>> good energy despite my butchering of her name i think ibm turn the proverbial corner. >> all right mike's the -- thank you very much for watching. d thimu tomorrow mawi j cramer starts right now. my mission is simple to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica my job is not just entertain but to educate andteach you. so call me or tweet me @jimcramer. for a moment, yeah, about mid morning, this market seemed unstoppable. we got a deadly virus wreaking halve being havoc in asia.

and we have executives at davos falling over themselves to take action against climate change, something that will hurt their earnings per share even if it may save the environment. yet, none of that seemed to matter until midday and then ultimately, the dow dropped 152 points s&p. after we learned that the coronavirus has reached our stores and boeing told us that the 737 max won't resume service until june or july causing its stock to crumble and taking the average down with it. the coronavirus is precisely the kind of outbreak that would have decked any other market right from the opening i mean, really cause it to plummet. and then what would happen is it wouldn't get off from the canvas it would stay down but this market was able to hang in there until that one-two punch this afternoon well, this hasn't resulted in huge number of fatalities, at least not yet. the fact that respiratory viruss like this one are incredibly difficult to contain should play a role here.

so far, it seems less lethal than sars. that was the scourge that swept through east asia in 2002 and 2003 infecting for than 8,000 people and calling more than 774 deaths but it is incredibly similar to sars any potentially deadly disease that could spread via sneezing could have a chilling effect on all sorts of industries. big news for the travel stocks because their earnings could get nicked, especially as we are heading into the chinese new year just listen to what the chinese health expert told "the washington post" the the outbreak is at the critical stage and we estimate increasing number of infections during the four days of rush. end quote. and there are many that do has to be concerned here so you can expect the analysts who cover, say, the cruise lines will cut numbers during the sars epidemic, carnival lost 28% of its value it's only down 2% today.

that doesn't seem like enough of an adjustment. could see the traffic drip las vegas sands down 5 and 6% respectively i still think they are vulnerable could see a fall worse than the one suffered today but that is terrific company when marriott, they picked up a presence i suspect you won't even see this outbreak in their numbers eventually marriott fell 12% during the sars epidemic. finally, the airlines are natural too. people are going to sell them. especially now that someone in america has contracted the virus. big airline stocks were down 3 to 4%. and a good quarter reported by united after the bell tonight may not be enough to change the stock's direction or the whole group for that matter. now, i mention all of this because the -- from this outbreak should actually be confined to just those stocks.

in other words, if the whole market sells off on the coronavirus tomorrow, that might be your chance to pick up some high-quality stocks into weakness you know what i was thinking this is the ultimately exogenous event that barely impacts just a few companies. even as the pain spreads to many unrelated stocks, it's collateral damage where there shouldn't be damage. i suspect the disease will likely run its course but people will likely not go out as much that said, this illness isn't a sideshow dragged down everything except for couple outperformers like costco if they had waited a day, the stock go higher. beyond meat exploded higher, too. it was up 18% as it keeps roaring on any news about the increased adoption of plant-based alternatives like the announcement from starbucks today that said it will emphasize them. still one more sell side warning. and uber rallied more than 7% on

news that management is doing what i want it to do moving to curtail the losses from uber eats i think uber's got a lot more upside of all the stocks i've mentioned, it's probably the best one oh, and after the bell, ibm reported a nice top and bottom line beat with strong guidance that is a very big deal given some key analysts downgraded the stock before the quarter as with the endless calls about another stock, netflix, and whether its online competition would bring it down. so far, it doesn't look like it slowed it down at all. but aside from these exceptions, i'm calling it a suboptimal day. so what should we be focused on if the outbreak proves to be sho short-lived? i know this is "mad money. he know i am jimmy chill not just jim cramer but i care about impact per share, which is equivalent of one word davos. and that's where the world economic forum is held every year and this time around, we are getting an astonishing outpouring of anti-carbon

statements from all sorts of big companies. they tend not to be as powerful as what we heard from the ceo of microsoft last week. potentially offsetting emissions -- in 1975 but these at davos are still noteworthy pause they're going to cost the companies money short-term even if preventing catastrophic climate change benefits everyone over the long-term, i believe this is a huge shift, people i know there is a tendency to say business leaders are only acting because our government advocated its responsibility to protect the environment. i think they would have acted even if the government did actually have a legitimate interest in climate change so far, i don't see anyone who is burr given the amount of money in sustainability funds, i'm betting companies that

