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tv   Mad Money  CNBC  May 16, 2014 6:00pm-7:01pm EDT

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protection or a directional bet to the downside. >> it looks like our time has expired. i'm mandy drury. check out mike's trade as well. have a great weekend. see you next friday. \s. my miss is simple -- to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. my job is not just to entertain you, but educate you. call me or tweet me @jeff mor w
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equities have referred pain from the bond mark all week. today was no different until a late afternoon rally broke the pains vice grip with the dow only gaining 45 points, s&p advancing, and nasdaq climbing 4.2%. a pretty nice day for the bulls in the end. what exactly has been happening here. we have a combination of weird data. meaning that rates keep going down, whether we have positive data or not. any good data shoo send rates shooting up, people. in inflation data that's shot should be sending rates up. the paradox,s epicenter of the injury is referring pain to the stock market, some sort of bizarre feedback loop. bonds are saying the economy is weak, so therefore stock market traders are saying all stocks must be doing weak. all companies must be doing weak. the bond market is never wrong. hey, listen, it makes no sense, except when you consider that so
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many people trade etfs these days rather than individual stocks. the etfs create a gravitational pull that can drag down any stock, chug stocks that will supposed to go higher when interest rates decline. next week we have earnings reports that could cause individual stocks to buck the trend the way that nordstrom and j.c. penney did today in the wake of their better than expected quarters. we've have more later, but the point is you made good money in part because the etfs had pulled down all retailers, because interest rates were going down. it's crazy! hey, look, it's pretty simple. you get a good quarter look we have with penney and in ordery's, you make some terrific money. with that negative referred pain from the bond market in mind, let's look at how kell with make money next week off of companies
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that report so maybe we can find the ones that similarly buck the down tripped. this is your game plan. first up, hmm not so hot campbell soup. i think this company is making a real complainback. it looks like companies that are being acquired, think pinnacle foods with that bid from hillshire brands earlier. if it goes down, it will yield 3%, buy buy buy. urban outfitters after the close, this is a quandary for me, two divisions are doing well, but the flagship, a nonstarter. unless it does a massive restructuring, that stock is going down. tuesday is huge. now, we've got a surprisingly strong new housing start this morning, but it seemed to be skewed. guys, one of the reasons why the market rallied. now, it makes sense there's more apartments being built, right?
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housing -- and because of the slowdown in existing home sales, home depot has been trading poorly until today. do you know that home depot is down 6% for the year? hey, that seems wrong. i like the stock, i want to be a buyer of home depot, half before it reports, half after. okay? so monday half, and then tuesday if -- it doesn't matter. if it goes down and i give you the green light, i want you to buy it. they have to watch "squawk on the street", because i'll be on it while i'm on that show. i think ceo frank blake will deliver. he always does. don't forget mortgage rates are coming down, something that blake will most likely flag as positive. the one consistency, not many retailers give you a consistency of tjx. some would say invisible ceo -- but the stock has been hammered this year, down 8%. i smell opportunity.
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staples also comes tuesday. i've disliked it forever. honestly whatever have i had to say about staples other than -- boo -- and -- that was easy. >> remember they merged, officemax and home depot. i think that staples will do the same. i think the risk is coming occupy. we heard from dick's sporting goods, but they'll have to do a lot to screw this up. we know the category is red-hot after speaking with underarmour. remember what happened. boy, they are selling huge amount at dick's. call me a buyer. finally this is the service giant that precipitated the big downturn when it reported that terrific quarter at the end of february, and then plummeted the next day. the pirouette, i think this would be the most important
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quarter of the week, maybe even the month, because the sales stores can reverse direction. there are so many other stocks that will follow this in general. we'll be all over this one on "mad money", even as we know the stock has been a real tough place to be, as of late. being that the ceo with us fired this quarter, you can't expect a jolly number. -- of course it's poppycock. i can show you house the charts do. the sails go up, the earnings go up, that's why we buy stocks.
