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tv   Mad Money  CNBC  December 20, 2016 6:00pm-7:01pm EST

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s&p push to protect the portfolio. >> you guys are snickering. >> huge massive tax overall. h & r block. >> what did i miss? >> i'm with her. >> i'm melissa lee. thanks for watching. see you back here tomorrow at 5:00 for more sigh e. my mission is simple, to make you money. i'm here to level the playing field or 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 it make friends, i just want to make you money. my job is to educate and teach you. now it is you'll about the prism. the prism we put a our thoughts through. a positive prism produces
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positive results that might otherwise be viewed as negative. that's how we can advance again with the dow gaining 92 points, s&p rising, nasdaq gaining 9.4% after a seemingly endless rally and yes we are indeed just a stone's three away from dow 20,000. the idea of a more positive prism for examining the value of stocks is a good way it put this. good way to put the rally in context. it means this entire run may not be so easy to uproot or repeal as many people think. it means that while yes this market has moved up pretty dramatically that there is a new way of viewing things. a belief that president-elect donald trump will fulfill his mission to get the economy really roaring again. you know i like do my own research and rely on my own thought processies, but over time i've learned it is okay to listen and learn and quote people who know what they're talking about.
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whether it is warren buffett, greatest investor of our time or dave catcher, working for at goldman sachs, should say work for, or a fund manager with huge calls. i have to consider the calls this morning from ray dahlia. he runs $150 billion at bridge water associates. i will quote it and parts. first saying trump's agenda could quote ignite animal spirits and attract productive cal tap end quote. then he continued, quote, trump is deal maker who negotiates hard and doesn't mind getting banged around or banging others around. certainly the people he chooses are -- he chose are bold and hell-bent on plague hard baying to make big changes happen in economics. let's start with animal spirits. we know trump will push hard to
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get the agenda going. corporate taxes. tax holiday for repatriation of overseas assets. and general deregulation that has clogged a lot of growth in the country. remember, i keep telling you that if trump can get these plans through, get them to zoom through congress, you are going to see earnings estimates go higher. pretty much across the board. perhaps much higher and stocks won't be nearly as expensive as they look now. after all, you can bring in more money and pay fewer taxes that's obviously going to produce better than expected earnings. companies cut costs in buy back stocks and announcing $20 billion, $10 million buy back and beating the estimates but in the absence of what we want which is revenue. frankly the market doesn't care for the engineered beats any more. we've got superficial and hunger for the kind of accelerated sales growth that could be
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created by deregulation and faster expansion of the overall economy which i'm saying hmay grow when i'm looking at different initiatives at 4% clip. kind of unheard of. at least lately. consistent economic growth could produce a very different mind-set among business leaders. which would then feed on itself. which brings me to the animal spirits, those are the two key words, animal spirits. for those of you puzzled by this animal spirits term, allow me to explain. the idea of animal spirits comes from one of history's greatest economists and fabulous investor to boot. let me give you the full quote. anyone that has tanzian named after him has to be serious. i will say this quote slowly, it's important. even apart from the instability due to speculation there is the instability due to the
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characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation whether moral, heed any of theic or economic. you do something positive the full consequences of which will be drawn out over many days to come can only be taken as a result of animal spirits of a spontaneous urge to action. rather than inaction and not as the outcome of a weighted average of quantitative benefits. end quote. in the big picture, the macro, and business friendly picks are producing animal spirits getting us to act, take action, not inaction. to buy stocks when we otherwise would be too circumspect to buy them. in other words what he's saying and what applies here, it's
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about feelings not numbers. think of where we would be if the action in the market was determined merely by what he calls the weighted average of quantitative benefits. for example here is a weighted average of quantitative benefit, the dollar. the dollar is soaring almost everyday. almost with europe. for the last decade we hated the dollar storm. we sold stocks. we sold stocks endlessly. especially versus the euro. european companies take share from american companies, exchange rate means our exports are let profitable. now we don't seem to care that the dollar goes up almost everyday. that's right. the super freakin' dollar doesn't matter. this is animal spirits. second, the market pretty much always thrives on lower interest rates and dislikes higher interest rates. i think we have had a remarkable lift in rates. it doesn't matter. third practically an article faith on wall street that you should never fight the fed meaning don't bet heavily on stocks when the fed is tightening. with last week's rate hike we are fighting the fed and nobody
