← Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 3/4/26
00:44:18
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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Jim Cramer
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Jim Cramer
Not every sale happens at the register before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time. Sometimes AT&T business Wireless Connecting changes everything. Hey, I'm Kramer. Welcome to Mad Money. Welcome to Cray America. My friends, I'm just trying to make you a little money. My job is to entertain, but to educate. Call me 1-800-7-3CNBC tweet me at. Jim Cramer the oil market always seems to know everything. I've seen it time and time again. We saw the same story play out today and it was very good for the stock market. Dow Jones gaining 238 points, S&P climbing 0.78% and the Nasdaq falling 1.29% because oil was at last, thank heavens. Chill. If you read about the war with Iran, you know what you're going to find? A continual theme. It's broadening, it's widening. It's getting ever more perilous. Yesterday the front page of many newspapers told a story of Iran's vast stockpile of missiles and drones borderline limitless because their hardware so cheap. Meanwhile, we on the other hand, have the most advanced anti missile systems in the world. But every time we use them, we spend millions to the point where we might not be able to defend our allies in the Gulf. And we will shortly be out of anti drone missiles as the war spreads, we were warned the coalition might break up. Countries could declare neutrality and preserve their populace and their tourism. And of course ultimately Iranians are blocking the Strait of Hormuz which should cause oil prices to soar. Hundred dollars anyone? And the nasty war will morph into an ignominious peace. Just very reminiscent of the run up to the first Gulf War in 1991 where we were ready for long war Heavy casualties and a resumption of an already elevated price of oil. The one thing that was so strange back then, though, was as soon as the shooting started, oil began to plummet and the oil stocks started rolling over. The US proceeded to crush the vaunted Iraqi Republican Guard, much to the chagrin of almost every commentator. Things returned to normal very quickly on the heels of the collapse of the major oils. And we had an incredible bull market, a new bull market. It was extraordinary. Now I'm starting to wonder if something similar could happen right now. We all read the stories about how the genius Iranians were playing the long game with barrage just beginning, accelerating each day as we ran out of ammo. Now it looks like the first big day of drone and missile activity. Maybe the last big day of drone and missile activity. Maybe it's the decapitation of the Iranian military, or we've taken out enough of their hardware, but. But there seems to be a lessening of the endless wave of projectiles. More important, like the start of the war. In 1991, the oil stocks were for sale. And those lines, those declines told you maybe everything was going to be, yeah, fine, sure, the oil stocks could be wrong, right? But right now they're saying that the Gulf will be reopened, the US will protect the ships, and the price of crude has seen its peak. You don't get Exxon, Conoco and Halbert and all down 1 or 2% at the Straits of a movement really close for a long period of time. It doesn't work like that. So what happens if the war winds down? We get a defange Iran? Maybe we should be thinking about that because I'll tell you what happens. Where do you go? Back to where before we started. Which is why I was so adamant that you avoid the panic earlier this week and not blow out of stocks in that first day. If you remember, that was the entire top because I didn't want you to go. What's amazing is that like almost every snapback rally after real hammering, buyers return to the tried and true. First they go for the highest risk stocks. Not the lowest, but the highest. That's a little magical investing there. As well as Bitcoin, which we know now trades with the bullish animal spirits that could be unleashed by some good news out of the Middle East. It has nothing to do with safety. Coinbase and Robinhood soared. Nothing to do with safety. Hey, by the way, so did the storage play. Western digital. You saw Love and Moderna shot higher, two classic risky stocks. In fact, today's winners look very similar to what worked after the end of a very different kind of crisis. The collapse of of Silicon Valley bank roughly three years ago. Let's run them down. First I want to talk Crowdstrike, my favorite cybersecurity company. George Kurtz, the CEO is on tonight. Crowdstrike's the best of the best. But its stock has been crushed down 13% for the year. Why? It's been caught in the mass exodus. Sell, sell, sell, sell, sell. Money from enterprise. Sell, sell, sell. Because investors are worried that they'll all be replaced by a agents. At the heart of this trade, there's the grim agent vibe coating reaper that is Anthropic. At the time of its last fundraising a couple of weeks ago, Anthropic seemed to be pumping out press release after press release about how it's going after every software vertical in the sun. Anytime Anthropic would announce that it was intruding to a new software business, the stocks of the incumbent would simply sell the last line of business. Anthropic intended disrupt after just, just scything everybody cybersecurity. Anthropic explained that it could protect agents from themselves, that there would be no holes in them, that they'd be secure. The result, Crowdstrike stock fell from 420 to 350. People told me, get out of the way, Jim. This one's going much lower. Sellers didn't think to stop and maybe say, oh, could anthropic really mimic CrowdStrike? Could they do it for a fraction of the cost? I know I was in disbelief that the stock could plummet like that. CrowdStrike doesn't provide a dashboard or help sell something or put something order on, make onboarding better. It's not just something that's good. It's a mission critical company. As George said in the conference call last night, quote, in cybersecurity, you simply can't have hallucination. You can't prompt twice. It's first time