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Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 3/5/24
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There's always a more market summer, and I promise to help you find it. Man money starts now. Hey, I'm Kramer. Welcome to Man Money. Welcome to Cray, America. If you want to make friends, I'm just trying to save you a little money. My job, not just entertaining to educate, put days like today in context, and you need that. So call me 1-800-743 CMC, Tweet me to Jim Kramer. Look, we have what I call "top-y" action, not bubbly action, "top-y." Easy to get these confused. A top is much less devastating than a burst bubble. One glance at the average tells you that something is wrong right now, Dow's sinking 405 points has to be plunging 1.02%. Now that's like plummeting 1.65%. We start off reading. And then unlike much of the time since the market began to rally in November, we actually then finished even lower. It had been the opposite pattern. Some stocks managed to buck the trend, of course, but most can't, and that is classic top-y action. Bubbly action, on the other hand, is when you go straight up and then straight down, with the only respite being wild short squeezes on the way down. We saw bubbles in 2000 and in 2006 and 2007. We saw a ton of top-y action in the 90s and the 2010 to 2011 period. Of course, 2000 was all about the dot-com bubble collapsing. Dragging down an entire generation of investors who put their money in bogus internet companies with stocks that went into free fall. Most of these people never came back to the stock market. Then in 2007, we had the bursting in the housing bubble. Lenders would give anybody a mortgage because they were selling these loans to third-parties. We packaged them as mortgage-backed securities. Then they rolled them in increasingly obstrues to rid us to hide the risk. When the housing bubble collapsed, we got a financial crisis that nearly brought down our entire economy. The first one, the dot-com implosion destroyed confidence in the stock market for at least a generation, maybe permanently. The second one was systemic, destroying some major finance institutions and leading to the great recession. That was truly a horrendous bear market. Now, those were bubbles. Right now, we've got nothing like that, but I'll admit that the market feels toppy. It feels toppy, which is worse than frothy and therefore not great. What's the problem here? More accurately, what are the problems? Exhibit A is Tesla. The electric car company saw its stock top out of $299 this year. It's now about $180. There's about $7 today. Now, that was one of the magnificent seven. With any other company, we call this a disaster. Tesla gets a partial pass because of Elon Musk. Oh, but it's not in good shape. Why? The Tesla sales are terrible in China. Chinese water makers are putting up. They're decimating everybody's numbers all over the globe. And they're hurting Tesla's in China. By the way, they also just got hit by an arson attack and then shut down the plant in German. They created a pickup truck that seems still worn to expensive, not in Utah. The competition for China is a serious problem. Without high tariff for import restrictions, you can't keep these cars out. And if you're trying to compete with them in China, like Tesla does forget about it. Making matters worse, electric simply aren't taking over the world like we thought they would. Even with Biden's subsidies. All out of Trump wins the election, you better believe those subsidies are going to go away fast. So not a great time to be a Tesla shareholder. Even though I still believe in Elon Musk and believe that something good can happen. Just that now. Second, sadly, in this tale of what is Apple? The long knives are out for this company practically every day now. Like with Tesla, China's become a problem. The iPhone may be just too expensive for the troubled economy. We're hearing from a questionable source that Apple's phone sales are down 24% in China this year. I emphasize questionable. This is on top of the many negative stories, but I'll Samsung as in now more AI infused phone got that from Best Buy and the Vision Pro has already lost its mojo. That's from various press reports. But people are constantly predicting Apple's downfall. And over the long term, they end up being proven wrong. Short term though, the flood of negativity can really hurt the stock. I always say own Apple don't trade it because it's too hard to sell the stock in the top and then buy it back at the bottom. But if you think you can pull that off, be my guest. I've made very, very big money for my travel trust by buying and holding after doing my homework. I'm not changing now. Could it go to 160? Of course it could. Third side of the time, the insane action in the shares of super micro computer. Now we had founder Chairman Seo Charles Lang on the show at the end of January when this AI stock and Nvidia partners today for $495. Two weeks later, it had doubled. Now that's a power blog move the first order and those moves are terrifying. They almost always, always and badly. The stock warned again that when we learned last week that super micro is being added in a terrible timing, it has to be 500. It took up almost another 20% yesterday as people tried to get in ahead. That is idiotic behavior, idiotic. Super micro did not deserve this move and it's a dreadful sign because it's the frothiest stock in the entire stock market. Fourth, the most sane part of the tech space is enterprise software. And within enterprise software is a segment called DevSecOps, a combination of development, security and operations software. That is the hottest software segment there is. And GitLab, which reported last night, is the poster child for DevSecOps with a big artificial intelligence tie-in. Oh, it reported a terrific magnificent quarter-in, but gave stunningly weak guidance. The analyst badgered and badgered management to no avail. They wouldn't even say it was a conservative forecast. GitLab stock fell more than 20% and it honestly had a surprise it didn't fall more. Fortunately, it wasn't a surrender. This is snowflake, which lost its brilliant CEO Frank Slootman last week. It gave him a