Skip to main content

tv   Fast Money  CNBC  April 21, 2016 5:00pm-6:01pm EDT

5:00 pm
earnings, haynes was higher and talk about norfolk southern and amd. there is plenty of ways to get a read, just not consistent yet. there is boston beer for everybody on your screen down 11%. thank you for joining us on closing bell. that does it for us. "fast money" begins now. >> "fast money" starts now live from the nasdaq market overlooking new york times square. dan nathan, brian kelly, karen finerman and guy adome. alphabet missing and starbucks missing on revenue. that stock is falling. look at visa tanking after slashing guidance. cnbc team coverage throughout the hour in each conference call with the headlines as they break and sell off in the bond market is reeking havoc for several high-paying dividend stocks. could any names be worth buying now and later, bill acreman gave $100,000 to a business school student who pitched him on a
5:01 pm
stock so what was the stock? first, we start off with the after hours lug bath in technology. alphabet and microsoft. those stocks are tanking and looks similar to the bad news we saw out of net flex and intel. tech telling us the real story here in the markets as we do see the queues down? >> the real story in the market is resilience of the broader market in the things we've seen now and over the last six months. it's telling a story that we would be talking about to a large extent but i don't know if that means the broader market will get crushed on the back. yes, queues are probably down. we'll see weakness tomorrow. the resilience of the broader market trumped everything we'll talk about in the next hour. >> until tonight. i mean -- >> until tonight, right. >> for me, i like the goal of alphabet. been a long time the move down
5:02 pm
is not dispreportion for the miss and headline number and call and more story, could be up and down but so far disappointing for sure. we'll see tomorrow facebook will be down, also, i think. every tech at the moment will be looking down. >> right. >> and google was down. is down because ad sales are slowing. that's not just a tech thing, that could be an industry wide corporation wide type of thing that's going on. does this change the earning's season? we'll know tomorrow because what's been characteristic is what guy is saying. you have bad earnings and the stock rips at 9:30 in the morning. we don't know if this changes the tone but if the stock market closes lower tomorrow on this news then i would be -- i would say the tone is changed. >> 24 hours ago we were here talking about how the earnings
5:03 pm
have not been great but the markets have resisted that. could this be the turn in the narrative? >> i'm not so certain and i'll tell you why. you know, we came to the earning's season and the market was rallying like crazy and wasn't a single stock story. we're getting a lot of single stock earnings and i don't think expectations were high but when you look at a stock like google 22.5 times adjusted on a gap basis and start to see earnings misses, those are the sorts of things that a few percent from an all-time high. if you're an investor you scratch your head when you dr how much exposure they have outside of the u.s. and think about the core business. forget the moon shots and everything like that. it's advertising. to me, what i'm saying is down 3, 4% is not the end of the world. >> connect the dots. let's look at intel. they told you enterprise is slowing. visa still not doing well. mike sofcrosof
5:04 pm
microsoft, google, juniper. how many do you need? this tells the picture what is going on in the economy. >> this is not -- google inot doing well. come on, tremendous growth there. >> you connect the dots. earnings are weakening. not falling apart a company going out of business. they are not going to be able to grow earnings like they have been able to. not in this economy. >> google missed estimates. when you piece it together, does it make you concerned about tech in general and the direction that earnings are taking at this point? >> i don't -- no, i mean, i want to look at the google specific story. what i haven't been able to do is look at the cost of the moon shot and factor that in. it was already factored in. a miss, no doubt. i'm not trying to say it isn't but i don't -- i mean, this is still a really attractive story. i know it's not cheap on an absolute basis. i think this business is phenomenal. >> it is phenomenal and double
5:05 pm
digit growth still. the concern is the back half of this year you don't see the growth for the first time since inception but you look at paid clicks. the headline number for paid clicks this quarter is i think 29%, which is excellent. up 26 is what the market was expecting. then you go to the fourth quarter when they reported up 31% when the street was looking for up about 22%. what is the point? that expectations are now narrowing, right? they are less apt to beat market expectations. >> the first quarter is always weakest, though. >> yes. >> so, a linked quarter -- >> i think we can extrapolate a bit to facebook and i wouldn't say what is bad for google is bad for facebook. i'd say a lot of stuff facebook is doing in mobile is really coming at the expense of google when you think about it. they are trying to use the stuff the way people search for things. >> is 1.5% decline in the after hour session that warranted on the back of google.
