Mad Money w/ Jim Cramer – Episode Summary (12/18/24)
Release Date: December 19, 2024
Introduction
In the December 18, 2024 episode of Mad Money with Jim Cramer, host Jim Cramer delves deep into the current state of the stock market, dissecting recent Federal Reserve actions, analyzing the performance of various sectors, and engaging with callers seeking investment advice. The episode is rich with insights, actionable advice, and expert interviews, making it a valuable resource for both seasoned and novice investors.
Market Overview and Federal Reserve Analysis
Jim Cramer opens the show by addressing the tumultuous market reactions to the Federal Reserve's recent decision. The Fed's move to cut interest rates by a quarter point, coupled with indications of fewer cuts in the upcoming year, left investors unsettled. This led to significant declines in major indices:
- Dow Jones: Dropped 1,123 points
- S&P 500: Fell by 2.95%
- NASDAQ: Decreased by 3.56%
Notable Quote:
"Sell, sell, sell. I guess you could say the baby got thrown out with the bathwater." – Jim Cramer [03:15]
Cramer explains the market's negative reaction despite the rate cut, attributing it to confusion among investors who were uncertain about the Fed's long-term policies. He highlights the conflicting economic indicators, such as robust sectors juxtaposed with areas of significant weakness, making the Fed's stance particularly challenging.
Key Points:
- The Fed's rate cut was not well-received due to mixed economic signals.
- Jim Powell's ambiguous statements further confused the market.
- Persistent inflation in sectors like food, insurance, healthcare, and rent complicates the Fed's policy decisions.
Spotlight on Jabil (JBL)
A significant portion of the episode is dedicated to analyzing Jabil (JBL), a $27 billion revenue contract manufacturer. Despite a challenging market day, Jabil's stock surged over 7% due to a strong quarterly performance and an optimistic forecast for 2025, driven by data center construction and diversified business segments.
Notable Quote:
"Jabil represents the part of the stock market that is smoking hot." – Jim Cramer [07:45]
Key Insights:
- Data Centers: Jabil expects data center revenue to rise to $6.5 billion, up from previous estimates, largely fueled by clients like Amazon.
- Diversification: While segments like renewable energy and electric vehicles are underperforming, Jabil's pharma business remains strong.
- Global Operations: With significant manufacturing presence in Mexico, Jabil anticipates minimal impact from potential tariff hikes under the Trump administration, citing past experiences where tariffs were pass-through costs.
Cramer emphasizes that Jabil is a microcosm of the broader economy, showcasing both the hottest and weakest sectors.
Interviews with Industry Leaders
Lyft CEO David Richard
Cramer welcomes David Richard, CEO of Lyft, to discuss the ride-sharing giant's recent performance and strategic initiatives.
Notable Quotes:
"We're down 40% in surge pricing year on year, which is absolutely amazing." – David Richard [13:04]
"Every car is going to be autonomous. Every. If you buy a car in 10 years, it's not autonomous. It'd be like buying a car without a radio." – David Richard [18:52]
Key Discussion Points:
- Operational Improvements: Lyft has reduced surge pricing by 40% and driver cancellations from 15% to 5%, enhancing customer experience and driving growth.
- Autonomous Vehicles: Richard expresses optimism about the future of autonomous driving, suggesting that Lyft is well-positioned to integrate autonomous technology without needing to sell to companies like Tesla or Waymo.
- Insurance Costs: Lyft manages insurance costs through tight partnerships with insurance providers and data sharing to improve safety and reduce expenses.
Cramer praises Richard's comprehensive understanding of the business and strategic foresight, highlighting Lyft's resilience amid market volatility.
Republic Services CEO John Vander Ark
Following Lyft, Cramer interviews John Vander Ark, CEO of Republic Services, a leading waste management company, to gain insights into the economy from the ground level.
Notable Quotes:
"We have to build more single-family homes in the United States. And I see it, we're in a thousand dots on the map across the United States." – John Vander Ark [31:01]
"Education is a big piece. We’ve got to tell people what is recyclable." – John Vander Ark [33:09]
Key Insights:
- Economic Growth: Despite recent slowdowns in construction and manufacturing, Vander Ark remains optimistic about future growth, driven by the need for increased housing starts.
- Recycling Technology: Republic Services employs sophisticated AI to enhance recycling efficiency, emphasizing the importance of consumer education to reduce contamination in recycling streams.
- Political Stability: The company maintains a stable business model unaffected by changing administrations, focusing on consumer demand for sustainable practices.
Cramer underscores the importance of Republic Services' role in the economy, particularly in housing and environmental services.
Health Care Sector Analysis
Cramer shifts focus to the health care sector, identifying it as one of the worst-performing areas in the market. He discusses the impact of political uncertainties and the Federal Reserve's policies on health care stocks, which are down nearly 20% from their 52-week highs.
Highlighted Stocks:
-
Thermo Fisher Scientific (TMO)
- Performance: Down 18% from September highs
- Outlook: Cramer remains bullish, citing a $4 billion stock buyback and potential recovery in 2025-2026.
- Quote: "At its peak in September 2021, the stock sold at 37 times forward earnings. Now it's trading just under 22 times next year's earnings estimates." – Jim Cramer [22:30]
-
Danaher Corporation (DHR)
- Performance: Down 19% from August highs
- Outlook: Upgraded by Bank of America, expected to rebound as temporary headwinds clear.
