Motley Fool Money - Motley Fool Money: 02.25.2011

Episode Date: February 25, 2011

What's behind Wal-Mart's slumping same-store-sales in the U.S.? Should Netflix fear Amazon's new video streaming service? Which stocks will benefit from rising oil prices? And how could shareholders possibly lose by investing in a business called Rent-A-Husband?  All that plus CNBC's Brian Shactman talks about the future of the tobacco industry in advance of CNBC's new documentary, Cigarette Wars. Learn more about your ad choices. Visit megaphone.fm/adchoices

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From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill, and I'm joined by Motley Fool Senior Analyst, Charlie Travers, James Early, and Ron Gross. Guys, good to see you. Good to see you, Chris. We've got the latest from GM, HP, and other companies that have more than two initials.

We'll talk about the future of the tobacco industry with CNBC correspondent Brian Shackman. But once again, we begin overseas with the ongoing situation in the Middle East. James, the business story at the core of what's happening is about oil. Oil prices hit a two-year high this week. What does all this mean for stocks that are connected to the oil industry? Well, Chris, in general, they're up. That's a pretty simple thesis right there. I like Chevron as an example in particular.

Like all the oil majors, it's up, but it got out of Libya in November of last year, which was pretty good timing, and it has a lot less exposure to refining than most of the oil majors. And refining, Chris, has been a lot less profitable, more of a commodity business. But within that story, there's sort of another story. The big refiners like Valero are really suffering because the prices they buy oil at are pegged to the European price index, the Brent index. But meanwhile, the U.S. oil price index, which usually trades at the same level as the Brent, is about $18 cheaper. West Texas intermediate. So the small U.S. refiners, not like Valero, but like Alon Energy, Holly Oil, these guys buy most of their oil at, because refiners are buyers of oil. So they buy it at the

lower print price, but they're selling it at the refined product at prices that are influenced by the higher price. So a lot of these companies are going to do a lot better if this unrest drags on. So not all oil refiners are created equal in terms of the impact. That's correct. It's a lot more nuanced situation that you might think. Ron Gross, what are some of the other winners and losers that you see that if they're not directly in the oil industry, maybe they're impacted by it? One, which I think maybe is a little counterintuitive. I think Costco could be an interesting play here. A, they sell gasoline, and they sell it at very competitive prices, which, as gasoline prices rise, theoretically, I could see people going to Costco more and more for gas.

Plus, once they're there, consumers that are hurting because of higher gas prices will hopefully shop at Costco for their staples and their 144 rolls of toilet paper. And the proposition, the value proposition that Costco offers will really benefit these folks. So you'll have them driving in for gas and staying for all the other merchandise. Charlie Travers, what about you? Outside of the actual oil majors that James mentioned, which are in the refiners, you know, the companies involved in pulling the fosters, fuel's out of the ground and processing it into a usable form, I think investors can look towards the companies that provide either services or equipment to the oil majors. This would be companies like National Oil Varco or Schlumberger. And the reason these companies will kind

of benefit in a tertiary sense is that as the drilling activity goes up, you know, equipment needs to be replaced, more services need to be provided. Now, unfortunately, these stocks are at 52 weeks highs, just like the oil company's stocks are doing well. So the market's it is forward-looking. You've got to pick your spots. But those are two very good companies. General Motors posted a profit for 2010, ending a seven-year string of annual losses. But GM's fourth-quarter profits were lower than analysts were expecting, and shares were down on the news. James, you're our resident gearhead. What's your take on GM? First, Chris, for perspective, even Chrysler had a decent year. So that says something right here.

You know, I don't like to mince words on GM. GM is the morbidly obese marathon runner who was on the ground with a heart attack. got picked up by an ambulance, resuscitated, and then got dropped off a block from the finish line. And now he's finished the race, and now he's celebrated. How do you really feel about it? There's an image. You know, the one thing that analogy is not fair on it is, is during the ride, GM did get a lot of liposuction. So it is a leaner, meaner company. And that's a, that is a positive.

I mean that. International sales, especially in China, are much higher. They're actually catching up with North American sales a little bit. And that's very, very significant. But the key point, Chris, is this. GM is used to getting by by just being GM. The problem is there's not a lot of good stuff about being GM. And so GM is going to have to think like a scrappy, struggling new automaker to succeed.

