Mr. Market’s Rough Week

Everybody needs money. That's why they call it money. I'll best stay there like I please. But you can get them to the present.

From full global headquarters, this is Motley Fool Money. This is the Motley Fool Money Radio show. I'm Chris Helen. Joining me in studio this week for Million Dollar Port, Folio Jason Moser from Motley Fool Pro and Options, Jeff Fisher and from Motley Fool Deep Value.

Ron Gross. Good to see you as always gentlemen. Hey, hey. We have got the latest from the auto industry, specialty retail financial services and more.

We will dip into the full mail bag and as always, we'll give you an inside look at the stocks on our radar. But we begin this week with the Big Macro. The monthly jobs report was the lone bright spot in what was otherwise the worst week to start the year in Wall Street's history. The continued slowdown in China along with a crazy week for China stock markets scared a lot of investors.

There's a lot to get here around Gross. Let's start with the investors. Let's start with the jobs report. Really strong, 292,000 jobs added and the previous two months revised up.

Things looking pretty strong for the US economy. Yeah, things look good. I like unemployment. I'm studying 5%.

I'm fine with that number. I think economists think of that pretty close to full employment. The fuller look at unemployment, the U6 measure flat at 9.9%. I'd like to see that lower, but still pretty good historically.

Again, this is a common theme. The only dark side to the employment report was wages, which are growing at about a 2.5% annual clip right now. Not so bad, but that was actually down just a bit. We want to see that number going in the right direction.

Jason, we saw in the employment report, spread out over a bunch of industries. No one single industry leading the way here, as we've seen in the past. This was increases in health care, in construction, a really pretty robust report. Yeah, I think you have to feel good about it.

I mean, we've come from a pretty dark place here with unemployment over the past few years. Instead of seeing any improvement really there is obviously encouraging. We want to see wages like Ron was saying continue to sort of take up there, because we're in a position now with energy prices so low, the cost of production so low, we're not seeing any real inflation concerns. In theory, this should lead to a more powerful consumer.

But we've obviously seen a very tumultuous beginning to the year here in the markets. It seems like China is like a space headline that keeps on making its way out. And to get that to a degree, it's obviously more global economy than ever before. But I mean, it also lends itself to this greater notion that as investors, we have really control over one thing, and that's our emotions.

We're the ones that can control whether we hold the stocks, we have sell them or buy them. And so everything else out there, you got to kind of let that play out. And I think that's really one of the biggest, you know, marks for investing foolishly is because we can look at it with that longer time horizon and be able to keep our emotions in check. But Jeff, I mean, if it were just that China's economy were slowing, that would be one thing.

And that's not insignificant, but we also saw this crazy activity with the market in China where they basically halted trading after 20 minutes one day just because the market dropped 7%. I mean, it's like a day off. You can go all day off and done with my work. I don't think anybody really should go to the park, take a nice walk.

Yeah, Chris, what gets lost in all this noise in a lot of cases is that the market in China did so well most of last year. You know, it about doubled. And then it began to decline toward the second half of 2015. And that just accelerated again now.

You see manufacturing in China dip a little bit, but it's been doing that several months in a row for a long time. If I have any concerns about China, it's sort of a contagion of fear concern, which is that China has pumped so much money into the economy. A lot of people say artificially, which is hard to argue with that, to build infrastructure that they may not need really for years and years. But that said, China itself accounts for less than 1% of US gross domestic product.

It accounts for only about 7% of US exports. And the American companies that we invest in, multinational companies here in America, they derive on average only about 2% of their net income from China. So even if the Chinese economy fell 10%, those companies would see their earnings fall 0.2%. So put it into perspective here in the States.

I completely agree with Jeff. The main thing I focus on when I see China's economy, not a stock market. It's economy having trouble is what that could do to commodity prices and how that reverberates around the globe and here domestically. So that's the one thing I focus on.

And I think it's also important as you kind of teed up to separate the stock market from the economy. Because while I'm no expert on the Chinese stock market, the mechanism itself, my understanding is it's relatively a mess. And that it's governed by retail investors versus the US, which is institutionally based. The retail investors appear to be panicking.

