Motley Fool Money - Motley Fool Money: 07.20.2012

Episode Date: July 20, 2012

Chipotle, Google, IBM,and Microsoft report earnings.  And Yahoo! names a new CEO.  Our analysts discuss those stories and share three stocks on their radar.   Plus,  we talk about the business of bouncing back with Andrew Zolli, author of Resilience:  Why Things Bounce Back.   Learn more about your ad choices. Visit megaphone.fm/adchoices

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Gig speeds available via hot spots that Comcast Business and mobile customers only. Actual Wi-Fi speeds vary, not guaranteed. Everybody needs money. That's why they call it money. 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 joining me in studio this week. For Motley Fool Inside Value, Joe Maker, from Motley Full Income investor, James Early, and for million-dollar portfolio, Mr. Charlie Travers' gentlemen. Good to see you. Hey, Chris.

We got earnings paloza this week. We've got the latest from Microsoft, Chipotle, Intel, IBM, and more. We'll give you a preview to Facebook's first earnings report that's coming next week. And as always, we'll give you an inside look at the stocks on our radar. But we're going to begin with Google. Shares of Google up this week after quarterly revenue came in 21% higher. Joe Magar, that's the top line number. What's underneath the surface? Oh, it's another great quarter.

But when you dig into the revenue, there are two big levers. One is cost per click. So that's how much revenue Google actually gets every time someone clicks on an ad. And the other is number of clicks. Now, number of clicks was up 42%, which is pretty phenomenal. But the cost per click was actually down 16%. And the reason is they're getting more clicks from outside the US, emerging markets and on mobile, which have lower revenue. But at the same time, it's more than offset by the total number of clicks coming through.

So, Joe, it kind of seemed like coming into this year, mobile was one of the big things to watch when it came to Google. What are you watching now? What's sort of the next big thing to watch with this company? Android activation. So they're activating a million new handsets a day. Wow. That's a lot of new handsets, and that's up 100% year over year. So it's really an amazing growth story, and I think you're going to see a lot more of that. And Android's value to Google, really is just through search.

Google has more than 90% of the search market share with mobile, and just having their own operating system out there instead of their arched nemesis rival. Apple helps cement their position. Microsoft went public in 1986, and this week, for the first time ever, Microsoft reported a quarterly loss. Charlie, I'm a Microsoft shareholder, so please talk me off the ledge. I can do that, Chris. So they reported $2 earnings per share for the fiscal year, which was down 25%. That's not as bad as it sounds. This is all due to a $6 billion write-down of a purchase of a company called Aquant of in 2007. Now, writing down this acquisition means that it turns out to be essentially worthless and that they threw money down the toilet.

However, that happened in 2007, not today, and it's not reflective of what's going on in the business. Microsoft did do $29 billion of free cash flow in the fiscal year, and the most important thing that investors need to keep an eye on is the launch of Windows 8 in October. As we just talked about with Google, mobile is increasingly important from the consumer perspective. Microsoft's been very, very badly left behind by Apple and Google in that space, and we'll see if Windows 8 and their mobile focus there, gets them back in the game, and I think it will. Charlie, let me just ask you this. As a dividend investor, I've got to love the $29 million cash flow. But in five to 10 years, look, Microsoft has a product that people use mostly because they have to,

but that's changing, a mildly deranged CEO. I mean, is this the kind of company that we want to be in for the long term? I think so, James. And speaking of the dividend, they instituted it about a decade ago. Have increased it almost every year. I think they'll increase it again this September, and the payout ratio is still. very low, only in the 20% range. And I do think they have a wider economic mode than you're giving them credit for it.

