Motley Fool Money - Motley Fool Money: 11.16.2012

Episode Date: November 16, 2012

Our analysts discuss BP's settlement, Berkshire's big buy, and some retailers' big earnings. Plus, corporate governance expert and film critic Nell Minow talks David Petraeus, Abraham Lincoln, and the future of Netflix. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Sign up for your $1 per month trial at Shopify.com slash special offer. Everybody needs money. That's why they call it money. The best thing they love. 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

Maeger, for Motley Fool Pro and Motley Fool Options, Jeff Fisher, and for a million-dollar portfolio, Mr. Ron Gross. Good to see you guys. Hey, hey, hey, Chris. We have got Warren Buffett's latest stock moves. We've got a business crisis that is far worse than the fiscal cliff. And as always, we've got a few stocks on our radar. But as we head into the Thanksgiving holiday week, we begin with retail.

We saw big box retailers like Walmart, Sears, and Target, all reporting earnings. And Jeff, Target had good results. Sears and Walmart, not so much. What is going on for people who are trying to read the tea leaves of the retail industry? So, Chris, Target is in a bit more of a sweet spot than Walmart. They tailor to or sell to middle income families who are a little better off than the lower income families that Walmart caters to. Target also has their stores located demographically in such a way to reach people who are a little better off. And Target then is able to raise prices.

Slightly they increase prices on many items and still they could push those price increases through where Walmart lives and dies by very low pricing. So what you saw is basically a demographically driven decent quarter for Target and Walmart's still suffering because the economy is rough still, and that really affects lower-income families. Meanwhile, Sears, their consumer electronics division is just shot, not doing well. That's actually news to me. I didn't know that Sears even had a consumer electronics division. Sears is huge. I was actually wondering, I don't know the answer to this. How's Walmart doing in the food space versus the hard goods? It's doing okay on volume there, Ron, but it makes very little, very low margins, of course.

And Joe, internationally, Walmart is struggling in the past when we've talked about Walmart that was really the opportunity for that, wasn't it? Yeah, it's kind of going the other way right now. The foot traffic in Chinese Walmart stores was down almost 8% last quarter, which was a real shocker. But I want to get back to Trashing Sears for a minute. Oh, by all means. I was looking at the press release today, and they talked about how they lowered their inventory by $1.4 billion. Basically, I went back and looked, and over time, they pretty consistently kept inventory at about 20% of total sales.

The problem is sales keep shrinking. So what's happening is they're just carrying fewer and fewer items. And that's just kind of a self-perpetuating cycle. You know, if you don't carry a broad array of stuff, people won't come back to you. And if you only carry one size of jeans, you know, at some point, business walks away. It depends what size. It could be perfect. Speaking of jeans gap had a pretty good quarter.

Great results. Great year. The stock is up some 80% the past year. You know, Chris, it's kind of like Target. They sell basics and staples at prices that are reasonable. so they're drawing in the middle-income family to shop there. It's cheaper than the boutique jeans sellers. Retail overall, as you guys know, is a really tough business, and you can go a few routes. You can buy the giants like Target and hope that they maintain dominance, make sure watch that they do.

You can have an eagle eye out for small retailers that are suddenly doing well, like Gap, or you can just buy a giant index of retailers, and that's one way to do it. I looked up some numbers the past 10 years. Target shares are up 89 percent, excluding dividends over the past 10 years. year's Walmart shares only 26% and Gap was flat for years and finally is up almost 80% in the past year. Meanwhile, the S&P Spider Retail ETF, the ticker is XRT, a whole ETF of 100 retailers is up 61% the past 10 years. So it's captured most of the gains of Target and much less risk. It's a lot of research there, Jeff. Thank you.