visibly care about this stuff will be rewarded with higher valuations than those that don't. and by the way, the oil, oil service companies, there's nothing they can do. people selling it like mad today. believe it or not, green can be good business. even if you don't intend it to be l.a. partners one of the most rigorous hedge funds on earth. this isn't some bleeding heart farm run by sharks. albeit brilliant ones, they say decarb decarbonization is a must. quote because of the strength of the wind resource in energy service territory. evergy stands to be a leader in decarbonization investments that facilitate renewables growth end quote. this piece from elliot really has nothing to do with environmental, courporate governance stuff

they only care what's good for business in power generation going forward, wind will be more profitable than coal and that could land you a higher price stock. end of story here's the bottom line i'm betting the coronavirus will be the kind of exogenous event that lets you buy unrelated stocks at a discount but it's also a good excuse for people who want reasons to sell. especially, since china's not very forthcoming about what's going to happen. then again, would we expect anything else? let's go to stuart in florida, please stuart >> hello, jim cramer boo-ya. >> boo-ya, stuart. >> nio, which has been referred to as the tesla of china first, is there any real value >> there is a tesla and its name is tesla only one stock in china i'm recommending which is alibaba. neohas proved to be a bouncing ball and i don't think it's going to be higher than it traded after that incredibly positive piece in 60 minutes all right.

you are getting a chance to pick up some high-quality stocks into weakness but the coronavirus is also an excuse for people who want to sell "mad money" tonight. as one of the most successful retailers of our time, costco's changed the way we shop. should you buy their stock in bulk i got the chance to browse the aisles with the company's ceo. then it's not all good news in the grocery space. the weakness in a company that sounds like it should be a fabulous one it is a called united natural foods. i want to see what's behind that and after gaining 50% last year, can the rally at logitech continue into 2020 i'm going to talk to the ceo so stay with cramer don't miss a second of "mad money. follow @jimcramer on twitter have a question? tweet cramer #madtweets. send gym an e-mail to "mad money" at cnbc.com or give us a call at

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>> before we left the west coast, we checked in with costco at their flagship store in isabel, washington this big box chain has been a huge winner for shareholders rallying about 50% over the past 12 months and it just keeps climbing today, it surges another 2.8% after upgraded costco. look at the fact that the stock has not run as much as others here now, could it have more room to go higher? on friday. we spoke to craig, costco's president and ceo who does very little tv. i need you to take a look at this. >> you have 100 million members. i think a lot of people believe

it's the price other people believe it's the treasure hunt. i think it's the people. we always see the same people for years. how do you keep 'em? >> well, i think since the beginning when our founder jim senegal and jeff broadwin, we wanted to have great prices. never do it on the back of your people pay good wages and one of the things we wanted to do is pay great wages. if you look at our employees that have been around for ten years or more, they make almost $29 an hour. our average wage is about almost $25 an hour. so it's just wages and we think we're a good place to work we pay benefits. we've got great people we want people to stay for the long-term. we have 401(k)s and it's just great when you have great people who stay with you and are loyal to the company and it's -- it's just the right thing to do.

>> it is counterintuitive in america to think that you can offer the best benefits and the highest wages and still have incredible profit margins. jim told me the churn, the way the turnover at all the other stores makes it so that you can afford to have those profit margins and still do better than everybody else. >> absolutely. you want longevity you want good employees. they -- they know their jobs they show you ways to become more efficient as a company. you're only as good as the employees that work with you. >> now, you have a few -- more than 500 stores. 546 stores in america. total of 785 and yet, you're -- you're the third largest. how can you have so few stores and be the third largest >> well, as you probably know, we're not a margin company we're a volume company and we need a lot of volume going through these, as we call

them, warehouses so that's really what it's about. we do a lot with very few units. we sell -- turn a lot of inventory. and it just works the best way for us to do it that way we will continue to expand our costcos. but we -- not going to have one on every corner. >> this is a beautiful store that you have here i am told that this is where you sold that $450,000 piece of jewelry. how can you have such a diverse clientele that really kind of encompasses everyone in america? >> well, you know, one of the things that we do no matter what your -- where you are in terms of incomes, everybody wants a value. right? and that's one thing that we've done from day one is we bring quality merchandise at the best possible price and we do it on -- and everywhere that we sell merchandise. that's the way we run our business. >> now, the notion that you can have full employment and not