5:06 pm
>> probably because there is no reason we see apple down in line with microsoft, too. so that's kind of the way people connect the dots and we know facebook's earnings are next week and this is a very expensive stock with growth. to me, i think it is to answer your question a bit warranted. >> let's get more. josh lipton is on the call with the latest. josh? >> well, melissa, on this call the company's cfo started the call by explaining to analysts where she is seeing strength in the business. let's listen to that. >> the primary driver was the increased use of mobile search by consumers benefitting from the on going efforts to enhance the mobile search experience. we also benefitted from solid great in desktop and tablet search as well as continued strength in youtube and advertising. >> porat is calling out the strength. said revenue is growing in her words at a significant rate, investors disappointed here so talking about the pressure porat
5:07 pm
talked about the stronger dollar and noted a significant currency impact as you mentioned, she highlighted other bets from nests to fiber where revenue did clock in at $166 million but operating loss did hit 802 million. porat saying alphabet is focused on discipline. i'm going to hop back on the call and bring you guys more headlines as they come. >> thank you, josh lipton. this came in as we were watching google shares but still sharply lower. google gapped down after earnings 15 out of 46 times and the negative reaction is pretty rare. so what we're seeing is a rare reaction to these earnings. let's get more on the earnings. bob is here with the nasdaq on the red phone and has a rating on the stock. anything change in your view? >> a couple quick take aways. the net revenue is in line growing 23% or so. a little weakness on the
5:08 pm
affiliate side to the non-core for google. a segment revenue, the google core was basically in line, really the reason why the stock is down is because of profit and the google core profit is what ruth porat talked about on the call. content, hardware, depreciation and took down the overall operating income. the big misis a lot below the line in the sbc line. don't forget this company is buying back shares at 720. they bought $2.3 billion back and sitting around 740. >> right. okay. bob, thank you. they got $1.4 billion remaining for future purchases of their own stock. this according to use of skully. karen, when you take a look at this, does anything concern you or do you look past? >> i look past. it's a little disappointing but back to where it was at the beginning of the year, which is little frustrating but i don't know. i really still like this business. i think it's -- i think it's not a crazy price, either. i think even though they -- i
5:09 pm
will see -- i think we will see more buybacks and reup this capital allocation of the balance sheet will continue. >> bob, i want to go back to you. is there a burning question in your mind you need to ask on this conference call to feel more comfortable with this miss or do you feel comfortable with the miss? >> the big question is on the cost line. think about margins going throughout the year. these costs i labeled, enumerated more one-time in nature or a lower cost structure going forward? mind you, this is in the core of google away from the bet side of things. is just the nature of the margins going forward be at a lower rate. >> bob, thanks. >> i was going to ask, to you it's growth at a reasonable price. they are a leader but they have some competition now for the first time. rather than buying back stock to offset compensation, why not go out and buy stuff? there are so many people -- >> it's not either or. >> $78 billion in cash and should start deploying it because there is no shortage of
5:10 pm
large social players trying to go at them. >> i want to ask you this question because we're seeing huge declines on a lot of blue chip names and names people wanted to get in for a long time. may feel like they missed it but on google, on a microsoft, on a starbucks, on a visa, are these buys on these pull backs. >> let's talk about what happened over the last couple weeks. >> sure. >> intel we saw the miss. the stock was down 2.5% in the after hours. ibm was an absolute disaster. look at how ibm traded today. what the market is saying is they are taking the advantage of weakness in stocks to buy the names. well, it happened tomorrow with these names? i'm not sure and i'll say one other thing. last quarter, google was trading north of $800 after they reported. dan was the otherwise -- i was saying stay with it. dan said absolutely not. we got to sell it. within two days the stock was below 700. i wondered if you'll see this sell off and two days later right back where we started
5:11 pm
today. >> my view on these four is more of the big picture view when you start to say okay, margins are compressing. margins are compressing in all companies. we're starting to see earnings misses and growth slow down. so for me, i am not buying any of these tomorrow morning if they are down. the only thing that would get me excited is if microsoft reversed in the morning because of the dividend that would give me the confidence to say it's not done going up and i get a dividend. >> of course, much more coverage throughout the hour of these earnings and much more. up next, is there trouble lurking in some of the safest trades in the market? find the highest yielding stocks tanking today and if there is danger in dividends and starbucks missing, we'll hear from the former president on the quarter and the competition and bring you the latest headlines from the conference call underway right now and later, why the oldest group of stocks could be the very thing to take stocks to brand-new highs. we'll tell you what that is when
5:12 pm
"fast money" returns. if you have medicare parts a and b and want more coverage, guess what? you could apply for a medicare supplement insurance plan whenever you want. no enrollment window. no waiting to apply. that means now may be a great time to shop for an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. medicare doesn't cover everything. and like all standardized medicare supplement insurance plans, these help cover some of what medicare doesn't pay. so don't wait. call now to request your free decision guide.
