Skip to main content

tv   Mad Money  CNBC  February 1, 2017 6:00pm-7:01pm EST

6:00 pm
wow! >> thermo fisher, not one we talk about. >> for good reason. i think it goes higher. >> thanks for watching. see you tomorrow for more "fast money."
6:01 pm
including samsung's explosive
6:02 pm
addition to the lineup. later on tonight i'll describe how apple's service business combined with the beautifully explained conference call has changed the way we value the stock. giving it a much higher price to earnings multiple. but right now i want to talk about the actual impact of the world's largest company on the entire economic ecosystem in this country. apple apple with a $676 billion market capitalization is so large that you have to assess its coattails but more importantly the swath of destruction it can leave in its wake. first the winners are companies that have been able to harness the power of the twice to gain viewers, most notably alphabet, the soon to come public snapchat, but certainly most relevant for tonight, facebook, which reported amazing numbers after the close, largely because of how many mobile viewers it has and continues to gain with
6:03 pm
stunning alacrity. facebook's revenue advanced 51% to $8.81 billion. that's versus the paltry $8.51 billion analysts were looking for. people can't resist checking their iphones for facebook entries, including its credibly profitable instagram division. facebook and apple, what can i say? a match made in heaven. let's go over these losers. i know we often talk about the death of the mall. i think there's tons of truth to that, especially with the way these retail stocks have been acting. but i want to put it a different way. when i see these cell phones sales like i saw last night, i think we've got it all wrong. you see, apple is the mall. i mean that in two ways. first it's obvious from the sheer amount of business that apple did this quarter not only in cell phones but in personal computers, ipads and watches that this company took a pretty meaningful chunk of the entire holiday consumer spend in this country. yes, it's that significant a piece of business.
6:04 pm
we keep hearing people wonder what the heck the consumer spending her money on? well, it looks to me that the consumer spent her money going to the mall to buy an iphone and then shopping at sephora or ulta beauty to get makeup for snapchats and selfies. otherwise i think the other brick and mortar stores were the losers from apple's strength. i am not kidding about this. their sales were so meager just when apple sales were so strong that you got to figure there might be a little bit of zero sum thrown in there as apple, one, everybody else, nothing. when i say that apple is the mall, i also mean that if you were actually thinking of going to the mall, you probably end up using your iphone to comparison shop to be sure you won't overpaying. that hurts the margins of all these stores. or maybe you just stayed on the couch and used your cell phone to go to amazon, another zero sum player. now, it's true that apple has probably spawned more businesses than any other with its amazing app platform. the company service revenue
6:05 pm
stream of $7 billion this quarter is a good proxy for the money apple is taking in that might have gone to other companies. still the better apple iphone is, the more it dictates a lot of our behavior and changes the way industry is created and done. it's the ultimate disruptive force. think about all the apps on your cell phone. look at them. think of what they've done to the way you think, the way you handle your day. some are obvious. you don't need a calendar anymore, a camera, calculator. you don't need a watch although you can get an apple watch, and judging by the millions -- well, including yours truly, it's selling well. you don't need a musical device, cds. you don't need a brick and mortar bank. now we'll be taking to h&r block tonight, but with the iphone, some say you don't need to see a tax preparer. you don't need a travel agent. you may not even need a doctor. the apps are that good, the resolution that strong. if you go on salesforce.com and look at their programs, which run very well on your iphone,
6:06 pm
then you don't need your assistant. you don't need whole divisions of workers when you marry the sales force platform with the iphone. then think about these future uses. you know that stores are going to be able to get rid of unfortunately for the people who work there hundreds of thousands of checkers because of the universeality of the iphone and the ease with which it can be used as a personal cash register. the credit card companies should be on their toes. i think apple pay just know is on the field. that's right, first inning. think about your daily life. it's so easy to order from your iphone that i think it's become part of the reason we aren't going out to much as restaurants as we saw in the fourth quarter again in december. the iphone's screen is so perfect that you can watch netflix on it. i do. i certainly watch sports on it. needless to say the 240 billion in the bank. apple could buy netflix for a 40% premium. the quality of the screen is so good that i think it's hurt espn's numbers although if those
6:07 pm
eyeballs can be counted, then smid will have a better story when it reports next week. apple could buy disney too. i don't know why it would want to do. certainly it could buy espn in smid was shopping it. how about your spare time? take a look at how take-two interactive shuft shelled out $250 million this morning to buy a red hot mobile game maker. when i saw that horrendous mattel quarter, talk about old-fashioned. i have to believe that mattel's real competitors are the gaming companies that have made their products ideal for the iphone. i know we worry all the time about which retailers can be amazoned, but i think we need to be thinking the same thing here. what industry can apple take the margins out of it? what businesses can apple obliterate next? the convenience and power of the ix phone has probably taken away as many white collar jobs as the country's president trump accuses of stealing our manufacturing jobs, maybe more so. now, again, i don't regard apple as a capitalist.
