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tv   Mad Money  CNBC  April 9, 2013 11:00pm-12:00am EDT

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i'm jim cramer and welcome to my world. >> you need to get in the game! >> firms are going to go out of business and he's nuts! they're nuts! they know nothing! >> i always like to say, there's a bull market somewhere. >> "mad money." you can't afford to miss it! >> hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends. i'm just trying to save you a little money. my job is not just to teach and coach but to entertain and educate so call me at 1-800-743-cnbc. you know what is worse than our own national inferiority complex that keeps us from believing in any financial recovery over here? i'll tell you what's worse.
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it's the superiority complex we have about china! and that blind aberration caused our stock market to rally once again, dow gaining 60 points. s&p rising 35%. nasdaq climbing .48%. last night i talked about how we just don't believe in ourselves or america anymore. and when the president scared us into thinking that the sequester would throw our great nation off its tracks, business people believed him and held back the hiring. made you feel we could do nothing right. but the chinese? holy cow. we've got a couple decent inflation numbers last night along with a positive read on china from alcoa and next thing you know, we've got a convincing tuesday rally in a group that united states could never budge. i'm talking about the machinery and material stocks. they haven't been able to rally in weeks and then boom, china, hey. they take off. let me explain. right now there's a whole huge part of our stock market that's
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getting buffeted by international markets. that's part of what's made up of the raw minerals, oil and mining stocks, finished goods made with them. they have been down because the consensus is that these companies will report incredibly disappointing earnings over the next few weeks. courtesy the horrendous recession in europe and the severe slowdown that might be developing in -- well, you get the point. but within the last 24 hours, we've witnessed one of the biggest trading bounces i've seen this year. a wholesale rush into everything that's lagged this market, because of international weakness and now it looks like international strength. what has changed in that -- let's call it 36 hours of time. first, last night, we got some better than expected inflation news from china. now, ever since the first week of march when "60 minutes" reported there was a big housing bubble in china, investors here have been unwilling to be aggressive in owning the so-called china stocks, stocks that involve copper, aluminum,
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iron, and the machines used to turn these materials into commercial products. now, it hasn't helped that the chinese new year seemed to slow things down and the new administration over there seems plodding in its ability to figure out how to get that economy moving again, especially when any attempt to cut interest rates which has stoked the hideous housing bubble that "60 minutes" brought to light that does feel like our country in 2007 and 2008. but then we get one softer than expected inflation number and all is forgiven. we go right back into thinking that china is a superior place that is taking over the world. they can just flip a switch and have $1 trillion worth of projects bloom. that's right. we are now hearing stories overnight, gigantic infrastructure projects that are in the works. products that can cut pollution, modernize the sewers. make the water clean as a whistle. all this would normally be viewed as fanciful by skeptical people if it weren't for alcoa. alcoa, aa, which reported last night.
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alcoa is the rodney dangerfield of this stock market. it gets zero respect, and its stock was unchanged despite a better than expected quarter, and it was a better than expected quarter! yet at the same time that everyone disses alcoa, we also hang on ceo klaus kleinfeld's every word about how the world is doing. and you know what, he told a story of terrific growth, a story that says those who are counting china out right now and think it's on the canvas simply aren't looking at the big picture. the chinese, kleinfeld made clear repeatedly in his comments, go listen, they saw a strong demand for new cars. something we heard also from ford this morning. they saw a voracious appetite for new trucks. they are using three billion more aluminum cans than last year and there is no change to the solid growth in commercial construction. 8% to 10%.
