tv Mad Money CNBC August 7, 2018 6:00pm-7:00pm EDT
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tan. ethereum buyer. >> be back tomorrow, judge, because it's been great having you onboard. >> amd, upgrade. >> go to cramer, quick >> that does it for us "mad money" with >> and drink a beer! my mission is simple 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 the 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. where did all the sellers go what happened to everybody who was worried about the trade war, surging inflation, especially
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the price of oil or rising treasury they all disappeared when the dow gained 127 points. the nasdaq tacked on .31%. and it took us to levels not seen since the epic meltdown at the end of january despite all the talking heads who tell you the sky is falling -- boy, aren't there a lot of them? this market refuses to quit, and i'll tell you why. this market has two main drivers, and we'll talk about them tonight first, we spent decades being told one things, invest in funds. first, there will always be buyers of iconic stocks. there will be takers in drugs and local retailers, but the game has changed since i first started picking stocks almost 40 years ago. we didn't even have index funds back then. now they're the preferred way to invest for majority of people who want to own stocks why does that matter because it changes the character of the market. look, it's been a long time since we've had a really
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horrendous and long-term sell-off we've been in bull market mode for ages that makes people feel more comfortable putting money to work in index funds. because it makes stocks feel safe and consistent. a nice place to invest the other piece, it's not just that people are comfortable investing in stocks, they can also afford to invest in stocks. the strong labor market has allowed more families to save. we got a great report last week from st. louis fed it's really kind of interesting. i love the work that they do, and showed household payment services as a percentage of disposable personal income will you look at this? look at this in this great recession. it tells you that the american people have gotten a lot more frugal that's what this is. it's about frugality we're borrowing less money because we're spending less relative to what we make the flip side of this exact chart is that the economy has picked up and we've seen a huge increase in the personal savings
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rate it's the inverse so now let's put this mosaic together you've got many more people working. and on average, these people are saving a larger percentage of the paychecks where. do they put the money? a lot of it goes into index funds. the cheaper, safer way to invest in stocks that appeals to this newly frugal attitude. plus, there has been a head-long rush to institutions for lower fees last week fidelity introduced two index funds without any fees at all did you see that and that's a catalyst for even more money cosming into the indices, often underrated because i think a lot of the rich people on wall street don't think about ministerial fees and then getting rid of them it does matter to people and that flood of index fund money, it translates to mindless buying of whatever desk people happening to investing in. it's like we have a hoard of automatic buyers >> buy, buy, buy >> now, i said there were two things pushing this market higher what's the second one?
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buybacks goldman sachs just published a prescient note titled the wrong trillion crush it where they argue we should stop focusing on apple's trillion and think of the trillion dollar worth of buybacks that have been announced this year. that's right a 46% increase versus last year. isn't that stag snerg as goldman points out, and i quote, august is the most popular month for buybacks, accounting for 13% of annual totals. ♪ hallelujah as someone who has execute buybacks myself, some of the buybacks are gigantic, like apple. they repurchased $20 billion in stock last quarter, picking up stock on pretty much every dip others are more episodic still, considering what's happening here you have you a wave of index fund buying, and on top of that a wave of corporate buybacks creating a floor that lifts underneath at each level that the index funds
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take it too. just in case real sellers come out in force the impact of the two trends simple they've created a stock shortage i'm going to say it again because it's so outlandish a stock shortage of epic proportion there just aren't enough shares big cap companies to go around until sellers materialize. and maybe we have to go higher levels, maybe considerably higher levels to find trillions of dollars worth not only that, but because the market seems chronically overvalued to most professional money managers, they're typically willing to provide some stock to aggressive index buyers but then the same managers are afraid the offer too much stock because then they won't have enough on their books to beat their own benchmark which tends to be, yes, the s&p 500. they're scared to sell because if they miss a move, their clients might abandon them [ buzzer ] sure, some of them are good enough at individual stock pickings so they have nothing to fear