They're not sophisticated. They're selling stocks willy-nilly and it doesn't appear appropriate. And then the government, the central government, doesn't really know what to do. You mentioned the circuit breakers on.

They're off. They're off. They're off. They're not great at what to do in terms of intervention from a central bank perspective.

They're trying to feel their way through this. And I think that's creating more havoc than perhaps is necessary. When we see big drops in the market, let's face it, the stock prices of good companies sometimes get dragged down. And so let's just go around the table and chase and start with you.

What's a company out there that's on your watch list that you think, hey, if nervous investors are going to sell this company off another 10, 20%, I might be jumping in. Well, I'm glad you went to me first, Chris. Because I have a feeling that Ron might agree with you. You may have this as well.

But it's actually Walt Disney. Disney's one we have on the watch list in MVP. It's when we continue to talk a lot of work valuation-wise looking at a really good idea of where we would feel like the no-brainer, click the buy button prices. It's getting there.

But it's a global powerhouse. They make their money so many different ways. When they have shortcomings in one segment, other segments are able to pick up a slack. It's going to remain relevant for decades to come, I feel.

So this is one that I'm glad we pick up on the cheap. Jeff? I've been watching Under Armour ticker as a popular full stock in many full services. Of course, the athletic and sports clothing and shoe retailer.

Fast Grower. But the stock has really hit a speed bump. It's gone from 105 per share to a current 76 per share. So what?

That's 25%? It's lost? If it fell another 10-20%, I might have to finally buy what has always looked like an expensive stock. Ron?

There's nothing I like more than a blue chip or a real solid company that is selling on the cheap. It's very hard to find that except every now and then you get a shock to the system. In 2009, it was a time where you could pick up amazing companies at prices that were rarely seen before. So if that were to happen again, I-Blue chips is right where I would go.

And I might look at ones that really don't even have that much exposure to China. When I think of a perfectly run company, I think of a Costco, a favorite run here would be a Markel. Stocks that are off 45% this year for no real reason. Let's move to the weekend automotive news.

Detroit made it official. 2015 was in fact the best year ever with just under 17.5 million cars and trucks sold and greats for Ford and GM and Fiat Chrysler, Jeff. But all those sales are not translating into stock performance for those three companies. Yeah, the stocks have really gone nowhere actually down in the past year, year and a half.

And I think a lot of the problem is where do you go from here when sales are this strong? Right. If the stocks aren't doing anything when they're having their best year ever, why should I be jumping in now? Because everything is in their favor, right?

Their employment is getting stronger. Income is ticking up. And those are two of the most important things when it comes to buying a car. But that said, those trends are expected to continue and most are predicting another record year in 2016 with even higher sales.

So I think the car makers, GM and Ford in particular, look inexpensive Ford is at less than seven times, forward earnings estimates, yields more than 3%. And it's doing really well in China. It just announced today or Friday that China sales were up strongly. They sold more than 1.1 million vehicles recently as sales grew 3% year over year in China, which is a huge potential market for them, of course.

Let's move on to retail. The Container Store reported a loss for the third quarter. Revenue came in lower than expected. And the stock got whacked down as much as 40% on Friday alone, Jason.

Yeah, really, really tough day for these guys. I didn't think it was bad, honestly. It seemed like the aftermarket numbers were bad enough. But really the day in Friday was just brutal.

I think this really all goes back to what we've questioned before the Container Store. It's the market opportunity that actually exists. And to my mind, I think it's much smaller than maybe someone who believed in the company went public. And I'm not also necessarily convinced that they really went public of their own accord.

I mean, there were investors in there that I think sort of pushed them along there. But I think the big question the market has today, it's a very fair one. It's that while management has always been very consistent in saying that this is an investment year, the question is, is this investment actually going to pay off? I mean, hope would be that this late in the fiscal year, you would see some signs of that.

