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tv   Mad Money  CNBC  September 15, 2015 6:00pm-7:01pm EDT

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seconds of the show. >> toe nail fungus. what happens to lion's gate after it 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 back to "mad money". welcome to cramerica. other people want to make friends, i'm just trying to make money. my job is to not just entertain you but educate you and teach you so call me at 743-cnbc. or of course tweet m me @jimcramer. we rallied beautifully but for the worst reasons, like the
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weaker-than-expected manufacturing data and the brutal 3.6% decline in the chinese stock market last night. how can this clearly bad economic news produce such a remarkable run? dow climbing 229 points, s&p jumping, nasdaq gaining 1.14%. is this opposite day? perhaps the market lost its mind? no, it's like we've entered bizarre-o world with bad news is good news. why? the uglier the backdrop, the more likely the federal reserve stands pat and refuses to raise rates when it concludes its deliberation this is thursday. this fed meeting, like it or not -- and you know i don't like it -- is the most important event of 2015 for two reasons i don't recall a more opaque fed. it's driving me crazy! it's about to render a momentous
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decision that will surprise people. second, the consequences of a rate hike, listen, you're not going to get that plus and minus stuff for america it's plain negative for stocks but the upside from the no hike while positive as we saw in today's action perhaps stolen by -- from a benign announcement thursday is not positive enough to outweighing the potential down side from fed tightening. as i keep saying, i don't like risk/reward here. i don't like it because negative economic news might keep the fed on hold but it will cause earnings estimates which are the mother's milk of stock prices, to get slashed. better economic news causes the fed to raise rates which is even worse for the average. you know what? to me it almost feels like a lose-lose possibility for most stocks, creating a treacherous market. and i have to tell you, sometimes that's all too easily forgotten on bullish days like
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today. so going to this meeting i think it's imperative to give you a feed cheat sheet on what can happen to your stocks depending on the fed's decision. first the upside, if the fed says we're on hold until we get more clarity about global weakness, especially in china and the emerging markets, then i think we rally dramatically simply out of much-needed relief from the uncertainty, a decision not to raise rates with a statement saying we can hold off on night ng for the rest of the year will give us more more days like this one. it's a genuine bear buster. no rate hike with a statement of wait-and-see will give us a few more days like this one, but the earnings estimates are very much at risk if the world's economies don't improve. okay, how about the down side that comes from a rate increase? i see six possible negatives for the stock market that you need to be ready for if the fed takes
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action and leaves the door open for even more increases in short order. [ boos ] first, higher interest rates per se weaken housing and auto sales. some say housing has begun to cool. i think auto sales could be at a peak here and they can only get worse, not better. a rate hike causes earnings to come down for these two industries not to mention the ancillary companies that service them, and they're big. second, if the fed tighten, the dollar should reverse its recent weaker trend versus the euro which i like and move up sharply which i don't like because that causes earnings estimates for all u.s.-based international stocks to be cut and cut immediately. we're at a crucial moment in the earnings calendar where the analysts are sharpening their 2016 numbers. that's what happened in september and they will ruthlessly slash their forecasts on a rate hike because a stronger dollar makes it harder for our exporters to compete
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against foreign companies while cutting into their international profits from the translation from weaker currency to strong. many companies will be if the final month of the quarter so they won't be able to support their shares with buybacks, that could exacerbate the post-rate hike decline. third, emerging markets are pegged to the dollar amount higher dollar inspired by a rate hike could cause these already weak markets to collapse. it happened in '98 and '' '97. those markets do bring us down here. for example, i don't think that brazil as currently configured can survive a big rate hike. yes, it's that much on precipice. you know what, our main trading partners canada and most importantly mexico could get slammed too. don't forget the economic advantage gives foreign companies the disincentive a strong dollar creates to travel here. see the hotel numbers today? they were awful. make no mistake, the dollar hangs on the balance in this decision and a sharp spike up could be deadly. we'll come back to this issue when we go off the charts later in the show.
