Motley Fool Money - Motley Fool Money: 01.24.2014

Episode Date: January 31, 2014

Netflix investors see green after strong subscriber growth.  Microsoft surprises with strong Surface sales. And Starbucks serves up big earnings.  Our analyst discuss those stories and share some stocks on their radar. Plus, Motley Fool Asset Management's Bill Mann talks international investing. Learn more about your ad choices. Visit megaphone.fm/adchoices

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It's the Motley Fool Money Radio show. Thanks for being here. I'm Chris Hill. Joining me in studio this week for Motley Fool 1, Jason Moser, for Motley Fool Pro and Options, Jeff Fisher, and a million dollar portfolio, Ron Gross. Good to see you, Jens. Hey, hey, Chris.

It's earnings paloza. We've got the latest results from Starbucks, Netflix, P&G and more. We will head to London to talk international investing with Portfolio Manager Billman. And as always, we'll share a few stocks you can put on your watch list. But we begin this week with big tech, and that means Microsoft shares up on Friday after second quarter revenue came in at a record level of more than $24 billion. Ron? Even a broken clock? Well, I was going to say there were some good numbers across a range of divisions at Microsoft. What stood out to you?

The server cloud business, the enterprise business was really strong. I think the headlines are focusing on Xbox and the surface. Those are great, too. But I'm actually more happy to see the enterprise business put up really good numbers. To be fair, even though the surface sales, it's still a fraction of what we see with the iPad, they more than doubled it quarter over quarter. And if you're a company that is transitioning to be a device company, as I don't know if you've heard Microsoft is, you really want to start selling devices. So Xbox plays into that, surface plays into that. The big question and the big concern is where do we go with

mobile phones when this $8 billion potential debacle of Nokia comes on board. Lumia cells are not good, and what are they going to do with it? It's a big part of their transition going forward, and it's a big question. Jeff's CEO, Steve Bomber, is retiring by August. Is he going out on top here? Or should they seriously consider keeping them on? This is a really good quarter from Microsoft coming on the heels of a year where the stock was up around 30%. You know, maybe employees are excited about the impending change in leadership, and that's driving results. Let's keep in mind, Microsoft shares are up 29 percent the past 10 years. That's it. Now, a lot of large cap has not done very well since 2003, 2004. That's true. But still,

29 percent in 10 years. Apple's 10 years. return, starting from a small base, of course, 4,700 percent. So Microsoft has some ground to make up if they're moving into the device mobile computing space. Yeah, not only the employees, though, but remember the market is a forward-looking mechanism as well. So maybe the market's really looking forward to Steve Baumer kind of bowing out and letting someone else take over. I do have to give them their due. First of all, we do like this company. We own it in a million-dollar portfolio. We have it on hold now until the CEO transition works its

way out. But this is a record revenue quarter for the company. in their history. So the company is still generating tons of revenue and cash flow, and the stock is really not expensive. Starbucks stock, also on the rise Friday, after first quarter results. Jeff, revenue up 12 percent, profits up 25 percent. Global seam store sales looked pretty good. Was there anything bad? I'm not trying to be a naysayer. I'm a happy shareholder. But was there any downside to this quarter? You know, it didn't look like it on the surface. It was a record when it came to revenue, operating margins, operating profits, earnings per share, I think free cash flow too. Everything looked good.

It was broad-based strength. Same store sales were up 5%. And that was really all around the world. So, Microsoft, or I'm sorry, Starbucks is doing really well. Microsoft is doing well, too, the past five years. I agree with Ron there. But one thing, and this, I got to give a shout out to Brian Hinman, my comrade in Motley Fool Pro. He summarized results from Starbucks really quickly for me before the show, or all morning actually. You farmed out your research. Wow. Yeah.

I didn't know we could do that. It's earnings ploos up, man. I got so many companies floating around my head. This changes everything. But what Brian took away from the conference call is that Starbucks has really underestimated its U.S. store potential. And they're now, they may possibly roll out stores more quickly in the U.S. because of that. They're seeing the leverage that they have and their performance they're getting from their

stores is really exceeding what they hoped. Now they're rolling out food, of course, as we know. They're recovering in Europe and in other parts of the world. All in all, great quarter. Here's the problem, though. So Starbucks expects earnings per share to grow about 20 percent this year. And the stock trades at 28 times expected earnings for the year ending September, so it is not cheap.