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same as before. despite the "60 minutes" piece. plus, kleinfeld pumped up his estimates for commercial aircraft which he expects will have 9% to 10% growth now, including 12% growth for large aircraft, 40% growth for regional jets and 60% growth for business jets. that is a huge amount of demand. no doubt a lot coming from the gigantic airport build in china. now some of this growth has to do with terrific properties in aluminum versus steel and copper. that helps lower gas mileage and leads to less maintenance. alcoa taking share from other producers which has lower costs. makes a better proprietary product these days, but that wasn't the take-away from the call or else alcoa would have actually done something today instead of finishing the day unchanged. the takeaway broady was china is back and it's bigger than ever! and that allowed the jjc, the etf that tracks copper, to gain 88 cents or 2%, one that caused
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the dog, freeport mcmoran, to rally to $33.76 and led to gains in steels, including u.s. steel and nucor, which have been nightmare underperformers. it caused a gain in the mining stocks, including bhp, which rallied $3, as well as vale, the brazilian iron miner which increased almost 5%. not to be outdone, the lagging plastic companies caught bids. that's how they say it on wall street, meaning there were buyers. ppg went up a buck 20, dow chemical up 60 cents. these are all part of the china trade and just ignited off alcoa and that inflation number. so did caterpillar and cummins which took off after the chinese demand remains unchanged for trucks. and something a lot of people wall street said, that truck appetite had abated. i was actually surprised that joy global only gained a buck 32 today. guess they're saving that one for tomorrow. of course, if china is staying
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strong, that's a terrific excuse to light up the oils. as its voracious chinese demand that has kept prices higher, certainly not europe, which is using less energy, or the united states where we keep finding more and more of the stuff. so finally chevron, mobil and eog, bingo! of course red china re-rising gives a lift to wynn resorts and las vegas sands. and gamblers flocking to macao in record numbers. here's something i found totally amazing. tech has been stalled because of european weakness. big business over there. but it will not stay weak if china is coming back online as, kleinfeld indicated. china's intel's largest market, so that stock takes off. see it today? as does its partner in lethargy, microsoft, that stock looked great today. why not? while all the drugs, foods, biotechs and utilities are moving up, tech has done nothing. which means for a lot of people less risk to buying ahead of the quarter if they disappoint. won't fall that far. you won't believe this. i don't know. i'm maybe taking my life in my hands here.
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but, you know, apple -- it needs chinese buying badly. how do i put this? it's trying to bottom, like right here. it's trying. i know, it's inconceivable, right? it's inconceivable. just way too glib if not total fiction. science fiction for anybody to say that apple might be done going down. but if china starts getting stronger and the apple apology has some gravitas, why can't it do rallying? where is it written that apple has to go down every day? where is it ordered apple can never have a real rally ever again? talk about numbers that have been slashed for weeks now. i mean, i've been thinking about it. nothing takes the risk out of a stock better than slash numbers. and it looks like the two most important apple analysts on wall street these days are freddie krueger and jason! look, i know that all that seems too good to be true off an inflation number and positive conference call from alcoa, but here's the bottom line.
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if americans can even get a glint of hope, kind of like off this bowie knife, building hope off china, we will buy every stock with even a tangential connection to the people's republic, and we just got not one but two glints of inflation, and aluminum. and from that, it was off to the races for a group of stocks that until today had been thought to have crashed and burned at the great chinese wall. who knows? you get another good chinese number tomorrow, and the next thing you know, these stocks become the leaders in the next leg of the rally. how about ryan in ohio, please? ryan. >> caller: hey, jim. what's up. >> not much. how about you, ryan? >> caller: i'm doing all right. some large banks are reporting earnings later this week and next week we've got regional banks. i know that you like keycorp but i was wondering what you think of huntington bank shores. >> oh, i like huntington very much. i think huntington bank -- i was talking about this with stephanie link, co portfolio manager of action alerts with me. we think that the ohio banks are
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going to be good, the regional banks could surprise. why? because no one believes they're doing well. and i think you and i know that huntington bank, they're doing much better than they have been. i like those stocks. i think they're -- let's say 50 cents down and a buck 50 up. good risk/reward. a bull in a china shop! yeah, that's what we saw today in the materials machinery stocks. we saw glimmers of hope. let's just hope they're not a bowie knife going down our throats. "mad money" will be right back. coming up, spice market? from salt and pepper to more exotic flavors, you could likely find consumer giant mccormick in your kitchen cabinets. but is its stock the secret ingredient for your portfolio? don't miss cramer's earning exclusive with the company's ceo. and later, in treatment. big pharma is back and all week, cramer is taking a look at the ways to play these strong stocks. tonight, a company that's got you covered from head to toe. but can it keep your cash in good health?
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plus, tracing travel. strong performances from travel stocks have been given first-class returns for investors, and cramer has got his eye out for the ideas that could provide an upgrade. pack your bags for an all-new edition of "off the charts." all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer #madtweets. send jim an e-mail to or give us a call at 1-800-743-cnbc. miss something? head to [ male announcer ] this is betsy. her long day of pick ups and drop offs begins with arthritis pain... and a choice. take up to 6 tylenol in a day or just 2 aleve for all day relief. all aboard. ♪
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some stocks are so predictable they almost trade like clockwork. take mccormick, largest purveyor of spices, flavors for the both consumer and food service companies. mccormick is everywhere. control 50% of the market for private label and store brand spices. this is terrifically consistent company, a slow but steady grower that pays 1.9% yield.
