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tv   Mad Money  CNBC  July 29, 2013 11:00pm-12:01am EDT

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or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a 30-tablet free trial. >> my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends, i'm just trying to make you money. my job is to educate you, so call me at 1-800-743-cnbc. merger monday? at last, we have one and i say -- ♪ sure the averages didn't reflect
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this good news, dow sinking -- nasdaq climbed .39%, but if it is finally the beginning of a wave of deals. that can be great for everybody and not just the companies involved in the takeovers. that's right. the huge deals announced today, publicists and omnicom merging for the world's largest advertising agency. paragon lowering its tax bill and hutches bay picking up saks to tack the u.s. luxury market. that will create a positive background that could fuel the next leg of a market. let me first point out the life blood of the stock market. it's a huge component of the health of individual stocks because it reminds us these aren't just pieces of paper we're trading. they are real companies with real prospects and real worth that should be owned, not just rented. i'm not being too obvious.
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we've had very few mergers this year. it has led many to believe stocks are too high or companies would be buying each other, so takeovers inspire awe, wake up. if you own these stocks you find yourself instantly richer. perhaps just as important, if you're shorting stocks, then you wake up and suddenly, you are insecure on these positions. you want to cover the shorts or buy them back, propelling major parts of the market higher. i also regard these type of high frequency businesses that prey on the rest of us. the insider traders may have known about the takeovers ahead of time, but can't stop the rest of you from making money with their machinations. the concept of merger monday was well engrained. get the job done and develop this classy monicker. it was always reassuring that companies wanted to buy other companies because it confirmed
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what we were paying for ourselves. merger mondays disappeared and we've been puzzling about whether they've been back giving us a run up to the stock coupled with a lack of confidence among so many business people that you hear about constantly and then today, first time this year, the day deemed worthy of merger monday monicker and that's fabulous news to the bulls in the audience. so, let's be constructive three deals. the biggest to create the world's top advertising agency. $35 billion fee to take on or fend off the digital competitors, namely facebook and google. omnicom jumped five bucks in the deal, then closed down 36 cents. do you know what? to me, that means there's still an opportunity to buy omnicom here.
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as shareholders, we'll get a dividend and reap the benefits. far more gains that might be lost by obvious -- represents both pepsico and coca-cola. that's not going to stand. why the defensive nature of the deal? because advertisers are going directly to facebook, google and twitter, cutting out traditional firms. i don't think this merger can stop that flow. if anything, if i was running one of these companies, i would have sought twitter. two old line ad firms do not necessarily have the smarts to go mobile. that's something facebook, twitter and google, to another extent, salesforce.com know how to do. with younger people increasingly turning to their mobile devices for all sorts of news, sports and entertainment, you can't
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afford to let facebook and google dictate the terms to their clients. tv, web, print, radio, that's going to be viewed as a positive by the clients. somehow, the combined entity can wren f better terms from the online ad world. second deal is kind of a puzzle, frankly. it's a head scratcher. irish drug company for 8.6 billion in cash. perrigo is a maker of knock off store brands, over the counter drugs. they can manufacture these products cheaply and charge less than the competition to make much more money than they do when they offer products of big name players like johnson & johnson and proctor and gamble. it's basically a royalty stream for a bunch of pharmaceuticals. the ms drug made by biogen. that's not like the perrigo we know. this deal allows the company to shift its status to ireland, changing the tax rate to a much lower rate. while i wish there were more to it than that, the combined company will have higher after tax earnings. for more people, that is what matters. the third deal is the one that
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makes the most sense to me. hudson bay, canadian department store chain buying saks. for 2.4 billion for $16 a share. i know given that the stock went out at 15 and change friday, that's hardly a home run. remember though, saks was at $11 when the chatter began, so you've gotten a gigantic return. we've been pushing for something like this to happen to saks for some time. saks has been in retrenchment mode, the victim of an insanely aggressive plan from a previous management team, not steve's. every year with the growth coming from online and outlet sales. hudson's bay can spot l and ts into the real estate vacated by saks' future closers. they were way too upscale for the neighborhood. steve tried to make as much as possible with this deal. he has succeeded. he is a man of his word. congratulations to saks shareholders.
