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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 in studio this week from Million Dollar Portfolio Jason Moser from MDP and Supernova Simon Erickson from Motley Fool Rule Breakers and Supernova David Kretzmann. Good to see you as always gentlemen.
Hey, we will dig into the latest earnings from Wall Street. We will talk cars and culture with our guest Frank Aaron's. And as always, we'll give an inside look at the stocks on our radar. But we begin this week with home improvement, Home Depot putting up record sales and profits in the second quarter, low second quarter, not quite as good Simon.
We'll get to both of them. Home Depot, I don't know what more you would want out of a quarter, plus they raised guidance. The stock didn't really move. Chris, Home Depot really raised the roof this quarter.
5.4% comps. Just overshadows those 1.9% in the US at least. And I've got to attribute this to a stronger housing market in the United States. Home Depot has always gone kind of after contractors more so than those who go after doing it yourself and do this for homeowners.
And you look at just the Department of Housing data. We saw a new housing starts this year, up 5.6% of last year and new housing completion is up 3.2%. So that really helps for those high dollar items like HVAC equipment and roofing, kind of the stuff like this that Home Depot has really got in spades. And that's really good for their contractor customer base and expect more of this coming forward.
Yeah, the thing I love about the space is really it works for pretty much any condition. I mean, is the weather too cold? Hey, that's great because they sell de-icer. Is it too hot?
Sure, because you're ready to plant that garden. It works out no matter what you rent your home. It doesn't matter. You just don't want to do something.
You don't want to pay your wallet to own your home. Yeah, well, absolutely. You got to do some other stuff to that too. So no matter what the condition seems like these stores are poised to perform well.
And I think they've made both very strong efforts in the on-the-channel department where they're taking that big physical infrastructure that they've already established and really sort of leveraging that into smarter e-commerce business. And again, they just really are known for that specific purpose. We were curious, I think, over the past five years, would they be sort of Amazon immune? And I think that the results speak for themselves clearly.
Yes, they are to a degree. Well, and you look at the performance of over the last five years. I mean, yes, Lowe's taking a little bit of a hit this week, but you go over the last five years. Both of these stocks are absolutely crushing the market's return.
Both of these are fine operators. When you look at operating metrics and Home Depot in particular is just a stellar retailer. And the company's done a really nice job leveraging its stores to build its online business. So in the most recent quarter, over 40% of online orders were picked up in the actual stores.
90% of online product returns are returned to the stores. They're ramping up today, delivery. They have three fulfillment centers around the country. And this year, they're rolling out delivery from the stores themselves.
So they're leveraging the stores that they have. They're not really building any more stores right now, but they're using the stores to expand their online business. And so far, that's been paying off very nicely. And I think one thing we were talking about before getting into the studio today, you look at Home Depot and Lowe's and sort of the nature of what they're selling, they're a little bit less prone to have to worry about the pricing side of the equation, right?
When you're going in there as a consumer, you're focused more on making sure you're getting the part that fits or the part that works. You're not so focused on how much you're actually paying for it. So your big box sort of of general retailers are competing for sort of the lower prices. Whereas Home Depot and Lowe's, I think they don't have to worry about that so much and that certainly plays out well for them on the bottom line.
And you're talking about kind of the market has rewarded them. Yeah, they have. Both of these companies are selling about 19, 20, 21 times forward earnings estimates that they have. But you kind of look at the consistency of their businesses and how established they are.
They're not getting Amazon out there. I think that this is reasonable based on good performance. Well, and you were mentioning sort of the valuation, you can look at Home Depot and say that's obviously a little bit pricing on a valuation basis than Lowe's. But when you think about how many people are retiring every week, that's a trend that's not stopping anytime soon.
I don't know either of these. And I sort of look at this and think, why shouldn't I just put a little bit of money in both of these just for the next 10 years and forget about it? Yeah, there's a lot of macro that's a tailwind for all of this, right? Like people are retiring like we talked about, new housing starts, gases cheap, you know, good discretionary income.