final. It's the difference between thwarting an adversary or experiencing a breach, end quote. And that is not something that Anthropic can do. And if Anthropic, we're here right now, high Anthropic, they would say they couldn't do it either. Last night, Crowdstrike reported incredible quarter, maybe one of the best of the entire winter. George tireless, as befits the winner of Le mans. That's that 24 hour road race. Explain again how Crowdstrike is not traditional software, meaning it's not so much fodder for anthropic cannons. He explained that CrowdStrike specializes in protecting institutions from cyber attacks. A business that has nothing to do with anthropic spirit moving into. And once again it does seem almost humorous. And once again it seemed to fall in deaf ears. Falling by the way at the opening today double digits. But then as if by magic, William Jennings Brian use that phrase. You got the gloom of Iran first kind of blowing away the decline in oil and the next, you know, the market actually heard what George had to say. It's the first time any company have been able to change the Aerokill narrative about itself. First time the line has been drawn in cybersecurity. The stock exploded higher, only finishing up 4%. Anthropic didn't get to this one. Then we saw strength in two other tech stocks that had that many people given up on. I'm scratching. I was not tiring of them, but I was. I think I down Amazon and video. Ever since Amazon reported last quarter and its Stock fell from 242 down to 198 over a two week period the ST couldn't find its footing. But not today. Amazon finally managed to actually break out of its negative range and burst higher rallying $8 almost 4%. Maybe there's a recognition that Amazon web services not to be wiped out by Anthropic. And then once again Nvidia started a new climb rally. Almost three bucks is the Nvidia of your back with us. Oh, that'd be a remarkable thing. Incredible how there was no real news flow. Nothing really positive about either Amazon or Nvidia. And equally amazing, the big rallies in these stocks are not correlated with any news whatsoever. They purely correlate with sentiment. Positive sentiment first and then reasons later. Look, here's the bottom line. We don't know if the Iranians are out of drones or out of leaders. Although the oil stocks indicate that the war is head in the right direction. We do know that we may have found the limits of software company destruction via Anthropic and may have seen a resumption in the buying of high quality stocks after a war that some still expect to be long and drawn out. But I'm starting to think maybe that's not the case. Hey, I say we go to Buddy in Rhode Island. Buddy. Hi Jim, this is Buddy. I just want to let you know I just bought your book how to make money in any Market. You're a good man. This book is about trying to get it so everybody, your kids, you, your parents, your grandparents, Understand what a stock is. It's real simple. Thank you so much. You're very, very welcome. I have a question on Zscale. I know that I own it at 250. I can buy it right now at 156. I know that have some issues with the buying of Red Canary. And I also know there was some question about stock based compensation affecting earnings. I know they talked about the rule of 62 as opposed to the rule of 40 in the conference call. I believe it got people kind of confused. At the same time, I own CrowdStrike, I own Rubric and I own cloud layout. And I'm wondering if I should leverage out the Z scale. I would own it at 203. 250 and 156 would average out at 203. Is that the best way for me to go? He's done it, buddy. You got a tough one because first of all, I like everything you have. But second, I would say zscaler, I would not sell it here, but I would want to sell it. If you've got all those other stocks, get that bounce going. We're starting to see some of these stocks really bounce. But do lighten up because you're a little too in. You have too many of these kinds of stocks and there's too many days of pain. I don't want you to have that much pain because you'll end up leaving the game. But thank you for the kind words and thank you for buying how to make money. All right, listen, guys. The oil stocks are indicating that the war is going in the right direction. We may have found the limits of our software stock destruction to all that money. Tonight, the war in the Middle east is highlighting the need for strong cybersecurity here at home. So let's check him across. Try to get a little more take on that one. Then I'm taking a look at some stories that have fallen off our radar lately. First, one of the one of the biggest IPOs of the year has been surging. I'm taking a look at datacenter play forging power solutions. You have ask me about it. I give you an answer. And Target has been staging quite a turnaround lately. Have you seen that? I'm going to take a closer look at the retail giant that everybody used to love. Maybe they can love it again. So stay with Kramer. Don't miss a second of Mad Money.
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Jim Cramer
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Madmentions. Send Jim an email to madmoneynbc.com or give us a call at 1-800-743-CNBC. Missed something? Head to madmoney.cnbc.com Listen up. True trade has revolutionized the trading industry with its AI driven technology. This isn't hype. This isn't theory. This is a smarter, modern way to engage the financial markets. True Trade puts institutional grade trading technology in the hands of everyday Americans. Tools once reserved for the wealthy. No need to know what or when to trade. No trading experience. Doesn't matter. You purchase the platform, connect your trading account, download the mobile app and turn it on. It's that simple. And if that's not exciting enough, TruTrade assists their clients in accessing tens of thousands of dollars in tradable funds, giving you the ability to participate without risking your capital. Join thousands worldwide who are already benefiting from TrueTrade's trading technology. Visit Truetrade IO that's T R U T R A D E IO Trutrade where technology earns for you. Trading involves risk including the possible loss of principal See Terms and Conditions.