5:13 pm
it could help you find the aarp medicare supplement plan that works for you. these types of plans have no networks, so you get to choose any doctor who accepts medicare patients. rates are competitive, and they're the only plans of their kind endorsed by aarp. remember - these plans let you apply all year round. so call today. because now's the perfect time to learn more. go long.
5:14 pm
great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. welcome back to "fast money." take a look at verizon for instance falling to the tune of 3% after reporting first quart e
5:15 pm
revenues that fell far short of revenue and phillip morris and coned. yield more than 3.5%. the culprit weighing on the high-yielding stocks and sell off we've seen in the bond market in the past week sending yields sharply higher. >> yeah, so i mean, you think of these as proxies, which some people do because of the high dividend build. what happened was oil ripped so everybody is looking at it and saying you know what? inflation expectations are starting to creep up. that's what the fed looks at. they are already close to the target on that and jobless claims and job report and that given those two, raise rates coming up next week. i wouldn't believe it. >> you would? >> i would. >> interesting. do you think this is the
5:16 pm
rotation. >> it's no question to move the bonds led to what we're seeing, that and move into a broader market but i caution people at home for this, the only thing that makes these stocks special is their dividend yield, otherwise the same risk to the broader market as every other stock. you're only insulated by the percent that the dividend yields. people are confused sometimes. the only safety is the yield. >> i would add when you look at u.s. utilities, there is a play not just for the yield but u.s. domestic safety, right? these companies that don't have exposure overseas, dollar exposure or exposure to emerging markets, things freaking people out over the last year and that's one of the things i would say utilities made a perfect, perfect double top. last year worried about the search for the yield came back down and just got there and down a lot in a very short period of
5:17 pm
time. you probably have an opportunity back towards 45. >> yeah, the staples move was interesting and some might have argued that they really reached full valuation at this point. the move, the ratchet hire that we've seen this year in the stocks is tremendous. >> yeah, i actually can't find any value there, not to just throw them out with the bath water but okay, i'll throw them all. i agree. the move has been too much. >> how about your coca cola? >> i think you trade it from the long side until it breaks back down through the double tops through the breakout level. quickly about the bond move. this is a couple day bond move. i don't think the move -- >> goes back down? >> i believe so. i understand what is going on. listen, i think ten-year yields in the united states is 1.25%. >> 1.25% -- 1.88 or so now. >> he's been saying this for three years now. he's been spot on and i agree with him. if you look at what is going on. the only thing that would change is if the dollar weakens from
5:18 pm
here. it doesn't look like it's going to do it. look what the dollar today. it reversed at 94. that's been a key level for a year and a half now and if you have the chance that the fed is going to raise rates because oil prices are higher, and the stock market is higher. they do watch the stock market. the higher the market goal the more chance of the fed raising rates. that will get a strong dollar, strong dollar means deflation and yields go lower. >> but not just that. look at europe and japan. okay? they went to negative interest rates and their currencies went up. to guy's line, central banks lost control. it doesn't matter. rates aren't going anywhere every. >> ever. >> lower -- >> ever. >> do these stocks continue? >> that's the rub, right? i've -- with rates going down, i would have thought the stock market would give -- when february started to happen, february 10th, february 11th, it made sense. stock marketing coming unravelled. the world made sense. the last two months it hasn't made a lot of sense for me.
