tomorrow, actress molly wingwald and back-to-school fashions. good-bye, everybody. we'll see you tomorrow. i'm jim cramer and welcome to my world. you need to get in the game. those firms are going to go out of business and he's nuts. they're nuts! they know nothing! i always like to say there's a bull market somewhere. "mad money" -- you can't afford to miss it. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to save you money. my job is not just to entertain but i'm trying to teach. call me at 1-800-743-cnbc. home depot wants you to go shopping. >> buy, buy, buy! >> they have 2,255 stores which means there's a lot of destinations to choose from. so tonight where the average is flat line, dow up 3 points, s&p up 0.1% lower, nasdaq up 0.8%. we're going to take advantage of the slow session and go shopping for stocks at america's number

one do-it-yourself retailer. why not? we got terrific details this the stock jumped above 89. a new high. part of the strength of the dow. the ceo is the best in the business. an his conference call is a thing of beauty, pretty much telling you which stocks to buy without naming the companies simply by letting you know what product is blowing out the doors. but before we go aisle by aisle, it's important to point out that home depot, which has a history of being brutally honest about the lousy state of the housing business in this country for the last four years, oh, i always dread their calls. sang a very different tune this time around. in the call, they said the bad old days are over. here's what frank blake declared

near the top of the call. and i'm quoting frank, we see strength in the core of our store, stabilization within the heart of the housing markets in california and florida and signs of gradual improvement within the overall housing market. believe me, that's some serious great out bullishness from a very muted, conservative guy who had been reluctant to call any turn whatsoever. he goes on to say, and i quote again, housing is not a contributor, my emphasis, to gross domestic product growth rather than a drag. and private fixed residential investment as a percentage of gdp improved in the quarter. and i've got to tell you, for me that is holy cow territory. for years now, i had to listen to blake say just the opposite, housing hadn't turned at all and most importantly, it was a shrinking part of the gross domestic pie. i had to hear that. unless home depot could take share from the mom and pop hardware guys, the true values and the lowe's, there couldn't be any notable growth of chain for the suppliers. he keeps saying it's shrinking

from a percentage of the gross domestic product. this is a major change. that's the history. now that housing is out of the way, let's go shopping. first, there's the store itself. home depot rallied today. home depot up $1.89 today. it's still a buy especially now that housing is a contributor and not a tractor to economic growth. the company told you that california and florida are now stabilize. let's see how we do that. hang on to standard pacific, pulte, lennar, keen kbr home. ring the register despite the huge gains. i'm not a fan of etfs, but anyone holding the philadelphia housing index, you let that bad boy run, too. if home depot is saying the hardest hit areas are us being, that means more new homes are coming. they need supply, which means profits for the california and florida-centric home builders. let's go aisle to aisle. craig lanier, these people you count on for all these conference calls. he's giving us the store map to give us the hot spots. lumber, kitchen, appliances, paint, tools, bath, flooring,

plumbing. the company got double digit positive numbers, more than 10% year over year. painting, carpet, doors, locks, wood flooring. before we start buying, though, we have to do one more field check and that's whether home depot is going to be ordering again. what does it mean if they have the stuff in their stos. it's not going to help the companies. do they need more supplies? there the answer is a resounding yes. we know for two reasons. one, they give you some granularity of how each month was, and the last month, july, was the strongest month. and the company makes it clear that the inventories are nice and lean, therefore, they haven't over-ordered so they will have to order as the july strength keeps pace. so let's go through our shopping list. to me when i hear flooring and carpet, bingo, that's mohawk industries, leading maker of flooring, laminates and rugs. and nearly $73, the stock is only a couple of points from its high. but it's a terrific company. ho depot's evidence is more than just circumstantial. home depot's testimony alone

should be enough to place mohawk on somebody's buy list. because the stock deserves to go higher. i think we'll hear that next. spray paint going strong. i'm not going to reinvent the will. wheel. i've been recommending sherwin williams for ages. even though it's a point off its high, i'm reiterating this point right now. even though sherwin williams is selling most of its paint at its paint stores. we know paint is flying off the shelves, that's enough. how about locks? how about kitchen and bath, more areas home depot is calling out strong. we circle back to another friend -- fortune brand home and securities. makes fabulous kitchens and bath fixtures, including the moen, good stuff. maerlock, best lock in the business. aristocrat cabinets, put some in myself last week. not kidding. i know i want to go to masco again too. despite the cat call i received not that long ago. here's the thing, hey, it's only up 24% for the year. versus 44% for fortune security. and it's not like delta faucets