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next up, do you remember when best buy was the coldest stock, then the hottest to be? if they give you hard -- and similar to what -- then maybe best buy could bounce. it was better than expected. people still sold the stock off. if it still gets hit, what will it do to gamestop? >> but i do want to own hewlett-packard. it reports after the bell. i believe that the personal computer market is stabilized and meg whitman, the ceo, will
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may make more money on the pcs. the stock is down 20%, and i know it's hard to believe it could fall further, but i think this one absolutely could be hammered again. the horrendous action in whole foods, since its quarter, nairy a lift, tells me that the second banana player will get blasted again finally on friday, we hear from a company -- man, i used to short this stock all the time. i don't run a hedge fund anymore and don't short. footlocker, the ceo has turned this inconsistent retailer into a powerhouse, trading at or around the 52-week high. it's hard to believe or even dillard's, because it's up so much, but you've got to tell you, if we get a couple down days.
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then i want you to pull the trigger in footlocker. >> i think the results will be striven, okay? we've got a week that is mostly retail, with the last -- but this is it. this is the last of the earnings dluk. isn't it worth pointing out that in this atmosphere we have, the vast majority of the quarters were pretty darn good? or manage serious telling you they don't like the market, even when they're great. see, there's plenty of good stocks getting hammered that deserve to go higher. let me give you the bottom line. we know the markets turned different. we know there were a couple real tough days, night rally. when good exude reports -- i want you to keep that in mind when you radio el view next
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week's game plan and pick what to buy ahead of time. dennis in michigan? >> caller: what are your thoughts on lvs. >> i think it's a guy. i've been watching it wynn go down and that's all chatter. these are long-term winners. how about dan in indiana. dan? >> boo-yah. >> i like that kind of fired-up approach. what's up? >> this is red lobster today, what is your take on that? >> doing a lot of bit there. so arcb is kind of stuck. if i was going over this deal, i think the real winner in the deal, not darden, not red lobster.
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arcp. call my bullish. we're feeling some referral pain. keep that in mind before some of these terrific companies report. still to come, alibaba has the spotlight, but there's more than one way to play it. then it's been fast lane for avis. just this year. is there more in store? or is it time to pull over? don't move. much more "mad money" after the break.
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all right. what do we do while we wait for alibaba, with staggering sales and earnings growth to become public. earlier this week i explained how managers will sal i
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investigate over ali baba's incredible numbers, which including amazon in the dust. but it could be months before the ipo. even when it becomes -- there's a distinct possibility you won't bet getting in on the deal. certainly you could be a very difficult to get any alibaba at a decent price, because like i said, the growth guys will want all over this one. that's why, the anticipate is generating a lot of buzz, i think -- i'm talking about vip shop holdings. symbol vips, another chinese interneat company with spectacular revenue and earnings growth, at least for now.
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it's the raining king worldwide. they can actually be valued on a price to earnings multiple basis, so it's the largest online discount retailer. a deep discount. typically we're talking about 80% off for both flash sales, vip shop is like an enter net version of t.j. max. ordinary i don't like to recommend chinese companies, you know that. the government has a pretty spotty track record when it comes to enforcing the basic rules of the road. they take grand juried that the s.e.c. will do, though times they left their guard down, too. that's why i'm only recommending
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vip shop. though it comes with some pretty unique opportunities. even a momentum like this one. in this case of vip shop, if a company like that were to operate in america, it would face competition like brick and mortars. hey, you know, any one of the bill sales that j.c. penney shows, but china is not a developed country, and they southeastern don't have well-developed retail infrastructure. however, the overall discount retail category in the vip shop taps into is growing in explosive pace, from 2012 through 2015 it's expected to expand at 52.6% compound growth rate, with much of that from the web. it's like middle-class chinese shoppers have passed the whole brick and mortar retail experience, going straight to
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the internet, vip shop isn't just an off-site retailer. they use a flash sale model. every day at 10:00 a.m., the company launches ten sales events which last foss five days, hundreds of products, everything from apparel to household goods. because the amount of merchandise is limited, really hot products can sell out within hours. they then ship the merchandise from the warehouse and customers receive their orders within a day or between. when it comes to the discount business, vip shop is the number one player with nearly 20% market share. like i told you earlier, the numbers are just phenomenal. vip shop just reported on wednesday after the close. the company earned 63 cents a share for a gigantic 17-cent earnings beat. that's their eighth better than expected quarter in a row. the revenues rose by 126% year over year to $702 million. about 9% higher than what the analysts were expecting.
