right? restoration hardware. i think it's going to flush tomorrow on big volume. i think it closes above 30 bucks. >> i'm melissa lee. thanks 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 just trying to make you some money. my job is not just to entertain but to educate and teach you. so call me at 1-800-743-cnbc or tweet me @jimcramer. when it comes to the overall direction of the market some stocks matter a heck of a lot more than others. they just aren't often as visible, and they aren't always talked about versus say like an

apple or a netflix or a tesla. after another day where the market hung in there, the dow gaining 67 points, nasdaq advancing .26%, starting to be a pretty good year. i think it's shining a light on the stocks that i follow in order to get a better feel for what's going on out there in the real economy, both domestic and international. so you have a sense of where we truly are. let's start with my mainstays. let's start with the rails. >> all aboard! >> i'm always trying to measure the actual strength of our economy, and i'm not using all those data that comes from the fed and the government. that doesn't get there for me. one way to do that is by looking at the rails before there are only four publicly traded railroads of any size, and they all carry the same cargo so we can get some valuable nationwide comparisons. they move chemicals, iron, lumber, steel, cars, coal, ag

products. don't forget that they carry trucks too. so they doship merchandise that would normally be viewed as over the road cargos. why do the rails matter? i am always telling you that the stock market is a forecasting machine and my rule of thumb is that stocks generally foresee the future by about three to six months. in that sense, the railroad stocks are like crystal balls. even though many of these cargos are down big, especially cole, even though csx this morning told tale of woe. the rail stocks, they're ef fuego. i candidly admit that i'm completely and utterly baffled by the move, but it's my job to try to impose some order on the chaos. first, there's the simple explanation that maybe the switch away from cole toward natural gas has finally run its course and key cargo which is

down double digits year-over-year has bottomed. coal is a big enough needle mover that it could drive this kind of rally. however, i actually don't see it bottoming. nothing in washington suggests that the world coal is going to end anytime soon. later in the show we'll talk about coal displacement by natural gas. i think the strength of the rails is all about pricing. favorable pricing for these various cargos. somebody at csx confirmed today at a meeting. that means one thing. business has to be getting better. not good enough for the railroads to bring back their furloughed workers and their sidelined locomotives and that's a real issue. but certainly good enough to suggest that the long earnings pressure on this group might be dissipating. it doesn't mean the stocks are uniform. union pacific was the leader today because it has the most diverse cargo, let skewed to coal. i'd be more concerned about norfolk southern, may not be able to outrun the coal demons.

positive sign for big infrastructure projects, major housing and pardon me construction as well as industrial and office building creation. putting up factories. you're not going to get a better signal that these things are doing well as if you follow the building blocks that run on rails. the second i follow to check the pulse of the economy is international paper. here's a company we know is reinventing itself. you've seen them on the show. creativity and all kinds of packaging products. it's great. company's novel packaging is giving it some extra street cred, so to speak, as an enterprise less hostage to rising or falling demand for one of the basic building blocks of any economy, and that's corrugated boxes. nevertheless, international paper is a tremendous barometer of commerce. the stock is up 17% for the year and yet because it yields 4% at a time when people crave yield, it's got more room to run. liner board as they call the industry is one of these commodities that goes up in price when there's more shipping

to be done and down in price when there's less. it's a pure and simple commodity that obeys the pricing laws and supply and demand. so when ip stock goes up, that's an amazing leading indicator of what's about to come in this economy. the more ip rallies, the better you should feel about the u.s. economy. 75% of the company's business is domestic. decemb despite the anemic employment -- or even a meaningful slow down. next up, i watch wasz management. david steiner, the ceo, frequent guest here on "mad money" has repeatedly explained to us while we think of waste management and curbside pick up, that's only a part of their business, and frankly it's not the needle mover part. waste management is really a gauge of construction, particularly of new homes and renovations, tear downs, all sorts of residential commercial. when more houses are getting built, you get more junk that

