Motley Fool Money - Why Target is Seeing Green

Episode Date: May 21, 2015

Target reports big earnings. Home Depot raises the roof. And Red Robin flies higher. Our analysts discuss those stories and share three stocks on their radar. And corporate governance expert and film critic Nell Minow talks McDonald's, Mad Men, and Memorial Day movies.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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I'm Chris Hill, joining me in studio this week for Million Dollar Portfolio, Matt Argusinger, from Motley Fool Income Investor, James Early, and from Motley Fool Pro and Options, Jeff Fisher. Good to see you, as always, gentlemen. Good to see you, Chris. We've got the latest from airlines, retail, restaurants, and more. Nell Minnow is our guest this week, and as always, we'll give you an inside look at the stocks on our radar. But we begin this week with the biggest retailer in the world, and that's Walmart. First quarter results, kind of a mixed bag, James.

U.S. sales were up, traffic to the stores was up, but profits for the quarter, down around 7%. And, Chris, even before I get started, can I just say, I hit a bird driving in this morning, and I'm still just trying to get over that. It wasn't my fault, but you know, those things happen. Oh, man. Yeah, right in front of my window. It's just like, boom, it's just like, it changed my day. Walmart, back to Walmart. You know, they're soft and the results are soft.

We all know that the business model has, you know, these long-term challenges, but they're basically copying Amazon Prime now with this $50 thing. I think that's the smartest thing they can be doing. I mean, from my perspective, I thought Amazon Prime would absolutely flop. Who needs their stuff in two days, right? But Matt is raising his hand. I just want it. But it's worked.

It's worked tremendously well. People don't like to go to Walmart, but I don't mind Walmart coming to my house, so to speak, to deliver good. So it's a smart thing for them. Yeah, Maddie, the $50 a year unlimited shipping, Walmart, I think they're being very smart about this because they're saying we're rolling this out in the summer,

we're going to get feedback from our customers, and you have to assume that if this goes well, then they can make a big push into the holidays, which historically, Amazon got a lot of people into Prime right before the holidays. Right, and it always hasn't worked out very well. Yeah, I think it's a good move. I agree with James. I mean, this is something Walmart should have probably thought about doing and using their distribution,

you know, capabilities and supply chain more efficiently this way. And what I like about as well is that, you know, the price is lower than what you pay for a prime membership. But, of course, you get a lot more with Prime. You got to wait three days with Walmart, Matt. Oh, well, gosh, not nice. By then I forget what I've ordered. That's right. I'm so surprised.

But yeah, late to the show here for Walmart, but I think it's a smart strategic move. Can I just say also their online sales were up 17% last quarter. International online sales were up 40% and their mobile website traffic more than doubled. So they definitely have the results to support this move. Let's go to the second largest retailer, bricks and mortar retailer, I should say, in the United States.

That's target. First quarter profits rose 52%. Maddie. Fashion sales were up, online sales were up. Shares of Target are up. Yeah, a little bit, you know, this is what investors in Target have been waiting for patiently for the past couple years. They've had some bad news.

The data breach being one, pulling out of Canada being the other big costly move of late. So this is them kind of drilling down focusing on their U.S. business, which is their core business, and that had a good quarter. The only thing I'd point out here with Target is, you know, sales were up, you know, 2.8%. The profit number was big. They've been buying back shares. Those are all really good things. But where does this company go?

the market opportunity for something like Target. They're competing with Walmart, a company we just talked about. They're competing with Amazon on online sales. But here's a company that failed in Canada. And if you can't make it work in Canada, where can you go? They already have 2,000 stores just in the U.S. So I'm struggling to see where the compelling, I mean, other than buying back shares and probably being a little more efficient and generating higher earnings, long term, I don't see the market opportunity for the company. Brian Cornell's been the CEO since last August. The stock is up more than 40%. I don't know. I look at this guy, and I think, I'm curious to see where he takes it. I'm going to give him the benefit

of the doubt on this, because you mentioned Canada, it seems like at least part of the problem they had in Canada was just trying to go in too quickly. So what we may see out of Cornell and his team is sort of a slow growth opportunity in the international markets. We'll see. Airline stocks have had a great run over the past 12 to 15 months, and that great run ended this week. Shares of Southwest Airlines fell more than 8%. on Wednesday after the company warned it expects revenue to drop this quarter. And Jeff Fisher, after that announcement, shares of American Airlines and United Continental fell about 8% each.