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this growth is even faster than ali baba's as the net income increased year over year. you heard me, 359%. so they're not just slapping and cutting prices. on top of everything else, it's moving aggressively. just from the previous quarter, mobile now makes up 36% of the company. as for next quarter guidance, they forecast a 122 to 125% increase. they're just extraordinary. 16% higher than what wall street was looking for. no although today for the a nice pullback. if it keeps falling, you could have a great entry point, but this is speculative, rank speculation. how is vip shop able to prove
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such incredible numbers? some of it is a business model most of what they can buy they it turn, that makes it relatively cheap. some of it is because the the company does a good job of finding the products its customers want. and they have good relationships with the companies behind the bran they sell. go to the site. they have great pictures, and a lot of them are american. you'll see australian brands. i had to google them. tried to order them, but couldn't. and european bran, and some home-grown products from china. vip shop is one of the best ways for these big-name brands to unload their competent es nifb torrie. piper jaffray just came out a nose today.
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online or off, so it's like walmart meets t.j., with a bit of dollar tree thrown in, and vip shop still has a ton of room to expand. it's a tiny fraction of the 575 million people in china, and the number that's growing rapidly as the people build out. companies covering more and more cities, also expanding, just a matter of time before the company doubles the user base yet again. think about it. the greater the bargains power, meaning they can get more exclusive deals. there's a percentage of overall revenue. that's how the company's -- it's a true virtuous circle. and though this stock has rallied some 9%, i'm sorry i am
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late with this, but you know, sometimes you just have to swallow and say it's okay. again, i said i'm late, but still not particularly expensive on earnings basis. remember, we only care where the stock is going to. but it's got 58% long-term growth rate. honestly they're probably not wrong. all that said, this is a chinese internet company. that's why i'm only endorsing it i would wait for a pullback. if you just can't contain yourself, how about speculating on another chinese internet company, but spectacular sales and earnings growth. it's vip shop. just remember, this schott shop is not for the faint of hard, but among the fasters growing companies on earth.
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every single time it gets what can whacked. now you're getting vip shop as my one chinese trade. after the break, i'll try to make you more money. coming up, rental car players avis is burning serious rubber on wall street, with the stock that's up more than 30% this year, but can it keep the pedal to the metal? or should you make a reservation with another company? announcer: where can an investor
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be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: scottrade- proud to be ranked "best overall client experience."
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got a puzzle here. see, sometimes you see a stock that's been roaring like crazy. you have to wonder if your eyes are deceiving you. that's how i initially felt when i noticed that avis budget group, symbol c.a.r., the secondly largest publicly held company, has been on a total tear. have you seen this? it's rallied 36% for the year already. only a couple points --. it's actually down slightly year to date. so what the heck is real ly -- how is this stock able to race down the fast lane? the truth is there are a bunch
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of reasons avis is strong. the one they used for 50 years -- we try harder. that's right, avis is the best-run company in the car rental business, actually by far. it always delivers on its promises and often exceeds them. despite the recent move, i think avis has a growth runway that could actually still take the stock higher. let me count the reasons. first of all, the rental car industry as a whole is basically a cartel, the kind of oligopoly i'm praising all the time. the airlines have got nothing on the rental car business. right now a stagger 96% of airport-based car rentals are controlled by just three companies, privately held enterprise along with hertz and avis. unlike the airlines which have been raising prices like mad, the rental companies have for
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example, right now avis is only forecasting about 1% increase. to me this simply can't last. any industry where there's only three players will eventually see substantially higher prices. in fact we're already getting some signs this could be happening. it's become to raise prices in a meaningful way. i'll bet the rest of the industry follows. beyond that, i want to mention something that none of the analysts are talking about. lately has been squawking they can't get enough rental, and if the priceline is openly bemoaning this, you better believe that or bits and expedia are seeing the same thing, that the companies are seeing enough demand that they don't need the help of priceline. pretty positive, right? but avis has been to play a 20% commission on any rentals, so the less they have to rely on the online travel agents, the
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more money they make. if this story was only about the dynamics, then hertz would be on fire, too, rather than lagging behind avis. what is going right at avis? for starters, they've become smart about expanding the higher segments like small business rentals. specially in luxury rentals, and rentals with answer leer products. second, residual values, having proved substantial from 7% during the 2008-2010, up to around 80% concern currently. this should only get better. probably didn't know that. then there's avis' $500 million acquisition of zipcar. now a lot of people scoffed at the time of this deal, zipcar, i mean, c'mon. but in fact avis and zipcar make an excellent combination.
