thursday. >> will you guys blow out the candles? you, too. >> a lot of win there. >> thanks for watching. see you tomorrow. "mad money" starts right now. my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. . "mad money" starts now. hey, i'm cramer. welcome to "mad money," welcome to cramerica. other people want to make friends, i'm trying to save you a little money. my job is not just to entertain you but to educate and teach, call me at 1-800-743-cnbc. you're only as good as your most recent quarter in this game. nothing you've done before seems to matter. your whole body of work means nothing. it's worse than that. even though you may have made

fortunes for your shareholders, even though you have oodles of cash in the bank, you're still unworthy in the eyes of some, and that's the story of apple which reported very good numbers after the close and after an initial dip, kind of hiccup, rallied nicely. frankly, i think it should have been up even more given the strength of the balance sheet and the improvement in gross margins which is what i was looking for. on a day when the dow drifted lower, nasdaq declined .08%. it was refreshing to see apple shake off the blues and power higher! >> house of pleasure. >> in a huge afterhours swing as the company made it clear, intraconference call, always wait for the conference calls, that things are, indeed, better than most expected. apple's earnings aren't the only ones that matter today. a dramatic run in all of the companies that don't need economic growth to maintain earnings. hershey rallied $3, kimberly clark increased $1.80, kellogg

more than a buck. that kind of group move is a sign of deflation. deflation. and weakness in the economy. i think the fourth straight month of declines in existing home sales could be behind that action we got the number earlier this morning. that plus an overall sense this economy is dead in the water. or will soon be because of a dearth of consumer confidence laid at the feet of washington which is only going to grow more rancorous not less as it seems to me politicians learned nothing from the most recent debacle. so many pols believe they're doing what's right for the country as consumers seem to be on hold and businesses stall here because of a horrendous partisan bickering that makes it much more appealing to do business -- guess where? overseas. on top of that, these consumer staples are huge beneficiaries of the decline of the dollar and raw costs, notably oil and gas. the estimates could be too low. lots of reasons for those stocks to keep rolling higher. we also saw the powerful tug of

management execution on big stocks. today merck reported a number that looked on the surface like a nice beat. but when we went under the hood, we saw the earnings surprise. was from cost cutting and the business seems to really slowed. including some best-selling anti-diabetes drugs. at the same time, bristol-myers is experiencing a renaissance in the form of what we call on wall street a rerating where the stock goes from a slower growth fixed income equivalent to being seen as a higher growth biotech-like company. two big firms upgraded citing huge drugs combatting lung cancer and rheumatoid arthritis business. this is a case of the power of expectations writ large. merck is still often thought of as st. merck for the long-term record of really tremendous innovations per management over many, many years. it's been at the forefront of tremendously helpful vaccines.

fantastic diabetes franchise. but that's all in the past. we now expect too much from merck. they can't deliver. meanwhile, we expect too little from bristol-myers and when it delivers new drugs with the shoot the lights out numbers, we go nuts! taking the stock up $3.25 on the twin upgrades and a sense it's pulling away from the laggard pack. which brings us full circle to apple. you may think this process is unfair. you may think, wait a second, i love the products, management's doing a terrific job, the management's way too critical. it's what i think. if you're like me, you don't even know anyone who has another phone besides an iphone or a tablet besides the apple ipad. tons of stocks that haven't done much at all over time. then they do something good, just a little thing and get rewarded with a 4% to 5% gain for doing the kind of number apple did tonight. why isn't the stock up 20 to 25 points ahead of what's going to be a terrific holiday season? it's because of expectations.

