← Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 1/8/26
00:44:17
Listen to Jim Cramer’s personal guide through the confusing jungle of Wall Street investing, navigating through opportunities and pitfalls with one goal in mind - to help you make money. Mad Money Disclaimer
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- [00:00]
Homes.com Narrator
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- [00:49]
Jim Cramer
What made you confident that you could.
- [00:51]
Julia Boorstin
Do something that hadn't been done before? I have no fear of failure. Trailblazing women, Changing the game Favorite pieces.
- [00:59]
Jim Cramer
Of advice Think about what your boss's boss needs.
- [01:03]
Julia Boorstin
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday, wherever you get your podcast.
- [01:42]
Jim Cramer
Hey, I'm Kramer. Welcome to Mad Money. Welcome to Crame America, my friends. I was trying to make a little bit of money here. My job is not just entertain, but to educate you. So call me at 1-800-743-CBC. Tweet me at Jim Cramer. Sometimes things just get out of whack with stocks at the beginning of the year. No worries. The market is an establish correct itself right in front of you. It can look inconsistent, even crazy when it all happens, but it's all part of a natural order of rationalization you need to embrace if you want to be a successful investor. So in a day when The Dow rallied 270 points, S&P edged up.01%, Nasdaq declined.44%. Let's go under the hood and figure out the method behind the market's madness. I want to start with two. It's a little cute, I know, but I'm going to give it a shot. Two big constellations, Constellation Energy, the independent power producer, and Constellation Branch, the beer, wine and spirits business. The big hyperscalers are obsessed with clean energy. That's why they're in love with Constellation Energy, which is the nation's most visible Nuclear powered utility. As clean as it gets if you want reliable electricity. Constellation has been loved to the point where the stock is up over 175% over the last two years. Stock seems invincible. Sells for 28 times. This year's earnings was pretty darn pricey, especially for a utility. Now how about Constellation, the beer company stc? It's been one of the worst stocks in the entire market over the last years. It is down over 40%. This one's been a toll Parade of arables. Beer has gone up a great deal price. Call it labor in cans. Younger people no longer drink like the older coworker. It's only going to get worse as the heavy drinking baby boomers age out. The company imports beer from Mexico. Very high packaging tax. The president's policies hurt it. Their customer base leans Hispanic which means those customers don't want to go out as often thanks to the immigration crackdown and yes, the omnipresent GOP. 1 Weight loss drugs make beer taste like nothing expensive nothing. So what's happening? Constellation Energy stock has already fallen from 353 to 322. I see no signs of this stock bottoming. To me it looks dangerously expensive. As for Constellation branch, I'll give you a full explanation later the show but let's just say that the Stock is down 13 times earnings and I think that may have overcorrected. In short, the value of two Constellations got out of whack and a company that makes liquor is certainly worth more or at least something we don't know what then under 13 times earnings. That's too low given the Constellation does make the beer with the most U.S. revenue. That's Modelo Especial. Or how about Costco versus Wal Mart? Well, this is really interesting. See last year was Wal Mart. Year this stock was up over 23% as the market recognized that this was the store of choice to for cash strapped consumers. Wal Mart even began to pull more customers from the upper middle class because CEO and now retiring sadly Doug McMillan made the stores more appealing while keeping prices low. Everyone loves low prices. However, Walmart's price journeys ratio how we measure whether the stocks cheap or expensive. It skyrocketed to the 40s. That was incredible. How about Costco? The sainted Costco? Well first it lost its long standing CFO Richard Glante more than 38 years he was the heart and soul of Costco. He knew pricing, new merchandise, knew the customer customer like no other CFO and most CEOs. Second, the renewal rates after steady as she goes upward. March finally faltered going more slowly, certainly more slowly than the street was looking for. For that we were paying more than 50 times earnings or last year. Come on. So of course this stock just got clobbered becoming an almost permanent denizen on the 52 week low list. By late last year we while the s and P500 was up 16% Costco stock actually declined 6%. But since the new year began, oh, it's a different story. Wal Mart's done nothing while Costco Stock has rallied from 862 to 915 including a monster 3.7%. Did it again today after some good numbers last night and I don't think it's done or this week. I told you Larry Williams, the great technician said Costco screaming, screaming by that number that they got last night much better than expected monthly sales I like to every single bit of it. The comparable sales accelerated in December with digital stepping up versus November. The year over year numbers showed a terrific gain. It was the best beat from the company that I've seen in quite a while. I think the estimates are now too low. I think we see a host of earnings bumps and price target increases. Costco, I like it. Or take Nike. Oh boy. The stock of Nike what it had been the house of pain. This thing spiked when they can the previous CEO and put in an old hand Elliot Hill he's had to work fast with his win now initiative. That includes returning the company to its roots as a sports based business. Still, if you take a longer term view, this stock has been a nightmare. Okay. But late last month three board members including Hill and Tim Cook, yes the CEO of Apple bought a ton of stock with