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cares. after the incredible run on the market, clearly overvalued and overextended versus history but it doesn't seem to be make any difference to buyers. animal spirits. not looking at quantitative evidence. just shoving it off to the side. optimism. spontaneous buying. and look, whatever your plit kag meanings, it is undeniable this move is happening because of donald trump. even though he won't be sworn in for another month. why? we believe the trump administration will be more pro business than the obama administration. looking a at numbers the market has bun well under obama. should be talked about. but again this is not about the numbers. this is the narrative we tell ourselves. obama seen as being indifferent to business at best while trump's policies are viewed as totally pro business and totally pro growth. and therefore totally pro profits rising and narrative matters. companies and their investors
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behave differently when they believe the investors have their back as they think about president-elect trump. how does it play out on a day-to-daypies basis? how does this distort things positively? let's go over what happened today. consider the earnings reports. lighter than expected revenues. disappointing same-store sales numbers. plus olive garden, principal asset did worse in november than october. what a red flag. that's a post election month. in another market, this stock would have been downgraded repeatedly and hammered. instead what happened? it went higher. car max, auto dealer, descent number then disappointed on the top line. i mean, normally, this kind of revenue miss, i have to tell you, i think it could have been catastrophic for the stock. a revenue miss on car max? instead car max rallied 6%. focus with same store sales that
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were nice. 5.4. carnival cruise. management's earnings forecast for 27 was a big cut. well below what wall street was looking for. remember i'm always telling you that forecast in quarterly results, animal spirits. market says don't worry about the weight of the imper cal evidence. carnival climbs 2%. not just earnings though. i've been endlessly recommending nvidia. i know you're sick of it. i don't care. triple play machine of learning. grabbing chips from gaming. and stocks double since i've been endlessly pushing it on you. bingo, animal spirits of the bull rams it for another three points for no reason at all. or how about this one? wallgreen's selling rite-aid stores that no one wants. so dodging ant i trust regulators. and today we hear about some
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alpha called fred's, general merchandise clahain, buying 865 rite-aid stards for $850 million in clans. hold it right there. on the announcement this stock rallied an astounding 81%. isn't anybody worried that there is potentially rundown rigte-ais will prove too much for fred's in taking down a $600 million loan and can't pay it back? answer is absolutely not. john maynard canes, animal spirits. canes wrote about these animal spirits and evidentiary concerns in the 1930s. this is far from the first time the market is hitting new highs because of animal spirits. bottom line one may think it is irrational and yes indeed by definition, it is irrational. because it is all about our feelings of the math. but when you seal million shares
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of any down stock right now, guess what? there's a buyer right there eager to take it down. verifying the rare price and that, more than anything else, is all that really matters. jr in massachusetts, jr? >> caller: jim, boo-yah from gardner, massachusetts. >> like that, what's up? >> caller: as a recent college graduate, young investor, your show has been very helpful to become active in the market. i appreciate everything you do. >> thank you. >> caller: my question is about groupon. with expectation of spending, do you see it as a good time to take a long-term in groupon? >> we have turned positive on groupon. we like that living social deal that picked it up forring into. we think the company is much better run. at three bucks i think it is a descent spek. understand, this is a spec. this ain't no j and j. sam? >> caller: thank you for taking
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my call. wishing you and your staff a merry christmas. >> they're the best. >> caller: yes. my stock is mdo. my question is, with companies taking a beating and the dollar almost in parody with the euro, allowing companies to rate prices and still be lower in the u.s. consumer, is now a good time to be buying it? >> that was a terrible conference call. if you go back over and dot homework you will say wow, i can't touch this yet. yield is only 2.5%. there is a target of congress. i would be careful of that stock. there's a lot of other better stocks here than that one. a new era people. market looking at things differently. animal spirits are overriding the logical and bringing us to new highs. on mad tonight, what do ritz crackers and marlboro have in common in more than you think. i'm on a quest to find each and every stock impacted by president-elect trump. i have a couple more tonight.
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these could make for very interesting stockings in your portfolio so to speak. anyway, get this, analog devices that help power a number of product that help make your life easier and they don't do a lot of tv. i have the exclusive with the cfo. power your portfolio higher. stay with cramer. >> don't miss a second of "mad money." follow jim cramer on twitter. #madtweets. send jim an e-mail to "mad money" at cnbc.com. or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. take one.
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directv now. stream all your entertainment! anywhere!
