Everybody needs money. That's why they call it money. Oh, this thing's a life on free. But you can get up to the present.
From cool global headquarters, this is Motley Cool Money. It's the Motley Cool Money Radio show. I'm Chris Hill, joining me in studio this week for Million Dollar Portfolio. Jason Moser and Matt Argusinger and from Motley Cool.
Deep Value Ron Gross. Good to see you as always gentlemen. We will break down the latest headlines from Wall Street. CNBC host Carl Quintanilla is our guest this week, and as always, we'll give you an inside look at the stocks on our radar.
But we begin with the oil industry. The latest meeting of OPEC ended with seemingly no agreements in place over whether to cut production. And the price of oil, Mattie, has fallen to its lowest point in seven years. Yeah, those guys, those OPEC guys, no, that is the reason.
And you can feel if there's something that Faria is going on where the OPEC just essentially wants to squeeze out the massive producers here in the US. Well, they have succeeded because by raising the ceiling or at least not cutting production, they've caused rate counts to plummet. At the same time, the oil supply of oil is still very high. And so, and the price you said is at a seven-year low.
We see things happen like this to industries all the time. And right now, you have to say, the energy sector is probably the most reviled segment of the market this year, certainly. And so, is it a time you get interested in this? Yes.
I mean, there are predictions that oil can go a lot lower in the coming year than OPEC continue producing. But now I'm starting to look and we've made a lot of moves in a million dollar portfolio, as Jason knows. But I think this is the time you have to start looking at some of the opportunities in this industry. I would agree.
I don't have any direct exposure in my own portfolio. And I think it's time to get serious about that. But it's interesting, if you work in the energy sector, times are tough. But theoretically, low energy prices are good for almost every other sector out there.
That's right. Including when you go to fill your car up every day. So, it's kind of almost be careful what you wish for. Because once we have those rising prices, raw material prices, that will reverberate in a negative way through every other industry other than energy.
Yeah, but if you're in the energy industry, you're hating those low prices because ultimately that's a lot of jobs that are getting cut. And we're seeing that, particularly, you know, it's like Texas, obviously, very oil rich. But I mean, it's just generally speaking around the country. That is great.
You know, I like to be able to fill my tank up for much less. But yet the unemployment picture certainly becomes a bit more dire, which then could have longer reaching farther reaching economic implications. And of course, the cure for low oil prices is low oil prices ultimately. And I think at some point, even OPEC is going to realize, hey, the capital budgets are the way they are.
We need to have certain reductions as well. The prices are simply too low. And it's like that with all commodities. I mean, all commodities are getting crushed right now.
Partly as a response to the strong dollar, but there's other reasons as well. And economics 101 basically will tell you that it cures itself over time. The time is the problem. And predicting and getting these.
You've got to get a major problem. Well, and you look at a company like Kinder Morgan, which is certainly, it's not ExxonMobil, but it's a multi-billion dollar company coming out this week and saying their path to getting much more stable on the balance sheet is to cut their dividend by 75%. Yes, it's a dramatic move. An expected move.
Didn't quite think they were going to cut it that much. But you know, in reality, we've talked about Kinder Morgan quite a bit on the million dollar portfolio team. We actually thought Paul Chi, who covers the energy sector for us, he thought he would like to see Kinder Morgan actually cut the dividend entirely. Just really rain in the spending, focus on preserving the cash flow, preserve that investment rate, that rating, which is key.
But yes, Kinder Morgan is a massive company. This is the largest natural gas pipeline operator in the country. The largest independent actually transport or petroleum products in general, largest transporter of CO2, which is critical to many industries. This is a business that's not going away.
These are assets that cannot be replaced. And Kinder Morgan, about 96% of their cash flow this year is all fee-based. It's all, you know, there's nothing to do with the price of oil. It's just what's happening now in the future with capital budgets and going forward.