6:08 pm
i don't regard it as a company that only leaves a trail of destruction in its wake. apple has allowed people to develop hundreds of thousands of businesses. it's real. it's probably created more millionaires than any company. it employs a huge number of people. in the end, apple is simply, though, a symbol of progress. but here's the bottom line. progress can be a mean task master, and i think after last night's report, apple's the greatest abettor of progress in our lifetime. let's go to julie ann in minnesota, please, julie anne. >> caller: jim, booyah. >> booyah, julie ann, what's going on? >> caller: what do you think of this earnings season? pretty awesome. >> you know, it's hit and then an occasional miss, but i'm liking hits more than misses. what's going on with you? >> caller: a lot of hits. you know what, i'm calling about csx. i started into that stock last
6:09 pm
april. i've got a nice, solid position. there's some serious activist activity going on. hunter harrison, everything he did at canadian pacific. paul halal wants to invest. all of my colleagues are saying buy it on the rumor, sell on the news. and i want to know what you think about rails in general. >> i think it's a richly valued stock frankly. i know that people think haunter harrison can do anything but michael ward wasn't a slouch there. i am more tempted to ka-ching, ka-ching at this point even though i saw norfolk southern have another good day. holy cow, that one was up three. so this is just a rotating rumor, sell rumor. i like your thinking but norfolk southern and csx to me, they're a little too rich on the fundamentals unless something happens, and that i have no control over. dennis in michigan, dennis. >> caller: hi, jim. the airlines have had a rough month, including jetblue down
6:10 pm
some 15% and another 1% today. it has initiated higher prices to increase its margins and had a solid earnings report. it is basically domestic unlike delta and united. your thoughts? is it time to buy? >> look, alaska air is doing incredibly well and, remember, southwest is my favorite. i liked united airlines but it just had such a -- united continental, had such a big move, made me a little nose bleed. let's go back to southwest. that's the one i think is the most consistent. andrew in maryland, andrew. >> caller: hello, mr. cramer. i'd like to give a quick shout out to mr. marx. i'm calling about gilead sciences. it has an amazing balance sheet. they just bought 10 pl shabilli shares back of their company. what do you think? >> you know, look, i don't
6:11 pm
know -- as it's currently configured it's a dead value stock, but it has so much cash, i believe it made that acquisition i've been looking for, i would ignite. i think there's very little risk at that point because it has so much cash. but without an acquisition there's not a lot of reward. kim in my old home state of pennsylvania, kim. >> caller: hey, jim. booyah from steeler nation and thank you for everything you do. >> we like steeler nation. we like the way the steelers play. we like the three bs. >> caller: yes, sir. i got a quick question for you, jim. >> yes. >> caller: since the united states receives a lot of imported clothing from china and now will be taxed, leveling that playing field, do you think burlington would be a best of brd textile stock to buy, or do you suggest another usa owned textile km? >> burlington is terrific. i do believe the border fax is going to be too complicated. with mnuchin and tillerson getting in, it should have been more of a trump stock day. but you know what?
6:12 pm
i think a company like burlington, i just doubt in the end that they're going to put through some sort of tax plan that is going to hurt that company's business. you know i don't really care for the retailers although i've been analyzing the dollar stores. they're down too much too. i just don't think you get that kind of negative taxation but this is a work in progress for me. oh, progress. it can be a fickle friend. case in point, today's market was defined by the success of apple that seems to have come at the cost of some other industries. it's a disruptor. what can you say? maybe the ultimate disruptor. on "mad money" tonight, who stands to benefit from both democrats and republicans lining up funds from media campaigns related to the trump agenda? i'm sitting down with a company that could be the resipiant of some of that cash. i'm not done dissecting apple, a look at the secret that's transforming apple to its core. why you need to be watching the fast-growing piece of apple's pie that i have been championing forever and one of the reasons why i say own it, don't trade
6:13 pm
it. and on august 2015, donald trump said he hoped to put h&r block out of business. the company has been struggling lately. could it be a buy? i've got the exclusive with the ceo. stick with cramer. >> announcer: don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. meta appetite control...
