Motley Fool Money - Motley Fool Money: 7.09.2010

Episode Date: July 9, 2010

Some big name retailers report better-than-expected numbers for June. Android gains on the iPhone. And a foul-mouthed, animated bear creates big controversy for Best Buy. On this week's Motley Fool Money Radio Show, we tackle those stories, share some stocks on our radar, and talk with Washington Post technology columnist Rob Pegoraro. Learn more about your ad choices. Visit megaphone.fm/adchoices

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I'm your host Chris Helene. I'm joined by Motley Fool Senior Analyst, Seth Jason, James Early, and Shannon Zimmerman. Guys, good to see you. Good to see you, Chris. On this week's show, Android is gaining on the iPhone. Google has a new deal in China, and Best Buy makes peace with a profane. animated bear. Plus, a talk with Washington Post Technology columnist Rob Peggeraro, and a look at the stocks on our radar. But we begin with the June retail numbers. Guys, beating expectations.

We had Abercrombie and Fitch, J.C. Penny, Macy's, Limited Nordstrib, and Hot Topic. James, I know you're a big fan of Hot Top. I am, Chris. You can see if I'm a wardrobe. Costco fell slightly below expectations, but keep in mind, Costco closed its stores on Memorial Day. that definitely affected their results. And Gap came in below expectations. Seth, Jason, obviously, a lot of retail numbers there. What's your headline? My headline on retail is always a more investor headline,

which is don't worry too much about this month-to-month garbage. But on the whole, I was actually surprised things weren't worse. There's been a lot of bad economic news lately. I've been kind of pouty on the economy for a while. And sales at a lot of stores, even the ones that dropped, like American Eagle, I believe at a 1% comparable store sales drop. We're still better than I expected. However, the thing to watch for, if you're interested in any of these retail stocks,

is told the microcosm is Abercrombie. Comp number looked good, but if you listen to the phone call, they don't give you all the details in the press release. I wonder why. Could it be because nobody makes the phone call to listen to all the details? Quarter to date, average unit retail price decreasing 16%. So if you sell a lot more stuff, but you make a lot less money per stuff that you sell, that could pose some problems for profitability.

So be careful what you ask for on sales, everyone. Shannon, are the better than expected numbers that we're seeing, is that just a result of the bar being really low from a year ago? Well, the bar is a little bit higher than it has been recently because we're coming off those catastrophic numbers. And so the comparisons are fair now, but yes, that point remains valid that you're comparing against soft earlier period results. James Early?

Chris, what amazes me is how much some of these retail stocks are moving on this news, whether up or down, 6% here, 7% there. This is material, and it shows a pretty volatile market. I say, easy come, easy go. Well, let's focus on the gap for just a second. No, no, come on. Do we have to? Only for this reason that this is one of the best-known brands out there in the retail space,

and you look at shares of gap. I've been struggling for so long. Let me guess. I haven't looked at the share price, I swear. in probably two years. Let me guess, somewhere around $18? My question is, where did it go? Am I right?

Yeah, it hasn't moved for a decade. So where did it all go wrong? Like, just from a retail business standpoint, where did the Gap just completely blow their lead? Chinoes. Yeah, they need new clothes and face music management, I think. Bring back acid wash jeans, and that'll change the whole story.

We shouldn't bust on Gap so much. Old Navy is a great place if you are cheap like everybody in this room and you have small kids. Yep. Do you have a favorite retailer, particularly when it comes to the mall? And I'm not talking to Orange Julius. As a stock or to get my wardrobe? Either one.

Well, as a stock, I'm really partial to guess, which is not just a retailer. It's a wholesaler as well, but their retail operations are significant and do a great job. Is Aunt Annie's pretzel shop? Is that publicly traded? I don't think it is. I pretty much buy all my stuff from Sierra Trading Post's a close-out, overstock type website. He's a camping dude. I just push a button and it comes on my doorstep.