5:19 pm
it's hard for me to answer the question. if yields go to where i think they go, you see a significant pull back in the s&p. next up, nice day for gm rallying after a big beat on the top and bottom lines. the auto maker setting strong results in north america and improve performance in europe. net income more than doubled gm saying this was a record for the first quarter, karen? >> such disappointment if you're a gm shareholder. >> right. >> it ended up one and change percent after opening up nicely. what do you need to happen for gm to move? >> we've had record auto sales. >> clearly people are concerned we're at peak, peak, peak and also had a nice mix of the higher margin, vehicle sales and people i guess maybe worried if oil starts to move back up, when we saw it last time around, 78 years ago when oil was $100 a share, they couldn't give away a truck. maybe there is a little risk. it's just too frustrating. the yield is great but i think
5:20 pm
people are going to be stuck with that peak auto for awhile until it gez down and until the auto sales go down. >> look, you look at ford for example at the beginning of 2012 when this run for auto started was a $14 stock. the stock market has gone up significantly since then. guess where ford is today? basically $14. obviously it's moved to the other side of that but we're back to where we started. if the stock can't rally in the environment, broader market rally, when is the stock going to rally? i don't know the answer. it clearly has downside more than upside at this point. >> still ahead, a busy night here on "fast money." starbucks and microsoft falling. call well underway as the stock is down 4.5%. we'll bring you results and the microsoft call minutes away from kicking off. we'll hear from the ceo as that stock is down 3.5%. i'm melissa lee and you're watching "fast money" first in business worldwide.
5:21 pm
in the meantime, here's what else is coming up. >> which stock are traders betting could lead the market to new highs? the answer might surprise you. plus, bill ackman, john paulson and karen finerman see value in the same stock. what is it? we'll tell you when "fast money" returns. is changing. at temenos, with the microsoft cloud, we can enable a banker to travel to the most remote locations with nothing but a phone and a tablet. everywhere where there's a phone, you have a bank. now a person is able to start a business, and employ somebody for the first time. the microsoft cloud helped us to bring banking to ten million people in just two years. it's transforming our world.
5:22 pm
that's why i run on quickbooks. details. i use the payments app to accept credit cards... ...and everything autosyncs. those sales prove my sustainable designs are better for the environment and my bottom line. that's how i own it. we believe in the power of active management. anagement, we actively manage with expertise and conviction. so you can invest with more certainty. mfs. that's the power of active management.
5:23 pm
5:24 pm
welcome back to "fast money." kayla? >> melissa, looks like a headline beat for revenue and for the bottom line. revenue is up a little bit more than 6% above expectations but the company's taking its guidance down for the full year of 2016 and the company in the fiscal third quarter reporting for the fiscal second quarter and the company said it's net revenues for the fiscal 2016 would only grow 7 to 8% as opposed to potentially as high as double digit percentages, which is what they previously laid out on the call underway right now. the ceo said we could be wrong but we want to be cautious when things improve, we will be the beneficiaries. with we know there will be a turn for the better, we just don't know when. he did talk about the volume so far through april.
5:25 pm
they are down slightly from what the company reported through the quarter that ended in march so perhaps that is the intel the company is using. he says the u.s. consumer is strong but warned about continued weakness in china, brazil and oil-based economies. he said they are still working to apply to operate domestically in this country. that is a big hole for visa's operations and one potential growth spot for them. the biggest news, though, is that visa europe deal. the company eliminating an earnout that would be more than $5 billion. they would pay in four years after closing. this came at the advice of the european commission instead they will be paying a little more than a billion dollars when the deal closes and then they will pay about $1.2 billion three years following the closing. so that's a little different timetable and will be a little more of a cash intensive situationmelissa,
5:26 pm
could push the closing of the deal beyond the current quarter they expect d to cloed to closer than that. perhaps they are being cautious. they wanted visa europe's earnings to come into the fold and that's potentially why you're seeing shares come down sharply. >> kayla back on visa. guy, you've been a bull on visa for a long time. when i hear language we could be wrong. that is not reassuring. >> it's not reassuring but also is somewhat reassuring they are taking -- >> honest -- >> they are being honest that see a turn and don't know what it's going to come. let me say this about visa. quarter wasn't a disaster. transactions processed up 9%. the problem is when you trade close to 26 times forward earnin earnings, anything ambiguous, you get the stock whacked. 81 and change is expensive. what do you do? take keys from the ceo and proof fri fits from the name.
5:27 pm
>> two big moves lower after hours. microsoft falling hard. that call just moments away from starting, we'll bring you the headlines from the ceo and starbucks shares down more than 4% after disappoint pointing revenue. the former president of starbucks international will be with us to weigh in on the quarter. much more "fast money" after this. ge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.