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fourth negative? shanghai. the shanghai composite will accelerate its crash from the 3,000 level it's been hanging on to by its fingernails to 5200 in june but up 800 from last year. i expect the chinese market to plummet another 33% if the fed tightens. we're way too linked to china's markets even if we're not that linked to its economy. fifth, once we get our first rate increase, we're going to be doing what's known as fighting the fed. money managers know that rate hikes change. a hike takes a tail wind, turns it into a head wind. it wouldn't matter if the global situation were stable but it's not. owning stocks will be more difficult in this new environment. period. i can show you a chart that says stocks rally this, stocks rally that. trust me. i've been through a lot of rate cycles. the only positive could be a statement that accompanies the fed's action. a one and done comment that the fed will wait and see if its hike inflicts real damage could actually limited the down side,
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mute the reverberations. remember, the market wants serbty and clarity, not herkineher k herkiness. a statement that sounds that will call for more rate hikes could work wonders in terms of damage control. the insane cacophony of federal reserve officials has created a level of uncertainty that makes no sense. it's nothing like the bernanke fed, at least not once bernanke got his act together. these jokers -- and i don't use that term lightly -- have caused a tremendous amount of selling and losses in your portfolio. idealen should tell these various presidents and governors that she doesn't want them to talk about rates and instead they should confine their comments to issues involving the financial health of their respective regions giving the fed chief herself the input she needs to make the right decisions. still i'm not about to stamp some smiley face on any rate hike, that's because of the sixth negative and maybe the
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worst, the needless fed-induced surprise factor. there are always plenty of hapless hedge funds that bet the wrong way with borrowed money and some of them might have to liquidate if they roll snake eyes. at times the stress is your fellow shareholders or at least the highly margined renters who hurt you with their flailing, not the actions of the companies themselves. that said we -- meaning you and i -- can navigate anything the fed throws at us. if the market goes down big we can find stocks, we can get the right back into the stocks that keep winning because earnings won't be impacted by higher rate or a stronger dollar. we'll figure it out together, that's what we do. haven't we done it for years now? never forget, though, this is a market of stocks and markets are about supply and demand. there's going to be too much stock supply, there is already! with a tremendous amount waiting in the ridiculous unicorn wings and less and less money coming into equities everyday. it's unimaginable to me that we'll see more money coming in if the fed raises its rate.
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most importantly we have to face important facts going into this meeting. we have had a terrific multiyear run in stocks. they're not cheap. at the same time, economies worldwide are turning down just when the fed wants to raise rates. that's an unholy combination if there were one. if you didn't know better, ex employment growth you would think a fed needs to cut rates not raise them. so let me give you the bottom line as i see it going into the big meeting. the rewards real positive for stocks if the fed does nothing, but the down side risk remains enormous that the fed does the wrong thing and raises rates without commentary, it's finished for both the foreseeable and i think perhaps more important the unforeseeable future. i need to go to jim in connecticut. jim? >> caller: hi, jim. i'm calling about united technologies, symbol utx. they're down about 25% from its high. i know they're planning on buying about a billion dollars back after the sale of sikorsky.
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what i don't know is what the future holds for united technologies. i hope you can help me with that. >> united technologies is a great american company and has a long tradition of doing the right thing. but i have to tell you, a lot isn't united technologies' fault. it's viewed with china. otis sells a lot of elevators. but no matter who is in that group, they're all being hurt, including utx. bill in florida, bill? >> caller: yes. >> you're up, bill. >> caller: yes, this is bill from st. augustine. it's 450 booyahs to you, jim, because we're celebrating our 450 years in st. augustine this week. >> oldest city and i love it. i've been there. i'd like to say i played golf but i went to the beach. what's going on? >> caller: not too much, not too much. the king and queen of spain should be here but they're keeping it secret. in any case, i've got a question about marathon oil but before
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that i'd like to precede it with the statement that goldman made that they may see oil at a $20 a gallon price and also i think morgan stanley came out with something talking about a projection of $50. now marathon oil has been in a lull of $14 and it's starting to climb up. >> i don't know, bill, let me tell you something, i talk about the travel trust marathons and why? because marathon pays good dividends but it has to take actions and i think mro in the end is the toughest one right now of the majors to own. that said, i am not as bearish about oil as goldman sachs. 20 bucks? no, not going there. the uglier the backdrop, the more likely the fed stands pat which is good news for stocks but if the fed does the wrong thing and raises rates, i'm
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trying to prepare you for trouble on an up day. that's what i like to do on "mad money". hey, on "mad money" tonight, the federal reserve meeting is only a day away. does it have you sweating? i don't know. sometimes i am. i'm tackling the technicals to tell if it's worth the worry. then time of the year again, football season is under way and i'm revealing my dream stock draft for you and your portfolio and, yes, indeed, i won this weekend. plus, it's a stock up 30% this year and you may not even have heard of it. i'll reveal it. it could go higher just ahead. stick with cramer!
