Motley Fool Hidden Gems Investing - Trouble in the Magic Kingdom?

Episode Date: August 7, 2015

Walt Disney shares fall on concerns over cord cutting. Is it a buying opportunity or is Disney losing its magic? We tackle that question and talk CVS, Coach, Lumber Liquidators, Priceline, and Zillow. And Paul Downs talks about his new book, Boss Life: Surviving My Own Small Business. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill, and joining me in studio this week from Million Dollar Portfolio, Jason Moser. From Motley Fool Income Investor, James Early. And from Motley Fool Funds, Brian Hinman. Good to see you as always, gentlemen. Hey, you, Chris. We've got the latest earnings from Wall Street. We will dip into the Fool mailbag, and as always, we'll give you an inside look at the stocks on our radar. But we begin this

week in the Magic Kingdom. Third quarter profits for Walt Disney came in higher than expected, making it the 11th quarter in a row. That has happened, Jason Moser. And yet, the cable division was a little weak. CEO Bob Iger lowered guidance for the cable division, and that alone appears to have sent investors heading for the exits. Yeah. It's very striking, the reaction this week to this earnings report, because in total, it was a very good quarter. I do understand concerns in regard to the slowdown in the cable department, but to me, this is more the market seeing the trees and not really the forest. The market's concerned about the growth in ESPN, and that's a valid concern.

The cable segment makes up about 50% of this company's operating income, and ESPN makes up about two-thirds of that. But I think the market's a bit more concerned thinking there is a weakness in the ESPN brand versus what I see as potential uncertainty in exactly how that's going to be distributed here in the coming five to 10 years. I think that's more really the reason why investors may be concerned today. We're in this shift to the over-the-top distribution, we're getting our content different ways, mobile, internet, and things like that. So, it's not really that ESPN is going away, it's just being distributed differently. I would actually argue that long-term, given the proliferation of the internet and

mobile technology, this is a better opportunity than ever before to grow and really nurture that ESPN brand, so to speak. Given the global nature of sports, and the fact that it translates globally, really, I think that this is an opportunity for them to really get ESPN out a broader audience over the longer term. And Brian, I've got to say, the sell-off surprised me, just because it's as though they're not opening a brand new theme park in Shanghai next year. It's as though Star Wars isn't going to be the biggest movie of all time later this year. I do think it's a little myopic here. The bottom line is that the business model

is changing a little bit on the distribution front, and ESPN for so long has been a cash cow that you could count on quarter in and quarter out. And it's not as though the distribution model changes are a surprise, but Iger acknowledged it in a pretty big way. And I think that just spooked investors a little bit. That's right. The stock is still up 210% over the past five years, though. So it's not like a ... ESPN, though, has been their little flagship, I guess, or their cozy little baby. I don't know what that analogy means. But that was the main thing we've been hearing for the past several years. Every quarter, ESPN, ESPN, ESPN. So, obviously, it's symbolically important

to Disney. Yeah, we talk about certainty, right? I mean, I think the cable model that we've seen for so long, that cable model more or less offered a guarantee of sorts for the longest time in regard to ESPN. That's shifting a little bit, right? There's a bit more uncertainty. So that's a fair point, I think. But again, like Brian was saying, like you were saying, there are other ways this company makes its money. And I mean, when you look further out, this is a business that still, as Ron Gross would say, it's firing all cylinders. We got a question along those same lines from Stefan Schumacher in Wheeling, Illinois.

He writes, there's all this talk about cord cutters and the emergence of subscription services like Netflix, Amazon, HBO, and possibly ESPN, but you still have to pay someone like Comcast or AT&T to provide the internet, and they overcharge you for it. If you don't bundle it with cable, in the Chicago suburbs, it's either Comcast or AT&T, and when you add up the costs of the subscriptions with the cost of the internet, it's not that much better than a traditional cable bundle. Until someone comes along to change this, do you think the cord-cutting revolution can only go so far?" I will say, Jason, it certainly is moving a lot slower than I think a lot of people predicted.