There's a lot of stuff kind of pushing these companies even farther forward. The wireless wars are heating up right after T-Mobile announced it was getting rid of data plans altogether, Sprint announced the same thing and accused T-Mobile of stealing their idea. David Kressman, it's getting a little chippy out there. Yeah, it's sort of the story that started this point with both of these companies.
They're always going back and forth, taking advantage of this uncarrier movement, fighting against Verizon and AT&T the established players in the mobile carrier space. But T-Mobile has far and away been the winner both from a business standpoint. They're subscriber count has almost doubled since 2013. They have over 65 million subscribers.
Sprint, their subscriber growth over the same time has been basically nonexistent. They're still under 60 million subscribers. Sprint's producing negative free cash flow. They have far more debt than T-Mobile and T-Mobile's cash flow and balance sheet look a lot stronger.
And there have been rumors of, you know, a merger happening between these two companies at some point. And I think if you're a T-Mobile, you don't want to shoot yourself in that foot and merge with Sprint. At this point, at the rate they're going, they should be able to continue capturing market share as they've done over the past few years. You look at just the way the two CEOs are going back and forth at one another.
I have a hard time imagining that these two are going to get together in a room and say, oh yeah, we're better off. You got it. Probably not. John Ledger, the CEO of T-Mobile, he's really, since he became CEO in 2012, he's done a lot to invest in two things, improving the network of T-Mobile.
So better coverage, better speeds and reliability. And then also investing in the customer experience. So this summer we've already seen T-Mobile unveil the stock up plan where they're essentially giving shares in the company to customers. They also launch T-Mobile Tuesdays where every Tuesday, T-Mobile subscribers can get free goodies from a lot of different companies.
And go figure the more you invest in your brand, the customer experience, you're going to get more customers. And let's not forget about John Ledger's slow cooker Sundays. I mean, you follow that guy on Twitter, you're going to get some great recipes. And he's really out there teaching us the important things in life.
Are you serious? I'm dead serious, man. He'll even put that stuff up for a vote. He's like, it's slow cooker Sunday.
What do we make this week? Can I give anywhere from pot rows to lentil soup or whatever? And then he gets in there with a periscope feed and everything. He's great.
Just a wonderfully ambassador for the company. Seriously. It's a good thing the business is humming along because that's the type of thing that if it's not humming along, then shareholders get unhappy. Sports retailers are having a pretty good week.
They're exporting goods reported in an increase in same store sales for the second quarter and foot lockers. Second quarter profits came in higher than expected. Also some pretty nice comps out of them too. Yeah, I think these both companies, I think there are a lot of good signs here that they have been able to sort of perform well, thankfully, in sort of the face of an economy with some seeming tailwinds there.
I mean retail has been challenged, I think, in some pockets. But generally speaking, I think we have specialty retailers, whether it be Home Depot and Lowe's or sporting goods, like Dick's Sporting Goods and Footlocker. They're doing a lot of good things. I think, unfortunately, we're seeing probably more of some short-term catalysts in play or the stocks were a bit sort of depressed.
And I think the performance sort of helped bring those multiples back up to reasonable levels. But I'd be hesitant to jump in to either one of these ideas really sort of as a better long-term style of investment. And I think really when you look at it, I mean, Dick's Sporting Goods, there's a lot of money that goes into maintaining that big physical footprint. Now they're doing a good job sort of becoming that omnichannel retailer and utilizing that store footprint.
Footlocker is more dependent on those mall locations. And so they're playing in sort of that headwind of mall traffic and there's seeing some challenges on that front. And I think ultimately investing is all about looking for the opportunities and finding which opportunities are really the best ones. I think when you're looking at the Sporting Goods market there, to me, Nike and Under Armour seem to be the easier ways to make money here.
I mean, that is really the key to both of these companies' success. I mean, Dick's Sporting Goods, carries somewhere in the neighborhood of 35% of their inventory, which is pegged to Under Armour and Nike. And Footlocker certainly, the performance was thanks to some excellent performance in the Footwear department. So to me, when I'm looking towards the longer-term trends and the bigger players in the space and the more important players in the value chain, Nike and Under Armour just seem to be the smarter ways to play it.
