Motley Fool Money - Wal-Mart's 10% Off Sale

Episode Date: October 16, 2015

Wal-Mart stumbles. Intel slips. And TripAdvisor takes flight. Motley Fool analysts Jeff Fischer, Ron Gross, and Jason Moser discuss those stories. Plus, Motley Fool Asset Management's Bill Mann talks China and investing. For Jeff Fischer's free crash course on options, go to OptionsRadio.Fool.com .     Learn more about your ad choices. Visit megaphone.fm/adchoices

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From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio show. I'm Chris Hill and joining me this week for a million-dollar portfolio, Jason Moser, from Motley Fool Pro and Options, Jeff Fisher, and for Motley Fool Deep Value, Ron Gross. Good to see you, as always, gentlemen. Hey, we are not in studio. We're in front of a live audience here at the Motley Fool Global Headquarters. We've got the latest earnings from Wall Street.

We will dip into the full mailbag, and as always, we'll give you an inside look at the stocks on our radar. But we begin this week with Walmart. The retail giant does not report third quarter earnings for another month, but CEO Doug McMillan lowered expectations for the rest of this fiscal year and all of next fiscal year, and Walmart's stock suffered its biggest one-day drop in 20 years. Ron Gross, how bad is this? Have you ever had a bad day to the tune of 21? billion dollars? No. Because that's the day that Walmart had on Wednesday. And as you said,

not even an earnings announcement. It was at an analyst day where they said, hey, no sales growth this year and our profits will be down six to 12 percent next year. And we're going to be spending billions and billions of dollars on e-commerce to compete with the likes of folks like Amazon. We're going to be paying higher wages, which I actually applaud to the tune of one billion this year, another $1.5 billion next year. And we're going to also be spending to improve our stores because a lot of them are, quite frankly, a mess. So investors didn't like any of that. Shave $21 billion off the company's market cap, and the company has that's work cut out for it. Jason, it's the largest private employer in the United States, so of course the higher wagers

are going to hit them. But when I hear they're going to spend more money on e-commerce, shouldn't they have started that about 10 years ago? Absolutely. I mean, I think you look at this from two perspectives. I mean, I appreciate the fact that they are going to pay their employees more, that I think, is a good thing. But to your point, spending on e-commerce, spending on the storefronts, I mean, these are all defensive moves. They're kind of caught back on their heels from this, you know, just spread of e-commerce here that's happened really over the past decade.

And so, yeah, I mean, management didn't really have the foresight to jump in there and try to compete earlier. I think they're paying the price now, and I don't think, you know, I think that investors need to look at this sell-off as really rational. I mean, did the stock more or less deserve this? And before you start screaming, while Walmart is now cheap, let's buy it. try to identify the catalyst going forward that's actually going to bring this stock back, because as of now, I don't see it.

Again, they're just playing catch-up at this point. That doesn't necessarily bode well for investors. And that's amazing when you think about it. When Walmart was building their empire all these past decades, they could have never foreseen, of course, how quickly the retail landscape would change right under their feet. And now they have this foundation of stores that isn't as effective as it used to be. And that's why you've got to love the spin they're putting on it, which is that it's much easier to build out a brick-and-mortar business over decades and decades

and then add the online platform versus doing it the other way. That's kind of what they're saying. They're saying they're about stores, but certainly they have to add the e-commerce in a bigger way to compete. Yeah, but everybody argues Amazon the other way around, right? They're like, where's Amazon's profitability? Well, we know where that profitability is going. It's building out the physical infrastructure they need to support those e-commerce operations. So it's a matter of kind of seeing the forest for the trees here.

