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tv   Mad Money  CNBC  January 6, 2017 6:00pm-7:01pm EST

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level. disney only if you tone stock. >> final call time. kick it off. >> carnival cruise. >> call spread risk carnival. >> qqq, i prefer long have a g. "mad money" starts right now. my mission is simple, to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to make you some money. my job is not just to entertain you but to teach you. so call me at 1-800-743-cnbc or tweet me @jimcramer. what can i say? this market -- this market is a tease. today the dow jones average rallied up to within 37 cents of
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dow 20,000 before ultimately pulling back to close up 65 points at 19,963. s&p gaining 0.35%, nasdaq advancing 0.6%. last two all time highs. tonight's game plan, i need to address something i don't normally spend enough time on, analyst conferences. that's because most conferences aren't powerful enough to move the needle. however, that's not the case with the 35th annual jpmorgan health care conference coming up next week. that's the biggest and most important of its kind. celgene presents on monday morning, and investors are looking for the company to guide up the numbers, which almost seems like an annual tradition now. but by how much? from what level? will it be price increases for the company's best-selling anti-cancer franchise, or will it be because of expectations for new drugs in the out years thanks to the acquisition of receptos two years ago? why does it matter? because we're now in an era of trump tweets, and i bet trump will be gunning for any drug
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company that tries to raise the price of older established cancer treatments that the government pays for. politically, it's kind of a slam dunk when you think about it. so how does celgene keep its head down ask yet still tell a good story? we'll know by 10:30 a.m. eastern time. we've got a boat load of other companies speaking and harz going to be a lot of impact. i'm focusing on the ones that can move stock, including amgen which just snuffed sanofi in a patent case over a blockbuster anti-cholesterol drug. watch this stock. amgen has a gigantic amount of cash overseas, meaning it's definitely a trump stock if the president-elect can get the leaf of repatriation, in which case you've got a terrific story on your hands. i think amgen can go much higher, perhaps on comments coming out of this health care conference. lots of people know allergan is the stock that fell apart basically when its deal to be acquired by pfizer broke down because the treasury department issue the new tax inversion
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regulations that seemed specifically designed to block that one transaction. since then allergan has been one of the worst performers in the s&p 500. don't i know it? we own it for my charitable trust and we've told club members to stick with it, but it has been torture. lately, though, the stock has gotten some religion here. as a matter of fact, it's up 25 points. i think that's because the fluff finally is out of the numbers and the prospects of some big new drugs are on the horizon. i think when ceo bret saunders speaks at the conference he might use some of his time to excor rate those drug companies that have raised prices aggressi aggressively. perhaps he'll suggest that they join him in pledging to keep future price hikes reasonable if not subdued in only to prevent the pharmaceutical industry from becoming a total political pariah. here's an interesting thing before you buy any amgen. regeneron is going to speak, and i want to know what they have to say about the big verdict in amgen's favor in that patent
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dispute i just mentioned. one suggestion. let's say you want to buy amgen stock. here's an idea. why not wait until you hear what regeneron says about what it will do to try to appeal the delaware court ruling, the one that took its competing drug off the market. maybe that could create a nice buying opportunity in amgen stock on tuesday morning. so don't pull the trigger as soon as amgen talks. jpmorgan's huge. this is a huge conference, and it dominates tuesday too. two major old-line pharma companies, bristol-myers and pfizer, are going to speak. we want to find out if bristol-myers is planning any restructuring around the opdivo anti-cancer franchise after that brug failed to heit some clinicl trial end points. pfizer, there's a lot of chatter they could be breaking up. you know, i've been a big fan of alkermese. i want to know more about its drugs for combating opioid addiction. that is a hot topic under the
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incoming trump administration. trump cares about this tremendously. this could be a possible needle mover. we need to hear more about the company's progress on its drugs to treat schizophrenia too. finally, what the heck will valeant say when it speaks at the end of the day tuesday? here's a hobbled by debt which desperately needs to do something to bolster its cash flow. will valeant announce a big sale of the division at the conference? will it tell us it's rolling back some of the price hikes that have made this company so unpopular? a lot hangs in the balance here. interesting to note that the stock fell 2.6% today ahead of that talk. beyond the health care conference, on wednesday we get results from the most despised home builder out there, kb homes. hated by all but us. we've been dead right. it's the best performer. we've suggested it's a great one to own because of its substantial land holdings in
