Motley Fool Money - Motley Fool Money: 10 15 2010

Episode Date: October 15, 2010

Google reports big earnings. Microsoft introduces new phone software. Fed Chief Bernanke says the economy is growing too slowly. And Starbucks says its employees are moving too fast. On this week's "Motley Fool Money", we'll tackle those stories, share some stocks on our radar, and talk vertical farming with Columbia University Professor Dickson Despommier. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Welcome to Motley Fool Money. Thanks for being here. I'm Matt Greer, standing in for Chris Hill, who will be back next week. I'm joined in studio, as always, by Motley Fool Senior Analyst, James Early, Ron Gross, and Seth Jason. Guys, always good to see you. Hey, Mac. Wow, you're on the wrong side of the glass, man. I am on the wrong side of the glass.

I should note that, you know, we've got a bit of a sick crew here. James, say something to the good people out there. Hi, guys. I'm a little stuffed up. Okay. I don't care about what James says. And Mac, you're just coming off a two-week absence too, right? I'm coming off three weeks. Three weeks. A viral pink eye. I would rather have you on the opposite side of the glass. I will be doing the entire show in a hazmat outfit. That's a smart move. You're a smart man. Okay, there's a lot to talk about this week. Microsoft has new phone software. Google has big earnings and some big banks have some big problems. We'll also talk to Columbia University Professor Dixon-Dapamier about something called vertical farming, and we'll share some stocks on our radar. But as always, we begin with the big macro.

On Friday, the government reported that retail sales for September were better than expected. Now, Seth Jason, you are our retail guru here. What does that mean for investors? Oh, it means that you need to go to the boring Commerce Department, Census Bureau website, and actually read the press release on this because there's interesting information. for investors. All in all, this is a good report. I'll get the conclusion out of the way at the beginning. One thing to watch out for is at gas stations. We're up 8.2%. That generally just means we're all paying more for gasoline. But there was strength in a lot of kind of stores where we haven't seen it for a while, like building materials and furniture, which is a little unusual,

surprises me. And as usual, electronics and appliance stores doing better than just about everybody else. Now, James Early also on Friday, Fed Chief Bernankees said that the economy was still growing too slowly, and he said the Fed was prepared to take additional steps. The Fed scared, Mac, because we've gone from having inflation as a prospect, to having deflation, which has crippled the Japanese economy for over two decades. The Fed can't do much about deflation, Mac. To fight inflation, it can raise rates, to stimulate the economy, it can lower rates, but rates are almost at zero now.

So we're kind of like a heroin junkie who's blown all our good veins. The Fed still wants to inject money into the economy for stimulus. So what it's been doing is taking money that is earned from these mortgage-backed securities that it bought as part of the bailout and going right over the Treasury and buying Treasury bonds. So it's sort of like the right-hand buying bonds from the left. It's sort of an iffy practice, but at least it gets money into the economy and hopefully we won't have massive deflation. The idea is if it's cheap enough, eventually people will try to take advantage of it, invest it, and that the economy will get moving again. But that hasn't happened yet. Ron Gross, what's your headline for the week?

Well, Mac, I think we're at that point again where everyone's talking about mortgage rates. Everyone's either refinancing or talking about refinancing. I actually called my mortgage broker yesterday to get a quote. The average rate on a 30-year fixed mortgage has just dipped under 4.2%. And we have to remember that that's actually tax deductible interest. So the effective interest rate is even lower than that. So we've got really cheap money out there right now. Interestingly, while that's fueled a refinancing boom, it hasn't really shown. up in the sale of existing homes. We're not seeing a large increase in those numbers. The 10% unemployment rate really kind of offsetting the cheap money that we have out there. We'll be interesting to see going forward if rates continue to go lower, if that can fuel an increase in the recovery in the housing sector. This is Motley Full Money. We're talking about some of the big headlines of the week. I'm joined by Ron Gross, James Early, Seth, Jason, Matt Greer here. not a good week for bank stocks, concerns that banks may have cut corners in the foreclosure process. There are also concerns that some of those mortgage-backed securities may be defective.