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that is yield is deceptively low because the stock seems to rally faster than the payout. if you bought mccormick five years ago at the beginning of the financial meltdown, you would have a 113% return with reinvested dividends. over the last 20 years, the stock is up 818% with dividends while the s&p 500 would give you just half that, 414% return with reinvested dividends. however, even though mccormick has been trending higher for years, the stock almost always sells off whenever the company reports earnings lately. back in late january, mccormick reported, falling to $61.23. two weeks later i told you to buy the stock because after the post earnings pullback, mccormick bounces back virtually every time. lo and behold the stock is now up 13%, as i told you. tuesday of last week, mccormick reported again, delivering a good quarter. company reaffirmed its full year guidance and the stock got banged. and in the days that followed, the stock fell. i cannot stress enough these
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earnings induced pullbacks are really your best if not your only opportunities to buy mccormick. they're pretty much the only moments when the stock isn't chugging higher. so let's check in with alan wilson, chairman, president and ceo of mccormick and company and find out more about the quarter and where his business is headed. mr. wilson, welcome back to "mad money." >> great to see you. >> we bumped into each other at the super bowl, and it turns out from your conference call in new orleans that that turned out to be a very significant weekend for your business, because of the way things shook out with zatarain's, which is one of your newer spices. >> it was great for our business because we combined mardi gras, super bowl, all of our products in a big promotion which played really well. on top of that, our hometown ravens won, so we got a big boost from that. >> but i think people would probably be interested to know and i know you also do digital that, while they may just buy spices when they need them, there are people who literally are going to go buy a new product that you have, something different. >> absolutely right. and what we always try to do is weed and feed the category.
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so we're introducing all kinds of new products and taking out things that aren't necessarily working as well. so that we keep the set fresh. and that's what we do with the retailers to manage the category so that we keep people coming to the set. >> at the same time, though, it always surprises me, the analysts were so quick -- not all, but some were quick to hop off. you said over and over again, that previous quarter when the stock went down, people didn't believe. but then when you came back, you came roaring back. and this has been -- this is what we call -- this is why your company is so consistent. >> our consumer doesn't change that much, and our business is very much a series of seasonal businesses. so there's the holiday spices, there's the grilling spices, there's the easter spices, there's -- all through the year, there's a whole series of different things people are looking for. >> now, internationally, there's just a pure growth path, though, it seems. it's not as seasonal. your china numbers are pretty incredible, your india numbers are pretty incredible. will this be one of those companies like a lot of the packaged goods companies i deal with, where 50% of your business
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will be asia, europe, india, ten years from now. >> we expect that we'll have a bigger business outside the u.s. than inside the u.s. in ten years. >> okay. that's what i thought. >> we absolutely are focused on driving business in emerging markets and this year will be about 15% of our sales will be from emerging markets. about 2020, about 20%. so we're building our business. it's not all we're trying to do. we're trying to build our domestic and developed market business as well. >> now, let's take in china right now. we like david novak and yum and kentucky fried chicken, kfc. they had a bird flu instance there. will people stay home and use more mccormick spices in china because of that? >> people will take a break. what we have seen in china, the business is so robust and resilient, that we expect the consumers are going to come back to the stores. we are seeing double digit growth in consumer business. some of that is our work that we're expanding and increasing marketing there and entering new provinces with our direct sales force.
