard to do but if you basically say something to yourself like no soda and no dessert unless it's the weekend. Or you basically create some very strict rules. Those things help a lot. So diet and strict rules about diets. What about trying to motivate children to help out more around the house? So one of the temptation, of course, is to bribe kids and pay them to help. and that's very effective in the short term. The problem is that when the bribe or payment goes away, their motivation goes away as well. So when we think about helping around the house,

we want to get things to be intrinsic motivation, not motivated because they're getting something else but because they really enjoy it. It takes a bit longer but that's the path to take. So you want to tell kids that this is part of their role in the household. This is part of their contribution, that they are responsible for X, Y, and Z. And over time, they will develop some joy from knowing that it fits with a greater framework of this is their contribution to the household. All right, last one.

What about if you're allegedly trying to talk your spouse into going on a trip to a particular destination that allegedly you might be more interested in than your spouse is? This may or may not be something I'm going through right now. Yeah. So I think the thing to do would be to frame it in a broader sense, right? It is not just about this one vacation. It's about saying, I want us to... So here's what I would say. I would say, I want us to try lots of different things. I think we should experiment. We should figure things out why don't we just try something different and if it doesn't work out we'll learn for the future that this doesn't work out but let's expand our set of things that we're going to

to try and if you move it from this one vacation yes or no to kind of a longer time frame of saying you know we have 40 more years of vacation let's try different things let's kind of experiment and so on it's easier to take it's kind of like portfolio theory right it says let's let's take a bit more risk on this particular vacation. By the way, I did the same thing a couple of years ago. My family wanted to go to Hawaii in the winter, and I wanted to go to Iceland. I said, let's go somewhere really dark and cold for the winter and see what it is. And as you can imagine, there was not too much excitement up front. I can imagine that. But it turns out it was amazing. It was amazing to be for two weeks in a place where you had only

very few hours of of light and lots of snow and and cold and so on certainly a very wonderful memorable vacation and i i think it's good to experiment it you know what too many times in general we we have our own comfort zone and we don't deviate from that and because of that we're not really finding better opportunities for happiness so i think exploring experimenting trying things these are all wonderful things to do that's great advice

and I'll let you know how it turns out the book is Pay Off the hidden logic that shapes our motivations it is out this week

it is available everywhere and it's fascinating stuff as always Dan Ariely thank you so much for being here my pleasure

hope to talk to you soon 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, 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 once again with Jason Moser, David Kretzmann, and Ron Gross.

You can listen to Motley Fool Money on radio stations in London, across the continental United States. And now, I am happy to welcome our newest affiliate station, News Talk KGUM in Guam. I would say road trip, but that is going to be a heck of a long road trip. That's 14 time zones. That's nice. Wow, welcome. Every year, the President of the United States gives out the Presidential Medal of Freedom. It is the highest civilian honor the President can give. And also happy to

report that one of the honorees this year is Newton Minow, the father of Nell Minow, our most popular guest here on Motley Fool Money. So, we're happy for him, we're happy for Nell. She's going to be on an upcoming show, so we'll talk to her about all of this. But I feel like this is, in a very, very, very, very small way, an endorsement of our show. Absolutely. It's actually not, but let's go with it. We'll take what we can get, Ron, shut up. And finally, you can check out past episodes of Motley Fool Money and all of our podcast by going to podcast.fool.com. Also, when you go there, you can test drive our

flagship service, Motley Fool Stock Advisor. The latest issue of Stock Advisor just came out with two new stock recommendations from David and Tom Gardner. So, check it out by going to podcast.fool.com and just scroll down to the bottom of the page. Alright, it is the time, once again, to get to the stocks on our radar. And we'll bring in our man, Steve Broido, in from the other side of the glass to hit you with a question. Ron Gross, you're up first. What are you looking at this week? So, in this age of Trump that we are now living in, I've taken a look at some infrastructure stocks and some industrial stocks, and 3M, MMM, stood out at me as one that looks interesting

to me. Obviously, an industrial conglomerate has their hand in just about everything you can find. 21 times earnings, not cheap, but also not expensive. I love the 2.6% dividend. And interestingly, the stock is only up about 1%, 1.5% over the last month, so it has not really participated in this run-up in stocks following the election, which was one of the reasons I got interested. I want to make sure that there's nothing going on here. October report was pretty weak, so we'll see. But if this infrastructure bill that Trump keeps talking about goes through, I think this could bode well. Steve Broido, question about 3M?

