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tv   Mad Money  CNBC  February 23, 2015 6:00pm-7:01pm EST

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>> always. >> the jacket. a nice green look. raytheon, look at these defense stocks. buckingham upgraded the stock. love lindsay buckingham by the way. she upgraded. >> i'm melissa lee. thanks for watching. . my mission is simple. to make you money. i'm here the 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 try to friends, and my job is to educate, teach and coach you. so call me. or tweet me. but don't harass me. you know it's amazing, i think what is amazing is the fact that it has taken us 15 years just to get near the nasdaq's all time
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high. 15 long hard years. and yet, what happens when we get thereafter all the struggle? i hear talk of the bubble again. bubble 2.0, dominated the discussion today, with the dow dropping 23 points and the nasdaq climbed, .1%, giving you a nine-day winning streak and fairing more bubblechatter. let me say, if you are like me no harm at all to call the move a bubble. if the market implotedes you are a genius if it doesn't, who cares, you are just early. you never have to worry about being negative or being wrong. nobody will criticize you, you will get a lot of air time when things go bad.
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win/win. unless you are trying make money for people. that's a problem. second, in any market there are pockets of over valueation. we have witnessed in j.p. morgan. they said, sell, it's moved too much versus the peer group. they never said the palo alto plays were spebsexpensive. they felt that one got ahead of itself, and maybe it has, it stormed down 15% after the downgrade and i pointed out that tesla doesn't deserve to trade at these levels after the last quarter. i was not surprised to see it fall. even as i took a ton of flack. as someone who watched the
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original tech bubble who is old enough to remember, who is part of the bubble and am in print that i was selling the nasdaq skpo and move engineing in to bonds, i think i have the street cred to come out and contrast the two moments. i was bullish this the top of 2000. that is true but after the final blow off, where the market soared i changed my mind and told you to get out. differences between the two, apple is the leader now. market cap over $200 on billion peak. when it led the group, it had a market cap of $556,000. we use price to earnings multiples. cisco sold 80 times earnings and apple is at 15 times. given the current strok trades at 18.5 times earnings that means that apple is cheaper.
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and apple watch that could be a stealth health kit and apple pay, which will be the preferred register method coming up. and shf it is because of important announcements that were made in europe. it's more subtle it's more subtle than you think. they will spend more on data centers. one of my biggest worries about apple was the potential full boar investigation of the company's tax status in ireland. which has saved the billions on of dollars and helped the earnings per share much thinking was simple. if apple was a mail drop. the authorities would take action. in fact, i think the european authorities are gunning for many of the major tech companies. especially google and others and these investigations are very real and costly and time consuming and bad for earnings. by the way, go ask general
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electric that just learned they are a target of the big eu investigation. enough already. but apple's terrific ceo tim cook is heading off this kind of talk. because he made a point of discussing all the new jobs that are being created by the investments and supports many european jobs. with many of them belonging to app developers. he is buying an important thing with europe. he is buying good will. buying good will through job creation, as you can see, from this tweet earlier today, buy cook, coming from a german factory that makes stores from the new campus. that good will is something that all other tech companies aside from cisco seem to overlook. they seem to say job destruction. no wonder they pop up in the crosshairs. what else is different between now and the peak in 2000? let's focus on cisco. back then many good things were
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happening and cisco was providing the backbone of the internet for a ton of cell providers. many disaed and were written down or written off. the client base that was robust eevaporated eevaporated, i do not see the same thing happening to apple. unless we have a real life investigation of stephen king's "the stand," in that case, who cares about stocks. next is google i'm concerned about google they are so quick to spread their bets. they have been acting like death for ages. it acts you feel a. however, with google trading at 19 times earnings and more if you back out the cash you are not dealing with anything too expensive. in fact, google was cheap. i wish they put people to work in europe.