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so we're really driving it, but we're seeing pretty good solid growth in our consumer business. >> we had international flavors, and they talked about how the innovation is driving their business. you have a technology bent to mccormick that people don't seem to know about. >> yeah, we expect we're going to grow, about a third of our growth is going to come from new products. new product innovation. we have a lot of proprietary technology that we use both in our consumer and our industrial business, which gives us flavor advantages and helps manage the cost volatility. >> one of the things i think you have all bases covered when we saw the employment number on friday, the first thing i thought of, going to seattle next week, it looks like there's not as many people being hired. but if people trade down from mccormick to a store-bought, that's you too. >> in some cases. >> in some cases. >> yes. >> so is that because you saw the economy -- that people are pinched? is that -- because you put a lot of money toward the generic, so to speak. >> what we're doing is trying to
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drive value, so we want to make sure that the consumer has a reason to buy value. what we do for the retailers is manage the category. we've got a complex category with multiple price points. so what we want to do is work with the retailer to have the right mix of private label, economy brands, and brands as well as gourmet, because there's a bit of a bifurcation where consumers are under stress and are looking to find value. other consumers at the top end continuing to purchase and our gourmet sales are doing pretty well, and we've got a lot of new gourmet products that help that as well. >> one last question. i know that some of the skeptics on the street are saying, look, unless the company is able to get gross margin improvement of 50 basis points or industrial comes back, which is quick-serve, outside, you won't be able to repeat this great success. it seems to me that maybe industrial can bounce back this year. i mean, it doesn't have to necessarily be as weak as it was this quarter. >> we certainly expect it to be more solid in the second half. >> and that's restaurant --
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>> that's restaurants, sales to other manufacturers. we're the flavor behind a lot of food manufacturers' products, other good food companies that you know really well. and so we expect that is going to be stronger in the second half. >> well, look, you've been just a terrific, rewarding stock. great company, and i'm so glad to bump into you in baltimore. to me, this is, again, one of those moments. your stock does not take any breathers in the last 20 years, other than periodically around quarters when people don't understand. >> great. >> thank you so much. alan wilson, chairman, president and ceo of mccormick and company, doubled the s&p over the last 20 years. maybe that's the most important thing you need to know about the company. after the break, i'll try to make you more money. coming up, in treatment. big pharma is back, and all week, cramer is taking a look at the ways to play these strong stocks. tonight, a company that's got you covered from head to toe. but can it keep your cash in good health?
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here on "mad money," we spent the last two weeks focusing on sexy biotech stocks like gilead up again today. the ones that could represent the future of the drug business. i don't want this emphasis on biotech off the big pharma companies that dominate the industry in the present. my charitable trust always owns one or two. these are terrific. it is true the big pharma names
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are no longer turbo charged growth stocks like in the 1990s. but you know what, not every stock needs to have a turbo charged growth angle to it, and you certainly shouldn't have a portfolio made up of only growth names, celgene and gilead. that's not going to work either. there is a place for slow and steady wins the race companies with big dividends.. especially in an environment like this one where people are worried about the global economy, you can count on it here in the united states staying low for a real long time. when interest rates are likely to stay this low, investors from all over the globe flee low-yielding bonds and certificates of deposit and they flock to united states' higher yielding dividend stocks, the ones that have great balance sheets. that's why even though big pharma is the antithesis of sexy, hot in 2013, and why i wanted to give you the panoply, the overview of the larger pharmaceutical names that are worth owning. because so many of you on twitter said, jim, could you tell me about these other stocks? you give me the hot ones.
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so last night we talked about johnson & johnson. it's a classic break-up play where management could create a ton of value with the stroke of a pen. and tonight i want to tell you about my favorite big pharma catch-up play. and i don't mean ketchup like this kind, although are you ready skedaddy is my brand, better than buffett ketchup. the one that i like is -- that's a mythical drum roll in my head. merck! merck! and another stock i like so much, i added it to my charitable trust, follow along at the other big pharma stocks have roared, okay? the reason i call this catch-up play, pfizer is up nearly 22%. bristol-myers up 30%. eli lilly is up almost 23%. but merck has lagged. it's advanced far less than the others. 6% over the same period. now, look, it deserves it. there has been a series of stumbles and negative headlines
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that is just as long as my arm. at this point it trades 12 times earnings. average trade of 14 times earnings. many of them have much of higher price to earning multiples than merck and even the lilies and the pfizers. granted, there are reasons why merck, one of the largest drug companies on earth, has been a laggard. let's go through them. in december they had to stop u.s. development of a cholesterol drug after bad trial results and had to pull the drug overseas where it was approved, and it looked like a real winner. in february, we found out that merck planned to delay some new osteoporosis drugs from the fda which pushed back the company's new drug application next year. another winner. then last month there were ugly headlines about how a class of type two diabetes drugs, two blockbuster drugs for merck might cause a risk for pancreatitis and even pancreatic cancer, mostly fatal. although those stories were mostly sound and fury, signifying nothing. those risks have been known about for years.