Out of sympathy? What's going on here? So what's going on partly is what really rose to the surface this week is the idea that capacity is growing more than demand, especially among discount airliners, JetBlue, Southwest, Spirit. They're adding a lot more capacity in the next 12 months, more than demand is growing. And then in response to that, American Airlines said, well, we'll compete on price if we need to, which is something they pretty much have to say. So that brought back all these fears that here's the airline industry. They have low oil prices. They have record profits. What are they going to do? They're plowing it into more airplanes, which is going to lower their profits. And that's really the fear. We're too young into this new, so-called new airline

industry. And everyone is hypersensitive to what happens next. We want to see this work out. profitably, but will the airlines trip over themselves again? Can I just add? This was delivered from a... Jeff has a tiny little post-it note with tiny writing, and Matt has several pages. I have my laptop, so I'm very impressed, Jeff. Oh, thank you.

And I can think a little bit clearly. I didn't hit a bird this morning, though. He just zo-right in front of me. I was going 65 miles an hour. I couldn't... I've turned around and driven over birds for mercy killing before. Actually, I saw a track of trailer, like, maim a bird, and I was like, I just can't leave this bird dying there.

But this time I had no chance. It was like a six-lane highway. So you've actually hit a bird and actually backed up. Yes, I have. I felt bad about it, but like the guy's like flapping on the ground. I mean, he's no chance. Radio at Fool.com is our email address if you feel compelled to weigh in on James and his habits with birds.

But back to the airlines. I can wrap it up by saying the airline stocks, especially the legacy carrier, here's the Delta, the American. They look really cheap. But that's because the fear is the industry truly won't stay on this profitable trajectory. and we just have to see how it plays out. It's a little surprising, only from this aspect, I think, Jeff. When you look back, certainly over the last six months, you started to see people, you started see pieces in the media

and people commenting in the media that there was a new airline industry. Buffett had the famous line about, you know, if he could go back in time, he would have shot down the Wright brothers because he took a bath on the airline investment he made. So that didn't work out for him. but we did have people saying, you know what, this actually looks like it's going to be a much more profitable industry to be in, but after everything you just said, it's like, no, maybe we're back to where we were before. No, it's true. Many people said that, and I'm one of them. In January, I said I think this industry is different.

I think American Airlines, to call one out, looks extremely inexpensive, because I do believe profits are here to stay the next couple of years at least, long term, hopefully. Speaking to that, American Airlines CEO has taken all of his pay and stuff. stock, none in cash, because he believes the industry is different now. And there are many fewer airlines now, and they're set up to run profitably. But, you know, when they start adding capacity at a rate that's greater than demand, those old fears come back again. From airlines to home improvement, Home Depot and Lowe is both reporting this week. And for the 21st straight quarter, Home Depot's results were better. James, I feel like we

need Steve Broider to queue up the four tops. It's the same old song. You know, Chris, I got to say, I see all these articles bashing Lowe's now, but whoever bashes Lowe's needs to take a look at a stock chart because over the past year, Lowe's stock is up 53% compared to 41% for Home Depot versus 13% for the S&P. So both these stocks are doing well. It is true. It is true, Chris, that Home Depot had the higher margin, higher sales forecast. It's just doing a little bit better.

