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tv   Mad Money  CNBC  October 9, 2014 6:00pm-7:01pm EDT

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puts so take the profits. >> and tonight, i'm in st. louis. >> and symantec, and the profit s are going to be continuing. i'm positive symc. >> and that is all ♪ ♪ 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 on 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 lose less money. my job is not just to entertain, but to educate and explain what's going on here so call me at 800-743-cnbc or tweet me @jimcramer. what's real? yesterday's humongous rally or today's hideous sell-off, sich plunged 2.7%, nasdaq nosedived
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2.02%. alas, i think today's sell-off is the real deal, unlike yesterday's rally which was triggered by positive federal reserve minutes, today's sell-off was based on real weakness in the global economy, worries like ebola, and the averages are still higher than when the year began and that's looking less and less logical. as the slowdown manifests itself. [ beeping ] >> before it gets started on the wacky nature of a market that goes up or down 300 points on a whim, let me just say point-blank that we are indeed in a -- treacherous market. we live in america, our companies are doing relatively well, but the definition of treachery in a stock market terms is when the simple facts mean nothing to the sellers. when one strand of weakness can frighten investors more than all of the good strands that are out
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there, it's pure treachery and that's what's going on right now in the field of battle. take alcoa, right? here's a company that delivered on every line-item when it reported yesterday. i know this company very well, people. it did everything i wanted. it saw strong growth in trucks and non-residential, autos, aerospace and that's a pretty darn compelling list of industries that employ a lot of people, yet companies that are involved in every single one of these industries saw their stocks get slaughtered today. >> sell, sell, sell! >> why some because alcoa's ceo acknowledged the obvious, that europe is weak. it's crystal clear if alcoa were to shutter its european operations and just be u.s. based with a smattering of asian, its stock would have been up today rather than down an astounding 4.23%. but it's ludicrous. alcoa can't close europe. alcoa is a gigantic international company which needs to be involved with europe
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because 770 million people live there. who wants to forego that market? the answer, any ceo that wants his stock to go higher wants to forego that market. so any of the company involved by kleinfeld is also involved in europe gets crushed. the stock of any manufacturer that sought after 770 million people got killed today. seems silly, the market is not that bright. in fact, it it can be down right dull-witted. what makes it so stupid in my eyes, simple. this market is like the ignore am us that only reacts to the last thing you heard. when nike said europe was very strong. so the stocks rallied. when ford said that europe was very weak, the companies that sell to europe r were annihilated. when the fed said europe is weak and intends to keep it with low rates and that was yesterday. when alcoa said europe's anything downhill and then everything tanks. >> the the house of pain! >> for the record, this whoever speaks last game is pure
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nonsense. alcoa is doing quite well and will continue doing well, the ceo is doing a remarkable cost, but it doesn't matter. we get crushed. we give back what we made yesterday and then some and we return right to where we left off on tuesday and i don't think that holds. it's a form of treachery that's also a form of torture. as i suspect the next few folks who speak will mention europe again, and it's unavailable and that will move us lower once again. europe's mighty tough to avoid and it's just too darn big and whatever is not being taken down by europe is taken by ebola outbreaks at home. as always in day like today, who needs this market? who needs cramer? >> i need cramer. why can't i sit this one out and come back in when europe gets better? >> hey, not a bad question to ask. not a bad question at all. the answer to it is a little convoluted, though, because the problems with europe are man
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made. just imagine if each country in europe were a company and its leader were a ceo, right now you have a ceo in russia, vladimir putin who said i'm willing to cut my country's only numbers, sales and earnings so the germany company has to take down its numbers, too. he doesn't have a board of directors, he's a dictator and he can get away with such financial suicide. he's betting that angela earning innel of germ. >> does have a board of directors and they'll replace her with a new ceo who cares more about profits. it hasn't happened yet. she's not blifrjing so the two ceos are duking it out. president obama who also doesn't care about profits, it's as. they're playing a game of chicken with all of the world's businesses to see who can win over ukraine, but let's say these ceos resolve their difference cans. many of the negatives will reverse and you will say, wow! how did anyone fore any those 770 million people in europe. not all is going reverse.
