Motley Fool Money - The Mouse That Roared

Episode Date: February 6, 2015

Disney reports record earnings and shares hit an all-time high.  Will the magic continue for investors?  Our analysts tackle that question and delve into the latest numbers from Chipotle, LinkedIn, Twitter, and more.   And Motley Fool Pro Australia advisor Joe Magyer talks Google and China.   Learn more about your ad choices. Visit megaphone.fm/adchoices

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Money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Chris Hill. Joining me in studio this week from Million Dollar Portfolio, Jason Moser, from Motley Fool Income Investor James Early, and from Motley Fool Deep Value, Mr. Ron Gross. Good to see you, as always, gentlemen. Good to see you, Chris. Earnings Paloza rolls on this week. We will head to Australia to talk with our man Joe

Mager about investing down under. We will dig into the business of Valentine's Day, and as always, we'll give you the inside look at the stocks on our radar, but we begin with the big macro. The jobs report for January capped the greatest three-month jobs gain in 17 years. Unemployment ticked up slightly to 5.7 percent, Ron, but these numbers pretty amazing. Yeah, I really like this report, despite the fact that the unemployment and the broader range of unemployment, the U-6 number, ticked up for good reason, actually. It's because the labor participation rate actually increased, so it's good to see people, instead of leaving the workforce, coming back in. Plus, we saw wage increases, which we keep saying

has been the real linchpin. As unemployment has ticked down over the months, we haven't seen wages do anything. We're now at kind of an annualized increase for wages of 2.2%. Not fantastic, but also not terrible. So I think this report is really strong. Yeah, James, biggest wage increase since 2008. Yeah, I mean, that's great. That's what the Fed wants. I think everybody's going to be watching. What does the Fed do now? At what point do we start seeing, you know, rate increase? Traditionally, I think we would see it, but I don't think the Fed feels the same pressure now, because if you look at the rest of the world, or Europe and Japan mainly, even some of what China is doing,

everything else is so low. So why? What's the reason to jack uprate so quickly? I think they're going to consider that. Yeah, Jason, when you broaden the lens and you look at the rest of the world, I mean, the U.S. economy is just looking so much stronger these days. It really is. I mean, we've seen that through a number of the automakers who've reported. You know, Toyota just brought out a fairly decent report. I mean, most of that was currency,

but North America is shining as far as auto sales, and it's shaping up to be the year of the truck. And now, that's really interesting to think about, though, because with gas prices so low, with the economy recovering, with the consumer maybe feeling a little bit more confident, if they are buying all of these trucks, it just sort of begs the question of when gas prices, prices do go back up. Are they going to start complaining about the fact that they have to, you know, take out a line of credit to fill up their tank? But, yeah, I mean, on the whole, it's nice to see the unemployment situation improving like that. And I think wages are really, that's the biggest key to it. It is funny, though. I mean, I don't mean to speak low of my countrymen, but, you know, gas prices

move around so quickly. It is funny when you see a sudden plumber, and then everybody goes out and buys these massive SUVs. I mean, six months later, they got to pay the gas bill. It's just kind of I will just head with respect to interest rates. For those that watch the Fed out there, and for those that do, I think you should get a different hobby. But for those that do, I think what we'll first see is we'll first see the word, the word patient or patience removed from their statement. That'll be a telegraph that interest rate hikes are coming, and we'll probably see it sometime later this year. All right. Let's move on to earnings. Twitter's user growth in the fourth quarter was just 1.4%, the lowest on record for their company. But if they didn't deliver the users, they sure did deliver the money, Jason.

