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tv   Mad Money  CNBC  August 30, 2016 6:00pm-7:01pm EDT

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got more growth. >> yeah, ual. i think it was a little fast too soon. sell a little upside. >>. >> yep. >> thanks for watching. >> well bought. 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 save you some money. my job is not just to entertain you but educate and teach you. call me at 1-800-743-cnbc. tweet me @jimcramer. look, there's just too much of everything and too many companies beating their brains out competing against each other. that's why the urge to merge has become a major problem for this
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market. when that problem goes away, as it did today web food giant mongolese walked way from its bid to hershey, after they couldn't agree on a price. over the entire averages. a big reason why the dow sank, nasdaq claimed .8%. the intenses competition created by the sheer number of companies in business may be good for the consumer, good for you and me. we all benefit from corporations duking it out for our patronage. at the same time, this competition is an anathema to profits [ booing ] which is why we see so many companies doing deals, even could argue the governments around the world have gotten tougher on mergers and a lot of stocks are pretty darn expensive versus their historic valuations. let me take you through the competitive landscape sector by sector starting with the food group. the food companies have so little growth that the best ones like general mills are hoping for flatter reits next year at
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best. think about the fierce composition in space. virtually every aisle of the supermarket. does campbell's soup need to be independent, does kelloggs stand alone? mondolese, now that it's given up on hershey. come. if they kaecan't get their act together why doesn't mongolese buy the company? the supermarket aisles are filled with companies unlike hershey would rather merge than fight. now, let's consider retail. this sector's been under are tremendous pressure for ages with only brief respites when the stocks get too low. take macy's. macy's stunned us with announcement it's closing 100 stores after christmas. chain only has 769 locations. that's a very big deal. why would macy's do this? we have too many darn stores in this country. listen to what ceo terry lungren
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said on "squawk box can "when macy's reported earlier this month. >> retail space is just ridiculous when you consider in the uk it's 1 president.3, in j 1.7. we have 5 1/2 times the number of retail physical locations in america for per capita than any other country in the world, and so there has to be a rationalization. and we're not waiting any longer. we're taking the stance. we're going to still as courtney said, 530 stores in all the key markets. >> no one has said it better than terry. i thought that really summed things up. yet you know what, the only real consolidation of retail was the dollar tree bought family dollar. it's ridiculous we haven't seen mo more deals in this space. capacity must be taken after mergers if that cohort is going to come alive in a sustained
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fashion. nowhere is there more powerful need for mergers than in technolo technology. it is exhausting to even ponder how many companies make components for electronic devices. the balance of power so tilted toward the big customers like apple and against the little putians that supply them. the idea is hanging thick in the air. for example, when i read citigroup's buy recommend of broa broadcom this morning, my jaw dropped. broadcom, one of my favorites, has $15.50 in peak earnings power. hey, boy, does that make $177 stock seem very cheap. but right out in the open, right out in the open this analyst predicted xilinx could be the next takeover target for this inquisitive company and potential in xylon steel would give the company a real chance of making $11.98 next year.
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broadcom is one of my faves. the remarken thing, the analyst, he's a vet, just put it out right there as though it were no different than a new product announcement changing management. kind of like, oh, yeah, they'll probably buy xylinx. this will be no big deal, a $13 billion company with a stock at its 52-week high. buying this communications defenses chips would not be a cheap acquisition for broadcom or at least not as cheap as it would have been a few months ago. this kind of research report, this kind of you know, you know, blase make mentios it clear the obvious consolidation coming. softbank buying arm holdings. then it's just too logical for broadcom not to buy yylinx. the same lodgic makes it difficult for marvel tech and
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others to stay independent. come on, guys. get with the program. how about pharma? pfizer plunked down $15 million to buy medivation. a lot thought pfizer overpaid. pfizer had to pay that price. why in? the rhyme wanted medivation so badly. it's a natural hunting ground. vy to wonder if biotech shouldn't be looking to merge with each other. some of the stocks in this sector getting trashed for lack of a bad deal. gilead got a ton of cash from its hepatitis "c" cure but stock is down 23 points. why? it hasn't redeployed the capital to diversify away from -- by its very nature dwindling franchise because it's a cure, it's not maintenance. other groups can't merge because there's too much concentration. we're already down to three major railroads.
