what makes it rally when it should stay down, play dead. i think the secret of this market is the immense negativity surrounding its of every move up. despite shattering record after record after record, everyone is afraid to give this market its due. the strength of the stock market, quite simply, is incredible. consider just this one stat as evidence of what i'm telling you. the dow has yet to have a three-day losing streak during the 82 trading sessions we have had so far in 2013. unfathomable. do you know this is the first time in history, not five years, not ten years, not six months. in history that the index has gone this far into the year without posting three consecutive losses. think of the degree of difficulty that smasher implies. it means we have had many days where like today the market looked weak but buyers came in from somewhere, anywhere, to buy, buy, buy stock.

still, no one comes forward to say this market is the real deal. it's as if we learned our lesson after the great bust of 2000 and 2007. don't you ever say anything good about a market, ever, because you will just be labeled a cheerleader and ridiculed on national tv, perhaps on another network, if you applaud this market. and then it goes down. it's just not worth sticking your neck out. that's why the tenor of the last 24 hours is to emphasize, not debunk, but emphasize, tha today the calendar turns, and tomorrow is the dreaded scary may 1st. the day we are supposed to -- sell, sell, sell. it's like a bizarre celebration of two horrendous days for capitalists everywhere, may day, where workers try for capital, and mayday, mayday, where we expect the whole edifice to stick. this is the fourth straight up

month to start the year, a trick the good folks at btig tell us has happened just a scant 18% of the time. it doesn't matter that when you have that set-up, the markets rallied into the end of the year, 14 out of 15 times and get incredible btig stat or that the average gain is an extraordinary 9% from here. nor does it even seem to matter that may is just a coin flip month. since 1950, there have been 35 instances where april was up 1%, and in 17 of those years, the dow posted a gain of 1% in may. how about this one. over the past 20 years, may has been positive 50% of the time. and we're supposed to sweat the program. put all these stats together and you can safely say the best thing you can do if the market goes down in the month of may is to buy, buy, buy, not sell, sell, sell. but that would be violative of the protocol of benign restraint we must all practice, lest we be taunted you own or buy stocks and the next day the market goes down. it's not just the entire stock market slammed with faint praise, at best, as if this potential hall-of-famer market

should be benched for poor performance. the most glaring source of negativity is none other than the one-time perma uber bullish analysts who are now fighting last war. yeah, the one that took the dow from 14,000 down to 6500 back in 2008, 2009. a real trouncing by the bears. incredibly inked on these analysts' psyches. these big thirst have been at the forefront of giving the market a bad name and you don't have to look further than any -- all we have to do is look at a one-time market darling. yes, apple, to see what i mean. here's a stock that after a horrendous $250 billion fall from grace still didn't get the true wrath of the analyst community until it dropped to $389 from $705 back in september of last year. consider that after apple's latest quarterly report last week, we got the following from these highly paid wall street prognosticators. bmo capital out and out capitulated, saying despite the now 3% yield which is where you

know i begin to like any stock, the company reported such disappointing gross margins, yeah, it was time to step away. >> that was easy. >> step away from the stock, even after its huge swoon. or how about goldman sachs, which when apple was flying high around its all-time high of $700 and change, goldman took its price target from 790 to 810. what did apple do? they cut their price target from 575 to 500. very useful. i don't mean to just pick on goldman. when apple was flying high, deutsche bank raised from 775 to 850. when it was laid low, deutsche slashed to 480. same story with ubs. in the month that apple went to its all-time high of 705, ubs raced from 740 to 780. and near the bottom, price target got slashed. 500. and what's happened since then.

