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tv   Mad Money  CNBC  April 2, 2013 11:00pm-12:00am EDT

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although that's not clear at the beginning of the show tonight, but to educate and teach. so call me at 1-800-743-cnbc. okay, what makes for a winning
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stock in this market? what's powering these averages with the dow climbing 89 points, nasdaq up .48%. i've got the answer. tonight, i'm playing bartender! tonight, i am going to mix you a couple of cocktails that will knock your socks off! the cocktails that are fueling this heady market and making it so people just refuse to leave this party. first, we're going to use a base of hawaiian punch. why? well, because we've got to mask the taste of pretty much everything these days. everything you put in it. much of the conversation this afternoon revolved around when is the fed going to take away the punch bowl, right? that's a reference first uttered by the longest serving reserve chairman ever, who famously said the fed's job is to take away the punch bowl just as the party gets started! now we know the single-biggest reason why so many professional
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money managers have missed this rally is because they believe the party is getting started and if that were the case it would mean the fed would stop buying bonds to keep interest rates down and the punch bowl would be taken away. me? me, i'm not worried about the punch bowl being taken away. in fact, i don't even think the fed is using a punch bowl. i think it's using a gigantic rubbermaid trash can, because this party has been incredibly resistant to having a good time, a time good enough that people actually hire others to enjoy the bounty. in fact, the economy is so weak that maybe, just maybe a punch bowl's not big enough to do the job. we need the brute! now, we aren't going to just use any hawaiian punch because that might not have the impact we like. what are we going with?
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we're going with uncle ben's best! that's right. ben's best. produced at the federal reserve gin mill. don't worry. we've got some real cheap gin to add, too. ben's best is going to let us buy when we're finished with this $80 billion worth of u.s. bonds every single month, and you know what? we're not even going to know we're doing it, it's that good. anyway, what's the secret behind ben's best? it makes everything other than stocks, especially bond juice, taste terrible. you can't even think of drinking a bond. it gives you no return, and a stomach ache like grain alcohol. it doesn't matter whether you're buying junk bonds, municipal bonds, agency bonds, certificates of deposits, treasuries! you're getting that same lousy
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return you get from sipping sterno or at least drinking some rubber-all alcohol, of course, mixed with kang! what else is special about ben's best? we're going to need a little more ben's work here because of the stuff i'm putting in this thing. how about the fact that it masks all sorts of unpalatable ingredients? most investors would prefer to own stocks, for instance, that sell at no more than two times their growth rate. it doesn't matter when you've got ben's best doing the job! you can't taste that kind of stress valuation, a clorox of 21% or a kimberly clark. i mean, you know, plus 18%. this year alone. all-time highs. couldn't be imagined in 2012, which isn't that long ago, by the way. look, absolutely, i would dump some kleenex in here to make the point. but then i would feel compelled to pour bleach in. and as powerful as ben's best might be, i don't want to set a poor example for the younger
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folks out there. but i am going to throw some cheerios into the cocktail since general mills has gained 20% since the beginning of the year. you get about a 3% yield with these ingredients which makes the taste of bonds seem like dumpster juice, especially after taxes. and because we're mixing this concoction in a trash can, doesn't matter. doesn't mean we can tolerate bond dumpster juice. you could put all sorts of spiked stuff with goodies and ben's best without tasting the swill. including a bunch of household names that have gone up roughly 15%. hey look at this, man. we can handle procter & gamble's head and shoulders! yeah, man, you can't taste it with ben's. how about this one? a little colgate toothpaste. you tell me uncle ben's hawaiian punch will make it so you can taste this? no way. special k, yeah, kellogg's up 15%. stir man, don't shake!
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and let's not forget pepsi! that's up about 15%. these stocks are growing like junior growth stocks. same with the pharmaceuticals. you know what we ought to do for good measure, because we're making a real good one here. why don't we throw in some pills? how about some bristol-myers? hey, come on, let's face it. you can throw in some real powerful stuff. celgene up 50% this year. biogen idec, gilead. how can you leave those out? by the way, just an fyi. we have definitely reached the don't do it at home stage. now, no -- here, here's what happened today. i mean, wait a second. i don't like this unnatural ingredient in the drink. anyway. what happened today? okay. for some the punch had been getting stale. tiresome. day after day tossing in the same ingredients, same foods, same drugs. today we got a new taste added to the mix.