are going out of business anytime soon. i bought one of those too. i did not know how to put it in. masco has been hurt and that's one of the reasons it's been a tough stock. all right, what else? lumber is selling well. don't outthink this one, weyerhaeuser, a stock my charitable trust has been buying to take advantage of this trend. and it's no coincidence that lumber liquidators, a hardwood flooring and wood company you may seem to know, they're always on the back stop when you watch major league baseball, i'm pushing for you. the appliance callout. i know it's been a multiyear disappointment. first it was the u.s. business took it on the chin because of the housing crisis, but it was offset by latin america and europe. now the whole dynamic is reversed. latin america is slowing, europe falling off a cliff. but whirlpool is too darn cheap to avoid after this home depot callout. if europe remains miserable, brazil is maybe on the cusp 06 turning. i think we're okay.

i think whirlpool is going to be throwing off a lot of cash. it could also win a dumping case it filed. at 71 bucks a stock, it's off its high. whirlpool, buy it off this home depo call. tools. that means stanley black & decker. be careful here. the company has a huge european business which caused the stock to underperform many of the other names i mentioned. although stanley bucking decker actually rallied when it reported disappointing earnings because they told a very positive story about north america. once you're done walking the aisles of home depot, let's not forget to check out. ebay had a major run. home depo endorsed paypal as a preferred way lay at the rester. travel trust recently took some profits in ebay, it's been such a hot stock. but i don't want to sell too much for the trust. why? home depot is a trend setter. i have to believe others will adopt paypal, which is cheaper for a retailer than master card and visa. here's the bottom li thhome despot is a beast here. and jammedith products with aisles that are ordered and is

ordered and ordered again. now that ceo frank blake has ld us that housing is no long a drag on the u.s. economy,ut actually giving it a boost. given how long this sector spent in the wilderness, it's inconceivable to me the move could be over after one r anblake would not have stuck his neckut if he thought it was possible. let's go shopping for stocks in the aisles of the best-run store in the country. even after these moves it's alit a bin ielling well at me depot. josh in wisconsin. josh. >> caller: hey, jim. big trucr boo-yah to yeah ya. >> what's own your mind? >> caller: love your passion. love it. looking at the retail sales data that came out today, also home depot reporting good numbers or better than expected. could you say the top is in in treasuries? >> everybody who said that the last couple of years has been dead wrong. i will say this. i don't know why you should be in treasuries. going over my -- i have a self employment plan. and it's in treasuries.

and i know i'm getting crushed. i can't earn individual stocks, but i know it's the wrong place to be because the return is so miserable. i would be a seller. how about steven in my home state of new jersey. steven? >> caller: thanks for taking my call. good evening. big south jersey beach boo-yah to you. >> i was in mid jersey. back at you. >> caller: it's all good. last night i called your show in regards to cheap aluminum prices. i had a stock that turned into an investment that i called a double on, i sold, it pulled back on a secondary offering from apollo group. i reentered it, and last night what you said hispot on the head. metals united states holding company ers don't red flag me. but i reentered it and i liked it. cheap. >> apollo, 19 million shares. yeah, it is cheap. and if i'm right that we could

be in a turn, it's going to be one you want to play. i actually like letter x a little more. and i like nucor better than that. i like nucor because i like the yield. i love dividends. home sweet home at last? that's what home depot frank blake was certainly telling us. the housing market is coming back. take a look. go look at the score or read it and let the shopping begin. "mad money" will be right back. coming up, euro trip? with europe still top of mind, cramer is taking a trip across the pond to find out how low its currency can go when he heads off the charts. and later, luxury lift? strong retail sales data sent the sector higher. including shares of high-end retailers saks. but after suspending reporting of same-store sales, should shoppers worry? cramer's exclusive with the company's ceo. plus, know the drill? as election season heats up,ing

