Motley Fool Money - Motley Fool Money: 03.05.2010

Episode Date: March 5, 2010

The government reports better than expected jobs numbers, Domino's and Urban Outfitters report big sales, Tivo records a big win, The SEC goes after false profits, And Apple goes after Google. On this week's Motley Fool Money Radio Show, we tackle those stories, reflect on some money quotes from film critic Roger Ebert, and share some stocks on our radar. Plus Warren Buffett biographer Alice Schroeder talks about why one company's trash is Berkshire Hathaway's treasure. 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 the show. Thanks for being here. I'm your host, Chris Hill, and I'm joined by Motley Fool Senior Analyst, Seth Jason, James Early, and Shannon Zimmering. Guys, good to see you as always. Good to see you, Chris. Coming up, we'll talk trash with Warren Buffett biographer Alice Schroeder.

We'll also tell you why you may want to think twice before taking financial advice from someone who claims to be a profit. And as always, we'll give you an inside look at the stocks that are on our radar. But we begin with the big macro. On Friday, the government reported that the unemployment rate in February held steady at 9.7%. Now, Seth, we also got reports of some strong retail numbers in February, better than expecting news on both fronts. What do you think it means for investors?

Well, I will hit retail because there are varying reports out there. Everyone seems to have their own version of what a retail report is. So you have people saying it's the best overall level of retail sales since sometime in 2007. Others saying it's the biggest gain for the month since then. Actually, when I look through some of the chain stores that have reported here, you do see some numbers that might be a little bit surprising. You've got a lot of increases, some Aero Postal up 7%. American Eagle Outfitters up 6%, even Gap Up 3%, limited brands 10.

but you also have your hot topics down there minus 7%. So as always, it is a mixed bag. Shannon, what did you think? Well, I'm confused. Why should I not take advice from somebody who can help me profit? What's the story there? P-H-E-T, man. E-T, the other kind of profit.

Oh, like the... Like out of the Bible. Oh, okay. All right, all right. That makes more sense. So it's a very interesting retail sales report. It's consistent with some information that we got earlier in the week about personal spending, which was up more than folks had expected against flat income.

Now, how does that work out? Why are people spending money when they don't really have it to spend based on what they're not earning? Some of it does have to do with inflation. Gas prices have started to tick up or something you have to have, and so people are spending more on that. But if these retail sales numbers, although you can poke holes in them, if they're at all consistent with what's going on across not only the malls, but the strip malls of America, it's an interesting development

because the big question is, is the consumer coming back? If over time we find out that it is, that's going to be good news for the economy. James? I'm with Shannon. It might not be enough to move the number, but we still lost 36,000 jobs, if I recall. And what do we do? We go spend more at the mall. Well, we can afford to do that because we kept our credit cards and stopped paying our mortgage, right? Exactly. We've got priorities. Retail therapy. Well, one of the things that gets me about the jobs report is that it gets revised. Oh, everything gets revised. So let's all get excited about it so we can forget that it was revised then later. So what should people be looking at? Like, what is the report?

that we should be looking at to gauge the health of the economy. Your paycheck. I hate to step all over our radio show, but honestly, you shouldn't pay too much attention to any of these single things. Shouldn't the government just save money by, like, instead of putting out this report, just put out the revised one a month later? They should just have like a smiley face on a board and point people toward that once in a while. Or like a Mr. Yuck if it's bad. Yeah. All right. Time to look at some of the earnings this week.

Costco reported that same store sales in the second quarter. rose by 9% helped by a 26% increase in the company's international locations. Shannon, earnings still fell below Wall Street expectations. Yeah, I mean, Costco is just a company that I absolutely love, and I think that there is a fundamental shift underway in the way people spend money. There's a whole private sale collection of websites, basically. You pay a membership fee, and you're able to buy bargains. Costco, of course, has been with that model for a while. And the earnings story is an interesting one. So earnings were up pretty dramatically, what, about 25% I think against the year ago period.