And they announced that they're giving each auto worker like a $4,200 check, which, yes, is part of their contract, but that's not very scrappy. Well, you mentioned China, and they are doing well in China. GM often gets compared to Ford. Certainly on this show, we do that. But in China, GM sales are five times what Ford is doing. Ron, what do you make of GM? Certainly, they're on the uptrend.

Things are looking better than they have in quite some time. But I see really four main negatives, at least in the near term. Four main negatives. We'll get to the ancillary ones in a later show. One, they're offering incentives to drive people to purchase cars. That can hurt them, certainly, from a margin perspective. Two, higher steel prices can also hurt them from a margin perspective. As we just discussed, we could be dealing with higher gas prices.

is typically not good for a company like GM. And then we have the government's desire to exit their ownership, exit their position, which will create an overhang on the stock until they finally get out. So some headwinds for GM going forward. All right, shares of Walmart were down this week after the company posted its latest earnings. Same store sales fell for the seventh consecutive quarter. Ron Gross, this is the world's biggest retailer. What's going on?

Well, let's differentiate. The seventh consecutive quarter of declining same-store sales was US base. So the U.S. stores continue to suffer. And they're stumbling, result of the U.S. consumer being relatively weak, and as a result of some missteps that Walmart has made. Are you calling U.S. consumers weak? Their pocketbooks and wallets are hurting at the moment, Chris. I don't know if you've heard, but we have 9% unemployment on this country.

I heard a little something about that. So Walmart has some missteps. They tried to pare back on their inventory, offer less items. That turns out to have been a mistake. They're now scrambling to offer more items, go back to the old Walmart model. They've taken a hit as a result of that. Interestingly, this is actually a stock we own in the service I work with here, the million-dollar portfolio.

We own this for its international exposure, specifically its emerging market exposure, which is doing well. So we have struggling U.S., international is doing well. Hopefully, if they get to act together domestically here, the stock will be a good purchase. Well, and Charlie, we were talking about this before the show. When you look at the stock, I mean, yes, it's the world's biggest retailer. But the stock really hasn't done much for a long time. Yeah, it's a case of great company, bad stock. The stock is trading basically where it was a decade ago, which is pretty shocking. So, you know, maybe investors were paying too high a price a decade ago. And, you know, actually, I think the price looks good now. You know, I think they'll solve their problems.

James? I agree with Charlie. This is a company that I'd like it, a recommended in a motley-full special report. I agree with Ron. Walmart with fewer items is basically a target, and between the two of them, you know, people are going to go to Target. But this is something they've known now for a while for the past, you know, six months or so they've been trying to add back. So there is probably a lag, and I think we're going to see those items return. We're going to see more money. It's just going time. I think it's right. It could be a good time to buy now. But people are going to Walmart. I mean, they didn't get to be the world's biggest retailer for nothing. Yeah, but when you're this

big, incremental stuff matters in terms of the stock price. Ron? Right. But to your point, $10 billion in free cash flow for the last year. The company is still quite profitable in doing well. I'll push back on what Charlie said just a tiny bit in terms of stagnant stock price. Let's not forget the company did pay over $4 billion in dividends this year alone and repurchase $15 billion worth of stock this year alone. So there are ways they are returning capital to shareholders. What do you think of that? You have no use for dividends? I'm a cash-in-hand kind of guy. I love it. Gotcha. Speaking of Target, Target's fourth-quarter

profit rose 11% and same store sales were up two and a half percent. Charlie, all that holiday shopping I did a target that's paying off for shareholders apparently. How could Target not do well? I think every time I go in that store, I'm dropping 70 or 80 bucks every time. Wow, Daddy Warbucks. What do you typically buying? I think like these giant things of laundry detergent and other ridiculous stuff I don't really need. You don't need laundry detergent? No. Just water goes to the job. So Target had 2% comps. which is in contrast to Walmart, which was down,

and they guided for a pretty impressive 4 or 5% growth this year. And what's working well for Target is some of their higher-end brands that you might not see at the Walmart, which would be like KitchenAid, the Green Mountain Courage, the Calphalon. So Target is really doing that well in that segment. But, you know, like some of their peers, Sears and Best Buy, the electronics is a struggle for them. So Target isn't, you know, rosy across the board.

