close. you'll probably end up at 200 but you'll have a lot of decay i think i'd sell at 210 and bring my break even price lower. >> that does it for us here on "options action. we'll be back next you my mission is simple, to make you money i'm here to level the playing field for all investors. there is always a bull market somewhere. i promise to help you find it. "mad money" starts now >> welcome my job is not just to entertain but educate and teach so call me or tweet me. this market is incredibly crazy.

opened incredibly strong and then petered out and then at the end of the day, a lazarus afternoon. was it too many people with one foot out of the door >> pretty much when you try to rebound from 1800 down yesterday, you get these anxious people who ran into a wall of sellers and were delighted to get out at a higher price. the sellers didn't care but didn't want a repeat of yesterday. once the sellers were done, the buyers came back we are still in the grips of one of the craziest times i have ever seen. at least there is enthusiasm you have tons of new investors attracted by low dollar stocks

and crazy hours. people can trade at 4:00 a.m clubs all over the place they blitz in and buy tons of shares with the hopes that someone else will take them out at a higher price. all of these people rely on other buyers to come in after they bought their stocks sometimes it works and sometimes it doesn't these buyers buy certain stocks each morning and bet it will go higher when it works, it's great. but when it doesn't and you lose a lot of leverage, it's a rough life i understand what people are doing. we like investing, not trading, but it doesn't mean we are going to thumb our noses at you. if it works for you, i am all for it, as long as it's legal.

most people who watch the show are investors, not short sellers. my concern is that these younger traders who keep trying to bag stocks, gun them with positive activity and then liquidate them if that happens, and we haven't seen the last of the reversals like yesterday or today. in other words, yesterday we were doing for a pullback. the problem now is that the run over the past few months has attracted many younger traders some of them are too sure and too confident and too cocky. i am concerned people will get blown out like in 2018 or like in 2000 or 2009 and they will never come back again. with that dwindling audience of

people who like stocks, i want people to speculate as wisely as possible i am sick of watching generation after generation of young people being blown out of stocks when they should be investing in them rather than say you don't know what you are doing, i am going to acknowledge you do know what you are doing and i am going to work harder to make you better i am not going to criticize and make a judgment. i am going to say i think i can help you if you don't want the help, okay if you do, you are in the right mace let's start off with the empire state manufacturing sur havevey. i bet this is the worst number ever recorded. spiking new cases over the weekend which people are worried about and a lousy empire state

manufacturing number, it will be bad. back to wagering on covid-19 tuesday morning we hear from the big home builder housing is roaring these ultra low home rates are bringing people out to the suburbs. if it doesn't surprise anyone, it might not go up they always manage to say something positive and inch up wednesday we hear from the hero of the stock market and that's fed chief powell someone tried to goad him into whether he would raise interest

rates. he had the perfect response. he wasn't even thinking about thinking about raising rates it's crazy the question was asked. speaking of housing, we get housing starts on wednesday. i bet they are strong but not enough to move the needle. thursday we get results from kroger and you have to know the supermarket business has become dog eat dog. kroger is being eaten. ever since warren buffett bought a stake, wall street has fallen in love with this thing. i think that's about the end after these numbers. too much competition and friday we hear from potentially important companies, carmax and jabil

car max sells used cars. i bet used car sales are higher. riding mass transit is too risky. we are still in a reception so this isn't a lamb borghini momet this feels more like a used car moment auto nation, auto zone, because used cars need more maintenance. last but not list is jabil when you outsource your manufacturing you go to a company like them. they can't mention apple by name you have to read between the lines. throughout the week i will be watching the covid numbers like

a hawk last friday it felt like we were in a v-shaped recovery and covid on the ropes but this week new cases started spiking and no more super positive economic news some mayors are talking about going back into lockdown thank heavens secretary mnuchin says he won't let that happen for the country. i think we will be able to beat this thing 100 pharmaceutical companies working on it. sooner or later they will be able to come up with a vaccine until we get a vaccine, we can't go back to normal because social distancing is hard to maintain and many americans are too stubborn to wear a mask. as long as you don't think we are going into lockdown, buy your favorite stocks if you want to trade in your favorite stocks, i will do my