Cook actually putting almost $3 million to work. Boy, talk about a handover fistfight of confidence. Today analyst from Needham decided to downgrade Nike. Sell, sell, sell from buy to hold. I'm going to quote because I thought it was just kind of outrageous. Quote the turnaround is progressing slower than we expected. We're concerned about the recent level of sell off in the North American wholesale channel. China appears highly problematic and street numbers for the next 12 to 24 months look to not look too high for us. To us quote did the stock get hammered in response to that incredibly negative sentences read no, it closed up more than 3%. Were Nike's buyers simply mocking this bearish analyst? Actually it's a new year and there's a lot of value in Nike. North America has already turned China is a disaster but Hill knows it he has a plan. I want to invest alongside Cook and Hill. I'm not dissuaded by what what Needham says, not at all. In fact I'm cheer when a stock goes up after such a sharp downgrade, you know, I think it's been immunized against the negativity. I predict analys analysts will come out from their from their foxholes, from their shelters and say bye, bye bye Nike. Finally, the homebuilders. Hardly a day goes by without an analyst downgrade in these stocks cut the price targets, they turn out to be a cut too far and the homebuilders actually bounced. I want to own them, I don't know but I do want to own the stock of Home Depot. A leading indicator rallied 3% today. Lots of people have given up on the stock because it's so tied to housing turnover. Something that would get a real boost though if the president can force institutional investors that own single family homes to dump them on mass. We own Home Depot for the Travel Trust proudly our only housing exposure. And I am beginning to feel pretty darn good about this situation which has been tough. Now some of these rebounds are because hope can spring eternal. Optimism tends to bloom at the beginning of the year. But that optimism does not come with new money. The cash to buy these things coming from somewhere else. Today these stocks were bought with gains from last year's winners, chiefly tech winners. These stocks have become sources of funds. It's not by luck that the worst performing Mag 7 stock in 2025 is Amazon. It's the best performing stock of the group so far in 2026. On the other hand, no matter what good in video says it's doing nothing. Nobody seems to care anymore. And that stock's being sold and that's providing a lot of cash for all the other stocks I talked about. I don't know how long this rotation from high performing stocks to low performing stocks will last. The valuations are shifting rapidly. I've seen this kind of early year action time and time again in my 44 years of trading and investing that sometimes it lasts about five days, other times I've seen it go for two weeks. Equilibrium tends to be reached by week three. But the bottom line for now brace yourself. It's Dylan time. Dylan kind so keep your eyes open because the wheel still in spin for the loser now will be later to win because the times they are changing. Jim in California, Jim.
- [10:08]
Caller/Guest
Cross Jim for your Eagles winning their division once more as well you know, 25 Super bowl champs.
- [10:14]
Jim Cramer
Well thank you we do have a big game Sunday at 425 against the Niners. The line is giving 4 1/2 to the Niners but I'm going to be out in San Francisco missing the game. Why? Because I'm an idiot. But I'm also covering the J.P. morgan Health Care. So what's going on?
- [10:30]
Caller/Guest
Hey, I've also been enjoying the meteoric rise of the SOFA share price and we purchased it thinking that the fintech stocks would rise because of their expectations of falling interest rates, integration and their 100% digital model. Even though so far share price has recently been punished with a recent funds raise. Is this an opportunity to buy more at these lower levels?
- [10:54]
Jim Cramer
Actually, believe it or not Jim, I think the stock has not come down enough. I think the stock acts what I call heavy. There's a lot for sale. I want you to wait. I'm not going to give you the go ahead to buy it. And by the way, I'd like to stop since 5 I'm on record telling Anthony Nuto I think it was right. So I've got some what I call gravitas. Anyway, I don't know how long the rotation is going to last. I want you to brace yourself because as the great Bob Dylan once said, the times they are changing Money. Tonight several sectors stood above the rest in 2025. I'm going to reveal which areas out for the market and if they can continue the run in the new year then for every winner there is a loser. I'll run through the sectors that performed the worst in 2025, give you my take on which ones can rebound in 2026 and the aforementioned constellation brands. The beer kind soared today after reporting a top and bottom ib. So are the stars finally aligning for a turnaround? I'm breaking down the quarter to find out. I want you to stay with Kramer.
- [12:00]
Mad Money Announcer
Don't miss a second of Mad Money. Follow imKramer on X. Have a question? Tweet Kramer. Hashtag MADmentions. Send Jim an email to madmoneynbc.com or give us a call at 1-800-743-CNBC. Miss something? Head to madmoney.cnbc.com.
- [12:22]
Comcast Business Narrator
Comcast business helps retailers become seamlessly restocking frictionless paying favorite shopping destinations. It's how nationwide restaurants become touchscreen ordering quick serving eateries and how hospitals become the patient scanning data managing healthcare facilities that we all depend on. With leading networking and connectivity, advanced cybersecurity and expert partnership, Comcast business is powering the engine of modern business powering possibilities. Restrictions apply.
- [12:51]
Podcast Sponsor Narrator
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview, delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update. Wherever you get your podcasts.