I was going to say, this is a stock up around 40 percent. If you go back to the beginning of 2013, Ron, it does look a little pricey at this level. It does. I thought it looked pricey. long time ago. And so, you know, hindsight's a beautiful thing. But yeah, I think you're paying up for the strength of this company and the growth potential, and it's certainly not a stock that is cheap. Yeah, I think that one thing that is probably overlooked in many cases is just the power of their rewards card. They had $1.4 billion loaded on the reward cards last quarter.

And you have to look at that from the perspective of, okay, people were giving them $1.4 billion today for some coffee tomorrow or at some point in the near future. I mean, that's a very powerful model to have. I mean, that's a lot of upfront capital that you can use to reinvest in that business. And like Jeff was saying, now, I mean, the whole saturation of stores was a concern maybe at one point, but because the Tvana and the Labulong and the Evolution, Fresh acquisitions are going to make them more things to more people, I think they are going to be able to continue to drive demand.

Yeah, they see a lot of promise in drive-through stores, in fact, that are much smaller footprint. So different store formats will work different places. that changes the game. And to what Jason just said, the CEO, Howard Schultz, pointed out that this holiday season, the company saw a big change in consumer behavior. They really went online to buy a lot more things than Starbucks had ever seen before. And they found that interesting, and they find themselves well positioned,

because through their digital app approach, they're driving traffic, both online and then to the store. Shares of Netflix up more than 15% this week, after strong, 4,000, quarter results. A lot to like here, Jason, particularly when you consider they added 2.3 million subscribers to the video streaming business. Yeah, very strong quarter. Are they? Domestic subs are up to almost 33.5 million international, almost 11 million. So, you know, they're up upwards of 45 million subscribers today. And it looks like that number is going to continue to grow. And really, that's what this business model is all about, is bringing in subscribers. Because, you know, they're going to continue, as long as they continue to bring in subscribers, they can

continue to write those big checks. And so, you know, the concerns of the off-balance sheet obligations closing in on $7.5 billion now, it's a fair concern to have. But as long as they continue to grow sales and as long as those sales outpace that spending, then they're going to be fine. I mean, it's a very, it's a tricky balancing act. And, you know, there are some concerns with, you know, when they hit sort of that ceiling where they can't really grow membership so much or if there's some pricing issues, you know, they're talking about pay. potentially tiered pricing, how customers will react to that. But, I mean, at the end of the day, they are offering really consumers what they want, and that's, you know, the video where and when

they want to see it. And so there, I think, is a lot to be a lot to be said for that. You know, the other thing, they're going to raise some debt here, about another 400 million I saw in order to kind of help fund some of that operations. It'll bring their long-term debt up to about a billion dollars as well. So, you know, the only blunder I really saw, I think Hastings kind of stepped in it when he made his little next. HBO password joke, it wasn't, you know, funny. I think he thought it was funny. There was a question on there about HBO sharing passwords and how HBO wasn't really concerned with passwords being shared, because at some point those customers would be able to afford to

subscribe to HBO, and then Hastings said something in the extent of, well, that's fine then, and it's, you know, you can go share his password. It's PLEPlarat, HBO, and his password is Netflix, bitch. And I think everybody on the call was kind of taken back. by that and it fell very flat. Gee, I can't imagine why. I think he's kind of one of those guys that needs to just sit back and run the business and maybe let some public relations folks kind of take over because he really knows the business, but he seems to always step in it once in a while with something like that.

But thankfully, that was the only rule shortcoming on the call. You're going to each conference call concerned and worried. You have to wonder. I mean, he tends to kind of do one of those a call. McDonald's fourth quarter revenue rose 2%, but global same store sales fell just slightly. Jeff, this is such a huge business. It's the largest fast food company in the world. I'm not a shareholder, but I look at this stock and I just, all I can wonder is, where is the

growth for this? Yeah, sure, Chris, at 37,000 restaurants more or less, but they opened 1,400 new locations last year. They did grow earnings per share on a constant currency basis. 4% last year, which isn't horrible. What really makes McDonald's a powerhouse, its returns, its return on equity is 37%. Its free cash flow is powerful and consistent. It's certainly in a transitional period right now, especially in the U.S. Now, the U.S., North America accounts for about one-third of sales, so it's really an international business. But in the U.S. especially,