Yeah, but that's quite a slinky outfit you have from Hot Topic there, James. In an interview with CNBC this week, Treasury Secretary Tim Geithner said the Obama administration still hopes to hold the top tax rate on both capital gains and dividends to 20% next year. That 20% rate would be an increase over the current 15%. James Early, you're our dividend guy. Tell me what this means for investors. Well, first of all, Chris, before we start talking about raising taxes on everyone else, I think we should make sure we've collected all the back taxes that Tim Geithner owes first.

Our Treasury Secretary owes some back taxes? It just may be. So it's very good news, actually, because the dividend rate is going to go from 15% to 20% if this holds, which is a lot better than, you know, 39% or so with the top ordinary income rate. Capital gains was going to go to 20% anyway. This is about average in terms of U.S. history. You know, same thing for developed countries, some places in Europe or more, places less, but overall this is good news because it seems to remove a lot of uncertainty

from the market. Let's keep in mind that our policymakers are right now kind of moving from bubble to bubble, and they don't want to do anything right now that would scare investors out of stocks because stocks are sort of our next comforting bubble. Yeah, and closing the uncertainty gap, that's huge because this has been a big story for quite a while. We've talked about it on the radio show before, and so now we have some closure on that. I think that James' favorite asset class will continue to go gangbusters. listening to Motley Fool Money. We're going through some of the big headlines of the week. Guys, this week in corporate profits, Seth Jason, our colleague Morgan Housel wrote an article on fool.com

that included a Commerce Department chart of after-tax corporate profits. And the headline is that after a wicked dip, corporate America is now more profitable than ever. That's got to be good news for investors, doesn't it? I hate to argue with Morgan because he's a lot smarter than I am. Better looking, too. There's one piece of that that I am a little bit worried about, and he's right to point out that this is a bounce back from a dip and that that dip was largely based on big financial companies writing off lousy assets. But the profitability we have right now is also somewhat of an illusion and the extent to which it's an illusion we don't really know, because banks are the beneficiaries of a lot of lax rules and rule changes that allow them pretty much to pretend that loans that, that before they would have had to write down or reserve against and thus cut their profits. Now they can pretend those loans are fine, and the government did this.

James knows all, by the way, all of the nerdy technical details of this. But they did this in order to take some pressure off the banks. And so there are some losses, I think, baked into these numbers. They're just hidden. Wait, wait, wait, hold on, hold on. So the government and the banks just got together and said, let's pretend like my four-year-old pretends he's a robot? It's called in the biz.

It's called extended. Say James and I have lent Broido some money to develop a mall property. How much would you like? I would like $14.5 billion. Okay. So Broido borrowed that back at about 2006, and we said this is all great. But now that property is probably worth 40% less because it was on the edge of the desert somewhere where it turns out nobody really wanted to live.

Maybe it's 60% less. Well, if Steve seems like he's good for the money and he's still kind of paying interest, or maybe lower interest because we've given them a deal on the loan, we can now pretend that that loan is fine, whereas in the past we probably would have had to mark it down. Yeah, and the hope is that the economy recovers and restores the value of that, but then hope springs eternal. And just to get on the technical note, for the next 20 minutes,

I'll just walk through this on. It's called FAS 157. It's accounting rule, and it started in 2006 requiring mark to market. So if the mall went from $100 value to $60, meaning we could sell it at $60, we had to market down if we were the bank. Then in April, I think of 2009, this got reversed, meaning even if it was worth 60 on the open market, as long as Steve was still making his payments and we thought overall we'd still make our money, we could keep it at $100.

And the important thing that does is let the banks warehouse the bad loans versus the government coming in and setting up like a resolution trust corporation or some sort of entity to buy up all these bad loans. So the government is hoping things get better. What the banks do then to further exacerbate this, just like, like Seth said, it extended pretend. They say, okay, well, Steve, we're going to keep lowering your payments to a level that you can comfortably make them at. So we can keep this loan marked as a good loan when maybe it's not really. But I will say this, Seth.

And I thought Morgan's article was still pretty good. There's a good telling chart from the Commerce Department showing how high corporate profits have gotten. And certainly the financial stuff plays into this. But I think there are other factors too. Yeah, exactly. Hoarding cash and not hiring. So the balance sheet health of corporate America is much better than U.S. government's balance sheet. But you guys just lent Steve $14.5 billion. He's going to be paying that off for a thousand years.