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all three deals have different rationales in the best market in the world, but more importantly, the stocks represent good values. even up here, where so many say they have run too far, too fast. some guy talking to judge wapner, talking about dow 5000. these deals say just the opposite. elan and saks, which had already run a great deal. they give the bulls the hope that the run's not over and another leg up could be upon us. despite years of fed tapering, faltering china, japan in jeopardy, they lead a higher valuations for other companies. shire, pharma, another irish drug company or macy's, which we believe is is the best in show. so, here's the bottom line. if you believe as i do that the stock market remains undervalued, you woke up this morning with a validation from three sectors.
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advertising, drugs and retail. that in the end is why we welcome back merger monday. particularly on what should have been just a sleepy july day. and it should mean much to those who embrace the market, and perhaps more importantly, to those who doubt it. mark in california. >> hey, jim. thanks for taking my call and boo-yah from the inland empire. >> oh, man, i love the inland empire. i used to go to the ontario racetrack. how old am i? >> the cars, that's a good segue. my question is about tesla. i'd listen to you for a while. i listen to you all the time, so i know you were kind of down on them a week ago. i heard you know -- and i guess my question is they've got earnings coming up and i know they were beat on announcements today, so everybody with electric, general motors and their volt. >> i want to clarify what people have been saying about me and tesla.
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when tesla came public, i said it was overvalued and it was and it did absolutely nothing. there was a really, really good call versus many other stocks i recommend. after i saw it, it got hot. that was about 100 points ago. i said it was a cold stock, but can go higher. i don't know why people think i hate it. i drove a tesla. i loved it. i went to bmw today, but it's a cold stock and because it's a cold stock, i cannot use the traditional metrics i like to use to be able to reward you with something on conviction. to fight people against the stock, that is just a crock, okay? i had to get that off my chest because i'm tired of hearing that. i hate that stock. it's just untrue. bobby in louisiana. >> hello, jim. >> how you doing? >> okay. what about dell and the buyout? >> what about dell? i think you should sell, sell, sell. why?
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because i view that there is because i view that there is very little upside and three or four points downside. that is not a situation i like. i'm trying to get everyone to ring the register at dell and move on to a company with actual upside. zach in california. >> hey, there, jim. boo-yah from southern california. >> nice. >> my question is about uncle medicine pharmaceuticals. yesterday it was down 32% since the recent ipo, but today, it rebounded up 8%. do you think it can keep going and meet or surpass its original market price? >> i've got to check into the most recent, different. they had a bunch of trials. some have been disappointed. others haven't. i've got to go do more work. that's just not good enough for my audience. i like the audience too much just to say hey, looks good. it's not the way we play it. sell in may and go away, debunked again today. merger mondays, well, we had one today when you least expected it.
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wake up call that the market is indeed still undervalued. we'll be right back. >> coming up, black ink. declines in the printing business caused hard times for rr donnelly, but investments in new technology has reignited the stock, now up over 75% this year alone. is the time it starts printing profits for you? don't miss cramer's exclusive. and later, the perfect brew? starbucks just served up a street shattering earnings report that made company history, and it's not just about the morning joe. don't miss cramer's breakdown. the anatomy of a piping hot quarter. plus, on a ride? you may not be on board with school bus operators student transportation, but with an outside dividend and its eyes toward a new future of fuel, is it time to hop on, or could this stock be ready to stop? cramer talks to the ceo.
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all coming up on "mad money." follow @jimcramer on twitter. tweet cramer #madtweets. send jim an email or give us a call.
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this is a market that loves comebacks. a month ago, i explained how rr donnelly and sons, a printing company that you think would be obsolete, has come roaring back. since then, the stock has given us a terrific 25% gain, much better than the s&p 500 in the same period and i think it would have more room to run. it's the largest player in a fragmented market and has great digital and ebook business where they transform all things publishing into ebook format then distribute them. it pays a tremendous 6.5% yield.