6:14 pm
6:15 pm
it helps put some distance between you and temptation. clinically proven to help reduce hunger between meals. from metamucil, the #1 doctor recommended brand. did you know slow internet can actually hold your business back? say goodbye to slow downloads, slow backups, slow everything. comcast business offers blazing fast and reliable internet that's over 6 times faster
6:16 pm
than slow internet from the phone company. say hello to internet speeds up to 250 mbps. and add phone and tv for only $34.90 more a month. call today. comcast business. built for business. just over a year ago, the local television station operator formerly known as next star broadcasting group announced a game changing deal. they told us they were buying media general for $4.6 billion in order to become the country's second largest broadcaster. it was a very complicated transaction. last month the company finally got the approval from the fcc, changing its name to next star media group. they're the second largest local affiliate for networks like nbc, abc, cbs and fox. initial lip the acquisition wasn't well received.
6:17 pm
next star stock has ultimately rallied 50% over the last 12 months. can it continue to roar? let's check in with the chairman, president, and ceo of next star media. welcome back to "mad money." good to see you, perry. have a seat. you said you thought the election season was going to be huge. i have to admit we got behind your stock hard. boy, were you ever right? >> right. >> just big, right? >> it ended up being very good for our company and we're also seeing issue advertising now for everything from supreme court candidate, judge candidates to issues. so it's a revenue stream that continues to grow even in the odd-numbered years and the off-presidential election years. >> i know that the mid terms that are coming up could be huge, a huge amount of spend. i know that's further out. what i don't want people to do is jump out now that the election is over. >> we're in 40 of the 50 states and we reach literally 60% of
6:18 pm
ma paul ryan's members. we've got senate seats. we anticipate 2018 to be huge. >> when you first did this deal, it was a monster deal and people were saying maybe they overstretched. you not only committed your dividend, but you're's very conservative guy, but you've been raising the dividend. >> we've been raising the dividend annually about 25% a year. just did that again last week for 2017. we have a lot of runway to continue to grow our dividend with the increasing free cash flow of the company. you know, we'll look to return shareholder cash through dividends and buybacks, and we also continue to be on the hunt for accretive acquisitions, less so in the broadcast space because we're kind of at the national cap at least for now. but on the digital side, we're very interested in growing our digital business. >> i think there was a perception that this kind of tv station didn't make as much money as it used to.
6:19 pm
that's dead wrong, isn't it? >> we make half of our money in our local news broadcasts, the news before the "today," the news before nightly news. that is a good business to be in. we're a local service business. we help local businesses sell stuff, and that's our reason to success. >> 40 of 50 states, what's the economy look like to you? you are just one of the great representatives of what's really going on in business. >> we cover a lot of main streets, and i would tell you that i think most folks i talk to, customers of ours and friends of mine in dallas we we don't have a business but our headquarters is, that they were waiting to see how the election turned out and are now making plans accordingly, and that they feel pretty confident. >> now, small business does advertise on your stations. we're hearing that small businesses is seeing and feeling a resurgence since the election.
6:20 pm
you're actually probably able to view that every week. you've got the numbers. >> we see our local revenue, the money we generate in our local mashlt places calling on small to medium size businesses. >> now, when you got into media general, what did you discover versus the next star way? >> well, you know, we saw that the television stations themselves operated a lot like ours there were some different philosophies corp.ly, but i did a town hall with all 10,000 employees last week and laid out our corporate philosophy. one company in charge and that we were going to go forward, as i said, to serve the local markets with content and advertising solutions whether they're broadcast or digital. those are all arrows in the quiver to grow our revenues. >> we have rise of ott. we've got the digital opportunities. any of these real threats? it seems like local media is here to stay. >> i think our. in our markets, the diminution of newspapers and local radio,
6:21 pm
we're one of the few sources to get local content, and i think we will always be in business serving that local content. over the top, 15% of our viewers do not take a pay service. you can imagine if you're on the farm in illinois or the ranch in montana, the wire doesn't go that far. so you've just been picking us up over the air before ott was cool. i think at this point in time, our content makes those ott services better. so i'm a content over distribution in terms of value creation. with our local content, i think we'll do just fine. >> last question. the fcc is changing hands. it looks like they're a little more, i think, pro-business. do you monditor these changes. >> nothing has happened yet and we have no clear signal yet what may happen. but we would tend to believe in this administrative environment that the regulatory agencies might be a little more business friendly than maybe they were for the past several years. >> it can matter, right? >> sure it could. >> i got to tell you, you were spot on. you came on, gave us a great idea. we pushed it for a long time.
