Mad Money w/ Jim Cramer – Episode Summary (12/13/24)

Release Date: December 14, 2024

1. Market Overview

Jim Cramer kicks off the episode by analyzing the current state of the stock market. As of the episode's release, the Dow is dipping by 86 points, while the NASDAQ is advancing by 2%. Cramer attributes the lackluster performance in the semiconductor and tech sectors to the consistently down bond market and higher-than-expected inflation, which dampens investor appetite for growth stocks.

• "Nobody wants to buy growth in that environment." (00:42)

Cramer expresses caution, noting that Wall Street has been excessively negative and warns against remaining overly optimistic until there's sustained improvement in bond yields alongside the stock market. He emphasizes the importance of not obsessing over Federal Reserve (Fed) movements, advocating for a long-term investment perspective.

• "As an investor, it doesn't do any good to obsess over the minutia of central banking." (05:30)

2. Upcoming Corporate News

Cramer outlines the key corporate events to watch in the upcoming week:

• Qualcomm vs. AAM Holdings Trial (Monday): A patent dispute concerning high-performance processors that could impact Qualcomm's licensing.

• Retail Sales Numbers (Tuesday): Critical data expected on consumer spending, especially significant due to the heightened focus on Black Friday sales.

• Earnings Reports (Wednesday):

  • General Mills receives an upgrade due to accelerating pet food sales, though Cramer expresses concern over their sugary cereal segment.
  • Micron and Lennar report earnings, with Micron showing a positive rally and Lennar facing challenges in the housing market.

• Darden Restaurants Earnings (Thursday): Focus on how Darden manages consumer pushback against high prices, particularly in casual dining.

• Nike's Report (Thursday): Anticipation of insights from the new CEO, Eliot Hill, on revitalizing the brand globally.

• Personal Consumption Expenditures Number (Friday): Inflation data that could influence Fed policies and present buying opportunities amidst market volatility.

• Carnival's Performance (Friday): Analysis of the cruise line industry’s bullish stance within the S&P 500.

3. Listener Call-ins

Cramer engages with listeners, addressing various investment queries:

• Jay from Arizona (08:36): Inquires about investing in Goldman Sachs amidst expectations of increased M&A activity under the new administration.

  • Cramer: "Do I buy Goldman Sachs or do I buy the field? You buy Goldman Sachs and I will be talking about that." (08:55)

• Tyler from Florida (08:59): Asks about Alibaba's prospects towards 2025.

  • Cramer: "Baba is the only Chinese stock I'm recommending." (09:10)

• Mike from New Jersey (09:27): Discusses considering AT&T for growth and income.

  • Cramer: "I've been impressed... If they were doing it wrong, they get it right." (09:59)

4. Interview with Jesse Singh, CEO of asic

In a featured segment, Cramer interviews Jesse Singh, the CEO of asic, delving into the company's impressive growth in a stagnant market.

• Company Performance:

  • Achieved a 12% growth in a flat decking, repair, and remodel market.
  • "We grew 12% in a market that in R and R repair and remodel in general has been flat." (14:28)

• Growth Strategies:

  • Focused on customer satisfaction and expanding product lines beyond traditional wood.

  • Emphasizes sustainability by using recycled materials in products like decking and trim.

  • "We give people better aesthetics, we give people long life and low maintenance." (16:07)

• Capital Deployment:

  • Retired debt, executed stock buybacks, and invested 5-7% of revenue into growth and margin expansion.

  • "We retired a portion of our debt, we bought back an additional few points of stock." (17:14)

• Market Positioning:

  • Targets both consumers and contractors, ensuring product quality and supporting small businesses.

  • "It's both. We market to the consumer, but we have a very large sales force that is focused on training and helping our contractors." (18:59)

Cramer lauds Singh's leadership, highlighting asic's ability to control its growth trajectory independent of Fed actions.

• "You are more in control of your destiny than anyone in the segment that you play." (15:14)

5. Discussion on Service Titan IPO

Cramer reviews the recent IPO of Service Titan, a technology platform for tradespeople, noting its strong market reception despite a high valuation.

• IPO Performance:

  • Priced at $71 per share, surged to $101 on the first day, then settled back.

  • "I would like it a little bit lower. I don't want to pound the table on a software company that doesn't pass this rule of 40 tests." (23:58)

• Company Fundamentals:

  • Achieved 31% revenue growth in fiscal year 2024.
  • Operates on a subscription revenue model with increasing profitability.

• Valuation Concerns:

  • Currently trading at nearly 12 times this year’s sales, which Cramer considers rich but not unreasonable.