very weak forecast. That one still can't find its footing. $234 stock goes to $1.66, which still knows sign of a bottom. Then again, Workday and Salesforce had good quarters with no big resignations, and their stocks are still being hammered. Here's the whole group's going out of style rather rapidly. Fifth, there's a company called Celsius, Cranmer Fade Beverage Company, heavily shorted stock. When Celsius reported terrific quarter, the shorts immediately put out stories, arguing the numbers weren't real, so the stock fell. It caused a quick and terrible panic. But it wasn't enough to keep the stock down. There is a 20% short position. The shorts were what I call operating line. You know, Celsius is up 20 points in a straight line over a couple of days. Again, though, that is toppy. More toppy-ness. How about when you get stocks like Target and Air Environments? Sorry, Target up 18 today, Air Environment up 136. Target rally, because inventory is down. It's revamped. It's loyalty plan. Air Environment is winning because Uncle Sam is finally embracing its cheap drones that they've been very useful in Ukraine. Then there's the action in Bitcoin. As long as people thought Bitcoin would be used to buy things and pay people, there was always a ton of volatility. But once the exchange traded products got rolled out, that eliminated the source of tension that came from ever having to sell this stuff for cash. The bears didn't understand that when Bitcoin stops trying to be a currency, it would actually become much more popular. And that's what's happened. No more volatility. Notice services from NFTs, wherever the heck those were. Just straight up. Of course, the much moving Bitcoin is toppy is old. Get out now that it's hit its old high. But you have very smart people like Michael Sillow, the CEO of MicroStrategy, selling $600 million in convertible bonds to buy more Bitcoin. Hey, look, that could prop it up. I don't know. I always find it curious, though, when someone announces their intention to buy something without the slightly degree of cashiness. It's kind of like you want us to walk it up or something. Now, against all of these signs of a top, what do we have aside from the rotation in inexpensive stocks like the banks? So you know the answer. We have Nvidia. You know, I feel about Nvidia. That said, I'm not oblivious. Oh, yes, we did have crowd circuit for a terrific quarter after the close. Cyberscuri still has Mojo, or at least this one does. It went up way too much for my taste. Again, I don't like stocks that screen parabolic, because then they can be parabolic and then lead to big declines. Even if they're good, here's the bottom line. Toppy action ends only when they get to everything and everyone. And that does include Nvidia, even as I can't think of a reason for it to come down and we're doing nothing but the trust. And that's the real oddity. It doesn't matter. When the market gets toppy, nobody needs a reason to knock down high-flying stocks. It happens all by themselves. Mike in Illinois, Mike. Jim, how are you? I'm doing, well, Mike, trying to figure out a very difficult market all of a sudden. How are you doing? I'm great. Thank you to you and Jeff and the crew for all you guys do for us. You're all great. I'm a club member and I've been watching it for many, many years. Listen, I owned some Eaton. I bought a little bit today on the clothes because I thought the market was down a lap. But I'm wondering if I should maybe buy some more if it's down again tomorrow. Weirdio, Jeff and I were talking about buying more Eaton. We feel like it's got him because we have such a great basis on it. We want it to come in a little more. I think you should wait when we do. I think just follow up Bolden's has been a real winner. And thank you for being a member of the club. We've got some good ones. Let's go to Jerry and Missouri. Please, Jerry. Hey, Jim, thanks for taking my call. Of course. Jim, it seems that if a company has anything to do with electric vehicles, its stock is cursed. Yes. Even though the best selling car worldwide is the model. Why? It just doesn't seem fair. And I know that is why Hertz is in the tank, but is Hertz a broken stock or a broken company? I actually believe it's a broken stock. I have great confidence in Steven Schur, who was the CFO at Goldman for a long time and did a fantastic job. The stock is very daunting, but the company isn't. And it's a great brand name. And it's come down so much that I think it's tempting, but I know that you fight the tape with your own carl right now in this market, but thank you for the time words. When the market gets copied, nobody in these regions knock down high-flying stocks. They happen to hold by themselves. Well, maybe tonight, the surge of interest from our makeup products isn't a novel. It's not a court. It's not an idiosyncrasy. It's an oddity. Yes, oddity tech. And I've got the CFO. Man, after an unusually strong start to year, how worried should we be about this recent market pullback? I'm going off the charts to find out. And it is disconcerting. And I've got an off the tape company whose name you might not recognize, but I'm finding out if it has a gross strategy that still has the meat. I'm talking to the CEO of R.B.'s Owner Inspire Brands. Yes, they own Dunkin' Tusses. Stay with Cramer. [music] Don't miss a second of Mad Money. Follow @JimCramer on X. Have a question? Tweet Cramer. #MadMensions. Send Jim an email to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. Miss something, head to madmoney.cnbc.com. Resourceful small business owners know how to get value from the purchases they already make for their businesses each month. The Enhanced American Express Business Gold Card is designed to take your business further. It's packed with benefits and features, like four times membership rewards points that automatically adapt to your top two eligible spending categories every month on up to $150,000 in purchases per year. So you earn more where your business spends the most. Plus up to $395 in annual statement credits on eligible business purchases at select shipping, food delivery, and retail subscription merchants. And with flexible spending capacity that adapts to your business and access to 24/7 support from a business card specialist, you can continue to run your business with confidence. 