Lowe tries to cater more to women, and maybe women are just not buying as much lately. But I think the difference between those two is going to be dwarfed by whatever. happens to the economy. We've had very low rates for a long time. We'll probably see them low for a little bit longer, but eventually they're going to rise. It's not right. I think the market is comparing these guys to their glory days in the housing bubble, and I don't think we're going back there. So I say watch the economy, not the difference between these two stocks. When you have any kind of home improvement project, do you have one of those two locations? I've always felt comfortable in lows, I just got to say, but home people is closer now. Coming up, if you would

like to be the next CEO of Lumber Liquidators, we've got some great news. Stay right here. You're listening to 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 Full Money, Chris Hill here in studio with Matt Argusinger, James Early, and Jeff Fisher. The hits just keep on coming for Lumber Liquidators. shares tanked Thursday morning on the news that CEO Robert Lynch resigned effective immediately. And Matt, initially, the company provided no other details which led me and others to believe that Lynch didn't tell a soul that he was leaving. He just up and walked out.

No, I don't think I've ever seen a press release or an AK from a company saying the CEO unexpectedly resigned. I mean, this just never really happens. usually there's a few months, or they go on a search, and the CEO agrees to stay on for a while. I mean, the CFO has decided to leave Lumber Liquid Airs about a month ago, and he's leaving in June, so there was obviously some preparation there, but this is just all of a sudden, and Thomas Sullivan, who's the chairman company founder, he's going to be the interim CEO. He's the guy who did a great job on the 60 Minutes. I'm being sarcastic, by the way.

You know, this is, I mean, this is a long string for Lumberhead Liquidaries. You can go back to 2013, actually, when the FBI rated Lumber Liquid Airs, looking for documentation on their sourcing. So it all started, I mean, it started way back then. There's been short sellers, of course, we know, they've been hitting the company for years, months, and certainly the news, the bad news. The important thing going forward, I mean, if Lumber Likwheres, you know, the stock's been crushed, if you're interested in looking this company, what you have to hope for is that the margins, the gross margins, come back to something resembling where they were, because that's what really was the Lumber Likwaredary

story. They had these great margins so far superior than the competitors. And as we know now, that was resulting because they had a lot of cheap suppliers in China, which they have now cut off for their laminate flooring. So I recognize the stock's down 60 percent so far this year. It's down way much from its all-time high. Can you get excited about this company, especially with the founder and chairman as an interim CEO? Can someone come in there and do and turn around what now is a big turnaround story? I don't know. Even without the formaldehy, I've spent time on some floor installer chat rooms, and they hate. They hate the lumber liquidator floor and it's just a bad product. Yeah, no, I agree. I mean, they had branding problems even before

now, but certainly it's bad news. If five years from now, lumber liquidators has, if someone has come in and turned this company around, do you think that part of that turnaround has to involve a rebranding? Because I think that this company is now in Arthur Anderson territory. Arthur Anderson, the consulting firm to Enron, that decided, you know what, we need to completely rebrand ourselves and they became Ascensure, which I thought was a ludicrous name at the time, but that's a stock that's done quite well. And I'm just wondering, like, is this now so damaged that whatever the turnaround plan is has to include a brand new name? I'm 50-50 on it, only because as a person who occasionally improves their homes and looks at

flooring and things like that, cost is just such a factor. And I think for years, Lumber Liquiders has just been a cost leader. And so, If they went back to that, if they focused, if they fixed their source, and they went back to the U.S., they comply with the Consumer Protection Bureau, and they got all past that, and they somehow efficiently were able to get back to a point where they were still offering superior values for the flooring, they might not have to do that. But you're right. I mean, that's certainly something they should think about doing. Shares of buckle down this week. First quarter profits for the apparel retailer were lower than expected. Same store sales down more than 2%. Jeff, you'd never like to see the negative comps. No, whether it's the buckle or urban outfitters also missed this week badly. Retail is tough, and I think the reaction that the stocks have just show how Wall Street magnifies everything. Retail is not like a software company where you have subscription revenue, say, so it's going to be steady. You have recurring revenue retail.