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has europe finally bottomed? as the currency, which stands as a proxy for the entire eurozone, at last giving us a reason to think a turn might be on the horizon? time to go off the charts to help us answer this crucial question. my colleague at the street.com went over all the charts the last couple of years. he has the best record. i'm not a chart guy, but there is a dashboard of charts i look at every day to keep track of where the market is headed. one is the fxe. okay? that's the etf that measures the strength of the euro versus the dollar. you can't do it in a vacuum. when collins looks at europe, he doesn't see a currency ready to go into that good night, at least not yet. it doesn't seem like the euro is about to shuffle off this mortal coil. instead, he thinks it could

potentially be ready to rebound. i don't know a soul thinking to this. both shorter term and longer term. hold it. isn't the euro supposed to be due. doomed? doesn't everybody know it's an endless house of pain? >> the house of pain. >> i mean, where did collins make up this stuff, right? i'll show you. it's pretty compelling. i went over this last night. again today. i couldn't believe this could be happening. check out the daily chart of the fxe, okay? this is the etf that measures the euro versus the dollar. it's important you recognize this is a ratio. ever since the beginning of march, this thing has plummeted. you're looking at the european crisis. that's the european crisis. every single bounce has been rejected. and when the euro finally dropped below 129.50 at the beginning of may, the darn thing fell right through the floor with a series of lower lows.

this has been breathtaking and has been exactly what we're most fearful of, okay? so here we are in the middle of august. once again, the euro is attempting to bounce. how can you tell if this move is legitimate or another failure? collins thinks we should look at something called the trix. this is the triple exponential moving average. it's a momentum indicator that technicians use. you can look it up, wikipedia, whatever you want to do to detect changes in the direction of a trend before they happen. the trix made a bullish crossover something that's only happened twice this year. this is dicey. the first one gave us a tradeable push higher in january, okay? you had this nice -- the second one, head fake. one for two here. bear with me. the current triangular price pattern is similar to the last two times when we saw this bullish crossover, but unfortunately, the last two times played off differently. in january, a six-week long rally. in june, the thing went up a couple of days and went right back down.

how does collins know which outcome is more likely this time around? well, what he likes to do is layer on indicators. he throws in another, the relevant strength indicator. we call that the rsi. that's a momentum gauge to decide things. the current rsi pattern looks a lot more like the -- it did during the fxe's tradeable bounce here, okay, than it did this time. so it looks much more like the tradeable bounce than the head fake. okay? that makes collins feel like the odds, at least for short-term bounce in the euro here seem pretty good. how does he think you should play this chart? the fxe breaks down below 122.40. talk about where it is, a few cents below now. collins says you should wait until it comes back up to 123.50 before you pull the trigger. however, if the floor of support holds and the fxe can go higher from here, then it could trigger a second and entirely more bullish pattern, a small inverse head and shoulders.

which is one of the most reliably positive patterns in the whole chart universe. in that case, collins sees the fxe rallying up to 1.25. it would make people feel a heck of a lot more confident about the euro. take a gander at the fxe's weekly chart. again, you can see how this thing has been a house of pain. i said tim, come on, this is a horrible chart. lately the euro has been in a bearish channel. the rounding pattern inside of it. none of that is that good. however, the pattern has been in a price target around 119. and the fxe has pretty much already seen those levels. so collins thinks we can toss those out and look at the wider channel. over the last few months, you can see what's known as a wedge pattern. that's a wedge pattern. and this matters because it now looks like the fxe may be breaking out of the wedge to the upside. again, these are all nascent moves, trying to catch the breakout ahead of time. if the breakout is for real, it's got a lot of room to run

before it hits the top of the channel at the 120 change mark. he's saying this is our next move. even more important, i want to look at the stochastics. terrific indicator that tells where the security has become overught or oversold. do people reach too much, have they been sellg it too low? right now the fxe and by extension the euro, extreme oversold territory. very oversold territory. happened five times since april 2010. every time we got a bounce. look at that. see? it's pretty clear. last time, no. produced gains of 16% to 30%. the last time it got oversold in may, you caught a brief bounce and right back down. that said, if you bought then and held on, your losses would be pretty small. you combine the oversold readings on the stochastics, worked 4 out of 5 times, with the breakout wedge formation, collins believes that's a situation where the risk-reward is very attractive.