5:28 pm
my favorite part of the show. ♪ ♪ >> you hear what's playing? >> prince. >> that was very sad. ising co-pd deductibles... aflac! or help pay the mortgage? or child care? aflaaac! and everyday expenses? aflac! learn about one day pay at blurlbrlblrlbr!!!
5:29 pm
youto get the help you'refar looking for. that's why at xfinity we're opening up more stores closer to you. where you can use all of our latest products and technology. and find out how to get the most out of your service. so when you get home, all you have to do is enjoy it. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around.
5:30 pm
well cokocoal coal come -- back to "fast money." dedra is monitoring the headlines. susan lee is on the starbucks earnings call. susan, let's kick it off with you. >> we've been hearing from howard schultz and kevin johnson. to get through the earnings and eps in line with expectations at 39 cents a miss and it came to revenues and comp sales, only came in at 6% which was a lit
5:31 pm
light from what the market was looking for in china and the asia pacific where starbucks has been investing heavily hoping to open 500 stores for half a decade. sales there only grew about 3.5%. looks like the market was looking for 4.5%. a big miss and we heard from howard schultz right there on the conference call. >> the performance in q 2 is particularly gratifying in it was in the face of very challenging consumer geopolitical and economic environments. >> yeah, so what analysts were looking for on the conference call, they wanted an update on the mobile app, especially as it looks like 24% of u.s. transactions are based on mobile and that adoption hasn't really changed. it's accelerated according to kevin johnson in his words. he says globally right now, mobile acounts for 4% of transactions, up 40%. as forhe rewards program, was
5:32 pm
just changed last week so instead, starbucks is rewarding the dollar amount you spend at their caves instead of the number of drinks and they said that it hasn't really impacted. they said it has accelerated so in this quarter, melissa and the markets were looking for analysts said starbucks is priceed to perfection. >> for more onstar bucks, we're joined by howard, the former president of starbucks international. howard, great to have you with us. >> thanks for having me. >> what are your thoughts on the softness that seems to be emerging from the emerging markets like china? >> yeah, i wouldn't worry about it. china is a long-term investment and it's been -- we've been there a long time. i think we started there in 1996 so a long time ago and continued to grow. they will add more stores. they will do great there. i open that market personally so
5:33 pm
i'm pretty familiar with it and i wouldn't worry at all about it. >> when howard uses challenging environment. is he a cautious man or should we be worried? >> he's a cautious guy. he likes to under promise and over deliver. that's who howard is. i really am not worried about it. those markets are strong. asia pacific has been very strong since the beginning and that was, you know, that's been going for a long time. starbucks will do great. they are at the heart of what consumers want. i think it's always funny when i hear we disappoint when we have 6% comps. it's strange to me. we'll take it. >> when you take a look at starbuck's empire, and where it might be going next, what excites you the most? >> i think everything. i think i've always believed there is a lot more room in the united states for stores. >> more room? there is like a starbucks every
5:34 pm
corner, howard? >> i'm always amazed when i go to manhattan and when i first started at starbucks, howard said to me, look, i'm from a seattle guy so he was born. some day we'll have 100 stores in manhattan. i told him he was nuts. i said that will never happen. i think there is close to 300 stores there and still, when i'm in new york, i always have a hard time finding a store. it's amazing. maybe i'm standing in the wrong places. i think there is lots of room for growth around the world, not just the u.s. >> howard, you said china is not a big deal but george said a hard landing in china is practically unavoidable, his words not mine. >> if you're investing in any stock whether it's starbucks or anything else and you're concerned about economic issues that are usually temporary, then, you know, you shouldn't be in the stock market but if you're in the for the long term,
5:35 pm