And whether or not Kinder Morgan can grow, it's dividend. I just think, like a lot of companies, this company has been really taking the wood shed with the fall in energy prices across the board. And I just think this is, it's on our watchlist million dollar portfolio. It's one I think we're taking a very close look at.
Shares of Chipotle down more than 20% in the past few months in the wake of the E. coli outbreak in the Pacific Northwest and now Noravirus in Boston. Chipotle founder Steve Ells gave a rare TV interview this week saying he's deeply sorry and vowing to make Chipotle the safest place to eat. I don't know, Jason, somehow it feels like we're still waiting for one more shoe to drop.
But I think it's really, really, really, really, really, really, really good. I think we're going to go. I mean, as a shareholder, I just, I look at this night, I don't even bat an eye. I just think, well, just keep on looking forward.
I think that this is a business that has made it to this point, you know, 22 years, you know, yeah, they're going through it. I think a very, very, very trying time right now. I think it ultimately is an opportunity to get better. And I think that's what they're going to do.
I appreciate Ells getting out there and saying what he said. It's quite plain that he's a listener of Market Vullari because we were talking about the day before. The day before? I made the point.
Where is Steve Ells? Where is my Iran? They need to be out in front of this. Clearly are, you know, a couple of dozens of listeners.
But I'm going to be really interested to see how they set expectations for 2016. I think that's what the market more or less is waiting for right now because they've already slashed guidance for this quarter. And I mean, slash, like that was a pretty big cut. And I was really kind of surprised to see the stock, you know, hold up like it.
But I think when we get a good sort of view on what 2016 holds, that I think will probably really be the test for the stock at that point. And if those expectations, I would rather see them kind of just like Kinder Morgan cutting that dividend. I'd like to see Chipotle just really go after and say, listen, we really think this is going to be a bad year. Because if they can do that, that brings that bar of expectations back down a little bit because it just keeps on going up every year to become victims of their own success, so to speak.
But again, I mean, looking past something like this, it is the food industry. Stuff like this happens. Remember, Costco and Starbucks are going through a very similar E. coli problem.
Right now as we speak. So, you know, it's not just Chipotle. And this is a very quality business with management that is bought in. And I am excited to see where these shares will be 20 years from today.
It's when we own a million dollar portfolio. I think that if we have the opportunity to add in 2016, we certainly will. One thing I wish is that they were able to identify where the E. coli was coming from.
That's a little bit odd, especially with such a limited menu offerings. I wish you could identify that. Second, the Norovirus thing is a little weird because unless you're on a cruise ship, you almost never hear about it in relation to a restaurant. So that's a little curious.
But having said that, I do agree with your comments. And I think it's a powerful company and it will remain so. Well, I just think, when Matt and Jason said it, I think the pain has not been totally felt. I think when they released that in 2016, it's going to be a lot lower.
I'm using a purely anecdotal experience that I have every night. I live right in Union Station, which is the main train station right in Washington, D.C., Chipotle is there. And I walk by about seven o'clock every night a month ago. I walk by that every night.
It doesn't matter what night of the week there will be a line at the door around seven o'clock. Past couple weeks, two or three people max every night. We've told our kids no Chipotle for a while until they get started. Wow, really?
That's amazing. It has to be my family in the office. Who loves their family more? In a few months, we're going to find out.
You know those seriously, think about it. The one thing Chipotle does have working in this favor here is one of the things I love about Chipotle is you go in there and you see the entire process. You see them cooking the food. You see them making your food.
It's very transparent, so to speak. Versus something like your traditional fast food restaurant, which is obviously not. So I think that is something that's definitely working in their favor. Perhaps they need to encourage their employees to watch their hands a little bit more.
It's kind of like that Seinfeld where Poppy was getting a little sloppy. Shares of Adobe systems hitting an all-time high on Friday after fourth quarter profits came in higher than expected ninth quarter in a row. They've been on profit. Getting it done.