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but most aren't that good, which means they feel come fold stay as long as possible whenever the market is in good shape, when the averages are roaring you look like a total idiot if you're sitting on the sidelines or worse, shorting the market. and looking like an idiot? that's career suicide in the hedge fund business, as i know because i used to be in it consider the specifics of today's rally. it's pretty typical of the way these moves work first the financials want to zoom whenever the rates go higher it's practically by rote and doesn't distinguish between individual stocks because, well, again, buying is concentrating on etfs. this time they link all financial institutions so all the banks go higher since they're all expected to have better earnings when interest rates go up. second, oil's up and that's viewed as a proxy for strength in the economy. that's a deeply flawed barometer. but when crude goes higher, money managers assume. that means we have clear economics, guys, ahead third, there are individual stocks that hearten the bulls
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and bring more money into the market today amazon is killing it when it comes toed a receive news well think of it as retail and web service, but how abouted a revenues and another report alphabet's wemo could be worth 270. emerson reported a fabulous beat and nice counterpoint to all the fears about chinese tariffs, something that ignited all the china oriented industrials including caterpillar and boeing then a quizzical set of tweets from elon musk about taking tesla private. look, i have no idea what this guy is doing, right? tweeting about something so important. but then our president uses it for distribution why not musk what you need to know is you got tons of bears in there, constantly betting against this market, and individual stocks that they consider overvalued, tesla being exhibit a of overvaluation. if tesla is going private from the gabe today, who knows what other stocks could do that also rip the longs out of the shorts.
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and let's take note of a prelude to tomorrow's business, please the stock of disney, because ceo bob iger talked about early success with espn plus, as i said he would on the show. it's over the top initiative that's gaining traction and changing the narrative positively until disney can close on buy from key fox assets the company reported what looked to be a weak number, and the stock went down. but this one always trades on the conference call. and it was stellar bottom line, if you only take one thing away from this segment, maybe for the whole night, understanding we have a serious stock shortage on our hands at these levels. there just aren't enough shares to go around, at least at the prices that we are trading at now. and it's making even bearish money managers afraid to sale. at the tend of the day the stock market is a market like any other. which means it's controlled by supply and demand. when there is not enough supply, prices go higher end of story james in california, james >> caller: hey, jim. >> yo, yo.
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>> caller: what are your thoughts on grand canyon education, given their recent transition to a management company since they sold the school to gtu. their amazing growth history and their ability to provide services to other schools now? >> well, you know, i'm not a fan of this group. i don't particularly follow lope i do feel what's happened here is you've got a stock that is up 32%. it's not my cup of tea i will do more homework on it. but i have avoided that group studiously i know it's kind of political thing at this point and maybe that's one of the reasons i haven't focused on it. let's go russell in alabama. russell? >> caller: finance rocks with a tremendous amount of diversification -- with the tremendous amount of speculation surrounding tesla and its stock price trading at 158 times forward earnings, it is time for investors to wake up and get out
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or weather the storms of musk's latest acquisition of taking the company private at $420 a share? further, what does this mean for the perspective private equity groups and creditors that would step in? >> first of all, got my eagles wrong. congratulations to tim cook. now, look, it's interesting. i followed both the bond market and the stock market you know bonds went up on this news which indicates there are real buyers there are people who want to buy. they want to buy tesla, up here, the stock. and i said when this last quarter reported that now it's in the bulls' court, just because the company is doing better than we thought so my take is do you need to sell it? i don't even know. look, if you own to it this point, just go to its logical conclusion and see what happens. because like i said, just like when i go to see david blaine, man, magic's exciting. all right.
