Motley Fool Money - Motley Fool Money: 10.21.2011

Episode Date: October 21, 2011

World markets react to the death of Libyan dictator Muammar Qadaffi.   Apple, Chipotle, Intel, McDonald's, and Microsoft report earnings.  And Groupon prepares for its IPO.    Our analysts discuss these stories and share three stocks for the next fifty years.   Plus, Honest Tea co-founder Seth Goldman talks about the business of tea.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Welcome to Motley Full Money. Thanks for being here. I'm your host, Chris Hill, and joining me in studio this week. From Motley Fool Hidden Gems, Seth Jason, for Motley Fool Income Investor, James Early, and for Million Dollar portfolio, Ron Gross. Guys, good to see you as always. Good to see you, Chris. We've got earnings from Chipotle, McDonald's, Microsoft, and more. We've got the CEO of one of the

Fast as growing brands in the organic foods industry, and we've got a few stocks on our radar. The big story this week is the killing of Libyan dictator Mumar Gaddafi. Obviously, guys, that's good news for the Libyan people, and hopefully this brings some closure to the victims of Pan Am 103 and their families and loved ones. But as a business show, we'll focus on the business aspect of this, and that's obviously James early oil. Libya is a huge exporter of oil. A lot of that goes to Europe. When you think about this story, what are the implications for the oil industry?

Chris, for some guy in power for 42 years, this is a global story. You would think that there would be a bigger narrative than there is. There's really no impact in the markets right now in oil stocks. It's almost depressing in a weird way because we expected something, but there just isn't. That's because all this was priced in. Libya was only producing 400,000 barrels per day of oil recently down from almost 2 million a day not long ago. They're going to ramp it back up, but it takes time. It takes maybe a year or so to really bump back up to full production.

And OPEC controls the price anyway, right, based on the demand or as much as possible. So Libya gets back online, producing a lot more oil and prices start to drop. That'll be taken care of. Ron? Yeah, I agree with James. That's going to take a while. We have to get through government transitions and a lot of things before oil companies are willing to come back and get back to full production.

But interestingly, Italy's ENI, for example, the large oil company out of Italy, they've already resumed production. So it's happening even quicker than I would have guessed. It's only one day later. They're right there. They're right there. Take a boat. But still, you know, they're reluctant. It's not just about space. It's about what's going on in terms of transition and all the anarchy that will be around for a little bit of time. Total is a French oil company that's also big into Libya. And stock is kind of flat today or just up along with everything else a little bit. But one interesting story could be some of the U.S. companies because Chevron and Occidental Petroleum are two stocks that decided not to renew their exploration leases maybe a year or two ago. They said ostensibly

this was because of the geology. They just weren't finding enough oil. I don't know if it was that or if it was there were worried about the politics, but we'll see now because it was actually wise them not to be in Libya when they weren't, but maybe they'll get back in. Is there a ripple effect for, you know, when you go one level down, sort of from the major oil companies to the refiners, a company like Conoco Phillips, that sort of thing? Well, I mean, the majors are less refiners than you might think. I mean, it depends on the time. Conoco in the U.S. Let me just say this. For U.S. companies, especially for U.S. gas consumers, the effect is probably going to be minimal because we don't get most of our oil from the Middle East or we don't get it as much as Europe does.

We get a lot from the U.S., West Texas Intermediate is a better proxy for our price. So I don't expect a big effect here. You're listening to Motley Fool Money. We're here every week. But for daily analysis on the latest money news, you can check out our daily podcast, Marketfulery. That's on iTunes and at Marketfulery.com. And we are a finalist for the 2011 podcast awards. One week of voting left.

Vote early, vote often. Yes. You can vote every day at podcastaward.com. Please help us out. Guys, for the first time in 34 quarters, Apple missed on earnings. It was counting. Yeah, exactly. Everyone?