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california. there's not enough land to build homes in california anymore. i want to find out what's been going on with orders since mortgage rates flew up. this company is going to give us the skinny. thursday is all about delta, the airline company. we're going to do a major roundup on what will happen with the airline stocks later this evening, but i think delta is one of the cheaper ones. the rally in the airlines was part and parcel with trump's surprise victory. is the move out of gas? it fal tered this week. delta will tell us. they're transparent. splunk. splunk holds an analyst meeting thursday, and this is a cloud data company that trades with salesforce and servicenow and workday and adobe and all those are threatening to recover or break out here. splunk needs to raise its guidance if this tech rally is going to broaden beyond fang, the acrenim we coined for facebook, amazon, netflix, and alphabet, the old google, which has a gigantic cash overseas
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which believe it or not makes it a -- >> trump stock. >> there's also carmax. this is important because carmax has its finger on the pulse of the american auto buyer. earnings for this company hit a rough patch not long ago but lately they've broken out of the doll drums and the scotch has been a real scorcher. if you want the rally in ford and g.m. to keep going, may i suggest car max better tell a good story? friday kicks off earnings season and starts with the most important component of the trump rally, the bank stocks. in my 37 years of investing, i've never seen a real solid rally, a mean a broad, strong one, that has absolute staying power unless it has the bank stocks at the vanguard. can it continue? we'll know when jpmorgan, bank of america, and wells fargo tell us how they're doing. these are all companies that have had to deal with way too much regulation, regulation that's going to be cut back and applied far more lightly under trump. that will be fabulous for compliance costs. that's a total dead weight loss
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and we happened to get rid of some of that. plus these companies are gigantic winners in a rising interest rate environment, bank of america getting the biggest boost. jpmorgan could make as much as $3 billion for doing nothing if we get four rate hikes. they aren't impacted by the strong dollar either, so you won't get number cuts from that. so the banks have the most going for them of any stocks in the entire park except for the fact that they've run and run big already. nevertheless, i don't think they're over. they remain historically cheap. the one i'm most interested in, wells fargo, and not just because my charitable trust has been stuck in it. this is all about the exit of former ceo john stumpf with cfo tim sloan taking the top job. believe it or not, i actually think wells fargo could have a decent quarter. so the bottom line, next week drugs and banks will be on the red hot griddle. i expect the drug stocks could be a mixed bag, but the banks should be in hog heaven given they are the quintessential trump stocks in this seemingly
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endless trump rally. dan in illinois, dan. >> caller: hey, jim. with all the negative news yesterday on the brick and mortar stores like macy's, sears, and kohl's, what does that do to stocks like simon property group? >> simon property, historically i've begged them to come on. they've historically done well, but the company that didn't skip a beat, really interesting was federal realty because don wood has come on our show and explained over and over again, look, we know what the consumer wants. the stock is down from 170 to 144, but i do like federal realty. now let's talk to matt in illinois, who comes to us via skype. matt, what's up? >> caller: hey, jim. >> matt, speak to me. >> caller: i just feel like i owe you a big thank you because with your help, my dad was able to make 900% over four years in the market allowing me to go to college and pursue my financial
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education now too. >> oh, man, i was tired coming into today. now i feel great. what's shaking? thank you for that. >> caller: hey. no. thank you. the stock i'm calling about, ener gist corporation, ticker symbol watt. >> yes, i know them and i got to tell you it's a great speculative stock that's really flowing up here. they do wireless charging. i've got to tell you, i want to go with a more traditional one, which is idti, which is going to be, i believe, big into the apple 8 iphone. you know what, you're a young fella. congratulations. i think you should ride a stock like that because you got your whole life to make the money back if it doesn't work. boy, did you make my whole weekend. thank you so much for calling in. i really appreciate it, matt. >> thank you, jim. >> makes it worth while. it's almost like 12 years. i need something like that. let's go to bruce in virginia, bruce. >> caller: mr. cramer, love what you do, buddy. >> how you been?