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anytime! can we lose the 'all'. there's no cbs and we don't have a ton of sports. anywhere, any... let's lose the 'anywhere, anytime' too. you can't download on-the-go, there's no dvr, yada yada yada. stream some stuff! somewhere! sometimes! you totally nailed that buddy. simple. don't let directv now limit your entertainment. only xfinity gives you more to stream to any screen. ♪ ♪ anyone who remembers the break-up of kraft, kraft foods group, retired international group of snacks, found themselves scratching their heads that this could be the best thing to do to bring out value didn't generate a lot of enthusiasm at the time. same thing with the break-up of the philip morris into the slow-growing u.s. yielding high
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yielding u.s. tobacco company and fast-growing fip ill morris company, supposed to have a high yield. the super freakin' high dollar and dividend in our country, leaves you with 3.6% yield of the international one philip morris with 4.6% residual. irony. all ending up being fabulous. major ton of money. if you own kraft and split up to 230% versus s&p 500 over that period. fill philip morris with a break-up over five years. much better than sharp stick in the eye. the talk is about recombining not one but both of them. remember kraft merged with heinz to create kraft hooinz which is a slow-growing pantry based company meant to give you a high yield. because people liked the franchise so much and cost-cutting that goes with it stock yields less than 2 .8%.
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more importantly, kraft heinz, which you can follow along at action alerts plus.com has been rallying talk because it will buy back mondalese. that's how much people like that company to do acquisitions. i know the split left kraft without the growth it needs and i know the heinz people now running the show don't really care about whether the antecedents were together before. the break-up weeasn't their ide. plus, i always thought that think would make a terrific acquisition for coca-cola, which is way too reliant on beverages. a merger would give coca-cola the same profile as pepsi cola, which gets a lot more respect for its growth these days than coca-cola because of frito-lay. there is about a $700 million market cap versus coke's 800 million. now a new ceo coming into the
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company. no sign whatsoever that new ceo will deviate from the decision to not pursue the snack entity. still, if coke doesn't want it, i bet kraft heinz would be happy to snap it up. as hot as that merge ensound i was shocked when yesterday wells fargo distinguished house put out a very overlooked piece of research entitled probability of pm mo combine now hiring. end quote. i didn't even know this was in the hopper. but hotter than the kraft heinz mond lees talk. get this, could be sooner rather than later end quote. with pm paying up to $77 a share for mo, end quote. just reference mo is at 67 currently. wells fargo is so confident they are giving you straight-up percentage chance that the deal will occur. saying 70% probability that these two companies will combine in the next 6 to 12 months. what is driving this
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combination? here is another thing i didn't know. philip morris developed revolutionary device called the iqos which will change smokeless cigarettes forever or that's what wells thinks. let me read you snoeanother sni quote, we believe it has the potential to usher in a disposition toward smoke, on trend aspirations for healthier living. and the way smokers feel about themselves, redefine the smoking experience, end quote. strong stuff. but philip morris only operates overseas. and so huge, so big that it needs the u.s. market to take off. that plus the trump's corporate tax reform and it means the deal would need to be done now. if it happens at all. makes sense when you consider the consolidation. discounted cash flow basis, kels thinks that iqos could add $26 a share to pm and $10 to allergen,
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that's gigantic. i do know this, these two potential blockbuster transaction will create one more wave, simply because the combination makes so much darn sense which is why i think it would be the right move for everybody involved p. much more "mad money" ahead. what trump promised to put america first. i'm looking to piggyback on the trend. and many gadgets under the tree this year, should it be in your portfolio? and i'm going off the charts. doing one stock on a huge rally that i think switching to the naughty list. stick with cramer.
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yeah, chevy was great in that. who played the wife? beverly d'angelo! juliette lewis costarred as the daughter. oh, i think it was um... chris columbus was the director... it's called claymation... narwhals really exist... actually guys, it was the ghost of christmas past... never stick your tongue on a frozen flag pole... yukon cornelius... "die hard" is considered a christmas movie! that's the unlimited effect. stream your entertainment with unlimited data when you switch to at&t and have directv.
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constantly looking for pro trump stock. as the market rolls higher, games get tougher. many trump stocks have run so much that they now need time to grow into their new valuations. that said i can think of a couple more trump stocks that have upside. i'm talking about automatic data processing, pdp, and paychecks, two largest in the united states. both could be winners from trump's america first agenda. these are ultimate trump stocks. just like the uniform rental play i recommended last week. that's the tip of the iceberg. adp has so much going for them that i think they could be terrific core holdings, not for weeks or months but years to come. but before we get into why i think the two stocks deserve to go higher, let me give you background.