it's all about the expectations and how the fundamentals at apple have become divorced from the expectations. tonight apple appeared -- what appears a pretty darn good number. reported a good one. the company earned $8.26 a share. that's 32 cents higher than the analysts expected. they generated $37.5 billion in revenue, up 22% year-over-year. wall street only looking for 36.8 billion, apple sold 33.9 million iphones. 14.1 versus 14.5 i was looking for, but the computer sales were better and the company's gross margin, the key metric here, what they make after the cost of sales came in at 37%. that's ten basis points higher than the consensus, that's what i was looking for. apple gave a higher than anticipated revenue forecast for next quarter, saying they expect sales of $55 billion to $58 billion. it initially looked like gross margins were going not the way i'd liked them. they looked a little

problematic. but in the call, the company explained an accounting issue kept them from going higher. that's what caused the huge reversal higher in the conference call in after hours trading. big swing, up about 20 points. still, apple beat on more items than it missed. you think wall street might appreciate that more than it did. the reason apple didn't go up more despite doing everything you could ask for and more comes back to this expectation thing. over the past few weeks, people began to get more and more bullish about the prospects. especially as the company preannounced strong numbers on september 23rd. the analysts were raising the estimates left and right. and when they get ratcheted up like that, it's difficult to not disappoint. with carl icahn in there, buying, making it clear he favors a more aggressive buyback than the monster one that apple has already, there was a real amount of hope and hype here that drove the stock higher into the quarter. who knows what apple will ultimately do with $146 billion it has in cash after tonight.

i think without a clear announcement of more cash deployment, some people will be miffed even with this great number. how can they want more? here's the bottom line, i still think apple's worth buying even here. my charitable trust owns it. i like the stock. there's still a lot the company can do to bring out value with all the cash it's sitting on and because of the terrific lineup for the holidays. you have to recognize the power of expectations. when they're too low like they were with bristol-myers, it's easy, but when they get ahead of themselves like we saw with merck, the stock gets hit. when an elevated stock did as good as apple did tonight, you get a slight cheer, an upside and a what did you do for me lately look. let's go to ed in new york, please. ed? >> caller: great buffalo boo-yah, jim. >> i'm all for that. what's going on? >> caller: i want to say thank you for an upcoming show in honor of us veterans. >> absolutely.

thank you for serving. thank you. >> caller: and my stock today took a haircut. snta. i bought it as a speculative. and there was a lot of insider buying on it. and i figured it might do well. but kind of got shot down today. what is your thoughts on that, please? >> well, they -- you know, they didn't get the numbers on this lung cancer treatment drug i thought they would. and that's why people are disappointed. and really not much you can do. when you have these little companies you're playing fda roulette. that's why i like to see people in the ones that have a lot more going for them than just kind of one trick. you need more to it. let's go to dwayne in oregon, please, dwayne? >> caller: hey, boo-yah, jim cramer. good to have you, what's up? >> caller: just reported earnings today. they've been up, they've been down, what's going on with merck? >> well, merck is kind of a problematic situation. because we like growth in

pharmaceuticals. and what we got was cost cut. that's not good enough. you need to have actual growth the way we saw bristol-myers this quarter. without that, people get disenchanted and leave the stock. can i speak to carter in hawaii, please? carter? >> caller: boo-yah, jim. >> nice. >> caller: calling about gdp goodrich petroleum. what is the upside potential with the acquisition and tuscaloosa marine shale? and two, when should we shy away from the shale drillers at the price of oil tanks? >> well, i do always worry about that, that's a problem. but i favor noble, my charitable trust owns. anadarko, i think that's better. and you know what, let's understand each other. this is a red hot stock that's moved a lot. and if you want one of those, go with pioneer, pxd. that company has come off a little bit from the high and it's doing fabulously. once again, we remind you on "mad money" that expectations are all powerful.

bristol-myers wowed because people expected very little. merck, they expected a lot. and apple, they expect the moon. and when it gives you the moon, well, what can i say? it doesn't seem to be enough. i think it should be, though. "mad money" will be right back. coming up -- head to head, lumber liquidators and tractor supply. does farming or flooring have a better shot at helping make your portfolio fly? cramer's making the call. and later, the right ride? the latest bull market may be made of leather, chrome, and pure horsepower. but hitching yourself to the wrong ride could take your portfolio down a path you'd prefer not to follow. cramer has one high horsepower play and another stock that could be out of gas. plus, healthy outlook? operating health care properties throughout the country, could

this reit provide some protection for your cash? don't miss cramer's exclusive with the ceo. all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer #madtweets. send jim an e-mail to madmoney@cnbc.com. or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. my customers can shop around--