needs to be carted away by the company. the stock is up more than 16%, climbing to an all-time high, and the action in wasz management is screaming that business nationwide is just plain better. but waste management flying this high, there's no way as you can be as concerned about the economy falling off a cliff. i'm sure steiner has to be impressed how it's fueling his earnings. hd supply, hds, just had their report this morning. it's one of my absolute favorite economic indicators. oh, man, is it flashing bright green. this company's businesses are very strong, and there ar bitters of everything you should carry about if our economy is growing, facilities maintenance, residential and non-residential construction, and water works. hd supply has 500,000 clients nationwide, and every one of its businesses reported robust results this morning. you can't beat this company's engaged in the u.s. economy. you might think come on, jim,

what do i care about water works? you should care a great deal because it's the largest distributor of water, suer, and storm equipment. think about it. isn't that exactly what you need if you're about to start building big housing developments? put a huge number of people to work that show strength. hd supply is also the leading supplier of hardware, tools, and materials for medium and large-size contractors. every line item, every box checked off. strong, strong, strong. again, this is the pulse. this is the thermometer for the country. it's clocking in at 98.6. i think hd supply results are a heck of a lot more dispositive for the economy than that payroll report that everyone trades off. the number from these guys do not get revised down every single ball. my final bellwether is ww granger. you might see it in the city where you live. they're in almost every town. companies the big distributor of everything. i mean i can't name them all. it would take the rest of the show. how about this. abrasives, adhesives, food

service, heating, ventilation, air-conditioning, hand tools, hydraulics, lab supplies, lighting, lubricants, pneumatics, safety, security, plumbing, painting. you get the drill. this $14 billion market capitalization stock is up 14% year-to-date and it's putting up terrific numbers, dramatically better than expected. i couldn't believe when they printed it. wow, blowout. this stock has let us down pretty much every rough patch i can call and it's led us up when things are about to get better. of course stocks can be fib. but the bottom line is taken together, union pacific, international paper, waste management, hd supply, and ww granger can't help but tell the truth. these building block characters, these stalwarts of the u.s. economy, are all performing better than expected, and with the averages either challenging or creating their highs for the year, you have to believe that

the rally is actually based on something. it's not kie mer cal. now, you my fight it. you may dislike it. but in the end, these stocks are saying, don't sweat the program that much. maybe even embrace it. the decent tenor of business isn't fiction. from these stocks we know it's fact. peter in new jersey, peter. >> caller: hey, jimbo. listen, i get my stock in netflix. i almost bought it like eight years ago, okay? and i had two strokes, and i went into the hospital, and i blew it. it went from $75 approximately -- >> right. >> caller: now i turn around and i want to buy it again. i'm hearing good things about it but i want to know -- >> well, i mean i'm not going to tell you good things about it this quarter because we got to wait and see. last quarter wasn't that good. do we think the long term value? the way i value netflix, i've always said this since the show started is i look at the market capitalization of netflix versus

the opportunity of netflix. now, this company's only valued at $41 billion. this is going to be the tv station for the world, and i think that's worth more than $41 billion, so i'm on board netflix. buy some now. if it gets hit, buy some more later. jim in florida. >> caller: hey, jim, love your show, man. >> thank you. >> caller: watch it all the time. booyah. >> booyah. >> caller: my question is at&t. >> yes. >> what do you think your growth potential is to the share price for the long haul? >> all right. i think the purchase directv sharply derided by many of wall street frankly actually was a brilliant move. and the 4.8% yield is real. i think the company's got good growth. it is giving verizon a run for its money, everybody knows that i'm a verizon guy. all right. if you know where to look, wall street can help you predict the future. and right now the signals i'm following are screaming full speed ahead.

there's one number that standing in the way of a move higher. find out what needs to happen with the stocks that are impacting the most. that number is going to determine the next move. hey, then is foot locker tripping over itself? after strong performance in 2015, stock's down nearly 15% to date. can it put the right foot forward once again? yesterday i checked in with meg whitman to see how hewlett-packard enterprises was faring. tonight i'm eyeing a part of the business that was left behind after the split. stick with cramer. >> announcer: 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 at cnbc.com. or give us a call at 1-800-743 perfect cnbc.