But revenue only rose 11%. Now, this is something that we had talked about earlier on the show when S&P analysts were expecting that the aggregate earnings would be dramatically high for the market as a whole, but revenue would increase at a much slower pace. Let's also point out just really quickly that a lot of companies out there would kill for an 11% revenue increase for 2000. And this is why Costco is such an amazing thing. story. I mean, so they're, they're minting

their own money through these membership fees. You pay for the privilege of being able to go to Costco to spend your money. Are you guys all Costco members? Is that curiosity? Actually, I'm not. I'm not. I used to be a BJ's member. I love the 100-count toilet paper, but it's hard to store it after a while. I had the same

problem. You got to have a closet just for toilet paper and paper towels. And the big gallon-sized jugs of toothpaste, that's kind of gross after a while. Doesn't that raise questions? Like, if you have guests over to your house and they mistakenly open a closet and they see nothing but toilet paper. It comes tumbling out on them. Don't they wonder? It's always a party at my house. That's all I'm saying.

Urban Outfitters reported that fourth quarter earnings rose 92%. Ninety-two percent. Seth, that is a crazy big increase. What gives? How do you do that? Well, the great way to do that is you go back and you say, I want really bad margins last year. This is all pretty much based on a very big increase in gross margins for fourth quarter of this year versus fourth quarter of last year. That sounds really great, except last year was a really abnormally low gross margin quarter for them. Somewhere on 34% according to the numbers I've got in my spreadsheets here. They usually do about 39%, about 40% this year. So yeah, if you increase your gross margin by about eight percentage points over the prior

your quarter, I mean, you are going to have a huge increase. Last year's fourth quarter margin for them really was abysmal. I haven't seen anything that bad since, you know, like my final quarter of college fueled by Michael. Well, you know, credit where it's due, so last week, we sort of slapped around Wall Street analysts from missing by 1,500 percent the earnings that AIG was able to deliver. They were actually quite close in this. It was about a nickel above what analysts had expected. So 90% might surprise us. And that's just for the quarter, but it didn't surprise Wall Street. And you're looking for a full year looking at a 10% increase. That's nice, but let's not get crazy. Urban

Outfitters is not going to increase its margins by eight percentage points going forward from here. Now, in other retail news, same store sales at Abercrombie grew 5% in February. We've had some fun recently at Abercrombie. Do we owe them an apology now? No, I don't think we owe them an apology. After all, they are, again, comparing to really bad levels last year, but we can give them a golf clap for this. Let's just take a quick look at the details, which is that the comparable store sales at Abercrombie and Fitch, the main store 8%, at the kids store up 11%.

And Hollister, for some reason, still the drag. That's the faux, like, Surf, California Surf Shop concept, up only 1%. It would have been another 1% if they'd sold stuff off the mannequin. Exactly. Domino's pizza reported stronger than expected earnings after changing its recipe. James, this was a pretty bold move. Domino's came out with a whole advertising campaign where they basically admitted that their pizza wasn't that good. they changed the recipe. It seems to be working.

It's really interesting, Chris, and it's kind of a life lesson. I mean, when you suck at something, you're not fooling anybody. I think that's, you know, maybe unless you're a winemaker. And that's the bottom line with Domino's. And they came out and admitted it. And EPS went up 58% on sort of a core basis. Overall sales were 8%. We had a guy named Robert Chaldini in here maybe a couple of months ago.

Sure, yeah. He pointed out that, if I recall correctly, that four out of the five best ad campaign ever started with admitting a fault and then later later you know plug the product but but that apparently builds credibility and i think that's what domino's did this is the miracle and 34th street approach right where the Santa Claus at macy says oh by the way it's cheaper down the way and at first all the executives are aghast and then oh it's working out well for us because it builds goodwill it works yeah is it just does it stick though i mean my question is is domino's pizza not suck now or is it just that everyone pays attention because hey it did suck let's give it

another try? Does it hold? That's the question. I think they certainly benefit from being a very pervasive brand, you know, huge, huge brand recognition. And I think that if you're someone who likes pizza, you're looking at that and you're saying, okay, you know what? I haven't ordered it in a while. I'll give them a shot. Yeah. So that's sort of my point. So I think is it sustainable. Is the novelty going to wear off? Yeah. I think people who really like pizza probably aren't actually ordering from Domino's ever. Well, this is an ad campaign that clearly they can't do over and over and over. You thought that last speech was bad. This is worse.

Now we're back with another one. Although detergents do that all the time. That's right. New and improved. It was old and lousy. Exactly. Tide. Tive just keeps getting better and better and better.