They had their own ups and downs within the quarter, but a little bit of higher traffic, and they did come through better than Walmart did. And part of the initiative that is working well for them is these P-Fresh store remodels where they're bringing in more fresh meats and vegetables to kind of make this a one-stop shop experience. And they're going to accelerate those remodels as we go throughout this year. Ron? One thing they're doing to drive, bring people in the door is they're offering a 5% discount to folks who use the Target branded credit card, which is a great way to bring people. people in, but it could pressure margins down the road. So, you know, give up a little piece of the pie to get more people in. We'll have to see how that shakes out. Over the next five years, which stock do you like better? Walmart or Target. Ron?

I like Target the company. I like Walmart the stock. James? Walmart. Walmart. Wow. Okay. Let's all hold hands and sing kumbaya. Coming up, would you like to invest in a business called Rent a Husband? It's not what you think. More in a moment. This is Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in the studio with Charlie Travers, James Early, and Ron Gross, as we dig into some of the companies making headlines this week. Amazon announced the official launch of its new video streaming service.

The service will stream 5,000 movies and TV shows and is available to members of Amazon Prime, the company's $79 a year service for two-day shipping. Charlie Travers, how scared should Netflix be? I would say not at all, Chris. Not at all? Not at all. As someone who's a happy Netflix subscriber, as our longtime listeners would know, the reality is, even though I'm happy with the service, Netflix doesn't offer everything.

And so when I saw this Amazon announcement, I went pretty quickly to the site and checked it out and saw what they had to offer. And honestly, the interface isn't that great, and the pickings are pretty slim. You know, it's like going to a blue light special sale where you're left with like Need for Speed 3 or something like that. All the movies you could watch for Fox. Right, right. Yeah, it's like old episodes of Doctor Who, and, you know, maybe that appeals to like four or five people, and I'm not one of them. You know, so I don't see the Amazon Prime, you know, movie component as a Netflix killer. What I think it should be viewed as is similar to a membership's warehouse like Costco or Sam's Club. And the reason is Amazon charges $79 a year for Prime. And their whole goal is to get as many people as possible to pay them this cash up front. And, you know, and giving, you know, you know, it's a lot. so they can get their shipping deals and what have you. And giving these members, movies or something like that is just kind of their way of making the prime membership more enticing. But I don't even see Amazon as actually aiming to hurt Netflix with this as much as to support their own membership business.

Ron? Yeah, I agree with Charlie, but I also think kind of a larger scale that you should be a little bit worried if you're a Netflix shareholder because competition is coming. And we're going to start to see it more and more. and they've been not the only game in town, but the best game in town for a while now. And I don't think that's going to last forever. And the stock is priced as if it will. Hewlett-Packard's latest earnings were up 26 percent, but analysts were expecting more, and the stock got hammered this week.

Ron Gross, why no love for HP? Well, HP had been on a run, so they were due for a pullback, but this was quite a slap in the face. Weak demand for consumer products, PC products, and the service business struggled a little bit. Still very profitable. Three billion dollars in operating earnings for the quarter, so no violin playing for Hewlett-Packard. They're doing okay, but the expectations were pretty high. The iPad, too, is coming out at some point, and HP is launching their own tablet,

touchpad. How big a hit does that need to be for them? Well, let's put it this way. They acquired Palm for $1.2 billion, relatively recently, to basically get the web OS operating system that POM had developed. And that's allowing to roll out some smartphones and the new touchpad tablet. So they're making big investments in the side of the business. Even though HP remains a PC-based company, there's a lot of capital going in here. The new CEO Leo Apothecares said he's willing to spend on R&D, he's willing to buy companies, targeted acquisitions to really grow this company. So they've got a lot riding on it from an investment perspective. What does the touchpad need to have to?