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oil. natural gas running hot. some of the black stuff is trading north of 50, and the clear stuff's approaching 250. staggering moves from just a few short months ago. do they make sense? yes. even as in new level of pricing is more bullish than i thought, i was pretty lonely bull when oil was trading in the 30s. we're still feeling the shortfalls from the canadian shut down caused bied wildfires. we're seeing a pick up in gasoline consumption. we're getting figures from pretty much anywhere that americans are driving 3% more than they were last year. third, we're not seeing the dreaded pick up in oil drilling that i would have expected at this point with the price of crude over $50. although i fully expected that when we see the baker hughes rig count numbers this friday, we'll have a second straight up week, and oil could come tumbling back to $50 and less. now, we did produce more oil

than any time other than april 29th just this last week but that's not enough to change things. more important on the demand side for the moment at least are the severe supply constraints in the oil facilities in both libya and nigeria, two huge oil exporters. nigeria literally has bandit who's are doing nothing but trying to knock out its oil production. libya is a failed state. chinese production has also fallen hard even as the chinese auto sales are up big. the numbers were -- it was a staggering plus 11% in the people's republic. oil represents one-third of all the oil that's used in china. so you have a combination of much better demand out of the u.s. and china along with dwindling supplies that's at least until the u.s. starts producing more oil. well, let's just say going in the right direction for the bulls. that said, it's true that iran is stepping up production. the majors hadn't been fully engaged with iran. even if the ban had been lifted there some credit issues. it's not enough to make up for

production shortfalls. as for natural gas, the 25% move in the last few weeks for this entirely domestic fuel is directly related to the hot weather. however, the reason for the rally doesn't matter to big natural gas producers like cabot and the beleaguered chesapeake. the rally gives them a chance to reliquefy and it keeps them off the do not resus state list. there's also the precipitous decline of coal for utility. no one thought coal use could decline 13% year-over-year in this country, not even the most anti-you know, coal organizations didn't predict this. that number is from a bloomberg study. that remarkable statistic plus the fact that natural gas is the principal sort of fuel for utilities here as put a bid underneath that fuel. overseas oil has supplanted gas. as far as the stocks go, i know there's a desire to go down the food chain right now. you want to buy the beleaguered

free port and the chesapeake on the oil and gas side along with halliburton. on the service and drilling side. not to mention dover, a peripheral manufacturer of oil drilling parts has had a bit of a run. all these stocks represent bargains if, but only if, oil goes to $60 and natural gas climbs to 3 bucks. that seems to be the new bet because stalwarts like exxon, chevron are already up. these higher oil and gas prices have also driven caterpillar back up to $78 from just $69 only a few weeks ago as their equipment is vital for more oil drilling. that stock's driving the shorts crazy. here's the bottom line. the answer is that the rally in both fuels does make sense. higher demand and falling supply will always produce a better price. watch that friday rig count now, though. that's what stands between $50 oil and $60 oil, and right here

all these reach stocks need crude to rally to those upper extremes to justify the moves. otherwise, i promise you, you will regret buying middling to worse of breed, and you'll wish you stayed with the strong ones. much more "mad money" ahead. including my take on the deleagued fo deleagud deleaguered foot locker. lace up your cross trainers because i'm taking a close look. then anyone looking at h.p.'s latest earnings? . stocks still up 19% year-to-date. i'll tell you if it's time to do some buying. ever look at the nutrition facts of your favorite foods and wonder if it's even written in engli english? taking our food out of the lab and back to the dirt where it belongs. stake with cramer.