Fourth quarter revenue up 97% and stock rising more than 17% on Friday. Yeah, I mean, what Costolo and Noto needed to do with this an earnings announcement was to communicate the value of tweets beyond that core platform of Twitter. And mission accomplished. I mean, they did that. And I think that we saw how the market felt about that in what the stock did on Friday. Now, the user growth, I think it's slowing. They offered a couple of reasons for that. They also shed some light into the current quarter that they have seen, you know, a tremendous uptake in users. But I think that, you know, this all sort of lends itself to, they initially, when Twitter went public, they made it a user growth story. And the market really made it a user growth story because it was always comparing Twitter to Facebook. And I think that's misguided. I mean, I think that Amher analysts who are looking at it from that perspective or aren't looking at it from the right perspective.

Twitter is certainly more of a niche service, and to think that they're going to have the same user base as Facebook, I think, is just absurd. Are they making real money, or is it more like going from $1 to $2 in revenue? I'm not quite sure what you mean. I mean, isn't that low base? Isn't that just double-groom from $1 to $2 sounds pretty good? But, I mean, are they profit? Just overall, yeah.

I mean, how viable is this business model for the long term? Well, I think that's the question. And certainly it's an ad-based model at this point, and they are proving out value there. Now, it's fair to say that 2014 brought a couple of big world events in the Olympics in the World Cup. Those are not going to replay, obviously, in 2015, but they do see an opportunity in the cricket World Cup, which when you look at the popularity around the globe as far as cricket goes, it's one of the most popular sports in the world. You made that up. Google it. Or better yet, Twitter it.

Well, speaking of Google, they also announced a new deal with Google that will bring tweets into Google search results. Right. It seems like a good deal. It's also adding more fuel to the idea that Google is just teeing up to buy Twitter someday. And, you know, that's been a rumor that's been out there for, I think, virtually the entire time Twitter has been public. We know that Facebook tried to buy Twitter before Twitter went public.

It could certainly make for a wonderful sort of ancillary service under one of those two platforms. I do think they're going to continue to try to go it alone because it would be a sizey-act acquisition regardless. But, you know, again, they made almost $1.5 billion in revenue this past year. They're guiding for, you know, clearly better than $2 billion, close to $2.5 billion, I think, next year. So, yes, they are making money. I think it's just a matter of really framing the discussion with this company so that we're focusing on the right things, not just user growth.

And who has two thumbs and is now on Twitter? This guy. Ron Gross. Which is clearly the sign of a Twitter top. Make a sizey contribution to the service. Shares of the Walt Disney. company hitting a new all-time high this week after first quarter revenue and profits came in higher than expected. CEO Bob Eiger was quoted as saying, calling it, quote, yet another incredibly strong quarter. He's not just talking to his book, James. This was unbelievable. Chris, there's nothing like a stock that makes you feel like an idiot every time you think about it. And Disney is, is that stock for me. I remember looking at Disney when it was $40 a share years ago and thinking, well, it's good. It was just a

little bit too pricey for me. Big mistake. These guys are firing on all cylinders in every way. Even studio entertainment, which was down just a little bit, that was the only thing that was down, basically. It was down because Frozen was just so great last year. So that's a perfectly good reason. 46% more money from product sales. That's amazing thanks to Frozen. The amazing thing, big picture wise is this company was founded in 1923. Companies that are almost 100 years old are mathematically not supposed to grow this quickly, at least in a traditional MBA finance valuation class. Nobody, nobody in their right mind would model this kind of growth for such an old company, but just really shows you that in investing, you can find a great company and you can ride that way for a long,

long time. And the stock up 12 percent. I mean, it's acting like a growth stock. James, I mean, I'm not really trying to pile on here, but, you know, you know, You know, my daughters, they had to wear with all to buy Disney two years ago. They are sitting on a nice, clean double at this point in a market smasher. So, Hannah and Ainsley, well done. Well, and you think about it. I mean, you mentioned Frozen last year, and obviously the ripple effect moves into the Consumer Products Division. But if you look at what the studio division has teed up coming in 2015 with another Avengers movie, a Star Wars movie at the end of the year, another Pixar feature, another Disney animated film, it seems like,

You know, it could be just a repeat of last year. And you're a shareholder, if I'm not mistaken. Is that right? I am a shareholder. As am I. Good times. I'm the only one. I'm the only one who's not a shareholder, right?