It's a lot of numbers. It makes great radio. Jeff comes from red. He's new. One other apparel retailer, I should throw it. throw out there because we certainly trashed them in the past, and it's worth pointing out that they had a good week. And that's Abercrombie and Fitch. Third quarter earnings up 40%. I know, Joe, they're working off a low base there, but I mean, give credit where credit is due. The stock was up about

25% in a single day. Well, that's the beauty of low expectations. I mean, over the long term, I don't think that mall retail is a very good space to be in because it's so competitive. You have one bad season with your fashion lineup. You lose customers. And, you know, this is kind of how these companies work. It's just kind of a cyclical boom and bust where you have a great quarter, you have a bad quarter. It's tough to predict, but very few of them earn high returns on invested capital or post margins that are sufficiently high to make me interested as a long-term investor. And it's even worse if you're a more mature retailer whose expansion potential is either waning or even dried up, because then really what do you have? You have a 2%, maybe 3% same store sales

as your revenue growth. If you're lucky into perpetuity, that's not the that exciting for an investor. So to go back to the two main ones that we started with, Walmart and Target, what interests you more as an investor right now, Ron, if you're looking at those two. Target has done very well recently. Walmart, obviously, it's the biggest retailer in the world, but if they're struggling internationally, that seems like a really bad sign. I've always liked Target better as a consumer, as we famously make fun of me here. I've never actually been in a Walmart, but I'm a big fan of Target. So purely as a consistent, consumer target would be what I'm interested. And I actually think, as what just said, the middle

income families are doing better and they're able to support Target. I think as the recovery takes a little bit of a stronger hold, that will get even better. And I think Target will remain in the driver's seat. Maybe that's a New Year's resolution for 2013 for you. We'll actually get you into a woman. We'll drag you into one. We'll film it. Investors got mixed messages from the housing industry this week. Home Depot's third quarter earnings came in higher than expected. and the company raised guidance. Meanwhile, home builders like D.R. Horton and Havnaniyan both expressed concern about the future of the housing recovery.

What's going on here, Ron? Well, it's that home builders in general have had a very strong year. The S&P Home Builders Index is up something like 40%. Havnani's stock has doubled. D.R. Horton is up 50%. So these stocks have been trading on the expectation that we're in for recovery. And the recovery seems to be taking somewhat of a hold. We're getting decent numbers month after month, quarter after quarter.

But they kind of got ahead of themselves. And so even though D.R. Horton turned into a pretty good beat. They beat earnings. They beat guidance. I'm sorry. And they said some cautious things about the future. And I think they're just being conservative because these stocks, really, they just got too far ahead of themselves. And a little bit of a decline, we shouldn't be too harsh on them.

They got a little bit ahead of themselves, but it got cured this week because both of those stocks down about 10% so far. Right, but still, I mean, on a year-to-date basis, up very strongly. And so people are looking for reasons to just sell out of them and wait for a pullback. And then they'll get back in if things get a little bit more reasonable. Joe, what do you think about Home Depot? Well, they had a great quarter. I mean, this was the six straight one where pricing and volume both rows, so people are coming back in and they're buying more. The real exciting part was that sales above $900 were up 4%.

And that's really a sign that people are coming back and doing big projects, both in the construction side and renovations at home. Definitely a great quarter. I mean, part of that is just that Home Depot has been really focusing on blocking and tackling for the last few years and better merchandising, better logistics. And that's really coming back to help them perfectly when housing starting to turn the corner. And one positive data point that I liked out of Home Depot was that Florida, in California were relatively strong. As we know, they've been decimated in those states. So to see some recovery there is definitely positive.

Yeah, I think after such a disastrous housing market, though, what we're seeing now is a nice big bounce, and then it makes sense, like Ron was saying, that it'll slow down a little bit. It got a little ahead of itself. It might slow down. But I like the retailers. I like Home Depot and lows.

They're doing well despite any slowdown. Shares have dialed down on Friday after third quarter profit fell 47 percent. Joe Mager. What do you think? Glad I don't own it. Hey. How dare you? Sorry. How dare you. So this is the sixth straight quarter where PC sales got worse on a year-over-year basis. That's nasty. They were down 23% year-over-year. It was 22% in the previous quarter.

So I don't want to hear anything about, oh, this is a Windows 8 thing. It's not a Windows 8 thing. It's a You thing. And they're making PCs that are too high costs that people aren't interested in. and there's tons of rivalry here. And even though PCs are now only about a quarter of sales, I still think this is a real red flag for them and a real danger point, because they're now posting an operating loss on PCs, and it's doing about $2.7 billion in quarterly business.