  • "Service Titan’s valuation is rich but not unreasonable." (26:00)

Cramer remains cautiously optimistic, suggesting that while the story is strong, the stock may be better positioned as it retraces to more favorable price levels.

6. Cybersecurity Insights with Vasu Jakarta, Microsoft

Cramer hosts Vasu Jakarta, Corporate Vice President of Microsoft Security, to discuss the escalating cybersecurity threats and Microsoft's strategies to combat them.

• Current Threat Landscape:

  • Password attacks have surged from 579 per second in 2021 to 7,000 per second.

  • "In today's age of AI, security must come first." (31:58)

• Microsoft's Initiatives:

  • Launching the Secure Future Initiative to enhance industry-wide cybersecurity measures.

  • Employing AI for defense, achieving 26% faster and 35% more accurate threat detection.

  • "Copilot for Security helps defenders 26% faster, 35% more accurate." (33:06)

• Cultural Transformation:

  • Emphasizes the importance of cybersecurity awareness and education across all organizational levels.

  • "Security is a cultural transformation as much as it's a technology transformation." (34:14)

• Advice for Businesses and Individuals:

  • Stay vigilant against phishing and scams.

  • Implement comprehensive security practices and prioritize proactive measures.

  • "Every time you see something suspicious, don't click on that link." (38:29)

Cramer appreciates Jakarta's expertise, acknowledging her role as a calming and informative voice in the realm of cybersecurity.

7. Lightning Round

In the high-energy Lightning Round, Cramer offers rapid buy, sell, or hold recommendations on various stocks based on listener calls:

• IBM:

  • Cramer: "I like IBM. It's still an inexpensive stock. It's still got upside." (42:15)

• Indy Semiconductor:

  • Cramer: "The auto business is really much worse than people realize right now." (28:59)

• Alcoa:

  • Cramer: "It's a material stock linked with China, so nobody wants them even though Alcoa had a great quarter." (29:05)

• Energy Core TV:

  • Cramer: "I say to start buying some... holding off for now because oil is so weak." (29:06)

• Dollar General vs. Walmart:

  • Cramer: "There’s another company called Walmart, and they are crushing it. Buy Walmart over them even though Walmart's at its high." (32:37)

This segment provides quick insights and actionable advice for listeners on a spectrum of investment opportunities.

8. Insights from Interview with President Elect Trump

Cramer shares his takeaways from his recent interview with President Elect Trump, focusing on the administration's stance towards China and its implications for the market.

• China Relations:

  • Emphasizes the need to protect Taiwan and transform China from an adversary to a trading partner.

  • "We need to protect Taiwan if we want to protect Taiwan Semiconductor, perhaps the most important non-American company to our national security." (44:15)

• Economic Policies:

  • Advocates for corporate tax cuts to benefit shareholders.

  • "Cut corporate taxes once again to let more money fall to you, the shareholder." (45:30)

• Market Impact:

  • Positive outlook on the administration's pro-business approach, likening it to Reagan's era which welcomed a multi-decade bull market.

  • "A pro-business conciliatory president... nothing could be better for the market." (46:50)

• Crypto Affinity:

  • Seeks to position the U.S. as a capital of crypto, integrating it with the dollar and traditional financial systems.

  • "I want our country to be the capital of finance and that means being the capital of crypto too." (44:20)

Cramer's analysis suggests that Trump's policies could foster a favorable environment for the stock market, emphasizing tax cuts and improved international relations as key drivers.

Notable Quotes with Timestamps:

• "Nobody wants to buy growth in that environment." – Jim Cramer (00:42)

• "As an investor, it doesn't do any good to obsess over the minutia of central banking." – Jim Cramer (05:30)

• "We grew 12% in a market that in R and R repair and remodel in general has been flat." – Jesse Singh, CEO of asic (14:28)

• "Security is a cultural transformation as much as it's a technology transformation." – Vasu Jakarta, Microsoft (34:14)

• "We need to protect Taiwan if we want to protect Taiwan Semiconductor, perhaps the most important non-American company to our national security." – Jim Cramer (44:15)

Conclusion

In this episode of Mad Money w/ Jim Cramer, listeners receive a comprehensive analysis of current market conditions, upcoming corporate events, and strategic investment advice. Through insightful interviews and dynamic interactions with callers, Cramer provides valuable perspectives on growth opportunities, cybersecurity advancements, and the potential impact of new administrative policies on the financial landscape. The episode underscores the importance of a balanced investment approach, emphasizing both short-term vigilance and long-term strategic planning to navigate the complexities of the modern market.