And unfortunately, what we're seeing is the opposite with revenue being guided down again with earnings per share guidance being slashed from a range of $0.38 per share to a range of 10 to $0.13 per share. So significant downward guidance there. And I don't know that they have, I don't know that they can fix these problems here in the next couple of quarters. I think this is an underlying bigger question as to the market opportunity, really.

And so it's not one that I would be looking to bounce back in guns. Well, and as you indicated, it wasn't just a bad quarter. They're lowering guidance because they're being transparent. And say, hey, look, we're going to be spending more money to try and boost sales.

And it's a good business. They do well by their employees. I mean, you have to acknowledge those types of things. But I mean, from investment perspective, you know, it can be a good company, but not the greatest investment.

I think that might be the case here. It offers such a good lesson to to would be IPO investors as well. I love buying IPOs, Google MasterCard, come to mind Facebook as ones I've bought in the last 10 years in their very early beginnings. But Container Store came public in November, 2013.

You know, it's a well known retail brand in this country anyway. It had a pretty good story. It's down 88% since then. So, and you can see by mid 2014 that it was declining sharply by then.

So if you just waited six months to see a couple quarters and see how the business was doing, that might have saved you a giant loss. So, you know, be cautious as you move into IPOs. The third quarter was mixed for Bed Bath and Beyond. Profits were about what Wall Street was expecting, Ron, but same store sales fell and profit margins falling.

Again, maybe not surprisingly, but all those holiday sales promotions. Yeah, the company continues to struggle as do many in the wake of Amazon. It's really tough to compete. They're brick and mortar stores, same store sales fell in the low single digits.

Now, their online digital sales did grow 25%, which is exciting, but it's still a very small percent of sales, less than 10% of sales. And it's very expensive to ramp that up, especially when you offer things like free shipping, which by the way isn't free. And if it's not the consumer, it's the company. So that eats into margin.

So we're seeing consistently lower margins as the company desperately tries to compete with Amazon. The company really is just not doing well. Stocks down 40% over the last year. Only nine times earnings right now.

So that stock may look cheap to some, but I would be careful. I don't care if the company is paying for shipping. You said that like I should have said. If you want to stock, that's what it's free.

Coming up, we've got video games and we've got alcohol. What more could you possibly need? Stay right here. This is Motley Full Money.

Welcome to Motley Full Money. Chris Hale here in studio with Jason Moser, Jeff Fisher and Ron Gross. Shares of American Express hitting their lowest point in nearly three years this week. After Fidelity announced it was dropping Amex after a 12-year partnership.

Jeff, last year was Costco this year. Fidelity. Yeah, Costco, JetBlue and now Fidelity. And Fidelity's portfolio of 24 million customers represents less than 1% of Amex's total billing.

So it's tiny to the business and yet the fear is legitimate, which is that Amex keeps losing partners. Now what's happening? Customers don't care as much about premium offerings from credit cards. Or MasterCard and Visa are matching those types of offers at a lower cost.

So Amex is under a lot of competitive pressure and doesn't look like it'll get much prettier anytime soon. That said, I think the stock is quite inexpensive. They still generate a mountain of free cash flow and huge operating income. More than MasterCard or Visa.

I own shares. I believe in it for the long term, even though it's going through a really rough patch. I think the brand will ultimately come through and deliver some value again. Chen Chenow is in his mid 60s.

He's been the CEO for about 15 years. He's been at the company since 1981. I bet he wishes he left a year or two ago. As a shareholder, do you look at him and say, Ken, let's start talking about a succession play.

I hope they are. They need to revitalize their vision and just do better. Not every company having a bad week shares of consolation brands hitting a new all-time high after third quarter profits came in higher than expected. They also raised guidance for the full fiscal year.

They're in the business of alcohol, Ron, and business. You're doing better. Business is booming. Business is moving beer and wind is strong.

Beer 8% increase in beer sales, 16% increase in beer shipments. That translated to a nice 20% increase in beer operating income on the strength of Corona and Modella brands. You'll remember they completed the Ballast Point Acquisition in 2015. A lot of folks paid up for it, but it's bringing in strong numbers.