Some quarters are good, some are bad, and the stocks get whipsawed up and down as a result. So if you're sensitive to volatility, don't buy into retail much. That said, the buckle is a well-run store. They have about 460 locations selling mainly jeans, denim products, to both men and women. And it's a slowly growing store. Generates a lot of cash flow. The company, the management tends to give a lot of that cash flow back to shareholders in the form of a dividend. It yields more than 2% right now.

But every year, they pitch in another, typically, almost every year, 5 to 6, 7% more in extra yield. So it's really a yield income play that I think is still well-managed, inexpensive company. denim is not going out of style anytime soon, but it's going to be, it's going to be volatile with the retail sector as a whole. But buckle is an income investor recommendation, but it's always felt weird, almost a little bit pompous to me, Jeff,

that they call themselves the buckle. Like the Jeff, or it just sounds a little bit of, you know, it used to be the Facebook. The Facebook, the Google, it wasn't that, but. Jeff, you touched on something that I think makes apparel retail

particularly hard because, and it's the fashion part, You're dealing with all the other X-factors that any retailer, you know, we were just talking about home improvement a little while ago, you're dealing with inventory, all that stuff. But it's the fashion piece that's almost like you're almost trying to throw darts against a board because trends can be so fickle. That's what's really tough. Look at Coach. Everyone thought Coach was this bulletproof brand. Well, most people thought Coach was a bulletproof brand, and it's been struggling for a long time now.

That's partly why we like the buckle. We have it in Pro 2 is a long time kind of income. oriented holding because it's fairly fashion proof in that they're mainly selling jeans. First quarter profits for Red Robin gourmet burgers up 38 percent. And James, the stock up more than 15 percent this week. I know you're not a big burger guy, but you got to respect what this stock has done over the last few years. Chris, we've had tracksuits, roller blaze, and now gourmet burgers. I think we're in the middle of a burger bubble. You know, five guys. You're right about that. Yeah. It's just a new trend.

end. Yeah, let's ride it while we've got it, but 37 times PE, 23X forward PE. They're doing great, but the valuation is not cheap either. And long-term expectations are probably too high. Now, James is a vegetarian, so we got a discount what he just said. I'm not anymore. I humanely killed me. Birds. Birds. Road kill, yeah. But look, look, I, you know, I see what James is saying about Red Robin Gourmet being overvalued. Let's talk about Shake Shack for once, I mean, 30 seconds. I mean, ShakeShack just hit 3.2 billion market cap. You take that and divide it by the roughly 65 stores. Right now, ShakeShack's per store value is about $49 million.

49 million per store. If you look at Red Rom Gourmet, if you just take the 415 company-operated stores there and divide by the market cap, it's about $3 million. So from Red Ron Gourmet at $3 million a store to Shakechak at $49 million a store, I don't know what's going. There's certainly a burger bubble somewhere. Well, that's the thing. We talked about Shakechack last week because they delivered a profit in their... in their first report as a public company, and good for them for doing so. But to your point, Maddie, I think the thing you have to remember about Shake Shack, or one of the things you

have to remember, is just the high concentration of their locations in New York City. Fair point. Once upon a time, we looked at Barnes & Noble and their bricks-and-mortar locations, and the thing about that is they have locations that are staggeringly profitable. I think the most profitable Barnes & Noble location is in right in the middle of New York City. And that's great. But don't think you can then take that and export that to the rest of the country. Right. Absolutely. I mean, Whole Foods, you know, if you look at Whole Foods, Whole Foods has several stores that do more than a million a week. And most of them are, there's New York, San Francisco, major, major cities. But

they're not getting that in Kansas City, Missouri, I'm sorry to say. And Shakespeare, I can't expect. 49 million. That's a pretty long payback period. I would say. Well, you know, you see headlines all the time in the financial media about any type of restaurant chain. And is this the next Chipotle? You can make a pretty good argument that Red Robin Gourmet Burgers, at least in terms of the stock performance over the last few years, has been the next Chipotle because its stock performance really has almost mirrored what Chipotle is doing. But Shake Shack, holy cow. Again, it went public in January 21, and this week it touched $90 a share. Unreal. Let's bring in our man behind the glass, Steve Broido.