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yeah, the health care cost containment stocks, also known as hmos. oh, boy, medicare issued rules recently that amounted to what was a stamp tax. not unlike the whiskey tax that the brits put on the colonies to finance the french and indian war. last night, the u.s. government repealed this whiskey tax and actually gave the humanas, united health and cignas a break. the result, these new ingredients rally like mad. we've got $4.10, $2.77, $1.84 for some of these guys. you know what? it's perfect to add some to the mix, don't you think? just so you know, this move in the hmos isn't done. when you see the huge gains you saw one day, it usually means the big money hasn't finished done its buying, probably be back tomorrow. short sellers have been drowning in this punch now for ages. they're licking their wounds
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given that one of the safest shorts out there was the hmo cohort. because if we're all about saving money for medicare hammering those guys has got costs. the hmo was looking to be big winners when the affordable care act is implemented next year, quite an irony, considering at the time we thought it would be the profit centers that would be squeezed by obamacare. no, late-stage capitalism american style. when companies go to work, companies tend to win, not lose. when they go to congress, yeah, humana. do we have any more humana? bond juice. it's too bad, because you know, humana is the champagne of bottled hmos. it tastes like coming home! how sweet it is, and timely. we needed something bubbly to keep this thing going, especially because heaven forbid we start getting not a fed that wants to take away the punch bowl, but a fed that might simply run out of goodies if the employment number friday turns out to be light and we join the list of punchless countries like italy and spain and even france, china. now get this.
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as much as ben's best can mask an awful lot of foul-tasting rot gut, there are some ingredients that simply aren't allowed into the punch can. first of all, we're not going to let any material stocks into the mix. the copper stocks, iron stocks, coal stocks, even the oils. they don't get into the drink. they taste terrible! because they need worldwide growth, and we don't have it. without china coming back online, you won't see these getting a good pour any time soon. we'd boot immediately, even if they got near the mix. second. you cannot add tech. not into this bowl. that would be like adding vivitrol, that revolutionary drug that cuts your craving for alcohol. tech needs europe to do better and needs personal computers to do better. we would be gagging if you added those to the industrial strength punch bowl. speaking of gagging, let's rule out one other juice besides dumpster juice. let's rule out apple juice. we don't want to see another apology from ceo tim cook for wrecking the party. i would rather throw some old
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lace into the bowl than some arsenic. three apologies, not a charm. finally, okay, we have to insist the bankers don't get their way. all right. we don't want them stinking up this place, not one bit. not the bankers, federal reserve gin mill. oh. here we go. bank earnings. yeah, they're going to have crummy numbers with earnings season coming up, some fear these bank earnings couldn't be camouflaged by all the ben's best of the world! let me see. eww! larvae! yep, this is a concoction that's not going to go away any time soon. and i've got to tell you, you've got the exclusively -- you've got one exclusive party going here, with the only -- with only the totally most bullish participants allowed to sip from this oasis in the midst of a bear park. so here's the bottom line. ben bernanke is not about to take away the punch bowl. in fact, he's serving up some industrial-strength brew in a real brute strength rubbermaid punch barrel.
