Mad Money w/ Jim Cramer 7/7/25

Summary

Mad Money w/ Jim Cramer – Episode Summary (July 7, 2025)

Hosted by CNBC, "Mad Money" with Jim Cramer delves deep into the financial landscape, offering expert insights, stock recommendations, and engaging discussions to help investors navigate the complexities of Wall Street. In the July 7, 2025 episode, Jim tackles the implications of recent tariff implementations, explores significant corporate acquisitions, analyzes defense sector stocks, and addresses listener questions in the popular Lightning Round.

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I. Impact of Recent Tariffs on the Stock Market

Jim Cramer opens the episode by addressing the recent surge in tariffs imposed by President Trump, particularly focusing on the automotive sector. He emphasizes the immediate effect of these tariffs on prices and the broader market sentiment.

• Tariffs on Automobiles:

  • "If you slap a 25% tariff on all the cars and trucks we import from Korea and Japan, you're talking about roughly 17% of the vehicles sold in the US last year." [01:43]
  • The imposition affects approximately 1.6 million vehicles in the U.S. auto market, leading to a noticeable pullback in major indices: Dow Jones (-22 points), S&P 500 (-0.79%), and Nasdaq (-0.92%).

• Market Overreaction Concerns:

  • Cramer suggests that while the market reacted negatively, the decline was not as severe as it could have been, hinting at underlying resilience. "A few months ago, I would have expected a much bigger decline in the stock market." [02:35]

• Broader Tariff Implications:

  • Beyond automotive, tariffs were also placed on imports from Kazakhstan, South Africa, Laos, and Myanmar, indicating a broad-based approach that could stoke inflation. "These numbers seem all over the place." [04:20]

• Strategic Advantages for Domestic Manufacturers:

  • The tariffs are designed to bolster American manufacturers by making imported goods less competitive. However, Cramer notes that not all domestic automakers benefited as expected, with giants like Ford and GM experiencing stock declines despite the protection. "Sounds like not everybody believes that." [03:50]

II. Core’s Acquisition of Core Scientific

A significant portion of the episode features an in-depth interview with Michael Intrader, Co-Founder and CEO of Core Weave, discussing Core's recent $9 billion all-stock acquisition of Core Scientific.

• Rationale Behind the Acquisition:

  • "There's a lot of synergy between them, the two entities, and there's a lot of positive goodness to be extracted from just the interaction of these two entities." [15:32]
  • Core Weave aims to enhance its infrastructure capabilities, particularly in high-performance computing (HPC) and artificial intelligence (AI).

• Operational Enhancements:

  • The merger allows Core Weave to access 1.3 gigawatts of existing power capacity, significantly boosting their operational footprint. "They've got got additional capacity within their fleet." [16:51]

• Financial Strategy and Market Perception:

  • The all-stock deal was designed to reduce leverage and strengthen Core Weave’s balance sheet. "It actually does take down our leverage rate." [18:29]

• Competitive Positioning:

  • Michael emphasizes Core Weave's unique software stack, which differentiates them from competitors like Oracle. "We're really able to drive tremendous shareholder value." [19:31]

• Future Outlook:

  • With the combined infrastructure and software capabilities, Core Weave is well-positioned to meet the growing demands of AI-driven industries. "There's, there's broad-based demand for the product, for the infrastructure, for the compute." [20:56]

III. Analysis of Leonardo DRS in the Defense Sector

Cramer shifts focus to Leonardo DRS, an advanced defense technology company, providing a critical analysis of its performance and future prospects.

• Company Background and Performance:

  • Leonardo DRS specializes in high-tech sensor systems and naval equipment, with 80% of its revenue stemming from U.S. government contracts. "Their equipment is in some of the most important shipbuilding programs." [34:30]
  • Recent quarterly results showed a 16% revenue growth year-over-year and a significant stock jump of nearly 9% following earnings beats. "Leonardo DRS is now 46% for the year to date and up 83% over the past 12 months." [35:00]

• Challenges and Opportunities:

  • The company's reliance on rare earth materials poses risks due to China's export restrictions. However, management remains optimistic, citing a robust domestic supply chain. "Their business is largely insulated from these pressures thanks to its primary geographic footprint in the United States." [35:20]

• Valuation Concerns:

  • Despite strong performance, Cramer expresses caution regarding the stock's valuation, noting it trades at over 37 times earnings. "It's a little pricey for the company that's on track to grow earnings at roughly 17% clip." [35:40]
  • He advises investors to wait for a meaningful pullback before entering positions, given the stock's substantial run-up. "I likely DRS the company. I think it's exactly the kind of defense contractor that can work in this environment." [35:50]

IV. Listener Engagement: The Lightning Round

In the popular Lightning Round segment, Jim Cramer interacts with callers, offering quick stock tips and financial advice.

• Caller Insights and Stock Picks:

  • Chris from North Carolina: Discusses Micron's potential in dominating the AI sector with its NAND and DRAM chips. "Micron stock ran up huge into the print, so to speak." [05:00]

    • Cramer's Advice: Suggests buying Micron in intervals as the stock dips, highlighting the difficulty in predicting its bottom.