Wine and spirits are up 3%, which led to a 12% increase in wine operating income. Good enough for a 22% increase in overall third quarter profit. They raised guidance. They're going to invest 1.5 billion in the new second brewery in Mexico to support the Corona brands.

The company is firing on all cylinders. First one of the air. First one of the air. First one of the air.

Didn't take long. I don't know anything about the management of this company, but I have to believe they're doing a good job. When you just look at how many... We talk all the time about acquisitions are tough to pull off well.

It's tough to integrate new businesses into under an umbrella. They've got more than 50 different wine brands. You were talking about the... I mean, they're...

They do a good job of executing. They're newest wine acquisition. I want to say it's Mayomia if I'm pronouncing that correctly, which I think is a Pinot Noir. Wow.

Great acquisition. I think that is actually doing quite well also. They're not afraid to pay for these acquisitions, but I think they do it well and integrate them nicely. Activision Blizzard is best known for video games like Call of Duty, Guitar Hero, and Warcraft.

Now, Activision Blizzard is getting into electronic sports with the purchase of majorly gaming for $46 million. Jason, this is a video streaming platform. Do I have that right? So I can watch people playing video games?

We say this is a Pinot Noir or an acquisition. That makes sense. Pinot Noir. Yeah.

So I mean, to your point there, this is a company that basically live streams people playing video games. I mean, I know what it sounds maybe a bit odd. It does to me too. It's a big market, those matter of fact.

Market value today, about $750 million. So it is very relevant. And if you just go a little bit back, I thought we were going to be able to make it through this radio show without even having to say Amazon. But since Ron, let's go ahead and jump in.

Amazon bought Twitch not too terribly long ago for about $1 billion. And that is the same type of business that Activision Blizzard has just bought as well. You know, based on a tweet that I just saw from Matty Argersinger who's out there at the CES show in Las Vegas this week, one in five Americans participated or watched esports last year. That's what this is, esports.

In China, it's more than 40% of their population total, which is more than our population total. So it is obviously a very significant market. I think Activision Blizzard was wise to dip a toe in the water. We got about 40 seconds left.

Favorite video game, you're on a desert island, you get one game, Ron Gross. What are you going with? Donkey Kong? That's fine.

I'm not a judge, Jason. You know, I would give Donkey Kong a good runner up there. I think I'd probably go with Galaga. We're so old.

I have to shut this show down. Space invaders? Sorry? No, there's no angry bird.

You know what? I'm going to at least go with the tablet game. I'm going to go with the title game. I'm going to go with the title game.

I'm going to go with the title game. I'm going to go with the title game. I'm going to go with the title game versus Zombie. Oh, that's a cool game.

Good one. Good one. Guys, we'll see you later in the show. Up next, leadership expert, Bill George shares tips for investors and shares why he's such a big fan of millennials.

Stay right here. You're listening. Come on, they full money. Welcome back to Monica Full Money.

I'm Chris Hill. As investors, we want effective leaders running the businesses we invest in, but that's even more important these days when there's just a little bit more uncertainty in the stock market. I guess this week knows a thing or two about effective leadership. Bill George was the CEO of Medtronic for over a decade and then moved on to teach management at Harvard Business School.

He's authored four best-selling books. His latest is Discover Your True North, Becoming an Authentic Leader. Motifull host Mark Reth recently sat down with Bill George to talk about what traits investors should look for in CEO, his own experiences running a global medical device company, and why he's so optimistic about what millennials will bring to the next generation of leaders. But Mark began the conversation by asking Bill George about his first days as the CEO of Medtronic.

Well, the first thing I did is I didn't know about medicine. I went through a lot about high tech. I'd been in 25 years. I went out and I saw a gallon up and saw 700 procedures.

So I actually put on the greens, went into a doctor's all over the world in Greece and Turkey and India and China and Alabama and you know, we're everywhere in the world. And so how they am planning, what's heart surgery look like, how they're doing brain surgery, how they're doing spine surgery, a lot of other things. People dying the operating table is tough stuff. But I learned how they thought through the eyes of the doctors.