In Apple's case, a miss means a $6.6 billion profit selling 17 million iPhones, 11 million iPads. Ron, I know this is a holding in a million dollar portfolio. What do you think of it? So they beat their own internal estimates. Well, they always do. Apple is notorious for sandbagging or being really conservative on guys. guidance. They came in shy of analyst expectations. I don't get hung up on quarterly expectations. I don't do them myself. I don't bother with quarterly estimates. We're looking out year,

two years, three years, the cash flow generating ability of this company over long periods of time. And when you're selling things, like you said, 11 million iPads, 5 million Macs, 17 million iPhones, those are big numbers. They were expecting 20 million iPhones, but quite frankly, people were waiting for the next iteration. Yeah, I was going to say even I give Apple a pass on that. It was pretty obvious when the demand ramped up for that new kind of mediocre upgrade that people had waited, and they were saying like, oh, I guess that's pretty good, and they all ran out and got it. I mean, they sold four million of the new ones in three days.

Yeah, but of course they would have sold some more had people not kind of weighted. I think it's pretty obvious, but they're still going to sell a lot of them. The backstory is what gets me, this is one of the largest companies on Earth. It's still growing, it double rates every quarter. It's like a linebacker who's outspreading a cornerback. It's just incredible. And weighs 600 pounds. And by the way, it's coming to your house.

to eat your house. Did James just make my house physically my house? Did James just make a sports analogy? He may have. I think that's the first time in three years he's done that. I don't watch much sports, but I used to. Even at this level, being one of the largest companies in the world, we actually, as you said, we own it. We don't think it's priced to perfection.

We don't think it's expensive. We think there's a good value still here, and it doesn't need to grow gangbusters to make this a good stock to own right here. They did raise guidance for the next quarter as CIS. as Seth, you indicated, sort of that opening weekend, people were just rushing out and buying the new iPhone 4S. But Ron, I want to go back on, like, even with the market cap being at $370 billion, this isn't a case where at some point it's going to flatten out and be, I mean, at one point Microsoft was this company. Through the 90s, sort of great returns. Microsoft was trading at huge multiples then. It was not only growing quickly, but it was trading

at much higher multiples. What's Apple trading at 14, 15 times? Right. If they can grow top line revenue sales at 12% a year for the next five years, I think that's reasonable. We think it's a $500 stock. So it doesn't need to be 20, 30, 40% kind of growth for investors to make money here. If they could, let me put it this way, who are they more worried about Amazon with the Kindle tablet or Google, which continues to have market share dominance with the Android phone? I mean, I think they have to be, quite frankly, worried about both. Amazon is really interesting to me.

That's not the answer here. I know. That's all right. Amazon is really interesting to me because they're kind of attacking this ecosystem that Apple has had locked up. They have the device, and then they have the world of iTunes. Amazon now has the same thing, whether it's the Kindle or the new fire, their app store, their music, their cloud. They're kind of going after that ecosystem. So that's interesting to me. Shares of Chipotle up on Friday after the company's third quarter profits were up 25

percent. Seth, you own the stock. It's a recommendation. What did you think of the quarter? Chiple just keeps making me more money and hidden gems, my service. And rubbing it in. Thank you, Seth. It's pretty incredible, actually, because food inflation, something we've talked about in regard to a lot of restaurant stocks, actually crimped the operating margins at the restaurant level, but the company managed to do so much better on costs elsewhere that the net income really increased beyond the rate of revenue increase. And that revenue increase is 24% year over year. And so those are just huge numbers. The stock still looks pricey, but I have held on for quite a while. Some of it's just luck. Let's say a lot of its luck,

but this is one of those companies that continues to defy expectations on how well it can do. And those are the kind of companies that I think you just have to hang on to, or at least a significant portion of your holdings. I mean, eventually food inflation comes back the other way. They've shown an ability to raise prices. People still keep coming in and buying the food. And they have this new concept, which is only one store right now. They've been, though, right? And I've been there. Yeah, and the food was great. I think that one maybe can't be as big as the burrito chain could eventually be, but I think it could still add materially to the value. Shares of McDonald's up on Friday after the company said third quarter

profit was up 9% James 9th straight quarter of earnings gains. It's looking good. Chris, to borrow Ron's overused analogy. Actually, let me give Ron a chance to anticipate the analogy that I'm going to use. Go, go, go. What's the analogy? Swayway man in a locker room.