how about a 40-point rebound out of nowhere the stock closing at $442 and change. i wonder, and you're thinking it too if the same analysts will start raising their price targets tomorrow. i have to tell you, this -- while this apple price target cut pattern is more egregious than most, we have seen analysts jump ship over and over and over at the least provocation, considering that when best buy, the big retailer, was traveling on the way down from 30 two years ago to $11 in december of last year, it received an increasing amount as it approached the low. a crescendo of downgrades when it reached a level that turned out to be a tremendous buying opportunity. same with netflix, in the 70s down from 297, only to see the stock triple soon after and downgrade, downgrade, downgrade. chipotle from 402 to 294, a fabulous time to buy. the stock since vaulted 363. oh, by the way, every one of the stocks i mentioned i think they could go higher. of course i put my neck in a

noose. i can't blame analysts who cut targets and downgraded stocks, because it did seem as if the companies were on the ropes or had their prospects permanently dimmed. i mean, when you think about it, apple, for example, had just disappointed for four straight quarters so why stick by, just for the 3% yield, even though the yield has held? i'm talking about an entire mind-set dictated by analysts and prognosticators who freely believe that if you're positive or if you stay positive, in adverse situations, you're a lightweight. and you're going to run the risk of looking too foolish, too happy. too optimistic. in a world where increasingly optimism seems sorely misplaced and only pessimism is taken seriously. there is no recognition we have taken out the highs, and instead we hear there is no real revenue growth out there. how about the prices? even though the earnings have so bountiful they allow for dividend boosts, we hear any possibility of a bottom in europe must be dismissed out of

hand, even though companies are saying the opposite, even on this show. i'll point that out later. we understand the sequester has to lead to lower stock prices because we hate washington, even though it's clearly not been the case. we fully expect the federal reserve to pull away from its bond-buying program soon and will parse every word from its open market committee statement tomorrow, looking for clues about how all of this must end. and, of course, we dismissed any of the possibilities that mayday may not be a combination of a communist holiday and call to abandon ship. yes, they have doubted all the way up. if you so much as say a good thing about this market and the next couple days it goes down, you will be lambasted in a thousand different venues, especially @jimcramer on twitter. here's the bottom line. in a world where you can get skewered for being positive, is there any reason why so many have missed these gains?

only the positive people are pulleried, so even though every bit of empirical evidence says don't bother to take the sell action, maybe we should, indeed, just mouth sell a day, and, well, you get the picture. james in pennsylvania. james. >> caller: hello, cramer. how are you? >> i'm real good, partner. how are you? >> caller: i'm fine. i'm calling to ask about las vegas sands. i understand that their auditor has resigned, and i'm wondering what is your outlook for las vegas sands. of sell, buy, old. >> i take my cue from china and a number of our ceos we have spoken to both on the record and behind the scenes has said that china has already bottomed, and you should stop paying attention to the minutia. that means you want to own lvs. i have to tell you, i like wynn more. to legit to quit. as stock seer mc hammer said, you know what, stick with the market.

stick with cramer. coming up, bank on buffett? warren buffett's berkshire hathaway has been minting money for investors up over 30%. but can it go higher? cramer is putting investments to the test when he goes "off the charts". and later, upper crust? domino's pizza delivered a piping hot quarter today, and investors sent its shares higher. but is all this good news baked in, or is there still time for you to take a bite? don't miss cramer's exclusive with the ceo just ahead. all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail at cnbc.com or give us a call at 1-800-743-cnbc.

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when it comes to sexy, sure, there's the kate uptons or the bradley coopers of the world. and they're all right. but on wall street, they're sexy and there's sexy! ♪

yeah, right here, nothing as sexy as warren buffett! smoke sh! everybody thinks the guy is brilliant, including myself. that's why 35,000 people will make the pilgrimage to omaha this weekend to see the man in action at the berkshire hathaway annual meeting, the woodstock of capitalism. buffett is the ultimate fundamentalist. no one knows or does security analysis better than he does, which is why we thought it might be fun to do a switcheroo ahead of the big shindig and take a look at the side of berkshire hathaway, which has been red-hot. since the end of the year he was shown some insurance businesses, housing, natural gas pipelines, railroad, has rallied 19%. and the stock is at a new all-time high. yep, berkshire has been on a roll. and that's why tonight we're going off the charts with the help of tim collins, my