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and i don't think you should put them in your calculus. when you look beyond the negativity you can see that merck is actually an excellent company. and one that sports a bountiful 3.8% yield. why do i like merck so much other than the fact that it's cheap and has a high yield? that's not enough. first, merck has been hit by some major patent expirations in recent years, but now the company is finally over the patent cliff and it's now on solid ground so you don't have that awaiting you. right now going forward, merck actually has the least exposure to drugs losing patent protection and going generic of any big pharma company in the world. and that is huge. second, in 2009, merck completed a huge transformational merger with schering-plough. remember we had fred hassan on last week, the ceo. over the last three years, the company integrated that acquisition, closed 22 manufacturing facilities to bring the count down to 22.
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the merger and restructuring programs expected to produce from $3.5 billion to $4 billion by the end of the year. plus the company has had terrific and terrifically broad portfolio of products. merck has a decent-sized animal health business, for instance, that they could totally spinoff, just like how pfizer spun off. merck's animal health division generated $3.4 billion in sales last year. that's only about 20% smaller than pfizer's recently spun off division. and merck's division is expanding much faster with a 9% growth rate. if you gave merck's animal health business the same valuation as pfizer's, it would be $13 billion on a spin-off. i actually think it deserves a higher valuation because it has faster growth. what else? merck has a big and rapidly growing diabetes franchise, worldwide epidemic. and that's led by genuvia and janumet, a pair of drugs that together generate $5.8 billion in sales. the company has a growing vaccine division, that's really
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moving, in part, thanks to gardasil, which is merck's hpv vaccine that can help prevent cervical cancer. and on the mental health front, really important. when merck bought schering-plough, they got a drug called saphris for schizophrenia and bipolar disorder, that has tremendous potential because it causes less weight gain than the other antipsychotics. and with these drugs, weight gain is the worst side effect. fda approved saphris in 2009, last year did $166 million in sales for merck. but these mental health drugs can take a long time to catch on. i actually think this could end up being a blockbuster in the end. the best thing about merck may be its incredibly deep pipeline. 35 drug candidates in phase two or three. pretty amazing. the second most of any pharmaceutical company out there. in the late stage, 16 phase 3 programs, the last phase before a drug can come up, before the fda stamps it okay.
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and of those 16, there are 5 drugs that could be approved this year. that's a lot of potential shots on goal. let me mix sports metaphors for a second. not all drugs are necessarily home runs. merck kind of reminds me when i look at not the phillies, because they're pathetic, of the yankees this year and their lineup may not be full of home run hitters anymore but they got some great drugs in the pipeline that could hit singles or doubles like ichiro suzuki or robinson cano. merck has a number of drugs in the pipeline that could only generate say $250 to $500 million in sales. not blockbuster home run material. but when you add them all together, you get these guys on base, you move them over and a little manufactured run, that counts for earnings per share. plus, both merck and yankees are written off in certain circles. but you know what, yankees can still win games, merck can still get new drug approval and send the stock higher. fda just improved merck's new insomnia drug in november. and they approved ridion, merck's neuromuscular blockade drug in january. within five years after launching, these drugs could generate, collectively $800 million in revenues.