all right. what on earth has gone wrong at foot locker? this company is a global retailer. sneakers and athletic apparel with nearly 3,500 stores worldwide. of course a number of different brands. when it comes to the footwear space, foot locker used to be the best of breed. their execution, best in the industry. they consistently stellar same stores growth. all of your running and leisure wear needs, and unlike many of its competitors, foot locker had a real moat to protect their market share, including lots of merchandise you couldn't find anywhere else and get deals that nobody else had. even when the shopping mall started going into decline, foot locker was a breed apart. if you're going to buy shoes, you'd be a moron not to try them on first. that's why the stock managed to rally 16% last year when a lot of other retailers started going

down. however, just since the beginning of 2016, foot locker stock is down 15%. most recently the stock got hit with yet another leg down when the company reported suboptimal results a couple weeks ago on may 20th. the stock sunk from $58 down to $54 in a single day. but before we get into this most recent disappointment that was such a tough one to take, it is worth noting that even if some investors didn't see these disappointing results coming, the stock market certainly did. after all, foot locker had been steadily declining most of the year. it peaked at $69 in early february. by the time of the end of may, it had sold off down to $58. we got the first inkling of a problem even though management delivered a nice top and bot line beat with robust same store

sell, the stock fell 4% on the news. management indicated they had seen low single digit same-store sales growth in the month of february, which wasn't included in the print numbers. so foot locker may have reported terrific results but they told you the numbers were in the process of falling off a cliff. that scared people. when the next quarter came around, for the first time in two years, the company posted weaker than expected revenue and delivered merely in line earnings instead of an out and out beat. this has been a clock work company. not anymore. plus foot locker saw a major deceleration in same-store sales growth. i didn't even believe it when i saw it in the press release. i said no way they could slow that much. that's not good. and even as management reiterated in the four year forecast, which brings me back to my initial question. after a long string of knockout reports from foot locker, what the heck went wrong around here?

first of all, the main area of concern was the basketball category. as foot locker indicated this segment was down mid-single digits. as soon as they used that term on the conference call, the stock went -- and it was the primary reason the quarterly comp gain. some of their signature lines like lebron james, the kevin durant shoes from nike, they performed a lot worse than expected despite both players impressive performances. to make matters worse, foot locker says their main same-store sales were actually down at least at the time of the conference call. the company has some trouble in germany, down double digits in deutsch land. management pointed out that the second quarter is traditionally the lowest volume quarter of the year anyway. throw in the fact that many of the company stores are in shopping malls, at a time when

mall shopping is in freefall, and right now a major competitor of the bankrupt sports authority is liquidating its inventory in anticipation of shutting down all of its locations and you're looking at a very difficult environment here. so is foot locker dead? should we just give up on this whole story? maybe not quite yet. given the company's fabulous long-term track record, i think it's worth listening to what foot locker has to say about each of these negatives. let's start with the slow down in basketball. foot locker remains adamant that the weakness in this category isn't necessarily as bad as everyone seems to think. and it certainly isn't permanent. why? because they didn't see an across the board slow down in all basketball shoes. foot locker performed well in areas where there were new products or innovation, including the air jordan brand and the kyrie irving shoes from nike, not to mention the hot shoe in the stores which is the

steph curry line. that's from under armor, and that posted big gains. didn't have enough square footage devoted if you ask me. managers were focused on fixing the losses they experienced in the kevin durant and lebron james lines with nike. they believe things can be turned around by the end of the year. nike launched a new jordan. it's called the air jordan 12 flew ga flu game. according to recent economics from piper jaffrey, they found that 90% of all adult sizes of the flu game were already sold out of foot locker, which may bolster the company's same-store sales this quarter. foot locker just launched this new steph curry 2.5 shoe from under armor which will have an exclusive warrant for the next month. timing couldn't be better give that so far curry and the

warriors have been dominating in the finals. let me just throw the idea that i think under armor has bottomed here, okay? aside from basketball, foot locker has been doing pretty well in their running shoes and the lifestyle shoes. they've been strong, which is why the total same-store sales in the past quarter were up mid single digits. despite the mid single digit decline in basketball shoes. on top of that, foot locker's average selling price has been rising and that suggests consumers are willing to pay top dollar for more than just signature basketball progresses. international business is quite strong. something that should only get better given the continuing weakness of the dollar. that leaves us with two big worries, the shopping mall and the collapse of sports authority. in terms of foot locker's presence, if that was really the problem, you would expect the traffic to be down big, right? but foot locker's traffic was up low single digits both in the u.s. and overall. as they explained on the conference call and i'm going to quote. fortunately kids still love to touch, feel, and try on sneakers, and they love to