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there is always some kind of negative news flow out there, but i don't see it shaking the confidence in the bulls any time soon on "mad money" tonight, apple's achilles heel. i'll tell you how it could impact your portfolio. then logitech is up almost 250% over the last three years could surging demand for gaming continue to push it higher i've got the ceo and you may think amazon is the only winner in the ecommerce space. wait i'll tell you how the charts are pointing to some new winners and some losers on the horizon so stick with cramer >> don't miss a second of "mad money. follow @jimcramer on twitter have a question? tweet cramer, #madtweets dmey jim an e-mail at maon.cnbc.com. or give us a call at 1-800-743-cnbc miss something
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people's daily, a chinese communist party story that said strong sales of u.s. brands including apple give china bargaining chips in trade row. ever since the white house started cracking down on china's unfair trade practices, everything from dumping steel to stealing intellectual property, china exports five times as much stuff to us as we do to them they're never going to win on tariffs alone. no, what worries me are boycotts the idea that american companies that do lots of business in china from kfc to starbucks to apple could be hurt by subtle government organized boycotts that would steer business to their chinese competitors. that's the smart way for china to retaliate so far china hasn't resorted to this tactic, at least not that we know it even starbucks in china have experienced very weak sales of late but the biggest vulnerability of course is apple, because apple gets so much of its growth from china. i have always said it would be
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self-destructive for communist party to go after apple since they do so much of their manufacturing in the people's republic if apple needs to cut back on production, a lot of people could lose their jobs. but perversely that means crack do you think on afterle is a great way for the communist party to show us that they're serious. sure enough, this article sets the table for exactly the kind of boycott i'm worried about the language is incredibly blunt. i quote. the eye catching success achieved in the chinese market may pro vote nationalist sentiment if u.s. president donald trump recent it will adopted protectionist measures hitting chinese companies hard, end quote. the saber rattling continues i really didn't like this quote. china is by far the most important overseas market for the u.s.-based apple, leaving it exposed if chinese people make it a target of anger and nationalist sentiment. doesn't that sound like a call for a boycott? it did to me and then there is a twist. the article points out that apple employees a huge number of people in china.
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if apple wants to continue raking in huge profits amid trade sensings, the company needs to do more to share the economic cake with local chinese people, end quote. am i crazy or does that sound like kind of a shakedown the communist party is basically saying nice business you got here hate to see anything happen to it of course, this is the first we've heard that apple isn't doing enough for its chinese workers as they're actually one of the most generous employers in the prc so clearly the piece isn't about workers pay. it's about sending a message to the president that they'll stir up anti-apple feeling bringing down the stock of the only american company to ever reach a trillion dollar valuation. from the beginning if push came to shove i felt the chinese would only go there. when president trump's aides speak about how going to have to accept short-term pain, this is exactly the kind of -- >> the house of pain >> that they're talking about.
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starbucks recently teamed up with alibaba to deliver coffee something that may have immunized them against a boycott. not sure what they can do if china decides to take a great leap backward. and i don't see much of an answer to an apple boycott in fact, i'd argue it's the achilles heel for apple. since the decline on a really up day. that's a little less than 1% i think it is time for the president to set clear, emphatic goals what he wants out of this trade war. and it can't be unconditional surrender. we're not going to get that. the chinese communist party is obsessed with what they call the century of humiliation, the period from the opium wars to the communist revolution where china was forced to accept all sorts of unequal treaties with the west that's why the chinese leadership would rather wreck their own economy than be seen giving it to washington. look, i'm glad president trump is standing up to china to put a stop to their unfair trade practices. but as someone who believes apple has been a model chinese citizen, it's a real shame that this great company is becoming a
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bargaining chip in the trade war. so maybe it's time for the moment to stop the saber rattling, hold off more tariffs like the one we just learned tonight. they'll 34r b placed on $16 billion of chinese goods starting august 16 we can keep punishing china with tariffs, but the only way we actually win this is by making a deal not by a siege that causes everyone, including apple shareholders, to lose. let's go to will in north carolina will >> caller: boo boo boo booia >> boo-yah, jim. >> caller: holy cow. >> thanks for all that you do. you're my favorite san ysidro second jim after jimmy garoppolo of the niners. i was just wondering if -- >> i am not a fan. i have said that i am not a fan. i've got tell you, i'm getting more and more concerned with even my two favorites which are baidu and alibaba, although alibaba i think is the best bet. i like the niners here maybe they shake up the western division let's go to amir in california
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amir >> caller: hey, jim. how's it going >> not bad, how about you? >> caller: i made some awesome gains. i want to go all in on ge. >> no, i don't want you to go all in because we don't know what the ultimate ge is going to look like i did do back in the envelope analysis on their health care division and i think you'd be surprised how much it looks like timo. i would say buy the company we had on last night, perkin. but that's a smoking red hot security yes, the chinese haven't played fair they haven't but if we want progress, it's time to lighten up on the rhetoric and realize victory is possible through negotiation much more "mad money." if you feel like amazon has a monopoly on ecommerce, i'm taking care which might be on the digital side and what might not be you may have missed it i'll reveal the group and all your calls on rapid-fire of
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tonight's edition of the "lightning round." so stick with cramer take control of your financial future with the new "ma madmoney.cnbc.com. full episodes, analysis, even your own soundboard. ♪ hallelujah plus special access to mad money 101 with rules and techniques. >> the red flag that makes me drop a stock immediately -- >> it's everything you need right when you need it the new madmoney.cnbc.com.