Is that it? I don't know. Where are we going? Firing on all cylinders. I don't think of that as an analogy. Much better. Much better. Okay. Okay. Seeing. A saying. All right. All right. That's good to correct me like that. Thank you. Global same store sales were 5%, largely on dollar menu type things in the U.S. and in Europe,

these cheap foods do well, obviously, in recessions. It's a euro menu over there? They have the single euro probably, yeah, right. Operating margins were actually up, which is particularly impressive. And currency movement accounted for maybe half the growth in operating income, net income. But even backing that out, we're still talking about 8% operating income growth and 6% EPS growth. which is pretty phenomenal. So over the next five years, let's just go down the table.

Chipotle, McDonald's, if you have to bet on one, what are you going with Seth? Oh, do I have to pick one? Yeah. I'll go Chipotle. Unless you like dividends and hit McDonald's. I like dividends. I'm going to hit McDonald's. Because you're certainly not eating at McDonald's.

I am not eating at McDonald's too often. Not even the salad. The salad is good. But why am I just going to drive there for the salad? I mean, I'm not really there. When you're on the road, rural Virginia, you're not going to stop at a restaurant rural Virginia. You're going to go from McDonald's salad. No, no, I bring all my food from Whole Foods when I go to there. I'm not going to even, I mean, come on. So I'm going to say

McDonald's a special on a risk-adjusted basis. Ron? I like Chipotle the company better. I like McDonald's the stock better. Coming up, good news for business shows and comedians. That's right. Groupon is filed to go public again. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in the studio with Seth, Jason, James Early, and Ron Gross. A lot going on with Microsoft this week. Let's start with earnings, Ron. Despite weak PC sales, a 5% increase in earnings. What do you think of their quarter? This is what Microsoft is now. They grow 6, 7%. The people that think they're not growing are wrong, and the people that expect more are wrong.

They're all wrong. This is who they are. And, by the way, this is plenty enough to make the stock a great buy right here at $25, $27. It was nice to see Windows revenue up, although slightly, for the first time in a while. I think it had been three consecutive quarters where we had seen decreases. We have Windows 8, Touchtone Technology coming. We have the smartphone alliance with Nokia coming. There's some good things.

They'll be re-entering China as a result of that alliance. So there are some good things, some growth drivers in the future. Obviously, people are worried that the tablet market is going to take over the PC market. Sure, it's going to eat into it. It would be silly to think it won't. But Microsoft isn't going away. Let me ask you this, though, Ron. Hasn't this been sort of the story for a...

couple of years. Value investors wait. How long are you going to wait? As long as it takes. James, James, you should be into this. What's the current yield on this? A couple percent.

A couple percent. It's not bad. And they're going to keep increasing that. I'm worried about what's the catalyst. If you have the whole diamond buried under a company headquarters, if no one's going to unearth it. No, you don't need to. They just keep making a little bit more every year and increasing that dividend.

James, this is your stock. Well, maybe this is, just because he doesn't like Balmer. One episode in my name. We'll get to Bomber in a moment, but maybe this is the game changer. The Wall Street Journal reporting that Microsoft is working with private investors to put together a proposal to buy Yahoo. Yahoo changes the game for no one. 2008, Microsoft put in a bid for Yahoo at $31 a share. The reported bid now would be somewhere in the neighborhood of $16 to $18 a share. I prefer a little higher since we own Yahoo as well. Jerry Yang makes one of the great moves in Yahoo history spurning.

that $31 offer? At the time, they thought 40 was a more appropriate price. I hope they like 16. But, Ron, what do you think? I think they want to keep Yahoo out of the hands of others more than they actually need it themselves. They obviously have this search alliance with Yahoo already Microsoft does, and that division actually loses money to this day. So they need to shore that up a bit. So they're not going to be going this alone. They'll be doing it with private equity and a Canadian pension plan. You mentioned Steve Vomer earlier. He made some fabulous comments at the Web 2.0 conference this week. Did he dance? He did not dance, but he did.

That's his strong suit. Nice. He did say, quote, you don't need to be a computer scientist to use a Windows phone. I think you do to use an Android phone. I didn't get an Android phone about a year ago because it was too complex. There's all these different, like, versions of it. Buttons and things. And so you had to decide, do I want the motor roll?