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let's talk to the president and ceo of rr donnelly and sons about the quarter and his company's turn around. welcome to "mad money." >> thanks, jim. >> thank you so much for coming to the set. now, i know that a lot of people have written you off, but it looks like from the cash flow tonight, there's a lot of room to run and the dividend looks pretty darn safe. >> to steal one of mark twain's famous quotes, my death has been greatly exaggerated. >> we've got the panoply of products and i think a lot of people know you as when you get a catalog, it's printed by you. get a phone book, good chance. a lot of people are online shopping. a lot of people felt this business has to be challenged, but you've reinvented a lot of other things. >> we're 150 years old next year. we've gone from the year 2000 from having seven products and 2013 and having 15 products. we've taken what was a long run business, magazines, catalogs, inserts, that was 80% of our revenue in 2000.
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now less than 30%. the catalog is still driving people to purchase, and as you look at some of the great companies that we work with, that catalog is a sales channel for our customers, and as you think about people that we work with, all of them are using every media possible to go ahead and communicate with their customers. >> when i look at this, this is, i actually have these. these are great headphones. you would make the box of it? >> there's a box, a label, material inside that. five years ago, that never existed, so everyone who's talked about the printed pieces going away. we've evolved. we've innovated, we've evolved, and we do that and also for the electronic devices, such as e readers, we are also involved in those, packing and shipping those out. >> so, i'm writing a book right now. when it goes to my publisher,
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amazon will want an ebook. you get involved? >> lieber digital takes whatever the content is and formats it to whatever device it's going to go to. whether it's your mobile phone, blackberry, ipod, ipad. whatever it may be. your laptop. so we are then taking that content and making sure it can reach again whatever that consumer's using at that particular time. >> and you're also distributing quarterly reports. how does that business work? because to me, why are you proprietary in that? >> it's a great business for us. if you look at our quarter, too, i think financial did come back strong with the ipo market being one of the best it's been in a while. when you think about mutual funds, we play a role there. with our tagging capabilities, we've got the ability to take that data that you're sending in, that people trust us to deal
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with and get that out to the investors. >> i'm holding up the quick response. this is a company that r donnelly's doing, too, which is labeling. >> we're doing more and more rfids. it's an intelligent label. it's still the label process. it's a printed process. what we can do as a result of it being a printed process, we can shorten the cycle time for companies to use our binding. it's being used for what i would call inventory tracking, supply chain management, lost goods. especially good for retailers in pharma. we want to make sure if you've got high value drugs, they're getting to where they need to get to. >> a lot of people are going to say to me, jim, you looked it because of the dividend. when we saw the earnings per share, the common stock is 45 cents. that compares to 49 cents.
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that's a decline in earnings per share. that's not necessarily the way to measure what you're up to. >> no, i would look at our top line. pensions, not a friend of ours this year. taxes aren't a friend of ours. if you go back to pensions. a lot of people hit us hard on, we had a liability because of operation twist. that was about a billion four as a result of the discount rating coming down when the fed took their action. with rates going back up, we reduced that by about 30 percent since year end, so that's a huge differential for us as we go forward. >> and also, just on the revenue growth, which i think is so important. this is the seventh quarter in a row now that you've had organic revenue? >> we've got 100% of the fortune 100. >> financial. for all products. >> all products. 60,000 customers worldwide. we're in 37 countries and touch 14 different time zones. all the things we've got going on, from going from a printer to print services to global
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communications provider, is taking place and starting to come together. >> now, do these old fashioned printers, with the phone books you've got here, is it just because people don't know the new donnelly does it pay to get rid of the old donnelly and just focus on the new donnelly? >> our print service offering is going to be key. print's not going away. without newspapers, just in the united states, print is $119 billion business. we've got 7.5, 8 billion of that. cut it in half, say it goes down to 60. we're still a small piece of what's going on there, and we don't believe it's going to go away. the channel that's being approached, it is both physical and electronic delivery that's taking place that our customers are communicating with their customers. >> people have just underrated you. i find this happens a lot where people have an image of what a company is. the company worked diligently to be not what you think it is and the message doesn't get through, which is why i'm so glad you came on the show. >> we appreciate it.