6:22 pm
i want to thank perry sook, the chairman, president, and ceo of nextar, what a stock. thank you so much sir. "mad money" is back after the break. >> announcer: coming up, h&r block makes an announcement for this year's tax season. will it help them return to growth when it comes to returns? and speaking of returns, is this company in the presidential crosshairs? >> will not need h&r block ripping you off anymore. >> announcer: stay tuned, cramerica.
6:23 pm
90% of the world's largest supercomputers run on intel? that means you can take a universe of data - in your case literally - and turn it into medical discoveries, diagnostic breakthroughs... ...proof that black holes collapse into one singularity. i don't know what that is. but yes. innovation runs on supercomputers... ...and supercomputers run on intel. you are super smart. and super busy. ♪ ooh! ufo! false alarm, eyelash!
6:24 pm
they got control of the narrative. that's right. apple got control of the darn narrative. i'm talking about their endless baltle to get their quarterly conference call to represent the strength of the quarter, not the weaknesses that the analysts
6:25 pm
always seem to want to talk about. now, of course it helps when you break losing streaks and set records but if you go over the arc of this beautiful call versus the calls from last year -- and i urge you to do so if you own the stock -- you'll notice a major difference. gone are the drive-by shooting questions about whether apple's best days are behind them. missing are the queries about how are you going to be more than a cell phone company. in its place, let's see. questions about how the tax laws are going to help apple perhaps more than any other company with the $240 billion cash hoard. huge amount of money overseas. then, a follow-up about the company's rapidly expanding service revenue line, growing at an 18% clip, a line that now exceeded what facebook made in the total sales last quarter. then a question about apple's fairly impressive china sales, especially in light of the debasing of the chinese currency. then another question about the service revenue and how it's changing the company into
6:26 pm
something much bigger than just a hardware company, a device maker. it's a software company. it's a subscription company. it's a bird, it's a plane, it's a super quarter! all right. for the last two years apple has been trying to explain about how it can this uber important service business and yet no one takes it seriously even though it has fabulous groesz mar jinz. this was the quarter when apple controlled the arc of its own stories and made it clear when you have the services stream, one that encompasses 150 million paying people, both directly and indirectly, one that's growing like wildfire and will double in four years, people had better start taking notice. i know the major focus of the call was the record-breaking iphone sales as it should have been. but what's dogged apple stock for ages, what's kept its price so low is what i call the blackberrirization issue, the issue that in the end the iphone is just a device, and companies
6:27 pm
eventually get waisted that are just device companies. service companies, however, can grow and grow without you having to do anything. they have fabulous and rising gross margins. they have what i call a fly wheel effect as more and more members sign up because they bought the device. isn't that why we give netflix such a high valuation? isn't that why we like amazon so much? what if buying an iphone is finally just the darn razor with the razor blade being all the apps you buy on the florm. that's what happened this quarter. yes, i like the average revenue per device went up to almost $700. i like that mainland china is growing again after you back out the currency, that apple is the number one smartphone in china. i loved indian where the major push is on. did great even as it fell apart for pretty much everyone else. even procter & gamble because of the government's demontization program. of course what's not to like about the iphone 7 plus being sold out because it's got a fabulous camera that goes so well with snapchat, one of the
6:28 pm
primary drivers by the way of the sales. but the fact that apple has a huge install base and is now monetizing it like gillette, except the razor costs a fortune anyway and there's no switching to the other guy, that's what this quarter was all about. that's why the earnings can go higher. but more important, the price to earnings multiple, what we pay for those earnings, can go much higher. hence why i think it's no longer insane to believe apple can trade back up to its old highs of 134 from a couple of years ago or perhaps even breach them, especially after today's seven-point climb. oh, and did i mention this? i think you should own apple, not trade it, even after this monster run. daniel in virginia, daniel. >> caller: hey, jim. it's daniel from virginia. my son has a question. he would like to ask you, please. >> what you got? >> caller: hey, jim. this is aid j. i'm 10 years old and my dad is teaching me about investing. i'm wondering what you think about e.a. >> e.a. is going.