You think people like Microsoft, basically? In certain areas, yes. People like Apple. I don't know people like... Well, in the Xbox Live Realm, for example, they do have 60 million paying users. So people do like them. Joe, what do you think? I think the Microsoft thesis for the last decade has been, well, there's another operating system around the corner. You know, now it's Windows 8, and it was Windows 7, it was Vista,

it was XP, and it just keeps going back. And that's always the thing people are looking forward to. No one's ever excited about the current business. I think part of it is they do make a ton of cash. And to their credit, they have paid out a ton in dividends compared to other tech companies. But they also set a lot of it on fire or put it down the toilet like they did with the quantive. And I think that's the real concern with the stock going forward. It isn't just the size of the moat, but what they're going to do with all that cash? You guys are all about toilets today. Charlie, you think that we talked earlier in the year about the surface tablet. You think that Windows 8 is actually

a better bet in terms of Microsoft making a splash later this year? That's a better bet than the Surface tablet being a hit? The Surface tablet will be a part of the splash. That was an incredibly well-designed device. Windows has absolutely no presence in the tablet market right now, and they have to get one, and the reviews I'm seeing around the Surface tablet are spot on. All right, I'm calling it here. Google Plus is more likely to be a hit with social media than the Surface tablet is on tablets. Is that because you're on Google Plus? and you're trying to get more friends? I am trying to get more friends, but yeah, that's my gosh.

We'll put a nice bottle of bourbon on the line for that. Okay. Make it friendly. Coca-Cola's second quarter profits came in lower than a year ago. Commodity costs rose, but results still better than expected. James Early, what did you make of Coke's latest quarter? Chris, this is a steady company doing what steady companies do. I mean, that's the why you own Coke.

Sales were up three or four percent. Global volume growth, I think, was up four percent. Profits weren't great, but the stock is okay. The stock is still pretty high compared to, was five, ten years ago. It's nothing exciting here. I mean, I certainly don't like the product or rots your teeth, gives you diabetes, but it's still a good company as an investment. Well, to be fair, I mean, there's more than just Coca-Cola. They've got bottled water, they've got juices, they've got honest tea. So true, and that has been kind of the double-edged

store for them, right? Because they've been losing share in the somewhat flat North American carbonated market. The market is very competitive, and they have big distribution advantages, but it's not like it used to be. So is that your thesis, if you're an investor looking at Coca-Cola today, if you haven't bought shares, is your bet basically that this is not just a company that has the number one and number two sodas in America with Coke and Diet Coke, but you're making, in some ways, an even bigger bet on the healthier options, the bottled water, the juice, that sort of thing? I would say the biggest bet is on the emerging market. The second biggest bet is on the healthy trend, but you need that consistent soda-based to stay put. And most of Cokes revenue comes from

outside the U.S., but they still need that there. They're bringing sugary goodness to children around the world. They're like Santa. Yeah. Shares of Chipotle fell more than 23% Friday morning after the company's latest earnings. Charlie, I'm assuming that means we're all buying fewer burritos as a country. That's actually not the case, Chris, and I'm buying enough to make up for it. I looked at the numbers, and for a stock that's off 20-something percent, the numbers are very strong. They had 8 percent same-store sales growth, profits were up 60 percent, and yet the stock is absolutely getting clobbered. And I think there's two reasons here. One is that they did comment about a consumer slowdown.

A lot of retail is seeing that domestically, and that's an up-and-down kind of issue. Sometimes are better than others. But the real issue here is that this was a stock that was overvalued. Chipotle was trading at over 50 times earnings for a very long time. And when the growth slows down, that's going to come back down. In comparison, Starbucks and Panera to other very well-run companies are trading at 30 times earnings. So I don't think it's as much as a memorandum on Chipotle's business but the price of the stock. I was going to say, I didn't get that.

We've heard this phrase before and we've used this phrase before. And it's the whole notion that a stock, any stock, is quote, price to perfection. And this seems like one of those situations where Chipotle was priced to perfection and results were just slightly less than perfect. I don't know. If 60% earnings growth is not perfect, I don't know what it is. Joe, what do you make of the company's valuation? Oh, it's obscene. It's still obscene. It's so tough to stay on top in restaurants because barriers to entry or low and consumer taste change. For a little fun, I went back and looked at some of the hottest restaurants from 20 years ago. So here are three of the biggest growers at the time.

the box, Carl's Jr. and Sonic. So let that be a lesson when you're thinking about hot restaurant stocks today. How that's going to do with a long haul. What is the growth potential, Charlie? I mean, we were talking before the show today about, you know, Chipotle, you look at their footprint, just how many locations they have. They don't have, you know, nearly as many as you look at a Yum Brands or something like that. I mean, it seems like Chipotle still has room to grow. Tons of room to grow, Chris. Yum brands and McDonald's both have over 30, thousand locations worldwide. Chipotle is purely a domestic story at this point. It only has

1,300 locations. I would imagine they could do that several fold over before they even have to look overseas. It's menu, though, is so much more concentrated? I mean, is this a concept that's going to last indefinitely? I think so. I mean, it's very popular consumers that give great value. Coming up, one of Google's first employees gets tapped to lead Yahoo. Details next. You're listening to Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in the studio with Joe Maker, James Early, and Charlie Travers. Guys, before we get back into the news, our man, Steve, Broido, on the other side of the glass for the first time in a few weeks.