  • Gary from Alabama: Mentions a recent IPO, Karman Holdings, seeking insights. "Tell me about Karman Holdings." [33:29]

    • Cramer's Response: Briefly touches on Leonardo DRS as a commendable stock, acknowledging Gary's choice.

  • Myra from Texas: Inquires about Anley Capital Management. "I have been against Anley for many, many years because I think all it is is just this mishmash of securities." [34:04]

    • Cramer's Take: Emphasizes a preference for growth-oriented investments over high-yield, unclear securities.

  • Jonathan from New Hampshire: Asks about investing in technical schools with potential Trump funding. "Do you think schools such as Lincoln Technical Institute should be a great long-term future investment?" [34:47]

    • Cramer's Endorsement: Supports the idea, highlighting the growing importance of technical education. "I've been thinking about that myself all weekend." [34:59]

V. Tackling Valuation Downgrades

Towards the episode's conclusion, Cramer addresses recent valuation downgrades affecting high-performing stocks, offering his perspective on whether these downgrades are justified.

• Netflix Downgrade by Seaport Research Partners:

  • "We believe that plenty of long-term opportunity set is factored into the shares of this price..." [35:50]
  • Cramer's Stance: Argues that Netflix deserves patience and confidence despite the downgrade, predicting continued growth.

• CrowdStrike Downgrade by Piper Saylor:

  • "Meaningfully increase numbers or our terminal multiple already the highest across our coverage universe." [36:00]
  • Cramer's Defense: Highlights CrowdStrike's resilience and strategic maneuvers post-issues, dismissing the downgrade as short-sighted.

• Wells Fargo Downgrade by Raymond James:

  • "Favorable fundamentals reflect in valuation." [36:10]
  • Cramer's Argument: Maintains that Downgrades for valuation reasons overlook Wells Fargo's robust fundamentals and market position.

• Overall Perspective:

  • Cramer emphasizes the importance of distinguishing between different types of downgrades and advocates for holding onto high-quality stocks despite negative analyst sentiments. "I'd much rather stick with these winners than sell them on valuation worries." [37:00]

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Notable Quotes:

• "Tariffs do matter. They raise prices almost immediately." – Jim Cramer [01:43]
• "It's a little pricey for the company that's on track to grow earnings at roughly 17% clip." – Jim Cramer [35:40]
• "Micron stock ran up huge into the print, so to speak." – Jim Cramer [05:00]
• "I'd much rather stick with these winners than sell them on valuation worries." – Jim Cramer [37:00]

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Conclusion:

In this episode, Jim Cramer navigates through the turbulent waters of recent tariff implementations, evaluates strategic corporate acquisitions in the tech and defense sectors, and provides actionable advice through listener interactions. His analysis underscores the importance of understanding market dynamics, recognizing undervalued opportunities, and maintaining confidence in high-quality investments despite external pressures.

For those seeking to enhance their investment strategies and stay informed about market trends, this episode offers a wealth of knowledge and expert perspectives to guide financial decisions.

Transcript

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[Jim Cramer]

Hey, I'm Kramer. Welcome to Mid Money. Welcome to Crane America. I've been with my friends. Geez, I'm just trying to save a little bit of money here. My job is not just to entertain. Put in context. So call me at 1-874-3CNBC or tweet me at Jim Cramer. Tariffs do matter. They raise prices almost immediately. If you slap a 25% tariff on all the cars and trucks we import from Korea and Japan, you're talking about roughly 17% of the vehicles sold in the US last year. Today, President Trump did precisely that, which would be a 25% price increase on about1.6 of the US auto market. And that's on top of the existing tariffs on everything from Japan and South Korea. Now, that's big enough to cause some inflation, which is a major reason why the average is rolled over today. Dow tumbling forward in 22 points. S&P falling point 79% and the Nasdaq losing 0.92%. That's a significant pullback. But you know what? A few months ago, I would have expected a much bigger decline in the stock market. On this news, keep in mind we have a big, persistent Trade deficit with both Japan and South Korea. You tackle a big tariff on imports from those countries, and suddenly about 17% of vehicles made there and sold here are priced out of the market. In other words, this is great news for its domestic automakers. Ford, GM should be able to clean up yet both their stocks went down today. Hmm. Sounds like not everybody believes that wasn't all. That wasn't all Trump did at all. He put a 25% tariff on imports from Kazakhstan, 30% tariff on South Africa, 40% tariffs on Laos and Myanmar, the country formerly known as Burma, which would be easier to pronounce if this had happened in March or April. The averages would have been down a heck of a lot more than three then 1%. I say three, maybe four. So is the market just ignoring these numbers? Not necessarily. It's possible that when we digest these new tariffs on top of others that are coming, more sellers might appear. Even after today's pullback, the market remains very overbought. We are vulnerable if more countries refuse to play ball. President Trump on trade, they're going to get some very similar letters from the White House and Wall street doesn't want to see that. But you know what? The last time the stock market got this overbought, we had a similar sell off like. Like this that in the next day, then a week later, we were up 3%. So if you sold at these overbought levels, you missed out a big move. At this point, we've been conditioned to buy, not sell. On weakness, which is just by road, and including tariff induced weakness. That's part of the psychology. A bigger part, though, these tariff letters are starting to feel a little. A visit from Borat. You aren't sure whether they hold up under close scrutiny, especially the one to. Is that Kazakhstan. It's like they're picking a tariff hat. Picking numbers out of a tariff hat. What can I say? I have mine. Kazakhstan. Let's see. Oh, Geez. We crushed them. 80%. Whoa. Malaysia. What are they getting? What are they going for? Oh, 32.44%. A little more specific for Malaysia. Myanmar.