Steve, any thoughts on the burger craze? I know you're always going to be loyal to Olive Garden, but have you ever eaten at either a Red Robin or a Shake Shack? Do you have a preference there? We do go to Red Robin on occasion with the kids, and it's all right. It's awfully crowded. I will say that.

I've never been to a shake shack. That's a good thing if you're... Well, it's good except if you're me with children. What I want is an empty restaurant, and a lot of playing space. This explains his Olive Garden love. It's always plenty of space. I was going to say, isn't the Olive Garden you go to crowded from time to time?

It is, but Red Robbins are a big claustrophobic feeling. They really jammy and tight. Olive Garden is nice and airy. Really let you spread out. Got to maximize the sales per square foot. Montana of restaurants, right? You don't see anybody all day. All right, James Early, Jeff Fisher, Matt Argusinger.

Guys, we'll see you a little later in the show. Up next, drama in the boardroom and on the big screen. We'll talk proxy fights and get a summer movie preview from Nell Minnow. Stay right here. You're listening to Motley Fool Money. The day it started rain. Millionaires on Wall Street. The sky grew as gray as ash. Welcome back to Motley Fool Money.

I'm Chris Hill. The summer movie season officially kicks off this weekend. And there's always something going on in the corporate boardrooms of America. So, of course, we turn to Nell Minow. She's an expert in corporate governance. and she is the film critic known as the movie mom. And she's our most frequent guests. So thanks for being here, Nell.

I'm delighted to be back. Before we get to movies, there's definitely some interesting things going on. And let's start with McDonald's, which is having its annual shareholder meeting this week, just outside of Chicago. And they've got some company at their meeting. Thousands of employees marching in protest over. wages, and part of the company's response was to ban the media from the meeting. So first, what do you make of that decision, and how common is that? Well, I'm sorry to say that it's very common. I get calls every spring from reporters who are shocked to find out that they're not

going to be allowed into annual meetings. But in this case, it's a particularly boneheaded decision, because what they've done is they've forced all the press to stay outside with the protesters wouldn't it be better to let them into the meeting where they could at least hear what the management point of view is? I think it was very, very foolish, but this is a board that's had its fingers in its ears and its head in the sand for a long time. Well, and also when you think about how easy it is for people in one place to communicate to people elsewhere with Twitter and now you've got live streaming video apps like Periscope, I just feel like this is, If this works out for McDonald's this year, this is probably the last year this is going to work.

Yeah, but this is exactly what the problem is with McDonald's. They're living in the 1960s, both in their menu and their business practices and clearly in their understanding of PR. Anyone who likes a good fight certainly got their money's worth recently with what's going on at DuPont. Activist investor Nelson Peltz was trying to get some seats on the board of directors at DuPont. and according to one report, DuPont spent about $15 million to keep Nelson Peltz and his candidates off the board. It was close. Peltz and his people got a lot of votes, but DuPont prevailed. Do you think that's a good thing in the sense that, look, Nelson Peltz took his best shot. DuPont took theirs and they won and it was a fair fight.

That's exactly what I think. And by the way, I have a couple of shares of DuPont and I voted. with management on that one. I think the biggest mistake that people are making is extrapolating from what happened at DuPont to some larger conclusions about the state of shareholder activism. Shareholder activism is often about losing the battle and winning the war, and I think that's what Peltz has done here. He got the company to make a lot of changes, but his fatal error, if what he cared about was getting people on the board, was he did exactly what corporate management's failed to do all the time. He failed to communicate a clear message. His was a trust-me message to shareholders, and that never goes over well. He did circulate a plan to break up the company,

but in the meantime, the company did take some very important steps and showed a lot of good faith efforts to do what was necessary to help the shareholders. And therefore, I thought it was really a win-win for everybody. Peltz made some money. DuPont got to keep their people on the board. The shareholders also made some money. And for anybody who complains that the proxy advisory firms are too powerful, they're going to have a hard time making that claim going forward. They all recommended for Peltz.