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zipcar benefits from the existing partnerships and the newfound ability to offer their service at airports. plus they can make doing with a smaller fleet during periods of high demand, like the weekends. meanwhile, avis is growing like a weed in europe. back in 2011 at the bottom, avis acquired the europe brand, an independently owned licensee. operating in europe, middle east, africa and asia. he snagged the baby for just $1 billion. he bought right into the teeth of that eurozone crisis. ever since then they've been pursuing a restructuring strategy that's just now beginning to pay off big time. last but not least, they have a balance sheet story. standard & poor's upgraded their credit rating this week, you know it can be a huge jet rater. being that they have the right to pay off these bonds in full. ranging from 8.25% to 9.75%,
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avis now is a terrific opportunity like you said. and the money they save on interest, where does it go? even though avis is growing faster, 25% lower, it trades at a immediately -- earnings estimate. actually a slight discount, even after the momentous route. we know that's in the bag. stock got slammed yesterday, increase in pricing that i mentioned. since then avis is bouncing back. you know i think the 1% is underpromised, the rental car business is a classic situation, which means sooner than later, they'll probably start raising prices. hertz is cheaper, but avis has proven it's best of breed with consistent results and improving balance sheet and a monster godzilla-like buyback. that's why i think avis is still
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worth buying even after the epic run in 2014. fred in florida, fred? >> caller: how are you, mr. cramer? >> couldn't be better. >> caller: everybody in my life is wonderful. my issue is i had bought quite a bit when the company was on, very impressed with the company i thought they might get involved in the new oil and drilling companies. most of this is companies would rather rent than own equipment. besides the housing -- just your opinion? >> i think nealon is the real deal, i think the company is the real deal. i think that nonresidential construction is on the way up.
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i like what you said about the oil companies. you want to keep on keeping on uri. >> buy buy buy! >> joe in new york, joe. >> hi, gym. i was on spirit airlines before it peek. wanted to know if you like this one as a long-term position. >> sure i do. >> i think the guys -- they makes you money when he's sleeping. i want to be with him and owning that stock. i do like, for the record, american and delta. mark in tennessee, mark? kell hello, cramer. >> mark. >> caller: what lies ahead for verizon if sprint and t-mobile merge? >> verizon goes higher too. this is one of those situation where verizon is going higher, because a lot of people want that yield. it's trading independent of t-mo and sprint. my friend david faber believes that deal will occur.
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i'm recommending sprint and t-mobile and at&t on a yield basis and verizon because of the wireless deal. i like all four players and love that industry. want to drive home profits? i think avid is the road to lead you there. i consider this best of breed now. still ahead, feeling a little parched? a water player that served 95% over the past five years, plus j.c. penney soared after the runs, but is the return for real? don't go shopping until you hear my take.
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with investors lately getting nervous and craving safety, this is maybe aqua america's time to shine. it's up 5% over the years, not too shabby after the recent declines.
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we know that for about a decade, starting in the mid 1990s it was a tremendous growth stock, rallies for years, it kept gobbling up smaller players. the stock has been stall lately, but there's still lots of opportunities here. currently there are ten publicly traded companies in the same space. . they've been getting in on the great american energy, in pennsylvania's rapidly growing marcellus shale. they reported a solid quart last week. revenues came in a tad light. stock at 2.4% yield at these levels. certainly better than treasuries, so let's take a closer look with nick, the chairman, president and ceo of aqua america.