to gain traction. What do they need to have over the iPad to get people to say, oh, I'm going to buy that instead? Apple's probably best known for having a seamless user experience. And somebody owns a couple Macs myself. Where they tend to come up short is on some of the hardware inside the machine. And so a company like HP can kind of beef up the specs a little bit. They'll get more the power users over. At the Apple shareholder meeting this week, the Central Laborers Pension Fund, which owns Apple stock called for the company to publicly disclose a succession plan to ensure a smooth transition

in case Steve Jobs leaves as CEO. The plan was voted down by shareholders. Apple says it already conducts such planning internally. James Early, how would you have voted? You know, Chris, I see two things here. I understand both sides of the argument, but in my opinion, we can't be drawing the line about what we should disclose and what we should not disclose on a per company basis. I think If the SEC or somebody wants to mandate a policy that all companies have to disclose their succession plans, that's okay in my book. But deciding, well, Steve Jobs is this degree sick. So we need to disclose now. To me, that's too fuzzy.

Well, and again, we're not talking about a question of legality here, but I think at least part of the debate is what do they owe their shareholders? Ron, what do you think? Yeah, this kind of gets me heated a little bit. I don't understand what all the secrecy is about. This is not the CIA. This is a publicly owned company. Individual investors, institutional investors are the owners of this company, the shareholders of this company. If I owned a private business, you can be sure that I would want to know if the CEO of that business was very sick or if something very important in the company was happening. Why is it different if it's

a public company? There is no difference. They owe shareholders the knowledge if something important is going on in that business. If they know something important is going on and they're not disclosing it, I think that's really a breach of fiduciary duty. If they think something important would hit the stock and they're purposely not telling us. They disclosed that Steve Jobs is sick. Barely. He's on medical leave. Tim Cook is handling the day-to-day duties. But I don't know. I think I come down with Ron on this one because just removing it from Apple, I own shares of Amazon. Jeff Bezos, the CEO, who I think on balance, has done very well. I'd like to know what Amazon has planned.

in case a Seattle bus mows him down, and all of a sudden, this company is without a leader. I would agree with that. I think it's fine if every company were to, as a policy, put out succession plans. But how do you draw the line in terms of, if you don't make it a policy on an individual company basis, what mandates something that's necessary to be disclosed? I'm willing to let our public companies use some judgment where they say if there's something material, no matter what it is going on in the company, that should be disclosed. That's what the 8K SEC document is for anything material going on that needs to be disclosed. Clearly, if Mr. Jobs is quite sick, that is very material. And as a shareholder, please tell me, because then I'll make

a decision if I want to own the company going forward. And finally, in my beloved home state of Maine, the founder of Rent a Husband, has agreed to pay investors $2 million in exchange for criminal charges against him being dropped. Among the charges that Kale Warren, the founder, told investors his company was working millions and failing to inform them that, in fact, he and his company were virtually broke. Rent-a-husband is, the idea behind rent-a-husband is it outsources chores around the house, so things that you don't want to do. It's not what anyone out there might think in terms of renting the house. Who was thinking that? Surrogate service for chores. I don't want to speak for our listeners,

but we have a lot of them, and some of them might have been thinking. But just quickly around the table, if there was one household chore that you could outsource, Charlie Travers, what would it be? just one. Just one. I'll go with, I love my cap, but I really hate cleaning the cat box, so that's number one. James? Unlike Steve Brito, I don't much like cleaning bathrooms. I think that was Steve's favorite chore. Am I correct, Steve? Is that right, Steve? Yeah, sure. It's definitely rewarding. See, what I like to do is actually undo the screws to the toilet seat and, like, get all under there and just get everything out.

And it's just kind of nasty, and I would rather someone else do it. All right. Ron? I'm sorry to our listeners for continuing the bathroom theme, but The plunging of the toilet on occasion is something I could clearly live without for the rest of my life. See, I will take it outdoors and say that raking leaves, I'd be more than happy to outsource that forever. Steve, what about you? You get to outsource one household chore. I'm with Charlie. The cat letter is definitely, my wife and I split the job, but it is miserable. My cat's Chuck and Eddie, if you're listening out there, guys, I love you, but I would rather someone else have to deal with here for business. All right, coming up, what does the future look like for the tobacco industry?

We'll talk with Brian Shackman about CNBC's new documentary, Cigarette Wars. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. Brian Shackman is a CNBC correspondent and the host of a new CNBC documentary, Cigarette Wars. It airs next Wednesday, March 2nd, at 9 p.m. Brian, thanks for being here.