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that won't happen until earning bowla's contained and right now it looks like we are far from that happening. of course sma, it seems like day one of the real scare. i don't know enough about ebola to say how real our fear should be. i'll leave that to the experts. i'm a stock guy. i'm not an ebola guy, but i do know the slowdown in europe is real. i saw a staggering factoid from ibm, the most author tafity source i have for news, which means european companies are using 5 hers less oil than last year right now. imagine, a 5% decline in the amount of oil used in the largest countries in the world. can can you imagine how bad business is over there? that kind of demand sends down every stock which is the epicenter of the decline today especially when we're producing 1.1 million barrels a day in this country more than it did last year which happens to be more than a million more than the million more, and we're
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producing more, and next year it will be 4 million and we don't have room to store it all as we heard from one of the largest oil storages in the u.s. when we talk to them later on. the saudis are selling oil like mad now and i that want to keep our prices low and ecuador is ramping up production and they have a lot of oil there. huge supply. not enough demand could send oil through the $84 level we closed at today. the declines in energy are so vicious that they make you wonder whether anything industrial is worth owning, even companies that are winners in the cheaper energy world. winners like alcoa. then, of courses, the chartists freak out as we take out levels that seemed to hold yesterday and they make dramatic projections about how low we need to go. i still can't believe it. incredentialy pressured off the charts segment. we're in a real tough moment for stocks as ed ponzi told us in off the charts, once certain key levels get taken out the selling will become more intense and it's not like they can switch
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into investor mode and react to the fundamentals. they aren't able on say, wow! the stocks i am brought down with my selling are now at such a raktive levels and that's not how it works. these traders, the declines mean more than one thing, more declines ahead. so what do you do? you get out ahead of those declines. how is the treachery end. how does this end? two ways. one, we get so low this europe doesn't matter nor the other ills whether they be ebola or isis or the slowdown in china some three issues that are all worth fretting about or do the ceos make peace in europe, china comes back in line, and stranger things have happened and it hasn't paid to be a pessimist for a long time. right now the market still doesn't think -- it still doesn't know how to price in the recession that europe's headed into. it's furiously trying to do, and this is not a dip. it's a wholesale ongoing readjustment that's the too
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difficult to buy into. i'm not in that camp right now. we'll know when we get to the right levels where the dip will be. and we'll know the right levels to create capital because the commodity companies won't bounce and their earnings won't be cut, but here's the bottom line. until everything negative is priced in and that includes both ebola and europe, you have to expect more treachery like we have today and hold steady, cash at theed ready when we start going down on bad news which is most certainly not the case right now. burt in connecticut, burt some. >> jim, i want to say first that i appreciate what you do for people with your show. i think it's a wonderful thing. >> i've been all over the world in the last couple of days and i'm getting nice comments because this job can be horrible if we have more days like this. how can i help? >> i've held price line all of the way down, 18% to 20% from its 52-week high even before this recent market decline and so i don't know if people are concerned about the upcoming
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earnings in november. i mean, is that the issue some is it still a buy or do you think it's a hold or sell? >> i think the problem here is competition. i think people feel that others have caught on to priceline's model and if that's the case, then priceline's margins can't hold up. i, myself, am less certain about priceline's margins than i have been in a long time so i understand the selling. i also think, by the way, that travel will be hurt by ebola and if you don't think so, i think you're being a little too pollyannaish. you have price cutting and a real challenger to priceline and you have ebola. let's go to don in new jersey, please. don? >> hi, jim. i've been looking for a stock with a long-term growth potential. i've been buying taser, tasr and it's one of the best growth stocks you think in the country. what do you think in. >> i'm in agreement. i did a whole segment, a whole piece on our show about why i like taser. taser has been winning a lot of
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orders, but right now taser is in the category of companies that people say it's too speculative for me and i don't have the earnings momentum i want. i think taser is a good level of speculation. it it ain't no pepsi or allergan. it doesn't look like it will end any time soon, but we'll know when we get to the right levels and we'll tell you. we'll get through this together and i'm not telling you to abandon ship. "mad money" tonight, find out what allergan and pepsico have in common and why it has me steamed and why j.p. morgan and target have all one thing in common. hacking attacks that have left your data compromised and tonight i'm highlighting a new security player that could be up to the task to protecting you online. zoe's kitchen, can it continue to cook? i have exclusive insight you won't want to miss. stay with cramer. >> don't miss a second of "mad money," pfollow @jimcramer on
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twitter. send jim an email to or give us a call at 1-800-743-cnbc. miss something? head to so i can reach ally bank 24/7, but there are no branches? 24/7 it's just i'm a little reluctant to try new things. what's wrong with trying new things? feel that in your muscles? yeah... i do... try a new way to bank, where no branches equals great rates.