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we think we've got a lot of things going on from the technology capability side, but more importantly, from a communications standpoint. we're touching creation of the content, managing the content, distributing the content and most importantly, measuring the content for our customers. our customers are number one. we've got to make sure we reduce their overall cost and improve their return on their investment. >> it's like a great little story. okay. i want to thank tom, president and ceo of r.r. donnelly and sons. go through this quarter. look at all the new products. you'll understand why it's not so crazy to like a printing company that actually has only one bit of its company being printed the way you think it is. we'll be right back. >> coming up, the perfect brew? starbucks just served up a street shattering earnings report that made company history and it's not just about the morning joe.
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so, how did the brewing behemoth do it? don't miss cramer's breakdown. the anatomy of a piping hot quarter. (announcer) scottrade knows our clients trade
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time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before. the new blackberry q10. it's time. this is a flywheel. what does a flywheel have to do with investing? for the non-mechanically inclined, the fly wheel is a rotating mechanical device that's used to store energy. you might note they collect
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energy over time, then release it to provide a big boost of power. but what you probably don't know is the success of starbucks, including an amazing quarter just reported, one that added 3.5 billion instantly, is based on the concept of the flywheel. howard schultz, the ceo has created a strategy just like a flywheel because it stores energy, then emits that at a level that exceeded the original power source. it includes 19,000 stores and global footprint growing by 500 units a year plus a rapidly expanding consumer business, coupled with the best in class social capabilities and a non-stop pipeline of innovation. and the energy that a flywheel produces gave starbucks the best same-store sales growth of any company i follow, with an 8% and a stunning 9% in the americas and asia pacific.
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allows the company to report much better numbers than it should, including numbers that seem metaphysically impossible. starbucks has made itself into the stock equivalent of a perpetual motion machine, which is why we have to examine this quarter because it contains everything you want a company to deliver. yes. this has now become the new gold standard for a new three-month period, one that seems impossible to top. one thing that schultz admitted, he was stunned to deliver the top number, but that it would be irresponsible. his words, he said the number be repeated. he's saying -- it's not the issue. the issue is we're building a great company and the comps are going to follow that, end quote. in an era where many ceos want to get away from reporting or even talking about same store sales, schultz is saying hey,
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listen, look. we're going to do the best numbers out there. but we are thinking even bigger than that. in other words, these numbers are important to the organization, but schultz doesn't want them to define the organization. still, so many of you want to know what a really good quarter looks like. what does it mean? what has to happen? that's why i want to parse this conference call, to give you a real textual analysis. not just with starbucks, but with every company. first, we need context. over and over in this quarter, we have seen retailers particularly restaurants deliver extremely sub par results. we've heard them blame the weather, the poor economy, the price of gas. mcdonald's, cheesecake factory, panera and dunkin' donuts. in fact, even the best
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surprise, domino's and starbucks. now, along comes starbucks and almost doubled that number and almost all those and should be subject to the law of large numbers, but the fly wheel effect, second. we know that this is a quarter where we have heard endless harangues where companies have not been able to show real revenue growth. many companies are satisfied and occasionally, you're going to see one that's next to that. we see it in -- some domestic oils that have had big finds. in some internet companies, but not in the consumer products space, except starbucks, which delivered a 13% year over year increase. that's incredible. third, we are addicted to what's known as margin expansion, meaning more money has to be rung out of those sales than has been because that's a sign of aggressive capital return on what companies bring in. it's not just the lower price of coffee. starbucks delivered 150 basis points to 16.4%. a record. huge for a food and beverage
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purveyor. a year ago this week, today, closed at $7.42. he said he was disappointed in europe's declining profitability and he was going to fix it. he stuck his neck out for good. i got to tell you that the skeptics didn't believe it. delivered a plus 2% comps number in the first six and now, i believe that things are about to get much better. this is the first quarter in six quarter that he delivered positive comps in europe. china, the numbers are staggering. beginning next year will be the chain's largest region outside the once thought to be saturated united states. but the growth continues now unabated. fifth, we always want to see changes made. right now, starbucks has not one, not two, but three monster initiatives. the first, la boulange.
