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tv   Mad Money  CNBC  October 30, 2014 6:00pm-7:01pm EDT

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you buy tlt. >> looks like it made a near term bottom, 42 1/2, i'm long the name, $50. >> thanks so much for watching. see you tomorrow here at 5:00 for more 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 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 trying to make you money. my job is to put it in contest, to teach you and coach you. so call me, or tweet me @jimcramer. apologies, please. for thousands of points, countless pundits have warned us that the stock market would be
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crushed, just crushed, when the federal reserve finally pulled the plug on its bond-buying program. turns out they were wrong. they were dead-wrong. but will they ever apologize for driving people out of stocks? for some of the most amazing gains in the history of the market. gains that continue today with the dow rallying 221 points, s&p climbing 6.2%, and the nasdaq advancing .27%. nah, never. they're never going to do it. but we have to review what's happening here because it should never be forgotten. and as my late mom always told me, you have to speak up for yourself, because you can't count on anyone else speaking up for you. for what seems like ages now, these pundits have warned us endlessly that the moment the federal reserve stops its bond buying program, the quintessential reason why the market is going up, known as qe-3, this is what they'd say, we'd be hit with a parade of
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horribles. who's in the parade? what dire forecast became gospel? let me tell you the five that have been beaten into our heads nonstop for ages. and yes, i am steamed about this. first we were told that we'd have runaway inflation, stoked by qe-3. and that has to end badly. because it had to end badly, we were told it was simply a given that we had to sell our stocks and sell them hard. the only exceptions, they said we'd be safe in the commodity-based stocks and gold, which would be the only safe haven in a world of out-of-control inflation stoked by the fed. we've been hearing these dire warnings for six straight years now. second, we were told that interest rates would soar once the fed finishes its buying program. that means anyone hiding out in stocks with high yields, the so-called bond market equivalents that i like so much on this show would lose fortunes. in short, rates were supposed to
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skyrocket, and after the program ended, it was only a matter of time, which meant the high yielders would be crushed and crushed fast. so you had to get out, ahead of the bond vigilante posse, who would finally be able to take rates where they've been all along because the fed's been keeping them artificially low. third, we were told the fed would destroy the bond market when it finally decided to unload all the the paper bought. stocks must follow. precept practically etched in stone. fourth, we were told that our gains would be illegitimate anyway. the fed would be creating so much inflation with its quantitative easing that stocks won't be able to maintain their value, so why even bother with them? finally, fifth, we were told repeatedly that no stock or any group of stocks would be able to overcome the terrible undertow of quantitative easing.
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so now that the fed's bond buying program is actually over, why don't we review what's happened. let's pick these five warnings apart one by one. i'm going to call them the cassandra warnings, but it does them too much credit. in greek mythology, cassandra was actually right. today we learned that our gross domestic product grew at a 3.5% clip in a third quarter, totally respectable level for a mature economy. at the same time, inflation was virtually nonexistent. wages are almost totally stagnant. the big commodities we should care about, the grains they've been hammered. usually takes six months to a year for the grain prices to trickle through the system. i'm telling you we're paying less, not more for protein at this time next year. because our economy is so strong, our nation's currency is strong. that allows retailers to sell them to you at better prices. have you noticed clothing prices aren't going up? that's a combination of cotton plummeting and the internet
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wrecking margins for all apparel. the internet's been driving down the price of goods for ages now during this whole qe. best of all, oil. the stunning decline in oil makes a mockery of everyone who told us that inflation lurked under a the corner. how about the supposed hedges against qe-3? stocks cut in half. cut in half. thanks for nothing. warning two. soaring interest rates. the ten-year. wow. you see it? it's at 2.3% for heaven's sake. weren't they supposed to double, triple? what a fantastic time to get a mortgage and refinance, just when the geniuses told you you had to be short bonds to make the most money, the high yielders that i make so much. today kellogg reported another mediocre quarter with no sales growth, but it's got to save 3% yield, so the stocks soared anyway. business as usual. warning number three, the federal reserve will destroy the bond market when it finally goes to sell the $4 trillion in bonds it's bought. all i can say is please, please, fed, do some selling.