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memo to all the activist investors out there, can you please stop picking on the summa cum laude students and go after the underperformers instead? right now three fantastic ceos are being called out for not doing enough for their investors. all three are under some sort of saument by big name activist hedge fund, nelsielelson pelt, beverage company and a snack company. i can understand how peltz might have wanted that to occur back when pep was traded in the 60s when he first burst on the scene and now pepsi is at 93 and it's a packaged goods industry and it's a major edge over the competition as we saw from this fantastic quarter this morning.
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pepsico raised its growth rate from 7% to 8% last near and this morning took it to 9%. if you had to own one packaged growth stock, this is the one, conagra, campbell's soup and so many other packaged places are doing owe poorly, why is peltz going after the best and why not congratulate for a job well done. i say ka-ching, ka-ching, congrats some. a hedge fund manager and bill ackman have teamed up to acquire allergan. what has it it done in exchange, how about deliver the best results of any pharmaceutical in the land. the company's ceo has done more to create value than the people who run merck, pfizer, lilly, bristol-myers and so many other so-called powerhouses and yet the catcalls about his leadership continue from valiant and ackman. i think what they should say, too, they should say we misjudged you and all you could
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do from shareholders. you took many of the accidents we wanted and we are thrilled which is why we're going to go after a different company where the ceo isn't as motivated to do the right thing. thanks, david, for a terrific job. why would that be so hard to say? finally today apple ceo tim cook got a pseudofan letter first leaked to twitter from financier carl icahn while cook has done a remarkable job, there's still so much to do. once we have the stock really moving because he believes that a defacto short squeeze could occur. he wants apple to roll out an high-def, television set. again, i think the the takeaway is that cook's not giving her all she's got. my view, i only wish there were other ceos as shareholder friendly and also as strong in the creation, development and execution of terrific products as apple's tim cook.