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you know what he's making us do? shots! i'm not kidding! i don't know about you. but if it's got growth, if it's got dividends, domestic, none of that wine from europe, w-h-i-n-e, of course, whatever the communists -- whatever the communist party is serving up these days. yeah, where's my politburo -- it was somewhere here. always got to have some politburo vodka. anyway. that's why this rally can continue. despite all the puritanical bearish talk that surrounds every day. just a second. how sweet it is. why don't we go to dave in washington to start. dave. >> caller: boo-yah, jimbo, how are you doing today? >> i'm blind for three days after this mixture. what's going on? >> caller: i want to let you know, i've watched you since the kudlow/cramer days, and i'm an action alerts subscriber, i have your books, i do research on the
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street. >> thank you. >> caller: thank you for all you've taught me through the years. hey, i've held phillips since the spinoff. i know bulls make money, bears make money and hogs get slaughtered but i think phillips is headed up. i do my research on the street and you guys haven't initiated coverage on phillips yet. last wednesday, they filed for a new ipo coming up the second half of the year, and i wanted to know your thoughts. what should i do? >> okay. look, this stock has come under pressure of late. so many others have, too. you know what? i think you use the pressure that comes purely from profit-taking, and you do some buying. i would not worry one bit. i think it's a good situation. all right. here we go. it's happy hour. ben's not stomping this party mix yet. in fact, he's serving up some industrial-strength growth. dividends, domestic! cheers! "mad money" will be right back. coming up, greed from garbage? waste management is turning
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trash into treasure by producing power for over a million homes from the things we throw away. can these new streams of revenue energize your portfolio? don't miss cramer's exclusive with the company ceo, next. and later. secret formula. there's more to pharma than meets the eye. and cramer's uncovering the hidden values all week. tonight, he's examining the outlook for companies fighting some of the most debilitating diseases to find out if it's time to get behind their efforts. plus, heating up. the ink is still drying on dominion resources deal to export liquified natural gas to india. but with regulatory approval still standing in the way, could investors cool on the stock or is it time to hop aboard? cramer is speaking with the ceo, all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter.
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the housing and housing-related stocks have been on fire this year. what if i told you i had a stealth housing play, one with a safe, consistent business model and a bountiful dividend? i'm talking about waste management, wm, the largest waste collection disposable company in america, which sports a 3.76% yield and i've liked for years. so what does garbage got to do with housing? pretty much everything. when you build homes, remember, we're putting up perhaps a million homes this year or you do any kind of commercial construction, rehab, it creates enormous amounts of waste. same goes for remodeling. and this is high margin trash, the kind that requires customers to rent their own dumpsters, plus once the new home is built, that's a new family added to the trash route. that's how the housing rebound
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could lead to an improvement in trash volumes and eventually its operating leverage as well. this company isn't waiting for business to pick up. it's incredibly shareholder friendly. 3.67%, $5 million buyback. second waste management is a host of growth initiatives. moving more and more into recycling, a rapidly growing waste energy business where they turn trash into electricity. and the company is in the process of converting their garbage truck fleet to run on natural gas. they already have the largest fleet of nat gas powered heavy duty trucks in the country and these trucks are not only better for the environment, they also have substantially lower fuel costs than trucks that run on diesel. now lately, a lot of people have been speculating about whether wm, which owns a massive amount of landfill real estate, might turn itself into a real estate trust, something that would save a fortune on taxes, likely meaning a business for shareholders down the road. but why speculate when we can talk to the man himself, david steiner, president of waste management to find out how his company is doing and where it is headed. mr. steiner, welcome back to "mad money." >> thanks for having me again.