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they basically divvy up the nation, don't compete with each other much. the airlines have done all the merging they can get away with. the regulators seem to have remorse over letting continental combine with america and america joined with us airways. banks also had too much concentration courtesy of the shotgun weddings during the dark days of the great recession. there's been regional combinations. the industrials may be able to do some buying, witness the fabulous merger between johnson controls and tyco. i simply don't see any other larger ones on the horizon given the potential for antitrust action like we would have seen if honeywell continued to pursue united technologies. by the way, i'm still concerned the government might block the dupont dow chemical mergemerger. follow along on actionalertsplus.com. there are complaints by farmers these two large seed producers might make that belove fed group of customers pay up for their plantings. that's why i'm skeptical about talk that bubbled ed up today
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about potash, merging with agream. who knows if the regulators will allow it. it sure is needed in the dog eat dog discounting -- the sector that needs takeovers to make itself investable again is the energy group with oil languishing in the 40s. we know the government nixed the merger, combination of jacked up prices for all its customers. however, the exploration production companies that are selling stock in order to acquire some of the country's lowest cost acreage, they've become red hot. you can always tell when the market values deals. it's when the aquier's stock jumps in the news. as you'll see later in the show. here's the bottom. too much of pretty much everything in this market. we need more last-man-standing situations. and fewer dog fights if umt stock prices to go higher. consumer may lose from these deals, but boy oh boy, do the shareholders on both sides win.
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joe in ohio. joe? >> caller: boo-yah, jim. >> boo-yah. >> caller: thanks for taking my call. >> quite welcome. >> caller: jim, i'm down to about 30% on nordic american tanker. am i down too much to get out? or is the stock -- >> i think you can hold it. they cut the dividend and you know, when you do that and you tell me that business is good, let's just say, you're not on the list anymore so to speak. all right. how about ryan in new york? ryan? >> caller: jim, it's an honor. a longtime listener, first time caller. >> okay. >> caller: the stock, real estate investment trust that invests in senior housing and services represented to seen quors. my question is with baby boomer getting older and some going into senior housing would this be a long-term investment or with talks of another possible housing bubble should i stay clear of housing stock? >> let's just be clear, i have always liked -- you know, there's not been my favorite. my favorite has been ventos and i'm not going to deviate now just because you can pick up a
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percent or more in yield. deb cafaro has delivered over and o'er and over again. we're not going to go away from what deb is doing. all right. listen to me. there's too many restaurants, too many retailers, too many tech companies and much too much competition weighing on the bottom lines. it's great for consumers, you and me, but lousy for stock prices. keep an eye out for m&a to relieve the pressure. chipotle announced it's giving a i way free food and drink in september to lure back customers. could it also lure back investors? i think apple is the worst chart in the book. does that mean you should sell? do not make a move before hearing my take. spark cries to equip police departments with wearable cameras. could this help the company behind taser surge higher? do not miss my take. and of course, stick with cramer. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets.
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send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com.