Six blades. All right. Seth, Tivo didn't report earnings this week, but shares were up more than 60% on Thursday after a federal appeals court sided with Tivo in its lawsuit against the Dish Network. 60% in one day. Yeah, somebody tell me if my math is wrong. But when I do this, the value, market value of

TiVo looks like it went up about 700 million in the ruling that may come their way because of, or the award that may come their way because of the ruling is 300 million. So that doesn't make sense to me. Well, and there's something else. There's a product story here. They're rolling out something called Premiere, and it's going to be a media aggregator. So web media, music, streaming music, and then also the cable shows that you're able to program through TiVo. It's an upgrade.

Seth and I were talking about this before. My point is, though, I think that everybody is their competition. So even if you say, all right, $300 million is a nice addition to the balance sheet, and we should add that to the value of the stock on the market, I think in the long run, Tebow goes away or is folded in to some other enterprise and maybe not at this valuation level. Not at this valuation. They're not an acquisition candidate.

But let me push back on that a little bit. Do you feel the same way about Netflix? I mean, so what's to prevent somebody from stepping into that space and doing exactly what they do? Netflix has no competition in that space. Tevo has a ton and it's all very well funded. Netflix does have competition. It's just their, well, Blockbuster would love to be in that. They're already on Amazon now.

They've already polluted it. They've done it badly. There's nothing in the same, but I'm just trying to, I'm pointing out the flaw at the center of your argument. It seems like it is, but it's not. It makes something that is complicated for people quite easy, whereas Netflix, what are they doing? They're shipping DEDs out to you. But the problem is that every single cable and satellite operator out there is going to be offering a TiVo like box. There's nobody out there who offers a Netflix-like experience that really has compared,

and everybody who has tried to sort of fall by the wayside. Why would this companies want to be manufacturing that equipment when they can partner with a company like TiVo that already has it down? Because, well, they already, first of all, none of a manufacturer. It's all manufactured elsewhere, but they can get it cheaper without having to pay TiVo. The real question, and I think the reason this rose is that people expect that somehow this is going to inhibit the cable companies and the others from distributing a TiVo-Bo-like box or mean that they get a licensing fee coming from now until forever. And that is what people must be assuming to add this.

Let me beat this dead horse one more time. Is it kind of winning? The reason why Netflix is a great company, I think, is going to be dominant in the future, is similar to what TiVo has done. They have perfected a relationship with customers, and they perfected an interface. So maybe somebody can step into that space, and it turns out to be a commodity product,

but if that's true for TiVo, that's also going to be true for Netflix. I don't think you believe that is. It hasn't played out that way, though. That's the problem. Into the future, it could. I'm going to take a long, hard look at TiVo just as soon as I get rid of my VCR. How did this happen? Where did it go? It should have been there last week's episode.

My TiVo, with the season pass, I thought I was all set. All right, coming up, should Ulysses S. Grant be replaced on the $50 bill? We'll consider a few new faces for your currency. You're listening to Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in the studio with Seth Jason, James Early, and Shannon Zerrin. Guys, time for some quick takes. Let's start with Apple.

Apple is suing HTC, the maker of Google's Nexus 1 smartphone. Apple accuses HDC of violating 20 patents related to the iPhone's interface, architecture, and hardware. Shannon, is this a sign that Apple is scared, or is this a power move by them? Well, it's a proxy battle for Apple's battle with Google, of course, right? So they're worried about the Android. And it's also interesting because the evolution of the market for smartphones, and the growth has been exponential, it will continue to be exponential in the near term. At some point, that's going to ebb, and then the folks who are going to be the big players

are going to start getting scrappy. And I think that Apple is, as ever, the bleeding edge getting scrappy early on. Have you seen some of the actual patents, though? I mean, I'm looking at this list, and number three says, unlocking a device by performing gestures on an unlock image. I mean, that sounds mildly impure to me. It also depends on the gesture you're performing. I think that's right.