Steve, how you doing? I'm doing great. Thank you. Now, Steve, we were just talking before the break about Chipotle. You're a Chipotle shareholder. I am, yes. How are you feeling? I'm not feeling so well right now. I feel like I just ate a bad burrito.

But your cost-bated. I mean, the shares are trading for well over $300 a share. I think I got in around. I got in on the B-shares. I think it was in the $80 range. So you're doing fine, but it still hurts to see your shares down 20-some percent. As our producer throws things at you. You might be in a little bit of pain, but probably not in as much pain as people who may be bought in at 400.

I would agree with that statement. I'm sorry, folks. All right, back to the news. For the fifth time in five years, Yahoo has a new CEO. Google executive, Marissa Mayer, is taking on the challenge of leading Yahoo. She is also, it's worth morning out, taking on the challenge of her first child arriving in October. Charlie, this is a smart woman, very accomplished. She was Google's first female engineer, but there are a lot of challenges at Yahoo. What does she need to do first?

Step one, Chris, I think, is stabilize the ship. You referenced the executive turnover. It's hard for employees to focus on doing a good job and being productive and creative when they're worried about the company always changing its strategic direction, worried about whether or not their job is going to be there or not, or their friend's job is going to be there or not. So I think over the next year, what she needs to do is set the right tone, get people on board with what the company's doing, and that Yahoo's here to stay. A year from now, what is one thing we can look to to sort of gauge how she's doing a year into her position as CEO?

Is it the stock price? Is it a major partnership deal? What do you think? I think if you get the media to stop saying what's wrong with Yahoo, that would be a good step in the right direction. I mean, I'll contribute to that and say, I think Yahoo is even dumber than I thought here. I mean, bringing in a fancy CEO to save a dying business works exactly never. I mean, it's just $100 million that's going to be wasted in my view. Well, the company has a very strong balance sheet. They have a couple billion in cash. They are still

cash flow positive. And I think the second thing she should do is set up a culture of innovation. A lot of the problems with tech companies come from. They have smart employees with good ideas and they don't have a process for getting these ideas out onto the market and to the light a day. And I think that would be a good step. If you see Yahoo start rolling out, whether it's something in advertising or content relationships, that came really from the rank and file employees. That'd be very encouraging. Yeah, and that's something she brings from Google, and that's something Google does extremely well, and she has a lot of experience on the products. What does Yahoo do better than someone else? Or what could they do better than Google?

I think if you look at the two properties they have in Yahoo Sports and Yahoo Finance, those are Finance is good. Those are both incredibly strong properties. So it's not like she's walking into a building that's completely crumbling. There's a foundation, I think, to build on there. eBay's quarterly profits up 26% more than a year ago. Joe, let me take it wild stab. PayPal is just crushing it. Yeah, PayPal's on fire. Revenue was up 26%. But the surprising star this quarter was the old school marketplace business. There's been an ongoing turnaround there where they've cleaned up the site. They focused on full. fixed price. And frankly, it looks more like Amazon than it looks like, you know, an old online garage sale, which is what the site was like a few years ago. And it's a cleaner experience, and you're seeing more people sign up. They actually had the biggest growth in a single quarter since 2006. They're also killing it on mobile. More than 8,000 cars are sold each week through eBay's mobile app. That's such an insane number. I thought it was wrong, and I went back and looked again twice,

but that is correct. They sell a handbag every 30 seconds. And, you know, you know, you know, it's a thing. I'm You got a hand at eBay. They were really early on mobile, and they seemed to be doing really well with cars. That's something you never would have thought people would be excited about buying online, let alone on a smartphone. Charlie, what do you think? They had to give the marketplace some attention. Their website looks the same as it did 15 years ago. And who wants to go through pages and pages of search results to find an item when you can just go straight over to Amazon, type it in and get exactly what you want? I do love eBay. It's like the best business in my mind, just matching up these weird, I mean, I've bought some weird stuff on eBay. Go on.