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is chipotle finally ready to get its groove back? it was roughly a year ago ben the former market darling got hit with a series of health scares at stores all over the country with an e. coli outbreak in seattle, neurovirus in california, some salmonella in minnesota and those were just the warmup acts last summer. by the time we got to late october, chipotle was dealing with a major multistate e. coli outbreak presidethat swept thro every state on the west coast along with many in the mid-atlantic, illinois and ohio in between and to top things off had a nasty neurovirus outbreak that infected 100 boston college students last september. all these health care stories september the stock into free fall, plunged in mid-october to an intraday low of $395 in
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mid-january before seeming to find a bottom. since chen chipotle's stock has gone into overdrive trying to repair the image, too. the stock is still bouncing along in the low 400s. i've told you repeatedly big health scares tend to eviscerate a restaurant chain's same-store sales. but as we've seen before with the past health scares, talking about taco bell and jack in the box, they almost always start to rebound after a year to a year and a half. now, if chipotle follows the same time scale, then you'd expect the company to find its footing somewhere in the next two to eight months. so could this be the moment to start buying chipotle stock ahead of that? tonight we're going off the charts to answer that precise question with the help of robert merino, a brilliant chartist, colleague at realmoney.com. his view is the action chipotle could be setting the stock up for a major move higher. so what makes him feel so
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bullish about chipotle stock in let's start with a longer term weekly, okay, right up here. this paints a clear picture of what happened when chipotle's stock started breaking down a year ago. as the downdraft accelerated, all right, the stock broke down below its long-term support, that's $600 level last november. once that floor was taken out, we got another huge leg down which sent the stock as low as -- there's that key number, $395 intraday in january. he says there's something special about the 395 level, represents a 50% retracement of chipotle's rally from the lows of 2009 to the highs of 2015 and a 50% retracement is one of those important fibinochi levels where it changes trajectory. ever since then, chipotle's floor of support at 35 has held. each time the stock has tested the floor, it's produced a nice bounce. saw it this spring, again in
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july. after chipotle retested the lows earlier this month, we're seeing it once again now. here's the thing. each of these bounces has been contained by chipotle's down trend. the down trend line from its highs ten months ago which merino says is acting as a ceiling of resistance. there's your ceiling of resistance. okay? the stock tested the ceiling again yesterday rallying up to $423. for the moment it's been rebuffed, pulling back $7.80 today to close at $415. however, if chipotle can finish the week above $420, it will have broken through this down trend line and he thinks that would be a huge positive. we're looking for $420 there and that would get things rolling. what else matters in this weekly chart? first there's the moving average convergence/divergence, the mackd indicator which technicians move to detect changes in a stock's trajectory before it happens. merino points out chipotle's mackd line is going up.
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it's been like that nearly all year with the mackd heading steadily higher as the stock has trended lower. okay. see that divergence? all right. that means sooner or later you'd expect the stock to follow the macd's aligned footstep in rally because macd leads this. you should see a turnup soon. however, it's chipotle's daily chart. let's look at that. has merino feeling more confident. this shorter term chart is all about the triangle that's been dominating the action chipotle since its breakdown. you got the $395 level support. we've seen that, right? that's the trend. the down trend line from the former support at 600. okay. so there we two with that line. but that's both the hypotinus. he sees a number of indicators to suggest the stock is due for a breakout. first there's the rsi up top,
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relative strength index. moved up rapidly in the last couple weeks and recently crossed above its center line. it's a little dotted line in there. that's reflecting better price momentum. second, you've got the new one that we don't talk about, the vortex index which i know it sounds like some weird "star trek" reference but it's a technical tool that uses two oscillators to identify early trend changes. when the green line crosses the red and here we go, and that did it not that long ago. the vortex indicator is making a bullish crossover. that's a very positive development that often means there's more upside to come. third, there's the money flow index. that's the mfi which is another way of measuring buying and selling pressure that suddenly is different from the taken money flow oscillator we saw on the weekly chart. merino think it's important it is in positive territory on the daily chart, that's this move right here, okay, and continues to trend higher. that's another bullish sign.
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all these are pointing upward. put it all together, merino believes if chipotle breaks out below the down trend line, 5 bucks from where it's currently trading, could be smooth sailing all the way back to get this, $6 00. there's your price target. okay. granted he thinks a move of this magnitude will take longer to play out than the decline that proceeded it but if you can just get that breakout, chipotle's stock will be able to recover. remember the timeframe i talked about, don't expect instant gratification. what about the actual business? wall street wasn't thrilled with the company's most recent quarter, reported a month ago. first of all, while chipotle's 23.6% same-store sales decline, okay, that's minus, was bad, it's still representing an improvement versus the nearly 30% decline in the previous quarter. management told us traffic was looking stronger in july, thanks to the chiptopia summer rewards
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program doing a good job of generating repeat customers. yesterday they announced students will get free drinks for the month of september and giving a free kid's meal when you buy an entree on every sunday in september. they're getting aggressive about boosting traffic. i took a little informal twitter poll to find out if people are once again seeing the kind of long lines at the local chipotle, used to be store's hallmark. 38% of those who responded said yes they're seeing lines. versus 35% who said no. 27% said it's a work in progress. all right. talk about unscientific. given the massive same-store sales declines the company's been experiencing, i think the fact 38% said the long lines are back tells me chipotle might be doing better than we think. here's the bottom line. the charts interpreted by robert merino indicate chipotle might be ready to rebound in the near future. the results of my totally unsif tsk twitter poll suggest the same thing. i think it still needs to mark more time just like the prior
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incidents of other restaurant chains before we can be sure that the turn is real. much more "mad money" ahead including my take on apple. unexpected $14 million tax, what's next for the company? i'm giving you my take. then taser, not just the stungun. police departments everywhere are turning to the new wearable devices so is it time to consider the stock? and the energy sector is up 15% year to date. do you know that's the best performer in the market? i'm digging into the oil and looking for some smart deals that could pay for you to be involved in. i suggest you stick with cramer.