- [13:20]
Jim Cramer
What made you confident that you could.
- [13:22]
Julia Boorstin
Do something that hadn't been done before? I have no fear of failure. Trailblazing women, changing the game One of.
- [13:29]
Jim Cramer
My favorite pieces of advice Think about what your boss's boss needs.
- [13:33]
Julia Boorstin
Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just gotta think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and Power Players. New episodes every Tuesday. Wherever you get your podcasts.
- [13:58]
Jim Cramer
At the beginning of every January. I like to look back at the previous year to understand the character of the market because it's very hard to predict where we're going if you don't know where we came from. And that's why today I want to break down the performance of each major sector in the market for 2025. Now there are 11 of them and they give us a real good sense of what worked and we didn't. I'm going to start with the sectors that outperformed and then after the break I'll go to the underperformers. Like I said, there are 11 major sectors and last year only three of them outperformed the S&P 500. Communication services, that was up 32%, information technology up 23% and industrials, they were up almost 18%. Those were the only groups that beat the s and P, 16.4% gain. That's kind of remarkable when you think about it. Then everyone, there's like a real bull market here. Let's take them one by one. The communication services sector is a weird amalgam of companies that was created in 2018 because the old tech sector was getting too big and the old telecommunications sector was getting too small. So msci, which is the keeper of these groupings, combined a bunch of telecom, media and entertainment companies, as well as some other companies, well, that we think of as tech companies. I know it's strange because it's Alphabet meta properties. I mean that platforms, these are really big companies into the hodgepodge sector now known as communication services. Probably confusing to you. It's always confused Me it's very artificial that hodgepodge do great in 2025 led by Warner Brothers Discovery which is finishing up nearly 173% after late year bidding work that ended with the company announcing its sales at Netflix. Although there's still a possibility that it might go to this Paramount. Congratulations to Warner's David Zaslav for delivering phenomenally for shareholders. I got to tell you what a performance this thing was at 8 bucks when he told me listen this is worth 30 and boom. Guess what? Probably get 30. The fifth best stock in the group is Electronic Arts has also got to take over bid. It jumped almost 40% because it's being taken private by a group of investors led by Saudi Arabia's sovereign wealth fund. The pin action from that deal boosted the other video game stocks like Take two Interactive which will be the only independent publicly traded game publisher after EA goes private. Take two was up 39%. Great scarcity value there and a hope for a launch of the new edition of Grand Theft Auto in the works. By the way, it's the greatest performing entertainment property in history. Apart from that, Alphabet was very strong last year up roughly 65% as the outcome from its antitrust trials amounted to really just a slap on the Wrist. While their Gemini 3AI platform. Don't know if you've trade done it. I use it all the time although I don't use it authoritatively. I just use it as some way as a compilation and compiles things. For me it's a home run and it's now threatening chat CBT for mindshare. Then another media company Fox came in third place up just over 50% and combat sports kingpin TKO Group at rallied 47%. We recently had them on the show. Meanwhile the traditional telco carriers match put up some positive action while the cable stocks and some advertising companies were really horrible. But it wasn't enough to drag down the entire group. Next is the second best performing sector and that's information technology IT. The gains here were led by semiconductor stocks, especially the memory and data storage companies. Think Sandisk, Western Digital, Micron and Seagate. Not the highest level of tech companies companies but companies that had great scarcity value to their wares. Each of these stocks more than tripled last year and then roared some more in the first days of 2026. Now they're cooling off, taking a much needed breather after over overheating. And let me just say I don't blame anyone for wanting to ring the register on the memory stocks here. That's the responsible move. If you own them, please do what I call a schnitzel. Take a little off the table. Plenty of other chipmakers and semiconductor capital equipment makers generated at tremendous outperformance. Think intel, which the President's been talking about. He had a meeting just the other just now with the CEO of Intel, Liputin, AMD and Nvidia, which I know has been weaker. But as the chip makers ended up being the winners with the most staying power. Now some of the other data center hardware plays did very well. Look at Corning glw. We used to call that Globe Room a key holding of the Travel Trust, that leading maker of fiber optics. Up 84% this year. And I still think it may be one of the best performers for 2026. Apart from that, retail favors like Palantir and Applevin stood out some cybersecurity stocks like cybersecurity up for him. I love that acquisition today into this privileged access management business. And I also like to see some big runs in old tech. That's names like IBM, which I think is still very inexpensive and Cisco Systems for the Chapel Trust. They were up 35 and 30% respectively. Now not all tech did well last year. Many enterprise software companies had a bad year as I've mentioned before. Tech consulting firms like Gartner, Accenture Decent Day To Day and CW CDW, they took a bath in 2025. These groups are being eaten alive by competition from AI. And then there were some one off weak performance Zebra Technologies, HP Fair, Isaac and Skyworks Solutions. Okay, HP is HP Enterprises.
- [19:01]
Podcast Sponsor Narrator
You know.