It's good to be with you again, Chris. Thank you very much. What is it about tobacco that made you want to investigate this industry? Well, it's actually, you know how it is, right? reporting it's a progression. My initial intent was to take a look at an iconic brand like Marlboro and just see how it survives and thrives in the 21st century with all the things that are going on across the world, whether it be smoking prevention, anti-smoking movement, government regulations, taxes, and just how this icon has survived. And it really just morphed into a global look

at tobacco in the 21st century because it's so much more than that. And honestly, we could have dedicated a lot more than one hour on it. But originally that's where it came from. But when you learn about what's going on overseas and what's going on with the government in terms of how they're trying to deal with this incredible emergent illegal cigarette trade, which we'll talk about it, it's not just the company. The companies are hugely important because, you know, investors want to know if these businesses will be around in 20 years, but it's also about this culture. I mean, tobacco was a currency with the Native Americans before Europeans arrived, and people have been trying to get rid of it for centuries, and yet we're still here, and they're still making billions of dollars,

and people are still smoking. Now, one of the things that you touch on in the documentary is how much tax revenue is lost. The U.S. loses $5 billion a year. Overseas, it's $100 billion. What is going on that that much money is being lost? Well, it's a fascinating crime, and it's pretty simple. I'll give you the easiest incarnation of it is you take a low tax state. There are about 20 states that have cigarette taxes lower than a dollar.

And in New York, it's, excuse me, 435. So you go to a low-tax date, and you either buy or steal the cigarettes, and you bring them to a high-tax state, and you sell them on the black market. And, you know, that margin difference is your profit. So you're laying out a business opportunity for me here. Well, no, I mean, listen, the ATF will go after you, buddy. And, you know, it's ironic that the ATF's actually their business is turning a profit off of going after these criminals.

They're getting back more money than their budget. budgeted for to do this effort. But what happens is you can make in the black market like $60 a carton. And you take an 18-wheeler and drive it up 95 from North Carolina, that's a million dollars in cash. And it's going to fund gun runners, drug dealers, or even adjudicated cases that have connections to terrorist groups. I mean, those aren't the most common groups, but they're there. And it was just a shocking development in our reporting that some people know about and some people talk about, but that money, because basically when they sell the cigarettes in New York, New York doesn't collect those taxes, right? And that's where the money is lost. And it is the

number one economic crime in Europe. And there's a lot of states, and there's been stories, state to state, go to Missouri. It was a recent news story that, you know, if they could deal with this and just get their cigarette taxes on par with some neighboring states, they'd have a balanced budget. So, you know, taxes are kind of a silly topic. Remember, that's what, you know, my joke is that's what brought component down. So it's worth talking about it. It's worth talking about because it could balance budgets in a time where a lot of communities don't have money. You're listening to Motley Full Money. We're talking with Brian Shackman from CNBC and the host of the new CNBC documentary, Cigarette Wars. Brian, this is a $60 billion industry we're talking about.

What surprised you the most when you were working on this documentary? Wow. You mean, in terms of the businesses or just overall? Both. Yeah. What fascinates me is how people still smoke. there are a billion tobacco users worldwide every day. Even with all the smoking rates going on 50 million smokers in the U.S., but they can't advertise on TV, radio, newspapers, and most magazines. And so you say, how does it happen?

And what you learn is that whether or not, they can't pay for product placement in movies and whether or not there's a relationship there, we could not prove. But anytime somebody lights up on screen, it is an influential thing. And we talked to some people who basically said that banning advertising was the best thing that I would have a app for tobacco companies. And you would not think so, right? Well, that money just went to the bottom line. They migrated to the web where if you're 21 and older, you can get a bunch of free stuff and you can connect to the Marlboro Man.

And they still have this legacy of smoking on cable and movies that, you know, listen to Sigourney Weaver. What is Sigourney Weaver doing smoking in Avatar? She's a scientist and she's in the future. I mean, but yet, you know, James Cameron didn't need the money. So I'm not saying he took any money, but there's no place for it. It doesn't make any sense. But you know what? She looks cool doing it, and it's a great cinematic trick, and it's still happening,

and that's why a lot of people start smoking. So when you talk about how marketing strategies have changed and adapted over time, is the web really the most significant change that's gone on? I think so, and because there's not a lot of rules. They don't have banner ads, right? but their websites, they try to verify ages, but once you're in, you know, they then lock you into a database, and they have you secured. And we know in the 21st century having your personal information for a company is gold. And that is a huge thing.