possibly too good to ignore. now, the best looking picture by far in his opinion is the euro's monthly chart. so we're extending the time frames now. now we're going all the way back. this is now -- you're looking at a nine-year chart. collins thinks this is the one. the fxe has a clear pattern of lower highs. that's not good, but it seems to be trying to break its trend of lower lows. and there's a robust floor at 122, about half of where the fxe is trading now. if it break, it goes to 115, collins says. the fxe has dipped below 122 and the lower prices have been quickly rejected. he's actually not that worried about a breakdown. he's talking upside. it's all about the stochastics. that's the indicator that tells you how overbought or oversold a security might be. collins points out every time the stow cast particulars have been oversold in this chart and also given you bullish crossover

where the black line goes over the red line, it's been smart to buy the euro. as long as you sold when they pulled back under 80 after rally. and right now, it's looking like we were about to get another one of these buyable moments. a bullish crossover in extremely oversold territories. these moves have been quite with powerful in the past. collins thinks if we break out above 125, you get a major rally in the euro of all things. who is calling for that? over the next 12 to 15 months. how major? based on the chart, he's talking 140, 150. okay? 18% move. that would be gigantic. can you imagine what that would do for the stock market. can you imagine? if we had them put this on a radar screen. the fxe can't hold above 122, collins thinks it can drop to about 115 by the end of the year. these technicians always go the other way. one more sailient detail, though. using the same indicators not that long ago, collins called the top in the euro in the high 130ed. so i'm all ears.

he's saying just like he did then, no one thought the euro was going to top out. no one. bottom line, the fundamentals are in europe, we know there's markets doing a lot better than you expect. maybe it's time for the currency to join in on the positive action. i know the idea is herretical, but based on tom's readings of the charts, a rally seems possible. you know what, it might even be probable. let's go to anthony in my home state of new jersey. anthony? >> caller: thanks for taking my call. >> no problem. >> caller: so could investing in european corporate bonds be a better way to make money long term than investing in equities? >> i'm not going to say no. i know that the preferreds, my friend says to me, an accounting friend, sends me a chart for the preferreds for the banks and those have been good. here's my problem. the amount of work i would have to do on the corporate bond market to help you is just too unfathomable for me. and i don't really have the time. i'm going to be very honest. european corporate bonds, just a

small market for me. but yes theoretically, that's the place to be. and some of the banks have been terrific, except for rbs, i think. let's go to scott in massachusetts. scott? >> caller: boo-yah, jim. just looking at financials. between ubs and deutsche bank, which do you like? >> not even close. deutsche bank is ten times better than ubs. go back to the jim stuart article in the "new york times" a couple weeks ago about ubs. deutsche bank is terrific. it's well managed. i'm not in the habit of recommending a european bank because that's been pretty hazardous. but deutsche bank is very well run and it's way down on its luck. i'm still not going to recommend it, but i will tell you that it's better than ubs. euro, welcome, tonight's chartist is tim collins. remember, who called here and said there was going to be a breakdown is now saying the odds favor a break up. and not of the euro itself, but

the chart. after the break, i'll try to make you more money. >> coming up, luxury lift? strong retail sales data sent the sector higher, including shares of high-end retailer, saks. but after suspended reporting of same-store sales, should shoppers worry? don't miss cramer's exclusive with the company's ceo. this morning, a lot of ♪ ♪ moving along ♪ new beginnings and new ends ♪ spending our time with our family and our friends ♪ ♪ celebrate with the cool autumn air ♪ ♪ ♪ and we're livin' out our lives ♪ ♪ as we dance without a care ♪ oh we were made ♪ don't worry, i can make more. ♪ oh to be free mike's being healthy and chewing like a man. introducing one-a-day vitacraves for men! it's a gummy multivitamin...

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this morning, a lot of people were really worry about the luxury side of retail, thinking it might be falling off a cliff. something people concerned about since coach imploded at the end of july and don't forget chipotle and starbucks. but things were overblown with kors rocking out in earnings. but saks blew out earnings, 6.18%. on a better than expected quarter. granted, saks beat estimates that have come down, but like i tell you all the time, a beat is a beat. five-cent loss the street was looking for them to lose 9 cents, meanwhile, revenues came in a bit light. saks same-store sales for the quarter, management forecast, mid single digit sales growth for the rest of the year. were these sales flawless? no, i say that not just because i pumped up sales with the purchase of this tie and this shirt, as well as dozens of others at saks not that long ago. earnings were certainly enough to send the stock soaring higher. within striking distance of its 52-week high. this quarter also tells you an all domestic player like saks

