tv Mad Money CNBC January 4, 2016 6:00pm-7:01pm EST
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geneticists of the world, take a look at this picture because it makes no sense. >> it is a conundrum. modern day science. i'm melissa lee. thanks for 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. 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 just trying to save you some money. my job is not just to entertain but also educate and put in context. so call me, 1-800-743-cnbc or tweet me @jimcramer. all rallies look the game but all sell offs are different in their own way.
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including this one where the dow plunged 276 points. that's the worst start since 2008. the nasdaq nose dived 2.08% although that represents a descent recovery. thank you. the scribe that penned that bull versus bear analysis. sure i know he was talking about families but the same logic applies to the stock market. each different cause of the decline determines how you can profit from a period give and sell off and that's what "mad money" is about, profiting. not just saying woe is me. think about this, bring in a rally trader and think about what hasn't moved the lock step in the s&p. a rally should include almost everything because rallies reflect generally positive events that resinate with all stocks. that is totally not the case with sell offs which is why we need to plunge into them on a case by case basis. take this one.
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why don't we set the clock back until early last evening. pretty much at the same time that the new york jets were busy being eliminated by the buffalo bills in an afternoon game that mirrored the devastation of the bulls on this, the worst opening day for the dow since 2008. yep. early sunday evening the futures would signal that we are going to rally at the opening. why? because we remain in crazy town where higher oil prices translate into higher stock prices. again, you know i think that's ridiculous. especially because oil was rallying off on actual issue involving a war between the saudis and the iranians. it could end up bottling iran's future production. let crude go higher. and destroyed it and makes sense that oil could go higher and then it all broke loosz in
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china. trading down 7%. so sellers overwhelm the chinese stock market in an obvious attempt to beat the breakers and that selling triggered the halt. call it a self-fulfilling prophesy. now the chinese communist party has done it's best to encourage selling of all sorts. going so far as to criminalize certain kinds of selling given the hundreds of people executed for white collar crimes over the years in china. you take a big risk if you dump stock on mass. balance against the authorities that don't want selling are the actual fundamentals which had been deteriorating for some time. so the chinese market deserves to come down. but as we learn in that western classic unforgiven, deserve has nothing to do with it. and the sooner you understand that, the more likely you are to turn bullish on china at the
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3,000 level. currently down about 10% from here that the communist drew in the sand during the august 2015 sell off that brought our market down more than 10%. pretty much in lock step. much of what traders do involved pattern recognition. we know from the timing and the break down that china is the real cause of today's decline. we know that the last chinese spill over produced very hefty losses here but we also know that those losses were exacerbated by glib comments from federal reserve officials. including one senquin about a rate hike. we have already had a rate hike in the not too distant pass. so other than increase that seemed to be required about when the next hike will occur there's not a similar wait on the market this time around. let's put it all together. china caused the sell off worldwide. we were down around 2%. we also know that china could
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cause a greater than 10% decline like this past august. this minus the fed settling being thrown on the fire could give us maybe, what, 5 to 7% decline? of which we just got 2%. remember we're playing percentages here. we don't know if the s&p will stay in the ballpark so we most likely should sit on our hands until we get to somewhere near that level. sell offs can be vicious and we don't need to be heros. especially when the fed is tightening. we must always be willing to take a pass. even as our ultimate goal is to buy stocks at reasonable prices. what is worth buying? what should be sold? the industrials are closely linked with china. even as the only real exposure comes from companies involved with metals and mining. it's the most obvious analog of the plague year that was 2016. what's up with the financials?
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no go. flight to safety in the bond market lessens the chance that they're going to go higher. tech, interesting but only select ones. the companies have nothing to do with any part of sell phones because the marginal buyers are the chinese although i'll exclude apple and talk about it later in the show. i prefer to buy tech on day three of any sell off because i'm worried about global economic sensitivity. i want to avoid it whenever possible. which leads us to three groups, retail, health care, and consumer package goods. what should be our targets? what can we start buying? we need certainly. who has given us certainty recently? they just cleaned up a big patent mess and allowed us to see the stock is cheap. kroger is the domestic spending name. a positive note from jp morgan and it could go to a takeover.