compare and shop together for the latest and greatest athletic footwear and apparel, end quote. in short, it's hard to amazon sneakers because people want to try them on before they buy. i know i do. plus it doesn't hurt that foot locker is renovating most of its stores in order to boost traffic down the road. how about sports authority issue? no question this is a problem short term for everyone in this business. shorts authority liquidates its merchandise at fire sale prices. i think that could hurt foot locker this quarter. once sports authority is finally dead and gone, which is going to happen, all of their market share will be up for grabs. that could be a positive. here's the bottom line. one bad quarter does not a downfall make. i'm not saying the foot locker will bounce right back the next time in reports. it might take a bit longer than that. but i do think the stock is now insanely cheap, trading down to 10.7 times next year's earnings estimates. that's why if you're wailling t be patient, i think foot locker could be a steal here, but you might need to endure more short

term pain before the long term gain starts kicking in. karen in virginia. >> caller: hey, jim. so excited to have been selected. >> oh, you're terrific. >> caller: love your program. been watching you since the 11:00 p.m. rerun days. you and carl david, cream of the crop. >> they are fab. my guys are fab. what's up? >> caller: i got a real quick booyah, my daughter colleen ran her first marathon in gloucester sunday. >> hope she did well. >> caller: she did great. anyway, i'm usually buying hole but september 2013, you suggested take a little profit in disney, and i sold my position, which wasn't huge. but it never really dipped again. kind of went up, but now that it's had this little recent period below 100, i'm wondering is this -- >> you know what it is. growing up with my riding friend, matt, and we were looking at the chart. it's hanging by a thread.

we're not charters when it comes to the fundamentals of disney, which i think are good. but it's not going to happen overnight because people are still focused on espn and that last movie didn't do all that well. all that said disney at 98, i think we can look back a few years from now and be glad that we pulled the trigger. colleen, once again great half-marathon. foot locker may not go undefeated here. but if you're willing to endure some losses, there could be a victory down the world. a close at hp's earnings. could the company continue to print profits or could a struggling pc business mean it's time to log out of the company? then forget a flower box. i'll help you find your green thumb with just a coffee can on your counter. tonight's edition of the lightning round. so stick with cramer.

last night we checked in with meg whitman, the ceo of hewlett-packard enterprise, the higher growth business focus technology company that was created when the old hewlett-packard broke itself up last october. i make no secret of the fact that i adore hp enterprise, which recently announced plans

to spin off its own i.t. services division and merge it with computer sciences corporation in yet another move i bet will create a tremendous amount of value. but what about the part of the old hewlett-packard that was left behind, the slow growth maker of printers and personal computers that renamed itself hp inc.? ordinarily i wouldn't be too intrigued by this legacy hardware business, but a funny thing happened when hp inc. reported a couple weeks ago. the stock surged nearly 7% in response. that's a pretty huge single day gain for a $21 billion company at the time. judging by the action in stock, you think that h.p. shot the lights out. delivering a really good quarter. but was it actually that good? sure the company delivered a 3 cent earnings beat off a 38 cent basis which translates to 5% earnings despite weaker than expected revenue that declined 10.7% year-over-year. far from perfect, these headline numbers were better than many

people feared. hence the stock's run. however, if you actually sat down and listened to that conference call, you heard hp inc. tell much more conflicted story. as i've told you a zillion times, there is no better resource for investors than company's quarterly conference calls. if you want to know about a business you're considering putting your money into, the call is where you get all of the important details that tell you how it's really doing. and in particular, you can learn a lot from how management responds to the questions asked by the analysts on these calls, especially the tougher questioners. in the case of hp, during the question and answer session, two very high profile analysts covering the stock seemed to differ in their opinions about the company's quarter as well as its outlook going forward. and i think this disagreement is incredibly enlightening. specifically tony saganaci at bernstein, he took hp's management to task for not seeming to have a plan to deal