Now, James... Wait a minute. I thought we knew they were defective. There you go. There's a dog bites man story. Now, James, Bank of America has now suspended foreclosures in all 50 states. J.P. Morgan and some of the other big banks have halted some foreclosures as well. What does it mean for investors? Well, first off, Mac, it is kind of poetic justice, given that a lot of these borrowers got into these houses fraudulately in the first place.

It's only fair that banks evict them fraudulently as well, right? What do you say? I'm kidding, I'm kidding. These were truly no-doc loans, it seems like, all the way through on both ends. And if it is just an issue of banks fudging it, when the paperwork does exist somewhere, and it's just a matter of convenience, that's one thing. If they actually don't have the mortgage note or if they've been faking them, that's a big difference. And that's a really bad thing.

But I think you did hit the nail in the head macwe. with the mortgage-backed securities because, yes, it's going to spook buyers of foreclosed properties. Yes, it's going to increase the cost of foreclosing. But the big thing is, who owns all these mortgages that are inside these securities? And we don't know. It could be a huge legal cost for banks. Well, actually, a lot of us may own them, right? You're right, yeah, the Fed.

Yeah, taxpayers. As taxpayers. Well, James, let's go back to that point about the mortgage-back securities, because on Wednesday, J.P. Morgan said that it had set aside $1.3 billion of new reserves for litigation, and this is a quote, including those for mortgage-related matters, end quote. So what does that tell you when J.P. Morgan is setting aside $1.3 billion of new money, new reserves? Well, J.P. Morgan is typically the first bank to release earnings and kind of get word out. And Jamie Diamond has been the first CEO to sort of publicly acknowledge that they're setting aside legal

reserves for this. So, yeah, it could be an indicator that the other banks are going to follow suit. Speaking of reserves, though, I'll say this. JP Morgan posted like a 20, 30 percent gain in earnings, but on revenue, but on revenue, revenue down 11% and I'll explain it like this. You can earn money the old-fashioned way, or you can earn money if you're a bank by simply reducing reserves. These are stockpile cookie jar accounts that you've built up against bad things happening. So JP Morgan brought their just overall loan loss reserves, reading about mortgage specifically, these reserves down from about $8 billion to about $3 billion. In other words, they've reduced it by $5 billion

compared to last year. So that's not a quality way. By saying things will be better than we thought. They better be right. They better be right, is the point. I actually read those earnings, too, usual for me and and I wanted to mention to get back to Main Street is it in the JP Morgan earnings I think there was an interesting divergence that can't continue forever which was that retail banking or the kind of banking that that you know schlubs like us engage in was pretty soft mortgage banking checking you know checking account savings accounts all of that kind of stuff whereas business banking was okay but eventually business needs the regular schlubs and

so I don't think that divergence can continue forever so So you may find early bellwethers by looking at some of these bank stock earnings releases in the coming quarters. Okay, so ask a question. What would it take for you to invest in a bank stock right now? Mack, it would have to be outside the U.S. Yeah, I may nibble on maybe a community bank if I really did the diligence on it, and I had confidence in what business lines they were in.

But for the most part, I'd prefer to be on the sidelines. Yeah, insider information, but then if you trade on that, you go to. to jail. Not a good idea. Best to stay away. You're listening to Motley Full Money. I'm Matt Greer, joined by Motley Full analyst, Seth Jason, James Early, and Ron Gross. We're talking about some of the week's big business headlines.

Guys, the five-month moratorium on deepwater drilling was lifted this week. James Early, what's your take on what that might mean? You know, Mac, I'm not a political guy, but I see this as a fairly political move on Obama's part. It was ended early. The major federal agencies that were investigating this have not yet finished their investigations. the elections coming up very soon. We have midterm elections that the Democrats are not looking very strong in. And this helps to win the favor of a lot of Gulf voters. So that's what I see it. In terms of the stocks, I mean, I think it's kind of a neutral. I don't think the market

expected any sort of prolonged moratorium. So I think it's about priced in. Yeah. I mean, it was everybody sort of knew it was a little bit of nonsense to begin with. It was completely arbitrary time frame and the things they claimed they were going to do while this moratorium was going on, as James mentioned, haven't all been done. And the reality is that they can just drag their feet on permitting and on all sorts of other bureaucratic matters in order to punish whoever they want to punish or maybe even to actually do good things. So it'll all, the devil will be in the details as usual. And Seth, you're a BP shareholder. We've talked about BP, of course, a lot on the show. Shares of BP have bounced back a little, really.

