Everybody needs money. That's why they call it money. Well, best thing to know about free, but you can get up to the bottom. From Fool Global headquarters, this is Motley Fool Money.
Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris L. Joining me in studio this week from Motley Fool, Inc.
of investor James Early, and for million-dollar portfolio, Charlie Travers and Ron Gross. Gentlemen, good to see you as always. We've got a big deal in the energy industry, some big numbers in the housing industry, and we've got a big promise from Apple CEO Tim Cook. And as always, we've got a few stocks on our radar, but we begin this week with the big macro, and there's a lot going on around, but I'm going to hit you with two reports that came out this week.
On Friday, consumer sentiment numbers were out confidence at a six-year high, and the Case Shiller Home Price Index was out earlier in the week, biggest gain in seven years. It's all roses. It's all good. It's all good.
It's all good. That's what they want you to do. Who's they? They?
You know that. Nothing's hard looking up. We're getting a lot of positive reports, a lot of great momentum here. Let's not forget it's because interest rates are at zero, and that's artificial, and that's not going to last forever.
So the big question is, can the economy get off on its own, take its own steps forward without the quantitative easing, which is going to be going away? At some point, we don't know when. But for now, I like what I'm seeing. The economy is picking up steam, and if the Fed puts it just right, we're all going to be in for a nice self-landing.
In case Shiller only looks at 20 cities and only existing, sales existing detached single family homes. Are you saying that's too specific? No, multifamily. No, but clearly the real estate market is picking up, and it's even more stronger in more affluent towns, which I guess is not surprising.
But we're still off from the highs back in 2006, which we were in bubble then, so I guess that's appropriate. But as the husband of a realtor, I can tell you anecdotally that things are definitely hot. I mean, there's multiple offers, again, there's people taking our contingencies from contracts, and the delevation clauses being put back in, which is starting to feel a little bit like it did back in the day. When I hear you say that, what I think that means is you're spending a lot more time heating up frozen dinners for yourself.
That isn't untrue. Charlie, what happened to selling May and go away? The market's up about 3.5% in May. Hey, don't let the party stop, Chris.
I'm certainly not complaining. We had a very long streak of updates, which is seen to come to a halt later this week. But yeah, I think that's nonsense in the first place, and you should be always investing in a company because you've got its prospects in the price, and not off of some in-name lunacy like selling a particular month. But to Ron's point is also the question of, it's the Landstark question.
What's the drugs in terms of the performance of the economy? We have QE, which has been stimulating this stock market as well, right? Totally. Shares of Envy Energy up big this week on the news that it is now part of the Berkshire Hathaway Empire.
It's being bought up by Mid-American Energy for $5.6 billion. Charlie, do you like this move? I think it's a nice asset for Mid-American Energy, a subsidiary of Berkshire Hathaway, to add to its portfolio. They serve the customer solely in the state of Nevada, which is a favorable regulatory environment.
They only have to renew their rates every three years instead of every year, which is a nice spot to be in. Mid-American, though, is still kind of a small part of Berkshire Hathaway's overall business. It's only 7% of the revenue. Even if you add in the $3 billion in revenue Envy Energy did last year, Mid-American is still only 9% of Berkshire as a whole.
I'm not sure it's a needle-mover for the company overall, but I do like this acquisition. Ron, we were talking a couple of months ago. I remember you said everyone in a diversified portfolio should have some exposure to energy. I said that.
That's not so smart. Do you think this qualifies? If you're a Berkshire Hathaway shareholder, can you check that box? Or do you think that that's not enough and you need more than that?
Since it depends how much Berkshire I guess you own, but you probably need a little bit more than that since it isn't an extremely large part of Berkshire. It's likely that Berkshire isn't an extremely large part of your portfolio, where perhaps it is. I know several people who it's the vast majority of their portfolio. It's a case-by-case basis, but you probably do have to add some.
This is a regulated utility energy company. It's a little bit different than what we were probably talking about last time. I made that comment, which was like an exploration production company and a gas company. It's a little bit different.
It's a regulated business. This was not, we talk about Office of Luchanants, Todd and Ted. They weren't involved in this. This was Greg Abel.
Is that right? The American energy? Can he just pull the trigger on it? Check this big by himself or does not go war and need to give his seal of approval?