with the fact that their business is in secular decline while jim souva from citigroup actually congratulated management not one, not two, but three times. that might not seem like a big deal to you, but traditionally analysts only congratulate a company's executives when they deliver a truly spectacular quarter. saying congratulations three times makes it sound like hp knocked it out of the park. before we get tiny which of these analysts is right, let me give you a little background on the quarter beyond the fact that it was a bottom line bead combined with top line miss. within the company's printing business, consumer hardware sales plunged 31% year-over-year. commercial hardware was down 11%. printing supplies declined by 16%. ouch! on the personal computer side, hewlett notebooks down 8% year-over-year. desktops down 13%. work stations down 10%. management lowered the high end of the range for the full-year

earnings guide. that doesn't sound like the quarter you'd ever call good. let's dig into the conference call even deeper, though. in particular, the q&a session, figure out what's happening with hpq. remember, we have one very embarrassed almost hostile question. while citigroup -- let's start at sag knacky's question. we go way back. he's just a really smart dude, and i say that as someone who rarely uses the word dude except to date myself. hp's management says the printer supplies which account for the vast bulk of its profits should stabilize next year. that's key, okay? but you could tell saganigi is dumbfounded that they would make that kind of statement at all. he's polite about it, saying, and i quote, your assertion that supplies should stabilize next year is still not transparent to me, end quote. in other words, he can't see how it's possible. you know, i got to adopt that term transparent. so diplomatic.

saganagi continues, hardware revenue has been down 19 out of the last 20 quarters. so if i'm looking at that box in the four-box model that says what's happening to my install base, it's down. and it's probably down mid single digits. so to stabilize, what's the key thing that changes, end quote. ouch. in other words, given that hp inc. keeps selling fewer and fewer actual printers, he wants to know how on earth their supply sales can stop declining and start stabilizing. after all, if the company's install base printer stream, you'd expect them to sell fewer inc. jet and toner cartridges, right. makes sense? that's his point. overall he seems pretty darn skeptical about the company's long term prospects or management's grasp of their dire situation although they did try to respond to his query. then you get a question like the one from citigroup, and it's like he's looking at a totally different quarter. he kicks things off by saying, thank you and congratulations to you and your team here at hp.

then he asks ceo dion weiss larry, your sister company announced last night that they'd break out part of the business, namely the services. have you considered splitting up, or would you and does that actually make any sense? souva follows up with another question, this time to cfo cathly lef shack asking how she would think about stabilizing operating margins of the printing business that are so profitable for your company? thank you, and again congratulations. when you combine suova's enthusiasm with the nearly 7% spike in the stock the day after it reported, it's enough to make you question your sanity. in short, is hp inc. a businesses that dwindling towards obscurity, or is it showing some signs of promise? at the end of the day, you know what? i've done my work and i got to side with saganaky and say the quarter was just no good because quite frankly the numbers were hideous. in fact, over the past year and

a half, both the printing and the pc businesses have declined quarter after quarter after quarter across virtually ever single product category. what the heck is there to get excited about with those trends? granted hp inc.'s overall 10.7% revenue climb this past quarter was smaller than the previous quarter. but the decline in printing supplies which is a key profit driver here, it actually accelerated. it's not like the yen is going the wrong direction anymore. i say, wow, i don't know about that. no wonder saganaky is so skeptical. why did it rally, then? simple. because they had successfully ratcheted down expectations enough over the past six months as an independent entity, that a slight earnings beat was all it took to get this stock roaring. it was all about the expectations or lack thereof. okay the stock sells at only 8.4 times next year. got attractive 3-d printing

prospects. that's about it. here's the bottom line. no, hp inc. did not report a good quarter even though the stock rallied in response. the company is in secular decline. so i say no congratulations from this quarter. and as bill par sells, one of the winningest football coaches in history says, no medals for trying.