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Distributed by four-side fund services, LLC. What just happened to the stock of an oddity tech? The Israeli direct-to-consumer cosmetics play. I mean, here's a recent IPO that's finally seemed to find its footing. Earlier this year, after the lock-up, one insider selling Spartan January. Over the past couple of weeks, this thing had rallied roughly more than 20% from its mid-February lows. But after auditing tech reported tonight, it stuck on poverty after hours trading. I gotta say, this reaction to this one tells you a lot more about the market right now, not about oddity. Oddity reported an excellent set of results, delivered a 5-cent earnings beat off 12-cent based on that's really hard. Higher than expected sales, up 44% year over year. However, Imagineers' Guide was considered to be not perfect, so it's mostly better than expected, but the gross margin outlook for the current quarter came in light. Full-year earnings forecast was a bit short of expectations. Remember though, we are in a very unforgiving mode right now, 'cause the gross margin is your extraordinary. Every spot of stock got a bit straight after hours trading, and you know what, I think that's crazy, given the strength of the numbers here, but don't take it from me. Let's dig deeper with Lindsay Drucker-Man, the CFO of Oddity Tech, to learn more. Ms. Mann, you are a seasoned pro. I welcome you back to me at Money, and maybe you can explain to people that sometimes a great quarter should be what people should be thinking about, and not necessarily a penny or two on a forecast. Listen, Jim, we're here to build something huge. We're here for the long term. We're not focused about one aftermarket reaction to your point. It was an unbelievable outcome for us in the fourth quarter to cap off. An exceptional year, we delivered 57% revenue growth for the full year. At 20% adjusted EBITDA margins, we beat on every single line, effectively revenue, profitability, and earnings per share, and that result on their face are excellent, but when you look at other direct-to-consumer companies, we are absolutely an outlier, and we will continue to outperform. We have lots of runway for growth. I'm really glad you put it that way, because we're in a very uncertain market, and what's happening is, I mean, what are my friends? George Kurtz runs CrowdStrike. The stock's up 70, because they didn't have a shortfall. You're down, because you just keep delivering good numbers. We have to put things in context, and maybe say to somebody, "You know what? Like ELF, which I like when it fell from 20 to 16." I mean, hey, because you did indeed have a gross, incredible, 1700 basis point year over your gross market. I mean, no one has that. That's incredible. Yeah, our business is truly firing on all cylinders, and this is just for now, our financial performance right now is amazing, but as you look to the future, we're even more excited, and we're really focused on the two most important dynamics affecting what we believe is the, you know, we compete in what we think is one of the most attractive and lucrative towns on the planet. I know you like the beauty sector a lot. Absolutely. We're owning the two most important trends. Number one is the consumer shift online, and number two is the consumer shift to high performance science-backed products with oddity labs where we landed on it. Let's talk about that, because of course, look, I have a fashionista daughter, and I said, "How about these guys?" And what she said was, she and her similar friend both love the foundation and concealer, online share matching system works perfectly. They're not well off, but they're well enough to be able to, her friend at her wedding, they made each other up with your stuff. Now, these are people who would love to be able to buy the absolute best, and they think that you're the best because it works scientifically. Yeah. How is that possible? So, you know, the beauty category had always been under-penetrated online, and if you talk to the companies, they say the customer doesn't want to shop there. The truth is the customer does want to shop there, but she needs help. And so, what we've done with our technology is instead of a store associate who helps you understand what's the right tone, undertone, ingredients, routine, we have machine models that do that for you better than a store associate can do. And that's been the huge unlock for us online, was figuring out how to leverage data science, AI, computer vision, all to drive very, very profitable conversion and growth online for the category. Now, you look at an outfit. My job has just owned it for years and years and years, and it's doing quite, unfortunately doing poorly estate water. Have they just not kept up with the kinds of things that you're doing? Listen, I think estate has over many years built an extraordinary business where they compounded for a very long time. They are running an old playbook, which for us, we believe the consumer has moved past. And this is part of why our opportunity is so attractive. We operate in an enormous global market that is dominated by legacy incumbents that have under invested in technology, and the consumer has just moved past it. So when, like your daughter, the consumer engages with our technology platform, we see so much pent up demand. That's what's driving our incredible growth. Now, meanwhile, a lot of people say, look, I'm worried about a big lock up expiration. That's coming long. I mean, you've got a very steady share base. You've got the clean balance sheet. We've got great priorities for cash. This is, again, why I'm saying that this night, this night sell off may not even exist. It may just be someone, I saw Celsius get knocked down horribly, and this talk went up 25 points in the next three days. I'm urging people to put away the short term. It's not working right now. It's not making anybody money. You've got a longer term game you're playing. And could you please explain to our people about what the notion means about the algorithm and the operating limits? Just walk through it. Yeah, and listen, on that point, we understand that