I'd imagine conversation with Warren and Berkshire's board of directors did happen. You don't just go off-road here. The utility merges. They almost always work out compared to most deals.
Because you just combine two companies, you have a better capital position. Yeah, I think this will work out. It's clearly a bet on Nevada, I think, on a continued recovery there. It allows Buffett to unload partially some of that elephant gun.
He's been talking about putting 5-million cash to work. It's a 10-billion-dollar deal overall, if you add in the assumption of debt. So it allows him to put some nice cash to work in a good regulated business. On Wednesday, a company in China agreed to buy Smithfield Foods for 4.7 billion.
Smithfield is the largest pork producer in the world. This is the largest ever purchase of a US company by a Chinese company. Some people out there are concerned about this. I'm not.
It's getting a lot of play as a national interest level story. Bottom line is ordinary Chinese people don't like to eat glow in the dark meat any more than the next guy. That's what this comes down to. The tainted meat is an issue domestically there.
This company wants to import this pork and sell it at a premium, which Chinese customers can now pay. It's not a strategic asset. It's not a telecom. It's not a defense contractor.
It's just neat. So, yeah, it's not as though they're taking a big stake in Lockheed Martin or something. Correct. When you're a healthy guy, once the last time you had some bacon or some pork.
I would need any from Smithfield. I mean, I'd make an organic pork. If they make an organic product, I would eat that. This week, at the Wall Street Journal, all things digital conference in California, Apple CEO Tim Cook made several interesting comments.
He took a shot at Google Glasses saying that he doesn't think that's going to be a mass-market device, unlike something that you would wear on your wrists. That added fuel to the fire in terms of Apple working on some sort of a device for the wrist. But, Charlie, he also went on to say, we have several more game changers in us. That seems like a really big statement, a really big promise that, I don't know, was that a smart move to raise expectations like that?
I think everybody's working assumption is that Apple has other products waiting to be launched when they're ready, whether that's an enhancement to their Apple TV product or wearable device like a watch, which he seems to be very excited about without also providing anything specific for us to chew on. So, my bet is, Apple does come up with something exciting sooner than later. He did mention the culture that created the iPhone and the iPad is still in touch trying to make products consumers love. So, I think he's on the money and they're just not ready to talk about it.
I think Tim Cook is kind of like an A-list movie star who's on the verge of making a skin flake or something. He's got to prioritize his credit and heft here and not just go for the quick feel. You don't pre-announce this sort of thing. You just do it and surprise everybody.
I'm not a big fan of bluster. I don't like when companies talk up their sock. I don't like when they talk up what's going to happen in the future. Just execute, don't worry about Wall Street, don't worry about investors, just do the work and the stock will eventually work out.
But, Charlie, in terms of the timing, a couple of months ago when Samsung had their big events, one of the things we talked about at the time was, it was brilliant timing whether they meant it to be this way or not, brilliant timing on Samsung's part because it didn't look like Apple was going to have anything coming out in terms of a big launch device, whether it's an upgrade of the iPhone or something new until September at the earliest. I hear this comment from Cook and it makes me think, well, you really better have something before the holidays. Well, their developer conference is in two weeks. They're going to talk a little bit about the future of their operating system and we might get a better peak at it then.
All right, we'll keep our eyes on that. Coming up, the greatest innovation in finance since the ATM. This is not the cool money. Cash, cash, cash, money, anytime.
Welcome back to Motley Fool Mike, Chris L. Hand Studio with James Early, Charlie Travers and Ron Gross. From time to time, we are happy to welcome a new station to our radio show Family Today. I'm very happy to announce, not just a station, but an entire network.
The American Forces Radio Network. Motley Fool Money is now part of the voice channel on over 1,000 outlets in 175 countries. Hey, US Navy ships at sea. It's amazing.
All our hard-working military men out there. Thank you for welcoming us and hopefully we won't bore you to tears. No promises. We'll be right.
No promises though. Costco, third quarter profit up 19% from a year ago. But Ron, there was a slight miss on the revenue. I don't think investors really cared because shares had a new all-time high this week.
It's kind of redundant, right? Here's a little boring radio for you. They just keep getting it done. They keep putting up great numbers.