- [19:01]
Jim Cramer
Finally, let's talk about the industrials. The last major sector that outperformed the S&P 500 2025. As I've been telling you for a while now, the industrial cohort contained a number of subsectors and you really have to be careful picking the right ones. Some subsectors, like anything related to power generation or aerospace, did incredibly well in 2025. The second best industrial stock in 2025 was a charitable trust holding GE Vernova, which nearly doubled. While the third and fourth best were Helmet Aerospace, which we call that How I Met my Mother because it's just something we do here and we have a lot of time on our hands. And GE Aerospace, those names tell you everything you need to know. Last year also surprisingly turned out to be a pretty great business year for the defense contractors, I think hii, that's formerly Huntington Ingalls Industries, that's a shipbuilder, finished up 80% last year good for fifth best among the industrials. Several others like RTX, L3, Harris Technology and General Dynamics had strong, strong years too. When the second Trump administration took over last January, there's a lot of talk about it finding cost savings, especially the bloated defense budget. As it happens, that was a total fake out. Just yesterday the President said he wants to curb defense contractors from spending money on dividends and buybacks sent the stocks lower. And then after the close, he said the Pentagon should increase his budget by 50% to 1.5 trillion. That sent defense contractors up. At the end of the day, if we're going to conquer Greenland, we'll need a lot more military hardware. Kidding, kidding, I hope. How about snowplows? What else worked? In the industrial sector, there was some strength in heating, ventilation and air conditioning, technically called H Vac that was connected to the data center builder. And the winner here is Comfort Systems usa. That's a name I don't know well enough but the symbol so great fix it ended up being the best performer in the S&P 500 industrials 2025 up 120%. Others like Johnson Controls JCI did very well too. There was some select strength in the transports. C.H. robinson Worldwide Uber Technologies both worry, I got to tell you that C.H. robinson I think they kind of declared an end to the freight recession. On the losing side of the industrial cohort were some housing related stocks like Builders First Source, Masco and Cabinets and then Stanley, Block and Decker. Like everything housing related, these companies needed meaningful, meaningfully lower interest rates in 2026 to make come back. They didn't get it. Other economically sensitive names like Paychecks, we have them all the time and people didn't like the last quarter. I thought it was okay. And Paycom Software, both of which are kind of odd to see in the industrial sector. Then ups that also underperform. You know, I like FedEx most overall. However, there were enough strong sector subsectors in the industrials to pull up the performance of the overall group. Which is why the industrials in the aggregate rallied 18% last year, outperforming the overall market. Here's the bottom line. When you look at last year's big winners, they're concentrating communication services, information technology and certain industrial subsectors. As for underperforming groups, there are eight of them. I'm going to go through each one after the break. That money's back after the break.
- [21:58]
Mad Money Announcer
Coming up, Cramer's turning to the eight sectors that lagged the market in 2025 to diagnose what went wrong and whether it will change in 2026.
- [22:09]
Jim Cramer
Next.
- [22:12]
Podcast Sponsor Narrator
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- [22:33]
Jim Cramer
Hey Fidelity, what's it cost to invest.
- [22:36]
Julia Boorstin
With the Fidelity app? Start with as little as $1 with no account fees or trade commissions on US stocks and ETFs.
- [22:44]
Jim Cramer
Hmm, that's music to my ears.
- [22:47]
Julia Boorstin
I can only talk.
- [22:50]
Jim Cramer
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- [23:03]
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- [23:42]
Jim Cramer
Even though last year was terrific for the stock market, when you break things down by sector, only three groups outperform the SB 500. That was communications, services, Information Technologies and the Industrials. Of course, those sectors weighed in at 53% S&P. But what about the rest of the market? Let's go through the other eight sectors, the ones that underperform. Descending order please. First, the financials were the fourth best sector in the market last year they were up 13.3%. Now there were some huge winners here like Robinhood that was up more than 20%. The big banks did very well. Citi, Goldman Sachs, Morgan Stanley, JP Morgan, Wells Fargo. They were up more than 25%. Banks Capital One major bundle two. Now we own Goldman Wells and Capital One for the Chapel Trust. And of course you can follow along with our moves by joining the CMUC Investing Club. On the other hand, the insurance Companies were merely okay lagging the market there. Ton of the publicly traded private equity firms got hit too. And the fintech names were down significantly for 2026. I said please just keep it simple. Stick with the banks, they're still cheap, especially investment banks. Even after these moves I really like. The fifth best sector is the utilities up 12.7%. And we saw some real strength in the independent power producers like Energy and the aforementioned Constellation Energy driven by all the electricity demand from yes, the data center. And that strength has extended to some old fashioned regulated utilities like American Electric Power which acted like a growth stock and Energy big deal there with Meta both up more than 20%. However, there were also many utilities put middling performance and a couple of California based utilities never really recovered from the wildfires. Early last year had some big losses. The sixth best sector and the only other sector to finish 2025 up double digits was health care which finished up 12.5%. Coming into last year there was a lot of worry about what the Health and Human Services department might do to the industry under the leadership of RFK Jr. But when the worst of these fears failed to materialize, the health care stocks were able to make a big run into the end of the year. Guess what was the best performance? Former CVS Health up nearly 77% as the company recovered under new CEO David Joyner. And their top competitor Walgreens is shutting down a lot of stores. Joiner's Money. I'm looking for another use here. The drug distributors continue the relentless climb higher. There's nothing people hate the pharma middleman even the president doesn't like about them. But I got to tell you, their stocks, they are juggernauts. Cardinal health, Sencor and McKesson. They were up more than 40% last year. Cardinals really the monster of that group. The hospital stocks did well to some large cap Pharma names stood out by the way. Health Care J and J Gilead