6:29 pm
i have to tell you, i like take two more because of its $250 million mobile game thing they did last night. they got a bought thaesz got great mobile games. i thank you and congratulate you for getting involved when you're 10. our audience demographic keeps going down. i like that. how about nick in illinois, nick. >> caller: booyah, jimmy. i just wanted to did you about style works. i bought it about two months ago at 78.50. where do you think it goes from here? do you think i should buy more? >> no, no. look, tomorrow, there's a real controversy going on. there's a company called qorvo, and that company reported a really bad number, which is going too bring down all the suppliers of apple tonight. you're going to see skyworks open down tomorrow. let's take a look at it then. remember what's roaring. it's nvidia and amd and micron tomorrow for that analyst meeting. we'll look at skyworks and we'll make a judgment tomorrow, but expect it to be down off of qorvo. it's a better company than
6:30 pm
qorvo, but sometimes that doesn't matter. dawn in oklahoma, dawn. >> caller: hey, jim. great show. >> thank you. >> caller: i've been following you for about 20 years, it seems like. >> wow, geez, i'm that old. holy cow. >> caller: hey, i know that my fellow investors in nxpi voted in favor of the qualcomm buyout, but i don't think that the best outcome of that investment, selling out for 110 a share less any withholding tax. i'm wondering what the down side would be of not tendering shares by the 2/16/17 deadline and hoping the deal falls apart. >> it's interesting you say that. this is one of the rare instances for actionalertsplus.com for the club. we told people hang on to it because we think that if the deal doesn't go through, the stock actually goes up from here. so we agree with you. we think that this is one, the rare instance where nxpi is worth more than qualcomm is paying. people hate that qualcomm.
6:31 pm
there's hate on that qualcomm. so i agree with you. anyway, apple? it provided the proof that it's way more than just a one product p can, and i think it's service revenue stream is transformative. oh, yeah, by the way, own it. don't trade it. much more "mad money" ahead. including my executive with h&r block. the company's newest spokesman, jon hamm, might be good looking, but the stock's been anything but. i'll ask the ceo how he plans to turn it around. then i'm diving deeper inside the iphone. i got one under the radar name that could come down tomorrow off of qorvo. and all your calls rapid fire in tonight's edition of the lightning round. so stick with cramer.
6:32 pm
♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.
6:33 pm
6:34 pm
with tax season rapidly approaching, what the heck is going on with h&r block's stock?
6:35 pm
the nation's largest tax preparation firm. something's changed. in 2016, they had a dismal tax season. in part because there was so much online competition, much of it low cost or even free. the stock got pummeled after we saw these numbers, it really hasn't recovered since. it's kind of like maybe how amazon has been able to lay waste to traditional bricks and mortar retailers. why go to somewhere to get your taxes done when you can get a similar service online? that's why they've been rolling out new initiatives including giving people interest free t advances. partnering with ibm's watson in order to help customers find tax deductions they might not have known they were eligible for. will this be enough to get the business back on track? let's take a closer look with bill cobb to find out more about how his company is doing and where it's headed. mr. cobb, welcome back to "mad money." >> thanks for having us. >> bill, the watson news, your
6:36 pm
big ad campaign, jon hamm. you're doing interest-free loans, which i know is going to have to cost you a little bit. will this be enough to turn things around? >> as you said, we had a bad year last year. got hit. i think the stock -- we bought stock back every quarter. dividend yield is still over 4%. i don't want to get into whether it's undervalued. of course i think it is. i said last june you're going to see a very different h&r block this year, and that's what you've seen. we came out with our value proposition, which is get your taxes won, not just get them done. we came out with jon hamm as our spokesperson. we're very aggressive in the early season. we've got the best digital offer with h&r block more zero. we are giving refund advance loans because of the delay in refunds from the irs, the path act. we have a free federal 1040 ez in our offices. tonight we're announcing our partnership with ibm watson to fundamentally change the experience in our offices.