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colder weather lowers the risk here. we have to let it come down before we pull the trigger. pfizer not expected versus their growth rates. and the company that runs the now much better performing olive garden has a excellent dividend. there. there, that's your down and dirty shopping list. the companies we know that are doing well that can continue to perform well because that's what they did last time we had a china scare and there's not much guess work about the earnings how about f.a.n.g. they all have minimal exposure to china. netflix hasn't gotten there yet. amazon is just scratching the surface. facebook doesn't need china. they wanted to show they were winners going into the end of next year. even if they're today slacking, apple outperforming.
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when do you put the triggers? maybe it's three days this time around. that means you want to start your buying tomorrow. but not if the market opens up because that pattern brings out sellers. obviously you only want to buy down or your buying merchandise only on sell and that's foolish. that's your sell off game plan. chances of it working, pretty descent because it worked before. because of human frailty don't you buy all at once. what if you want to contribute to your 401k money. buy some s&p. what do you do then? and all of this is noise. wait a couple of days. is it really that simple? not necessarily but it's what the professionals do. now you have their game plan too. dennis in michigan. >> hi, jim, the airline stocks are taking a beating. in particular jeb blue which is
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down over 16% in over a month, okay? yet the oil is low and it has been low. what are your thoughts on jet blue and the airline stocks in general. >> these stocks are all very general. at the same time people think they cannot make the estimates and that's why they're going down. i happen to like alaska. i like delta. i like aal and i like jet blue and then united. south western, it depends on where it is but it's going to deliver a good quarter. let's go to frank in new york. frank. >> hey, jim. blackberry's most recent earning showed software revenues growing faster than expected. they have plenty of cash on hand. would you be a buyer of this stock at this time?
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>> yes. yes. that's the first time in about 50 points. i like that last quarter. it showed me that the company is engaged in a serious turn around. i would love the ceo to come on air. he tells a compelling story. i do not like the stock. i don't believe you'll get more than a 20% increase but the down side is limited. that's the first time i have said anything positive about blackberry in multiple years but i went through that conference call and i liked what i heard. let's go to john in new york, john. >> booyah, jim. personal thank you to giving extra analysis of what to do in the stock market. here's my question. about a year ago i bought some anheuser-busch stock for yield and growth. i know you saw them carefully and you're on the money again with the coors analysis. my question is do i hang on to the stock? do i sell it and move into
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consolati constellation brands or do i sell the bud and go up to a totally different beverage group other than these three. >> you cut me to the quick. you have three stocks i like. i like it very much. i think all three are good. we had him on recently. it's just doing great because of the justice department ruling and what can i say? good growth. i like them all three. don't need to shoot any i'm sure. what can i say? but look at this as an opportunity. now you have a sell off. remember, committing to s&p all noise. 2015 maybe in the books but knowing what separated last year's winners from losing could be the key to a profitable 2016. especially after today's decline. the biggest drop goes from zero to hero or should we stay away. plus wing stop.