Really nice transition. As most software companies have found themselves needing to do, Adobe has made a nice transition to a subscription model, which has pros and cons, but the recurring revenue associated with a subscription model is very nice. They've done it better than perhaps most. Their cloud business up 35% for the quarter, 833,000 new subscribers for the quarter.
The recurring revenue on an annualized basis up 13%, again, all wonderful ways to book profits year after year. Transition has been a wonderful 150% increase in profits. You can't complain with that. The stocks are reflecting it up 26% so far this year.
This week Yahoo's Board of Directors made it official. The company is dropping its plan to sell off its stake in Alibaba and will instead look to spin off its core U.S. Internet businesses. After delivering that new, CEO Marissa Meyer went to the hospital and delivered twin girls.
Congratulations to Marissa Meyer and her family. Where do we go from here, Mattie? It seems if the comments coming out of Verizon are in any indication. There are certainly some companies that would be interested in perhaps purchasing some of those core U.S.
Internet businesses. Probably. This is sticking with me. So when Marissa Meyer took over Yahoo in 2012, came in from Google with Much Fanfare, Yahoo's trailing 12 month revenue, 4.9 billion.
And you guess that's what it was in the latest quarter? Right about the same. Exactly 4.9 billion. And this is after heavy investments in mobile, dozens of acquisitions, including a billion dollars for Tumblr, the Blogger site.
I don't know where the business is going. If your shareholder, who's obviously not going to be involved in any of these break up things that are going on, it's hard to get excited about Yahoo. I mean, there was the Alibaba stake. If they're holding on to that, why not just by Alibaba?
It's a public company. Now you can avoid any potential tax issues that way. There's just no reason to get excited about Yahoo at all. And no matter what happens, I'm getting tired of the story about whether or not assets are going to spin off, what assets are going to keep.
It ultimately really doesn't matter anymore. It's interesting, though. You look at the stock, obviously not having a great year. But if you bought when she became CEO, that thing's more than double-cent.
That is one good point. Yeah. Coming up, we will mix some chemicals and dig into the sexy world of auto parts. Stay right here.
This is Motley Fool Money. Nothing quite as wonderful as Motley. Welcome back to Motley Fool Money. Chris Hill here in Studio with Jason, Mozart, Argus, and Ron Gross.
Big merger in the chemical industry this week. DuPont and Dow Chemical merged in an all-stock deal. Together, they form a $130 billion company that will be called Dow DuPont. Creative.
It's going to say, better than Mona-Lease. It is better than Mona-Lease. It's better than Quickshire. Isn't the obvious move there just to go DowPont?
I was thinking, I don't want the move. It's a huge deal. It's a huge deal, and you have both stocks down on the news. Does anybody like this deal?
It seems to make sense, but I think because it's a little bit convoluted. It is a pretty much a merger of equals, kind of, but for our purposes it is. DuPont CEO will be CEO. The Dow CEO will be executive chairman.
They're splitting that up nicely. I think there's some confusion in the sense that they've stated already that they want to break up into three companies. Probably a couple years down the road. Probably will take a 2018-ish timeframe.
That might be confusing to people. The dreaded word synergies is all over this deal. They want to really create some synergies, create some more- Increase profitability prior to breaking up into three companies. With the next layer of synergies.
With the double layer of synergy squared. It'll be an agricultural company, a material science company, and a special products company. When all is said and done, it probably makes sense to do this. It's not without antitrust concern here.
I think the conventional wisdom is that it does get done now. Shares of Costco falling this week after first quarter profits fell more than 3% and Jason membership still growing, but it is slowing down. Yeah, and I think you keyed in on it right there. You look at the top line and it was a growth of 1% really.
It's not all that encouraging, but really the big problem for Costco right now is growth in membership fees. It's hitting a wall more or less. Growth in membership fees was about 1.9% for the quarter versus around 6% a year ago. It starts to beg the question.