Well, I think it's a fun headline to debate. We've talked about this on MarketFoolery a number of times, in that you have on the one hand this multi-channel cable subscription package, but then if you break that out and you just start subscribing to the services that you want, well, eventually, those services realize they're in demand, they can raise their prices, and yeah, at some point, you are paying basically the same thing. So, yeah, I think that listener's point is very well taken. Yeah, but I think we're closer than this listener may think. You've got some pretty big companies, some pretty well-funded companies going after changing this model. I mean, Facebook

with internet.org and Google Fiber, Google laying fiber across different cities in the U.S., are really looking to circumvent that model. So, there are some big players investing big dollars and almost using it as a loss leader to fund their very profitable operations elsewhere. Second quarter profit for CVS Health came in higher than expected, but they lowered guns for the full fiscal year and shares down a bit this week. And James, when they announced they were going to stop selling tobacco products, they knew it was going to affect the front of store sales. And when you look at the results in this quarter, it really did.

Yeah. I mean, quitting tobacco is hard for anybody, including CVS. They lost about $2 billion in annual sales, I believe, from this. But it's the right thing to do. The stock is still up like 40% in the past year, so it's not bad. Margins were down this quarter. Prescription stuff was good. The issue was just people were not buying as much non-prescription stuff. People weren't coming in to buy cigarettes and buying all these other things that CVS sells. I mean, they sell DVD players. I mean, how weird. Who goes to CVS to buy a DVD? I mean, that person should be put in a database. It's just such a weird behavior. Like, I just want to record that. But, yeah, they are doing well.

I mean, they sold $11 billion in new pharmacy benefit contracts. That's a lot of money. But I support them. You know, I feel like I want to go buy something from CVS the next couple days just to show my support. Because I think it was the right thing to do. You're going to pick up a DVD player? Maybe a DVD player. Maybe.

Strong second quarter for the Priceline Group. Bookings were up, profit was up, revenue was up, and Brian Hinman, just like we saw last week with Expedia, all of this despite the currency headwinds. Yeah, we can call Ron Gross here and say that Priceline's firing on all cylinders, because it really was across the board. I think really what you're seeing here is a nice sort of culmination of a multitude of factors. You've got this secular shift to online booking, that it's just a really nice tailwind for them. They're really well positioned across different categories. They've got Booking.com, they've got Kayak, they've got OpenTable,

they have partnerships in Latin America and China, and they're really growing their vacation rental space. And then you've got the shift to mobile, where they're really performing well. So, a really, really strong quarter for Priceline here. And although competition is picking up, I think there's still room to go here. It's easy to look at this stock and say, over the past five years, it's up 350%. Over the past 10 years, it's up 5,300%. But the bottom line for investors here is that their global share of online bookings is only less than 5%. So, what's stopping them from doubling that over the next five or 10 years, or tripling that? The way that they're executing, the way that they're positioning

themselves now, they've got the ability to get there. Zillow's second quarter results were better than expected, but that still didn't help the stock. Jason, what happened here? We're seeing a lot of this lately, this earnings season, where the stock pops initially once the earnings news comes out, and then it was just steadily selling off throughout the day. It's the rise of the machines, Chris. It's not people doing that, right? Who really knows? It seems to have been a trend this earnings season, for sure. In regard to Zillow, or not, Zillow has gone from just this website-slash-app that used to have a bunch of real estate

information that may or may not be correct, and a silly little tool in the Zestimate that we always like to make fun of just because it was called the Zestimate, to actually now a full-fledged real player in the real estate market here. And I think that the Trulia, I'm pronouncing that correctly now, I'm trying to change that, the Trulia acquisition, while it is a transition year, I think that was a shrewd move on their part to really consolidate, because that really does make them a big player in the space and one that can really start calling more shots as they grow out their advertiser base, their agent base, so to speak. Monthly revenue per advertiser growing is the key there. When you look at the number

of agents spending more than $5,000 per month, that grew 48% year-over-year. Agents spending over $2,500 per month grew 44% year-over-year. The number of agents spending over $1,000 per month grew 34% year-over-year. So, we can see more agents spending more money, and that's really the key for Zillow. And as long as it's seen as a place to get started, they're always going to garner those eyeballs. And like Spencer Raskoff, CEO there, says, advertisers follow eyeballs, and a lot of them go to Zillow. And you touched on this, Raskoff did say earlier this year that 2015 was going to be a transition year for them. And when you look at the stock down in the neighborhood

