Caller (8:47)

Hey, Jim. First a comment. The blind lady that called you last week, that was a wonderful story. See what you do for people. You and Jensen Wong helped that lady pay off her house. And I was almost moved to tears.

Jim Cramer (9:01)

And I have to tell you, Gary, I have to tell you, I told my wife that I went home. My wife doesn't watch the show, but that's okay. And I just felt like I said, listen, maybe this is, you know, because she's always saying, how long are you going to do the show? How long are you going to do the show? It's like, hey, good morning. How are you going to do the show? Oh, good evening. How long you do? And after I told her that, she goes, I can see why you want to do it. I can see it was that. It was that powerful. So thank you. It was that powerful.

Caller (9:23)

I hope you never retire. You've done the same things for me as well. You and Jensen have changed my life, literally.

Jim Cramer (9:29)

Well, Jensen changed a lot of people's lives, but thank you.

Caller (9:32)

Well, that's, That's a fact. Well, I bought this stock a few months ago when I thought it had bottomed, but it just doesn't seem to be able to find any traction. What's your opinion of truist Bank.

Jim Cramer (9:44)

You know, I am really surprised that Truist is doing badly as it is. I think it's a pretty good situation. I would hang on to this one. The fact that it yields 5%. I think that that's at 10 times earnings. I think you can go to 12 times earnings. I want to thank you for your comments and I think you should hold on to Truist, if not even buy some. I need to go to Tyrone this year. Magical thinking. Tyrone.

Caller (10:05)

Hey Jim, how you doing?

Jim Cramer (10:07)

Hope your day is going well, Tyrone. It's been an excellent day. I've been outside saying hello to people doing things. It was really a pleasure. How about you? A good one?

Caller (10:15)

It was great. Beautiful out here in the Virginia area.

Jim Cramer (10:19)

Oh, fantastic.

Caller (10:20)

I was calling in because I was intrigued about Coca Cola Consolidated ticker symbol Coke. They just did a reverse stock split and they seem like they're reasonable to pay for for regular day investors. So I just wanted your opinion on that.

Jim Cramer (10:38)

You know, Tyrone, I. It doesn't have the yield that people want. I think it's a really good company. It is very intriguing to me because the distribution is a really good business. I would hold on to it just because I think the distribution business, not because it's necessarily good right now. But I do know that long term it's been a good one. And thank you for the call. Hey, how about we go to Craig in Missouri? Craig.

Caller (11:00)

Booyah Jim. How are you doing today?

Jim Cramer (11:02)

I am doing well, Craig, how about you?

Caller (11:05)

I'm doing great. Just finished getting my tag renewed at the DMV and so I'm asking you about grocery store right now.

Jim Cramer (11:14)

All right.

Caller (11:15)

It is a place that I use all the time. They always seem to be full of people. It's good service. I am entering a position at Kroger stock. I wanted to know what.

Jim Cramer (11:29)

All right, I'll tell you. Kroger stock is rolling over, Craig. That's the problem. It's just rolling over. And when I see a stock rolling over at 13 times earnings, I say to myself, okay, let it come down. Buy a little, buy a little and then wait for the next level. Do not buy all at once. It could be a bad sign that this stock is having such a hard time at this particular moment. And it sure is 73 down to 64. I will wait till it goes to 60. Then we see where the charts a little better right there. All right, listen, look, based on what we've seen so far, I think we're looking at an IPO market that's like 2021, or maybe even better than 2021, because these companies, driven by real ideas, even if they're losing a ton of money. Oh man. President Trump wants to bring back manufacturing to the United States. I spotted an industrial stock that I think would be a big beneficiary of this move. I'm going to reveal it then. There's a reason why they're called rare earth minerals. They're hard to come by. I'm sharing what I think our country needs to do to source these critical elements. Cardinal is hosting an Investor Day tomorrow. We're getting a preview of what to expect with the CEO and it's a very winning company. So stay with Kramer.

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Jim Cramer (15:15)

Now that we're nearly half a year to Trump's second term, we can say one thing is definitely for certain. The administration wants to bring manufacturing back to America, no matter the cost. If it sometimes makes very little sense from a business perspective, like what they're doing to Apple, the iPhone. See Apple stock today.