may not have to worry about the same things as an international operator like coach. saks has given you a juicy 22.7% gain since we talked to the ceo last year. i think there's more room to run. don't take it from me. let's talk to the chairman and ceo of saks and find out more about the quarter and get a read on the luxury side of retail. welcome back to "mad money." >> good to be back, jim. >> first, you know every time we've talked, i'm saying when are we going to get the growth? you've gave us some numbers which i happen to love, your outlet that shows me you are finally in acceleration mode for a portion of saks. >> i think we're in acceleration mode for the entire company. we saw 4.7% growth overall. that was on top of 15% growth last year and we're feeling very good solid performance. i think there are a lot of head winds out there, but i feel good about the things we're doing. >> give us the health of the consumer. i felt new york wasn't as good as some of the other areas. i was wondering if that's tourism or because of the investment banking. or it's just the rest of the

country is stronger than new york. stronger than we realize. >> new york has been a big overperformer for many years. there's been a lot of tail winds from international, from financial markets. right now there are a little bit of head winds in new york. i think the international customer is performing about at average. we've seen a slowdown in the european tourist, but seen an increase in the chinese, brazilian and russian tourists. i think the local market in new york is a little tougher. the financial markets unsteady in that consumer, but overall, we're seeing positive performers out of new york, so it's not a negative, but it's not growing as fast as the rest of the chain. >> you have always been remodeling that fabulous store. you have a 40% increase in shoes. i don't think people realize what a driver shoes are for your business. will that matter? that change in floor space? >> i think we're adding 40% of the space in the eighth floor of new york. it's going to be wonderful and already probably the premier luxury shoe floor in the world. and we think it's going to be even better. more attention, more attraction.

it's already the second most productive floor in the store. >> one of the things we like amazon about, they have a fulfillment business second to none, they have warehouses, get the stuff to you. you always said listen, watch us on line. you're opening a tennessee fulfillment house. what does that mean trying to get your costs down and making your website more powerful? >> we have seen such great growth out of our internet business. we're not reporting the comps anymore, but very substantial growth. we're bursting at the seam in our facility that tried to service both our full line and our stores. we just opened a new facility in tennessee, totally robotic driven that we think is going to increase the service component, get us better delivery across the country, both to the east coast and the west coast, and we feel really good about being able to give that superior service to the customer. >> you mentioned not giving numbers going forward. frankly, i don't understand. finally, i'm getting the numbers i really want to crow about. and suddenly you tell us you're not going to do it anymore. i know walmart doesn't do it anymore. a lot of other guys .do. it's going your way, why not

give them? >> we're not giving monthly comps. we'll give it on a quarterly business. the reason is that i think when when you give monthly comps, it's half the picture. you can give away product and get sales but you don't know the margin. i think it's not accurate to look at the monthly comps and not understand what the margin component is. we think it's better to do it on a quarterly basis and thought it was a much more accurate portrait of the business. >> fair enough. women's apparel. you talk about how, again, that there's a designer apparel and is not that great. i'm starting to think from the people i know in that industry, are we in a decline for women's apparel. every time it's always called out by everybody, saying it's not doing well. >> i think there are haves and have nots in women's apparel. there are trends that are fashion forward, colorful, performing quite well. there are other parts of the business, a little more suited, a little more classic that aren't doing well. so it's really very much brand

and fashion-specific. >> i used your jewelry store. it's the best in the city. you can tell me whether the problems at tiffany's seem to be related to tiffany by just telling me, the jewelry year over year is good for you. >> jewelry year over year is good for us. >> it is good. >> yeah. especially some of the high-end jewelry. we're seeing it in fashion jewelry, but also in our large transactions have picked up over the last quarter. >> that's very telling. now how about the fact that you are still closing some stores. are we almost at the end of that? i asked you to close them all once. you said that's not the way it works. i always feel as long as you're closing stores, we don't have the growth angle i really love here. >> we're closing some very unproductive stores. we closed eight over the last couple of years. i think there's a few more you'll see coming. we'll announce them when uh you can. but when it's when a lease comes

through or work with a developer. you're not going to see them all come at once. i think there are some very unproductive stores that you don't see margin on, that you see distraction. that you will see closing. we're also seeing a lot of openings. we've already announced six new stores for next year. we're accelerating the growth. and you're seeing full line stores. we've announced puerto rico is opening. we're opening a bigger store in sarasota and you may see a couple other of those coming down the stream. i think that you're going to see net increase in terms of the square footage. >> one last question, this luxury consumer. when i was down at your store in miami, i've got to tell you, that's got to be the richest group of people eve ever seen in the world. are they spending like there's no tomorrow? >> i think one of the strongest markets we're seeing in the country is in southern florida, both in our day land and bell harbor stores. enormous amount of influx there over the southern, south american, brazilian, as well as the chinese are starting to come in and the europeans.