Android front end or it was just way too much. And this is why I'm actually surprised Android has been as popular as it has been, given the fact that it is there sour grapes here? It is not, I don't think so. I think he's, you know, the problem with people, people always want to bust on what Balmer says, but I think he's right in this case. Android is not all that simple. iPhone is much simpler. Windows phone is much simpler. But Android still remains very popular. I think mostly just because they've locked up so many relationships, the phones are low cost and they're everywhere. I'm scared now because I just learned how to use Actually I don't even know how to use speed dial

So stuff is just way out of my way So if it's too complex for you Yeah yeah You just give me the iPhone Does Microsoft need to just do like a blind taste test kind of thing With its phone and just slap you know An Android logo or you know or an iPhone logo on it and just give it to someone Like that to prove to people to just say here

How easy it is to use? Yeah They probably do if they they would need to change the name Windows phone 7.5 doesn't really really float anyone's boat, even if you like the operating system as I do. It still doesn't, yeah, it still doesn't work. But they do suffer a little bit of that. I think if any other company came out with a phone operating system that was as different and unique and really as good as this one, that, you know, everybody would be going, wow, that is just great because it's Microsoft.

People find a reason to hate it. How long does it take for the brand to change, though? I mean, if they keep doing this, is it a five-year? I don't know. I don't think they're going to give up on this because they've got the partnership with Nokia, which is going to get them worldwide exposure to a large group of consumers on both the high and the low end. And I think they should be able to get some traction that way. I mean, it really is a pretty good phone operating system. I think they just have to see what works. Sometimes the better products, you know, don't win out. I mean, that happened with, you know, Apple and Windows, the first versions of Windows were absolutely unusable, but they sold a heck of a lot more of that than they ever sold

Macintosh. It's important for Nokia, quite frankly, because they're getting it done on the low-end phone, but they're a disaster on the smartphone end. So if this can really be good for them, Nokia could come back and not be the disaster that they've been over the last several years. Low-end phones are popular. I went to the Philippines for a month, and we just bought these little Nokia phones and gave them away at the end of the trip, but they're everywhere there. Yeah, and they sell a lot of them, still the number one mobile manufacturer in the world. By volume. by value. Intel reported better than expected third quarter earnings, strong sales in China and

emerging markets helped offset weakness in the U.S. market. Seth, I think that's a narrative we've heard before. Yeah, and it's, well, and it's not just overall weakness in the U.S. market. The enterprise sales have still been okay in the U.S. market. So businesses are still buying some computers, and it's the consumer end that is weak, which is actually, I think, decent news. And if you wanted to, you could look at it as sort of an economic bellwether sort of story, that if businesses are investing a little bit in improved technology, that they don't think things are all that bad. But Intel's problem is similar to Microsoft's problem. It's really big. It's sort of everywhere it's going to be. And luckily for them, the emerging market stuff is growing a little more quickly.

Yeah, but the PC is not dead. And that's been kind of the story that it is dying. and there are so many places all around the world where it's just becoming affordable to people. So I think they have a lot more growth ahead. Yeah. I mean, tablets are cool, but you can't do a whole lot of work on a tablet. And finally, guys, Groupon has once again filed for an IPO. This time Groupon has scaled back, now planning to sell less than 5% of the company at around $16 to $18 a share. Yeah, yeah.

It's just a little bit. So earlier this year, there were reports it was going to be like a $20 billion market cap. This would be around $11 or 12. Is this a smart move? It's a move that is necessary because their bankers walked in and said, boys, we need to talk. We can't get it done at the value that we had before. You can't sell into the offerings.

Existing shareholders are no longer selling to the offering. Oh, really? You've got to clear up your accounting. You've had two COOs in the past year. You've got to cut out the shenanigans. Maybe we can get it done at a lower value. That's not even definite because people are worried about the business model, but let's give it a shot.

Wow, when the Wall Street bankers don't think they can bring in enough room. I wasn't in the room. That's speculation on my part, but I'm fairly confident. This strikes me as a company, though, just an outrageous sense of entitlement. Like the world owes them something for being Groupon or for being whatever this genre is. They brought coupons to the Internet. Come on. Come on.

I've used to Groupon once. When you look at some of the other Internet companies that have gone public, LinkedIn, Zillow, Pandora, I mean, isn't there a chance that Groupon could. have the same kind of pop opening day? Not anymore, I don't think. Otherwise, the bankers, yeah, they missed the window. Yeah, the bankers would be a lot more excited. All right, Seth Jason, James Early, Ron Gross. Guys, we'll see you later in the show.