Ecolab Representative (15:30)

Wow.

Jim Cramer (15:31)

But regardless, this push for domestic manufacturing is happening. Unfortunately, it's much more expensive to make things here in America because wages are so much higher than in developing countries that normally do this stuff. So if you want to manufacture, you know what I do. You got to embrace automation. Which brings me to Rockwell Automation, the leading industrial automation digital transformation company. Now, these guys make equipment and software that allows factories to run with fewer workers. That's exactly what we're going to need if we're going to have domestic manufacturing make a comeback. There's a reason Rockwell Automation stock Is run up 51% from its April lows. So does it deserve to keep running? Does that big picture thesis give you enough reason to buy the stock here? Look, we've heard this story before 2021, we were starting to see the first signs of what became the supply chain crisis. Even though President Biden, no obvious lust for tariffs, was in charge at the time, there was an idea that supply chain disruptions would lead to a wave of reassuring from companies that were looking to avoid repeating that they might avoid the COVID experience. But that thesis quickly fell Apart by early 2022, when Rockwell Automation disclosed that they were experiencing their own supply chain problems, especially with semiconductors, which prevented them from doing a great deal of business. The stock spent the rest of the year getting eviscerated. By early 2023, it had rebounded. Rockwell found a new way to this point. After reporting backward a little less than two years ago, the stock got stuck in the high two hundreds. And that's where it stayed until the whole market rolled over earlier this year. So is this the latest rally in Rockwell emotion? Finally, the real deal. This is hard. Okay, first, you know, you need to know that last year was not a particularly good year for this company. It's a 10% organic revenue decline. Decline. Earnings down 20%. Some of the worst numbers came from Rockwell's fiscal fourth quarter, which ended last September as business deteriorated over the course of the year. Now I spoke to CEO Blake Morett in November of last year, a few days after Rockwell reported those numbers. I was surprised by his optimism seemed off base. But he explained that the company was up against some very tough post by supply crisis comparisons last year. He also stressed that they've been moving aggressively to lower their cost basis, which should set the stage for stronger earnings growth down the road. And hey, in the seven months since the interview, Rockaw Automation has been able to deliver just that, some pretty strong numbers. February the company reported in line sales and a big earnings beat. Then in early May they posted a really strong set of results including a legitimate revenue beat, another big earnings beat. Crucially, when the company reported that last quarter about a month ago, Rockwell maintained its full year sales outlook and it raised its full year earnings forecast really significantly. Originally management was guiding for 860 to 890 and adjusted earnings per share. Now they're saying it's more going to be more like 920 to 1020 worth of earnings. That is much, much better than Wall Street. I'm not used to seeing those kinds of blowouts. So putting it all together, things are playing out pretty much like Blake Barrett said they would when he came on the show last November. Sales have improved and it sounds like he was right about Rockwell being able to lower its cost base, which has translated some tremendous earnings numbers. We went and looked back. This was the first time that Rockwell has raised its full year earnings forecast since late summer of 2023, which not coincidentally was the last time the stock traded as high as it currently is. Now. During this latest quarter in May, the company spent a good amount of time talking about the tariffs, what they mean for business. It certainly sounds like Rockwell Automation will benefit in some major ways from the new tariff regime. As Moretta explained on the confere Roswell quote, there is still a generally optimistic long term view among most of our customers, especially those with high exposure to the US because the idea of US manufacturing as a good thing for the US economy resonates with a lot of us. And of course Rockwell is a net beneficiary of that end quote. But for whatever it's worth, you should know that the tariffs aren't all good for Rockwell Automation. For example, the company said that some of its customers, the automotive industry, are delaying plant facilities as they wait and see what the end state tariffs are going to look like. Makes sense. Rockwell also has to pay tariffs itself on some components. The management said they're using what learned during the supply chain crisis to try to limit the damage. Still, generally speaking, if we see a huge wave of reshoring thanks to this one, wow, it's going to be a winner. Now after that last quarter in early May the stock caught an upgrade from influential JP Morgan industrials analyst Steve Toussa, who had hit the stock as an underweight and he took it to neutral meaning sell to hold. Now Tucson was really the only analyst on Wall street had to have a real negative look on these guys, but he was also the only one to have a sell on GE back before its major problems several years ago. So this guy's got clout and he's been a long time skeptical rock wall in most nation ever since that underwriting from the same underweight from December of 2019. So while an upgrade is to hold is far from enthusiastic recommendation, you got to look at the contest. The fact that Tucson is no longer a hater is a big deal. Another analyst from TD Callen also updated the stock from sell to hold if that last quarter Slowly Rock Automation is building back what I regard as being some admiration on Wall Street. About two weeks ago, in fact it quoted another upgrade, this time a hike from equal weight to overweight from Barclays analyst Julia Mitchell. Here's how Mitchell has played a quote we think the top line will show an improvement alongside a rebound in factory automation markets, especially program logic controllers. The operating margins are also likely to recouple closer to typical multi industry expansion rates after a hiatus over the past five to ten years amidst a greater focus on operational execution. End quote. At the end of the day, while I slow some scar tissue from this one after its multiple failures over the past years, I see enough good things happening here to justify find going forward. I think it's a good one. Here's the here's the bottom line. Big picture Rock Oil mission is a winner from tariffs that forced companies to move their manufacturing back to United States. Matter of fact, it's the way to play reassuring because that without losing a fortune, these companies have to rely on Rockwell Automation. But I would not stick my neck out for the thesis if the fundamentals weren't already on the men. Fortunately, Rockwell's going the right direction and this change I'm calling simply the icing on the cake. Net money's back. Every break.