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good wings down nearly 40% stock though from its ipo. does the company need more than a wing and a prayer? i love that. and i'm talking with the ceo. so why don't you stick with cramer. >> don't miss a second of "mad money." follow @jimcramer on twitter. have a question, tweet cramer. #madtweets. send an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. when a moment spontaneously turns romantic, why pause to take a pill? and why stop what you're doing to find a bathroom? cialis for daily use, is the only daily tablet
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>> i make no apologies for my love of the dow jones industrial average as an index. even on a day like today where it just gets hit. others misdoes it as a poorly way to index. and it is true also that there's been so many changes to the dow over the years that it may be an inconsistent measure of things. shouldn't starbucks be in? should sis coe and intel still
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be in? and not facebook and not google? or alphabet. the dow remains the face of the market. even if it's not the benchmark that funds use to measure their performance. just think about it today. what was the first thing we heard about the brutal sell off. dow is down 400. the dow, the dow, the dow. that's why tonight i want to give the index it's due by highlighting the biggest winners and the losers and what to do with them now. let me reiterate beginning of 2016 z i try to do almost every year of the show's existence that for the first $10,000 you save up you should not be picking individual stocks instead you should put money in an index fund i recognize for most people it's too hard to spend time picking stocks but
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there's always going to be a cohort that once helped pick individual stocks. i would never recommend it to the dow jones average because there's more stocks in the index. it's always investing in index fund but they're still incredibly important. that's why tonight i'm going to go over first the five best performers in the inexdnd anne this five worst in order to assess their prospects for 2016 because we need a little positivity. that means nike rallied some 30% last year. first let me say that nike's performance was astounding and it's a credit to the ceo and his team. i mention his name because i still regard him as the best and most underknown ceo in the
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country. how could that be. and not because there's a bizarre uprising. i'm talking about you know it comes from toiling out and makes it the most underdom in a to in the world. they really do act like underdogs. nike can repeat it's performance because it's about beating your personal best. think about it. they still have the pvh except for nike. china was supposed to be a wasteland for everything. it's the market for the whole company. it's the hidden gem which while a small percent of revenues now
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can add juice to the bottom line. so fuse the brand with new editions and add it. this could be the year that nike unveils a wearable product worthy of its name that with the help of teammate apple lets you forget that tim cook is on the board of directors and can finally compete against fitbit which had a dynamite christmas. in second place, mcdonald's. up more than 26% last year. that rally is no fluke people. this is a case of new management energizing the joint and being accustomed. tweeted out a near instant thank you to me as he stopped to sneak a diet coke and egg mcmuffin. all daybreak fast. technology reported from around the globe and i think mcdonald's may very well be a place where you ain't seen nothing yet. especially as we annualize the
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strong dollar. next up home depot. my theory of 2016 is that we leave crazy town as lower oil and gas prices brew demonstrable at last. others attribute it's greatness to have a home improvement spending binge that's only turned on. i love those trends. but the real reason home depot out performed all retailers is it has impeccable knowledge of you and it's own customers and what they need. it helps the ceo find new ways to please. i also believe that home depot is impossible to amazon higher mortgage rates put a damper on the stock and will trump each time but expect more stocks valleys and peaks this new year.
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last year's number four performing dow general electric is like mcdonald's and playing catch up to its full potential. it's expanded to well in excess of the global con glam rants but we're waiting to see how many things can come from ge. losing it as a financial institution while digital industrial. this is when it shows how much stock it can buy back. they can use a bigger dividend too. something that can happen given how much cash ge throws off. another goodyear ahead although beating 2015 maybe difficult because of the sheer size of the institution. finally put this one in a category all by itself. microsoft's 19% gain could be compared to what lies ahead t.ceo has so many weapons at his
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disposal, an x-box one that is loved. and a software company that is no longer hated. could microsoft become cool? don't laugh. his personal city seeping into the organization. i don't know how many times to tell you i like this guy. he's a difference maker. the stock can go higher. after today's brutal tlashihrasi like all the topper formers. i don't know if they could be the best performers this year. you have real competition there from visa to cogoldman sachs as well as pfizer combining with allergen. much more mad ahead. might look at some of the biggest losers of 2015. could they be this year's winners? don't miss my take. after a hideous day like today i have to find out about wing stop. see if it's wings could carry it higher. facebook, netflix, amazon,
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all the time. santa claus rally or whatever. i can never keep that one straight. the fact is that all week we aren't just going to search for the winners. we're also going to look for goodness in the losers or at least we'll see if there are any opportuniti opportunities. and we have really small shoes to fill with walmart down 29%. caterpillar off nearly 26% american express down 25%. and united technologies almost 17%. wow. oh, this is tougher than it looks. i like the new ceo except he