Coming up next, a conversation with Seth Goldman, the co-founder and CEO of Honest Tea, one of the fastest growing brands in the organic foods industry. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. In 1998, Seth Goldman and his business partner founded Honest Tea with a simple mission to make

bottled tea that tastes like tea. The company's grown from 250,000 in sales the first year to over 78 million last year, and Seth Goldman joins me in studio now. Thanks for being here. Hi, Chris. Good to be here. The rare in studio guest on Motley Full Money. How did you get the initial idea for Honest Tea?

We were thirsty. We looked at the beverage shelf and we saw all these really sweet, drinks and all these watery drinks and there wasn't anything that we were thirsty for, which was something with, you know, 17 to 30 calories. So, I mean, did you just start tinkering around in your kitchen? Well, I had always, whether it was mixing juice and seltzer or sort of combining different drinks, I'd always been a tinkerer. And it finally hit me.

I had actually, I used to work in financial services and I was at a presentation in New York and after that went for a run, I went to a cooler and I said, there's still nothing here. It's got to quench my thirst. It's time to do something about it. So what differentiates honesty from, you know, the snapples and the other teas out there? Well, the first thing that makes us different is we're so much less sweet. You know, we have anywhere from a third to the sixth of the calories of other bottled tea drinks. That's the starting point.

And then for us, we were the first to make organic bottle tea. And for us, now all our line is organic. And then we're also the first to make fair trade bottle tea. You know, everything we sell is fair trade. So when did you realize, okay, we've actually got a. viable business on our hands. You know, I don't think it was about until five years into the business that we started.

Really? Yeah, it was always this risk. Like, we're trying, obviously we believed in it because we were, you know, we're investing real time and money in it, but it was always this idea, could we make this work? And I don't think we really became believers that we could until about five years into it. How did that conversation go over

with your family and friends, by the way? I'm successful in the financial services business, but I'm actually going to throw that all away, and I've got this idea for a tea company that doesn't have nearly the same ingredients that existing and arguably successful tea companies. For sure. You know, my wife was always supportive. She said, if this is what you want to do and you believe in it, then I think you'll make it work. I think others a little farther away where, like, wait a minute, you have no experience in the beverage industry.

You do understand there's huge companies out there with a lot of resources. So there were some questions, but I've never been someone who's followed a traditional path, so I guess no one was too surprised that I was willing to give this a go. You're listening to Motley Full Money talking with Seth Goldman, the founder of Honest Tea. Speaking of big companies in the beverage industry, you were about 10 years into this endeavor when Coca-Cola came calling and ended up buying 40% of the business. Right. I mean, I'm a Coke shareholder, and I love all the products, and obviously, a lot of them

have a lot of sugar in them. You've got one that was really pretty different from anything they had. How did those conversations go, and why ultimately did you decide it was time to do business with Coca-Cola? Well, first of all, over the 10 years, we had been approached almost every year by different multinationals interested in learning more about our business, possibly investing, and for different reasons over time. We generally just said, you know, we're not interested in selling. We're still building this thing. And so what was nice about the conversation with Coca-Cola was, number one,

they recognized we're very different from what they own. And that meant two things. Number one, they appreciated there was an opportunity for growth, but also they appreciated that there was real value to our team continuing to run the business. They knew they couldn't buy honesty and then just sort of fold it in, you know, with all the other brands. And in a way, that helped ensure we were able to stay a mission-driven company run by the same founding team. Over the years, I mean, you said you've been approached pretty much regularly over the years. Along those same lines, have other companies, whether it's Coca-Cola, basically what I have in my mind is Pepsi, which has a very kind of different strategies from Coca-Cola

because they've got Frito-Lay, they've got the whole snack line. Have people approached you about taking on a lot of? and applying it to snacks or anything like that? That's a good question. We have certainly recognized that opportunity. And so we do have the rights to the name honest foods, and we have product honest kids. So we know there's more we can do with the brand. But to be honest, no pun.

We still have a lot to build with this core brand. So we're still just getting started with the beverage brand. But what you say is true, I mean, if you think about one of the best brands out there in the food world is Whole Foods, you know, and what that stands for. The challenge is you can only buy Whole Foods products in Whole Foods stores. Right. But what if you could still have some of the same equities around authenticity, health and organic, and make it available in a convenience store, make it available in other places?