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there's tremendous demand, and maybe the banks would do a little better with higher interest rates. probably book a profit on the darn stuff. warning number four. the illegitimate gains thesis. this is my one that really makes me most angry. this was a thesis created by hacks, charlatans, and mount box. they hate it when the fed tries to create wealth or help to get a job. these people are laissez faire idealogs. they are the monstrous british prime minister who had a million irish people starve during the potato famine in the 1840s and '50s because, well, it was their own darn fault. they should have diversified from the potato. these critics have been defrocked here. they have no clothes. they only have microphones. illegitimate gains. turns out the banks take them. and stocks actually advanced gigantically as ben bernanke wanted. mild man, good man, smart man. never praised.
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he ma you made a ton of money if you ignored the negativity. it's okay to let others make money, too. warning number five. no individual stocks can avoid the undertow when qe-3 ends. this is a travesty of a mockery of a sham. hence today's fabulous buildup in honor of the death of qe-3. or how about the largest stock in the world apple run by tim cook. a both ceo both at the office and now as a person. thanks for helping your human rights cause, and what a shame that someone's sexual orientation is still big news, let alone news at all. were the gains at apple that hard to spot? how many am products do you need to own before you realize a stock's the one to buy? if you've watched "mad money" since qe-1 or 2 or 3 or whatever, you have these memorized. let's not forget about the new frugalities droving sales, natural foods, hain celestial. you'll hear about a couple of other totally viable stocks kept down by the jeremiahs of the
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uninformed. incorrect in all five counts and we're never going to get a single apology. so let me give you the bottom line tonight. first they will never forget they're wrong. second, other in cramerica they won't be called out in part because people fear them. in part, because anyone other than yours truly really believe it would play out this way and tell you how unimportant it was to the greatness of the profits made by terrific companies? apologies? heck, these dopes still think they're right. they always will. but here's an idea. for those bravely wrong souls, may your potato crop fail, so you know just how it feels to have listened to your own mindless gas bag warnings. joe in new jersey. joe? >> caller: hey, cramer. yeah, this is joe from new jersey. i love your show. >> thank you. >> caller: listen, i bought
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american realty capital about two years ago. arcp. and yesterday, it tanked on accounting regularities. should i still hold on to it? and keep collecting those nice dividends? >> here's the problem. here's the problem. go right to the index of "real money," which is a book i used to use for my hedge fund. accounting mayhem tops. says accounting regularities equal sell. i want them on the shelf. i know the actual money involved was not that big. but you know what, i've got to be careful and you've got to be careful because we don't own stocks with accounting regularities. joe in nevada. >> caller: boo-yah, jim, from nevada. how's it going? >> all right, thank you. >> caller: thank you for your informative and helpful information you give us each day. >> thank you. >> caller: and my stock is wendy's. is that a buy, sell? >> i think wendy's is fine. the travel trust has been buying mcdonald's because the stock didn't go down a lot when it reported bad numbers's been going up. i think that inflation is going
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their way. but wendy's is fine at eight bucks. maggie in arkansas, please. maggie. >> caller: boo-yah, pig suey from little rock, arkansas. >> excellent. >> caller: many thanks for all you do. >> sure trying. >> caller: you make a bad market go positive with all your pep and go. >> i do my best. >> caller: in fact, i think you should run for president. you definitely would get us out of debt as chaommander in chief. >> well, that's kind of an unfathomable thought, but i'll take it to the bank. >> caller: well, you never know. okay, jim, my question today is about continental resources. the oil sector is tanked, as we all know, but says he's not tapping any wells yet. with the upcoming earnings release on wednesday, what are your thoughts? >> i don't know, i've got to tell you something, maggie. travel trust owns world dutch. it shot the lights out. has one of the most amazing
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quarters. the cash flow is gigantic. dividend is huge. yet it still couldn't get any traction. continental is a real good company. but right now, people are on tenterhooks about oil. you're going to hear from chevron and exxon tomorrow. let's wait and see. expecting an apology? don't hold your breath. those who try drive you out of this market just won't give you what you're looking for. but the important thing is you realize they were wrong. and boy were they wrong. the fight against ebola is far from over. i'm checking in with a player on the front lines in the battle to stop this deadly virus. then the company behind grand theft auto is absolutely tearing up wall street, surging up 10% today. but can take two interactive keep the pedal to the metal? i'll ask the ceo. plus, all stocks get hit, but the heavyweights get back up and knock out any losses. i'm listing some winners that make great buys a weakness. stick with cramer. don't miss a second of "mad
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money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to, or give us a call at 1-800-743-cnbc. miss something? head to
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how many more spectacular quarters do they need to report before wall street will finally start believing in the terrific video game maker? for ages, this company, the maker of grabbed theft auto series, has been dismissed as a one trick pony. and some topnotch sports games like nba 2k and mlb 2k with exciting new product launches. etch if we forget all of that, i think take 2 is a fabulous investment based simply on the numbers. the stock soars $2.47 at nearly 11% today. a 47 cent loss when wall street
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was looking for them to lose 59 cents. management also raised their guidance for 2015 fiscal year. but take two is now sitting on $804 million in cash. it's a ton of cash. market capitalization of less than $2 billion? the truth is, take 2 has become an incredibly consistent company. so we need to stop being surprised when it shoots the light out. up more than 46% since we talked to the ceo in january. i think you could have even more upside as we head into the holidays. but don't take it from me. let's hear from the chairman and the ceo. welcome back to "mad money." good to see you. >> great to be here. >> have a seat. i felt that after looking at your numbers, it's now like one of the greatest businesses in the world. the music catalog business. you just have a catalog that generates a huge amount of cash. >> yeah, it's turning into that.