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last night i got a poignant tweet. someone asked me, turning on apple now? they didn't etven really mean
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anything by it but i took it personally. yesterday, head of the european union telling apple it owed them more than $14 billion. i said on air that apple's chart was the worst in the book. meaning the technical suggested the stock wases going lower for certain. now, i've been predicting apple might get hit with a humongous tax bill because the eu thought the company managed to avoid paying its fair share by making a sweetheart deal with ireland to pay very low taxes when it opened offices there that employ 6,000 people. of course, i didn't have the foresight to say, and i quote, and it's going to get hit hard off the news when it breaks, end quote, which is what happened. i was just looking at the chart. it was terrible. after today's 82 cent decline, it remains terrible. i answered the tweeter as courtesy as i could saying simply i was commenting on the chart, not the company, to be sure, my view on the stock is unchanged. you should own apple, not trade it, despite the massive potential tax bill which apple and ireland, they are one in the same here, are, they're trying to fight. they're trying to appeal it.
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but i totally get where the tweeter is coming from. how can i not turn on the stock of apple if i think the chart's bad? isn't it stocks, not companies, that i opine on? if i think the chart is terrible, why not just say -- >> sell, sell, sell. >> let me answer that question a couple ways. first, apple's stock does look like it's rolling over. second, you do have what will be a big eu mandated overhang. even as $14 billion is not much when you consider the company has more than $200 billion in the bank. third the upcoming iphone 7 launch does sound totally uninspiring unless you have a cracked screen on your 5 or 6. fourth, the stock had a terrific run since tim cook came on this show after the last quarter and said apple's products basically speak for themselves. profit taking is always to be expected after a such a speedy move. as long as apple keeps making the best products and its revenue stream continues to bulk up, it's difficult to say the company's best days are behind it and then count the stock out.
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fifth, can the chart be wrong? well, in my opinion, when you see a pattern that's horrendous as the one that apple's stock is currently exhibiting, it's hardly ever wrong. in fact, it's almost self-fulfilling at this point. more important, you have to ask yourself, what happens after the news of the allegedly unexpected tax bill? what happens after the iphone 7 comes out and turns out to be hohum like everyone predicted? what if they take me up by asquiring sirius xm? what if the iphone has anything we haven't seen but we'll surely want? what if there's other news that no one has thought of yet? then what would i have accomplished by warning you to take action off the stock? in the end, telling you to sell off the chart would be telling you to do exactly what i've spent ages begging you not to do. would be telling you to trade it. go back to when tim cook came on the show back when apple was at 93 bucks. oh, boy, it looked terrible. you sold it thens though, you would have missed a terrific run. what happens if apple trades down to $100, $102, after
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telling you to trade out of it at $106, would i have to tell you to trade back in at $101? is this a hedge fund tu tourl? karen cramer would have booted the apple stock on my desk the moment i went out for cherry coke. she scaled right back in as it got closer to $100 where the chart indicated apple would be going pretty quickly. my take is this, if you want to trade it, go be my guest. the chart sure says sell. with apple stock being this cheap, products being this good, ask yourself, do you know when it will be done going down? can you be nimble enough to get back in before the rebound starts? i know i'm not that good. few are. which is why i always say own apple. don't trade it. doug in california. doug? go ahead, doug. >> caller: hey. can you hear me? >> uh-huh. >> caller: okay. hey, i bought blacker be a bebey at $6.90. >> yeah. >> caller: given the negative company narrative and competition in the industry, i thought the stock may have been
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oversold when considering the negative. >> yes. >> caller: but improving certainings outlook and cell foreign offering that was touted as the most secure in the industry. stock was at $7.87 at market close. i'm no longer confident in the improving earnings story. should i cash in now? >> yes, geez, this is a game about conviction and discipline. your conviction is waning and your discipline says ka ching ka ching. so i say we move on. and we find the next blackberry which is pretty darn good move and i say congratulations to you. that's great -- that is a great way to trade. all right. there's no doubt the chart of apple looks ugly even before news of a possible eu tax bill, but my view is not changed. you want to trade it? be my guest. i prefer you just own a company with potential for some exciting prospects down the road. now listen, there's much more "mad money" ahead. shares of taser up 60% year to date. you know i like the stock. offering new tools to help law enforcement keep an eye on crime. i'm talk to the ceo, exclusive interview, to find out if it can
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give your portfolio a jolt. the oil sector has been on a tear. the best in the market. some of the top performers in the base to see if they're still worth owning. and your calls in a very special edition of the lightning round. so stick with cramer.
