Mad Money w/ Jim Cramer – Episode Summary (12/11/24)

Introduction

In the December 11, 2024 episode of Mad Money hosted by Jim Cramer, viewers received an in-depth analysis of the current stock market dynamics, focusing particularly on the Magnificent Seven (Mag 7) tech giants. Cramer delved into recent regulatory changes, corporate performances, and strategic insights from industry leaders. The episode also featured an interview with Jeff Martin, CEO of Sempra, a spotlight on Ollie's Bargain Outlet, a comprehensive discussion on market volatility with Mark Sebastian, and a dynamic Lightning Round addressing viewer questions.

1. The Magnificent Seven and Regulatory Shifts

Antitrust Policies and Market Impact

Jim Cramer began the episode by discussing the significant regulatory changes affecting major tech companies. He highlighted the replacement of Lina Khan, the previous FTC head known for her stringent antitrust stance, with Andrew Ferguson, a pro-business regulator. Cramer emphasized the positive impact of this shift on the tech giants, speculating that reduced regulatory pressures would foster an environment ripe for growth.

"People always dumbfounded these stocks and keep going up, you hear right there in disbelief that it can happen again and again. Me, on the other hand, I'm in disbelief that people still don't get it. They know nothing." ([02:15])

Apple’s Resilience Amid Regulation

Cramer praised Apple’s recent performance, attributing its stock surge to both innovative product releases and the easing of antitrust challenges.

"What’s driving the individual Mag 7 stocks to these record highs beyond just the changes in government? These companies do amazing things. They keep changing, they keep inventing." ([03:00])

He also touched upon Apple’s latest announcement of iOS 18.2, which includes advanced AI features like ChatGPT Image Playground, demonstrating the company's commitment to innovation.

Amazon and Alphabet’s Continued Growth

Transitioning to Amazon, Cramer commended the company’s resilience, noting its substantial stock growth since its IPO. He criticized the previous FTC attempts to regulate Amazon, suggesting that the new leadership under Ferguson would relieve Amazon from these pressures, allowing it to continue its upward trajectory.

"Amazon, by the way, is up 306,913% since it came public on May 15th of 1997. You know that doesn't happen if you're a relentless bad actor like the FTC would have you believe." ([05:45])

Similarly, he lauded Alphabet for maintaining its dominance in the tech sector, despite past regulatory challenges, and anticipated further gains as the company navigates through its strategic initiatives.

Meta’s Strategic Positioning

Cramer discussed Meta Platforms, highlighting its significant stock appreciation and the impact of FTC investigations on investor confidence. He remained optimistic about Meta’s future, suggesting that the end of stringent regulatory scrutiny would bolster its market position.

"Another reason why Meta's given, you get this, a 250,908% gain since coming public 44 years ago. Take that, S&P." ([07:20])

Tesla vs. Waymo: The Self-Driving Race

Addressing the competition in the autonomous vehicle sector, Cramer expressed strong confidence in Tesla over Waymo, citing Elon Musk's strategic alliances and regulatory advantages.

"I believe him simply because he's tight with President Elect Trump. The White House can make the interstate highway system a test lane for Tesla and will thrive on it." ([08:30])

2. Interview with Jeff Martin, CEO of Sempra

Sempra’s Position in the Utility Sector

In a pivotal segment, Cramer interviewed Jeff Martin, the Chairman and CEO of Sempra, to explore opportunities within the utility sector. Martin articulated that utilities are poised for a "super cycle" due to the increasing demand from data centers and the broader energy infrastructure needs.

"With higher expected growth, a strong dividend, and what I think will be a constructive interest rate backdrop, we think Sempra shareholders are set up for some good value creation in the future." ([15:02])

Data Centers and Energy Demand

Martin emphasized the critical role of utilities in supporting data center growth, particularly in Texas, which has become a hub for these facilities. He pointed out Sempra’s strategic investments in natural gas pipelines and LNG export terminals as key drivers for future growth.

"Data centers, hyperscalers, artificial intelligence... are intensive in terms of energy consumption. That’s why Sempra is ramping up capital expenditures to meet this demand." ([16:53])

Expansion and Market Leadership

Discussing Sempra's expansion plans, Martin highlighted the company's leadership in both California and Texas economies, underscoring their capability to outgrow the utility sector through diversified energy infrastructure projects.

"We have a portfolio of new capital opportunities all across the energy value chain, with a real focus on transmission and distribution." ([16:05])

Sustainability and Strategic Investments

Martin touched on the importance of sustainable energy solutions, noting that while renewable sources are vital, natural gas remains essential for meeting the baseload energy demands of modern data centers.

"The critical success factor is are we prepared to invest the capital to ramp up electricity production and expand and modernize the grid." ([16:36])

3. Spotlight on Ollie's Bargain Outlet

Ollie's Competitive Edge in Off-Price Retail

Cramer provided an extensive analysis of Ollie's Bargain Outlet, positioning it as a standout player in the off-price retail sector. He contrasted Ollie's with other major chains like TJX and Ross Stores, highlighting its diverse product offerings beyond apparel, including home goods, toys, and books.

"Ollie's is the biggest player in certain parts of the closeout space and often gets the first call from retailers looking to move major blocks of product." ([20:26])

Financial Performance and Growth Strategy

Despite recent challenges, including a significant stock drop and macroeconomic factors like hurricanes, Cramer remained bullish on Ollie's. He attributed the stock's recovery to strong profitability margins and strategic acquisitions, such as the takeover of bankrupt Big Lots locations.