And you can see one business in Amazon that's really, you know, looking forward versus another in Walmart that really can't escape the past. And Walmart's shares have lagged for a long time, and it's hard to see what would change that anytime soon. Demand for PCs continues to be weak, so maybe not a surprise, that Intel's third quarter profits fell more than 6%. The computer chip division still bringing in billions, Jeff, but it is steadily on the decline. It has, and it's been for a long time, and yet almost every quarter Intel's CEO says it, looks like the PC market is stabilizing. But it really isn't. And this quarter, too, corporate sales, PC sales were weak as well,

and emerging markets remain weak. That said, Intel is growing with their data center and their memory and their Internet of Things division. Those are all growing pretty well. So the company has been able to keep growing revenue over the years, despite a slowly declining PC market. Part of the investment thesis was always that they were late to mobile and that they would catch up because, after all, their Intel,

and they have such a huge, resources behind them to get this done. Has there been any real progress in moving forward? They've moved into mobile pretty well. They're in a lot of tablets, and it's a multi-billion dollar business now for them, I believe, a couple billion. But they're providing incentives to all the tablet makers, so they're losing money on it. But they plan to ratchet that down and turn it profitable in the next year or so. But that's just eating into PC sales. So it's a wash. Take from one hand, yeah, give to the other. We also had the news this week that Intel is teaming up with Microsoft, Dell, HP, Lenovo, a $70 million ad campaign to promote PC sales?

I mean, they got the money, but is this going to get people to upgrade their device sooner? No, it's not about the money, as you say. They've got plenty of cash. It's a drop in the bucket in terms of advertising expense. More interesting that they really feel the need to team up, to raise awareness of the personal computer as if we all weren't aware that they existed. but it is an indication of the weakness in that market, how they can't gain traction, it continues to suffer. They'll throw some money at it, see if it works. I don't think it'll even make a dent.

Yeah, they're really trying to push Windows 10 and the new Intel microprocessor, six-generation core processor, but in a world that's moving to app-based mobile convenience, it's a really hard sell. Netflix shares falling around 15% this week after third quarter profits came in lower than expected, and if subscriber growth in the U.S. was a little

light Jason Moser, international growth is looking pretty good. Sure. I think the story is basically the same with Netflix, with exception to the potential. There's at least the possibility that they could be witnessing some domestic saturation or the beginning of some domestic saturation. It's not terribly obvious there. I mean, there were some questions as far as, you know, new chips and cards and people having trouble renewing. So there's some unknowns there. But if that is the case, we are seeing some domestic saturation, either due to competitive pressures or otherwise, it at least justifies management's about face not long ago to kind of go full throttle into their international expansion,

which is actually playing out very well. It's not profitable yet. They expect to break even with that operation at some point in 2016 and then bring material profitability to the model in 2017 and forward. Pretty incredible that even with the drop this week, this stock has still doubled over the past year. Yeah, and it's just been, you know, you can never really, I think, sell short CEOs, founders like Reed Hastings, you see these kinds of folks who are so focused on the customer and really making sure that they're bringing something to the table that their customers want. And we've seen that in Netflix, not only from the beginnings as a DVD by mail supplier, but now they have all of these different pricing tiers for,

you know, streaming to one device, family streaming, 4K, HD. So they're bringing more options to the model and more content to the model for consumers. And I expect that to continue. And one interesting thing the CEO said in the conference call is that content tastes around the world seem to be very similar, which is a great thing for Netflix. If they have a hit in the U.S., it'll probably be a hit in most international markets, too. Johnson and Johnson's third quarter profit came in higher than expected, and they raised guidance for the year. That's a pretty nice one-two punch, Jeff. It is, but I don't know how much it'll do for the stock. The last 10 years, J&J has slightly lagged the S&P 500, and I think part of that is a result of its,

size, $270 billion company. I've always liked about J&J that is divided into three fairly equal divisions, consumer products, pharmaceuticals, and medical devices. But the downside to that is usually one of those divisions, at least, is having some headwinds. So it's hard to get all three to grow at the same time. That said, it's a solid performing company,

and it'll probably continue to provide decent results, if not market topping results. Jeff, one of the things that they've been having problems with is a lot of the, the, the, drugs they make becoming off-patent and a lot of competition arising from generics. But isn't that really the business? I mean, that's going to happen time and time again. They've got a good pipeline of things to replace like their hepatitis C drug that has come off-patent.