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the eu investigation is punitive and it's not going away and the company is tone deaf of what is happening on the whole the continent continent, back in 2000 micro microsoft was the second largest company. and their market cap was assuming they were going to be the dominant company in everything technical. they missed cloud and the stock valuation did not assume a full scale attack by the justice department that forced the company to take their eye off the ball. their market company is $200 billion less than it was when it was the second largest company back then. but it's still the third largest in today's market. are they overvalued now? not unless you think 16 times earnings is outrageous. that is how intel, got their
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earnings. that is probably why it lost value since 2000. that is awful. oracle and sun micro were fourth and fifth and they were devalued it's currently valued at 295 billion. they sell at 1/8 their price earnings multiple since back then. not expensive. there are other stocks that are powering the naz higher and namely the bio teches. now, these have had expensive -- they seem expensive. let's put it that way. gillid sells at 16 times earnings. bio bi b biogen, and you have to look at this on the out years. where i think it will turn out to be cheap. that shoe you have to think if
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you are investing in bio tech the. i struggle to figure out why it's not higher already. and why the valuations are not bigger already. with a ten-year treasury yielding 10%. that was competition. sure it's easy to say it's all overvalued. dare the i say it, the naz can go higher without it becoming stretched. even as of course we often admit the days of the real bargains are long since past. john in california john? kul . >> caller: we love you in sacramento. >> i like sacramento what is up. >> caller: you know what? i have had at&t and considered it the best of brooedeed and i had a question for you, i wanted to find out what you think of at&t now that sprint has come out with we will cut your bill this half and give you $350 to dump your program do you think it has an affect on at&t.
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>> i think that sprint and that wild man, john ledger who is my twitter partner, both of them are making it hard to own at&t but i do prefer it. >> caller: in light of oil prices do you see it up 20% this year and i am curious if you are thinking a merger could be possible. >> no, no no merger. the stock got hammered after earnings, but it ran up because goodyear tire is so good. i'm not a big tire guy. general motors seems to have stalled, i'm not losing faith in general motors. why isn't the nasdaq higher and why aren't really valuations bigger? it may be overvalued but it's too soon for me to declare that. dow chemical hit the latest quarter out of the park and now
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it's pumping massive money in to a project in the middle east and a high flying pharmacy stock. but can they keep the healthy gains alive. don't miss my take. oil is down on fears of too much supply, does that mean paying for oil and gas producer? i have the ceo, stick with cramer.
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after trading side whys i think dow kep calchemical got its groove back. they are a monster buy back. on top of the $4.5 billion worth of stock. along with a big dividend boost.
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one of the nastiest camp ans came to an end in november. they allowed two directors hand booked to join the board, that were also good. most of all we know that when dow chemical reported they had strength in europe. even better the company gave healthy volume growth tore casts, and on top of that the massive joint venture to build a vast chemical complex is expected to start production this year. it will be a boom to the numbers. dow stock has not looked back. they stole $5 from the 52-week high. that is a bargain. tonight take it from me let's check in with mr. livers. good to see you. the ceo of dow chem kagicalchemical
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it's safe to say that dow is the low cost producer and also of proprietary chemicals, that was a big switch from where the company was a few years ago. >> the firm has ip driven sales and it was 100% petro chemical, we were one product company. people that bought our stock rented our stock, they followed us on the way up and got out on the way down. now we are a consistent earner with 2/3 of the portfolio based on technology and based in all markets. >> when i talk to analysts they still think for some reason if oil goes down sell dow, if oil goes up, buy dow that relation is nil now. >> we have decoupled it. this is the type of lower price you want it will stimulate the economy, we have it healthy
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demand. every point increase i get on my machine i make $200 million more on the bottom line. that is without the low import costs. $20 million a year import costs now i've gone down. i have to pass some of that through. >> and that is why people think the margins were hurt but they were not. >> not as much as everyone thought. if i sell materials in to a tv set, pixels and color materials that has a price relationship for the customer. samsung wants better screen resolution because you want it they don't know that it's hooked to our price. that means i expand with a healthy committee, a low price means a healthy economy. >> you have to talk about the combination is ready to happen. many years in the making. what does it do for the margin profile of dow chemical. >> two things, of course the saudis have infinite low cost
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gas. and we have some here. >> you are the only industrialist that is taking advantage of our low cost oil that i have seen so far. >> we are doing it in texas and louisiana, in saudi, we are building 26 production units for one reason they have low cost class and the targetinge emergeinge inging growth. i can take my share from 1% to 2%. big deal? i can do that off of this maifs new investment that will start up this year. >> do the new board members. ray though stranger to the show, do the new board members understand the new dow maybe our coming in with more open mind than i thought they might have given the fact that they are compensated by what dan pays? >> that compensation package is behind us.