they're, of course, fighting a war on three fronts. People are slowly eating more healthy food choices. Many competitors have stepped into that space. Yeah, it's not just Burger King and Wendy's anymore. A lot more choices. Good old age, yeah. When we were grown up, yep. That's what my parents say, oh, you want Burger King, McDonald's or Wendy's? Neither. And McDonald's is a value brand. So, if they're trying to serve healthier food, they still need to serve it at a value price. So that's three things they're competing against. But they have a plan to do it to continue to alter

the menu, enhance its brand, and keep margins steady. And that's what I think investors ultimately love. They're keeping margins steady. Thanks again to Brian Hedman for compiling this information. No, this is all me. Thanks a lot, Ron. This is all me. Brian, thank you, Brian, for Starbucks. Geez, let's see. So, bottom line, though, at 95 bucks a share, they trade it 16 times this year's expected earnings when, as you said, Chris, earnings really aren't growing. So you're buying this for the 3.4% yield and not much growth in the mix right now anyway. Yeah, Ron, I was going to say when you think about assembling a portfolio, it does seem

like maybe the main thesis for owning McDonald's is really to occupy that dividend spot in your portfolio. I think that's fair. I don't think the stock's going to be knocking the cover off the ball anytime soon, but it does provide a nice stream of income. Yeah, it's like Coke. It has a massive distribution channel, basically, and they serve inexpensive food. Coming up, you want your vending machines to have more options? We're here to help. Stick around. This is Motley Fool Money. Welcome back to Motley Full Money. Chris Hill here in studio with Jason Moser, Jeff Fisher,

and Ron Gross. The Dow Index had its worst week since June of 2012. But don't blame Procter and Gamble, Ron. Hey! Shares up after second quarter results. Help me out here. After second quarter results were poor. I was going to say, profits down 16 percent. Sales were flat year over year. What? It's expectations, like we always say. They beat what analysts were expecting. So, the stock moves on that.

They have a whole turnaround plan in place. They're cutting costs. They're focusing on their top 40 brands. And there seem to be making headway, but it's a long way to go here. Emerging markets are very important to them. This is concern that that growth could be slowing. But for now, it looks pretty solid. But that hurts gross margins because prices are cheaper there, and you can't charge as much.

And that does impact the gross margin line. But all in all, hey, you know what, not as bad as expected. It could have been worse. Coach down more than 6% this week after second quarter profits fell. Jason, the company, saying that foot traffic at North American stores was, and this is their phrase, substantially lower. Yeah, speaking of it could have been worse. I don't know, actually, that it could have been worse for coach. It was a pretty bad quarter.

At least North America-wise, I mean, that was the big story here with North America's comp. Oh, why? Is that a big market for them? Just it's part of the business. You know, it's just a little part of the business. But, yeah, I mean, North American cops down 13%, which is really, really bad for those of you scoring at home. The international market is still a very bright spot, I think, for Coach. China continues to perform very well.

And as they make this transition into a lifestyle brand, they're bringing the men's department into play here. And that is something that is going to continue to bring in a substantial amount of money here over the course of the next few years. It's predicted to be about a billion-dollar business in the next three years. So, I mean, there is a big sort of date, a deadline here in September when Stuart Vever's, the new designer for the company is going to unveil his first line. And no pressure, Stuart, I mean, this is all kind of coming out of you. But I think that is going to be something that will – it won't make or break the company. But I think if it's successful, it will go a long way into helping coach turn the tide here. But, yeah, the stock today is not very reflective of optimistic assumptions.

and we will learn more when Michael Corr's results come out in February. But I will leave you with this, Chris. It's the wise words of Warren Buffett who said, The Future is never clear, and you pay a very high price in the stock market for a cheery consensus. Uncertainty, actually, is the friend of the buyer of long-term values. I got choked up. He must be loving coach then. We can't blame McDonald's for the bad performance of the Dow Index this week.

But, Jeff, we certainly can blame IBM. Shares down around 4% after fourth quarter revenue came in, lower than expected. What's going on here? Because this is a company, you look at the stock, had such a great run for a good 18, 20 years. Where is it now? What's 18 or 20 years, though, in the scope of things? So, IBM is the largest Dow component at 9%. So, yeah, let's blame them.