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in this market, more than most, you really have to pay attention to what's happening with foreign currencies. i know, kind of boring but stick
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with me. you have to worry about their exchange rates for the u.s. dollar. remember last month when china announced that big surprise ewan yuan devaluation? that led to a monster selloff in the u.s. since then the averages have barely recovered but they seem to have stabilized. plus we know super freaking strong greenback has been the bane of all u.s.-based international companies. the stocks are down 15%, 20%, 25% because they have to translate their overseas sales in weak foreign currencies to fewer strong dollars and many exporters are losing out to foreign competitors. if you're not paying attention these issues can come out of nowhere and body slam your portfolio. they and the fed are the principal causes of uncertainty in what many describe as a bear market. so on the eve this thursday's decision by the federal reserve to hike or not to hike, something that could have a major impact on currencies around the globe, you know what? it's time to get a better sense of the markets, given my endless emphasis on their power to create havoc for your portfolio.
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that's why we're going off the charts with the help of bob lang, a brilliant technician and the founder and senior strategist at explosiveoptions.net as well as being the two man start of by the hindthestreets.com. let's deal with the fed meeting. if you listen to some people, i think it will be momentous. i even think that. i like to look at individual companies that you can make money off of by owning the stocks but, of course, as i said at the top, whether or not we get a rate hike or not is a gigantic deal for the rest of 2015 and it will matter to the trajectory of the dollar which i know unless you go overskaes you don't feel like it. not to mention host of foreign currencies, especially the ones from smaller emerging market countries. lange's view is that if the fed tightens they'll do in the a responsible way. they'll try hard not to spook the markets. you can argue this either way. on the one hand, china is still collapsing. witness last night's 3.5% plus decline in the hang shy composite and if we're looking at a global slowdown that would make a rate hike not just
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unnecessary but irresponsible. on the other hand, lange thinks the combination of lower unemployment rate, the emergence of newfound wage inflation, last month's producer price index on an annualized basis when you strip out food and energy costs they make it more likely that they will tighten. if that happens the all-powerful dollar gets stronger putting pressure on foreign currencies at the same time, translation, still more pain for the big u.s. multinationals that do business overseas that i'm so worried about night after night, don't like the setup. but -- and this is a big but -- based on the technical metrics that lange is looking at, the market doesn't seem to be preparing for any kind of major fed-induced dislocation of currencies. what gives lange that impression? first of all the volatility index measures the level of implied volatility. it's wildly used as a proxy for fear in the market. it's dropped sharply the past couple weeks, it spiked because people were focused on it. last friday it closed below its
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20-day moving average. that tells lange investors have been getting less not more affr afraid as we approach the fed meeting. so that suggest there is won't be a rate hike or it won't cause much disruption. then there are the feds fund futures. these are contracts designed to let traders bid directly on whether the fed will take short-term rates up or down. based on the difference between the september fed fund futures and october ones, lange's arithmetic says this futures market is signal ago 12% probability of a rate hike this week. that's lower than the 50-50 numbers you hear commentators throwing around. lange also thinks we've seen telling options in the skew index. another index that measures the tail risk in the, s&p 500. basically it's disaster insurance although i think it's just another instrument in the casino and it rallies when investors are worried things