recently, but are still well off their 52-week highs. So are you bullish on BP right now? I think you have to be still. I think things look a lot better right now than they did when everybody was screaming that, you know, silliness like BP will be bankrupt within a month, people were saying at one point in time. But there's a lot of smaller companies, oil services companies and others that really were crushed. And we told you about some of those here and over at Hidden Gems, the service I run. And those have also bounced back pretty well and should do fine in the long term as we sort of forget about this. We'll hold it right there.

For now, coming up is Microsoft's new phone software a game changer? Should AOL and Yahoo get hitched? And how's that whole YouTube thing working out for Google? You're listening to Motley Full Money. Money is Honey. Where can my honey be? This is Motley Full Money. Matt Greer stepping in for Chris Hill this week.

I'm joined by Motley Fool senior analyst James Early, Ron Gross, and Seth Jason. We're talking about some of the week's big business headlines. Google reported a better than expected 32% increase in, quarterly profits, and the stock was up sharply on Friday. Now, Ron Gross, Google is a holding in the portfolio you manage here at the Molly Fool. So what's your take on the earnings? So, Mack, these look pretty good, I think. The big headline here is that Google looks like it's perhaps not just a search engine story any longer. We're seeing real interesting things coming out of the mobile ad sales, the display ad business, the display ads. They look to have an annualized run

rate of maybe 2.5 billion in sales, mobile search. It looks like it has a run rate of one billion. These are things we actually don't have priced into our valuation model at million dollar portfolio, the service I manage here. So it looks like perhaps we're being a little too conservative and we need to start giving Google credit for some of these other businesses. But it still adds and it still ads. It's still ads. It's an advertising model. That's what they do. Let's not forget about the fortress-like balance sheet they have here also, $33 billion worth of cash. They've actually done a nice job of making some good tuck-in acquisitions, some acquisitions of technology.

Android is a good example of that. And the stock looks, even being up sharply on this news, the stock looks good from here. And perhaps more importantly, Ron, do you approve of Google Street View? You can't look at your house? You know what? I've tried it. I can't see my house, which kind of... I tried and I couldn't see it in your house either.

You have like a palace way back from the road with a big stone wall. If you can't see the gates block the view. One of the things that Google said this week, Ron, in that earnings report, they said that the sale of those display ads that you talked about was on pace to bring in $2.5 billion this year. Now, that includes YouTube. So my question is, has YouTube been a good investment for Google? It looks like it could be a good investment down the road. We have the ability to bring in significant revenue here. I don't think we're seeing probability just yet, which, of course, we need to see.

Because nobody's going to tell you what it costs to serve all that video for free, right? Right. But it looks like certainly this could be something down the road. And we also learned this week that Google is spending a lot. They hired 1,500 employees last quarter. They've hired 3,500 new employees this year. And this week we learned more about their plans to invest in wind farms and computer-driven cars. Now, I'm all for diversification, but as someone who owns the stock, does that worry you at all?

I'm hoping these are not big investments. We are not pricing them into our valuation, and we will never be. But you've got to pay to play. They're staffing up. This is a pretty high-growth business still, even with its large size. And it looks like they're doing a nice job. You're listening to Motley Full Money. Matt Greer here, joined by Motleyful analyst, Seth, Jason, and James Early and Ron Gross talking about some of the week's big business headlines. Seth Jason, I know you're excited about this next story. Microsoft has a new phone software, Windows Phone 7. And I got to tell you, the ads, the website, it's some good-looking stuff.

It's not much of a surprise. Yeah, we've seen it for a few months now. Yeah, they're saying they're promising better integration with Microsoft Office. They're saying that it has built-in social networking and gaming capabilities. So the question for you, Seth, Jason, is, is it a game changer? it allow Microsoft to get back into the phone game? I think it should. You can never tell how a product is going to be received.