6:37 pm
the client now has their own monitor. people are saying it's fun to come to h&r block. we wanted to be aggressive across the board on all fronts, and you're going to see a very different block this year. >> i know you can't talk numbers right now, but are you seeing more traffic because of the hamm ads, seeing more traffic because of the interest-free ? i know that's going to cost you a little bit to loan that to people, but it's a pretty good deal. >> it's a very good deal. there are no hidden fees. it's interest-free. it's an advance on your refund. it's secured by the refund so we get paid back that way. we think it's an excellent offer for the consumer. >> does it have people buzzing? >> it does. i can't talk about the numbers. there's a lot of social media sentiment about the jon hamm ads, but refund advance. >> let's talk about some headwinds, the president -- he was not the president when he said this. he said this a couple times. we put in a very big policy paper, massive simplification of what we have now.
6:38 pm
you will not need h&r block ripping you off anymore. we mentioned this once before but it kept resonating. now he's president, something to worry about? >> i think there's a lot of campaign rhetoric. i actually came out with an article a couple weeks ago and said the president is right. tax reform is needed. i think we're in agreement with him. there are ways we can streamline the tax code. i think there are ways we can help small business. we have ideas about reform and regulati regulation. corporate tax form, you talked about it this morning with apple. it would be a big deals for us. our tax rate is in the mid-30s to high 30s. any corporate tax reform will help h&r block inc. dramatically. >> over 1 million americans sign up for credit karma tax in the first 15 days. credit karma, they're saying you shouldn't have to pay to have your taxes done. is that kind of get what you pay for? >> well, there's a catch of course because it's free. but we're going to sell your data to advertisers and the
6:39 pm
lightning. so your personal identifiable information, which we protect, would be exposed. the other piece is they've had a lot of difficulty getting authorized to file in a number of states. so they are delayed relative to the rest of us in the industry who have been doing this for a long time. >> how about younger people who really do like to do everything online? look, i can go to stores and there's an h&r block right near me. it's right next to wendy's, which is where i pick up my kings. i see t. i know people go in there. i wonder where the younger people -- they do everything on their cell phone as we saw from apple's numbers. >> what we're trying to do this year as part of our aggressiveness was to say we've got to get people to rethink the tax event. people just wanting to get their taxes done, they are leaving money on the table. if you went to an atm, tried to take a hundred bucks out and you got 70, you'd be banging on the machine and running into the back. that's what's happening at tax time for young people and the like. you're just getting your taxes done, and what you really need to do is come out with the best outcome, which is what watson's
6:40 pm
about. watson's ability to find every credit and deduction in concert with our tax pros is going to get you the best outcome. >> we did have intuit on and they had some decent numbers. will this blunt intuit in some way? >> it's a fine company, and we allow you to do taxes the way you want to. we don't want to force you into digital. we have the best digital offer out there with h&r block more zero. you can even file for free with a 1040 with a schedule a if you itemize. that's why we're working both on the digital front and on the retail front and especially try tock change the retail experience, make it more interesting, make it more interactive with our partnership with watson. >> all right. let's see how it goes. that's bill cobb, president and ceo of h&r block. the watson thing, kind of cool. we spent a lot of time with watson and ibm. "mad money" is back after the break.
6:41 pm
6:42 pm
6:43 pm
>> announcer: lightning round is sponsored by td ameritrade. it is time! it is time for the lightning round on cramer's "mad money." that's where i take your calls rapid fire. you tell me the name of the stock. i tell you to buy, buy, buy or sell, sell, sell. we'll play this sound -- [ buzzer ] -- and then the lightning round is over. are you ready, skee-daddy? it's time for the lightning round on cramer's "mad money."
6:44 pm
let's start with joe in virginia, joe. >> caller: hey, skee-daddy. we get your tweets 24/7, follow you every morning on squawk and here on "mad money." >> thank you. >> caller: really helps with the homework. please keep it up. hey, jim, please signal to regina because i have a two-parter here. okay. with all the talk of hacking and focus on cybersecurity, first this is a trump stock, trump stock, or is it not a trump stock, not a trump stock? second, if you were long on this stock, would you hold or sell? you're e fireeye. >> these guys just miss too often. you know, they're in the penalty box big time. regina agrees with me there. let's go to anthony in iowa, please, iowa. >> caller: how are you doing, jim? booyah? >> booyah. go ahead. hit me. >> caller: i'm interested in finding out about advanced disposal services, what you
6:45 pm
think of the stock is is there is a future for it with all the majorers mergers and. >> i have to work on that because i've been a fave of waste management and i don't know this guy. let me do more work to see whether this should join the stocks i like in this sec store. greg, in new york. >> caller: booyah, skee-daddy. sitting here with my 10-year-old son gregory who watches your show with me every day. >> how do you like that? isn't that perfect? >> caller: my question is related to sanchez energy. the stock had a huge runup after announcing a buy in eagle ford acreage but just announced a secondary offering. >> yeah, but that's okay. we like the secondary offerings. it makes the balance sheet better. i think the oil stocks have come down a little bit. i think it might be time to do a little buying. we did some for actionalertsplus.com club members. this is a good level. let's do this buying. kathleen in louisiana, kathleen. >> caller: hello. thank you for taking my call. >> of course.