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if there's one thing we know about the market, it's that wall street always has a voracious appetite for growth stocks. now last wednesday we got truly stellar results from two of my favorites. the two great high growth names. tractor supply, largest supply in the country. a rural version of home depot and lumber liquidators. america's largest specialty retailer of hardwood floors.

here's the rub, if you're trying to run a diversified portfolio and everyone should be diversified because everything else is reckless insanity, then you only have room to own one of these fast must ha-growing reta. tonight we're going to teach you to compare these stocks, we're going to figure out which is the better buy. tractor supply or lumber liquidators. and because i'm all about helping you become a better investor, i'm going to show you how to do this one-on-one steel cage death match thing. at home. when we compare growth names here on "mad money," we judge them based on a ten-point rubric. we know tractor supply and lumber liquidators are hot, hot, hot. which each stock off the 52 week high. if you want to make a rigorous call here, we need to drill down deeper with the ten-point growth stock checklist we created on "mad money."

here's how it works, there are ten criterion -- criteria, each one worth up to ten points, add them all up to the end and whichever stock has ten poi-- t most points out of 100. does the company have the potential for multiyear growth that it can put a value on. is there a clear growth path? when it comes to tractor supply and lumber liquidators, the answer is, yes, but who has the better growth path? however, lumber liquidators did better with an astonishing 17% increase. even more important, lumber liquidators has more room to expand across the country. tractor supply has 1,245 stores, it's been around forever, guys and 47 states. management believes they can get to 2,100, that's growing by about 8% per year. home depot doesn't add to stores

at all. lumber liquidators around 300 stores. they believe they can double that figure to 600 locations, possibly within the next five to seven years and that implies a 12% compound annual growth rate for new stores. so for item one, tractor supply, i'm giving seven, i'm giving lumber liquidators ten. big difference. item number two is the total addressable market we call it the t.a.m. total addressable market. again, yes and yes. tractor supply serves the niche farming market without much in the way of competition, as for lumber liquidators, at the end of the year, they control 14%, just 14% of the $3.5 billion hardware market. and even if they double the store base, that would only take them up 20%. that's actual reasonable. plus, the company's moving to hardwood and laminates which represents an opportunity and making more of an effort to sell floors to casual buyers rather than just the diy, the do it

yourself community. i'm giving tractor supply an eight and lumber liquidators a nine. item number three on the growth rubric, does the company have the ability to stay competitive? the great thing about both tractor supply and lumber liquidators, these have each carved out a fairly specific niche and a highly fragmented market. tractor supply caters to farmers and located in more rural areas, there's not that much overlap with lowe's and home depot, although mine is just a few miles from a home depot. they have enough unique merchandise, i don't find them to be that competitive at all. they're all about competing with the mom and pop grain feed. meanwhile, lumber liquidators has a fabulous place in the hardwood flooring business where they're able to offer lower prices and faster delivery times. on this point, i think both stocks. can they return capital shareholders over time? tractor supply has a dividend, yields 1%.

while they're also buying back the share count, that's not shabby. lumber liquidators doesn't pay a dividend, but they're reinvesting pretty much every penny back into the business. and that reinvestment makes sense because they're funding the future expansion. that said, you're buying these for capital appreciation, not for preservation. so at least on this particular front, it's three points for tractor supply and none for lumber liquidators. we always have to consider some people want income. item number five, can they expand internationally? both tractor supply and lumber liquidators have plenty of room to grow in the united states itself. neither has immediate plans to go global. five points each. six on the checklist, are the balance sheets strong enough to support the kind of growth we're looking for? absolutely. tractor supply has $46 million in cash and $40 million in debt, very clean balance sheet for $10 billion company. lumber liquidators has no debt whatsoever, $84 million in cash. and both companies have bountiful cash flow.