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i'm not saying we should throw a pity party for paillette or cook. i'd say you have it pretty darn good. plus all three of the ceos is extremely well compensated and given the wealth they created for the shareholders i think they deserve every single penny which brings me back to my initial point. i wish these activists would say thanks a lot, pat them on the back, maybe and declare vikt ye in all three cases and put the heat on other ceos of companies that have actually underperformed. why go after people who run the best consumer goods, best pharma and best technology companies, why pick on the cum lauds or those who have been held back a bit. why go after the best? because quite frankly, these activists could do much more goodel where. it's time for them to say well done to pepsico, allergan and apple and move on. drew in virginia. drew? some. >> boo-yah, jim from the old dominion state in the colonial williamsburg area. >> i love williamsburg, and been
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there with my family and i love pearson's bq back there. >> thank you for all you do for us investors. you're a great coach and mentor. >> i say that to myself every day. people say jim, stop it already. what's up some. >> there's not been a lot of focus in the technology sector. i've been following microsoft and buying blocks the past year. how do you feel about this company as 2014 closes out and we head into 2015? >> i think you have horse sense. both stephanie link and i. she's the co-portfolio manager of my charitable trust and people don't care company's gotten new focus and can split itself up and generating good numbers. i agree with you. i'll go to wall ney new york. wally? >> yes. >> go ahead. >> is that you, jim? >> yeah, you got cramer. what's going on? >> i have a question for you, with the spin-off of paypal from
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ebay you recently interviewed musey from paychex. would that make a big company? i don't understand it. i need your help on that. >> i think paychex wants to stay focused on the actual distribution of checks to smaller businesses and the payroll checks and he likes the human resources business. i think paypal has to stick as an alternative payment processing system. so kind of separate businesses, but you know what? i think paychex is the one to buy here. stop focusing on the winners, pick on the losers! companies that can really use your help. chances are you get more accomplishme accomplishments. much more mad ahead. i'm breaking bread with the zoe's kitchen, and see if the mediterranean chain can follow in the footsteps of chipotle. how about a company that makeses
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money no matter where the price of crude is. i'm checking in with a very special one that could be piping hot for you and potentially probable players fighting to keep your online account secure. stay with cramer. word of another security breach. >> 76 million household others. >> breach of personal data ever in the internet age. >> the stakes are high to keep you secure online and a fresh-faced stock on wall street is taking up the task. don't miss the under the radar name cramer's found next.
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after another hideous down day on a market that's becoming increasingly volatile and increasingly violent, i think we need to be on the lookout for stocks into powerful loom themes that have nothing to do with the weakness in europe or the the meltdown in the middle east or the slowdown in china or the ebola epidemic. i'm not saying these stocks would necessarily make their way higher in a terrible market like this one. i'm using these words like terrible and treacherous, but they will get cheaper and thus more attractive as they go lower and i think they'd be among the first to rebound once the sell-off runs the course. they always do. what kind of themes am i talking
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about here? what's more cirque elg the wagons around and cyber security and an area that's looking more and more essential in the day. putting 56 million credit cards at risk and the very next month and j.p. morgan can get hit compromising 76 million bank accounts and it's not safe for celebrities to store naked pictures in icloud. you better believe that companies and government agencies will spend fortunes safe from cyber criminals. garner, the research firm, expects the global cyber you security market will grow from $76 mill twron to $86 million, and i would be surprised. and i think that's conservative. the days like this one that can drag down the entire market, we can have robust bull markets in individual sectors and right now the cyber security space is very much in raging bull mode. that's how longtime pallo alto network had 114% over the last months, that is a little nose bleed territory. let me give you another example