One of these things is not like the others. We'll get into the business of Valentine's Day later in the show. But maybe for Valentine's Day, the three of us will just chip in. We'll buy you a share of stock. LinkedIn also hitting a new all-time high this week. Fourth quarter revenue up 45 percent. And Jason, unlike Twitter, LinkedIn's user base is really growing. Yeah, LinkedIn's making real money, right, James.

Not just that fake Twitter money. No, I think that investors who think that LinkedIn is coming up on sort of a ceiling or their growth is slowing. I don't think they fully understand the potential market opportunity here. And so LinkedIn has done a tremendous job, really, of defining more or less this new professional networking space. And it's the name to go to. But closing in on 350 million users, sales grews 44% for the quarter. I think what's really interesting is we've always talked about engagement is a big challenge for LinkedIn, because it just didn't seem like it was that engaging at the beginning, but they are engaging with users.

I mean, unique users grew 24 percent or 23 percent, and that was supported by 34 percent growth in page views, which means more users clicking on more pages, which means better engagement. It's coming down to the advertising bottom line for them as well. So I think that, you know, when you combine that along with the opportunity that their sales navigator product offers them. The Talent Solutions product, it brings them about a billion dollars a year, but they see this as a $10 billion pipeline for the business, ultimately. So I think there are a lot of reasons for investors in LinkedIn today to be very encouraged about the future. If the business opportunity is that big, just in that subset of their industry, doesn't that

just give Facebook even more of a reason to double down on what they're doing? Because they recently rolled out their own sort of version, Facebook business or something like that, their version. I mean, if the market opportunity is that big, Facebook's kind of go after it, aren't they? Well, there's absolutely no reason they shouldn't. I mean, if it's a significant market opportunity out there in a way to diversify your business model, then, hey, give it a go. And I think you're right. They probably will try to capture some of that market. But, you know, they are playing catch-up where it's involved with LinkedIn. And it seems that the surveys time and time again show that individuals want their personal profiles and their professional profiles separate.

So I'm just, I'm not quite sold on Facebook being able to turn our thinking on that just yet. I was talking with our recruiting team here at the Motley Fool the other day, and one of them mentioned something that I had not really clued into, maybe one of you guys had. And it is this phenomenon of younger people who grew up with Facebook, so people in sort of their late 20s, maybe 30 years old, that sort of thing, basically changing their name on their Facebook profile so that they're basically, instead of using their last name, they're using their middle name as their last name so that when recruiters are doing background research, they don't find their Facebook profile and maybe some of the photos that they now regret posting.

It's a big problem. It's actually a big problem with college. As well, when applying for college, the admissions will often ask for your Facebook password so they can check out your Facebook And that raises all kinds of privacy issues, I think, and that's been in the news as a debate. I'm so glad we don't have to deal with that. That probably lends itself a little bit more to something like a Snapchat with that ephemeral content that just sort of disappears, so to speak, after 10 seconds, right? Ephemeral? Appemeral. AP English for the win.

Coming up, an iconic retailer rides off into the sunset. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Full Money. Chris Hill here in studio with Jason Mozer, James Early, and Ron Gross. Guys, on the face of it, Activision Blizzard appeared to have a pretty strong fourth quarter. Record profits for the video game maker. Ron, they also announced a stock buyback plan. Usually, that's a nice combination, and yet shares falling on Friday after the report. What gives?

The stock, I think it's rebounding. So I think people have had time to digest a bit. But the guidance was weak. That's where the linchpin is here. 2014 was really strong. In 2015, they've come out and they've said both on a revenue and earnings per share basis, it will be weak. It's based on things that are largely out of their control, largely currency, translation, and a higher tax rate. So in one sense, you can't really blame them for those things because they don't have any really power over them, except for maybe some potential hedging.