And it's when it comes to the companies, what's surprising is that you look at these cigarette companies, and it's like Netflix. When Netflix was trading at $24, and they were doing all this stuff by mail, you're saying to yourself, they're going to go out of business, because eventually the streaming is going to take over, they're going to have no business model. Well, they were smart enough and good enough to adapt. And these cigarette companies have found a way to adapt. They've even – some companies have bought, you know, nicotine gums.

Their smokeless are now hugely profitable. And these companies yield incredible dividend yields, 6-7 percent for some of the major U.S. tobacco companies. So they're still making money. Now, the question is, you know, what's going to happen with all these regulations and taxes? They can eventually make tobacco illegal? I don't know. But right now a lot of investors like these companies – Listen, Philip Morris last week just hit new highs.

You know, Phil Morris International. So PM is a ticker. So these companies are still hugely profitable, even though everyone seems to want to get rid of them. You're listening to Motley Full Money. We're talking with Brian Shackman, host of the new CNBC documentary Cigarette Wars. It airs next Wednesday at 9 p.m.

Brian, even with commodity prices, corn and others on the rise, tobacco is still the best cash crop per acre in the United States. Yeah. Why is the American tobacco farmer struggling? It's a great question. And just give listeners, corn and soybeans can yield up to 300. The tobacco can yield up to $1,500. So it's not just like $100 per acre difference.

It's a big difference. And the reason why they're struggling is that the U.S. tobacco companies aren't buying as much tobacco from them. We talked to, we followed farmers from seedling all the way to auction, and some of them, you know, won't be able to sell some of their tobacco because it's not under contract, which is the first time that they ever happened. happen for a lot of these people, because smoking is declining in the U.S. and if they're selling more tobacco in Indonesia or China or Poland, they're not going to buy tobacco from American growers and then ship it over there to make the cigarettes or they're not going to ship the finished product. They're going to buy the tobacco closer to those areas, and they're going to produce it there, and that's why the American tobacco growers are struggling because they know, they see the future.

The future in the United States is grim, and the future is overseas because these companies are going to the places with the least amount of rules and the least educated populations. And actually, one of our farmers, he's ahead of a five-state co-op that has hundreds of millions of pounds of tobacco. He literally trades in the overalls for a suit and tie, and he logged 100,000 miles last year going to all the places I just mentioned in the world trying to sell tobacco. So it's not just the cigarette companies that are trying to sell tobacco overseas. It's also these farmers because if they don't, they're going to either go out of business

or they're going to have to find a new crop. And as I just said, they cannot find a crop that makes as much money. So what do you think the tobacco industry does look like 20 years from now? I mean, there are, you know, state governments getting a lot of money from the so-called sin taxes. So on the one hand, I think it's unlikely that tobacco would be regulated out of existence, but it seems like there's some people who'd be in favor of that. Yeah, and it's one of those strange dynamics. We talked to the New York City Mayor Mike Bloomberg, and he said, listen, I would give up that tax money in a minute because long term it saves health costs. But you know, politicians have short-term. views, they have to get elected, and they're not going to adopt that necessarily. It's an awesome question, and it's a question, it's a hard one to answer. Do I think cigarettes are going to become illegal? Well, I know that politically, even though they love the tax money, it is the most toxic substance sold. I mean, a great quote from Henry Waxman back in the day, just talking about it,

it's the worst consumer product ever made. But I think that they're going to make it as difficult as possible and as expensive as possible to do it. And people will still do it. But it's going to be the dynamic where it's almost going to be confined to their private homes. I mean, there's a, just this past week, there was a decision made where if a gentleman in a Manhattan apartment lit up one more cigar, he had to pay a $2,000 fine because neighbors, you know, brought a suit against him. And so if I was going to say the future, it's going to be extremely expensive, fewer people going to do it, but I have a tough time thinking that it's going to be illegal. But there are some people out there, and then I'm not trying to make a joke of it, Chris,

that think that there could be a day where marijuana is legal and cigarettes aren't. That is something to ponder. Can I imagine the guys in Kentucky growing weed? I don't know if it's going to happen, but some people think it will. You're listening to Motley Fool Money. We're talking with Brian Shackran from CNBC. All right, Brian, before we let you get out of here, we need to wrap up with a round of buy-seller hold. Buy-sell or hold.