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Jim Cramer
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Jim Cramer
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Jim Cramer
Lately the cybersecurity stocks have been hammered by the same AI displacement workers that crushed the rest of enterprise software cohort. Like it's just another kind of piece of software. I was that was crazy Krause. That's a key position in Chapel Trust. Last night the reported an excellent quarter. The stock rallied more than 4% today, but it's still down more than 13% for the year. Could this be the buying opportunity we're looking for? Let's check in with George Kurtz the founder and CEO of CrowdStrike. To get a better read on the quarter and what comes next. Mr. Kurtz, welcome back to Mad Money.
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Guest/Caller/Announcer
Great to be here, Jim.
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Jim Cramer
Well, thank you, George. Actually, I want to try to hit two themes with the first question. We always know that we have these actions, like what's going on in Iran, that there are bad actors who try to mess up our system play and basically put us down. And although there are some great things happening, it would really be only CrowdStrike that could detect and try to stop that behavior. Are you seeing anything like that this time?
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Guest/Caller/Announcer
We're certainly seeing activity out of Iran. And whenever you see geopolitical tensions rise, which obviously they have been, you're going to see cyber activity connected to kinetic activity. And when you think about the activity and the actions that the government's taking, it's not just about government. On government, you can think about the transport sector, the shipping sector, energy, telecommunications. These are all cyber targets for the Iranians. And again, we've seen increased activity in
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Jim Cramer
those areas and sympathetic entities to the Iranians. Are they out there doing things?
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Guest/Caller/Announcer
Well, you have lots of activists, you have lots of nation state actors, as you might imagine, there's a lot of activity. So you even have other nation states trying to figure out what's happening and also trying to hide behind some of the noise that's out there.
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Jim Cramer
Excellent. Now, George, you came out in this call, and I've read every single call you've ever had, and they've all been great. This one, you came out swinging. You basically said, look, you've got people. Listen how much money we're making. Tell me about this. You know, the annual recurring revenue. And you put up some incredible numbers. You came out so tough this time. Did you want to say to people, look, this is not what you think it is?
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Guest/Caller/Announcer
Well, yeah, Jim, let's start with the numbers, because the numbers don't lie. We crossed the $5 billion annual recurring revenue mark, 5.25 billion, as the first and only pure play cybersecurity company, software company to do that, which is incredible. So an incredible year. If you look at the net new annual recurring revenue, that was 331 million or 47% year on year growth. Incredible at our scale. And we're a free cash flow machine. In terms of our free cash flow is $376 million with a rule of 52. Free cash flow, rule of 52. So these stats are a rarefied area. We couldn't be prouder of our results now.
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Jim Cramer
But I Want to get into what I think has been ailing the stock and has nothing to do with your numbers, which are extraordinary. Although of course the stock it down 5 as if nothing in the narrative had changed. You took things just head on. You say there are historically nice to have technologies that are with productivity features and point products, good for legacy models. And then there's what you guys do mission critical. What you basically seem to divide the world into is kind of older technology that gives you a kind of a dashboard and then the new technology which is you, not necessarily the AI agents that we fall in love with.
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Guest/Caller/Announcer
Well that's right there's the nice to have category one which will see disruption and then there's mission critical infrastructure that are what I call net data creators. We create real time telemetry. We have visibility across 176 countries in tens and tens and tens of millions of different endpoints and telemetry points that are out there. We are the tip of the spear for what's happening in security. And this is proprietary data that we've trained our own models on over the last 10 plus years. This is a structural moat for us. And you have to look at the agents that we created, the software agents or sensors that run on all these computers. This is a very hard thing to replicate. They're mission critical. You're not going to vibe code your way into a mission critical critical agent, which is what we've created.
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Jim Cramer
You can't prompt twice. It's first time final. What does that mean?
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Guest/Caller/Announcer
What that means is, and Jim, you're a big consumer of AI, We've talked about all the various platforms that are out there, you use them all. And you have seen firsthand as I have, if you ask the same question three times, you get three different answers. Or if you ask a question, you know, sometimes you ask a sports question and you get results from like a decade ago. So these sort of hallucinations are not possible in security. You have to have first time final, you have to be in the path of a breach and you have to be able to make a decision with 99.9% precision and stop it in real time. A large language model is not going to stop a breach in real time and it's not in that decision and closed loop path. So that's what I mean. First time final is you got one shot to make a decision. You better be right. And just given there's plenty of benefits of large language models, but real time and precision are not one of the benefits right now.