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and one i haven't talked about. cyber arc software. small israeli security company trading under cybr. cyber arc came public in the united states and i told you to try to get a piece of the ipo shortly before it happened and the stock rallied at 87% in the first day and climbing to $29.99 and it's seen its shares fall 5% including a nasty 4% decline in today's session. ever since that explosive ipo i've been wanting to circle back to the company and i've been waiting for it to come in and today's clobbering gives us the perfect opportunity and is this the overhyped deal that comes really strong right out of the gate only to peter out almost immediately or is this a company that we can believe in? >> let's go through these questions one at a time, cyber arc software is unique among the cyber security plays that i follow. most of these companies are
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about defending the perimeter and keeping hackers out with sophisticated fire will walls, but if target, home depot and j.p. morgan could be hacked then anyone can which means you need a system that can help limit the damage once the hackers get in and that's cyber arc's forte. cyber arc's software is focused on protecting what is known as privileged accounts or administrator accounts and for hackers getting into one of these accounts is holy grail of cyber crime. every met work has privileged accounts and they might belong to your company's system administrators or third-party providers as cloud-based providers of service, and from the perspective of cyber security, these are the most vulnerable part of the system because they provide complete access to in control of all parts of the information infrastructure including industrial control systems and sensitive business data. basically a privileged account and let's consider a master key that if you know what you're
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doing it can let you go anywhere or do anything within a given network and it is no wonder that hackers are constantly trying to gain access to these accounts. once they're in they can take control of the network and more importantly, steal confidential information or just commit straight-up financial fraud. >> boo! >> and that's where cyber arc comes in and they protect the privileged accounts and protect malicious activity. >> it has a whole additional layer of security to detect and respond to cyber attacks before they can compromise sensitive data. how does it work? it has a number of different tools. there is a password vault that protects and manages all privileged accounts across an entire organization. a session manager that monitors every key stroke and mouse click made by these privileged accounts. >> and a threat of analytics tool that profiles and analyzes the behavior of individual, privileged account holders like
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a criminal cyber minds thing so it can set off a warning when it detects any unusual activity, plus cyber arc's software creates a wall around these privileged accountses and lets them monitor everything that passes tlie and i think this is a very smart belt and suspenders approach. think of it as a good, barb wire approach. whatever analogy floats your arc. ♪ >> can you make a little joke? is it so bad? apparently, a lot of people agree with me and cyber arc's 1500 customers could have 30% of the fortune 500. we know how cyber arc fits into the network security food chain. is it worth own something the company grew revenues at a 33% clip, and you know how much i love that 30-percent plus number for growth. plus it occupies an underpenetrated neech with no real direct competition. if it wants to protect the privileged accounts, cyber arc
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is the way to go. however issue it did shoot into the stratosphere and it goes to the sales estimates. we don't like that. that's not cheap and it's still less expensive than the securities plays. and that's at ten times the 2015 sales. nose bleed territory for my favorite p.a. i think it's too early to tell whether it will be a terrific investment, and that said it could be a great trade right here given that the quiet period ends in a week and a half at which point all of the investment banks involved in the ipo can start rolling out research coverage, and i'll bet that's positive because that's just how the business works and one that's coming down where it opened and you don't help bring a company public and turn it around and say it's a piece of garbage. >> you can circle the wagons and it does remain the inflated, will palo alto networks. while i like what i see with the software, i need to see the first quarter before rec menged
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as a long-term investment and as a trade, i think it makes a ton of sense to buy cyber arc before the ipo quiet period ends and wait for the analysts to roll out the research covers which i expect will be buy ratings later this month giving you a chance to -- ♪ ring the register. it's not as watertight as noah's arc and it it might be able to withstand the storm of selling without the stink of two by two animals like bulls and yes, bears. still ahead, i'm wondering if wall street is hungry for hairs of zoe's kitchen and the power of american energy or the pain of the $84 pullback. wouch! last night i uncovered my favorite players from the far east and stick around what tonight's lightning round has in store, will you? stay with cramer. so i can reach ally bank 24/7, but there are no branches?
