Mad Money with Jim Cramer: Episode Summary (February 6, 2025)

Release Date: February 7, 2025
Host: Jim Cramer, CNBC
Podcast: Mad Money w/ Jim Cramer

Jim Cramer dives deep into the financial landscape of early 2025, spotlighting both established giants and emerging players outside the traditional tech sphere. This episode is packed with insightful analyses, candid discussions with industry CEOs, and an engaging lightning round where Cramer shares his latest stock recommendations.

Market Overview and Quiet Winners

Jim opens the show by lamenting the lack of transparency in current market leadership, emphasizing that many top performers are "unsung heroes" diverging from the usual tech-centric Magnificent Seven (02:06:25). He highlights that when major indices like The Dow and NASDAQ show mixed results, it's often these lesser-known companies driving the gains.

Key Highlights:

• 3M: Once a market leader, 3M faces challenges from enduring lawsuits related to forever chemicals. However, with new leadership under CEO Bill Brown, Cramer anticipates a resurgence reminiscent of the company's illustrious past (00:31).

  "I await the innovations that will remind me of the halcyon days when this company used to be known as Minnesota Mining and Manufacturing." (00:31)

• J.P. Morgan: Cramer underscores the bank's undervaluation, noting its comprehensive services from M&A to IPOs. At 14 times earnings, he believes it's poised to grow to over 20 times earnings.

  "JP Morgan could trade up to more than 20 times earnings." (02:06:25)

• IBM: Transitioning from hardware to a software-centric model, IBM's integration of Red Hat and the spin-off of its IT infrastructure business have stabilized its earnings. Cramer praises the company's pivot towards recurring revenue streams.

• Goldman Sachs: With anticipated rebounds in M&A activities and IPOs under less stringent regulations, Goldman’s current valuation of 14 times earnings is seen as a bargain.

  "That's ridiculously low given this company's about to have its strongest moment in years." (02:06:25)

• Amgen: Despite its robust portfolio of blockbuster drugs like Isupril and the upcoming Maritime weight loss drug, Amgen remains undervalued at nearly 14 times earnings. The once overshadowed company is gaining traction as new products hit the market.

• Wal-Mart and Visa: While Wal-Mart continues to thrive as an inflation hedge with its expansive product range, Visa and MasterCard remain stalwarts in the payment networks space, benefiting from the growing buy-now-pay-later trend.

• Amazon: Reporting a strong year-over-year sales increase of 10%, Amazon's stock faces slight after-hours declines due to conservative guidance and high capital expenditure forecasts. Cramer views the pullback as a potential buying opportunity.

• Travel Sector: Companies like Hilton and XPD demonstrate remarkable growth, with American Express also standing out as the 9th best performer of the year.

In-Depth Conversations with CEOs

1. David Bouzouki on Roblox's Stock Dip (09:01 - 21:03)
Roblox experiences an 11% stock drop despite a 30% year-to-date increase. Cramer engages with David Bouzouki, the founder and CEO, to dissect the reasons:

• Revenue and Growth: Roblox reported 32% year-over-year revenue growth and substantial bookings in key markets like India and Japan.

  "We exited December once again, 25% year on year, bookings, growth." (14:24)

• Safety and Community: Emphasizing the platform's commitment to safety, especially for young users, Bouzouki outlines over 40 safety innovations and the use of AI to enhance user experience.

  "We think safety, civility, and transparency across all media platforms are our top priority." (18:01)

• Future Prospects: With partnerships like Shopify, Roblox is venturing into immersive 3D shopping experiences, reflecting a strategic expansion beyond gaming.

  "We're focusing on this long-term vision that immersive 3D is a new way for people to come together." (19:24)

Cramer concludes that Roblox's dip presents a buying opportunity, reaffirming his bullish stance.

2. Tarang Amin on Elf Beauty's Struggles (29:35 - 37:43)
Elf Beauty faces challenges as its stock tumbles 11% post-earnings:

• Sales Performance: While net sales growth remains robust at 31%, January saw softer results due to post-promotional hangovers and reduced social media engagement amidst external distractions like wildfires.

  "We still built 90 basis points of market share." (37:02)

• International Expansion: Elf Beauty's international sales surged 66% year-over-year, with strong performances in new markets like Germany and Italy, positioning the company for sustained growth.