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some stocks are so strong that when you get even a wee small pullback, you need to be ready to pounce. take logitech international, a few years ago this company seemed relic, a declining piece of business. logitech makes computer peripherals like keyboards and mice, not headphones and mobile speakers videoconferencing gear, all kinds of spiff high-end gaming equipment. in 2015, the first half of 2016, none of that sounded like a growth business. but now this whole story looks very different thanks to the resurgence of the personal computer and the extreme popularity of gaming remember, there are people who pay money to go to an arena, we're going the talk about this, and watch e sport, meaning competitive video games. that's why the stock has given us 90% gains since we brought ceo on the show.
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it just keeps going. the company keeps putting out excellent numbers. logitech reported a raise at the end of july. the stock sold off from 46 to 43 a little over a week later it's up 45 and change i bet it's got more room to run, though don't take it from me. let's check in and find out where the quarter is headed. welcome back to "mad money." i tell you, you were the one who first told me about egaming. i had no idea. before we get to, that we have a lot of news today about elon musk. >> sure. >> he is talking whereby being private might be better. you start the conference call in 2012 there are a lot of people who said you needed to go private to do what you needed to do but didn't need to do that in order to change ourselves. i may change that because i love being a public company wait a second. he said he hates being a public company. you love it? >> elon musk is in a completely different situation than we are in but what i love about being in a public company i love the forced
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rigor of the short-term. it keeps the heart beat going fast that's what you need >> the late, andy grove felt the same way it's a terrific way to measure not long-term, but short-term. you need to it stay in the game. >> absolutely. >> now gaming, you say, is a -- great conference call, by the way. a rare long-term secular generals change. i don't went to barclay center. >> unbelievable. >> i don't want to steal your thunder. nba. >> yep. >> nfl. >> yep >> soccer. give us its evolution. >> well, i'll start with me and you. in 1965, i remember 1968, 1969, i remember the nfl and the super bowl, how big it seemed then looking back, it was tiny in the fan base again i think that's where we are in gaming it's just taken off. it started in earnest six or seven years ago. and the growth curve has been like this. we have one business, our astro head sets. they've tripled every year well bought them a year ago. >> put this so the people understand
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>> this is the astro headset this is one of them. this is the a of 40. it sells for $149. it's just an amazing period. and i think we're certainly not at anywhere near the end of the beginning. this is the early stages >> you have the prediction here that it's going to be an olympic game. >> yeah. we were involved in a meeting in lausanne with the international olympic committee. and there was a discussion -- >> when was this >> this was about two weeks ago. i think it's inevitable. i'll make another prediction you'll be hard to hold me to unless you have me on the show in 10 years. i think it will be the biggest sport in the world. >> oh, come on >> i do. i'll draw you a picture. i'll draw you a picture next time on here and i'll show you why i think it's going to be the biggest sport in the world 15, 20, 30 years >> did you like it when you were the barclays >> one of your guys did well >> we sponsored one team both team were using our wireless mice.