But it's not to take anything away from either company. They both turn in some very good quarters and it looks like the remainder of the year should be pretty good. Also probably a little bit of what we saw this week with them was almost an element of surprise in the wake of sports authority going bankrupt. The way sports authority very quickly went from, we're closing some stores too.
We're closing all of our stores led a lot of people on Wall Street to say, you know what, I'm not sure this works at all. And in the case of Footlocker and Dick's Sporting Goods, it just shows that not all operators are the same. Sure. And there were some surprises there.
I mean, Dick's Sporting Goods turned in comps of a positive 2.8% versus 1.2% a year ago, but also they were guiding for anywhere from minus 4 to minus 1%. They also raised earnings guidance for the rest of the year. So certainly Dick's Sporting Goods surprising on all fronts this quarter looks like the remainder of the year is going to be a good one. But again, with retailers like these, you've really got to keep on your toes there and mind the multiple look at what's coming down the pike there.
And it's just it seems like there are a lot of long-term headwinds they're going to still have to deal with. Six years ago, Google rolled out Google Fiber, a plan to deliver high-speed internet access in select cities across America. This week, the company announced is putting the plan on hold and suspending projects in San Jose and Portland, Oregon. Why the switch, son?
Well, this is a very interesting experiment for Google. The whole fiber idea, you know, the first city they launched was Kansas City in 2012, where they basically would provide one gigabit per second internet for about $70 a month. So I put that in context. It's about 20 times faster than you're in that I have right now in my place for the same price.
So please, Google come to Alexandria, Virginia. But the reason I say it's an experiment is because Google was testing how much the costs are related to the subscriptions that they were going to be getting from people that wanted that internet. It's very expensive to dig up flower beds and put fiber on the cable all around a city. And they were trying to figure out how the equation worked out with the subscriptions versus the costs.
And a lot of the analysis at least that I've seen was saying that up to $500 per household, whether you subscribed or you didn't, was Google's cost in these different locations. So the economics perhaps were not as favorable as they thought they were. And so I think right now we're in a spot where they're pivoting from laying a bunch of fiber optic cable, as traditional telecons have, for internet connectivity, to going wireless. They're playing with wireless technologies now.
You can put wireless access points around any kind of urban area. And I think that we're still going to see Google pursue the fiber project, but they're not going to jump into this without knowing exactly what they're getting into first. Over the past five years, shares of Buffalo Wild Wings have returned nearly 200% crushing the market's average return during that time. One activist investor thinks, just ain't good enough.
Details next, you're listening to the model. Welcome back to Model Little Money. Chris Hill here in Studio with Jason Moser, Simon Erickson, and David Kretzmann. Mick McMcGwire is the founder of Marketo Capital Management.
His fund owns a 5% stake in Buffalo Wild Wings. And this week, he set a letter criticizing the restaurant chain and asking for substantial changes. What does he want, David? I mean, this is not a business in crisis.
Everybody's a critic. No, he has a laundry list of things he wants Buffalo Wild Wings to do. Among them bringing fresh talent to the board and the management team, refocusing on the core Buffalo Wild Wings brand, forget about Artaco and Pizza Rep, get those out of there and stop buying restaurants from franchisees. And he wants a company's future growth to come from franchisees, which kind of flies in the face of common sense with restaurants.
I think when you have a company that's long-term, has been one of the best restaurant operators out there, among the ranks of Chipotle and others, you want to own those restaurants. You generate far more cash flow over the long-term, you know, if your upfront costs are higher. So I don't know, I think the translation for what Mick McGwire and Marketo Capital want is please juice your short-term profits over the next year or two, and we'll disappear within the next five years. Jason, I guess that 2016 is not been a great year for this stock.