[Caller]

Oh.

[Jim Cramer]

I've always wondered what the. What they're going to be for Myanmar. Oh, my. 45%. That's a lot. Oh, my God. Well, I've got it. I've got oceania. Oceania's getting 40. All right. How about Eurasia? That's a good one. 49.9. And then finally Fredonia, maybe the most important country of all. 39.42% Fredonia. Not bad. They got away with a lot now nobody knows whether to take them seriously. I obviously don't. If I talked about two countries in 1984 and a third for the Marx Brothers, we have all sorts of due dates, we have all sorts of percentages. We have little consistency. Japan and Korea make a lot of cars here. But like with Apple, which has pledged to invest $500 billion across America, building things here does not get you in the President's good graces. There is no immunity in this tariff survivor game because these numbers seem all over the place. And the White House has repeatedly postponed a reduce its tariffs. It's really hard to tell what's happening. How many times will be renegotiated, how much will go through, potentially causing inflation, making it harder for the Federal Reserve to cut interest rates. How much does any of this even matter? Big picture, compared to our trade deficit with China, our trade deficits with these other countries are practically chump change. My view is worth 25% plus again, every one of these new tariff proposals could be lowered as part of negotiation. It's all scattered. Who knows what will happen next? We're gone. We're done. I think that there are a lot of misunderstandings about these announcements. You have to go back to what Trump said, though, when he was running for president. This is really important because people forget I went over this when with Peter Navarro, trade rep today. People are missing what he first said. Back then, President Trump said that our trading partners took advantage of us by buying nothing from us and then demanding that we put up plants in their countries. They want to do business there. And that was very bad and very understandable for most of America. Now we're saying these countries don't buy enough from our country anyway. Maybe when they see these tariffs, maybe they'll buy something as a gesture of good faith. That means you want to buy the stocks of American companies to make big ticket items that you can't get elsewhere. I'm talking about Boeing planes, huge turbines from ge, Vernova machining from John Deere, Caterpillar, Cummins, that that's what countries will have to do. They'll have to buy that stuff to get into President Trump's good graces. And that's what this is really about. How can I talk about buying anything in this environment? Because I think Trump's ultimate goal with these tariffs isn't to force companies to build new plants here anymore and simply to sell more stuff overseas. Be good. Be good trading partners. That's good for profits, it's good for stocks. It's bullish. How about all the cars that Japan and Korea make here? The White House seems to believe that those foreign automakers basically do most of their manufacturing overseas. Then they assemble the cars here. The intellectual property, the big edges, that stuff, it's all made over there. Put the bodies here. So again, there's no immunity for doing business here when it comes to trade because the President thinks that almost everyone is a big bad actor when it comes to exploiting our country. And you know what? I think most of Americans agree. Now, aside from trade policy, I believe what really matters here are the provisions in the big bad budget bill. Even though it will add trillions to the national debt. Not happy about that. This legislation is full of stuff that will ignite the economy. All sorts of accelerated expense write offs that will cause a huge, a fire hose of construction. With all that on the way, it's hard to really get worried about these trade negotiations. And that's why the stock market can't collapse the, that is strong employment. More on that later. So let me tell you what we're doing for the charitable trust. We no longer believe that the tariff numbers for the President swing around are meaningful. They're just a starting point for negotiations with countries that really need access to our markets. Will tariffs be inflationary? Right now the market's trading like it doesn't matter. It's not going to influence Jay Powell as much as you might expect because it seems very one off. Of course, if these numbers are the real numbers, then yeah, it's going to be a bit of a problem. But nobody believes they're the final numbers. So we're making some small sales with the trust in order to take advantage of the profits that others want to. Want to take. I. Look, I don't. I know we're staring down the barrel for tariff gun, but if I'm right that the President's game plan is really to help our manufacturers export more merchandise, it's hard to make the case that we need to do really huge amount of selling here. Unless you're ringing the register on something that's had a huge run or something that's a dog and didn't move at all. But the bottom line, when the only stock that's down enough to create a real price break is Tesla, largely because Elon Musk trying to get back into politics instead of humanoids, it's tough to pull the trigger. Maybe if we're patient we'll get a better buying opportunity. That was a bad number. 32.4 bad number. So why don't we start with Chris in North Carolina. Chris. Hey Jim, how you doing? I'm doing well. Chris, how you doing? Very well. Hey, I know Nvidia dominates all talking points, but I'm heavy on micron. Last three years has been up 50%. Also in video, last two years has been up 100%. But I'm wondering with Micron making both NAND and DRAM memory chips, aren't they in a better position to dominate AI over the next five or 10 years? I can't tell you how glad I am that you brought up Micron. Micron stock ran up huge into the print, so to speak. And then when the print came out, it was excellent. Since then the stock has been going down. We've seen this pattern before, by the way. You know, we saw the same pattern in tjx. It's rather remarkable. It took far longer to settle down than I thought. Micron, you buy some tomorrow and then you buy again. You wait a 10% interval. I'm not getting 10% because I don't know where the bottom this thing is. But you can start tomorrow because it's down that much from the high right. In today's sea of red, I don't see a lot of areas where it would be prudent to sell. But we still have to be pat for some buying opportunities. We need some cash. The market is very overbought and some. Wow, that's a very specific number. 32.441 who that belongs to on Matt Money tonight, Core. We've announced its acquisition of course scientific in a $9 billion all stock deal. And I'm hearing more about the vision. The combined companies with Core Weave co founder and CEO Mike Intrader, then the Labor Department's non farm payrolls can tell you a lot about the state of this market. I'm going off the charts for the legendary Larry Williams to read the labor market tea leaves. And it did stump me with this land auto drs. I did the homework weekend and I'm ready to share my thesis. So stay. So 45% are gonna stay with Kramer.