>> announcer: lightning round is sponsored by td ameritrade. >> it is time. it is time for the lightning round. you say the name of the stock. i don't know the calls or the name of the stock ahead of time. i tell you whether to buy or sell. when you hear this sound -- [ buzzer ] -- then the lightning round is over. are you ready, skee-daddy? it is time for the lightning round. alan. >> caller: big booyah, jim, from the lone star state. how are you doing today? >> i am doing great. how about you? >> caller: hey, with all the success that halftime ceo have been taking, i want to ask if that's a discounted boy. >> i don't like the power generation business. that's why i like aep.

let's go to alex in florida. >> caller: hey, jim, booyah. >> booyah. >> caller: hey, man, just checked in on pharmaceuticals, seyp. >> second time i looked at this company today. it's very funny. it's down a lot. i'm not recommending right now. i'm just not. they're losing people too much money. why don't you just by asell gene. andrew in florida. >> caller: hey, jimmy. i've been waiting for this to break even, up about 5%. united rentals. >> i think it bottomed. i've been reluctant to recommend. what brought down you or i was that oil business. they were not as open about how bad that oil business could get. but guess what? it's getting better. it bottomed. i need to ge to lou in pennsylvania. lou. >> caller: hey, jim. thanks for taking my call. >> of course.

>> caller: i bought an ipo last week. i'd like to know what your opinion on my stock is. nh. nan health. >> these cloud based companies have tended to work. i just don't like them on that opening day. i'm not done yet. i'm going to fred in new york. fred. >> caller: jim, debit energy. >> secondary at 19. the stock is at 37. can you believe that? we missed devin energy. kevin in new jersey. >> caller: how are you doing? i'm down here in new jersey. >> nice. >> caller: i'd like to know about texas roadhouse. >> the first that delivered a great number. i was just dazzled by it. i like it. i didn't know it was that good. and that, ladies and gentlemen, is the conclusion of the lightning round. >> announcer: the lightning round is sponsored by td ameritrade.

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i'm very excited about this. you know we love to focus on companies with disruptive technologies, game changing business models. that's why we go off the tape. we look at companies that aren't public. one they consider back to the roots. this is a company founded in a frat house in 2009, which is trying to change the way we think about the process of

procuring food and what goes into it. at first back to the roots, grow your own mushroom kits. but since they've expanded into all sorts of ready to grow products. last year they started selling ready to eat foods that you can buy at the grocery store including non-gmo breakfast cereals. they're on a mission to, quote, undo food. they're taking food out of the laboratory, away from all the artificial ingredients, put it back in the dirt where you know what's going into your produce and into your body. i think these guys really under the zeitgeist when the millennial generation has become skeptical about the food chain and i think they've been right. let's sit down with the founders and co-ceos of back to the roots. to learn more about the company and their vision for its future. welcome to "mad money." who wants to tell me about the frat house, and then we'll talk about undoing food. >> first off, jim, honored to be here. before i want to send you a big

back to the roots booyah. >> i'll take t. i saw that. you know how important gardening is to me so it's really near and dear. >> absolutely. this is one crazy idea that started out at u.c. berkeley. we had zero background in food. we were actually going into investment banking and consulting. >> fabulous. >> heard this random fact that you could potentially grow mushrooms on coffee ground waste and nobody had ever done it. took that idea, grew our first bucket out of my fraternity kitchen, literally out of college, and from that day on we said, you know, took the bucket, walked into the berkeley whole foods store, first produce guy we saw. >> you did? >> literally first produce guy we saw, through their culture of embracing -- >> they checked it out. >> big supporter of everything we've done from the very beginning. >> a lot of food chain guys who were somewhat skeptical are also caring. you've got some big backers who are atraditional in terms of what you're doing. >> i think everyone is realizing

that the pendulum has kind of swung too far. we've been disconnected from our food and it's got to come back. it's almost like we're entering this radical transparency. millennials are asking where does my food come from and it's been exciting to see the support build around that. >> i'm fortunate enough to have done okay in life. i'm lucky enough that i have a little land. if i didn't, my daughter has a one-bedroom apartment. she could use garden in a can, right? >> absolutely. >> what started out as this random idea of taking waste and growing food, which got us excited about this to begin with, was the reality that we ourselves had never grown food in our lives. so when we grew mushrooms out of coffee waste, this was the coolest thing we'd ever seen. that inspired us to basically say, hey, let's make food easy, fun, sustainable. it's not about growing outside. especially with the millennials being indoors, we said let's create a product line about