Margins are improving. Retention rates are great for their membership fee. What a beautiful business model. People actually pay for the right to shop at Costco.
It doesn't get much better than that. So the stock continues to perform? The membership fee increase that was put in place, that real effect continues to work out well for Costco, but that's gotta be coming to an end soon. It does.
It happened at the end of 2011, but the way this accounting works is it kind of dribbles in over time. So about $26 million of the incremental membership fee increase in this quarter was due to membership increase. We'll probably get another 35 million total before it's done in this quarter and perhaps a little bit into the next quarter. And then we'll be on an apples to apples basis, kind of waiting maybe in a couple of years for the next price increase.
But we're really concerned with all that that amps up the pressure because once that gravy train for lack of a better term runs out, then it's all about the operations. From a valuation perspective, it does. From a business, looking at the business and the cash flows. It's a very thin amount of money they make on actually selling their products, most of 75% of their operating income comes from these membership fees.
So clearly, if they can continue to raise those prices, it'll continue to fall to the bottom line. If they have more trouble doing that, then we'll see slower growth. Hedge fund investor Dan Loeb owns about 6% of Sony. And just a few weeks ago, he hand delivered a letter to CEO Kazuo.
I hope I'm pronouncing that correctly. Urging him to spin off Sony's music and movie business. And Charlie, at the time, we talked about it and there was a polite response from the CEO, but personally, I didn't think it was necessarily going anywhere. Now we see reports that Sony has retained Citigroup and Morgan Stanley to consider the proposal.
Is this going to happen? Sure looks that way, Chris. And when you consider that, Sony stock is down about 85% from where it peaked 13 years ago. And they've had cash flow declines for years running.
Yeah. Some's got to happen here. Some's got to change. And Loeb's proposal to spin off their entertainment division, their life insurance division.
Sony is just a massive conglomerate. They make TVs, mobile phones. They're one of the biggest record labels in the country. And a lot of the electronics stuff is underperforming their divisions that are making money or what Loeb is proposing to spin off, which is a little disconcerting because then if you stick around to Sony, you're making a bet on a turnaround in electronics when they're competing with Samsung, LG, and Apple.
Not necessarily a bet I would want to make. But Loeb, he's got a great track record and you can do worse than writing his co-tails. But if you hand deliver a letter, why wouldn't you just talk to the guy? I mean, he's a language singer.
I believe there was a meeting and this is uncharacteristically polite for Dan Loeb. But I think it's sensitivity to the business culture over there. Usually he files a 13D with a scathing letter. It's very entertaining reading.
Either that or he'll do 110 PowerPoint presentations just destroying, in this case, green mountain coffee roasters. Back to Sony for a second. Do you think this is reasonable to buy the stock or is it a situation where if you think this is going to happen, you wait and then you just buy the spin off? I think it does make Sony interesting and I do think that something's going to come of it.
That's positive. Fast food chains and packaged food companies have come under fire for selling things that contribute to the rising obesity rates. This week at an analyst conference in New York City, McDonald's CEO, Don Thompson revealed that he has lost 20 pounds in the last year by quote, getting my butt up and working out again. And James, he also said he has not changed his habit, which I was unaware of, of eating at McDonald's every single day.
Chris, I lost 20 pounds when I hit a tape worm once. I didn't want to take a tape worm. It was a decimal parasite. I got a Pakistan.
The point being that it doesn't doesn't prove any point. Right? I mean, he's compensating for the food. It doesn't make argument to me.
But do you think as we have seen things like Mayor Bloomberg and New York City targeting the soda companies and that sort of thing and McDonald's coming under fire and others? I mean, there are plenty of companies out there. How do you think this all shakes out? Where do you see this going in the next couple of years?
Because I don't know. Chairs McDonald's, but I look at it and I feel like if I were the CEO and I could point to look at all the healthy things we have added to our menus, even though salads only make up about two to three percent of sales, hey, look, at least we're putting it out there, I feel like they're covered. Right. I mean, it's the public's choice and there's always going to be a choice for the lowest common denominator.
The question is, do people know what's best for them? We're going to do a philosophical and political question. I don't think we're ever going to legislate a way greasy fast food. That's the problem.
I wish we would. I wish we would. You worried about this? I'll try.