Mad Money Announcer (21:41)

Coming up, Kramer's revealing his main takeaway from the US Trade agreement with China and what it could mean for trade talks with other countries.

Jim Cramer (21:49)

Next.

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Jim Cramer (23:02)

If we've learned one thing during the President's recent negotiations with China, it's that we don't have the cars. We can disrupt their entire manufacturing economy. We can threaten them with a level of unemployment, specifically youth unemployment, that they didn't see coming. But in the end we got rolled because of one thing, our well known dependence on China for rare earth minerals. They got them. We need them. Although it does make you wonder what the heck were we thinking when we started a trade war without having this rare earths issue or buttoned up and ready to go? Didn't we know that they'd ask for the moon and get it because we need these materials to make smartphones, tablets, speakers, touchscreens, wind turbines, semiconductors, lasers, electric vehicles, as well as the F35 fighter jet which is loaded with rare earth materials. Did the generals know that I know the companies that make this stuff? Did someone screwed up as the country these planes would most likely be used to defend would be Taiwan and the challenge would come from China. How stupid can we be if we need Chinese materials to make our military hardware? Only a few minutes after we announced that we had reached a framework, whatever that is, the Chinese came out and say the new licenses for rare minerals will last only 6 months. Totally insulting but typical. So what are we going to do? The only big thing the Chinese wanted was Nvidia chips. We knew that from the get go and they were non negotiable. Even as I think given those chips and to China would have stunted their growth while giving them as much control over their economy as they have over ours. So what should we be doing right now? The White House is basically sticking it to everyone else in the world so we can punish companies, countries that have taken advantage of our free trade at all cost policy that's been going for decades. I get that. But it's time to make real deals. The kind the Chinese have excelled at. Right Now Brazil is 21 million metric tons of these crucial rare earth materials. One fifth of the world's known reserves. 10 times what we have. It's starting to produce all the metals we need for magnets. We need to immediately make a deal with Brazil in return for waiving the 10% reciprocal tariff and begin to funnel money into the country. This needs to be done yesterday, Manhattan Project style. It's not like China has monopoly on rare earth minerals in the ground. The raw materials are everywhere. It just costs a fortune to refine them and nobody else bothered to spend the money. Now we go to Vietnam where they're staring down the gun barrel before 46% tariff including on all goods that our companies make their. Vietnam also has reportedly a large amount of rare earths reserves and more important it has an integrated supply chain. We need to negotiate with them right now. We take the tariff to zero if they let us have co development rights.

Caller (25:35)

Smart.