of 30%. It certainly is playing out that way. I feel, though, that that amps up the pressure just a little bit on 2016. It really does seem like, OK, we're going to give you permission to make this a transition year, but they've really got to hit a home run next year. There's no question about it. When you present the message as they have, and that this year is a transition year, they are basically saying that next year is not going to be a transition year, and so they better bring the numbers. And if they don't, it's a very volatile stock to begin with, but if they don't show the numbers, show us the money next year, I think that the stock could have tougher days. But still, ultimately, we do

like this as a longer-term, 5-10-year stretch. We think this is a very real story that's continuing to grow out. One of the best-performing stocks in the S&P 500 last year was Keurig Green Mountain, and after this week, there is almost no chance whatsoever that stock will be repeating that performance in 2015. Details next. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, James Early, and Brian Hinman. Keurig Green Mountain turned a profit in the third quarter, but for the first time ever, sales of Keurig's coffee pods fell, and so did the stock, Brian. Shares

down nearly 30% this week. Holy cow! Yeah, it was an ouch quarter for Green Mountain, for sure. Basically, the story here has always been, you have a nice razor and razor blade business model. You sell the coffee brewers, and then you sell the pods as a recurring revenue source. And new product growth. And what we really saw was, if those are the three legs of the stool, all three legs got kicked out from underneath the stool on this one. So, it was a pretty brutal quarter. The growth Here, as you said, the first time that K-cup growth has really fallen, and they saw this coming. K-cups were protected by patents for a long time, and they knew those patents were

going to expire and new competitors were going to enter the market. That has happened. Their response to this was putting out the Keurig 2.0, which actually had a scanner inside to read the pods. If you were putting in a foreign pod, a non-approved Keurig pod, it would basically spit it back out at you. The problem is, consumers don't really like that, and they haven't been buying the Keurig 2.0 at all. On top of that, you have another product they put out, the Keurig Mini, that had a big recall on it because it basically lit on fire, had burn risk. So, product No. 1, swing and miss. Product No. 2, swing and miss. And the product No. 3 they have in the hopper here is the Keurig Cold, and it's got a $300 price point on it when

SodaStream can't sell a soda maker to save their lives. So, you've got everything that was good about this company now having turned. And the future doesn't look too promising. So, you don't look at this as one of those situations where, OK, now the stock is on sale, now's the time to jump in? Well, I definitely think there's a business here. The problem is that since Brian Kelly took over as CEO, everything has gone wrong. And so, I think there's just a complete lack of confidence that he is the guy to turn this around, to reinvigorate product innovation, and get this company going back in the right direction. Shares of Coach up this week, despite

the fact that this is the eighth quarter in a row of falling sales, James. Yeah, you know it's bad when your stock rises 5% on bad news. It's like saying, honey, you're not drunk. These guys had a 19% drop in North American same-store sales, a 5% drop in international same-store sales, but actually 3% rise apart from currency. But international was the only good thing they had going for them. To their credit, well, then they took a massive restructuring charge. When things go bad, why not just take some useless restructuring charge, right? They have stopped. This is an I.I. recommendation, so I do follow it, actually. I'm bashing it, deservedly so. But they are in a pickle,

because they have stopped their promotions. At one point, like a vast majority of their sales still are actually to the Coach Outlet stores, through the Coach Outlet stores, which is not the best thing for their brand. So they've cut back on their sales. They've reinvigorated their brands. They're doing everything they can on paper. But fashion is kind of like a jellyfish, right, like slippery and painful at the same time. And they're experiencing that right now.

So I don't know what else they can do, but I know they're doing their best. Wasn't it about a year ago that there was a lot of optimism that they had a new designer coming in? Yeah. What happened to that? They got good reviews, but you've got to have people buy the stuff. Michael Kors has been rocking lately, too. It's not been smooth sailing for everybody. It's something that's going to take multiple years to play out. And the question is, are these young girls who are the future buyers going to keep buying Coach

or going to go somewhere else? Lumber Liquidators shares down more than 35% this week after a disastrous second quarter. Jason, same-store sales down 10%. Gross margins are falling. going, this is a debacle. It is. You would think the solution would be something other than to open more stores, but they're opening more stores. And I'm just floored by that. We know the problems that they've had. Illegally sourced wood, formaldehyde levels in the laminate flooring, and this has become a crisis of