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>> first of all, we get a better housing market. you can feel it. plus we have the gigantic rebuild that has to come from sandy. are your landfills starting to feel a little better? are you starting to make money on your bread and butter business? >> yeah, absolutely, jim. you said it all in your introduction. i can't say much more. when you have a home build or reconstruction, that generates waste. but then that customer that builds the house becomes a residential customer for us, and you get enough of those residents and guess what happens. commercial businesses start to move in, and that creates waste for us. and then finally for those folks that want to do those remodels, spring is coming up, we have a product that's unique to waste management. no one else in the industry has it and that's our bagster product, a product you can pick up at your home depot, target stores, and bring it and use it as a dumpster in a box for a very cheap price. $29.99 generally around the country. and then you can call us and
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we'll come pick it up. >> all right. last summer i visited one of your landfills, had a great view of the statue of liberty, and it was not that crowded because there wasn't a lot of construction going. this is all right outside new york. is that kind of facility -- i understand those are starting to get more business because of the sandy traffic. >> oh, absolutely. you know, when you look at what we did in sandy, not only just with our landfills, but with our collection business, our response was spectacular. it really is something that demonstrates that our folks just aren't the people that pick up your garbage. our folks are the people that help rebuild communities after disasters like katrina and sandy and all the different events that happen around the united states. it's why i like to say our guys aren't just garbage men. they're heroes. >> credit suisse did not focus so much on garbage men or heroes but they're saying waste management companies can become real estate investment trusts. it's a very smart piece, had to read it three times. they're saying you can convert, raise your dividend dramatically
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and make all shareholders much richer than you've already made them. true or false to this report? >> well, when you look at it, jim, you know, the day i came here and started as ceo, we've always looked for ways to be more shareholder-friendly, and there is no better way than looking at master limited partnerships, reits, anything you can do from a tax advantage point of view would be good for our shareholders. now, with respect to reits, you know, those are very complicated laws. probably above both of our pay grades at this point in time. but what we have seen is that you've seen what it keys around is basically creating a rent stream out of your properties. and, you know, that's why it applies generally to commercial and rental properties. it's a little more difficult to see that happen in the landfill space, but what we have seen in the last few years is a little bit of an easing around those rules. so we have been following that. we'll continue to follow that. you know, we're not going to step out in front of that and
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try to lead that charge, but if we see the regulations get more friendly toward reits or towards master limited partnerships we would certainly look at those to help us. >> you're not ruling this out at all, the possibility out there. >> well, you know, you can't rule out anything. i think anyone that runs a business our size needs to look at capital efficiency, at tax efficiency, and do ultimately what's best for the shareholders. >> let's talk about natural gas. i know that when i mentioned that you were going to be on this morning, my friend andrew littlefair from clean energy said you've got to go over the fact that waste management is now the largest fleet in u.s. operating, heavy duty vehicles and natural gas, and ask him how they're filling them and how many trucks you have on order that are natural gas. >> yeah. about 90% to 95% of the trucks we order will be compressed natural gas trucks. anywhere where we can use compressed natural gas we're going to use it. the only place where we won't is where we don't have the massive trucks where we can get in a
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fueling station on our own. as you know, you came out to one of our fueling stations in camden last year. not only are we using that fuel for our trucks but also using it for other commercial fleets. you know, trying to drive cng infrastructure throughout the united states. >> all right. how about the methane that everyone always sees, pipes coming out of the landfills? how much energy are you able to make from those and is it saving you money or making you money? >> well, it absolutely makes us money, and it's a renewable resource. when you think about it, jim, we take garbage that everyone produces every day, and we create over five times the amount of energy. just one company, waste management, produces over five times the amount of energy than the entire solar industry in the united states. so if you're looking for renewable energy, look no further than waste management. >> all right. one last question. the $500 million buyback, not that active. has the stock moved up too much or trying to figure out whether you should use that for more dividend? what's the story there? >> yeah, you know, we decided this year, jim, to sort of take a step back in the last couple
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years. we've run up the balance sheet a little bit through acquisitions. we wanted this year to make sure that first and foremost, we will pay and continue to increase our dividend. we think that's the most shareholder friendly thing we can do. and then we're going to take the excess cash we generate this year and we're going to do one of three things. we're going to continue to invest in the growth of the company, we're either going to pay down debt or we're going to return it to our shareholders through a share buyback. i'm hoping we can do all three in the next year or two. >> david you continue to deliver for us. a know a lot of people have bought the stock because they see you on the show. terrific job. and i'm looking forward to the real estate investment trust news and higher volumes. thank you so much for coming on the show. >> thanks, jim. hope to see you again soon. >> that's david steiner, president and ceo of waste management, wm. giving us a great, great return. it's not done. could be in its early innings. after the break, i'll try to make you even more money. oh, he's a fighter alright.
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pull out the paper and what? another article that says investors could lose tens of thousands of dollars in hidden fees on their 401(k)s?! seriously? seriously. you don't believe it? search it.