This is the ninth quarter in a row where revenue missed expectations. And really, it's been hardware, servers and whatnot that have been a big drag on the business. But IBM did just sell its lower-end, lower-margin hardware business to Lenovo for only $2.8 billion. So it was a small part of the pie overall. Services and software are plodding along at IBM. But here's some interesting facts, Chris. IBM's free cash flow has declined in eight of the last 12 quarters. And now a competitor in some regards, in many regards, Oracle, five years ago, Oracle generated about half as much free cash flow as IBM.

and now Oracle generates more free cash flow than IBM. So the past five years, IBM is losing market share and just not executing. And yet they say they're still on track to reach their 2015 goal of at least $20 in operating earnings per share. They gave five-year guidance back in 2010, and this was it, $20,000 operating earnings per share by 2015. They're well on track for it. Unfortunately, one of the reasons they're on track is that they're using debt. They're taking on new debt to finance share repurchases. Their long-term debt is up to 33 billion now from 22 billion just a couple years ago

as a buyback share. So it's really, it's financial engineering. I don't like to see it at any company. I'm frankly surprised that Warren Buffett bought shares in this company. And I'm not an owner and not a buyer. Finally, guys, a gas station in Los Angeles has just unveiled the first ever burrito vending machine. Just choose a meat and fillings, and the burrito box will put together your customized burrito in about 60 seconds, all for the low price of $3. But, Ron, there are other vending

options around the world. Machines in Germany can give you fresh eggs, hot baguettes in Paris, and there's a vending machine in China that will give you live crabs sold in a pinch-proof case for about $3.20. Pinch-proof is key. Hey, if you're getting live crabs from a vending machine, you better believe that's key. So many jokes. We'll just move on. We'll bring in our man Steve Rodo from the other side of the glass in just a moment, but I am curious, what would you like to get out of a vending machine that you can't currently commonly get?

If we could somehow make sure that scalding hot oil was safe, I would go the funnel cake route, freshly cooked funnel cake. Wow. I was wondering where he's going with that. Jeff? I went the other route. I went with what I would not want, and I would not want a shucked oyster to come rolling out of that vending machine.

But if it was fresh, I don't know. We've got fresh eggs. We got live crabs. No? Jason. You know, Chris, every once in a while you walk around, you kind of feel a hankering for some bacon. I think, you know, a... Maybe every once in a while.

But I'm all the time. Vending machine with, you know, some different styles of bacon, different cuts. That'd be kind of cool. It's salt cure. This stuff probably won't go bad. I like that. For at least a little while. Oh, I'm sensing a business opportunity here.

Steve Brito? Anything in particular you'd like to see out of a vending machine? It's a reach, but every item sold at Home Depot. I would like to never have to go into that store Just drive up on the side of the road It's a reach Certain kinds of nails or screws Now some of the items they sell at Home Depot

Are pretty big Joint Compound 2x4s I want it all coming out of a vending machine I believe it's possible Weber Grill Do you think there's a partnership opportunity there? Do you think Home Depot is missing an opportunity? I hope so

I never want to go back in that store again But I end up there all the time All right drop us an email Radio at Fool.com is our email address. That's Radio at Fool.com. Let us know what you would like to see out of a vending machine. And if you'd like us to get in touch with Home Depot on your behalf on the Steve Broido vending machine idea, Ron Gross, Jeff Fisher, Jason Moser, guys. We'll see you later in the show. Up next, we will head across the pond to talk emerging markets and more with portfolio manager Bill Mann. This is Motley Full Money. Welcome back to Motley Fool Money. I'm Chris.

Bill Mann is the portfolio manager at Motley Fool Funds. He is also the most traveled person I know. And as proof of that, he joins me now from the London office of Fool UK. Good to talk to you. Go ahead, London. What was that old line? I don't know. Edward R. Murrow. Oh, was that? Thank you for invoking the great Edward R. Murrow. Before we get into any number of topics, I should ask, what are you doing in London? So we are here, Deutsche Bank is holding a conference where they bring together a bunch of companies from Eastern Europe and from Russia. So, you know, it gives us a chance just to, you know, just to meet a bunch of companies in a very short period of time and get a little bit of a macro idea of what's going on in, you know, in these countries. What sense are you getting of the macro view?