6:46 pm
>> caller: i'm a fan, a new listener, and i have a question about brooke field infrastructure, a limited partner. i wanted to see if that was something i could add to -- >> canadian stock. i don't follow a lot of canadian stocks. i've got to do more work. the canadian stocks often elude me, but we will do so work. helen in wyoming, helen. >> caller: hi. thank you for taking my call. i want to buy shares of acm. >> i think it's an infrastructure company that i like a lot. people have come back to flor, to kbr, and acom is a good stock. josh in texas, josh. >> caller: baba booyah, jim. >> what's going on? >> caller: thanks for everything you do for us. i've got a real mad stock i wanted to bring. kenne kenneth ther putts.
6:47 pm
>> this is too hot for me. i can't come in at this level. it's just way too hot, particularly with a group that's not hot. and that, ladies and gentlemen, is the conclusion of the lightning round! [ buzzer ] >> announcer: the lightning round is sponsored by td ameritrade. e? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade.
6:48 pm
6:49 pm
lately the semiconductor space has been totally on fire. just look at the semi-index up 55% in the past year or the
6:50 pm
incredible runs in nxpi, broad cam and nvidia. today alone, advanced micro devices rocketed up 16%, thanks to a very strong quarter. the strength in this group has spread to the commodity makers like micron and the semiconductor capital equipment pl place like lam materials because you need their machinery if you want to increase production. heaven forbid people bid against nvidia. however, at this point i can't blame you if ur you feel like you're late to the party with these high profile semi-stocks. i feel like we might be missing out on some of the lesser known, lower profile names in the sector. that's why i want to introduce you to maxim integrated products, mxim. it's a semiconductor company that's focused on making chips for the automobile, the data center, computing, consumer and industrial end markets. now, maxim integrated products has a pretty inconsistent track
6:51 pm
record. it's been spotty. but just last week the company reported a very impressive quarter and it grabbed my attention and wouldn't let go. remember, the stock market loves self-improvement stories. maxim's the equivalent of a c student who is suddenly starting to get some b-pluses, maybe an occasional a on that report card. that's the kind of story we love because it sets the stage for enormous upside potential as long as the company can keep delivering strong numbers. in short, maxim is a company that's changed its stripes but so far it's still not getting the credit it deserves for what is really kind of a remashlable transformation. before i get into the nitty-gritty of the latest quarter, let me tell you about what this company actually does. maxim integrated products serves a wide variety of industries. they make power management and security chips for computers and data centers as well as analog chips that help increase the bandwidth of communications networks. you can also find their power management chips, audio amplifiers, censosensors, weara
6:52 pm
fitness trackers. they make chips for a number of industrial applications too, everything from test equipment, automation, utility metering and financial terminals. perhaps best of all, they got a piece of the automobile, and we know that's one of the fastest growing semiconductor markets out there. maxim helps with fuel efficiency and safety. before the data center and the connected car, you got two smokin' red hot businesses. okay. then how come maxim integrated products hasn't been getting the kind of attentions that lavished on nvidia? simple. the numbers here haven't been particularly inspiring, at least not until they reported that amazing quarter last week. for example, in 2016, maxim's sales actually shrank by more than 4.8% although that was an improvement from the nearly 6% decline in 2015, hardly the stuff that dreams are made of. and while maxim was able to grow it's earnings at an 11% clip in 2016, that came after two years of earnings shrinkage.