There's a lot more to bleed out here in terms of de-leveraging, and I think they need to come to some real intense solutions around what they want to do with the PC business. I know this sounds, it would have sounded like a crazy idea a couple of years, ago, but they really need to be thinking about, is this a business we want to be in? Do we need to spend this off? Do we need to sell this to some chump? Follow the IBM model to the best of their ability. Ron, you own shares, Adele? Unfortunately, yes. It's one of those stocks. You put in your portfolio and you kind of don't look at it very often. I think it probably would

behoove me to take a look because things are not good. And even though just on the numbers, the stock looks really cheap, it's because the business is suffering. I was going to say it's really cheap because it's at its lowest point since the summer of 1997. Joe, you mentioned Windows 8. Microsoft also in the news this week because Steve Sinovsky, who's been at Microsoft for 23 years, the president of the Windows Division and the guy in charge at the Windows 8 launch, departed somewhat abruptly. This is one of those situations where it's not entirely clear whether he left of his own accord or if he was pushed out the door. But this is a guy who was on the short list to succeed Steve Bomber, as CEO. And with him gone, we saw Microsoft shares take a hit that day down I think about 4% for the day. How much

of that was investors saying that we're not thrilled about the fact that it looks even more like Steve Palmer is going to be ensconced to CEO for an even longer period of time? Well, that's part of it. I mean, no matter the reason he left, it's bad. He was talented and got a lot of things done. The reason he got pushed out was because Windows 8 is getting really poor reviews, and I think the surface is now progressively becoming more clearly a flop, then that's bad. And that's an indication that things are not going well in their core Windows business. This was really the driver of the whole enterprise. If he left because he didn't see a lot of opportunity at Microsoft, that's not good either. Because he was the guy who was number

two. I think he clearly had set himself up to be the next Steve Ballmer, only much better and better dressed, too, incidentally. Yeah, I mean, it's a tough, tough read. And when you see PC sales across the board suffering and Microsoft, such a, I think, non-factor in mobile and progressively coming more that way. They're really hurting. Jeff, what do you think? Yeah, it's a little, it's nerve-wracking as an Intel shareholder right now because Microsoft, Intel, obviously Dell and all the PC makers are at a big

inflection point where these Intel-driven Ultra Books are what's out now at retailers right now. We need to see how Ultra Books do, and they're basically a combination of old laptops by design form factor and tablets, so they're much smaller, thinner. They're kind of like a MacBook Air, as Apple would say. But how are these ultra-books running Windows 8 going to perform? And if they don't pick up a lot of market share,

then that's going to be very worrisome for not only Microsoft but also Intel. Yeah. Sorry to cut you off. I mean, I don't think the problem so much is like market share for an Intel or a Microsoft. The issue is just that we're replacing our PCs less as we use smartphones and tablets instead. So we're just booting them up.

less often. So the need to actually use them is shrinking back and it becomes a little more difficult to justify going out and buying a new PC when you've already got these devices that are working well for you. Yeah, but I agree with Intel that the PC is evolving. It's as is the tablet. The tablet is not in its final form factor. And they're both going to kind of merge. You're going to have powerful tablet slash PCs that have all the good things of a PC and all the good things of a tablet. And so the key thing for me, Intel related, is that Intel's chips are in those machines, whatever they end up being. It's all about you, Jeff.

Thank you. Coming up, Berkshire Hathaway has been reshuffling its portfolio. We'll break down what Warren Buffett has been buying and selling. Stay right here. This is Motley Fool Money. Welcome back to Motley Full Money. Chris Hill here in studio with Joe Maker, Jeff Fisher, and Ron Gross. BP has agreed to pay $4.5 billion in damages for the 2010 Gulf Oil spill.

The company pled guilty to 11 felony counts, and two employees face manslaughter. charges for the deaths of 11 people in the Deepwater Horizon explosion. And Joe Maker, even for a $125 billion company like BP, $4.5 billion isn't pocket change. But after the news of this broke Thursday morning, shares of BP were on the rise. Yeah, well, the only thing the market hates more than bad news is uncertainty of around, of bad news. And in this case, I think that's what was happening here. And BP has already set aside lots of money and reserved for to handle what they're ultimately going to owe here. They're divesting a lot of assets.