So whether you blame them or not really isn't the question. It does impact cash flow, and that's what investors look at. So, even though 2016 is supposed to be better, investors are saying, well, why do I want to hold a stock now that is going to have a difficult year? I can get back in later. Stock sells off. But when you look at the bigger picture, the company continues to put up really fantastic numbers, increasing the dividend of 15 percent, buying back stock, going to pay back a quarter

a quarter billion dollars in debt in the first quarter. The company is really doing quite well. Balance sheet remains strong. So, you know, if you want to own a solid company that produces solid cash flow and you don't mind the ups and downs. This is a good one for you. Last week we talked about Caterpillar. I think of that as a company that deals with currency issues, given how much business it does outside the United States. I guess I never put Activision Blizzard in that same category.

Yeah. About 50 percent of Activision's revenue comes from overseas, so it has quite an impact. Fourth quarter revenue for ExxonMobil felt 21 percent, but profits came in higher than expected and shares up more than 4 percent this week. And James, when you look at what has happened of the price of oil over the last six months. This does seem like one of those situations where bigger is better. Yeah, Exxon certainly benefited from size, from having other places to go, focusing on natural gas liquids, other things like that. And that's part of the narrative is how great Exxon is now, how they don't have to spend as much CAPX as their peers to get more oil. I'm going to cushion that a little bit. Anytime I see such a big company, I see it kind of like

as a water balloon. I mean, they can always squeeze one thing and, you can always squeeze one thing, going to expand in someplace else. And big companies can do that in their numbers and their accounting. So I don't buy into the hype as much, but I do think just about every oil stock is still attractively priced right now on a price earnings basis. Obviously, ExxonMobil stock not down nearly as much as some of the smaller players in the oil industry. Is this almost a safe haven stock for 2015? Yeah, it's the more conservative man's way to play or woman's way to play a big oil company. If you want something more aggressive, Chevron would be a pick. It's cheaper on a P.E basis, but CapEx is probably a more important part of their future. Exxon doesn't have to spend as much.

So, yeah, I think that's the situation. Chipotle's fourth quarter profit rose 52%. Same store sales up more than 16%. And it just wasn't good enough, was it, Jason? No, it wasn't. And, you know, I called this out as my stock on the week last week, to stock on my radar last week and expressed the possibility that this could happen. I mean, it's just, this is your classic long-term versus short-term thinking here. And Chipotle had a wonderful quarter by virtually every metric. But, you know, the market picks out little metrics that they expect to be met. And there was maybe some margin concerns, perhaps a little bit lighter on the comp side than the market was expecting. And consequently, the stock sold off quite

quite some a bit, 7, 8%, something like that. I don't see any reason really for that. I mean, I think this is a business that's still operating wonderfully. They're maintaining their strategy, adhering to food with integrity, and we talk about victims of your own success, and this, I think, was one of those situations. The long-term picture doesn't change really. I think the thing that we have to keep our eye on with Chipotle is just going to be, it's their supply chain, their food supply chain, and the food costs as a percentage of overall sales. I mean, that, did go up, I think about 110 basis points over the same quarter last year to 35%. So that's something that's going to continue to, you know, I think maybe pose a challenge for them. I think

they can deal with it because they've developed such a good loyal customer base. But it was a good quarter. Well, and as we were talking about earlier in the week, you look at the fast casual space, whether it's Chipotle, Panera or others. Even despite the growth that it's had over the last 15, 20 years, it's still only about 5% of the entire restaurant space in the United States. Yeah, and when you think about the fact that they only have about 1,700 Chipotle stores today, they're going to basically be able to double that, tack on additional restaurants with the shophouse and pizza real locale, and you can see that there's still plenty of growth to be had here.