And I insisted all of our people instead of looking in, we're going to meetings, doing management 101, like they learned at some business school, get out there and talk to the customers. The great retailers, two dozen stores a week like Brian Cornell Target. They're out there all the time with their customers. But we want employees to be engaged.

And we also brought patients into Medtronic to tell their story. And all the employees together around. I remember Warren Bennett, who was my mentor, came in. He had a Medtronic to February.

He died about a year ago. He had a Medtronic to February later. And he sat there in front of these people. A lot of theories said, thank you.

You saved my life four times. I've had sudden cardiac arrest. I would've done dead four times. That had not been for your breath.

And you went and visited the production line. That's very motivated to people. You see, I'm doing work same in so much life. I'm not just making buck for you, the CEO.

That's what it all comes. Alright. Well, getting back to those leaders that you interviewed of all those almost 200 leaders that you spoke to, who did you learn the most from? You just mentioned Warren Bennett, you were a mentor.

Was there anyone else that you interviewed that you really took away from? Paul Paul, I'm a Unilever, a fantastic leader. You know why? Because he is trying to transform society.

He's taken, you know, Unilever and made it true North. If you only cause it, it's true North, sustainability. And they've gone over the globe. And he's also transformed the company into a global company.

So that they give opportunity, it's a good opportunity for somebody from Vietnam or Chile or Poland to get to the top of Unilever as the person from the headquarters in London. And he's transforming it to build it. He's going to have 70% of his sales come from emerging markets. There's no company that has that, that does business in the Western world.

But he's got this commitment to transform all their products. And he does it with all his suppliers. He's all his customers. And people are really resinsing.

So he's way ahead of his time. He started about six, eight years ago. And, you know, he's put some six, seven hundred people through a program of helping them become authentic leaders. So he's really committed to this authentic global leaders.

And I've had a chance to work with him a lot. Very admirable guy. And he also had the courage to go to the London stock market where it's not straighted and say, you know, folks just so you know, I'm not here to serve the shareholders. I'm here to serve customers and consumers.

And that got a lot of people upset. But, you know what, he's done extremely well. If you check out, he's done his own shareholders because he's serving consumers, because he's inspiring his people. That's where he tried to do it, met John the exact same thing.

Enough. Now, let's talk a bit about Warren Buffett, who is a leader, very near and dear to the hearts of a lot of our subscribers, our members. You actually talk a bit about him in your book when you talk about the sweet spot. First of all, what do you mean by sweet spot?

And what is Warren Buffett's sweet spot? Your sweet spots when your motivations, mostly your intrinsic motivations, not just money payment power, but making a difference what you'd love to do, which you're really good at. Come together with what you're really good at. And you bring together your strengths and your intrinsic motivations.

Like for me, it would be seeing people who are stored in full life and health. For Warren, it'd be making money for people because he loves to do and he's good at it. But you know, he started out on the wrong track. He went to work for brokerage firms.

And he actually hated the brokerage business because he was under pressure every day as a 25 year old to continue to churn his customers account. Well, they made any money or not. Warren, you get the commission. He said, that's not what I want to do.

In fact, he says, you know, he went back to fund his own firm because his own capital went back to him. I always from and using Ben Graham's ideas for this firm. But basically, he says the best holding period is forever. You know, he invested his own money and invested your money.

And he's built a great enterprise. But he's a very long term investor. He's not these guys who are trying to make commissions off you. I often say to some of these people, you're trying to make money for me or off me.

And he was very clearly trying to build something with the law. And he gave his managers freedom to operate. So he was really a very modern manager. He's in his 80s now.

He's had dinner with him. He's the most modest guy in the world just sitting and chatting with him. He's very down to earth, very real, straightforward, very clear. I have yet to have a dinner invite from Warren.

I'll be waiting for it. I wouldn't alone. It was with five other people that they were sure. But I'll take it.

Just casual dinner with Warren Buffett. A lot of leadership books, including where he's talking about successful leaders, not a lot of books, talk about leaders who have failed. We always hear the story about the guy who falls and gets back up and has even more success than he originally had. You talk about those, but you also talk about the folks who don't get up, who can't get up.