best to help you i want a big ten and smarter one, too tom in new york. >> caller: with office buildings reopening, they will have to change their environments. carrier global will be updating filtration systems in hvac >> cars are good, but you have to believe chinese will get better i like the management. it's good. i wouldn't say it's great. patrick in new jersey. >> caller: thanks for taking my call new to the market, piecing together my portfolio, i have a few stocks in there. is it better to have larger amount of stocks in four or five companies or smaller amount in

ten companies? >> we recommend 30 companies knowing ten companies well enough to invest is difficult unless you do it full time if you are going to trade i think it's a full-time position when you do trading. let's go to grant in texas >> caller: earlier this week this company announced 3 billion loss in sales, stores closing. they have taken over a big book in china with the tensions between china and u.s., how do you feel about starbucks? >> i like them i am glad they allowed them to

wear black lives matter shirts i think the starbucks numbers are more negative than they will turn out to be i think it's a buy right here, right now. if you don't think we are going to a second likedown, you have to buy your favorite stock in weakness if you are going to trade, we will help you, too could coronavirus be on the ropes? my take after we come back and four or five prescription companies are still growing despite the economic impact of coronavirus. i am talking with the ceo of zora

yesterday felt like something out of february or march when the covid numbers kept getting worse and worse i think that's the wrong analogy. i know we are not out of the words. parts of the country like new york city are doing better other parts are doing worse. numbers are trending higher among 19 states, texas and others now we know a lot more about

this virus, know how to fight it and know that masks and social distancing work especially with aggressive testing and contact tracing. that's how south korea and hong kong have handled it they have handled it better than we have. they have experience with sars and mapped out who was spreading the disease and rapidly kwaur teeng them i think we are better prepared to handle a second wave, but it only works if americans will wear those masks and maintain social distancing. otherwise systems will be overwell md a overwhelmed and the rest of america could experience new

york types outbreaks please, wear the mask. i know it's a pain i know you don't like being told what to do, but the last thing we want to do is go back to lockdown end of the day, we need a vaccine or cure. too many businesses are taking it on the chin thanks to the new social distancing rules. in the midst of yesterday's horrific sell-off we got good news regeneron is now going into trials with their antiviral cocktail i was surprised we didn't get more reaction. but they are still relatively unknown and the news came out on a hideous day for the market

i believe in johnson & johnson i believe in the antibody cocktail from regeneron. i just hope we get something fast enough to save a lot of lives and the economy. covid may be on the rise again, but between masks, social distancing, contact tracing and the potential therapies, we are in better shape than in february and march. plus we know it is far more than a respiratory disease and far more nefarious all of that changes if people are irresponsible. i beg you, rather those darned masks. here is a sneak peek into what sarah has tonight. >> tonight at 7:00 p.m what is it like for contact tracers trying to stem the spread of coronavirus. and class of covid unique graduation for massachusetts high school

students and expert advice for business owners trying to mnavigate their path forward

the last time everyone freaked out about the pandemic and the market got obliterated, we had to circle the wagons around the cloud stocks. should that be the new playbook? if you are really worried about covid coming back. if we are worried some cities may need to go back into lockdown houston is already talking about it does it make sense to go all in on the cloud you know we have had five years worth of digitization in the last five months

some say ten years many were at new highs before the new market rolled over yesterday. when a new group gets more expensive, you have to get more selective. i fear there will be a lot of underwritings in this area let melee them out which ones i like using rigorous analysis that others in the profession choose to do in the past we have broken them into five groups, big cloud, smaller cloud, names that work and the questionable ones which are questionable when you look at the best performance, nearly all of them come from the class of 2019. there is not a cruiseship or airliner in here that's a joke about trading.