As a general rule of thumb, is there one strategy that tends to work out better for people in Nelson Peltz's position? I'm just curious. Yeah, the one strategy is pick a worse company. So you've got to be very, very careful. You want to start from the bottom up as you look at lists of corporate performance, and you want to start with somebody who's going to make the case for you, that their performance is so terrible. This is, you know, a good bad example for us was when we went after Sears,

and this is before its current problems. This is a long, long time ago, and where they had failed to meet their own numbers for 10 years in a row. That's a story you can take to the other shareholders. And that's what you want. You want to be able to make that elevator pitch and rest your case. And he just was never able to make a clear case. This is why this company needed an activist to be involved.

I'm not suggesting that you're hanging out in the board of directors' room at DuPont, but as a shareholder, did you get a sense of how peltz and this fight he was waging were regarded by the people at DuPont? Yeah, well, you know, Fortune had an excellent article. Clearly they had a lot of access to DuPont's top executives, and I thought it was very revealing. They clearly were not taking him too seriously, but they were taking him seriously enough that they felt that they were able to come up with compelling counterarguments. I think one of the most interesting aspects of this contest was also that it really came down to four shareholders at the end of the day. They were four shareholders that had large enough stock, shares of stock to really control the outcome. And that says to me something more important about what's going on today than about whether activism is dead or not, which is what Deal Book, you know, Deal Book is declaring activism dead pretty much on a weekly basis.

Well, let's stick with Deal Books, parent company, The New York Times, and a headline from the Times this week. Shareholders' votes have done little to curb lavish executive pay. And in the story, it states how in the five years since the Dodd-Frank law required that companies let investors vote on executive pay, CEO pay has risen, on average, 12% per year. do you think that is because we're in a bull market and for five years people are more likely to say, well, look, my stocks is going up, so I'm fine with what they want to pay themselves. Yeah, I do. But you have to realize also that even in the cases where the shareholders have voted against C.O. pay, the companies haven't done anything about it. The fact is that you've got kind of a toothless tiger on the say on pay votes.

they are non-binding, and therefore nobody takes them seriously on the shareholder side or on the management side. I'll be very interested to see what happens now that there was, what, a 30-some percent vote against Jamie Diamond's pay. I'm guessing they will not make any changes, but to me, that's a very significant vote of no confidence. Let's say, for example, just for the sake of argument, let's say Jamie Diamond gives you a call. Okay. And he wants your advice. and he says, you know what, now, I'm just looking to avoid this whole thing the next time around. Other than telling him you've got to pay yourself less, what advice do you give him?

That is the advice I would give them. I would say pay yourself less. I would say take out or give yourself present value, the exact same dollar amount in indexed options so that you have to beat your peer group in order for them to be worth anything. And I will stand up and cheer. But the fact is that the bars are just set so low in these, quote, incentive, unquote, plans that they don't have any credibility. So I would be thrilled for him to make that same amount of money. I just want to see him perform a little better in order to get it.

You're listening to Motley Fool Money talking with Nell Minow, corporate governance expert and film critic. I do follow you on Twitter, Nell, so I have to assume based on what you were posting that you were at the White House earlier this week. What was all that about? I was indeed. I was the date of my sister. My sister serves at the appointment of President Obama on the board that oversees all libraries and museums in this country. Mostly what they do is they give away money.

And 10 of the most outstanding and innovative library and museum programs in the country were awarded medals by Mrs. Obama, and I was lucky enough to be there for that ceremony. So if I'm understanding this correctly, the White House doesn't have any problem with you taking footage and posting Vine videos to your Twitter feed, but McDonald's is not going to let anyone periscope their meeting. That is right. Yeah, I didn't see any selfie sticks, but there were certainly many, many selfies going on at the White House. All right. Before we get into the summer movies, I want to ask you a couple of questions about the world of television. and let's start with David Letterman, who called it a career this week with his final show. Where do you think David Letterman fits in the history of television?