What's the weirdest thing you bought? I bought this steerhead from Texas with these huge horns, and I got it to my house, and then, like, I noticed the bone starts, like, falling apart, like, couple weeks later. And it turns out there's all these maggots inside the bone. So then I put it on the curb for the trash men, these kids, because Boy Scouts come by, like, can we please have your deerhead, your steerhead? I'm like, no, there's maggots. You don't want this. They're like, we don't care. We'll take it anyway.

So, some Boy Scouts took it. That's it. It's almost hard to believe eBay hasn't contacted you to do sort of like a customer profile as an ad for their business. Products on the long tail. Moving on, IBM's second quarter earnings rose 6% despite a drop in revenue. Charlie, it's the 38th consecutive quarter Big Blue has grown earnings. That's amazing. Almost 10 years. It's remarkable. And I think a lot of investors still, when they think of IBM, think of the old mainframe computer maker.

that had its business model disrupted, but the IBM of today is a very innovative company. They have a lot of different product lines ranging from hardware to software to services like managing large data centers, which is crucial to how businesses run these days. And they get over 60% of their revenue from outside of the United States, and they've also got Watson. Are they putting Watson to use anymore? Yes, in financial field and in medical field, places where there are just reams and reams. of data where a computer can go through it far, far more quickly than a human could. We have a tale of two chipmakers. Intel's earnings came in better than expected, but the

company cut its full year forecast. Shares were up slightly this week. That was not the case with AMD. Shares down more than 10% on Friday after AMD reported a nearly 40% drop in profits. James Early, what do you think? Well, Chris, to understand AMD, if you start with Intel and take out all of good stuff, then you've got AMD basically. It's a really, it's a lot of It's a PC story, is what it is. And Intel is, PCs have not been selling well, you know, that they've been declining. Intel is largely a PC story, but it does have a lot more presence in the server market, and that's been helping them quite a bit.

It just has more money, too. So it's not a complicated story for both of these guys, though, especially Intel. The real story is going to be over the next year is what happens with these ultra books. Joe, AMD, hit a 52-week low. Is it a value play, or is this the classic value trap? I think AMD will hit plenty more 52-week lows. They're in a terrible competitive position, like James was saying. It's just so tough to keep up with Intel, which has a much bigger R&D budget, better brand. Over the long term, it's always going to be this competitive dynamic if they're able to just float along. But if you're Intel, for competitive purposes, you want AMD out there. You've had to. Yeah, they had to give them their old technology for many years. I don't know if they're still doing it.

Finally, Facebook is going to announce its first earnings as a public company next week, Thursday, July 26th, after the market closes. Before we engage. in reckless predictions. Joe, I'll just start with you. What's a number to watch? What's a metric that investors should look to to gauge how Facebook is doing as a public company? A similar number to Google. You're looking at cost per click. You're trying to figure out what ad rate prices are going in at Facebook. And they'll have different measures for that. But ultimately, you're trying to figure that out. And you want to see how much revenue they're pulling in per user overall. That's really a measure of efficiency. And if that's not trending up, then I think the stock is definitely wildly overvalued.

or, well, it is wildly overvalued, but even more if they don't make some progress on that. James? I can do no better than to copy Joe in the ad rates. I think, though, to me, it's not just one quarter. This is going to be a year-long thing. We have to see if the business actually works. Charlie? It is much easier to run a private business and invest in your company's future

because you don't have short-term earnings pressures. And I want to see how Facebook starts doing this as a publicly traded company with analysts hitting them on earnings quarter after quarter and see if they stick to. looking for the long term. Facebook is going to go into next week with shares down in the neighborhood of about 30% of where it IPO. It IPOed at 38. It's about 30% below that. Reckless prediction time, Joe. What do you think they're going to do? I think they're going to surprise. They've been rolling out a lot of new features, both on the advertising side and on the user side. And just like LinkedIn rolled out a whole bunch of new campaigns right after they went public to help