store bucks will do great. everybody said, i remember when we first went to china people told me they will never drink coffee. look at them now. they said the same thing in japan. i think there is over 1200 stores in japan. you know, that's short-term thinking. starbucks is in it for the long term, not the short term. if you're in it for immediate gratification, again, you shouldn't be in the stock market. >> howard, it's karen. obviously it's a long-term story. you know the story well for a long time. looking at $21 plus billion of revenue, what do you think several years out? what's the goal? where can you get to? >> i have no idea. i'm an outsider. it wouldn't be who of me to give you an answer to the question. >> i assume, howard, you own starbucks stock. are you -- >> i own -- >> would you -- >> i would buy more. i was always on the wrong side of it. you know, i was too old when i
5:36 pm
got to starbucks, you know. i was almost 50 years old. never did i think that starbucks would become what it's become. i was too smart for my own good. if you're a long-term player. it a great company. i'm in the store every day and some store every day and i'm a customer but i pick paper up off the floor because that's my nature. i'm proud of the place. >> howard, thank you. howard, we should note he's the auth author of "it's not about the coffee" and kevin johnson the current president and coo of starbucks will be on "mad money" tonight at 6:00 with jim. don't miss that. what do you make of this tumble? >> that was pretty objective. >> listen, you're talking about what the stock has done. choir in comps have missed for
5:37 pm
four consecutive quarters growing well but not reaching their own guidance. to me that is troubling. throw in the head winds to grow in china and i'll mention this, the stock is up 50% since the start of 2015. they did $19 billion in sales last year and they will do $21 billion in sales don't little math. that's 10% year over year growth and the stock has appreciated 50%. trading 32 times -- >> too expensive right now. >> it's always too expensive. it's a premium brand. to me, it's not my thing. if the stock continues to consolidate in the high 50s and 60s, it will break out sooner or later. >> it's not my thing but i would never ever bet against howard schultz. that guy is amazing. look what he's done but what i would bet against in this space based on this news, duncan brands because it seems to me if you can translate that weak economy to the other places and duncan brands hasn't executed, that's what i want to bet against. >> interesting. >> it's funny. when i go to starbucks, which is
5:38 pm
once in awhile -- >> you don't drink coffee, though. >> i get bread. >> you see milk spilled -- >> you clean it up. >> compulsive. >> some jerk comes over and spills cream -- >> that's it? how abdomout a trade? >> it is expensivexpensive. yes, the comps are concerning but again, on every pull back in the stock is a buying opportunity my sense this one is, as well. >> check out shares of microsoft down 4.2% after hours on earnings. we'll hear from the company ceo what drove the quarter plus bill ackman gave these three colombia students, business students $100,000 for their idea. we'll tell you what it was exactly and what has the billionaire so excited.
5:39 pm
i'm only in my 60's. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, it helps pick up some of what medicare doesn't pay. and could save you in out-of-pocket medical costs.
5:40 pm
to me, relationships matter. i've been with my doctor for 12 years. now i know i'll be able to stick with him. [ male announcer ] with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients. plus, there are no networks, and virtually no referrals needed. so don't wait. call now and request this free decision guide to help you better understand medicare... and which aarp medicare supplement plan might be best for you. there's a wide range to choose from. we love to travel - and there's so much more to see. so we found a plan that can travel with us. anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations. remember, all medicare pplement insurance plans help cover what medicare doesn't pay.
5:41 pm
and could save you in out-of-pocket medical costs. call now to request your free decision guide. and learn more about the kinds of plans that will be here for you now - and down the road. i have a lifetime of experience. so i know how important that is. welcome back to "fast money." we talk about bill ackman's investments but he's also heavily invested in our youth. each year the founder holds the persh irk pershing square challenge. they get the opportunity to
5:42 pm
present the best investment idea as well as a panel of judges. that panel last night included john paulson and our very own karen finerman and the fine was, get this, $100,000. the winners of this year's challenge were three that join us now. johanna is going to give us her pitch in just a second. we first want to welcome these ladies to the show. congratulations to you-all. were you -- how did you come up with the id that and were you nervous? >> we practiced a lot, so the nerves weren't that much. >> do you plan on actually putting money where your mouth is in terms of this idea? >> we plan to make a scholarship for women interested in investing. >> fantastic. why don't you guys go ahead and give us the pitch. >> sure. first we'd like to thank the center at colombia business school and mr. bill ackman for making this opportunity possible. last night we pitched along the