colleague at realmoney.com. we're going to figure out where warren buffett's baby is headed next. is it due for a pullback or will it rally. my colleague on realmoney.com, doug kass is going to be there playing the house bear this weekend, invited by warren himself and becky quick, to be the devil or play devil's advocate to the minions who justifiably adore. we want to hear what doug has to say, but we're huge bulls in the stock. and on warren. yet we also want to know if this is a good entry point ahead of the meeting, or perhaps we should wait for a pullback after it. often berkshire is thought of as a mutual fund and nice stock package. but collins thinks the truth is very different. i've got to agree. in the past when berkshire only offered one class of stock, the thinly traded a share that sells for $159,000 a piece, you couldn't get much out of the chart. i remember it was $200 when i started at goldman sachs, but thanks to the introduction of berkshire class b shares that sell for $106 a piece now and trade like a normal stock,

collins says the chart can tell you something meaningful. and when collins looks at the chart, he thinks there is a chance you can get hit with a small pullback at berkshire hathaway, maybe after the meeting, i don't know. but on the other hand, also sees the potential for one more big push higher. first let's take a look at the daily chart. you can see the stock is trading sideways for the last month, more or less after spending the previous four months marching nicely higher. when you get this kind of consolidation after a sharp move upwards, it's known as a flag pattern. there's the flag. it's also called a pennant, okay? and it's like the flag hanging off the end of a flagpole. that's what you're supposed to be thinking. and collins says that's very good news for the bulls. see, the way this pattern works right here, berkshire can break out above the top of the flag at 108. see where you are? then collins seems to very quickly jump to the 122 -- well, 113 to 122 range. and i've studied a lot of pennants and flags and he's

absolutely right. when we see that pattern, it happens most of the time. this last month where berkshire has done nothing, it could be the pause that refreshes. the stock has taken a breather and could start running immediately. what else looks bullish here? the most eye-catching thing for collins is the accumulation distribution line being sell. top of the chart. this is a volume-based indicator that measures whether the money is flowing into the stock -- people taking the stock, or out of the stock, people offering. over the last month while berkshire has traded sideways, there has been a very constant, even rising level of accumulation that collins says even though there has been some profit-taking in the stock, buyers continue to step in at every level, and that's -- you measure that as when it's above that. so you can see the chart. looking pretty darn good. that's accumulation distribution. now check out this next version of berkshire's daily chart. because there is another pattern going on here that collins thinks is very important. you know this one, don't you. this is the top of the bullish flag formation we saw before, but i'm sure hathaway has a developing cup and handle pattern.

again, reviewing this segment for the last five years, ts one always works, always. a company handle is a u-shaped pattern, that's the bottom, looks like a cup. followed by a period where the stock traded sideways, we have that right now. and that makes the handle and one of the most reliable bullish patterns, because after the handle is finished, the stock goes higher. in berkshire's case, the stock could go to 113. again, very similar to the target we got from the flag pattern, they often dovetail. for collins, that's two big reasons to buy berkshire hathaway. collins only has one concern and we have to look at this about this chart and it's more of a yellow flag situation than a red flag. all right? and that's this relative strength. we call it the r -- relative strength index. it's important momentum indicator tells you where the -- the momentum of the stock is going, and you can see there has been a bearish divergence here where the rsi has been declining while the stock has been going higher. that's a divergence. if there weren't so many

positives on this chart, collins may take this as a sign it would take a sign for the worse, maybe roll over. but he thinks it's a reflection of the recent consolidation. remember, not really doing anything, this is declining momentum right now. pause and then refreshing. when we look at the weekly chart, collins has to get more cautious. on the weekly, berkshire almost looks parabolic. all right? just like on the daily chart, 108 levels, key level. and if berkshire breaks out, collins sees it moving up another five points. after that, move. this weekly chart says it needs more time to consolidate. i don't fear that. take a look at the bottom of the chart, all the way here. this is the money flow, mfi. that's an oscillator, in other words, measures the buying and selling pressure. and also the accumulation distribution line, measures the money coming in and out of the stock. if you consider the last two big rallies in berkshire hathaway, the past four months, and before then, the period from last june through last october, what you

saw was a rising money flow index. so you had things really going well. then coupled with a rising accumulated distribution line. but then when the money flow fell -- index fell below over -- in other words, was not people reaching, we got a decline in the a.d. line, meaning more sellers and berkshire hathaway pulled back 10%, so we have the consolidation and that's why it went down. the money flow just recently declined in the same way it did in october. that could be a sign that a pullback is -- collins thinks berkshire will have 113 followed by consolidation to 103. level roughly in line with the floor on the daily support pattern. only after that garden variety pullback does think berkshire can charge a higher level. so he is thinking like this, and down like this and down like that, okay? here's the bottom line. even after the recent run, berkshire hathaway's chart still looks pretty good, not perfect, pretty good, at least