for you and for other people that make their business in short term trading, that's the focus. That's not our focus. We're here to build something for the very long term that continues to compound durably over time, sustainably, and generates an extraordinary amount of value. We're not focused on the norms. We're focused on executing. As it relates to our algorithm, we've committed to sustained minimum 20% revenue growth at 20% EBITDA margins, which is top tier and outlier relative to what other companies are able to deliver. And actually, in 2024, we'll be delivering, we're committing to performance slightly ahead of that long term algorithm at 22% to 24% sustained top tier growth. I think it's fair to say that that is what I want to measure you by. I mean, if you came in and suddenly said, "Listen, we're now mid-teens," I would say, "Well, you know, Lindsey, that is not what you came on the show and said." Sure. And that's how I want to analyze your company because I would never have caught ELF if I had listened to the drumbeat of the shorts telling me they don't have it. They did have a great playbook. Your playbook is very different. There's room for both. Yeah, no, there's so many, right? Name me a stock that is an extraordinary value today that hasn't had moments where people doubted it. But we have more conviction than ever. And in fact, if you're paying attention, every single time we've reported a quarter, we've beat across all of our metrics. Always. We deliver what we say we're going to deliver, and we'll continue to do that. Well, fantastic. I'm glad you're here. You come here on an important day because a lot of people are very unsure now of what to do. And I am saying, "Please don't take your cue from the short term action." Whether it's up 50 or down 50 is probably wrong right now. So anyway, I want to thank Lindsey Drucker-Man, Audity Tech's global CFO for coming on. And I try to tell you, the people who know love this stuff, and everybody's back everywhere. Coming up, is this month's market going out like a lamb? Don't be sheepish. Join Kramer as he goes off the charts. Next. In life, we're often driven by the search for better. But when it comes to hiring, the best way to find candidates isn't to search. It's to match with Indeed. Indeed's a matching and hiring platform used by over 300 million global monthly users, according to Indeed data. Need quality candidates fast? Use Indeed for scheduling, screening, and messaging. And you'll connect with candidates in no time. And it's not just faster. 93% of employers agree that Indeed delivers the highest quality matches compared to other job sites, according to a recent Indeed survey. And here's the best part. Listeners of this show get a $75 sponsor job credit, giving your jobs more visibility at Indeed.com/MadMoney. Just go to Indeed.com/MadMoney right now. And support our show by saying you heard about Indeed on this podcast. Indeed.com/MadMoney. Terms and conditions apply. Need to hire? You need Indeed. How do we purchase market for today's Turbo Action? There's lots of small unit combat action being one by the Bears right now. Helped by a bad official warning us that we might only get one rate cut this year. It makes sense to me. It was an approximate cause of the average getting pummeled today because not too long ago, Wall Street was looking for three rate cuts. A lot of people thought we would get six at the beginning of your reality economy strongly enough. If that is no reason to even think about multiple rate cuts, which of course is bad for the market short term. It's simply a responsible central bank in the long term. So this bargain has had a huge run. And now we are in the midst of a sell off. So what's next? How worried should we be about this pullback? Well, it depends. You heard what I had to say at the top. But another way to answer the question is we're going to go off the charts with the help of Larry Williams. Here's the legendary technician. He's a market historian. Been the best in business since I was a teenager. He's written over a dozen books. He had a ton of proprietary technical indicators that everybody uses. Larry's also made some stunning calls from the last few years. He nailed the COVID bottom. He nailed the market wide bottom late October. So what does he have to say about the current moment? Just because he's been very bullish all the way up. Yeah, Larry's been so bullish since the lows of 2022 that this one's going to be hard. What about to tell you? See, every time the market's gotten hit, he's urged you to buy stocks and a weakness. He recognized those pullbacks were viable because we were at a bull market. And he knew the bull was in charge because of this cycle analysis. He'll look up the historical action and give him stock or index. Then identify patterns that seem to repeat themselves over and over. Then he projects those patterns forward to identify moments where the market's more likely to change trajectory. Now, that's what he's always looking at, change of trajectory. Now, though, Williams was actually worried that we're going from melt up, which we've been to melt down. Because the cycles are looking at a lot more negative. Although he missed it as time, it could be imperfect. And he's been, you know, he's been more negative about the minutes and seven that was worn. It only Tesla really broke down from there. Cycles are so predicted, plunge and crypto, which happened, but then it weren't higher. It's impossible to be right all the time. Just want to make a few mistakes. The other guy. Let's start with the daily chart of the Nasdaq. The price action in black and the red is the general path that the indexes followed for several years. Yeah, that's the cycle forecast. As you can see, if this historical pattern holds true, Williams would expect the Nasdaq to peak around March 15. That's what we can hear from them. Of course, he's not saying the Nasdaq will actually peak over 15. Nobody's good enough to put together a cycle forecast. They can identify the precise day at the top or bottom. That's not what this tool is supposed to be used for. As Williams explains, these cycles forecast are more like traffic lights. When the cycles headed higher, that's a green light. When it's headed