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$800 million. beyond that, merck has a ton of catalysts in 2013. the company is waiting on fda approval decisions for multiple drugs, including a gross pollen allergy treatment, a ragweed allergy and medication. who would not want that? an ovarian cancer drug. also important clinical trial data. clinical oncology conference in june where we focus on celgene and maybe we should focus on merck. merck will present new data on their metastatic melanoma drug although that is in phase 1 development. and we will find out whether the company will move the alzheimer's drug it's developing into phase three trials which would be a big deal that moved eli lilly ten points. and next year merck will file for approval of its osteoporosis that got delayed. and this one actually is a home run hitter. potential for more than $1 billion in peak sales. i still believe that merck could easily trade to 15 times earnings. and like i told you a month ago, that would make this a $60 stock. yeah, a 31% increase from where it's trading now, with that good
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dividend the whole time. here's the bottom line. merck has a very deep pipeline with a host of catalysts for 2013. meanwhile, the stock needs to play catchup with the rest of the industry and merck is paying you to wait with that bountiful 3.8% yield. by the way, merck has the balance sheet to raise the dividend from here. so at this point, what's not to like? let's go to ginny in illinois. >> caller: dr. cramer, this is ginni from beautiful downtown plainfield, illinois. >> you're so right. i forgot how beautiful plain -- yeah, terrific. what's up? >> caller: since we've been talking about pharma the last few weeks, i need a prescription on what to do about orasure. i'm in a lot of pain because it's down 55%. you got any advice for me? >> oh, gee, i know. you know, i mean, i -- they came on, they had that new blockbuster product, the drugstores are going to love it. i thought it was really special, and it just didn't pan out. and you know something, i'm going to say that you shouldn't
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sell it down this much. it's too low. but on any lift, you should. because it is just a disappointment. and i don't want to keep people disappointments. i brought them on. showed the stuff. it didn't work. just didn't work. let's go to dominic in my home state of new jersey, please. dominic. >> caller: hey, jim. how are you? >> all right. how about you, buddy? >> caller: doing well, thank you. my question is on energizer holdings, enr. they have popped significantly since last year, look like a great buyout possibility. my question to you is, would you agree, and if so, what would be a great price to get in at? >> i don't recommend stocks on a takeover basis. this is a slow and steady wins the race, but also at this point not as expensive as it was before this run. but i cannot recommend it on a takeover basis. that's just not what we do on "mad money." i'm sorry. it's a good company, but i can't put it -- i can't say, yeah, i think it's going to get a buyout bid. i just don't do that. anyway, if you're looking for a healthy dividend, big pharma companies are really the place to be.
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after careful examination, i like merck! it's got to play catchup with its peers, but, look, it's going to pay you to wait in the meantime. plus there's plenty of catalysts. it's a singles hitter. get on base, move the runner, score, take the dividend, stay with cramer. the "mad money" back to school tour is in session and this time we are 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 so if you have a flat tire,
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before we get to the "lightning round," the "mad money" back to school tour is going to be back in session, april 25th at villanova university. if you want to join us, head online to, and to register for the most profitable class you can take anywhere! hey, you might even see some boo-yah presence on campus
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tomorrow. and now it is time for the "lightning round" on cramer's "mad money." rapid fire calls. when you hear this sound, the "lightning round" is over. are you ready skedaddy? start with todd in louisiana. todd. >> caller: mr. james cramer, big boo-yah! >> i like that mr. sportsman's paradise. >> caller: start off by saying this, mr. cramer. i miss "mad money" sometimes on my schedule but i admire your career path. selling ice cream at phillie games and graduated from harvard and harvard law and then a lawyer and now a financial genius. >> well, thank you. now let's make money together. what do we got? >> caller: all right. we got two-and-a-half questions for you today, sir. first off, i would like to start off with nike.
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>> i like nike, dynamite quarter. terrific. i would love it to come in after that gap up but it was really good. i like the quarter. i like the business. all right, let's go to scott in new jersey. scott! >> caller: boo-yah, jim, from a recent college grad. >> great to have young people on the show. what's up? >> caller: not too much. i'm new to the game. my stock is coh. >> all right. i was at a couple coach stores in the last two weeks. the shoe line is remarkable. the moccasins are doing well. the three-inch heel is doing incredibly well, this is from my sources. i think coach is done going down. i want to buy coh. wow. mike in texas. mike! >> caller: hey, jim. what's up? what's the deal with this sirius radio, s-i-r-i? >> i think sirius radio is a slow-grower here from 3 to 3.5. people keep getting excited. it does not have that kind of growth to power to five. don't be aggressive. tom in my home state of new
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jersey. tom! >> caller: hello there, jimmy. double boo-yah from tom and joanne up here in lafayette, new jersey. >> oh, well, that's a beautiful place. i know it well. what's up? >> caller: yes, sir. i would like your thoughts about yahoo! and their most recent acquisition. what do you think? >> i think mayer is terrific. check the record. since the day she came on, i said you've got to buy yahoo! it's a new sheriff in town and she is doing a phenomenal job. i'm sticking with yahoo!. let's go to ardy in minnesota. ardy! >> caller: hey, jim. i wanted to know, what do you think of johnson controls? >> i'm worried about the quarter they got to, european business. if the stock comes down, you can buy it, because if they broke the company up, it would be worth north of 36. but i don't like the earnings profile now because of too much europe, and europe be toxic. let's go to matt in new york! matt. >> caller: hey, jim. i want to know about eep. what do you think about the
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dividend and where it's heading? >> all right. the eep. we got to always be sure. this is enbridge energy partners, and i think that at 7.25% is a good yield. i think it's for real. i think that company is terrific and also i like the regular enbridge and that, ladies and gentlemen, is the conclusion of the "lightning round"! >> the "lightning round" is >> the "lightning round" is sponsored by td ameritrade.