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it's easy to panic on a horrible day like today, but remember the united states is in pretty good shape. it's the rest of the world that's dragging our stock market down. the price of oil gets crushed like we saw today. that's good news for american consumers and it saves serious money when they go to buy gasoline. when consumers have more money in their pockets they're more
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likely to spend it at a restaurant. rapidly growing, fast casual mediterranean food chain with 125 looks across the south. zoe's is somewhat reminiscent of the early days of chipotle which say huge compliment. zoe's reported a robust quarter with the revenues coming in higher than expected. same-store sales up, and the company is on track to add 29 to 30 new stores with a 29% increase. it came public at $15 in april and immediately opened above 25. it's trading up to $32 even after the 1% pullback. can it keep climbing? let's take a closer look at kevin miles. president and ceo of zoe's kitchen. mr. miles, welcome to "mad money," great to have you. let's get right to. normally it's not fair to compare anyone to chipotle. they can't live up to the expectations and there was a company called baja fresh which i know you were involved with
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which at one time looked like that be chipotle, is this in your many years of experience with restaurants logical to compare it to chipotle. >> to have it in the same breath as chipotle is fantastic and we are honored to be in the same breath. zoe's is different and we're a unique brand. we're in the mediterranean space and delivering what the customer it looking for today. >> it looks to me when i read your literature that you're talking about a lifestyle, casual brand. not casual eating, but lifestyle brand. >> correct. our customers connect to their emotions and attitudes and something that makes them feel good and we ask the customers at you will time, what do you feel? i peel better with fresh fruits, fresh vegetables and lean proteins and it's resonating. >> it looks like you are one of the early adopters of social media to talk and huddle with
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your customers. >> correct. >> we do a lot of that one to one market. not one to mass. one to one, what is that consumer looking for today some is she a busy mom looking for a better meal? what is she trying to drive in? what does herr busy day look like and how do we provide that for her some. >> you've done a lot of work about the demographic of your customer for a $9 price point, tends to be wealthier can that translate across the country? >> i think so. everyone is more educated today around better eating. >> yes. >> and looking for better options and that educated consumer is trying to find that and there aren't many spaces in the place today that you can do that. >> and clearly relate mediterranean with better for you food, right? leading to the word zoes. >> mediterranean food has been around for thousands of years, lean proteins, fresh fruits, fresh vegetables and we're about delivering goodness to the communities that we serve, not only to the team, customer and
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great quality food and it's better for you when you're eating something predominantly preservative and additive-free and fresh fruit. >> did we get away from what food is? >> the customer is looking for the transparency of food and they'll make the choice ultimately if they still want a burger, they're going to eat a burger, but they still want to know what's in the burger. >> you have cheap gasoline where you guys are. for $9 a customer can splurge a little bit more when they have more change in their pocket. >> the customer across the country and what's nice about zoes and you can have a great lunch for under $10 or a fantastic family meal or mediterranean meals we've kicked off for under $40 for a family of five or six. >> here is a tough question. you're located in dallas. we all know that there's the ebola scare and dallas lost a person to, bo ebola. is this going to, as previous moments when we had scares, can
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it cut into casual dining? >> specifically around the fast cash all space? >> just ebola because i don't know, the cruise ship stocks are all down. a lot of people are feeling that this has gotten unchecked and they can't check it. >> i think consumers today, again, they want to know really what's going on and dallas was a scare that we watched very closely to understand what that consumer, how they were going to react and we had a potential second scare there as of yesterday and the good news is that person tested negative, so that i think is good, but i do think it it can cut into it if we don't get that under control. >> that's across the board. >> absolutely. it affects all restaurant stocks and consumers and the dining habits. >> do people in the industry, would the industry ever say or petition the government saying we have to get more serious? because at some point an open borders policy may not be that good for zoes or chipotle or anybody. >> it would be hard for me to
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comment. i'm a restaurant guy who is making great mediterranean food and the like and the government will definitely get involved and restaurant space is highly concerned about that. >> the commodity prices, across the board going down. what does that mean some do you hedge or what does that mean for your raw costs? >> for us, we're still a small company and leveraging our growth. our market basket is relatively diverse. lots of chicken and lots of lean protein there and produce and fedda chee feta cheese and we're still leveraging our growth as we continue to grow across the country. this is the closest one i've seen on chipotle and many people who said it was a concept. this is not a concept and this is a way of eating and to be the next chipotle, that's what you have to be, a lifestyle brand. kevin miles, president and ceo of zoes kitchen. i know it's expensive, but this had is one to watch. "mad money" is back after the break. (receptionist) gunderman group.