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could take a turn for the worse. lange mentioned this because on september 4 the skew index soared up to its eighth-highest level ever. people started gearing up for the end of the world. but ever since labor day this index has fallen off a cliff. that tells lange that regardless of what happens, sophisticated players are not worried about a selloff after the fed meeting. you know i am. finally we come back to the currency markets which is really what i want to get to here. the euro has been gaining ground versus the dollar over the last couple weeks. the yen seems to have found its footing and even the pam recovered late last week. if the fed is on hold though as the fed funds futures and the vick seems to suggest, then lange could make a bullish case for the euro. not the dollar but the euro right here and a strong euro is what the industrials need. our drug companies need it, consumer package good companies needs it to name a few groups if the darn dollar were to come down. take a look at this weekly chart
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of ifxe, the etf that measures the strength of the euro versus the dollar. all we hear about is a strong dollar but this isn't saying that! remember higher on the fxe means the dollar is weaker. lower means stronger. when you zoom out to this weekly view of the euro ux see that the european currency seemed to have bottomed. in other words, fxe, euro getting stroenger. euro getting stronger and it's been climbing slowly but steadily ever since this bottom. some that have is because europe's been improving with good auto registration numbers this week and if the fed doesn't tighten this week or puts the idea of a rate hike on hold you can expect to see the fxe fly. lange likes the relative strength index, or the rsi, which is is up here. it's been working its way higher plus the moving average convergence/divergence line, another indicator technicians use to predict changes has been
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flashing b inin ining buy buy b. very bullish. at these numbers it's a couple weeks away from its 50 week moving average. if it can break to 113, lange says smooth sailing to 120, that represents a tremendous rally in the euro versus dollars that will cause investors to buy stocks of the same things that keep getting thrown away, u.s. based international companies have been buying them hand over fist because they benefit from a weaker greenback. but very few of the big boys believe the euro moves. they think this is about to be erased by the fed. he can, lan heck, lange even thinks the japanese yen could be looking good. they've debased the yen forever. the fyy just made a higher low last week as it held above its floor supported 80. the yen has been in a long term down trend, no kidding, right? but just like with the euro it's now within striking distance of its 50-week moving average.
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81.53. if it can rally and hold above that level for a couple of weeks lange says this chart will turnbullish. can you imagine trying to turn this battleship around. no( matter what you think of the fundamentals the charts as interpreted by bob lange suggests you shouldn't sweat the upcoming meeting and if we get a stay of execution, the euro and yen could roar giving a boost to stocks of u.s. companies that do business overseas. i think this is a huge call and i remind you if the dollar gets weaker than 2016 earnings estimate for all but the pure roe test i can companies will be going higher which is something that could knock this bearish phase for so many international stocks right off its tracks. much more "mad" ahead. it's the most wonderful time of the year, that's right, football is back. but instead of setting up your fantasy squad or talking to espn on the phone to get my 2013 results, why not draft up dollars? i'm putting together a dream team of stocks that could lead you to victory. then it's one of the
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best-performing plays in biotech. i've got the exclusive with the ceo. plus, could this company turn its stock around? i'm getting to the meat of the story with the ceo, stick with cramer.