epic proportion. We've had a mass leadership exodus from this company, and really the founder of the business is just stuck here, kind of like, oh man, what do I do now? And when you have an investment that was based on really the gross margin story for the longest time, that they can sell you hardwood flooring at better prices and still make investors more money, well, at some point, something doesn't add up, and we know why it doesn't add up now. I get a lot of questions about this on Twitter as far as, is this a buying opportunity now? Personally, perhaps there is a business here still. I don't really know, but I can tell you, they're going to have a long, long line of litigation to deal with here for the

coming years. And a turnaround is going to take a lot of time. And even then, I don't understand why this necessarily would be a compelling investment from that perspective. So, we get this question of buying opportunity versus selling. Selling, I think the primary reason is when the thesis is broken, and I think the thesis here is clearly broken. So, I'm not telling people to sell, but I would be very careful looking at this as a buying opportunity, because I don't think it is. That's the thing, even without the scandal, if you just look at the fact that gross margins in one year have gone from 40% to 25% ...

That's a sign there's a problem. Planet Fitness, the chain known for offering gym memberships for $10 a month, went public this week. The stock opened at $16 a share and closed the first day at $16.10 a share. Brian? They got it right! Yes, it was up a robust 0.6%. Something tells me that this is a business that doesn't necessarily have the pricing power that we typically like to see in investments. I think that is a correct characterization. And I think the market sees that as well. The other problem with a lack of pricing power is that there's no differentiation,

really, in this business. I mean, there are 34,000 fitness clubs in the U.S. And the story with Planet Fitness is that they're going to grow from 1,000 to 4,000 in the U.S. and expand in Canada as well. Well, this is not just Greenfield expansion. I mean, this is a mature and highly competitive space that they operate in. There are no barriers to entry, as they're proving now. And so, really, what you're betting on here is the Planet Fitness as a brand. And I just don't know that anyone has any confidence in Planet Fitness as a brand, especially when we know that the real power of a brand is that you're able to charge more for your product. And the way that they try to differentiate their product

is by charging less. So, there's just a lot about this story that doesn't add up. O'Reilly. Isn't it kind of heartening, though, that for once we have an IPO that doesn't just shoot to the moon on a business that, you know, it seems like people actually looked at the S1 and said, you know what, I don't think I want this. Either that or the market just collectively said, really? You guys are actually going public? Seriously? Do they have equipment? Is it just like a room? I think Brian was talking about this earlier. Their deal is they've stripped away all of the classes and frills.

Bathrooms? They've also stripped away most of the things that would attract what they call lungs. So these are the people who wear those tank tops with the really skinny shoulders. Much like myself, yeah. Yeah, and they walk around with a gallon jug of water and just pound it, and they grunt a lot when they lift weights. So they're really trying to democratize health and fitness. So they basically have just a bunch of machines. They have a bunch of treadmills and ellipticals and that sort of thing.

All right, guys, we'll see you a little bit later in the show. Coming up after the break, we will learn about the boss life and what it's like to really run a small business. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. If you've ever dreamed about starting your own business, pay close attention to our guest this week. For nearly three decades, Paul Downs has been running his own custom furniture business,

and he provides a window into the ups and downs of a year in the life of being a business leader and just what it's like in his brand new book, Boss Life, Surviving My Own Small Business. Paul Downs, good to talk to you. Well, thank you for having me on the show. You've got a busy life. You're running your own business. You're married. You've got three kids? What made you want to add to your workload by writing a book? Well, I had been writing for the New York Times, You're the Boss blog, for a number of years. And that's an interesting gig for me because I've never been a writer before. And my brief there was basically just to write about whatever I thought was interesting about running my own business. And I really enjoyed it.

I was able to talk about a lot of things that puzzled me and have a great dialogue with the commenters in the Times. But there is some limitations to the blog format that I felt prevented me from telling the story in a way that I hadn't seen it told elsewhere. And that is, instead of me just dispensing advice and talking about one subject at a time, the reality of my life as a boss is that I have to deal with a huge variety of different things each day. And much of my day is the plan gets thrown away by 10 in the morning, and I have to respond to all kinds of puzzling things that fall in at random. And I think that that's one of both the most challenging and the most interesting things about being a small business boss.

And I wanted to bring readers into my world and tell that story. When people think about starting their own business, whether it's right out of college like you did, or leaving whatever job they have and striking out on their own, do you think that is the part that people underestimate the most, just how unpredictable things can be on a day-to-day basis? Or is there something else that's probably an even bigger thing that they're underestimating? Well, I think that it's hard for me to know exactly how prepared everybody is for starting a business, but it's surprising.