zoom, we know we like you. fiverr up. number five, z scaler, who can forget that one? another couple i like are datadog. docusign, we just had them on. and there are ones that i have tried to introduce to you these companies. this is where money is being made not american or delta. these. what do most of these have in common the biggest winner are the ones that work from home economy. they are not just immunized

against covid, but actively benefit from it. when you look at our universe, you see they are getting expensive. the average stock is up 45% for the year and newer ones are up 82% and we have been riding them the whole way, getting a nosebleed. they are selling for 11 times next year's sales estimates, not earnings of course there is a reason they are so expensive by and large the earnings from the cloud market has been extraordina extraordinary with this economy. datadog is one of the best beats of the year. i honestly can do no wrong with zscaler. and zoom video, well, i am not

telling you to do your banking on zoom, but do your boozy brunch on zoom it would be a mistake to do a register on these, some yes, some no. let's figure out which ones have gotten too expensive when you are evaluating these service companies, there is a way to get a sense of what works and what doesn't it is called the rule of 40. you add the company's revenue growth rate to its earnings before interest, taxes, depreesh yags, am torization. if it's over 40, you have a good

one, under 40, risky if they are losing money, they better have rapid revenue growth if it is slower, they could be a problem. of the 50 cloud names, 17 pass the rule of 40 tests based on this year's estimates, they are zoom video, livongo, adobe, datadog, service now docusign zscaler, dropbox and whip. there are another two we like. lose datadog, fiverr and

zscaler, one of my faves what if we created a new metric by taking the rule 40 score and dividing it by the price to sales multiple let's say the ebitda margin should be five times the size of its price to sales multiple. who makes the cutoff some old friends, dropbox, livango, adobe, chegg. of course i sold adobe too early. let's get specific

if things go haywire, i have four stocks worth hiding adobe systems which we had on the show last night. it is unique in that it is a balanced cloud stock the stock still has reasonable valuation selling just over 35 of next year's sales estimates, not earnings, but sales. this is the only cloud company that has reported for the most difficult period of time shut down in march, april. the ceo is a genius. adobe illustrator makes you better than you are. and this cloud based platform i think will do incredibly well. schools will likely keep going

digital to slow the spread of the virus. security sales force, the king of the cloud, we have been recommending this one and it's been good every step of the way. they sell cloud share to more businesses it's a smart thing and a reasonable valuation and there is vmware. i think the ceo is terrific no wonder they reported a great report sister coming did good, too. after yesterday's slaughter, you want more exposure to the cloud

that did good in a not so hot economy. stickwith the ones that pass the 40 test and if you are looking for just one go with adobe or chegg or vmware i know young people want to buy another kind of stock, but this is the kind of work you should do for the long-term james in georgia >> caller: i am a finance student and young investor wanted to get your thoughts about a marijuana read in in medicalins industry. do you see it as a smart investment despite people not paying rent.

>> if you want pot, just go for it canopy missed the quarter. some others i recommend are too small for me to mention on the show the show has rules here we go it's time to have some exposure to cloud plays that work during a not so hot economy like yesterday. maybe use that 40 test we just went over. we will have much more this company works with a covid-19 index including docusign and others. and how could the covid-19 impact managed care. and we will have tonight's edition of lightning round stay with cramer at leaf blowers.

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in this kol volatile market, double down in the cloud a cloud play, zuora it is a great read the stock still hasn't gotten back to where it was trading in february but they had a solid quarter last week. i think they can do well here. as advertising dollars do dry

up, we are seeing more producers launch subscription services to try to make money. let's check in with the founder and ceo of zuora you put out a terrific study and impact report covid-19 rendition. companies still growing despite the covid-19 pandemic. this is the best stream of revenue we have in this country. >> that's right. we have been talking about that the end of ownership is coming it is here four out of five companies are still growing their subscriber base despite economic

uncertainty. if you got your own mad covid-19 index, some of those customers are ours, zoom, docusign i think people are waking up to the power of recurring revenue let's say you are playing football and you are a subscription business. all of the other companies have to start way back there on their 20 yard line with the entire field in front of them, but you get to start ten yards away from a touchdown. that's why you are seeing the statistics clothing retail down 80%, but stitchfix is doing well. advertising sales down, but media subscriptions including places like the street are on fire this is a better business. >> it is true. i don't want to brag about it, but it is true let me ask you something

there is a crystal clear football analogy people will understand the fender play >> fender is a major story it is not just a guitar company. it is a media company. they have a service fender play which teaches you how to play guitar they have a subscriber base while we are trapped at home pulling out our guitars from under our beds there are a million new guitar players not sitting on the touch watching "tiger king." they are playing their guitar. if this is not a whole new world, what is >> my wife came in one night and said we have to switch down on this because of the pandemic,

but thank heavens they know what they are doing it's called resi i said i think i know the guys powering that. that's you >> what we do is never more apparent what we do. there is resi, guy online, yogi studios. what we are seeing is we can help companies expand through this exponential design or in the case of resi adapt with agility to their changing needs. >> resi went with you. >> all of the companies including some of the companies in your mad covid-19 index we power. we see ourselves as a portfolio play >> let's circle back to the business itself.