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here's a brutally revealing segment. in any given year you know i make a bunch of mistakes. last year i made not one but two big ones. my charitable trust sold home depot -- i said i would never mention this on air -- i cut tom brady from my fantasy football team. both before home depot and brady made monstrous super bowl and super bowl-like runs. now, i recognize it's fashionable in fantasy circles to not draft a top quarterback early just like it's not fashionable in the stock game to stick with the retailer linked to the cyclical home business. it's especially questionable to pick brady because he always seemed tapped out the guy is so old. can't be enough gas in that tank. same thing is often said about home depot. it has to be the most mature retailer around opening only a handful of stores in the last few years because they're already everywhere. but that's not the point at all. what both tom brady and home depot do is make the most out of what they have which is why brady wins super bowls and home depot rises above the rest of
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retail year after year after year. i've long championed home depot both when the understated frank blake -- i loved that guy -- ran the show and now under newly minted ceo craig minnier. but i've said if the fed raises rates this goes down the hardist. that's consistently been the mistake and a lot of us make it. just like i cut brady from my fantasy team last year way too soon -- as if you should ever cut him -- you should be on the lookout to buy not sell hem depot if the federal reserve tightens. i couldn't get brady back on the squad but you can always get home depot. there's no rate hike, this rallies more than anyone in the sector. while house willing be increase by an increase in mortgage rates and i'm not changing that view, i don't think home depot's numbers will come down therefore the stock is a buy. i think it's the kind of quarterback your portfolio needs. why? how can it maintain this level of performance? first, statistically home depot
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grinds it out in the trenches, consistently delivering better-than-expected quarters and boosting its earnings forecast. it's generated more beaten forecasts than any other retailer i've followed while many retailers struggled even this quarter, home depot posted a 4.2% increase in same store sales much better than what the analysts were expecting, no mean feat when you remember that two of its largest markets, texas and california, were crunch bid too much and too little rain respectively. second like brady who even during deflategate, never lost his allure, home despoe fan friendly. it brought back a quart every of its shares in the open market. third, home depot is perhaps theening is l greatest embracer of all sorts of customer relations management techniques, many of them sent everything around programs put in place with the help of salesforce.com which we'll hear more about when we go to dream force, the salesforce.com conference. it's all about using the company's tools to connect with the customer and generate more
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business -- which is what home depot does. the despot has the best omni channel going where you can buy on line and pick up in store or bopus, as it's now known. no one can touch them in store productivity or gaining from do-it-yourselfers and professionals alive. you wouldn't think much about the patriots without tom brady. sometimes i feel that way about home depot. this group wouldn't seem as investable without the existence of hd. it did better than most when housing was terrible and now that it's booming it rises further. it's the best in class and like housing in general it always plays over its head. the bottom line in fantasy football when you need a quarter back it's brady as he showed over the steelers squad, okay, so he had gronk. and you fwleed home depot, the most reliable retailer in the land to tackle the toughest of foes, a looming interest rate hike that will hurt all but the true hall of famers that can be claimed thursday no matter where
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you stand on the waiver wire. michael in maryland. michael? >> caller: booyah, jim? booyah! >> caller: as a young investor i appreciate your advice. i bought wall part in consideration of china devaluing its currency leading to cheaper imports and a strong u.s. dollar going into the holidays. it also pays a generous dividend and is near a 52-week low. with that in mind, do you like walmart? >> this is really important. michael raises a great question. what do you do with a fantastic retailer that's down 250% with 3% yield. ? show patience, patience, patience. it won't be this quarter that mcmillan will turn it around. the terrific new ceo. it's a battleship but he'll get there. bide your time, though, and i don't think it will turn in the next quarter or even two. ray in pennsylvania. ray? >> caller: hi, jim. >> ray, what's up? >> caller: not much, thank you so much for sharing your knowledge everyday. >> thank you for saying that,
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man, thank you. >> caller: my question is about one of my long-term investment, general electric. i've read your books and applied the metrics on what makes a stock move but ge seems to defy that for better or worse. the stock just likes to stay in that $25 to $30 range and i'm curious about what you think needs to happen for it to move. >> i'd kill for the $30 side of that range. here's the issue with ge. it doesn't seem like whatever they do is working. but you know what? i care about what it's doing which is getting out of the tough-to-understand financial business. it shows the best organic growth in the show, it has great yield. i say hold on. it's a bear market in industrials but what ge's doing is right. greg in new york. greg? hit me, greg. >> caller: hello? good evening, jim. i have a question on cmi. before earnings came out they increased the dividend by 25%.