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what stock can you count on in this increasingly volatile market when it seems to get hit every morning only to rebound later in the day, courtesy of i believe of a huge influx of overseas money, japan. happened again today. how about the online travel names, stocks like priceline, expedia, orbitz, and tripadvisor, stocks you love to talk about and own. increasingly starved for growth. you know i've been a big fan of this group, especially priceline for some time now. lately many stocks pulled back in some cases quite dramatically. so it's time to ask if this pullback represents a good time to buy or take a vacation from these stocks. tonight we go "off the charts"
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with the help of bob lang, the brilliant technician and founder and senior strategist,, at the and most importantly the man who nailed boeing before its fabulous stock liftoff just when everyone else was leaving boeing. four weeks ago, lang told us to bet on the casino stocks and you swiftly caught a nice move to the upside. i like that. now he's saying that the charts could be about to favor these online travel names that a lot of people don't like anymore. based on his record, we've got to hear him out. first off, take a look at the daily chart of "mad money" fave this is the undisputed best of breed player in the industry, and my favorite by far. especially in the wake of the acquisition of kayak, which gives them some fabulous mobile exposure, since kayak is the best online travel app out there. take a look at it. lang points out that priceline had a giant move here in january. so you go up, see this -- this was just a huge move, right? but since then, the stock has been consolidating. that's what it's been doing. basically trading sideways.
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however, the stock is held above its uptrend and i know some people probably think wait a second, head and shoulders. bear with me. he said it's held above its up trend, that's what matters. the long term trajectory is still positive. more importantly, there's the moving average convergence/divergence line, everyone calls that the mac d in the business, momentum indicator i've talked about before, that technicians use to detect shifts in the direction that a stock is headed. with priceline, he says the mac d is about to flash a powerful buy signal. and remember, that's where the black line in the indicator crosses over the red one. and this signal regularly predicts a move up in the stock before it actually happens. after more than two months of consolidation, this mac d indicator is telling lang that priceline could once again be ready to roar. he thinks it's going to flip like that. i think he's right. i think he's one of the best in terms of interpreting the mac d. now how about expedia? check out the daily chart for this one.
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expedia has got the same business model as price line, although they're a smaller company with less international exposure. lately the stock's been pulling back from its all-time highs around 68. now $62.43, roughly six bucks off the highs. but lang has noticed something in the expedia chart i know i haven't seen. over the last couple weeks, a very solid floor of support developing at the $60 level. just two bucks below where the stock is right now. so as long as that floor -- new-found floor holds, he says your downside is very limited. meanwhile, when you look at the moving average convergence/divergence line i mentioned, the mac d indicator, about to flash the same buy signal that we saw with priceline. and then there is the williams percentage r oscillator that we have talked about, bottom of the chart. we mentioned this before. one that was developed by a commodities trader named larry williams. it's another momentum indicator that can measure if a stock is overbought or oversold. this one has worked well for us in the time since we started
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using it off of the chart segment. and with expedia, you can see this indicator has recently moved up, out of an oversold position. this was the oversold position there, moved up, now trending higher and that could be a sign that this stock price is about to take off too. that would be odd, again, because i saw head and shoulders, but he sees it differently and i've got to trust him on this stuff. now let's talk about the one i know too many of you own, frankly. it's orbitz. i've always said that orbitz was the dog of the online travel group but i know people can't resist this kind of price level. when you take a gander at the daily chart, you can see that lately, though, this stock has just been bent on proving me wrong. look at this move. wait. share price having tripled since the november lows. since mid february, orbitz has been rallying like crazy on high volume. we look at the volume right here. that's massive volume. people realize that this stock simply didn't deserve to trade in the low single digits. then the stock stalled in mid march, okay? and it's trading sideways. that's, again, consolidating its