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>> caller: i want to know in cyber arc is well positioned -- >> it is. i think cyber arc is now -- remember, it's profitable, it does well. it's got the key to the kingdom kind of cybersecurity. i like it. ma cady has told a good story every time he's been on. it's been rocky but better than the others. how about bruni in florida? >> caller: i want to thank you. >> i do the morning show for everybody. thank you. >> caller: yeah. i wanted to know if i should buy shares in twitter before the inauguration due to its significance in regard to the president-elect's objective and its earning report. >> the problem with twitter is it's probably worth on the fundamentals, probably worth between 12 and 13 because the business isn't doing that well. on a takeover basis, maybe it's worth between 19 and 21.
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it's at 17. that's kind of no man's land. i don't like being in no man's land when i got so many terrific companies like an alphabet that my charitable trust owns or an adobe. those are better stocks. all right. we came, we saw, we really -- we nearly tasted dow 20k. next we're we're getting a ton of data that will determine whether we hit this historic milestone. it's the trump stocks versus the not trump stocks. i'll bet on the trump stocks. on "mad money" tonight, due do this week's airline down grade, do they have you shouting mayday? i'll tell you what to make the reports. then i'm cracking open the liquor cabinet to find out who's the beer king in this new twitter driven world. then is this market a friend of the farmer? i'll tell you why this rally has everything to do with agriculture. stick with cramer. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question?
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tweet cramer, #madtweets. 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. inhe t
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after getting pounded for most of last year, it seemed like the airline stocks had finally gotten their groove back when they soared higher in the wake of the election. for a while it seemed like the group suddenly had a lot going for it. a faster economy courtesy of the pro-business agenda everyone expects from the trump administration, and improvement in traffic. even the blessing of warren buff etd, who decided to build positions in all the major carriers despite his long time distaste for the industry. the stocks were darn cheap. before the election they were dismissed as what we call value traps, but within a couple weeks the sense of optimism surrounding the groups was tremendous and the stocks roared higher. now sentiment is starting to cool in this group and cool rapidly. just over the past two days, we've gotten two strikingly bearish calls from both cowan
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and morgan stanley. what made these analysts suddenly turn cautious on the airlines and are they right or can the cohort continue to rally in 2017? the first negative report really thoughtful, it was titled 2017 sky scape, taking a more defensive stance. it came out of the research team led by veteran and smart analyst helene becker. i worked with her when i was a hedge fund manager. she downgraded american, alaska air, jetblue, spirit and united connent of continental. first of all she noted accurately that the airline stocks had run significantly in the fourth quarter. they're up about 29% on average. the problem, those rallies were all about what we call multiple expansion, not earnings improvement. in other words, it's not that people thought the airlines would make more money. it's that investors were willing to pay a lot more for the same earnings streams on the theory that they would get better
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someday. now, i have to tell you the critics call this the greater fool theory. now, here's the rub. while cowan does project that the airlines will generate better passenger revenue per available seat mile -- and that is the key metric in the industry -- these analysts think those gains will be offset by higher costs, resulting in margin compression. specifically they're worried about the higher price of jet fuel and labor. how much of a problem is this? with the price of crude up to the mid-50s thanks to opec's production cuts, cowan's forecasting a 15% increase in jet fuel costs this year with non-fuel costs also rising by 3%. so if you put that all together and on average, they see the airlines expect to see their net income decline by 20% because of that. most of the weakness coming right away in the first quarter. ouch. that could hurt. so while the analysts at cowan believe the airline stocks could have more upside, for the moment they think the group is due for a breather as investors process these margin issues. now, the airline cohort mostly
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managed to shake off this negative report from cowan. the stock managed to rally that same day. but wait a second. the next negative piece of research from rajiv team at morgan stanley titled, u.s. ail airlines flowing at a lower altitude did more damage whether it came out yesterday morning. they downgraded united continental from overweight to equal weight and kuft estimates for american airlines even as he upgraded southwest. so why does morgan stanley think the airlines will be cruising at a lower altitude? they think the industry looks pretty attractive with better pricing. but given the huge recent run in the airlines and many of the same margin compression problems that cowan pointed out, they want to get more cautious on the cohort and only double down on the best of breed, which is their favorite and mine, southwest. overall they tell a pretty similar story. morgan stanley sees business picking up, pricing improving,
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and a possible tailwind from trump's pro-growth agenda. however, they also see serious margin compression. last year the airlines posted operating margins of 17% to 18%. this year morgan stanley expects those numbers to come down by what's known as 350 basis points, something that's already begun to happen over the past two quarters and only going to get worse given the recent uptick in the price of oil. in general, morgan stanley prefers the domestically focused carriers with the least international exposure. because the super freakin' dollar is also playing havoc. they prefer american and delta while they prefer alaska airlines and southwest among the low cost carriers. all in all the morgan stanley piece was less negative than the one from cowan. but since it was the second hit on the airlines in a matter of two days, it had a lot more impact. united couldn't continental, the one they downgraded, lost nearly 3% yesterday.