But they continue to blame that, but isn't that really just kind of the cycle of the business? It is the business, and as they talk about that, they're trying to beat back all the talk about drug prices being too high. They're saying, we don't hear about the other side of the equation, which is lives saved. cheaper health care as a result of better treatment and whatnot. And then all the cost of innovating and discovering these drugs. You know, one hit takes literally thousands of misses. So, yeah. They also announced a $10 billion stock buyback.

I mean, are we bullish just because of that? That's 3.7% of their outstanding market value. So it isn't giant. But all these share buybacks, Intel announced one as well, Walmart did as well. They kind of give permission to management to issue more shares as well. So I'm not sure I'm a fan. Wall Street seems to be becoming addicted to these giant buybacks. Johnson and Johnson maybe around 18 times earnings.

Not a terrible time to buy back stock, but also certainly not dirt cheap. Well, you look back to Walmart there since 2008, they've spent $55 billion on buying shares back, and the stock to date since that time is actually trailing the market, so it's not rewarding shareholders from that perspective. Coming up, we'll talk casinos and alcohol. St. Bloomberg Radio. This is Motley Full Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser, Jeff Fisher, and Ron Gross,

in front of a live audience here at Fool Global Headquarters. SAB Miller rejected Anheuser-B. InBev's first three offers to merge, but the fourth time was a charm, and all it took Ron Gross was an offer of $106 billion. A tidy little sum, yes, and they had to also put in a separate structure for big owners, Altria and the Santo Domingo family, which own 41% of the stocks. For those guys, there's a partial stock cash plan. For most shareholders, they're going to take the cash, which is actually a better value. But this was a long time in coming.

Still, a lot of hurdles to get over from a regulatory perspective, especially in the U.S. A.B. has a 45% market share. SAB has a 25% market share through their joint venture with Miller Coors and Mulsin. so they may have to do some rejiggering of the business there to get it through the regulators. For the most part, this deal probably will go through intact with just some minor tweaks, I think. If it goes through, it will be the fifth biggest merger of all time. This behemoth is going to control one-third of the global beer market. Jason Moser, you've been known to enjoy a beer from time to time.

How do you feel about this? You know, these guys don't really get a lot of my money to begin with, Chris. I'm a bit more of a – I shudder to call it a beer snob at this. point just because of the revolution in craft brew, but Boston beer's going to get more of my money anyway, so I'm rather indifferent. Shares of TripAdvisor up 22% on Wednesday after announcing a new partnership with Priceline Group. Customers will now be able to directly book hotel rooms on TripAdvisor.com.

Jason, neither company disclosing exactly how they're going to share the revenue, but when you look at what happened to TripAdvisor stock, I think the expectation is that there's going to be a lot of it. Sure. Well, I mean, I think, yeah, the economics of the deal are somewhat cloudy, but we know they're positive for both parties involved. And I think ultimately this shows how valuable the online, it shows the value that the online travel agencies place, you know, on properties like TripAdvisor. TripAdvisor, we know, has that slew of content, reviews, pictures that priceline and expedias of the world don't have and are really probably never going to be able to get. And so, I mean, I think this deal makes sense from a lot. of angles and I expect that it will have a very material impact on trip advisors top line here in the coming quarters. What I did what I failed to understand is this just create a portal for booking a room or is it

one of the discount models where you can get a room at a discount? Well it definitely creates the discount model but basically what would happen before is if you booked a book a room on price line for example you would be booking that room on price line and price line would handle that transaction with trip advisors is instant booking platform trip advisor is not the merchant to record, right? So typically if they're dealing with Marriott, then Marriott's going to control that transaction. And very much the same way here, booking.com,

which is Priceline subsidiary or part of their business there, they're going to be the ones controlling that transaction. But ultimately, what it brings is a number of hotels and other properties to the TripAdvisor platform that they didn't have before. Just put that in context. Booking.com,

price lines property now has more than 700,000 hotels and properties on its platform. So it is really going to open up a lot more options there for trip advisor visitors. It's a good indicator of how strong TripAdvisor has become in the travel space. It has the most visitors. It has the most momentum. So it's a good sign for the business as a whole.