[Mad Money Producer]

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[Jim Cramer]

This morning we had some big news from Correct, the data center operator that we've championed. It makes its money by renting out computing power, especially for artificial intelligence. The stock came with a whimper in March for going on to become one of the best performers of the year. Today after Core, we've announced that it's buying Core Scientific, another Data center infrastructure play for $9 billion all stock deal. These two companies are already long standing partners. Corey has been paying to lease Core Scientifics infrastructure for years, so now they own it outright. Very positive. Given that this Stock's up almost 3% from where it came public, they should be using it to pay for acquisition. That's more. Of course, the market didn't love the transaction. Corey fell more than 3% today. Core scientific plunged almost 18% in part because we've been hearing rumors this deal for a week and a half. So of course Scientific shares had already run and the old material price tag was a little lower than expected. When it comes to this company, I'm a believer and you know that. But why not go straight to the source with Michael Inserter? He's the co, founder, chairman, CEO of cor we do you get a better sense of what's happening here? Welcome back to man.

[Michael Intrader]

Thank you for having me. Great to be here.

[Jim Cramer]

All right, so Michael, once again we have to explain to people that this was actually quite a good deal for you in part because of your long standing relationship. Maybe you can tell us about the Core Scientific deal. I know you wanted him even last year for much lower price. It was worth it even at these prices. Yeah.

[Michael Intrader]

So one of the things for to understand is that like the two companies have been working together for an extremely long time. Our first contract with Core Scientific dates back to 2018, where we use them for hosting resources on GPU compute for cryptocurrency money. And so we really know the team over there, they really know us. There's a lot of synergy between them, the two entities and there's, there's a lot of positive goodness to be extracted from just the interaction of these two entities. Over the years, we've kind of built and expanded our relationship. As our company has evolved, they have evolved with us. They have built up infrastructure that is capable of supporting the type of compute that drives our business forward, the accelerated compute, the hpc. And you know, we continue to work with them really closely. And it became an opportunity to kind of bring them under the same tent to work with us and to build a larger company that's capable of building and extending the offerings that Coral brings to the most demanding clients in the world. And we took advantage of that. We move forward in a really great deal with them that I think will be very accretive to both parties.

[Jim Cramer]

And you mentioned special things that they have 1.3 gigawatts of existing gross power capacity is really pretty terrific that you use that immediately.

[Michael Intrader]

Yeah, so. So we've got a pretty big footprint with them already. I think we're, we're about 850 megawatts worth of infrastructure already contracted with them. They've got additional capacity within their, their fleet. That is some of it is going to be, be able to be repurposed to extend our continual build of infrastructure. Some of it probably will be more crypto focused over time.

[Jim Cramer]

And so you keep some of the crypto.

[Michael Intrader]

We intend to, to, to disgorge the company of the crypto only assets, assets that we don't really feel like can be efficiently or economically converted into hpc.

[Jim Cramer]

Management of court of Core Scientific when I spoke with them, felt that almost everything could be repurposed.

[Michael Intrader]

Yeah. So, so with enough time and money I think everything could be for us. It's just a question of which assets are located in jurisdictions and have access to infrastructure that, that make it most productive for us.

[Jim Cramer]

Now it was worth it. Obviously the deal last year, year would have been something if you can could have been able to get it for $5.75 in cash though the way this deals work, the way I look at it, this actually builds your equity up. It's, people have to understand the way you do your accounting and how this makes you even better in terms of less leverage. Yeah.

[Michael Intrader]

So it actually does take down our leverage rate.

[Jim Cramer]

Yeah.

[Michael Intrader]

One of the things, you know, because.