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the business historically had been thought of one that didn't have catalog. that's changed. catalog can be 30 or more percent of our revenue. >> way too many holds. a lot of them left behind with a $20 price target. you blew through that. people are starting to recognize that you have the cash to be able to buy if you want, get organic if you want, or just buy back stock. >> we've done basically all of the above. our story has been an organic growth story. we now have the capital to consider strategic acquisitions that are creating more focused and last year we bought back $277 million of stocks. we've shown a willingness to return capital to the share holer hole -- holders. >> you've got some dates coming up. these are big release dates. i still don't think the stock reflects those, because these could be big winners for you. >> well, gta 5 for next, we have high hopes.
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we tend to like to talk about things after they've occurred, not beforehand. >> you're so conservative. throughout the conference call, this is the least promotional conference call you're ever going to hear. i'm not kidding. you just don't believe in it. >> but we do feel great about gtf. shipped a billion dollars of product at retail in three days and has lived on through gta online and continued to delight consumers. so the brand is very much alive. and it seems to me if you buy a new console, seems to me you want the very best content for it right away. and of course, coming in february, as you alluded to, is evolve, which i think has won the best game in show. >> my friends who are gamers are so glad you have a date. >> right now, to begin to play it and give us feedback, which is something we've never done before. we're very excited about that. >> we had flextronics on. it's a huge product. there are lots of people who are just going to migrate. >> the way this cycle is shaping
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up appears that it's going to be just as exciting if not more so than every other console cycle. and while our strategy isn't reliant upon that, there's no question that we and our competitors benefit from that. >> okay. i was talking with david faber this morning on "squawk on the street." he's always amazed that the gaming culture is not cultish. it's mass, right? and then i also read about this gamer gate. and i know the association is taking a point of view, 48% of your users are women. >> that's right. median age is 37 years old. >> right. so first of all, how do people have the time. and second, gamer gate. what is the association saying? >> well, i'm not going to speak for mike gallagher. i'm the chairman of the association. so i'm going to support their statement. i think in terms of the audience being cultish, there are hardcore gamers for whom this is just their daily bread. and then there's a big audience for whom interactive entertainment, the most exciting category. which is why it's the only growth business in the entertainment business today and
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it's why i'm so excited about it. >> do you see women staying away from the games because of all these news articles? >> no, nearly half of our consumers are female. >> when we look at the digital -- i mean, for instance, here's another guy -- all these guys are so tepid, it drives me crazy. growing digital contribution. we expect higher margin to grow. this business is already making you a lot of money. >> yeah. i mean, the point about digital distribution versus physical i think is overblown. we need to be where the consumer is. we were the first company to put out downloadable digital content. it's always been a big part of our strategy to be ubiquitous, and not to take a point of view on a distribution. that's a couple's choice. in fairness, our competitors are everywhere. we offer physical goods, we offer digital goods. today, however, our physical retail partners do represent the lion's share of our business. >> the first thing i think of is okay, so microsoft new guy, very forward-looking guy. amy hood says be bold.