It's definitely a good sign for TripAdvisor, and certainly it's a bigger company by virtue of what happened to the stock this week, but it's still about one-fifth the size of Priceline group. And I'm wondering if five years from now, TripAdvisor is still a stand-alone company, or if they get snapped up by someone. I think that's the question we're all kind of noodling around right now because even when you look at it compared to something like price line,

it is smaller. It's still a big company. I can't help but think that Google probably covets TripAdvisor at this point because Google is still trying to figure out inroads to that mammoth, you know, online travel market. So my suspicion is we probably won't see TripAdvisor stand alone, you know, here in the next five years and that someone will come out and buy them up because it really is.

it's just an unbelievable property to have. It's just you cannot replicate what they've been able to build at this point. Sounds like a prediction from Jason. To what extent does that play into your thesis on any given company? Put aside TripAdvisor for a moment, but just the idea that I want to buy this stock because I think they're going to be bought by someone else. Does that ever play into your thinking?

That would play into my thinking for a little portion of my portfolio that we'll call special situations. It wouldn't necessarily be the bulk of my business. portfolio. Yeah, I think typically we're not going to base an investment thesis around it, but we'll definitely look at it as possible protection to the downside. And I'll use Twitter as an example in MDP. We bought Twitter and MDP based on the price, based on the prospects, and based on the fact we felt like the worst case scenario is that this is a company that would be snapped up by a bigger player if management couldn't get their act together. Yeah, I agree. You have to believe in the company

on its own as a whole. And then if it gets acquired, that's cherry on top. Yep. Third quarter profits for win resorts came in higher than expected, but overall revenue was lower than expected for the fourth quarter in a row. And Jeff, they're not just having problems in Las Vegas. They're having big problems in Macau. Win resorts, as much as they have gained from being in China, they may be regretting the headaches that it's bringing right now because China is just in Macau, a very difficult place to operate. They're trying to build a new hotel there and they're having trouble budgeting the compensation, buying furniture, hiring for it correctly,

because the regulations and rules keep changing. At the same time, their current table business, casino business in Macau, has been hit because China is running an anti-corruption campaign, and all the VIP government officials are not going to Macau to gamble. So it's just, it's quiet there,

and they really took a hit. I love Steve Wynn, and he's a smart guy, but, you know, one of the things he said about it. What's that? Exactly. But one of the things he talked about was just he used the word bewildered in terms of how he felt about the arbitrary ways in which the Chinese government is reacting here. And he's not expecting the Chinese government to stop being arbitrary.

No, he isn't. He says they may not have clarity until 2017. If then, he opened the conference call with words like bewildered, confusing, you know, headache-inducing. It's a tough place to work. I would say these are great lessons again. I mean, I just feel like whenever we look at international investing, I mean, someplace like China, yeah, there are plenty of opportunities, but there are risks that even boots on the ground research,

we can't have to come close to quantifying, and you have to account for that when you're investing. If I send you to Vegas and I give you $1,000 to play, but you got to gamble it. Let's just go around the table. What's your game of choice, Ron? Whenever my high school buddies and I go on our annual trip, usually it's at someplace like Vegas.

Everybody gives me $100. I walk right over to the roulette table, and I put about $700 on black. If we win, we start off our vacation, $700 richer. If we lose, we all move on to something more appropriate like blackjack. So this is not, I got excited for a second there. It's like, wow, you have great friends that just hand you $100. I'm just the conduit to the bed.