Which part of this? Just the legislation, Warren. In general, yes, I'm not a fan of I'll say I'm on the opposite side of the table with James. People want to jam a thousand calories worth of hamburgers and their mouth at lunch.
That's our business. In late 2011, the Canadian government released a new $100 bill and the bill was noteworthy because it's made of polymer. Not paper. Now it appears that it is noteworthy for having a distinct scent.
And that is, of course, because it's Canada. Maple syrup. The Canadian press obtained a year's worth of correspondence to the Bank of Canada from ordinary citizens about the new currency. And dozens of citizens were emailing and writing and calling the Bank of Canada, claiming that the bill smells like maple syrup.
But they said that it doesn't. Is there an official denial? I think there's an official denial. But first and foremost, I love that this is just a groundswell of people.
This is not one sort of random person. This is many people coming forward and saying this. But two, it makes me think, shouldn't we be doing this? Does it?
I mean, can you do it? Is it possible? I would hope so. I think on a brand new minted bill you could and that it would dissipate over time.
Yeah, it was going to start somewhere. I'm sorry, it was wrong. Just maple syrup your bills. Well, I mean, maple syrup makes sense for Canada and God bless our friends up in Canada.
But I don't think if we're picking a scent for currency, let's bring in our mancy, right off from the other side of the glass. Steve, in America, if we get to pick a scent for our currency, what do we go with? One word. Progress.
The smell of freedom. You're not apple pie. There was a poll thrown up on NPR's website. People choosing between apple pie and bacon.
I think apple pie was the slight winner. But we'll just go down the line. Personally, I would go with cinnamon rolls. I'm a big fan of bacon as you know, Charlie.
But I freshly make cinnamon rolls to go up your wallet and that scent wafts out. Who doesn't love that? What about your run? I've said before, I'm a fan of anything that is banana scented.
So I'm going to go with a banana scented bill. That's crazy. McDonald's french fries. Now wait a minute.
Hold on. My personal preference. Ron's going with a personal preference. I'm going with a nation.
Oh, okay. What would your personal preference be? Kale? A fir tree scent.
It's very refreshing. It's very refreshing. Okay. That's a native of Maine.
I applaud that, Charlie. Beef brisket. Beef brisket. I change my throat to beef brisket.
Yeah. See, you know, now all of a sudden, bananas don't look so good anymore. It doesn't. All right.
Drop us an email. Radio at fool.com is our email address. That's radio at fool.com. If you're from Canada, we want to know if you have a maple syrup scented $100 bill on you.
But anyone else please just let us know what scents the money should be radio at fool.com is our email address. Ron Gross, James Early, Charlie Convers. Guys, we'll see you a little bit later in the show. Ooh, last smell.
Can't just smell that smell. Up next. You want to make money investing in the stock market? There is one type of stock you have got to stay away from.
That's next. You're listening to Penny Stocks. Mummy, next up. Welcome.
Welcome back to Mummy Fool. I'm Chris Hill. The lore of Getting Rich Quick is so powerful that it leads some investors to invest in penny stocks. Because hey, if it's a 50 cent stock and it goes up a quarter, then you just made a 50 percent return on your investment.
And while you may realize that penny stocks are in fact a terrible investment, what you may not be aware of is how some penny stock promoters are out to scam you. Joining me now in Studio Brian Richards, a managing editor of Fool.com. Thanks for being here my friend. Thanks for having me, Chris.
You recently wrote just a brilliant article and the headline says it all, the Desperate Deceptive Measures, Penny Stock Scammers, Used to Dupe Investors. And what I love about this story is that you wrote it from your own experience, which is learning about a company called Gough Corporation, which, and here's the first step that blew my mind, was that in three months it traded more shares than Apple and ExxonMobil combined. I never even heard of this company. How was it trading?
It didn't even exist as a public company until March. So in its first six weeks it traded more shares than some of the most liquid large gap US names in the world. And it's a social recruiting company turned Columbian Gold Minor. Boy, I mean you talk about diversification.
Well, you'll see this a lot. If you dive into the world of penny stocks, you'll see a company that has no business really. They exist on a sheet of paper, on an SEC filing. This company was founded to become a LinkedIn competitor.