tractor supply a nine and lumber liquidators flat out ten. item seven, are the stocks expensive on the out years? remember, growth oriented money managers like to look a couple of years into the future when they value these stocks, not just the current. tractor supply is up 63% for the year. but even after that run, it sells for only 23 times 2015 earnings estimates, 17% long-term growth rate. which means the stock trades at 1.4 times growth. not too pricey at all. lumber liquidators run up 115% for the year. wait a second, it's setting for 27 times 2015 earnings estimates which is less than the company's 30% growth rate. meaning it trades at just .9 times that growth rate. that is darn cheap by growth manager standards even as it does look rich to the uninformed in terms of valuation, eight, and ll ten.

i think both are incredibly well run, but lumber liquidators has an edge over tractor supply. so give eight points to tractor supply and nine for lumber liquidators. management to have a little more time at the helm. a big one, does the company need broad macro economic growth to meet the numbers? lumber liquidators is tied to housing. more cyclical than tractor supply. i think as housing stumbles and looked like it with the existing home sales this morning. but it's still cheaper, easier place to buy flooring than the other guy. and the economy's definitely more of a risk factor for lumber liquidators but inexpensive. i don't know, this is a tough one, but i think that tractor supply has less cyclicality. finally, can the companies maintain or grow their gross margins? both have seen their gross margins on the rise. pretty amazing when you read the quarters but expanding more raptly, up 370 basis points. most recent quarter, new record 41.8%. tractor supply just 90-basis

point increase, just 90, that's fantastic. but lumber liquidators gets the nod here. eight points for tractor supply, ten for l.l. here's the bottom line, when you go through the whole checklist, you get 73 for tractor supply and 78 for lumber liquidators. if you're looking for a specialty niche retailer, lumber liquidators is the one to own. i think it's worth buying still. just so we're clear, tractor supply is terrific outfit too, but not as compelling as lumber liquidators after this very moment. after the break, i'll try to make you more money. coming up -- the right ride? the latest bull market may be made of leather, chrome and pure horsepower. but hitching yourself to the wrong ride could take your portfolio down a path you prefer not to follow. cramer has one high horsepower play and another stock that could be out of gas. so i c

an reach ally bank 24/7, but there are no branches? 24/7. i'm sorry, i'm just really reluctant to try new things. really? what's wrong with trying new things? look! mommy's new vacuum! (cat screech) you feel that in your muscles? i do... drink water. it's a long story. well, not having branches let's us give you great rates and service. i'd like that. a new way to bank. a better way to save. ally bank. your money needs an ally. with my united mileageplus explorer card. i've saved $75 in checked bag fees. [ delavane ] priority boarding is really important to us. you can just get on the plane and relax. [ julian ] having a card that doesn't charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u.s. when i spend money on this card, i can see brazil in my future.

[ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. ♪ if you only learn one thing from this earnings season, if you only have one take away, it's that the execution at individual companies fortunately, i think, because it's what we do, still matters. now we do live in an age of etfs where people glibly trade entire sectors of real estate investment trusts. you know the drill. you know, not every industry should be like that, but they do trade exactly that way.

it's not the way it's supposed to be. see the reality is, the good management can make an enormous difference in the performance of a given stock and, of course, the company itself. now it maybe sometimes takes a little time, but not in this example, no. we've seen enormous variance in the performance of companies within the same sector this earnings period. and a lot of the difference comes down to the simple fact that some of the managements are doing much better than others. they're just doing a better job. and finally, i found the perfect example. you can see this really clearly. and of all things, the snowmobile business. just last week, quarterly report cards from two major manufacturers of snowmobiles and other vehicles. polaris industries and arctic cat. and the results couldn't have been more different. going to last week, each stock were on fire. arctic cat up 80%. both companies were thought to have exciting new product lines as well as the consumer that was