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but i was looking from up above. and i was looking down and one of the amazing things, it's just like being at an nba game i looked down. not a single person son their phone, zero. >> younger people engaged? >> remarkable. >> now, but you also make the point you are not abandoning your core business. >> no. >> and if anything, you're continuing to innovate. >> love it absolutely love it our core business keeps ex-panting tex-pant i -- expanding too. this is a cool tablet, we're keyboards for gaming web cams are growing again because people who are streaming themselves on twitch playing games or video blogging need better web cams. yeah, they're growing double-digit again this is one of our newest businesses true wireless earphones. >> chief, i wear them. that's what i work out with. i didn't know they were yours. i just bought bout them and said look good. fabulous >> they're really amazing. >> and come on, if you can this. >> we just announced it's not
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closed yet but it will we're buying a company named blue they're the primary player in the microphone business. they started as a professional microphone player for people but they moved and now people are video blogging or they're playing games. they need a very high quality microphone these are the best >> all right one last question. i was with some kids this weekend. they won -- they can't play football, too small. basketball, too small. they keep saying, these kids are 12 we're going to get scholarships. ncaa scholarships to go to the schools of our choice. they're gamers true >> yeah. at uc irvine is already doing scholarships scholarships are starting to spread across the university system my brother is a college president at kentucky wesleyan he is a smaller college. they're putting in gaming as not a varsity but a club sport it's coming everywhere >> well, you were visionary. you told us about it i have to admit i was skeptical. but i was wrong. >> you weren't so skeptical. you've always been a fan
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>> all right i have but you proselytized it. i bought in that's logitech and president bracken darrell. it's so clearly not done when we look at this, stuff. and yes, i do like these because they fit in my little bag. "mad money" is back after the break. tomorrow, kick off the trading day with "squawk on the street." live from post 9 at the nyse >> it sticks to it the man >> it does >> it stick it to the man. >> that's the first thing i think of stick to it the man every day. >> he agreed with me >> he agreed with me thank you. imagine traveling hassle-free with your golf clubs. >> it all starts at 9:00 a.m. eastern. >> it all starts at 9:00 a.m.
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we've all been conditioned to believe that ecommerce is a lot like the movie "highlander." in the end, there can only be one winner and in the end that winner is obviously going to be amazon or at least that's the theory. the truth is a little more complicated. in reality, online shopping is still a rapidly growing category with room for more than one player we know this because lately big
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box stores have gotten aggressive about expanding their digital presence people love buy online pick up in store why do you think amazon wanted whole foods? they didn't have a game here by the same token, every big box store has the potential to be an online distribution retailer tonight we're going off the charts with the help of tim collins. he is a brilliant technician he is my colleague at real money.com, to dig deeper into a pair of big box chains that have made some major internet investments. two household names, people. walmart and target they're different. let's start with a daily chart of walmart because collins said this company has stepped back into the ring, made itself a viable amazon contender walmart has had a rough time earlier. in late february, it was trading 103 when it got below 100, quickly well to the 80s. wow. okay
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and since then, it's pretty much where it stayed. based on what he sees in this chart, collins believes that walmart could be poised to return to $100 before the end of the year which would be a nice move for this $89 and change stock. so what exactly has he liked here first of all, walmart has made a very large rounding bottom over the past five months you've also got a clear double bottom right here. when the first low may 7th and the second low in the week of may 29th then about six weeks ago, the stock started finally marching higher making its way from the low 80s to just under 90 today basically what collins sees here is a pattern within a pattern. this is similar to the formation he pointed out with allergan, agn when he checked in with them a month ago. since then even though a skeptical of the fundamentals, allergan has rallied, boom, quick 10 bucks what do i mean a pattern within a pattern? walmart's got a bullish channel
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where the stock trends higher with a tight range but since the beginning of july, there is a second bullish channel inside the first one, the stock moving up inside an even tighter range this because of not one but two to support one at 87 and one back in the other 88 and we get a big downdraft, you got a third floor at 82 bucks, the level where walmart bottomed in may this is a great way the define your risk. very important concept for technical traders. if the stock goes below 87, roughly, 3 bucks down from where it is, he would become more cautious if it breaks down below 82, he would tell you to abandon the bull thesis and simply cut your losses remember, that's how technicians work they're all about i'd fight trends, not finding cheap stocks so when a trend breaks down, they admit they got it wrong and move on to greener pastures. more importantly collins thinks walmart is only one step atwra a pamplona style rung of the
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bulls. the next major hurdle, the breakdown level from february in the stock's 200 day moving average are sitting up 73 cents. if walmart can close love that level collins says we'll be off to the races all the way up to 103 bucks as it fills in the gap from the big late february decline that would be monumental. what else? check out this tool down here. this is called a trend meter he first introduced this when we were talking about allergan. this is a momentum gauge it's a melange you have strength index, standard deviation across six different time frames and distills them into a single score, making a new high here, hitting levels we haven't seen since walmart was trading in the triple-digits. that's a very bullish sign put it all together, and collins is confident that this stock is ready to roar.