Remember the poor Palm Pre, which got great reviews and then four people bought it. So the interesting thing about Windows phone, I think, is that it hits the sweet spot between the iPhone and Android phones, which is that if you want an iPhone, you're kind of stuck with one piece of hardware every year or whatever it is that Steve Jobs decides that you deserve a new and improved piece of hardware. Android, you don't have that problem. There's all sorts of different hardware. If you want a slide-out keyboard, a phone that runs Android, you can get that. You can also get that with Windows phone. But at the same time, the Windows phone OS is a little more like the iPhone operating

system. In other words, they're not going to let carriers junk up the operating system, which is a problem with Android. And if you want an Android phone, I talked about this a few shows ago, you have to figure out, do you want the HTC skin thing, or do you want what the Motorola a droid does and you actually have to sit around and worry about this and and i'm kind of nerdy and i don't care about it at all i don't want to learn that so that's the opportunity they have another uh really potential uh sticky feature of this is the integration with xbox also it's just got the tightest integration with microsoft office which is the reason i've actually waited for this and not gotten an iphone or an android phone so does it move the needle or well mobile OS never moved the needle

a ton for Microsoft anyway, even when they had much larger market share. The real story will be if they can use this to grab more search dollars with their Bing search engine, which is pretty good and is ahead of Google in a lot of ways like mapping. And you know, Microsoft at its current price has very, very little growth built in. Their price for this to fail. Right. So if they fire on this or any of those cylinders here, the stock could be really interesting going forward. And the duct tape are on the phone will be optional on this. But do my zes? But do my zes? Zune apps transfer, that's what I want to know. Well, you know, a lot of it's built on the Zune OS.

So the OS now that everybody is actually praising is really cool, comes directly from the Zune. The Zune team worked on it. So it's sort of funny that this much maligned media device is actually... Yeah, for those who don't know, the many you don't know, the Zune is like a fail. I don't do any more, it's a Microsoft. They still do them, and they still have a lot of fans. But it was an MP3 player that everybody made fun of, but it basically gave birth to

this new phone OS. The Brownsern. That's what I have, and that's going to be a collector's item. All y'all are going to be coming to me, ooh, Seth, in the future you're going to be, ooh, Seth, please give me some money. I'm poor, and I'm going to be rich from my Zoon Brown Zoon collector's item.

Okay, let's talk a little wheeling and dealing. The Wall Street Journal reported this week that AOL and some private equity firms may team up in a bid to buy Yahoo. Ron, here's a mathematical... Here's a mathematical question. What does AOL plus Yahoo equal? Probably a disaster.

or who's who's better than making acquisitions and mergers than aOL yeah they've come on job they're amazing at it so the the street was all hot and heavy when this first came out it's starting to die down even even now I tend to doubt that this deal actually happen anytime perhaps maybe at all it doesn't it doesn't look like it makes that much sense to me you can always find that dreaded word synergies certain and and create some value but I tend to think that this will not happen I think the bigger picture here is the M&A activity in general that we're seeing. Mergers and acquisitions, Ron.

Yes, sir. Spel it out for us. Sorry, I don't the jargon. Whether you're looking for strategic acquisitions, like Intel buying McAfee or starting to see the private equity players step up again, there's a lot of money on the sidelines here. Companies have really bloated balance sheets. Private equity guys have been hanging on to cash for quite some time. We're starting to see the mergers and acquisitions activity really heat up, and I think the next 12, 24 months will continue to see that grow. I think it's a sign of desperation. If you think about these two, what is the, what is the Yahoo business, you know, in a nutshell, what is the AOL business, defunct portals that people don't need anymore because they're interacting with the internet through things like iPhone and

specific apps. Does anybody need a Yahoo portal or an AOL portal? I mean, who needs that? Not anymore. Nobody. And finally, Starbucks wants to bring you slower service. Yes, slower service. According to the Wall Street Journal, Starbucks has asked its bristas that people making the coffee, to prepare two drinks at a time at most. So don't do nine different things. Do two things. Seth, Jason, good move for Starbucks? It sounds like the dumbest move I've ever heard of.