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that's bad pin action. where do i come down? i've been a gigantic fan of united continental thanks to ceo oscar munoz. he's been tackling many of the company's long term problems including some labor issues. he's got them, i think, under control. we've always liked southwest. that's gary kelly. we had him on. it's the best run airline, never had any losses. you shouldn't be surprised when wall street suddenly sours on a group that's rocketed too much, too fast. the truth is i do think the easy money has already been made in the airlines, which is why, like these analysts, have pointed out you need to get more selective from here. if this quarter is really going to be tough on the cost, the airline to own right now is going to be southwest because they hedge their fuel costs. you know something? it wouldn't shock me if the group actually sells off when delta reports next thursday. maybe that will give you a better time to buy them if you
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want in. here's the bottom line. after roaring in both november and december, the airlines got hit with a cold dose of reality this week. if you've been riding these stocks up, i don't blame anyone who is watching the show who wants to take their cue from the negative research and ring the register here. no one ever got hurt taking a profit. the truth is the airlines have had a huge run, and stocks do get less attractive as they go higher. much more "mad money" ahead. i'm cracking open a cold one, telling if kwon tellation brands or mole son coors could be a better bad. then could adco recent strength? i'm taking a closer look. and you stumped me, but i'm back in turn doing my homework, including a company focused on keeping you cool. stick with cramer.
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last night we sat down with rob sands, the ceo of long time cramer fave constellation brands, which in addition to selling a number of fine wines is also the company that imports corona, modelo and pacificco beer into the u.s., all favorites at bar san miguel. constellation's stock had plunged 7% yesterday, in part because their beer sales weren't quite as robust as some super bowls were expecting, but mainly because i think investors are worried, and they're worried that the company could get hurt if the trump administration imposes some kind of cross-border tariff on mexican imports. in fact, the stock's down 10% since the election, even as the broader market has been roaring steadily higher. who would have thought it? constellation. it's a hillary clinton stock, all of which makes me think this is a good time to see if we need to reshuffle the beer stocks. i want to compare the two that have been the best of breed for ages, constellation brands versus molson coors.
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you know i've liked both of these stocks for years. constellation has been my favorite because it was able to pick up the rights to corona and modelo back in 2012. as we enter 2017, though, it's worth wondering whether this stock is still the heavyweight champion of the beer business. but before we get into the comparison, some background. let's start with molson coors. here's a company that has a lot going for it. back in october, anheuser-busch, the world's biggest brewer closed on at this time acquisition of sab miller, the second biggest brewer. but the biggest winner here was molson coors. why? because in order to get this deal past the antitrust regulators, the combined company was forced to sell off assets including sab miller's 58% stake in miller coors. molson coors bought it for 12 billion, much less than it was worth. it includes miller light, coors
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light, blue moon, keystone and royalties from imports. long story short, tap's management expects this deal will add $4.7 billion in incremental revenue while generating $200 million? annual cost synergies and boosting its earnings. how about constellation brands? here's a company that had always been a well-run alcohol business, but in 2012, they took it to the next level when anheuser-busch brought modelo and had to do a similar forced sale, this time selling constellation, 50% of modelo's u.s. because they didn't already own and giving them corona, modelo and pacificco, all great brands. since then, constellation's made a series of smaller acquisitions, picking up a bunch of fast-growing craft beer brands, ballast, high end wines, not to mention my personal favorite, casa noble tequila.