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they beat the street by five to six cents after that and they cashed. they got a pd of 9.5. what's holding the stock back? >> greg raises another point that's interesting. we are in a bear market for the industrials. he just detailed everything you want to hear about a company and still down what? 20% this year? it's kind of -- down 16%. it's insane. but you know what? it's related to china. cummins has a big business in china and what what that means is people are saying stay away. now if you only spend half as much time on your stock portfolio as you do your fantasy team, you need a quarterback. every portfolio needs a reliable player. home depot, the most reliable retailer in the land. much more ahead. success in biotech hangs in balance of the all powerful drug approval process. but is the way to play it with the guys who are doing the testing maybe not the ones who will go binary, good, bad? i'm putting it under the microscope. when it comes to investing in
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brazil, the country's markets may not look appealing at all but could a brazilian steak house that's american based tell a different story. i have the interview with the ceo. today's edition of lightning round. stick with cramer! at&t and directv are now one.
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. sure we had a terrific rally today but this market is loaded with uncertainty. sometimes it feels like we're uncertain about everything -- the fed, china, you name it. however, even when the big picture macroeconomic situation is this murky you can find high quality stocks that should work regardless of how things play out for the global economy. take quintiles transnational holdings, that's q for you home gamers. that helps drug companies manager their clinical trials, especially late stage trial that biotech players lavish most of their money on. i like to think of them as an arms dealer to the biotech industries. they're the ones to go to if you want to get through the fda. they've been an incredible performer, it's up 30% since we spoke to the ceo. i think it could have more upside going from it. the company reported an earnings and sent stocks soaring and then
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stocks peak there had. then august rolled along and kwen ti quintiles got taken down with the rest of the market. now it's back. that stock could be a terrific buy. but don't just take it from me. let's check in with tom pike, the ceo of quintiles transnational holdings. hear more about his company and where it's headed. mr. pikes, welcome back to "mad money." >> thanks for having us back. >> tom up 30% by your own terms may be one of the best kept secrets in the fortune 500 yet this is a renaissance time for biotech and drugs in general, why is the company relatively unknown versus the best performance of kind of the whole secretary generalment? >> it's funny saying we're a simple story in a complex industry. we've been growing the last five years, almost 8% in revenues, almost 14% in evada and our backdrop has gotten better. the bio pharmaceutical industry has been better for a long time and we service that industry and
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we continue to be able to grow. >> now you've mentioned directly in your conference calls and notes immunotherapy. we have lots of these companies on. i can't imagine how difficult it is to run a trial and how sophisticated quintiles has to be to get it right. >> we are a sophisticated logistics operation in a way and if you think about it we have great docs, 950 medical docs, a thousand ph.d.s, size of a teaching hospital, really, who design the right trials with our customers and figure out how to run them around the world. an immunotherapy trial may be a small trial with difficult-to-find patients or later in its life that it's larger around the world. but our job is to find those patients and find the investigators who can deal with the complex therapies. >> i think it might help our viewers because i know look you don't have -- you have 14 customers that are 100 million but no customers more than 10% but you talk directly, and i thought it was helpful, about what you've biogen.
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>> biogen is a terrific company. we're very proud of our relationship with them. we have a sole source arrangement because of the breadth of our capabilities, 14 therapeutic areas over 100 countries we're able to service their needs across their organization from a clinical development standpoint. what it lets us do do is work together on innovative designs and great execution so they can have high quality clinical trials. >> i felt from the materials, we've seen companies that frankly they have one or two shots on goal and they have to get it right. the smaller companies. you're almost their partner versus just contract research organization. >> that's right. it's our fastest-growing segment right now. what we've found is that small bioteches do want to use quintiles, they're just worried about whether we're too big for them so we've created a couple service offerings focused on smaller biotech. we have a higher service model.
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interestingly often i'm involved in them as well. >> you directly? >> it's important to get the top-to-top relationships with them and make sure they get the focus they need. then the key with them is they use all of our capabilities. they use docs and ph.d. we design the statistical approach, help them design the trial, go to the regulatory agency so we can be a great partner. we've even helped some go all the way into commercialization and essentially reach a higher valuation because they're able to exit later. >> i think it's great you mentioned the valuation issue because one of the things we always talk about with our viewers is the pipeline. you have to look at the pipeline. pipeline gives valuation quintiles gets the pipeline going. >> well, that's right. essentially what we do is as soon as the drug goes into humans that's when we start getting involved. so it will be what's involved in the safety and efficacy in the early stages and we'll really help bring it through to regulatory approval.