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we went through a full process to vet. there were three proposed directors. we took on two. we had our first board he meeting. we are moving forward. >> no disruptions. >> none. none. we are working together as a team. they will tell you, including my other directors that are coming on. this is one of the best on boarding board member processes that i have seen. we took them to free port. >> i love it. >> we gave them exposure to our r and d machine we were showing the power of a integrated company that builds value by being in many businesses not one. but together in those businesses based on technology. the board has met. we have moved on. we listen to our shareholders and we have moved on. >> you were the first person that told our viewers that there could be green chutes in europe that europe is not the disaster we thought it was. still? >> still, i think this euro and where it's going, it's a bit of short-term pain. companies like mine will have a currency hit.
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if you allow europe to be for competitive and export more if they show a bit of growth in the domestic sector and lower oil price means that we are more competitive in market. and here is the other thing, we have a lot of propane, i'm taking it to europe to be lower cost in europe. so propane is a unique dow advantage. i can take it here. >> because your refineries can use propane and almost all of the others can't. factories can deal with it. >> yes, 60% of hi refineries i call them crackers. a cracker is not an easy word to understand. i can take 60% of the stock and make it propane. the industry can do less than 20%. >> your costs go down. >> in europe and i take advantage of growing demand. >> something that i was concerned about that you brought to my attention, if we open 12 or 14 plants wefld number
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trouble of course like you know, you know australia, it looks like there's going to be money for dominion, which is maximumed out all ready and maybe you are okay. >> i actually i have been for a balanced export on. let's not, you know take this wonderful gift and just export the hell out of it. >> you saw what happened in australia. >> it went to world price, world price is japan price. there's commodity value. it's 1 point to 1 point energy. it's shutting down the manufacturing sector. what i'm seeing here in the united states is the prospect. of energy depen dance, imagine the advantage of the u.s. economy. putting them in high tech
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highly advanced jobs. it was named by the brookings sfut as one of the industry hubs in america. the town in michigan why? because we are putting 2000 ph.d.s in place to do invasions, new light weighting of cars. >> it's a dead business that you have had huge numbers in. >> proud of our team there. i have invented new ones. i have new a adhesives. where did the i get them? roman haas capabilities. >> i did not think so initially. but you had to stick by the price you paid. >> the timing was the worst in the world. timing is everything. but we made it work. and this technology we are now getting out of rowman house, with the multi-layer films, you can open up your oreo cookie bag,
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that is all dow technology. >> state of u.s. not bad, right? stable? >> this is an economy that has a bit of tail wind and from here through next year if we do not screw it up and i'm sure we won't, there's possibilities there. >> that's the story. it's a cash machine lowest croft producer. "mad money" is back after this. >> coming up what is the drill, flotek is a major driller, the price of of crude has put a pinch on the stock. can the gains start flowing again. or should you stay away. cramer is drilling deeper with the ceo.