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"401(k) hidden fees." then go to e-trade and roll over your old 401(k)s to a new e-trade retirement account. we have every type of retirement account. none of them charge annual fees and all of them offer low cost investments. why? because we're not your typical wall street firm that's why. so you keep more of your money. e-trade. less for us. more for you. whenever the market is getting hammered, i always try to prevent you from giving up to give into despair, and to panic. at the same time, whenever the market roars like it did today, part of my job is to help you curb your enthusiasm. especially since the larry david show has been off the air for a while now, to prevent you from getting too euphoric! regular viewers know that i'm a
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big fan of the market, but in the wake of still one more rip-snorting rally, how about being a little selective? this is not the time to go all-in on some index fund that mirrors the s&p 500. stock market intellectuals tell you you constantly it is the best and only strategy for home-gamers. they don't believe it's possible to consistently beat the averages. i said before, i'll say again. these proponents of index funds are well-intentioned. they're also wrong, and right now they're even more wrong than usual. the reason, simple. this is a market that really rewards stock-picking, picking the best ones. if you don't have time to pick individual stocks, too busy to do the homework, find it too boring, that's okay. index funds are fabulous for you, because you do need exposure to stocks to make it so your savings can keep pace with inflation. and it's the dividends you get from the funds when reinvested that have provided you with that decent return over time. but if you do have the time, and you do have the inclination, you should be picking your own
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stocks, putting together a diversified portfolio of high-quality names, because you will most likely beat the stuffings out of the market. at least the averages. and i think you know why, because the averages -- well, they're average. they've got plenty of bad stocks pulling down the good ones. remember averages in elementary school? think about that. within that diversified portfolio, i think you should keep a parking spot open for -- wow, biotech. not just any biotech. for over a week we have been talking about the biotech names that i believe represent the future of pharma. last week i highlighted celgene, regeneron, which are well on their way to becoming the next big pharma companies. and these stocks, i mean, holy cow, they keep rocketing higher. celgene up another 75 cents today. but biogen rallying $5.42 and regeneron gaining $6.49 in today's session. regeneron lagged the rest of these stocks. this week we're looking at the small and mid cap biotechs, the ones that have the products in the pipelines to grow into
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larger ones. these are higher risk plays, but when you catch a small capitalization stock that becomes a big one, come on, man, that's about making a killing! the upside potential, i'm calling it enormous. that's why tonight i'm not going to give you one, not two, but three smaller to large biotech opportunities you know we like. vertex pharma, sarepta therapeutics and nps pharma. these companies are orphan plays. like the two drug companies i gave you yesterday. look, we adore orphans here on "mad money." remember, orphan drugs, they treat ultra-rare diseases, and governments all over the world give these drugs all kinds of special treatment in order to encourage their development. and once these companies get on an orphan drug on the market, they can charge basically whatever they want for the
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medicine. typically hundreds of thousands of dollars a year, because there's no competition, and patients have no alternative except to be sick, and being sick and being taken care of by these health maintenance organizations actually costs more than taking the pill. so let's start with the biggest of the bunch. let's start with vertex pharma. that's symbol vrtx. an $11.7 billion company. 11 points off its high. got your attention. almost all of these are at their high. vertex is a play on cystic fibrosis, a nasty, uncurable genetic condition that messes up the body's ability to regulate sweat production. certain aspects of digestion and worst of all, mucus that makes it very hard to breathe, leading to chronic infections and ultimately destroying your lungs. there are 70,000 people who suffer from this condition. and that makes it an orphan disease. the company already has one
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cystic fibrosis drug on the market, and we've talked about it before. it's colidico, but it's only approved for a small subset of people with the disease, 4% who have a specific gene mutation. however, vertex has another cystic fibrosis drug, fx-809. that's now in phase three clinical trials in combination with colidico. and remember phase three, near the end, this is where the opportunity comes in. based on the earlier data, these two drugs taken together can lead to significant improvements in lung function for cystic fibrosis patients. that said, when vertex initially presented this data, wow, they really botched it. it was very disappointing. they made the results seem more positive than they were. the company issued its correction at the end of the day, the stock got slammed down, which it should be. since then another stock has slowly but steadily been working back up and the reason for that is simple. if the fda approves vertex's
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combination of vx-809, they could do peak sales of $6 billion in sales. massive opportunity. there's nothing else like it on the market or on the horizon, and because of this orphan drug rule the patents extend out to 2026. now vertex's phase three trial could be finished by the end of this year so we have to pay attention to this all year. and the company plans to file for fda approval in 2014. plus the company has a third cystic fibrosis drug in phase two development that we can get more data on sometime this quarter. and vertex also has the hepatitis c franchise, being eaten alive by the competition. but even though the other guys may have a better mousetrap, generating over $1 billion in sales last year. the company's next drug in phase two development, the street isn't expecting much from them but that could give vertex's pipeline a kicker. i'm saying there are many ways to win with vertex. next up, sarepta therapeutics.