Let's say you have a company like mine that's under 20 employees. It's surprising the vast range of things that the boss ends up dealing with simply because somebody else may not be able to do it. And it's also a struggle to sort of figure out what to do next in an ever-shifting situation. And people may have some preparation for that or they may not, but that's the big challenge. You really don't hold anything back in terms of what you go through, what your employees go through, what your family goes through as well, including a topic that I think for

a lot of people is something that they are very reluctant to talk about, and that is your pay. Over the years, and you've been running this business for nearly 30 years now, but over Over the years, you've raised your pay when times were good, you've lowered them when times were bad. Give me a sense of what that looks like. What were the highs and what were the lows? This is a business that I started in 1986 with basically no revenues. I've grown it over the last 29 years to the point where, last year, we had about $2.7 million in revenues

and 17 employees. The total revenues over that whole span is about $26 million. The total income that I've taken out of that in that entire time is $1.69 million, about 6.4%. The average income over that whole span, $58,314 a year, or $26.50 an hour. Now, that's mediocre pay for the amount of hassle I've put up with. But in the best years, I've made close to a quarter million dollars a year. How many times did you just think to yourself, you know what, this ain't worth it, I'm just going to go out and find a basic nine to five job working for someone else? Probably zero times, actually, because I'm not the kind of person who gives up. And even though the pay has been spotty at times, I think that one of the things that I've loved about running

a small business is that it's a constant challenge. There's never any boredom. And I'm in charge. I'm the kind of person who likes to be in charge of things. And I don't really care for other people's systems. And so I've been able to manage the challenge of managing my own incompetence and dealing with my own problems, but also enjoying my own triumph. You're listening to Motley Fool Money, talking with Paul Downs. His brand new book is Boss Life, Surviving My Own Small Business. One of the things that you write about is advice and the importance of finding mentors. How long did that take you to sort of figure out, you know what, I'm going to need some help from outside of this business if I'm going to keep this thing going?

Well, it's interesting because I started my business at a time when information did not flow like it does today so that was one of my biggest problems from opening day and i i never really got any help until about 2002 when i actually took on a partner and then it turned out that the partner even though he had many uh good features he also gave me a lot of bad advice and it wasn't until i joined vistage in 2012 that i started to get a real broad range of advice from people who knew what they were doing. And I got to say, good advice from people who actually know your particular situation is the best. And internet advice, which falls down on us like a gentle rain every day at all moments, is usually not so good because every piece of advice you get is replaced

in the next two or three minutes by some other piece of advice. And it becomes overwhelming after a while. I've found that mentors who spend significant time with me get to know both me and the people in my business. Those are the ones who have really helped me. At The Motley Fool, our main focus is on publicly traded companies. Was leading a public company ever an aspiration for you? Or do you think that the benefits of running a private company outweigh whatever benefits come with running a public company? I don't think my own company is suitable to go public, but I do know a number of people who've taken companies public, and I know another bunch who have substantial privately owned businesses. And I would say that there's

potential even in a business that maybe only grows in two or three million bucks for a sole owner to do very, very well. And so, my basic inclination would be to keep things private if I had the choice. Again, you really don't hold anything back in this book, and one of the things you talk about is sort of your shame, and that's the word you use, your shame at your lack of success. But given that, with all the ups and downs of the last three decades, not just for your business, but for the economy in general, I think a lot of people would consider where you are today as a success. When you think about the next couple of decades,

what does success look like for you? Well, given that my financial success has been not to be taken for granted, I found success in other aspects of the business. I take satisfaction in mostly in seeing how we've been able to put together a good crew of fine craftsmen and build a product, which is difficult to make, and work with clients all over the country. And I've been able to watch my employees, most of whom I'd hired as young men when I was young myself, we've all developed together and sort of become adults. We've gotten married, had kids, bought houses, bought cars, you know, and we're participating in economic life of the country as a solid, middle-class set of people.