What about you, James? See, I'm not really convinced I have no edge on the house whatsoever. I feel like I'm going to go in there and lose no matter what. So I'm taking the money I'm just going to the golf course and playing this day. Jeff? If I have to play something, it'll be Blackjack. It's something where I think I can have some say in what happens. How about you?

I'm with Jeff. I'm going to sit next to Jeff at the Blackjack table, and I'm going to lose all of the $1,000. Our man, Steve Brodo, is not behind the glass, but he is here. Steve, I believe you've been to Vegas a couple of times in the last year or so. What's your game of choice? I love slot machines. Don't tell anyone, but I love slot machines.

They have this Wizard of Oz slot machine. It's just a dynamic experience. It's a lot of fun. I won't tell a soul. Your secret is safe with me. Guys, we'll see you later in the show. Up next. We'll talk global investing with portfolio manager Bill Mann. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Bill Mann is the portfolio manager at Motley Fool Fund, and he joins me in studio now. Thanks for being here. How are you, man? I'm doing all right. I'm doing all right. We're in the final quarter of the year. This is true. pretty confident that at the end of the year, when we look back and we're all doing our

lists of what are the big investing stories of 2015 that really define this year, somewhere at or near the top of the list is going to be the economic slowdown in China. So let's start there. So China is in the midst of what you would call a market crisis, but it's the craziest-looking market crisis that I've ever seen because China's stock market is up 40 percent over the last year. And yet this is somehow a crisis because they managed to inflate it by three times from October of last year through June of this year, and then that stopped. So the fact that it's only up 40 percent means that it has destroyed a lot of wealth in the midst of going up

in what would be in most countries in most years a really, really great amount. That's what's going on in their stock market. Yeah. In the U.S. market, we've got more and more companies. And we're just kicking off earnings season so we can probably expect another refrain of this, but more and more companies checking the box of, and the reason our results are not as rosy as they were is because of the economic slowdown in China. Yeah, this is true. And one of the really interesting things that you see, if you've invested long enough,

you will have seen this. It happened in 2001 with the technology companies. They were basically the last to stand is that China went up by itself. The market rose by itself, but when it dropped, it really took everything else with it. And so it's almost like this strange reflexivity where you get to gain all by yourself, but then when you come back down, every other market in the world, it's like, what did we do? People say, well, there's a slowdown in China, and China is really important. But they didn't benefit from China going up, but they feel it on the way down.

And there are really important themes that have nothing to do with the stock market itself. I mean, it is simply a fact that there are countries in the world that have trade surpluses and countries that have trade deficits. And the path to global economic recovery is really the Chinese consumer buying more stuff. I mean, it literally is it. And it sounds very simple to say, but Chinese consumers, China can no longer be the factory of the world. They also have to increase their consumptive power and they're failing. So Warren Buffett has the line about, you know, the rising tide lifts all boats. But when the tide goes out, then you can see...

The sinking tide sinks, whole boats. Then you can see who's been swimming naked. That's right. So when we have this slowdown in China, is this a case where now we can see which U.S. companies are actually executing well in China and can actually sell stuff? Or is it fair to just say, hey, look, there's a slowdown, and everybody gets a little bit of a pass on this one? I think everybody gets a little bit of a pass on this one.

It is really important to note that American companies, by and large, although there are some that have dramatic presences in China, the one that people think about most often is young brands with Kentucky Fried Chicken. They are all over China. Most American companies have not hit upon a successful formula to make money in China. They've been able to sell stuff, but the process of making money, they're not there yet. You and I were talking earlier in the week about something that we don't focus on all that often here at the Motley Fool, and that's Commodities. And you were making the point that, look, this may not get as much attention as the stock market, but this is a huge part of that. For someone like me who does not invest in commodities or commodities producers, anything like that, what's the ripple effect for an investor like me?