get off to a good start. I think Facebook will do the same thing. James? I tend to agree. A stock price says the quote-unquote benefit of a lot of negative emotions. So if they just do something that's okay, it'll be good for the stock. Charlie? They're going to blow it out on the upside. And the reason is a company does not go public, a high-profile company like this, and then blow it their first quarter. Unless they're group on. Yeah, so they're going to come out strong. Coming up, why does some companies bounce back while others don't? Author Andrew Zolley explains the business of resilience. Stay right here. You're listening. to Motley Full Money. Welcome back to Motley Fool Money. I'm Chris Hill. Between the recent financial

crisis in the United States and the debt crisis in Europe and general week-to-week stock market volatility, let's face it, there is not a lot that we can control as investors. Our guest this week says that while we can't control the storms, we can learn to build better boats. And Rosali is the executive director of PopTech, a global innovation network, and he's the author of the new book, Resilience, Why Things Bounce Back. Andrew, thanks for being here. So let me start with this. Why did you write this book? Well, you know, we, and PopTech brings things to some technology and corporate leaders in many different fields. And just before the financial crisis in 2008, it was becoming increasingly clear to many of these kinds of organizations that rather than just

simply steer around the storms like climate change or a big economic, and you take all the people who care about that, you put them in a car and you send it careening toward the cliff. When the car is far from the cliff, the people who have the moral authority in the car saying things like, stop, slow down, we are headed toward the cliff. But because profits are rarely appreciated in their own time,

the car will continue in that direction when it gets close to the cliff, a different group of people come to the fore. And they said things like, we'd better put an airbag in some parachutes on this thing, because we don't know, even if we hit the brakes, we could still be going over in many different domains. and that was really the motivation behind the book.

Now, ours is a business show, so let me spot you up with some of the businesses that you're writing about in your book and have you expand on them. And let's start with a company that I think most people are familiar with, at least in one way, shape, or form. And that's Nike. Yeah, Nike is an extraordinary company in this regard. One of the ways in which we build resilient fire breaks within disruption in one area, it doesn't. Another really important strategy, the most is. on to Mo is the one you never have to grow. If you can decouple yourself from a scarce

underlying resource can make your supply chain much more efficient. Nike is a huge company, and it's an amazing statistics about what they do. For business, obviously, and most people may not know this, but it takes 700 gallons of water to make a single organic T-shirt, to make those. Nike is making strategic investments to decouple themselves from the water. water supply, which given population growth and the other competition from agriculture and industry and human consumption is going to become tighter and tighter, they're making themselves more resilient by building systems that allow them to dye their clothing, the clothing that they sell compressed form of COD use any water at all and be a much bigger part of our future.

And while we talk a lot and focus a lot of our attention as investors on the big Wall Street Banks, Bank of America, Wells Fargo, Citigroup, et cetera. You've got a pretty extraordinary story in your book about a bank, frankly, I'd never heard of until your book, and that's Hancock Bank. Hancock is a regional bank down in Gulfport, Mississippi, and they're a beloved institution in that part of the United States. And when Katrina hit the Gulf Coast, they, like institutions in that part of the country, were devastated. Their new gleaming 17 stories was decimated and about 90 of their 100 or so branches were shut down. They wiped off the mat, including many in the communities have been flooded out. Many people didn't have IDs. No one could

not to mention how much money they had on deposit. And this was a real serious problem because without electricity and without any way to prove what people with the bank, there was no way for people to get the money out. And this was a moment when people needed cash. So Hancock's did this amazing thing. They went back and they checked the charter of their institution, and they saw that serving the community took precedence over anything else, certainly over near-term profits. And so they engaged in this extraordinary act of trust in their community. They set up car and mobile homes and tents outside of all of their decimated branches. And they would hand out small $200 dollar loans of their, this is of their own money, not their depositors money, $200 loans to

anybody who would sign a piece of paper, security number, and their address. No ID, no problem. Now, you'd say, what an incredibly risky thing to do. Well, 99% of those loans were repaid, and they pumped about $40 million into the local economy at a time when it was absolutely needed. And as a result of this, net assets at the bank blossomed by about $11 billion, and we saw thousands of new accounts open at Hancock Bank because they were able to engage in an active trust that put the institution in its relationship with the community ahead of its near-term profitability and operations, and everybody won. You're listening to Motley Full Money, talking with Andrew Zolle, author of the new book,