interpreted by tim collins. he thinks the stock is a buy on a breakout of 108 or pull back down to 103. only if it falls below, would he get worried. i love tim, but i think you just own it. because it's levered to all of the great american trends right now that we have. it's levered to housing. then, you know, the things blooming right there. if the pullback collins mentions comes true, i suggest you snap this up. and if you do already go ahead and bask in the glory of this weekend's meeting, congratulate the man, you deserve it. brkb, it's for me. after the break, i'll show you how to make more money. coming up, upper crust? investors sent its shares higher. is all this good news baked in or is there still time for you to take a bite? don't miss cramer's exclusive with the ceo, just ahead. we know a place where tossing and turning have given way to sleeping. where sleepless nights yield to restful sleep,

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look at domino's run, a stock on a tear for the last three years, and still shows no sign of stopping any time soon. in fact, domino's pizza may be the best international growth story. you might think a company like domino's with over 10,200 stores would saturate the earth, right? they would run out of room to grow. you would be very wrong. in their ten largest international markets where they already have 3,941 locations,

management says they can open 2,700 before they hit a wall. another 2,700. i think they're being conservative. and those are the countries where domino's is most concentrated. this is a concept popular all over the world. domino's has mastered mobile with a fabulous online ordering app for the iphone and android. i use it all of the time. set it to the baseball function that tells you when your pizza is out of there, or at least out of the oven. no-cheese function for the vegan in me or my two daughters. just witness this latest quarter where domino's reported earlier today, they posted a 4-cent earnings beat off a 55-cent basis continuing to amaze, stronger than expected revenues, rose 8.6% year over year. best of all were the same-store sales, i was shocked, up 6.2% in the u.s., phenomenal numbers for a big established player that last year was no slouch year. as a result, the stock jumped another $2.25, 4.25%. domino's has now given us a 480% return with reinvested dividends

since i first served it up this n january 2010. can they continue the momentum? let's check in with patrick doyle, ceo of domino's pizza and hear more about the quarter and where his company is headed. mr. doyle, welcome back to "mad money." >> thank you. good to see you. >> you know, it's funny. the show is not about making friends. it's about making money. but when i see you, and i know the performance, it's phenomenal. >> thank you. >> and i want -- a lot of our viewers watch it. there is something else you never talk about i want to mention. it is a common story among domino's pizza workers, 90% of its franchises are owned by former delivery people or entry-level workers? >> yeah, that's right. we've got 1,000 franchisees in the u.s., over 900 started in the stores as drivers or answering the phones or assistant managers. they have worked their way up through, made a little money, buy their first store, they build their way up.

but it's the energy of our system. that's why we've got the best operators. >> so they're totally vested. >> absolutely vested. it's what they have done. it's what they love and they started from the ground floor, and now they're owners. it's fabulous. >> in the quarter you talked about how some of the ten-story people can get financing. but the one guy can't. what can you do? if there is a guy who is a delivery person the last ten years and wants to do it, what can you do to help that person? you said financing for that person is tight. >> yeah. we've got some sponsorship programs for that, ways we'll try to get them in. run classes to try to get them in. but if you hear me talk about that on the call, it's something i'm frustrated with. because it's the energy of our system, these guys coming up through, and you know, we want the big guys to grow also, but the little guys coming in, the guys come up through the system, it's part of what's made domino's what it is. so i want them to have access. >> the federal market committee, i thought this was the most salient statistic, mr. ben bernanke, the guys who you know who are bankable can't get the loan. it's a shame. what's wrong with the country now. now let's talk about what's