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for someone who likes the baked goods at starbucks, i would have adopted a fixed perspective. not howard. company is seeing tremendous uptick with la boulange instead of the current baked goods. more than 2500 locations across the country will have the goods in stores by september. including new york, boston and los angeles. i can't wait. second, teavana. just sold fancy teas in teapots, to an actual tea store serving tea drinks. tea, not coffee, does it for many countries. third initiative, probably the most exciting, evolution fresh. the new healthy drinks acquisition picked a partner in danone, greek yogurt. that means both the pick up and healthy eating offerings in the stores and a chance for -- by the way, a business in which dunkin' donuts experienced a year over year decline.
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it is possible this channel could become so enormous and make the whole same store sales obsession seem a little ridiculous. but you know what else i heard? invasions. how about a rollout of wireless charging stations? i do fear table hogs who won't let the rest of us sit down, even just want to take advantage of the wi-fi. starbucks has exceeded all bounds when it comes to social and mobile. 10% of the orders are now by mobile. includes tremendous loyalty, both from twitter and the starbucks card that allows people to feel like they are a member of a club, a club that saves them money. then there's just the brand origination. not unlike costco. another seattle pioneer. here's the bottom line. if starbucks were an engine, you would say it is firing on all nine cylinders, even as it is just an eight cylinder engine. ain't that something? yes.
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hence, the flywheel effect. this quarter will become the new benchmark that all other quarters are measured against and those may be indeed the toughest comparisons of all. let's go to stacy in new jersey. >> hey, jim, here's a boo-yah to you from new jersey. >> well, right back at you. >> my mom and i are huge fans of the show. i'm calling and blooming brand. it's taken a bit of a dip. is it a buying opportunity or a hold? >> the rest of the restaurant business is challenged with the exception of chipotle and starbucks and domino's. i'm sticking by those right now rather than venture out to the ones that had a very big run. bloomin had a very big run. we'll look again in a couple of months. i think we'll be fine. sam in hawaii. >> how is that. boo-yah from maui. just wonder what your opinion is
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on ngvc. they went public last year, but have been in business for almost 60 years. a ton of cash on the balance, looks like they have a lot of growth ahead of them for the future. >> i've been recommending gnc, which thankfully, did hit a 52 week high today. i've got to do some homework on yours. i don't know the vitamin cottage, but i should and i just don't know. ask me what makes a perfect quarter and i'll tell you to look at the amazing quarter that howard schultz just brewed. don't move. the lightning round is next. [ male announcer ] come to the golden opportunity sales event
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it is time. it's time for the lightning round on cramer's "mad money." rapid fire calls. i tell you to buy or sell. play to this sound and then the lightning round is over. are are you ready skeedaddy? sonny in illinois. sonny. what was it? >> what would you do for us investors here?
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what do you think about aes corporation? >> utility, no. i'm going to own aep. tim in california. tim. >> i was wondering about smith & wesson. >> no. if i'm going to own guns, i'm going to own cabela. let's go to curtis in ohio. curtis. >> boo-yah, jim. >> boo-yah. >> what happened to roundees and what's your read op it? >> it's now up because of takeover talk. i like the fundamentals. i like kroger. let's go to jeff in iowa. jeff. >> hey, thank you, jim. boo-yah to you from iowa hawkeye state. silver being at low levels, it's a good time to roll back the truck on silver wheaton? >> no, no, no, no. but we did go to iowa to have a really terrific time. let's go to buddy in south
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carolina. buddy. >> hi, jim. >> hey, how's it going? >> how are you? well, aside from the fact that i don't seem to know what i'm doing and i keep losing money, i decided to start watching your show and get some advice. the question i have now is unimedics. >> oh, man, that's like the third stock i ever bought in my life. i've got to go back and look at that. that thing has been around forever and not a lot to show. let me do some work on mu. sam in minnesota. sam. >> boo-yah, jim. >> good to have you. >> i was wondering what your opinion is on rbs. >> i stick by rbs. now, they're worried about bbva. listen, rbs has a great franchise. i am not backing away at all. they have a lot of business to sell. citizens can be sold. the stock's cheap to me. joe. >> how are you doing? >> not bad.