You're telling people who run your stores to be less efficient. They claim that they'll be able to move more people through more quickly. I really doubt it. I think part of the problem that Starbucks has is they want to believe that they're an experience and that they're, you know, this Italian coffee bar and that it should be like, when you're in Italy and the guy makes your espresso, but they're not. They're an assembly line for reasonably good coffee. They should just live with that and get us through the line and get us out the door. Did the Rice Krispy treat behind the container? Was that the clue that it wasn't

an Italian beverage? Yeah, that was my tip off. Thanks guys. James, Seth, and Ron will be back later in the show to talk about some of the stocks on their radar. And you can always email us about Starbucks, about Google, about anything that we talked about. That email is radio at fool.com. That's Radio at Fool.com. I love my Starbucks. I love my Joe. Coming up, we'll talk to Columbia University Professor Dixon DePamier about a new type of farming

that could change everything. You're listening to Motley Full Money. Welcome back to Motley Full Money. I'm Matt Greer stepping in for Chris Hill this week. Vertical farming. It's an idea that could have profound implications for the way food is produced. Columbia University Professor Dixon DePamier

is the man behind that idea, and he recently talked with Motley Full Money's Chris Hill. Let's start with just the basic question of what is vertical farming and how does it work? Well, vertical farming so far is a concept, and it began about 11 years ago in a classroom, believe it or not, and just try to think back to your own college days as to how many things actually made it out into the real world. And you'll get a hint as to how surprised everybody is at the fact that this is. is almost about to happen. So it began as a rooftop gardening project that the students picked themselves, and it didn't actually turn out so great because there's not a lot of rooftops, let's say, for instance, or Manhattanites I should have referred to them as. But I then

challenged them. I said, you know, well, maybe you can take this idea and move it inside of abandoned buildings and make use of all those floors, let's say, or a five-story building. you could improve greatly the amount of crops that you could produce if there were some way of doing that. Of course, there is some way of doing that because that's what the greenhouse industry is all about. So that's how the idea started. So it has evolved to the point now of enticing designers and architects and engineers to the table to sit down and decide actually how to do this. Now, you know, I've been to farms. There's a lot of dirt there.

I mean, are vertical farms, I mean, there's no soil? None. Absolutely none. It's all done hydroponically, and there's a newer technology called aeroponics, which takes hydroponics to the next level and actually sprays a mist of nutrient-laden water onto the roots of the plants. They're perfectly happy as long as you feed them properly, and they don't require soil or food. They just require it as a solid matrix. So if you can supply that in some other way, and certainly the hydroponics industry is,

I've found lots of clever ways of doing that. You don't have any soil at all. So you don't have a weight problem if you're going to put this into a room, say, for instance, it's not designed for soil-based agriculture. So are we just talking about when it comes to vertical farms? Are we just talking about fruits and vegetables, or are we talking about animals too? Because if you tell me that these vertical farms are going to smell a whole lot better than the average farm, then I'm in.

I'm sold. I can promise you that they'll smell better because we're going to keep out the four-legged varieties and let in chickens, for instance, and ducks and geese and aquaculture, you can raise fish, and, of course, like tilapia, and some saltwater species of fish can be raised this way as well. Crestations like shrimp, freshwater and saltwater shrimp. There's a whole industry out there that's actually doing all of this already. So nothing's impossible. I think the four-legged livestock in the farms, unfortunately.

I was going to say, because, I mean, how would you deal with things like waste? Yeah, well, ha-ha. That's not a good word for us. We don't consider waste. We consider waste as unresolved energy recycling. So there are lots of strategies for taking what's left over after you eat something or harvest something, and converting that back into energy, not at 100% of what it was before, of course, but you have a loss to the instrument that actually does this like an incinerator, a high-tech incinerator.