Well, eventually, you know, when times are better, we'll mark that loan down. Yeah, that's the point. You worry about it later on. Let's bring it back to investors for one second. I mean, all this uncertainty and all this pretend that's going on between the banks and the government, is that a signal for investors to just stay the heck away from financial stocks? Yeah, but we've been saying that for a long time. we've been wrong. Smart people who know what they're doing with financials and who are lucky probably can do okay. I've always said that some people are going to make a lot of money on financials, but it's not going to be me. Coming up, the smartphone landscape is shifting and a profane animated bear causes trouble for Best Buy. Stick around. You're listening to Motley Full Money.

Welcome back to Motley Fool Money. Chris Hill here in the studio with Seth Jason. James Early and Shannon Zimmerman. And during the break, we did check on Gap stock. Seth, you said it was going to be around $18.18. Without even checking. Shannon, you check the numbers? Yes, and I'm a little bit of Seth credit for anything. But yes, the stock price is 1859 as we speak. All right. Let's dig into some more of the companies making headlines this week. Let's move to the week in smartphones. Google's Android is gaining ground in the smartphone market. Research in Motion's Blackberry still holds the top spot. Apple's iPhone is in. Second, Microsoft is in third.

But Seth Jason, Android's in fourth place, but over the past few months, it has gained market share. Gained and like crazy. At a time when all three of the others are losing. Are losing. What does that tell you? Well, it tells me that they've got a pretty good opportunity, and this is a pretty robust operating system. There's some really nice devices out there from HTC and Motorola and others that are helping with this. I actually wrote an article for our Fool.com this week about one of the challenges I think they have,

which is that I believe they're making the same mistake that Microsoft did. The operating system is so open that they risk having Android not mean something specific enough to attract customers. And I think this is a lesson that Microsoft seems to have learned. They are late to this game with a new phone operating system, but the one they are showing now, which is due out late fall, is much more like apples. It's going to be much more tightly controlled. And one of the more amazing figures to me here is that Microsoft still,

is in third place and the smartphone market share because no one's buying anything right now because they're waiting for the refresh. So I think microphones still, or microphone, I think Microsoft. I think Microsoft still has a chance, but they need to get on it. And this is still an open field. Shannon's, yeah, I have a slightly different tape because you have to have an opening. And I think that Apple so controls a kind of boutique consumer experience of the device that what's left for Google to be able to do is to go the open source route. And so it's a gamble. And it means. may not pay off and you may be right, but I think that they have a competitive opening in that space because Apple hasn't taken it over. Well, and Seth, you mentioned Microsoft. I mean, one of

the stories that came out really over the last couple of weeks is Microsoft killed the kin, which was this. Nobody out there has heard of this except if they listened to us. And when this came out, we said, what are they doing? They're issuing a new OS. And this is a casualty. This is if I were a Microsoft investor and I'm not, I would, I would, this is a symptom of a problem that they really need to get a handle on, which is that this, ironically, this device got pretty good reviews, except that if everybody is waiting for your next real phone operating system to come out, you know darn well, you're not going to sell this one. And so they should have killed it a while ago.

There's some politics. It sold 10,000 units, I think. Yeah, there's some, well, some people are saying they sold 500. It's no Zoom. It's no Zoom. I'll tell you that. Actually, we played with one at the store before even the reviews came out, and I said, you know, if I were in the market for just a really small phone, this is pretty interesting, but I'm waiting for something better.

and I think pretty much everybody had that attitude. And the Palm Pre had a similar fate. A pretty good product, really good reviews, no sales. You're listening to Motley Full Money. We're going through some of the big companies making headlines this week. Google said on Friday that China's government has renewed the license necessary for Google to keep using its Chinese web address. Now, Shannon's in January, Google announced it was not going to comply with China's self-censorship rules. What's changed?