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how about you, joe? >> pretty good. got a question on twr. earnings coming out, bought the stock about a year ago and it seems to be stuck in a rut. what do you think? >> this is a company that did very well when we had all those storms and now it's kind of come down. i do like it. it's just got no catalyst right now. patrick in california. patrick. >> boo-yah, cramer. what are your long-term prospects on solar capital? slrc. >> i was stunned by solar capital's bad quarter. stunned, and now it's back to kind of where it was when we first met it, but i have to say don't buy it. stunned. let's go to steverino in new york. steve. >> greetings. i need your pedagogical skills for lcd. >> these guys are just money. they are money. they are what i want out of a retailer. consistency, consistency, consistency. ron in my home state of new
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jersey. ron. >> how you doing, jim? >> not bad. how are you? >> good. i got a question for you. years ago, i had -- i, i sold them, i made money on them. now, a few weeks ago, i heard you talk about -- okay and i was watching it the last couple of weeks, okay? and i decided to buy it friday. >> okay. >> what you think about it? >> position's going to close at the end of the month. have to raise numbers about a month from now, people are too concerned it might be a play. i would reiterate, it's going to go higher rather than lower, but it will be initially some digestion period and that, ladies and gentlemen, is the conclusion of the lightning round. [ babies crying ] surprise -- your house was built on an ancient burial ground. [ ghosts moaning ] surprise -- your car needs a new transmission.
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we're always going out of our way to try to make mad money
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most interactive show on television, so last wednesday when mark in california called in about student transportation, i said i would do my homework and get back to him and tonight, we're doing one better. the tiny stock, $500 million market cap from canada. third largest provider of school bus transportation services in this country with 9500 vehicles operating out of 130 terminals. takes a million children to and from school every day. now, they score a monster yield that's unique among school bus operators including various forms of natural gas, that's why i want to check in with dennis gallagher, the ceo of student transportation. welcome to mad money." thank you for coming in. really appreciate it. all right, you're a novel company. we've not had a school bus company and you're located in canada, so there are different tax considerations for canadian companies.
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that yield is a qualified yield. so, if you're american, you should check with your accountant before you buy. is that the best way to put it? >> well, t a qualified dividend because they're paid out of cash flows. >> just want to be sure because i don't want people to say canadian companies have different implications. >> absolutely. we're a canadian corporation. we're based here in new jersey. >> okay, excellent. now, you've got a novel business strategy. people don't realize that mom and pops run a lot of student bus companies and you're just buying them up around the country. >> school busing is a $24 billion industry in north america. 66% of the 24 billion is owned and operated by municipalities and governments, so it's a big privatization play. now, what we've done is went public in 2004 on the tsx as a u.s. company going public on the tsx. in the income trust like structure up there, which you know is a high yield dividend
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kind of market for us and canadians love it. they yawn at an 8.5% yield, so i've been up there for seven years and thought maybe the u.s. market would actually like the opportunity to have a yield. the problem is, the u.s. guys don't believe it, but what the canadians have allowed us to do, and we're 65% canadian owned, 20% u.s., 15% french, but literally, this has enabled us to build a national footprint, so we've now broke the house and now, it's time for us to really rachet this thing up with non-asset growth. >> you say they don't believe it. is that because the dividend is not covered by gap earnings? >> we pay dividends out of cash flow, so we've got $65 million of ebitda. $45 million of free cash flow and we pay about $36 million out in dividends. >> here's what i'm concerned about. when you read the research, they
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say eventually, you have to buy new school buses. the school buses are going to cost a lot of money to be able to buy and obviously, you've got short-term loans. interest rates go up. will you be able to continue to do as well? >> yeah, one of the things we've got is a tremendous bank group, number one. low cost leasing right now. we've never seen leasing costs like this. we're borrowing money at 1.9% to 2.3% fixed for seven years if we want it, so we've got tremendous access to capital other than our own. the thing that we're doing right now is we're going in with municipal bond financing, so the banks are borrowing from the government at zero. they're lending it back out to our customers, fixed for ten, so manage business where our customers still own the assets. that's the model we're trying to move over to now. we're going to grow this business without us going back