Jim Cramer (25:36)

Australia's an old friend. It's got 55.2 million metric tons of reserves. They're supposed to be of the highest quality. Time to roll up our sleeves, cut down our tariffs and make sure that we do a Manhattan Project there too to get the minerals in our hands refined and ready to go. Plus we should support the new Mexican project that's all about rare earths right here in our continent. Something that's close by and we can really start a great long term relationship with a country that's no longer seen as a conduit to those who want to cross the border illegally. I know America first, but you know there's somebody got to be second. Might as well be our friends. Here's the bottom line. We need to make these rare earth deals with the same alacrity The White House gave out the reciprocal tariffs on Liberation Day. We need them yesterday. Then and only then will we be truly liberated. Stafford in California. Stafford. Jim, how are you? I am doing well. How about you partner?

Caller (26:29)

I'm okay, thanks.

Jim Cramer (26:30)

Good. I want to get your thoughts on Sherman Williams. Hank on Sherwin Williams. Okay. Dow stock now by the way, I think Sherwin Williams. Look, I like the stock of Home Depot. Home Depot, which is by the way less expensive. It's got $7 today. I think some people are selling it because ice is lining up in front of Home Depot's and I think the stock's getting hit because of that. I need to go to Alex in Oregon. Alex.

Caller (26:58)

Booyah. Jim, how's it going?

Jim Cramer (27:00)

All right. Alex, how about you?

Caller (27:02)

I'm good, thank you. So I'm calling in today about asking for a company. It's called lmd. I've followed them for a bit now. They're kind of like an owner operator, H vac company. They're very small. They've got a pretty small float, decent Internet ownership, but they're pretty expensive in the fundamental aspect of it. I'm just wondering, does this take something I should buy on dips at all?

Jim Cramer (27:23)

This one is so high. It's got such a high price to earnings multiple. I cannot recommend it. I don't care how. It's like Ferguson, I guess. People just say, you know what? I'm just going to be in there. I don't care and I don't know why. I don't want you to be in it. Too high versus say, a Home Depot, which is just really inexpensive. Look, we need to take a more methodical approach to tariffs. I am being very serious about about what I'm saying here as offering a plan to the administration because it's time to look past China and make some rare earth deals with the rest of the world that makes it so they don't own us. I know they don't own us. I'm telling the truth. Much more man money ad, including my excuse with Cardinal Health. Cah. We recently had a segment on the big three drug distributors and I told you this one was my favorite. I'm sitting down with the CEO to see if the strength can continue ahead of an analyst meeting. And you called in, you stumped me on a new defense tech stock. But of course it was really an old company, just changed the name. It's called Mentum. And I think it's got some momentum. It's kind of a project momentum. And your call is rapid fire. Tonight's edition of the Lightning round. So stay with Kramer. Tomorrow, Cardinal Health, one of the nation's top drug distributors hosting an investor day that I think would be a really big deal. This whole industry is in a real quandary. But it. Well, it's been there before. Whenever a major politician like the current president starts talking about knocking out the drug middlemen to bring down health care across Wall street, get spooked. Yet these stocks, including Cardinal Health Long, my favorite name in the space, never seem to stop chugging higher. This one's up nearly 30% year to date. In fact, since its last investor day two years ago, Cardinal's up almost 80%, roughly double the return you would have gotten from the s and P500. So let's take a closer look with the event with. Right on the eve of the event with Jason Holler. He's the CEO of Cardinal Health. Hey, Mr. Holland. Welcome back to their money.

Jason Holler (29:14)

Hey, John. Great to be here.

Jim Cramer (29:16)

All right, so how do you. How did you do it? I mean, it's very rare that I see that kind of outperformance from a company that isn't just a brand new firecracker company that we've had to deal with lately. What was the secret sauce here?

Jason Holler (29:27)

Yeah, thanks, gentlemen. It's great to be here again. So the main point is we have really, I put everything into three key buckets. First of all, the industry has been quite resilient. The underlying utilization in the pharmaceutical space has been very predictable and resilient and in fact a little bit stronger than it's spend historically. Specifically to what we've been doing. I put it all into two key buckets. Our core has been very strong. Whether that's core distribution or the similar services around that. We've invested heavily there to make sure our customers get a fantastic service level and experience. And then we are also investing organically and inorganically in M and A where the market is growing the fastest, which is specialty. We put a lot of money to work recently and we're seeing the benefits driving our overall business.