That was what they were founded to become. And it didn't work out for whatever reason. Shocker. And so in February they changed strategies and they decided that they were going to become a gold miner in Medellin, Colombia.
Sure. Sure. Yeah, natural. So they changed their business model, their strategy, and they had a complete overhaul of their management.
And I would use air quotes here if people could see me listening because they had two directors and they both departed the company and a new person stepped in. And so part of their strategy, all kidding aside, part of their strategy was to just go out and promote the stock. And you first learned about this through one of our bloggers. And we talked before on the show about the Motley Fool blog network.
One of our bloggers was contacted by Gough with a very attractive offer. It sounds like. Right. And so here I will say legally, I don't know whether the company was behind this stock pump because they did not reply to any of my inquiries.
And so I have no evidence. It could have been the company. It could have been a third party who was totally not affiliated with the company. But yes, so what happened in our situation was our Motley Fool blog network, which is an open blog platform anybody can sign up to write a post.
We had a blogger on there who was contacted by somebody through LinkedIn and asked for a phone call. The blogger spoke to the gentleman on the phone. The gentleman on the phone offered him a four figure sum to write a positive post about this company, Gough. And at that point it had been trading for about three weeks.
When the blogger showed some concern about this offer, the gentleman on the phone offered to write the post for him if he would simply put it under his own byline. Nice. So the blogger, and we give him a lot of credit here because he refused and brought it to our attention. I eventually spoke to the guy on the phone who made the offer.
His name was John O'Connell on LinkedIn. But I did a Google image search and found that he had simply stolen somebody else's LinkedIn profile photo, an insurance salesman from Milwaukee, Wisconsin. And the picture of the insurance salesman was a gentleman who had gray hair. He was probably in his 50s or 60s.
The person I spoke to on the phone was not a day older than 19. And we go further down the rabbit hole because it turns out other bloggers are contacted either by this company or third party. And here's one of the quotes from your article, which is one of the bloggers saying, I am on a regular basis offered compensation to write about multiple firms. How prevalent is this?
Well, it seems to be more prevalent than anybody knew. We have some standards in place on the Motley Fool blog network to make sure that people aren't taking advantage of the open platform. And we had to disassociate ourselves with, we had to ban four bloggers who wrote about golf in various forms. Some of them were mentions in passing and some of them were longer profiles of the company.
And we saw some of this on other blog sites as well, like Seeking Alpha. Seeking Alpha actually has recently announced that they have new standards in place for the size of the company you can write about. This was a company that at its peak was trading at 65 cents. That was its all time intraday high with 65 cents, which gave it a market value of $50 million maybe.
It's now the last night I checked it was at $2 and it had a $6 million market cap. But we have rules in place to prevent talking about stocks that small for the simple fact that in the penny stock land, the movement of the stock is frequently totally detached from the quality of the underlying business from the business fundamentals. You're listening to Motley Fool Mike talking with Brian Richards, managing editor at Fool.com delving into the mysterious world of penny stock scams. This is where your article really took a hard turn for me.
Again, and we were talking about this during the break. The Motley Fool has been around for 20 years and pretty much from day one we have been screaming from the mountaintop that penny stocks are horrible investment. People should just stay as far away as they can. And yet even I was surprised by part of the strategy here being the advertorials that show up and they look like they're just, you know, you get to the bottom of an article on a webpage and it's like, oh, you may be interested in this other article.
And you think maybe it's a legitimate piece of journalism or an opinion piece and really it's just a scam. It's a scam. Yeah. It's meant to look like proper editorial content.
Trustworthy editorial content. These advertorial sites, you'll see them all over the internet. They have such snappy headlines as why you should never use shampoo again and how penny stocks will make you rich. And you know, you click on one of those.
It looks like a normal editorial article. Click on it and you'll realize soon that it's an advertisement for a penny stock site. And really the penny stock site wants to get you on their email list because that's how they alert people to the new trades. That's how they're able to get that trading volume up so high they get tens of thousands of people all buying the same tiny company.
And what's amazing about this is it ties into the two emotions that we touch on frequently here at the Motley Fool and that is fear and greed. And you know, we quote Buffett all the time, I like to be greedy when others are fearful. I like to be fearful when others are greedy. And this really taps into both because it's just the natural allure of I can if it just moves 10 cents.