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they spend $2.5 million on my craft. you have so much cash. are you not afraid that someone will look at the cash, look at the catalog, look at this quarter, recognize you don't have to have a new hit every quarter, but you have an annuities stream and say you know what, strauss, 40 bucks? >> there's things to be afraid of and things not to be afraid of. you know, we're an independent company. we actually really like being independent. we're proud of what we've done and we think the future is incredibly bright. we're also here for the shareholders. i think we're a well-run businesses. we're fiduciaries. we'll take those opportunities as we come. >> and you refuse to give an evolved forecast. >> it would be wrong to. i would actually be pumping something that i don't know about yet. >> and that's why i like you. no pump, and yet a great stock. that's the chairman of take-two internation internationalive. after the break, i'll try to
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make you more money. ahead, the common link between these all-star stocks that could power gains for the rest of the year. jim cramer, you're one of my heroes. >> thank you so much for helping beginning investors like me. >> when you talk about the market, i just believe that you're spot-on. >> oh, i love it. thank you so much, every night we watch you. i have learned and earned.
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look, the great ones just keep coming back. they may frustrate you for a day or two or sometimes a week or two or even a month or two, but they do eventually come roaring back and that's when you make the biggest money. but you can't lose conviction. let's just refresh on some of the best names that are worth holding on to. you know one of my absolute favorites is bristol myers. why? because it is an anti-cancer franchise that can deliver wonder drugs when you don't expect them. that's what it's done today with the experimental therapy that's showing some tremendous results with late stage lung cancer patients. a small sample, the results were overwhelming. an astounding 41% of patients taking this drug were alive after one year. the survival rate without the
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drugs, no more than 20%. sometimes as low as 5%. it's a whole new kind of imunotherapy. lots of people have been questioning bristol-myers' oncology of late. i put them up will almost with allergen. in fact, you have to hope the stock comes down so you can get another chance to buy. next, how about chipotle? remember when it was a number reported widely panned by pretty much everyone who commented on it? the stock rapidly fell from 6:53 all the way to 606. chipotle wouldn't shock me if it rallies right up to where it was before the quarter. i always tell you, you need to look to farther than honeywell, and 3m. both companies are innovators with tremendous growth
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regardless of the environment. but in the recent slowdown scare, honeywell stock fell from 96 to 84. right before 3m reported earnings, we've got a number of cuts who feared that the worldwide slowdown away from the u.s. could result in a real 3m dispoi disappointment. when 3m reported, it delivered on every line item, with the innovations being reported for a sizable portion of the beat. what did honeywell and 3m do? nothing that they haven't done consistently. lastly, how about the people who sold disney down 10% from its high because of worries about theme parks being hurt by ebola. short-sighted? you can only hope that someone else will be disappointed with the company when it reports next
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week, especially disney's just a few months from the new "star wars" debut. remember that acquisition? supposed to come into play in 2015. that's around the corner. i bet disney's bob ieger bought back a ton of stock during the recent dip. at least someone took advantage of that dislocation. it wouldn't shock me if two big-time losers today, facebook and starbucks, both of which severely disappointed in their guidance, and i mean severely, could come back after running right into the quarter. we'll have to see. here's the bottom line. best of breed stocks don't sell off much and they don't stay down long when they do. when you get a chance because someone's squawking about fed frightening, or chinese sluggishness or conservative guidance, remember these franchises and who captains them. they don't make excuses. they don't have to make alibis. that's because they deliver through thick and thin. because it's just in their dna. tony in florida. tony. >> caller: hey, good afternoon,
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jim. thank for taking my call. i bought under armour. i also started noticing it was getting more space in the large retail shops. should i keep buying it? >> i don't like a lot of the other stocks. kevin plank guided conservatively. i think the company is one of the great long-term buys here because they are a stealth technology company. i know that stock got hammered, not unlike starbucks, not unlike footbal facebook. why? because they were conservative. i think they will be fine. ed in florida. ed? >> caller: thank you, jim, for all your help throughout the years. i'm a philadelphia eagle fan. i'm from southwest philadelphia, originally. my question to you is, is it time to go back into bp? i liquidated my whole position when the ukraine and russian thing was happening. >> i thought you were beginning to say is it time to get back
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into darren sproles, which i would have said two thumbs up. bob dudley, he said listen, russia's got too much oil. i have to be there. we have no choice in a company. believe it or not, i think he's dead right. i think bp is good. but i understand every oil is going down. nobody cared. bp didn't do nearly as good a job. i do like world dutch more than i like bp. all right, best of breed names are that for a reason. they just don't stay down long, even if it looks like they're very conservative, they just give you opportunities. much more "mad money" ahead, including the race to cure ebola. i'll get an inside look at the lab. then werewolves are all the wage. plus, i'll try to make it rain in a brand-new edition of "the lightning round." stay with cramer.