We know they're modus operandi, so to speak, is to get that membership fee and keep prices really over their members. That's what they're going to do. But at some point, we got to wonder, can they get more members or can they exercise any price increases on that membership fee? I was just going to say, are we're going to see one of those in 2016?
I wouldn't keep it off the table. It seems like they don't either. Every call I go through a quarter and quarter out, they do bring it up. They never really say yes or no, but I think it's something they probably will look at in 2016.
The question is, how far can they go with it? They typically raise it by maybe $5 or something. Like Amazon Prime, it's a very compelling way to just live your life. It makes things a lot easier for a lot of people.
I don't know what the way the internet is just shaping the space. I'm not sure how compelling that offering still is. Right, and we talk about Costco a lot, and Kudos to Ron and his team, because they brought it to MDP and it's been a wonderful winner for us. But we look at the business.
It's not really going to grow exceptionally over the next five to ten years, and yet you're paying almost 30 times earnings for the business right now. Again, it's a great business, great management team. I worry a little bit about the valuation. You're forgetting about the new slogan of E.
Coli Free since December 2015. There you go. That's going to make all the difference in the world. Big Week in the auto parts industry, shares of auto zone on the rise after putting up a nice profit in the first quarter.
And activist investor Carl Icahn back in the news, because it's only been a couple of weeks, of course. He made an $863 million takeover bid for pet boys. It's not a sexy industry, but there's a lot going on this week. And the starboard value is attacking advanced auto parts.
So we have the whole trifecta going on here. Sleepy little business categorized by typically a lot of real estate, which activists love to go after, because there's a lot of things you can do from sell these facts through outright sales. So you can create some value there. But to auto zone, 37th consecutive quarter of double digit earnings per share growth.
Pretty amazing. The important part of there is the words earning per share growth per share, because they've done an unbelievable amount of repurchasing of stock. 160 million shares was what they had back in 1998. They now have only 30 million shares left.
Wow. But they are growing revenues. They are growing operating income, just not as fast as that EPS number. So the company is executing well.
The pet boys, the Carl Icahn bid, really interesting. Surfing bridge zone. Peppaoids already accepted bridge stones offer. They look like they're going through Negan except Carl Icahn.
But bridge don't have the right to come in and top the offer, but time is really ticking on that deal. One more thing on auto zone. That's another one of those companies that hasn't split their stock in more than 20 years. So it's also if you're a new investor or a casual investor, that's one of the stocks you look at.
It's got a price tag on around $800 a share. You see right now, stocks have 25% year to date. Again, we consistently say don't look at the stock price. Look at the market cap with the company as a whole is trading at its fine to buy one share rather than 10 shares.
Of a $70 stock, it actually is the same thing. What matters is the amount of capital you commit to investment. The top-performing stock on the NASDAQ this week is Cara Green Mountain. Shares are more than 70% on the news that it's being acquired by JAB Holding Company, a consumer products conglomerate based in Luxembourg.
And the buy-out price, $92 a share, Matty. How do you think they came up with that number? Well, it is interesting. I mean, I was definitely one of the investors scratching my head and saying, wow, that is a massive premium.
I mean, it's not that high, but then you look at the $92 per share buy-out, and it's hard to get the exact number, but Coca-Cola's cost basis, Coca-Cola owns about 17% of current shares. Their cost basis is right around $90 a share. So I'm starting to think that they had to offer $92 just to get the deal through so Coca-Cola would approve it. It's a bit of a bailout for Coke.
I actually think it's a bigger bailout for shareholders. I think it was really going to struggle this coming year. We talked about it a little while ago on the show, earnings have been terrible. Sales for the new Curate 2.0 machine have not really panned out.
It's a Cluji machine as we talked about. And I think there are doubts about whether this is a cold machine, which Coca-Cola has invested heavily in, but it's going to be a success on people's kitchen counters. I doubt it. And so I think shareholders should take this cash and run.