Jim Cramer (30:06)

Okay, so talk to me about specialty because people at home may not realize how that's different from. I don't want to call commodity because it's more than just your regular business. But specialty to me could mean generics, could be biosimilars, it could be at home. What are some of the special things?

Jason Holler (30:22)

Yeah, it's simply put, specialty means that there's specialized requirements and handling. I mean, the name really does define what it is. And. But the key part of it is it's in with a lot of the therapeutic areas that are growing more quickly. And so this is driving underlying volume. The specialty market is growing around 10% per year. The other part, traditional part of the market is growing around 6%. So still good. So they're both key tenants to our growth plan, but it really takes both to continue driving the business long term.

Jim Cramer (30:50)

Okay. For the longest time that I can recall before you got in, I always felt that there were three companies, you know, the Sinquo, McKesson, you guys. And it's just a horse race sometimes once ahead, sometimes sometimes. But you have broken away in a different way. Can you tell me how your company is distinguishable from the others in the group?

Jason Holler (31:08)

Well, I'm going to focus on what we do each and every day and where we believe we do excel. I think we take care of our customers better than anyone. We really do believe we're health care's most trusted partner. And I think our customers would say the same thing. And that's because, you know, we show up each and every day. We put their needs at least neck and neck with our own. We find win win solutions for, for each other. And the market has been growing well in the areas we've invested. We have positioned our business to take advantage of some of those more favorable secular growth trends. One thing that you'll see a lot more tomorrow in our investor day is our other growth businesses, our nuclear at home solutions and optifreight business. These are each businesses our competition does not have and that's unique to us. So we have been investing more significantly there organically and inorganically. And that has been a nice tailwind for.

Jim Cramer (31:50)

Okay, so those of us who've been south, and particularly in Florida, where we love a particular grocery store, Publix, you won that business. Now, they're a very discerning company. Everybody know, goes there, loves there, loves it. Tell me how you won that business.

Jason Holler (32:06)

Well, I love winning accounts and customers and relationships like that because they are going to be a tough customer, going to make us even better. But it really does come down to customer service and what we are able to deliver for them. But I can tell you, organizations like that also do their own channel checks or customer checks or reference checks, and they look up as to what kind of supplier and partner are we. And I'm sure they did that diligence and we're really proud to have that account. It's a component of the growth that we're seeing this year. We have exceeded our own initial guidance a few times already in the pharma segment for the enterprise. And it's partly driven by the volumes that we're seeing with our broader customers. But also those new accounts, that's about $10 billion in new business that is coming online this year, which they are one of those components that's big.

Jim Cramer (32:49)

Now, I know you've got this specialty in generics. Now people think, well, how do you make money? Engineer generics in biosimilars how could there be any margin for that? But I figured you wouldn't be doing it if there wasn't some way to make money.

Jason Holler (33:01)

Sure. Well, I would think about. I think it's important to step back for the pharmaceutical industry. There's the 9010 rule. 90% of the volume is generic, but it only is about 10% of the cost. So the volume is significant to our distribution channel and the supply chain. It helps give us the economies of scale to be able to go do a lot of other things. And the price points are very, very low, but the margin per unit we make is relatively similar. So our margin rates are higher but at a lower price point is it's a part of that whole basket of products that we provide to our customers.

Jim Cramer (33:33)

Okay, last question I have is a little offbeat, but the big beautiful bill, I mean, do you follow it closely in terms of what they're saying about Medicaid, Medicare as a observer, or does some of this stuff directly impact.

Jason Holler (33:45)

Well, I do take some trips to D.C. to make sure we are understanding and having our, our opinion and voice heard in these things. But it is very much a wait and see. For the most part, we are very confident in our role in health care, our essential role to safely, securely and efficiently deliver these products, these critical products to our customers. And there's, there's no better way to do it than the way we are doing it. We're very confident of that role. So how we get compensated, you know, we'll continue to work with any of our customers as well as administration to figure that out. But at the end of the day, we provide incredible value for the 1% margin that we earn and we're very comfortable.