You know, it's interesting that you mentioned Vine because David Letterman, in part, decided to call it quits because he just couldn't figure out how to be a part of the new world of social media. He saw Jimmy Kimmel and Jimmy Fallon, who were trending topics on Twitter every single day, day, and that's just not his style. So I think he will always be seen as a person who was very much of his era and knew when it was time to quit because it wasn't his era anymore. The hit series Mad Men also wrapped up this week. I know that you have a personal connection because your daughter works on the show doing costume design. Where does Mad Men fit in television's Panteon. I thought the last episode was outstanding, and that I think will continue to be seen

as one of the most thoughtful and provocative and insightful and creative shows in television history. It's extremely well done, and it's interesting to me that it was made by somebody who wasn't even born at the time that he was portraying, and what it says about the post-war era, what it says about our time now, thought it's just fascinating. AMC Networks really has built up a nice track record of programs between Mad Men, Breaking Bad, the Walking Dead. How nervous should HBO be about the creative spirit at AMC Networks? Well, certainly, they should be nervous, but it's interesting to me just as a whole, that this is really where the thought-provoking,

deeply ambitious, intellectually ambitious, creatively ambitious work is being done right now. Not in the movies. It's all on television. All right, let's talk movies. This time last year, when you and I were talking, we were looking ahead of the summer, and you had sequels from Spider-Man and Transformers and X-Men.

I said I was already looking ahead to the summer of 2015, and you said, you know what, there's a movie coming down the pike that a lot of people are unaware of. It's based on a comic book that's kind of obscure called Guardian to the Galaxy. So keep your eye out for that. And I've got to give you credit now because that was a huge hit. It grossed over $750 million worldwide. The second highest-grossing film of last year. So now I have to ask, what's on your radar this time around?

Listen, I don't see anything sneaking by to surprise anybody the way that that one did last year. In fact, I am not feeling good about my abilities as a prognosticator at all because I was sure that Mad Max was going to do better than pitch perfect two last week. I think the most interesting story of this summer is how many of the films are about or made by women, more than we've ever seen before. You know, the two equivalents that we have coming out that are kind of this year's hangover, the very, very raunchy comedies,

the things that we've expected from Judd Apatow are both about women this year. We've got Melissa McCarthy in Spy, and we also have the Judd Apatow produced Train Rec with Amy Schumer, who seems to be really the woman of the year as far as comedy's concerned. So I think that's really, really interesting. And then other than that, we've got these tent pole movies.

We've got, of course, we already had the Avengers and Mad Max. We've got the Jurassic World coming out. I think that one looks pretty good, not great. We've got the new Mission Impossible. That one looks awesome. If anybody surprises us this summer, maybe it might be, I don't know, maybe Masterminds, which is coming from the Napoleon Dynamite guy. It's based on a true crime committed.

by complete imbeciles, but nevertheless was one of the highest dollar value robberies in American history. Well, you know, it's interesting when you talk about sequels. When we think about sort of those big tent pole summer movie sequels, it is, they are typically things with either car chases like Fast and Furious and that sort of thing, or superheroes. But when you look at a movie like Pitch Perfect 2, which was made for around $30 million, and in the opening weekend took in more than 70 million at the box office, if I'm a studio executive, that's one where I'm looking at. How many more of those can we make? I would bet the ranch on there being a Pitch Perfect three in the future, although I think

the people who play graduating seniors may not come back. I think that's the reason that they were so intent on adding Hallie Steinfeld to the cast because they want to keep it going. But what's interesting about Pitch Perfect is that the original movie was just a modest success, And then on DVD, it went nuts. And that's the audience for the sequel, are the people who fell in love with it on DVD and have seen it many, many, many times.