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interestingly, our fastest-growing business what we call real-world evidence where we post approval, collect information that helps provide market access information and understand how the drug is doing in the real world. >> health care professional, this is an interesting point, they say there's a nearly catastrophic failure rate in clinical trial of new cancer drugs. how does quintile solve the quality versus quantity problem in selecting patients for new trials? >> the key is to be as targeted as we can in terms of the patient. so what we do is we create relationships in advance with hospitals or other caregivers, essentially top quality investigators in the area. we make sure we get the right therapies to the right patients. we find them as quickly as we can. interestingly, increasingly, not only do we have these kind of relationships but we're helping develop social networks and using tools like that to try to make sure that we attract the right patients earl will toy these trials. >> wellness question. i remember the old quintiles because when i was a hedge fund manager we used to go long or
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short quintiles, this is the old quintiles, because it was so episodic. your company is opposite of episodic up-and-down earnings. what changed while you were private? >> we're a great private-to-public story, really. we were able to restructure the business. what it led us do was sell pieces off, make investments that work as a public company and now what we're trying to do is just focus on the customer because we believe if we satisfy the customer, if we're top quality, we deliver with speed and effective costs then we will grow as a company. and we've got a structure that lets bus a little more predictable than we were in the past and that helps drive results for sure. >> i think you're being too humble. it's about predictable as any company i've ever seen. tom pike, ceo of quintiles, letter q. i like it. "mad money" is back after the break.
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i could get used to this. now you can, with the luxuriously transformed 2016 lexus es and es hybrid. ♪ with before we get started i have to tell you that tomorrow i'll be coming to you from the heart of american innovation, san francisco. we are informsing in america the new way with the ceo's defining the future. tomorrow you'll see sales force
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ceo mark benioff and cisco's ceo chuck robbins just to name a couple. this is a powerful week for "mad money," you don't want to miss it. and now it's time for the lightning round. are you ready? time for the lightning round. let's start with herb in kansas. herb? >> caller: hello, jim. thanks for taking my call. >> quite welcome. >> caller: my question is about vox incorporated. >> i have to tell you something, box is -- i guess people want to make money now. they wanted to grow the business but where are the big insider sellers everyone was so worried about? i didn't see them. i like it. don in florida. don? >> caller: booyah, mr. cramer. my stock is alexis, buy, sell, or hold. exel. i'm a big shareholder, blah blah
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blah, excel is one of my favorite biotechs even up here in six. let's go to dustin in california. dustin? >>. >> caller: what's your opinion on taser internation all? >> a young investor might be the key because it's speculative. it's down a lot but i like the core business. ed in new york. ed? >> caller: jim, public storage, buy, sell, or hold. >> interesting. boy, that group has been so you have to. this one has moved up 10%. i cannot endorse it, even though i like it. there's other fish to fry. and it's time for jim in illinois. jim. >> caller: jim, my question is on bristol-myers, should i add to my position, sell it or hold it? >> bristol-myers? you're thinking about selling bristol miers. that would be wrong. i'm a buyer of bmy and that is the conclusion of the lightning round!
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even advanced orders. and it offers more charts than a lot of the other competitors do in desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivative pricing model, honey? for all the confidence you need. td ameritrade. you got this.
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this sumpter market was flooded with ipos. in june we were averaging more than one deal a day. many of these newly minted public companies are not so hot to be diplomatic. when you dig deeper you might find there's undervalued gold buried. i want you to consider fogo de chao, that's fogo, the small cap brazilian steak house chain,
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unique concept. gaucho chefs rotate through the restaurant bringing you new cuts of meat. fogo de chao became public in june, rocketed up to $25.75 on its first day of trading then peaked. since then the stock is falling about 30% from its highs but down here with the stock under $20 and below i think this could be an inkritriguinintriguing. part of the reason they've been punished is because they only have 36 in the u.s. ing by the brazil exposure has been annihilated because of the weak real. but the story is the u.s. the company believes they can add another 100 plus locations in the u.s. which makes fogo de chao a major runway for growth as it continues to expand, plus when fogo reported its first quarter as a public company it beat on the top and bottom lines. i think this is a stock that's been overly penalized for its exposure to brazil, not given enough credit for its expansion potential in the u.s.