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let's start with adp. in addition to being mer ka's largest payroll process were adp is a human capital provider that helps human resources, taxes, administration. they handle astanding 26 million payro workers payroll in the u.s. that's 1/6 as well as 13,000 int internationally. they are an employee benefits business doing quite well well as adp focuses on largent prize, paychecks is for small and medium sized businesses the ones that should thrive with less regulation in the trump regime. i use that in full disclosure that manages my payroll. they still cut checks for 1 out of every 12 private employees in america. latter is up 14%.
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i believe that they are just getting started frankly which is why i'm willing to recommend them up here. what makes trump stocks the kind of names this market can't get enough of? first and foremost if you believe as i do the economy is about to experience a major acceleration which should lead to a dramatic increase in hiring then these are natural beneficiaries. if you are looking for a pure play on job growth these two are about as close as you will get. here is how it works. if you're payroll processor and you're pretty much hostage to your clients. when you're hiring, you make money, when they're firing, you make less money. maybe they decide to keep 1,000 jobs in the u.s. that were planned to outsource to mexico, that's payroll for these thousand workers. and so paychecks and adp benefit from the fact that trump is cracking down opt practice of off-shoring, sending american jobs overseas. even without that they win because of any kind of pickup and business activity that triggers more hiring. you better believe that trump of
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lower corporate taxes deregulation and repatriation will give the u.s. economy a real boost. that's just the beginning. suppose the trump administration and republicans in congressmanage it repeal the affordable care act. adp helps clients remain in compliance with obama care. it is extremely complex. but wait, any time you get a change in administrative landscape breeds confusion which means more companies coming to paychecks an adp for post obama care landscape. best of all paychecks and adp are part of that rare group of companies like the banks that actually benefit from higher interest rates. giving that the fed just tightened and we know they plan at next year, these could get more profitable. these interest rates float, the cash that they are sitting on between when their client pay them and when they cut you your
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paycheck. that's called the float. picking up a day or two worth of interest from your paycheck may not sound like much but when you consider the companies are writing checks for millions of workers you can see how it adds up when the short rates go higher. for many years this float revenue has been pretty negligible because until recently the fed was holding the short rates down but with the federal reserve raising interest rates and tightening even more to prevent the economy from getting overheated once trump's agenda kicks in, paychecks and adp can make a lot more money off that float. that's going to be key. that's why the analysts are getting behind it. thefr been waiting and waiting and waiting. what else? adp gets 85% of revenue to the u.s. paychecks. major positive with the american first president about to take office. and service providers it doesn't matter to these guys if we get into a trade war with china. not like they are buying lots of semi conductors and getting more expensive or selling product to china.
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finally if you forgive the play on words, sorry, have to do it, the trump card, trump stock, here is the very real likelihood of the big cut in corporate taxes. in its last full year paying 33% p paycheck is 34%. if trump's proposal becomes law, estimates that adp could get 21% earnings boost in 2018. paychecks could see earnings increase by 25% simply because it is a tax cut. okay look, i'm not the first person to notice this stuff. paychecks and adp have been terrific trump stocks the whole way. goldman upgraded paychecks to buy. and just this morning barclays initiates with slightly more mixed and still pressie darn positive outlook giving adp overweight as they raid equal weight. they can't seem to get the idea that can you recommend them both at once. we don't feel that way. we're comfortable with it. so understand that you're not necessarily early to the party
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here. i've recommended paychecks since we started the show almost 12 years ago. it is okay if you are fashionably late. there is hiring and the float. one major caveat, paychecks reports tomorrow morning. it's stock has run up dramatically going into the quarters i mentioned. that's difficult for a stock to rally further on good news. simply because expectations are so good to deal with. i would like them so have a soiled quarter then sell off anyway which could give you still one more incredible chance to buy the stock. we will have the full story as we usually do because ceo marty moussy will be joining us to talk more about the quarter as he always does after he reports. but regardless of what happens tomorrow the long-term thesis here i'm telling is you stre strong. bottom line, adp and paychecks are in the rare a way of benefiting both president trump's agenda and fed's policy of higher interest rates they are both trump and fed stocks that's why i think they have more room to run although it is possible paychecks. pull back temporarily after
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reporting tomorrow morning and given the scenario i just outlined it could be a terrific buying opportunity for more shares in this incredibly well-positioned company. will in new york. will? >> caller: hi, cramer. thanks for taking my call. >> my pleasure. >> caller: i just wanted to know your opinion on u.s. steel. i know you said it was a trump stock but is it worth buying in now for waiting for it to dip a little bit. >> it is a trump stock. but on fire. i prefer new corps. new corps guided down numbers and stock didn't go down. what does that tell you? much better run company. matt in washington. matt? >> caller: jim, boo-yah. hey, is goldman sachs going to continue its rally? if so, what's the price target? >> goldman sachs, when it was trading, i thought that was ridiculous because if you close the company you get the cash that they have. at $243 you are beginning to get in what i require to be going
