Mad Money with Jim Cramer – December 6, 2024 Release Date: December 7, 2024

Hosted by CNBC, "Mad Money" offers listeners an inside look into Wall Street’s strategies with Jim Cramer guiding them through investment opportunities and pitfalls to help them maximize their returns. In the December 6, 2024 episode, Jim dives deep into market trends, specific stock analyses, and engages with callers seeking personalized advice.

1. Introduction and Market Overview

Jim Cramer opens the episode by addressing the recent economic indicators and their implications on the stock market. He highlights the resilience within the market despite some concerning signs.

• Unemployment and Fed Rate Cuts:
  "Basically [the] November jobs report better than October. But with the unemployment rate still ticking up to 4.2%, I don't think that does much to change the Federal Reserve's rate cut calculus." [01:30]

• Market Performance:
  "Dow dipping 123 points, S&P advancing 0.25%, and the Nasdaq gaining 0.81%." [02:15]

Jim emphasizes his expectation for a potential Federal Reserve rate cut in early 2025, indicating cautious optimism amidst mixed economic signals.

2. Sector Highlights

a. Data Centers and Enterprise Software

Jim identifies the data center and enterprise software sectors as emblematic of current market strengths.

• Oracle’s Data Centers:
  "Oracle, one of the major companies building out these data centers, I think they'll show incredible strength..." [03:45]

• Enterprise Software Surge:
  "The enterprise software stocks... we're all doing okay during the lull but they're doing better than okay and their stocks are being greeted with extraordinary buying." [05:10]

b. Consumer Goods and Retail

Jim discusses the robust performance in high-end housing and retail sectors, particularly focusing on companies like Toll Brothers and Bargain Outlet.

• Toll Brothers’ Performance:
  "When the Fed was announced, the stock flew up but then it stalled because bond yields actually and surprisingly went higher." [07:00]

• Bargain Outlet’s Downgrade:
  "It's a highly promotional moment for retail. This kind of off-price chain tends to be a big winner." [08:00]

3. Individual Stock Analyses

a. Oracle, HP Enterprise, Nvidia

Jim evaluates the prospects of Oracle and HP Enterprise in the data center space, noting strong sales and demand.

• Oracle’s Strength:
  "There's practically an endless demand for data centers." [04:20]

• Nvidia’s Volatility:
  "We won’t have to wait too long to find out what the story was with Nvidia stock..." [06:30]

b. MongoDB and Salesforce

Jim highlights MongoDB as a standout enterprise data company and commends Salesforce for its excellent quarterly numbers, boosting stock performance.

• MongoDB’s Tools for Developers:
  "MongoDB... helps other software developers create applications." [05:50]

• Salesforce’s Market Sentiment:
  "Salesforce reported excellent numbers this weekend; the stocks soared." [06:10]

c. Toll Brothers

Toll Brothers’ fluctuating stock is analyzed in the context of mortgage rates and bond yields, with Cramer expressing cautious optimism about its future.

• Impact of Bond Yields:
  "Given that mortgage rates are priced off the long end of the bond market, you can see why the stock struggled." [07:30]

d. C3AI

Despite being a profitless enterprise software company, C3AI’s stock surged over 50% in three weeks due to its association with AI, leading Jim to question its sustainability.

• AI-Driven Surge:
  "But in this market, you can't afford to bet against any company with AI in its name." [06:55]

e. AutoZone

Jim discusses AutoZone’s import exposure to China and the company's significant buyback strategy, expressing skepticism due to geopolitical tensions.

• China Exposure Concerns:
  "Any company that imports anything from China is viewed with tremendous skepticism." [07:55]

f. Bargain Outlet

Highlighting Bargain Outlet’s solid performance, Jim praises its business model of selling premium merchandise at discounted prices.

• Retail Success:
  "Always gets bulk trail if you track a trailer full of unsold premium merchandise and sell it to you with bargain basement prices." [08:20]

g. GameStop and Applovin

Jim expresses mixed feelings about GameStop, acknowledging its volatility and lack of strong earnings as red flags, while noting Applovin’s resilience despite lack of substantial justification for its stock price.

• GameStop’s Uncertainty:
  "I can't tell you to buy it either because I don't have any legitimate reason whatsoever to do so." [09:30]

• Applovin’s Resilience:
  "That's a cold stock that's worth 168 to 401 in a month's time on nothing." [09:10]

h. Zenith 'Zen Zinnia'

One of the most detailed discussions centers on Zenith, the parent company of high-end menswear brands like Zinnia, Tom Brown, and Tom Ford Fashion. Jim explores Zenith’s strategic transitions, challenges in the China market, and the stock’s speculative nature.

• Strategic Expansion:
  "Gradual transition from being a traditional family-run business focused almost entirely on high-end menswear to more of a modern diversified fashion house." [10:50]

• Challenges in China:
  "Another big problem for Zenith is China... the Chinese government has been cracking down on the ultra-rich." [12:15]

• Speculative Buy Stance:
  "I say Zen is a speculative buy at best... But I just don't follow the industry well enough to confidently tell you that they can pull it off." [17:45]

4. Economic Indicators and Implications

Jim delves into macroeconomic factors such as the Consumer Price Index (CPI) and inflation, discussing their potential impact on Federal Reserve policies and market behavior.

• CPI and Inflation Concerns:
  "If inflation flares up, it'll be pretty darn hard for them to cut rates again... why should the Fed really bother to cut?" [10:10]

• Forecasting Rate Cuts:
  "Don't worry, they'll still cut. We just have to be prepared for that kind of chatter." [10:30]

5. Corporate Governance Issues

Using Macy’s as a case study, Jim highlights the importance of corporate transparency and robust internal controls to prevent financial misconduct.