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isn't new anymore and walmart has a lot of problems. first when he to draw straws over who would go to the walmart on our vacation last week. lose her to take the pilgrimage. telling, isn't it? second amazon is only going to get better. sometimes i think that jeff besos sits there and says today we destroy walmart and tomorrow he does the same thing and then the next day and the next. here's what walmart needs to do. offer a dozen key items below cost every single day to get people in the store. no one cares about walmart's profitability anyway. crush the earnings estimates and crater the prices and stop amazon at a game it can't play. get people into the stores. it's an apporent place to shop but at least it's beyond cheap. just take a beating and get on
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with it. >> they must come in on the 10 most sought over products. and i would just get that stuff to your house. third i demand that some of the board be replaced before computer scientist graduates. oh and you know what they can be named later. next up, second worst performer in the dow, caterpillar. all i can say is that cat needs to get into another business. i like this. it's like a zoo. why doesn't it try to consolidate the industry? i mean, everyone knows that this company has become china cat means mineral cat. so change the darn stripes. caterpillar made horrible acquisitions in the past but
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that made them more cat. it needs to be less cat. if not agriculture how about aerospace. how about the feds. abc is the watch word. anything but cat for cat. the fact that i'm right about this would be painfully obvious. the third worst performer in the dow american express. people leaving home without it all over the place. down 25% for 2015, what can i say? they need to replace the ceo. he's been there too long and did a good job for a long time. i remember when i was proud to have an american express card. two geniuses laughing at me for being proud members since '82. what can they do besides change the man at the helm? obviously go by paypal. how can it not be interested in snapping up expedia. that would move the stock up quickly. right now the company is not
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only doing poorly but we know how much that meant to earnings. plus we learned fidelity to the competitors at visa. otherwise no reason to have this true dow dog. i sense that fossil fuels are the new vice. i'm talking about tobacco. i'm enam nored that they're onl down 12%. still it is telling that oil couldn't list today despite the tension. what will cause it to rally if not that. finally one winner among the lose losers, united technologies.
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right before particular market got tough. he has a new aircraft engine that's so far and away that he'll be crushing rolls royce and his climate control division has a fantastic balance sheet too and if my thinking comes true i doubt the federal reserve will be as aggressive and the united technologies, utx with strong year over year compari n comparisons only sells at 14 times earnings. they just changed their stripes except for united technologies. simply needs to continue on its new course and will find it's way out of the dow jones bow w bobow wo bow wow chauteau.
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>> i love your show. you the best staff in the area. >> staff is unbelievable. i have been talking about them all week. >> shares of yahoo! stock. i bought it it with the spin off which is no longer the alibaba stock is no longer going to spin off. the rumors are they might spin off the core business or might sell it. my question is, should i wait and see what happens or sell the shares and put it into top bands. >> top dividend stocks to yahoo!. i don't really feel great about recommending someone selling yahoo! when it's actual core business is valued at nothing.
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so my reluctance is i think it's worth something. i always prefer dividend stocks to stocks that don't have dividends. ann marie in new york. >> i'm so glad you're back. i had a really goodyear. i really appreciate your help. >> way to go. what's up. >> what do you think about the turn around and if you like it at what point, what price would i start buying it? >> this is both a time and price issue. we have to deal with the fact that they're putting in some very special top of the line safety control which is are going to cost a lot of money and we know from an interview with them that they are not having any pick up in the same store sales where it's been difficult. so you have costs going up and traffic going down. that won't change until a year from now.
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you don't have to be in chipotle until wow, september-october? that's a long time and i'd love to see it go better, faster, but that's the safer entry point. $400 price target by some would be hard. rob in florida, rob. >> hey, jim, happy new year. >> happy new year to you. >> in your expert opinion when will they raise the dividend, by how much and your price target in 2017 and final question, why are they shorting the stock now. >> it's a large position, fraction owners plus.com. it's very inexpensive. just the company that has the biggest deposit base. if the fed does raise it's going to win and do all sorts of good things and earn a lot of money which is what have to care about. putting rates up when it shouldn't. some of the loser of the dow aren't all bad. walmart, caterpillar, american
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express and chevron could be winners if they have to change their stripes. united technologies just needs to stay on track. much more "mad money" ahead including with my exclusive with the ceo of wing stop. new year, same f.a.n.g. where it could be headed in 2016. and all your calls are just ahead in the first lightning round of 2016. so why don't you stick with, cramer.