They're on the road to evil. It's kind of interesting, and it makes me wonder what the whole dust up a few months ago was all about. Remember, we were talking about that here on the show, and this is either a clever strategy on Google's part to have an exit strategy from a market that they were losing, because, oh, you, they're going to take a stand against Chinese censorship. But at the end of the day, what they've done is kind of capitulate to all of China, the government's demands. There still is a link on the Chinese site to the non-censored Hong Kong site, but of course the Chinese government is free to block that for their users as well. So to me, it's capitulation. But you know what? The important, nobody's paying attention anymore, right?

So we all say, oh, Google stood up to China, but a couple months later, they quietly say. So they're relying on how everything goes down the memory hole so quickly. Well, if you look at the stocks of Google and Baidu... The giant search company in China. Yeah, Baidu is up, I think, over 60% for the year. Google's down at least 25%. I mean, is that factoring into their decision here? I don't think that the stock price decline on Google has so much to do

with this. I think it's, we kind of touched on it before. They're kind of not floundering exactly, but hoping that they're going to be able to profit from the Android platform in ways that are not direct as they are for Apple. I think that is sort of dawning on investors over time. James? Just ask a silly question maybe. So if I'm a Chinese internet user, I'm presented with the scrubbed Chinese site, but I can also go to the Hong Kong uncensored site. Why would I want the Chinese, I just willingly click that to get my results? It's an excellent question. My understanding from what I have read is that the Chinese government can block that, whether or not they're doing it regularly.

I see. I'm not sure. And maybe they'll just also figure out who's clicking on that site and raise their house. Keep a record of that. And knock on your door. And finally, last week, Best Buy suspended one of their employees after it was discovered, he created a video making fun of people who wanted to buy Apple's iPhone 4. Brian Maupin, who worked at a Best Buy in Kansas City, Missouri,

has been reinstated by the company. But Maupin now says he's taking a leave of absence. Guys, this video has millions of hits on YouTube. It features two animated bears. One of them is a sales clerk. The other just wants to buy an iPhone 4, no matter what the clerk says. And the clerk's trying to sell him on the benefits of another phone, which the clerk thinks is superior to the iPhone.

Steve, can we play a clip of that? If it's not an iPhone, why would I want it? Well, it's similar to an iPhone, but has a bigger screen. I don't care. The internet speeds are around three times faster. I don't care. It has a higher resolution camera on both the front and the back. I don't care.

It's f*** prince money. I don't care. It can grant up to three wishes, even if one of those wishes is for an iPhone. I don't care. We should say to anyone going to YouTube to find this video, it is hilarious. It is profane. It's got a lot of swearing, but I think it's appropriate swearing. I think so, too.

It's just not something you want to watch in front of the kids. No, or at work. I mean, who gets the worst of this? Is it Best Buy for the publicity of firing this guy? Well, they didn't really fire. They probably would have had to not become an Internet phenomenon. You know, I think Best Buy needs to think a little more out of the box and maybe hire this guy to do some marketing for them

because I nearly walked into Best Buy to buy this phone, which I had not heard of, until I saw this video. It makes a compelling case, and it's also very funny. Yeah, well, maybe Best Buy gets it. gets the worst of it, but the guy who put the video together gets the best of it. I think this guy has a bright career ahead. It's hilarious. Well, he needs, he should do something with his 15 minutes.

Very quickly, yeah. What about Apple? I mean, does Apple get the worst this? I mean, this video pretty good. Did you not hear the other bear? Nobody cares. That's right. Not Steve Jobs.

He doesn't care either. All right, drop us an email. Radio at Fool.com. Tell us if you think that you, this guy should be, I don't know, suspended, fired, or, yeah, hire them. Well, you can check on that here in the studio. Broido. You have a new iPhone 4 and you have that whole antenna problem, right?

I haven't had an antenna problem, I have to tell you. It's working out just fine for me. You have the prophylactic, though. You don't care. And if he did, he wouldn't care, yeah. No, it has not been an issue for me. I know some people have had problems, but it's working fine. So even though there are these other smartphones out there with bigger screens and faster speed, you don't care.