They patented the color black as well. And by the way, Apple Palm called, and they want their OS interface back to it because all it is is a bunch of pictures on a screen. Come on. The chairman of the Commodities Futures Trading Commission testified before Congress this week and called for, quote, an Eddie Murphy rule to be put in place. The proposed rule would ban insider trading using non-public information misappropriated from a government source. the rule inspired by the movie Trading Places. Is this what we've come to, James, that we're turning to Eddie Murphy

movies for regulations? Whatever works, baby. I mean, what's interesting is that, yeah, I mean, it seems to make sense. Apparently, we just hadn't banned trading off of misappropriated government information. I don't know that people are really doing that these days, but the problem here is that

defining inside information in the commodities market is tricky because a lot of the big players have their own data, their own forecast, and they the insiders. So, you know, the government thing might be a little more explicit, but it'll be interesting to see what the rule actually looks like. All right. Exit question. In the pantheon of investing movies, where do we put trading places? Is it above Wall Street? Is it below it? It's high up the list.

I think it's just a couple of ticks about 48 hours, which is the vastly superior Eddie Murphy film. Yeah, no. Somewhere near Shrek. Investing movies. Below Shrek 2. I'm watching too many movies with your kid. All right. The SEC is charging Sean David Morton, with bilking $6 million from more than 100 investors, Morton claims to have psychic powers and calls himself America's profit. And if you check out his website, you'll see photos of Morton with Robin Williams, Adam West, Gabe Kaplan, real icons of the 70s. And he writes

that he learned time travel and the ability to view events in the past and the future. I mean, did the SEC just lose their sense of humor? He's the psychic Bernie Madoff. I mean, come on, Seth. You know, geez, there's so many jokes. Where to go? I'm actually more afraid of this guy. I watch the SEC website every day,

and I have to point out that the SEC has done a pretty good job of bringing the hammer down on a lot of scammers lately. They're busting them at a rate of one or two a week, and this is an alleged scam still. But it's really scary. The newsletter that is on the SEC website, the front page of this Delphi Associates newsletter says at the bottom

Happy anniversary, Melissa, I would conquer the world for you. Is he in a hot tub on that? He looks like meatloaf, but the picture is so blurry. Really, this guy, if you believe he could make the kind of returns he claims to have made, then maybe he ought to be able to hire

somebody who could do a little page design work. I just want to point out that there are a lot of scams like this. They've been going on a lot over the past few years, and I notice an increasing tendency of scammers out there to try and feed off a certain sort of mindset in America. And so you will see people claiming that, you know, God is on their side,

and it's the sort of anti-government thing. In fact, our friend here today, Mr. Morton, falsely assured his investors that, quote, the feds can't look over our shoulder, interfere, or regulate any of it. And so I want to make sure that people realize that whatever anyone is pitching sort of anti-government populist investment scheme like that, you probably ought to be grabbing for your wallet. I don't know. I mean, again, there's a photo of him and Robin Williams together. That's good enough for me. I claim those are all photos of meatloaf.

And if the photo were of him and the amazing crescent, then I might consider investing with him. Guys, I predict he's headed for jail. No. And finally, a North Carolina congressman wants to put former President Ronald Reagan on the $50 bill, which of course is bad news for former President Ulysses S. Grant, who is currently on the $50 bill. But guys, let's go higher. I want to test your knowledge of the $10,000 bill. And yes, there is a $10,000 bill.

Just quickly. Go around the table. Just take a shot. Shannon, who do you think is on the $10,000 bill? Whoever it is. It should be Kurt Vonnegut. Tell me it's not Grover Cleveland. Seth?

Man. Just take a shot. It would be great if it were Hoover. It would be great. Steve Brodo, our man on the other side of the glass there, what do you think? Just take a shot, man. $10,000 bill. Chris, if memory serves, I think that would be Solomon Chase, U.S. Senator from Ohio,

23rd Governor of Ohio. I believe it was the U.S. Treasury Secretary under President Abraham Lincoln and Chief Justice of the United States. I think he was also born in Cornish, New Hampshire, to Ithmar Chase and his wife, Janet Ralston, just throwing that out there. That's a phenomenal guess. Do you ever get the sense that maybe Steve's on the wrong side of the glass and so are we? Salman Chase, man, that is strong, Steve. How'd you pull that one out? That's how I roll.