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remember this one? $1.6 billion. much smaller. the company with a $36 stock that's eight points off its high. i recommended this back on september 21st when it was trading at $14.47. since then, 152% gain. remember, this is biotech. you can get these gains. this is not att or verizon, although i like those. those put you to sleep. sarepta is developing a drug for muscular dystrophy, a condition that leaves patients wheelchair bound by their teens and dead shortly thereafter. back in october, if you remember, sarepta spiked up to nearly $45 on some downright miraculous clinical trial results showing their drug improved patients' ability to walk. i say miraculous because the current treatments only slow down the deterioration. they do not reverse it. now sarepta is trying to file
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for accelerated approval with the fda in order to skip phase three trials. it tells you how revolutionary this drug could be. we'll likely get more clarity, and if the fda says yes, the stock is going to roar. on the other hand, if the fda refuses and sarepta has to spend time doing additional trials, i think they clobber it. but the long-term opportunity is so terrific for sarepta. last but i don't think least, is nps phrma whose ceo we heard from, and their main drug is gatex, that's for short bowel syndrome, another rare condition. remember, orphan drugs, where patients need to be fed intravenously because their intestines can't properly absorb nutrients. gatex received fda approval at the end of december and the company started selling in mid february at a price of $294,000 bucks a year. remember, you cannot blanch at this because the treatment costs more than that. about 3,000 to 5,000 people suffer from short bowel syndrome in the united states. and they expect to start getting meaningful revenues by the third quarter. i think management is bullish
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about the drug's prospect, because two weeks ago though bought back the rights for $50 million, in addition to milestone payments down the road. as part of this deal, nps got the worldwide rights to their drug for hypoparathyroidism, yet to be approved in the u.s. but nps expects to file their new drug application with the fda for this one sometime in the second half and could potentially do $350,000,000 in peak sales. i think this stock has more room to run. so here is the bottom line, vertex, sarepta, nps pharma are more on the speculative side of the biotech spectrum versus the celgene, the biogen, the regeneron. but if their key drugs succeed, these stocks could go much higher. however, these names in particular are not for the faint of heart. you need to be careful with your buying. i would not put on full positions and remember that the downsides are larger for these, although the upside could be too.
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it is time! it is time to reveal the next stop of the "mad money" back to
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school tour. thursday, april 25th, we are headed to villanova! we bring the bulls to the wildcats, so watch out. and now, it is time for the lighting round. rapid fire calls. when you hear this sound, the "lightning round" is over. are you ready, skedaddy? bob in new york. bob. >> caller: hello? >> hey, bob. >> caller: hey, jim. how are you doing? >> all right. how are you? >> caller: a few times i brought to your attention my interest in a long-term holding. at best at that time you were lukewarm. recently, it's at an all-time high and i've been joined by many noteworthy investors. the name of the stock is iconix. >> you're right. icon has been a very hot stock. i like the ralph lauren, i like the pvh and the vf corp and you're right. i think the stock can still go higher. that's my bad. i liked the others better, what can i tell you? john in florida. >> caller: hi, jim.