lower, that's a red light. While the exact dates won't be perfect, I find it very helpful analysis. It's showing us where something like the Nasdaq is more likely to change its direction. Change its trajectory. Look, if you took your cube from Larry's cycle analysis, you could have sidesteped the Nasdaq's big decline from late last summer through late October. You would have known about the big rally to come. That's when they started late October and early November. Again, that's exactly what happened. I don't know why this methodology works, but I can't deny it. It works surprisingly often. It doesn't mean it's going to work every single time. Like I said, Bitcoin didn't work. Now, Larry's cycle forecast says the Nasdaq's likelihood to start rolling over starting around the middle of the month. Fortunately, this kind of analysis doesn't tell you much about the magnitude of a given move. I mean, otherwise, judging from this picture, you think we're going to hit you as the client. But Larry's cycles tend to be pretty reliable when it comes to predicting the duration of these moves. Based on his three points that you should expect this weakness in Nasdaq to last well in the late May. So that would mean you don't buy the first dip, right? Don't buy the second dip. Now, of course, I hope he's warm about the Nasdaq, because many of you are in it. But this tech heavy index has had a huge run, and it wouldn't shock me if it needs some sort of breather, right? It's got to consolidate the gains. So Larry wants you to knock the Russian to buy the first pullback. He's expecting a couple months a week. This evens his still believes we're in a bull market, which I think is what matters to you. All right, now beyond the Nasdaq, let's take a look at Larry's cycle forecast for the broader base, S&P 500. Now, notice this picture looks a lot like the picture of the Nasdaq, because there's a lot of overlap. Once again, the cycle forecast has been very good at predicting the intermediate tops and bottoms. The S&P 500. You can see that there and see that there. And right now the cycles are saying that the S&P is likely to peak this time around March 7. Well, just a second. That's Thursday. Remember, these dates aren't meant to be super precise. You can give or take a couple of days. Maybe maybe S&P already started rolling over with today's high in this action. Just like the Nasdaq, Williams says you should expect multiple months of selling pressure. The cycle doesn't turn positive again until the end of May. So don't buy this dip and don't buy that dip. But maybe we need to look at a specific stock to really hammer this point home. And when you know it, Larry sent it, watches the show. What do you think? Yeah, it's in video, right? It gives you a better sense of the market. Nothing. The stock held into a great... It's a newly-crowned artificial intelligence campaign. This has been one of the biggest winners in our history for the travel trust, which is why I always tell you to just own NVIDIA and don't try to trade it. However, I acknowledge that it is a volatile stock. And if you've got a huge gain, keep in mind that you're being undisciplined if you don't take something off the table. So I am not telling you that, look, you have to do nothing other than just own it. When you take a look at Larry's cycle forecast for NVIDIA in red, just like with the Nasdaq and the S&P history, suggested stocks should peak a week from now on the 12th. And that's right before the gigantic chance among state of the union speech at the GTC24 conference. And he doesn't see the cycle turning positive again until mid-May. I don't necessarily think Nasdaq's NVIDIA's due for a pullback at that badly, but maybe like the Nasdaq. The stock has had a much to run though, and we know that one can sell off hard when the market goes south. Now, this is important. I love NVIDIA too much to back away from it. You need to understand that this stock sometimes gets hit with some nasty short-term turbulence. And if Larry's right, the turbulence is only a week away. We are maintaining our position for the child of trust that, of course, I write as part of the CMC investing club. But we're also advising club members who went to sidestep the decline. There's absolutely nothing wrong with ringing the register. Oh, God of battle, steal my NVIDIA soldier's hearts, please. But I get that if you want to try to sidestep this and believe in this work, you could get a chance to be able to buy it back cheaper. And I'm not going to disagree with it. Okay? Here's the bottom line. The charges into root by Larry Williams suggest that the Nasdaq and the S&P 500 both due from nasty sell starting in the next week or two. With the pain potentially lasting through the end of May, since we're at the beginning of March, it's a long time. So brace yourselves for what could be a very difficult period. I am still believing this market and NVIDIA. But that doesn't mean that they can never go down. Let's hope to Zachary in New York, Zachary. Hey. Hey Zachary. Hey, hey, hey, hey, what's going on? It's Kenneth, man. How you doing? Come on, how are you? What's up? Good, good, man. I was just wondering, uh, my stock I have here is Oracle. Their earned report is supposed to come out sometime next week. So I was wondering what's your views on that stock. And what was the stock? Oracle. Oracle. Oracle? Oracle. Oracle. Okay, the report next week, um, the last two quarters have been miserable. Uh, so I have to tell you they're in the penalty box with me. Um, maybe this is the one that works out, but they have just disappointed and disappointed. You only get twice with me because I have three, it's not a three strikes your out game with me. It's a two strikes because I can't take the, uh, the hit for my travel trust. I have to put them in the penalty box. All right. The charts, you know, by Larry Williams, suggest that the NASDAQ and the SVP 500 are both due from the SDC selloffs, starting in the next week or two. So I say brace yourselves, and if you want us, you know, do what we call Schnitzel. Can't go off the table. Let's be my guest. Much because we've got so much. Much more meta. My dad, putting my screws with inspired brands. Okay, maybe that's a part of the company, you know, another bit. Dollars and donuts. It's the owner of Duncan, Bastion Roberts and Jimmy Johns. Let's find out about the pace of both there. I thought I'm going to talk with the CEO. And solar stocks can be in good addition to your portfolio. But you don't want to invest in every company under the sun. I'll explain to you why. And of course, all your calls, wrapping fire tonight's edition, the lightning round. So stay with Kramer. ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ You don't understand a sector. It's not enough to follow the publicly traded companies. You need to keep up with the biggest privately held ones. Take Inspire Brands. That's the restaurant company that owns a bunch of household names. You know them all. Buffalo Wild Wings Andes. Duncan, Donut, Sonic, Jimmy Johns, Bastion Roberts, among others. These guys have more than get this. 32,600 locations. Of course, 57 global markets make Inspire one of the largest players in space. On top of that, there's been speculation that they might be thinking about coming public later this year or in 2025. Give me some. But even if it stays private, you know what? We can learn a great deal about this industry from this phenomenal outfit. So let's check in with Paul Brown. He's the co-founder and CEO of Inspire Brands to get a better read on the restaurant business. Mr. Brown, welcome to Bad Money. It's great to be here, Jim. All right. Well, as a restaurateur, I have to tell you, you inspire me. You have created something in six years. In six years. And it all works. How did you get the idea? How did you get these particular businesses? And tell us your number one and everything. Yeah. Inspire Brands is a global restaurant platform with obviously six distinct brands and 32,000 restaurants. What makes us different is that we are tightly integrated. Our brands are tightly integrated around a set of shared capabilities. So each brand can benefit from the investments in those capabilities from the other. It looks more like a model that you might be familiar with in the hotel sector than it does in restaurants. You're back ready, Hilton. Yeah. Now, I'll tell you something that's amazing. I always thought that Duncan was pretty good, Ron. But I used to see there were so many areas in the country that didn't have Duncan. I was a boss for a long time, tons of Duncan's, but they just never seem to want to do anything. What have you done with that change since you took it over? Duncan is absolutely on fire. Incredible. Average unit volumes are up 30% since we acquired the brand. Those people knew how hard it is to do. And then a lot of work has gone into it. Part of it is we've replaced all of the coffee equipment and beverage equipment across the brands. The franchisees have made some great investments. It's allowed us to actually build up the iced business. In fact, we're selling more ice beverages than we are. You invented them? We did invent it. A franchisee in Rhode Island about 30 years ago got the broad idea of pouring coffee over ice. And everybody liked it. And so we went with it. Well, it's remarkable. Now, there's something that I think people don't realize. Drive-in turned out to be the way everyone, you got to totally drive this. You buy in your drive-ins with Sonic and it's still working. Well, what attracted us to Sonic is we felt that brand was perfectly set up for order ahead. It already has the ability to order ahead and bring the food out to you. Of course, we didn't know that COVID was going to come along and it actually exploded during that time. But it's actually been a great business. It's 27% order ahead sales, up 25% year over year in order ahead sales. So it's just a phenomenal concept set up for digital technology. People might say, wait a second. There are almost 33,000 restaurants that you're tapped out. But you're putting out projections that would indicate that you're nowhere in your tapped out in any of these great brands. Yeah, that's a great thing about having a portfolio. We see white space at least 2X in the United States. 2X, if you look at the white space, just given where we are. And you even dunk it as many as we have. They're still fairly concentrated in this part of the country. I know you just opened 10th in your 10,000 store overseas, right? In Netherlands, I've found what you're doing is really rather remarkable. Do you ever get home? Are you literally living at land? I guess so you get to go home occasionally, right? We have a lot, but it's really all about building the relationships with great licensees and bringing one of our brands to a licensee that may have had another brand. And it's really helping us build that portfolio. Yeah, it sounds like there's great synergy in terms of knowing how to operate. And one of the things I'm most impressed about, I've been a big wingstop backer. I admit, I like wingstop. I hadn't loved Buffalo. And you've got the BWW Go, including one in Philly where I think that we could use an additional. How is that going to work, the takeout? Well, we have over a million dollar takeout business in all of our sports bars today. And it's just a great takeout and delivery product. So we said there's just an opportunity to create a format dedicated takeout delivery. 800 square feet to 1100 square feet. Let's just take this concept into places that you couldn't put a sports bar. And we just see a huge amount of growth in that. We'll have 160 open by the end of the year. Our third one opening in Manhattan in a few weeks. In April, you're going to have one in Philadelphia. And so we have 500 commitments plus from franchisees to build those restaurants. And we've only been franchising it for 18 months. That's incredible. That is so fast. I know there's lines. You really got the word out. Now, I do want to get, I'm not going to overlook Sonic and B.R. But I have to tell you that I was when I was not doing as well as I am now, candidly. I'm very blessed and lucky. Arby's was my go-to. But then I started thinking that Arby's had lost its way. But you're starting to think about maybe a plan to make it so people realize how it's been reinvented under you. Arby's has terrific food. And it's a really exciting brand. We think there's opportunities for people to try more of that food. So we have