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what can i say? valiant pharmaceuticals is credible and it's worth buying even up here. even after the move today. that is why 1.5 in the wake of the announcement-- we are ushling seeing that action in the target. not the buyer. what is going on here? first we have got amazing earning from the regular valiant
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and i'm shocked it's doing so much better than we thought. wall street was looking for or gun i can growth of 12% and instead, it came in at 16%. it came in at $2.3 billion. wall street was looking for $600 million in cash flow. 600 million, it's gigantic. it's a time when all drug companies disappointed in their numbers. no currency stuff in these things. the super growth here is led by the u.s. and bought everywhere. second valeant is a great acquire acquirement. you can see their growth from 2014. . saw it's consumer business soar 13% and prescription business soar the top brands are getting them more than other companies. we know one of the reasons that allergen fought off the hostile
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take over bid, is that allergen has a lot of research and development and valeant spends low numbers in research relatively. but it is not hurting them. they developed an ultra brand of contact lenss, and that is a gigantic improvement to take that much share. now, with this acquisition of symptom medicines, the company can expects to save $500 million in r and d cut backs. they think they can close the deal in six months. it's all cash and the money saved will hit this err 82's bottom line. the street was looking for it to earn $10 a share, and i think it can earn $12. sales are doing well after an inventory glitch that hurt them back in thof. that caused a big discount to the stock and that is one of the
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reasons they got it cheaply. the ceo of michael pearson feels confident that they will be scrubbed clean. they have an advantage tax structure that magnifies earnings the way american companies can get disproportional returns. they are build on deals. some would say that slashing r and d. i am kind of mesmerized here. break -- this has been the hottest drug company in the business. the stock went out at $200
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today. and i think this could trade to 240 from here. especially if they get that drug approved. approved approved 240, it's not a pipe dream. it could be realty. let's go to joseph. >> caller: thank you for all you do for us and also your staff. i watch your show every day. you're entertaining and informative show. >> thank you. >> caller: and so i don't miss a thing, i tape it also. my stack is horizon form suit pharmaceutical, it had a recent price jump and i would like to know if you would recommend more to buy at this point? >> you know we are kind of amazed by these guys really are. and we think the world of them and i have to tell them my take is it's not on done. i think you can make more money in horizon. i -- frankly they are like
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valeant, they make a lot of money off of things that people don't think would make them money. let's go to frank. >> caller: booyah this is frank. >> booyah back. >> caller: listen to you every night, jim. love you. >> thank you. >> caller: love your staff and thanks for your integrity. jim, okay? >> thank you, man, i'm out there. i tell the truth as i see it every night. what is up? >>. >> caller: i mow you do you had the ceo of agen in january he had said is they have a new vaccine. is that coming in. >> he said that it will go smoothly. people said he does not have what we are looking for. they got a new deal last month with insight. i hesitate to write him off.
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i have known him for too long. that horizon, hcnp that is like a mini va lmp eant that joseph called about, i like that one. here is another great name valeant, i did not believe it, but it's the fastest growing p pharma name. there's a lot of mad ahead. oil and gas producer up 8% can it weather the storm if we go to the low 40s and flotek helps producers pull more black gold out of the ground. this is the lightning round. just ahead. stick are cramer.
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one thing we know is the forecasters are guessing, and that is before the chatter of what we heard an emergency opec meeting. traded under $50. xec for you home gamers it's a mid size oil and gas producer. major acres in texas, and oklahoma back in the third quarter of last year before the collapse in oil prices hit, it looks savy they sold off noncore assets strengthening the balance sheet and allowing it to focus on its holdings. it slashed the capitol budget in
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half. and still forecasted down three to plus 8% growth. still going to grow. more important though, management indicated that they would be willing to make acquisitions if they see deals that are truly worth doing. the stock has rallied nearly $23 since the price of crude stopped to plummet in mid january. the bounce seems deserving considering how the run has been. let look at the chairman. he had a better sense of where the company is headed and what is going on in the oil industry in general. welcome back to mad money. good to see you. thank you for coming on. i have to tell you, you have done a lot of things right. you raised the capitol when everyone was plunging all in. you have said over and over again, look you will be disciplined, my favorite quote on the conference call that you drk we are not ship wrecked victims waiting for rescue. that really is -- you do stand
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out because of that. >> that speaks about our organization. these are tough times. so first off, you have to have good assets. there's no substitute for quality assets. you have to have a balance sheet to capitalize on the assets and third and most importantly, you have to have an organization that can weather through an environment. >> one thing that is astounding people you can cut your drilling budget and still have growth how is is that? >> a lot of it is baked in. really through the fourth quarter, a lot of companies in our space had tremendous actively levels, so there's a big backlog of wes going in. we think in our lower rig count, which will be down to six riggs, from the mid 20s, we think we
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can throttle ahead and still preserve the option for our future growth. when indeed things stabilize. >> you said in the call. we may not have seen the bottom of the correction yet. it's not like you are saying listen, under 50 is the level that you should decide to start things off. >> we have always drop a terrible job pricking these price swings. you know people asked me were you surprised by the price swing and to me it's like asking people in california were you surprised by the big earthquake. we knew the price collapse was a possibility. we managed the company for it with our balance sheet health. bullet when but when it comes, it's stemming. we are managing the company with a short-term focus with the balance sheet and a long-term focus on our asset hes and organization. >> you are not hedging here. >> we said it's a zero sum gain in the long run. we have our balance sheet that is the biggest hedge. there's times when you are ahead
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and behind in the game clearly, do i wish we were fully hedged? you bet i do. >> you did point out that there are a lot of people chasing here. a lot of people think, wow, when it collapses it will be the big void, you talk about private equity is in. are too many people waiting for a bottom? >> well i hi people are prudent and cautious. i they there's still rationalization to happen, there's companies that are talking about growth and that to us seems like the wrong focus. i think prudance and focus is the right way. there's talk about mergers and accusations, it's still high. >> you have the senior people, you have the most heavy weight of the independent boards. what are they saying in the room? are they saying who knows when it will come back? that the united states is no longer going to be this renaissance? are they worried longer term?