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rapid-fire calls. [ indiscernible ] play until you hear this sound and then the lightning round is over. are you ready, skee-daddy? it's time for the lightning round. let's go to derek in california. der derek. >> jim, boo-yah. first-time caller. >> thank you for calling. >> hey, what's going on with timkin steal is what claus kleinfeld said last night. claus klein pelled said aluminum is replacing steel, and people can't handle any negatives right now. i need to go to bob in missouri, bob! >> hey, jim. this is bob from kirkwood, missouri. >> how are you? >> very good. hey, you were talking about dividend paying stocks and the dividends of them and i was wondering about mlps that are connected to the energy sector beaten down like crazy with the price of crude, specifically
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mmlp. they crushed that thing. they crushed that. it's mart -- i think it's overdone, but you know what? every day i say that it gets even more overdone, so if i want to start a position in midstream and i would start some tomorrow and i would hold back for the next level and that's what stephanie link and i have been telling people. be careful, this market does not know a bottom yet. we will know what it looks like. it's not here. max in florida. max? >> i just have a question for you about netflix. do you think it's a good buy and a good hold? >> i think netflix has to come in more and i'll throw in tesla. i think both stocks have held up very, very well and they are going to be the stocks to bounce when things get better. right now they're too speculative for me. >> let's go to -- look, that's not a new view, but i've been saying they're cold stocks and i was looking at netflix and i was
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hoping it would be down at 20. at 20 i would feel better about it. how about bob in rhode island? bob? >> bob from rhode island. >> hi, bob. >> i would like to get your take if i should hold or sell united rentals. >> united rentals is under assault and it turned out to be overowned by hedge funds, okay? no matter what they do it seems they can't get it right for the stockholders and it is a great company and it is going lower until the hedge fund liquidation period is lower and we are not there yet and it has very little to do with how you're doing which is very well. >> cramer, i'm trying to fill the energy portion of your portfolio and i need shinear energy or kinder morgan. >> you want to get the plus 5% yield. i'm saying lng is not as good as cheniere energy partners, but kmi is coming down. we were going back and forth and we think it will go down to 33
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and 34 and that's where we will pull the trigger for the rest. jim in florida, jim? >> jimbo. >> yo, yo. >> boo-yah to you. >> i'm hoping for good news sunday, but i have my fingers crossed. what's up? >> i have a question on vanguard natural resources and bought it it for the dividend and bought more recently because it came down and it was down again today. do i buy more, do i sell it? what do i do? >> people have given up this thing like i wouldn't believe, and i'll give the same caveat like i have all of hem. i think it's okay to buy some and then you have to wait because there's too much pressure and that, ladies and gentlemen, is the conclusion of the lightning round! >> the lightning round is sponsored by td ameritrade.
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with the price of crude falling off a cliff here, the entire oil complex is being obliterated, but not all of these stocks deserve to get slammed. in particular i'm thinking the pipeline companies make the the vast majority of their money from volume-based fees that have nothing to do with the price of oil. if anything with domestic production surging, these companies should be benefiting from higher volumes. when awe look the at the stock like magellan midstream partners, it's getting hammered here, down nine bucks from the high in today's session alone. how does that make sense when roughly 85% of magellan's price is fee-based.