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what do you do when a company reports better than expected results but then a stock gets slammed through no fault of its own. i'm talking about charles river labs. provides universities and biopharma firms with everything
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they need to discover new drugs and conduct early stage clinical trials, right down to the lab rats and mice the drugs need to be tested on. charles river has a 50% share in research models, meaning rats and mice. 20% share in toxicology. 20% in drug discovery. and 20% in microvial detection. something we've heard a lot about, right? because of the concern about ebola. and the need to speed up the development of potential early stage treatments and vaccines for the virus. here's the thing. last night, charles river reported a terrific quarter. higher than expected revenues that rose 2% year over year. the stock, it got dinged. it fell 2.6%. why? because the company's competitor delivered some truly horrendous results and a hideous conference call. stock plummeted over 6% today and caused negative pin action. crl had just reached its high ahead of the quarter. this stock has given you a 7%
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gain, and i think you'll be getting a rare opportunity here to buy it into some unjustified post-earnings weakness. let's take a closer look with jim foster, the chairman and ceo of charles river labs, to learn more about the quarter and where his company is headed. welcome back to "mad money." >> nice to be here, jim. >> all right, you did an acquisition, i want to go right the it. it's very exciting. sounds like you're in the business of being able to try to figure out individual drugs for individual people. because of in vitro. could you explain it to people? i thought it was the most exciting thing you guys have done in years. >> sure. so we did an acquisition in april of a company which moved us upstream to identify drug targets, design the molecule, design the drug and test it in vitro, so not in animals.
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so that's the architecture for chantest, the ion channel business. which simply means you want to get drugs into the channel across a whole bunch of different therapeutic areas, and so the deal does two things for us. it allows us to discover novel compounds across novel targets across areas like inflammation and pain, and also since the fda is worried about cardiac effect with drugs, we will be doing safety testing with this company. so one of the adverse impacts of targets on these channels is it can cause arrhythmia. so drugs will be approved, have to be tested to show lack of cardiac problems. you remember vioxx being pulled off the market because of cardiac problems. so we'll be in that business as well, which is a wonderful addition to our portfolio. >> it made me think about also
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the disease that's on a lot of people's minds, which is ebola. if you want to do tests and you want it to be fast, would chantest be involved? is it that kind of thing? or are you the guys saying help us, please help us, jim. try this, try that. we've got to solve this problem. >> so chantest is there to help. the drug companies are all about finding novel targets. if they can't find targets, they can't drop targets against them. now with these companies that we are buying, we will be able to discover the targets, not for ourselves, but for our clients. and things like ebola, where we did some work on one of the drugs that's in the marketplace has been in the marketplace recently, we did the safety work in animals to make sure that that drug was safe.
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if it eventually wanted to go into people. recently, the fda, which it was being very careful about providing drugs to these patients because there's an unmet need and a compassionate use theory, made this drug available and actually one of the patients that's been in the public press got the drug and is fine as a result of that. so we've been involved historically with the aids campaign, recently ebola. so we're participating in the discovery and development of drugs both in vitro these days with our new acquisitions, and in vivo with historical companies that we've had. and now we can do it across the whole spectrum, from target i.d. all the way through drugs being filed with the fda and then the situations like ebola actually being on the marketplace. and now knowing the drugs are safe because we've worked on them. >> let me ask you. are there drugs that could kill ebola, but they kill the
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patient? is that what goes on? >> i don't think we know that yet. there could be. that's a very difficult and delicate decision for the fda to make. you recall with the aids crisis, they had to make decisions like that. i think with their unmet needs, the fast -- if they believe it's safe -- will offer it to the patients on this compassionate use theerry. even n -- theory. even not having a bunch of human clinical trial data. and i think that's an appropriate thing to do. i think they know if the drug isn't safe and the safety profile isn't good, it's kind of pointless to give it to the patient. so no, i don't think that there are drugs that would kill the patients that otherwise would be available. and if it were, i think it's the fda's role to keep it off the market. >> you guys had a great quarter.
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i think this acquisition is the most important thing you've done so far. jim foster, chairman, president, and ceo of charles river labs. thank you for coming on "mad money." >> pleasure, jim. >> this is the company that's at the forefront of all that money that the biotech companies, a lot of it goes right to charles river and you can see why i'm so excited about the story. "mad money's" back after the break. tomorrow, kick off the trading day with "squawk on the street." live from post nine at the nyse. >> i guess you're right. >> so the cow bell was the bell. >> yeah, cow bell was the bell. >> it all starts at 9:00 a.m. eastern. ♪ there's confidence...