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from the company that was at a discount to now a premium. i think if the stock goes to 260 it is up a hundred straight points. that is starting it make me feel queasy. so let's use -- let's reflect that a stock that's up 100 straight points is a stock that's getting a little more dicey. adp and paychecks are trump and fed stocks. does it get any better? much more room to run for both. more "mad money" ahead. with the semi conductor showing strength. could a company like analog devices help set yourself up for a profitable new year? i'm asking the cfo. santa may be busy checking his list twice, but in the spirit of the season i'm offering my assistance. i'm putting together my naught oy or nice list and stuffing profits with a lump of call possibly. tonight's edition of lightning round. stick with cramer.
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can the semi conduct or stocks keep rocketing higher? in the last few months, the socks rallied 14%. i think some of the names could have more room to run. take analog devices.
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adi. designer of chips used in a broad array everything from cars to aerospace defense consumer product could be an internet of things. big thing from analog devices came over the summer when the company shrewdly announced it was buying linear technologies. a high margin chip maker. on top of that when the company reported a month ago it delivered a blow out top and bottom line beat and haven't closed in linear yet. just imagine how much they can do once the merger is done. that's why i think the stock could have more upside but don't take it from me. let's take from t from david zin zer. mr. zin zer, welcome to "mad money." good to see you, sir. have a seat. >> thank you. >> have you one of the most exciting stories. i talk way too much about the internet of things because it is so important but i have an internet of things guy. can you tell me because we sod many people, dia facebook live this week some guy frank said could you please tell us what internet of things is? tell us what it is.
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>> i think internet of things is really about taking information from the real world and collecting it, bringing it up to the cloud, analyzing it and making decisions base owned preventative maintenance. health care systems. we are the connection of real world, light, motion, temperature and plflex data. >> so lydar is a great example of what analog is. >> a we move along with autonomous vehicles, right now what they do mostly is use radar to detect what are are the object in its path. lydar will be able to more accurately detect what things are in the car's path which will enable an autonomous vehicle to get to the next level. >> i have to believe that almost every car would have to have analog device chips once they
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are built with this. >> there are other players. what we did is we acquired a company just this last year, not linear technology, a company that will enable us to deliver lydar under a cost effective way so almost every car can have it. >> now to go through the big acquisition, the complimently capabilities, industrial, infrastructure, automotive, consumer, you will be at number 1 oor number 2 in all these segments once this deal closes. >> rights. >> how is that possible? >> we had a very strong position in what's called the data converters. this conversion from the analog world to the digital world. what we lack is power management. all of these applications is to get more and more advanced. they require more and more sophisticated power. you don't want to have increased power in your systems as you advance the technology. so what linear technology does well is that particular thing. they actually manage the power unbelievably efficiently at very
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high-performance levels and the one critical piece of the portfolio that we didn't own at this point. just great edition to adi. >> i know consumers will be a relatively small part of this, which is good. companies are worried about being too dependent on apple and apple doesn't like them talking to them on an apple watch. this will reduce your -- you won't be at all hostage to any one company or any one product. >> that's correct. we have 100,000 customers. no customers over 10% of our revenue. we have over 30,000 product. no one single product will consider our future. it is a great story. somewhat unique in the semi conductor space. >> you have a huge cash flow, i'm surprised and you talk about goals. 4 or 5 billion in sales. soon after the deal closes. pretty aggressive? >> they had a billion and a half of revenue close to $3.5 billion. we will easily get to 5 billion
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and steps, can we take it that much further and advance the growth on the cash flow side we will generate about maybe somewhere between 35 and 40% of revenue into free cash flow. >> you would pay down the debt. there is a lot of debt. >> we should pay about $1 billion of debt down every year. >> and con the conference call, what's the trump stock and not a trump stock and what it means for you. you guys very easily just said this was november 22nd, we hear the rhetoric. now that's almost been a full month. is there anything more than rhetoric yet? >> no. i think that everything he talks about as it relates to the u.s. economy and stimulating the u.s. economy is good. we sell, as you pointed out, a lot into the industrial structure space. if that stimulates certainly that's going to be positive for us. as to the other initiatives, i don't know. we will have to wait and see how it goes. >> at one point if the conference call you say a core kind of business is robotics.