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magellan has 9500 miles of refined pipeline where the company transports, gasoline, diesel and 42 million barrels of storage space. at the same time, the company has 1,100 miles of crude oil pipe and they transport black gold to where the refineries and where it's needed. meanwhile, magellan protects you with the distribution that currently yields 3.25% and the company has raised its payoff, if the company gets pounded its yield can create a cushion. let's check in with michael meres and he's the the chairman and ceo of magellan mid-stream partners. learn more about where the company is doing and welcome back to "mad money." good to see you, sir. you probably have a handle better than almost anyone in the country about how much crude we have. is there just a huge glut developing in this country? had there is a significant glut occurring in this downry right
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now. it's across multiple basins and it's in texas, in colorado, it's in north dakota. producers are really ramping up their drilling. it creates opportunities for infrastructure companies such as us to get the routes from the production fields to the refineries and we're capitalizing on that. you're putting in another premium pipe. will there well be 3 million of barrels a day coming. >> those projections change every week. >> how can that be somehow can something so big like that change some i think the technology improves. >> right. and that's one of the primary drivers there. the producers are improving theec it tech every day. they're expanding the production in that field and the efficiency of the production is growing and those production forecasts, we haven't seen an end to that and it's rather shocking to us, you know, just a few years ago we thought once we completed the two pipelines we've got in place that would be enough. we're not so sure now. we may need more pipeline
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infrastructure. >> is it possible that if we can't export our domestic oil mooi might drop. >> there might be an impact on price and production if we don't o lou exports. the light production in this country is reaching record levels and it will soon reach the point where the refineries can't process at all. so at that point that's going to be the critical point and probable not for another year or two, but that's where the rubber will meet the road and 60 to 70 is probable too low. i think there are things that can be done to optimize the use of that light crude. i think there are things that can be built. >> that's what you're doing. please explain what that does because we've talked about it a bunch of times on the show about how the splitters can be. >> under current u.s. law you cannot export unprocessed crude. so a condensate splitter splits
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it into various products. the biggest products that come are finished diesel and jet fuel and naftas which are precursors for gasoline. so once you've done that you can export those products and keep them domestically and one of the benefits of doing that domestically is you can optimize where you take the finished product and you don't have to put it on a ship and take it overseas and what needs to go overseas and keep here what needs to be here. >> we do have that. corpus christi, we have a large facility and the capability to build 3 million more garls and we're looking at new, potential marine facilities to prepare ourselves for this potential export capability and we're looking up and down the gulf coast for the best place to put this and so it's something that we're actively developing. >> do you think that there is a move by some of the opec nations to get the price of oil lower so that we're not able to develop what we can develop and they
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ruined the pricing umbrella? >> that's certainly a theory. that's the first step they've taken to indicate that that's the path they're going take. i think it's interesting to see how far they'd go, if we got down to the kind of numbers you talked about, $70 crude and whether they'd stay true to that or not is an open question, but i think they're trying to perhaps set that fear out there, perhaps that they're willing to do that to affect production, but i don't think it will do anything in the short term. >> how about the 15% that you have that is commodity related and do you think that's behind the decliners or just the whole group? >> think it's the whole group. >> that 15% is not hurting you. >> on that particular 15% it's a particular type of blending we do in our business and we're seeing record high margins there. that's not what's hurting the industry right now or the -- it's a group wide issue. >> i know you're putting it in
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and there is the sense that everywhere we know there's oil there's a lot more oil than we thought. i understand, from the way i look at it, the price of oil doesn't matter to you, right? it just really doesn't matter to you. >> generally speaking, that's true. at some point it matters to us, but if you look at our business in total the biggest portion of our business is refined products and if the price comes down, what we expect refined product would go up. ours is 9% year over year is which is unusual. >> that's what matters. michael mears, chairman and ceo of magellan midstream partners. it's not about what's happening at magellan which is real good. stick with cramer. a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits. so every time you use it,
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might not seem so big after all. ♪ look, i'm in favor of buying dip, but can we wait for the dip to end? i think the market still has further to fall because just think about it like this, we came into 2014 and there were much, much, good things happening. europe was getting better and we didn't have an ebola scare. we thought that the middle east was under control and now ebola, the breakout. everyone's worried. okay. europe coming off the rail, all right? the middle east and very
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destabilized and throw in china. how about we wait for a further decline from the top. that's all i'm saying. just sit tight. not saying cash out. there's always a bull market somewhere and i promise to find somewhere and i promise to find it for you on "mad >> narrator: in this episode of "american greed"... a pharmaceutical giant is accused of putting profits over patients. pfizer pharmaceuticals goes beyond fda limits and pushes a pain pill called bextra to the masses. >> this was about putting bottom line above the patients' lives, and that's wrong. >> narrator: the illegal marketing has already cost some the ultimate price. [ monitor beeping ] and later, in southern california, jeanetta standefor convinces 600 investors their cash is rescuing homeowners from foreclosure. >> it felt like everyone was going to win. >> narrator: the would-be marketing mogul relies on friends', relatives', and


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