supporting their offerings. so when polaris comes out october 22nd and over 3 cent earnings beat off $1.61 basis, higher than expected revenues, rose more than 29% year-over-year, management raises guidance. you know what, i wasn't surprised. i've become used to that. i'm spoiled. no, the surprise came two days later. when arctic cat reported a truly hideous miss. somehow even though polaris and arctic cat are in the same business, arctic cat with earnings coming in at $1.70 per share, a 26-cent miss, one of the worst of the whole earnings period on lower than anticipated revenues that rose 4.1% year-over-year. since then, arctic cat has been crushed. it got hit by an ice road trucker. it's down 15%. over the last week. jes jesse's favorite show. how is it possible they did so well while arctic cat did

poorly? many might say this isn't a fair comparison. polaris has branched out, diversifying to onroad vehicles now only 9% of the company's sales versus 50% for arctic cat. when you drill down into the results, you know what, sure there's variation, but i don't think the explanation holds that much water. polaris saw across all product categories, snowmobiles up 25%, on-road vehicles up 28% and the catch all parts, garments and accessories category up more than 36%. in short, polaris seems to be firing on all cylinders, although i'm not sure how many sill dcylinders are on the atv machines. then you see the opposite. alter rain vehicle sales up 4.3%, snowmobiles up 5.3%. wow. while parts, garments and accessories declined by 4.2%. people don't want to be seen in

this cool-looking cat thing? arctic cat feels like it's firing on no cylinders. when you see this kind of big disparity because one company is doing a better job is will there's no way to explain it. it's clear that polaris eating their lunch. in order to move more merchandise, that's a clear sign of a company struggling. what's even worse, the promotions didn't work that well. arctic cat saw a sharp deceleration of single seat all terrain vehicles. normally when one company gets too promotional, that puts pressure on pricing, hurts everybody in the business. however, polaris barely bat an eyelash at the discounts. quote, despite ongoing competitive pressure and amplified promotional spending, we continue to gain share in off-road vehicles, end quote. in other words, arctic cat went to the mattress in these sales incentives, didn't stop them from losing share or taking share.

maybe the results would have been worse without the promotions, but feels like the only affect here is cut into the gross margins, what they made after the cost of goods sold which declined by 210 basis points year-over-year. meanwhile, polaris saw an increase in gross margins if you exclude the impact of a one-time contract dispute they lost. arctic cat talked about how europe presents a continued challenge for their business. going from 14% of sales last year to 33% by 2018. and they specifically mentioned that polaris brand is on the rise in western europe. what is now among the top five players by market share and off-road vehicles. how is it that europe is a challenge for arctic cat but an opportunity for the great american polaris? is there snow wherever polaris sells snowmobiles? but it's like the sahara where arctic is? no, maybe because they're executing fabulously and arctic

cat seems to be questionable. polaris has a long track record, missed estimates once since 2007 and they've raised the year-end guidance each quarter since 2011. polaris' ceo scott wein has done a terrific job and the stock has given you a 54% gain since we last spoke to him a year ago. he's terrific. on the other hand, arctic cat hasn't been as consistent. and those of you who think all this talk about execution is just mushy, subjective just nonsense from the easier part of the business school, let me put it in more quantitative terms. companies with good management consistent execution get rewarded on a 16% long-term growth rate. arctic cat just at 14 times earnings even though it has historically a higher 20% growth rate. you might look at that and think arctic cat must be a steal at these levels, but i think you'd be wrong. investors are willing to pay substantially for for polaris because they perceive the country is a lot more likely to