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Jim Cramer
I want People to understand that we're, we're listening to a man that has unbelievable respect for Anthropic, works with them both ways. Anthropic loves you guys. But one thing that is certain, if you do have a breach and you're using Anthropic, so to speak, as a cybersecurity company, there isn't any George Kurtz to call.
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Guest/Caller/Announcer
Well, I think there's a few things, right, which is, I mean, it took me and the entire CrowdStrike team 15 plus years to build this incredible platform with the data that we have and all the things that I've talked about. But putting that aside, you have to look at the organization behind the technology. We stand behind our technology. People know who to call. I got a call this morning from a CISO who needed something immediately based upon some activity that was happening in Middle east. And we were there, we got everything provisioned literally within 15 minutes. That's the kind of service that people expect. And it's the domain knowledge that you have in security and the fact that you have to stand behind technologies that are battle tested, which is why the large enterprises have adopted CrowdStrike. And again, the success is in the numbers. But as you said, we work with Anthropic, we work with the other labs. It's fantastic technology and it complements what we do. And in providing the best outcomes for,
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Jim Cramer
they might want to try to do some sort of identity thing for the agents. And I think you would say, well, that's terrific. But the fact is that an agent itself is never going to be able to defend itself. The data must be protected. And then one of the things I think that you offer those people to realize, you know, the bad actors, I mean, Anthropic doesn't know it open. They don't know who the bad actor. You probably have a list of all the bad actors and what they do and how to stop.
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Guest/Caller/Announcer
Well, Jim, this is a critical point and that is the security data, the threat intelligence, the incident response that we do. We respond to some of the largest breaches around the planet. We know how the threat actors work. We have the data and it's, it's proprietary in our system. So when you think about the training models, we're not training on just Internet data and scraping, you know, Reddit. Right. We are the tip of the spear in terms of the managed detection response business. We have, we know how it works, we've instrumented and that's a huge advantage. This sort of data fly wheel that we have, the network effect is Incredible.
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Jim Cramer
And that's why leave it with this. I want you to go into this. There's a lot of companies that are in denial and they know that it's really a headwind for them. But when I look at all the data that's being created and all the agents and all the one person equals 100 agents, I say to myself, there going to be so much, maybe a factor of 10, the amount of business the CrowdStrike has had. This is the ultimate tailwind for your company.
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Guest/Caller/Announcer
That's right, Jim. You know, we talked about some of our structural moats, but the most important thing is the tailwind. And what we've seen is that if you want to create AI, you need GPUs, and if you want to secure AI, you need CrowdStrike. And we're an accelerant to AI adoption. We have customers, CEOs, boards. I was on a board called two days ago. Their number one question was how do we safely deploy AI in a compliant way? So we are, we look at ourselves as a way to help accelerate the adoption of AI in any form. And that's ultimately good for customers, that's good for us, it's good for the lab providers. And that is a massive tailwind. And what I called out in the earnings call is if you remember this whole cloud revolution, there's a lot of pundits that thought, well, the cloud providers, the hyperscalers, we're going to create all this security and the security companies are going to out of business. Didn't happen. You know what happened? There were more threats, there were more attack surface that we needed to protect. And at the end of the day, the hyperscaler became a massive channel for us. I called out in the earnings transcript, AWS $1.5 billion in their marketplace. So it's all an accelerant and a tailwind, as you pointed out.
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Jim Cramer
That is what I want people to leave with. We have to separate. There are indeed some companies where it's a terrible headwind and we see their stocks go down and there are others where it's a great tailwind and we also seen their stocks go down. The latter is wrong. That's George Kurtz, CrowdStrike founder and CEO. George, so good to have you on the show.
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Guest/Caller/Announcer
Great to be here.
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Jim Cramer
Buys back after the break.
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Guest/Caller/Announcer
Coming up, so far the biggest IPO
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Jim Cramer
of 2026 has been forgent.
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Guest/Caller/Announcer
So what does Kramer think of the company? He's letting you know next.