It's certainly 2013 was a great year for the stock market in the United States. The economy slowly, methodically getting stronger. How is the view from London? Not so much of a great year for the emerging and frontier markets as it was for the developed markets. Across the board, emerging markets underperformed the developed markets by about 30%, about 3,000 basis points, which is really, really remarkable. It has something to do with the fact that emerging markets in 2008, 2009, 2010 were considered to be the great saviors when everything was falling to pieces in the U.S. and Europe, apparently. So it wasn't as great of a year for emerging markets, which, of course, for contrarian folks like myself, very interested in a lot of these markets. So we are hearing a lot of continued concern about 2014 because they do believe that, you know, there's there's a great linkage between what happens in the developed markets and what happens in the emerging markets.

There are several countries, not the least of which is Turkey, which has several companies here that are going through some real political turmoil at the moment. They've got an election coming up. But, you know, for our standpoint, companies that have done poorly over the last year or so are companies that are in certain ways, the market always tends to extrapolate what has just happened into being what is going to happen. And so, you know, we're very interested in some of the companies that we've seen. What has just happened in the United States, again, a phenomenal year, 2013, the market up just shy of 30%. I'm curious for you as an individual investor and as someone who manages portfolios, how does a performance like that factor into the way you invest the following year? Is it hard to recalibrate your expectations?

Does it not affect you at all? It, of course, affects us. And we try not to think of things in terms of emotions, but it is really easy to look at every company that you see and you're like, gosh, if I had bought this in January of last year, it would have been a double. You know, it's, it is, it is hard to look at companies that have recently gone up so much and not have that affect you. The thing to remember about a 30% gain in a market, in, in the U.S. market is that is three or four years worth of average gains. Now, 2013 was really the year that we, that we came out of the, uh,

the financial crisis that started in 2008. 2013, I think, was really the first year in which you could look at certain things and say they are really starting to normalize the housing market and things like that. But that's a lot of gains for the market and for individual companies to have to have their performance catch up with in order to make the assumptions that are being built in right now to make them valid. So it's a lot harder for us to find companies that we, that we're excited. about at the current valuation. It just means that we have to turn over more rocks and we have to

remember and remain really steadfast in what our principles are and how we invest and how we buy things. You're listening to Motley Fool Money talking with Bill Mann, portfolio manager at Motley Full Fund. He joins us from the London office of Fool UK. Let's talk about the way in which you invest. You have a monthly newsletter, a free monthly newsletter, declarations. Anyone can sign up for by going to foolfunds.com and entering their email address. But I want to ask about something you wrote recently. You wrote about a few different ways that we as individuals can increase our investing acumen. And one of the ones that really caught my eye was something that you headed as diversify some. Yeah. And that caught my eye because we hear diversification

seems like if you consider how nuanced the investing world is, diversify. The diversification seems like one of those black and white principles. Well, you always want to diversify. Yeah. Who would argue against diversification? That's right. It's like arguing against apple pie. So what...

I'm anti-freedom, right? Exactly. So what is the case for diversifying, but only some? Yeah, so I'm speaking specifically to people who really want to take hold of their finances and take hold of their investing. And really, we have been blessed. This is a glorious age for investing because of the advent of index funds. Index funds are out there which allow you very cheaply to diversify across a vast segment of the markets.

You know, be they in the U.S., be it global, their global index funds that are out there, and they're very cheap to invest in. if you are going to choose to invest in common stocks or in actively managed mutual funds yourself, you do want to be diversified. But at the same time, you have to understand that every time you're making a transaction, you are spending some money. There's both the spread and the cost of the actual transaction itself. Plus, there's also a time value where you are saying, essentially whenever you buy something,

you're saying, I know more than the market. I am smarter than the market because I am buying this at this price. That is a, in some ways, it's a really obnoxious thing to think, but it is really the essence of the individual investor. And, you know, whenever you make an investing decision. So what you have to understand in terms of diversifying some is that you want to make sure that you make enough of those decisions that any time that you're wrong, it's not going to hurt you that much. But you don't want to be making so many of those decisions that you're, your transaction costs really eliminate any advantage that you have. One of the other things you write about is beware the have-toes and embrace discomfort.