All right, drop us an email at Motley FoolMoney at Fool.com. Give us your nominations for who should be on the $50 bill, or, you know, the $10,000 bill, for that matter. Drop us a note, Motley Foolmoney at Fool.com. And if you missed any part of the show, you can always visit us online at motleyfoolmoney.com. The guys will be back later to talk about the stocks that are on their radar. But coming up after the break, bestselling author, Alice Schroeder joins us to talk about Warren Buffett's annual letter to shareholders and which industries he's investing in. Stay right here. You're listening to Motley Fool Money.

Welcome back to Motley Full Money. Chris Hill coming to you from Full Global Headquarters in Alexandria, Virginia. Warren Buffett recently released his annual letter to shareholders, and in the past year, the Oracle of Omaha has made some big bets on trains and trash. Joining us to share some perspective is someone who spent a lot of time with Buffett while working on an hour. his biography. Alice Schroeder is the author of The Best Seller, The Snowball, Warren Buffett and the Business of Life. Alice, welcome to Motley Fool Money. Hi, Chris. Thank you for having me on. So Warren Buffett just released his annual letter to shareholders. You just wrote a cover story for Business Week magazine about Buffett's influence on CEOs. One of the things that really stood up for me in that cover story was you wrote that Buffett may now command as much information

about the state of the U.S. economy as anyone, including the Federal Reserve, and that he probably gets his information faster. How is that? Well, you know, he owns a piece of just about everything, and I was, to some extent, being facetious because, of course, he doesn't invest in technology and a lot of businesses, but he's got daily information from a lot of the Berkshire companies about sales in city-specific levels.

So he looks at California, for example, city-by-city, he's candy and he's got extremely granular information about real estate, city by city from Home Services of America. And his ability to understand that information instead of in big aggregate chunks the way the Fed would look at it has enabled him to see things that I think other people don't see. All right. Well, I want to dig into some of the companies in Berkshire Hathaway in just a couple of minutes,

but first let's dig into the annual letter, which is always eagerly anticipated by the investment community. I want to have you elaborate on a couple of the investing principles that Buffett addresses in the letter. And the first one is, we won't be dependent on the kindness of strangers. Too big to fail is not a fallback position. If only the banking industry operated that way. Yes, and Berkshire, of course, performed magnificently through the financial crisis. It managed to invest more than $15 billion during that period rather than requiring a government bailout. It did lose its AAA rating, but that was a very small price to pay for the opportunity to invest on incredibly lucrative terms in companies like GE and Goldman Sachs.

Now, one thing I did think was interesting is that he scolded the CEOs of companies that had failed for being paid and for taking high compensation and not suffering the same as their shareholders, but he didn't mention companies that have been bailed out. Why do you think that was? Could it be because Berkshire invested in Goldman Sachs? Yeah, let's talk about that. I mean, you've written that Buffett has typically viewed investment bankers as, and I'm quoting here, useless self-serving windbags.

That didn't keep him from investing $5 billion of Berkshire's money into Goldman Sachs. That's right. I think when you look at Warren's behavior, you have to remember that ultimately he's a pragmatic guy and that he doesn't let his personal feelings about things generally get in the way of making money. Also, when it comes to Goldman, he's had a longstanding relationship with the firm through Byron Tott, his banker, and going all the way back to trading with Gus Levy, who was the head of Goldman for many years, he's got a comfort with Goldman that he doesn't have with the other bank, so I'm sure that that played into it.

It certainly made headlines when Warren Buffett put $5 billion into Goldman Sachs, but I think the biggest headline in terms of Berkshire's business last year was the purchase of Burlington Northern Santa Fe Railroad. Well, and in a piece that you wrote for The Motley Fool, you said that the Burlington investment, like a lot of his investments, was rooted in a lifelong interest. Yes, well, you know, Warren, I would never say this is why he did it, But it's really fascinating that there are always these little connections in his life.

And, of course, that's true with the chocolate, but it's very true with the railroads. He calls it his choo-choo that he's always wanted to own. He grew up in a railroading town, and as a little boy, he wanted an elaborate model train set very badly, and he never got it. So now he's got the big one. Well, and back to what it means strategically from an economic sense, our writer Morgan Housel, thought that he overpaid for Burlington. but Morgan also thought that, hey, this makes sense because it gives him the opportunity to deploy tens of billions of cash at reasonable returns. And it also gets back to something that you wrote in the Business Week magazine cover story, which is about getting information.