Sciences, Abbvie Amgen still up more than 25%. On the other hand, most managed care companies got obliterated with Molina Health Line Health I'm sorry and UnitedHealth. They're both down for 40 and 35% respectively. That's terrible. They all lost big money in their Medicare Advantage plans. The Medtech and medical device stocks had surprisingly weak years. And then there were this. Lots of sedate pharma stocks with meager gains. Mixed bag. Hey, by the way, we're going to get a real deep dive into the sector next week when we go out to the J.P. morgan Health Care conference in San Francisco. We got a huge slate of interviews. The top people including the CEOs of course, Pfizer, General and Amgen. You don't want to miss it. Now let's get to the more dramatic underperformers. Starting with the material sector that's up just 8.4% last year. Some of the precious metal stocks really roared thanks to the strength in gold. Look at Newmont up 168%. Freeport McMurray, largely a copper company with some gold, rallied 33%. Couple of steel companies also did well then from new tariffs. And there were some one off success stories like Albemarle for lithium and CRH for construction materials. But most of the chemical companies dragged the material sector down. Dow and Lionel Bazelle both fell more than 40%. The packaging stocks were mostly very weak too. That reflects weakness in what I've been calling the real world economy, meaning the non data center economy. Because the real economy needs lower interest rates to thrive. Next, both of the main consumer sectors were soft this year. The strong consumer Discretionary group put up just 5.3%. That's a gain the aggregate. So you had had some big winners worth pointing out. One that we've championed for a long time. Carvana that was up 108%. Some big losers like Deckers Brands down 49% and Lululemon down nearly 46%. Ouch. In addition to Carvana, we got nice gains from Tapestry and Ralph Lauren, both terrifically well run companies. And General Motors. Thank you Mary Barra. All up more than 50%. Expedia, Hasbro, Ulta Beauty, DoorDash and Kramer fave TJX because we own it for the Travel Trust also posted nice gains. On the other hand, many consumer travel plays have middling performances even as they've recovered in the last few months. The restaurants in general are pretty bad. There's a lot of inflation issues there. Many of the hardline retailers think Lowe's, Williams Sonoma and Home Depot lag because of a weak housing market. I love the action in Home Depot today. The homebuilders were downright awful. They look terrific today, but again that was because they were down so much last year. Next there's the energy sector. It finished up 5% for the year. Now we've got some major cross currents here. The refiners mostly did well and some natural gas focused producers did fine. But the integrated oil giants that we all consider as the oils like ExxonMobil and Chevron, they underperform the exploration and production companies were lucky to manage low single digits. Texas Pacific Land, the quirky story that we've been we've been buying was a huge gainer. Pull back in 2025 was down 22%. And one of the natural gas focused pipeline play was the caboose the sector down 27%. I meant I talk about one oak and how to make money in a market. I think this is a great opportunity and I wrote this when I saw the chapter that includes it was included the fact that the stock was already down and I thought it was a great buy. How about the play to the consumer staples cohort? This is the second worst group in the market this year is up just 1.3%. How about some standouts? The dollar stores they did well with Dollar General and Dollar Tree checking off tariff worries to rally 75 and 64% respectively. Monster Beverage also had a good year up 46%. And the long hated Estee Lauder mounted a recovery up 40%. That was just wasn't a dead cat bounce but man that stock had fallen way too low. Philip Morrison national posted a 33% gain. Wal Mart talked about that earlier up 23%. Being the market, you know now I like the underperforming Costco and I accept that the dollar stores will just keep running. They are Wall street faves. But the rest of the sector really awful. The packaged food stocks were mostly lower with some huge names down. The ones the big ones just down horribly and some that was GOP dash one. The consumer packaged good stocks also drifted lower with even high quality operators like Procter and Gamble down double digits. Now I recommended Proctor here here yesterday and rallied three and a half dollars and I do not think it is done today. A weaker operator like Clorox tumbled 38%. Targa was a one off disaster down 28%. And the alcohol companies, they were just eviscerated. In keeping with what I said at the top of the show that they all had excellent days today. Finally the worst performing sector of 2025 and the only one of the 11 major sectors to finish in the red was really real estate which ended the year down 0.3%. The success stories here were few and far between. A pair of health care REITs, Welltower and Ventas rallied 47% and 31% respectively. Real estate services firm CBR E Group had a surprisingly strong year up 23% and an all time Kramer fave Repro lodges was up 21%. That's storage. But overall 24 of 31 real estate stocks in the S&P 500 finished in the red last year. 23 of those were rates. There was real pain. The retail REITs and even some of the data center REITs were down double digits. Maybe they just have the wrong kind of data centers. There are also one upperformers like Warehouser Lumber company that's been hurt by soft housing market and Alexandra Real estate equities. Those guys own office buildings for life science companies. Stock was down almost 50% after the company was forced to cut its dividend. There's really no need to overthink this one either, people. The real estate stocks mostly just need lower interest rates to do better. Looking at all the groups that underperformed last year, I think the financials will be the winners this year. I still like the utilities. I'm optimistic about health care after its rebound late last year and one of the reasons of course I'm going out to California to cover the J.P. morgan Health Care conference and all the major minor drug companies will be there. If we get that lower rate, get the lower rates that I'm looking for, it'll be good for the materials sector, real estate sector and the consumer discretionary cohort. Energy might benefit too. But I'm less optimistic there because the White House is so aggressive about boosting production which is bad for pricing. As for the Staples, the best thing I can say is that some of those stocks have just gotten cheap, cheap, cheap and their yields look great. I just don't know if that will be enough. The bottom line. Now you know why the 11 big sectors are positioned as the new year gets going. You know what they look like, you know how I feel they'll be. We can make predictions about where these groups might be headed based on what we saw last year. Let's go to Ned Nohill please. Ned.