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at a time when our country's concerned about the relationship between police and communities across the country, taser, the maker of nonlethal stunguns, and body cameras just like this one, have become a mainstay of law enforcement officers everywhere. the stock has seen its -- soar more than 70% year to date. while taser is synonymous with stun guns, fact is this company also embraced all sorts of technologies becoming essential for police departments giving we live in a world where virtually every bystander is carrying a smartphone with a built in videocamera. taser offers a suite of evidence-capture technologies including body cameras and audio recorders as well as evidence management software that easily stores and compiles all sorts of data needed by police and by the prosecution. now, police/community relations has become a contentious topic
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as you know. taser is about two things almost everybody can agree on. need for nonlethal weapons and need for transparency. no wonder the company has been doing extremely well in the environment. taser reported a terrific quarter a little more than three weeks ago. a nice top and end bottom line beat. with police body camera sales rising and stun gun sales up 20%. after such a remarkable run, whether taser's stock can go with the amazing momentum or whether it's time to ring the register. to find out more about his company and what it's up to, mr. smith, welcome back to "mad money." >> hey, jim. it's great to be here. >> rick, in the time since we've known each other, you are a stun gun company and now it seems % like all the acute coutremenacc lot cloud based, actually surpassed the amount you sell in stunguns. >> our cloud connected device business, last quarter we bucked something like 40% more orders
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in dollar volume in the axon segment than the taser weapons business. >> because everyone knows you for the stungun, drive axon because i know this is part of the business that can have the biggest gross margins and in many ways is proprietary just to taser. >> yeah, so axon is, it's basically a network of smart devices, software, and connecting people into a network where they can share all this information. it's sort of like ipod, itunes for police. processes it, shares that data to a police chief, prosecutor or media. >> a "bloomberg business week" article talked about how body cameras are too new for anyone to say how they'll change policing. says early studies show officers who wear them use force less frequently and force fewer citizen complaints. footage may increase conviction rates and guilty pleas in prosecuting crimes. i mean, that seems to be exactly what our country's after. so why isn't this being, say, a
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federal initiative that every city has to embrace to end what, or at least to try to minimize what's been going on? >> for sure. we're seeing indisputed momentum that way. when we first started doing body cameras sevennor eight years ago, a lot of people said this is big brother, police will never wear cameras. now i can tell you, every police chief you talk to says it's not a matter of if, but when, and we have presidential candidates or even president obama, you know, is pushing through funding for body cameras. it's happening and that's part of what's driving a lot of growth in the business. >> we showed somewhat of a heavier device which is excellent obviously, docking, which has a docking station so it can't be, obviously, it can't betray the police, so to speak. we also here some glasses with a light camera on. is that also something that police have found to be certainly easier to use? >> yeah, i mean, basically cameras are showing up everywhere and we got a variety of options for police so there's the body camera. if they just want to wear
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something that's ease ze to pop on their chest. if they want to get a better perspective, axon flex is our camera that goes up on the glasses and tracks with the officer's head. now we're rolling out our axon fleet, our in-car video system. the idea is to put the cameras wherever you need them and seamlessly get the data into the cloud and put it to use. >> i know there's hours upon hours of video. you got the solution for that, too, right? >> yeah, so evidence.com is our backend for storing all this digital evidence. again, it's a bit unique. it's not like home video. there's a lot of security you've got to wrap around this and a lot of legal controls. but we actually are now storing more data than the entire library of netflix and it's growing on a very smooth exponential curve as more and more cameras come online. it's a huge sort of big data challenge that we solved with evidence.com. >> how much of your business is razor -- you won some very big contracts.