getting kids and families to grow foot d in the classroom. >> one of the thing i like mark cuban, he said all the new companies that are successful, they have a component that is social. you do the schools. >> it's really started organically for lack of words. we had our mushroom kits and we started selling them in whole foods and home depot, farmers markets and we started getting -- you know, it's like thousands of photos coming in. and it wasn't the foodies and the chefs. it was the kids. we actually have a program. anyone that posts a photo now on our facebook page of the fully grown mushroom kit, we donate one to the classroom of their choice. the mushrooms grow in ten days. for kids, it's that idea of instant gratification almost, how we make food, fun, easy, well designed. >> and the president's heard of it, right? >> yeah. >> how did that come about? >> the huge honor was they named back to the roots one of the two green companies out of

california, and we had -- >> that is a great honor because it's really the hotbed of greens. so it's not like that, you know, you're coming from someplace where you're the only guys doing it. >> yeah. well, it was definitely -- i mean in so many ways we're trying to stand on the shoulders of the brands that have built this industry. kind of how do we take it to the next generation? >> lthis is the stuff that we, y kids would -- we would never buy frosted flakes ever. where do i get this? >> we've actually got a really amazing partnership with whole foods market. so the same -- >> are you in the 365 in l.a.? >> we're working on it. did you get a chance to visit? >> no, i really want to. recallter is telling me it's unbelievable. >> our whole visions align so closely, and we ended up launching with them actually just this april. so it's a brand-new launch, and it's going super well. and again the whole idea for us is imagine if you can connect the dots between growing food

and eating food, and the way we see it in the store is connecting dots between produce and grocery. >> absolutely. >> so this idea whether you're growing your own food or eetding packaged food, it should be one and the same. know exactly who the farmer is, where it comes from. with the cereal, we tell you on the box where they're grown, you know, how to make it at home. we tell ul the recipe on the back. >> whole foods has the pictures of them but here you've got them right here. but amazon is involved too. >> the amazon launch prap. talk about accessibility. what a platform to make sure our cereal is accessible to anyone anytime. >> finally a company that's trying to reinvent itself, i got to give denise credit. campbell's soup is involves, right? >> we actually did a series, it's a first real fund-raiser. it's a $10 million round, and it's actually called acre ventures, the partners that are investing. it's the limited partners are campbell's, but it's completely arm's length away. >> is she doing it with her bold

house division or they just give you money? >> yeah. so we're working really, you know, jeff dunn and -- >> sure. >> and sam cass is one of the other partners with the former executive chef of the white house, who is also very passionate about schools and getting the whole idea is in retail but at the same time, we've got to get kids because if they can get trained to eat healthier food with less sugar, i think that's how we can make a real impact. >> look, i got to wrap this up. i mean you're not public, so i can say i just want you guys to do fabulous. okay? i want you to do fabulous. >> thank you very much. >> they're the founders and co-ceos of back to the roots and i'm all in with this company. stick with cramer. thank you, guys. only at&t has the network, people, and partners to help companies be... local & global.

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with a different kind of network that delivers the bandwidth you need without the high cost. because you can't build the business of tomorrow on the network of yesterday. i always like to say there's a bull market somewhere. i always try to find it for you here on "mad money." i'm jim cramer, and i will see you tomorrow.

male narrator: tonight on "west texas investors club"... [eagle shrieks] - the i-tap is an electronic draught beer dispensing system that me and my dad created. - if this product is all he says it is, he could revolutionize the beer industry. can you show me how the doggone thing works? - [laughing] - look at the foam! - oh, [bleep]. - i don't know about this. - i'm starting to freak out a little bit. - together we've created... both: beddy's! - it's a one-piece bedding unit. - these two girls have had no business experience whatsoever. - last year we made 1.8 million. [eagle cries] narrator: deep in the heart of texas, two men carved a fortune from a harsh and unforgiving land. butch gilliam transformed a humble machine shop