>> just a great quarter. congratulations to you. >> thank you very much. >> that's the chairman and ceo of saks. stock is not done because the growth is here. stay with cramer. >> coming up, ride the lightning. take a nonstop thrill ride as cramer goes stock after stock. all your calls taken rapid fe on "the lightning round." and later, know the drill? as election season heats up, america's domestic energy development is sure to be a hot topic. could energy 21's offshore assets te center stage as a show-stopping investment. cramer talks to the ceo to find out just ahead, all coming up on "mad money." you want to save money on car insurance? no problem. you want to save money on rv insurance? no problem. you want to save money on motorcycle insurance? no problem. you want to find a place to park all these things? fuggedaboud it. this is new york. hey little guy, wake up!

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>> it is time. it is time for "the lightning round." rapid-fire calls, one after another. buy, buy, buy, sell, sell, sell. when you hear this sound, the lightning round is over. are you ready skee-daddy? start with the "lightning round". i'm going to start with edward in new york. edward? >> caller: hey, cramer. >> listen, michael kors, kors. >> stock is going higher. those numbers were unbelievable. that stock is not done. as a matter of fact, that stock could actually blow through new highs. let's go to loretta in ohio. in idaho. loretta. >> hi, jim. boo-yah. how are you? >> great, how are you? >> caller: good. the stock i have a question about if you think is a buy is amerigas partners.

agu. >> i am not a big fan of the pipelines that they have. that said, they are in the sweet spot for this natural gas liquids. so i'm not going to say it's not okay. but i curse myself, because this etp has been such a disaster for me. and it looks like amerigas is better than etp. let's go to tony. in new york, please. tony. >> caller: big boo-yah, jim, from brooklyn. >> i'll be in brooklyn later. i'll probably see you. what's up? >> caller: a couple of months ago, you recommended pwi. since then it's gone down. i want to know your outlook going forward. >> i had the guy on. it was kind of a weird interview. it's an inexpensive stock. that's all i can say. you do need a little infrastructure built in. i wouldn't call it, you know, a real big push in his favor. at least i don't remember it that way. let's go to kevin in new york. kevin? >> caller: it's kevin. big boo-yah from long island. i was wondering about morgan

stanley, ms. >> keep wondering. no, we're not going to go there. morgan stanley is just okay. i have no catalyst to buy it, so i'm not going to. i'm not going to slight it and i'm not going to praise it. >> richard in florida. [ buzzer ] >> big boo-yah from florida. >> nice. >> caller: okay. last week, you discussed buying stock of quality companies on a pullback and you mentioned general parameters, which you talked about in the past. church & dwight. a pullback greater than the parameters you discussed? your thoughts on that. >> i was surprised that the quarter wasn't as good as it was. it really looked to me -- and i've been critical about proctor & gamble. it looks like procter really got to church & dwight. i think it's a positive name. i think it's a buy, but i did not -- that quarter was mystifying to me. and i would like to see another quarter before i say hey, man,

this is terrific. and that, ladies and gentlemen, is the conclusion of "the lightning round." [ buzzer ] >> the lightning round is sponsored by tdameritrade. [ male announcer ] this is rudy. his morning starts with arthritis pain. and two pills. afternoon's overhaul starts with more pain. more pills. triple checking hydraulics. the evening brings more pain. so, back to more pills. almost done, when... hang on. stan's doctor recommended aleve. it can keep pain away all day with fewer pills than tylenol. this is rudy. who switched to aleve. and two pills for a day free of pain. ♪ and get the all day pain relief of aleve in liquid gels.

with the price of oil on the rebound, i think this would be a good time to have an energy name in your portfolio. i want to introduce you to energy 21, exxi for your he players. a terrific pure play off shore oil and gas producer it gets 71% of its production from crude and owns 7 of the 11 largest oil fields in the gulf of mexico. energy 21 is a fantastic operator.