Jim Cramer (34:22)

And when you hear these attacks by a politician, are they ill informed? They've been, they've been led to think that maybe you're somebody who is Friction.

Jason Holler (34:33)

No, not, not at all. Everyone, everyone we talk to understands our role, understands that we're the infrastructure. We are the supply chain of the health care industry. We physically take the product from the manufacturer all the way to the end, customer and patient. That is an absolutely essential service. And you know, we're a public company and our two key competitors are public companies. You can see what all of our margins are. There's, there's no hiding the margin there. And so I think we have a lot of transparency and credibility with our role.

Jim Cramer (34:58)

Well, I think so. I want to wish you the best of luck in your big analyst meeting. I'm sure will be as great as the one two years ago really said it. That's when I knew that this was a new company and I always enjoyed the old guys. You know, I told you I had a good relationship with them. But I knew it was a new company and much better companies. Why would recommend terrific job. Jason Holler is the CEO of Cardinal Health Cah. And you know I've been saying for a long time this is the one to be in they have money's back.

Mad Money Announcer (35:22)

They can bring Coming up Kramer takes your calls and the sky's the limit. It's a fast fire lightning round Next.

Jim Cramer (35:41)

It is time shock the lightroom customize and rep for Cor my Stanford grandfather. You're playing this out and then the lightning round is over. Are you ready Ski dad time for the light round Christmas. Let's start with Brad in Connecticut.

Caller (35:56)

Brad, hi, how are you sir?

Jim Cramer (35:58)

What I am good, Brad. You know what Biomarin I am getting tired of the orphan drug model. I just not thinking it's working. I think it worked for some time. I don't think it works now. Let's go to Brian in Pennsylvania.

Jason Holler (36:10)

Brian.

Caller (36:12)

Hey Jim, thanks for taking my call.

Jim Cramer (36:13)

Of course. What's up?

Caller (36:15)

Jim, about five years ago we bought some home security cameras for the house. The hardware has proven robust so far and we're paying a monthly subscription fee. I found out the company is publicly traded and right now they seem to be making a run at their all time high. What is your opinion of Arlo Technologies?

Jim Cramer (36:34)

You know I've looked at 8 ADT. I've noticed not looked at Arlo. I'm gonna have to give that a solid look. I'm sorry, I don't. You stumped me on that one. Let's go to Jonathan, Pennsylvania. Jonathan.

Caller (36:46)

Hey Jim.

Jim Cramer (36:48)

Jonathan, how you doing? What's going on?

Caller (36:52)

You know, as a very happy club member, I'm so grateful to you and your club.

Jim Cramer (36:56)

Thank you. Jeff does such a great job. Thank you very much you guys with real stuff. Thank you you thank you. Well, thank you for all the learning.

Caller (37:06)

You'Ve given to all of us with onshoring going on, tariffs, reshoring, whatever you.

Jason Holler (37:12)

Want to call it, etc.

Jim Cramer (37:14)

What do you think the impact will.

Caller (37:15)

Be on transport and especially Union Pacific?

Jim Cramer (37:19)

I think it's good for them and I think Union Pacific is the one that has lagged. I mean I've seen a lot of them run. I've seen the truckers run Union Pacific, you've got Union, you got Jim Vena there. I think it's a buy. I'm glad that you highlighted tonight because I think it's a really good Stockton. I need to go to Jatin, Jatin Jaden in Washington.

Caller (37:40)

Jaden, yeah, Good evening, Jim. This is Jatin from Washington. I'm watching your show from my childhood.

Jim Cramer (37:47)

And it's incredibly pleasing. Thank you.

Caller (37:50)

And your time tested wisdom, really helpful, helpful. And you are fatherly figure for me. So I really appreciate it.

Jim Cramer (37:59)

Thank you. Thank you very much.

Caller (38:01)

My question is regarding GitLab GTL.

Jim Cramer (38:05)

Yeah, I thought that GitLab, frankly, I was prepared for your disappointment and I got it. This kind of collaborative software, enterprise software stock, I don't want right now. You know, I like an Oracle which is going up, but that's Data Center. I don't want, I just do not want enterprise software. I think they're all too expensive. David in Georgia.