- [32:56]
Ned Nohill
Good afternoon Professor Kramer. I hope you're doing well, sir.
- [32:59]
Jim Cramer
I'm doing well, absolutely. Same to you, Ned. What's up?
- [33:03]
Ned Nohill
Well, I have a question I wanted to ask you having to do with short selling volume and in particular I've been looking at Best Buy and last year their short Shelley selling volume was in the moderate to high range, I think and I noticed today this stock is moving up. I'm wondering how do you use short selling volume or if or do you use it when making opinions about buying a stock?
- [33:33]
Jim Cramer
If I think the company is crummy, I don't regard it as an issue. It's going to go the right to short it if I think it has got a good dividend and has some high quality management and I see a big short position like this one with 8% I do take a look at it and I think it's valuable to look at because you might have a coil springer hint. Best Buy does have a 5% yield but you need lower rates for that one to work. Out of all the underperforming sectors last year I think the financials would be the biggest winner. And you know I like Goldman, I like Capital One, I like both of them are absolutely terrific and Wells looks like I think is going to go through par then at Wall street gibberish for 100 and now that we've reviewed all 11 sectors I hope you had a good framework of where all these groups might be headed in 2026. Much more mad moneyhead including my breakdown of Constellation brand's latest earnings, the owner of Corona and Modelo saw its stock jump more than 5% today. So is now the time to say bottoms up to this beaten down name? I'm Sheridan. Where I come out man, it seems like President Trump is setting a new precedent by intervening in such a wide range of industries. But tonight I'm breaking out the history books to tell you why this is nothing new from the White House and of course all your calls Rapid fire in tonight's edition of the Lightning round. So stay with Craig. Like I mentioned at the top of the show, last year was very tough for the alcohol. That's especially true for Constellation brands STC best known for Mexican beer portfolio Modelo Corona Pacifica stock was down 38% in 2025 June that that was the 15th worst performing the S&P 500. This has been a tragic underperformer for a while since mid 2024. Now some of that's thanks to the GOP. Just one drugs. You know they not only reduce cravings for snacks, they also reduce craving for alcohol. Some it's because younger people seem more health oriented than their parents so much because Constellation's biggest band a customer base that's less willing to attend large gatherings during this immigration crackdown doesn't help that there are tariffs on imported beer and the aluminum used for cans. Now we used to own this stock for the Travel Trust but you know what? I finally threw in the towel last February. I really couldn't. I just saw nothing but pain in the future for the darn thing. Since then the stock's down 20 to 30 points and that's after 20 point rebound from its November lows. Today though, the stock did shoot up more than 5% on a better than expected quarter. I got to take Constellation Brands. Looks a heck of a lot more attractive here down here, I should say, than a year ago. This thing was trading about 20 times earnings when things started going wrong in 2024. Now it sells for just 13 times this year's earnings estimate. It pays a decent dividend now. And that wasn't because it was raised, is because the stock went lower 2.8%. So is the worst over? Look, I'm open to the possibility, but I don't think we're there yet. See, just because a quarter is better than expected, that doesn't mean it's good. Last night, Constellation poured better than expected numbers across the board, although those expectations were really incredibly low. Still, a beat is a beat as certain as a rose is a rose. That's some great stockpile advice from Gertrude Stein. Not sure what firm she's at. The company's organic sales were down 2% year over year. When Wall street was looking for 2.9% decline, they earned $3 and 6 cents. Wall street said to 63, that's a nice beat going business by business. Constellations long struggling wine and spirits division put up 230 million in sales. Look, that was a huge positive analyst. When I look over 173 million, but it's still down 7%. Organic basis, obviously not good in vacuum. Much better than the previous quarter where it's down 19%. Of course, it's the beer business that really matters here. It makes up roughly 90% of its sales. Your revenue came in a little light, mostly driven by lower volumes, although that was partially offset by higher pricing. Now you really want to be the other way around. This one is down so much. Those numbers looked up to me. The shipments from Constellations breweries to distributors were down 2.2%, slightly better than expected. 