I can get a great return on my investment. And with a market at an all time high over the last few months, people saying, gosh, I've missed out either altogether or partially. Here's a way I can make it up quickly. That's exactly right.
I think this is this is not investing at all. This is speculation. And it's not much different than rolling dice at a Vegas casino. The other thing that I was well surprised at but also sort of chuckled at was the use of fake celebrity endorsements.
You know, a picture of Mark Cuban, you know, the entrepreneur and owner of the Dallas Mavericks and his Twitter handle, you know, and it's a screen capture. And it looks like, hey, Mark Cuban is endorsing this penny socks site. That sort of thing. We actually contacted him immediately.
And he was like, no, that's not me. That's not me. He confirmed that it's a fake. Yeah, Donald Trump is on there and Mark Cuban and there's a few other celebrities, 50 Cent for all those rap fans out there.
Exactly. Who did not actually endorse penny stocks.com. Are there any additional lessons that you take away from this as an investor? I mean, we talked before about transparency and there is greater transparency in the public markets now than there was 10, 15, 20 years ago.
But this is one of the situations where it seems like, yeah, there's more transparency. But there's also a greater ability for people to scam you. I think that the greater amount of transparency is only useful if it's taken advantage of. Most of the research I did for this article was out there in Plainview.
It was, you could tell that the company had a wholesale management change 90 days prior to the public. You could tell that the person running the company had absolutely no experience in gold mining. And, you know, there are so many red flags here that for people who invested in this, they didn't do it after performing great amounts of due diligence. So, you know, I think, as I said, this is an investing.
Investing is about finding companies with competitive advantages, with competent management, with market opportunities. And this was not happening. Investing was not what was happening with people who were buying golf. Well, again, the article is the desperate, deceptive measures penny stock scammers use to dupe investors.
And I'm not the only one praising you. Seeking Alpha when they announce their policy change gave you credit. And you also got a very nice shout out from the Columbia Journalism Review. So that was fantastic.
Before I let you go, one of the people I follow on Twitter is tested biglin to for many years was the host of Marketplace Money. And she had pointed the way to a very in-depth article in USA Today about millennials, people 18 to 29 years old, really struggling with financial literacy. And I was saying during the break, I was surprised by this in part because I just imagine people who are 20 years younger than me being much more savvy about money in general, but certainly about the world in general. And having greater awareness about money, financial education, that sort of thing.
Before we dig into the particular, were you surprised by this? Not really. I know that there was no golden age of financial literacy. It's not like our parents and our grandparents were experts in these topics.
They're exceptions, of course. But I think the big change today is that the world has gotten a little more complex. And so the products, the financial products that are out there are harder to navigate and are more overwhelming and confusing. And you know what you find in those scenarios is people kind of throw their hands up and say, well, I don't understand it.
So they end up going through life not understanding it. What do you say to a 20 something person listening or to someone who knows someone in their 20s who may be struggling a little bit? What are one or two things they can do? Yeah, I would say to those people, I would say number one, to the extent possible, make savings automatic.
So have it deducted directly from your paycheck. Do it the first day you get a paycheck and just have it automatically go into a savings account or an investing account. Obviously that applies for a 401k. Take the maximum deduction that your company would offer, match to, etc.
So number one, make it automatic. There are all sorts of studies showing that behavior is really the thing that gets in the way. So to the extent that you can take the behavior out of your own hands, do it. And the second thing is I think that there's a lot of borderline condescending advice about doing away with your $3 latte and how that is going to change your financial life.
Exactly. You'll be a millionaire if you just hadn't drank 50 latte in 2013. I would say that's important. And yes, you should be conscious of how you're spending your discretionary cash.
But more importantly, it's something that Deanna Yokem here at the Fool says all the time, which is sweat the big stuff. So negotiating a 10% raise with your employer is going to have a larger effect than doing away with a weekly $3 Starbucks, switching to cheaper housing, figuring out how to save money on gas mileage or those more frequent expenses, paying down high interest debt for so if you have a credit card that charges you 17%. Those are the sorts of things that over the course of a lifetime, those are going to add up a lot more than the little tiny $3 latte at a time. Now, I'm not saying that you should go spend $6 on latte as a day.