You know, it takes a long time for these things to play out. It's easy to forget, but it took 19 years for all of the Exxon Valdez lawsuits to play out. So this is going to be an ongoing headache for BP, but I actually think a bigger issue for them is really just focusing on the operations of cleaning up their safety standards and getting them up to snuff. And they've also got some real issues with their Russia assets and kind of getting out of that country and they're not doing well with that, Overall, things are not going so hot, but this is a good step in the right direction, both in terms of them settling this and just in terms of owning accountability.

This week, Berkshire Hathaway filed the necessary paperwork with the SEC to disclose the latest changes in Berkshire's portfolio. Ron Gross, a lot of stock moves. What stood out to you? Yeah, well, first, can we pass a rule that it's no longer, but those are Todd or those are Ted stocks? It's all just Berkshire from now on. It's enough is enough. Those guys are getting more responsibility. So it's going to be, you know, it's one for all and all for one. Some interesting moves. I think if I had to categorize it in very broad sense, I would say I see lightning up on consumer, whether it's Mondalese or Dollar General or CVS, and I'm more doubling down on industrial and infrastructure with companies like deer, precision cast parts, Wabco. So it seems to me they're making some bets with regard to lightning up on consumer and going more into infrastructure.

And Joe, all of a sudden buying four million shares of deer and company. Yeah, it's a big bite. I mean, I've been looking at deer. It's a great business, and it's pulled back a good bit along with a lot of other industrials. You know, honestly, when I look at what they've been selling, to me, it's been a lot more about Buffett's Lost Faith and some franchises that he used to really have a lot of conviction behind. So Procter & Gamble, the Kraft group there are now Mondalese and Kraft, but also Johnson and Johnson, which Berkshire is now almost entirely blown out of. And I think instead he's finding that he'd rather own businesses outright and be able to have more control over that. And while Buffett is always a big bull on America and talking about that, deer actually has a really a lot of growth ahead of it in emerging markets. That's probably the bigger play for deer as infrastructure gets built around the world.

So it's nice to see them kind of getting exposure there. Yeah, I was surprised to see J&J get sold out almost completely now that the business is finally starting to find some stability. But like Joe said, maybe he just felt twice burned and wanted to get out. And Deer is, I bet Buffett just saw the article in Barron's last March that I saw. It was very compelling. That's how he makes. Sure. They've increased their dividend, 14% annualized for a long time now.

And the egg industry they sell into is expected to double in size in the next decade or two. We have to feed the world. Busy week for Nike, the company announced a two-for-one stock split and a dividend increase. Nike also announced a deal to sell its coal-hawn business to a private equity firm for $570 million. Jeff, of these three things, which one do you think is going to have the biggest long-term effect for investors? Well, you'll be surprised by my answer, but I'll say the dividend, the larger dividend, because research shows, Ned Davis research shows that since 1972, stocks in the S&P 500 that increased their dividends earned returns of 9.5% annualized, and those that didn't pay a dividend at all

saw their stocks rise just 1.5% annualized, obviously a huge difference. So Nike has increased its dividend for nine years in a row. It's a good move. And finally, guys, after 82 years in business, Hostess Brand is closing its doors. Yes, the maker of Wonderbread, Twinkies, and numerous other snack cakes

is shutting down its plants after it could not come to an agreement with striking workers. I went out to 7-11 right before we taped the show. You really did. And we've got on the table here, Joe's, Zingers, Donuts, cupcakes. Joe's cracking into the cup cake.

No Twinkies. There are no Twinkies at the 7-Eleven. They're gone. People are smart. They're buying them while they can. I bought Twinkies. I'm going to sell them on eBay in a few weeks when people are desperate. Ron, what do you think?

Because this is a brand, an iconic brand that will have value for someone. Do you think that a Kraft Foods or a Mondalese comes in and buys the brand? Yeah, I think definitely. I don't know if they'll buy all the brands or some of the brands. I've seen a lot of talk of a company that I've never heard of called Grupo Bimbo out of Mexico, which is the largest bread manufacturer in the world, may have some interest, which was interesting to me. But there's Kellogg's Campbell Soup, there's Mondalese. There's plenty of players here that would likely like to snap these up on the cheap.