be able to deliver on the forecast. they pay less for arctic cat because there's a lot more doubt about whether that company can deliver, especially after that hideous quarter. so let me give you the bottom line. this has, once again, become a stock picker's market. despite the homogenation. why i think polaris still worth buying, particularly into any weakness. morgan in california? morgan? >> caller: coach cramer, how you doing? >> real good. coach is in the house, what's up? >> caller: listen, i've got a profitable trade with one of my favorite defensive stocks and they beat on top and bottom line, raised guidance, and i need help telling me how high this one can go. >> champ, i don't know, man, that was a dynamite quarter. i would never get off that horse, not until -- i mean, honestly, the defense stocks

have been the standout this year. i see no reason right now to cut a raytheon position back. bob in california, please, bobby? >> caller: hi, jim. how are you doing? >> all right. what are you up to? >> caller: i have a question on long-term kndi. >> yes, yes. well, this is the chinese version of a lot of companies i really like in an atv business. and i can't go for it because i have been too mystified by chinese companies and blown away by their numbers. i have to take a pass on kandi. john in florida, john? >> caller: how you doing, jim? >> all right, john, how are you? >> caller: i'm doing good. i need help with ford. it was good, i liked the ceo, selling a bunch of trucks, do you think it's going to hit 19 by the end of the year? >> 18 is where i thought it could be, frankly, and it's almost there. now, i have to tell you because this is the stock owned by my charitable trust. i'm very disappointed in how the stock has acted.

it has not acted well. i'm not disappointed in how the company's done. and that in the end will will out over the stock. it's all in the execution period. that's where management really does matter. the roar you hear from the atv and snowmobile market, it's not arctic cat, it's polaris. stay with cramer. mad about "mad money"? immerse yourself into cramer's world while you watch the show with zeebox. on your phone, tablet, or on the web, get sneak peeks, go behind the scenes and join the conversation. download the free app today for the ultimate cramerican adventure.

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more details. we hope you can join our studio audience to help celebrate members of the u.s. military and their families. and now it is time -- it is time for the "lightning round" on cramer's "mad money." what is that? it's rapid-fire calls, play until this sound, and then the "lightning round" is over. are you ready ske-daddy? time for the "lightning round" on cramer's "mad money." brandon in georgia, brandon? >> caller: hey, jim, big newlywed boo-yah from atlanta, georgia. first i want to give a shout out to my smoking hot wife. >> wow. sizzling. >> caller: calling about -- down about 30%. >> now, remember, we did say take profits in celldex. we did in the cell block a few weeks ago. we said we're not looking back. ca-ching ca-ching. we felt like it'd gotten overextended. i got a lot of heat on twitter on that. i don't care, it was the right call. michael in california, please,

michael? >> caller: boo-yah, jim, from bakersfield, california. >> boy, that's a fun town. what's up? >> caller: i just added a stock to my portfolio about a year ago and it's done extremely well for me in the past year, rite aid. >> i think it's consolidated at this level. by the way, walgreen's new high, cvs, room for all of them, rite aid is making a big comeback. michelle in california, michelle? >> caller: hi, jim, boo-yah from san francisco. >> nice. what's up? >> caller: well, first i want to thank you for boeing. i bought it at the end of june and again in july and i'm very happy with it. >> that's terrific. thank you, thank you very much. >> caller: you're welcome. >> jim mcnerney. >> caller: i wanted to ask you about the russian internet stock yndx, what do you think? >> no, i've got enough trouble. i like google very much. it's too hard for me. let's go to john in florida,

john? >> caller: yes. i'm lucky that i have a brother-in-law who is in his 90s and he was in world war ii and he got out when the wharton school and said, john, you ought to get some of this adp shares and now i have 300 of them. and as i read the annual report that came out this fall, it says, boy, business is going to boom. >> no, sir, it's a great stock. i know it's at its high. i don't care, that and paychex are great stocks. it'll be terrific. and that, ladies and gentlemen, is the conclusion of the "lightning round." >> the "lightning round" is sponsored by td ameritrade. l. it told him what was happening on the trading floor in real time. ♪ the shell brought him great fame.