The management team stays in place. I'm a happy shareholder. After 94 years in business, Radio Shack is calling it quits. The electronics retailer, filed for bankruptcy this week, and speculation quickly turned to what will become of Radio Shack's thousands of locations. According to a Bloomberg report, Amazon is considering buying some of the stores. And if that idea sounds familiar to our listeners, Steve Broido, it's because of something Ron Gross said on this very show over a year ago. I think Amazon is going to acquire Radio Shack. And they're going to use the sites as showrooms. They're going to use them as places for their lockers so you can go pick up stuff, Amazon stuff.

They're going to use it as a place for returns and service. They're going to get a nice, cheap asset there. That was January 3, 2014, our reckless predictions for the year. You know, even a broken clock is right twice a day. We actually don't have confirmation, truth be told, of the Amazon deal. What we do have confirmation about is standard general, the hedge fund coming in, going to buy 1,500 to 2,400 stores, and then partner with Sprint to open up store within a store. The Radio Shack name will still exist if you need your batteries out there.

You'll still have a place to go in a couple thousand stores, but the rest of the stores will be closed. I like to think listeners heard it here first. Up next, we're going down under to talk with Joe Mager about investing in Australia and China. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Joe Mager is the lead advisor of the Motley Fool's Real Money Portfolio Service in Australia. and he joins me now from Sydney. So good to talk to you again, my friend.

How are you? Mr. Hill. I'm great. Great. How you going, mate? Longtime listeners actually have been emailing me recently saying, when is Joe McGar going to be back on? So I was in the happy position of being able to tell them, you know what? He's coming real soon. And I want to talk about investing in Australia in a minute.

But let's start with China, because you and your colleague, Matt Joe, just got back from a research trip you did in China. Let's start with the headline. What was your biggest takeaway as an investor? Yeah, well, I think China's a country of big juxtaposition. So you've got the most ruthless form of capitalism I've ever encountered operating under a communist country.

The people are very rude, yet they're very warm to one another and very caring and supportive families. And so you kind of have to take that when you're dare. and you just see there are two different speeds of economy and two different faces of the people. And there's a lot of ambition, and I respect that. The big punchline takeaway was that the economy is slowing down, though. And I think probably a lot harder and faster than most people expect. So everybody knows, you know, we all know that the economy is slowing down because the government says it's slowing down.

Of course, it's the worst kept secret in finance that nobody trusts the numbers in Chinese government publishes. You know, in the third and fourth quarter, they were supposed to grow 7.3, 7.4% GDP. But when we looked at 147 consumer companies, we didn't see that. We saw the median sales of companies that dropped 2%. And we saw receivables and inventories growing faster than sales. And those are classic red flags. And then once we got on the ground, you see all kinds of construction flowdowns.

I mean, literally, you know, at one point, I saw 53 crane in two minutes while riding on the train. Every one of them was idle. And these construction projects, massive, massive projects, was sitting completely idle. So there's a lot to be concerned about there. I was going to say, if people are reluctant to trust the numbers coming out of the check, Chinese government, they may be more apt to trust the numbers being reported by publicly traded companies in the United States. And just last week, I mean, you mentioned the construction reminds me of Caterpillar. We talked about that on last week's show and how one of the headlines

for Caterpillar was construction falling in China. I know just from following you on Twitter that part of what you guys were investigating was the ghost cities. For people who are unfamiliar with the term, first, what constitutes a ghost city? So a ghost city is a giant Chinese city that was built way in advance of population moving in with the idea being that people would move from the countryside into one of these cities because cities like Beijing and Shanghai are so, so fulfilled and so huge that they need new major urban population. There's just one problem, which is some of them never filled up. So you have these cities that it looks like I am legend, you know, where it is just this vast

expanse of urban wasteland and there's no one there. And it's very creepy looking and obviously a major defallocation of resources, which you're really worried about if you're a country like Australia, which makes it to live in selling resources for that construction through. So some of the ghost cities are, there's one that's a replica of Paris. So some of them are kind of creepy like that. And then some of them are like the one we went to,

which is a model financial district. And it's supposed to be a replica of Manhattan. But just to kind of frame this thing, so this ghost city is 40 miles outside the TN Gym, which is a city that I'm guessing most people listening, haven't heard of. It's actually about twice the size of Sydney, and you've never even heard of it. We just get you a sense of scope of China, right? But Tianjin is a 30-minute bullet train ride out of Beijing. So we're talking about a new financial center that's built 40 kilometers outside the city.