I think Mondays makes sense. How's the cupcake? Delicious. We'll wrap up there, Joe Meager, Jeff Fisher, Ron Gross. Guys, we'll see you later in the show. Why is Nell Minow the number one guest in the history of this? this radio show because no other financial expert can talk about the David Petraeus scandal and make movie recommendations.

She's up next. This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. We've got corporate executives in the news, but we've also got the holiday movie season kicking in. So, of course, there's only one guest we can turn to. Nell Minow is with Governance Metrics International. She is also the film critic known as the movie mom, and she joins me now.

Now, always good to talk to you. Well, thank you. I'm very happy to be back on. We will get to movies in a little bit, but I want to start slightly out of the business realm, or at least in terms of the news these days. And I'm referring to the David Petraeus scandal. I had a feeling you would. And there's a parallel there that we need to talk about because that was not the only sex scandal of the day.

Well, absolutely. I mean, for people who think this may just be limited to government, We see this in business. Lockheed Martin's incoming CEO resigned after the news came out that he had a, quote, lengthy, close and personal relationship with a subordinate. We've seen this over the past year or so with Best Buy, with Hewlett-Packard, these types of issues. And I'm just curious, when you look at this, how much weight should shareholders give infidelity when they are evaluating a company's management and their corporate governance? Well, there are two ways to look at it, or I guess there are two ways to handle it, and there's what I call the Willie Brown approach, which is, you know, he was an elected official of several different capacities, including mayor of San Francisco and California,

and his view was, I'm going to sleep with anybody I want to, and if you don't like it, don't vote for me. And I think that's just fine. As long as you put it out there, that's fine. But I think, and then there are people who have discreet affairs or not so discreet affairs, and that's fine, too. When you are having sex with a subordinate, if you're in business or in government, or when you're having sex with somebody who is a journalist, then, you know, that raises some issues that could really compromise your credibility. When you are using corporate money to pay the person, as happened at Hewlett-Packard,

that is an issue, too. And, you know, I've said this to you before. The rule of thumb is if you would fire a middle manager for it, you've got to fire the CEO for. it. And the biggest difference, it seems to me, between Petraeus and Lockheed, is that Petraeus is not getting a $3.5 million severance package. $3.5 million. Yeah. And just a review, he hasn't even been the CEO yet. He's the incoming CEO. That's right. And he, you know, if there is such a thing as termination for cause, it seems to me this is it. He violated a key rule of the company. As I said, if you would fire a middle

manager for it, you've got to fire the CEO, and that means for cause, no severance. Where is Lockheed Martin's board of directors on this issue? Shouldn't at least one of them be coming forward and saying, no, no, this isn't going to fly? It would be nice, but I have yet

to see a board that will do that. Warren Buffett has used sort of the front page rule of thumb as part of Berkshire Hathaway's Code of Ethics, basically. If you don't want to see it on the front page of the newspaper, you shouldn't be doing it. Is that as good as any standard investors should be applying? The standard that I like is what Warren Buffett said when he took over Salman Brothers. He said,

if you lose money for us, we will be forgiving. If you lose reputation for us, we will be ruthless. The last time you and I talked, Nell, one of the things we talked about was activist investor Carl Icon. He had at that point taken a stake in Chesapeake Energy. He has very recently taken close to a 10% stake in Netflix. Yeah. And that led Netflix to set up a shareholder rights plan that would prevent hostile takeovers. How do you think all of this is going to play out for Netflix and its shareholders? I'm a little mystified by what I can't see in Netflix right now.

So I have a feeling that his perspective on them is very short term because I don't see a long-term play for Netflix. and so I think he's going to shake out of them what he can. So I think for the short term, it's probably good for shareholders. For the long term, I don't think he cares about what happens then. Long term, and by long term, I mean three to five years. Do you think Netflix is still a standalone company? I don't think so, no. I think that it's a classic case of a company that had a spectacular idea

that was almost instantly overtaken by technology. and, you know, it would be like if you could all of a sudden have Starbucks in your house. And Netflix has not made a smooth transition. They've not to the cloud and to online and streaming. And I think there's still two bound up in the red envelopes. Let's move further into the movie business. One of the big news items recently was Disney's $4 billion acquisition of Lucasfilm, the creator of Star Wars. First, what was your reaction to that news when you heard it?