right internationally. you are talking about markets -- the international opportunity chart that you gave us, turkey, you could double. japan you could triple. france, you could quadruple. >> yeah, yeah. all three of those. >> where, i mean -- >> so we've got about 225 stores in france today. and there's absolutely -- huge -- >> jerry lewis? i mean, come on -- they've got a good cuisine country. >> absolutely. >> but they want it. >> yeah, they do. >> they want the convenience. >> largest pizza chain in france and they love -- our volumes are terrific there, return on investment for stores is great. so a lot of up side for us there. still doing great there. >> i thought that was staggering. another thing i thought was pretty amazing that when we listened to howard schultz whom we like very much, starbucks has grown 35%, seems like a big number. you're growing at 43%. >> yeah. >> but you're not considered to be in that cohort of the

so-called great american growth stocks. >> we've got to get the story out, right? >> i think that's one of the reasons why it can go up so much. >> we actually had more growth over the last five years in just store growth, i think, than any of the big international concepts. >> okay. how about when you -- you talk about -- let's just take a country you mention -- you called out. turkey. >> right. >> now, turkey i also know from cheryl -- who i did not know you know. >> asce. the turkey seems to be this great developing country that seems to love american food. so are you looking -- these are all franchise models. are there people calling you and saying, listen, i want to put the 20th up in -- istanbul? >> so in the case of international, the way we approach it, there will be a master franchisee. so there will be one entity or one person that will buy the rights to the market. but then they sub franchise. so in turkey where we're closing in on 250 stores here, i think pretty soon, we've got a master franchisee. but then we've got dozens of people who have bought a store

or two, and often are people that, again, have come up through the stores. >> okay. >> so they're bringing that same energy there. so there's somebody there acting as stewards of the brand and building the brand. they'll own a bunch of stores, but then they sub franchise a lot of it. >> all right. okay, now i understand. it's not just an individual. not just one guy, one guy, one guy. go back to america. you talk about digital marketing really paying off. i always like to drill down further. is that because -- you have a free app. you said the itunes app is really -- google play, and obviously very popular. where is your digital media dollar most effective? >> you mean within digital right now? >> yeah. >> i think, first of all, the real answer is we've got such great analytics on that that we'll move dollars around until our costs per order is the same on any of these. so if our costs per order is lower on paid search, we'll buy more paid search until it comes up to the same level as banner ads, for instance. >> would you ever think about

not being in a particular medium, because digital is so much better or is it all just 360, everywhere? >> we do a media mixed model probably every other year, something like that. we'll go through and move big blocks of dollars from television to digital or off of radio to outdoor. whatever it may be. but that will be driven by the return on investment on those marketing dollars. and then we'll do that, you know, every year, every other year, and then within years, we'll look at how is it working, what's the return we're getting on each of these, and something like digital, great visibility. so you know exactly -- >> great metrics. now, are you able to find out whether there are more pizzas sold when you're in the ads than when not? i'm serious. because your ads stick out. usually there is a little bit of a spoof. the other guy has got the frozen dough or the cardboard tastes better than pizza. there is some resonance here. not a lot of ceos are in their ads. >> i've probably been in about a third of the ads.

some have been good performers, but we have had some fabulous performers that i haven't been in. so it's got to be broader than that. i actually think there is an issue if i'm too many of the ads, it gets too associated with one person. >> i understand. i wouldn't have thought of that. another thing you talk about, the big gap. the big gap in technology. not necessarily the other -- the big major chains. but against the mom and pops, which i'm surprised. 47% of the industry is still mom and pop. >> more than that, actually. yeah. over half of the industry is mom and pops in regional chains. and so if you look at the big three, really, if you look at us, at pizza hut, papa john's, caesars is big, but -- because they're only carry-out, not playing in the same place. those three are doing 85% of the digital orders today. in the u.s. so the three are absolutely dominating there. and so while we think we're better than our --

>> you make sure and take claims in the conference call. >> i think the big play from a digital standpoint has been the three national players, and the gap that we have created between us and the regional chains and smaller players. they can't do digital as well as we do. >> yeah, they don't have the capital or technology. now, one of the things that i'm trying to get my handle on, everyone is always focused on commodity costs which is pass-through, should be. but if commodity costs would come down as general mills says they will, as conagra says they will, would your price ever come down? >> yeah, if they came down enough -- >> you would lower the price. >> yeah, if they came down enough, they would. in the near-term, you're not going to adjust the price around, either up or down. i think really around the commodities, six months out, a year out, then you're going to. if they move materially. so, you know, at the end of the day, if commodities come down, probably the price would move a little bit. they go up over time, you adjust it. >> because sauce is a big component, not the biggest. but tomato crop, if it's booming, maybe -- the sauce could come down. you did not list gasoline as one