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Jim Cramer
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Jim Cramer
off, go test yourself not every sale happens at the register before AT&T business Wireless, checking out customers on our mobile POS systems took too long. Basically a staring contest where everyone loses. It's crazy what people say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sail or two. Sometimes I do miss the bonding time. Sometimes AT&T business Wireless Connecting Changes Everything. On Monday night I got a call from Sari in Illinois who wanted to know about Forgent Power Solutions, a company that just came public a month ago. I liked it so much I told her, you know what? I'm going to do a whole piece on this. The truth is, I've been watching this Fortune like a hawk. It's the biggest IPO of the year so far and stock has already climbed from 27 bucks where it came public to 34 and change. Now these guys make electrical distribution equipment. Last year they got 42% of their sales from the data center. That was easy. Yeah, 23% come from the electrical grid, 19% coming from industrial end markets for just one among a small number of companies that can engineer all the electrical distribution equipment. You need to get a data center running with some of the highest levels of customization and shortest lead times in the industry. There's a reason the stocks doing so well since it came public. It's a terrific play on the hottest theme in the market. The Great AI Data Center Build out now story is a good one. And the numbers are pretty darn good too. In Fortune's fiscal 2025, which ended last June, they put up 56% revenue growth in their first quarter of the 2026 fiscal year. The third quarter of last year, if you're Working off the normal calendar, the company had 84% revenue. Growth says the demand for its products is growing rapidly, thanks to the rise, of course, of the data center, which also is forcing independent power producers to add capacity and upgrade the power grid, as you well know by now. Hey, by the way, the quiet period for forging ended on Tuesday. So we have a fresh set of analyst estimates for the company's growth going forward. The street expects them to put up 41% revenue growth in the current first fiscal year. And longer term, the analyst consensus says the company's revenue could rise in 37% compound annual growth rate through 2029. That's among the highest companies that I know have a profitability. Okay, Fortune's already profitable, although just how profitable depends on which metric you're looking at. If let's say we go by the most stringent standards. GAAP net income. Fortune made $17.4 million in 2025. In their most recent quarter, 1st fiscal 2026, they had 15.6 million in GAAP net income, up 112% year over year. But if you look at the smoothed out adjusted numbers, no, not plain gap, but adjusted, you get a much clearer picture of what's really going on here in Fortune's profitability. In fiscal 2025, Fortune had adjusted earnings before interest, taxes, depreciation, amortization of $169.2 million. Now that is up 70.5% year over year. In first quarter of fiscal 2026, their adjusted EBITDA was $65.1 million, up 50.6% year over year. For both of these periods, we're looking at an adjusted EBITDA margin in the low to mid-20s. That's not bad. Finally, Fortune offers adjusted debt income numbers. I know there's a lot of numbers I'm throwing at you, but these add back some one time and other, say noncash costs, and those look even more solid, especially in the last couple of quarters. Now, all that said, there's one thing to consider here. You got to remember that the company now known as Fortune Power Solutions was actually assembled piecemeal over the past few years by a private equity firm, Neos Partners. They made a series of electrical equipment acquisitions 2023 and 2024. After reorganization the business in the fall of 2024, they brought in a new CEO, Verde veteran Gary Niederpool, who took over in May of last year versus a data center pro. So that's a terrific credit. Great bloodlines, I guess you could say a few months later the combined business was rebranded Fortune Power Solutions. Now, there's a couple of extra considerations I need to put in front of you. First, when you see this roll up, and this is a roll up up type structure, you normally want to make sure the growth stats aren't being inflated by M and A activity. They're not buying growth, but I'm not worried. Why? Fortune spot has got 84% revenue growth in most recently reported quarter. It's that's organic number. They said that explicitly. The prospectus nethers. They didn't buy that number. It's organic, they grew it. Company hasn't quit an acquisition since June of 2024. Second, whenever there's an IPO with a private equity sponsor, we got to do a wary you should watch the balance sheet because the standard private equity playbook is to buy a company then load it up with debt, ideally improving the business as well before bringing it public. But again, that doesn't seem to be a concern here, in part because Fortune was able to use some of the IPO proceeds to pay off old debt. In this case, the balance sheet is relatively clean, forging as a leverage ratio of 1.4, which is really nothing to worry about. Now the one private equity worry that does apply here is the fact that NIO's the sponsor has a concentrated ownership stake in Fortune and will continue to control the company. Specifically, they still own roughly 79% of the business and someday they're going to want to ring the register when Nio starts selling down its stakes. Something that won't happen though for at least five months as there's a lockup play. I think it's going to put some real pressure on the stock. It really will. Finally, let's talk price. Luckily we've got a good comparison here, which is the aforementioned Vertiv and other electrical equipment maker with big data center exposure. If we adjust Fortune's calendar using the next four quarters of estimates, we find that portion has an enterprise multiple of 27. That's pretty darn high compared to most industrial companies, but not compared to Vertiv, which has an Enterprise multiple of 29.5 based on its 2020 success. Given