I think the advice though is really focus on the big stuff and make sure that you are maximizing income and minimizing outflows out of your pocket. He's managing under your at Fool.com. Brian Richards, thanks for being here. Thanks for this.
You're coming up. We'll give you an inside look at the stocks on our radar. You're listening to Motley Fool Monday. Oh I like to be a man.
He's got money to burn. As always people on the program may have interest in the stocks they talk about and the amount of Fool may have formal recommendations for against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill joining me in studio once again, Charlie Travers, Ron Gross and James Early. He's at time once again, time for the stocks that are on our radar and will bring our man Steve Roidow in from the other side of the glass.
Steve wasn't here last week. I'm not sure where he was. There's no confirmation that he may or may not be a spy and have some illicit activities on the side. I have no idea.
I'm not asking. Ron Gross, you're up first. What's your say? Oh, Steve, Nathan's famous N-A-T-H, the restaurant and packaged food company.
It's a small cap company. Quite frankly, I've missed it. It's up 50% this year. But it looks like it could still have some room to run.
There's some lawsuits going on, some things that need to be worked out that maybe are creating an overhang of the company, but it's doing really well. They report next week, so I'll be really interested to see what they have to say. Steve, a small cap with lawsuits. Of course, a hot dog company?
Yeah, sure. Nathan's. Yeah, sure. Coney Island.
That's a good thing. Have you never eaten that Nathan? I probably have, but... It's also Arthur, Treacher's Fish and Chips, Kenny Rogers, Roasters, Miami subs.
Yeah, Arthur, Treacher freaks me out. Maybe this isn't for you. Let's move on. James, early, what's your say?
I'm watching him on the door saying that, but Mike Olson, an analyst here, is key on Lazar. This is an investment bank that is big in M&A. Increasingly asset management. They're sort of building back their business.
And Elson Pelt, who's an activist investor, took a 5.2% stake in it. He's gonna try to cut compensation, which is drive up earnings. Where are they based? I believe it's New York, right?
El Az, Steve, question about Lazar? How transparent are they in terms of what they're actually doing? Well, these guys are gonna be more transparent than, let's say, like a Bank of America or something. It's got a lot of weird instruments that they hold.
The big risk for Lazar is gonna be M&A volume. If there's a lot of deals, they'll do well. If not, they won't. All right, Charlie Travers.
What do you got? I'm going back to Sony, Chris. The ticker is S&E. And not only do we have the catalyst of a highly regarded activist investor here, but there's the E3 gaming conference coming up starting on June 11th.
And we should get a lot more information about their PlayStation 4, which should be out in time for the holidays. I view the console market as a two horse race between Sony and Microsoft. Nintendo's just really falling back way behind the pack. So I think this could be a good catalyst for the shares along with the other stuff we talked about earlier.
Before I take it to Steve, when we talked earlier about Microsoft and the new Xbox, you were pretty bullish on that new system. Is Sony gonna be able to really compete with that? Absolutely. I am bullish on the Xbox One, but both consoles have their own legions of fans, and I expect both will sell very well.
Okay. Steve, question about Sony? Does Sony have any play on the smartphone? Are we not?
They do, Chris, or they do, Steve. And if you go right to their website now, showcase it on their front page is a smartphone device. I don't imagine they're selling particularly well, but it is something they're working on. Steve, just a rainbow of options for you.
Sony, investment bankless R and Nathan's. Do you have a preference? If you had to add one to your watch list or just buy outright, what would you go? Well, I love Sony.
We use a lot of their products here, including their cameras and their fabulous. So I'm going with Sony. I think it's a terrific company. I don't know how the investment angle, the Sony stores seem a little confusing to me.
It's not just you. And I don't know why they don't have a bigger presence in the smartphone space because it seems like they could really do well there. Have you been to a Sony store? I have.
And you got lost and just had the experience? I just wasn't quite sure what I was supposed to buy there. And just to bring it back to Ron. Was it Arthur Tree?
Arthur Tree. That's just a totally... Have you had the Nathan's franchise? Probably at some point.
Very good. And without memorable to me. Alright, Ron Gross, James Early, Charlie Carver. Skye, thanks for being here.
Thank you, Chris. That is going to do it for this edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer.
I'm Chris L. Thanks for listening. We'll see you next week.