And so we do think long term, that's an opportunity, but short term, we've still got to build the core brand and product line. One of the things that you guys focus on at Honesty is the notion of sort of doing well. doing right by others. Obviously, your customers, your shareholders, but by the environment, social responsibility, that sort of thing. What are some of the other companies you mentioned, Whole Foods, they come to mind? What are some other companies that you look at and think to yourself, you know what? Those guys are really doing it right, and they're bigger than we are. We want to be them when we grow up. Sure. Well, one of the brands and founders that's been a real mentor for me

is Gary Hershberg of Stonyfield Farm. And so there's a lot of reasons why I'm inspired by Stonyfield. one, they have really stuck to their mission and grown. They're now owned majority owned by Denome. But what they've done is taken, you know, a product that is certainly in the beginning, at least, organic yogurt, you know, a health niche and expand it dramatically. They're now the third largest yogurt company in the country. But they've also, what I like about it is you look at the yogurt category. Over 10% of yogurt sales are organic. And so, and I think it's only going to continue to grow. We look at the bottle tea category, which is also a health-oriented beverage, but the organic share of the bottle tea category is less than 0.1, less than 0.5%.

So there's a huge growth opportunity, and if we can follow that same course. Just another brand that I really have always admired Timberland. We're an apparel company, and they've just done a great job of creating and executing a brand that follows up on sort of the core equities that they've promised. Do you think it's easier for companies in this space, and by this space, I mean essentially, consumer goods, whether it's footwear with Timberland or Whole Foods, honesty. Do you think it's easier for companies like that to sort of pursue the we're going to do right by the environment than it is for a company like Alcoa, which doesn't really touch consumers and connect with

consumers in the same way? I don't know if I would say it's easier. I'd say it's certainly more direct and tangible about how you get there. But I would I wouldn't let anyone off the hook. I think every business, and we certainly consider ourselves, you know, among this group that still can do more than they're doing. And so, you know, we challenge, and I challenge any business to think about everything they do in a different way. And I'm not talking here about can you give away more profits to charities. I'm talking about the core everyday business. You know, one of the things I've been using a quote is that a lot is that quote from Watergate,

fall to money. So, of course, I admire when a company does some nice charitable projects. and in a good company, it's sort of one to two percent of profits, but what's going on with the 99 percent, or the profits, in fact, maybe in a high-margin company it's 30 percent. So what's going on with the real revenue and the real core business that they're doing every day, and how can they change that?

So, you know, honesty, we gave away between product and cash, we gave away about $700,000 last year in sort of supporting of nonprofits, but we spent over $32 million on organic fair trade ingredients. So that's where we have our impact. We, you know, spent over $12 million on our payroll. That's where we have our impact, you know, creating good quality jobs with benefits. So I think every business really needs to look at what are they doing every day? Where is their money going every day?

And how can they make that have a more positive impact? Now, earlier this year, Coca-Cola became majority shareholder of honesty. How do you, in your job, how do you balance all the various interests, whether it's Coca-Cola, it, whether it's shareholders, consumers, business partners. How do you manage that juggling act? Well, it's funny, you know, before we sold a Coke, we had over 130 shareholders that I was managing. Now I've got really just one. So I actually spend less time raising money, talking to potential investors.

I spend more time talking to retailers and distributors who, you know, are the ones who are going to build the sales. So that part is good. And then I think the challenge is, you know, making sure we can keep our culture while clearly making it clear to our company and everyone that we're part of the Coca-Cola family. So, you know, in some ways we built a company being a counter to what Coca-Cola is, and our brand still is counter to a lot of the offerings Coca-Cola has. But in terms of the way we think about our business, we're a compliment now. And so we go on the same trucks, we go into the same coolers, and we need to make sure they all understand why it makes sense for us to be part of that family.

You're listening to Motley Full Money talking with Seth Goldman, President and co-founder of Honest Tea. before we wrap up with a round of buy-seller hold, what is something that you now know about running a business that you wish you knew back in 1998 when you were starting this adventure? I'd say there's two. For us, one of them is distribution is critical. So, you know, our original business plan is on our website, and it's a nice read. It's a nice branding exercise, but it has no real knowledge about the fact that distribution was so critical.