something coming later this year that will give people an opportunity to really try Arby's in a way that they haven't before. And I'm sure they're going to absolutely love it. Okay. Now, we have, I mean, I can't leave JJ. I did Jimmy John. But Baskin, Robin, 7700 of those. I mean, these are incredible numbers that you're putting up. And there really is more room for ice cream. There's really more room for sandwiches. Absolutely. Outside the United States. Baskin, Robin's two-thirds of the business is outside the United States. We have almost a thousand Baskin, Robin's in India. We're going to cross that mark in a few months. You said something in an interview that was so terrific. You said, you know, we don't want to be in China so much. We want to be in a growth market. India. So you're not hostage to the thinking that it's just enthralled so many Americans for so long. That's not working. You have to go into China the right way. We have no exposure to China. But we love India. And we love so many of the other markets. We love Latin America. Just such huge growth opportunities in those markets. All right. So let me ask you about the health of consumer in two different ways. Is the consumer spending, health consumer GLP-1, what are you thinking? We see about 75% of Americans every year in one of our restaurants, given the breadth of our brands. And so we do see the nation. And we have been pleasantly surprised about the resiliency. There are differences based upon income level. But that's the beautiful thing about having a broad, diverse brand with multiple price points and multiple occasions. And these weight loss drugs, I mean, they're just a factor, right? And people want to have a good meal and they want to go where they are and they're going to eat it no matter what. We haven't seen any impact. We're just focused on having great, craveable food at the right price. Well, you have done it. I want to congratulate you. There are business people I meet and I'm just incredibly impressed. And one of them is you, sir. Thank you so much. Thank you very much. Okay. That is Paul Brown, co-founder and CEO of Inspire Brands. There are some fantastic articles about him and his company. And if you ever want to be an entrepreneur and really own something, this may be a great place to not get started because it's a little harder than that. But certainly have a man's money specic. It is time. And then the lighting matters. Are you ready? I'm crazy about it. So with Aaron, it puts me Aaron. Hey, Jim, how you doing? First time call. Thank you for sharing all of your investing knowledge with all of us out here. I'm thrilled that you're called through individual thoughts last year. I have a relatively new read. I've increased the revenue 17% net. It comes up earnings per share is up 15% dividend yield 5.6 T of 11.9 market cap of 3.79 billion. V key property ticker V.I.C.I. I wasn't think Santa Beach. The last acquisition they made, they did a bowling alley deal. And I'm not sure I like it because I just think it's a little too dicey. I really wanted to. I would love that when they're doing these really high end operations. But, you know, let's have them back on. Let's have them back on. Maybe we can figure out what the heck to go. It is going on because I do think the management there is excellent. Let's go to hutch in New Jersey, hutch. Hey, Jim, how are you? I am good, hutch. How about you? Good. I'm looking at a Generact. See what your thoughts are about Generact. As long as the insurance you're going to go low or lower, then Generact is fine with me because the grid is awful. It turned me a bit more of a financing place because Gener bar is so much money to get at Generact. But I think it's fine here. We had the one I like. Let's go to Joe and Marilyn. Joe! Yes, Jim, thanks for taking the call, buddy. I really appreciate it. Well, I'm doing what you're calling in. What's happening? Well, I did about eight months ago. I bought a thousand shares of a company that's doing pretty good except since then so lately. It's been going up and down like a yo-yo. And I can't figure it out. Now, I'm thinking about selling half of it and putting it into Ethereum. Now, the company that I bought would be Capiletta. All right, that's T-cell immunity. I have always felt that that is an incredible, hopeful product so that with speculation money, I'm fine with it. I typically do not like a lot of biotechs, but that is a particular kind of therapy that I believe in, so I'm okay with it. Let's go to Philip and Arkansas. Philip? Yes, Mr. Kramer. Yes, yes. North install. First time caller. Long time listener. Thank you for everything that you do. You're welcome. Yeah, I bought a regional bank right before the regional crisis. I bought more because I believed in the bank. I'm now up 1%. I get a 5% dividend. You know, should I buy more, hold, or trim or sell regions financial or... All right, just hold on. It's not my favorite bank, but I think it's fine. My favorite right now is this Wells Fargo, which has just been a juggernaut for the Chappell Trust, but I think you're fine. Let's go to Supo. Sorry if I mispronounced it. Supo in North Dakota. Supo, thank you so much for taking my calls. Of course. I'm good with you. I wanted to ask you about M.E.R.E. I bought it at $25, but share yesterday. I went down too much. What's the money? Do you like that you need to buy more or get out of a fee? Oh, Marathon? Well, no. I mean, just go buy the Bitcoin ETF. That's what you want to do. Don't fool around. Oh, the pure. Let's go to Jerry in Illinois. Jerry! Yes. Sam Booja, professor. Booja, do you know what's going on? He's a professor of finance. I've nicknamed you the blizzard of business knowledge. I'm one of the guys who back in '08 was lost in the course, and the banks were only offering 1% on CDs and you told all of us to invest as well as they could any time. So I followed your lead and did. And I want to thank you for making my financial life safe for the last 14 years. You're terrific. Thank you so much. Thank you. You're welcome. I did the show, man, because believe me, I could have retired a long time ago. Here's why I do this show. What's up? My question is about Portillo's restaurant. You interviewed the CEO, CEO, wild friend. Yes. And