Some of them just come to mind Richard Grosso, Mike Baker in your book. You talk about them. What are some lessons some people can take away from the leaders who fail and just can't get back up? I'm not going to write about leaders who fail to haven't met.

So I know these people. Even clean lines are I'm strong. You know, I bite to them once. You get a sense of who's the human being inside.

I don't say that people are not evil. People aren't born evil. They lost sight of their children. They got pulled off, of course.

And it's sad when you see that happen. A guy like Rajat Gupta, sadly, next to me in the Goldman Sachs board, just a terrific leader, fantastic guy that he got caught up with money. Maybe he'll go back to being impoverished as a youth, but he got caught up with, you know, he's worth 120 million, so he's not exactly poor. He's crossed over the line.

Another one of the superstars who wanted to make CEO of Medtronic someday, not my successor, but maybe one time removed, got a Mike Baker. Very sad case. And he got caught up with the fame of being successful. He got caught up with that.

And when the numbers went away, he didn't acknowledge it and he was put in jail for fraud. Very sad. So you see that happen. And Richard Gasser, we lost a great guy.

You know, he didn't even spend all the money he got, but you know, we lost a great leader. That happens. That's what makes me sad. So I'm talking about why the leaders lose their way.

Why do they get off there? And do they have a team of truth tellers to pull them back? Bill, you're losing it, man. You need to get back to your true north or get your moral compass work and don't get pulled off over here.

Don't start chasing that title or that thing. Now, obviously our members focus on heavily, excuse me, heavily focused on publicly traded companies. When you're investing, one of the first things you look at is the leadership team. Who's in charge?

I do. That everyone does. I'm not sure what's going on with that. But it is one of the things we like to talk about here at the Fool.

What's the track record for leadership team? How long have they been around? What are their goals? But for the man on the street, for the average investor, it might be difficult for them to tell if a CEO of a publicly traded company is being their authentic self.

What advice would you give to an average investor when he's looking at a publicly traded company? Well, he's looking at that CEO. What are some of the traits some of the characteristics he should be looking for before he makes his investment? Is he transparent?

Does he or she tell the truth? They tell you the whole story. Do you feel like he can trust him? Look, if it doesn't resonate well, and believe this story, you're getting, you feel like this a Huxter selling you a bill of goods?

If you think that no matter how good the story is, be skeptical. Can a person just sit down and explain what they're trying to do in simple terms in about two minutes, three minutes? If they can't do that, so-called elevator speech, if they can't do that, I wouldn't invest their. I would look for people that I think I could really trust and are good and go with them because they understand their business, they know what they're doing, and I think they're true to their word.

Because I'm a long-term investor. If you're a short-term investor and play the game, it doesn't matter. You might as well invest in wheat or corn, or currencies. But if you're a long-term investor, you need to have trust in the leadership.

This person will put my money, because you're promoting your feet. I don't put my money behind this person. And by the way, bad things happen sometimes to good companies. That happens to you.

You need to watch out for that. And they go through all companies, go through difficult periods. And so I just want to say that, you'll see companies go through a bump. They'll come back.

The good ones will. The bad ones will go away. And you just will find them going away like John and Motor said. Now coming back in a very garro.

But rough patch. Turn off. You were the CEO of a publicly traded company. Hey, what was the best and worst part about being the CEO of a publicly traded company with all those eyes on you, shareholders, board members, everyone in management, the best and worst parts of that world?

The best part for me, even today, I've been out of there 12 years, is hearing from patients who live to restore. You're hearing from family members. You gave my father and their 10 years of my son as your diabetes. It's transformed his life.

That was the best for me. No doubt about it. And watching people come together in the company, all kinds of employees doing all kinds of job. IT department finance.

Didn't have to be people on the firing line. Great. And that was the best part for me. I remember once, 48 quarters, we missed our numbers once.

Wow. And yeah, but I remember I missed it. I was out skiing in Colorado. It was a presence weekend.

It was a bill you got to come back on a Monday. That was a presence day. And you got to explain to people. 375 people.