But again, over the long-term, the way Sally Smith has run this company, when this story broke a few weeks ago that someone had taken a stake, we were talking about like, really? What are they hoping to do? It seems, I mean, you'd really have to give Sally Smith a lot of credit. I mean, taking a relatively mundane concept in just Wings, Beer and Sports and giving it really a national identity and growing this business to the point where it is today, it's been just a phenomenal achievement and it's one that she should be very proud of.
And I think David's right there with Marketo. I mean, I think they're looking for more of a short-term sort of catalyst here as opposed to what the business is trying to do over the longer term. And certainly flies in the face of their longer-term strategy of building out that portfolio with restaurants like Artaco, Pizza Rep, and whatever else they may come to them. But I think that, again, if for some reason they were to have their way and to achieve to succeed in getting the business to sort of change a strategy, investors in Buffalo Wild Wings, they would definitely need to rethink this one because that is a big change in sort of the thesis here.
And the thesis for the most part is that they want to be this restaurant company and it's going to be more than just Buffalo Wild Wings. And that's how they're going to get to that 3,000-store footprint. If that changes, well, certainly the store base is going to be a smaller one. And yeah, they could potentially realize maybe a more profitable model via franchises, but that doesn't necessarily mean they'll succeed at doing it either.
Yeah, to be fair, there are certainly areas where Buffalo Wild Wings can improve. Their capital allocation has been a bit scatter-brained. They're increasing their share repurchases. They're investing internally in the restaurants.
They're acquiring franchisees and opening new restaurants all at the same time. If I'm Buffalo Wild Wings management, I pick maybe two of those and really go all in on those. You don't need to be increasing debt on your balance sheet and spreading your cash thing. You don't need to do everything at once.
Focus on the top one or two key points and hit on those. Third quarter profits for deer came in much higher than expected. They raised guidance for the full fiscal year and not surprisingly, Jason shares up more than 10% on Friday. I played golf the other day, Chris.
Did you know that just seemed like kind of a deer thing to say. I mean, these guys run that kind of business. Yeah, it was good stuff. It was lovely.
It was lovely. I'm sure John Deere had a deer that had a good part in making that happen. Are you taking credit for the quarter that deer just put up? Hey, listen, you know, the golf courses don't maintain themselves.
And if it's not for guys like me out there using them, Chris, I don't know that we're having the discussion. I mean, hey, whatever. I think that this has been a very interesting investment here because right now they are in the face of a very, very difficult economic time. You look at their top line and that tells you all you need to know.
They're having trouble really growing on the sales side. And the interesting thing is when you look at a cyclical type of business like this, and you look at the price of earnings multiple, typically when multiples are high, that's when you start thinking, Hey, I want to probably avoid this stock. These are the kinds of businesses when the multiples high because they're very depressed earnings. Actually, you have to start kind of taking a look at them and thinking, is there something down the road here that's going to help send this stock higher?
And I think there are reasons to believe that their stock could go higher. I think they make a lot of their money. More than half of their operating income comes from the agriculture and turf segment. And I think that when you're looking at a global population that is continuing to grow, that's going to continue to need more in the realm of agriculture and farming and whatnot, that plays right into deer strength.
And they have a very powerful brand where they can sell the equipment, the service, the aftermarket parts to help support that. So a great network there. Very interesting to note that Berkshire had to wait a little bit to position this company as well over the past couple of years. I'm not saying copy what they do, but whenever they do something like this, you want to take a look at it, at least understand what they're thinking.
And I think that's what they're thinking there. So, yeah, tough time for them now. But I think there's a reasonable thing to get better. The largest distributor of toys in the world is McDonald's, roughly 20% of their sales involved Happy Meals, which typically include a toy.
Recently, however, McDonald's started giving out fitness trackers instead of toys. And this week, that came to an abrupt end. McDonald's issued a recall due to reports of skin irritations associated with. And this is the key point guys, actually wearing the fitness tracker.
This is like the most McDonald's story ever. Like, they're trying to do the right thing. Isn't there an opportunity here, though? I mean, McDonald's branded Aloe something to sue your irritated skin.