Caller (38:24)

David, Jim, it's great to be with you, brother. I want to thank you and your team for the educating, entertaining process that you put me through these last couple of years.

Jim Cramer (38:36)

I need to do both. Thank you.

Caller (38:39)

Jabbing yourself with an epinephrone needle, or should I say a harpoon is not an enjoyable experience.

Jim Cramer (38:45)

No.

Caller (38:45)

And for time first, the first time in decades, brother. There's an option for children, adults with allergic reactions. It's an epinephrine nasal spray that received FDA and EU approval last year. Companies expanding internationally, recent contract 145 million upfront payments on the heels of allergy season. Is it a good time to act? Ars Pharmaceuticals, you know what?

Jim Cramer (39:08)

I like their model. I've been analyzing spray myself and I think that here's what I look at, it's a great flyer. Someone needs that technology. Someone's going to pay for it. Let's go to Cedric, Cedric in Illinois. Cedric, hey, how we doing? All right. How about you?

Caller (39:27)

Good, good, man. Blue Yard Gym, first time caller.

Jim Cramer (39:30)

All right.

Caller (39:31)

Appreciate you, man. My father, Cedric Senior, always talks about, she says you're in a class of your own and he's read all your books, man.

Jim Cramer (39:39)

Thank you. Thank you very much. And more ahead.

Caller (39:44)

All right, man. Calling about new scale.

Jim Cramer (39:49)

New scale. Okay, here's the problem with new scale. It is at really, really high. Here's the answer with new scale. If it doesn't, if it doesn't offering here, that's when I buy. I wait for this stock offering after what happened with OKLO tonight. And that, ladies and gentlemen, conclusion of the Lightning Round.

Mad Money Announcer (40:08)

The Lightning Round is sponsored by Charles Schwab. Coming up, could an under the radar defense contractor provide your portfolio with some protection? Kramer's breaking down the name Next.

Jim Cramer (40:29)