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robotics, that replaces humans. in some wayes what do you is make any sort of manufacturing more efficient. >> absolutely. the idea is to make systems and equipment more efficient, better, able to detect when they are going to have an issue in terms of a maintenance issue. so that's what we do best. >> one last question. the start of the call, which was a magnificent call, you say we executed well in a tough business environment. you know, since the great recession all we have heard about is tough business refinement. i'm not asking you to say pro trump or anti-trump but do you think it is possible that stock mark set saying that the tough business environment might be ending? >> that's probably what it is saying. one challenge is that there is a high level of administrative bureaucracy that we all have to deal with. if you can eliminate, that's beneficial to corporate america. >> you're a real manufacturer. that doesn't make you less of a manufacturer. and it is good to hear that there could be something good
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because boy your company is so uniquely positioned it take advantage of it. that's cfo analog device webs what a great acquisition. won't close that soon but will close next year and have you to be there before or after it, doesn't matter. "mad money" is back after the break.
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it is time, time for the lightning round. then the lightning round is over. are you ready for the lightning round? starting with ken in florida. ken? >> caller: boo-yah, jim. from florida. hey, my stock is johnson controls international. >> oh i like that one for here with the whole trump program. >> trump stock, trump stock, strum. stock. to barry in california. barry? >> caller: hi, jim. university of pennsylvania quaker. wants to know about biib, buy, sell or hold? >> quickly, this is interesting. biogeneral announced a ceo last night and not for sale stock went down 10 then the ceo we
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like and up 6 and don't buy, don't buy. ian in kansas. >> caller: boo-yah, jim. >> boo-yah. here by way ofvil villanova. >> holy cow. what's happening? >> green ticker grpe. >> no. michael? >> caller: thank you for taking my call. my question is about thorough gas stock. >> yeah, more work because rbn security, which we love, rusty brazil, put out an interesting note about the price of propane. there issensti sensitive to the of propane. we have to find out if it is sensitive of good or bad. that is the end of the lightning round. >> lightning round is sponsored by td ameritrade. thank your support team for walking me through my first options trade. we only do it for everyone gary. well, i feel pretty smart.
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well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade. our mission at clover is to highest quality dairy products. clover has relationships with 27 different family farms. the environment is who clover is.
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as we get close to holidays, time to take a page from the santa claus play book and make a play list or two list. one that seems to act naughty. and one for the stocks that keep playing nice. this market has had a truly incredible run. and there are a ton of individual stocks that have truly rocketed higher this year. so far a lot of nice and not much naughty. but not every red-hot stock will
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continue roaring higher and i think it's important to use every tool at your disposal p to figure out which winners will be able to sustain the momentum and which ones might be -- in jeopardy. and that's why tonight we're going off the chart with the lep of tim collins. he is brilliant. my colleague at real money.com. well look at two examples of high-flying market darlings. but collins thinks that one is really naughty. in a bad way. and the other one is nice. let's start with the nice chart because after all this is supposed to be some sort of choice, right? with all the stocks with fabulous technicals and there are lots of them, collins believes the single best one in the entire book, one that stands out is such a great company, i'm so glad he feels this way, broad com limited. symbol avgo. yes. the semi conductor giant long-term cramer fav formerly known as avgo. remember to change the name
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after the acquisition, that closed earlier this year. combine company is a major maker of trips for communication, enterprise storage and internet of things. iot. and able to deliver stunning results both lately and then for the last few years. perhaps even more stunning is the weekly clart. lo chart. look at this. when this picture of broad com weekly action, he sees the bull's holiday come true. to put another way, the chart is like a beautifully decorated christmas tree. for ages the stock has steadily marched higher using its 30-week moving average. that's the blue. as a powerful floor of support. look at there. holds, holds, holds, holds, holds. like brave heart. then on the few occasions when that failed in the past year broad com is like a coiled spring. ba boom, ba boom, ba boom. i like making that noise.