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gains, until last week, when lang pointed out orbitz would once again have a very strong breakout to the upside. could this be the start to the second leg of orbitz' monster rally? there's no denying this chart is on fire, even if, like me, you're not much of a fan of the fundamentals. he likes it. all right. last but not least, there's trip adviser. i don't even put these in the same league. different business model. trip adviser is where you go to get your travel related reviews and opinions. and the company makes its money from selling advertisements. on the daily chart you can see that trip adviser has pulled back lately, along with the rest of the group, other than orbitz. however, lang notes that trip has found a floor of support here at its 50-day moving average. that's the blue line, 50-day. that's a short-term measure of the stock's trajectory. and he points out that in the past, trip adviser has made big moves after touching this key moving average. so he thinks this is really important. that said, take a look at this. look at trip adviser's weekly chart. lang thinks that the stock still
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has room to fall, room to come down if the market declines from here. he could see trip adviser falling to the $42 to $45 range. but if that happens, he would buy the stock aggressively and he believes it will travel to new highs from there. so either this one holds above the 50-day moving average on the daily chart which i just showed you, which is exactly where it's sitting now, and rallies, or pulls back to 42 to 54 and lang thinks it rallies in there either way. his long-term view for this stock is bullish. my view on the fundamentals, priceline is still the best, followed by expedia, with orbitz a distant third. i think trip adviser, totally different business, one that's levered to online advertising rates and i don't like those rates and where they're plunging. i would rather just stick with priceline. but here's the bottom line. when it comes to the online travel names, the charts, as interpreted by bob lang, are starting to look bullish for priceline, expedia, orbitz and price adviser. always a good thing when the charts are on your side. "mad money" is back after the break.
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should we dare about jcpenney? we should care about any company that used to have $19 billion in revenues worth following. come on, it's a visible chunk of the u.s. retail economy. of course, that's not the principle reason why it's been talked about so much. we have cared because ron johnson, fresh face from outside, from apple, no less, came in to clean up the mess allegedly made by the former
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ceo, mike holman. at least that's what the party line was. at the behest of hedge fund manager bill ackman who had basically taken over the company. the daring, some would say arrogance of ron johnson and his backer created a polarizing set of expectations that led to total failure and then collapse and then the comeuppance, johnson getting fired yesterday only to be replaced by his allegedly disgraced predecessor. that's all history. what matters right now is that there is a land grab of retail sales as i genuinely believe that jcpenney could go away, and johnson's buffoonery has opened the floodgates for every other retailer. how do we play? dismiss the notion that jcpenney is worth buying. not worth the risk, the retail is the hardest business in the world to attempt to turn around. the biggest winner so far is macy's and i think a huge chunk of what is left in jcpenney sales will still go the way of that chain. especially if penny loses its lawsuit against macy's over the right to sell martha stewart home products, and i believe they will lose. walmart and target are both game but the new found sales may not
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be as meaningful to them. both companies doing fabulously and walmart hit its 52-week high again today. i also like tjx, so much that my charitable trust owns it. i find tjx to be more similar to penney's than people realize in the sales it runs and the merchandise it sells. it should be bought here. kohls should be a big beneficiary because of similar merchandise but that growth retailer seems to have completely lost its way. gap works. its clothing profile is similar to the clothes penney's sells. check it out. i did, ahead of the show. i think you'll agree. why does it matter now who is gaining on penney's? we are going to get same-store sales from all these retailers this week and we know from pvh's manny chirico that march was soft because of cold weather. so you may get your chance to buy these winners when we hear the numbers, especially given that some of the better stores don't even report monthly numbers anymore. and many of the worst ones do. so i expect on thursday they're going to knock down all retail. to me the cheapest of all these is tjx, boosted its dividend by
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26% and announced buyback of $1.3 billion. tgx is the one ackman should have bought. he didn't. you can. stick with cramer. why not make the day unforgettable? with two times the points on travel, from taxis to trains. you'll be asking why not, a lot. chase sapphire preferred. there's more to enjoy. let's say you pay your guy around 2% to manage your money. that's not much you think. except it's 2% every year. does that make a difference?
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search "cost of financial advisors" ouch. over time it really adds up. then go to e-trade and find out how much our advice costs. spoiler alert: it's low. really? yes, really. e-trade offers investment advice and guidance from dedicated, professional financial consultants. it's guidance on your terms, not ours. that's how our system works. e-trade. less for us. more for you. is its own reward. but there's nothing wrong with enjoying a little extra reward. ♪ that's why southwest built a better rapid rewards program with unlimited reward seats, no blackout dates, and points that don't expire. rewards that actually reward you. we are southwest. welcome aboard.
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