But you do get a return that's different than what the outdoor farms get. You're listening to Motley Full Money. We're talking with Dr. Dixon de Pommier. His new book is The Vertical Farm, Feeding the World in the 21st Century. In the book, one of the things that you write about is a 30-story building, one city block in New York City. I have to believe that the startup cost of a vertical farm is going to be enormous. Yeah, that's to my class, and I asked them to feed 50,000 people, and I wanted to know how big a building. that would have actually turned out to be.

So it's not a realistic idea, but it gives you an idea of what's possible in such a very, very small agricultural footprint to feed 50,000 people. All you would need is a building, of course, of enormous size, but only one square city block, and New York City's got a large footprint in terms of that. But when you consider how much land outside is used to feed those people,

for instance, the entire city of New York requires the state of Virginia's land mass in order to feed themselves. And that's an enormous footprint. And we're trying to reduce that. Now, at the Motley Fool, when we look at news stories or new technologies, one of the ways we look at them is, okay, so if this is going to happen, if this new technology is going to be successful, well, who's going to benefit from that in terms of companies in industry? So who are the winners going to be if vertical farming takes off? Well, I think city planners and cities will be big winners because they can use a lot of abandoned properties that now are going to waste. Recovering land from brownfields, for instance, and putting buildings in places where nobody wants to live anyway.

So the biggest winners would be the citizens that live within a radius of those vertical forms. But if you're asking for specific industries, I think the hydroponics industries are infant in their, in their growth rate right now because of the lack of a proper model for integrating this into an urban setting. And what this offers them is a new venue for their technologies. And I think the hydroponic industry is really going to go crazy once this thing takes off. And so I think that would be my best answer. And also people that want reasonably priced, you know, are beyond organically grown, safe

to eat 24-hour days, 365 days. a year of food, this gives that to them as well. So the consumer will we, we'll end up as a big beneficiary here. One of the things that you write about is that vertical farms will allow us to eliminate the use of pesticides, fertilizers, and herbicides. When I hear something like that, I can't help but think of chemical companies like Monsanto or fertilizer producers like potash, mosaic, agriam. They can't be happy about that.

In the outset, I would agree with you, because we have thought a lot about this, too. You know, we're not in the business of putting other people out of business, and I don't see this as a disruptive technology in terms of Monsanto or other large corporations like Cargill. They could make other things besides what they're making now and make just as much money. For instance, they could make chemically defined diets for these plants and charge just as much for that as they now have to charge for the production of pesticides, herbicides, and fertilizers. So a switch on a dime, so to speak, for their product. using their chemical no-hat to produce well-defined, you know, toxin-free, heavy metal-free food,

I think they end up as the winners, and they end up as the heroes rather than the goats that they are right now, unfortunately. So you're not, no one from big agriculture is leaning on you, you're not getting late-night phone calls from ConAgra or Archer Daniels Midland? Not yet, and in fact I made these presentations to the United States Department of Agriculture where I thought I'd have to use a bulletproof vest in order to go in the room. And they not only welcomed me with open arms, but they actually lamented the fact that they hadn't thought of doing something like this sooner. So the reasons why the United States Department of Agriculture is concerned is that they enable other countries in their own agricultural situations to go forward. And there are lots of countries out there that are in great need of agricultural solutions.

Just today, for instance, I saw something on Yahoo News, a setting for news stories, right, that there's an enormous outposts of locusts right now in Australia, of all places, eating up all these wonderful crops that they finally had a good year for. Now, you know, that's not going to happen when you can grow your food indoors. You can actually lock out locusts quite nicely. And the other things you can do with this, too, is to keep that plant diseases. So there's no need for pesticides or herbicides. If you can make this food supply secure indoors, if we can do it for people isolated in

hospitals that have their immune systems compromised or that have an infectious disease that you don't want to catch, if we can do that easily now in health care settings, we can certainly give some health care to our plants that we eat as well. You're listening to Motley Full Money. We're talking with Dr. Dixon de Pommier. His book is The Vertical Farm. One of your biggest supporters is not from the world of science. He's from the world of music, and that's Sting, who has secured the rights to the vertical

farm movie. Is this going to be a documentary? Yes, it certainly will be. The first customer, so to speak, who agrees to actually sit down and work out the plans for a prototype vertical farm, which we imagine would be the first iteration of this new concept, would be the beneficiary of a documentary film as to how all of that came about. And, you know, Sting is very passionate about the rainforest, and he sees this as a way of saving the rainforest, because if you can supply food to people in another way, they don't have to encroach into these beautiful, diverse hardwood forests of the tropics.