of the costs. >> gasoline indirectly, i think, is the most important. >> right. so therefore -- >> over time -- gasoline is down dramatically. will you see some sort of bigger gain than talking about the new year's day, which we spent a lot of time talking about, but i don't think it's substantive. >> it spiked up first. we had to get gas up to get it back down again. and so, you know, it's back into a very reasonable range for us. longer-term, it's the one i worry about the most. >> okay. >> energy costs flow through all commodities. >> that's why you need natural gas for your delivery cars. one last thing. goldman guy kind of represented a lot of different analysts by saying that there was really a kind of temporary spike here in numbers. and they expect solid, same-store sales. on your conference call, i'm thinking about how you're going to deploy all that capital, not worried about this one-time thing. i'm thinking last year during march, the special dividend, i'm looking at the leverage ratios. we should be more focused on what you're going to do with that capital rather than if there is a short-term spike.

>> the capital story, that's a big part of this. >> but you wouldn't say it. you can say it here, though. just between you and me. i can tell all these people to go home. >> no, i can't talk about what we're going to do going forward. but the answer is we're going to deploy the capital in the way we think is going to generate the best return for our shareholders. we just started paying a regular dividend as of last quarter. >> right. >> and so that's certainly something that's going to continue. and then how we balance out dividends and share repurchases going forward. and, you know, maybe at some point debt repayments, if interest rates move -- >> of covenants allow you. celebrity. i don't want to leave on just a finance note. obviously, some great-tasting pizza. you know what i do -- and i am a big customer, which you know. that's patrick doyle, president and ceo of domino's pizza. yes, you can be jovial when you make this kind of money for shareholders. stay with cramer.

it is time! it is time for the "lightning round" on cramer's "mad money." my staff prepares the graphics on the fly. i play this sound, and then the "lightning round" is over. are you ready, skedaddy, time for the "lightning round." starting with gus in my home state of pennsylvania. >> caller: yes, thank you, jim. first-time caller. i want to know about international paper, stock for 2013?

>> it was the stock for 2012, i think it could go higher, a lot of big money made, still a well-run company. let's go to elliot in california. elliot. you're up, elliot. >> caller: boo-yah to ya. >> boo-yah. >> caller: i'm calling about bgc partners. >> yeah, that was -- >> caller: discounted value. >> i know. we had the ceo on and i thought it was a pretty interesting story, but it has not worked out that well. does have a good yield. if it gets back to 6, 7, you just got to go. let's go to mickey in michigan. mickey. >> caller: motor city boo-yah, jim! >> i like ford and gm. what's up? >> caller: well, i've been trying to get into a railway, and i think i found one, but i want to know what you think about it. it's canadian pacific, cp. >> here's the problem. there's going to be a lot of problems like this. canadian pacific traded at 68 and now at 124. we have missed a lot on the big move, but i still believe in the stock. i think you can buy it.

i think csx is cheaper, though. diego in california. diego. >> caller: hey, jim, b-b-b- boo-yah from southern california. how are you doing? >> all right. how about you? >> caller: i'm doing good. i want to thank you for the call, i made some good money there. my question is kroger. my sister is in management, they're always going to meetings, and they've had 37 profitable quarters in a row. are they going to fall victim like safeway? >> no, safeway is a management issue. kroger, your sister is at a great place. kroger has done a lot with private label, done a lot with natural foods, i think kroger is a winner still. mark in tennessee. mark. >> caller: boo-yah, jim. from the southeastern conference. >> s.e.c. >> caller: my stock is cree. >> decent spec. if i want to do l.e.d., i believe eaton. the l.e.d. story cold. and that, ladies and gentlemen, is the conclusion of the "lightning round"! >> the "lightning round" is sponsored by td ameritrade.