[Jim Cramer]

The bears were saying leverage, leverage. You and I were saying 40 bucks given away.

[Michael Intrader]

Yeah, so, so you're absolutely right. Like, like it does, it does incrementally bring down our leverage which is great. And you know, it really does allow for an opportunity for us to expand our, our footprint and to ensure that we're in a position to provide best in, in class infrastructure to our clients right now.

[Jim Cramer]

One thing people have to recognize is that you kind of, I don't see leaked it, but you kind of made it pretty clear business is dynamite right now.

[Michael Intrader]

Yeah, listen, we're, we're, we're, we're busy. We've got a tremendous amount of demand for the product that we bring to market. You know, there's, there's a little bit of a misunderstanding still within the market in terms of how important the software stack that we have built and augmented.

[Jim Cramer]

People just think you're just like, you're just a reach.

[Michael Intrader]

Yeah, that's, look, you and I talked about this right at the beginning is the market's going to take some time to understand the extent of our business and the differentiation that's associated with how we go about running the software that drives the infrastructure. Earlier this year we acquired weights and biases and that's a really great example of reaching all the up the stack into the software layers as opposed to core Scientific, which is really more down the stack into the physical infrastructure. And by putting that all under the same roof, we feel like we're really able to drive tremendous shareholder value.

[Jim Cramer]

Now let's say for something that people maybe understand in terms of strength, not everybody got the, the, the Nvidia GB300 NVL72 platform so fast, did they?

[Michael Intrader]

Yeah, so, so it's not even a question of whether or not they got the platform this fast. It's a question of is there infrastructure, is there software, software built to be able to bring that online. And you know, other people got it actually before we did. But our ability to kind of take the infrastructure and operationalize it and deliver it into a performant configuration for commercial use is just unmatched in the market.

[Jim Cramer]

Right, so you still speaking to Jensen One, a big shareholder, he expressing that the demand is still incredible?

[Michael Intrader]

Yeah, you know, you're feeling that demand from, from Jensen, you're feeling it from my peers across the, the infrastructure and cloud space. There were some very large deals. Ours was a $12 billion deal. There was another extremely large deal that was announced after that the last few weeks. You know, you're continuing to see broad based demand for the product, for the infrastructure, for the compute, to be able to drive artificial intelligence.

[Jim Cramer]

My sources indicate that there are many private equity firms that feel like, you know what, we got a bit off a little more than we can chew, maybe we ought to sell them. Would those deals be accretive to you? Depends on the terms. But private equities, not everybody in private equity knew what the hell they were doing when they went into this business. You told me that would happen. Here it is, it's starting to develop, isn't it?

[Michael Intrader]

Yeah, so, so look, I think there's, there's, there are opportunities to position yourselves to take advantage of this wave. And a lot of different folks took different positions in terms of how they wanted to address, you know, the super cycle that's really being, that is driving. And our approach was to really start as close to the base layer as we could. You know, the, the, the core scientific is a, is another example of how we get down really to, to the bricks and mortar and kind of work our way back up through the physical compute, through the infrastructure stack, all the way up to the top level where you see awaits and biases or other software extensions.

[Jim Cramer]

Now you obviously have been watching the development of Oracle stocks double because they're getting in this business, are they Offering the same kind of thing to, to a hyperscaler as you do.

[Michael Intrader]

So Oracle has its own set of products that they're offering and they are a formidable competitor. They are one of the companies out there that I think that we compete with.

[Jim Cramer]

Right.

[Michael Intrader]

In terms of being able to offer infrastructure to, you know, the AI labs that are, you know, are offering infrastructure to the hyperscalers. But you know, from our position, we really believe that over time what's going to differentiate us from anyone else is the software stack that drives the performance that we're able to achieve on our infrastructure.

[Jim Cramer]

I'm glad you brought that up because in the time we got to know each other, what I'm trying to explain to people is, look, Oracle's great company and we know, and Safrakatz is great, Larry Ellison's great, but when it comes to core competence, the people I know in this business want to work with you because you guys are what you said, you're kind of like, you parachute in when things are broken, which things do break, you are the part of the stack. And in many ways you are not just a dumb facility, you are a smart facility, which is why people want to partner with you.

[Michael Intrader]

Yeah, look, when we built our software stack, we kind of built it from scratch, right? Like we started with a blank sheet of paper and said make every decision based on optimization of this infrastructure solution. We're not trying to incorporate any legacy technology, we're not trying to incorporate any history of success or failure. We're really just saying based on all the options in front of us, what is the best solution? And when you face a problem, that way you really can build into your software, into your hardware, into the way that you deliver the compute incredible performance enhancing step function that just make it really easy to do the work that these companies have to do on our infrastructure.

[Jim Cramer]

At your suggestion, I saw it myself with my team, I wanted to know for sure that this wasn't just like some empty place where there's just lots of different silos. It's very clear that it's filled with software that works very well with what Jensen brings to the party.

[Michael Intrader]

Yeah, no, it really is hand in gloves. You've got to be able to bring the hardware, you got to be able to bring the data center and you've got to be able to bring the software stack to deliver it.