Jay holding has other coffee in their portfolio. They've got care about their pizza. I like the fact that they just went in with the Godfather offer because what we saw with the beer industry recently, the whole back and forth probably smarter than they just said, you know what, we want to get Coca-Cola signed off immediately. There's going to be some synergies there.
Ron, you've got a Curate machine, don't you? Use it almost every day. It makes a week, but quick cup of coffee. A week?
It's relatively not strong coffee. Is it worth the trade-off there? I mean, I have a curating machine, but I really prefer it. I feel like a week coffee.
I'm just dumping it. I don't even want it. We got to get you some new pods. That's what we're going to do.
That's going to be under the tree this year. Up next, we'll head to New York City and check in with CNBC's Carl Quintenilla. Stay right here. You're listening to Motley Fool Money.
Welcome back to Motley Fool Money. I'm Chris Hill. When the opening bell rings at the New York Stock Exchange, I guess, has a front row seat, Carl Quintenilla is the host of CNBC's Squawk on the Street, which you can catch every weekday morning at 9am Eastern. He joins me now from New York City.
Carl, good to talk to you, my friend. Happy holidays, Chris. And to you as well. Before we get too deep into the holidays, let's look back a little bit over 2015.
Always big stories. Certainly the Volkswagen recall probably makes anybody's shortlist of the big business stories of 2015. But what stands out to you when you think about this year? You know, I think using Volkswagen as a proxy, I think corporate America took some black eyes, whether it was Food Safety Scares or GM or VW or just corporate reputation, I think, took it on the chin.
There were a lot of apologies and full page apologies in the newspapers. And it just, I think, dovetails with an over a general sense of cynicism politically and economically in this country. We're in a low growth environment, we're in an election season, people are frustrated, and it's been tough to get good ink. You know, it's been tough to get positive ink for corporate America.
And the fact that we had a flat stock market probably didn't help matters much. And the fact that oil is still at the price that it's hanging around at. And you think back to a year ago, and there were plenty of people, even with the fall in the price of oil, that it experienced at the end of 2014, this time last year, you didn't have to look hard to find people saying, oh no, it's going to bounce back in 2015. And you look around now and I don't really see anyone saying that.
That it's going to bounce back in 2016. No, I mean, the problem is you got all these oil drillers, gas drillers, they got big bills to pay, they've got a lot of debt to service. So the cantor shut off the spigot, they've got to keep the cash flow going to pay their debt. And so we're washing and crude, OPEC obviously has decided we're going to cause them some pain, twist the knife, we're not going to turn off the spigot.
So it's weird. I mean, we definitely crossed the line this year where cheap commodities, cheap gas, cheap oil went from being a quote positive to the economy to now a negative. And you can, there's a lot of charts floating around looking at that correlation. But we crossed that line.
And so now people are hoping against hope that somehow supply matches demand sometime in 2016, if not maybe 17. Do you get the sense that generally retail is in pretty good shape? Obviously you can cherry pick whether it's a specialty retailer or even a general retailer. That's maybe not doing as well.
But it seems like when you look at the numbers being put out by Walmart, Target, Amazon, etc. heading into the holidays, even though we don't really have the quote unquote hot gadget this holiday season, it seems like generally retail is doing pretty well. I totally agree. I actually think that's spot on.
For one thing, the companies you just mentioned, maybe with the exception of Walmart, but certainly Amazon and some others. Even Netflix is included in some retail indices. Very large companies in that space are showing big growth. And that soaks up a lot of consumer dollars.
So yeah, maybe they're not going to gap. Maybe they're not going to Jake Crew. They're certainly not going to Wentman's warehouse or Joseph Big Bank. But they're spending online.
They're spending on their cars. They're spending on their homes. That's been the dynamic all year long. So I think the financial media has probably played up the weakness in apparel.
A little bit too much. Obviously consumers, they're not going whole hog. They're saving a little bit more. But I do think we're going to come out of the holiday season and think, all right, it wasn't a moonshot.