It's a 30-minute train ride from the biggest city. So that doesn't seem all that rational. I'm not an urban planner, but that seems like a bit of a reach. And when you get there, there aren't a lot of people there, and there aren't many businesses that have relocated. Yes, it was a pretty stunning sight just to see the lack of everything. I mean, you pull up, and there are some people there. But, I mean, it's like if you were in Manhattan and, you know, you just somehow turned back the clock on the buildings, and you made two-thirds of them unfinished, and you just wiped away 99% of the people.

I mean, half the people walking around were security governments. At this point, it's well-known that China has ghost cities, and I think they are sensitive to that. So we wanted to get a lot more footage and photos than we did, but there was an intimidating number of security, quote, security guys walking around who looked like they might not have appreciated Western guys like me walking around with a camera. We did get some footage, but, I mean, it is a serpent. You know, and you've got dozens of unfinished skyscrapers just sitting there,

and the unfinished part, right? Because it means that they weren't even close to filling up the demand. I have to say the one we went to was one of the more famous those cities, but we went, we took a bullet train from Kenjin to Beijing to Shanghai. So it's a 1,300 kilometer ride. So pretty far, right? You see a lot of countryside. I can't begin to guess the number of massive idle projects that we saw basically in the middle of nowhere.

There would be like eight massive apartment complexes, most of them either unfinished or mostly empty. and that's very disconcerting if you are an Australian, again, focused on, you know, feeding that overcapacity. On last week's show, one of the companies we talked about was Apple and their record-setting quarter, and a big part of the story for Apple is China. And the fact, Joe, that they're selling iPhones at a much higher price point than Samsung is selling their Galaxy phones. Apple's revenue in China grew by 70%. You were just there. From your observation, how much more room to run does Apple have in China?

A lot. A whole lot. So here's the good news. When I was saying all that stuff about construction, China is overbuilt, for sure. There's an estimate that they've got about 49 million empty homes in China, which is about six years' worth of urban migration. So another way of saying that is China could go. six years without building another home and still probably be just fine. So that's an issue

if you're Australia, but the Chinese consumer is moving in the right direction. And I think the government is very keen to push consumerism. And you can just see it. You know, the Chinese people are extremely ambitious. They're hungry. And they have seen such improvement over the past 20 years. They all had this energy and enthusiasm for better lives. And you can see it in what they wear and the phones to carry. I can't begin to guess the number of iPhones we saw. So we weren't shocked when we heard that they posted great results in China. And there's a big demand for top-notch brands there.

I mean, you get on the subway. And frankly, the people on the Shanghai subway are dressed much better than the ones on the DC Metro, including. me when I would take a metro. People are just very stylish, very focused on looking good. And that spirit and that desire for top-knots brands is very real. And I think that will continue to be the case. And just the sheer size of the market there is going to fill up a lot.

Now, of course, there's also been, you know, you probably heard a coach and insert luxury brand here. It has struggled in China recently. And the reason for that is because of the big anti-corruption drive. So that's a bit of a wild card. Basically, you had corrupt officials getting bribed with things like handbags, with bottles of Johnny Walker. And that has been squashed, or it's been pushed back pretty severely by President Xi. And I don't see that turning any time soon.

But, you know, people aren't getting bribed with iPhones. That's a consumer-led purchase, not a government official-led purchase. And so that's why you're seeing strength from Apple and not from other than literature. I'm going to ask you about another tech company that's been in the news recently, and that's Google. And I know it's a company you follow it for a long time because this week, Twitter announced a new deal. We talked about this a little bit earlier in the show where tweets are going to be brought into Google's search results. But part of the narrative, Joe, is this is just sort of adding fuel to the fire the idea that Google will some point in the future buy Twitter. If Larry Page calls you up and asks your opinion, should Google buy Twitter?