[Jim Cramer]

Well, once again, congratulations. The stock. I understand how the stock had to be down because of a stock deal. I also know that the shorts are trying to jump all over again. And my advice to them is good luck. That's Michael Intraders, co founder and CEO of Core Weave, a deal that we were really behind by the day the moment it came public and ever since then, money's back.

[Mad Money Producer]

Coming up, could the labor market be the key to a continued rally for stocks? Kramer's going off the charts to find out next.

[Dell Representative]

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[Jim Cramer]

Every so often I do get a call about a company that I either don't know or simply haven't checked up on a while. And whenever that happens, I always do the homework. So back because this show is pointless if I'm not answering your questions. We are idea driven when mad money. We're looking for ways to help you make money. We have to vet what you give us in this vox popularized show. Which brings me to last Wednesday when Chris in Pennsylvania asked about a company called Leonardo Drs. That's DRS for homegamers and I told him I could take a look. This is actually an advanced defense technology company. It's been around for a long time. It was founded in 1969 as diagnostic retrieval Systems. Back in the day it was a pioneer in passive sonar technology for the Navy, which allows submarines to stay undetected. During the Cold War, men, these guys, they made out like bandits. And after initially listing on the New York Stock Exchange 1981, the old DRS was bought by Finn Mechanica, that's an Italian aerospace and defense company, in 2008. Then Mechanica then changed its name to Leonardo in 2017. Fast forward to 2022. The DRS business re entered the public when Lander emerged with Rada Electronic, that's an Israeli defense contractor specializing in tactical radar. Under the deal, Rada shareholders got about a 20% interest in combined entity and Leonardo, the parent company retained 80%. The combined business was named yes, Leonardo DRS. So what does the new Leonardo d' Art look like? The company gets 65% of its revenue from advanced sensing computing. Think high tech sensor systems, signal intelligence systems and radar systems. That's the nuts and bolts of modern warfare. The other 35 cent comes from their integrated mission systems business which makes advanced systems for power conversion, control, distribution, ship propulsion, force protection and logistics. Specifically, they make a ton of hardware for the Navy. Their equipment is in some of the most important shipbuilding programs, including the Columbia class ballistic missile submarine. As these heavy duty submarines and other Navy vessels become increasingly electrified Leonardo DRS this is looking at a major opportunity. Altogether, the US government is their largest customer, accounting for roughly 80% of total sales across the Navy, Army, Air Force and the rest of the Defense Department. So that's what Leonardo Drs does. But how's it performing? Let's look at the most recent quarter. When the company reported back in May, they delivered a sizable revenue beat with 16% growth year over year. Both of their two big segments did better than expected, driven by strong demand for Leonardo Drs electric propulsion. I'm sorry, electric power and propulsion systems, as well as their tactical radars and naval network computing programs. All that Translated into a 3 cent earnings beat off a 17 cent basis. Now to be fair, landowner does have some exposure to rare earth materials which have risen in price as China imposes stricter export restrictions. Remember, right now the Chinese are the main source of this stuff and our relationship with their government is tricky to say the least. Simply, management's highlighted their exposure to germanium and that's a critical component in the company's thermal imaging systems where China controls 60 to 70% of the global supply. That said, management remains confident that the volatile tariff environment will will have a minimal impact on their operations. They believe that their business is largely insulated from these pressures thanks to its primary geographic footprint in the United States, with their domestic supply chain predominantly comprised of American companies. While the US government accounts for roughly 80% of Leonardo's business, the remaining 20% comes from from close allies Canada, Israel, South Korea. Their international business was the headwind for revenues this past quarter as the company lapsed significant deliveries to Ukraine last year. But management believes that the rest of this business can outpace the the growth of the domestic business through the rest of the year makes sense. Peace in the Middle east remains elusive. Another positive indicator. Leonardo reported a book to bill ratio above 1 for its 13th consecutive quarter, reflecting strong future demand. Put all together, you can understand why the stock jumped almost 9% on the day reported. So the business is sad, the numbers are good. So then we have to ask, what's the bull case for sticking with the stock? Keep in mind, Leonardo DDRs is now 46% for the year to date and up 83% over the past 12 months, meaning you're not exactly early here. That said, Max is pretty optimistic about the future. For starters, they believe they can benefit from key development Fed spending priorities under the Trump administration, particularly in shipbuilding. This shouldn't be too much of a stretch considering President Trump signed an executive order earlier this year to create the Maritime Action Plan aimed at revitalizing our maritime industry, otherwise known as the Make Shipbuilding Great Again order. Plus, the company sees an opportunity to benefit from President Trump's Golden Dome initiative, especially because they have the equipment to help counter drone attacks. Such a good company. At the same time, it doesn't hurt the landlord. DRS paid its first ever dividend just this year. While quarterly payment of 9 cents and a.8% yield may not turn any heads, it's certainly a signal, right, that management's confident about its outlook commitment to returning capital shareholders. You don't start paying a dividend out of nowhere if you're all that concerned about making the numbers even better. Leonardo announced his first buyback ever this year. And even if it was only for 75 million. Again, it does matter. Not a crazy amount, but always good to know that the company's in there buying its own shares right alongside you. So where do I come out on this one? If land or DRS were still in the mid 30s, I'd be pounding the table. But now it's 47 change. Like the other small mid cap defense contractors, it's had a huge run this year and the stock now sells for over 37 times estimates, paying too much for those earnings. That's a little pricey for the company that's on track to grow earnings at roughly 17% clip. I'm willing to double that. Say pay 34 times earnings stretch. Here's the bottom line I likely drs the company. I think it's exactly the kind of defense contractor that can work in this environment. But the problem is it has been working. It's very, very well where it is. All right, if you don't own it already. I wait for meaningful pullback before you start a position. Yes, if you have to buy a little here, but then you got to wait for it to come down because it has had such a big run. Mad money is back after the break. It is time. It's time for the white male Christmas My Death rapper of course save the name is Tony. My bad buy Castle sun just cleared. No, course not. Christmas temper Stair FR and then the writing round is over. Are you ready Ski Daddy how the light round Cravers. And start with Gary in Alabama. Gary.