typically as oil fields age they produce less and less crude. and in the gulf of mexico, the average rate of decline is 35% annually. not for this company. energy 21 has averaged about a 14% decline for base oil production and the company still has the same amount of reserves that it did five years ago. they use the best technology out there to get more oil out of the ground. and back in december 2010, they bought a new assets from exxon, untouched fields with a lot of potential. energy 21 has a tremendous track record of making acquisitions where the oil reservoirs are bigger than originally mapped and the flow rates are better than expected. either these guys are very smart or very lucky. i'm happy either way, because it's better than lucky than good. energy 21 reported last wednesday and the company knocked it out of the park. 3-cent earnings beat off revenues rose 21% year over year. that's a growth stock record

production volumes. even better, their all source reserve replacement rate came in at 119%. the company forecast 35% production growth for 2013, but it's not levered like the other guys that have that kind of growth. these are huge numbers. the stock trades just six times next earnings, 33% discount to its peers. i think that's crazy. but maybe i'm crazy to think that's crazy. let's check in with the chairman, founder and ceo of energy 21. to learn more about his company and where it is headed. mr. shiller, welcome back to "mad money." >> glad to be back here, jim. >> we spent a lot of times talking about companies that don't get the respect of the marketplace. you delivered solid growth numbers.

you're showing there's far more oil in these fields than people thought. you're hedged at a great price. your finding costs are incredibly low. what does this market want? because the stock hasn't done anything since you were here last. >> yeah. that's a great question, jim. i think the market, you know, they've fallen in love with the shell plays and the manufacturing process. we just do what we do. we take out oil fields, the engineers roll up their sleeves. we get more oil out of the ground, we drill great wells and now we have on this whole next 5% where there's just -- you know, we got over 2 billion barrels under our five largest fields and you start to get an incremental 5%, 10%. those become real numbers real quick. >> you have reduced your leverage. a lot of the companies have increased their leverage. or actually have a joint budget that unless they're selling stock, they are not going to be able to pull it off. you are going to be two years from now, having a huge amount of capital, unless you find a lot of different things to buy. what are you going to do with that capital? >> well, yeah, it's nice to have a bunch of free cash flow and get the balance sheet in shape. we continue to look at m&a activity. there's a decent amount of assets coming out there. but we're committed. we focus on buying more of the large oil fields. the top 25 fields in the gulf of mexico in terms of production. that's kind of what we target. there's a lot of assets out

there. we're going to look at ones that we fit really well with. >> people have been feasting off this bp for a couple of years. tesoro had its biggest quarter of the decade. they got $7.9 billion selling gulf of mexico oil fields. you're going to be kicking the tires with everybody else, right? >> yeah, we're going to be in there kicking tires. those are really large projects that most of it is going to be remained operated by some of the majors that already operate them. and it's going to be some good opportunities, but we kind of focus on where we get to be the operator, where we come up with an idea and literally, one of my young engineers comes up with an idea within two weeks of their executing that plan. >> okay. now -- >> that's hard to do if you don't operate. >> well, no, now -- i know you're just now switching to horizontal drilling for some of these older fiding. i thought when you announced it, people would again rerate you. the price to earnings multiple is, i don't know, if i were you, i would say why am i even

working? i can't get the stock up even if i delivered far better growth than anybody else. >> i've had a few days like that, but you do what you do well, you keep doing it and the market will eventually reward you. the horizontal wells are going to be a big step. the gulf of mexico guys pioneered the horizontal drilling with new tools. and we kind of went away from it, because oil price collapsed. the fields you could do it in were owned by the majors. now as you pointed out in your opening, we have a bunch of those large fields. i think you're going to be some incredibly successful horizontal wells. we just put our first well into the zone. we're running pipe. we'll drill about 1,000 foot lateral. this is not like shell drilling. they're short laterals, really high flow rates and we're going to concentrate on moving volume, moving water through there and increasing our recoveries. and i think as those kick in, you're going to see the multiple increase you're talking about. >> now, let's just speak more globally for a second. i see the amount of oil that

you're pulling out of the ground. what it tells me is, people made estimates about what was in the gulf of mexico a long time ago. what you're showing is that's not the case. are you just another part of this puzzle that shows why we could have north american energy self-sufficiency and it's not pie in the sky and it's not a political promise? >> i would agree with that. it's not pie in the sky. it involves some hard work and involves some things that have always gone on in our industry. you have the majors, independents like ourselves and then you have the smaller mom and pop shops. and properties go through those three cycles, because each of us have different levels of overhead and different levels of where we can capture capital. and so, you know, exxon couldn't put capital to these projects. they had too many other projects around the world that they made a better return on. for us, they're great projects and we put the money to them. it seems working and we make these old fields get bigger. that's the one adage, the big oil fields, they get bigger.