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some are saying there aren't that many more big contracts to win. once you're in the door, there's a lot more business for taser to. >> yeah, if we talk about the axon business, booked 90,000 seats of 800,000 police in the u.s. plenty of headroom. only one-eighth penetrated. the axon business is not just about cameras. they're telling us, wow, the software works great, not used to the typical government software we're used to using. we have a lot of people we brought from consumer businesses to do the user interface and take advantage of the speed and flex nlt of the cloud. what you're seeing is our first product. you're going to see us expand the footprint to where in ten years a police officer should be able to do his job with a smartphone and tablet and no servers at the agency. when we execute on that, we think the business can be five or ten times larger than it even is today. and, plus the growth, you know, the existing business, we're still in the early innings with evidence.com, but what's really
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exciting about this, frankly, intellectual challenge, is there are so many opportunities of where we expaad our footprint next that we have to be very selective to make sure that we continue, you know, we don't want to drop the ball on the growth we're experiencing right now but there's a lot of adjacent opportunities. >> one last question. i'm trying to figure out how well known the taser store is. not just among police, but among communities. do you think that there will be people who are in a situation where it's a contentious situation who if they knew about taser would be saying, why don't we just do -- this could really defuse a lot of the situations we're in. >> well, certainly we're expectiexpect i expecting a lot of effort builds our axon brand. taser, an image forms in your head of the taser weapon so we realized we couldn't do software and cameras effectively with the taser brand. we're starting to put marketing muscle behind our axon brand for connected camera. you'll see that growing over time. we have by far the largest market share. we have about 85% of the large
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agencies that have purchased body cameras are on our platform. you're going to start seeing them showing up everywhere. that footage, one example, recently remember the guy playing pokemon go and actually hit a police officer while he was driving? that was captured on axon cameras and got us worldwide publicity with people talking about how the axon cameras captured the rather ridiculous incident. >> always great to have you. great to see you u. a bit of a center of debate of which i think your transparency would really help a lot of people and ease lot of people's concerns. thank you so much to rick, ceo and co-founder of taser international. lot to like with this company. you know, i've liked it for a very long time and i continue to do so. "mad money's" back after the break. mary buys a little lamb. one lions of ords on thispa's serve.
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>> announcer: lightning round is sponsored by td ameritrade. >> it is time. it is ime for the lightning round. say the name of the stock. >> buy, buy, buy. >> sell, sell, sell i don't know the calls or the name of the stock ahhad of time. i tell you whether to buy or sell. when you hear this sound -- [ buzzer ] -- then the lightning round is over. are you ready, skee-daddy? michael in connecticut. >> caller: yes, jim, boo-yah. i'm counting on paypal. what do you think?
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>> my charitable trust, actionalertsplus.com, has been selling at higher levels. we think it's a good situation. it is stalled here. the last quarter was just okay. i'm not going to pound the table and tell you to buy it. bob in california. bob? >> caller: hey, jim, got a great big double boo-yah to you, my friend. how you? >> thank you so much, sir. how can i help? >> caller: jim, i want to tell you, show the other day about looking for an edge, look at the filings, it was like you were in my living room speaking to me or my kich l table. >> thank you. >> caller: i can't tell you how much that episode spoke to me. i wanted to share that with you. >> you're very kind. thank you so much. >> caller: i want to tell you, i've been through a similar struggle but getting to the poiit, i saw the insiders and hedge funds. >> right. >> caller: with buying clayton williams energy. >> it's a hot stock. just went up three again. i think at this point we're just chasing it. we got to stay away. it's too high. let's go to jay in california. jay? >> caller: hello, gentleman jim.