No. I thought they should three years ago. But at this point, I don't see any reason to. I mean, they just got the milk without having to buy the cow. So what they really wanted was to have all those tweets, which were, you know, real-time. You and I look at our news from Twitter. I mean, that is the place to get real-time news. It happens so fast and it spread so quickly. Google wanted that because they don't have real-time as down. So if they're able to get that from Twitter without having to buy the whole thing, that's incredibly valuable. It improves their search results, essentially, and improves freshness.

So great deal for Google. If they bought Twitter, I think they would really struggle to monetize it at a price that I think would make sense. Of course, Google has paid prices before that I thought were ridiculous for things that turned out to be visionary, YouTube being one, double-click being another. And they've grown some acquisitions considerably. Both of those. I mean, YouTube in particular was one that didn't really have a revenue model when they bought it. And through Google scale engineering and ad planning, they were able to turn it into a monster. I'm sure Google could do more with Twitter than Twitter is doing with Twitter today,

especially they did some tight Android integration. But for right now, there's a Google shareholder. I'm just happy to get those tweets into the search stream and search results without having to buy both things. All right, we got just a minute left. We talked about construction commodities. If that is not where the opportunities are for investors in China, what is one industry we should all be watching over the next year? Is it mobile? Is it e-commerce? Is it something else? Well, I think e-commerce is going to continue to be a big growth driver there. I think you're going to see something like 500 million Chinese come online over the next decade or so. I think that's a pretty

big population of e-commerce, online users. It's hard to figure out exactly how to play that because of the convoluted structures of some companies. Alibaba, for example, I don't feel warm and fuzzy when I look at their corporate governance. But something marginally less convoluted like Bidu, I think is interesting, and I think Google, unfortunately, is probably going to be muscled out of China for a long time. So something like that, I think, is a good way to play it. And that also So you're avoiding any construction headwinds. Because even though it is overbuilt, essentially, but I don't think they'll have anything negative in particular

or something like a bydo or the other online leaders. You can follow him on Twitter. You can read more by going to fool.com. com. Joe Mager, always good to talk to you, my friend. Thanks for being here. Absolutely. Thanks for happening.

Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money. As always, people in 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. Welcome back to Motley Fool Money, Chris Hill here in studio. Once again, with Jason Moser, James Early, and Ron Gross. Guys, before we get to the stocks on our radar,

Radio at Fool.com is our email address. That's Radio at Fool.com. We'll dip into the full mailbag for a second. Question from Lawrence Chi, who writes, with Disney's recent spike to over $100. Do you think they're thinking about splitting the stock under what circumstances does a company split its stock? We'll deal with the second question in a second. But, Ron, since you did so well with the Amazon Radio Shack prediction, look into your crystal ball.

Do you think Bob Eiger and his team at Disney are thinking maybe it's time to split the stock? I think actually once we start to get a little bit above 100, it may be approaching 120, 130. They'll start to talk about it. It really means nothing, actually. It makes it, you know, you can have the price of the stock double the amount of shares. It makes it more attractive to the everyman, to the individual investor, supposedly. But it really shouldn't. It's kind of smoke and mirrors.

In the days where people traded in odd lots, which is 100 shares, perhaps it was more important. Today, you don't need to do that. So they probably will do it at some point, but it isn't necessary. Beyond the smoke and mirror. that Ron referred to, James. What is the sort of the best reason for a company to split its stock? The best reason would be that there has been some, I believe, academic evidence showing that between $50 and $80 is like an optimum, quote unquote, optimum stock price simply for psychology reasons, because maybe it feels affordable but not too expensive. You know, as Ron said, the pizza is still the pizza. Same size of the company, you just chop it into as many different pieces as you want. but in these days you don't need to buy, you can buy out lots, you can even buy fractional shares through many brokers.