Yeah. I don't want to speak for our dozens of listeners, but I'm not a fan of discomfort. Well, you really have to be in the stock market. You really have to understand that a cheery consensus comes generally at a very high price. I mean, you can name dozens of companies. that people will almost reflexively say, hey, that's a great company. And by and large, we want to hold great companies. I mean, that is one of the bedrock principles of the Motley Fool. But you also want to try and get them at a time in which the market is less sure about them. And a really great example is about 18 months ago, it seemed as if Netflix could do no right. Now perhaps it can do no wrong. And the stock collapsed by about 70%. And if you were enterprising and if you believe that at that point in time that Netflix was, in fact, a world beating company. And I happen to believe that it is.

I happen to believe that we have not seen the end of innovation from Netflix. But being able to buy it at $80 a share is vastly different from being able to buy it now, you know, 18 months later when it is three times that high. So discomfort means understanding that there are certain points in time in which you and everyone else are certain are unsure about things. And that's the time when you really want to be most aggressive about trying to find the companies that are over the long term going to continue to do well. You raise an interesting example with Netflix because Reed Hastings, I think the CEO, among other things, has demonstrated over the last couple of years, how deft he is at learning and evolving and adapting to changing circumstances. And I think it's fair to assume that any attempts at increasing or changing prices over the next year or two are going to be handled in a much more deft manner than the whole question.

I don't see how you could do worse. But yeah, I think that's certainly the case. And remember the other thing about Netflix two years ago is that people were saying, well, the content providers are, you know, really can beat up Netflix. And it turns out they kind of can't. They kind of can. And if you look at some of the content owners, the DreamWorks of the world, they've done very, very well along with Netflix. And I think that they found, you know, really kind of a partnership equilibrium.

But Netflix has been very, very smart in the way that it has become a content provider as well as a conduit. I want to ask a question about your process. I'm curious, because you will. are looking at investment opportunities around the world, do you have the same checklist for company management regardless of where that company is based? Yes. We talk about Reed Hastings, any U.S.-based company. Are you looking at the CEO of a company in Russia or the UK or Eastern Europe or anywhere

and thinking, no, I want and expect and even demand as much from him or her? as I would for any U.S.-based company. Yeah, I think that you have to. I think that you have to be very choosy in terms of who you invest with. I mean, you know, ultimately, for me, there are three questions. One is, is it a good company? Two, is it attractively priced? And number three, who's running it?

And I think it's even more important when you're talking about countries where there is not the same level of investor protection as there is in the United States. And as cynical as we can be about the regulatory condition in the United States and, you know, and the regulatory framework, it is really second to none. So, you know, I always keep that in mind. And so when I'm looking at companies outside of the United States, I ask myself that even more than I do with, with American companies. One of the interesting things about foreign companies is that in a lot of ways, they don't tend to, they don't have to, they don't tend to compensate their management in the same way. as highly as U.S. companies, and they don't tend to lean upon stock option packages the same way that U.S. companies do. So a lot of times, you can get really good leadership in companies that

are based outside of the United States at a relative bargain. You're listening to Motley Fool Money talking with Bill Mann, portfolio manager at Motley Fool Funds. I want to get to the Olympics in a second, but first, I want to ask you about something I read this week. Costco is a company that I know you've been a big. fan of for a very long time. Herb Greenberg, pretty well-known columnist here in the U.S., wrote a column acknowledging right up front that he, too, is a huge fan of Costco and how they have run their business. But asking the question, is Costco vulnerable to what Greenberg referred to as the online avalanche? And say all the great things about Costco that you

will and Greenberg did, Costco's not really an online operator. No, they are not a monster online. I think that Costco, I mean, there are a few things. And one, Herb makes some very good points. And I do think that he points at a potential vulnerability for Costco. But at the same time, I think it should be recognized that Costco itself makes almost all of its money from the membership and not from the turnover of goods. And Costco really makes its, you know, makes its hay on goods. goods that are either perishable or their fast turnover goods.

These are not areas that have had the same level of threat coming from online that other areas of commerce have, which is why a Costco has done much better than, you know, say, a Best Buy, which is, I mean, really, really at the sweet spot of where, you know, where its online competitors can do damage, you know, against it. So Costco has certain areas where it has perhaps some level of vulnerability, but it should be remembered that so much of Costco's ultimate value comes from the real estate that it's built on and from its membership fees and not so much the actual turnover of goods and services at the company. So long as people are still joining Costco, I think Costco will be a-okay. We have the Winter Olympics starting in a couple of weeks in Sochi, Russia. A lot of concerns out there about the security situation.