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however, they've been c consolidating, side ways, catching its breath to to speak. now they are ready to lift off. loo last week broad com broke out of silly resistance and keeping a lid on the price since last august. so far this week continuing to move higher. the stock made an all new time ev new all-time high today. it is not just the break out after six months of consolidation. look at the gos lator at the bottom here. this is the full sto. that is to figure out if stock is overbought or oversold. for months this oscillator ran under a pretty tight range. ba boom, ba boom, ba boom. it maintained a reading above 50. meaning it never lost its momentum. that's the 50 read. okay. but in recent weeks, the oscillator rocketed higher. look that. thinking it is forecasting a similar run in share price then
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the money flow. chi. that's another momentum gauge used to buy or sell power before they happen. the oscillator just made a bullish crossover. you can see that here. okay. and i got to tell you, so did the moving average convergence to vergens. i know they seem small but when you're a technician these little cro crossovers are what you're looking for for a break out. that's exactly what you're getting in the stock. i've got to tell you, hard to imagine a confluence of breakouts. but i asked him to pick the best chart in the book and that's what this is. all predicted trajectory ahead of time. if everything goes well collins can imagine a broad com rally and get this above $200 plus a day valentine's day. that's a nice move from the current 182 price. break out fails, broad com will resume its old trading range. that's what is so good about this. understand a floor. call it a 20, 15, down situation
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with the 20 seeming a lot more likely than the down 15. yeah. this is a good one. next up, how about a red-hot collins list has on his flaunau list? i'm referring to one we talked about endlessly on this whole trump rally, resurgent of manufacturing, tech resources. that's the mining company producing copper were zinc and coal. that's the kind we use to make steel. take a look at this weekly chart. it's been pretty good. tech resources is one of the biggest winners of 2016. get this, this stock is up. you know what this represents? 450% increase. holy cow. you have any like that in your portfolio? even though it pulled back substantially the last few weeks. and collins thinks this is about a little more than a bit of old profit taking at the year end. the issue here is support. last week tech resources broke down below very important in
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long standing trend line of floor support popular stock up since april to make matters worse stock is trading below its 13-week average from the first time since 2016 breakout. so here we go. it broke this line. now notice it never broke the line before. okay? the whole time it rallied, it never broke the line and then right here it broke the line. but what collin says worried about are secondary indications that we like to focus on. why don't you check out moving average convergence? this indicator has come down dramatically. k collins says this is eye-opening. we haven't seen a push like this since 2015. incredibly ill-fated. over the huge drop in tech resources share price. at the same time the oscillator, sto, so good for broad com, that's a momentum again and in addition to when something is overbought or oversold, broken down very aggressively. that is very serious break down. much more serious than this one right here where you might have
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been tempted to sell the stock ahead of time. now the oscillator made a similar down move in may, the one i just referenced. now the syndicator has fallen below the 50 which is important. this one held. this one has fallen below the 50. that's the key long-term support. once it penetrated 50, that's when this chart became hideous. of course tech resources is it have support at 1850. mentioned that. but collins doesn't think that will hold. even as the stock rallied nicely today. he expects the stock to pull back to $16 next year which is something you want to get out of. of course if collin says wrong and tech resources can bound back, about a buck 50 from where it is currently trading, then he needs to retest the 26. collins sees the stock going higher, not lower. 2017 he says this is a different story. me? frankly i'm more on the fence on this one. if we get a roaring economy we
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can, which we very well could, i'm forecasting 4% groaning next year because of the trump tripod. the deregulation. and we've got repatriation and lower corporate taxes. i've got to tell you, if i own the stock, here is what i would do. i would be tempted to sell some, you can sell some but you know what you should be doing then? playing the rest with the house's money. end riding it higher. here is bottom line. collins suggesting to broad com to play nice this holiday season and beyond. another winner tech resources may be just about to join the naughty list and get a lump of coal in a stocking, which would be doubleably insulting for this med allergical coal producer. coal and stocking -- stick with cramer. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future.
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how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.
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i'd like to say there's always a bull market somewhere and i promise to try to find it just for you right here on "mad money." i'm jim cramer, and i'll see you tomorrow.
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lemonis: tonight on "the profit"... 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.

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