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hey, man, a big cap stock. it also helped the dow by the way if it happens. how about target check out the weekly chart target just made a new 52-week high today and it's a few bucks away from its all-time highs brian cornell doing quite a good job here, by the way however, collins thinks the stock is starting to look extended maybe overextended the isolator is extremely overbought territory, which often means the stock has come up too far, too fast and is due for a pullback collins says it could get a boost up 26 cents where it's currently trading, but he doesn't like the risk/reward at the moment that's why collins recommends swapping out a target and swapping in a walmart which is a lot more room to play catch-up and while we're talking about big box stores, let's not forget about cramer fav costco. here is a stock that has been absolutely on fire back in february of 2016 we told you to buy costco off the
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recommendation of larry williams he's that legendary technician whose got a host of different indicators named after him, not to mention nearly a dozen books and a website. the website is named i really trade.com. at the time it was $162 and now at 223 nice 38% gain in less than two years, okay? but i'd bring this up, and let's take a look at the costco chart. i bring it up because it says it's time to declare victory at cost t costco and ring the register a shocking position. why? because costco's stock has a strong correlation with the strength of the dollar now this may seem completely crazy, remember, the dollar and the key accent forecast, they do import a ton of stuff from overseas so a strong dollar makes them more profitable. this is a big reason why williams recommended costco two years ago. take a look at the chart which shows the action of costco in black and the linkage between costco and the dollar index
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which williams projects out an additional three months. in other words, this is williams' work this is not the actual chart it's a prediction. william predicts a downturn in the dollar and thinks that will translate into a downturn in costco's stock what else? check out the next stock it's interesting this is the williams cot indicator. it's not like mattress firm. this is commitment of traders. this is a tool that helps figure out whether big institutions are buying or selling. after a monster run in costco stock, the williams cot has come down hard. look at this you would expect that to be going higher that's indicating that the big boys right now are selling into this as one more reason to believe that the stock could be primed for a bit of a sell-off here i was shocked when i saw, this because i am so used to seeing that indicating that well, williams says it's time to ring the register because he thinks that's exactly what is going to happen. look, levee costco i go there all the time. but nobody ever got hurt taking a profit
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the bottom line, the charts as interpreted by tim collins and larry williams suggests that you might want to sell some costco and target here. they've run a lot and they both might be due for a pullback. but walmart, on the other hand, is looking mighty attractive and could be the next retailer to explode higher ♪ experience the versatility of utility, more "mad money" after the more "mad money" after the break. experience amazing at your lexus dealer.
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"lightning round" is sponsored by td ameritrade >> it is time. it's time for the "lightning round. >> buy, buy, buy, buy, buy, buy. >> sell, sell, sell, sell, sell, sell, sell, sell, sell. [ buzzer ] >> and then the "lightning round" is over are you ready, skee-daddy? fred in new york, fred >> caller: yes, hey, jim how you doing? i'm a first time caller. this is fred from long island. >> glad to have you on the show. >> caller: this is no reference to elon musk's 420, but cannabis growth corporation, cgc. >> that's an interesting analogy there here is the problem. the stock ran up because of the canadian vote. and then the canadian vote happens and there is no more catalyst
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now we see what kind of beverages they're going to offer, what kind of candies, what kind of food and when we get chewing gum. when we get that, then that stock will moving again richard in flag, richard. >> caller: hi, jim greets from miami. >> nice. what's up? >> caller: hi. my stock reported earnings last week great top line revenue but didn't do so well on their earnings what's your long-term and short-term take on gtt communication? >> i saw that geez i know that it was considered to be a miss. you know, i think that's a very inexpensive stock that is doing quite well i think it might be an opportunity, but i got to see it calm down. it is just too -- i mean it's kind of like in free fall right now. let's wait a bit and maybe have them back on the show. let's go to jose in california jose >> caller: hey, jim. boo-yah to you. >> boo-yah >> caller: it looks like you got quite the green thumb too. your garden looks great.