Is that part of it for Buffett that Burlington Northern enables him to get yet another toehold on the state of the U.S. economy? I think that he would not be willing to pay more for it because of that. But when I look at his other investments, it's really interesting how many times you see a note in one file referring to information he got about another company that he's used to think about one investment versus another. And it's clearly added a great deal to his ability to make money for Berkshire. So it's got to be because Matt Rose, who runs Burlington, has called it the kaleidoscope of the economy. who wouldn't want that. At the one last company I want to hit on, at the end of 2009, Coca-Cola was Berkshire's largest holding.

Buffett seems to approve of Coke's recent decision to buy its largest bottler. The quote he gave was, I think on balance, I like it. Is that damning with faint praise? Because that's a little bit how it sounds. I would say that that is conditional approval or faint praise. It leaves the door open for him to come back later and change his mind or have qualifiers or criticisms. You know, there's a really long history of bottler producer relationships in the COLA industry. And, you know, Indranui made a very compelling argument of Pepsi's strategy.

Coca-Cola's own history has been poor in this area. They have had problems in this area. So, you know, he may have reservations about Coke's ability to execute it. He may have reservations about Coca-Cola. as strategy or a price they're paying, you know, but he seems to have left the door open to come back later and distance himself from it. One of the things that came out in the annual letter was obviously the positions that Berkshire holds where they reduce their positions with companies like ExxonMobil and WellPoint,

Johnson and Johnson, but also where they increase positions. And right at the top of the list, a company, probably a lot of people haven't heard of, Republic Services, a waste management company, Berkshire more than doubled their position in this. What does Warren Buffett know about the waste management business that the rest of us probably should know? Well, I can tell you what, I can't tell you what's in his mind, but I can tell you what your listeners should know about the waste management business, and that is that it's going to be a big player in alternative energy. because garbage is a gold mine.

Recycled energy garbage is going to be a big player in producing sources of alternative energy. And if you look at what's happening, it's part of a supply chain where you can pull all kinds of metals and reclaim all kinds of things. And recycling, which we think of is not really that economic is going to become a lot more economic in the years to come. So the garbage is actually worth something. Alice Schroeder is the author of The Snowball, Warren Buffett and The Business of Life. It is a New York Times bestseller. It's out and paperback available pretty much everywhere. Alice, thanks so much for being here.

Thanks, Chris. All right, let's switch gears now from the Oracle of Omaha to the international scene, and here to help us do that. It's Tim Hanson. He's a senior analyst and co-advisor of Motley Fool Global Gains, a service focused exclusively on investing outside the U.S., and he joins me in studio now. Tim, welcome.

Hey, Chris. So we've talked on this show before about the state of the euro and particularly the problems that are happening in Greece. What's your latest take on what's going on over there, and what do you think it means for investors? Well, the problems are all stemming from one issue, which is that economic growth in Europe is horrible. Unemployment is very high,

and that's driven deficits and debts extremely high, which is now undermining all the standards that we're governing the setup of this currency. So for investors, be very aware of any kind of, company that's relying on European consumers, any company that's relying on, that has a lot of euro exposure, because if that goes down, it's worth less to you if you're buying those shares in dollars. And so I'd think specifically about something like Inditex, which is a Spanish retailer, Luxottica, which makes sunglasses over there and has big European exposure. Those are things

you really want to be worried about right now. Now, I was digging through your writings. Back in May of 2009, you actually made the prediction that the euro is going to disappear in the next five years. I look pretty smart. Tell me why you made that prediction. Well, it's not that hard, it wasn't that hard of a prediction to make. The whole European Union, the monetary union anyway, was sort of founded on a lie. And that was that all these countries could get together and hold themselves to certain fiscal standards to keep debt down and keep spending down. And they just haven't done it. They haven't had any sort of fiscal discipline. And then they lied about their numbers. And Greece was foremost among that group. And then the rest of the union had no

enforcement mechanism by which to figure that out, to crack that code, so to speak. So now what you have is small countries like Greece and even larger countries like Spain really struggling under massive debt loads and they don't have the flexibility in their currency to deal with them. So you're looking at stocks in Europe, in Asia, all over the world. Give me one stock that you like right now. Well, you know, unlike Europe, China is still growing, putting up positive growth. And while it has some issues among in its real estate sector in the big cities like Beijing and Shanghai, rural China is doing fabulously well because the government is really supporting agricultural production out there.