I mean, let's turn this into a positive right. All right, Jason Moser, David Crutzen, Simon Erickson. We'll see you later in the show. What's it like to be the only American working for a major automaker in South Korea, Frank Erens shares his adventure in Seoul.
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I'm Chris Hill. The last time I'd seen anyone drinking this way was during quarter beer nights at West Virginia University in the 1980s. That is how Frank Erens described a work outing after his very first week as director of Global Public Relations for Hyundai in Seoul, South Korea. It is an adventure that he details in his new book Soul Man, a memoir of cars, culture, crisis, and unexpected hilarity inside a Korean corporate titan.
Frank Erens joins me now from Washington, DC. How are you, my friend? Great Chris. It's nice to talk to you.
Thanks for the interest in the book. It is my pleasure. I'm actually going to start before your book. I'm going to start with, because you and I have known each other for nearly 20 years.
I'm going to go back to getting an email from you. I remember getting an email from you saying, hey, just wanted to let you know, I'm getting married. I'm starting a new job and I'm moving to South Korea. I can tell you now, Frank, that when I got your email, my first thought was, wow, if he had shared only one piece of information, any one of those three, I'd be happy for him.
I read all three of those and I thought, oh my goodness, do you have any idea how your life is about to change? I didn't. You didn't. Let's go with the beginning.
What brings you to Seoul, South Korea in the first place and let's delve into the first week on the job? Sure. Well, this is the sort of thing that happens when you marry a diplomat. My wife, now wife, then girlfriend, Rebecca, was taking the US Foreign Service example.
We've been going out for a year or so. She had gotten in and she had gotten posted to Seoul, South Korea for nine months in the future. I was covering, I was covering the Washington Post, the business reporter, and part of what I was covering was the business of publishing, and the Washington Post Company. This was the pre-basos era.
I would watch the quarter-lease, and I would see the ad revenue and the readership go down and I could see my age go up. I figured it was going to be tougher to make a change if the first number of my age was a five instead of a four, so I was looking around for different careers. I was looking into public relations, which is not unusual for a journalist to go into. But then Rebecca got posted to Seoul, and I said, well, this sounds like an adventure and for a diamond for a dollar.
So we decided to get married so we could go overseas as husband and wife. I just started calling people I knew. I didn't think about Hyundai right away. I was just calling everyone I knew.
We had any ideas for jobs in South Korea. Through Grace of God and some connections, I found out that the head of Global PR Hyundai Motor was retiring. I got my resume in, and literally two days later, I was interviewing for the job. We arrived.
Rebecca and I arrived in Seoul in October 2010 on a Thursday. She went to work on a Friday, and I went to work on a Monday. Well, let's not about the work part because it's clear that you didn't really know what you were getting yourself into in terms of the job, because one of the things you're right about is that this isn't a nine-to-five job. One of the things you're right is your availability to the company begins before 8 a.m.
Monday, and it ends Friday night pretty much when your boss decides it's time to call it quits. How did you deal with that type of adjustment? Right. So I was a career-long journalist used to being in a newsroom, which is at best a horizontal structure.
Is it worse? Is an anarchic structure with maybe two levels or three levels between me and my top boss, executive editor, who I called by his first name. And I was largely an independent contractor as many journalists are. We work alone.
And then suddenly I was in a corporation, which not only corporations around the world share a lot of top-down sort of vertical traits, but then you go to East Asia, which is Confucian. Confucianism suffuses everything in Asia. Confucianism is about hierarchy, rank, relationship, one to the other. Whoever you are, there's always a superior and a junior, and you address them by those titles, regardless of the different settings that you're in.
And suddenly I was not only in a hierarchical corporation, but in a confusion hierarchy. And it was incredibly difficult. I mean, working in a newsroom does not prepare you for working in a corporation, much less in an East Asian one. Well, and we can go back to the drinking.