Well, I mean, I think the most important thing that you recognize with commodities is that they are very, very closely tied to supply and demand curves. So if you've got supply that's 99% of demand, the prices are going to go up substantially. If you've got supply of 101% of demand, that marginal cost is really, really important. And in a lot of countries, quite simply, those commodity prices really drive a huge amount of. their economic growth. You know, and as I said, China is, you know, Chinese consumption is a big part of the global economic, the global economy coming back into balance. But so is economic development in a lot of the emerging market countries that have, you know, that are so, they are so dependent on commodities for their economic growth. And this is all very meaningful to American companies.

It may seem like it's a long way away, and it may seem somewhat reflexive, but it is very real. You're listening to Motley Full Money talking with Bill Mann, the portfolio manager at Motley Fool Funds. You can go to FoolFunds.com and sign up for declarations. It is the free monthly newsletter produced by Bill and his team. You wrote a column recently entitled Market Fears Could Bring Investing Opportunities. And one of the things you wrote about is that fear is what allows us to buy into great companies at drastically reduced prices. Fear can be irrational. Fear can be warranted. How do we differentiate between a stock that is on sale at a much better price versus one that has fallen

for really good reasons and it ain't coming back? Yeah. I mean, I think that, yeah, generally speaking, and I think that I think it's very easy when times are great, you know, for people say, oh, well, you know, I'm not going to be afraid again. People are always afraid for real reasons, right? The stock market very rarely goes down simply because buyers don't show up. I mean, there are always, there are always real events that are out there. For us, we spend so much time looking for companies that have competitive advantages. I mean, I think that's everything in investing is buying companies with competitive advantages at good prices, right? You can go and you can find, and competitive advantages tend to persist whether people are excited or people are afraid. Now, when people are

afraid, they tend to be masked a little bit. But, you know, I think, I think that's primarily the, you know, the key element to looking for companies that are going down for no reason and companies are going down for great reason. You know, for example, right now in the oil services sector, every company has just gotten hammered. You know, and with with good reason, oil prices have dropped so much that the exploration companies are really shutting down as fast as they can. But these cycles, this cycle is absolutely nothing new. It's going to happen. So if during the great times, you were paying attention to which companies were able to make the most money, you have a guidepost now for the companies that are going to make the most money when oil prices go back up.

Where does pricing power rank on your list of competitive advantages? near the top, it is really, really easy if you are the low-cost producer to win. Right. If you get that advantage starting from the outset before you do anything else, then that is something that's extremely helpful. Now, there are management teams that manage to blow it. There are competitive advantages that disappear over time. But yeah, having that pricing power or having that, that's not even so much pricing power. That's almost on the, you know, that's almost, that's almost, that's almost, that's almost, that's almost, on the expense side, but having those types of advantages in place, particularly when you're talking about commodities. It doesn't have to be commodities like wheat. It can be things

like hamburgers, right? Like restaurants. If you've got a, you know, if you've got price. Chipotle raising prices. Buffalo Wild Wings a year or two ago going from where you're paying for the number of wings to you're paying by weight. Exactly. Exactly. They have the ability to do it because they have pricing power. For anyone listening who owns a mutual fund or is thinking about a mutual fund, you've recently were at an event where you're talking to money managers. What are the types of questions that you get about mutual fund ownership, not necessarily about your funds, but just in general? You know, I think that one of the really great questions, and let me preface by saying,

even as an active manager and as a company that, you know, as a company that runs active funds. I happen to think that a lot of this is true, but a lot of people ask whether ETFs and passive strategies are going to destroy the active managed mutual funds. And I think that the answer is sort of a lot of active managed mutual funds spend so much, or so the managers are so afraid of underperforming that they try and stay really, really close to their benchmarks. And so they get to charge, you know, 1% 1% plus to essentially do the same thing as an index fund. Right. And it's all about career risk. It's all about being predictable, and I get those sorts of things.