I don't care. You know, Seth and I were talking about this a little bit before the show. The thing just works. You plug it in. It works. Everything's fine. I'm good to go. What about a phone that grants wishes?

stuff. I would definitely be interested. All right, drop us an email, Radio at Fool.com. Tell us your iPhone stories. And tell us if you think Android really has a shot against Apple. That's Radio at Fool.com. Coming up, Washington Post Technology columnist Rob Pagoraro talks about Apple, Google, and the artist currently known as Prince. Stick around. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. With the release of the latest iPhone, the e-reader war between the Kindle and iPad,

as well as the latest from Microsoft and Google, there's obviously a lot going on in the world of technology. So we figured it was a good excuse to check in with one of our favorite tech columnists, Rob Pagoraro of the Washington Post. Rob, welcome. Thanks for having me. So I want to start with the smartphone market in the U.S. Right now, you're looking at Research in Motion and Blackberry has around 35% of the market. The iPhone has about 28%. Google's Android, about 9%.

Three years from now, what do you think those rankings will look like? How much do you think that's going to change? I see the iPhone. I realize this may be an unfamiliar model to many people. It's a popular phone sold by Apple. That number is definitely going up. Android is definitely going up. I think it was just this morning that ComScore put out some new numbers,

and I think they have Android up at 13% already. Okay. Windows Mobile is going down, down, down. Microsoft is moving to an entirely new generation Windows Phone 7, but it's doing work it should have done and completed, I'd say, a year or two ago. Research in motion, they're kind of in Microsoft's position as well. For years, they've made phones that IT departments love, but consumers are not necessarily you know how many people have you do you meet on your days off that say I really want to see my work email show up on my phone instantly you know is that is that a feature on most people's wish lists I don't know you know Blackberry has a terrible browser that they are replacing their equivalent of an app store is late and slow and clumsy their interface is just not as as elegant as the iPhones or androids so they've got work to do

Let's move from the smartphone market over to the tablet market. Obviously, when people think tablets, there's the iPad. Actually, the last time you and I spoke, you were out in California for the unveiling of the iPad. But according to reports, Google is working on its own tablet computer and will be partnering with Verizon. How big a threat is that to the iPad? It's definitely got potential. I think it depends on a few different things. I'm not so worried that with Android you'll have a bad fit of software to hardware.

What the iPad did great that prior tablets completely failed at was in using software design for a mobile device. I've tried a lot of different tablet or sublaptop computers running versions of Windows, and they were all pretty bad. The netbook, some of them are okay, but the sort of, what was it, this ultra-laping? mobile PC I tried a few years ago. Just horrendous. So with Android, you've got software that is also made for use on a mobile device with a touchscreen. The questions are, you know, what's it going to sell for? Will you be able to sort of turn the data connection on and off? You know, I find that the 3G iPad, the nice thing about it, although it's sort of clunky to do this in practice, is you don't

need to keep paying AT&T month after month. If you're only using it around the house in the neighborhood, you can go Wi-Fi only a month, then turn on 3G when you travel. The other thing, of course, Android, unlike the iOS, the software on the iPhone and the iPad, Android is designed to not need a host computer at all. You know, if you want to update the software on your iPhone, even just to set it up, you need to have a Mac or a PC running iTunes. Android doesn't need that. You take the thing out of the box, plug it in, and there it goes.

So what you could have with an Android tablet would be, to steal a phrase Apple used to use in its ads, the computer for the rest of us. You're really simple web and email device that doesn't need any configuration, takes care of itself, is cheap, and, you know, let you get the basics of online life done. You're listening to Motley Full Money. We're talking with Rob Pagoraro, technology columnist from the Washington Post. Now, I know you're not a stock picker, but you follow technology closely and increasingly. Increasingly, it looks like we are in an Apple versus Google kind of world, like it's a Coke versus Pepsi kind of world.

Over the next five years, which of those two companies do you think has a greater upside? That's a good question. It really amazes me. You're correct that I'm not a stock picker. I can't invest in any of these companies, which I should note, had I been able to invest in some of these companies 10 years ago, it would have got my clock cleaned. You know, Cisco, micro strategy, they looked like a sure thing at the time.