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how do these companies stack up against each other? in the quarter that constellation reported yesterday, they delivered 10% revenue growth with the beer business growing at a pretty darn fast 16% clip. and they forecasted 16% to 17% beer growth for 2017 with the company's wine business continuing to chug along in the mid-single digits. even better on the conference call, management told us they repurchased over $800 million worth of stock during the quarter, during that period when the stock was underperforming because, quote, they believe our stock is undervalued at current levels, end quote. so how about molson koors? they're latest results from early november don't include the sab miller acquisition but without the deal, it's pretty clear molson isn't in the same league as constellation. this company's revenue shrank by 7%. it's worldwide beer volume declined and its total international sales volume was down more than 20%. now that they've snagged the miller coors business, their
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earnings should improve and improve dramatically this year. remember, so far they haven't been very clear on what the numbers are going to actually look like. however, this is going to be a one-time boost and not the kind of consistent organic growth that constellation gives you quarter after quarter. just looking at the numbers, it would seem to be no contest but there's one issue that people are worried about with constellation, and that's trump's trade agenda. i don't blame them t. was talked about a lot on the conference call. that's why the stock tumbled 13% the day after the election. their biggest business involves making beer in mexico and selling it in the u.s. the demand is so great they've been expanding their mexican operation, so you can see why investors might be scared given that trump has been talking about cross border tariff on mexican imports, walls, all sorts of punishment. after speaking with rob sands last night on "mad money," i have decided i think the furor is overblown, first of all, constellation's making beer in mexico is a whole lot different from ford or g.m. from moving an
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auto plant to mexico. the entire point, it's a mexican brand for heaven's sake. if they made it in america, it couldn't be corona. whereas a chevy cruse is a chevy cruse. the idea they would be punished for not making mexican beer in the u.s., doesn't that seem preposterous? more importantly on the call, constellation's management went over several different possible trade legislation scenarios. they really laid it out. under each one they believe they can generate at least continue to generate double-digit earnings growth for the next three years. plus 40% of the company's beer costs are already sourced in the u.s., which means the kind of border tariff trump's people are talking about wouldn't hurt them as much as you might think. and let's not forget they've got a fabulous fast-growing wine business, a terrific boutique whiskey division, and some of the best tequila in the world,
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and that is a rapidly growing spirit. put it all together and i think constellation has been punished too much here. right now it's trading at just 22 times earnings for 2017 while molson coors trades at 17 times this year's numbers. now, that's still a decent premium over molson coors but it's a lot cheaper than the company has historically traded at. while i like molson coors too given the fundamentals, given molson's slow growth and constellation's stellar stats, it deserves to trade at a much larger premium than this guy. even if you bake in the possible risks from the trump administration's plans to tamp down on mexican inports. the bottom line, i have long been a fan of both -- whoa -- constellation and tap. but given the recent decline in the former, i think it's become a much more attractive buy than these guys. sure, there are some unknowns in terms of a possible tariff on mexican goods. i don't deny that, but i think
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that's now been baked into the point whereas the positive from the company's continued strength, they're just being ignored. that's why i still believe that in the beer business, constellation is the strong number one, and molson coors is just a very good number two. jack in massachusetts, jack. >> caller: booyah, jim. how are you doing today? >> i'm doing well, jack. how about you? >> caller: doing great. i'd like to know what you think of pepsico, of its future. i know i've been a pepsico shareholder for 40 years, and i think the diversification and steering the company to healthier products through quaker and tropicana drinks and even the frito-lay snack division. >> jack, a agree with you. my charitable trust, which you can follow along at action alerts plus feel exactly the same way. we've owned pepsico forever. the stock has stalled here as people want more cyclical, more aggressive stocks. sometimes what you have to do is
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say i'm willing to tolerate some short-term underperformance because of some changes and rotations in the market in order to have the long-term game that they've traditionally given us. i'm banking with her and note worrying about the rotation. matt in maine, matt. >> caller: booyah, jim. what's up? >> not much. how about you, partner? >> caller: not much. i was wondering if i should be worried about anheuser-busch when it comes to the growing craft beer market. >> no, no. look, i think here's the problem. the other two are better. molson coors has got a catalyst because of that acquisition, and corona and modelo together under constellation have far better growth. but i would never tell anyone to sell anheuser-busch down here. it's had way too big a decline and it's not that expensive. how about erica in south dakota, please. erica. >> caller: hi, greetings, jim. >> hey, erica. >> caller: about a year ago you described scu as being on sale. for the past year, it really hasn't done much, goes up and down, but the only major change
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happened in the first 15 days of 2016. i would believe that scu has a different customer base than wfh and sprouds. do you -- >> reviewing that is part of my game plan because they report on the 11th. i'm not a fan of the supermarket business. we're now coming out of a bad deflationary period. i own costco for my charitable trust. super value, it doesn't intreek me here. i think it's one point up, one point down. it's not one of my favorites, but i appreciate the call. don't let your beer goggles fool you into thinking constellation is anything but best of the breed in alcohol. i think the concerns about trump's trade agenda are already mixed into this stock, and it still holds the top spot, even over molson coors. much more "mad money" ahead. could an investment in golf be a hole in one of your portfolios?