Really angry. You missed their numbers by 2 cents. I think our earnings were up 12% instead of 14. And they were really angry.

And they said, you lied to us. I said, whoa, wait a minute. I'm not clairvoyant. We are just acquiring a company.

What happened in between that and the time we closed? No. But, you know, I think you just have to stay the course. That's part of it.

I don't miss that. That must have been fun for you. Well, but you got to stay the course. I said, look, okay, we missed the quarter.

Back to you. We missed your expectations on ours. These are your numbers. We did.

So guess what? It's a great company. What kind of a great strategy? We went out and acquired some companies and made some significant moves two years later to stock and double.

So, hey, you can laugh, laugh, laugh, laugh. Well said. Hang in there, man. All right.

So we've got some great advice for leaders, some great advice for investors. You're actually a professor at the Harvard Business School. What about the young folks, the people who were graduating college these next few years. Any advice for them as they head into the business world?

As I told you earlier, this is a fantastic group of people coming up. And this is going to sound corny to you particularly group investors. Follow your heart. Do what you're passionate about.

If you really care about the media, go into it. You don't have to go into working for a hedge fund or private equity firm. If you love it, go do that. But follow your heart.

Do what you want to remember. I had one student, Seth Molten, who's now the second youngest member of Congress. He was going to go to work for Goldman Sachs. He said, do you like finance?

No. Did you like the environment last summer? No. I said, why are you going there?

And he said, well, yeah. And he rethought it and came back and ran for Congress. And I bless him. He's going to help the veterans.

He's a five-time Iraqi war towards the duty in Iraq under General Petraeus. So, you know, people got to do what they want to do. You'll be best. That's sweet spot.

You'll be best when you're doing what you really want to do. During Bill George's tenure as CEO, shares of Medtronic rose over 1, 1,200%. His latest book is Discover Your True North Becoming an Authentic Leader. Coming up next, we will dip into the full mail bag and we'll give you an inside look at the stocks on our radar.

Stay right here. You're listening to Motley Full Money. That ain't worth it any chance for free. Motley Full Money.

As always, people on the program may have interest in the stocks they talk about in the Motley Full May have formal recommendations for or against. So don't buy your sell stocks based solely on what you hear. Welcome back to Motley Full Money. I'm Chris Allen joining me in studio once again, Jason Moser, Jeff Fisher and Ron Gross.

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And speaking of which, also brand new this year, a new podcast center on our full.com website. You can go to full.com slash podcast. Check out previous episodes of Motley Full Money as well as all of our various podcasts here at the Motley Full.com slash podcast. Radio at full.com is our email address, Radio at full.com.

Question from Brian Herold in Denver's Massachusetts. I've been listening to your many foolish podcasts for about a year now. And I can't get enough as I start to analyze stocks and develop my own analysis model for companies. I've been looking for indicators that matter most to me and I think that the price to earnings ratio will be one.

I've noticed that the Boston Beer Company is now around $183 a share, but the PE is around 24, which seems low to me based on what I'm reading about PE ratios. I know you can't offer specific advice for listeners. However, how would you recommend I interpret a seemingly low PE ratio relative to the current stock price? Jason?

That's a wonderful question. And as a Boston Beer consumer and as a Boston Beer shareholder, I'm happy to have a lot of them answer here. You know, PE ratios, I think, can be very helpful. And it is very helpful to look at them as comparative sort of ratios.

In other words, you're going to look at a PE ratio of one beer company, maybe compare it to another beer company. You don't want to compare the PE ratio of a beer company with a bank, for example. So they want to keep it sort of apples to apples. And if you look at that, I mean, over time here, Boston Beer's multiple has certainly come down.

And you're looking 24, 25, 26 times. If we look at something like Budweiser, Anheuser, Bush, and Bev. Interestingly enough, their PE ratio stands out at 23 right now. Now, if you look at Craft Rule Alliance, which is a bit more of these sort of Boston Beer-style, smaller craft brew company, that's a multiple that's 80 and higher, which indicates maybe that there are some expectations for some serious growth there.