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>> after a hideous day like this one it's checking on stocks, take wing stop. the chicken wing chain with more than 800 locations came public this past june. more than $30 on its first day of trading. since then it's down to 22. i was concerned about the super high growth trajectory. they reported a pretty strong quarterback in november. it's the low teens and down to
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6.3% earnings beat. and really terrific times. this say regional national story. it has the vast majority of locations. a new jersey store and i think it's got an ill pressive store count of 18%. plus at some point you have to figure thermal start with cheaper gasoline. use savings at the pump to eat out more. restaurant stocks have been hammered. stocks down 47% from post ipo highs. maybe it's picking up. let's take a closer look with charlie morrison. welcome. first time. "mad money." good to see you sir. you have fastest growth of any of the restaurant chains.
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why? it's the unique concept we have. wings, fries and sides make up 90% of our revenue and with that focus and unique flavored experience we provide to our guests it's been something they craved for years and fuelled the growth of the company. >> buffalo wild wings have alcohol and dominos have delivery. you don't want to deliver because you think the taste may not be as good. how can you compete with those guys. >> we have been doing it for a number of years. we have one of the most efficient unit economic models in the business today. our average restaurant yields a $1.1 million. about 1700 square feet in the prototype. 75% is carry out. we keep it very simple. very efficient. creates great returns for our franchisees and they continue to keep growing the business with us. >> digital helpful? >> very. >> this year alone we tapped 15% during the fourth quarter.
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online revenue is about two times more than last year alone and we're going to continue to fuel that. and we're going to continue to focus on that. >> on the last call which is november 5th, an analyst comes up with 3 to 4% and that would be deceleration. it wasn't clear to me and this was two months ago whether that was necessarily the right call to say it's going to be that slow. >> we haven't provided any guidance. it is growing 12 consecutive years and through the third quarter combined our comp growth was over 40% so we have been dealing with high growth here. we still had a great quarter as you mentioned with 6.3% comps. some of that was effected by the football season that started late.
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>> it's how strong it s. we skew african american and hispanic by design, it is very unusual to ever see that kind of language in documents. >> yeah. i think it's a testament to the quality of the customer base. we do it very heavily with hispanic african americans and it's geography in which we started the brand but a lot of that is who the fans are of the brand that are passionate about us. we're in 39 states around the u.s. we found that wings are sr. much a center of the plate item for just about anybody. >> when i look at what the company does and you have a lot of snapshots, you can put that anywhere in strip malls and all different places. >> our asset strategy is to
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start in a major market and inside the core of the market and that allows us to find all kind of real estate. it's more expensive in a strip center. it's much more efficient for our operating model and yields great returns for our franchisees. >> people aren't worried about labor costs and commodity costs. where do you fit on both? >> it helps us keep the number of people very low. we have low turnover rates so we're generally paying our employees higher than most would. on the commodity side there's a lot in the market right now. commodity costs are favorable for wings. that will be a benefit for us. >> i have to ask this, troy aikman. we were worried there are other sellers in ipo. should people wait for more stock to hit the market. >> we're evaluated our options
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>> it is time. it is time for the long round. and then this sound and then the lightning round is over. are you ready? it is time for the long round. i'm going to start with david in california. david. >> happy new year. >> same. >> it's been a huge winner but no longer has a big enough yield for me. so i'm going to take a pass. >> don't buy, don't buy. >> let's go to mark in colorado.
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>> 15% yield. looks like a red flag to me. probably have to do more work on that to see how that is sustainable. >> buy, sell, or hold. >> we're after the saudi arabia juan tension. michael in new york, michael? >> hey, booyah, jim. michael from queens. i have been long and heavy in mcgraw-hill. >> it's fine. it's a financial. let's two to sebastian in new jersey. sebastian. >> big booyah. i wanted to ask you about sun edison. >> i have been reading the street.com on real money and it really is what i consider to be,
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yes, i'm going to say it, a dead cat bounce. and they do bounce. i saw it back in 1999. ken in california, ken. >> hello, jim. i'm wondering about kinder morgan. >> keep wondering. the rest of us are wondering ourselves. how about tom in new jersey? >> what's up, man. >> what's shaking? >> i bought twitter last year 26 and change and i was wondering if it's through the hole. >> twitter. okay i think twitter is going down. my charitable trust owns a small stake in it. why? i think the franchise can be reenergized but i have very little near term hope because the company is giving you very little near term hope. dan in new york. dan. >> happy new year. >> happy new year. >> ball corporation.