But the consumer did, he did. They treated themselves a little bit more than we expected them to. When you and I talked this time last year, you said that automakers were the ones to watch in 2015. And right now, automakers are on track to put up their, maybe their best year ever.
It's looking like north of 17 million vehicles are going to be sold. Are we going to top it? We did in 2000? I don't know.
That's a tough target to get back to 20. But the problem of the automakers is they did sell cars this year. They sold the expensive kind. They sold the SUVs and the trucks because of cheap gas.
But China and Brazil and even to some degree Europe were troublesome. So all that strength in North America was having to offset just really tough environments overseas. So I don't know. I mean, the stocks haven't been complete winners, even though the sales figures have been good.
I still think they're going to be interesting to watch more as we graduate to the Tesla generation. I mean, are the big three finally going to decide they're going to compete in that space? Is Tesla going to be able to deliver as many cars as they say they are? I think that's going to be the big question for the next couple of years.
What do you think of the series that are being floated now that not just with the rise of Tesla Motors, but with the rise of Uber, the eventuality of autonomous vehicles that car ownership itself goes away for an entire generation? Well, it's kind of like the record player. I mean, vinyl died and now with the novelty. You're kind of hip if you have what actually happened in my house.
But it's definitely going to be, especially we all know the country is moving toward urban environments in general. I do think it's going to be not necessary. And Kalanik, who I noticed is now on the runner up list, the runner's up list on the time person of the year, has a real pitch to spin now that we imagine all the efficiencies you would get from not having a car, all the insurance bills you want to pay, all the parking garage bills you want to pay in New York City. There's sort of this long-term utopia you can imagine where we can get around as efficiently as we want, and we don't have to pay that lease or that car payment one month after month.
I'm still waiting for teleportation to come along and get perfected. I'm trying to be the name of that what that company would be. He'll teleportation company, HTC. I like it.
All right. After this interview, we'll get working on that. We'll get a website specs the whole thing to a road show. The Federal Reserve is going to meet next week.
Are we finally going to see a slight tick-up in interest rates? Is this finally going to happen? Yeah, I think it's, I mean, what the market's counting in, 80% chance almost. Even though some of the data has been a little soft this month, everyone feels that we're sort of on track.
And I think the thinking is, when we went to the lower bound, when we went to emergency interest rates, that was the word, emergency. And I think it's gotten harder and harder over time to build a case that we are currently in an emergency environment. So it's going to be a tricky task where they've said to communicate, look, we're hiking, we're going to take our time. But do people really believe the economy at this point deserves like red alert interest rates?
I'm not sure that case has been harder and harder to build over time. You're listening to Motley Fullman, talking with Carl Quintenilla of CNBC. NBC, he's also a correspondent on Real Sports on HBO. Last time you were on the show, one of the things we talked about was the business of extreme sports.
Let's talk general sports business for a moment. Fortune Magazine named Nike CEO Mark Parker as their business person of 2015. Next month, Mark's 10 years he's been running that company. And when you look at how Nike has grown, you look at how that stock has returned nearly 10 times what the overall stock market has returned.
I look at Mark Parker and my question is how is this guy flown under the radar for as long as he has? It's amazing. It really is amazing. He's a veteran for one.
He's been around forever quietly, as you say. They've split, they've returned cash, they've made literally groundbreaking deals. This LeBron deal is literally just jaw dropping and they've kept a very aggressive competitor in Under Armour at bay. It's amazing.
We just talked about the weakness in apparel. You don't say that about footwear right now. You don't talk about Chinese weakness right now when it comes to Nike. It's like they float above these other macro environments.
Given all of that, it is not surprising at all that they're the top Dow stock of the year. It's amazing. You mentioned LeBron James. Nike gave him a lifetime contract.
I can see that and I'm not a Nike shareholder. I can see that making sense for the next 10 years, maybe in the next 20. And I like LeBron James. I'm a fan.