I think those types of fund companies are in huge trouble, given the ease at which you can buy a passive product that does basically the same thing. There are true active managers out there. I'm glad to say that we are, that we are amongst them that provide stock picking and provide portfolios that are dramatically different than where you can find any place else. And it is simply the case. that the entire market can't go to a passive strategy because then there'll be nobody there to set prices. Somebody at some point has to say, this is expensive and this is cheap. So I think that there's going to be a big role for them to play going forward. Two more questions, and I'll let you go.

As we are at the start of earnings season, what's one thing that you're watching? You can be a company, it can be an industry, anything that you're looking for or curious about in this upcoming earning season. You know, one of the things that I've really been fascinated by, and in the U.S., we are somewhat inured to it, has been currency movements. You know, there are companies that we hold in our portfolios, and there are companies throughout the world that we get valued on a U.S. dollar basis at the end of the day that look like they've gone down a lot on the U.S. basis. But if you were to value them in their home currencies, they're flat. maybe they've declined a little, or they've even gone up. So I think over the next few years, you're going to see, over the next few years, you're going to see some real impact from what has happened in the currency market. And that's something that we pay very, very close attention to.

Cozy, the fast casual restaurant chain recently reported their same store sales for the month of September. It was not a good report. The comps were down. And let me read directly from the statement from the company as to why comps were down. One of the reasons anyway, quote, business interruptions resulting from the Pope's visit on September 22nd through the 26th, 2015, negatively impacted 30% of our company-owned restaurants. It's incredible, isn't it? Cozy just called out the Pope. They called out the Pope because I think they are, most of their stores are in New York. Here's the thing. I happened to be in New York that week. They could have blamed, they could have blamed

Obama? They could have blamed the UN. Is this number one on the dog ate my homework? That's pretty bad. I mean, this is up there. Yeah, but it's not even just a dog. It's like Lassie ate my homework. It's like the most, Benji and Lassie conspired to eat my homework. I can't even come. Rintin-10. Who are the most beloved dogs of all time? I think, yeah. Right now we're comparing the Pope to a dog, so I'm going to pull back from this a little bit. But yes, this, even if it happens to be statistically true, you've got to go with something else than the Pope. Don't you think there was someone in the room at Cozy who was probably saying that? Look, we can't do this. But it's true. But it's true.

Yeah, the Pope will come back and say, well, you know, you capitalists. Yeah, I'd come back to America, but I don't want to hurt Cozy. I don't want to hurt Cozy again. You can go to Full Funds.com, sign up for declarations. He is the portfolio manager at Motley Full Funds. Bill Mann, thank you for being here. Glad to be with you, Chris. Coming up, we'll give you an inside look at the stocks on our radar. 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 hear. Welcome back to Motley Fool Money. I'm Chris Hill and with me once again. Jason Moser, Jeff Fisher, and Ron Gross, in front of a live audience here at Fool Global Networkers. Let's dip into the Fool Mailbag.

Radio at Fool.com is our email address. Question from Tom Linum from T.C. Williams High School Class of 2009. Go Titans. Home of the Mighty Mighty Titans. Tom writes, we are just over one week into all-day breakfast at McDonald's. And this has got to have analysts wondering if Chipotle takes another shot at breakfast. What do you think? And is this something Jason Moser would be open to asking on the next earnings call? I'm flattered that he would include me on that. I mean, I would definitely ask. I can pretty much tell you what their answer would be, and that would be that they're going to continue focusing on the namesake brand Chipotle

and what they do well right now. And I think if we just look at what has been going on with McDonald's in their first week of breakfast all day, it does sound like it is a bit of a supply chain nightmare for a lot of the franchisees, which is something we more or less expected might happen. Chipotle has done such a wonderful job building that business, that model on simplicity and controlling sort of the,

The ingredients, the supply chain there, it's fairly simple. To introduce a breakfast concept would certainly, I think, make it a little bit more of a difficult thing to manage. Don't get me wrong. I mean, I would be the first to go and get it. I mean, I love Chipotle as much as the next guy. I don't suspect we will see that anytime soon, but I could be wrong. I think if they do do it, they would probably do a better job. I think the difference between the franchise model and the company-owned model would probably serve them well.