Let's start with Buy-seller-hold, the likelihood that the new... New York Times will still be publishing a print edition in five years. In five years. I'm going to say yes, and I think it's going to be free and thin. And they're going to use it to promote their web presence, and they're going to advertise to cover costs. So the answer is yes. I'm buying.

Buy seller hold Facebook as a public company. I'm buying it. It's going to be a hard barrier entry for the average investor, but I think though even though they're doing well in the second market, if they're going to be too big, they're going to have to go public, and my guess would be 2012. You spent a few years working for ESPN, so we'll shift over to sports for a moment with the threat of an NFL lockout looming buy-seller hold pro football's 2011 season starting on time. So a buy would be, it's going to start on time? Yes.

I am going to sell that. I know, and I'm a huge Patriots fan. I love the NFL. Me too. I just think there's too much money in. involved, and I think that, I know they're in mediation right now, I just think that it's going to be difficult, especially if the owners want 18 games, and I think the owner's the only people on the planet that want 18 games. And part of me, you know, you always tend to root for management

and ownership for some reason in these things, but in this case, I'm kind of rooting for the players because what they want is a little more in line with what I want, but I have a feeling that we're going to lose three to four games, and when the seasons in danger being wiped out, they'll come to a deal. He's been struggling on the golf course over the past year. Buyseller Hold, the future of Tiger Woods. I think this is a great question, Chris, because I love Tiger Woods when he was at his top, and he was great, and I love greatness, and then obviously he had this fall from grace. I will say that I think he will come back and be the number one player in the world, but I will say, and I'm going to, I might come to regret this. I don't think he'll break

Jack Nicholas's record now. On the majors. What's that? On the majors. On the majors. I think that's going to take him longer than anyone thinks for him to dominate again and nobody fears him. So I am, I guess, selling. Even though I think he'll come back, I don't think he'll be what he once was. So I'm selling Tiger Woods dominating once again. He's one of the people you interviewed for the new documentary cigarette wars. He is strongly anti-smoking. Buy seller hold the likelihood. Michael Bloomberg runs for president. I am going to sell that. I think that his profile has too many headwins. I mean, there's a quote that I can't share with your audience that isn't quite appropriate, but I mean, he, I'm shocked. A big city mayor using that kind of language.

But I don't want to get in trouble. But listen, I mean, he's divorced. He's from a certain, you know, part of the country that it's difficult. I think there's elements of his background that are going to be a tough sell to the whole country. Do I think he's a strong enough leader? Do I think he's smart enough? I absolutely do, and I'm not even a supportive of his. I just know I've met him and interviewed him, and he's a strong presence. He's really smart. I like people who are so confident in what they believe in and don't need money or anything that they just do exactly what they think is right regardless of party. And I think that that's one of the good things, but I think he'd be better served in the administration.

I don't think he can win, and so I don't think he'll run. And finally, for years, he was one of the biggest stars on CNN, and he's just announced he'll be doing a one-man comedy show about his life and career, by Seller Hold, the Comedy Stilings of Larry King. I can't. I just can't see it. I just think it's going to be Jerry Seinfeld meets Rodney Dangerfield, and I just think it's not going to be funny. The new CNBC documentary is Cigarette Wars.

It airs Wednesday, March 2nd at 9 p.m. So tune in or set your DVRs, people. Brian Shackman, thanks so much for being here. Always a pleasure. Coming up, we'll dip into the Fool Mailbag and 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.

Don't buy ourselves stocks based solely on what you hear. I'm Chris Hill, and back in the studio with me, our trio of senior analysts, Charlie Travers, James Early, and Ron Gross. Guys, time to welcome a new affiliate, WGAC AM 580, and FM 93.1 in Augusta, Georgia. Latest stations for the full family. Any golfers here? Because I'm thinking maybe we head down to Augusta to visit our new affiliate, maybe sometime in April when the masters are going on.