I mean, one of the things that surprised me in your book is the getting co-workers getting together after work to have a drink. I think everyone can wrap their head around that. What you went through was not only required, it was this almost heightened alcohol consumption competition. Right.
So this is unfamiliar to us in the West. You're right at work. Maybe, especially if you're single, you don't have kids, a couple of folks get, hey, you want to get a drink after work. Yeah, let's go do that.
In the Confucian, the corporate culture, your team leader typically usually work on a team of five to ten people, let's say your team leader may decide at 4.30 at night, okay, everyone, Waisic, which means the team drinking dinner. And you are compelled to call your wife or husband and say, I got to go Waisic tonight because your loyalty to your team is paramount. And this sounds martial to us maybe, but it was just one of the many examples of the things that I had to look at differently and look at from an Eastern perspective instead of a Western perspective. One example is we say conformity is a bad thing.
They say harmony as a good thing. And the drinking dinners are meant to increase the bond between you and your teammates and to produce more efficient work and also to produce a real esprit de corps. As one Korean executive said to me at one point in his nearly proficient English, everyone's same level of drunk, everyone the same. And so that's really, and if you don't drink, if you don't participate, and with a caveat, there is an increasing awareness in Korean culture and society and government that there is a health cost of this.
And there's a productivity cost of this even. And so the Korean government has just now begun airing public service ads, encouraging the big corporations and governments and so to ease back on the Waisic because sure, you're at work the next morning at seven, where you're supposed to, but you're not good until 10 AM or so. And you're commiserating in the smoking room with your buddies from last night. And so the foot's coming off the gas a little bit, but the Waisic will be part of the Korean corporate life for some time.
And there are benefits to it as well. You just have to alter your way of thinking about it. But you're not a particularly big drinker. I am not.
So how do you thread that needle? Do you drink more or do you try to come up with creative ways to avoid drinking? Right. So for me and for Rebecca and I, it really comes back.
I mean the limiting factor comes back to our faith. We're both Christian. And the Bible doesn't tell you not to drink. I mean look at the last supper crisis sharing one.
But it does implore you not to get drunk. So I said okay, that's our instruction. But drinking together in East Asia is about getting drunk. There is no other reason to drink than that.
So the last thing I wanted to do was a come across as holier than now. Because many of my coworkers are Christian. And secondly, it's like my new host country in the face. And so I asked for advice from some other expats on what they had done.
And they ranged everywhere from like dumping. So the drink in South Korea soju. And it's about 20% alcohol. It's clear.
It comes to a small green bottle for national drink. It's more than the drink. It's like more than what vodka is to Russians. A green think of it as their spirit.
Right. And it's the tool of bonding. And it comes in a shock glass. And you say, gun bay or we hire you and you down it.
And so you can do 50-20 shot tonight. Right. And so solutions range from dumping it into the soup when no one was looking and filling it with water to just going forward. And so with the help of my boss quite honestly and his endorsement which sort of made it okay to everyone at dinner when we were all making our endless toast and every male executive, typically male executive expected to make a toast to a Hyundai's success to global number one to whatever it's for.
Instead of taking a whole shot of a soju, I would take a sip. So by the end of the night, I was participating in the ritual and I was trying to fit in. But by the end of the night, I had to say two shots of soju instead of 10. You're listening to Motleyful Money talking with Frank Ehrens.
His new book is Soul Man, a memoir of cars, culture, crisis, and unexpected hilarity inside a Korean corporate titan. I want to get to the automotive industry in a moment. But you tackle a number of social issues and conflicts with the way we're used to dealing with basic manners in the United States versus what is considered polite in Korea. And one of them revolves around a napkin.
What is the deal? If I'm in Seoul, am I supposed to ask for a napkin or do I reach for it myself? Yeah, you got to reach for it yourself. So I call it the napkin episode and it happened right before I left Korea.
And I honestly wish it had happened right after I'd gotten to Korea. It would have made things easier for everyone around me. I'm having team dinner with my global PR team. And one young woman sitting next to me at Alkorean, of course, except for me, napkins are next to her.