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i recognize this is a steak house chain but let's take a closer look with larry johnson, the ceo of fogo de chao. we'll learn more about his company and prospects. welcome to "mad money.." >> pleasure to be here. >> when i studied the company what i realized is that it's not a steak house, it's an experience that serves steaks, fair? >> right on the money. and, in fact, it's even more exciting than that because what we're offering is an opportunity to it's things that are familiar. it's great steak, great fruit, great vegetables, great salad, great wine selection, great caipirinhas so the people that go to fogo are in for a treat and we have the opportunity -- look, we've define there had category. we lead it. but the beautiful thing is
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someone wants to have churrasco, we're at the top of the list. but when somebody goes to a steak house, what happens? they consider fogo. when you're a fogo it's a dining experience. what happens? you've got the opportunity not just to have that filet, not just to have a rib, you've got the full experience of maybe one night it's lamb chops and rib eye, maybe another night it's a different kind of filet. you're in charge, you're customizing it. >> we know beef has been expensive, we know labor costs are going higher. yours, though, do not -- your inputs don't seem to be hurting your bottom line. >> correct. and it's a real advantage of our operating system. our labor costs are about 20% which is unheard of. where it starts are gaucho
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chefs. each of our restaurants have 12 or 15 chefs. they do the butchering, they grill they serve you at table side. they carve your meat. so you've knocked out a couple layers of labor. i'd like to say we're geniuses but it's inthoernt the system. same thing on the food side. we're not tied into a tight speck on filet or rib eye. we often 20 cut, beef, lamb, pork, chicken, a fish entree. so we don't have those tight specks that box us in on meat costs. >> you're still early but you've been around. it's not like you just appeared. >> jim, fogo started in brazil 35 years ago, came toll the u.s. in '96, quickly at the time the
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company had three stores in sao pau paulo, came to the u.s. today we're at 26 stores. we've got five under construction. we know that there's an an incredible opportunity in the u.s. we can do another hundred plus stores and think about it. auv, eight million dollars. >> average unit. >> the margin at the restaurant level, 32%. >> extraordinary. >> cash-on-cash return in excess of 50% on our stores. the average fogo we run through our store 137,000 guests a year. >> this is incredible. >> do the math. >> oh, i know because i see where you guys come out and we follow a lot of restaurants. you're just above almost everybody we follow and yet the stock is too low. feels like ruth kriss before the big move. i want to thank the leo of fogo de chao. it's been overlooked because so
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many ipos came at the same time. stick with cramer. good. very good. you see something moving off the shelves and your first thought is to investigate the company. you are type e*. yes, investment opportunities can be anywhere... or not. but you know the difference. e*trade's bar code scanner. shorten the distance between intuition and action. e*trade opportunity is everywhere.
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we're going to invest in america. we're going out to dream force, sales force's hub in san francisco, it's going to be an amazing couple days. you don't want to miss it. there's always a bull market somewhere. i promise you i'll find it just for you right here on "mad money." i'm jim cramer and i will see you tomorrow!
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male narrator: tonight on the "west texas investors club"... - i'm here to present to you pie and cobbler fillings. i am asking for $150,000 for a 40% investment into the company. - we put these entrepreneurs through some hellacious tests, but this is the test to beat all. do you mind helping my mom put on this party? she's a real sweet lady. - look who's here! the [bleep]head. - this is a hot mess. - i can show you guys an amazing time in your hometown. - using your app. - using this app. - bring it on, jen. - [yells indistinctly] - oh, [bleep]. narrator: deep in the heart of texas two men carved a fortune from a harsh and unforgiving land-- butch gilliam and rooster mcconaughey.

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