Yeah, I don't know. That is a tough call, because on the one hand, Apple sells enormously popular devices that, for the most part, sorry from the occasional reception problem, they work great, they look great, they exceed your expectations

in all sorts of pleasant ways. Google doesn't quite do that, but they have services that reach so far and, you know, compare so well. Look at how, you know, a free service like Google Docs, you know, does things that Microsoft Office is only just starting to do, like letting you, you know, you share a document with somebody in the other side of the world work on at the same time. So, you know, you hate to bet against Apple here. I guess I would say, well, put some money in both. Sorry, that's the most weasily answer I could give.

other than each other what do you think is the biggest threat to Apple and Google? Hmm Well there I think you have to sort of go back to Microsoft because they do have a huge installed base you know that they have shown that they can you know move quickly when they have to

look at how the Xbox 360 the Xbox Xbox and the Xbox 360 have done they with that Microsoft was moving into a market where it had no experience you know no installed base at all where you had Sony and Nintendo and Sega owning the video game console market,

and Microsoft knocks Sega out of that business entirely. So when they put their mind to it, you know, they can do good work. It's just a question of what sort of sweeping changes are they willing to make and their existing lines that have maybe gotten stale. I think Windows Phone 7 could be a good example of them recovering since they elected to pretty much scrap Windows Mobile as we knew it. You're listening to Motley Full Money. We're talking with Rob Peggeraro, technology columnist from the Washington Post.

Now, a few months ago, I interviewed your colleague Frank Aaron, business columnist extraordinaire at the Post. Indeed. And I got to ask you something about something. I want to get your reaction to something he said. We were talking about Sirius XM. And he said that he thought that in three years, Sirius XM will be gone. You're the technology columnist. do you think i think we're heading that way uh... i had this revelation last year went to a

tech conference and it was about music and technology and there was a panel about web radio and the guy from pandora very good web radio site said you know we're getting so much traffic on mobile devices all came home the next weekend my wife and i were visiting some friends who have a vacation house in the shandahua valley in virginia thought well let me take one of these phones reviewing we'll see how long we can listen to web radio we listened to it all the way down 66, interstate 81, pretty much all the way to this little cabin in the woods. And I thought, you know, we've been listening to Web Radio the whole time, did cost us anything, no contract, only required a phone we already, you know, you'd already buy.

What's the use case for Sirius XM in there? I don't know. You know, there's sort of two ways you can compete with Web Radio. You can be cheaper. That's kind of hard. You can have more variety. Also kind of hard when you use satellites with, satellites with fixed bandwidth. with, or you can be more local, difficult to do when you use satellites that have to cover

the entire country. All right. We're talking with Rob Pagoraro from The Washington Post. And Rob, let's wrap up with a round of buy-seller hold. Let's start with something that's... Sell, the economy's doomed. Let's start with something that's gotten some good reviews, but it's been criticized for its size. And one of our regulars here on Motley Full Money, Seth, Jason, called it waffle-sized.

So buy-seller hold, the soon-to-be-released, DroidX smartphone. I'm a hold on that. I think the size, it may or may not be an issue. I think if you carry around your phone in a purse, I don't, but I know many people do. The size is not just a big deal. The size can be an advantage if you're not great with on-screen keyboards. But I agree, yeah, to me, that's kind of a big phone. I also just don't like the fact that, you know, it doesn't have the sort of trackball

most Android phones have. So when you're trying to select text or move around, you have to use just your thumbs on the screen. And that's one area using fingertip control of text where iPhone is better than Android. I've seen other Android phones that I like more than the DroidX. I'd put it that way. Buy seller hold, the likelihood that the iPhone will team up with Verizon in 2011. That's a hold. You know, I've seen, I know the engineering logic behind it, Verizon moving to a new network standard.

I will not be surprised if it happens in 2011, but I can't ignore the fact that every prediction so far of a Verizon iPhone has been wrong. So, you know, I could say buy, but don't blame me if you lose your shirt. This was once a red hot stock, but increasingly we're seeing this technology in smartphones and mobile devices. Buy seller hold the future of Garmin and its GPS. Oh, sell. Yeah, I don't see why. You know, the first time I tried the navigation, turn-by-turn navigation on the droid, I thought, yeah, goodbye GPS. You know, especially once you figure out a way to cache some of that information on the phone, so you don't need to have a live Internet connection, yeah, why would I pay for a separate device that I need to remember to bring along and recharge?