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>> you know, we have a great board and i appreciate you noticing that. we have with an experienced board and a board that shares our long-term horizon. we don't know where the price will is settle what we know is that if the united states will become a swing producer it sounds like that. >> yeah. >> so it got to settle in a price that differentiates on shore u.s. plays. so it's going to be somewhere in between. i will say, we will emerge from this a difference industry. costs will count in way they have not in the past. organizational effectiveness will koupt. pru department resource developments. and he we will organize and look at our assets and be a low cost producer. that will be the difference between companies this survive and those that falter. >> a last question where does it go? where is it going?
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doesn't seem like you get the posted price right now. >> we sell in to a couple of markets. we sell in to w temperature iti curb canning and we pay -- cushing and we pay transportation and bottleneck price. >> well you have done an amazing job and the ones that will come back the hardest are the ones that are most disciplined. and yours is the most i've seen so far. it's tom jordan. go read their documents. some guys cannot just borrow the heck out of the banks. some guys have cash in the bank "mad money" is back after the break.
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did you just share a listing with me? look at this one. it's got a great view of the lake. it's really nice mom. ♪ your dad would've loved this place. you're not just looking for a house. you're looking for a place for your life to happen. zillow it is time! it's the lightning round. and then the lightning round is over. are you ready? time for the lightning round. starting with bob in nevada bob. >> caller: hey, hello and thank
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you for taking my call. booyah too you. >> done. >> caller: symbol is apo, buy, sell? hold? >> usually bx that is our play in that consecutivesector alex? >> caller: jim thank you for taking my call. i want to get your opinion on -- whether i should hold it long-term. >> that is one of my least favorite i like -- i them more than that one. i'm going to james in north carolina james? >> caller: booyah jim. >> yo, yo. >> caller: i'm an injured disabled sheriff's departmentuty, you have my back brother. i want to know with kate spade. >> too hard. i tonight like that business it's too difficult.
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that one has had the best run if you had to buy one of the three. it would be that one. trevor in michigan. >> caller: cramer -- >> what is shaking? >> caller: not much what are your thoughts on aris group. >> why buy it when you can buy cisco, with good yield and going higher? sis couldcisco is the play in that sector. >> caller: i was calling about enbridge energy partners. >> i like the 5% yield, it's way too cheap. i want to buy it. gary in connecticut. >> caller: hi jim. i bought xel energies on a good report in a bit of a pull back. >> i think you are fine, buy more. you are in good shape with that idea. jody in alabama. >> caller: booyah jim, how are you? >>ing
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>> doing well. >> caller: question of j.p. who began. >> listen, don't listen to i am you can'ty diamond, wells fargo is my pick in the sector that is my travel trust owns. and we have none of that justice department stuff. i love the guys but tired of him. chuck in california, chuck? >> caller: jim, listen i'm here in nowhere california, the weather is 70 and i know you are not doing that well. in any case i want to know what your feelings are on yahoo with regards to -- >> i wish i was in california, okay, i think it's just okay. i think it just okay. i don't, you know no real feel just okay and that ladies and gentlemen is the conclusion of the lightning round. [ buzzer ] >> the lightning round is sponsored by t dmp ameritrade.