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welcome. it is unique for me at 22 years to actually say we have extra cash. everyone likes your stock, it's a dividend play, but we also like the new growth. what's going to happen with that oddity of extra cash? >> well, after 20 years we have turned a corner, now bring in more cash than we spent on capital, though we get our money back on rates eventually. it's always nicer not to have any new equity flowing into our -- to do what has to be done, fix the infrastructure in this country. you've been making acquisitions, but also kind of horse trading some spots. how do we know what is central to the core and what you can let's say cut and sell to another guy? >> i was thinking back, in the '90s, first time i was ever on the show it was called
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kudlow & cramer, and we were talking about the rapt growth. most of our growth occurred in the last decade when the electric companies all -- remember enron? they got in the water business, duquesne, no longer a listed stock. we bought a lot of their properties. what happened is we had to buy them all then we started what i called pruning the lower performers. in the last three years, we actually exited four states and increased or assets in the states like texas and ohio, where we're doing very well. once you acquire a system, what do you do to get it up to snuff? >> first, we check out --
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they're actually in violation of the ferred safe drinking water act. that's the very first thing we do, we make a commitment to the regulators and fix them. we then put our staffing in there and train existing people to get them up to the best in breed. we go out and see if there's anybody else on the outskirts of that system who have been turned down looking for growth, because they didn't have the capital and try to grow the system we just bought. >> i know people are suspicious of water where i live, and we use bottled water. when you take over a system, do you see people switch back to your water? because they know the water is cleaner? >>. >> for many of these, the water looks dirty, because it's rusty. that's the first thing we do. obviously we bring it up to
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standards, but also fix the aesthetics the the water. it's 1/100th of the price of bottled water from the tap. >> everyone knows that hydration is something that is taking the place of soda, soda sales are down a lot. a lot of people recognize that the cost of coffee is so high versus water. the cost of evian, coca-cola, are you win something sort of cost battle and seeing more people drink water which could actually impact your earnings? >> we're hoping. one cent a gallon is an average gallon of water that we treat that's i would say is just as safe if not safer than bottled water, because it's tested more by the federal standards. if you want to fill up a fancy bottle, it will look just as good as what you're paying 1.25
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for. >> the excess cash, there's a lot of good things going, thank you for coming on the show. >> thanks for having me. >> solid growth company, with good dividend, sometimes maybe that's the antidote to the craziness. nick debenedictis, is the water company i grew up drinking. we didn't use any of silly bottles. stay with cramer.
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♪ it is time -- it is time for the lightning round. it's about rapid-fire calls, buy buy buy or sell sell, and then the lightning round is over. are you ready, skee-daddy? it is time for the lightning round. i'm going to start with bret in virginia. bret? >> caller: what an honor it is to speak with you, sir. >> same. >> you also have some sweet young ladies answersing phone in there, too. >> yeah. >> caller: hey, i bought about a year and a half ago, and gradually, but recently it took
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a big dive. man, i'm just trying to get back some confident. what do you think it's going to do? >> which is the stock? i'm sorry. >> excel. >> no, it's too risky, sir. the market changed the coloration in the small biotech companies are all now what's under distribution, people are selling left and right. can't get behind it. chris in new york. >> caller: hey, jim bo, love your so. thanks for having me on. >> of course. >> caller: everything in me wants to short it itches that's the problem. thank you for mentioning it. let's get some statistics out here. this stock 37% of the float is shorted meanwhile, spence are ascot is shooting everybody short, and got some big long-term buyers taking it in if it does take out the high, which is only five points, i'm not getting in the way of this
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either way. it's too juggernaut-ish, like pip will ko. >> caller: longtime fan, how are you, sir? >> not bad. how about you? >> caller: that "get rich carfully" book is fantastic. >> thank you very much. sales were very good this week. >> caller: i wanted to get your opinion about wendy's? >> people are turned on wendy's, that's when you buy buy buy, not sell it. stock is just -- look, it recovered, it usable toss at five. let's stick with it -- no, i'm not done. this is my home right here. i want to go to max in minnesota. >> caller: big boo-yah from minnesota, the real city that never sleeps. >> it really is. i thought of it as that. people think of it as sleepy, they're so wrong. >> hewlett-packard.