Just get a car charger for your smartphone and a little dashboard mount. Off you go. In an interview with the British newspaper, the Daily Mirror, Prince said that the Internet was, quote, completely. over. I don't see why I should give my new music to iTunes or anyone else. He also went on to compare the internet to MTV. So buy, sell or hold, Prince. I would buy Prince just because, you know, we need wacky people. I believe he is wrong in this particular technological analysis, but I do like his music. I guess I just won't be able to listen to the music on this new CD unless somebody, you know, illegally posted on the internet. So maybe he's not. Maybe he's

he'll reconsider that. So you're buying Prince the musician and not Prince the technology prognosticator? I won't interview him for my next story about web trends, no. And finally, you and your lovely wife are expecting your first child any day now. So buy seller hold the likelihood that on your child's 10th birthday, your newspaper, the Washington Post, will still be available in print. Buy. But you didn't ask what state. Will it be a weekly edition? Will it be you know, much thinner. Who's to say on that? We'll have to see. Even, you know, the newspapers that already have gone all digital, like the Christian Science Monitor, they still have a print presence. U.S. News News and World Report, they have a print presence. It's just sort of, you know, these publications, they've shifted to keeping, to printing the things that have some kind of keep around the coffee table value. So if you'd ask 15 years from now, I'm not a different answer.

Rob Pagararo is the technology columnist for the Washington Post, and I don't care if you're a gadget person or you're looking to invest in technology companies, you've got to read his stuff on Washington Post.com. Rob, thanks for being here. You're welcome. Coming up, we'll give you an inside look at the stocks that are on our radar. Stay right here. You're listening to Motley Full Money. As always, people on the program may have interest in the stocks they talk about. Don't buy ourselves stocks based solely on what you hear. I'm Chris Hill and back in the studio with me, our trio of senior analysts, Seth Jason, James Early, and Shannon Zerun.

Guys, before we get to the stocks on our radar, we were talking about retail earlier in the show, and I neglected to mention maybe the most interesting retail story, which had nothing to do with revenues. It's the bedbug infestation at a couple of Abercrombian Fitch stores in New York City. Oh, yeah, the one that had the CEO crying to the mayor for help because he can't figure out what to do on his own. He wants to say, I've read somewhere guidance and leadership from the mayor on bedbugs. I'm sure Bloomberg will get right back to them on that. What people are missing this story, this is guerrilla marketing. Bedbugs, that's a sign of hipsterism. In Williamsburg, Brooklyn, the hot happening music scene, bedbugs, do you want to have them? That's a status symbol. What the hell is

going on in Brooklyn? What are getting up. Bedbugs is a status symbol. We run with very different crowds. A lot of skin and ever crummy. Well, yeah, I mean, that's the thing. I mean, if, I could see where that bedbugs would be a problem at a clothing store where there's lots of fabric, But, you know, the, aren't those guys walking around shirtless at Evercom? You've seen the sleazy ads they use it out. Anybody catches a parasite at Abercrombie gets exactly what they deserve for walking in there is what I say. You know what that is? That's fierce. That's fierce.

You know what? I have to say today when I was at the Investor Relations page at Abercrombie, the fierce thing was gone, but it was still a shirtless dude. But they took away. But the word fierce was no longer there. So let's give him a golf clap for getting rid of that. And for listening to our show. Was he pockmarked by Bedbug Bites? No, but I didn't look too closely. James, you've got the bedbug Wikipedia page? Is that right?

It is. I did not know what bed bugs look like. So I went here and apparently says largely eradicated as pests in the developed world in the early 1940s. Bedbugs have been resurgent since about 1995. Interesting. So the key point is to eat the blood of warm-blooded animals. I didn't know that. They can survive negative 25 degrees Fahrenheit.