I'll drive the cart. Fabulous. I'll try not to spill my drink. All right, we're going to dip into the full mailbag for the first time in a while, and let's go to our man on the other side of the glass. Steve, Broido. Steve, what do you got for us? Yes, we have a question from Walter. His question, people on the show frequently refer to the tens of billions of dollars held on company balance sheets these days that will be needed in the future or return to investors, etc.

But where do they actually keep that money? And in what form? Surely not in a good old savings account at the local bank. Surely not in the local savings account. Ron, you want to take the first whack? So it's always a combination of things. It's traditional cash. It's actual cash in short-term instruments, whether it be treasury bills, money market funds. Then they'll invest some in some longer-term instruments to get a little better yield, perhaps. And sometimes even longer-term than that, and they'll be categorized as long-term investments. Analysts will clump that in together as cash. When they get in,

trouble is when they start chasing yield. And we saw this in the recession where they started investing in auction rate securities or other more risky types of money market funds. And we had a phenomenon called Breaking the Buck where, hey, surprise, the dollar isn't worth a dollar anymore. And the million dollars you had with us is not worth a million any longer. So you've got to be kind of careful with cash. You want to earn a good yield, but you don't want to chase yield. James? There's a whole cottage industry, actually a real industry based on earning the best cash return companies can get, you know, just a few blips or basis points that we say.

Basis point is a hundredth of a full percentage point more. It can make a big difference if you've got a lot of cash. Charlie? And, yeah, the only point I'll make different is that if you're looking at large multinational companies, some of these caches with significant overseas operations actually have their cash overseas and banks around the world, and it's not really freely available to invest in the United States without paying a tax on it. So, you know, whatever the number is on the balance sheet, it's subject to different

kinds of rules as to how much that's really available. If you ran a company and you had literally billions of dollars in cash, wouldn't you want some of it in actual cash, like right there in your office? To roll around in. Just to roll around in or just a stack up, like in a display case and just people come in, they're sitting in the lobby, and it's just like, what's that? Oh, that's our case. A pile of money.

That's our big old pile of money. All right. Time to talk about the stocks that are on our radar this week. And Charlie Travers, I will start with you. One of my very old-time rule breakers picks, Vertex Farmer pharmaceuticals. The tickers VRTX had some very interesting news to report this week on a drug for cystic fibrosis. One of my strategies with drug companies is to look for companies doing innovative R&D for diseases where there are no available treatments in cystic fibrosis is

certainly one of those. And they're filing for FDA approval later this year, and that's really exciting. Do you have a sense of what the FDA approval process is going to be like for them? Because it seems like with companies in this space, it's a lot. It can be faster, it can take years upon years. It's far easier if there's no existing drug on the market, and the FDA tends to be a lot more lenient. If it's a crowded field with a lot of effective therapies, the bar is very high. James Early, what's your stock this week?

Chris, I'm going the no originality route because it's always worth well for me so far. I didn't say Chevron. This is my favorite oil company is I think everybody knows. It has less refining exposure. It's also a deep water drilling expert, and we've used that most of our light close to the surface oil. So having that expertise is really going to help. Ron? For several weeks, I've been hammering home the theme of rising food prices, which probably

means we're at the top of that trade. So take this for what it's worth. But I'm still really focused on it. And I'm going to give one final way to play that, which is an exchange-traded fund, an ETF called the Power Shares DB Agriculture, ticker symbol, DBA. And this is simply an ETF that tracks commodities like soybean, corn, sugar, wheat, and if those rise in value, the share price of the CTF will as well. And what has it done recently?

It's as prices have gone up, so it has as well. All right. Ron Gross, James Early, Charlie Travers. Guys, thanks for being here. Thank you, Chris. Thanks to our special guest this week. Brian Shackman from CNBC. The new CNBC documentary Cigarette Wars debuts this coming Wednesday night, March 2 at 9 p.m. and gets replayed at 10 p.m.

That's Cigarette Wars on CNBC. Really interesting stuff, so check it out. And if you haven't already, check out Market Foolery, our new daily podcast on iTunes and at Marketfulery.com. Our engineers are Steve Brodo and Gail Año Nuevo. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.