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>> my tanning garden is better than my long island garden what's going on? >> vivant solar. >> i'm going to make this observation -- [ buzzer ] i was talking to someone from the eagles, you have any solar stocks you have environmental stocks in whoa if we're cutting the standards in terms of how much gasoline you use for a car, i don't want to be in any stock that is levered to solar how about we go to chuck in colorado please, chuck. >> caller: hey, jim. a big rocky mountain boo-yah >> right back at you, where my daughter is right now. very excited what's going on? >> caller: hey, this company is splitting out. their lithium business buy, sell or hold, fmc. >> it's had a nice pullback. i think it's trifx >> buy, buy, buy, buy, buy, buy! >> you have a crop and lithium and that, ladies and gentlemen, the conclusion of the "lightning
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round" [ buzzer ] [ buzzer ] >> it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. sponsored by td ameritrade trade 24/5, with td ameritrade. ♪ dinner date...meeting his parents dinner date. why did i want a crest 3d white smile? so i used crest. crest 3d white removes... ...95% of surface stains in just 3 days... ...for a whiter smile... that will win them over. crest. healthy, beautiful smiles for life.
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mergers that cbs combined with aetna that look like they give other players in the health care food chain more bargaining power versus the hospitals and of course there is the possibility of this new health care joint vent dpler amazon, brookshire, jpmorgan hats off to those three. they're all pretty good. but despite of these worries, the hospital stock, they've caught fire of late. the whole group is absolutely inflatable but that was company specific. wall street doesn't like how tenet handled the sale yet if anything tenet is the exception of the rule. while this stock got obliterated today, most of the group still managed to rally and you noe what even after this decline, tenet's shares still more than doubled this year to date. tenet has been incredible. which brings us back to the central question what in the world is driving this incredible move in the hospital stocks? a two weeks ago we learned life
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pointing into taken private by a very smart guy, apollo from big premium. so to understand what is happening here, let's zero in on the largest player in this space, hca health care why? because i think it's the best example and the best stock in a red hot group. for those of you who aren't familiar with this one, hga owns 178 hospital, 120 freestanding surgery stwers a few in the united kingdom hga has an interesting trajectory after a period of underperformance, things started to pick up hca really broke out a couple of weeks ago after the company reported a massively better than expected quarter and the stock shot up 9% in ainge isle session -- ♪ hallelujah -- before gaining 10% since then they just had a new all-time high this very day at 131 before pulling back at the close.