Well, I'm going to tell you what my husband's reaction was because I think he's right. He said, Disney can't do a worse job on the Star Wars movies than the last three. So I thought that was good. And I was overjoyed to hear who they've picked to write the next Star Wars movie. Michael Aren't. The guy who did Toy Story 3 and Little Miss Sunshine, this is a man who knows how to go into a franchise and just revitalize it. I think he will do a fabulous job. I've heard him interviewed.

I have the greatest respect in the world. And I think that Disney will be a better steward for the franchise than Lucas has been. How big do you think the next trilogy of Star Wars films could be? Because certainly the first trilogy was hugely successful. Is it the sort of thing where it could be on the order of the Lord of the Rings, that sort of trilogy? I'm going to go bigger than that. I'm going to say it could be like the series that we just celebrated the first half century of. It could be James Bond.

It could go on indefinitely. It's not like Twilight, which is coming to an end this week after five movies. Thank goodness. It could go on forever. You could keep telling those stories. And one of the things that I love about comic books and soap operas is that they're the only art form where we see these characters go on over decades and decades and decades told by different people and in different ways.

And I think it's wonderful to be able to experiment with that in film. And I think that the Star Wars saga is one in which the developing technology is going to open up all kinds of wonderful opportunities for it. You know, we've got Ender's game that's coming out, which is another possibility for a franchise that would never have been possible as an... the technology was developed to tell those stories. So I think Star Wars could be great. I foresee some wonderful rides at Disney World.

And, you know, let's hope it's not Tron Legacy. Let's hope it's more Pirates of the Caribbean. But it could work out very, very well. You mentioned James Bond, the latest James Bond film, Skyfall, just came out. And I think one of the first times I interviewed you, we talked about Skyfall because at that point, the news about the film was that. it was being put on hold for financial reasons, that they just couldn't raise the money to make the film. They subsequently did, and one of the ways they did that was through a lot of product placement.

And some would argue too much product placement in the film itself. Where do you come down on that? I don't know if you've seen Skyfall. I have. I've seen it twice. I loved it. It has one of the best opening action sequences ever. and I think it's a really smart, resonant film, and a lot of great stuff in it.

And the product placement was not anywhere near as intrusive as it was in the Pierce-Brasnan films, where you just really felt you were watching an infomercial. So I thought that was okay. I want to read the first two lines of your review of Stephen Spielberg's latest movie, Lincoln. You wrote, the first question about big prestige films like Lincoln is always where it falls on what I call the spinach scale. When I tell people to see it because it is entertaining or because it is good for them, where does Lincoln fall on the Nell Minow Spinach Scale?

It is extremely entertaining. I do have to caution people that there's a lot of time in this movie of people sitting around in a room talking about a constitutional amendment, and that does sound like watching C-SPAN, but it in fact is not. It is extremely affecting, inspiring. incredible performance by Daniel Day Lewis. Tommy Lee Jones almost steals the movie as Representative Thaddeus Stevens from Pennsylvania. And even though we do know that slavery was, in fact, outlawed, you'll be on the edge of your seat.

You will not be sure whether it's going to happen or not. If we're looking to kick back over the Thanksgiving holiday, whether it's with our family that we haven't seen in a long time, or if we just want a little time away from our family that we've just spent time with, what do you recommend for? a Thanksgiving rental. It's out on DVD and Blu-ray this week from Pixar. That is one of the best films of the year. It's a wonderful

family film. It's the first Pixar film to feature a female protagonist, and I thought they did a fabulous job with it. Emma Thompson, great voice talent, Kelly McDonald, and so I think that's a great choice for families.

You're listening to Motley Full Money, talking with Nell Minow from GMI, from GMI and also the movie mom. We're going to wrap up with a round of Buy Seller Hold. His latest film, Argo, got good reviews. Buy Seller Hold, Ben Affleck, the director. Ben Affleck, the director, he is absolutely A-plus-plus. He's had three superb films as a director.