• Macy’s Expense Scandal:
  "We need to understand what went wrong... Does the company now have the systems to try to catch anything like this malfeasance?" [11:25]

6. Callers' Questions and Jim's Responses

Jim interacts with several callers, providing personalized investment advice based on their portfolios and specific stock inquiries.

a. Ford

• Caller’s Concern:
  "Ford has a yield of 5.9, P/E of 13, and a dividend of $0.15. Should I buy, sell, or hold?" [08:58]

• Jim’s Response:
  "It's not cheap and I don't want to own the stock." [09:05]

b. Dow Chemical

• Caller’s Question:
  "Dow Chemical stocks have been hammered down 23% year-to-date. Why are they declining?" [09:44]

• Jim’s Insight:
  "It's still selling at 20 times earnings because the estimates keep going lower... With anything to do with China, they just tend to hurt and hurt." [10:13]

c. Home Depot

• Caller’s Inquiry:
  "Should I buy more or sell my Home Depot shares?" [10:54]

• Jim’s Advice:
  "Don’t sell. If it comes back down to 410, even for 15 to 5." [11:08]

d. Nike

• Caller’s Concern:
  "Nike is hovering around a five-year low. Should I invest heavily?" [31:50]

• Jim’s Perspective:
  "Nike is so hard. You have to give the new CEO a little time... if we get that second down leg, let's buy it because I think that will be the bottom." [32:06]

e. Topgolf and Callaway Brands

• Caller’s Question:
  "Thoughts on the decision to spin off Topgolf to unlock shareholder value?" [32:37]

• Jim’s Response:
  "This is a very hard call... the stock’s down 44% and I’m not touching it." [32:48]

f. Portfolio Diversification

Jim evaluates callers' portfolios, suggesting adjustments to enhance diversification and reduce concentration in specific sectors.

• Example with Ken from Florida:
  "Sell Microsoft and add an industrial... perhaps Constellation Brands." [34:37]

• Example with Ann from Indiana:
  "Indiana is perfectly diversified with retail, finance, cybersecurity, and consumer products." [35:55]

g. BlackRock and Applied Digital

• BlackRock Inquiry:
  "What's the catalyst for BlackRock's stock movement?" [40:35]

  • Jim’s Insight:
    "If you buy a company that Larry Fink is running, you just own it over the many years." [40:58]

• Applied Digital’s Status:
  "Enterprise software is so hot people just can't resist." [41:28]

h. ExxonMobil and Lydell Basil Industries

• ExxonMobil Opinion:
  "Exxon is overvalued versus Chevron. These stocks are high-priced earnings multiples..." [42:23]

• Lydell Basil Industries:
  "It's got a 7% yield... buy some now and if it goes down to 70% yield, buy more." [43:00]

7. Lightning Round Summary

In the rapid-fire segment, Jim addresses multiple callers with brief yet insightful responses, covering a wide array of stocks and investment strategies.

• Home Depot Success:
  "Home Depot was dead. I feel good because we told people to buy it into the teeth of some bad numbers." [45:00]

• Lululemon and Ulta Beauty’s Stellar Performance:
  "They absolutely deserve the premium... many other stocks that don't deserve the premium." [48:20]

Jim underscores the exceptional market behavior where strong earnings led to significant stock surges without typical selling pressure, highlighting a bull market phase that favors well-performing stocks.

8. Market Performance Insights

Jim reflects on the remarkable performance of certain retailers like Lululemon and Ulta Beauty, attributing their success to strong earnings reports and strategic management.

• Lululemon’s Growth:
  "Lululemon up almost 16%. Their stunning moves are a testament to a new phase of this market." [48:00]

• Ulta Beauty’s Resilience:
  "Ulta up 9%. Their loyalty program still growing nicely." [48:15]

Jim points out that the absence of typical selling dynamics in the current market allows these strong stocks to break through previous ceilings, rewarding investors who held through challenging periods.

9. Conclusion and Final Thoughts

Jim wraps up the episode by reiterating the importance of diversification and staying informed about market dynamics. He encourages investors to remain disciplined, highlighting that while some stocks exhibit extraordinary gains, others may not sustain their valuations without solid fundamentals.

• Final Advice:
  "We’re seeing this kind of action all over the place and there are many other stocks that don’t deserve the premium... The overly appreciated stocks are going to give back their gains once the seller starts showing up again." [49:00]

Jim emphasizes maintaining a balanced portfolio and being cautious with speculative buys, ensuring that investors are prepared for potential market shifts.

Notable Quotes:

• "My mission is simple to make you money. I'm here to level the playing field for all investors." [00:50]

• "In a rational market, no [C3AI]... But in this market, you can't afford to bet against any company with AI in its name." [06:55]

• "Zen is a speculative buy at best. If you believe in a turnaround, this is the time to get in before it happens." [17:45]

• "Lululemon and Ulta had stocks that were undervalued going into the print, and they're still undervalued even after these runs. They absolutely deserve the premium." [48:50]

Conclusion:

In this episode of "Mad Money," Jim Cramer provides a comprehensive analysis of current market trends, sector performances, and individual stock evaluations. Through engaging discussions and personalized advice to callers, he underscores the importance of diversification, prudent investment strategies, and staying abreast of economic indicators. Despite the optimistic outlook in certain sectors like enterprise software and consumer retail, Jim remains cautious about overvalued or speculative stocks, urging investors to make informed decisions based on solid fundamentals.