So you can build a great beverage, but if you can't get it into people's hands when they want to drink a beverage, then it's really a thought exercise. And we certainly lost a lot of time, sleep, and money trying to build distribution. The other one is, and this is, in my view, a good thing, is how much fun this can be, how rewarding it can be from a sense of mission that, you know, we really are having an impact on the American diet. We're having an impact on the landscape of, you know, agriculture in the developing world. And so I had maybe not fully appreciated how powerful business can be as a vehicle for social and environmental change. Okay. We will wrap up with buy-seller hold and as a longtime shareholder of Starbucks, I have to ask you,

buy-seller hold, the future of coffee. I think people are still going to be looking for that caffeine hit. And so what coffee does? I wish people were drinking more tea, and I think they will drink more tea over time, but I don't think coffee is going away. so I guess I'd buy. Buy seller hold, the business of Facebook. So clearly that medium is going to grow. So I would buy the medium. I think Google Plus certainly seems to be gaining traction.

I think actually Facebook will be diluted a little bit, so I'd probably hold. Okay, fair enough. He is an award-winning talent. Buy-seller Hold, the acting career of Mr. T. Mr. T. I love Mr. T. So my favorite movie was Rocky 3. It turns out I like all the prime numbers from the Rocky movies, one, three, and five.

And I love the story of being the underdog and fighting for that. I got a hold on Mr. T now, though. I don't think he has the same edge that he used to have. Probably not. And finally, KFC has a new TV commercial featuring their latest innovation, and it includes the phrase, everything's better with bacon. So, buy, sell or hold, a bacon-flavored honest. I'd sell that. I would never sell it, but I would run away from that concept as quickly as I can.

You don't think it would match up with something? I'm not saying it's a full-on bacon tea. You know, we lived through the whole low-carb craze when everyone was like, oh, just have bacon all the time. I'm like, how is that healthy? So, no, I'm not going near that. I'm a vegetarian. Seth Goldman is the president and co-founder of Honest Tea. It is fabulously delicious stuff. Thank you for bringing some with you today. And by all means, check out the website, Honest Tea. Tea.com. Have a cup of tea. Coming up, we'll give you three stocks for the next 50 years.

This is Motley Fool Money. Funny, funny, funny what money can do. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy ourselves stocks based solely on what you hear. I'm Chris Hill. I'm back in the studio with me, Seth, Jason, James Early, and Ron Gross. And guys, before we get to the stocks on our radar, great news.

Three weeks early, our man, Steve Broido, is a father. Yes. Thank you. Thank you very much. Congratulations. So yeah, the due date was in November. How are you feeling? I feel great. A little tired, but very excited. Yes. Three weeks early, though, did not see this coming. All right. Welcome to the fraternity. Advice for a brand new first-time dad, Ron? Jake is going to come to you and ask for permission for many things. When it comes to worldwide wrestling, say no. Just say no. Okay, got it. James? I made the mistake of moving to the flashcards too soon, and it works for a little while, but they get bored of it. So you've got to kind of pretend to really love it.

And then that really kind of really sell the learning, and that helps. All right, Seth. Mine goes with James, dovetails a lot. Don't be afraid of the TV. I know some parents out there, oh, I've never let my young kid watch TV. Our daughter loves educational programs, and she has learned more letters and words and skills from that than she ever has from us. You know, those are actually designed by education experts. So don't be afraid of a little TV.

Like father, like son, I hope, yeah. And my advice for you is don't get sucked into the whole baby music thing. Right? Honestly. Yanni? Yeah, no, no, no. Somebody exposed it as a gimmick, didn't they? It's a total racket.

Bob Marley is great. Kids love Bob Marley. Actually, there's a Ziggy Marley album for children, but adults can listen to it and not poke their ears out. With my son, it's just going to be hip-hop and REO Speedwagon. Keep on loving you. All right. In honor of Steve becoming a father for his boy, Jake, let's make stocks on the radar for Jake. So I want you to think 50 years out.

This is a stock that's got to be around in 50 years. Ron, you're up first. All right. So Steve obviously is going to have to take care of Jake now. But down the road, Jake's going to have to take care of Steve one day. So I've got something for both. Kimberly Clark. The maker of huggies and the maker of depends.