What do you think the timing is looking like, and do you have a couple of finalists, for lack of a better word, in terms of a location for this pilot project? Yeah, we actually do. I'm glad you did, because we've been in discussions now, and when I say we, there are some obvious associates of mine as well who have gotten together and said, you know, this would make an interesting company if we could prolet this into a consulting firm that would teach people how to proceed in terms of making indoor food production a livelihood.

Fortunately to be invited to the table in Jordan, in Abu Dhabi, in Dubai, in Qatar, in those situations where no soil to speak of to feed their people and still great need for food. Those would be at the top of my list. do this first, but the cities of Chicago, York City. And I haven't received any flack from those people at all. They've all been enthusiastic about the concept. It's just that generating the funding for this would be. And Newark, I should have mentioned Newark. Also, Newark has expressed deep interest in it. All right, Dr. Nepominee, before we let you go away, we have to wrap up with a round of buy-seller hold. Oh, no, this is going to be fun. You'll love this. All right. It's the biggest scientific challenge confronting New York City today. Buy-seller hold.

bed bugs. Now you're into a deep area of interest of mine. I'm actually a trained parasitologist. I would buy bed bug control. I would certainly buy controls that actually worked. And we're still looking for those because it's an intractable problem of dense populations. Yeah, I was going to say, you can buy the controls, but from what I've read about the problem, right now I'm buying bedbugs because they look like they're not going anywhere. I see your point. All right. If I'm a bed bug, I buy into this one. No problem. All right, this is really big on Facebook, buy-seller-hold farmville. Oh, I'll buy that in a second, and I'll incorporate the vertical farm concept into it.

We'll right off into the sunset on that one. If you throw in Lego, I'll do that one, too. Perfect. And finally, this is a license plate motto that has a lot of people scratching their heads. Buy-seller-hold, New Jersey, as the Garden State. Jersey. And when we gave our presentation to Newark, we actually used the motto, bring the garden back to the garden state. But of course, we'd bring it back in another form. I would leave the garden state as a natural wonderland and incorporate vertical farming. So I'd buy the state, but I would convert it back to what it used to be before we got there. Congratulations, Doctor. I think that's the first time anyone's used the words New Jersey and natural wonderland in the same sentence. The book is the vertical farm feeding the world in the 21st century.

It is an absolutely fascinating idea. Good luck with the book, Doctor. It's available everywhere. Dr. Dixon de Pomeyer. Thanks so much for being here. My pleasure. Coming up, we've got some stocks on our radar. You're listening to Motley Full Money. Welcome back to Motley Full Money. As always, people on the program may have interest in the stocks they talk about. Don't buy or sell stocks based solely on what you hear. Matt Greer here joined in studio by our trio of senior analysts, Seth Jason, James Early, and Ron Gross, and Steve Brodo, our man on the other side of the glass. Steve, you over there still? Still here, yep. Okay, guys, it's now time to share some stocks on your radar. James Early, what do you got? Mack, let's talk about soiled linens, or more specifically, a company that changes them.

Let's not. This is, we're going to do it. He's been in my house again. Healthcare Services Group, the ticker is H-C-S-G. This is a company that provides housekeeping, linen service, food, things like that, to nursing homes, hospitals, retirement homes, places like that, 3.7% yield, which I like as a dividend investor, a billion-dollar market cap, meaning it's a fairly small company. And while I like this company, I keep always finding it a little bit overpriced by my model,

but it just keeps rising up. I was going to say, James, we've had that on our watch list in Hidden Gems for a couple 100% now. So, yeah, be careful when you look at the valuation. Exactly. I mean, valuation is great, but if I bought this a while ago, I'd be rich now. Steve, do you have a question for James? Sure. How might health care reform affect this company? You know, that's a very good question.