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>> yeah. what you got? >> caller: what do you think about mccormick? >> okay. at this point, too high. the consumer -- moved too much. i'm moving into the industrials and the financials here. let's go to sean in new york. sean? >> caller: hey, jim. how's it going, buddy? >> not bad, how about you? >> caller: very good, very good. i just wanted to get your take on chesapeake energy. >> all right. it's back to life. chesapeake's done a series of financing so it made it so it can play longer. i got to tell you, i think pioneer and occidental are both better. last one is owned by my trust. john in florida. john? >> caller: hi, john, john k. in florida. >> how you doing, man? whht's going on? >> caller: it's been a while, jim, always a pleasure talking to you. >> same. >> caller: jim, my stock is novavax. >> stanley has done a lot of good stuff. they're at the cutting edge of solving now diseases. you' you never know what they'll do with the ones we read about. it's a good spec.
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spellma in florida. >> caller: boo-yah. >> boo-yah. >> caller: i have shares of lockheed -- >> it's come down. ptill not intrigued. i think you can go to 220, 210 and that's when we'll pull the trigger. let's go to carolyn in new jersey. carolyn? >> caller: hi, jim, i'm a first-time caller. i'd like to get your take on air product -- >> i think air products is doing incredibly well. fits the profile with the industrial i like. bruce, writing for real money, says be careful of the industrials, i think they have more upside. i like them at this noint the cycle. jennifer in florida. >> caller: hey, jim, tampa bay lightning boo-yah to you. >> i'm thinking about drafting but i don't want to play my hand yet. >> caller: i want to know your thoughts on stonepartners. >> i'm going to have to stay away. bob in nevada, please. bob? >> ccller: hi, jim. i want to send a personal thank you for your terrific guidance through the years.
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>> thank you. >> caller: telling me to stay the course. as far as i'm concerned, your advice is always spot-on. >> i'm sorry, what was that? >> caller: my stock -- my stock, quarterly earnings of 61 ents per share which was a 37 cent beat above the 24 cent consensus. my stock is petx. >> okay. yeah. i do like the pet group. you know that. i like idex labs. i'm not going to deviate from those two. and that, ladies and gentlemen, is the conclusion of the lightning round. [ buzzer ] >> announcer: the lightning round is sponsored by td ameritrade. you knowhat thinkorswiseamlessls tradall your devices, right? oh, my custom studies will go withe? anywhereou want to go!
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time to talk about the incredible resurgence in the oil and gas stocks. get this. did you know the energy sector has become the best performing group in the s&p 500 year to date? up 15%. even though the rebound in the price of crude is stalled in the mid 40s. and natural gas remains tuck below $3 ppr million british thermal units. when you consider that nearly this entire cohort had been written off and left for dead, just eight months ago, you can underssand why these stocks have been such remarkable performers ever since oil bottomed at 26 bucks a barrel mid-february. even though there remains as everybody knows it a worldwide glut of crude. but there's one specific subset of the energy sector that's been doing staggeringly well.
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the expiration production companies that took control of their own destiny self-help by making opportunistic acquisitions buying high quality acreage at bargen basements prices. they seem to discover the secret formula for generating much higher stock prices in this environment which is why tonight i want to examine exactly how these deals have worked. and why the markets reacted positively to them. for example, three examples. pdc energy, sm energy, that's the old st. mary's, and pioneer natural resources pxd, which have shrewdly taken advantage of the chaos to get prime acreages, price of oil is above $40 a barrel. these companies have practically rewritten the playbook for what every other exploration firm should be doing in this environment. start with the pdc energy, $3.2 billion company that last week told us it had bought wo businesses owned by the private equity fund, kimmrage energy
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management. this is a huge transformative transaction. gives pdc roughly 57,000 acres in texas, delaware basin, sub basin of the most lungtive part of this whole country's oil formations. these assets are already producing 7,000 barrels of oil equivale equivalent. they were focused on the wattenburg gasfield in colorado. giving us some very high quality real estate with ultra low productton costs in an area where there's already a ttn oo pre-existing pipeline information infrastructure there place. this company basically overnight transformed itself to a diversified business. the best acreage in texas if not the whole country. roughlyy-- after all, this is only a $3 million company. began in march when pdc did a
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secondary offering selling 6 million shares for $51 a pop raising 300 million smackers. the original purpose of that secondary like so many others in oil was to pay down debts that were coming due in the near future. fast forward to may with their financing secured, pdc shelled out $115 million to repay the senior notes and the company's bankers reaffirmed the borrowing base on the credit facility at $700 million. in retroopect the cfo's comments at the time were telling, "the liquidity and remaining cash gives us great flexibility to execute on our strategic vision of increasing shareholder value by maintaining a strong balance sheet while delivering long-term growth." translation, we got enough cash and borrowing capacity to make growth-boosting acquisitions. sure enough, that's exactly what happened. all of this has been tremendously positive for pdc energy stock. if you bought on the secondary $51 in march, the stock traded up to $65 by late april. oil prices stagnated from may
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through july. pdc reported a strong quarter earlier this month, the stock roared higher and news of last week's deal gave ittanother leg up. a hit of analyst upgrades and 36% gain if you pprticipated in the company's secondary offering back in march. you know what i think it could go even higher. how much value can this kind of deal create? look at this. sm energy. that's a $3.3 billion exploration production company that aflounced a major acquisition on august 8th. we learned sm was snapping up nearly 25,000 acres in the midland basin in texas, another subsection. this time from rock oil holdings for $980 million. this move more than doubles the company's presidemore than -- t wells due to come online this month. again, this is another low-cost region with lots of pipeline information that's going to be quite profitable even if oil prices staa in the mid 40s for ages. before the deal, sm energy operated in three core areas.