"The stock's up 557,000% since it came public in 1999. That's because Ollie's has been pretty consistent the whole time." ([20:26])

Expansion Plans and Market Position

Cramer discussed Ollie's aggressive expansion strategy, aiming to grow its store count by 10% annually. The company’s acquisition of Big Lots stores, particularly in Texas, was seen as a strategic move to enhance its market presence and capitalize on emerging retail opportunities.

"Ollie's now has a stated goal of growing its store count by 10% per year. They now have 557 locations and are planning to accelerate their expansion plans." ([20:43])

4. Audience Questions and Cramer's Responses

Caller Insights and Stock Recommendations

Throughout the episode, Cramer engaged with several callers, providing tailored advice on various stocks. Notable interactions included:

• Jake from New York: Asked about Cintas, which had recently dropped 10%. Cramer recommended buying the stock, praising it as one of the "greatest stocks of all time."

  "I think this is one of the greatest stocks of all time and they have just a huge pastiche, if not mosaic of great customers." ([09:52])

• Jill from New Jersey: Inquired about Royal Caribbean. Cramer suggested holding the stock but preferred Viking over Royal Caribbean, emphasizing caution against excessive buying on limited earnings.

  "I like Viking more than I like Royal Caribbean. We can't keep buying up and up on the same set of earnings." ([10:39])

• Paul from Maryland: Concerned about Constellation Energy’s volatility. Cramer advised against selling but recommended reallocating gains to Sempra for more stability.

  "I think that when it gets back to 250, 260, I think you should take some off the table and go put it in Sempra." ([38:22])

5. Market Volatility Analysis with Mark Sebastian

Understanding the VIX and Market Signals

In collaboration with Mark Sebastian, founder of Option Pit.com, Cramer explored the current state of market volatility. Sebastian analyzed the relationship between the S&P 500 and the VIX (CBOE Volatility Index), often referred to as the "fear gauge."

"The so-called Santa Claus rally is never guaranteed, people. Never." ([30:00])

Historical Patterns and Current Trends

Sebastian compared the present market behavior to historical December trends, noting anomalies such as the VIX rising despite the S&P 500's modest declines. This divergence raised concerns about potential upcoming market turbulence.

"If this pattern holds up tomorrow, then we might be at the beginning of a moment where the volatility index starts to have a positive correlation with S&P 500." ([34:15])

Proactive Investment Strategies

Cramer and Sebastian emphasized the importance of not becoming complacent, even in a seemingly strong market. They advised investors to remain vigilant and consider booking measured gains to mitigate risks associated with unexpected market downturns.

"We've gotten two years to seeing stocks rally endlessly because there just haven't been that many sellers coming out of the woodwork to slow down the momentum." ([45:00])

6. Lightning Round: Rapid Stock Picks

Quick Recommendations and Insights

In the high-energy Lightning Round, Cramer addressed a series of rapid-fire questions from listeners, offering swift opinions on various stocks:

• AMD Holdings: Despite recent declines, Cramer remained optimistic about AMD’s potential, highlighting CEO Lisa Su’s strategic moves to capture market share.

  "Lisa Su has built an amazing company taking a lot of share from Intel and got number two in data center and AI." ([37:03])

• Bitcoin ETFs: Cramer advocated for investing in Bitcoin via ETFs like IBIT, asserting his belief in cryptocurrency's long-term viability.

  "I believe passionately in crypto. I think that if you want to have 10% of your position in crypto, you buy it now." ([38:00])

• Netflix and Spotify: Cramer acknowledged the continued growth potential in subscription-based businesses like Netflix and Spotify, advising cautious optimism.

  "Netflix is a subscription business. I'm going to throw this down. I’m going to throw in Spotify." ([41:38])

Closing Remarks

Cramer concluded the episode by reinforcing the importance of focusing on quality investments and remaining proactive in monitoring market trends. He underscored the enduring demand for data centers and the pivotal role of companies like Nvidia in powering the future of technology.

"Reports of this theme's death... have been wildly exaggerated. Keep your focus on the big trends." ([44:00])

Conclusion

The December 11, 2024 episode of Mad Money provided a comprehensive overview of the current investment landscape, emphasizing the robustness of the Magnificent Seven amid regulatory easing, the strategic growth of utility companies like Sempra, and the promising outlook of off-price retailers such as Ollie's Bargain Outlet. Through engaging interviews, insightful market analysis, and interactive segments, Jim Cramer equipped viewers with actionable strategies and a deeper understanding of the forces shaping today's financial markets.

Notable Quotes:

• Jim Cramer on Tech Giants: "They are sovereign states with better balance sheets than any country." ([02:30])
• Jeff Martin on Sempra’s Growth: "With higher expected growth, a strong dividend, and what I think will be a constructive interest rate backdrop, we think Sempra shareholders are set up for some good value creation in the future." ([15:43])
• Jim Cramer on Ollie's Expansion: "They have a suite of opportunities in our energy infrastructure business... which sets us up where I think is strong growth in the future." ([16:36])
• Mark Sebastian on VIX Trends: "The so-called Santa Claus rally is never guaranteed, people. Never." ([30:00])
• Jim Cramer on Bitcoin Investment: "I think that if you want to have 10% of your position in crypto, you buy it now." ([38:00])