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john k. in dunedin, florida. jim, i'd like to know what you think about a possible takeover or merger of jetblue. >> no, no, no. we don't want to play that game. we're playing with usairways, down badly today. seth in arizona. seth! >> caller: yeah, jim. my stock is usg corp. >> people didn't like the quarter, i liked the quarter. buy. and that, ladies and gentlemen, is the conclusion of the "lightning round"! >> the "lightning round" is sponsored by td ameritrade. the "mad money" back to school tour is in session, and this time, we're headed to the city of brotherly love. if you're a student at villanova university and want free tickets to see cramer do the show live on campus, thursday, april 25th, visit
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one of the most ridiculous economic tragedies of our era is
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the fact that we discovered vast quantities of natural gas in the united states that virtually no one in this country is excited about actually making use of the stuff. it's cleaner, cheaper, but it's a fossil fuel. meanwhile, other countries are desperate to get their hands on our natural gas. because this stuff is so difficult to export, you need lots of expensive equipment, freezing, compact natural gas form, for the moment, there's no way to ship it overseas. just too expensive. in order to build a liquified natural gas terminal, you need approval from the energy regulatory commission, and only cheniere has that. been making a killing off contracts to sell natural gas once the terminal is finished. it caught my attention today when i saw that dominion energy, one of the largest gas and electric utilities in the country also has a big nat gas storage business is moving ahead with its plan to build an import/export terminal in maryland.
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a maryland state judge ruled in favor of dominion and now they need approval from the commission to start building. hence why the company submitted a 12,000 page application to regulators. dominion has signed deals with japan and india. although those contracts, of course, need to be approved by the department of energy. if everything goes right, dominion's facilities could be operational by 2017 and yet they're paying you to wait, a 3.7% yield. we last spoke with dominion on december 6th and it gave a 15% return. of course, including dividends. so let's check in with the chairman and ceo of dominion resources and find out more about the lng export project and where its company is headed. mr. farrell, welcome back to "mad money." >> jim, it's nice to be with you today. >> all right. i see you're biting the bullet, taking the big move, talking about $3.4 to $3.8 billion in capital expenditures. what is your confidence level you might be able to get this
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thing rolling by 2017? >> well, jim, that's the -- the number you give, 3.4 to 3.8. it is a range of capital we'll spend just on a liquefier. these are, as you said, very expensive to have a complete facility. keep in mind, we already have 15 billion cubic feet of storage there in tanks, a pipeline dedicated to the facility that goes right to the heart of the marcellus and utica shales near the hub. and then we have a terminal that can take super tankers. all we're talking about is an additional liquefier, still almost up to nearly $4 billion. we have had a lot of checks in the -- we need to check off a lot of boxes. our recent announcement yesterday, just yesterday, of the contracts with gail and sumitomo were big steps forward. we still need to get the two permits you mentioned and we also signed the construction contract. so we've completed all the engineering studies. we've done a lot.
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we've made a lot of progress on this project. and i think we have a good chance of getting there. >> what would you say to the people who say you're putting the cart before the horse, that without these two government approvals, you're already signing contracts, you've got the dominion resources packed with ihi. isn't that premature? >> we feel -- we're pretty confident that we deserve these permits. the 12,000-page permit we filed with ferc is the environmental permit you need. we spent many, many months working in what they call the pre-filing process, to try to answer all the questions we can get answered. so we think that's a pretty complete package. and remember, it's an existing facility. it's not a greenfield facility. the d.o.e. permit, which is the permit you need to export natural gas to non-free trade
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agreement countries, that's an important step for us. and we'll be working hard over the next few months to get that permit. >> okay. "washington post" today, upper left hand column, basf, wanting to move plants here, taking advantage of our cheap and plentiful natural gas. dan d'amico gave me a statement today saying, listen, if we start exporting this natural gas, we will lose the competitive advantage that is bringing outfits like basf here. what do you say to the people who believe that we are going to give away our competitive advantage by exporting our natural gas? >> well, my primary response is there's an ocean of gas. all of the forecasters think over the next 5, 10, 15 years, there's going to be a vast amount of gas found and produced. eia says by 2025, 2030, we'll be producing at least 10% more gas than we can use, and that includes a very large increase in the use of natural gas to fire electric power generation. and a certain amount of export. i don't think we're going to
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have unfettered exports. but i think we'll have enough done to make sure that the balance stays in the markets. gas has been volatile over the years. it's important to keep an underpinning under the price to keep encouraging drillers to drill for the gas. so to keep that competitive advantage in the u.s., i think you need a little bit of all of this to make it work best for everyone. >> tom, one last question. i know corporate finance, but can you explain to people why you're not selling common stock. it's not going to hurt the common stock to finance this. you've got another method of financing that should not dilute existing shareholders. >> we're going to use mandatory convertibles, which is an equity-like instrument. i think technically, a dead instrument. rating agencies give you largely full equity credit for it.