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i'm hitting the links when i turn in tonight's homework. then think tractors are sexy? so does the market. i'll explain why this rally has everything to do with agoco. and all your calls rapid fire in a finally friday edition of the lightning round. so stick with cramer. ik
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's?ta tyo tue
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whenever i get stumped by a caller, i always try to do some research so i can circle back to the stock in question, give you a considered answer. you deserve it. this is the most interactive show on television, so with that in mind, let's do some homework. back on december 1st, george in new jersey asked me about the toro company, and i said i needed to do some more work on it. toro sells turf maintenance,
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grounds keeping equipment, irrigation, outdoor lighting, mostly to professionals. think tractors, lawn mowers, snowplows, sprinkler systems. in fact, it's kind of been part of housing play, but they've also got a nice golf kicker as golf-related sales make up a fifth of their business. so where do i come down on toro? i like it as sushi. but i'm less enthused about toro the stock. its sales have decelerated dramatically over the past two quarters. it trades at a premium to deere, and deere is expensive. pass. next up on december 14th, kyle in virginia called in about shenandoah telecommunications, and i told him i needed to brush up on this one. as the name implies, it's a phone company offering voice, video, and data services in virginia, west virginia, pennsylvania, and western maryland. they also offer wireless as a sprint affiliate. now, in may, shenandoah acquired
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a wireless provider, expanded their footprint. initially the market cheered the deal, but over the summer we learned that the company immediately lost 2% of the subscribers if picknd ed up, an the stock plummeted in two week' time. >> sell, sell, sell. >> over, when shenandoah last reported, they indicated integration was ahead of schedule. plus they have a history of acquiring smaller regional telecom plays and upgrading their networks. sprint actually makes more money in markets operated by shenandoah. so it wouldn't surprise me if the company is able to convince sprint to expand that affiliate footprint. unfor the natally, shenandoah doesn't pay a dividend unlike the other regional telco plays, and the stock is expensive. it's too rich for me. finally on wednesday, aid ren in alabama asked me about hudson technologies, hdsn.
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i had to come back to it. i know we talked about in on realmoney.com but i wasn't up on it. hudson is a refrigerant service company. what does that mean? first off the company provides the actual refrigerants that get used in cooling systems. think your air conditioner. they also recycle and reclaim these same chemicals. they provide energy optmization services and integrated monitoring systems. we know old school refrigerants, the kind that mess with the ozone layer, have been getting phased out for years. pruxz of r-22 refrigerant is going to be eliminated by 2020. short term that's actually good news for hudson because it raises prices and also because they're the largest recycler of the stuff in the nation, something that becomes more necessary as less and less of it gets produced. plus over the summer, they snagged a $400 million contract from the defense department, which is a big zedeal. the problem? hudson technologies has seen its stock rocket up 170% in the last
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year, and while it's not that expensive, trading at 18 times earnings, the fact is that in the not too distant future, some of your core businesses are going to be obsolete. unless the trump administration gets a whole lot more aggressive about environmental deregulation than i expect, i wouldn't want to own this stock up here. but what a great one it has been, and i congratulate anyone who hit this one out of the park. all right. that's all my homework for today. "mad money" is back after the break.