have a lot of inflation, i think depends on the likes of your store. you can do huge volume obviously, there must be some tension between volume and price here but you're part of the reason why we don't have inflation in this country. >> well, that's certainly very nice of you to say we -- we have a responsibility to figure out how little we can make off of a product instead of how much we can make off a product. >> how little. >> all right we want to sell a lot. we're in the volume business, not the majoritirgin business. >> that works worldwide as a concept, correct >> absolutely. >> it even works in shanghai where you had been reluctant to do business in china, you personally, but looks like some would say too successful in shanghai. >> well, you know, we're very early in the game. when we opened up in shanghai, we opened up very strong and we were not -- we were actually not ready for the amount of traffic that came into

that building. >> you opened and closed the same day. >> absolutely. so we had to go through a lot of crowd control and we had to go through and learn a lot of things but we learned a lot we opened up the next day. and it's business as usual over there. >> i have some great shirts. they're made in indonesia. is that a way to be able to avoid chinese tariffs? >> no. we've just -- that's not it at all. we -- we've had a factory over there. when i say a factory, our supplier has made the shirts over there we've been with this supplier probably now who's been making our signature shirts for 20-plus years. and they do a very good job and they're great-quality shirts. >> i'm glad you mentioned kirkland i'm proud to be a long-term shopper at costco. i have often found that the kirkland brand is superior to the brand of items most other companies would say, listen, our brand is just as

good as the other guy. you want it to be better. >> well, we want the kirkland brand -- it's -- it's our name you know, we came up with kirkland because our offices used to be in kirkland it wasn't, you know, that s sophisticated a way to come up with a name. but, know, we don't do any advertising as you know. you can put the kirkland signature on toilet paper. you can put it on wine you can put it on just about everything we're proud of that brand and if you do a good job and you build a quality item, you're going to have trust with your members. >> let's talk about the stock, which has been an incredible performer. there's got to be tension between a special dividend that you give and low prices as members. i mean, why are you giving special dividends and also charging what you do for membership because i've always tried to figure out what is the -- the balance of how you do your capital allocation >> well, you know, and you're

very -- the stock has appreciated very well. but also, a lot of people's stock has appreciated very well recently the markets -- the market's at an all-time high you know, we want to have all-ti -- you know, one of the things about low prices, you generate a lot of volume. when you generate a lot of volume, you don't generate cash. and you have a responsibility to your shareholders. and, you know, the stock has appreciated. we've done special dividends in the past we always think about when the right time might be to do another special dividend we have no plans right at the moment. >> okay. >> but we'll always look at that. >> you have a huge amount of money that comes in from subscription fees. how do you decide when it's time to take that price increase? because it looks like nobody drops off when you do it. >> you know, we -- we -- we have to do it based on how we increase -- increase the value

of the membership. right? when we add new pieces to the membership, like travel. but also, when we increase that, we don't put that on the bottom line we turn around and lower prices and work off less margins. >> now, i find that because of your low prices, you can pretty much defeat anyone, including someone who is located in town amazon i find better buys here than i do at amazon is that conceivable? you're not going to get some of these prices on amazon. >> well, you know, i -- i don't -- you worry about amazon because it's a competitor. >> right. >> really, what we need to do is worry about what we can do well. figure out how to lower prices lower our expenses the lower the expenses that we have, right, the more efficient we become. the more we can lower prices >> the word that comes to mind, and i certainly find it here, this great store with these fabulous managers and people

you have a level of humility that does not exist anywhere else in corporate america. you are humble how do you stay humble and be the greatest retailer in our coincidentry country. >> you're very kind about the greatest retailer in the country. you know, we just -- as i said before, we don't really turn a lot of people. we've been very blessed with -- as a company because even from our founders, it's a lot of hard work a lot of hard work from our employees and we don't take anything for granted because, really, we feel good that we have a purpose to create lower prices for people where we do business. we have a responsibility to try to do that and make a little money for our shareholders. >> you've mentioned the word responsibility many times. again, very different from the low margin supermarkets i see. department stores. is that one reason why you had