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buy buy buy. >> i believe in meg whitman and the turn, i believe pc's at the bottom. i believe in 3-d printing. i believe. that, ladies and gentlemen, is the conclusion of "the lightning round." the lightning round is sponsored by -- you think i seem stressed when i come out here hollering like a madman? are you even listening to me? did you wake up and say i'm going to ruin's jim's day? you brought me down, you succeeded. i was doing great. i walked in, now you've made me miserable. are we allowed to light a fire? here? >> come visit us sometime. >> hey, good evening, this is ed from south florida. the cruise capital of america.
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>> boo-yah. >> i like that. what's up? >> i had a question about rigte aid. >> it's been a -- i went to my rite aid the other day and my picture is up in the wall of the manager's office. hey, dear leader. kind of strange. mcdonald's versus chipotle, aka my modern-day retelling of the tortoise and the hare, because they crave mcdonald's yield. sheesh, mcdonald's feels like a big mac. the hare had an amazing run. they're getting killed by higher beef cheese, guac -- guac-pocalypse? i run my own restaurant? and my food suppliers,
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here's something you ought to know. retail turnarounds, they're next to impossible to do. once a downward spiral begins, it's really just so difficult to break, because customers get turned off, then suppliers get skittish, banks run from you,
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and then the next thing you know, it's over. i've seen this pattern happen repeatedly when samestore sales begin to go negative. that's why i value that metric so highly. it rarely is proven to be wrong. which is why this turnaround -- and it is a turnaround at j.c. penney is so amazing. here's a company at one point reported comparable store sales down, a staggers number one that parts -- ron johnson, a little more than a year ago. penney brought back tried and true mike you will mean, the former ceo and immediately said, even though the appointments was only meant to be temporary. you willman immediately made several shrewd moves, the first raising cash in a brutal equity offering. next he cleared out all the merchandise that johnson had brought in, because it turned off shoppers. the displays chiefly showcasing
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more -- sent shoppers to just about every other retailer. especially macy's which had been the huge beneficiary of the downfall. then offering private label brands, given the far more bountiful gross margins the change gave a lift to the cash flow, which took any monetary worries. you willman is going on the offense now. first made perment ceo. by the remarkable work he's done. second, the lapsed penney shoppers are returning as the markets and promotions that penney had been done before johnson's tenure are revived. finally the home furnishings department totally in sync with what the shoppers went. he's the only merchant i follow that can claim to have strength many the home category. the result is a remarkable
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return to growth. 6% increase in same-store sales, one of the highest i've heard. a promise there will be many more good months to come. quite a switch from the 2 1/2 year reign under johnson. there will always be setbacks and turnarounds. i've been behind the rite-aid turnaround, but during that term there were fits and starts that caused people to lose heart, even though i urge shareholders to stay long, and i still do. i'm sure penney will not have a straight line, but the turn is for real. you willman has accomplished a huge amount in the last year. i think he's just getting started. i think the company's long-suffering shareholders are at last going to be repardoned for perseverance, and it's not too early to wish him congratulations on a turnaround well done. stick with cramer. (mother vo) when i was pregnant...
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simple is good right now. (anncr vo) innovations that work for you. that's health in numbers. unitedhealthcare. two dining earnings reports next week. home depot, that will set us straight about whether the consumer is or isn't spending on their home. then
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mark ben off, if they blow away the number and the stock doesn't go up, still more hurt ahead. i like to always say there's a bull market somewhere, and i promise to try >> tonight, on the profit, i go inside athans motors, a used car dealership started by a guy with no car experience. >> i don't have cars, but i have a good business. >> but you don't have cars! that the business! >> no, i'm done arguing with you. >> he spent so much money building the most opulent dealership i have ever seen that now he can't afford to buy cars or pay bills. if i can't stop the wasteful spending... what'd you spend on these walls? >> $100,000. >> wow. and sell some cars... >> i won't sell it. that car's worth 30 all day. >> athans motors will be out of business. my name is marcus lemonis. i fix failing businesses. this month you lost $150,000. i make tough decisions... you're not gonna come behind every single person and change the deal. >> i didn't agree to this [bleep]. >> and i back them up with my own cash.


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