you have some very big plus 100,000 contracts. nice acceleration. nice quarter it looks like business went to the next level i see you have ibm working for you. they are all trying to explain this economy and using zuora, too. we believe long-term is on our side everything we do is based on long-term, what do we need to do to help companies win, subscription economy we created something called the subscribe strategy work to work with companies of the world, help companies figure out their pricing. we give our customers even more agility as designed. and our partnerships with these

companies continue to be a big focus of ours, too >> the premium model you pioneered everyone knows how to do is one of the greatest features if you bring zuora, it is something you can do wrong if you don't know >> our platform, you see companies being able to adapt to a dime one of the we messages is fundamental return of customer relationships. companies are realizing if we have a direct relationship with our customers, we can adapt more quickly quickly to their changing needs. >> why do some people think advertising is the holy grail and don't want to mess with subscription >> this is a whole new thing what we saw in 2008, before 2008

people thought cloud computing is for small or medium sized companies. with an economic downturn people realized this cloud computing is powerful we saw the whole world shift in this 2008-2009 model we hope in two or three years we hope companies will look back and recognize this as a turning point where companies employed us >> that's the founder and ceo of zuora. stand by we will be back after the break. hey! lily from at&t here. i'm back and while most stores are open, i'm working from home and here to help. here's a tip: get half-off the amazing iphone 11 on at&t,

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it is time and then the lightning round is over are you ready? michael in new york. >> caller: jim, how are you? >> what's happening? >> caller: first time caller started watching your show and love it. my question is about sony. >> it is a very inexpensive stock, has been for a long time. i would stick with it. leon in new jersey >> caller: hi to my children my question is alibaba

>> that's the only chinese stock i am recommending. >> caller: talk to me about dxc. >> i will talk to you about it that's all i have to say that's because my grandmother said if you don't have anything nice to say, don't say it. sandy in new york. >> caller: long-term holder of cardinal health stock and i wonder what your opinion is. >> i love george barrett tough business, low margins. i would rather see you in a pharmaceutical company made a nice comeback, but not

long-term. and it's the group by the way. brian in california? >> caller: wanted to shout out i have been watching you for eight years. i am looking to hold -- thank you so much for everything i have a for the polio i am looki -- portfolio i am looking to hold for about two years. i have exxon >> i think you have to go with chevron. i don't personally like any fossil fuels, but i like them and diamondback and parsley. lindsey in new york. >> caller: astrazeneca

>> they have made so many good things going i do like them roberta in arizona >> caller: thank you for taking my call. i am a first time caller i have a question i would like your opinion on awr, american states water company >> i have liked them absolutely forever. it is the kind of stock that you own it, a little bit up each year i like that kind of thing. not like buying an airlines and banging it up at six, but it will get you there and that's our lightning round you run it by an expert, you talk about the risk and potential profit and loss. could've used that before i hired my interior decorator. voila!

maybe a couple throw pillows would help. get a strategy gut check from our trade desk. ♪ can i find an investment firm with a truly long-term view that's been through multiple market cycles for over 85 years? with capital group, i can. talk to your financial professional or consultant for investment risks and information.