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>> oh, man. the government should never have allowed that acquisition. they have a monopoly when it comes to cans. i say buy. let's go to corey in massachusetts. corey. >> thanks for having me on. look out for my resume. but what are your thoughts on oled? >> all right. this is a brilliant company. it's a panel display infrastructure. it's a brilliant company run by brilliant people. it's heavily shorted. i don't understand that. it has descent earnings. i like the stock. and that ladies and gentlemen is the conclusion of the lightning round. >> the lightning round is sponsored by t.d. ameritrade. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies
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fang. that other popular favorite, apple. what do you do if you own them? what do you do if you want to own them. much of fang has to be avoided for now. they're up so much you have to expect profit taking. it would be insane if you didn't get it. how do i calculate they're too high? i know about money managers. they out perform their benchmark. they also want to show they are with it and have a brain. how do you demonstrate that?
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you buy the stocks that make up fang going into year end as they were up huge in 2015. i know this must sound stupid to those that have never run money but anyone in the game and this is demonstrable evidence that it is a game knows better. once a manager owns any of these names it's incumbent on him to try to keep them higher in the last few weeks of the year. typically with concentrated buying underneath. what good does it do to own the smart stocks? every point higher increases performance. that's the name of the game. so we have two forms of artificial buying that disappears the moment the new year begins and that's this moment. are any of these undervalued? they trade off of growth and retail sales and growth in sign ups and can't be measured against any traditional brick or mortar. that means no unhurt valuation
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makes them buyable right here. sure you can buy them if you can't help yourself but why not wait until the full magnitude of the artificial buying weighs off. the good news is they have real earnings and price to earnings multiples so they can be valued against the s&p 50 and their growth rates. the bad news is that even with the growth rate amazon has still 37 times this year's earnings estimate by my count. alphabet is about 23 times earnings. the stock though has travelled from 530 to almost 800 last year. so give it a little space and don't forget every one of these stocks will now be in the grips of chartis who will go negative. to wait and go with alphabet first because it's the cheaper. how about apple? the world somehow decided without growth in cell phones the stock is finished.
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i say it dominates one part of mobility, the cell phone, the other part big enough to matter, the mobility of autos. they buy the brain bess hind cars, you own the second leg of mobility. the dominant internet of things segment and a renewable revenue stream. i would love it. just put my cell phone in there and start everything. it's clear from today. you already own it, do i buy more? i say wait. now your rational though which is no different from any other year pretty much since the show began. own apple, don't trade it and please don't bet against the percentages here. they can be wrong but not as often as they can be right. stick with cramer.
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>> listen, rough start to the year but i'll be here each day as always to try and help you make 2016 a profitable one. i gave you some buys and yes you can start tomorrow. not be aggressive. piece mill please. don't be a hero. it doesn't work. you'll get hurt. i'd like to say there's always a bull market somewhere and i promise to try to find it just for you right here on "mad money." happy new year cramerica! i'm jim cramer. see you tomorrow.
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l-that was pretty good. -mike: [ laughs ].. lemonis: ...a custom drum company can't find the rhythm to meet supply and demand. mike: our turnaround time is six to seven months. -lemonis: six to seven months? -mike: yeah. that's created a backlog of unpaid bills and serious cash-flow problems. chris: we don't have enough money to cover payroll for next week. lemonis: i mean, you're kind of closed. chris: yeah. lemonis: the owner and his right-hand man are out of sync. louie: the lack of communication, i think, between chris and mike, it's like -- it's just...exactly. lemonis: and the two brothers who started this business have split up... scott: what did i ever do to you? mike: i really don't want to get into all that. lemonis: ...causing a whole nother layer of crippling issues. if they can't fix their process and their relationship... mike: fixing the business and this [bleep] is hard enough. lemonis: ...they'll be forced to close their doors forever.
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