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with the threat of rising interest rates perhaps basically off the table, is it time to start thinking about the high-yielding bond alternative stocks like the real estate investment trusts. the reits in particular got

hammered over the spring and summer as rates soared, many of the investors who had been chasing yield swapped back into fixed income. now the rates seem to be stabilizing at 2 1/2, lower level, certainly way below where they peaked. is it safe to buy the bond alternatives again? check vtr, owns everything from senior housing, skilled nursing facilities, hospitals, medical office buildings. this stock peaked in may. it's now down nearly 18 points from its high. now, look at these levels, this stock yields a 4%, it's got the best performance in the group, and you know what, i think even just do better than the affordable care act next year. the company delivered $1.04 from funds of operations, that's the key metric, 2 cent beat, better than expected revenues, rose 11.5% year-over-year, management raised the guidance. let's check in, maybe we can explain this. the chair and ceo to hear more about where the company's headed. welcome back to "mad money." >> good to see you. >> good to see you.

>> thanks for having me. >> i've been following your company for years because it's been a great performer. >> thank you. >> i don't know if it's ever done better than this. yet at the same time on may 21st, this stock peaked because of interest rates. are you yourself surprised by how kit turned out? >> between march and may, and frankly, we're managing the company much more for a stable, consistent environment. and i would say that march to may period was a little unusual. >> i see. so if you took that out, you would see a much more smooth trend? >> absolutely. and so i think that's really important to get perspective. i think where our stock is now and with the interest rates that we still can borrow at, we can make a lot of hay at ventas. >> in the most recent quarter, we saw you bought $1.2 billion of properties and if i'm right about this, explain it, the

yield 6.3% before gaap, that means theoretically to me, your board can think, you know what, we can raise the yield, raise the dividend right off this. >> absolutely. you raise the right point. we bought $1.3 billion in assets, gaap yields about 7.3% and we borrowed for 12 1/2 years up 3%. as i said with our metrics, i think there's still a very constructive investment environment and we grow cash flows internally and through external growth, which in turn allow us to raise the dividend at significant levels. >> okay. now there are people who say, jim, you like the stock for so long, but in this environment where they have to cut medicare, it has to hurt them. when i look at what you're doing, i don't see that relationship. >> well, first of all, for the last years while we've pursued a growth of diversification plan, our revenues are 84% private pay, which is very important. and we do own some skilled nursing and some hospitals and

our operators pay us rent which doesn't change regardless of the levels of medicare and medicaid reimbursement. but i would add that medicare is going up for the providers, 1% to 2% starting in october of this year. >> okay. now explain how you own 1/3 of the management companies. why would anyone want to only own 1/3? can't they hurt you? >> well, we own 1/3 of one of the country's premiere senior living providers, a private pay business. and we as a reit are really capital providers to the health care and senior living business. and there are limitations on what we can own of the operators. but ultimately, our main business is providing billions of dollars of capital to the health care and senior living businesses by owning their real estate. and we own about 30 billion of it as you know. >> as i've looked at the map, there's still whole areas that you're not even there yet, right? >> well, there are areas where we can continue to expand.

both inside and outside the united states, different sectors that we can be in. right now, we are across the board, though, hospitals, nursing homes, senior living, medical office. >> do you think that the most important thing to be levered to is not the affordable care act but the demographics of the nation? >> i mean, it is indisputable that we have the demand. within real estate, the demographics are overwhelming in terms of the over 85 being the fastest growing segment of the population and then the ever present baby boomers. there are 79 million of us and we're the second fastest growing. so we will have demand for health care and senior services. that's a very good start. it's not sufficient for profitability. we have to do a lot of things right. but it's certainly a good start. >> one last question, you do what's known as an at the market issuance of equity. did you back away from that when the stock fell this far? >> well, one of the things we have to do. we have three things we have to do in a world class way to make