9% comps when everyone else was saying it was so promotional >> you know, i think we had the 9% comps for the simple reason that we do have a great membership base. we communicate to that membership base. i think they trust us when they come in to buy merchandise, that this is going to be the best price they see when they come in for quality merchandise. and i think, you know, that's just the way we run our business i can't speak for everybody else but i think our values that we have on merchandise just tells the story. >> are you ever afraid that you give away too much runs a fantastic conference call you give away cannibalization numbers. you talk about 20 basis points in this country. 138 points international you are giving away information that is secret at other stores. >> you know, we try to be transparent. i mean, it is what it is i mean, you know, i mean we're going to toalk to you about wha we're going to be doing three or

four years from now, maybe not but that's what we do. >> responsible >> responsible transparent. if we screw something up, which we do on occasion, we're going to make it right. >> well, as a proud member, i've never seen you screw up. but maybe that's just the way we, as consumers, know you. >> and we appreciate that. >> and it's a joy. it is still a treasure hunt. it's still the best price. >> thank you. >> okay. that's craig he is the costco ceo thank you so much. >> thank you and we appreciate you coming thank you. it sometimes.

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names through the grocery space. but on friday, i noticed a much more negative story. united natural foods the food distributor specializes in natural and organic barest piece of research and the already devastated stock got hammered falling more than 10%. jeez this thing is almost way down to eight bucks. it's a far cry from where it was just a few years ago, five years ago. 83 now, this stock wasn't always such a dog with fleas. from the great recession to early 2015, united natural was a phenomenal performer just a tremendous multiyear growth story for 20 years, they've been the primary distributor for whole foods. at first, that was a huge business but since 2015, this thing has become an unmitigated disaster plummet more than 90% sinking from the 80s just under eight bucks as of today. what a sobering story about how much money can be lost in stocks

on the day when we're thinking about how much money can be made that latest step down on friday got me wondering how could a company that's exposed to such a powerful secular trend such an awful story? i mean, what the heck is wrong with united natural foods? the whole world has embraced organic food yet, this organic distributor just keeps getting hammered. it didn't help with amazon acquired whole foods in 2017 but things really started fall age part for united natural in late 2018. not long after the company acquired a real dog itself super value. making itself the largest grocery distributor in america with some actual supermarket locations that they were in the process of divesting the stock plummeted from ten and change during the fourth quarter of 2018. this was a volatile time for the whole market but downright horrific for this particular stock. a lot of people thinking wait a second it's united. it's natural it's food! just keeps getting worse after rebounding to 15 bucks in

the first few months last year, united natural, increasingly distressing results. the source of the problem? part of it is super value. as ceo steve spinner put it last march, we experience higher than anticipated cost, largely associated with our network realignment projects resulting, primarily, from super value's previous acquisitions. that's great they made a lot of acquisitions and then these guys acquired them this is really important they believe that the problems should be short-term in nature more importantly, barring a few exceptional operators, the grocery business has become awful. too much competition in the grocery distribution space meanwhile, the independent grocer's clients these distributors crave well, they're all under pressure from big national chains making their business less lucrative. thinking about target's there. walmart's there. we already covered costco. when they reported again in june, they had the exact problems only worse.

yes, the same ones analysts started coming out of the woodwork to downgrade the stock based on fears that their coveted independent grocery clients were rolling over in a world that's increasingly going digital. united's chief financial officer resigned to take over of a trucking company he made a smart move but this sent a tailor signal to wall street. when a company's facing a complex merger integration like united natural's purchase of the gigantic super value well, you hate to see the cfo leave in the middle of the process. the conventional wisdom is such a high-level executive wouldn't be leaving if everything looked promising. but then a funny thing happened in september united natural rebounded, again, to the low teens sucked people in fueled by a broader rotation out of -- names and beaten down value names. well, united natural foods was struggling, the company was plenty powerful. still pretty good.

they were talking about making more than two bucks per share for fiscal 2019. making the stock incredibly cheap. four times earnings. well, if you believe those numbers were attainable, what a bargain. what a steal now, fast forward october 1st, though, and investors got a real reality check. there was a reason they were trading at less than four times earnings it's because those numbers were unattainable at the beginning of october, the company reported an ugly earnings miss and gave horrific guidance for 2020. this year, management's talking about making $1.22 to $1.76. but even at the high en, they are going to experience some nasty earnings shrinkage even worse, the new cfo came out and disavowed the company's long-term targets. management lay out some pretty optimistic forecasts for 2022. the cfo told us we don't believe we have a path to achieve those forecasts. you can't do that. that's what causes the stock to go down. within weeks, it was bouncing