He's got his career back. I got to interview him about Argo. I was extremely impressed with him. Somebody gave him a hard time about some of the political stuff in the movie, and he came back and said, I was a Middle Eastern Studies major in college, and here are facts and figures and names, and he was fabulous. So definitely a buy on him as a director, a buy on him possibly political candidate. Do you think he might be in line for a second Academy Award?

And if so, is it safe to say it would be as a director as opposed to an actor? Yes, I think his next Oscar probably will not be for this movie, although I bet he'll get a nomination, but I think his next Oscar will be as a director. And I think Gone Baby Gone, Again, just a flawless film. and this one is just a whole other scale in terms of its ambition and scope, and he just did a great job. It opens next week featuring Santa Claus, the Easter Bunny, and the tooth fairy, Uniting to Battle a Common Enemy, Buyseller Hold, Rise of the Guardians.

That would be a hold. There's some really good assets there, and William Joyce, who designed the characters, is a fabulous artist. The visual effects are great. Story, little wobbly, a little overplotted. That was a wonderfully clinical description of Santa Claus, the Easter Bunny, and the Tooth Fairy as assets. Santa's a pretty good asset, but I don't think they're utilizing him well. Jude Log is a great bad guy in that one, by the way.

They will be partying in Middle Earth when this opens next month. Buy-sellerhold, The Hobbit. Bye, buy, buy. That one's going to be absolutely huge. And you want to know what else is a buy with regard to The Hobbit is that that movie will be pioneering. new technology that will be double the frames per second, and it's going to be like HDTV times 10. The clarity of the picture, the depth of the picture, it's going to rock your world. Is this the first major motion picture to have this technology? Yes. The Avatar films

are going to have it, too. And finally, my producer is forcing me to ask this because he has seen the musical 11 times. Oh, we're going to talk about Les Mizz. And the film opens Christmas Day, buy seller hold, the latest film adaptation of Le Miserob. Le Miz is going to be a monster hit. It's probably the number one candidate for the Best Picture Oscar. Ahead of Lincoln? Yes. I think so. I think so. I say it's the latest film adaptation because there was a version in 1998 featuring Liam

Neeson and Jeffrey Rush, but I'm guessing that Russell Crowe and Hugh Jackman topped those too? Well, there was a singing, and people are, I have to say I'm not a huge fan of the musical. I'm sorry, but I'm not. But I think it looks like it's been stunningly done, and all the people who are fans of the musical wept throughout the trailer. So I think it's going to be a major, major film. Fortune Magazine called her the CEO Killer at The Motley Fool. She is absolutely one of our favorites. Nell Minow. Thanks, as always. My pleasure. Another day, another destiny.

This never-ending road to Calvary. Coming up, we'll give you an inside look at the stocks on our radar. Stay right here. This is Motley Fool Money. 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 or sell stocks based solely on what you're here. I'm Chris Hill, joining me in studio once again, Joe Magar, Jeff Fisher, and Ron Gross.

Guys, before we get to the stocks on our radar, I should mention Jeff Fisher, your service, Motley Fool Options, it only opens up. It's a closed service. It only opens up a couple times a year. It's going to be opening up again before the end of the year. For more information, people can go to a free micro site we've set up, which is just Optionswiz.com, and OptionsW-H-I-Z, OptionW-H-I-Z. OptionsW-W-T-Fool.com. But just give me 15, 20 seconds on the Motley Fool Options Service for people. who are interested. Sure, Chris. Whether you've never used options before or you're an options expert, Motley Fool Options has something for you. We teach hundreds of beginners every year how to use

options to generate income, to protect your positions, to invest with less risk. And we have advanced strategies for people who know options, frontwards to backwards. So it's a great service, great community of members, and we hope to see you there. And it does a great job of debunking the whole notion of just how risky options are. So again, for more information, a free Microsite Optionswiz.fool.com. Ron Gross, time for the stocks on our radar. We'll bring in our man Steve Brodo from the other side of the glass with a question for you. Sounds good.