And I think that I can look in the mirror and say, hey, you were instrumental in keeping this little tribe going, and I'm very proud of that, even though I haven't really walked away from the whole experience with a ton of money. We're actually having kind of a bad year this year. We had two good years, and this year there's a bunch of factors I don't want to go into, but I don't think I'm going to be making much money, if any. And that's just the life of the small business owner, and that's one of the things that I wanted to talk about very, very clearly,

because that's what you're in for. All right, before we wrap up, I need one tip from you, and it can be about woodworking, it can be about home improvement, what to look for when I'm buying furniture, just one tip along any of those lines. um consult with your significant other oh that's a given paul come on i mean i may look dumb but i'm not that dumb okay uh yeah you don't ever want to surprise someone with a gift of furniture if you're looking for a technical tip uh think of uh there's

solid wood furniture and there's veneered furniture and it's difficult to tell whether that's a good thing or a bad thing, unless you consider the product itself. In general, the more you pay for a piece of furniture, you've probably got better craftsmanship along with it. Is the stuff in your home stuff that you've made, or do you actually go out to Ikea every now and then? Both. You know, I've made quite a bit of the furniture in my home, but because I've been poor for most of my adult life, when I couldn't make something, I would go to Ikea. Or if we expected to throw it away in a few years, I'd go to Ikea. So it's a weird mix in my household. The book is Boss Life, Surviving My Own Small Business. It is a very intimate portrait of

a year in the life of a small businessman. Paul Downs, thank you so much for being here. Thank you. I appreciate you asking me on. Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money. Send lawyers, guns, and money. Dad, get me out of this. Ha! 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. I'm Chris Hill. Joining

me in studio once again, Jason Moser, James Early, and Brian Hinman. Guys, before we get to the stocks on our radar, let's dip into the Fool mailbag. You can always email us. Radioatfool.com is our email address. From Eric Hedberg in Sweden, he writes, please show MasterCard some love. It's a fantastic company with a product that has enormous potential in the global market. Is MasterCard simply too boring for you guys to talk about? No, sir! Eric, great call. MasterCard is a wonderful toll booth business. It makes money every time a MasterCard card is swiped, and it makes a small percentage of every dollar that is spent across its network. So, this is a fantastic business. The real story here

is a war on cash. Most transactions are still done on cash, and so MasterCard has decades and decades of runway ahead of it. From Johnny Grisdale in North Carolina, can someone please discuss InvenSense's earnings and the market's reaction? The numbers for the last quarter were good. I realize guidance trumps results for the market, and that it was a little soft, but it didn't seem bad enough for this reaction. I'm an owner and I have no intention of selling. I'm wondering if I should consider adding. Jason, obviously we can't give specific guidance, but InvenSense is a chip maker that you watch. What do you think?

Yeah, very good observation there on guidance trumps results. Typically that is is the case, because it's always about what's next. I tell you, with InvenSense, I own a handful of shares myself, and I am really, I'll be honest, I'm losing patience with them. The problem is that these types of companies find themselves in a very difficult position in the value chain. They supply big companies like Apple, for example, Samsung with their chips, but as one colleague put it so bluntly, they're basically perpetually on a treadmill, and that treadmill is just always going on an incline. They have to constantly keep running to innovate and bring something new. Another company like that, Sierra Wireless, I find

the same thing. When I look at these chip makers, I become less enamored with them. I don't know that I would put it at the top of my list as one that I would be adding to it this time. Question from Sam Burgess. I was recently looking at investing in Cedar Fair, the amusement park company, and I noticed it was a limited partnership. What does this mean in simple terms, and what would some of the advantages and disadvantages be with investing in a limited partnership compared to investing in a corporation? James? The short answer, Sam, is that, maybe it's not so short, in the 80s, Congress made this

MLP structure allowed so that the companies wouldn't pay corporate taxes. This was to encourage infrastructure investment in the U.S. energy business, basically pipelines and stuff. And a bunch of cheaters sort of snuck in that used this tax code to their advantage. Cedar Fair was one of those. There was a big legal shakeout. The laws changed, but Cedar Fair survived. So it's one of the few remaining non-energy MLPs. Practically speaking, what that means is you have a tax deferred distribution, which is a special type of a dividend. So you basically don't pay taxes right now. When you sell, you do, but it's sort of a good way to compound your investment. I love MLPs and the energy business, and Cedar Fair

has that structure going in the amusement park business. And it's a little wrinkle to your taxes, though. It is definitely more complicated. There's plenty of information you can Google for to learn about MLPs and the tax structure. I won't get into it all here, but just definitely Google for it before you buy a bunch of stock. You don't want to spend a few minutes talking about tax structures for MLPs? Come on, that's riveting stuff. It is time for the stocks on our radar.