resilience, why things bounce back. When it comes to companies bouncing back, Apple is probably one of the best examples. This is a company that was basically dead in 1997, and now it's the most valuable public company in the world. If you are research in motion or Best Buy or Nokia or any company that is heading for a cliff, to use your phrase, are there lessons you can take? from Apple's bounce back, or is that just a unique situation because of Steve Jobs? It would be the most important lesson for many Silicon Valley CEOs is you are not Steve Jobs. We see a lot of guys walking around the valley these days wearing black turtlenecks and wireless, you know, wire rim glasses yelling at people without his talent.

But I think there are lessons in Apple that are less obvious that we're going to be writing about in the decades to come that involve things like the way they made their products. Apple's a huge company. How do they hide from the world what they're actually working on? How do they keep such a big boat, not a leaky boat? And one of the important ways in which they're able to do this is because the actual number of people who are making those breakthrough innovations is very small inside the company.

What Apple really has pioneered is getting the right group of very diverse talents in very small teams to do really big things together. And that talent management was underneath jobs and now underneath Cook is really a major part of their success, as was one other really critical. And this is a part of Apple's culture that runs very deep, and that is the thousands of products. They were a major. People don't even remember. They released one of the first digital cameras ever. And he said, look, we can't be a profitable $10 billion company, but we can be an insanely profitable $2 billion company. But in order to do that, we have to FOCOP in a desktop. And by radically simplifying and cutting the complexity, they were able to unlock all of this extraordinary growth through focus. You're listening to Motley Full Money? Talking with Andrew Zolley, author of the new book, Resilience, Why Things Bounce Back. What surprised you the most when you were working on the book?

Probably the most surprising for me was in the U.S. you think of as a very whole kind of, but from the inside is engaged in all kinds of really amazing experimentation. We spent Kansas called Red Team University. Training a core often take place when young soldier's professional training hit the very complex environment of the battle. One of the days that we were there, they were all watching scenes from the godfather. Consulieri, who has to complicated news. from the out. And what he has to do is challenge their assumptions, purely that there are people in the military at the really the forefront of management innovation was.

As an officinado of the Godfather, I find it interesting that the character of Tom Hagan is being used by the military since at one point someone says to him, you're not a wartime consuliary. Right, which is great. In fact, actually, that scene in particular was, I was with a group of who are all looking at this. I mean, you see how the military chooses its lead. And finally, and this is a mildly selfish question, but since you've written a book called resilience, I figure I can ask this, what's one thing I can do to boost my own resilience? I'm in the book actually exploring that very question.

And it turns out that your resilience and my resilience and all of our listeners' resilience is affected by lots of things. Your beliefs, your habits of mind, your genes, your physical health, the caliber of your social networks. But there is one set of things that scientists have discovered have a real. really dramatic impact on our, on our resilience. And that is things we can do to cognitively train ourselves, typically meditating Buddhist monks. What they discovered was that the plasticity of the brain of these really master meditators, the strategies that they use could be applied to active-duty military officers and emergency room physicians and firefighters to help them deal better with the stresses that they were in high-stress, you know, in high-stress positions. And anyone who's got

a portfolio these days. He's in a high-stress position. So, you know, understanding and dealing with all that complexity, there are some mindfulness training exercises. These are secular tools that belong to everybody. They're free. And there are ways in which we can help cognitively appraise stress when we're in stressful situations that can dramatically increase our psychological resilience. And we don't have time to go into the details, but they're all in the book. Okay, we will wrap up with a round of buy-seller hold. Let's start with this. Google's got one. Buy-seller hold, the future of the driverless car. Buy heavily. Really? Yeah. I really think this is a, you know, we're not going to get jet packs and we're not going to get flying cars. That future is...