>> what is it with managed care stocks covid-19 meant people put off nonurgent medical procedures which meant the managed care companies didn't have to pay out claims but now that we are reopening we will probably see people go out for those procedures

centene works in managed health plans. the stock went up 2.8% can it keep climbing let's meet with the chairman of centene. welcome back to "mad money." >> mr. cramer, how are you doing? >> i am doing well these questions now have great meaning. how are you doing? >> doing well. working to keep our employees safe it's all good. >> and delivering numbers. you increased guidance once again. some people are saying how could he increase guidance in a reception. but the answer is centene is not

necessarily levered to that. >> you base your decision based on the facts today when we announced the $4 billion in incremental revenue it was not clear what that margin would be. now we know it's more normalized >> i think there are things that throw people for a loop. like this quote. consistent with inpatient we have seen a dramatic decrease i e.r. claims. that's a meaningful number for you guys >> sure. >> e.r. -- we do a pretty good job, but a lot of them still use the emergency room as a primary care physician

during this coronavirus environment, that's not happening. >> also a reduction in utilization medical costs. natural to presume there are good numbers coming. you reached guidance, but you were your usual cautious self. >> what we have to be careful of we said we would have 68% of our income, of our earnings in the first half of the year we were starting to see a stronger than normal second quarter. that will start to come back and it is starting to come back now. we will see a higher than expected third and fourth quarter and will probably have momentum into next year. on the year it will all average out except for that incremental ref fr revenue from that $4 billion

>> i saw you had a mask on before we all wear masks and practice social distancing. somehow it went from being how you got taiwan with seven deaths to something we don't need them because things are better again. is there any reason to think things are better? >> no. that's frustrating japan 127 million lives, oriental markets have always had a mask mentality they have had 832 deaths during the time we had 100,000. hong kong, as you know, very concentrated population, 7 million people they had 4 4 deaths in that same time this mask is the answer until we

have a vaccine >> amen. >> no doubt about it you can't come in our building without one. if i walk down the hall without one, i will have to fire myself. >> there are things happening we need your advice on. you thought about it very hard before there was a murder committed in minneapolis, one of the worst we ever had to witness. you had one happen in ferguson you built something in ferguson. what is it like to talk versus do >> i am very proud that in a matter -- we heard that small businesses would be closing. we said we had to do something about it this was labor day when it happened that friday i said we are going to build -- we are going to

announce and build a service center in ferguson over the weekend we worked and announced it and that friday we owned the land we had the effect of those small businesses saying if centene is coming here, we are reopening. we saw property values starting to increase. you drive through ferguson, people are showing pride and taking care of it. if i took you to our day care center, you see young children learning it's incredible. i feel successful only when i see other people successful. and the people in ferguson are becoming successful. >> can we clone you? we are not seeing other people doing what you do. no >> we see people sending their hearts, prayers. how about sending money

across the crowountry, k throug, we know we have to improve the educational system in the inner city we can do that and start turning people's lives around. there are a lot of things we can do you have met some of our people, our head of hr we put together these courageous conversationings they are on going all of the time jim, 52% of our population are of color, of our employee population across the country.

it's something i feel good about. i think it can be done >> you should and you should feel good about all of the work you are doing. you are a good man, sir. thank you so much for coming in. congratulations on a great analyst day and everything you are doing. into thank you >> that's the president and ceo of cnc when i say he cares, i don't mean he mouths i mean he does back after this break.

can i find an investment firm with a truly long-term view that's been through multiple market cycles for over 85 years? with capital group, i can. talk to your financial professional or consultant for investment risks and information. you know, the chef here trained in france. mmm, it shows! so good. oh hey, did you say you needed help with investing? because i know someone who's really great. and you trust him? totally. yeah. we went to school together. i'll check him out on investor.gov. so, what'll it be? i'll just have the burger. before you invest, get the full report. check out an investment professional's background for free on investor.gov. before you invest, investor.gov. snhu let's you transfer up to 90 credits - [announcer] if you've tried college but never finished, toward your bachelor's degree. - [woman] it doesn't matter how old you are, you can do it. you can finish. - [announcer] finish your degree at snhu.edu.

>> a lot of people think the market is about to blow up and some think it is about to plummet down today it went up, came down and went back. i think we could be chopping unless we get a big pickup in states with covid. wear masks and do social distance, we will beat this thing because we will get vaccine and antibodies from places i'm jim cramer and i will see you monday

i'm sara eisen on day 166 of the coronavirus crisis the problem gets worse in texas. this marks one of that state's busiest days since the crisis began. >> we've not been able to control that spread. >> spikes in several states. >> what has been -- >> stocks, whip sawing back and forth. >> there are concerns lingering about the virus. >> tonight how cities and states are trying to get the health crisis back under control. we'll talk to a chief viru