- Quote: "If you believe that the health care sector is primed for a comeback next year, Danaher is a great stock down." – Jim Cramer [24:10]
-
Agilent Technologies (A)
- Performance: Down 14% from 52-week highs
- Outlook: Solid financials with plans to accelerate growth through its "Ignite" strategy.
- Quote: "Management provided solid numbers with 5 to 7% annual revenue growth and steady operating margin expansion." – Jim Cramer [25:30]
Conclusion: Cramer identifies Thermo Fisher, Danaher, and Agilent as attractive entry points for investors seeking value in the beaten-down life sciences tools and services space.
Lightning Round: Buy, Sell, Hold
In the high-energy Lightning Round, Cramer addresses multiple caller questions, providing concise advice on various stocks:
-
L3Harris (LH)
- Caller Concern: Declining stock without negative news.
- Cramer's Take: Suggests selling due to external factors like potential government shutdowns affecting the Defense Department.
- Quote: "But what can I say? It's going down for a reason." – Jim Cramer [09:32]
-
Bank of America (BAC)
- Caller Concern: Future rate cuts and stock valuation.
- Cramer's Take: Advises that BAC is fairly valued and recommends selling if expecting limited rate cuts.
- Quote: "I think the stock's fairly valued, goes under 40." – Jim Cramer [10:21]
-
Vertiv Holdings
- Caller Concern: Whether to buy during a dip.
- Cramer's Take: Advises against buying immediately, emphasizing market reactions over individual stock movements.
- Quote: "I just wish the Fed hadn't been so definitive about the need to cut rates." – Jim Cramer [11:11]
-
Oracle (ORCL)
- Caller Concern: Recent stock decline post-earnings.
- Cramer's Take: Recommends selling, citing continued punishment for missing earnings.
- Quote: "Oracle does go lower, in my opinion." – Jim Cramer [35:48]
-
Gilead Sciences (GILD)
- Caller Concern: Whether to buy amid a stock downturn.
- Cramer's Take: Advises taking profits, suggesting the business doesn’t justify the stock price.
- Quote: "I would take profits in that stock tomorrow morning." – Jim Cramer [36:13]
-
Uber (UBER)
- Caller Concern: Significant stock drop and future prospects.
- Cramer's Take: Views Uber as attractive despite the decline, believing the downturn is temporary.
- Quote: "I think Uber's attractive and it's come down a lot and I do like it." – Jim Cramer [37:36]
Summary: Cramer emphasizes the importance of evaluating where a stock is headed rather than its past performance, advising caution in speculative sectors and focusing on fundamental strengths.
Speculative Stocks Segment
Cramer dedicates a segment to speculative stocks in the realms of commercial space, nuclear power, and quantum computing. He categorizes these stocks into three groups and provides a detailed analysis of each:
-
Commercial Space:
- Rocket Lab USA: $11.5 billion valuation, generating $364 million in revenue, expecting reusable rockets by next year.
- Intuitive Machines: $2 billion valuation, with NASA contracts for lunar satellites, reporting 359% revenue growth in Q3.
-
Nuclear Power:
- G Vernova: $4.9 billion, focusing on small form reactors.
- BWX Technologies: $10.4 billion, profitable but slow-growing.
- Oclo: $2.2 billion, developing micro reactors, losing money.
- Energy Fuels: $1.1 billion, struggling to make a profit.
- Cameco: $22.6 billion, profitable but expensive.
-
Quantum Computing:
- Quantum Computing Inc.: $3.1 billion, loss-making despite NASA contracts.
- D-Wave Quantum: $1.6 billion, software-focused, minimal revenue.
- Rigetti Computing: $3 billion, developing quantum chips, low revenue.
- Honeywell's Quantum Division: Part of a larger conglomerate, minimal impact.
Key Takeaways:
- Speculative stocks tend to underperform in volatile markets driven by inflation concerns.
- Cramer advises investors to exercise caution, highlighting that many of these companies are losing money and may not recover.
- Investments in these sectors are high-risk, with many companies unlikely to achieve profitability.
Notable Quote:
"You can speculate away, but recognize there's a lot to lose in these speculative stocks if they don't pan out." – Jim Cramer [39:00]
Conclusion and Final Thoughts
Jim Cramer wraps up the episode by reiterating the importance of informed investing, especially in uncertain economic times. He urges viewers to focus on fundamental strengths and value opportunities rather than succumbing to speculative fervor. Additionally, he hints at upcoming content, including discussions on AI tools, health care opportunities, and more in-depth interviews with industry leaders.
Final Quote:
"What you've been asking for. You can speculate away, but recognize there's a lot to lose in these speculative stocks if they don't pan out." – Jim Cramer [42:18]
Key Takeaways for Investors
- Federal Reserve Policies: Understand the nuanced impact of rate cuts and the importance of aligning investment strategies with Fed signals.
- Sector Analysis: Health care presents value opportunities despite recent downturns, while speculative sectors require heightened caution.
- Company Spotlight: Jabil and Lyft showcase resilience and strategic positioning amidst market volatility.
- Informed Speculation: Approach speculative investments with a clear understanding of associated risks and market conditions.
For a comprehensive view and specific stock recommendations, tuning into the full episode is highly recommended.
This summary encapsulates the essential discussions and insights from the December 18, 2024, episode of Mad Money with Jim Cramer, providing a thorough overview for those seeking to navigate the complexities of the current investment landscape.