all the positives here, I think Vertiv really does deserve a premium multiple. So yes, expensive, but it's still cheaper than the closest competitor. I like that. Here's the bottom line. I like Forging Power Solutions. In fact, I borderline love it. Stocks had a great start. While it seems pricey, I think the valuation is justifiable when you look at verdict. In my view, Forge is worth buying right here, right now. Copy portion 2 weeks if you want to wait. Maybe you want to wait and see what happens there. But maybe there will be some reason for fortune to pull back, giving you a better buying opportunity. Then again, maybe they'll tell such a good story that you want to buy more. Anyways, thank you to Sari in Illinois for the nudge. I like the look of this one. Put half of it on now and half of it on after it reports. Ishaan in Georgia Eastern. Booyah. Mr. Kramer, this is Ash. I'm here with your biggest little fan. He just turned three last quarter and his growth is off the charts. He's already learned many key fundamentals from you like red or bear is down, green or bull is up. He's been curious to learn about is curious about a retailer that's been trending red lately. So here's Ishan with his question. Go. What do you think about Home Depot? Home Depot. He said Home Depot. Oh my God. That kid is. He stays in the picture. He's obviously the smartest, smartest 3 year old ever. I can 21 years smartest, smartest 3 year old ever. Home Depot. Big position by Chapel Trust. It's been problematic but we have it on because rates are going to get cut and you have to own the stock when rates get cut. 3 year old kid man, we got the whole demo covered here. I borderline love forging solutions. I think it's worth buying at these levels. Of course it's a viewer who called and gave it to us. We didn't do it on our own watch where man, including my deep dive into one of the only names that was in the green yesterday during a sea of red. Then did today's market rally catch you by surprise? I'm giving you my method for anticipating these market swings and you're gonna love it. And oil calls. Raven part tonight's edition of the lightning round. So stay with Kramer. Now you might not have noticed with the war on, but this is the retail week of earnings season and yesterday we got a much better than expected quarter from Target which had been struggling for years, but it's now under new management. From its highs in 2021 to its lows last November, this stock lost an astonishing 69% of its value. Now it was a death by a thousand cut situation. Target seemed to make poor merchandising decisions. It had trouble managing its inventory, the in store experience kept deteriorating and eventually it couldn't compete on price, ending its long standing price matching policy last summer. Just a T disaster. Last August, though, the company announced that longtime CEO Brian Cornell would be retiring to be replaced by the old chief operating officer Michael Fidelke, effective on February 1st. Some people didn't like the choice of Fidelke given the stock's underperformance. They wanted to bring an outsider to shake things up. But very quietly, Target stock started just gaining some real traction in the final weeks of last year, despite the fact that they reported another dismal quarter in November. The Stock fell nearly 3% in response to that last quarter, but it bottomed the very next day at the lowest. Target was selling for less than 12 times forward earnings and the stock yielded roughly 5.5%. This is Target for Evan's sake. Clearly it earned some attention, its value play though, rallying from $83 November to $113 as of Monday's close. Maybe it should never have been down at $83 then. Yesterday, Target reported a surprisingly strong quarter. The revenues came in a little light. The same store sales were down 3.9% for physical stores, but their margins, the gross margins expanded substantially, allowing the company to deliver 28 cent earnings beat off a $2.16 basis. Looking forward, Target said expects net sales to grow, quote around 2%, end quote, with a quote small increase in comparable sales end quote as new store openings. And they're going to have stores store openings in places where there are no major stores right now in the country. And non merchandise sales contribute, quote, more than 1 percentage point of growth now. On top of that, Target said it expects to grow net sales in every quarter of the year. Mattress predicting an adjusted operating margin of 4.8% which would be up from 4.6% in 2025 and was certainly better than the 4.5% number that the analysts were anticipating. I was kind of my jaw dropped. I saw or how positive they're going to be now. Overall, Target believes It can earn $7.50 to $8.50 per share for the full year, much higher than the dollar than the $7.63 number that wall street was looking for. But it sounds like the earnings growth will be weighted to the back half of the year. As Target said the first quarter earnings will be flat to up slightly from last year, with stronger growth coming over the next nine months. So if you're going to get behind Target here, it takes a little trust. You have to believe management can deliver on the rest of the year even after a softer than expected first quarter, which I by the way, don't think is in the cards. I think something better still. The stock caught fire yesterday rallying from $113 to 120 and change despite the terrible tape because Target managed to change the narrative. Now remember he came in here, you know, he was thinking this remarkable climb. And I'm not saying he's claiming it. I am saying that Wall street gives him all the credit. How about that? For the reported quarter, Target said the food and beverage, beauty and toys delivered net sales growth over year a year over year. While their essentials and home categories also had stronger trends. Non merchandise sales were bright spot too. They grew over 25% in the fourth quarter. Membership revenue more than doubling year over year. And Target's in house advertising business rondell up double digits while marketplace revenue was up 30%. Same day delivery grew 30% in the quarter. More important, management said that sales and traffic trends accelerated in the