So there's not really the reason to put the stock there used to be. Valentine's Day is just around the corner, and Cupid may be working hard, but Cupid doesn't work cheap. According to the National Retail Federation, the average American will spend $142 this Valentine's Day on candy, flowers, apparel, and more. That's up 6% from last year. We're all married in this room, Ron. Hopefully I'm not tipping something off for your wife who may be listening, but was that the figure you were looking to hit? God, I wish. You know, a spa day is expensive nowadays, and I find that's a typically good go-to gift.

Yeah, it's hard to screw that one up. Let's go to our man behind the glass. Steve Broido, before we get to the radar stocks, you're a big guy when it comes to Valentine's Day. What do you have planned this year for your lovely bride? I didn't know it was February yet. So I'm glad you reminded me. We're going to be in the Dominican Republic next week on vacation. So we'll be celebrating there. I'll have a lovely time.

Fantastic. But you didn't actually directly address the question. That's exactly right. He's got a couple of weeks to figure it out. All right, let's get to the stocks on our radar. And Steve will hit you with a question. Ron, Gross, you're up first. What's on your radar this week?

J.M. Smucker, S.J.M. hit my radar this week. This is a stock I recommended back in 2009 for inside value. And the reason it kind of jumped on my radar is because they announced they were acquiring big heart pet brands for $5.8 billion. This is obviously the Jam Jelly Company, the Jif Peanut Butter Company, now moving into Meow Mix and Kibbles and Bits. Very interesting. I never thought I'd hear you say Meow Mix. Very interesting diversification strategy, trying to get some growth from a company that recently had lack of growth.

So I'm going to be looking at it. And the ticker? S.J.M. Steve? Can I make peanut butter and jelly for my cats? You can do whatever you want, Steve. Just stay away from the chocolate. James Early, what's on your radar this week?

Can I just say first, a small gloat? I just happen to notice that for three in a row, my radar stocks have actually been doing pretty well, Verizon, One Oak and the advertising company. Dilling none of it. It's no female health, but hey. No female health. Oh, gosh. Apollo investment management today. Let's see if this can make it a four pete. 10.6% yield. This is a recent I-I-Re recommendation of my service. Makes risky loans going to do well because it's harder for big banks to make these loans now. Ticker? A-I-N-V. Steve, question about Apollo? Interest rates rise? What happens? These guys are so high. I mean, they'll get higher interest rates on the loans they make also.

Jason Moser, what do you got this week? Yeah, we didn't cover it on the show here, but I've got a call-out Under Armour. They announced earnings this week, along with a really interesting set of acquisitions where they bought a couple of social apps. One is called My Fitness Pal, the other one called Endomundo. It's an international app. But essentially what it does, it's opening up Under Armour. being more than just an apparel in sporting goods company.

And Kevin Plank, the quote that he offered up the following day is really what kind of caught me here. He said, that's what really led to getting behind wearables. For the first time, we can say we're number one in the world. I want my team to know what that feels like to be the largest in the world, the largest health and fitness digital community in the entire world. And he also wants Nike and Adidas to make sure they know what it feels like to be number two. And to me, it's just one of those things. Yeah, you just have me. phenomenal driven leader here. This is a company that's performed very well for us here at the

Fool, and I think it's going to continue for some time to come. And the ticker? U.A. Steve, question about Under Armour? Under Armour shoes. Did that thing work or not? It did. I actually have a pair of Under Armour running shoes, and I like them a lot. Steve, you got Under Armour, Jam Smucker, Apollo investments. Any of those peaking your curiosity? I know Apollo. I love dividends. Yeah. Wow.

All right. Ron Gross, James Early, Jason Moser. Guys, thanks for being here. Thank you, Chris. That's going to do it for this week's edition of Motley Fool Money. The show is mixed by Rick Engdahl. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening.

We'll see you next week.