That's what I'm here, James. Yeah, I don't see it reducing demand for any of these services. Mostly they're on the retirement end, you know, which is going to be pretty steady. I don't think that's going to be negatively impacted at all, actually. Ron Gross. Well, Mac, I think I've been interested lately in Kellogg's, ticker simple K, we're all familiar with Kellogg's. Tony the Tiger, Pop-Tarts, Egos. Big K, right? Big K.

Kellogg's isn't typically cheap, but lately they've had some missteps, some serial recalls, some ego inventory issues, some... It's true. You can't buy Ego, but you can now. It wasn't just what you said. It was the way you said it.

It's true. I love it. I buy the whole grain egos for my boys, and they've been out. And I'm like, what is this? It's not like enrich plutonium. They had to shut down a manufacturer. facility for a while. We couldn't get our Egos. My household as well. So the stock's actually off about 10% this year from its high mid-year. And that could create an opportunity here to pick up a company with fantastic brands,

a 3% dividend yield. It's not normally cheap, but we might have an opportunity here. Steve, what's your Kellogg's question? My question is, you know, the whole grain thing, they're really promoting that. Cereals are now made with whole grains. whole grains. Is that sort of set off by the, you know, there's still two pounds of sugar in each box? Is that? That is. What a whole grains do for you that? Every time I come home with a box of, you know, frosted, uh, ego, you know, whole wheat. My wife said, you got to read the label. It's the first part of the label has to say whole wheat. Hey, but cholesterol free, right? But,

uh, my kids won't eat it unless it's covered in sugar. What are you going to do? Okay, there you go. Seth Jason. What's your stock? Uh, Kendall International KNDL. This is a small CRO clinical research organization. They do drug trials, help companies do drug research. And this is an expensive thing for drug companies to do. And sometimes it takes some specific knowledge. And Kendall has a lot of smaller pieces that accomplish this in various places. It's a pretty small company. It used to be a lot bigger. They kind of choked on a big acquisition they did before the economy, you know, dropped out from under everybody. And so they haven't been doing that well because drug between the failing economy and health care reform drug companies cut back a lot on research.

And so this is not a stock for, as they say, the business widow and orphan money, because this is a stock that could go bad if this debt situation doesn't work out. However, if they return to their winning ways of the past and the cycle turns a little bit, which it should when the economy turns, then this is also one of those stocks that could, you know, go up three, four times in value over the course of a couple of years. years. So you need to read the, read the filings yourself and decide which side you want to place your bet. And at Hidden Gems, we own some of it, but keep the position small. Okay, Steve, what do you got for Seth? We know Barbie has always really been a huge hit,

but is there really enough demand for the Ken doll brand? Let's hope so. Hey, actually, this is, for those of you who are out there who are feminists like Steve. That is solid. That'll come out in post-production. That is great. No, that is, that is great A material. That was not scripted. I think that was just off the cuff. Named for the founder, Candace Kendall, woman CEO. Well, there you go.

Equal opportunity over at Hidden Jams. And Steve, of those three stocks, which one are you most intrigued by? I think Kellogg's is, I certainly understand the brand best, so love cereal. Or there you have it. Steve Brodo has spoken. James Early, Ron Gross, Seth Jason. Thanks for joining us. Thank you, Mac.

Thanks, Mac. And I should add here that Ron's service, the Motley Fool's million-dollar portfolio, will reopen to new members for the first time in a year. That's going to happen next month, and you can get more information on that by going to mdp.fool.com. That's M as in Mac, D as in dog, P as in Penelope Pitstop. MDP.fool.com. Thanks, Matt. Guys, thanks again for joining us, and thanks to our special guest, Columbia University Professor Dixon DePamier, the author of the vertical farm. If you missed any part of the show, you can find it at our website. That's motleyfulmoney.com. motleyfulmoney.com.

Our engineer is Steve Broido. Our host is Chris Hill. Chris will be back next week. I'm Matt Greer, the producer, and sometimes host, and the pink eye is getting better. James, how's your cold? It's feeling better already, Mac.

You sounded better. You've got a little Deborah Winger thing still. I take that as a compliment. Thanks for listening. We'll see you next week.