But what is 60 year old LeBron James going to be doing for Nike? What is 70-80 year old LeBron James going to be doing for Nike other than still cashing their checks? Yeah, I was interesting. They didn't give complete transparency into the structure of the package.
Is he going to be a billionaire? We don't know. We actually know quite a little about what Jordan makes to this day over off Air Jordan. But clearly they've decided to make him above the ordinary universe of athletes.
And I'm talking even the Cobys and Jeeters of our time. There's just never been much anything like this, especially on such a formal scale. And I guess I'm not enough of a basketball fan to know whether he is truly deserving. But Nike has done a lot more research into this than I have.
You've got to take them out for their word. All right. Two more questions and then I'll let you go. As you look ahead to 2016, what is an industry or a company or even a business person that you think is going to be pretty interesting to keep an eye on?
Well, we talked a bit about autos. I think the one that keeps coming up more and more to us in the past few weeks are banks. I've seen a bunch of lists where either regional banks or for instance, Citigroup ends up being the top pick for 16. Once rates start to go up, the net interest margins go up.
If the consumer hangs in there, fees, mortgages will help. Trading's been tough. But generally when interest rates are rising, the banks are able to work that spread and do what banks do and collect that money. So it's been a long time since anyone has recommended banks on a big scale.
We all know why. But that could be a big surprise. And we'll know we should know by summer whether that bet is really going to pay off. We are just days away from the opening of the next Star Wars film.
Is there any way it doesn't become the biggest grossing film of all time? I don't think so. I mean, I think we've crossed the line. Maybe you agree with me here where it better be really good because the marketing has lifted everyone's expectations.
I happen to what I know about J.J. Abrams believe he's going to be honest with the franchise. He's going to be true to the franchise. China's going to be a tough sale.
There's not the Star Wars Mysmeth over there that we have. And they buy a lot of movie tickets. But nobody, I've seen some charts that looks at how Disney is able to monetize, especially consumer products, against all their intellectual property. And they do it better than any media company out there.
So I would say 5% chance at the disappointment. But I don't know about you. I'm seeing it next week. I'm definitely seeing it before the end of December.
Absolutely. CNBC, NBC, HBO, Twitter. He's everywhere. Carl Cantonio.
Have a great holiday, my friend. Same to you, man. Coming up, we're giving inside look at the stocks on our radar. This is Motley Full Money.
As always, people in the program may have interested in the stocks they talk about in the Motley Full Money. Have formal recommendations for or against some of our stocks based on what you hear. Welcome back to Motley Full Money. Chris Hill here in studio.
Once again joining me, Jason Moser, Matt Arguessinger, and Ron Gross. Before we get to the stocks on our radar, guys, let's dip into the full mailbag. Radio at Full.com is our email address. That's Radio at Full.com from Ed Murphy who writes, what do you guys think of the match group?
Also, is Seidrill about to sink? Should I jump ship or weather the storm? Two very different businesses. Ron, do you want to take a whack at the match group?
Sure. I actually think match as a fine business. Match, OK, Cupid, Tinder, and several others. They've made 25 acquisitions over the years.
That's primarily how they've grown. The valuation was somewhat reasonable. 24 times last year's earnings. I like that they're profitable.
Two things I really don't like is that it's spun out of IAC and that company still controls match because of their ownership of Class B shares. All of the proceeds of the IPO want to pay down IAC's debt. Do not like to see that. It's just kind of just pushing, letting us hold the bag there.
I never like to see a producer proceeds use that way in an IPO. Matt, what do you think about Seidrill? I don't follow Seidrill very closely. I do follow at Oceanix, which is another kind of offshore rig operator.
If you think it's bad with the on-land drillers, well, it's really tough right now in the offshore because it's more expensive. It's much more complex. If oil prices are below $40 right now, just imagine what's happening to the offshore guys. Again, I think there's probably better places to be investing in energy right now.
These are going to be the more riskier, specular ones. They're probably the ones that bounce back the fastest though. If oil prices do rebound, so it's a risk reward thing. I think you're taking a lot of risk by investing in the off-shores.