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to the market and using municipal tax financing, and that's going to be a huge difference for us. >> at the same time, you're saving costs by using alternative fuels that are uniquely american. how is that going? >> this is a tremendous deal. cerberus, they own bluebird. i heard john yang say i rode a bluebird bus. we're working with navistar, freight liners, collins and we've developed with them, rauch technologies. nascar. he's partnered with bluebird and they've created this lpg engine that is unbelievable. we've taken now 1,000 buses, put them on the road this year. largest contract in omaha. but we're taking $3.65 gallon diesel down to $1.60 and locked it in for three years. that's without a 50 cent discount from the government, who gives us an alternate fuels tax. i don't count on that 50 cents back, but if it does, i'm now
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paying $1.10. >> it's a multiyear payoff to switch. >> it's long-term, it's immediate. it's going to be huge. that's going to drive our rh0 down from 83, 85% down into the 70% range for this coming fiscal year, which just started 2014. >> i sure wish more people would listen to you because i'm >> we had to convince navastar to lower the cost of the capital of this engine. get those r&d costs out of the way. don't make me pay for those. there's 500,000 school vehicles on the road every day. as i said, the government owns 66% of these things. fleets are getting older and older. 12-year life. they've got to replace 42,000 a year. you know they're replacing 27 to 30, which means they're getting older.
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i put my 2% financing down and my lpg, i'm lowering maintenance costs, fuel costs and i'm giving them the lower cost of capital. this thing's got to work. >> dennis gallagher, remember, you have to check into the yield. check with your accountant if you want to. this is a different kind of tax structure than you may be used to. stay with cramer.
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have we been had by the home builders? i want to say no. at this point in earnings report, you've got to be in shocked about the endless denials. plus, when you consider this morning's home sales. at least according to penny's sales numbers and gordon's rates, pretty much stopped housing sales in its tracks. moderation are net sales pace
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after mortgage rates began to increased according to the cfo. while each home buyer responds differently to changes in mortgage rates, we continued. we typically see short-term moderation of buyer activity during periods of mortgage rate volatility as potential buyers adjust to the changing rate environment. in other words, they got real sticker shocked and decided to put the buys on hold. and who knows what the quarter was and how badly the cancellations spiked in the last month. there was a grudge in -- affordability, the great balance sheets, ed horton in particular. as if we care about balance sheets from momentum stocks. these are all down 30% now. here's a typical interchange between an analyst at wells fargo. don, this question falls under the category of trying to determine your body language
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over the phone. you don't sound quite as enthusiastic as you did last quarter. thomas responds, quote, if i don't sound optimistic enough for you, i guess i didn't drink my red bull this morning, end quote. hey, listen, i'm absolutely sure that's the case. what matters is this answer later that on the call, a question about how the quarter went on month to month with the obvious intervention of higher rates. frankly, we've got good demand in all our communities. just a slower demand coupled with the fact this is a slow time of year for the homebuilders in june. typically, sales start the slow down around super bowl sunday, end quote. huh? you got to wait until super bowl sunday six months from now. oh, that's too far. that's what matters in this market. nobody's going to hold on to these momentum stocks through super bowl sunday. many of these so-called owners, but actual renters of the stock, will be out by opening day by the flyover. now, i hope it all makes sense
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to you. why, why, why, stick with the builders. it's too long to wait and too dangerous to do so considering that if anything, rates are going higher, not lower, between now and super bowl sunday, which i have to remind horton, is very, very far away. stay with cramer. so... [ gasps ]
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reports better than expected eps number and the stock is spiking. this one's a real battleground. be careful. i'm jim cramer. i'm jim cramer. i will see you tomorrow. away. >> i often tell people that abraham shakespeare was lakeland's stimulus package. >> narrator: with his fortune dwindling, a woman named dee dee moore steps in and promises to help protect what's left. >> i mean, he'd been in the hood all his life, and, all of a sudden, this woman come out of the blue. phew! okay? >> narrator: but instead of looking after the lotto winner, moore only looks after herself. >> everything that mr. shakespeare has ever owned now belonged to dee dee moore. >> narrator: when he goes missing, all eyes turn to her. >> they're saying that i took a

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