again. most recent quarter mid december sure enough, we got another disappointment even though the company's sales came in higher than expected, earnings per share were just downright ugly they earned 12 cents wall street was looking for 26 cents. this has got to be the biggest disappointer in my lexicon united natural faces uphill battle when it comes to integrating super value. paying down the debt they took on to make that acquisition. then analysts raised concerns about what might happen if that company actually lost the whole foods contract, which expires in 2025 once again, the stock tanked this story just keeps repeating itself united natural gets eviscerated by some bad news then the stock finds its footing. sure enough, last week the company made a not too terrible presentation at that big icr conference management can see they've been too bullish if their forecast after they bought super value. and they were adamant they'd be able to keep the whole foods

contract stock rebounded to nine bucks and change so of course it gets side swiped again. downgraded from equal wait to underweight. seems like a reasonable target to me. the rationale, seems every other -- for the past year, the wholesale grocery business is, quote, structurally challenged with a shrinking customer base and relentless competitive pressure end quote. and while the deal might make sense down the road, if there is a road, it's currently a mess. stock got clobbered in response. that's why it's now under 8. of course, united natural seems cheap to the -- ever -- to the people who are ever bullish and of course even the -- assume they can earn more than a dollar per share this year. however, that was the same logic of people buying this thing before it blew up late last year to me, it's a value trap that's what this is. this is the look of a value trap my view. just because something looks like it's pegged to a powerful secular trend, like natural and

organic food, that doesn't mean it's good business with all the tough competition, united natural's customers are being hammered and they foolishly doubled down in the same space with that super value deal over a year ago. if they call this thing, let's say instead of united natural foods, i don't know, united distributor of foods, it will be more accurate description. but would you want it if they x that out that's what keeps sucking people in natural. oh, my god they shall call themselves meatless the bottom line, at these levels, i think it's too late to short united ed natural foods but please i'm begging you please stop trying to speculate around here. so far, we've seen no evidence that things are getting better you want a grocery play, forget united natural and buy costco! stick with cramer. imagine traveling hassle-free with your golf clubs.

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what do we make of the stock of logitech international up here this company is the king of computer peripherals like keyboards, mice, headphones, mobile speakers, and remote controls and high-end gaming gear saw its stock surge more than 50% last year. as 2020 got rolling, the stock

was hit with a wave of downgrades it had run too much. but when logitech reported last night, higher than expected sales up 4% over year. and cost discipline. their gaming pc and video collaboration business all on fire plus, reiterated their forecast for fiscal 2020. i would bet that it has further to run so let's check in with brock darryl, the president. mr. dow, welcome back to "mad money." >> jim, thank you so much for having me. >> all right i'm going to go right to the end of your conference call because it was probably the most instructive moment in many calls that i've heard, not just your call the analysts asked you about different things you have done and you say this call is kind of very anti-climatic for me because we're so focused on what's coming, and you are so focused on what happened to try

to learn from it, which is great. i want you to focus on exactly what the analysts are tell you don't be anti-climatic give me the goods! >> well, you know, i think at the end of the day, i think what the analyst saw in our earnings this quarter was, you know, we had a good, solid growth number at the top line. 5% nongap. we had a good solid profit number and maybe most important of all, we delivered strong, strong gross margins in spite of the tariff impacts and currency. and, you know, we are growing all three of our biggest businesses two of them, double digits gaming and video collaboration and one, mid single digits, 6%, which is our pc peripherals business so i think they saw strong, solid growth across the board. >> the momentum in video collaboration. this is something that we all knew that there's something like zoom's doing well. logitech is doing, in many ways, just as well because you're in the sweet spot with some really

great gross margins in this business >> yeah. we have terrific gross margins in that business we've gone from, you know, six or seven years ago, we were $100 million business we delivered $92 million of sales this quarter up another 25% our growth for the year is up 37%. and the coolest thing about this, jim, is for us and zoom and google and microsoft and everybody who's in this business, only 4%, 4 or 5%, of all the rooms that should be video enabled are. and you know a lot of the experts forecast over the next five years, you will see that jump to about 12%. so there is a lot of growth here ahead of us. >> when i look at your products on amazon, i am thinking that zoom is enterprise logitech is enterprise but also consumer what are some of these consumer uses that people are willing to pay 500, 600, $700 to logitech in order to be able to get their video conferencing >> you know, it's really

interesting. most of the products we sell, the mavast majority are used in the office but i continue to think there is a big opportunity in the home. how many people watching this right now have a home office and they use one of our little web cams, which are great. but if they just put one of these in and they could tap the button and be on a video call right away how many of your calls could you do there at home i have three rooms set up in my house with video conferencing. two of 'em have couches. one of them is a traditional office setup so i think that's going to happen in the future. >> that's exactly what i was perusing i got the idea i know it's not the primary use but i said wouldn't this be cool i mean, these are now affordable i mean, these are not thousands of dollars pieces of equipment. >> no, it's super affordable and it's so cool and by the way, the numbers i quoted, 4% of all the rooms that could be video enabled, doesn't even include all the homes out there in the u.s. alone. it's going to be really big.