2.9% decline while depletions key measure. Okay, and that's what their distributors sell to retailers declined by 3%. That's a big bit better than the 4% decline in Wall street expected. That's enough though. Again, none of this is super encouraging, but I think it's good to see shipments so close to depletions because that means the wholesalers are no longer trying to lower their inventory. Very big positive in terms of branding. Modelo, Especial, Corona Extra remain the number one and number five beer brands the United States. Hey, look, for what it's worth, some of Constellation smaller beer brands, Pacifico, Victoria managed to deliver positive depletions, up 15 and 13% respectively. The Pacific coast, now the number two brand in the state of California. He expected to replicate model his previous success in moving from west coast popularity to the rest of the country. There goes long necks. As for profitability in the beer business, the operating margin actually ticked up 10 basis points year over year to 38% thanks to favorable pricing and lower demand depreciation expense. Now Wall street expecting a 35.4% operating margin for the beer division Upside surprise. Unfortunately, when you listen to the conference call, management's talk about margins was less optimistic. This is what worries me, which is why the stock gave back some of its gains after the call started at 10:30am this morning. First, constellation CFO Garth Hankinson explained that Constellation's operating margins are under pressure in the current quarter, which ends next month. Some of that's because the fourth quarter is Constellation's lowest volume quarter from a seasonal perspective, accounting for just 20% of full year volumes. That means its fixed cost pressures will be amplified. Now some of it has to, with depreciation benefit from the third quarter becoming more of a headwind in the current quarter. And some of it, well, it comes down to tariffs, higher aluminum can prices given those fourth quarter headwinds and an analyst asked what that meant for Constellations medium term operating margin guidance from last April and Hanksen said, quote unquote quote here the guidance will give it under a different set of macroeconomic conditions and the macroeconomic environment has worsened since that time, end quote. That's just bad. He said he'd go into more detail next conference call in April. It's not encouraging. I would not stick around for for on the other hand, there were some positives. Constellation Branch seems cautiously optimistic that the upcoming World cup tournament can be a positive catalyst. This is a trading stock right now. CEO Bill Nuance called it a beer moment and I plan to start borrowing that terminology with my wife. Eagles play at 425 against the Niners Sunday Seems like a beer moment to me. New ones also called out some new products that are resonating with customers like Corona Sunbrew, which is more citrusy, and Corona Non Alcoholic, which apparently is what the kids go for these days. The kids are not all right. What else matter on the call? Unsurprisingly, Constellation is still not ready to give an all clear for their Hispanic customer base, even though many analysts tried to goad management to saying something more positive. When an analyst asked if lapping the initial shock of Trump's immigration crackdown last year could make things better, new one said quote we hope you're correct, end quote. But he went and quote, With zip codes that have greater than 20% Hispanic representation. It still remains very challenging, end quote. Overall, this was an encouraging quarter from Constellation. Branch management is talking a lot these days about controlling the controllables. And I think that's the right perspective because these guys have no control over tariffs. They have no control over immigration policy. I am glad they are not overpromising either. So the bottom line, look, I'm not ready to pound the table on Constellation Brands again. I'd like to see their volume start rising before going positive. But I am open to the idea that this comeback can maybe be real and that you get a trade here. The expectations are low enough, the stock's multiples low enough. And the core business is stabilizing, if not yet improving too soon for me. But I don't think you're crazy if you want to start a small position trading or otherwise in Constellation Brands. Stz. Their money is back after the break.
- [41:37]
Mad Money Announcer
Coming up, Kramer takes your calls and the sky's the limit. It's a fast fire lightning round.
- [41:44]
Jim Cramer
Next. It is time. It's time for the light round. Sorry about buy sells dirt. No course ahead of time. My step bears to grab. So probably playing this out and then the lighting round is over. Are you ready, ski daddy? Time for the light round. Crazy. Let's talk with Jeff in Florida. Jeff. Booyah.
- [42:11]
Caller/Guest
Jim.
- [42:12]
Jim Cramer
Apollo Group invested $1.2 billion in a convertible preferred in Q. Oh, is that a floor and is it a buy? I think it's a buy because it's Brad Jacobs. You can't bet against Brad Jacobs. They do have 10% short position. I tell you, while I'm not just pounding the table because it's all the way up, I think it's by. Let's go to Joe in Iowa. Joe, Big Jim. You and my spec are both going.
- [42:35]
Caller/Guest
To be at the JPM conference this next week.