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>> announcer: lightning round is sponsored by td ameritrade. it is time! it is time for the lightning round on cramer's "mad money." that's where i take your calls rapid fire. you tell me the name of the stock. i tell you to buy, buy, buy or sell, sell, sell. we'll play this sound -- [ buzzer ] -- and then the lightning round is over. are you ready, skee-daddy? it's time for the lightning round on cramer's "mad money." we'll start with debbie in new york, debbie. >> caller: hey, jim. i absolutely love watching you. i think you're wonderful and you're helping me out a lot. >> thank you. >> caller: i was wondering if you could give me your opinion on western digital. >> $70. i think it goes to $85.
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they made me feel even better about the stock because i like flash memory. i like the san disk acquisition. i like them. mark in indiana, mark. >> caller: hello, jim. i'm a daily listener, first time caller. love your show. >> thank you. >> caller: i bought farrell gas on the way down. in the past week or two, it's raised quite a bit. do you think it's getting ready to take off? >> there are forces going on in the propane business right now that trade day to day. rusty brazil has a tutorial. it is too hard. i would not sell it down here. the cross currents in that business are insane. ron in florida, ron. >> caller: yeah, hey, jim. thanks for what you do from sunny florida. >> good. >> caller: hey, about six months ago or so i heard about twilio. i'm not even sure if it was on your show. luckily none of my professional brokers have ever heard of it, and i did not purchase it.
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it has since dropped about 25% or 50%, and the question is what are they doing? are they ever coming back? >> they're the backbone for a lot of things like airbnb and for uber. we know it went too high. when they did the secondary we backed away from it. at 27 bucks, i think it's fine. not pound table, but i think it's fine. they are a great technology. we've had them on a couple times, and i do think jeff wall stop should come back on and talk about how business is. let's go to william in massachusetts, william. >> caller: how you doing, cramer? >> i am doing good. how about you? >> caller: pretty good. i was interested with the fed threatening to raise rates, if realty income was a good buy? >> when they're raising rates, i don't want to own it. i think a 4% yield is not enough to keep me in that stock. no, thank you. i'm going to pass. steve in florida, steve. >> caller: synergy pharmaceuticals. >> oh, my, this is like the most speculative stock in the world.
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everyone wants me to pound the table on it. no can do. i can't. i'm calling it a spec, and i'm leaving it at that. let's go to michael in new york, michael. >> caller: hey, jim, my question is on atian, i picked up a few shares when johnson control split. >> i think that was the right movement i think that's terrific in light of the december numbers, and i don't think they're peak numbers. i think autos are still okay. stephen in washington, stephen. >> caller: booyah, brother. what do you think of avis? >> no. too hard. too hard. don't buy, don't buy. that group is way too hard for this guy. it's way above my pay grade. john in massachusetts, john. >> caller: hey, jim. how are you doing? >> i'm doing well. >> caller: yeah. looking at hub spot, the stock bounced up 46. they got great fundamentals. >> we don't need this. we have salesforce. salesforce has had a great quarter, okay? salesforce is still down from when they reported at the
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quarter. let's not outthink this. it's salesforce.com. it's benioff time. gary in new york, gary. >> caller: hello, jim. i hold at&t in my i.r.a. >> people are telling me it's rolling over and the charts don't look good. give maie a break. at&t, very aggressive management. good yield. i'm not backing away from verizon either just so we know. and that, ladies and gentlemen, is the conclusion of the lightning round. [ buzzer ] >> announcer: the lightning round is sponsor the by td ameritrade. were you shocked? i did not tweet or go online for seven whole days. how many? i think the kid has horse sense. remember when we were fretting every minute. oh, espn, oh, oh. >> booyah, jim. >> oh, we got a familial booyah.