no matter what, the video collaboration business for us is -- is a huge growth opportunity. >> i know that take two activism blizzard and ea have all been hitting highs. you've got some easy comparisons versus fortnite. you have a much lower pumultiple than those companies you then -- you said you would pick up in video games and that's exactly what happened >> yeah. i mean, we have -- the coolest thing about our business we have a very diversified portfolio. we're in 28 different categories so that has given us like having a good, strong portfolio that we're constantly weeding and doubling down on things that are growing. we've been able to deliver consistent growth over the last six or seven years including this quarter and then our gaming business, as we said the first couple, two or three quarters of the year, we had lower growth because of the incredible fortnite effect last year we're back to double digit growth again 16% this quarter. >> one last thing, i know a lot

of people thinking about esg, what you're doing. you've got that box checked so to speak but far more important, you talked about s.t.e.m. and hardware i think there is too many people who are just concerned about -- i'm not as concerned about your carbon footprint as i am concerned about your educational footprint. and that's something that you made the point of. without necessarily of course not going to slug people who care about environment but that is your sweet spot, isn't it, what you're doing in education? >> yeah, you know, i would say it's -- first of all, we are doing a ton in sustainability. i'm super excited about that we just -- we were named one of 35 companies, only 35 companies until the world to the world finance list of honorees for sustainability the only one in consumer tech. i had to say that. >> no. no that was right you came out great on the conference call. absolutely. >> i'm super excited about that. and there's a lot ahead of us. in the education field, we've never really penetrated the education space as much as we could have you know, our products are certainly used by students all

over the place but we've never really focused on it we had 30% growth this quarter in our education space we've got several different products that go in there. mostly, working with the ipad. i'm optimistic there's a real vertical opportunity for us going forward. >> well, i think that you're -- everyone who is going to downgrade you has downgraded you. they obviously should have, let's say, done more homework because you said certain things were going to happen you delivered on every line item that's president of logitech guys, read his conference call i commented last week there had been a lot of downgrades but the downgrades were ill advised. there's not much more i can say. "mad money's" back after the break. that's what happens in golf nothiand in life.ily. i'm very fortunate i can lean on people, and that for me

is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley.

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the design thinking, the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies at scale to advance speed to market. it is time it's time for the lightning round. and then the lightning round is over are you ready? start with douglas in new york douglas! >> hey, jim, how you doing >> i am doing well

how about you, douglas >> i just want to know what i do with this stock. i had it for a long time. >> i think nokia is getting better i think there are improvements there and at four bucks, i think it's a decent stack. i'm going to add ericsson to it. i'm willing to go out on a limb because it's in everybody's interest they stay strong. let's go to joe in new york. joe! >> jim, great show been a big fan for many years. >> thank you very much, man. >> w.e.n. >> well, wen has been stuck at this level of 21 for some time they're doing a very good breakfast. i think that it's a stock that you should be buying right here. let's go to naliney in maryland. >> i'm sorry my bad. >> that's fine so, jim, i have a question on -- which i got into about a year

ago. compelling story and it has plummeted and now it's been hanging around 16 to $17. yeah you know, i'm not going to rave about that one they've got -- they got to do a couple good quarters in a row and they have not been able to do that. i need to go to doug in new york doug >> jimmy >> yo. >> big brooklyn boo-ya to you. >> love that what's up? >> i want to tell you thank you very much. you and your great staff for the homework you did for me on this -- a couple nights ago. >> and don't forget to wish regina a happy birthday, our executive producer. >> happy birthday, regina. my ticket tonight is mx -- >> magnachip i don't know it's a chinese semiconductor i like 'em here. i don't like 'em there remember, alibaba is the only chinese stock i am recommending.