And I said, would you mind handing me a napkin, please? So she did. Now she had spent a year of college as an exchange student here in the U.S. She's familiar with us.
She spoke very good English. I said, my team members, she said, did you ask me to hand you that because in your culture it's considered rude to reach in front of someone while they're eating? I said, yes, that's right. She said, in our culture it's considered rude to interrupt someone while they're eating to ask them to give you something.
So aside from the hilarity of it, the fact that here were two cultures trying to do exactly the most polite thing, only doing exactly the rudest thing. And so that's what I had to really learn. I ended up sort of thinking about it. If you put a glass on a table between a Korean and an American, they're both going to see a glass, but it's going to mean something different to each.
The American will think, oh, thing that will soon provide me with a refreshing beverage. Korean will think, oh, thing that I must fill and serve to my senior here at the table to show him respect. You see? I do, but I'm also thinking about how I would really be a fish out of water in that situation.
Yeah, well, listen, all of a sudden, I was my entire time there. I got better as it went along because not necessarily because I learned more even though I tried, but honestly, because I dropped my sort of Western, I tried to drop my sort of Western, you know, natural American bumsciousness and, you know, blustering through and doing things that the big, my wife used to call me an America bomb, dropped in the middle of Korea. So I tried to tone it down a bit. Now that you are back in the States living and working, is there anything you have brought back with you from Korea that you use in your work life, whether it's a custom or tradition or just something you learned about working with other people?
Yeah, well, first off, I noticed my emails are a lot more polite because here in America, email is sort of a value neutral delivery tool. We use it for everything from breakup notes to contracts. And in Korea, it's an official tool. It's typically a tool of official business.
And you don't just send somebody an email say, hey, what do you think? You start with an address, you know, dear title, name. It is a pleasure to speak to you today, et cetera, et cetera. We would call it small talk, but it's important.
And then you address the issue. I've made my emails a bit more polite. And also, you know, in my job now where I work at a PR agency, we deal with a number of foreign clients. And I become a lot more sensitized to learning about how the email and my all my communications will be received than how I'm saying them.
Few industries have been as interesting to watch over the last five to 10 years. And I would argue as interesting to watch over the next 10 to 20 years as the automotive industry is. And I'm curious, having worked at the inside of a major automaker like Hyundai, what is going on in the automotive industry right now that is of the greatest interest to you? Is it clean energy cars?
Maybe what they're doing at Tesla Motors? Is it self-driving cars? What catches your attention and makes you think as someone who used to be an executive and automotive company, this is where the world is going? Yeah, it's convergence of all those things that you talk about that we're irretrievably going those ways.
I mean, the internal combustion engine will be around a bit longer, and it will be dominant for a bit longer, but it will continue to get better and be a part of the solution. You're going to see a continued rise in electric vehicles, hybrid electric vehicles, and fuel cell electric vehicles. Every Hyundai has a fuel cell electric Tucson, the Mirei at Toyota. More and more, a fuel cell is a magical car.
You fill a tank up with hydrogen gas instead of gasoline, and the only thing that comes out of the tailpipe is water vapor, right? EV battery range is going to continue to increase. All that is fascinating. And then the step to autonomous driving will continue to come in some leaps and steps and leaps and steps.
So we'll start already. You have some autonomous elements on cars with lane keeping devices and adaptive cruise control and automatic braking, lane departure warning, haptic warnings when your wheel vibrates, when you move out of lane, things like that. Pretty soon you're going to see car to car communication. You're coming to a blind intersection.
Your car sees the car coming at you before you do and warns you. And then pretty soon we'll move to autonomous. Now I take that back. Not probably not pretty soon.
At some point we'll move to autonomous. But it's going to be a big leap because essentially everything is going to have to be autonomous before something is, before one thing is, because they're all going to have to talk to each other. And then our cars, you know, I see a future where your car, and I think this is where people get around. They say, oh, car is going away.