And, of course, we'll bring in our man Steve Broider from the other side of the glass to hit you with a question. but joining Steve on the other side of the glass this week, very special guest, Chuck Daley, longtime listener sitting in this week. Thanks for being here, Chuck. Always welcome here at Fool HQ. Brian Hinman, what are you looking at? So, Steve, I've got Compass Minerals for you, ticker symbol CMP. This is sort of a safety blanket right now with all the volatility in the market. This company mines rock salt, and they sell a fertilizer called sulfate of potash. And this is a highly advantaged company because they have the world's largest salt mine, and it's located right on the Great Lakes with access to the Mississippi River, so they can

transport it to the Midwest, where there's a lot of snow, at really cheap prices, cheaper than all of their competitors. This is very well-run, cheap valuation, and a 3.3% yield. Steve, question about Compass Minerals? This may be off the radar, but sometimes I'll drive through Baltimore and look to my left, and there'll be large piles of salt. Is that okay to leave that out in the rain all the time? Is that concerning to anyone but me? That seems like an error on Baltimore's part, but that's great for Compass if they do that. They're covered here in Virginia. I've seen that. James Early, what are you looking at? If you don't mind being bored out of your

mind for about 30 seconds, I'm going to go with Maiden Holdings, which is a reinsurer. But it's not the typical reinsurer that you might think of. You think of some big catastrophe, and the reinsurer insures the insurance company. These guys mostly do what's called quota share reinsurance, meaning they just take offloaded business from just a regular primary insurer that just wants to get a little bit off its books in exchange for a finder's fee, pay a 3.1% yield. What I like about insurance companies writ large is that in a period of rising interest rates, they tend to do better. They hold a lot of bonds, and they tend to refurbish those bond portfolios fairly frequently, which means they're much less sensitive.

So it's sort of like a different kind of a safety blanket in this type of climate. And the ticker symbol? M-H-L-D. Steve, question about Maiden Holdings? Do you trust the concept of reinsurance if there's a lowering tide? So if everything is doing poorly and all these companies do badly, will the reinsurers be able to pay off? You know, the reinsurers have their own actuaries. They manage the risk.

You know, as long as you – I mean, reinsurers just insure, but for insurance companies, basically. So Maiden, actually, they do have one big sugar daddy company called Amtrust. It gives them a lot of business, but they independently underwrite their own business. So far, I trust them. Their results have been pretty stable. Jason Moser, what are you looking at this week? Well, Chris, I'm dedicating this week's stock on my radar to Matt Greer. I know he's going to love that I am now shining a spotlight on the Jangler. Bo Jangles, ticker is B-O-J-A.

And, you know, they just reported a very nice quarter here this week. System-wide, comps were up 4.4%. And it sounds like a lot of that was attributed to price, so maybe they have a little bit of room to raise those prices. They whip up a mean chicken biscuit. So, top line growth up 13%. They're raising the number of stores to be open this year to potentially 63. Raised guidance slightly. So, this is an interesting story. It's maybe tugging at my heartstrings a little bit, because I grew up eating Bojangles. O' They don't have them around here.

They're around here. There's one in D.C. at Union Station. They're not peppered like Starbucks', for example. But, yeah, I mean, I think that's the one concern I've had, is I wasn't really sure. I'm not really sure about the market opportunity, how well it will translate across the country. But, again, they do make good food, and I'm going to give this one a look. Steve, question about Bojangles? Is there something I should never order from Bojangles?

If I plan to go, is there something I should just avoid? I can't think of it. That's a good way to think about menus, by the way. It's sort of the anti-recommendation. Just whatever you do, just stay away from that. But you're saying ... I mean, everything I've ever had there, I've liked. You seem experienced in this dining. I grew up with it. It's all over South Carolina, James. Steve, Bojangles, Maiden Holdings, Compass Minerals, pretty eclectic group this week.

What do you like? I don't own any mineral companies, so Compass gets my vote. Salt wins. So, you're not put off by what you saw in Baltimore? I am put off, but it's complicated. I don't know what's going on with all that salt. It might not be Compass Mineral Salt that's left. It could be somebody else's.

It could be some other company's salt. All right, guys. Thanks for being here. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening.

We will see you next week. Thank you.