money for shareholders and be excellent. we have to invest wisely and i think we've done that. 20 billion in acquisitions, we have to raise capital effectively. and that's debt and equity capital. >> right. >> and we try to be judicious with our equity raises. we did taper very much. but, again, we raised debt and that was fantastic. so -- >> that's what i wanted to know. i'd hate to think you're giving away the store down here. >> absolutely not. we'll never give away the store. >> very good. the chair and ceo of ventas. this is the best-performing reit in its class and i'm glad to hear they think the stock's as cheap as i do. stay with cramer. this veterans day, "mad money" honors those who defend our country's freedoms. by helping defend their financial futures. if you or someone in your family is proudly serving or has served in america's armed forces, we invite you to join our live

studio audience on november 8th for "mad money" invest in america salute to the troops. for tickets, go to madmoney.cnbc.com.

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the ceo of avnet, ppg. all three of these companies like so many u.s.-based enterprises diversified many years ago as they recognized the european union opened up a gigantic market of 7 billion people served by one currency. we forgot before the euro it was difficult to do business because of the fluctuating currencies. the euro truly did unite europe when it came to commerce. and enticed our companies to buy and build with. and ppg, the proprietary coatings and glass company represent the cream of the crop in the respective industries and each of their managements knew that they offered superior products and therefore could take share from the locals. now if you recall, europe really didn't come out -- come down with its own version of economic flu until well after we hit the wall and their illness was magnified by not one but two interest rate hikes that crushed

industries in almost every country except germany. and these three companies saw a dramatic decline which in turn hurt overall revenues because it represented over a quarter of their geographic mix. now, though, all three are seeing a noticeable stabilization in europe. using that term stabilization. and that occurred this intraquarter. yes, it is true that the ceo of avnet don't expect anything robust to come from europe any time soon but all expect 2013 to be better. combined with easy sales and earnings comparisons along with a vastly weaker dollar versus resurgent euro, then i've got to tell you, two-year high, i think the possibility of a pretty huge earnings swing could be at hand for each of these. indicated a couple of percentage point swings could be huge for ppg because a massive amount of costs were taken out when the downturn group prolonged. as i study eaton and take a hard

look at many of these companies including avnet, i see they've cut the fat in europe. the techs and the industries aren't the only companies that have diversified into europe. our packaged goods plays are dominant players there. none saw a downturn as huge as the cyclicals. europe could be a healthy offset to a slowdown in the u.s. caused by, yes, our dysfunctional government. something our domestic companies won't have in their arsenal. semiconductors, software, disk drives, you can expect many of our tech companies are going to have a similar boost. you can say the same about companies as diversified as honeywell, united technologies, elmerson, dupont. we'll also most likely see the big advance in sales that so many have been waiting for. now, you know i have long held it has been and continues to be stupid to wait for the increase in sales. because by the time it happens, these kinds of stocks will advance so far that you'll have missed the entire move. that's why i think you need to buy these stocks now on any

material weakness that we get in this country, maybe a bad labor report. soft gdp reported. and weak retail sales nurl. because europe not the united states is now tu new swing factor in earnings. and given the tremendous cost cuts and the possibility of a good bunch of at least maybe four quarters of good european sales, i'm sensing these stocks could be the biggest standouts of 2014. stick with cramer. tomorrow, kick off the trading day with "squawk on the street." live from post 9:00 at the nyse. it all starts at 9:00 a.m. eastern. i love having a free checked bag

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this time from the fed. i don't think the fed will matter all that much this time because it is an earnings period and we know there's a bit of a slowdown in the u.s. all that said, have to be back on this taper watch. there's always a bull market somewhere, i promise to try to find it for you. i'm jim cramer and i'll see you tomorrow. . the obama care debacle continues, and a story just breaking tonight. nbc news reports the obama white house has known for at least three years that millions of americans would in fact lose their preferred health insurance plans because of obama care. this comes as more people call for hhs secretary kathleen sebelius to step down over this, but i say it's way over time to hold president obama accountable. the buck stops there. he ought to show some back bone and not just blame his underlings. and there's talk about the