You've been to that part of the world. How concerned are you? I think that ultimately, I mean, I don't want to make a prognostication, but you want to talk about a government that has everything riding on this coming off clean. You know, it's the Russian government because this is a government. government that has really lost a lot of international credibility in terms of being, you know, a government that's, you know, five, you know, for the people, by the people. You know, it's a government that has seen a very large amount of, you know, of unrest, of even terrorist

activity in Moscow, even in the region around Sochi. I suspect that, that they will do everything they possibly can to make sure that the, you know, that the event comes off clean. And the thing that I know about the Russian government is the things that they are willing to do to get their way are way beyond what most governments are willing to do to get their own way. So, you know, I really, as a fan of the Olympics, I hope the Olympics come off, come off clean and good. And I suspect that they will. Last question. I know you're a fan of hockey, but if you could eliminate one winter Olympic sport, what would you get rid of? Oh, gosh. So the Olympic sports, this will make me very unpopular. I mean, let's, let's, this will make me more unpopular than perhaps I am. But I'm really annoyed by sports that the ultimate winner is entirely done by judging. So I am not a fan of any of the figure skating because it just seems like it would be great if figure skating could be judged blindly.

But it seems like the people who are considered to be the best turn out to win. And I, as a casual observer, I look at some of the people who have no chance of winning and I can't see the difference between what they have done and what the people who are the best have done. And maybe I'm sensitive because I just watched that awesome 30 for 30 special on Nancy Kerrigan and Tonya Harding. But it didn't, you know, a lot of it just doesn't make a whole lot of sense to me. Does that make me a bad person? You're getting rid of figure skating and not curling. Oh, I love curling. The winner in curling buys a round for the loser and then the loser buys a round for the winner.

How could you not love that? You know what? If figure skating were more like that, I don't. walk. Go to foolfonds.com if you want to read more from Bill Mann and his team. Sign up for declarations, the free monthly newsletter. Bill Man. Drinking figure skaters. That's... Always good to talk to you. Enjoy the rest of the conference and get home safe.

Thank you so much, Chris. Coming up, we'll give 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 bas solely on what you hear. I'm Chris Hill. Joining me in studio, once again, Ron Gross, Jeff Fisher, and Jason Moser. Guys, before we get to the stocks on our radar, email from listener Johnny Grisdale about our conversation last week about Hershey launching a new line

of chocolate spreads to rival Nutella. He writes, with the subject line, Ron Gross is correct. That's right. Johnny writes, unlike peanut butter, which, of course, is made primarily out of peanuts, The number one ingredient in Nutella is sugar, 21 grams, in a two-tablespoon serving, the same as cake frosting. Wow. With that, kudos to you, Ron Gross. What's the stock on your radar this week? I'm looking at Apple. AAPL. They report on Monday. We heard some news this week that they have two new phones coming out with large screens, scrapping the 5C. We got Carliscon knocking at their door, getting them to increase the buyback. Stock looks good to us, but I want to hear what they say on. Monday.

All right, Jeff Fisher. What do you got? Chris, I'm looking at Valmont Industries. It's a company we own in Pro. Ticker is VMI. They are the leading seller of irrigation systems for farms, and they're a leading seller of poles around the world. You made that up.

No, no. Poles for light poles, power lines, telecommunications towers. Now, when you drive along the highway and pass all those traffic lights, man, how cool would it be to own the company that sold those? There you go. Anyway, great infrastructure opportunities exist all around the world. The stock has returned 17% annualized since 1993, beating most stocks out there. It's not expensive today either.

That's why we own it in pro, but cyclical business, so we want to see how it does the next three or five years. All right, Jason. Yes, sports is universal and forever. So I have Dick Sporting Goods back on my radar. Ticker is D.K.S. And the biggest point I think is that retail has had just a really brutal holiday quarter. And with Dick Sporting Good's earnings to come here in the next few weeks, I think there may be a potential

opportunity there to buy into the clear market leader in this market. And with 16% market share over competitors like Foot Locker and Sports Authority, I think the stock at 20 times earnings today looks like an opportunity and it could potentially look even better here after earnings. All right, Jason Moser, Rod Gross, Jeff Fisher. Guys, thanks for being here. Thanks, thanks for being here. Thanks. That's it for this edition of Motley Fool Money. The show's mixed by Rick Engdahl. Our engineer is Steve Groydough. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.