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and you have interest payments associated with it. you can capitalize that interest, so you can work through -- it's a perfect kind of a financing instrument for a project like this. that has a two-and-a-half, three-year construction period to it. so we promised our shareholders we were going to do our very best to give them 5% to 6% earnings growth for the foreseeable future. co point will be an important part of that but not starting until 2017. so we needed to come up with a financing technique that would allow us to get that 5% to 6% growth during the construction period. >> all right, tom. look, this is very big news. we have been waiting for someone else other than cheniere. you stepped forward. i know it's going to create a lot of jobs too. thank you, chairman and president, ceo of dominion resources. thank you for coming on "mad money." >> glad to be here, jim. >> all right, guys. this stock, like cheniere, has got a yield. i will tell you, dominion's is far more consistent and dominion has made you a huge amount of money over time. you want that upside from cove
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and you want to sleep at night, it's letter d. "mad money" is back after the break. the "mad money" back to school tour is in session, and this time, we're headed to the city of brotherly love. if you're a student at villanova university and want free tickets to see cramer do the show live on campus, thursday, april 25th, visit [ male announcer ] there are people who find their own path.
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and never back down. who believe the american dream doesn't just happen, it's something you have to work for. ♪ we're for those kinds of people. because we're that kind of airline. and we never stop looking for a better way. it's how we've grown into america's largest domestic airline. we are southwest. welcome aboard. some brokerage firms are. but way too many aren't. why? because selling their funds makes them more money. which makes you wonder -- isn't that a conflict? search "proprietary mutual funds." yikes! then go to e-trade. we've got over 8,000 mutual funds, and not one of them has our name on it. we're in the business of finding the right investments for you. e-trade. less for us. more for you. the fund's prospectus contains its investment objectives, risks, charges, expenses, and other important information and should be read and considered carefully before investing. for a current prospectus, visit
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how do stocks bottom? the same way they top out. stocks stop going up when everyone turns positive, and they stop going down as soon as everyone is negative, and that's what's happening right now to apple. that's the journey. just as it received ever more love on the way up, it's getting more and more hate as it goes down. today's move by goldman sachs, taking apple from a conviction buy to a regular buy is typical of the process. nothing in the down grade we haven't heard, no new products that move the needle, not one but two missed quarters. a sense they peaked a year ago. i'm not saying the stock has bottomed yet. the bad news, there are still some 60 firms who follow apple, five or six still recommending it. apple compounds the case on a regular basis. second apology now from this management team this time to china. the impetus for the apology, how about arrogance and poor customer service. previous apology? arrogance for swapping out the fabulous google maps for admittedly inferior apple product at the time. great companies don't have to
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make a lot of apologies. great companies have terrific customer service. great companies don't whip out a product and replace with an inferior one. cell phones have been beaten by samsung. there is still an ecosystem worth trumpeting along with a plethora of products selling. there is the promise of itv. we don't hear about people switching from samsung. analysts are saying positive things. so no all-clear on the apple front. a recognition that the hatred is game on and when most of those firms break ranks, cut numbers and say how disappointed they are in management, that's when the stock will be safe and ready to run. stay with cramer.
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the rally in health care continues, and i do not think it is over. i like the biotechs as the best way to play it. i like to say there is always a bull market somewhere. i promise to try to find it just for you right here on "mad money." i'm jim claimer and i will see you tomorrow! the "mad money" back to school tour is in session, and this time, we're headed to the


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