last two months of the quarter which is always a good thing to hear from a retailer and that I tell you, if any one thing move this stock. It was what's called the cadence that February came in good and left great. So when you give the range to Fidelity in November you actually, in February you actually had some good momentum. Now beyond the quarterly report, Target also rolled out its new strategic plan. Hosted a financial community meeting in the hometown of Minneapolis. Boy there was a lot in here. The company plans to invest in Incredible, incremental incredible $2 billion this year including more than $1 billion in additional capital expenditures and another billion dollars of operating investments all to boost growth, make these downy stores look better. Target laid out plans to transform its in store floor plans and displays while also increasing payroll and training so that their staff can make the shopping experience more pleasant. They also plan to improve their product assortment in key categories. At the event, Target tease plans for a more immersive trend forward approach to sports play, gadgets and pop culture. Areas where Target believes it has a right to win. They also taking this approach to more staid but important categories like baby home, food and beverage and beauty. By the way, they told me that they were very disappointed in home. They just really said we've got to fix home. Couldn't agree more by the way. Finally, management said they'd be accelerating their tech rollout including AI quote to make shopping easier and more personalized. End quote. They have to do that. These are all long standing issues and I'm glad that the company's working to fix them. Clearly the market agrees given the Target stock jumped nearly 7%. Yes sir. Overnight every analyst that covers the company seem to be raising their price targets in two different firms upgraded the stock. Bernstein essentially covered their short. They went from up from underperform the market perform while taking the price target from 91 to 116. Bravo retail specialist Telsey Advisory was even more enthusiastic. Taking Target from market performed to outperform while boosting the price target from 110, 145. So have I become a believer in Target under new management? Honestly? Yes, I am a believer in I could leave her if I tried. At least for now. The new management team will have to deliver on the promises that it made yesterday. And I'll need to see some same store sales turn positive along with continued margin improvement and legitimate earnings growth before full buying fully buying in. But it's tough not to be encouraged by what we heard yesterday. Target was already improving before the management handover and now the new regime has a bunch of plans to keep that going. The most important thing in my opinion is that the new management team seems to have a very good, good grasp of what the company's been doing wrong and they're not afraid to admit those mistakes. You would think that maybe the CEO because he was CEO would say, hey listen, some of these were mine. This fresh start here. The first, the first step as they say is acceptance. And Targets now well beyond that first step, moving on to the point where they're rectifying the most pressing problems. Getting the proof will be in the pudding. These guys still need to deliver. Better numbers will have to follow this period of better vibes and big plans. But with Target currently selling for still just 15 times its midpoint of its new earnings forecast. While Wal Mart trades at nearly 44 times and Costco trades at almost 50 times. Well, the bottom line is Target stock. It could still here be considered a steal. It's just way too cheap. If the company can maintain a sustained recovery under new CEO Michael Fidelke. You know what I think he's worth betting on their money's back there for the break.
- [40:15]
Guest/Caller/Announcer
Coming up, you've got questions. Kramer's got the answers. Get charged up for a fast fire lightning round next.
- [40:33]
Jim Cramer
It is time. It's time for the light run crusher with Rapper. And then the lightning round is over. Are you ready, Steve? Dads on the Right Love show with Eric and Michigan Eric. Jim, I love the show. Oh, thank you, buddy. What's happening? I am calling about a fintech company that may not be solely dependent on lower rates. Jim, with the recent acquisition of Redfin and Mr. Cooper Rocket now Owns the ecosystem from search redfin to loan rocket to servicing Mr. Cooper. They also just announced a strategic alliance with compass. Jim, can you see this stock doubling once the housing market. No, I cannot. No. I think there's just too many headwinds to housing. I'd love to be more bullish. We own home depot for my travel trust. It's one of my worst positions right now. I've got to tell you, I don't want you to be big and rocket, I don't think you make a lot of money. Let's go to Don in Florida. Don. Good evening, Mr. Kramer. Pleasure speaking with you again. Same. So I've been. I've been watching your morning meetings every morning with you and Jeff Marks. I feel like it's made me a much better wiser investor. And it's been a pleasure being a member of the club. I got a question for you. Sure, sure. So this stock's beating me down a little bit and it's confusing for me. For the past three months it's beat the earning projections. It's close to a 52 week low. It's got an attractive P. E, less than 20, a good yield, 3.2%. The fundamentals are all green, Jim. But why can't Accenture get any traction going forward? I don't know. I opened the file on them again yesterday after I saw that they bought this really interesting business from Ziff Davis. And I said, geez, what is Julie Sweatman that stuck so low? And then I realized, you know what? It shouldn't be that low. I think you're onto something. And let's go to Raymond in California. Raymond? Yes. Good evening, Mr. Kramer. My name is Jimon from Chicago, longtime listener from the first day. I thank you so much for everything you do and I learned so much from you. I have a question about the stock that I wanted to add to my portfolio. But I've always learned from you about that. We should seek conviction from the CEO in insider buying. Every