You might want to look elsewhere. Seidrill, definitely a cheap stock go. I think they're going to be close. They cut their dividend and pair back their spending a little bit, but it's going to be tough for a while.
Let's get to the stocks on our radar. We'll bring in our man, Steve Broido, from the other side of the glass to hit you with a question. Run Gross, what are you looking at this week? I got something different from me anyway.
It's Priceline Group, PC, LA. Really? Most recent recommendation from the Fool's Inside Value Service shares are up more than 5,000% over the last 10 years. What's better than that for a value guy?
I was going to say, how is this a value guy? I think people are mostly familiar with Priceline. Their booking.com site is really consolidating the fragmented European market. It is the world's leading online accommodation service.
There's a powerful network effect here with Priceline. The more people they get, the more hotels they get, the more people they get. Growth will come from international expansion. My friend Inside Value think the stock's worth $1700 per share.
That's 30% higher than we are right now. Steve, question about Priceline Group? Does name your own Priceline? It seems like that model doesn't work.
You go in there and you're like, 9 bucks. I'll be 9 bucks. No, he's interested. No, he's interested.
My friend Captain Kirk seems to think it's powerful, but I'm not so sure. Jason Moser, what are you looking at? Well, everybody likes to paint, right? I mean, whether you rent or own a home, I mean, you got to paint that place at some point.
I don't know that everybody likes to paint. Well, maybe not. But you can like it if you invest in it and make money from it, right? So that's what I've got this week.
Sherwin Williams, Sticker as SHW. This is a very, very high quality business with a great leadership team. It's worth noting that Chris Conn are the CEO for many, many years of stepping down at the beginning of 2016. The good news is that COO, John Marica is stepping in, and he has also been becoming for a long, long time.
So this is sort of a cost-co-esque leadership transition, causes no concern really, but I love their dominant market share here domestically. There is a global opportunity out there certainly. We've got on the watchlist at MDP. We're going to try to do some work to establish really the price where we feel like is worth bouncing away business.
Steve, question about Sherwin Williams? Is paint a commodity for you or do you feel an affinity towards Sherwin Williams? Would you choose that over or just going home, be going? What are they got?
Benjamin Moore. Having painted a number of rooms and decks and whatnot in my life, I can vouch for the quality of paint. So something like a Sherwin Williams or Benjamin Moore is going to be typically better than, you know, sort of just run the middle home depot paint. Although Benjamin Moore does have the green monster paint.
It is pricey too. It is pricey. But you get what you pay for. Mattie, what are you looking at?
I'm going with IMAX. The trend is certainly, I am Aax, very easy. The trend is certainly away from the theater. I know people are kind of staying home more often than going to movies, but I think they're still going to pay up to see a big blockbuster movie like Star Wars or The Avengers.
They're going to pay up for an experience they can't get at home. And IMAX is that. Having a great year growing like gangbusters in China, I love IMAX especially with all the new Star Wars movies coming out. Steve?
Is there any way for IMAX to translate the experience to the home user? It seems like I got to drive 50 miles and put on glasses and go into a spaceship. So they have actually had a home theater set up that you can do, but of course it doesn't replicate the actual IMAX. Yeah, I'm pretty big at home.
I know Steve does, but it's just no way. Priceline Group, Sherwin Williams. IMAX, you got one you're interested in there? I do use Sherwin Williams paints on going there.
Hey now. Are you going to see the new Star Wars movie when it comes out? And if so, are you going to see it on an IMAX screen? I will not see it on an IMAX screen.
I mean, unless it's convenient. I will go see it and I just don't know what. I hope so. Alright, Jason Mozart, Marcus Singer, Ron Gross.
Thanks for being here. Thank you guys. Check out the Motley Fool Money podcast on iTunes and Stitcher. That's going to do it for this week's show.
Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening.
We'll see you next week.