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what's driving this monster move before i get into the numbers, i need to tip my invisible cap to peter costa of wells fargo, who resumed coverage of hca back in january with an outperform rating when many other analysts were skeptical costa has been dead right. i'm too critical of analysts when a guy has been right, got it to come on the show and say good things. i'm saying good things about costa. i hope he sees this. the best of breed hospital chain. it really differentiated itself from the competition by focusing on making itself the top health care provider in a number of rapid di live expanding cities that's means when the insurance companies and hmos try the strong arm them, hca can negotiate from a position of strength plus, it's hard for new competitors to come in because building something as big as a hospital in a major american city is a regulatory nightmare he liked that hca has gotten ahead of the peers when it comes to embracing big data and generally going digital. at the same time costa pointed out that the company's strong
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balance sheet gives it a lot of flexibility and pointed out that the stock is darn cheap. what a reformation not long after costa came out with this incredibly bullish piece. but more importantly management's full year earnings forecast was much, much, much higher than wall street was looking for. analysts were expecting $7.52 per share for 2018 hca told us it could make $8.50 to $9. it was an insane number. the stock only rallied 4%. as hca reported on the same day we found out than big joint health care merger from amazon and jpmorgan timing is everything fast forward to may 1. hca delivers another great quarter. the source of their strength the same facility admission rates were up 2% overall, pretty much what management had been forecasting. what's known as the intensity of service key metric for hospitals increased by 4.4%. this would be kind of like if a retailer gave you a modest increase in traffic, but a big,
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big boost in same-stoesame-stors however, the stock barely budged again on the news because management maintained their guidance it was a simple beat, not a beat and raise. the real game changer, though, two weeks ago, don't ever say this market doesn't give you a chance to buy. hca reported still one more top and bottom line beat but this time they raised their forecast and raised it substantially. remember, management had already given incredibly bullish guidance in january. so they raised alreadyelevated numbers, increasing the revenue forecast by an astounding $500 million, taking up their earnings forecast from the $8.50 to the $9 to the $9.40 range it was stunning, which is why the stock shot up into the stratosphere on the news once again they give you an intensity number of 4.1% the company also had its best volume in more than two years with same facilities admission
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up 2.4s. % this is not possessed to happen. most were worried that volume would slow down thanks to the expansion of competing urgent care facilities across the country. you've seen them open up on every block, right huh-uh didn't matter. what's really driving hca's outperformance i think it's a combination of factors. you an improving economy that makes patients feel more comfortable about going to the hospital hen they get hurt and they have a footprint in many fast growing cities. especially down south where the economy is booming the best part? even after this incredible run, hca remains pretty cheap it's trading at just 13 times next year's earning estimates, and it's still got that fabulous balance sheet. you know what? it's a buy right here when, how about tomorrow now the rest of the industry compass health, formally known as healthsouth it republicans major of 178 hospitals and hopp, 14 acquired in compass which gave them a wider nationwide foot. and then they changed the name
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to reflect the new reality just like hca, compass has delivered a series of excellent quarters just like hca. unlike hca, it's a heck of a lot more expensive, selling for 21 times next year's earnings estimates. that's an above market multiple, despite having a similar growth rate i think encompass could stop, but hca is much more attractive. next up is tenet after years of underperformance, a group of activist lid by larry robbins ousted the ceo last summer and brought in a replacement of their own choosing since then tenet has gotten aggressive about unlocking value. they're cutting costs. they're trying to sell the provider business that helps other health care providers improve their operation. and they put up good numbers the stock more than doubled since the beginning of the year. but this story has become complicated. last night tenet reported another massive earnings beat with raised guidance there was a small revenue shortfall and the company wants
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to hurry up with asset sales i think a lot of today's 16% decline was simply about profit-taking. but this one is too risky for me so let me give you the bottom line, and that is an ax action oriented bottom line lately we've been seeing some great numbers from the group but judging by the way tenet imploded you need to stay selective, which is why i want to stick with best of breed hca health care. if you want exposure to the if you want exposure to the health care sector, this making cars lighter, it's a good place to start, advanced oils for those hard-working parts. fuels that go further so drivers pump less. a must own stick with cramer. a must own energy lives here. a must own stick with cramer. at ally, we created a savings account with a great rate.
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but if that's not enough, our app helps monitor your spending too. and if that's not enough to help you save, we could start a carpool. look at this traffic. don't worry. ok, if that's not enough we'll start a trainpool. oh i have a meeting in five minutes. and if that's still not enough... i got it. we'll just create a shortcut. we'll do anything, seriously anything to help you save. ally. do it right. talking 4th quarter? yes. that's confident. but it's not kayak confident. kayak searches hundreds of travel and airline sites to find the best flight for me. so i'm more than confident. how's your family? kayak. search one and done. - anncr: as you grow older, -your brain naturally
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i'm jim cramer see you tomorrow ishese sharks. if they hear a great idea, they'll invest their own money or fight each other for a deal. this is "shark tank." the ♪ first into the tank are erika welsh and keeley tillotson, college students with a business they created in their dorm room. hi, i'm keeley. and i'm erika. we founded our company, wild squirrel nut butter, this january as sophomores at the university of oregon. wild squirrel is seeking a $50,000 investment in exchange for 10% equity in our company.
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