5:43 pm
price target of 84 canadian dollars which represents a 44% upside. first the company is misunderstood. the convenience part of the business provides very resilient and high free cash flow. the field margin part of the business is not correlated to oil and we believe field margin will trend upwards. second, management continually purchased at multiples and we expect them to continue to do so. third, the industry is fragme fragmented with 3.5% and there is a long runway to grow in the u.s. market. >> do you think they will make acquisitions, johanna, is that part of the premise? >> yes, yes. >> karen -- >> yes. >> you're on that panel last night. what caught your attention? you must have gone through lots of pitches. >> five pitches last night, which were all great. i was so impressed with the caliber of the pitches but the thing that attracted all of us to this one is it is a great business just -- it is gas
5:44 pm
station convenience stores and so people wonder when gas prices go down, are you going to make less money? in fact, that hasn't -- they showed how that z hand been what happened and margins are great on the convenience store businesses, cigarettes, beer, slim jims. >> shrilim jims. >> that's a great business. they talked about the acquisition runway and as they get bigger, they are good at rollups and evolution from mom and pops to big chain stores is very -- >> you talked about the stock years ago, didn't you? >> i've always liked the convenience store thing. we talked abo cst brands. i liked it. we owned it from 11 to 12. it's now -- >> 1 1 to 12 -- >> p.m. to a.m.? >> like a buck. it compounded at 21% annual rate of turn. it's really interesting. they did a great job. >> this pitch which was under a minute was a great detailed pitch on the convenience store
5:45 pm
side, what is interesting is we said and seen with companies like a cst is when you have more money in your pocket from lower gas prices, you buy the slim jim or migrate to higher premium or cigarettes you might go from a lower brand or higher brand and lower slim jim to slim jim delux. >> is there such a thing, wise guy? >> i don't know. >> there is a tendency to spend that extra. >> it's been a great store. i remember karen talked about this stock at least three or four years ago. >> awhile ago. >> you had the same thesis. the difference between these ladies in college and me, they are pitching a story like this and i was pumping gas at the places. that's the difference. >> buyers, interested? your interest? >> here is what concerns me. all we hear about is the fact that in five years, there is not going to be as many cars on the road. they will be electric or because the millennials don't want to
5:46 pm
drive anymore, uber. i guess what i would be curious about is long-term plays. you can roll this up but is this a long-term growth industry that they are in? doesn't seem that way. >> you guys did a great job, ladies. thank you for joining us. congratulations on winning the competition. >> and i love the all-girl team that won. >> that's very powerful. >> by chance. >> exactly. >> they are going to put the money to a good cause, too. >> no doubt. >> still ahead, microsoft shares falling sharply about 16 minutes in now in the call. we'll hear after the break and a shrew of big-named earnings tomorrow. what it could mean for the broader markets, you're watching "fast money" here on cnbc.
5:47 pm
hii'm here to tell homeowners that are sixty-two and older about a great way to live a better retirement... it's called a reverse mortgage. call right now to receive your free dvd and booklet with no obligation. it answers questions like... how a reverse mortgage works, how much you qualify for, the ways to receive your money... and more. plus, when you call now, you'll get this magnifier with led light absolutely free! when you call the experts at one reverse mortgage today, you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free cash from the equity in your home and here's the best part... you still own your home. take control
5:48 pm
of your retirement today! great time for a shiny floor wax, no?
5:49 pm
not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet comcast business.r schedule. built for business. welcome back to "fast money." deidra is at microsoft monitoring. >> reporter: it's a story of a rising cloud versus a p.c. market. weak sales hit the bottom line with earnings missing what the street was expecting. the company telling us not long ago a one off tax issue lowered earnings by four cent as share.