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it is time! it is time for the lightning round. are you ready? time for the lightning round. let's start with lou in illinois. lou! >> caller: hey, jim, thanks for taking my call. what do you think of arr?
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>> when i see these big dividend stocks, this one has i think like a 12, and they do this kind of fixed rate mortgage thing, it has always been a red flag for me. i just don't recommend those stocks. need to go to richard in pennsylvania. richard. >> caller: thanks, jim. a big silly cheesesteak to you. i'm doing some bottom fishing here in the city of brotherly love on a stock that has taken a bashing in the last two days to the tune of 25%. this company has two back-to-back record revenue quarters with positive guidance. my stock is wnc, wabash. >> yeah, that stock has been completely hammered and it does have some debt. but it's not so much debt that i worry. i like your bottom fishing idea. but i understand you're bottom fishing and that's not been a great way to make money so far in 2014. but this heaven-sent year is almost over. how about bill in california? bill. >> caller: hey, jim. a big boo-yah to you. i fell in love with a stock,
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west port innovations and it broke my heart. is it time to end this relationship? >> the same thing with gts, gas to liquids, which reported a horrendous quarter. this theory of the natural gas, liquid fuel, it just didn't happen. and i just have to tell you that i think that west port is not going to be able to pull out of this. maybe it jumps back to eight. i don't know. boy. thank heaven we walked away from that one. bridget in new jersey. bridget. >> caller: hi, jim. i bought your book last month, i love it. >> thank you so much. what's going on? >> caller: i also brought some slb and i need some help. >> i think you're going to be okay, but you've got to think longer term. you may have to buy that stock again at 90. oil is not going to stay down forever. we're going to have global growth.
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stephanie thinks they're good and i am in. let's go to greg in ohio. greg. >> caller: hey, boo-yah, jim. my question is intel. house of pain. >> got to swap that out and go into mgm. my close confidant who does great accounting work, and we both agree mgm is the way to go and it's right here, right now. patricia in tennessee. patricia. >> caller: yes. boo-yah, jimmy. >> boo-yah. >> caller: you're the best. energetic, entertaining, brilliant, and all the rest. i love your book. "get rich carefully." and i'm glad you have my back. >> how big is my head right now? >> caller: i'm a beginner investor on a limited budget. would you recommend i buy diamond offshore -- >> no, way too risky. we just when over slumberjay.
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patty. >> caller: hi, jim. i'm calling about atk. >> they have destroyed the stock. i just think it's such an opportunity. of course, should have just said stick with lockheed martin, stick with general dynamics, those were all ones we liked. went on a limb with lion technology. but you know what? i can't throw it away here. we're going to be engaged in a major defense buildup if things keep going the way they are around the world. richard in california. richard? >> hey, jimmy. a big boo-yah from sunny san diego. >> sure. >> caller: what do you think of etp? >> etp is like philip rivers. it's good. it's not as good as peyton manning, which would be enterprise products. but i do think it's absolutely a right thing to buy here. it's bounced back. it's one of the few that have actually gone all the way back up along with enterprise. enterprise brought a great quarter today and they sold it
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back down.reported a great quarter today and they sold it back down. joe in maryland. joe? >> caller: boo-yah, professor cramer. thank you for all you do for the home gamers. >> thank you. >> caller: my question is with fuel goi so low, what do you think of yrc worldwide? >> if i want to move things, if i want something that's office supply chain, i will send you to ups, which my travel trust unfortunately sold way too soon. ups is the way to go. and that, ladies and gentlemen, is the conclusion of the lightning round! >> the lightning round is sponsored by t.d. ameritrade.