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i always like those for the new year. happy new year. >> i'm glad to see you're looking better. you weren't yourself for a few weeks. you need more sleep, buddy. >> we'll get some mindfulness and some finance. stick with cramer. yes. good show! heport
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you know what? this radical rally, this move since the election, it's really
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about stocks like agco. unless you've watched the show consistently, you probably don't even know agco. it's household names but only if you've ever owned a farm as i have. trust me, your massey ferguson lasts forever. i know agco the company, because the man who runs it is a total delight. he's been coming on "mad money" for the last five years telling me about how his company is quietly accumulating cast off ag equipment businesses and spending r&d money to reviolatae them. but in truth, commodity prices have collapsed during this period, so every time he comes on, i always ask him what's so cheap about your darn stock? why do you keep buying it from the company? why not just take a break? he always said the same thing. the agricultural cycle which has been so miserable will turn, and
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when it does, agco will have the best equipment and the earnings per share boost will be enormous because there will be so few shares outstanding. in 2013, agco had 99 million shares outstanding. now there are only 80 million shares outstanding because of that buyback. he bought them all the way down. indeed, in hindsight at some terrific prices. and as of this week, the stock's right on the verge of taking out its three-year high. yet now both agco's stock and the stock of deere, a much larger farm equipment company that shrunk its share count too over the same period, they're just flying. why? because the cycle finally has turned. martin was right. agco, which does 53% of its business in europe, including russia, is seeing an incredible comeback. three weeks ago they raised their 2017 earnings forecast from $2.41 to $2.50. it had been slashed, slashed,
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slashed no more. this company has about $6 in earnings power when the cycle is good, and it's only trading at 60. there are 17 analysts who follow agco, and it only has one buy. it's got four sells. the rest are just holds. i say that's a lot of dry tinder. why do i say this is a rally about stocks like agco? let's say you're running a trading desk and your portfolio manager runs into you and says darn it, i missed the whole move in deere, so i got to buy something like it. let's buy some agco. you could only hope the manager wouldn't want to buy too many shares at once. a think a 500,000 share order would move this stock up $3 in a day. if that happens, and i bet one of these naysaying analysts capitulates. then the other thing would have another great day. in that case, the stock probably shoots to 70, where is till is inexpensive if the cycle is really turning as martin says it is now. the reason, not because agco is the best in the world, no.
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not because the cycle is so powerful although it could be a good one especially as brazil is coming back and the farmers always have their way with the european governments. no, martin's stock is headed higher because he freakin' bought the heck out of it when it was much lower. now there's not that much supply for everybody else. there are tons of agcos out there in the stock market, companies that stood by and watched facebook go to the moon or salesforce skyrocket or amazon endlessly rally, and they just said, you know what, we're way too cheap. our best investment is our own stock, and we'll put our money where our mouth is. it's funny. sometimes martin would come on like when brazil was collapsing or sanctions were put on russia, and i just feel bad for the guy. he was kind of like job or something. now i look at the stock and i think, holy cow, martin knew. he knew what a bargain it was. it was worth having him on all along. good call by the bookers, i'd say, because this is a market about the agcos, the
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metal-bending companies that soldiered on endlessly, kind of like andy dufresne pulling himself through that nasty item to get outside the walls of shawshank, and now, i'll be, the darn thing sure feels like it ain't looking back. stick with cramer. of om
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okay. next week is split between health care and the stocks that i would say are the hottest stocks in the market, which are the banks. what we need to see are both do okay if we're going to take out this dow 20,000 because you've got stocks like merck in there. you've got pfizer. they didn't do us any good. and you got the bank stocks stalling with the only one that's really pulling its own weight right here is goldman sachs. we need the other stocks in the dow to start doing their job and stop relying on lloyd blank fine and company. it's just not fair. i like to say there's always a bull market somewhere. i promise to try to find it just for you right here on "mad money." i'm jim cramer, and i will see you monday.
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male announcer: america is struggling to shake off the recession. public distrust of wealthy ceos remains high. but more and more bosses are looking for radical ways to reconnect with their workforce in order to find out what's really going on in their companies. each week, we follow the boss of a major corporation as they go undercover in their own company. this week... the president and ceo of the unifirst corporation, one of north america's largest producers of work wear and uniforms poses as a former shop owner looking to return to the work force. hi, mike daniels. - how are you? - nice to meet you.

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