time I wanted to buy this company, I checked the insider buying and selling and I saw three sales only in the last six months. Probably worth about $160 million in August, September, even as recent as January. So should I be concerned the company I wanted to add to my portfolio is a firm? Oh, no, I like a firm. I like a firm like Max left out. Like a firm, the stock is down way too much. Really attractive level. I couldn't believe that people might be able to buy it under 50. I would say pull the trigger. All right, let's go to Tom in New York. Tom Jim, I'll get right to the point. Paychecks is down about paychecks. The long lives are out for paychecks. I think that Paychecks is doing well. I want to buy it at 17 with a 4, with a 4 1/2% yield. I'm not sticking my neck out because I'm not worried. I think that that's a good company and it shouldn't be this low. Let's go to Gary, New Jersey. Gary. Hey, good afternoon Jim. Thank you for taking my call. Really enjoy the show. Thank you. Wondering your thoughts on this company that you and I pay every month. Right now it's down about 8% off its 52 week high. They just increased their dividend by 6%. Do you think it's a buy PG no, actually I was talking to my friend Ready pal Matt Horween. I'm not as big enthusiast of the bond market right here and that's going to be what determines public service enterprise. I don't want you to buy any. And that ladies have included lightning round. When I was on the trading desk for two decades, I very quickly learned the lingo. The conversations in the desk were always opaque and conspiratorial. It always started with a they, as in they are buying Bitcoin or they're bailing from enterprise software. That insight would be followed by the most glaring of examples of what they want. You might ask what the heck are you talking about? There is no they. There's no one stock or two or three that they want that should be bought because everyone's buying it. A lot of what I do in the show is teach. I don't try to teach trading though, but it's almost impossible to do well unless you're doing this full time job. I want you in, not out. But with this volume market, you need to know how to spot what kind of day might be in the offing. That way you can avoid getting smoked if things go south. Right now it all starts in South Korea, one of the most exciting markets in the world. A gigantic number of traders there, even if a huge chunk of it comes down to trading. Two companies, Samsung and SK Hynix, both of which have big exposure to computer memory in the data center. These stocks have been making parabolic moves higher, but they've fallen apart in the recent days. Samsung is up 215% in the last 12 months, but it's down more than 15% in the last five days, including a 12% decline last night. SK Hynix has rallied over 3, 350% the last 12 months, but it'S dropped more than 16% over the last five days, down 10% in the last day. This correction, the Cosby has been the worst in ages largely because of these two stocks represent more than half the index. I like to get up early. That's not in reality. I have a huge problem sleeping when I come downstairs these days. The first thing I do is go to Gemini and get prices for those two Korean memory stocks. Then I read the paper, skim some research and then put on Morgan Brennan, the anchor of Worldwide exchange on our 5am show. I look at what's called the crawl, the line of stocks. At the bottom of the screen, I write down the stocks I see trading repeatedly in the first two days of this week. Everything tech was trading down. Micron, Sanders, Seagate, Western Digital. Not today. Today I saw the opposite. A true divergence. I saw Memory King Sanders trading rapidly, trading higher and higher and higher. And I screamed to no one particular. I can't believe it. They're taking up SanDisk. They're going to go for Micron. The linkage is broken now. We don't know who they might be, but whoever it is, they weren't even trying to disguise their buys. They were the teller. We're going to have a rebound. The risky stocks. Something became more obvious when I saw that Bitcoin was flying. Bitcoin being a perfect proxy, only for one thing. People buying the riskiest stuff. That was all you needed to know about today. Today's session. I mean, you knew by 5:30, by 30am you know it's going to happen. They means the people are motivated, the ones who determine prices with their own buying. They decide the cost was done going down. It was time to buy the semis here. Now, I know this sounds almost too crazy to believe. How about Iran? How about the drones have at the Gulf? Which I say sure, it can reverse things. But remember, I'm not giving you a fundamental call here. I'm telling you what you could see from the trading desk, which is now replaced by my kitchen table. I went to work with confidence that we could have a strong market because they were buying the hottest stuff and it would spill over to the rest of tech. And you know what? That's exactly what happened. Am I a seer now? I just been on the desk with two eyes and of course a conspiratorial frame of mind. You don't believe it. Okay, try my exercise tomorrow. You won't believe how obvious it is all once you suspend your critical faculty's notice what they are taking up and how you too can tell what's most likely going to happen when the session opens and things start to trade in the regular hours of the morning. Just be prepared to wake up at 3:30am like me, because sleeping in is how they get you. Alex says. Always for Marcus. I promise. I've had just for your man Monday after Kramer. See you tomorrow. 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 Powerful doesn't just happen, you have to make it happen. So the moment Total Wireless offers a free Samsung S25FE with Galaxy AI. When you switch to total 5G or 5G unlimited 3 month plan, you take the network as powerful as you with unlimited 5G data that won't slow you down. Now that's a total power move. Visit your neighborhood Total Wireless Store device taxes and fees may apply. Requires new activation on a total 5G unlimited 3 month plan or higher. External port in and ID verification available only in total wireless stores limited to 4 devices per account.