6:53 pm
ouch! at best, malong term performanc has been uneven, and the company has disappointed versus wall street's estimates more often than not in recent years. however, the stock has started picking up speed. it's up 16% from 2017. so what's changed here? first of all, in 2015, max um conducted a strategic review where they determined which businesses to invest in and found $100 million in cost savings. since then the company has been doubling down on the power management business, which is the largest and fastest growing subcategory for the kind of analog chips the company specializes in. anything that runs on electricity can benefit from a good power management chip either to extend its battery life or to lower your energy bill if it's plugged in. these guys have a long history in this business going back to the days when mobile meant something like the palm pilot and laptops were an expensive luxury. later, of course, they moved into digital cameras and smartphones and wearable devices. lately these markets have slowed so maxim has made another move.
6:54 pm
they've been diversifying their power management business into the data center, the automobile, communications, the industrial market. in 2012, only 24% of maxim's power business came from those end markets. by next year, though, it will be two-thirds of the company's power management related sales. they've been diversifying away from mobile and the p.c., which is exactly whe like to see thes days with semiconductor stocks. second, in the last year, maxim has reoriented their research and development budget toward these faster growing end markets. third, the company has a lot of older products with high margins but not much growth because once they get their analog chips in any kind of technology, it kind of tends to stay there. maxim decided to organize all these disparate products into a single business unit so there would be less internal confusion about where the innovation was happening and where the cash cow is. they reported last thursday and it's clear these efforts are paying offme. before the quarter they people were worried about high exposure to samsung. these concerns were pretty much
6:55 pm
pushed aside by the strength of its numbers. the company posted a three cent earnings beat, higher than expected revenue, up 7.9% year-over-year, and a monster 450 basis point increase in its gross margins. that's a rather remarkable figure. maxim's automotive business was up 18%, consumer business up 16%. meanwhile, their communications and data center sales increased by 5%. computing and industrial, a little lackluster, up 2%. both after excluding the impact of divestments. it was a good quarter. this company gave upside guidance for the next quarter and the conference call commentary was very positive. we heard about how they're rolling out new chips for the automobile market including for infotainment and driver assistant. maxim a industrial business will keep moving higher as long as factories continue to embrace automation, especially if president trump keeps encoura encouraging companies to build their factories in the u.s. because manufacturers will use a lot of machines to relatioffset
6:56 pm
cost of labor. their consumer oriented business will likely take a bit of a dive next quarter. that is a bit of a worry. still, they've weaned themselves off samsung. that's smart. now, on top of everything else, they're finally getting credit from the analyst community for diversifying away from the consumer. it trades at 20 times earnings, a little cheaper than companies with similar product profiles like texas instruments or analog devices. i think it can go higher although it might be down tomorrow off some disappointing pin action related to qorvo's terrible numbers. >> sell, sell, sell. >> even though they aren't all that much alike. here's the bottom line, i know the semiconductor stocks have been roaring, but if you're l k looking for a lesser known, less exploited chip maker, they're a
6:57 pm
much better company. i think we could be in the early innings of this very nice self-help story. stick with cramer. so they can detect and repair corrosion before it ever becomes a problem. because safety is never being satisfied. and always working to be better.
6:58 pm
can this much love be cleaned by a little bit of dawn ultra? oh yeah one bottle has the grease cleaning power of two bottles of this bargain brand. a drop of dawn and grease is gone.
6:59 pm
remember there's two components to why a stock might move up because we're talking about the largest capitalization stock in the world, apple. there's the actual earnings, and then what will pay for the earnings. if those earnings have a rich mosaic, they're not just about a device, we want to pay more. if they're a subscription business or a razor/razor blade business, we'll pay even more. this service revenue stream of apple has finally hit the radar screen, and people realize that apple has an ecosystem of 150 million subs. there it is. i like to say there's always a bull market somewhere. i promise to try to find it just for you right here on "mad money." i'm jim cramer, and i will see you tomorrow!
7:00 pm
-(theme music playing) -smells great. mcgraw: diggin' ditches. it's all in a day's work... when you're a millionaire. -(energetic drum solo) mcgraw: these folks invest in hedge trimmers, not hedge funds. they turn diy into roi. and thanks to hard work, incredible passion, and a whole lot of mud, sweat and tears, they turned their dirty jobs into filthy riches. -time to go make some money! (horn honking) mcgraw: tonight, meet a junkyard king who gave old parts new life, and his bank account, new commas. -how much am i worth? well, that's a pretty personal question. mcgraw: a hard working mom who's hatred of messes

125 Views

info Stream Only

Uploaded by TV Archive on