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the rocky mountains, the gulf coast. this dramatically ncreases their exposure to the area with the lowest cost, as low as 2 bucks per barrel. sm energy announced a secondary stock offering and offering convertible notes. only sold 18.4 million shares in the secondary at 30 bucks a piece. netting $531 in convertible debt, brought in another $150 million. sm also sold off some noncore assets in new mexico and north dakota and montana, raised addition the $172.5 million. i think it's a good trade. if you bought sm energy's $30 secondary earlier this month, you were up 28% in roughly 3 weeks. wow. again, since buying rock oil assets three weeks ago, sm got many upgrades. what makes this story all the more impressive is the beginning of the year sm had basically been left for dead. the stock traded down to 77and
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change in late february. since then the stock quintupled. investors realized this company has a great future as opposed to no future. finally the best and most aggressive oil company in the country, pioneer. pioneer made its move earlier this summer on june 15th when it simultaneously announced it was buying 28,000 acres in the midland basin from devin energy for $435 million and a secondary offering to pay for it. given that pioneer is ten times the size of sm or pdc energy, this deal will be less of a needle mover but it was still a smart move giving them additional acreage in a profitable region where they'd already done a lot of business. pioneer priced its secondary at $157.50 2 /2 months ago. up a quick 16%. this move in pioneer was totally gettable. in fact, if you had the guts to participate in that january offering, you're up 55%. these are extraordinary mooufrs. here's the bottom line.
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we've liked energy companies that are doing smart secondary offerings for quite some time. what's even better are energy companies that do smart secondary offerings to pay for smarter acquisitions like pioneer natural resources. sm energy. and pdc energy. i like them here. longer term, why don't we do this? let's keep an eye out for the next exploration production firm to do a savvy deal making that issues stock and will snap it up. you know why? because that's where the upside is. stick with cramer. nnouncer] if nature? or a sales ent? the suer of audi sales ent is here. get up to a ,0 b on seleudi models.
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you know, last week i talked about the banks, i said bank of well, it broke out today. it's trading about where its tangible book value is. look out. i think citigroup could have the same move and wells is breaking out. jp morgan had already broken out and is doing quite wwll. i like to say there's always a bull market somewhere. i promise to try to find it just forryou right here on "mad money." i'm jim cramer and i will see you tomorrow. lemonis: tonight on "the profit"...
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this place is awesome. two business partners revive a beloved family restaurant chain... woman: i was so excited to see that it was back. lemonis: ...only to run it right back into the ground. mike: we've gone through hell together. lemonis: the c.e.o. is incapable of doing his job. why are you blaming everybody else? mike: i'm not blaming everybody. lemonis: what about you? the head of marketing isn't allowed to do hers. shauna: i feel like i try to take on things, and you try to take them back. -sandy: it's not that simple. -shauna: well, it is. lemonis: as the dysfunction gets worse and worse... mike: paul was handling the numbers. i trusted, but i didn't verify. lemonis: ...the day of reckoning gets closer and closer. $1,900,000 is the total debt, and you have no cash. it's like a train wreck.

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