You can fire back maybe a Thanksgiving-related question at him, but what's your stock? All right. I'm going with Hibit Sports, H-I-B. They are a chain of sporting goods stores. The reason I like it is they go into smaller communities where Dicks and Sports Authority perhaps are not interested in going. They get a local relationship built up with the local schools, and they brand themselves that way. They're expanding westward. I like that. The thing I need to get a handle on, because

it's not that cheap, is how much, how many more stores do we, can we open here? Because that, that will really drive my valuation. Steve Rodo, question. What is the highest margin item you think that sells in sporting goods stores? Is it golf related stuff? It certainly probably isn't shoes. Yeah, I don't think it's apparel by any means. It would be some specialized type of equipment. And I think maybe golf clubs is a good guess, actually. Or the gum, by the the cast register. Whoa, yeah. The quench gum.

Do you have a question for Steve, maybe related to the Thanksgiving? I've been dying to know, Steve. Cranberry sauce or not cranberry sauce? Not cranberry sauce. I've never been a fan and never will be. No, just say no to cranberry sauce. Jeff Fisher, what is your stock? Steve, I'm talking about BMC software.

The tickers BMC. They make software that manages the company's information technology and makes all their hardware work together. Their software license revenues starting to grow again after several soft quarters, and their earnings should grow about 9% this year. And that is not including a massive share buyback they just announced. By the end of this year, the company plans to buy back about 10% of outstanding shares. Meanwhile, the stock trades at under 10 times free cash flow, so I think it's a good value. Question, Steve?

How would a company find out about BMC? Would I get a phone call from someone, or is it direct marketing? How does it ever do? Like how do they get new customers? Yeah, exactly. A majority of Fortune 500 companies use some sort of BMC software, so they know about it by now. You would probably find out by word of mouth from another company

or when BMC comes knocking on your door with their salesperson. Before your question for Steve, does BMC stand for Big Man on campus? It doesn't. It's a Texas-based company. It's a good guess, and those are the initials of the three founders. Okay. Question for Steve? Now, I'm making an assumption in my question.

I'm sorry for that. But if the meal is your favorite part of Thanksgiving, what is your second favorite part? I would have to say it is very nice having the whole family together. It's nice. My sister comes. My wife's family. A brother will come and my parents are in town. Do you host?

We are hosting this year, yes. And are you cooking the turkey? No. Will there be cranberry sauce for your guests? I think we're buying all of this stuff from Whole Foods or one of those places. So it's, yeah. Strong move. Joe?

Tesla Motors. Yeah, so the new Model S that they're rolling out, it's priced around 50 grand, made to compete with the likes of Corvettes. I just won Motor Trend car over the year. I've been burned by GM on investing in companies based on how well they've done on Motor Trend ratings. But in this case, I think the car is definitely going to be a hot seller.

Their big challenges are scaling up to meet demand. And the valuation, it's richly priced by any conventional metric. But I think that they've got a lot of things going for them, including proprietary technology, a lot of buzz around it. The product sounds great, and they're not encumbered by all the legacy costs that GM, Ford, Toyota are in terms of dealing with unions and these huge cost structures. And the ticker symbol? TSLA. Steve, question for Joe.

Talk to me about the infrastructure around these charging stations that I see popping up everywhere that don't ever seem to be used. Do I pay for that? How does that work? I've seen these charging stations that I don't see cars plugged in. I'm like, but if I had an electric car, free juice sounds like a good idea. Am I paying for that? Yeah, free juice is a good problem. The thing is that it's not popping up anywhere because there's not a critical mass of electric cars.

But the nice thing is, you know, you can remember you charge your car at home, too. Question for Steve? Yeah, turducken. Trying too hard? I don't even know what you're talking about. It's a turkey with a duck and a chicken all stuffed up in one another. It sounds delicious. Does it really?

It's like the bacon explosion of fowl. So actually, maybe not. Could it just be the turkey and the chicken? For you. We have to be the name. It should be the name. We'll wrap up there. Joe Baker, Jeff Fisher, Ron Gross.

Guys, thanks for being here. Thanks, 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. Happy Thanksgiving.

We'll see you next week.