[Caller]

Hey, Jim, I know you're a tomato connoisseur and if you haven't tried the zebra variety, you should check those out. They're outstanding.

[Jim Cramer]

Well, that is the tip of the half. That's the tip of the half. Thank you. 42%. 40% powerful now. Go ahead.

[Caller]

There you go. The zebras.

[Jim Cramer]

Yeah.

[Caller]

This is a fairly recent IPO that I stumbled across a few months ago. I bought it. I've made a little money, but I can't find out a whole lot of info about this company. Tell me about Karman Holdings.

[Jim Cramer]

Like you know, the missile defense. I mean the missile story is good. That company came public in February. It really worth a piece for us. You know, we should be doing it. We did it. Leonardo Drs. These are the kinds of companies that are making a lot of people a lot of money and I thank you for bringing it to our audience's attention. Came out, came public in February. Let's go to Myra in Texas.

[Caller]

Myra, much gratitude for the once in.

[Jim Cramer]

A lifetime opportunity to come to the annual meeting in New York City. Oh boy, it's going to be fabulous. Going to throw a lot at you. A lot at you. We got a lot of Jeff Marks. I got a lot planned. I did a lot of work this weekend on it too. Thank you. I can't wait to meet you and we'll get some pictures and have some fun. How can I help? Yay. Thank you so much. What are your thoughts on Anley Capital Management? I have been against analy for many, many years because I think all it is is just this mishmash of securities that I never know what they are because they don't, you know, they don't really tell you and it's got a big yield. But I want to own growth. Growth is the only safety in this market. Let's go to Jonathan, New Hampshire. Jonathan.

[Caller]

Graham. How you doing?

[Jim Cramer]

I'm doing well, Jonathan, how are you?

[Caller]

Yes, I have a question. If Trump does invest millions or billions in technical schools, do you think schools such as Lincoln Technical Institute LIMC should be a great long term future investor?

[Jim Cramer]

Yes, I do, actually, I do and I've been thinking about that myself all weekend. That that's where you want to be. And that, ladies and gentlemen, conclusion of the Lightning round.

[Mad Money Producer]

The Lightning round is sponsored by Charles Schwab. Coming up, Kramer's got a bone to pick with some analyst. Downgrades of stocks that have had big runs. Don't miss his take on the names.

[Jim Cramer]

Next. It is time. It's time for the white round. Christmas, my next rapper. Say the name is Tom. Just cleared, no course, but it's fine. And then the writing round is over. Are you ready, Ski daddy? Tell the light round crazy. Start with Gary in Alabama. Gary.

[Caller]

Hey, Jim. I know you're a tomato connoisseur and if you haven't tried the zebra variety, you should check those out. They're outstanding.

[Jim Cramer]

Well, that is a tip and a half. That's a tip and a half. Thank you. 42%. 40% tariff on that. Go ahead.

[Caller]

There you go, the zebras.

[Jim Cramer]

Yeah.

[Caller]

This is a fairly recent IPO that I stumbled across a few months ago. I bought it. I've made a little money, but I can't find out a whole lot of info about this company. Tell me about Carmen Holdings.

[Jim Cramer]

Like, you know, the missile defense. I mean, the missile story is good. That company came public in February. It's really worth a piece for us. You know, we should be doing it. We did it. Leonardo. Drs. These are the kinds of companies that are making a lot of people a lot of money and I thank you for bringing it to our audience's attention. It's came out, came public in, in February. Let's go to Myra in Texas. Myra, much gratitude for the once in a lifetime opportunity to come to the annual meeting in New York City. Oh boy, it's going to be fabulous. Going to throw a lot at you. A lot at you. We got a lot of Jeff Marks. I got a lot planned. I did a lot of work this weekend on it too. Thank you. I can't wait to meet you and we'll get some pictures and have some fun. How can I help? Yay. Thank you so much. What are your thoughts on Anley Capital Management? I have been against analy for many, many years because I think all it is is just this mishmash of securities that I never know what they are because they don't, you know, they don't really tell you. And it's got a big yield. But I want to own growth. Growth is the only safety in this market. Let's go to Jonathan, New Hampshire. Jonathan.