I think that the Boston Beer multiple has come down a little bit here because maybe there are some questions as they grow how quickly we can expect that growth to come in the near future. But typically as a company gets bigger, you'll see that multiple come down as the growth becomes a little bit slower. All right. Let's get to one more from Christopher Johnson.

Generally, I regard a company cutting the dividend as a warning sign, possibly a candidate to sell. However, given the trouble in the energy sector, US-Silica recently cut its dividend in half is US-Silica just one of those holding weight stocks as the previous emailer mentioned. We can't give specific advice, but generally, Jeff Fisher, how do you feel about companies cutting their dividends? In this case, in half.

Generally, especially when they're in a competitive industry where they don't have much pricing power or sustainable advantages that I know of, I would look at it as a competitive industry where they don't have much, you know, pricing power or sustainable advantages that I know of, I would look at it as a good inflection point to possibly just sell it to get out of it. I don't know much about US-Silica, well, I won't say anything anyway, but energy and commodities are very, obviously, very tough industry, tough business. If the dividends being cut, losses are expected at the company for the years going forward, you can do better. It might be a warning sign, but it also may be very prudent capital management by the company that has been made necessary by outside factors.

All right. Let's get to the stocks on our radar. Our man Steve Ruedo is on assignment this week with our producer, Matt Greer at the Consumer Electronics Show in Las Vegas. But fortunately, we've got Dan Boyd behind the glass.

He'll hit you with a question. Ron Gross, what are you looking at this week? Back to my theme I mentioned earlier about buying blue chips on the cheap. I'm going with Apple, AAPL.

Stocks down 7% this year, 20% over the last six months. Yes, there are some concerns about slowing growth, but at this price, the stock is very undervalued. It doesn't need to put up significant growth to be a big winner in the future. Dan Boyd, question about Apple?

Does the next version of the Apple watch need to be a hit, Ron? I don't think it's absolutely necessary for the future of this company or the future of the stock, but it would be nice. Jason Moser, what are you looking at? The question gave me a good idea.

I'm going with Boston Beer as my stock on my radar. The ticker is S-A-M, Sam. I think we may be finally getting the pullback that we've been waiting for. We've got it on the watch list in MDP.

We were really looking at under $200 when we started peaking our interest. It's down over 40% from 62-week highs and for good reason. They are witnessing competitive pressures in the craft business today, and that's not going to abate. I think there is a solution for them.

It's the Alchemy and Science subsidiary that they own, and that's where they bring more craft brewers on board with their model, and they help with the distribution in production. It's a good situation there. I think that the little craft brewers will find it a better choice than maybe joining up with something like an Anhazar Bush and Bev Down the Line. I think that founder Jim Cook has something special here.

I believe he's going to leave this company to better days, and it's one I've got definitely on my radar. Damn. Does the way founder Jim Cook smells his last name? I know you like it does me.

No, it doesn't. Jeff Fisher, we've got about a minute left. Another blue chip. This one more boring than Apple.

It's Wells Fargo, WFC. The shares are down more than 12% recently as financials have taken a hit across the board largely, I think because there are now concerns that interest rates will not increase that quickly in the coming year or a couple of years, which would then lower their interest income. Wells Fargo is the trillion dollar giant in America, the mortgage leader, well-run business. If you want to be bored and own something for a long time and earn a good return, I think, 10% annualized.

Check it out. Dan, question about Wells Fargo? Yeah, whatever happened to the Wells Fargo wagon? Jeff?

It's still out there, I think. I think it's a Christmas commercial, really? Yeah, it was like the first time I'd ever seen it. It's like endearing icon.

Three very different businesses, Dan. You got one you want to put on your watch list? Yeah, I think I'm going to go with Jeff and Wells Fargo this week. Thank you, Dan.

I'll buy you a coffee. I was going to buy you a beer, Dan, but forget it. Alright, guys, thanks for being here. Dan Boyd and Rick Engdahl, teaming up to make sure the show gets put together this week.

I'm Chris Hill. Thanks everyone for listening, and we'll see you next week.