When I think of 3M, I think of everything and nothing. I think of scotch tape and then a bunch of other products. Is that a problem for this brand? They literally have their hands in everything. Everything from truly industrial products to consumer products and health products, they're everywhere. Is it too much diversification? You could make the argument that perhaps it is, but it works for them. They're a true conglomerate. If they spun off Post-it notes as an IPO, you'd buy into that. Jason Moser, what are you looking at this week? Yeah, in line with Ron's election theme there. It certainly has been an interesting time here

for the market. But Ellie Mae, listeners will know this is a business I've been watching for a while. Tigger is ELLI, the mortgage software as a service provider. That stock has actually pulled back about 25% since the election. It's fundamentally the same business, though. They've always enjoyed very nice barriers to entry in regard to the tech side and the regulatory perspective. And while Trump seems to be a bit anti-Dodd-Frank, it remains to be seen exactly how that could play out on the housing side of things. And I think it would be very difficult to justify trying to blow up the very system that was put into place to try to avoid a future housing crisis, given that Wells Fargo, other big banks, lenders across the country have already

adopted Ellie Mae's services. I think this is a bit of an overreaction, and I think they're getting a little bit of a hit there due to some interest rate concerns as well. But this is still a very good business with a very good competitive position. It's one that I own. We own it in a million-dollar portfolio. It's on our radar. Steve, question about Ellie Mae? Sure. With Ellie Mae, aren't interest rates at historic lows, they're rising? And doesn't that really threaten the core of why people buy homes? Well, it definitely threatens the business. Now, thankfully, Ellie Mae makes

is money from refinancing as well as purchase. That is one of the concerns today, is if refinancing slows down, will they be able to make up for that with purchase volume? Thankfully, they also make money via subscription revenue as well as transactional revenue. It's a good, diverse business that is not really stuck in just one category. O' They don't have a Post-It note to knock off, do they? But if they did ... O' That's where the money is. David Kretzmann, what are you looking at?

I'm looking at one of the stinkiest stinkers I've come across. I'm looking at At Home. This is a recent IPO. It's a chain of 115 home decorating accessory stores in the U.S. So, in English, this is a big box brick-and-mortar retailer selling home decorations and furnishings in the Southeast. They have no website or e-commerce presence. They have a net debt of $540 million. They've burned $16 million over the past year. They're opening more than 20 new stores a year in locations where JCPenney, Sears, and Kmart used to be. Steve, have I sold you yet? Is this a short?

This is a short. O' Okay. What is the ticker? H-O-M-E. O' What is the downside again? I'm trying to ... Downside is zero, Steve. Zero. Actually, yeah, the more I look at it, maybe there's something to like here. I don't know. O' This sounds like Pure One Imports, but smaller and not as good an operator.

Yeah. This company actually went bankrupt in a former life in 2004, then a private equity company came back in and IPO'd it with a ton of debt. So, I really don't ... I don't get it. success post-IPO? Did we get any kind of a lift in the shares or it's been straight down? It's down about 25%. Not pretty. That's private equity letting regular retail holders with the bag, as they say. O' Bread and butter. Steve? I might have to go with Ellie Mae on this one. I think that's where we're at today.

O' Alright. David Grutsman, Jason Moser, Ron Gross, guys, thanks for being here. Thank you, Chris. O' And again, you can check out past episodes, just go to podcast.fool.com. Not just of Motley Fool Money, but all five of the Motley Fool's podcasts. That is going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer. Next week, you know you've been waiting for it. It's our Thanksgiving special, so stay tuned for that. I'm Chris Hill. Thanks for listening. We'll see you next week.