I speculated a little bit, and I lived near a Portillo's, and it's walled the wall people all the time. It's always James, sir. But, you know, I've lost faith. I've lost faith in this management. They should be delivering better. The insiders were selling, oh, they were smart. I went to the places to see what could possibly go wrong. They're great-looking. It's amazing. But that company is an overvalued company, and I just don't get how they could make it so they don't have better earnings. I mean it. They need better earnings. All right. Let's go to Dave in Illinois. Dave. Dr. Kramer, a beautiful press conference retirement for Jason County today. Yeah, that was a tough one. What a good man. All right. Had breakfast for the last year. He's fantastic. Let's go on. Holy agree. My stock for today is Powell Industries. Up over 100% year to date. It's not done. It's not done. Powell is just a really good company. It reminds me of Eaton, which we own for the trust. It's just kind of a mini, frankly, and I wish it would come down. I'd love to be able to put it in the portfolio. Dave always has something to offer. Let's go to Jeffrey and Massachusetts, Jeffrey. Hi, Jim. How are you? I'm a student. I'm a student in the club. I'm called from Boston. I actually have a stock that actually pays a great dividend over $5 a share. And it's up over 20% in the last five months. The stock is BlackRock. It's going higher. I think BlackRock is the distinguishing event. It is the great financial repository for our nation. And you should own it. They made a fantastic acquisition for an infrastructure fund. BLK, which should never have gone down when it reported. It's still inexpensive. Great call by you. And that, ladies and gentlemen, concludes it up the lightening round. The lightning round is sponsored by Charles Schwab. If you tried to get a tan in this market, you got burned. I'm talking about TAN, the symbol for the Invesco Solar ETF, which has scorched investors over the past year. The reason? So many solar companies turned out to be just financing plays first. An alternative energy plays second. People bought this tan ETF thinking they were betting on the rise of clean energy. But it turned out they were betting on interest rates because when rates soared, people couldn't afford solar panels. The whole group crashed. And that's how the TAN went from $80 around this time last year to $43 now. The TAN is everything I rail against in the investing club. When I talk about the need to pick the best stocks in an industry, not the best and also the worst for some crazy reason. These ETFs are basically marketing games, which is why they always have to have the catchy symbols. But in the end, it's a group of stocks in the same business, meaning it gives you zero diversification anyway. I always say you know what you own. I wanted people to avoid the ETF and its components because a lot of people thought these stocks would be able to participate in the great solarization of our energy grid. Solar's gotten so cheap and demands for clean electricity that definitely the power data centers are so pressing that there should be a big opportunity here. We know the mandated need to move away from colossal fuels has granted terrific environment for commercial solar. Not residential solar, for the consumer, commercial solar, for the enterprise. And to this which comes to true stocks, constellation energy and next tracker. Constellation has all the clean energy generation assets that were spun off by excellent in February of 2022. Although it's mainly a nuclear power plate. I've recommended this one since it's been off and it's really paying off. It's up 51% year to date. How about next tracker? Oh, we had them on last night. This is a technological marvel that allows solar power to be more flexible. The panels can be turned automatically to face the sun, avoid hail. With next tracker, the cost of solar drops even more than it already has. CEO Dan Sugar, aka Shug, made it clear that 25% of our energy production could end up being solar by the end of the decade. That's pure commercial power generation though. Nothing to do with consumers installing solar panels in their house. And everything to do with the falling price of the most renewable energy source there is. Consider these two winners versus a sun runners or a sonova energy. Two improper residential solar plays that investors piled into to play the consumers love for renewable energy. Both these two have been crushed. Both that nearly 90%. From the early 2021 highs, as people realize, holy cow, these are totally hostage interest rates. Next track on the other hand came public just over a year ago at $24 while freeing price before rallying to a just under $57 of today. It's one of the best IPOs of 2023. It keeps climbing. Why? Because there's tremendous demand for their technology at the corporate level. That's right, not the consumer. Constellation Energy's had a gigantic move to the point where it's gotten a little too hot for me. But next tracker with this extraordinary patent-protected sulfur and harbor, that still seems worth buying to me. With the stock in the mid-50s, I like it very much. Two lessons here. First, don't bet on residential solar unless you're sure that financing is getting cheaper, because that's what drives that business. Second, stay away from these made-up marketing gimmick ETFs like the Tan. Non-diversification group of solar plays that are really interest-rate plays is the exact opposite of what you need to do with your portfolio and your hardware and cash. Don't be fooled. You can become roadkill very easily if you're led astray by these much-hyped products. I like to say that there's always a more market somewhere. I probably try to find it just for you right here on Mad Money. I'm Jim Kramer. See you tomorrow. Last call starts now. All opinions expressed by Jim Kramer 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 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. Sometimes it takes a different approach to help you unlock your true potential. With Capella University's game-changing flex path learning format, you gain relevant skills you can apply to your career right away. 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