coming up, from bieber to seacrest, splitsville can be devastating. but tonight, cramer's is looking for one business breakup that could be the best thing to happen to your portfolio. ♪ ♪ [ female announcer ] you've never tasted anything like new fruttare. the taste of delicious strawberries and creamy milk, bursting together and perfectly frozen in time. when you look on the bright side, it's all good. ♪ new fruttare. it's all good. plays a key role throughout our lives. one a day men's 50+ is a complete multivitamin designed for men's health concerns as we age. it has 7 antioxidants to support cell health. one a day men's 50+.

on a slow day like today, remember that not all companies have to be held hostage to the vicissitudes of the stock market or even the economy. some have the ability to take their fate into their own hands. that's why while it sounds unromantic, we are big believers in break-ups here on "mad money," because breaking up can be a fabulous way for a can be to unlock value for its

shareholders. this is a story we have seen so many times, but it's worth repeating, because it's so darn lucrative. a killing when they broke themselves up, along with others. sometimes it feels like all we do is talk about big-name breakups, kind of like the "people" magazine of the stock market. that's okay. successful. another company i believe could unlock a tremendous amount of value, simply with the stroke of a pen, simply by splitting itself up, i'm talking about perk & elmer. pki. a little $3.5 billion laboratory supply and life science. probably never heard of them unless you watch the show all of the time because i've mentioned it before. they formed into a merger in 1999 and built itself up through a series of major acquisitions and five years ago management reorganized the company, two distinct units, a human health division and environmental health business. on the human side, accounts for 56% of the company sales. perk now makes diagnostics and tools that help detect diseases

earlier especially when it comes to prenatal screening, and tools that research labs. in short, part diagnostics, part research company and this is the part of perk & elmer we really like. the human health is growing faster than its peers in the industry. if it traded as an independent company, think about this. we know that just two weeks ago, thermal fischer, tmo agreed to buy life technologies, very similar to the research side of perk & elmer's human health division. 15% premium to where the stock had been trading, but more importantly, almost 55% higher than it was before the rumors began. you break up perk & elmer as a stand-alone company, someone might try to take it over like life technologies. i think the break-up makes a ton of sense.

the other part is the environmental health division where they make the technology and instrumentation for detecting contaminants to industrial end markets like chemicals. even construction. here's the problem. that's a slower growth business. okay? it's got lower margins. it's also more cyclical than human health side meaning stuff i don't like. meaning the environmental business is more captive to the overall economy, both here and around the world and a slowing economy situation. why do we want this thing? just last week, perk & elmer got slammed after a disappointing quarter and it was really, wow -- it fell from $34.47 to $30 and change, a decline of 12%. it is worth pointing out, much of the weakness here came, yes, from the environmental division. in fact, 85% of perk & elmer's business grew at a 3% clip. most of the company is chugging along okay, but the other 15% down 25%. thanks to this environmental sales in western europe, along with japan.

purchasing imaging instruments on the human health side. you break up perk & elmer, you'll be left with a robust company made up of the human health division and a weaker company on the environmental side, but one that might have more focus and attention, including the ability to add bulk through bold acquisitions as it could be a much better stand-alone entity. at the moment, it has faster organic growth, but it gets a lower valuation, stock selling for 12 times next year's earnings in large part because they simply don't get the full credit for the human health business because of the ball and chain that is environmental business. the environmental side is ailing right now. the business still has a largely a play on increase in consumer safety regulations which you know will be toughened, not lessened, and china, and issues of air pollution and water pollution are very important. you spinoff that environmental business and it can focus more heavily on china and other emerging markets and i think

those are bottoming now. but the main reason i like perk & elmer's potential break-up play, right here, simply that the parts are worth more than the whole right now in the stock market. let me give a quick sum of the parts analysis. they call them smtp these days. the human health business, part diagnostics and part laboratory research tools. if you look at what thermal fischer is paying, same valuation of perk & elmer's lab business, $1.8 billion enterprise value. how about the diagnostic side? that's similar to gen-probe, taken over for six times sales, the same multiple, diagnostics worth $3.3 billion. let's add these two up and you get an enterprise value of $5.1 billion for just the human health business side. the entirety has an enterprise value of $4.4 billion. in other words, not only are you getting the environmental business for free here, but also the human health business at a discount. the environmental side has lower margin. so if we say it's worth two times sales, be more