[Caller]

Hello, Graham. How you doing?

[Jim Cramer]

I'm doing well, Jonathan, how about you?

[Caller]

Yes, I have a question. If Trump does invest millions or billions in technical schools, do you think schools such as Lincoln Technical Institute, Linc should be a great long term future investment?

[Jim Cramer]

Yes, I do, actually, I do and I've been thinking about that myself all weekend. That that's where you want to be and that, ladies and gentlemen, conclusion of the Lightning round.

[Mad Money Producer]

The lightning round is sponsored by Charles Schwab. Coming up, Kramer's got a bone to pick with some analyst. Downgrades of stocks that have had big runs. Don't miss his take on the names.

[Jim Cramer]

Next, let's talk downgrades. Sell, sell, sell. There are many kinds of downgrades in this business. Analysts might think that earnings are at risk or maybe the companies already missed projections. That's an easy downgrade. There's the kind of downgrade where the company has lost its way and simply doesn't seem to be worth investing in. Totally justifiable. And then there's the valuation downgrade where nothing's wrong with the company at all but the stock's going too high for some analysts to justify our buy rating. I have no problem the first two kinds of downgrades. We live in a market that punishes stocks for merely meeting estimates and annihilates them for missing estimates. Any analyst worth their soul is going to be try to get out, get you out of those situations. The valuation downgrades never like them. They get you out of a stock, but they never seem to get you back in at a lower level. Who's to say that an expensive stock can't go higher? Happens all the time. This morning we saw host evaluation downgrades in part because this market's been so fantastic, at least until today. The most glaring, a firm called Seaport Research Partners downgraded Netflix to neutral after fantastic run. Listen to this quote. We believe that plenty of long term opportunity set is factored into the shares of this price and the company needs time to execute against expectations and advertising, aggregating, launching experiences and expanding shares again. And now the risks mentioned, they're substantial, but Netflix has shown time and again that it can pull these things off. I think the company deserves the benefit of the doubt. If Netflix succeeds, and I bet they will, anyone who listens this down, they will miss another big move. How about CrowdStrike, the cybersecurity play that we own for CBC investing? This morning Piper Saylor downgraded the stock. The analyst says he can't foresee anything near term that would, quote, meaningfully increase numbers or our terminal multiple already the highest across our coverage universe, end quote. Okay, so CrowdStrike's going up a lot and certainly expensive. But then get this quote. Yes, this is a valuation goal again. There is a sense of deja vu as it was July of last year when we lowered our opinion on valuation, end quote. Again, I get that I mean, if you call Last year on July 19, CrowdStrike had a bug that shut down 8 million computers worldwide. We're about to annualize that algo and I think it'll be celebrated one of the greatest comebacks in business history. Harvard Business School case study for certain CEO George Kurtz met with as many customers as possible and kept most of the business, allowing the stock to Aurora. I think you'll get a lot of full price contracts out of the companies he offered discounts to last summer, giving him a good chance to raise numbers. Number bumps coming so I'm not going to take this valuation downgrade seriously given the fact that the analyst was indeed dead wrong when it did the same thing last July. Full disclosure, we sold some CrowdStrike for the travel Trust in effort to balance our portfolio, but we're not making a call to stock valuation. We regularly trim our winners simply because we don't want to be green. Meeting Finally, Raymond James downgraded Wells Fargo, another Chapel Trust name with the very dismissive quote downgrading to market perform. This is a strong buy to market perform. Wow. Favorable fundamentals reflect in valuation. Now the analysts going from strong buy to hold two markdowns. You think something was wrong, right? No, they just think the upside is baked into the share price. I think it's crazy. First, Wells Fargo is priced like almost any other bank stock, so it's not like there's a premium valuation. Second, these guys just got out of the penalty box when the Fed lifted its long standing asset cap lying walls to do more lending. Third, the bank stocks have become leaders here and this is one of them. How the heck will this analyst get back on? I don't think he can. Again, I get it. The stocks had a nice run, but so many stocks have had runs so that that's become a frivolous reason to downgrade. I don't blame the analyst community for getting more cautious after a major rally. They should. But some stocks deserve the benefit of the doubt. With Netflix, Corral Strike and Wells Fargo, you're buying into franchises with excellent bona fighters and very smart CEOs. I'd much rather stick with these winners than sell them on valuation worries. I just don't think you'll be able to get back into such high quality stocks at an easy to find lower level. I like to say that there's always bull market somewhere. I promise I'd find it just for you right here. Mid Money, I'm Jim Cramer and I'll see you tomorrow.

[Podcast Disclaimer Voice]

All opinions expressed by Jim Cramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC, NBCUniversal, 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 we quilt this.

[Jim Cramer]

City with a comfy roll.

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Quilted Northern is quilted with three cushy layers for your comfort.

[Jim Cramer]

The quilted comfort of Quilted Northern Keep.

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It quilted with Quilted Northern.