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we are seeing an interesting dynamic in the oil companies. they are slashing their budgets are increasing production because they need the cash. what do we do with the company like flotek. they make environmentally lyally friendly chemicals that are used from drilling to production and they made a nano fluid that boosts the production and makes
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it more efficient on top of that they are a drilling technologies business. they make citrus based chemicals. and they have fracking chemicals. no i have had fracking fluids not tasty. they have seen their stock get crushed. that said the company reported robust results with the energy chemical technologies and the drilling segment is up, no oil company canies that i know as long as u.s. oil companies plan on growing, can they afford to go without the technology? let's drill down with the ceo of the company can. welcome back to "mad money." good to see you, sir. >> good to be back. >> there's a bit of a pairradox in the companies i follow they had
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bad fourth quarters. your company is making it so that you can see up production thbs numbers if you are drilling less, and your stock got hit. >> yes, it puzzled us as well. as i was on the show last time. we said that we have a consistent message. you have to use the right technology at the right time to get the most oil out of a well, so we did have a record quarter but people paid attention for it for 15 seconds and wanted to move on to 2015. >> let's say the rig count is cut down dramatically. i mean that means fewer holes and less flow. >> no doubt about it that that is what happens when there's less wells drilled. we still have such a market penetration opportunity, the people that use our product on only about 10% of the wells so we still have the ability to pen are
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trait more of the market even though there's less activity. >> you have information that shows there's a dramatic amount of oil left in the ground unless you use flotek. >> we have public data from state production information and frack focus, and the did itdata shows that you will use the oil in the ground if you do not use the best technology. in this case the nano fluid to get it out. >> it seemed that your majors are using the stuff. the client list in here is all the big guys. >> what we are trying to do is get more of them to use it. >> okay. >> there's 234 different operating companies, that uses the technology and we are trying to expand that every year that wref the opportunity on do it. >> you spend a lot of time in your presentation talking about the environment.
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you are one of the few peepople in the industry that recognizes what could shut down the industry is not demand but the government. >> well we appreciate you noticing that and we have a patent in our product way before folks were concerned about the environment. in fact we pumped it in wells in california that i'm sure if it was not environmental aly sensitive, they would not have pumped that product in california. >> and describe it. this is citrus that is more effective than the other things that people on should be worried about. >> it comes from orange peels and viewers are thinking how does it work? it comes from an orange peel and it helps to open up the pwells. >> we heard there could be an emergency opec meeting, meaning nigeria will call it. do you think we will have a u bottom or v bottom or it go on and we don't know.
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>> our numbers show that the decline will occur faster than. >> this is the key that i know you know more than anyone. >> thank you for saying that. we believe that it will flatten out sooner and decline sooner and i think a couple of the folks you had on today feel that way. >> he does. >> sheffield from pioneer feels that way. >> he does. >> we are on the view that toward the end of summer and early fall you will have stability. and the activity trails the pricing by about a quarter. this is a 2015 thing we are still in the middle of for sure. >> your stock is terrific and should not have fallen. it's a difficult market and people sort through the rubble after, and that is what they are beginning to do. >> we thank you for saying that. >> a technology company that happens to be in the oil business. stick with cramer. aflac! what are you guys looking for? claims! legend has it these hills are full of 'em. it can take months for an insurance claim to surface.
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reliance on coal fire heating plants and prevent 60 million tons of co2 emissions? when emerson takes up the challenge it's never been done before simply becomes consider it solved. emerson. two of my favorite groups two great reports tonight, express scrips they are in the cat bird seat. texas the roadhouse, one i talked to you about last week. i told you they could deliver the number. restaurants are terrific and health care cost containment, fabulous. i'm jim cramer and i will see you tomorrow.
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lemonis: tonight on "the profit," i visit swansons fish market a multi-generational landmark located in fairfield, connecticut. is it always this busy? gary: yeah. lemonis: but after a tragic fire, these owners are struggling to keep their heads above water. how are you surviving? gary: we'll take money out of the deposits. i'm put against the wall. lemonis: and morale is at an all-time low. larissa: i've just been through a lot trying to help everyone, and i just don't know how much more i can deal with. lemonis: if i can't throw them a line this historic institution may close forever. gary: it's the only hobby i really have. sue: it's ridiculous! lemonis: my name is marcus lemonis, and i fix failing businesses. if you don't like money, don't follow my process. i make the tough decisions. we're closing the store, we're done i'm not talking about it anymore.

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