  "We're the number one unit share brand in the U.S. and number two in dollar share." (34:19)

• Operational Efficiency: Despite tariff challenges, Elf Beauty maintains an incredible price umbrella, effectively managing costs through strategic pricing and supplier diversification.

  "We've been facing 25% tariffs since 2019, and we use a very balanced plan." (33:22)

Amin remains optimistic about Elf Beauty's trajectory, emphasizing strategic product launches and market expansions.

3. Chris Swift on The Hartford's Performance (22:15 - 29:07)
Cramer discusses The Hartford's recent achievements and strategic branding with CEO Chris Swift:

• Financial Growth: The Hartford has nearly doubled its earnings per share over five years, leveraging higher premiums and strategic investments in the bond market.

  "This company's nearly doubled its earnings per share over the past five years." (22:15)

• Brand Modernization: The Hartford unveils a modernized logo, reflecting its evolution into a growth-oriented and innovative company while honoring its 215-year legacy.

  "We're becoming a more growth and innovative orientated company." (23:40)

• Risk Management: Emphasizing prudence, The Hartford has strategically ceased writing new homeowner business in high-risk areas like California, advocating for policy reforms to address escalating risks.

  "In February of 24, we stopped writing new homeowners business in California." (26:09)

Swift highlights The Hartford's commitment to maintaining robust underwriting standards and fostering a team-oriented, equitable culture.

Lightning Round Stock Recommendations (38:00 - 42:57)

Jim Cramer wraps up the episode with his signature lightning round, offering quick buy, sell, and hold opinions on various stocks:

• Terra Energy (Timestamp: 38:33):
  Buy – Cramer approves of Terra Energy as a growth utility despite its modest yield, commending its strategic positioning.

• Fastly:
  Sell – Despite financial improvements, Cramer remains skeptical due to consistent quarterly misses, recommending alternatives like Cloudflare.

• Danaher:
  Sell – Disappointed with Danaher’s recent performance and executive demeanor, Cramer advises against holding the stock.

• IESC (Jeffrey Gandel's Company):
  Buy – Praising CEO Jeffrey Gandel's leadership, Cramer endorses IESC as a promising investment opportunity.

• Schlumberger:
  Hold/Sell – Recognizing its strong operations but advising caution due to market positioning, Cramer refrains from recommending a buy.

• A10 Networks:
  Hold/Sell – Despite strong earnings, Cramer cautions against parabolic stock movements, suggesting a wait-and-see approach.

Cramer emphasizes the importance of staying informed through interviews and continuous analysis to make informed investment decisions.

Additional Insights

Towards the episode's conclusion, Jim Cramer reflects on recent interviews with CEOs of Honeywell and ARM Holdings, addressing market overreactions and the critical need for accurate information:

• Honeywell:
  Cramer critiques the market's rapid response to Honeywell's business split, highlighting the long-term strategic benefits despite short-term volatility.

• ARM Holdings:
  Addressing misconceptions, Cramer explains ARM's strategic partnerships, particularly with Nvidia, and clarifies the company's resilience in the evolving tech landscape.

  "They just can't talk about it because they're in a quiet period." (43:12)

Cramer underscores the value of comprehensive interviews for a nuanced understanding of company dynamics, urging investors to engage deeply with expert analyses.

Conclusion

This episode of Mad Money serves as a compass for investors navigating the complexities of a shifting market. From undervalued financial giants to resilient beauty brands and innovative tech platforms, Jim Cramer provides a wealth of knowledge, strategic insights, and actionable advice to empower listeners in making informed investment choices.

Notable Quotes:

• "I await the innovations that will remind me of the halcyon days when this company used to be known as Minnesota Mining and Manufacturing." – Jim Cramer on 3M (00:31)

• "JP Morgan could trade up to more than 20 times earnings." – Jim Cramer on J.P. Morgan (02:06:25)

• "We think safety, civility, and transparency across all media platforms are our top priority." – David Bouzouki on Roblox (18:01)

• "We're becoming a more growth and innovative orientated company." – Chris Swift on The Hartford (23:40)

• "It's our top priority." – Tarang Amin on Elf Beauty's safety measures (19:07)

This comprehensive summary encapsulates the key discussions, insights, and strategic evaluations presented in the February 6, 2025 episode of Mad Money, offering listeners a detailed overview of the financial narratives shaping the early part of the year.