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look at flextronics run. the second largest electronics manufacturing company on earth. bisically when businesses want to outsource their manufacturing, they turn to flextronics. high end stuff. this company serves a host of varied end markets, including medical, automotive, aerospace, consumer technology, like smart phones, pcs, but wearables. last but not least, some diverse industrial exposure where there's a lot of money. so when flextronices reported a terrific quarter, that can give you a good read on a bunch of different industries. the company earned 26 cents a share. higher than expected sales, rose 2% year over year. now, hedge fund wizard larry
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robins recommended flextronics at the alpha conference over the summer. they throw off a lot of cash. it's probably the biggest buyback i know of. right now, 20% of its share camp they can buy back. even though the stock jumped over 4% today, it's just nine times earnings. incredibly cheap. too cheap. let's take a closer look with the ceo of flextronics international to hear more about the state of his business. welcome to "mad money." very excited to see you. i'll do an interview with a great manager and i'll just sit back and say you've got to be kidding me. 20% they want to buy back on top of the 30% you've already bought? you guys believe. if you really go through our data, we've generated a tremendous amount of cash consistently over the last six, seven years. we generated 600 million dollars of free cash flow. on average, we only trade at $56
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billion multiple. so if there's one thing we do at flextronics, we generate a lot of cash and we love buying back stock. >> how is it possible that you thought you were going to do 200 million in free cash flow and ended up doing 326 million? >> it was a good quarter. we had really strong working process productions due to a lot of great disciplined and really good operating execution. we continued to beat cap ex and we exceeded our net income more than we anticipated. all across the board, it was a very good quarter. >> there was an alpha that said that the pc chain was weak and killed intel stock. you got out of that low end stuff. you're a much more value added now, aren't you? >> we tend to push more and more into industrial products, medical, automotive, high end -- really high end industrials. and a really, really broad section of the market. but we really tap virtually every industry in the
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marketplace. it's really a broad cross section and we tap into that market on a global basis. >> how do things look to you then? because you probably have a finger on the pulse of more industries. >> i have to think we're building 10,000 products for hundreds of different companies in every different industry, and we do have a pretty good view of the world. and we view the world as pretty stable. we don't see it falling apart. a lot of times we feel we have early warning indications of what that might look like. we haven't had that yet. we continue to have it stable. you saw the quarter we just announced for. beat by two cents. and it just created a great opportunity for us to -- you know, we think it's stable. so we like the way the economy is running right now. >> i like wearables. i like them because i want to have self-discipline. but everybody loves them. i mean, it's incredible. when you're talking with the under armour guys, you are the guy that builds the wearables. >> we believe we build more wearables than anybody in the world today.
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>> is it the trend that we really think it is? >> i think it is. the forecasts are explosive, as you know. and there's all kinds of wearables. you can wear them on your wrist for a health tracker. you've got smart watches. you've got it in fabrics. you've got it in helmets. you've got it in so many different aspects of really what connected living might be over time. we're in a lot of those markets and we're heavily focused at developing the underlying process technologies that actually enable wearables to happen. so whether they go into clothes or shoes or the wrist or whether they go anywhere else on attachments, we're very well positioned with those technologies. >> i know the clothes stuff. i know intel is interested. but you said helmet. go-pro reported a great helmet. went to 90s, we said it's too hot. but that kind of device is an ecosystem. you participate in the whole ecosystem of it? >> we participate in multiple parts of it. so we don't do the whole thing, but we do some distribution. i don't want to go into all the details. >> right. because i know it's a customer.
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>> we participate in virtually -- you know, practically every major customer in all these different industries is one of our customers. >> larry robinson said one thing to me, it bugged the heck out of me. he said look, if we're buying back that much, i'm going to be there side by side. why do you think you set up such a low multi-le multiple? it's silly. >> trailing at nine times trailing, 12 months. we say that's just a great deal. so it gives us an opportunity to be a buyer right alongside larry robinson and invest right alongside our customers. >> this is a great story. this is a great story. flex, finally an inexpensive stock that has the pulse of the world and buying back stock with you. the ceo of flextronics international. i like that go-pro angle. "mad money" is back after the break.
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take-two is good. flextronics. i'll buy it right here. charles river down. that was ridiculous. it should have been up. starbucks, really didn't like the quarter. got to find out more. we'll be interviewing howard
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schultz tomorrow. i didn't like the guidance either. but you know what? go-pro did shoot the lights out. that's a great product story going into the holidays. there's always a bull market somewhere. i promise to try to find it just for you. for you. i'm jim cramer and i will see >> narrator: in this episode of "american greed," meet the attorney who swears he can make the dreams of couples wanting children come true. >> these people weren't looking for money. they wanted a family, and he preyed upon that. >> narrator: he promises babies for a hefty price. >> i'm thinking, "oh, my god, there's a baby. how are we gonna come up with all this money?" >> narrator: but kevin cohen is actually a merciless con artist, brokering deals that shocked investigators. >> i've never seen anything like this before. he had every angle figured out. >> narrator: and he callously exploits the hopes and desires of people just wanting to be parents. >> it really is incredible that anyone would do this, and, you know, he


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