- [42:37]
Jim Cramer
My stops up ticker. Vktx, BKTX or vktx. Oh, Viking therapy. Okay, now look, I. Look, I'm a Eli Lilly guy, okay? I'm going to stick with it. If I'm going to do Viking, I'm going to do Viking Cruises. Right, Vik? That's the one you want to own. I mean of the Vikings. I need a Viking horn. Anyone have a Viking horn? Let's go to Jacob in Alaska. Jacob.
- [43:02]
Caller/Guest
Hey, Jim.
- [43:03]
Jim Cramer
How's it going? Not bad, Jacob. Thank you for asking. How are you?
- [43:06]
Ned Nohill
I'm doing pretty good.
- [43:07]
Jim Cramer
It's minus 20 in Anchorage. This morning, but I'm hanging in there. But on the business, the new aerospace IPO Starfighter space has an incredibly volatile it's had a volatile debut since it ever listing is here's what I want you to do. Here's I want you to do. This is as I say in my book, how to make money in any market. You have a spot for a spec F jet is what I call an Uber Spec and there is room for an Uber Spec and that letting them put it on the Lightning round.
- [43:38]
Mad Money Announcer
The Lightning round is sponsored sponsored by Charles Schwab. Coming up, worried about the White House's recent interventions in industry, Cramer's giving a history lesson on how similar moves turned out in the past.
- [43:52]
Jim Cramer
Next. Every time President Trump takes a more interventionist approach to the economy, it makes me feel ancient. Yesterday, Trump said he didn't want to see any more buybacks or dividends from the defense companies until they got better at their jobs. Then a few hours later, he talks about putting through a 50% increase in the defense budget. Defense stocks, they got hammered and then they soared. People act like this stuff is unprecedented, but it's only unprecedented if you were born after the Carter administration. If like me, you lived through the middle of the 20th century, it's just retro and from a different party entirely. Let me give you an example for my child. In 1962, JFK was petrified that inflation could run rampant and the steel industry was at the crux of those rising prices. The president recognized that both the unions and the companies were at the heart of the problem. Prevailed upon the incredibly powerful United Steelworkers of America to accept a contract with no wage increases. In exchange, the steelmakers were supposed to hold off on putting through new price increases. But literally, days after labor grew, the steelmakers put to a 3.5% price increase right the president's face. JFK was enraged. He felt he would double cross. So he held a highly unusual televised conference where he said, quote, a tiny handful of steel executives whose pursuit of private power and profit exceeds their sense of public responsibility can show such utter contempt for the interests of 185 million Americans. Sounds like Trump that it may be more conspiratorial. After letting people know that he agreed with his father, the former head of the sec, who routinely called businessmen sons of bitches, JFK told the secretary of Defense to shift steel contracts away from the big manufacturers to smaller ones. And then he told the just part, run by his brother Robert Kennedy, to open an antitrust investigation into the companies that raised price JFK basically extorted the entire steel industry and within days they rolled back the price increase. Very Trumpian, right? Maybe you think that doesn't count because JFK was a Democrat. Fine. How about Richard Nixon? He imposed wage and price controls in 1971 like this. A blanket freeze on price increases in order to tamp down inflation. Very popular first, even if the policy ended being a disaster. So this stuff from Trump isn't unprecedented at all. It's just that we haven't seen it since the Reagan revolution. Now the current tradeoff for the defense contractors, a big budget increase in exchange for axing their dividends and buybacks doesn't really appeal to me. I think the dividends and buybacks restraint may be more impactful than the President's ability to raise the defense budget. Something that needs to be authorized by Congress. The President's other initiative yesterday, he wants to ban social investors from buying single family homes. That's quite unorthodox. But you know what, there's actually a case to be made that if you kick these companies out of the housing market, it will put downward pressure on pricing because they'll flood the market with new homes. Plus, the vacancy rate of homes owned by individuals is much lower than the vacancy rate of the homes owned by corporations. If you can force the sale of these corporate owned homes, it could cause prices to drop. It would certainly change the psychology of homeowners who right now are too confident that prices will stay high and are unwilling to sell to beat any sort of decline. Again, it's a highly interventionist policy, something you maybe expect from Bernie Sanders, not from Donald Trump. But when the public is angry about inflation, the government starts getting real creative. Nixon, the biggest anti communist, sort of Joe McCarthy, went full command economy to get inflation down. So before we dismiss these moves as radical, I urge you to read some history. When voters get mad about inflation, politicians of both parties tend to scorn the free market. Some you just haven't seen it before because that's because from the mid-80s until Covid, we had very low inflation in this country. Our leaders during that time never felt compelled to do anything crazy to get costs under control. You know what? Maybe you just don't know how good we had it for so long. I like to say, as always, but Morgan sell. My pumps are fine just for you. Are you men money? I'm Jim Cramer. I'll see you tomorrow.
- [47:54]
Julia Boorstin
All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Kramer on television, radio, Internet, or another medium. You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Mad Money disclaimer, please visit cnbc.com madmoneydisclaimer Building a portfolio.
- [48:28]
Podcast Sponsor Narrator
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