We all know the drill by now. You call in about a stock and I give you my take. Sometimes positive, sometimes negative. But on very rare occasions I need to take a look deeper for forming an opinion. Now, we've been running through our outstanding homework assignments like it's the end of the semester here, money. And tonight I'm taking care of one more name that was added to the pile just a couple of days ago. On Monday night, Frank in California asked me about Momentum Holdings. It's provider of advanced engineering and technology solutions that only started trading nine months ago. I said I'll get back to when this one now the business that eventually became Momentum was originally part of a Econ, the infrastructure consulting firm that I liked a lot ever since it came public. Back in January 2020, they sold their government services business to a pair of private equity firms and Momentum was born. Then in late 2023 we learned that Momentum is coming back to public markets. They have really complicated transaction. They merged their entire business with Jacob Solutions, Critical Mission Solutions and Cyber and Intelligence divisions. There's a mouthful now. We actually spoke to Jacob CEO Bob Brigada about this a couple of occasions recently. Asked specifically about the deal, he had a lot of positive things to say about this. The new company's prospects look great. Started trading again late last September. So what do we make of the present day event? The company operates through two main businesses. The first, global engineering solutions account about 60%, six out of total revenues last quarter. The segments all about large scale environmental remediation, clean energy, platform engineering, sustainment and supply chain management primarily for the US government and other allied nations. The remaining 40% of the business comes from Digital Solutions division which provides advanced digital and data driven solutions including intelligence and analytics, space systems development, cyber security and next generation IT solutions across the federal government as well as commercial clients. While those are the two big operating segments, it might be better to look at Momentum through the lens of its end markets. The largest end market is Defense which accounts for just under half sales. The second largest ends market civilian about 17% of total sales. Here we talk about Department of State Department, Justice Department, Homeland Security. Environmental work represents about 15% of the business. Think the Department of Energy and the UK based Nuclear Decommission Mission Authority and Atomic Energy Authority and Intelligence related related work makes up about 11% of the business. Again their clients are federal agencies or their international compadres. Finally, space is about 10% of mentors revenue. That's NASA, Missile Defense Agency, the Space Force and yes the Air Force. Now, given this breakdown, it's a curious breakdown. You can understand that Momentum's work is heavily centered on government contracts. There's a strong defense tilt here with nearly 70% of funding obligations coming from the Department of Defense. Overall, Defense is a solid business to be in, although you have to start worrying if anyone in Washington starts taking that budget deficit seriously. Doesn't seem like a major priority though. Now when a Mentor reported its latest quarter in early May, the results were good. Better than expected. Revenues healthy earnings beat Management reaffirmed the full year earnings and cash flow guidance. Not bad. Sounds good. Then how come the stock dropped 4.5% the next day? Well, it seems that the market wasn't overly impressed with the Mentor's growth story. While the company beat estimates still only posted 1% revenue growth year over year and the earnings were just up 4%. That's not good enough for a business that operates in high demand sectors like defense, energy and intelligence. Some investors might, but they might be expecting better. I can see that there are also broader concerns hanging over every government contractor right now, namely Doge, although I don't see that doing much against this against Momentum now that Musk is gone. Plus in a Mentor's case, these concerns seem overblown. The company has over as really emphasized that they only expect a 1% revenue hit from the new administration's belt tightening initiatives. Not bad. That resilience stems from how their business is structured. No single department or agency accounts for more than 50% of sales 15 with strong exposure to critical areas like nuclear energy intelligence Indo Pacific Operations Hard to believe that Doge is going to see Indo Pacific operations as a priority for spending cuts after Secretary of Defense Pete Higseth just said that the threats to Taiwan from China could be imminent. In fact, Momentum is laid out a long term growth plan calling for 4 to 6% compound annual revenue growth from 2028. They haven't been able to gin up much excitement with that forecast. There's a lot of companies that are growing much faster that aren't that expensive, but I think they can hit these numbers. Recent contract wins suggest their confidence isn't misplaced. Last quarter Momentum announced over 1 billion in new intelligence contracts and they were selected as program manager and the lead design engineer for seismic well see, that's a next generation nuclear power station in the UK management also indicated that they have $29 billion in pending awards and remain on track to submit over 35 billion in proposals this year. All this is happening amid long term macro tailwinds and support the company's core end markets, rising geopolitical tensions, modernization demands across defense sector, the need for supply chain resilience, humanitarian response, new environmental regulations, an evolving cybersecurity environment and evolving a space race yet point beyond the headlines. It's important to remember that Momentum isn't a newcomer to this space. It's made up of a series of legacy businesses with deep roots in federal contracting, businesses with incumbent status and long standing agency relationships. This familiarity is something incredibly important. When the government decide where to allocate funds, they also have the scale to compete. Their $45 billion backlog is one of the highest in the sector. This isn't some fly by night outfit that's going to have to fight tooth and nail for government contracts. This is a well known commodity in a space where that really matters. Their commercial and international businesses deserve some attention to the business now represents about 20% of mental sales and is growing faster than the US government based businesses if there's one thing that gives me pause about the stock, it seems that it will this is a Kenyan theme with for many of our homework names, that's the ownership concentration. More than 35% of momentum is still owned by American securities and Lindsey Goldberg, the company's private former private equity sponsors this private overhang. It can be a real issue if these firms ever decide to unload their shares. We saw it, by the way, really badly in Dutch bro. I mean Portillo's too. But the bottom line? While I'm worried about the private equity shareholders, I think this stock already has too much caution price into it. Momentum sells for less than 10.5 times this year's earnings estimates. That's a pretty compelling valuation for a company with this kind of scale of long term positioning. At the end of the day, I'd like to see some of the large shareholders these private guys reduce their stakes before jumping in, but Momentum is definitely worth keeping on your radar. It's kind of been forgotten. No one's focused on it. They should. And I want to thank Frank for bringing it to our attention. Alex says always more Marcus Homer and I promise you find it just for you right here on Mad Money. I'm Jim Cramer and to see you next time.

Bank of America Representative (47:50)

All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of cnbc, NBC Universal, or their 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 Jim Cramer 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 Earn a business degree on your terms at Capella University. Our flexpath format is available in select programs and lets you learn on your schedule. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.