No, it's not going away. People still like that personal space. But the personal space now will be one in which they don't have to worry about driving. They can get in their personal space and they can work or they can talk to their friends or they can have a drink with their friends.
And the car will take them where they want to go. And that's fascinating. I tell my three-year-old daughter, jokingly, I'm never going to have to teach you to drive or get you to go through the learner's permit thing. I will of course.
But maybe her daughter not, right? So it is absolutely fascinating time that's coming. All the automakers know that. They're all moving forward.
Google has their self-driving project. It really is fascinating to watch. And the automakers do have to adapt. All right.
Last question. Then I'll let you go. Another big part of Korean culture that you write about is karaoke. How did you adapt?
And what is your go-to song? So unlike in America, karaoke or in Korea, noribong, which means music room, is no joke. Every year you see some news stories about some poor salaryman getting knifed in Korea or China or Thailand because he was butchering my way. And nobody couldn't stand it.
So it's an integral part again of the bonding, but also the evening out experience. You eat dinner, then you go karaoke. And everyone's got their go-to. And I just settled on dancing queen.
Because everyone knows that everywhere in the world, and it's fun. And it's just hilarious to see a big American guy singing an ab-a-thong. And so it's a good leveling device. If I can never go wrong with ab-a.
The book is Soul Man, a memoir of cars, culture, crisis, and unexpected clarity inside of Korean corporate Titan. It is available everywhere. Fantastic stories. Frank Farris.
Thank you so much for being here. Thank you, Chris. Take a lot of fun. Coming up next, we give you the inside look at the stocks on our radar.
This is not the full money. As always, people in the program may have interest in stocks they talk about in the month before we have formal recommendations for against Sonobai or Selsdok, space solely on what you're here. Welcome back to Mount Le Mans, Chris Hill here in studio with Jason Moser, Simon Erksen, and David Kretzmann. Time to get to the stocks on our radar and our man Steve Brodell.
Hit you with a question from the other side of the class. David Kretzmann, what are you looking at? You know me, I like Flashy so I'm going with Exalta, ticker, A-X-T-A. This is a global provider of specialty paints and coatings for new and used cars and other vehicles and industrial uses around the world.
90% of their business comes to markets where they're the number one or number two market share leader and Berkshire Hathaway actually bought a 10% stake in the company last year. So it's one of my radar. Steve, question about Exalta? Is paint technology changing?
Is paint different today than it was 10 years ago? It definitely is. You're having paints go from salt and base paints to liquid based paints. There's a lot of technology there surprisingly.
Jason Moser, what are you looking at? Sure. The phase of a very difficult energy market. Taking a look here at Clean Energy Fuels, ticker is CLNE.
Most recent quarter of gallons delivered grew 11%, revenue grew 24%. They've done a lot of work here that shares short of the balance sheet which has resulted short term, a little bit of a dilution there for shareholders, long term absolutely the right thing to do. Once we can see some sustainable higher oil prices, $45, $50 even higher, this business is going to benefit from that tailwind. So it'll just take a little time.
But financially speaking, they're back on solid ground there. And I do like what they're doing here in the natural gas space. Steve, the future of liquified natural gas. I'd say is two thumbs up Steve.
Simon Erickson, what are you looking at? I'm going with a small micro-cap called Disney. ticker D-I-S. Getting of course Disney is the largest media entertainment groups in the world.
And shares have been getting dished in the last couple of months by analysts that are calling Disney out for a falling subscriber count in ESPN, which is true. They have dropped from about 99 million subscribers in 2011 to about 90 million today. But the company has got such pricing power with those cable networks that they're getting great affiliate fees, operating profits for media networks is up great. I think it's still a great opportunity for investors.
Steve? What age should my children be when I first take them to Disney World? I would say at least six. Three stocks Steve.
What are you looking at? I'm a Disney shareholders. I'm going with it. All right.
Jason Moser, David Krebs, Simon Erickson. Thanks for being here. Thanks. That's going to do it for this week's edition of Motley Fool Money.
Thanks for listening. We'll see you next week.