They couldn't much retain control over the process, and I think they're just better operators in general. So if we do see it, I think it'll have a better outcome than we're seeing with McDonald's. All right, before we get to the stocks on our radar this week, Jeff, the option service that you run is opening up to new members for the first time in a long time. Give me 20 seconds on Motley Fool Options. That's right, Chris. Motley Fool Options opens Tuesday for a few days, and what we teach members to do in options is use options in a sensible way that leads to profits. in our case more than 90% of the time. So if you want to target income,

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For more information, that's OptionsRadio. DotFool.com. All right, let's get to the stocks on our radar. Ron Gross, you up first. What are you looking at this week? I'm looking at Rocky Brands, R-C-K-Y. It's a deep-value radar stock. Not a recommendation yet, just a radar stock.

They're a micro-cap shoe manufacturer. They focus on rugged outdoor, occupational shoes, and some casual. You may have heard of brand names like Georgia Boot or Durango or Lehigh, or perhaps you haven't, which I hadn't when I first started looking into this company, which is only $100 million-sized company. So really quite small. Looks dirt cheap, but what I need to dig into is if there's any growth in the future of this company, and what if any kind of competitive advantage they have,

are they literally just selling kind of a commodity-type shoes? Our man, Steve Brodo, is not behind the glass, but he is. on the premises, Steve, question about Rocky? Sure. How does something like Zappos.com is selling shoes online affect your shoe provider here? Well, it's really a method of distribution for many shoe brands, whether it's high end, really, or the lower end. And Rocky brand would be no different. I'm not positive if they do sell through Zappos, but I certainly wouldn't be surprised. Jason, Moser, what are you looking at this week? Sure, I think this is one of the best tickers out there, B-A-B-Y, it's NADIS Medical. And NADIS Medical, Focused.

It's primarily on the newborn market, but they provide healthcare products, services, devices for everything from newborns to neurological dysfunctions, epilepsy, sleep disorders, even balance and mobility disorders. But this is just a small cap, a little medical device provider that has been a recommendation are hidden gems universe for quite some time. I've been looking at it for the watch list over in MDP. It has been run by CEO James Hawkins since 2004. done a really good job of sort of making little bolt-on acquisitions, building this business up to about a $1.5 billion market cap today.

The one thing I can't get past here is what's the ultimate goal? And I have a feeling we'll probably see them acquired at some point by a bigger player, something like potentially a Johnson & Johnson or something. But definitely has rewarded shareholders an interesting little company, and I'll be digging deeper into it next week. Steve, question about Natus Medical? Is this a sure thing with insurers? I'm assuming insurers are paying for a lot of these products. Well, Steve, in the market, there are no sure things. And I think that you bring up one of the bigger risks there is just the third-party payers in general. Whenever you're dealing with insurance, Medicare, things like that, they're always stuck in a negotiation, and that can certainly play out on these device makers to the low side.

Jeff? American Express, AXP is a ticker. If it isn't on your radar yet, I think it should be. The stock is down about 17 percent this year. They announce earnings next week. What's going on with them? Of course, they lost Costco, one of their largest clients. and there's a lot of competition with MasterCard and Visa.

But I think American Express has a brand and a customer base that's going to see it through. The shares look inexpensive right now. I'm a long-term owner, and I may add a bit more at some point here. Steve? I'm a shareholder as well. What is the upside for me in terms of points or rewards or travel or something like that with American Express? I don't see that as much as with other cards. It depends on your card, Steve.

Some of the cards have a lot of upside and a lot of points. I have the wrong card, I think. The rewards card does it right. of the black card, right? The American Explos is the coveted black? He should be. Three stocks, Steve. You got one you're interested in? Well, I think Nottis Medical sounds pretty interesting. All right, guys, thanks for being here. Thanks, everyone for sitting in on our live audience. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We will see you next week.