At the opposite end of the spectrum, what is a movie on your radar that we should avoid like the plague? Let me think for a second. Well, I just saw a really terrible movie called The A-list, but I don't think that's on anybody's radar, so you won't have any trouble avoiding it. But that was really just painfully bad. There's a new movie out that is just very weird called Aloft with Jennifer Connolly, and I went into it not knowing a thing about it, came out of it pretty much the same way.

Wow, that says something when you walk out of the theater, and your basic question is, what happened? What was that? Before we wrap up, because it is Memorial Day, obviously people are going to go to the movie theaters, but there have been a lot of great movies built around the theme of Memorial Day. What's one or two that people should try and check out whether it's on Netflix or buying the DVD? I think the most underrated film that I recommend every year for Memorial Day is a Francis Ford Coppola film called Gardens of Stone, and it's about the military who work at Arlington Cemetery. and James Earl Jones is in it, and that is really just an excellent, excellent film and very, very appropriate for Memorial Day.

And then also I think that one of the things that makes our current conflict different from any previous one is that you've got people there, you know, making vines and taking pictures. And there are a couple of really excellent documentaries that were made by the soldiers themselves. and I think those are very worth seeing. One of the best reasons to be on Twitter is so that you could follow Nell Meno. You can find out her thoughts on corporate governance, movies, and so much more. Nell Meno, have a great summer. Thank you so much for being here. Anytime.

Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill, joining me in studio once again. Matt Argusinger, James Early, and Jeff Fisher, guys, time for the stocks on our radar. Mattie Argusinger, you're up first. What do you got? I'm going with an oldie but a goodie, Whole Foods, WFM. Just looking at the stock price down 25% from its 52-week high.

It got decimated after its latest results. But I see compelling growth here. The competition worries are not as big as I think. And I think if you buy today and hold for at least five years, you'll do really well. Co-CEOO, John Mackey, is on the board of directors here at the Motley Fool. Steve Brodo, question about Whole Foods? Do you believe Whole Foods, organic foods, are better than what I might get at Safeway or Kroger or anywhere else? I you know superior health quality you know marginally but I just think for me Whole Foods it's all

about the experience and the customer service versus the actual quality of the food customer service yeah what do you get served by well not dead birds James early maiden holdings is a reinsurance company and it's not like the reinsurer you probably think of like a big catastrophe type of company this basically picks up excess business from other companies who just want to offload it. A lot of workers' comp, these are very small, low-cost policies to deliver very consistent statistical results.

3.75% yield. It just raised 21% in the last year. And the ticker? M-H-L-D. Steve? Can you reinsure a reinsurer? I think you can, actually. I think you can.

Wow, that was kind of meta. It's like a derivative. Jeff Fisher, what are you looking at this week? So, you know, at Memorial Day weekend, what's more American in some ways than Apple? I've got to go, it sounds easy, but Apple, the giant company, I think, has more room to grow. It trades it 14 times expected earnings for this coming year, which is not expensive. The company just initiated another $200 billion capital return program to shareholders,

and that's on a $750 billion market cap. So a powerhouse company, about 20 to 30 percent of people have upgraded to the iPhone 6 is all. So there's a lot of potential still, just in that phone, let alone the new products they have rolled. out. And the ticker? AAPL. Steve? They've got the watch. What's next? There's going to be something to do with the TV, with the living room, whether it's just the

little small Apple TV box or a program around that, some kind. That would be my bet. Steve, Apple, Whole Foods, Maiden Holdings, anything intriguing you there? I'm going with Maiden Holdings. It sounds a little obscure, but I own some Apple, and I don't know about Whole Foods. I'm not sure right now. I'm going Maiden Holdens. Probably a little too crowded for your taste. Indeed it is. All right, Matt Argusinger, James Early, Jeff Fisher, guys. Thanks for being here.

Thank you, Chris. That's going to do it for this week's show. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.