And so the rural Chinese consumer is doing well. So I've actually brought you a sample today of a company from a company called China Marine Food that makes snack foods. I've got a bag of roasted shrimp here. Roasted shrimp from Fujian province. And this is a fast-growing little company. It generates a ton of cash.

And these are basically like potato chips over in China. They've been growing very quickly. They're signing deals farther and farther inland. And for example, they just released a new product called Chili Squid, which is really spicy. Chili Squid. And the reason they did that is because people in Sichuan Province love spicy food.

And so to crack that market, they wanted a product that was a little zestier. And it is quite zesty. I don't know if you're going to try them, but you should. And what's the ticker symbol? CMFO on the NASDAQ, China Marine Food. It's fascinating little company. You had me at Chili Squid. Tim Hanson, senior analysts and co-advisor of Motley Fool Global Games.

Thanks for being here. Thanks, Chris. Happy Squid lives beneath the sea. Dreaming fancy dreams for you and me. Coming up, we'll dip into the Fool Audio Archives to hear from Roger Ebert, and we'll give you an inside look at the stocks that are on our radar. This is Motley Fool Money. Welcome back to 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 the guys will be up shortly to talk about the stocks that are on their radar. On last week's show, we talked with film critic Nell Minow about the Academy Awards, but also about Roger Ebert. Ebert was a guest of the Motley Fool back in 2002, and our radio producer Matt Greer is here to share a couple of highlights. Matt, good to see you. Chris, good to see you. So we have a couple of clips to share. What are we going to hear first?

Well, Chris, when we had Roger Ebert back on the show, that was back in March of 2002, at one point in the interview, we asked him about his favorite movie, his favorite film about business and investing. And he took it in a slightly different direction. He instead talked about his favorite line about money. And that's a line, as you will soon see, that should be recognizable for a lot of our listeners. Well, you know, I think the funniest line of dialogue that David Mamet has ever written was about money. And it came in his movie of 2001 called Heist, The Heist. Danny DeVito was trying to convince Gene Hackman to pull one more job. And Gene Hackman says he doesn't want to do it.

He'd rather go sailing. And Danny DeVito says, you've got to do it. And Hackman says, why do I have to do it? And DeVito says, for the money. And Hackman says, I don't like money. And then DeVito comes up with this classic mammoth line, which ought to be the motto of The Motley Fool. Everybody likes money.

That's why they call it money. I love it. I loved it the first time I saw that movie, and I'm so glad we have it as part of our opening. It is a great, great line. And as I was listening to it for this segment this week, I thought, you know what, that sounds really, really good. Yeah, it's high quality.

It's high quality, and I realized, wait a minute, we had Ebert join us from a studio in Chicago, and the light bulb went on because as Nell Minow mentioned, as a lot of people may know now, there's a Scottish technology company called Sarah Prock that's essentially reconstructing his voice, giving him a new voice, and they do it from audio like that. So I emailed the company. They shot me an email back. I sent him a clip. They said, hey, this is very good quality. And so there you have it. So the Motley Fool in a very, very small. way we'll be doing our part. We'll be part of the library. Exactly. I love that. All right. Do you have another clip? I do have another clip. This is how we ended the interview with him back in 2002. We have this buy-serral-hold question. Instead of stocks, of course, we say, hey, if these were stocks, would you be buying, selling, or holding? And we asked him, buy-sell or hold, Ingrid Bergman. Buy. Buy big. You know, get heavy into Bergman. She's the most beautiful woman in the history of the movies, from certain angles. I love the from certain angles.

It's wonderful. It just makes it so good. Yeah, I think if I could buy shares of Ingrid Bergman and Grace Kelly, I think that would represent the bulk of my portfolio. You've always got to buy shares of Ingrid Bergman. And I've got to say you've always got to buy shares of Roger Ebert. I had the opportunity to hear him at the University of Colorado back in the early 90s when I was in graduate school.