Dan. Yeah, I know. I feel just as swindled as everybody else. But if you think about what's happened to automobiles. If we compare them to, say, 1950s automobile, much, much safer, much smarter, much more comfortable and less ecologically efficient in some ways, but I think Google's onto something really important there. Buy seller hold, the future of the euro. I'm going to go counterintuitive and say, I'm going to buy on the euro. I think the, buy long. I don't think we want to go short on it. I was going to say, you seem kind of hesitant. Yeah. Yeah, it takes a little bit of set up. I mean, the reality is that the euro zone is a political institution and was established with a political goal, which was to stop countries that had spent the better part of several decades

beating each other up to a pulp in the 20th century from ever doing so again. They're figuring out now how to make what is a political union, a financial union. In the future, if they can figure out that problem, I think it's long. Buy seller hold, the future of satellite radio. satellite radio, an absolutely wonderful, completely eliminated by the Internet. And finally, earlier this year, we had the first successful, privately funded flight of this kind buy-seller-hold space travel. And private space travel is a very strong buy.

We're going to see a huge new industry there on the back of what are going to become big government contractors moving all of the... You got a destination in mind? A few of my friends have told me that if I get actually get up there to just keep going. The book is Resilience, Why Things Bounce Back. Andrew Zolle, thanks so much for being here. That's been a great pleasure. Thanks a lot. Coming up, my super-sonic ships at your disposal if you feel so inclined. But all right.

Coming up, we'll give you an inside look at the stocks on our radar. Stay right here. You're listening to Motley Fool, Mother. 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 no buy or sell stocks based solely on what you hear. Chris Hill, back in the studio with Joe Mager, James Early, and Charlie Travers. Guys, it's that time again, time to talk about the stocks that are on our radar.

We'll bring in our man Steve Brodo from the other side of the glass. He's still reeling from Chipotle's week, but hopefully he'll have a question for you. Charlie Travers, you're up first. What's your stock? Let's stick with the food theme here, Chris, with Arcos Dorado, tickers ARCO. This company has the exclusive right to own and operate McDonald's franchises in Central and South America. They only have 1800 stores down there right now, so they have a huge growth runway with by far the best fast food brand. They have more stores than their next five competitors combined. a long-term winner. Steve, question for Charlie?

Sure. Should the menu be identical down there, or are they going to specialize for the tastes of South and Central Americans? They do specialize. One example would be they have tons and tons of places called dessert centers just to give people a nice, tasty treat because the weather's so hot. Man, I'm in. Dessert Center.

I'm totally in. James? I'm going to almost copy Charlie and go with a restaurateur and public health enemy McDonald's, which stock has been at a 52. week high, but has drifted down like 7% or 8% in the last couple of months. The question is, it reports on Monday, will it surprise? Europe has been, Europe was weak for Coca-Cola. Europe might be weak for McDonald's too. It gets more revenue there. So the question is, it's more in my radar. I like it as a long-term play. I just don't know if we're going to see a good entry point now.

Steve, question about McDonald's? What's your take on franchise businesses in general? I think they're good if they have the strong brand that you could not create yourself. Like, we could never create a McDonald's brand ourselves. Do you think McDonald's needs to, just rip off the dessert center idea? Because that seems, I'm totally in love with that idea. That might fly here, actually. Joe Maker, what's your stock? Kimberly Clark. It's always been kind of the Jan Brady to Procter & Gamble's Marsha. It's not particularly strong, but investors or consumers have been gravitating towards the brands that they have, so Kleenex, Cotonel, Huggies. They're premium brands, but they're not as expensive as P&G's brands.

And as people have pulled back a little bit, they picked up share. And this is a business where people are really loyal to the brands that they buy. And so my hunch is you're going to see people who've downgraded stick with these brands over time. And I think that that could leave them in a really good position that people aren't necessarily expecting for the long haul. And you get a nice little three and a half percent dividend to boot. Steve? Why is the Kimberly Clark brand not more branded in terms of its products? I don't, I'm just not, that brand does not ring out as being meaningful.

Well, it's just the name of the parent company. I mean, like Kleenex, for example, is when you know. They also have Depends, which might be a product you're familiar with. Wow. Wow. I do have a child, Joe, but it's only nine months old. When you think of highbrow humor, you think of Motley Fool Money. And Brady Bunch analogy. So that was strong. Joe Mager, James Early, Charlie Travers. Guys, thanks for being here. Thank you, Chris. That's it for this edition of Motley Full Money. Our engineer is Steve Broido. Our producer is Matt Greer.

I'm Chris Hill. Thanks for listening. We'll see you next week.