they never get smaller. >> well, john, look. i think you're right. just keep doing what you're doing. it's the most undervalued oil company in the country. thanks so much for being on the show. >> all right, thanks, jim. >> you just heard from energy 21. exxi. look, it doesn't make a lot of sense to me how it's valued. just watch it, okay? i think you'll come around to thinking like i do. why have him on the show? it's just too inexpensive. can't not like at this one. "mad money" is back after the break. i've been taking the product for about a year. and, after taking 5-hour energy, i feel more energized. i have more energy. you know, i'm not tired anymore after taking it. i was skeptical but i decided one day i'd try it. 5-hour energy works fast. i have the energy to get through a meeting, to get through a workout. it keeps me alert for a long period of time, and keeps me going. on or off the course, play with energy, 5-hour energy.

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if you want to define the defining contrast of today's internet marketplace, google brought froemmer's for 22 million, versus groupon showing a dramatic slowing. in their daily deals business. you know the ones where they send you to the mani/pedis? the results were so bad, they caused the stock to lose 26% of its value today. google after taking the online world by storm for a time seemed to have lost its way. even going so far as to thinking about buying, put a bid in for groupon. $6 billion smackers a few years ago. in light of groupon's horrendously horrible performance, that would have been a truly epic mistake. not unlike the dot-coms of old. using the ridiculously overvalued stocks to buy the other ridiculously overvalued dot-coms. groupon didn't sell and the rest is history. $3.7 billion price target that groupon supports now. instead, google has come up with

a new strategy, buying offline companies and making them into online powerhouses. it's brilliant. first they picked up the zagots, couldn't do that well. $150 million for google. now with the $23 million purchase of froemmer's, google has added a respected and authoritative creator of travel content to the mix. put them together and voila, google has the makings of a travel site that can give yelp a real run for the money. amazingly, google once tried to buy yelp for a reasonable price. $500 million. as yelp is currently worth $1.4 billion. i think the combination of froemmer's and social media reviews to go with the powerhouses has the potential to give yelp -- well, it could outvote yelp, and i like yelp. meanwhile, there's the other voice of the web. there's groupon. [ buzzer ] >> the house of pain. it's shown deceleration in its core business. the irritating e-mail coupons

you get for nail salons and places you can't get to during the day to brazilian waxes that you have no desire to get at all. after some initial excitement that drove customers to stores via good copyrighting, i think the thrill is gone here. this business model seems broken. so broken, it's selling actual physical inventory. that's terrible. the whole darn point of the internet is you get to avoid all the risk associated with inventory. amazon carries no inventory, so they have no risk. groupon is in such lousy shape, this is something they're bragging about? groupon also fretted about a slow down in europe on the conference call. that's kind of ironic. google is a huge european business, 50% europe. i didn't hear about anything bad about europe on their call. two companies going in very different directions. google taking advantage in its own brilliance and rolling out beloved offline products, while groupon goes into traditional retails. it's core business flat lines. i want to own google here, even up here, just a couple of points

off its high. but groupon? i'm going to be a real gentleman and just tell you right here, right now. that it's still too early to buy groupon. stick with cramer. lysol knows a real clean isn't just something you see. it's something you smell. lysol no mess automatic toilet bowl cleaner not only cleans your toilet with every flush, but also freshens your entire bathroom. so even in between deep cleans, it's as fresh as any room in your home. available in spring waterfall™, citrus, and lavender fields™ scents. for tips on a healthy home, visit lysol.com/missionforhealth. what a bargain! [ female announcer ] sometimes a good deal turns out to be not such a good deal. but bounty gives you value you can see. in this lab demo, one sheet of bounty leaves this surface cleaner

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just want to go over some of the stocks i keep being asked about at jim cramer on twitter. no, i don't think you should be buying nokia. no, i don't think that groupon is right. yes, i think that sprint on a pullback is terrific. no, i don't think you should be selling apple. i don't know why i keep hearing that one. and yes, i believe the that google has more to run. these are just stock answers for me. but i know you keep asking them. maybe you just stay tuned to the show and write them down. after the close, we had the holdings of warren buffett and others. stock trading on these people. stop trading. stop saying i'm going to buy this because he did this. it doesn't work. it's a loser strategy.