He'd come out once a year. He would show a movie on Monday, and then he'd start the movie over on Tuesday. And for the rest of the week, anyone in this auditorium could raise their hand and say, stop and ask him a question. And the year I... So just stop the movie and he'll take questions on the spot. Absolutely. And the year I saw him do it, he did it with Silence of the Lambs,

and I realized that Roger Ebert is a lot smarter than I am. He is a brilliant guy. He's seeing things in one shot that I never thought twice about, talking about where Jody Foster is in the frame, what's going on with the music. And most of all, he's just a guy who's incredibly passionate. And you know what? There's a lot to be said for that.

All right, Matt Greer. Thanks for sharing that. Hey, drop us an email at Motleyfulmoney at Fool.com. We want to know your thoughts on Roger Ebert, the Academy Awards, and hey, even Ingrid Bergman. Ingrid Bergman, Ingrid Bergman, let's go make a picture on the island of Stromboli. Ingrid Bergman, Ingrid Bergman, you're so pretty. you'd make any mountain quiver,

you'd make fire fly from the crater in great Bergman. Joining me in the studio once again, our trio of senior analysts, Seth Jason, James Early, and Shannon Zemarin. All right, guys, time to talk about the stocks that are on our radar. Shannon Zemirin, let's start with you.

I'm tempted to make Costco of my radar stock this week. Just, you know, as we were saying before, a fantastic company going to gain greater relevance into the future, but the thing doesn't look cheap. about 25 times earnings, about 10 times cash flow, that's not cheap enough for me. So rather than recommend a good company or focus on a good company, I'm going to focus on a craptacular one, which is Sprint. A third, a distant third in a field of three.

And it has a lot going against it. But even companies that are on the decline can be valued. And I think that right now where Sprint is, it's dramatically undervalued. So if you're looking for an interesting stock that is kind of distressed but may be on the comeback trail, although it's one of those better than expected comeback. trails. Sprint bears looking into now. So you like it or you don't? I like it at this valuation. I think it's an intriguing. It's a crappy company with a really good price to act. You're not a long-term holder. No. So like things are so bad with Sprint if they get even

slightly better. It's party time. Right. And so the expectation should be for a slide improvement. I mean, they've done a lot of things wrong. I think they'll do fewer things wrong into the future. James Early, one stock on your radar. Chris, you know, obviously Chile is on everybody's radar because of of a very devastating earthquake, and that's obviously very sad for the country, but the country is actually the strongest economy in South America. I mean, this is a business show, and there are a lot of good businesses in Chile, and I've actually gone to some of them from my income investor newsletter, and one of those is United Breweries.

The ticker is CCU. This basically has the dominant market share in beer in Chile with an 85% share. I mean, that is humongous. Nobody else can come close, and they have a 22% share in Argentina even. This company yields 4% of. and actually since the earthquake, the stock hasn't really been hit that hard, which I take as a sign of strength. CCU is a ticker, again, United Brewery is the name. Okay.

Seth Jason. Well, as part of that whole retail frenzy we had this week, one of the stocks in our Hidden Gem Service, a company called Zumies, the ticker is ZUMZ, announced a just above just better than 10% comparable store, same store sales increase. and the stock went crazy. It really went crazy. Like 25% it jumped right after the news, came back a little from then. And I just want to caution people out there, even though it is in my service. It's sort of on Team 3, which means that we have our suspicions about the current valuation,

and we're not so sure about the business. And I believe that this is a parable for all of the rest of the so-called great retail news, which is that if you read between the lines and the actual sales release, you start to suspect that there's a lot of, merchandise maybe being sold a little bit cheaper and that that's why they're bringing people into the stores. And so I encourage everybody to not just read the headlines on these retail sales, but to dig in a little deeper and find out what the profits are going to be on those sales. Are you wearing any Zumi's clothing right now? This is like skateboards and, you know.

The question stands. No. You should ask Tim Hansen that question. Yeah, exactly. All right, Seth, Jason, James Early, Shannon's everyone. Guys, thanks for being here. You're welcome. Thank you, Chris. I want to thank our special guests this week, Alice Schroeder and Tim Hansen. And if you missed any part of the show, you can find it at our website, motleyfoolmoney.com. You can also get a copy of our free Motley Fool Special Ops Advisory, all that and more at motleyfoolmoney.com. Our engineer is Steve Brodo. Our producer is Mac Greer. I'm Chris Hill.

Thanks for listening. We'll see you next week.