5:50 pm
delving into different business seg. the office subscription continues to make good ground at 22 million subscribers from 12 million a year ago but remember, the margins are lower in this business than selling office licenses on actual p.c.s. it comes to the cloud, this is what everyone wanted to hear about and didn't take long for the ceo to address this on the call. have a listen. >> the cloud is being built into over organization's quest to of timmi of tim mince and grow. we're one of the two leaders in the market. >> reporter: microsoft's cloud business is growing at a very good pace but competition is very fierce in this pace and he was referring to the hearder in the cloud market, which is amazon. looking at devices, revenue for microsoft's surface line of pcs and tablets continued to climb
5:51 pm
but its phone service is in free fall. back to you. >> thank you very much. this probably could be chopped up to the fact microsoft is another one of the stocks that ramped up really hard. >> right. >> going into this number. >> absolutely. again, it concerns me that they say the cloud is competitive space. is it a shrinking pie or is the pie as big as its going to get and you have this competition among all the companies. so i wouldn't look at microsoft. i'd have to see if it holds 50. >> the pie is getting much larger. at aws, amazon has such a huge lead. they will compete on price. to me, i think they will continue to grow. it's what it does to the margins like she said and this is a company six years ago had 80% gross margin and expected to be 65%. the stock strides at 20 times earnings and earns growing mid single digits at best. >> it's interesting because you mentioned amazon. amazon is trading lower at 1.3%
5:52 pm
which is teamer. >> amazon had a huge move. stocks from sub500, $630. >> is this a correct read through? >> think about it. you want the take the chance you're right about amazon and have it move in google. if you enjoy the move over the last month, month and a half, you have to take money off the table. >> if there are holders in the strategy and you see the g start to weaken. >> right. >> yes, i think that we'll see more money. >> we should note, too, that queues in the after hours session are down by more than one full percentage point. we're seeing the impact. what is your thoughts on how to approach tomorrow? >> i think -- well tomorrow is a very, very critical day because if you do not get the reversal in any of these names in the qs that we have seen in the earnings season, the tone has changed dramatically and the tone has changed at a critical
5:53 pm
resista resistance point. i would be very concerned if by noon tomorrow you don't see any rebound. >> what also will set the tone tomorrow, three industrial giants reporting earnings and dan, the options market expecting big moves here. >> it is. bk seems like tomorrow is a critical day. it is critical for a totally different reason when you think how we started earnings season and got off to bank stocks, low expectations, they beat the expectations, the stock rallied. now technology, the stocks rallied into them and high expectations and stocks went down. industrials are important when you have this talk about the dollar and exposure to emerging markets. tomorrow we have caterpillar and ge and 4.3% move in either direction and 2% move in either direction in ge and a 2.5% move in honey well and do the math, that's $2 billion, $6 billion. to me it's less how much these
5:54 pm
stocks move but react to the news and expectations are high and they have that exposure we talked about. >> for more options action, check out the full show tomorrow 5:30 p.m. eastern time. a top movie producer tells us the one company he thinks will survive the landscape. that's right after this break plus, the traders will tell you what they are watching for tomorrow. aka the final trade. stay tuned. here at td ameritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade.
5:55 pm
5:56 pm
5:57 pm
welcome back to "fast money." our team did a charity auction to build creative confidence in children we auctioned off ourselves. the winner for a second year in a row is martin shafer. he produced mega hits like "shaw shank redemption" and "seinfeld" and donated a generous $40,000 to the charity. martin, welcome to the show. thank you very much again for your generosity for this cause. you actually trade. you watch the show. >> i watch the show every day. i'm like a cnbc junkie from 6:30 in the morning until 4:00 and i
5:58 pm
don't do like a lot of trading but i, you know, i watch the market very carefully. it's more investing than trading, but -- >> yeah. >> i definitely have my eye on it. >> got to ask you about disney. what do you think whababout wha going on? >> i think it's definitely an issue. i think the question -- it's still two years and two months away. sit him s is it him saying i've had enough and want something else and it's hard to get past that if he wants to retire or is it --fy was the board, if that's the case i would beg, beg for hill to stay and i think if the board is not sure and taking that company ford into the future by the way if two people running for president three years older than him, president of the united states has been in the 70s, good job as disney but
5:59 pm
i think in a way also what happened with the guy, mr. stags, who was going to, you know, become the chairman, i think in a way it's almost positive. they didn't feel for some reason he was like the perfect guy. there is still two years. >> right. >> to figure out who it might be but he's done a spectacular job running this company. i think he's one of the great ceos and as a shareholder, i hope he stays. >> yeah, a shareholder. you own disney. >> i've owned disney for many years. >> in terms of content production f. you're to produce, i don't know if you have anything in the works right now, you know, movie, series, does it make a difference if it's going to be released directly on to a netflix or amazon -- >> i think what is happening now is people want to see what they want to see when they want to see it. you know, they will watch amc networks to see walking dead but if walking dead was on animal planet, they would watch animal planet. as good a service netflix is "orange is the new black" and "house of cards" made netflix
6:00 pm
the other way around there is an convenience watching at home and that's the programming disney does. >> got it. we got to leave it my mission is simple -- to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. 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 trying to make you a little money. my job isn't just to entertain but to teach you. call me at 1-800-743-cnbc. or tweet me @jim cramer. what do you do when they turn on your favorites? what do you do when the market has


info Stream Only

Uploaded by TV Archive on