and that, ladies and gentlemen, is the conclusion of the lightning round! the lightning round is sponsored by td ameritrade ♪ ♪ ♪ ♪ you leave it to me. i'll get your taxes in an ok place. what? just as soon as my audit's over, this gets my undivided attention. you take a lot of trips to the islands, phil? pretty great, right? oh phil's legally dead. fell off a boat. going by denis now. celery. long story. what do we got here. oh. not going to want to see this. i don't think this is going to work. just ok is not ok. at&t has america's best network,

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i know this is going to sound odd. you know what? i'm actually glad the market pulled back today. stocks have had an enormous run and you got to wonder if they can grow into their elevated

price-to-earnings multiples. that's the big question as earning season goes into full swing. right now, we are paying a great deal for future earning streams. for example, the average stock in the s&p 500 currently trades about 22 times earnings. now, historically, that's pretty expensive. normally, i start getting nervous when the s&p's trading anything north of 19 times earnings because that is where you tend to get in trouble by the way, the crash in '87, they were 29 times earnings. let's take that off the table. and also, in 2000, the nasdaq didn't even have any earnings. arguably, we should never have gotten this high in this particular market in the first place. it reminds me of the heights we reached right before the super bowl when inflation came in too hot and the whole complex of money managers got their heads handed to them something to raise cash and they did it by selling the s&p 500 futures, which then crushed the stock market so what can justify these elevated valuations?

how do we get through earning season unscathed why should we at all be confident? what needs to happen first, the numbers actually do need to be better than expected. and that's what we saw from banks when big institution money managers stopped worrying about margins and started foe kusz cussing on stability j.p. morgan put up a consistently great number. 13 times earnings. however, j.p. morgan simply didn't go down giving the stock a lower multiple and a higher earnings model. now, it sells for 12 times earnings godman sac god goldman sachs delivered consistency. gave investors the conviction they needed to buy it a at ten times earnings the biggest winner was morgan stanley. even after reporting a truly colossal quarter that sent its stock up five points, that's multiple compression in short, when the banks reported better than expected numbers, they simply kept their stocks running in place.

usually, these results would trigger terrific rallies but this is what happens in expensive market as the case with ibm this very evening, you know, repeatedly lowered bar and that is enough to send the stock up and after hours. but that was not the case with banks where the bar kept being raised second potential justification after bte. mergers and acquisitions if we see companies buying other companies, that's a sure sign these valuations are actually legitimate now, we had a big mna party last year but so far, 2020's been quiet. third, big dividend and buybacks in recent years, citi group's retired a third of its shares. outstanding. as long as the stock keeps trading around its book value, ceo michael corbatt will -- put an immense floor under the stock. meanwhile, a dividend boost are tremendous sources of strength albeit one that's often ignored

by this show and all shows it shouldn't be ignored. fourth the phase one trade deal with china has caused many underperforming stocks to start outperforming. once they do, we have to believe it will allow the earnings of many companies to blossom. finally, we need bond yields to have another leg down because it will help prop up stocks with high dividends by comparison, of course in many ways, this is the thing i am most worried about though if we get a wholesale causing a surge in bond yields, the stock market -- some serious competition. it can happen. i'm glad the dollars been so weak of late but it's weak because investors from overseas have stopped the relentless purchases of u.s. treasuries if bond yields don't roll over, this market will suddenly start seeming a lot more expensive and that is the trouble with expensive markets. we need a few items on this checklist to tread water here. we need all five for the averages to rally and rally big. and if we get none, well, look out below. stick with cramer.

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i have an important programming announcement i've always wanted to say that tomorrow morning, "squawk box" 5:00 a.m. eastern. my pal joe kernen is sitting down with president trump in davos. the president was pretty scripted i bet you he goes off script when joe kernen asks him a lot of questions 5:00 a.m. squawk it must not be missed. now, good quarter but what's more important is that the expectations were tampered by a series of downgrades netflix, a lot of people expected them to blow up not be able to sign up as many people as they did that stock can go higher now that that veil has been lifted but look what matters is the illness and how quickly it can be contained. i like to say there's always a bull market somewhere and i promised i'd find it just for you right here on "mad money." i'm jim cramer and i will see you tomorrow

>> welcome to the shark tank, where entrepreneurs seeking an investment will face these sharks. if they hear a great idea, they'll invest their own money or fight each other for a deal. this is "shark tank." ♪ is a low-calorie version of a favorite breakfast treat. hi, sharks. i am ashley drummonds. and i am josh mcclelland, and we are from tampa, florida. our company is abs, and we are seeking $120,000 in exchange for 40% of our company.