And cockroaches actually eat bed bugs, as do some like upper model ferocious bedbugs, called the masked hunter bedbugs. So in Brooklyn, actually, the ecosystem is probably pretty balanced because I've been out there and those places were full of roaches. Sure, exactly. They probably have a good balance between the bedbugs and roaches. The game plan there is to fight problems with bigger problems. Exactly.

The cockroaches. So wait a minute. Bedbugs were largely eradicated in the 40s and then what, lay dormant for 50 years? And what happened in 1995 that the comeback started? Like John Travolta. They've just a... Come back. Did you just compare Benvolta to Bedbugs?

I'm not arguing with the comparison. He was popular, then he wasn't, and then he was again. That's not really fair to bed bugs. Steve, you'd like to tinker around with science and technology. Any theories as to the resurgence of bedbugs? I think nature always wins. Even in the city, having a row house in the city for a while. Bugs just everywhere, and nature finds a way.

Never, never bet against nature? Is that the rule? Never, never, never, never. And if it's not bugs, it's plants. All right, let's move to the stocks that are on our radar. Shannon Zimmerman, we'll start with you. Well, after all that appetizing discussion, bedbugs, my stock on the radar is McDonald's, the ticker's MCD.

I love this company. I love the stock. And it does trade at a modest premium to the market, but I think that's entirely warranted based on the fact that they've now brought crispy bacon to their breakfast sandwich. Really? On the McGrittle, which is a pancake sandwich, and what's not to love about that? And even though McDonald's is a bit priser than the broad market, it's less expensive on a PE basis relative to its average industry competitor and its own five-year history.

I think now it's a good time to look at McDonald's. it's a wonderful time to go order a mcgrittle sandwich you know what they just need to get rid of those darn salads yes just just just just dressing that's right and we are not stumping for a sponsorship but if they want to send one our way that's fine right drop us an email radio at fool dot com we've got some very attractive advertising rates james early your stock this week i'm going safe with johnson and johnson the ticker is j and jay is probably everybody knows they have paid dividend since 1994 2027 return on equity i think everybody knows what they do basically medical device is everything.

Pharmacists, healthcare. The FIS lately has been from some contaminated products, like children's Tylenol with metal shavings in it and fungus or mold or things like that, which sounds terrible, and it's bad news for the stock, but nobody was really, like, really hurt by this to my knowledge. So I think it could be a good negative catalyst and a good time to buy. It's a 3.6% yield or two. I'll tell you what's popular in my house, because with three kids. Metal shavings.

Metal shavings. Band-Aids are popular, and the brilliant move by Johnson and Johnson And they're not the only ones, like Nex Karen, others do this as well, is they license out the Band-Aids. So Band-Aids when we were growing up, we're just, you know, just that regular plan color. Now they've got superheroes on them. They're scented. Oh, they're scented? No, but they've got superheroes.

They've got princes. They got everything. You know, Hanna Montana. I use a lot of those at my house. The Hannah Montana ones? Yeah. Well, any, whichever are on sale. You know what?

I don't even want to know. Seth Jason, the stock on your radar this week. Well, I'm looking at, I just figured I'd go with this retail theme. And if you see any dive in Aeropostal, the ticker is ARO, and last I looked it was down a little bit, this is a small retailer appealing to the teens out there that makes a lot of cash flow, runs small stores, has done a great job overall. And so I would say look for a chance to buy that on any weakness. I like it in a decent economy because I think they'll just sell more stuff like everybody else.

I like it in a down economy, if that's what we have coming up, because they are kind of the cheapest among the Abercrombie American Eagle Outfitters. They're sort of a continuum. I like them anyway there. So I would be on the lookout for weakness in that stock price. Again, the ticker is A-R-O. I'm just glad you stuck with the apparel theme and not the bed bug theme. I don't have a stock play there, but I'm going to start looking.

All right. Seth, Jason, James Early. Shannon's, everyone. Guys, thanks for being here. Sure, thank you. Thanks to our special guest this week, Rob Pagrar. technology columnist at the Washington Post. You can read his stuff online at Washington Post.com. If you missed any part of the show, you can find it at our website, motleyfoolmoney.com.

You can also get a copy of our free report, the Motley Fool's top stock for 2010. All that and more at motleyfulmoney.com. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.