Kimberly Clark. Ticker symbol, KMB, really strong company. 3.9% dividend yield for you income lovers. And that's a good one for a little Jake. Yeah. Or if you're just interested in driving cross country on some kind of a lunatic, you know. What was the? Oh, there's an astronaut?

Yeah, yeah. Steve, what do you think? I think it sounds great. Kimberly Clark, isn't that more, I mean, of a commodity-type business and you're dealing with paper products? The great thing about Kimberly Clark is they have pricing power. So when raw materials rise as they have been, Kimberly Clark has the ability to raise prices on Kleenex or Huggies or what have you, and they continue to increase cash flow. As you will find out soon, to your great dismay, the type of diaper often matters. Oh, it matters.

The name brands are worth buying. Absolutely. James? Chris, you never know. know when a biohazard is going to strike. And it's a decent chance that something could happen in the next 50 years. So that's why I like Ancel Limited, which is an Australian company. They make rubber gloves, both for industrial applications, for medical applications. They also make condoms because it's kind of the same type of thing. And this, I like also because it's an industry that doesn't see a lot of

change, and it's probably not going to see a lot of change. It's a very steady company, about a two and a percent yield, $1.8 billion market cap. It is in Australia, but it sells all around the world, so it's pretty diversified. What do you think? He's five days old. Is it too early to talk about contraception with him? Never too early. Wait a little bit. Seth? Well, since I don't know who actually make these, which are Howard Light foam earplugs, you can buy these by the gross on Amazon, and I urge you to do so. I went with Church and Dwight. Again, same reason. You got stuff like baking soda, but more importantly for Steve, you've got clothing detergent and rubbers. And Steve needs both of those right now. So, Church and Dwight.

Arm and Hammer. You know. What's the term symbol? CHD. As a friend of mine, Rob Aaron, and once said, this is a company that convinces you to buy a box of low-cost stuff and then immediately dump it down the drain. What could be better? Genius. Steve, what do you think? I love it. Sounds great to me. All three of these stocks for you. The ear plugs actually did buy air plugs at a time. know that's cheating, but it's very, very healthy. It's cheating, but it's the kind of cheating you need.

All right. In the time we have left, something that you're working on in the next week, Seth, Jason? Reading dozens of earnings reports still. I know we're sort of in the thick of earning season, but are there... It's just starting. Are there one or two companies that you're particularly keen to watch? Well, I need to loop back through Chipotle, and I actually... I'm going to take another look at Super Value, the worst.

of breed, former worst of breed grocery store chain that I recommended a while back and I own shares of because they seem to be turning the corner, but yet nobody is paying attention. Is this a part of your thesis that longtime listeners will recognize as Seth Jason going, well, you know, it's, I just need the lousy company to be slightly less lousy? There's a great case to be made for investing in excellent companies. There's also a great case to be made for investing in companies that everybody hates so much. All they have to do is not suck. James?

Chris, I've been talking about filming this video for a lot. time and now Bank of America, J.P. Morgan, these banks have come out with these nefarious accounting gains, basically. It's just a cheesy thing, and I've wanted to talk about it for a while, and now that Steve's back in action, next week I'm going to get in here, I'm going to film this video. A banking video about an accounting topic, FAS 159, which is a way less exciting than I thought. Ron Gross in the one minute we have. Coming into the home stretch for MDP's reopening. We only do it Once a year to new members.

It's coming in about a week and a half. For anyone interested, for more information, go to MDP. That's not next week, though. We asked you next week. That sounds like a plug. We're working hard on the opening. It doesn't happen on its own. I see.

Okay, I got to count. MDP.com for more information. Plugging McPug over here. Are you doing any videos? I mean, not necessarily banking videos, but... Non-stop videos. We've got welcome videos and how to use the service videos. We're gearing up.

As I said, it doesn't happen on its own. There's a lot of work that goes into this. And if you're really good, you can see James Banking video too. All right, Seth Jason, James Early, Ron Gross. Guys, thanks for being here. Thank you, Chris. Thanks to our special guest this week, Seth Goldman, the co-founder of Honest Tea. For more information on that company, you can just go to Honestey.com.

That's it for this edition of Motleypool Money. Our engineer is New Dad, Steve Broido. Our producer is Old Dad, Mac Career. I'm Chris Hill. Thanks for listening. We'll see you next week.