conservative, still gives you $1.9 billion enterprise value which means the total company is worth $7 billion, come on, 59% premium to the current price. so if it breaks itself up, it's possible that there could be $30, $30 stock could go to $48. that's right. 18 points. so conservatively, if perk & elmer announces it's divorcing itself, i see the stock bouncing back to 35 and change, and possibly a lot higher. i just gave you that ultimate target after the split. i'm not factoring if one of the divisions catches a takeover bid. here's the bottom line. sometimes if a company wants to create value it has to create destruction of the biggest thing holding perk & elmer back, two very different businesses tied together under a same roof and shouldn't be that way. easy problem to solve. all management needs to do is announce a break-up and this stock will go higher with the stroke of a pen. "mad money" is back after the break. have hail damage to both their cars. ted

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what would happen if you were bottomed out. no, not if it went up, but simply just bottomed. something the european stocks might be singling. last time we talked to sandy cutler and chuck bunch and both indicated that europe could be hitting bottom, and may not decline much at all. we got numbers from deutsche bank and ups, spectacular. all signs things are getting better in europe despite the hideous employment numbers over there.

for eaton's cutler, a huge electronics business, the continent is indeed mired in molasses, but may not be getting worse. yes, the business is terrible, but might be nearly -- just merely staying terrible. bunch goes further. he says he thinks the first quarter might have been the worst. and that things could actually look up between here and year-end. these are not idle sentiments. last week when howard schultz gave his overview, he said he thought europe was bottoming. colgate indicated the same. there are many companies including technology companies that would indicate things are getting worse. there are also auto companies that say it could be getting much worse, although i still think gm might do a good number. but the ceos of are not pie in the sky guys. they're very smart people who know what their order book looks like and have all been very accurate at forecasting. hence why their companies have been able to navigate this

treacherous period so well. their view dovetails with the banks' earnings and we're seeingyes, remember in 2009, the bank here in this country bottomed before all other stocks so maybe the same thing is going on in europe. could that finally be a carry on the continent? if that's the case, if europe is bottoming, then eaton and ppg, could be huge buys here. because companies have taken out tremendous costs in europe not willing to wait for revenue to turn. if the revenues do turn, earnings would be magnificent. a turn in europe could help us in explaining our remarkable run here in america. you simply couldn't be getting this move in the international stocks we have had most recently, the bouncebacks after the disappointments. if yours truly flung off a cliff. given the grim news in europe, what could be the basis for forecasting a turn? politics. the austerity has gotten europe as far as it can go. initially it was about reigning in government spending, that's been done. italian yields yield at 7, now at 4. making it easy for italy to borrow. same in spain.

however, far more important, the slow down has at least arrived in germany, which has exerted tremendous hegemony over the rest of the world. meaning germany would be open to stimulus and a rate cut thursday when the pain is felt in germany, the germans can no longer fight the idea that deflation, not inflation is the issue. so much makes sense here. the run on the european bank stocks, five-year highs and the surging stocks of companies that do business in europe. the bottom is being put in, despite what the naysayers tell us. and with it, the worldwide rally. stick with cramer. [ female announcer ] switch to swiffer sweeper, and you'll dump your old broom. but don't worry, he'll find someone else. ♪ who's that lady? ♪ who's that lady?

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you know we like dividends here. after the bell, pepsico, 6% increase, better than a sharp stick in the eye. i like to say there is always a bull market somewhere. i promise to try to find it just

for you right here on "mad money." i'm jim cramer, and i will see you tomorrow! ♪ >> now a paid presentation for meaningful beauty advanced by cindy crawford. >> with special appearances by debra messing. >> valerie bertinelli. >> christa miller. >> and stars from tv's royal pains and the mentalist. >> hosted by network tv correspondent katrina szish. >> brought to you by guthy-renker. >> hi, everyone, i'm beauty and style journalist katrina szish on location in beverly hills. in just a few minutes we'll meet one of the most beautiful women in the world, supermodel cindy crawford. at age 45, cindy still looks impossibly young and gorgeous. >> oh, my god, she's just stunning. her skin is just amazing, and so i feel like now i have a chance. >> what's cindy's beauty secret? we're about to find out. ♪